Archive | June, 2010

Another win against Downey Savings

29 Jun

645068 – US BANK VS. MARTIN, A – Plaintiff’s Motion for Summary Judgment – DENIED. The Plaintiff as moving party has established a prima facie showing that it is entitled to judgment for possession against Defendant as a matter of law. However, Defendant’s objections Nos. 1, 3-6, 8, 9, and 11 to the Johnson Declaration are overruled; and objections Nos. 2, 7 and 10 are sustained, based on a lack personal knowledge and/or hearsay, regarding the alleged transfer of the beneficial interest to Plaintiff and as to the reasonable rental value.

Further, the Court finds the Defendant has met his burden of establishing triable issues of fact to rebut the presumption of validity of the sale and the issue of whether Plaintiff had the right to proceed with foreclosure. Namely the evidence of a gap in title and security interest from Downey Savings & Loan through the FDIC to Plaintiff during the time of the foreclosure proceeding, as well as missing evidence to show whether the Trustee, DSL Service Company, was authorized to act as Plaintiff’s agent in continuing to pursue the sale once Downey Savings & Loan had lost its security interest. (See Plaintiff’s undisputed fact # 7 and Defendant’s objection thereto; and Declaration of Defense counsel, McCandless, paragraphs 2, 8, 9, 10, 12 and 13). As such, triable issues of material fact remain and the motion for summary judgment is denied.

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Where and when does the fraud begin

26 Jun

This document is meant to take the reader down a road they have
likely never traveled. This is a layman’s explanation of what has
been happening in this country that most have no idea or inkling
of. It is intended to give the reader an overview of a systemic
Fraud in this country that has reached epic proportions and
provoke action to eradicate this scourge that has descended upon
the people of America. This is intended as an overview of the process. Is
is one thing to have a grasp on what actually happened in our capitalistic
society it is quit another to convince a judge on these facts. The Judge
has his or her hands tied by the very system that allowed the
fraud in the first place.
Depending on what your situation is, you
may react with disbelief, fear, anger or outright disgust at what you
are about to learn. The following information is supported with
facts, exhibits, law and is not mere opinion.

Let’s start our journey of discovery with the purchase of a home
and subsequent steps in the financial process through the life of
the “mortgage loan”. It all starts at the “closing” where we gather
with other people that are “involved” in the process to sign the
documents to purchase our new home. Do we really know what
goes on at the closing? Are we ever told who all the participants
are in that entire process? Are we truly given “full disclosure” of all
the various aspects of that entire transaction regarding what, for
most people, is the single largest purchase they will make in their
entire life?

Let’s start with the very first part of the transaction. We have a
virtual stack of papers placed in front of us and we are instructed
where we are supposed to start signing or initialing on those
“closing documents”. There seems to be so many different
documents with enough legal language that we could read for
hours just to get through them the first time, much less begin to
fully understand them. Are we given a copy of all these documents
at least 7 days prior to the closing so we can read and study these
documents so we fully understand what it is that we are signing
and agreeing to? That has never happened for the average
consumer and purchaser of a property in the last 30 years or more
if it ever has at all. WHY? We have a stack of documents placed
before us at the “closing” that we haven’t ever seen before and are
instructed where to sign or initial to complete the transaction and
“get our new home”. We depend on the real estate agent, in most
cases, to bring the parties together at the closing after we have
supplied enough financial data and other requested information so
that the “lender” can determine whether we can qualify for our
“loan”. Obviously we have the “three day right of rescission” but do
we really stop to read all the documents after we have just
purchased our home and want to move in? Is the thought that
there might be something wrong with what we have just signed a
primary thought in our mind at that time? Did we trust the people
involved in the transaction? Are we naturally focusing on getting
moved into our new home and getting settled with our family?

Who are the players involved in the transaction from the
perspective of the consumer purchasing a property and signing a
“Mortgage Note” and “Deed” or similar “Security Instrument” at the
closing? There is, of course, the seller, the real estate agent(s), title
insurance company, property appraiser who is supposed to
properly determine the value of the property, and the most
obvious one being who we believe to be “the lender” in the
transaction. We are led, by all involved, to believe that we are, in
fact, borrowing money from the “lender” which is then paid to the
current owner of the property as compensation for them
relinquishing any “claim of ownership” to the property and
transferring that “claim of ownership” to us as the purchaser. It all
seems so simple and clear on its face and then the transaction is
completed. After the “closing” everyone is all smiles and you
believe you have a new home and have to repay the “lender”, over a
period of years, the money which you believe you have “borrowed”.

IS THERE SOMETHING WE DON’T KNOW?

Everything appears to be relatively simple and straightforward
but is that really the case? Could it be that there are other players
involved in this whole transaction that we know nothing about that
have a very substantial financial interest in what has just
occurred? Could it be that those players that we are totally
unaware of have somehow used us without our knowledge or

consent to secure a spectacular financial gain for themselves with
absolutely no investment or risk to themselves whatsoever? Could
it be that there is a hidden aspect of this whole transaction that is
“standard operating procedure” in an industry where this hidden
“aspect of a transaction” occurs every single banking day across
this country and beyond? Could it be that this hidden “aspect of a
transaction” is a deliberate process to unjustly enrich certain
individuals and entities at the expense of the public as a whole?
Could it be that there was not full disclosure of the “true nature” of
the transaction as it actually occurred which is required for a
contract to be valid and enforceable?

THE DOCUMENTS INVOLVED

The two most important and valuable documents that are signed
at a closing are the “Note” and the “Deed” in various forms. When
looking at the definition of a “Mortgage Note” it is obvious that it is
a “Security Instrument”. It is a promise to pay made by the maker
of that “Note”. When looking at a copy of a “Deed of Trust” such as
the attached Exhibit “A”, which is a template of a Tennessee “Deed
of Trust” form that is directly from the freddiemac.com website, it
is very obvious that this document is also a “Security Instrument”.
This is a template that is used for MOST government purchased
loans. You will note that the words “Security Instrument” are
mentioned no less than 90 times in that document. Is there ANY
doubt it is a “Security”? When at the closing, the “borrower” is led

to believe that the “Mortgage Note” that he signs is a document that
binds him to make repayment of “money” that the “lender” is
loaning him to purchase the property he is acquiring. Is there
disclosure to the “borrower” to the effect that the “lender” is not
really loaning any of their money to the “borrower” and therefore
is taking no risk whatsoever in the transaction? Is it disclosed to
the “borrower” that according to FEDERAL LAW, banks are not
allowed to loan credit and are also not allowed to loan their own or
their depositor’s money? If that is the case, then how could this
transaction possibly take place? Where does the money come
from? Is there really any money to be loaned? The answer to this
last question is a resounding NO! Most people are not aware that
there has been no lawful money since the bankruptcy of the United
States in 1933.

Since House Joint Resolution 192 (HJR 192) (Public law 7310)
was passed in 1933 we have only had debt, because all property
and gold was seized by the government as collateral in the
bankruptcy of the United States. Most people today would think
they have money in their hand when they pull something out of
their pocket and look at the paper that is circulated by the banks
that they have been told is “money”. In reality they are looking at a
“Federal Reserve Note” which is stated right on the face of the piece
of paper we have come to know as “money”. It is NOT really
“money”, it is debt, a promise to pay made by the United States! If
you take a “Federal Reserve Note” showing a value of ten dollars

and buy something, you are then making a purchase with a “Note”
(a promise to pay). There is absolutely no gold or silver backing
the Federal Reserve Notes that we refer to as “money” today.

When you sit down at the closing table to complete the
transaction to purchase your home aren’t you tendering a “Note”
with your signature which would be considered money? That is
exactly what you are doing. A “Note” is money in our monetary
system today! You can deposit the “Federal Reserve Note” (a
promise to pay) with a denomination of $10 at the bank and they
will credit your account in that same amount. Why is it that when
you tender your “Note” at the closing that they don’t tell you that
your home is paid for right on the spot? The fact is that it IS PAID
FOR ON THE SPOT. Your signature on a “Note” makes that “Note”
money in the amount that is stated on the “Note”! Was this
disclosed to you at the “closing” in either verbal or written form?
Could this be the place where the other players come into the
transaction at or near the time of closing? What happens to the
“Note” (promise to pay) that you sign at the closing table? Do they
put it in their vault for safe keeping as evidence of a debt that you
owe them as you are led to believe? Do they return that note to you
if you pay off your mortgage in 5, 10 or 20 years? Do they disclose
to you that they do anything other than put it away for safe keeping
once it is in their possession?

WHAT ACTUALLY HAPPENS TO THE “NOTE”?

Unknown to almost everyone, there is something VERY different
that happens with your “Mortgage Note” immediately after closing.

Your “Mortgage Note” is endorsed and deposited in the bank as a
check and becomes “MONEY”! See attached (Exhibit “B” para 13)
The document that you just gave the bank with your signature on
it, that you believe is a promise to pay them for money loaned to
you, has just been converted to money in THEIR ACCOUNT. You
just gave the “lender” the exact dollar value of what they said they
just loaned you! Who is the REAL creditor in this “Closing
Transaction”? Who really loaned who anything of value or any
money? You actually just paid for your own home with your
promissory “Mortgage Note” that you gave the bank and the bank
gave you what in return? NOTHING!!! For any contract to be valid
there must be consideration given by both parties. But don’t they
tell you that you must now pay back the “Loan” that they have
made to you?

How can it be that you could just write a “Note” and pay for your
home? This leads us back to the bankruptcy of the United States in
1933. When FDR and Congress took all the property and gold from
the people in 1933 they had to give something in return for that
confiscation of property. See attached (Exhibit “B” para 6) What
the people got in return was the promise that all of their needs
would be met by the government because the assets and the labor
of the people were collateral for the debt of the United States in the

bankruptcy. All of their debts would be “discharged”. This was
done without the consent of the people of America and was an act
of Treason by President Franklin Delano Roosevelt. The problem
comes in where they never told us how we could accomplish that
discharge and have what we were entitled to after the bankruptcy.
Why has this never been taught in the schools in this country?
Could it be that it would expose the biggest fraud in the history of
this entire country and in the world? If the public is purposely not
educated about certain things then certain individuals and entities
can take full financial advantage of virtually the entire population.
Isn’t this “selective education” more like “indoctrination”? Could
this be what has happened? In Fina Supply, Inc. v. Abilene Nat.
Bank, 726 S.W.2d 537, 1987 it says “Party having superior
knowledge who takes advantage of another’s ignorance of the law
to deceive him by studied concealment or misrepresentation can
be held responsible for that conduct.” Does this mean that if there
are people with superior knowledge as a party in this “Loan
Transaction” that take advantage of the “ignorance of the law”,
(through indoctrination) of the public to unjustly enrich
themselves, that they can be held responsible? Can they be held
responsible in only a civil manner or is there a more serious
accountability that falls into the category of criminal conduct?

It is well established law that Fraud vitiates (makes void) any
contract that arises from it. Does this mean that this intentional
“lack of disclosure” of the true nature of the contract we have

entered into is Fraud and would make the mortgage contract void
on its face? Could it be that the Fraud could actually be “studied
concealment or misrepresentation” that makes those involved in
the act responsible and accountable? What happens to the “Note”
once it is deposited in the bank and is converted to “money”? Are
there different kinds of money? There is money of exchange and
money of account. They are two very different things. See attached
(Exhibit “B” para 11), Affidavit of Expert Witness Walker Todd.
Walker Todd explains in his expert witness affidavit that the banks
actually do convert signatures into money. The definition of
“money” according to the Uniform Commercial Code: “Money” means a
medium of exchange authorized or adopted by a domestic or foreign
government and includes a monetary unit of account established by an
intergovernmental organization or by agreement between two or more nations. Money can actually be in different forms other than what we are
accustomed to thinking. When you sign your name on a
promissory note it becomes money whether you are talking a
mortgage note or a credit card application! Did the bankers ever
“disclose” this to us? Were we ever taught anything about this in
the school system in this country? Could it be that this whole idea
of being able to convert our signature to money is a “studied
concealment” or “misrepresentation” where those involved
become responsible if we are harmed by their actions? What
happens if you have signed a “Mortgage Note” and already paid for
your home and they come at a later date and foreclose and take it
from you? Would you consider yourself to be harmed in any way?
We will bring this up again very shortly but we need to look at the

other document that is signed at the “closing” that is of great
significance.

THE DEED OF TRUST

Why do we need a Deed of Trust? What exactly IS a Deed of
Trust or other similar “Security Instrument”? It spells out all the
details of the contract that you are signing at the “closing”,
including such things as insurance requirements, preservation and
maintenance and all of the financial details of how, when, where
and why you are going to make payments to the “lender” for years
and years. Wait a minute!!!!! Make payments to the “lender”????
Why do you have to make payments to the “lender”??? Didn’t we
just establish the fact that your house was paid for by YOU, with
your “Mortgage Note” that is converted to money by THE BANK
DEPOSITING IT? Is there something wrong with this picture? We
have just paid for our “home” but now we are told we have to sign a
Deed of Trust or similar “Security Instrument” that binds us to pay
the “lender” back? Pay the “lender” back for what? Did they loan
us any money? Remember the part about banks not being able to
loan “their or their depositors money” under FEDERAL LAW? What
about: “In the federal courts, it is well established that a national bank
has no power to lend its credit to another by becoming surety, indorser,
or guarantor for him.” Farmers and Miners Bank v. Bluefield Nat ‘l
Bank, 11 F 2d 83, 271 U.S. 669; “A national bank has no power to lend
its credit to any person or corporation.” Bowen v. Needles Nat. Bank, 94

F 925, 36 CCA 553, certiorari denied in 20 S.Ct 1024, 176 US 682, 44
LED 637?

What is happening here with this “Deed of Trust” or similar
“Security Instrument” that says we have to pay all this money back
and if we don’t, they can foreclose and take our home? Why do we
have to have this kind of agreement when we have already paid for
our home through our “Mortgage Note” which was converted to
money BY THE BANK? Could this possibly be another example of
“studied concealment or misrepresentation” where those involved
could be held accountable for their conduct? What happens to this
Deed of Trust or similar “Security Instrument” after we sign it?
Where does it go? Does it go into the vault for safekeeping like we
might think? See attached Exhibit “C” for substantially more
information.

WHO ARE THE OTHER PLAYERS?

We have already found out that the “Note” doesn’t go into the vault
for safe keeping but instead is deposited into an account at the
bank and becomes money. Where does the Note go then? This is
where things get VERY interesting because your “Mortgage Note” is
then used to access your Treasury Account (that you know nothing
about) and get credit in the amount of your “Mortgage Note” from
your “Prepaid Treasury Account”. If they process the “Note” and
get paid for it then they have received the funds from YOUR

account at Treasury to pay for YOUR home correct? They then turn
around and bundle the “Note” and sell it to investors on Wall Street
and get paid again! Now let’s see what happens to the “Deed of
Trust” or similar “Security Instrument” after you have signed it.
You may be quite surprised to know that not only does it not go
into “safekeeping” it is immediately SOLD as an INVESTMENT
SECURITY to one of any number of investors tied to Wall Street.
There is a ready, and waiting, market for all of the “mortgage
paper” that is produced by the banks. What happens is the “Deed
of Trust” or other similar “Security Instrument” is bundled and
SOLD to a buyer and the BANK GETS PAID FOR THE VALUE OF THE
MORTGAGE AGAIN!! Haven’t the bankers just transferred any risk
on that mortgage to someone else and they have their money?
That is a pretty slick way of doing things! They ALWAYS get their
money right away and everyone else connected to the transaction
has the liabilities! Is there something wrong with THIS picture?
How can it possibly be that the bank has now been paid three times
in the amount of your “purported” mortgage? How is it that you
still have to pay years and years on this “purported” loan? Was any
of this disclosed to you before you signed the “Deed of Trust” or
other similar “Security Instrument”? Would you have signed ANY
of those documents including the “Mortgage Note” if you knew that
this is what was actually happening? Do you think there were any
“copies” of the “Mortgage Note” and “Deed of Trust” or other
similar “Security Instrument” made during this process? Are those

“copies” just for the records to be put in a file somewhere or is
there another purpose for them?

CAN REPRODUCING A NOTE OR DEED OF TRUST BE
ILLEGAL?

We have already established that the “Mortgage Note” and the
“Deed of Trust” or other similar “Security Instrument” are
“Securities” by definition under the law. Securities are regulated
by the Securities and Exchange Commission which is an agency of
the Federal Government. There are very strict regulations about
what can and cannot be done with “Securities”. There are very
strict regulations that apply to the reproduction or “copying” of
“Securities”:

The Counterfeit Detection Act of 1992, Public Law 102-550, in Section 411 of Title 31 of the Code of Federal Regulations, permits color illustr

ations of U.S. currency provided: . The illustration is of a size less than three-fourths or more than one and one-ch part of the item illustrated

half, in linear dimension, of ea

. The illustration is one-sided All negatives, plates, positives, digitized storage medium, graphic files, magnetic medium, optical storage devices, and any other thing used in the making of the illustration that contain an image of the illustration or any part thereof are destroyed and/or deleted or erased after their final use

Other

Obligations and Securities
. Photographic or other likenesses of other United States obligations and securities and foreign currencies are permissible for any non-fraudulent purpose, provided the items are reproduced in black and white and are less

than three-quarters or greater than one-and-one-half times the size, in linear dimension, of any part of the original item being reproduced. Negatives and plates used in making the likenesses must be destroyed after their use for the purpose for which they were made.

Title 18 USC § 472 Uttering counterfeit obligations or securities
Whoever, with intent to defraud, passes, utters, publishes, or sells, or attempts to pass, utter, publish, or sell, or with like intent brings into the United States or keeps in possession or conceals any falsely made, forged, counterfeited, or altered obligation or other security of the United States, shall be fined under this title or imprisoned not more than 20 years, or both.

Title 18 USC § 473 Dealing in counterfeit obligations or securities Whoever buys, sells, exchanges, transfers, receives, or delivers any false, forged, counterfeited, or altered obligation or other security of the United States, with the intent that the same be passed, published, or used as true and genuine, shall be fined under this title or imprisoned not more than 20 years, or both.

Title 18 USC § 474 Plates, stones, or analog, digital, or electronic

images for counterfeiting obligations or securities Whoever, with intent to defraud, makes, executes, acquires, scans, captures, records, receives, transmits, reproduces, sells, or has in such person’s control, custody, or ossession, an analog, digital, or electronic image of any obligation or other security f the United States is guilty of a class B felony.

p

o

Are these regulations always adhered to by the “lender” when
they have possession of these “original” SECURITIES and make
reproductions of them before they are “sold to investors? How
much has been in the media in the past 2 years about people
demanding to see the “wet ink signature Note” when there is a
foreclosure action initiated against them? You hear it all the time.
Why is that such a big issue? Shouldn’t the “lender” be able to just
bring the “Note” and the “Deed of Trust” or similar “Security
Instrument” to the Court and show that they have the original

documents and are the “holder in due course” and therefore have a
legal right to foreclose? To foreclose they must have BOTH the
“Mortgage Note” and “Deed of Trust” or other similar “Security
Instrument” ORIGINAL DOCUMENTS in their possession at the time
the foreclosure action is initiated. Furthermore, IS there a real
honest to goodness obligation to be collected on?

Why is it that there is such a problem with “lost Mortgage Notes”
as is claimed by numerous lenders that are trying to foreclose
today? How could it be that there could be so many “lost”
documents all of a sudden? Could it be that the documents weren’t
really lost at all, but were actually turned into a source of revenue
that was never disclosed as being a part of the transaction? To
believe that so many “original” documents could be legitimately
“lost” in such a short period of time stretches the credibility of such
claims beyond belief. Could this be the reason that MERS (Mortage
Electronic Registration Systems) was formed in the 1990’s as a way
to supposedly “transfer ownership of a mortgage” without having
to have the “original documents” that would be required to be
presented to the various county recorders? Could it be they KNEW
THEY WOULDN’T HAVE THE ORIGINAL DOCUMENTS FOR
RECORDING and had to devise a system to get around that
requirement? When the foreclosure action is filed in the court the
attorney for the purported “party of interest”, usually the “lender”
who is foreclosing, files a “COPY” of the “Deed of Trust” or similar
“Investment Security” with the Complaint to begin foreclosure

proceedings. Is that “COPY” of the “Security Instrument” within the
“regulations” of Federal Law under 18 U.S.C. § 474? Is it usually the
same size or very nearly the same size as the original document?
Yes it is and without question it is a COUNTERFEIT SECURITY! Who
was it that produced that COUNTERFEIT SECURITY? Who was
involved in taking that COUNTERFEIT SECURITY to the Court to file
the foreclosure action? Who is it that is now legally in possession
of that COUNTERFEIT SECURITY? Has everyone from the original
“lender” down to the Clerk of the Court where the foreclosure is
now being litigated been in possession or is currently in possession
of that COUNTERFEIT SECURITY? What about the Trustees who are
involved in the process of selling foreclosed properties in nonjudicial
states? What about the fact that there is no judicial
proceeding in those states where the documentation purported to
be legal and proper to bring a foreclosure action can be verified
without expensive litigation by the alleged “borrower”? All the
trustee has to do is send a letter to the alleged “borrower” stating
they are in default and can sell their property at public auction. It
is just ASSUMED that they have the “ORIGINAL” documents in their
possession as required by law. In reality, in almost every situation,
they do NOT!!! They are using a COUNTERFEIT SECURITY as the
basis to foreclose on a property that was paid for by the person
who signed the “Mortgage Note” at the closing table that was
converted to money by the bank. When it is demanded they
produce the actual “original signed documents” they almost always
refuse to do so and ask the Court to “take their word for it” that

they have
. They have,
instead, submitted a COUNTERFEIT SECURITY to the Court as their
“proof of claim” to attempt to unjustly enrich themselves through a
blatantly fraudulent foreclosure action. One often cited example of
this was the decision handed down by U. S. Federal District Court
Judge Christopher A. Boyko of Ohio, who on October 31, 2007
dismissed 14 foreclosure actions at one time with scathing
footnote comments about the actions of the Plaintiffs and their
attorneys. See (Exhibit “E”). Not long after that came the dismissal
of 26 foreclosure cases in Ohio by U.S. District Court Judge Thomas
M. Rose who referenced the Boyko ruling in his decision. See
(Exhibit “F”). How many other judges have not been so brave as to
stand on the principles of law as Judges Boyko and Rose did, but
need to start doing so TODAY?
BOTH of the original documents which are absolutely
required to be in their possession to begin foreclosure actions.
Almost every time the people that are being foreclosed on are able
to convince the Court (in judicial foreclosures) to demand that
those “original documents” be produced in Court by the Plaintiff,
the foreclosure action stops and it is obvious why that happens!
THEY DON’T HAVE THE “ORIGINAL” DOCUMENTS

Has any of this foreclosure activity crossed state lines in
communications or other activities? Have there been at least two
predicate acts of Fraud by the parties involved? Have the people
involved used any type of electronic communication in this Fraud
such as telephone, faxing or email? It is obvious that those

questions have to be answered with a resounding YES! If that is the
case, then the Fraud that has been discussed here falls under the
RICO statutes of Federal Law. Didn’t they eventually take down the
mob for Racketeering under RICO statutes years ago? Is it time to
take down the “NEW MOB” with RICO once again?

HOW RAMPANT IS THIS FRAUD?

How could this kind of situation ever occur in this country?
Could it be that this whole entire process could be “studied
concealment or misrepresentation” where the parties involved are
responsible under the law for their conduct? Could it be that it is
no “accident” that so many “wet ink signature” Notes cannot be
produced to back up the foreclosure actions that are devastating
this country? Could it be that the overwhelming use of
COUNTERFEIT SECURITIES, as purported evidence of a debt in
foreclosure cases, is BY DESIGN and “studied concealment or
misrepresentation” so as to strip the people of this country of their
property and assets? Could it be that a VERY substantial number of
Banks, Mortgage Companies, Law Firms and Attorneys are guilty of
outright massive Fraud, not only against the people of this country,
but of massive Fraud on the Court as well because of this
COUNTERFEITING? How could one possibly come to any other
conclusion after learning the facts and understanding the law?
How many other people are implicated in this MASSIVE FRAUD
such as Trustees and Sheriffs that have sold literally millions of

homes after foreclosure proceedings based on these COUNTERFEIT
SECURITIES submitted as evidence of a purported obligation? How
many judges know about this Fraud happening right in their own
courtrooms and never did anything? How many of them have
actually been PAID for making judgments on foreclosures?
Wouldn’t that be a felony or at the very least, misprision of felony,
to know what is going on and not act to stop it or make it known to
authorities in a position to investigate and stop it?

How is it that so many banks could recover financially, so
rapidly, from the financial debacle of 200809,
with foreclosures
still running at record levels, and yet pay back taxpayer money that
was showered on them and do it so quickly? Could it be that when
they take back a property in foreclosure where they never risked
any money and actually were unjustly enriched in the previous
transaction, that it is easy to make huge sums by reselling that
property and then beginning the whole “Unconscionable” process
all over again with a new “borrower”? How is it that just three
years ago a loan was available to virtually almost anyone who
could “fog a mirror” with no documentation of income or ability to
repay a loan? Common sense makes you ask how “lenders” could
possibly take those kinds of risks. Could it be that the ability to
“repay a loan” was not an issue at all for the lenders because they
were going to get their profits immediately and risk absolutely
nothing at all? Could it be that, if anything, they stood to make
even more money if a person defaulted on the “alleged loan” in a

short period of time? They could literally obtain the property for
nothing other than some legal fees and court filing costs through
foreclosure. They could then resell the property and reap
additional unjust profits once again! One does not need to have
been a finance major in college to figure out what has been
happening once you are enlightened to the FACTS.

WHAT ACTIONS HAVE PEOPLE TAKEN TO AVOID LOSING
THEIR HOMES IN FORECLOSURE?

There have been a number of different actions taken by people
to keep from losing their homes in foreclosure. The first and most
widely used tactic is to demand that the party bringing the
foreclosure action does, in fact, have the standing to bring the
action. The most important issue of standing is whether that party
has actual possession of the “original wet ink signature”
documents from the closing showing they are the “holder in due
course”. As previously mentioned, in almost ALL cases the Plaintiff
bringing the action refuses to make these documents available for
inspection by the Defendant in the foreclosure action so they can,
in fact, determine the authenticity of those documents that are
claimed to be “original” and purportedly giving the legal right to
foreclose. The fact that the Courts allow this to happen repeatedly
without demanding the Plaintiff bring the ”wet ink signature
documents” into the court for inspection by the Defendant, begs
the question of whether some of the judiciary are involved in this

Fraud. Where is due process under the law for the Defendant when
the Plaintiff is NOT REQUIRED by the Court to meet that burden of
proof of standing, when demanded, to bring their action of
foreclosure?

One other option that has been used more and more frequently
in recent months to deal with foreclosure actions is the issuing of a
“Bonded Promissory Note” or “Bill of Exchange” as payment to the
alleged “lender” as satisfaction of any amounts allegedly owed by
the Defendant. As was earlier described, a “Note” is money and as
the banks demonstrated after the closing, it can be deposited in the
bank and converted to money. SOME of the “Bonded Promissory
Notes” and “Bills of Exchange” are, in fact, negotiated and credit is
given to the accounts specified and all turns out well. See (Exhibit
“B” para 12) The problem that has occurred is that MANY of the
“lenders” say that the “Bonded Promissory Notes” and “Bills of
Exchange” are bogus documents and are worthless and fraudulent
and they refuse to give credit for the amount of the “Note” they
receive as payment of an alleged debt even though they are given
specific instructions on how to negotiate the “Note”. Isn’t it
interesting that THEY can take a “Note” that THEY print and put
before you to sign at the closing table and deposit it in the bank
and it is converted to money immediately, but the “Note” that YOU
issue is worthless and fraudulent? The only difference is WHO
PRINTS THE NOTE!!!! They are both signed by the same
“borrower” and it is that person’s credit that backs that “Note”.

The “lenders” don’t want the people to know they can use your
“Prepaid Treasury Account”, just as the banks do without your
knowledge and consent. See (Exhibit “D”) for more information on
“Bills of Exchange”. The fact that SOME of the “Bonded Promissory
Notes” are negotiated and accounts are settled, proves beyond a
shadow of a doubt that they are legal SECURITIES just like the one
that the bank got from the “borrower” at the closing. Why then
aren’t ALL of the “Notes” processed and credit given to the accounts
and the foreclosure dismissed? Because by doing so you would be
lowering the National Debt and the bankers would make less
money!!!!

One very interesting thing that happens with these “Bonded
Promissory Notes” or “Bills of Exchange” that are submitted as
payment, is that they are VERY RARELY RETURNED TO THE ISSUER
yet credit is not given to the intended account. They are not
returned, and the issuer is told they are “bogus, fraudulent and
worthless” but they are NOT RETURNED! Why would someone
keep something that is allegedly “bogus, fraudulent and
worthless”? Could it be that they are NOT REALLY “BOGUS,
FRAUDULENT AND WORTHLESS” and the “lender” has, in fact,
actually negotiated them for YET EVEN MORE UNJUST
ENRICHMENT? That is exactly what happens in many instances.
There could be no other explanation for the failure to return the
allegedly “worthless” documents WHICH ARE ACTUALLY
SECURITIES!!! Does the fact that they keep the “Note” that was

submitted and refuse to credit the account that it was written to
satisfy, rise to the level of THEFT OF SECURITIES? This is just one
more example of the Fraud that is so obvious. This is but one more
example of the ruthless nature of those who would defraud the
people of this country.

CONCLUSIONS

One of the incredible aspects of this whole debacle is the fact
that the very people who are participants in this Fraud are victims
as well. How many bank employees, judges, court clerks, lawyers,
process servers, Sheriffs and others have mortgages? How many of
the people who work in law offices, Courthouses, Sheriffs
Departments and other entities that are directly involved in this
Fraud have been fraudulently foreclosed on themselves? How
many people in our military, law enforcement, firefighting and
medical fields have lost their homes to this Fraud? How many of
your friends or neighbors have lost their homes to these
fraudulent foreclosures? Everyone who has a mortgage is a VICTIM
of this fraud but some of the most honest, trusting, hardest
working and most dedicated people in this country have been the
biggest victims. Who are those who have been the major
beneficiaries of this massive Fraud? Those with the “superior
knowledge” that enables them to take advantage of another’s
ignorance of the law to deceive them by “studied concealment or
misrepresentation”. This group of beneficiaries includes many on
Wall Street, large investors, and most notoriously, the bankers at
the top and the lawyers who work so hard to enhance their profits

and protect the Fraud by them from being exposed. The time has
now come to make those having superior knowledge who HAVE
taken advantage of another’s ignorance of the law to deceive them
by studied concealment or misrepresentation to be held
responsible for that conduct. This isn’t just an idea. It is THE LAW
and it is time to enforce it starting with the criminal aspect of the
fraud! Under the doctrine of “Respondeat Superior” the people at
the top of these organizations are responsible for the actions of
those in their employ. That is where the investigations and arrests
need to start.

What is it going to take to put a stop to the destruction of this
country and the lives of the people who live here? It is going to
take an uprising of the people of this country, as a whole, to finally
say that they have had enough. The information presented here is
but one part of the beginning of that uprising and the beginning of
the end of the Fraud upon the people of America. It is obvious, as
has been pointed out here, with supporting evidence, that Fraud is
rampant. You now know the story and can no longer say you are
totally uninformed about this subject. This is only an outline of
what needs to, and will, become common knowledge to the people
and law enforcement agencies in this country. If you are in law
enforcement it is YOUR DUTY to take what you have been given
here and move forward with your own intense investigation and
root out the Fraud and stop the theft of people’s homes. Your

failure to do so would make you an accessory to the fraud through
your inaction now that you have been noticed of what is occurring.

If you are an attorney and receive this information it would do
you well to take it to heart, and understand there is no place for
your participation in this Fraud and if you participate you will
likely become liable for substantial damages, if not more severe
consequences such as prison. If you are in the judiciary you would
do well to start following the letter of the law if you haven’t been,
and start making ALL of those in your Court do likewise, lest you
find yourself looking for employment as so many others are, if you
are not incarcerated as a result of your participation in the fraud.
If you are part of the law enforcement community that enforces
legal matters regarding foreclosure you would do well to make
sure that ALL things have been done legally and properly rather
than just taking the position “I am just doing my job” and turn a
blind eye to what you now know. If you are a banker, you must
know that you are now going to start being held accountable for
the destruction you have wreaked on this country. You have every
right to be, and should be, afraid…….very afraid. If you are one of
the ruthless foreclosure lawyers that has prayed on the numerous
people who have lost their homes, you need to be afraid also. Very
VERY afraid. When people learn the truth about what you have
done to them you can expect to see retaliation for what you have
done. People are going to want to see those who defrauded them
brought to justice. These are not threats by any stretch of the

imagination. These are very simple observations and the study of
human behavior shows us that when people find out they have
been defrauded in such a grand manner as this, they tend to
become rather angry and search for those who perpetrated the
fraud upon them. The foreclosure lawyers and the bankers will be
standing clearly in their sights.

The question of WHERE DOES THE FRAUD BEGIN has been
answered. It began right at the closing table and was perpetuated
all the way to the loss of property through foreclosure or the
incredible payment of 20 or 30 years of payments and interest by
the alleged “borrower” to those who would conspire to commit
Fraud, collusion and counterfeiting and practice “studied
concealment or misrepresentation” for their own unjust
enrichment.

The simplest of analogies: What would happen if you were to
make a copy of a $100 Federal Reserve Note and go to Walmart and
attempt to use it to fraudulently acquire items that you wanted?
You more than likely would be arrested and charged with
counterfeiting under Title 18 USC § 474 and go to prison. What is
the difference, other than the magnitude of the fraud, between that
scenario and someone who makes a copy of a mortgage security,
and using it through foreclosure, attempts to fraudulently acquire
a property? Shouldn’t they be treated exactly the same under the
law? The answer is obvious and now it is starting to happen.

Title 18 USC § 474

Whoever, with intent to defraud, makes, executes,
acquires, scans, captures, records, receives, transmits,
reproduces, sells, or has in such person’s control, custody,
or possession, an analog, digital, or electronic image of any
obligation or other security of the United States is guilty of
a class B felony.

“Fraud vitiates the most solemn Contracts, documents and
even judgments” [U.S. vs. Throckmorton, 98 US 61, at pg.
65].

“It is not necessary for rescission of a contract that the
party making the misrepresentation should have known
that it was false, but recovery is allowed even though
misrepresentation is innocently made, because it would be
unjust to allow one who made false representations, even
innocently, to retain the fruits of a bargain induced by
such representations.” [Whipp v. Iverson, 43 Wis 2d 166].

“Any false representation of material facts made with
knowledge of falsity and with intent that it shall be acted
on by another in entering into contract, and which is so
acted upon, constitutes ‘fraud,’ and entitles party deceived
to avoid contract or recover damages.” Barnsdall Refining
Corn. v. Birnam Wood Oil Co. 92 F 26 817.

Exhibit B Walker Todd_Note Expert Witness

Exhibit D Mem of Law Bills of Exch

Exhibit A Deed Trust Tenn

Exhibit C Mem of Law Bank Fraud_Foreclosures

Exhibit E Boyko_Foreclosure Case

Eviction and the issue of “Duly perfected” foreclosure sale

24 Jun

The Lender has already foreclosed on your house at the time they bring a Unlawful
Detainer action against you. The Unlawful Detainer is just an eviction and not a
foreclosure proceeding. If you want to stop the eviction, you have to claim that they
have no right to evict because of a defective deed due to fact that they are not true
lender, etc.
A qualified exception to the rule that title cannot be tried in an unlawful detainer
proceeding [see Evid Code § 624; 5.45[1][c]] is contained in CCP § 1161a. By extending
the summary eviction remedy beyond the conventional landlord-tenant relationship to
include purchasers of the occupied property, the statute provides for a narrow and
sharply focused examination of title. A purchaser of the property as described in the
statute, who starts an unlawful detainer proceeding to evict an occupant in possession,
must show that he or she acquired the property at a regularly conducted sale and
thereafter “duly perfected” the title [CCP § 1161a; Vella v. Hudgins (1977) 20 C3d 251,
255, 142 CR 414, 572 P2d 28 ]. To this limited extent, as provided by the statute, title
may be litigated in the unlawful detainer proceeding [ Cheney v. Trauzettel (1937) 9 C2d
158, 159, 69 P2d 832 ].
CCP § 1161
1. In General; Words and Phrases
Term “duly” implies that all of those elements necessary to valid sale exist. Kessler v.
Bridge (1958, Cal App Dep’t Super Ct) 161 Cal App 2d Supp 837, 327 P2d 241, 1958
Cal App LEXIS 1814.
Title that is “duly perfected” includes good record title, but is not limited to good record
title. Kessler v. Bridge (1958, Cal App Dep’t Super Ct) 161 Cal App 2d Supp 837, 327
P2d 241, 1958 Cal App LEXIS 1814.
Title is “duly perfected” when all steps have been taken to make it perfect, that is, to
convey to purchaser that which he has purchased, valid and good beyond all
reasonable doubt. Kessler v. Bridge (1958, Cal App Dep’t Super Ct) 161 Cal App 2d
Supp 837, 327 P2d 241, 1958 Cal App LEXIS 1814.
The purpose of CCP 1161a, providing for the removal of a person holding over after a
notice to quit, is to make clear that one acquiring ownership of real property through
foreclosure can evict by a summary procedure. The policy behind the statute is to
provide a summary method of ouster where an occupant holds over possession after
sale of the property. Gross v. Superior Court (1985, Cal App 1st Dist) 171 Cal App 3d
265, 217 Cal Rptr 284, 1985 Cal App LEXIS 2408.
Go to Topic List 2. Construction, Interpretation, and Application
This section extended the former statute to permit persons not in the relationship of
landlord and tenant to maintain an action in unlawful detainer. Hewitt v. Justice’s Court
of Brooklyn Township (1933, Cal App) 131 Cal App 439, 21 P2d 641, 1933 Cal App
LEXIS 731.
Under this section, which was added to the code in 1929, an action in unlawful detainer
by a purchaser at a trustee’s sale under a deed of trust is a proper proceeding to
remove persons from the demised premises; and, the remedy being purely statutory, if
the determination of the question of title to realty becomes necessary, the legislature
had the right to provide for the trial of that issue in such a proceeding. Nineteenth Realty
Co. v. Diggs (1933) 134 Cal App 278, 25 P 2d 522, 1933 Cal App LEXIS 54.
In an action to recover possession of premises under this section, the record title owner
is sufficiently the owner, notwithstanding that he holds title as trustee for some other
person, to maintain the suit. Kraemer v. Coward (1934, Cal App) 2 Cal App 2d 506, 38
P2d 458, 1934 Cal App LEXIS 1455.
This section does not create a new right and an exclusive remedy to enforce it, but
merely creates a new remedy without excluding the old remedy of ejectment where it
may apply. Mutual Bldg. & Loan Asso. v. Corum (1934, Cal App) 3 Cal App 2d 56, 38
P2d 793, 1934 Cal App LEXIS 1138.
This section does not apply to a quiet title action. Duckett v. Adolph Wexler Bldg. &
Finance Corp. (1935) 2 Cal 2d 263, 40 P2d 506, 1935 Cal LEXIS 321.
This section, which extends the summary remedy of unlawful detainer to certain cases
where property has been sold, has no application where the party in possession raises
complete issues as to title and the right of possession in an action to quiet title in a court
of equity; and under such circumstances the court has power not only to decide the
issues presented but to carry its decrees into effect, and it may grant relief by directing
the issuance of a writ of possession even though another and different remedy might
have been available had an action to quiet the title not been brought. Furlott v. Security-
First Nat’l Bank (1936, Cal App) 14 Cal App 2d 118, 57 P2d 952, 1936 Cal App LEXIS
829.
This section is not unconstitutional. St. George v. Meyer (1937) 9 Cal 2d 161, 69 P2d
993, 1937 Cal LEXIS 373.
The unlawful detainer statutes, including CCP 1161 of this section are purely statutory
remedies created by the legislature; hence, it is competent for the legislature to
determine the scope of the issues that may be tried in such an action. Altman v.
McCollum (1951, Cal App Dep’t Super Ct) 107 Cal App 2d Supp 847, 236 P2d 914,
1951 Cal App LEXIS 1990.
CCP 1161a, governing unlawful detainer proceedings, does not require a defendant to
litigate, in a summary action within the statutory time constraints, a complex fraud claim
involving activities not directly related to the technical regularity of a trustee’s sale. Vella
v. Hudgins (1977) 20 Cal 3d 251, 142 Cal Rptr 414, 572 P2d 28, 1977 Cal LEXIS 192.
So long as a person’s possession of real property is achieved through the landlordtenant
relationship, unlawful detainer may be properly used to regain possession in the
event of the tenant’s default (CCP 1161, 1161a). Neither the relationship nor the
remedy is eliminated by the mere fact that, in addition, there is an executory contract of
sale between the parties under which the rent is credited against the purchase price, in
whole or in part. Provouskivitz v. Snow (1977, Cal App 2d Dist) 74 Cal App 3d 554, 141
Cal Rptr 531, 1977 Cal App LEXIS 1943.
Go to Topic List 3. Service and Effect of Notice
Failure to serve the three-day notice upon the trustor of a trust deed, as well as upon his
subtenant, does not vitiate a proceeding under this section, where the subtenant only
and not the trustor contested the plaintiff’s right to possession as a purchaser under the
trust deed, and such failure may be deemed waived by the subtenant. Mailhes v.
Investors Syndicate (1934) 220 Cal 735, 32 P2d 610, 1934 Cal LEXIS 595.
Service of a notice to quit on subtenants is not jurisdictional. San Jose Pacific Bldg. &
Loan Asso. v. Corum (1934, Cal App) 2 Cal App 2d 276, 37 P2d 866, 1934 Cal App
LEXIS 1418.
Go to Topic List 4. Persons by and Against Whom Action May Be Brought
A purchaser or trustee at an execution sale or under a deed of trust may maintain an
action under this section. Pacific States Sav. & Loan Co. v. Hoffman (1933, Cal App)
134 Cal App 601, 25 P2d 1006, 1933 Cal App LEXIS 180.
In an action to recover possession of premises under this section, after sale under a
deed of trust, a foreign corporation, which made the loan to defendants, was not doing
business in this state in making said loan, where the notes and deed of trust were
executed by defendants in favor of a party secured by defendants’ agent, and said
documents, with draft attached, were forwarded by defendants’ agent to an eastern city
where they were approved and accepted by said foreign corporation, which had
theretofore been a stranger to the transaction, and which, upon such acceptance,
honored the draft and sent the money to the state, payable to the order of defendants.
Kraemer v. Coward (1934, Cal App) 2 Cal App 2d 506, 38 P2d 458, 1934 Cal App
LEXIS 1455.
An action under this section is not restricted to cases covered by 1161 where a tenant
holds possession “in person, or by subtenant,” and may be brought against any person
claiming the right of possession as a successor to or under one whose title is terminated
on sale of the property through a deed of trust, pursuant to CC 2924. Stockton Morris
Plan Co. v. Carpenter (1936, Cal App) 18 Cal App 2d 205, 63 P2d 859, 1936 Cal App
LEXIS 191.
Where a vendor remaining in possession for a limited period as part of the consideration
for the sale of realty failed to surrender possession within two years after completion of
the sale as provided by the contract, unlawful detainer was the proper form of action
and the court was authorized to award treble damages. Moss v. Williams (1948, Cal
App) 84 Cal App 2d 830, 191 P2d 804, 1948 Cal App LEXIS 1278.
Mortgagee is not entitled to possession of property, either before or after default, and he
has no right of entry except when he is vested with title to property on foreclosure and
sale; hence, applying provisions of CC 2924 that transfer of interest in property made
only as security for performance of another act is to be deemed mortgage, plaintiff’s
right to maintain unlawful detainer action was not impaired by existence of deed naming
defendant as grantee of property where such deed recited on its face that it was for
security only and said defendant made no attempt to show there had been any
foreclosure of any security interest asserted by him which would have entitled him to
possession. Byrne v. Baker (1963, Cal App 2d Dist) 221 Cal App 2d 1, 34 Cal Rptr 178,
1963 Cal App LEXIS 2099.
Judgment creditor who purchases at his own execution sale and first records sheriff’s
certificate of sale is protected by provisions of CC 1107, 1214, and his rights are
therefore superior to those of holder of unrecorded deed; any interest defendant
acquired by deed in property which is subject of action for unlawful detainer would not
operate as bar to plaintiff’s right to maintain action where defendant’s deed was not
recorded until after plaintiff’s title under execution sale had been perfected and
marshal’s deed to property recorded. Byrne v. Baker (1963, Cal App 2d Dist) 221 Cal
App 2d 1, 34 Cal Rptr 178, 1963 Cal App LEXIS 2099.
A subsequent purchaser from a purchaser at a foreclosure sale was entitled to bring
unlawful detainer actions pursuant to former CCP 1161a, subd. (3) (see now CCP
1161a(b)), against occupants of condominium units; the policy of the statute, to provide
a summary method of ouster when an occupant holds over possession after sale of the
property, would not be served by restricting availability of the action to the original
purchaser at the foreclosure sale. Moreover, the requirements that the subsequent
purchaser prove his acquisition of title from the foreclosure sale purchaser does not
destroy the summary nature of the action. Evans v. Superior Court (1977, Cal App 2d
Dist) 67 Cal App 3d 162, 136 Cal Rptr 596, 1977 Cal App LEXIS 1215.
Homeowners cannot be evicted, consistent with due process guarantees, without being
permitted to raise affirmative defenses which if proved would maintain their possession
and ownership. Accordingly, in an unlawful detainer action brought in municipal court by
a corporation that had acquired title to homeowners’ property through a loan transaction
after the homeowners had defaulted on a prior loan, the homeowners were entitled to
defend the eviction action based on their claims of fraud and related causes which they
asserted; therefore the action necessarily exceeded the jurisdiction of the municipal
court and could not be tried there. Asuncion v. Superior Court of San Diego County
(1980, Cal App 4th Dist) 108 Cal App 3d 141, 166 Cal Rptr 306, 1980 Cal App LEXIS
2038.
The procedure in unlawful detainer is covered in CCP 1161 et seq. The remedy, as
broadened by statutory changes, is available in three situations: (1) landlord against
tenant for unlawfully holding over or for breach of the lease (the traditional and most
important proceeding), (2) owner against servant, employee, agent, or licensee, whose
relationship has terminated, and (3) purchaser at sale under execution, foreclosure, or
power of sale in mortgage or deed of trust, against former owner and possessor. The
statutory situations in which the remedy of unlawful detainer is available are exclusive,
and the statutory procedure must be strictly followed. Berry v. Society of Saint Pius X
(1999, Cal App 2d Dist) 69 Cal App 4th 354, 81 Cal Rptr 2d 574, 1999 Cal App LEXIS
42, review or rehearing denied (1999, Cal) 1999 Cal LEXIS 2245.
Go to Topic List 5. Action Involving Issue of Title and Right to Possession
On a sale under a deed of trust, the purchaser has an immediate right to possession;
and where a party exchanged property for an apartment house encumbered by a deed
of trust, under which notice of default and election to sell was filed before the exchange,
but the sale was conducted after the date of exchange, regardless of the right of
possession prior to foreclosure the party who would have received the property under
the exchange was not entitled to a judgment for possession of it after the sale. Farris v.
Pacific States Auxiliary Corp. (1935) 4 Cal 2d 103, 48 P2d 11, 1935 Cal LEXIS 506.
Proof that he has duly perfected his title by a sale regularly conducted may be made by
the plaintiff in a proceeding under subd 3. Mortgage Guarantee Co. v. Smith (1935, Cal
App) 9 Cal App 2d 618, 50 P2d 835, 1935 Cal App LEXIS 1196.
Matters affecting the validity of a trust deed, primary obligation, or other basic defects in
the title of a plaintiff who purchased at a sale under the trust deed may not be raised by
the defendant in an unlawful detainer action. Cheney v. Trauzettel (1937) 9 Cal 2d 158,
69 P2d 832, 1937 Cal LEXIS 372.
Right to possession alone is involved in a summary proceeding under this section, and
the broad question of title cannot be raised and litigated by a cross-complaint or
affirmative defense. Cheney v. Trauzettel (1937) 9 Cal 2d 158, 69 P2d 832, 1937 Cal
LEXIS 372; Delpy v. Ono (1937, Cal App) 22 Cal App 2d 301, 70 P2d 960, 1937 Cal
App LEXIS 116.
The title of a purchaser at a sale under a trust deed is involved in an action in unlawful
detainer brought by him to the limited extent that he must prove his acquisition of title by
purchase at the sale, and the defendant may attack the sufficiency of the sale. Cheney
v. Trauzettel (1937) 9 Cal 2d 158, 69 P2d 832, 1937 Cal LEXIS 372; Delpy v. Ono
(1937, Cal App) 22 Cal App 2d 301, 70 P2d 960, 1937 Cal App LEXIS 116; Seidell v.
Anglo-California Trust Co. (1942, Cal App) 55 Cal App 2d 913, 132 P2d 12, 1942 Cal
App LEXIS 146.
The validity of a trust deed attacked as part of a conspiracy to evade the Alien Land Law
was an issue relating to title which could not be raised in an unlawful detainer action by
the purchaser at the trust deed sale. Delpy v. Ono (1937, Cal App) 22 Cal App 2d 301,
70 P2d 960, 1937 Cal App LEXIS 116.
Where after a sale of trust property the purchaser sued the trustor in a justice’s court for
unlawful detainer and alleged ownership by virtue of purchase at a trustee’s sale
regularly conducted, denial of such allegations put in issue title to the property and a
judgment which restored possession to such purchaser was sufficient adjudication of
title to render applicable the doctrine of res judicata. Bliss v. Security-First Nat’l Bank
(1947, Cal App) 81 Cal App 2d 50, 183 P2d 312, 1947 Cal App LEXIS 1021.
While the broad question of title cannot be raised in an unlawful detainer action, where
the action is brought under subd 4, the plaintiff must establish the sale of the property
and the title perfected under such sale before recovery can be allowed. Kelliher v.
Kelliher (1950, Cal App) 101 Cal App 2d 226, 225 P2d 554, 1950 Cal App LEXIS 1103.
Where purchaser at trustee’s sale proceeds in unlawful detainer under section, he must
prove his acquisition of title by purchase at sale but is not required to prove more with
respect to title. Abrahamer v. Parks (1956, Cal App 2d Dist) 141 Cal App 2d 82, 296 P2d
341, 1956 Cal App LEXIS 1814.
Under subd 3, title, to the extent required by this section, not only may, but must, be
tried in actions if provisions of statute extending remedy beyond cases where
conventional relation of landlord and tenant exist are to be judicially nullified. Kartheiser
v. Superior Court of Los Angeles County (1959, Cal App 2d Dist) 174 Cal App 2d 617,
345 P2d 135, 1959 Cal App LEXIS 1746.
Question of title is not triable in unlawful detainer action, but only question of right of
possession. Patapoff v. Reliable Escrow Service Corp. (1962, Cal App 2d Dist) 201 Cal
App 2d 484, 19 Cal Rptr 886, 1962 Cal App LEXIS 2618.
Broad questions of title may not be litigated in unlawful detainer action; though
purchaser at execution sale who proceeds in unlawful detainer action under provisions
of this section must prove his acquisition of title by purchase at sale, it is only to this
limited extent, as provided by statute, that title may be litigated in such proceeding.
Byrne v. Baker (1963, Cal App 2d Dist) 221 Cal App 2d 1, 34 Cal Rptr 178, 1963 Cal
App LEXIS 2099.
A proceeding for unlawful detainer is summary in character, and ordinarily, only claims
bearing directly on the right of immediate possession are cognizable. Also, crosscomplaints
and affirmative defenses, legal or equitable, are permissible only insofar as
they would, if successful, preclude removal of the tenant from the premises. As a
consequence, a judgment in unlawful detainer usually has very limited res judicata
effect and will not prevent one who is dispossessed from bringing a subsequent action
to resolve questions of title or to adjudicate other legal and equitable claims between
the parties. However, to the limited extent provided by CCP 1161a, subd. 3, providing
that a person who continues possession of real property may be removed where the
property has been duly sold and the title of the sale has been duly perfected, title may
be litigated in such a proceeding. Vella v. Hudgins (1977) 20 Cal 3d 251, 142 Cal Rptr
414, 572 P2d 28, 1977 Cal LEXIS 192.
In an unlawful detainer action against occupants of condominium units by a subsequent
purchaser from a purchaser at a foreclosure sale, pursuant to CCP 1161a, subd. (3),
questions of title unrelated to compliance with Civ. Code, 2924, concerning a power of
sale contained in a trust deed, and issues which would have been unavailable to the
occupants’ predecessor in interest, the maker of the trust deed, could not be raised as
defenses, but would have to be litigated in a quiet title action. Since such issues were
not cognizable in the unlawful detainer action, the judgment in that action would not be
res judicata as to those issues, nor would the pendency of the unlawful detainer action
be a bar to the simultaneous maintenance of a quiet title action. Evans v. Superior Court
(1977, Cal App 2d Dist) 67 Cal App 3d 162, 136 Cal Rptr 596, 1977 Cal App LEXIS
1215.
In an action for unlawful detainer, the trial court erred in dismissing the tenants’
affirmative defense that raised the issue of title, where the landlord had previously filed
an action seeking declaratory relief and quiet title thereby putting the title in issue.
Greenhut v. Wooden (1982, Cal App 2d Dist) 129 Cal App 3d 64, 180 Cal Rptr 786,
1982 Cal App LEXIS 1304.
Go to Topic List 6. Procedure
Adoption of specific findings on each detail of the proceeding for the sale of the property
under a deed of trust were not necessary, where the court found that the defendant,
who died pending the action, took a deed and possession with full knowledge that his
grantors had no title, that he was in unlawful possession, and had no right thereto at any
time. Stockton Morris Plan Co. v. Carpenter (1936, Cal App) 18 Cal App 2d 205, 63 P2d
859, 1936 Cal App LEXIS 191.
A judgment in unlawful detainer is res adjudicata in a subsequent suit to set aside a
trustee’s deed on the ground of irregularity in the foreclosure proceedings, where the
unlawful detainer action brought by the purchaser at the trust deed sale involved the
same issues which were determined in favor of the regularity of the foreclosure
proceedings and the validity of the deed. Seidell v. Anglo-California Trust Co. (1942, Cal
App) 55 Cal App 2d 913, 132 P2d 12, 1942 Cal App LEXIS 146.
It was improper to grant summary judgment in an unlawful detainer action instituted
under this section, where a supporting affidavit related facts concerning a transfer of title
not within the personal knowledge of the plaintiff concerning which he was incompetent
to testify. Kelliher v. Kelliher (1950, Cal App) 101 Cal App 2d 226, 225 P2d 554, 1950
Cal App LEXIS 1103.
Municipal court has jurisdiction of an unlawful detainer action by the purchaser at a
trustee’s sale against the trustor where the purchaser alleges the reasonable rental
value of the premises to be $100 a month and seeks damages for less than two
months. Karrell v. First Thrift of Los Angeles (1951, Cal App) 104 Cal App 2d 536, 232
P2d 1, 1951 Cal App LEXIS 1656.
Facts that owner of realty was not in default under trust deed executed by her, that the
note secured by such instrument had been fully paid, and that she had no notice that
property was to be sold were available to her as a defense in a prior unlawful detainer
action brought against her by a successor of the purchaser at a trust deed sale, and
having failed to appear in that action she is precluded from asserting such matters in a
subsequent suit instituted by her for a decree setting aside the deed from the trustee to
the original purchaser, the sale to such purchaser and his successor, and the judgment
in the unlawful detainer action. Freeze v. Salot (1954, Cal App) 122 Cal App 2d 561, 266
P2d 140, 1954 Cal App LEXIS 1085.
In summary proceeding of unlawful detainer, only the right to possession is involved, but
when purchaser at trustee sale proceeds under this section, title may be litigated to
limited extent that purchaser must prove his acquisition of title by purchase at sale.
Cruce v. Stein (1956, Cal App 2d Dist) 146 Cal App 2d 688, 304 P2d 118, 1956 Cal App
LEXIS 1522.
Go to Topic List 7. –Pleadings
Conclusions of law and not facts are stated by a complaint alleging that the plaintiff
became the owner in fee and entitled to the possession of the premises by virtue of a
sale under CC 2924, where nothing more about the deed and sale is alleged. American
Nat’l Bank v. Johnson (1932, Cal App Dep’t Super Ct) 124 Cal App 783, 124 Cal App 4th
Supp 783, 11 P2d 916, 1932 Cal App LEXIS 6.
Although a complaint is insufficient as a statement of facts to bring the case within CCP
1161 where the answer shows that the fact and validity of the sale under the deed of
trust is made an issue by the defendants, they cannot on appeal question the
sufficiency of the complaint. Harris v. Seidell (1934, Cal App) 1 Cal App 2d 410, 36 P2d
1104, 1934 Cal App LEXIS 1289.
Taking of the necessary steps to a valid sale is sufficiently alleged by a complaint under
subd 3 alleging that the plaintiff duly performed and caused to be performed all the
conditions on his part required by CC 2924, and by other applicable laws and
provisions of the deed of trust. San Jose Pacific Bldg. & Loan Asso. v. Corum (1934, Cal
App) 2 Cal App 2d 276, 37 P2d 866, 1934 Cal App LEXIS 1418.
A complaint based on subd 3, substantially in the language of the statute is sufficient.
Quinn v. Mathiassen (1935) 4 Cal 2d 329, 49 P2d 284, 1935 Cal LEXIS 547.
An allegation of due compliance with CC 2924 is sufficient without alleging compliance
in haec verba. Quinn v. Mathiassen (1935) 4 Cal 2d 329, 49 P2d 284, 1935 Cal LEXIS
547.
In action by lessee for damages for eviction, where it was obvious from allegations of
the complaint that the parties to the lease intended that the lessee should not be
disturbed in its possession and use of the premises by the foreclosure of a trust deed or
mortgage securing a bond issue, and the complaint alleged facts sufficient to show the
assertion of a paramount title and right to possession by the purchaser on foreclosure
under said deed of trust, the allegations of eviction were sufficient against demurrer.
Stillwell Hotel Co. v. Anderson (1935) 4 Cal 2d 463, 50 P2d 441, 1935 Cal LEXIS 569.
In action in unlawful detainer for rent and possession of property held in part by oral
agreement and in part under a written lease, there was no merit in the contention that
the property covered by the written lease was not sufficiently described in the complaint
where the description was sufficient to enable the appealing defendant to enter on the
same and make avail thereof, and, at the trial, said defendant testified that at all times
he understood what land was referred to both by the lease and the notice to pay or
surrender possession; and, under the circumstances, the addition in the lease of the
word “station,” after the name of a town near which the land was located, did not make
the description doubtful or imperfect. Mendoza v. Castiglioni (1936, Cal App) 14 Cal App
2d 710, 58 P2d 939, 1936 Cal App LEXIS 951.
A cause of action under subd 3 is stated by a complaint alleging that the property was
sold to the original plaintiff in accordance with the terms of a deed of trust executed by
the former owners, and in accordance with CC 2924, where a supplemental complaint
details the proceedings required by CC 2924, including notice of default. Stockton
Morris Plan Co. v. Carpenter (1936, Cal App) 18 Cal App 2d 205, 63 P2d 859, 1936 Cal
App LEXIS 191.
An allegation of due compliance with CC 2924, as authorized by 459, is not merely a
conclusion of law, but an allegation of fact which, if not denied, must be deemed to have
been admitted. Bank of America Nat’l Trust & Sav. Asso. v. McLaughlin Land &
Livestock Co. (1940, Cal App) 40 Cal App 2d 620, 105 P2d 607, 1940 Cal App LEXIS
150, cert den (1941) 313 US 571, 61 S Ct 958, 85 L Ed 1529, 1941 US LEXIS 686.
An unlawful detainer proceeding is summary in character, and use of cross-complaint in
such case would frustrate remedy and render it inadequate. Tide Water Associated Oil
Co. v. Superior Court of Los Angeles County (1955) 43 Cal 2d 815, 279 P2d 35, 1955
Cal LEXIS 387.
It is proper to sustain, without leave to amend, demurrer to a complaint seeking to set
aside a sale under a trust deed, based on alleged failure to comply with the legal
requirements as to notice, where the trust deed, which was made a part of the
complaint, discloses a provision making the recital in the trustee’s deed conclusive, and
where such deed, also made part of the complaint, recites that sale and notice complied
with the law. Pierson v. Fischer (1955, Cal App 3d Dist) 131 Cal App 2d 208, 280 P2d
491, 1955 Cal App LEXIS 2037.
Complaint in unlawful detainer against defaulting trustors of trust deed states facts
sufficient to constitute cause of action where it alleges that plaintiff, to whom property
was sold by trustee, “is owner and entitled to possession of,” property, and where there
is attached to complaint as exhibit a copy of trustee’s deed which recites that default
was made in payment due on note and obligation secured by trust deed specified them.
Abrahamer v. Parks (1956, Cal App 2d Dist) 141 Cal App 2d 82, 296 P2d 341, 1956 Cal
App LEXIS 1814.
In unlawful detainer action based on sale of property by defendants to plaintiff and
agreement to vacate property by specified date “if it is possible,” it is not necessary to
allege facts showing that it was possible for defendants to vacate premises by date set,
and complaint alleging that real property involved had been duly sold to plaintiff and title
under sale had been duly perfected, that plaintiff was entitled to possession, that threeday
notice to quit premises had been personally served on defendants, and that they
held over and continued in possession after three-day notice had been served, is
sufficient. Johnson v. Hapke (1960, Cal App 2d Dist) 183 Cal App 2d 255, 6 Cal Rptr
603, 1960 Cal App LEXIS 1746.
Go to Topic List 8. –Defenses
Equitable defense of cancellation of escrow and withdrawal of defendant’s consent to
transfer before made is properly raised in action by vendee for removal of vendor from
premises and award of damages for withholding possession. Kessler v. Bridge (1958,
Cal App Dep’t Super Ct) 161 Cal App 2d Supp 837, 327 P2d 241, 1958 Cal App LEXIS
1814.
Equitable defense of delivery of deed to plaintiff in violation of escrow is properly raised
in action by vendee for removal of vendor from premises and award of damages for
withholding possession. Kessler v. Bridge (1958, Cal App Dep’t Super Ct) 161 Cal App
2d Supp 837, 327 P2d 241, 1958 Cal App LEXIS 1814.
Equitable defense of failure of consideration is properly raised in action by vendee for
removal of vendor from premises and award of damages for withholding possession.
Kessler v. Bridge (1958, Cal App Dep’t Super Ct) 161 Cal App 2d Supp 837, 327 P2d
241, 1958 Cal App LEXIS 1814.
Equitable defense of fraud in inducement for relinquishment of property is properly
raised in action by vendee for removal of vendor from premises and award of damages
for withholding possession. Kessler v. Bridge (1958, Cal App Dep’t Super Ct) 161 Cal
App 2d Supp 837, 327 P2d 241, 1958 Cal App LEXIS 1814.
Equitable defense of rescission of transaction prior to suit is properly raised in action by
vendee for removal of vendor from premises and award of damages for withholding
possession. Kessler v. Bridge (1958, Cal App Dep’t Super Ct) 161 Cal App 2d Supp
837, 327 P2d 241, 1958 Cal App LEXIS 1814.
Equitable defense of unauthorized unilateral change in escrow instructions by plaintiff to
effect delivery of deed is properly raised, in action by vendee for removal of vendor from
premises and award of damages for withholding possession. Kessler v. Bridge (1958,
Cal App Dep’t Super Ct) 161 Cal App 2d Supp 837, 327 P2d 241, 1958 Cal App LEXIS
1814.
Summary proceeding in unlawful detainer is subject to control of equity in proper case;
hence, if defendant in such action possessed valid equitable rights in property that
would make it inequitable for plaintiff to proceed, defendant could, by seeking injunction
in quiet title suit pending between parties, prevent plaintiff from proceeding. Byrne v.
Baker (1963, Cal App 2d Dist) 221 Cal App 2d 1, 34 Cal Rptr 178, 1963 Cal App LEXIS
2099.
In an unlawful detainer action under CCP 1161a, subd. (3), by a subsequent purchaser
from a purchaser at a foreclosure sale, the subsequent purchaser may not claim the
status of a bona fide purchaser without notice against one in open and notorious
possession of the premises, so as to cut off defenses which would have been available
to the occupant against the original purchaser. Evans v. Superior Court (1977, Cal App
2d Dist) 67 Cal App 3d 162, 136 Cal Rptr 596, 1977 Cal App LEXIS 1215.
The statutory remedies for recovery of possession and of unpaid rent (CCP
1159-1179a; Civ. Code, 1951 et seq.) do not preclude a defense based on municipal
rent control legislation enacted pursuant to the police power imposing rent ceilings and
limiting the grounds for eviction for the purpose of enforcing those rent ceilings. Thus,
CCP 1161 (unlawful detainer), does not preempt a defense based upon local rent
control legislation. Also, since 1161 does not preempt such a defense, it follows that
CCP 1161a (removal of person holding over after notice to quit), does not preempt such
a defense. Accordingly, 1161a did not preempt that portion of a local rent stabilization
ordinance limiting the grounds for eviction. Passage of such legislation by a local
government was an exercise of police power which substantively placed a limitation on
an owner’s property rights. Gross v. Superior Court (1985, Cal App 1st Dist) 171 Cal
App 3d 265, 217 Cal Rptr 284, 1985 Cal App LEXIS 2408.
The county’s motion for summary judgment on plaintiff’s claim of excessive force in
evicting her should be granted, absent evidence the county had a policy or custom other
than to lawfully enforce writs of possession. Under CCP 1161a, a writ of possession
may be effectuated without a warrant; peace officers may obtain possession through
eviction under a valid writ of possession. Busch v. Torres (1995, CD Cal) 905 F Supp
766, 1995 US Dist LEXIS 19998.
Go to Topic List 9. –Evidence
To prevail, in action by vendee against vendor for removal of vendor from premises and
award of damages for withholding possession, plaintiff must prove affirmatively that
property was “duly sold” and that “the title under the sale has been duly perfected,” and,
contrary to rule applying to unlawful detainer where landlord-tenant relationship is
involved, title thus becomes issue. Kessler v. Bridge (1958, Cal App Dep’t Super Ct) 161
Cal App 2d Supp 837, 327 P2d 241, 1958 Cal App LEXIS 1814.
In unlawful detainer action, property involved is shown to have been duly sold by
defendants to plaintiff, within meaning of CCP 1161, by evidence that at request of
defendant husband, joined in by defendant wife as evidenced by her active
participation, both executed escrow constructions and grant deed conveying title to
plaintiff, and that no material representations were made by plaintiff to defendants
concerning escrow instructions, reconveyance of second trust deed, grant deed or
general agreement of parties. Johnson v. Hapke (1960, Cal App 2d Dist) 183 Cal App
2d 255, 6 Cal Rptr 603, 1960 Cal App LEXIS 1746.
In unlawful detainer action based on sale of property to plaintiff and agreement by
defendants to vacate premises by stated date “if it is possible,” such agreement
conditioned defendants’ performance on event that was within their control, placing
collateral duty on them to bring about happening of event of vacating premises within
reasonable time, and placing burden on them to show any reason why it was impossible
to vacate on or before agreed date, and where such burden was not fulfilled finding that
it was possible for defendants to vacate on or before agreed date was supported.
Johnson v. Hapke (1960, Cal App 2d Dist) 183 Cal App 2d 255, 6 Cal Rptr 603, 1960
Cal App LEXIS 1746.
In fixing plaintiff’s damages for unlawful detention of real property purchased at a nonjudicial
sale under a trust deed, the trial court did not err in considering, in part, the rents
received by defendant during the period of unlawful detention. The proper measure of
damages in an unlawful detainer action is the detriment to the owner because of the
detention of the property, and the detriment to plaintiff caused by defendant’s unlawful
detention was measurable in the amount of a reasonable rental value that plaintiff might
have realized had it not been denied possession. MCA, Inc. v. Universal Diversified
Enterprises Corp. (1972, Cal App 2d Dist) 27 Cal App 3d 170, 103 Cal Rptr 522, 1972
Cal App LEXIS 838

Self-Help Eviction: Don’t Even Think About It! Wrongful Foreclosure=Wrongful eviction

24 Jun

Posted on May 24, 2010 by Julie Brook

Here’s an all-too-common scenario these days: A property goes into foreclosure, the owner who buys the foreclosed property wants to evict the current tenants, who are living there lawfully. The owner decides to skirt the normal legal processes and engage in a self-help eviction. This is a very risky and potentially illegal course of action! Additionally when it is the lender evicting. If the foreclosure was Wrongful that makes the eviction Wrongful and substantial damages may be available as against the biggest banks in the world.

A self-help eviction can take many forms: changing the lock on a unit, adding a lock without providing keys to the tenant, cutting off utilities, and forcibly entering the rental unit and refusing to permit the tenant to reenter. These practices have one thing in common: to oust the tenant from possession without complying with the legal requirements for eviction.

California law is clear that an owner who has purchased property at a foreclosure sale cannot take possession after the foreclosure unless the occupants’ consent has been freely obtained or a judge has awarded possession following a court proceeding. See CCP §§1159-1179a. Also note that the law governing evictions after foreclosure is rapidly changing. In rent-controlled cities, the eviction of tenants of the borrower following foreclosure is prohibited unless the tenant defaults.

Unlawful self-help by a landlord or owner can result in

* Criminal penalties (see Pen C §§418, 602.5), and
* Actual and punitive damages (see Jordan v Talbot (1961) 55 C2d 597, 12 CR 488).

OwnerSecrets.com warns that self-help evictions can result in suits for the common law intentional torts of conversion, trespass to chattels, and trespass.

Self-help is never a good choice for evictions. Instead, evictions should always be handled through legal processes, generally by an unlawful detainer action, i.e., a fast, summary procedure that is generally limited to the issues of possession of the premises and associated damages.

On how to legally conduct a lawful eviction, see CEB’s online book Handling Unlawful Detainers and Landlord-Tenant Practice book (evictions following foreclosure are governed by both state and federal law and are covered in chap 8 of that book). On defending evictions, see CEB’s Eviction Defense Manual.

Also, check out our June programs on Representing Residential Landlords and Tenants in Unlawful Detainer Actions, which will be available On Demand beginning June 29th.

Challenges to Foreclosure Docs Reach a Fever Pitch

20 Jun

American Banker | Wednesday, June 16, 2010

By Kate Berry

Correction: An earlier version of this story misidentified the court
where Judge J. Michael Traynor presides. It is a Florida state court,
not a federal one. An editing error was to blame.

The backlash is intensifying against banks and mortgage servicers that
try to foreclose on homes without all their ducks in a row.

Because the notes were often sold and resold during the boom years, many
financial companies lost track of the documents. Now, legal officials
are accusing companies of forging the documents needed to reclaim the
properties.

On Monday, the Florida Attorney General’s Office said it was
investigating the use of “bogus assignment” documents by Lender
Processing Services Inc. and its former parent, Fidelity National
Financial Inc. And last week a state judge in Florida ordered a hearing
to determine whether M&T Bank Corp. should be charged with fraud after
it changed the assignment of a mortgage note for one borrower three
separate times.

“Mortgage assignments are being created out of whole cloth just for the
purposes of showing a transfer from one entity to another,” said James
Kowalski Jr., an attorney in Jacksonville, Fla., who represents the
borrower in the M&T case.

“Banks got away from very basic banking rules because they securitized
millions of loans and moved them so quickly,” Kowalski said.

In many cases, Kowalski said, it has become impossible to establish when
a mortgage was sold, and to whom, so the servicers are trying to
recreate the paperwork, right down to the stamps that financial
companies use to verify when a note has changed hands.

Some mortgage processors are “simply ordering stamps from stamp makers,”
he said, and are “using those as proof of mortgage assignments after the
fact.”

Such alleged practices are now generating ire from the bench.

In the foreclosure case filed by M&T in February 2009, the bank
initially claimed it lost the underlying mortgage note, and then later
claimed the mortgage was owned by First National Bank of Nevada, which
the Federal Deposit Insurance Corp. shut down in 2008, before the
foreclosure had been started.

M&T then claimed Wells Fargo & Co. owned the note, “contradicting all of
its previous claims,” according to Circuit Court Judge J. Michael
Traynor, who ordered the evidentiary hearing last week into whether M&T
perpetrated a fraud on the court.

“The court has been misled by the plaintiff from the beginning,” Judge
Traynor said in his order, which also dismissed M&T’s foreclosure action
with prejudice.

The Marshall Watson law firm in Fort Lauderdale, Fla., which represents
M&T in the case, declined to comment and the bank said it could not
comment.

In a notice on its website, the Florida attorney general said it is
examining whether Docx, an Alpharetta, Ga., unit of Lender Processing
Services, forged documents so foreclosures could be processed more
quickly.

“These documents are used in court cases as ‘real’ documents of
assignment and presented to the court as so, when it actually appears
that they are fabricated in order to meet the demands of the institution
that does not, in fact, have the necessary documentation to foreclose
according to law,” the notice said.

Docx is the largest lien release processor in the United States working
on behalf of banks and mortgage lenders.

Peter T. Sadowski, an executive vice president and general counsel at
Fidelity National in Fort Lauderdale, said that more than a year ago his
company began requiring that its clients provide all paperwork before
the company would process title claims.

Michelle Kersch, a spokeswoman for Lender Processing Services, said the
reference on the Florida attorney general’s website to “bogus
assignments” referred to documents in which Docx used phrases like
“bogus assignee” as placeholders when attorneys did not provide specific
pieces of information.

“Unfortunately, on occasion, incomplete documents were inadvertently
recorded before the missing information was obtained,” Kersch said. “LPS
regrets these errors and the use of this particular placeholder
phrasing.”

The company, which was spun off from Fidelity National two years ago, is
cooperating with the attorney general and conducting its own internal
investigation.

Lender Processing Services disclosed in its annual report in February
that federal prosecutors were reviewing the business processes of Docx.
The company said it was cooperating with that investigation.

“This is systemic,” said April Charney, a senior staff attorney at
Jacksonville Area Legal Aid and a member of the Florida Supreme Court’s
foreclosure task force.

“Banks can’t show ownership for many of these securitized loans,”
Charney continued. “I call them empty-sack trusts, because in the rush
to securitize, the originating lender failed to check the paper trial
and now they can’t collect.”

In Florida, Georgia, Maryland and other states where the foreclosure
process must be handled through the courts, hundreds of borrowers have
challenged lenders’ rights to take their homes. Some judges have
invalidated mortgages, giving properties back to borrowers while lenders
appeal.

In February, the Florida state Supreme Court set a new standard
stipulating that before foreclosing, a lender had to verify it had all
the proper documents. Lenders that cannot produce such papers can be
fined for perjury, the court said.

Kowalski said the bigger problem is that mortgage servicers are working
“in a vacuum,” handing out foreclosure assignments to third-party firms
such as LPS and Fidelity.

“There’s no meeting to get everybody together and make sure they have
their ducks in a row to comply with these very basic rules that banks
set up many years ago,” Kowalski said. “The disconnect occurs not just
between units within the banks, but among the servicers, their bank
clients and the lawyers.”

He said the banking industry is “being misserved,” because mortgage
servicers and the lawyers they hire to represent them in foreclosure
proceedings are not prepared.

“We’re tarring banks that might obviously do a decent job, and the banks
are complicit because they hired the servicers,” Kowalski said.

Tort damges for Wrongful Foreclosure

19 Jun

It will be interesting to see how the damages in tort cases develop with the holding in the Mabry case.The case holds that tender is not necessary. Most likely contract damages would be waived because the value of the property lost most likely is less than the loan. Soooo…. whats left tort damage. In tort what is the value of a case where the lender refuses to, and factually fails, to comply with 2923.5 and in good faith negotiate with a homeowner. Bad Faith ??? punitive ??? Class action tort ??? intentional infliction of emotional distress??? what’s more stressful than being evicted ??? I have one client who had to undress in front of a Marshall so she could be put out of her home !!!

Munger v. Moore (1970) 11 Cal.App.3d 1 , 89 Cal.Rptr. 323
[Civ. No. 25853. Court of Appeals of California, First Appellate District, Division One. September 3, 1970.]

MAYNARD MUNGER, JR., Plaintiff and Respondent, v. ROBERT MOORE, Defendant and Appellant

(Opinion by Molinari, P. J., with Sims and Elkington, JJ., concurring.) [11 Cal.App.3d 2]

COUNSEL

Bruce Oneto for Defendant and Appellant.

Field, DeGoff & Rieman and Sidney F. DeGoff for Plaintiff and Respondent. [11 Cal.App.3d 5]

OPINION

MOLINARI, P. J.

Defendant appeals from a judgment in the sum of $30,000 plus accrued interest entered in favor of plaintiff after a trial by the court upon a supplemental complaint for tortious damages for wrongfully effecting a trustee’s sale of a parcel of real property. fn. 1

The facts, essentially undisputed, are as follows: In 1959 defendant was the owner of a parcel of unimproved real property situated in Santa Clara County. Defendant exchanged such property with Mr. and Mrs. Atwill for a parcel in Los Angeles. The Atwills then sold the Santa Clara property to Geld, Inc. Geld gave the Atwills and defendant notes and executed a deed of trust as security. Defendant’s note was for $13,393.41, while the Atwills’ was for $36,606.59. Thus, the total encumbrance against the property was $50,000. Valley Title Company (hereinafter “Valley”), a codefendant below, was named trustee.

Geld, Inc. then granted the subject property to one Reichert. Reichert, who intended to build an apartment complex on the parcel, executed a second deed of trust in favor of Home Foundation Savings and Loan (hereafter “Home”) as security for a $283,000 building loan from the latter. Shortly thereafter, the Atwills and defendant agreed with Home to subordinate their deed of trust to that of Home. Accordingly, the Atwill-defendant deed of trust, although first in time, became second in priority.

Plaintiff then entered the picture by lending Reichert some $15,000 for construction of the apartment building. This loan was represented by a promissory note in the face value of $18,000 and was secured by a third deed of trust on the subject parcel. Shortly thereafter, plaintiff advanced an additional sum of $10,000 to Reichert to be used to defray costs in the construction of said apartment building. In exchange for this loan plaintiff received a grant deed to the property from Reichert, but gave Reichert an option to repurchase the property for the sum of $25,000.

Subsequently, the payments on the Atwill-defendant note became in default. Accordingly, defendant caused to be published a notice of default and intent to sell. Apprised of such default notice, plaintiff duly and timely tendered to Valley the sum of $4,000 representing the sum needed [11 Cal.App.3d 6] to cure the default. Contrary to its advice to defendant and based upon his insistence, Valley refused plaintiff’s tender. Defendant advised Valley that the note to Home, fn. 2 which was secured by the first deed of trust, was also in default and therefore plaintiff’s tender was an insufficient cure of the default. Accordingly, the trustee’s sale was had on May 22, 1963, and defendant, along with the Atwills, purchased the property at such sale for $57,920.94. Defendant held the property for several years and in 1965 “exchanged” the property for a price of $475,000.

On appeal defendant makes two contentions: (1) That the trial court used the wrong standard for measuring damages; and (2) that in any event there was no evidentiary support for the court’s finding as to damages. We observe here that no contention is made that damages may not be assessed where a trustee illegally, fraudulently or oppressively sells property under a power of sale contained in a deed of trust. We note that in California the traditional method by which such a sale is attacked is by a suit in equity to set aside the sale. (See Taliaferro v. Crola, 152 Cal.App.2d 448, 449-450 [313 P.2d 136]; Crummer v. Whitehead, 230 Cal.App.2d 264, 266, 268 [40 Cal.Rptr. 826]; Central Nat. Bank v. Bell, 5 Cal.2d 324, 328 [54 P.2d 1107].)

The only California case which has come to our attention involving an analogous situation is Murphy v. Wilson, 153 Cal.App.2d 132 [314 P.2d 507]. In that case the plaintiff and the defendant entered into an agreement whereby the defendant loaned $50,000 to the plaintiff who, pursuant to the agreement, placed a bill of sale to and chattel mortgage on certain personalty and a deed to his home in escrow and agreed that if he did not pay the sum of $75,000 to the defendant before a certain date the conveyances would go to the defendant. The defendant subsequently took possession of the property and sold it. The plaintiff then brought a declaratory relief action to have the conveyances adjudged to be mortgages. The trial court found that the agreement was in fact a mortgage loan and that since the defendant had not foreclosed the chattel mortgage and had sold the home outright he was liable to the plaintiff for damages. (At p. 134.) The reviewing court, although it disagreed with the computation of the damages, upheld the trial court’s determination that the plaintiff was entitled to damages. The appellate court held that the defendant had converted the property to his own use and that he was required to pay to the plaintiff the fair market value of the property converted as of the date he took it into his possession together with interest on the value of the property converted. (At pp. 135-136.) [11 Cal.App.3d 7]

In analyzing the holding in Murphy we observe that it makes no distinction between the real and personal property and holds that both had been converted. We note here that it is generally acknowledged that conversion is a tort that may be committed only with relation to personal property and not real property. (See Graner v. Hogsett, 84 Cal.App.2d 657, 662 [191 P.2d 497]; Reynolds v. Lerman, 138 Cal.App.2d 586, 591 [292 P.2d 559]; Vuich v. Smith, 140 Cal.App. 453, 455 [35 P.2d 365]; 48 Cal.Jur.2d, Trover and Conversion, § 8; but see Katz v. Enos, 68 Cal.App.2d 266, 269 [156 P.2d 461] where an action was brought for what was there stated as an action “to recover damages for the alleged wrongful conversion by her of 42 acres of land” and damages were assessed.) fn. 3

Since conversion is a tort which applies to personal property, we disagree with the Murphy case to the extent that it purports to indicate that there may be a conversion of real property. fn. 4 We are inclined, however, to believe that with respect to real property the Murphy case was articulating a rule that has been applied in other jurisdictions. [1] That rule is that a trustee or mortgagee may be liable to the trustor or mortgagor for damages sustained where there has been an illegal, fraudulent or wilfully oppressive sale of property under a power of sale contained in a mortgage or deed of trust. (See Davenport v. Vaughn, 193 N.C. 646 [137 S.E. 714, 716]; Sandler v. Green, 287 Mass. 404 [192 N.E. 39, 40]; Edwards v. Smith (Mo.) 322 S.W.2d 770, 776; Dugan v. Manchester Federal Sav. & Loan Assn., 92 N.H. 44 [23 A.2d 873, 876]; Harper v. Interstate Brewery Co., 168 Ore. 26 [120 P.2d 757, 764]; Black v. Burd (Tex. Civ. App.) 255 S.W.2d 553, 556; Holman v. Ryon (D.C. App.) 56 F.2d 307, 310-311; Royall v. Yudelevit, 268 F.2d 577, 580 [106 App. D.C. 1].) fn. 5 This rule of liability is also applicable in California, we believe, upon the basic principle of tort liability declared in the Civil Code that every person is bound by law not to injure the person or property of another or infringe on any of his rights. (Civ. Code, § 1708; see Dillon v. Legg, 68 Cal.2d 728 [69 Cal.Rptr. 72, 441 P.2d 912, 29 A.L.R.3d 1316].)

Accordingly, since the subject tort liability inures to the benefit of a [11 Cal.App.3d 8] mortgagor or trustor, it also inures to the benefit of the successor in interest to the trust property. [2] Pursuant to Civil Code section 2924c, such successor has the statutory right to cure a default of the obligation secured by a deed of trust or mortgage within the time therein prescribed. Plaintiff, therefore, as Reichert’s successor in interest in the trust property was entitled to tender the amount due to cure any default in the obligation to defendant and to institute the instant action for damages for the illegal sale which resulted from the failure to accept the timely tender.

Before proceeding to discuss the proper measure of damages we observe that in the instant case plaintiff has brought the instant action against both the trustee and the beneficiary of the deed of trust. [3] Since the trustee acts as an agent for the beneficiary, there can be no question that liability for damages may be imposed against the beneficiary where, as here, the trustee in exercising the power of sale is acting as the agent of the beneficiary. (See Davenport v. Vaughn, supra, 137 S.E. 714, 716; Edwards v. Smith, supra, 322 S.W.2d 770, 777.) In the instant case the trial court made unchallenged findings that the trustee Valley was acting as the agent for and pursuant to the instructions and directions of defendant and the Atwills, the beneficiaries of the subject deed of trust.

Adverting to the measure of damages we observe that defendant asserts that the proper measure in the instant case is that which applies to damages occasioned by the wrongful loss of security. fn. 6 In this context defendant argues that plaintiff has only suffered a loss of security for the promissory notes executed and delivered by Reichert to plaintiff. In essence defendant is contending that the deed absolute in form from Reichert to Plaintiff was in fact a mortgage because it was intended as security for a debt. (See Civ. Code, § 2924.) In considering this contention we note initially that the trial court found that plaintiff purchased the subject property from Reichert and that such purchase was evidenced by a grant deed given for a valuable consideration.

The record is silent as to whether the issue was tendered below that defendant had no standing to make the claim that the subject deed was in fact a mortgage. [4] As we apprehend the rule declaring that a deed absolute may be shown to have been intended as a mortgage, it applies only to the parties to the transaction and those claiming under them. (See Jackson v. Lodge, 36 Cal. 28, 40 [overruled on another ground by Hughes v. Davis, 40 Cal. 117]; Ahern v. McCarthy, 107 Cal. 382, 383-384 [11 Cal.App.3d 9] [40 P. 482]; Taylor v. McClain, 60 Cal. 651, 652; Bell v. Pleasant, 145 Cal. 410, 417-418 [78 P. 957]; 33 Cal.Jur.2d, Mortgages and Trust Deeds, §§ 54, 56 and 57.) Accordingly, Reichert and those claiming under him were entitled to assert that the deed was in fact a mortgage and that plaintiff acquired merely a lien. They could not, however, make this assertion against an innocent purchaser or encumbrancer from plaintiff since such purchaser or encumbrancer was entitled, on the theory of estoppel, to claim that he was the real owner of the property. (See Civ. Code, § 2925; Carpenter v. Lewis, 119 Cal. 18, 21 [50 P. 925]; Bell v. Pleasant, supra; Jackson v. Lodge, supra.) [5] Here defendant was not claiming under any of the parties to the subject transaction, but he was a stranger to it. Moreover, since defendant’s encumbrance was prior in time and superior to Reichert’s interest, defendant’s interest was unaffected by the transaction between Reichert and plaintiff.

Assuming arguendo that defendant has standing to challenge the nature of the deed from Reichert to plaintiff, our inquiry would be directed, in view of the court’s finding, to whether the subject instrument was in fact a deed and to whether this finding is supported by substantial evidence. We shall proceed to do so mindful that in making this determination our power begins and ends in ascertaining whether there is any substantial evidence, contradicted or uncontradicted, which will support the finding. (Green Trees Enterprises, Inc. v. Palm Springs Alpine Estates, Inc., 66 Cal.2d 782, 784 [59 Cal.Rptr. 141, 427 P.2d 805]; Brewer v. Simpson, 53 Cal.2d 567, 583 [2 Cal.Rptr. 609, 349 P.2d 289].)

[6] We first observe that Civil Code section 1105 provides that “A fee simple title is presumed to be intended to pass by a grant of real property, unless it appears from the grant that a lesser estate was intended.” This statute establishes a rebutable presumption. (Evid. Code, § 602.) Such presumption is one affecting the burden of proof since it is a presumption which, in addition to the policy of facilitating the trial of actions, is established to implement the public policy favoring the stability of titles to property. (See Evid. Code, § 604, and Law Revision Com. comment thereto.) [7] Accordingly, the effect of this presumption was to impose upon defendant the burden of proving the nonexistence of the presumed fact, i.e., that the grant deed conveyed a fee simple title to plaintiff. (See Evid. Code, § 606.) fn. 7 This burden required that defendant [11 Cal.App.3d 10] produce clear and convincing proof. (Beeler v. American Trust Co., 24 Cal.2d 1, 7 [147 P.2d 583]; Spataro v. Domenico, 96 Cal.App.2d 411, 413 [216 P.2d 32]; Cavanaugh v. High, 182 Cal.App.2d 714, 718 [6 Cal.Rptr. 525]; Borton v. Joslin, supra, 88 Cal.App. 515, 520 [263 P. 1033]; see Legislative Committee comment to Evid. Code, § 606.) [8] The question whether the evidence offered to change the ostensible character of the instrument carries that much weight is for the trial judge and not the court of review. (Beeler v. American Trust Co., supra; Cavanaugh v. High, supra; Spataro v. Domenico, supra.) “On appeal the question is governed by the substantial evidence rule like any other issue of fact.” (Cavanaugh v. High, supra, at p. 718; Beeler v. American Trust Co., supra; Borton v. Joslin, supra.)

[9] In the present case there is conflicting evidence on the cardinal issue of the intent of the parties in deeding the property. Although there was testimony that plaintiff took the grant deed as better security for his loan, plaintiff testified that when he made the second loan to Reichert, plaintiff, at Reichert’s instructions, paid the proceeds of the loan directly to the contractor who was constructing the apartment building; that Reichert gave plaintiff a grant deed which he recorded; and that Reichert’s indebtedness to plaintiff was cancelled. Under familiar appellate principles we must, where there is conflicting evidence, accept as established that evidence which is favorable to plaintiff. That evidence is sufficient to sustain the trial court’s finding upon the conclusion that defendant has failed to overcome by clear and convincing evidence the presumption which arises from the face of the deed. We note here that an important consideration is whether plaintiff’s notes evidencing the indebtedness from Reichert survived the conveyance. (See Borton v. Joslin, supra, 88 Cal. App. 515, 518; Cavanaugh v. High, supra, 182 Cal.App.2d 714, 718; Spataro v. Domenico, supra, 96 Cal.App.2d 411, 416.) Here, there was evidence adduced by plaintiff’s testimony that there was no survival of the indebtedness upon the execution and delivery of the grant deed. This circumstance is strongly indicative of a grant rather than a mortgage. (Beeler v. American Trust Co., supra, 24 Cal.2d 1, 17-18; Cavanaugh v. High, supra, 182 Cal.App.2d 714, 718; Workmon Constr. Co. v. Weirick, supra, 223 Cal.App.2d 487, 492.)

Having determined that plaintiff was not a security holder but the owner of the subject property, we proceed to inquire as to the proper standard for measuring plaintiff’s loss. In making this inquiry we first note that the trial court found that defendant, in instructing Valley to foreclose upon the subject real property, did so intentionally, wrongfully and pursuant to an intentional design with regard to plaintiff and that because of such conduct plaintiff lost all of his right, title and interest in [11 Cal.App.3d 11] said property, damaging plaintiff in the sum of $30,000. The trial court also found that the fair market value of the subject property on the date of the foreclosure was $30,000 more than the composite liens and encumbrances against it on that date.

Civil Code section 3333 provides that the measure of damages for a wrong other than breach of contract will be an amount sufficient to compensate the plaintiff for all detriment, foreseeable or otherwise, proximately occasioned by the defendant’s wrong. [10] In applying this measure it must be noted that the primary object of an award of damages in a civil action, and the fundamental theory or principle on which it is based is just compensation or indemnity for the loss or injury sustained by the plaintiff and no more. (Estate of De Laveaga, 50 Cal.2d 480, 488 [326 P.2d 129].) Accordingly, where a mortgagee or trustee makes an unauthorized sale under a power of sale he and his principal are liable to the mortgagor for the value of the property at the time of the sale in excess of the mortgages and liens against said property. fn. 8 (Murphy v. Wilson, supra, 153 Cal.App.2d 132, 135-136; Edwards v. Smith, supra, 322 S.W.2d 770, 777; Silver v. First Nat. Bank, 108 N.H. 390 [236 A.2d 493, 495]; Black v. Burd, supra, 255 S.W.2d 553, 556-557.) In Murphy this rule was applied when the court awarded the plaintiff his equity in the home sold by the defendant.

[11] We turn now to the question whether there was substantial evidence to support the trial court’s finding of damages. Defendant points out that the composite of the two prior encumbrances amounted to $411,562.74, that is, $352,562.74 plus $9,000 interest on the Home obligation and $50,000 on the defendant-Atwill obligation. This computation is conceded to be correct. It is defendant’s contention, therefore, that such aggregate sum exceeds the sum of $408,000 which plaintiff’s expert appraiser testified was the fair market value of the property. Accordingly, he argues that since this valuation was the highest appraisal and the fair market value of the property was less than the sum of encumbrances, there was no evidence to support the trial court’s finding that the fair market value at the time of the sale exceeded by $30,000 the sum of the outstanding encumbrances. This contention is without merit since it assumes that the trial court was bound to accept the valuation placed upon the property by plaintiff’s appraiser. We observe that although there was testimony by defendant’s [11 Cal.App.3d 12] appraiser that on the date of the foreclosure sale the fair market value of the property was $360,000 and that defendant himself testified that on said date said value was $400,000, there was also evidence from which the trial court could infer that on the subject date the fair market value of the property was approximately $450,000.

When defendant testified that the fair market value was $400,000 on the date of the foreclosure, he was cross-examined as to whether this was not in fact his valuation on the date of the recordation of the notice of completion of the apartment building, since in his deposition defendant had so testified. Defendant responded that the value on the date the notice of completion was recorded was approximately $350,000 and explained that in his deposition he understood the reference to the notice of completion to mean the completion of the building so that it was ready for occupancy. The trial court was not required to accept this explanation but was justified in believing that from the time the notice of completion was recorded and the foreclosure sale the value of the building had enhanced approximately $50,000. Moreover, the trial court was justified in believing, in the light of defendant’s experience, fn. 9 that when he testified that the value of the property was $400,000 at the time the notice of completion was filed he understood the meaning of “notice of completion.” Under the state of the record the trial court would have been justified in concluding that plaintiff’s equity was the difference between $450,000 and $411,562.74 or $38,437.26, and a finding to that effect would have been supportable. The trial court, however, found this equity to be the sum of $30,000 apparently on the basis that defendant’s valuations were approximations. fn. 10 Under the circumstances defendant cannot complain.

The judgment is affirmed.

Sims, J., and Elkington, J., concurred.

­FN 1. Defendant also appealed from that portion of the judgment in the sum of $4,500 entered in favor of defendant and cross-complainant Valley Title Company, a corporation. We have been advised that the matter has been settled with respect to Valley and that it is no longer a party to the proceedings. Defendant has not argued or presented any points with respect to any issues having to do with Valley. Accordingly, under the circumstances, although no formal dismissal as to Valley has been filed, we deem the appeal as to Valley abandoned. (See White v. Shultis, 177 Cal.App.2d 641, 648 [2 Cal.Rptr. 414].)

­FN 2. Home, in the meantime, had made an additional advance under the terms of the first deed of trust in the sum of $69,562.74, making the total sum loaned by Home $352,562.74.

­FN 3. Katz does not discuss whether the tort of conversion may be committed with relation to real property but apparently assumed that it was the subject of conversion since the issue was not tendered.

­FN 4. No petition for a hearing in the Supreme Court was made in the Murphy case.

­FN 5. We note that in 59 C.J.S., Mortgages, section 603, subdivision a, footnote 91 (1970 Cum. Annual Pocket Part) the Murphy case is cited as authority for this principle which is there stated thusly: “Where a sale by a mortgagee or by a trustee in a deed of trust is illegal, fraudulent, or willfully oppressive, the mortgagor may maintain an action for damages against the mortgagee or trustee, …” (At p. 1068.)

­FN 6. We observe in passing that as defendant properly asserts, the proper standard for wrongful deprivation of security is the fair market value at the time of sale less outstanding encumbrances and/or taxes due at such time, not in any event to exceed the amount due plaintiff on his loans. (See Howe v. City Title Ins. Co., 255 Cal.App.2d 85, 87 [63 Cal.Rptr. 119]; Stephans v. Herman, 225 Cal.App.2d 671, 673-674 [37 Cal.Rptr. 746].)

­FN 7. A deed absolute on its face may be shown to be a mortgage by parol evidence of such contradictory intent. (Workmon Constr. Co. v. Weirick, 223 Cal.App.2d 487, 490 [36 Cal.Rptr. 17]; Greene v. Colburn, 160 Cal.App.2d 355, 358 [325 P.2d 148]; Borton v. Joslin, 88 Cal.App. 515, 520 [263 P. 1033]; see Civ. Code, §§ 1105, 2925.)

­FN 8. We observe here that this is the same measure of damages for loss of security urged by defendant, except that in such case the damages may not exceed the amount due on the note for which the real property was security. (Stephans v. Herman, supra, 225 Cal.App.2d 671, 673-674; Howe v. City Title Ins. Co., supra, 255 Cal.App.2d 85, 87.) It would appear that even under this theory plaintiff could recover damages up to $28,000, the amount of plaintiff’s notes, if that sum exceeded the fair market value of the real property security, less prior liens and taxes.

­FN 9. The record discloses that defendant had a law school degree.

­FN 10. In testifying to the $400,000 and $350,000 valuations, defendant stated “These are both rough guesses.” Although defendant used the term “guesses” it is obvious from his testimony generally that he equated the term “guess” to an opinion.

MABRY tip no injunction needed to stop foreclosure TERRY MABRY et al., opinion 2923.5 Cilvil code

12 Jun

The court in Mabry

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