Gator Bradshaw and the BASICS

CASE INTERPRETATION BY ATTORNEY NEIL GARFIELD of livinglies:
“The real party in interest in relief from stay is whoever is entitled to enforce the obligation
sought to be enforced. Even if a servicer or agent has authority to bring the motion on
behalf of the holder, it is the holder, rather than the servicer, who must be the moving
party, and so identified in the papers and in the electronic docketing done by the moving
party’s counsel.”
For 2 years I have been saying “stick with the basics.” Black Letter Law will set you free. But
time and again attorneys, pro se litigants and judges go astray and find themselves in never-never
land. Most attorneys and Judges take preliminary motions with a grain of salt. Virtually all
foreclosures would be eliminated if lawyers and judges paid attention to the very beginning of
the case. Gator Bradshaw in Florida delivers a nice piece at our seminar on motion practice.
Your job is to immediately focus the Judge’s attention on the fatal defects presented by the
actions of the intermediaries in the securitization process and more specifically, whoever is
attempting to foreclose. By failing to challenge this at the outset you have effectively waived the
issue and now face an uphill battle. This case reported below shows that a mere objection from
the Trustee in BK Court caused the entire claim of the forecloser to completely collapse.
Seven (7) months ago, before any of the landmark decisions reported on these pages, Federal
Bankruptcy Judge Myers in Idaho was presented with an objection from the Trustee to Motion
for Relief From Stay.
The fact that the Trustee took up the cause is reason enough to note this case. What the Court did
with it, in an articulate, well-reasoned memorandum of decision, is nothing short of startling in
its clarity.
One by one, this Judge takes down the arguments and tactics of the intermediaries in the
securitization chain and basically says that none of them has a right to make a claim.
In short, just as in these pages, the Judge doesn’t say who CAN assert and enforce the claim; he
just says that none of these nominees, intermediaries, conduits, bookkeepers, servicers, MERS,
or pretender lenders has any pecuniary interest in the outcome and therefore they lack standing to
be in court. On jurisdictional grounds, therefore, the case is closed and these interlopers are
thrown out of court. Will the REAL Lender please stand up? Maybe, maybe not.
The Judge points out that “The Motion further alleges that Debtors were indebted at filing “to
Movant” and that the debt arose out of a promissory note and a deed of trust dated September 20,
2006 “naming Movant as beneficiary.”
Judge Myers calmly and correctly points out that this was a total lie. When pressed, the
attorney acknowledged that the movant was not owed any money and that MERS was
merely an agent for an undisclosed principal for an undisclosed purpose acting
purportedly for the real party in interest. But the Judge says quite clearly and correctly
that the rules require the real party in interest to be the movant.
This Judge also addresses the issue of burden of proof, a sticking point for many readers of this
blog. He states that the burden is on the movant to prove standing, not on the homeowner or
petitioner to prove lack of standing. In fact, pointing to the rules again, he says that the pleading
must “[p]rovide the details of the underlying obligation or liability upon which the motion
is based;”
In a stroke of his pen, this Judge ends the issue over who has the burden of proof and even
provides grounds BEFORE DISCOVERY for dumping fraudsters out of court. They must plead
the allegations, and they must attach documentation that shows their pleadings are true and
correct.
This Judge is telling fraudsters to stop coming to court with attorney affidavits that are not
evidence (see his memorandum) and to stop submitting affidavits, notes, revisions to notes, late
indorsements, assignments that don’t match up with the pleadings or the requirements of
pleading.
Edited by MSFraud.org
1 All chapter and section references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532,
unless otherwise indicated.
2 In 2008, this Court saw over 2,300 stay relief motions in the 5,224 cases filed.
3 See Local Bankruptcy Rule 4001.2 (addressing substantive and procedural
requirements for stay relief motions, and providing for entry of orders upon absence of objection
after notice).
MEMORANDUM OF DECISION – 1
UNITED STATES BANKRUPTCY COURT
DISTRICT OF IDAHO
IN RE )
) Case No. 08-20381-TLM
DARRELL ROYCE SHERIDAN, )
SHERRY ANN SHERIDAN, )
) Chapter 7
Debtors. )
________________________________ )
MEMORANDUM OF DECISION
________________________________________
INTRODUCTION
In this Chapter 7 case, the trustee, Ford Elsaesser (“Trustee”), objects to a
motion under § 362(d) for relief from the § 362(a) automatic stay.1 Motions under
§ 362(d) are common in bankruptcy cases.2 Most stay relief requests proceed
promptly to entry of an order, after proper notice, without any objection.3
However, changes in mortgage practices over the past several years have
created a number of new issues. The one highlighted in this case is the standing of
4 There was no objection, and the exemption was therefore allowed. Taylor v. Freeland
& Kronz, 503 U.S. 638, 643-44 (1992); Rainsdon v. Farson (In re Farson), 387 B.R. 784, 797
(Bankr. D. Idaho 2008). Debtors indicated in their § 521 statement of intention that they would
(continued…)
MEMORANDUM OF DECISION – 2
the moving creditor. Serial assignments of the mortgagee’s interest(s) and the
securitization of mortgages have complicated what was previously a generally
straight-forward standing analysis. Though many creditors provide in their
motions adequate explanation and documentation of their standing to seek relief
on real estate secured debts, Trustee challenges the adequacy of the subject motion
in this case.
Following hearing and consideration of the arguments of the parties, the
Court determines that Trustee’s objection is well taken and the same will be
sustained. The motion for stay relief will be denied.
BACKGROUND AND FACTS
On June 24, 2008, Darrell and Sherry Ann Sheridan (“Debtors”) filed their
joint chapter 7 bankruptcy petition, schedules and statements. They scheduled a
fee ownership interest in a residence located in Post Falls, Idaho. See Doc. No. 1
at sched. A (the “Property”). Debtors asserted the Property’s value was
$225,000.00. Id. They indicated secured claims existed in favor of “Litton Loan
Servicing” ($197,000.00) and “Citimortgage” ($34,000.00). Id. at sched. D.
While this left no apparent equity in the Property, Debtors nevertheless claimed
the benefit of an Idaho homestead exemption. Id. at sched. C.4
4 (…continued)
reaffirm the secured debts on the Property.
5 Closing of the case as a no asset chapter 7 would constitute an abandonment of the
Property as a scheduled but not administered asset, see § 554(c), and the automatic stay would
terminate, see § 362(c)(1).
6 Mortgage Electronic Registration Systems, Inc. refers to itself, and is generally referred
to by others and in the case law, as “MERS.”
MEMORANDUM OF DECISION – 3
The § 341(a) meeting of creditors occurred on July 31, 2008. Debtors
received a discharge on October 3, 2008. While the case was noticed to creditors
as a “no asset” chapter 7, and though Trustee concedes there will be no anticipated
distribution to creditors, Trustee has not yet filed his final report of no distribution
which would allow the case to close.5
On October 16, 2008, the subject motion for relief from stay was filed. See
Doc. No. 21 (the “Motion”). It was filed by “Mortgage Electronic Registration
Systems, Inc. as nominee HSBC Bank USA, National Association, as Indenture
Trustee of the Fieldstone Mortgage Investment Trust Series 2006-3.” Id. at 1 (the
“Movant”).6 The Movant characterized itself as a “secured creditor and
Claimant.” Id. The Motion further alleges that Debtors were indebted at filing “to
Movant” and that the debt arose out of a promissory note and a deed of trust dated
September 20, 2006 “naming Movant as beneficiary.” Id.
Attached to the Motion is a promissory note (the “Note”) executed by
Debtors. It is payable to “Fieldstone Mortgage Company” as the “Lender.” See
7 The documents attached to the Motion were admitted into evidence at the final hearing,
by stipulation of the parties, as “Exhibit 1.”
8 A “final hearing” is contemplated under § 362(d) and (e). That it would be an
evidentiary hearing is a result of the presence of material, disputed facts, which under Fed. R.
Bankr. P. 9014(d) requires testimony in the same manner as in an adversary proceeding.
MEMORANDUM OF DECISION – 4
Ex. 1.7 A portion of the Note states: “I understand Lender may transfer this Note.
Lender or anyone who takes this Note by transfer and who is entitled to receive
payments . . . is called the Note Holder.”
The Note is secured by a deed of trust dated September 20, 2006 and
recorded in the real property records of Kootenai County, Idaho, on September 22,
2006 (the “Deed of Trust”). The Deed of Trust at paragraph (C) identifies and
defines the “Lender” as “Fieldstone Mortgage Company, a Maryland corporation.”
Paragraph (E) of the Deed of Trust recites:
MERS is a separate corporation that is acting solely as nominee for
Lender and Lender’s successors and assigns. MERS is the beneficiary
under this Security Instrument.
Ex. 1.
Trustee objected to the Motion, contending that the Movant failed to
establish its interest in the Property or its standing to seek stay relief. Doc. No. 23.
At a preliminary hearing on November 4, 2008, the parties requested a final
hearing because the question of standing remained unresolved.8 A final hearing
was held on December 16, 2008, at which Trustee and counsel for Movant made
argument, but no evidence was presented other than the documents that, as noted
9 The Code establishes time frames for preliminary hearing, final hearing and ruling.
See § 362(e)(1), (2). In this case, the Motion was originally filed October 16, 2008. Under
§ 362(e)(2), the stay generally “shall terminate on the date that is 60 days after a request is made
by a party in interest” if the case is one under chapters 7, 11 or 13 and the debtor is an individual.
However, that period may be extended by either agreement of the parties or by the Court for good
cause. See § 362(e)(2)(B). Here, the scheduling of the hearings resulted in a final hearing on
December 16, 2008, about the 60th day after the request. This delay was by or with concurrence
of the parties. The Court concludes that additional delay to the date of this Decision was required
to address the contentions of the parties.
10 Another ground for stay relief with respect to acts against property is an absence of
equity in such property coupled with a lack of necessity of such property for an effective
reorganization. See § 362(d)(2). The Motion indicated a lack of equity in the Property and, in
light of the fact that this is a chapter 7 liquidation, the Property is not required for reorganization.
MEMORANDUM OF DECISION – 5
above, were admitted by agreement.9
DISCUSSION AND DISPOSITION
A. Stay relief requires a motion by a party in interest with standing
The Bankruptcy Code, Bankruptcy Rules and this District’s local rules
govern stay relief requests.
Under the Code, relief from the § 362(a) stay is authorized “[o]n request of
a party in interest and after notice and a hearing, . . . .” See § 362(d) (emphasis
added). See also § 362(e)(1) and (2), § 362(f), § 362(j) (all referring to requests
made by a “party in interest.”) One ground for stay relief is “cause, including the
lack of adequate protection of an interest in propertyof such party in interest[.]”
§ 362(d)(1) (emphasis added). The Motion here alleged “cause” based on
delinquent payments, see Doc. No. 21 at 2, thus implicating § 362(d)(1) even
though no specific citations to § 362(d)(1) are made.10
MEMORANDUM OF DECISION – 6
The Rules require that a stay relief request be made by a motion. See Fed.
R. Bankr. P. 9013 (“A request for an order, except when an application is
authorized by these rules, shall be by written motion, unless made during a
hearing.”) (emphasis added); Fed. R. Bankr. P. 4001(a)(1) (“A motion for relief
from an automatic stay provided by the Code . . . shall be made in accordance with
Rule 9014[.]”) (emphasis added).
In addition to the Bankruptcy Rules, this District’s local rules require, inter
alia, that:
– the request shall be made by a “party in interest” and by “motion;”
– the motion shall “[p]rovide the details of the underlying obligation or
liability upon which the motion is based;” and
– the motion shall have attached “accurate and legible copies of all
documents evidencing the obligation and the basis of perfection of
any lien or security interest[.]”
LBR 4001.2(a), (b)(2), and (b)(5).
1. Party in interest, and standing
While the term “party in interest” is not defined by the Code, this Court has
held that such a party must have a “pecuniary interest” in the outcome of the
dispute before the Court. See In re Simplot, 2007 WL 2479664 at *9 n.45 (Bankr.
D. Idaho Aug. 28, 2007) (citing In re Elias, 05.2 I.B.C.R. 41, 42, 2005 WL
4705220 (Bankr. D. Idaho 2005), and In re Stone, 03.2 I.B.C.R. 134, 135 (Bankr.
MEMORANDUM OF DECISION – 7
D. Idaho 2003)). See also Brown v. Sobczak (In re Sobczak), 369 B.R. 512, 517-
18 (9th Cir. BAP 2007) (noting that a “party in interest” may be one who has an
actual pecuniary interest in the case, one who has a practical stake in the outcome
of the case, or one who will be impacted in any significant way in the case).
Simplot not only defined party in interest, it addressed “standing” issues.
The question there was whether the J. R. Simplot Company, which was not a
creditor with a claim against the debtor or estate, “had sufficient party in interest
standing to be heard[.]” 2007 WL 2479664 at *9. This Court stated:
Hasso v. Mozsgai (In re La Sierra Fin. Servs.), 290 B.R. 718 (9th Cir.
BAP 2002), explained that the doctrine of standing encompasses both
constitutional limitations on federal court jurisdiction (i.e., the case or
controversy requirements of Article III), and prudential limitations on
the court’s exercise of that jurisdiction. Constitutional standing
requires an injury in fact, viz. an invasion of a judicially cognizable
interest. 290 B.R. at 726-27. Prudential standing requires that the
party’s assertions fall within the zone of interests protected by the
statute and, further, requires that the litigant assert only its own rights
and not those of another party. Id. at 727 (citing Bennett v. Spear, 520
U.S. 154, 162, 167-68 (1997). The party asserting standing exists has
the burden of proving it. Id. at 726. Though sometimes articulated in
the cases as principles applicable to standing on appeal, the same
propositions apply to a party at the bankruptcy court level.
Id. (footnote citations omitted). In Simplot, the Court concluded that “parties may
not assert . . . objections that relate solely to others, or that go to issues that do not
directly and adversely affect them pecuniarily.” Id. at *10 (footnote citations
omitted). These same standing requirements were recently highlighted in a stay
relief context by the court in In re Jacobson, ___ B.R. ___, 2009 WL 567188 at
MEMORANDUM OF DECISION – 8
*5-6 (Bankr. W.D. Wash. Mar. 6, 2009).
2. Real party in interest
Under Rule 9014, which by virtue of Rule 4001(a)(1) governs stay relief
requests, certain “Part VII” rules are applicable. See Rule 9014(c). Among those
incorporated rules is Rule 7017, which in turn incorporates Fed. R. Civ. P. 17, and
Rule 17(a)(1) provides that “An action must be prosecuted in the name of the real
party in interest.”
Jacobson notes that its moving party, who claimed to be a servicer for the
holder of the note, “neither asserts beneficial interest in the note, nor that it could
enforce the note in its own right.” 2009 WL 567188 at *4. It concluded that Fed.
R. Civ. P. 17 applied, requiring the stay relief motion to be brought in the name of
the real party in interest. Id. (citing In re Hwang, 396 B.R. 757, 767 (Bankr. C.D.
Cal. 2008)); see also In re Vargas, 396 B.R. 511, 521 (Bankr. C.D. Cal. 2008). As
Jacobson summarized:
The real party in interest in relief from stay is whoever is entitled to
enforce the obligation sought to be enforced. Even if a servicer or
agent has authority to bring the motion on behalf of the holder, it is the
holder, rather than the servicer, which must be the moving party, and
so identified in the papers and in the electronic docketing done by the
moving party’s counsel.
Id.
The upshot of these several provisions of the Code, Rules, local rules and
case law is this: to obtain stay relief, a motion must be brought by a party in
interest, with standing. This means the motion must be brought by one who has a
11 The Ninth Circuit’s recent decision in Reusser v. Wachovia Bank, 525 F.3d 855 (9th
Cir. 2008) does not require a different conclusion. Reusser held that a lender, Wachovia Bank,
did not violate the automatic stay by seeking to foreclose on the debtors’ property after the
bankruptcy court granted the loan servicer’s (Washington Mutual) § 362(d) motion. Id. at 861-
62. Although Wachovia did not join in the motion or separately seek stay relief, the court held
that the order entered “as to Washington Mutual” was effective as to Wachovia. Id. at 857, 861.
Notably, however, the Reussers never challenged Washington Mutual’s standing in bankruptcy
court; instead, they launched that attack in a subsequently filed district court action. Id. at 861-
62. The Ninth Circuit held that “a final order lifting an automatic stay is binding as to the
property or interest in question—the res—and its scope is not limited to the particular parties
before the court.” Id. at 861. The difference here is that Trustee has timely objected to Movant’s
standing and, of course, no final order has been entered.
MEMORANDUM OF DECISION – 9
pecuniary interest in the case and, in connection with secured debts, by the entity
that is entitled to payment from the debtor and to enforce security for such
payment. That entity is the real party in interest. It must bring the motion or, if
the motion is filed by a servicer or nominee or other agent with claimed authority
to bring the motion, the motion must identify and be prosecuted in the name of the
real party in interest.11
B. The present Motion
Under the documents attached to the Motion and later admitted at hearing
as Ex. 1, Fieldstone Mortgage Company, a Maryland corporation, would certainly
appear to be a party in interest and have standing. It has an economic interest
according to the Note attached to the Motion and an interest in Debtors’ Property
according to the Deed of Trust that is also attached.
However, the Motion was not brought by Fieldstone Mortgage Company.
12 Idaho Code § 45-1502(1) defines beneficiary for purposes of the trust deed statute as
“the person named or otherwise designated in a trust deed as the person for whose benefit a trust
deed is given, or his successor in interest, and who shall not be the trustee.” Idaho Code § 45-
1502(3) defines trust deed as “a deed executed in conformity with this act and conveying real
property to a trustee in trust to secure the performance of an obligation of the grantor or other
person named in the deed to a beneficiary.” Id. (emphasis added).
MEMORANDUM OF DECISION – 10
1. MERS as “nominee” or “beneficiary”
Counsel for Movant argues that MERS, given its titular designation of
“beneficiary” under the Deed of Trust, is or should be able to prosecute the
Motion under the Code, Rules and Local Rules. Counsel conceded, however, that
MERS is not an economic “beneficiary” under the Deed of Trust. It is owed and
will collect no money from Debtors under the Note, nor will it realize the value of
the Property through foreclosure of the Deed of Trust in the event the Note is not
paid.12
Further, the Deed of Trust’s designation of MERS as “beneficiary” is
coupled with an explanation that “MERS is . . . acting solely as nominee for
Lender and Lender’s successors and assigns.” Ex. 1 (emphasis added). Movant’s
briefing suggests that a “nominee” is synonymous with an “agent.” See Doc. No.
26 at 2.
The Motion was filed by MERS “as nominee [for] HSBC Bank USA,
National Association, as Indenture Trustee of the Fieldstone Mortgage Investment
Trust Series 2006-3.” Even assuming that MERS as a “nominee” had sufficient
rights and ability as an agent to advance its principal’s stay relief request, there
13 The Motion uses several terms (Movant, Claimant, Petitioner) without definition or
evident consistency. The Motion commenced as follows:
“COMES NOW Mortgage Electronic Registration Systems, Inc. as nominee
HSBC Bank USA, National Association, as Indenture Trustee of the Fieldstone
Mortgage Investment Trust Series 2006-3, a secured creditor and Claimant
herein, and moves the Court for its Order granting relief from the automatic
stay[.]”
Thus, the “Claimant” and evidently the “Movant” (i.e., the party who “COMES NOW . . . and
moves”) are one and the same, and this entity also purports to be a “secured creditor.” Since
MERS is acting as nominee, the Claimant/Movant and secured creditor appears by these
allegations to be HSBC Bank USA (in its role as indenture trustee for others). The Motion
continues by asserting that “Debtor was on the date of filing the petition herein, indebted to
Claimant arising out of [the Note] and a Deed of Trust dated September 20, 2006, naming
Movant as beneficiary.” Contrary to these assertions, the Deed of Trust does not name HSBC
Bank USA or the Fieldstone Mortgage Investment Trust as its beneficiary. Nor is there
explanation of how Debtors came to owe HSBC Bank USA.
14 This language appears in the Deed of Trust only. There is no mention of MERS in the
Note.
MEMORANDUM OF DECISION – 11
remains an insuperable problem. The Motion provides no explanation, much less
documentation or other evidence, to show that the Fieldstone Mortgage
Investment Trust Series 2006-3 (as an entity) or HSBC Bank USA (as that entity’s
“indenture trustee”) has any interest in the subject Note or the subject Deed of
Trust.13
In light of Trustee’s objection on this score, Movant argues that MERS’
role as “nominee for Lender [i.e., Fieldstone Mortgage Company] and Lender’s
successors and assigns” gives it ample authority to assert the stay relief request
under the Deed of Trust for whatever successor in interest or assignee might have
the beneficial interest.14 Even if the proposition is accepted that the Deed of Trust
15 Some courts have indicated that the stay relief request should explain the serial
assignments resulting in the movant becoming the holder of the note. See, e.g., In re Hayes, 393
B.R. 259, 269 (Bankr. D. Mass. 2008) (“The Court and the Debtor are entitled to insist that the
moving party establish its standing in a motion for relief from stay through the submission of an
accurate history of the chain of ownership of the mortgage.”); In re Maisel, 378 B.R. 19, 22
(Bankr. D. Mass. 2007) (“‘If the claimant acquired the note and mortgage from the original lender
or from another party who acquired it from the original lender, the claimant can meet its burden
through evidence that traces the loan from the original lender to the claimant.’”) (quoting In re
(continued…)
MEMORANDUM OF DECISION – 12
provisions give MERS the ability to act as an agent (“nominee”) for another, it
acts not on its own account. Its capacity is representative.
2. Documentation
This District’s Local Bankruptcy Rule 4001.2 requires copies of “all
documents evidencing the obligation and the basis of perfection of any lien or
security interest.” The sole documentation provided with the Motion here
evidences the interests in the Note and Deed of Trust held by Fieldstone Mortgage
Company, a Maryland corporation. This submission does not answer the key
question — Who was the holder of the Note at the time of the Motion?
Several movants for stay relief have argued that the holder of a note secured
by a deed of trust obtains the benefit of the deed of trust even in the absence of an
assignment of the deed of trust, on the theory that the security for the debt follows
the debt. Under this theory, it would appear that when bankruptcy intervenes, and
somewhat like a game of Musical Chairs, the then-current holder of the note is the
only creditor with a pecuniary interest and standing sufficient to pursue payment
and relief from stay.15
15 (…continued)
Parrish, 326 B.R. 708, 720 (Bankr. N.D. Ohio 2005)). The court in Jacobson decided that it
“need not here go so far” as to require such tracing, because of the paucity of proof presented in
that case. 2009 WL 567188 at *6. The same is true here. Movant’s proof does not even show
who presently holds the Note. That alone provides sufficient basis to deny the Motion.
MEMORANDUM OF DECISION – 13
The Motion here certainly suggests that the Fieldstone Mortgage
Investment Trust Series 2006-3 (or perhaps HSBC Bank USA in its capacity as
indenture trustee for that trust) was the holder of the note on the June 24, 2008,
petition date. But at the time of the final § 362(e) evidentiary hearing herein, the
parties discussed and Movant ultimately conceded that (I) the Note contained
nothing indicating its transfer by Fieldstone Mortgage Company, (ii) the Motion
was devoid of allegations regarding the details of any such transfer, and (iii) the
record lacked any other documents related to the issue.
3. The supplemental affidavit
Subsequent to the closing of the hearing and after the Court took the
dispute under advisement, Movant filed a “supplemental affidavit” of its counsel.
See Doc. No. 28 (filed January 2, 2009). This affidavit alleges that Movant’s
counsel obtained on such date the “original” Note and that the same contains an
indorsement. Counsel states that his “affidavit is presented to supplement the
record herein and for the Court’s consideration in the pending motion[.]” Id. at 2.
The filing and consideration of this supplemental affidavit are improper for
several reasons.
16 Accord Jacobson, 2009 WL 567188 at *6-8 (discussing inadequacies of evidentiary
submissions).
MEMORANDUM OF DECISION – 14
First, the record was closed, and the Court did not authorize the reopening
of that record, nor did it indicate any post-hearing submissions would be accepted.
Second, Trustee did not have the opportunity to address this “newly
obtained” document at hearing, and nothing shows his consent to the post hoc
supplementation of the evidentiary record.
Third, disputed factual issues in contested matters may not be resolved
through testimony in “affidavits” but rather require testimony in open court. See
Fed. R. Bankr. P. 9014(d). Under the circumstances, the identity of the holder of
the Note certainly appears to be a fact in dispute falling within the ambit of this
rule.
Fourth, the affidavit is insufficient to establish that counsel, as affiant, has
the ability to testify regarding or lay the foundation required to admit the
document. See Esposito v. Noyes (In re Lake Country Invs., LLC), 255 B.R. 588,
594-95 (Bankr. D. Idaho 2000).16 The assertion that the newly possessed note is
the “original” appears to be based not on the affiant’s (counsel’s) personal
knowledge but on the assertions of someone else.
Fifth, the proffer of this “new” note as the “original” note directly
contradicts Movant’s prior representations that the Note attached to the Motion
17 See generally Idaho Code § 28-3-205(2) (“When indorsed in blank, an instrument is
payable to the bearer and may be negotiated by transfer of possession alone until specially
indorsed.”); § 28-3-301 (providing that the holder of the instrument may enforce it). These
provisions make identification of the current holder significant.
MEMORANDUM OF DECISION – 15
was “true and correct” and the operative document in this matter. See Doc. No. 21
at 1.
Sixth, even were it considered, the “new” Note’s asserted indorsement
states: “Pay To The Order Of [blank] Without Recourse” and then purports to be
signed by Fieldstone Mortgage Company through a named assistant vice
president. There is no date nor indication of who was or is the transferee.
Fieldstone Mortgage Company may have indorsed the Note in blank, but this
document does not alone establish that either HSBC Bank USA or Fieldstone
Mortgage Investment Trust is the Note’s holder.17
Thus, even if a “nominee” such as MERS could properly bring a motion for
stay relief in the name of and on behalf of the real party in interest – the entity that
has rights in and pecuniary interest under the Note secured by the Deed of Trust –
nothing of record adequately establishes who that entity actually is. Under the
evidence submitted at the § 362(e) final hearing, which consists solely of Exhibit
1, the only entity that MERS could conceivably represent as an agent/nominee
would be Fieldstone Mortgage Company. But MERS does not represent that party
according to the Motion and, in fact, its contentions are to the effect that
18 For this reason, Movant’s reliance on In re Huggins, 357 B.R. 180 (Bankr. D. Mass.
2006) is misplaced. Huggins held that MERS, which was named in a mortgage as the lender’s
nominee, had standing to seek stay relief. Id. at 184-85. But in Huggins, the original lender
continued to hold the note, and the mortgage had not been transferred. Id. at 182, 184.
19 See Fed. R. Bankr. P. 9011(b) (providing inter alia that a motion’s filing or other
presentation constitutes a certification that there has been an “inquiry reasonable under the
circumstances” and that factual allegations made “have evidentiary support or, if specifically so
identified, are likely to have evidentiary support after a reasonable opportunity for further
investigation or discovery”). Trustee here was clear, though, that he asserted no Rule 9011
claims against Movant or its counsel.
MEMORANDUM OF DECISION – 16
Fieldstone Mortgage Company is no longer a party in interest.18
At the time of that final hearing, counsel for Movant conceded that he had
no documentation provided to him by his “client” which indicated the interests
under the Note or Deed of Trust were held by either HSBC Bank USA or the
Fieldstone Mortgage Investment Trust. Counsel filed the Motion and
characterized the Movant’s identity therein based solely on undocumented
representations made to him. This would appear to be a problematic approach
generally.19 And, in this particular case, Trustee’s objection to the Motion put the
matter at issue and Movant to its proof.
CONCLUSION
When Trustee challenged the Motion’s bare assertions, Movant failed to
provide an adequate record showing it was a party in interest with standing
entitled to seek such relief. On the record presented, the Court finds and
concludes Trustee’s objection is well taken. That objection will be sustained. The
Motion will be denied. The Trustee will provide a form of order for the Court’s
MEMORANDUM OF DECISION – 17
review and entry.
DATED: March 12, 2009
TERRY L. MYERS
CHIEF U. S. BANKRUPTCY JUDGE

MERS to big to punish

The issue before the court boils down to whether MERS qualifies for certain exemptions from corporate tax registration required under section 23305 of the California Revenue and Tax Code. If it does not qualify for exemption, then MERS’ contracts are voidable under White Dragon Productions, Inc. vs. Performance Guarantees, Inc. (1987)
196 Cal.App.3d 163, and MERS may not appear to defend itself in this matter. (While Defendant presents a contrary 9th circuit decision on the issue of voidability of contract, the doctrine of stare decisis prevents the court from choosing to elect to follow that advisory opinion over California’s own precedent. Auto Equity Sales, Inc. v. Superior Court, 57 Cal. 2d 450 (1962). In Auto Equity Sales, the Court explained:
Under the doctrine of stare decisis, all tribunals exercising inferior jurisdiction are required to follow decisions of courts exercising superior jurisdiction. Otherwise, the doctrine of stare decisis makes no sense. The decisions of this court are binding upon and must be followed by all the state courts of California. Decisions of every division of the District Courts of Appeal are binding upon all the justice and municipal courts and upon all the superior courts of this state, and this is so whether or not the superior court is acting as a trial or appellate court. Courts exercising inferior jurisdiction must accept the law declared by courts of superior jurisdiction. It is not their function to attempt to overrule decisions of a higher court.” Therefore, White Dragon controls.)

With regard to the matter instantly before the court, MERS’ claimed exemptions are laid out at Corporations Code sections 191(c)(7) and 191(d)(3). Each of these statutory provisions provides narrow grounds for a foreign corporation to gain exemption from registration with our Secretary of State and payment of taxes so long as that corporation meets certain requirements and only conducts certain limited activities.
To rule on the question of MERS’ exemption under Corp. Code section 191(c)(7), the court must make three determinations: first, the court must make a legal determination as to the meaning of the language “creating evidences” in the statute; second and third, the court must make factual determinations to what activities MERS has been alleged in the FAC to have been conducting, and whether those activities are “creating evidences” and thereby exempted.
To answer the question of MERS’ exemption under Corp. Code section 191(d)(3), the court need make only two factual determinations, which are: is MERS a foreign lending institution, and if so, does it own the instant note, or any note in any of the thousands of MERS foreclosures in this state?
Finally, the court must decide whether, under either section, the operation of a database, selling memberships, and providing access to a database constitute exempted activities, and whether the acting as an agent of an exempt institution extends the exemption to MERS?

II. ARGUMENT
A. MERS DOES NOT QUALIFY FOR EXEMPTION UNDER CORPORATIONS
CODE SECTION 191(c)(7) BECAUSE 1) THE RULES OF STATUTORY
INTERPRETATION FORBID RENDERING SUBSECTION (d)(3) TO BE DEAD
LETTER; 2) ALL OF MERS’ ACTIVITIES GO BEYOND THE PLAIN MEANING
OF THE TERM, AND 3) NONE OF MERS’ ACTIVITIES COMPRISE THE PLAIN
MEANING OF THE TERM.
1. A Finding That MERS’ Foreclosure Activities Constitute Merely “Creating Evidences” Of Mortgages Would Render Subsection (d)(3) Dead Letter.

California Corporations Code section 191 (c)(7) provides an exemption to tax registration for foreign corporations engaged in “[c]reating evidences of debt or mortgages, liens or security interests on real or personal property.” Id. The statute does not expressly define “creating evidences,” and so the court is called upon to apply the rules of statutory construction to interpret the code prior to applying it. This is a matter of first impression, as there is no California precedent on this issue. (However, both parties have submitted federal court opinions on both sides of the issue).

California courts do not favor constructions of statutes that render them advisory only, or a dead letter. Petropoulos v. Department of Real Estate (2006) 142 Cal.App.4th 554, 567; People v. Stringham (1988) 206 Cal.App.3d 184, 197. Because Corp Code section 191(d)(7) expressly reserves the activities of assigning mortgages, conducting foreclosures, and substituting trustees for foreign lending institutions, these activities must, by definition, go beyond what is intended by “creating evidences” of transactions, or else, the gateway consideration of being a foreign lending institution required at section 191(d) would be dead letter, because such activities would already apply to ALL foreign corporations, who are exempted at (c)(7) for “creating evidences.” If the legislature included these foreclosurerelated activities in a new subsection expressly reserved for a certain type of foreign entity, then it clearly did not intend for them to be included by the term “creating evidences” which is provided to all foreign corporations.

2. All of MERS’ Activities Go Beyond The Plain Meaning Of The Term “Creating Evidences.”
Because there is no express definition of “creating evidences” provided in the Corporations Code, this phrase should be given its common meaning. “Creation” is defined by Mirriam Webster’s Dictionary as “the act of making, inventing or producing.”
“Evidence” is defined by the California Code of Evidence as “testimony, writings, material objects, or other things presented to the senses that are offered to prove the existence or nonexistence of a fact.” Evidence Code 140.
The evidences referred to in Corp. Code section 191(c)(7) are “of debt or mortgages, liens or security interest on real or personal property.”

Hence, when the words are taken together, the statute exempts: “making, inventing, or producing testimony, writings, material objects, or other things presented to the senses that are offered to prove the existence or nonexistence of debt or mortgages, liens or security interest on real or personal property.”

MERS’s California activities go far beyond these activities. In contrast to MERS, a foreign corporation who might qualify for exemption for “making, inventing, or producing testimony, writings, material objects, or other things presented to the senses that are offered to prove the existence or nonexistence of debt, mortgages, liens or security interest on real or personal property” is Socrates Legal Media, LLC, 227 West Monroe Suite 500 Chicago, IL 60606.

The business of Socrates Legal Media includes selling pre-packaged contract forms at Office Depot for people who conduct routine real estate transactions, such as taking liens on real property to secure debts. If a dispute arose between two parties to such an agreement within our state, and Socrates was brought in by the Plaintiff and alleged as being an unregistered foreign corporation who does not to have capacity to defend, Socrates could point out that it merely CREATES EVIDENCES of transactions, and seek exemption from the registration requirement to defend itself in the case. MERS, on the other hand, does not merely provide forms for agreements, or “create evidences” of them; MERS participates in California transactions.

Therefore, MERS’ activities go beyond what “creating evidences” could possibly mean. However, the trouble with MERS’s argument does not end with that.

3. None of MERS’ Activities Meet The Definition of “Creating Evidences.”

The real trouble with MERS’ argument is that it clearly did not even create these evidences to begin with, nor does it claim to. To wit, the evidences of debt, liens on property, or mortgages at issue in this case – the Note and the Deed of Trust – are “made, invented, and produced” respectively by the Lender and by federal government bodies known as “Fannie Mae” (short for the Federal National Mortgage Agency) and “Freddie Mac” (short for the Federal Home Loan Mortgage Corporation).

The court may take judicial notice of the fact that these uniform instruments, used more commonly than any other to evidence the fact of a real estate mortgage transaction in our state, may be downloaded at http://www.freddiemac.com/uniform/. The mortgages at issue in this and every other MERS related case are not MERS’ forms. MERS did not “create” these “evidences.”

Rather, MERS’ involvement in the transaction was wholly participatory. MERS was named beneficiary on the deeds of trust. MERS participated in the foreclosure activities, though it was never entitled to collect a single penny under the notes. Characteristically, MERS only participated in the transaction for the sole purpose of avoiding paying California taxes. See: MERS’ admission in MERS v. Nebraska, that its purpose for being a phantom beneficiary on these deeds of trust is to avoid state real property transfer taxes at Plaintiff’s RJN in Support of Supplemental Briefing Exh. A (For the Nebraska Supreme Court’s finding that ” Mortgage lenders hire MERS to act as their nominee for mortgages, which allows the lenders to trade the mortgage note and servicing rights on the market without recording subsequent trades with the various register of deeds throughout Nebraska.”). See also: the admission of Bill Hultman at Plaintiffs RJN in Support of Supplemental Briefing Exh. B at Paragraph 8 (for MERS’ admission that “MERS is not a party to or obligee under the terms of the Promissory Note, and MERS does not appear on the Promissory Note.”).

Nor was the execution of the documents at closing MERS’ doing; that was conducted at a title company or by mobile notary. MERS does not claim that any person from MERS was present at a single mortgage closing in this state. Nor does MERS claim that any agent or representative of MERS even so much as signed the Fannie/Freddie uniform instruments.

The record in this case clearly establishes that only the Plaintiffs signed the Deed of Trust. Therefore, MERS’ activities do not render it exempt from tax registration under Corp Code 191(c)(7) because its activities go beyond “creating evidences” and do not include “creating evidences” in the first instance.

B. MERS DOES NOT QUALIFY UNDER SECTION 191(d)(3) BECAUSE IT IS NOT
A FOREIGN LENDING INSTITUTION AND BECAUSE IT DOES NOT OWN THE
NOTE.

1. As a Gateway Consideration, The Court Must Find That MERS Is A Foreign Lending Institution (Or Wholly Owned By One) to Qualify for ANY of the Exemptions at Corp. Code Section 191(d).

Under Corporations Code Section 191(d)(3), MERS must both 1) be the right type of entity (the gateway consideration to the exemptions), and 2) own the note to qualify for exemption.

Corporations Code Section 191(d) provides exemption solely for any:
“…foreign lending institution, including, but not limited to: any foreign banking corporation, any foreign corporation all of the capital stock of which is owned by one or more foreign banking corporations, any foreign savings and loan association, any foreign insurance company or any foreign corporation or association authorized by its charter to invest in loans secured by real and personal property, whether organized under the laws of the United States or of any other state, district or territory of the United States, shall not be considered to be doing, transacting or engaging in business in this state solely by reason of engaging in any or all of the following activities either on its own behalf or as a trustee of a pension plan, employee profit sharing or retirement plan, testamentary or inter vivos trust, or in any other fiduciary capacity…”

Firstly, MERS does not argue that it is a foreign lending institution in this case. In its Demurrer, Reply, oral argument, or anywhere on this record, there is NO factual averment that MERS is a foreign lending institution or wholly owned by one, or is an investor in mortgage notes.

Secondly, MERS has not submitted any evidence which would support such a finding.

Thirdly, in MERS v. Nebraska, MERS judicially admitted to the Supreme Court of Nebraska that it has never lent a dollar in any state, and is also not the holder of the note on any of its Deeds of Trust. Plaintiff’s Supplemental RJN Exh. A. In that case, MERS appealed a finding of the trial court that MERS was a foreign banking institution and therefore had to register as one in Nebraska. While the legal issue in the instant case is distinguishable, the factual problem before the court is identical to that case: is MERS a bank?.
Whereas there, MERS did everything it could to prove it was NOT a foreign lending institution, here MERS attempts the opposite. Where in Nebraska, MERS sought to avoid registration as a financial institution by swearing to God that it does not ever own the note, here MERS seeks to avail itself of an exemption reserved for foreign lending institutions, asserting the bald-faced conclusion that it should not have to register as a foreign corporation and pay California state taxes under a statute which clearly requires both status as a financial institution, AND ownership of the note, which it also disclaims.

B. MERS DOES NOT OWN THE NOTES AS REQUIRED BY 191(d)(3).

At Corporations Code Section 191(d)(3) the legislature expressly states MERS’claimed exemption:

“The ownership of any loans and the enforcement of any loans by trustee’s sale, judicial process or deed in lieu of foreclosure or otherwise.” Id. [Emphasis Added].

Corp. Code section 191(d)(3) is written in the conjunctive: “own and enforce.” MERS’ averments to its ability to participate in trustee sales without registration by way of this statute is therefore patently unfounded.

There is no averment in this case that MERS owns the note. In fact, by judicial admission, there is the opposite: MERS submits in its own joint Request for Judicial Notice in Support of Demurrer, an Assignment of the Deed of Trust to Wells Fargo. Consistent with MERS’ practice of hiding the true noteholder from the borrower to facilitate foreclosure fraud, the transfer to Wells Fargo suggests that it was Wells Fargo who had been the holder of the note entitled to enforce the Deed of Trust all along, never MERS.

C. MERS ACTIVITIES GO BEYOND THE SCOPE OF BOTH STATUTES; EVEN
IF MERS WERE EXEMPT UNDER EITHER STATUTE, ITS ACTIVITIES
INCLUDING OPERATING A MEMBERSHIP DATABASE GO BEYOND THE
SCOPE OF ANY OF THE ACTIVITIES INCLUDED IN EITHER EXEMPTION.

1. MERS’ Foreclosure Agent Activities Are Not Exempt Under Either Statute at Issue.

In reality, MERS operates as more of an agent than as a beneficiary on any given Deed of Trust (using the dubious title “nominee”). In support, MERS claims that Civil Code section 2924 allows “agents” to begin the non-judicial foreclosure process in California, and therefore, its agency activities should enjoy exemption from taxation. This is a non-sequitur.

The statutory exemption provided at Corp. Code section 191(d)(3) does not extend to companies in the business of “acting as foreclosure agents,” nor is any such interpretation of the statute even possible. While the Civil Code does allow agents to perform certain foreclosure functions, such allowance has no impact on the operation of the Tax Code.

MERS’ exemption argument leaps from one unfounded conclusion to the next. Nowhere in either statute does it aver that agents of the true noteholders are subject to the same exemptions simply by reason of agents being allowed to act on behalf of the noteholder.

Finally, and perhaps most telling, if you “follow the money” the distinction is clear: MERS profits by posing as the beneficiary to the deed of trust and generating foreclosure paperwork; a foreign lending institution profits by lending, and, when that doesn’t work out, by selling its security to collect on an unpaid debt. The business activities, or “profit generating activities”, of MERS are quite distinct from those of its principals, and there is no indication in any of the statutes that the legislature intended for the two to be interchangeable.

2. MERS’ Database Maintenance and Subscription Activities Are Not Exempt.

In their FAC, the Plaintiffs allege a set of activities which is neither included nor discussed above or by MERS at all in any of its arguments in favor of exemption: MERS operates a subscription-based information database for profit within the state of California.
MERS sells memberships to the database, provides access to records, and charges its customers accordingly. Similar to Westlaw, LexisNexis, or any other database provider, this activity is no more “creation of” the information contained therein, than is Westlaw the Creator of judicial opinion in any jurisdiction in this state or country.

Thus, regardless of the applicability to either claimed exemption to MERS’ other activities, MERS’ subscription-based activities exceed what the legislature intended a foreign corporation to do in this state without paying taxes to support the courts, schools, infrastructure, and other benefits of which it avails itself.

Therefore, MERS does not qualify for exemption from Revenue and Tax Code 23305 by way of either Corporations Code section 191(c)(7) or section 191(d)(3).

D. PUBLIC POLICY WEIGHS IN FAVOR OF MAKING MERS PAY ITS TAXES.

There is an argument that because MERS has embroiled itself in so many California mortgages, that it would be detrimental to industry to enforce our laws against it. However, because of the fact that the potential detriment to MERS pales in comparison to the impact MERS has had on this state, and will continue to have if allowed to be above our law, it would not be sound judicial policy to disregard the laws of California solely because of the sheer volume in which the defendant has violated them. It should be the opposite.

To enforce compliance with California’s tax code against MERS would not be any detriment to the mortgage industry, because the mortgage industry has already profited far beyond what was legal or fair in the first place due to these unlawful activities, as has MERS. To now disregard that those monies were ill-gotten based on the idea that it was just so much money that we’ll hurt the industry, truly, is to incentivize wholesale violation of California laws, as long as the issue stays under the radar long enough for the wrongful
conduct to become “too big to punish.”

Indeed, the mortgage industry has already received $700 billion in TARP funds, which came from taxpayer dollars, MERS itself as saved hundreds of millions of tax dollars by refusing to register in this state, and MERS’ customers have saved hundreds of millions by abusing the recording system and the unsupervised nonjudicial foreclosure statute.

It should be noted that secondary market mortgage holders have a remedy to all this: judicial foreclosure. The California codes are not set up without some recourse for those who are RIGHTFULLY owed a debt and RIGHTFULLY entitled to collect on it. Indeed, judicial foreclosure is the due process right of every California citizen whose mortgagee is not entitled to foreclose under Civil Code section 2924. (While Civil Code 2924 was not found to be a violation of due process by the California Supreme Court, a judicial seal of approval on abuse of that statute by those without any right title or interest most certainly is.)

On the flip side of this coin is the already felt crushing impact of these activities on the state of California. The courts are closed the third Wednesday of every month, and clerk staff has been cut to the bones. Public schools and universities are cutting both staff and course options as well as increasing tuition. The roads and bridges are in disrepair. Record foreclosures have caused record joblessness and record inflation. And meanwhile, MERS’ participation in the subprime securitized mortgage scheme was essential to the volume of bad loans being made, to the alacrity with which Wall Street was jamming these pools down our throats, and to the vigor with which mortgage brokers working for yield spread premiums were cold calling and loan flipping.

Clearly MERS was and is conducting business in this state, without paying a dollar on its own tax-free profits, and while aiding its customers in the avoidance of essential property transfer taxes. Its activities not only cost the state in the sheer loss of income, but also in the expense that will go into correcting thousands of real property records which have been deranged by MERS’ wholesale disregard for California law.

CLASS ACTION FILED AGAINST STERN, MERS

Posted on July 28, 2010 by Neil Garfield

Entered on the Court docket of the Southern District of Florida, a class action for damages has been filed against MERS, the Stern Law Firm and David Stern individually.The lawsuit alleges racketeering under the RICO (Racketeer Influenced and Corrupt Organization Act, 18 U.S.C. Sec. 1962 and 1964) statute, alleging that MERS was created “in order to undermine and eventually eviscerate long-standing principles of real property law…”. It also cites the “lost note” syndrome we are all so familiar with by now.

The lawsuit filed by Kenneth Eric Trent, Esq. in Fort Lauderdale, Florida reads like a mystery novel. He probably has an incorrect chronology of a few details of the actual way securitization played out, but on the whole, the complaint is worth a read and he should get all the help you can give him. He includes actual testimony in the complaint taken from other cases in addition to a very well-written narrative. Here is one quote I liked —

“Unbeknownst to the borrowers and the public, the billions of dollars spent to fund these loans were expended to “prime the pump.” The big institutions and the conspirators were making an investment, but the expected return was NOT the interest they pretended to anticipate receiving as borrowers paid the mortgages. The lenders knew that the new loans were “bad paper;” this was of little concern to them because they intended to realize profits so great as to render such interest, even if it had been received, negligible by comparison. Part of the reason this fraudulent scheme has gone largely unnoticed for such an extended period of time is that its sophistication is beyond the imagination of average persons. Similarly beyond the imagination of most persons is and was the scope of the DISHONESTY of the lenders and those acting in furtherance of the scheme, including the present Defendants.”

Gretchen “Gets It” but misses the mark

Posted on July 25, 2010 by Neil Garfield

It’s no secret that I admire Gretchen Morgenson of the New York Times. Her articles have penetrated deeper and deeper into the realities and logistics of the Great Financial Meltdown. But she continues to drag myth alongside of reality. True, it is difficult to get your mind around the idea that Wall Street managers WANTED bad mortgages, but that simple piece of truth is unavoidable. In the article below she draws ever nearer to this truth, saying that the real question is “what did they know and when did they know it?”
She even spots the extremely important fact that the worse the loan the more money was made by Wall Street. My objection is why not ask the next obvious question, to wit: “If Wall Street’s profits went up as the quality of mortgages went down, isn’t the obvious incentive to create increasingly bad paper?” And in what world has Wall Street ever done anything to diminish profits on moral grounds?
But her spotting is defective. She sees a 5 point spread (Yield Spread Premium) between what was paid for the loans and the price charged to investors. She correctly points out that the most Wall Street usually gets on trades like this is around 2 points. But think about it. Could such a small spread actually account for the ensuing mayhem that resulted?
What she fails to point out is the actual logistics. Investors, and for that matter, even the rating agencies, were never given the actual loans to look at and kick the tires. They were given descriptions of the loans which were incorporated into a narrative that portrayed the loans in a much better light than anything a loan underwriter would agree with. The final description of the loans was so loaded with misrepresentations that even a small amount of due diligence would have revealed major discrepancies that would have stopped this money machine from operating, for good.
Gretchen’s error is reflected in most articles by journalists and government officials. They all miss a major part of the transaction. Do the math. How could a five point spread account for the actual 8-10 point spread that was used to massage the description of the pool? There is a whole other SIV transaction that everyone is ignoring. The size of it will astonish you.

If for the purpose of one extreme example we isolate a single loan transaction, you can see how it works.
John Smith, an unemployed, homeless migrant worker with a gross income of $500 per month is pulled off the street by a “loan adviser.” The salesman gets John to sign a bunch of papers and tells him to go move into a $500,000 house. The interest rate on the loan is 18%, which is $90,000 per year. John doesn’t have to pay anything for the first 3 months and then only $100 per month for the first year, when he must pay a higher amount, still not as much as the monthly interest of $7,500 per month, let alone amortization, taxes, and insurance.
Now go to the investor who has been promised, for this example 9% annual return. The investor gives the investment banker $1,000,000 dollars believing that the investment banker is taking a 2% fee ($20,000). In other words, the investor is expecting $980,000 of his money to be invested. But that is NOT what happened — not ever, in ANY example. The investor, expecting a 9% annual return on his $1 million is therefore expecting $90,000 per year in income.
So in our over-simplified example the investment banker goes to the mortgage aggregator, and says give me the crappiest mortgage you have that says the interest is $90,000 per year. The aggregator (Countrywide, for example) sells the John Smith Mortgage to a structured investment vehicle off-shore for $500,000. The SIV sells the John Smith Mortgage to another entity (Seller) created by the investment bank for $980,000. The Seller sells the John Smith Mortgage to an “investment pool” for $1 million.
Watch Carefully! What just happened is that the John Smith mortgage was created that would never be paid. The interest rate on that mortgage was 18% and the principal was $500,000. So the annual interest to be paid by borrower was $90,000. The investor gave $1 million to the investment banker and thus “bought” the $90,000 in “income” from John Smith.
The surface transaction that Gretchen and others are looking at is that last transaction where the investment banker appears to pick up a few points as a fee. The underlying transaction, the substance of the real deal, is that the investment banker took $1 million from the investor and funded a $500,000 mortgage, thus creating a yield spread premium total of $500,000. In other words, the investment banker, in our oversimplified example, made a profit EQUAL TO THE MORTGAGE PRINCIPAL.
Not all the borrowers were John Smith. They ranged from him to people with the ability to pay anything. But the Mary Jones Mortgage where she had a credit score of 815 and assets of over $10 million was a key ingredient to this fraud. May Jones Mortgage was put in the top level of the “pool.” She was the gold plating covering dog poop underneath.
The identity of Mary Jones and her credit score HAD to be there, HAD to be used without her permission in order to sell the John Smith Mortgage. I think that is called identity theft. I think it was interstate commerce and I think it was a pattern of conduct. I think that is racketeering, breach of the the Truth in Lending Act and Securities Fraud, based upon appraisal (ratings) fraud at both ends (borrower and investor) of the transaction.
And let’s not forget that all these sales and transfers were undocumented. The only thing that moved was the money. And of course there are all those third party insurance and bailout payments that were never credited to the investor or the borrower. The investment banker kept those too.
——————————————————————————————–
July 24, 2010
Seeing vs. Doing
By GRETCHEN MORGENSON

“WHAT did they know, and when did they know it?” Those are questions investigators invariably ask when trying to determine who’s responsible for an offense or a misdeed.

But for the Wall Street banks whose financing of the subprime mortgage machine placed them at the center of the credit crisis, it’s becoming clear that a third, equally important question must be asked: “What did they do once they knew what they knew?”

As investigators delve deeper into the mortgage mess, they are finding in too many cases that Wall Street firms did nothing when they learned about problem loans or improprieties in lending. Rather than stopping practices of profligate originators like New Century, Fremont and Ameriquest, Wall Street financiers, which held the purse strings for these companies, apparently decided to simply look the other way.

Recent cases have provided glimpses of this conduct. Last week, the Financial Industry Regulatory Authority accused Deutsche Bank Securities, a unit of the huge German bank, of misleading investors about how many delinquent loans went into six mortgage securities worth $2.2 billion that the firm underwrote. Deutsche Bank underreported the delinquency rates among loans when it created the securities in 2006, Finra contends, and then sold them to investors.

Deutsche Bank also understated historical delinquency rates in 16 subprime securities it packaged in 2007, Finra said. Even after it discovered the errors, the authority added, Deutsche Bank continued to report the misstated figures on its Web site, where investors checked the performance of past mortgage pools.

Deutsche Bank settled without admitting or denying the allegations; it paid $7.5 million. The firm said Friday that it had cooperated and was pleased to have the matter behind it.

James S. Shorris, acting chief of enforcement at Finra, said that this was just the first of such cases and that he oversees a team of more than a dozen people investigating firms involved in mortgage securities.

While the Finra case showed Deutsche Bank failing to report problem loans in its securities, investigators in other matters are learning that some firms used information about lending misconduct to increase their profits from the securitization game — without telling investors, of course.

Here is what investigators have learned, according to two people briefed on the inquiries who spoke anonymously because they were not authorized to discuss them publicly. The large banks that provided money to mortgage originators during the mania hired outside analytics firms to conduct due diligence on the loans that Wall Street bought, bundled into securities and sold to investors.

These analysts looked for loans that failed to meet underwriting standards. Among the flagged loans were those in which appraisals seemed fishy or the mortgages went to borrowers with credit scores far below acceptable levels. Loans on vacation properties erroneously identified as primary residences were also highlighted.

The analysts would take their findings back to the Wall Street firms packaging the securities; the reports were not made available to investors.

In 2006-07, amid the mortgage craze, more loans didn’t meet the criteria. But instead of requiring lenders to replace these funky mortgages with proper loans, Wall Street firms kept funneling the junk into securities and selling them to investors, investigators have found.

Cases brought against Wall Street firms by Martha Coakley, attorney general of Massachusetts, have brought some of these practices to light. “Our focus has been on the borrower,” she said in an interview last week, “but as we’ve peeled back the onion we’ve gotten the picture of the role Wall Street played through the financing of these loans.”

But some on Wall Street went further than simply peddling loans they knew were bad, according to the people briefed on some investigators’ findings. They say the firms used these so-called scratch-and-dent loans to increase their profits in the securitization process.

When due-diligence reports turned up large numbers of defective loans — known as exceptions — the banks used this information to negotiate a lower price on the mortgages they bought from the original lenders.

So, instead of paying 99 cents on the dollar for the problem loans, the firm would force the lender to accept 97 cents or perhaps less. But the firm would still sell the mortgage pool to investors at 102 cents or higher, as was typical on high-quality loan pools.

Wall Street enjoyed the profits these practices generated. And because lenders were financed by the Wall Street firms bundling the mortgages into securities, they were hesitant to reject too many dubious loans because doing so would slow the securitization machine.

FOR their part, Wall Street loan packagers were loath to imperil their relationship with lenders like New Century; as long as Wall Street’s lucrative mortgage factories were humming, it needed loans to stoke them. Forcing New Century to eat its bad loans might prompt it to take its business elsewhere.

The bottom line: the more problematic the loans, the better the bargaining power and the higher the profits for Wall Street.

To be sure, the securities’ offering statements noted, in legalese, that the deals might contain “underwriting exceptions” and those exceptions could be “material.” But as investigators get closer to understanding how Wall Street used these exceptions to jack up its earnings, that disclosure defense may ring hollow.

Filed under:

Emplode-o-meter mortgage company failures

384. Liberty Mortgage Corporation – Wholesale
383. Universal Mortgage Corp.
382. American Mortgage Specialists, Inc.
381. Assurity Financial Services, LLC
380. Premium Capital Funding, LLC dba TopDot Mortgage
379. First Regional Bank, Century City
378. Security Atlantic Mortgage Co.
377. Apex Lending, Inc.
376. Charter Bank, Santa Fe
375. Equitable Trust Mortgage Corp.
374. AmTrust Bank
373. Dynamic Capital Mortgage
372. Lend America / Lending Key
371. New South Federal Savings Bank
370. AME Financial Corp.
369. Envision Lending Group Inc.
368. Warren Bank
367. Stockton Turner & Company
366. The Lending Company Inc. – Wholesale
365. Capmark Financial Group Inc.
364. Northeast Mortgage Corp.
363. Security Mortgage Corporation
362. Windsor Capital Mortgage Corp.
361. First Rate Capital Corp.
360. StoneWater Mortgage Corp.
359. First National Bank of the South – Wholesale
358. Senderra Funding – Wholesale
357. Capstone Realty Advisors
356. Granite Mortgage, Inc.
355. Worldwide Financial Resources Inc.
354. Guaranty Bank – Warehouse
353. Colonial Bank
352. Corus Bank
351. America One Finance
350. Taylor, Bean & Whitaker Mortgage Corp. – Wholesale
349. 1st Reverse Financial Services LLC
348. HCI Mortgage
347. BankersWest Funding Corp.
346. American Partners Bank
345. Senior Lending Network
344. BankUnited, F.S.B.
343. Precision Financial, Inc.
342. Accredited Home Lenders, Lone Star Funds
341. Wells Fargo – Small-Cap Commercial
340. Guaranty Bank – GB Mortgage
339. American Sterling Bank
338. Chase Home Mortgage – Construction Lending
337. First Security Loan Corp
336. South Pacific Financial Corp. – Wholesale
335. Home Loan Consultants, Inc.
334. Central States Mortgage
333. HSBC – HFC & Beneficial
332. JPMorgan Chase – Warehouse
331. Ameritime Mortgage Co. LLC
330. Perfect Mortgage – PerfectFHA
329. EquiFirst
328. Residential Loan Centers of America
327. CU National Mortgage
326. Colonial National Mortgage – Wholesale
325. U.S. Mortgage Corp. – Retail
324. First Interstate Financial – Wholesale
323. Realty Mortgage Corp.
322. Vertice
321. USA Home Loans – Wholesale
320. SunTrust Mortgage – FHA Wholesale
319. First Federal – Wholesale
318. 21st Mortgage – Wholesale
317. J.B. Nutter & Co. – Wholesale
316. Homebridge Mortgage Bankers – Refinance.com
315. 1st Republic Mortgage Bankers
314. Superior Mortgage Corp – Wholesale
313. Wall Street Financial Corp – Wholesale
312. Fairfield Financial Mortgage Group
311. Chase Prime – Wholesale
310. Sunshine & Madison Mortgage Corp
309. Liberty One Lending
308. Frontier Investment Co.
307. Solstice Capital Group – HSBC
306. MortgageIT
305. HCL Finance Inc. – Wholesale
304. LIME Financial Svcs. – Wholesale
303. Mortgage Network Inc. – Wholesale
302. Fortes Financial – Wholesale
301. HSBC Mortgage Corp. – Wholesale
300. CBRE Realty Finance
299. Franklin Bank, SSB
298. Mortgage Lion, Inc. – Wholesale
297. HMS Capital, Inc.
296. CTX Mortgage Co. – Retail
295. Equity One Commercial
294. Coldstream Financial Svcs.
293. Banco Popular North America – Wholesale
292. Ace Mortgage Funding, LLC
291. E-Loan
290. Gateway Bank, F.S.B. – Wholesale
289. First Call Mortgage Co.
288. Downey Savings and Loan – Wholesale
287. Prospect’s Metrocities Mortgage – Wholesale
286. ComCor Mortgage – Wholesale
285. Chevy Chase Bank – Wholesale
284. Washington Mutual – Retail and Warehouse
283. Hometown Commercial Capital
282. Mid Atlantic Capital LLC
281. Kemper Mortgage, Inc.
280. Liberty Mortgage Funding Co.
279. Freddie Mac
278. Fannie Mae
277. Pacific Community Mortgage, Inc. – Gold Reverse, Inc.
276. Homecomings Financial, LLC
275. Thornburg Mortgage
274. CSB Mortgage
273. Carteret Mortgage Corporation
272. Western Residential Mortgage
271. Liberty Home Lending
270. Equipoint Financial Network, Inc.
269. Ideal Mortgage Bankers, Ltd. – Wholesale
268. Silver State Bank – Wholesale
267. Irwin Union Bank & Trust Co. – Wholesale
266. SunTrust Bank Equity Wholesale
265. Wachovia Mortgage, FSB – Wholesale
264. Lehman Brothers SBF
263. IndyMac Bancorp
262. Mortgages Ltd.
261. Wilmington Finance – Wholesale
260. Accredited Home Lenders, Home Funds Direct
259. Assured Lending Corp. – Wholesale
258. Homewide Lending Corporation
257. Vanguard Mortgage & Title, Inc.
256. Chase Home Equity – Wholesale
255. Chase Subprime – Wholesale
254. Evergreen Investment & Carnation Banc
253. Casa Blanca Mortgage/Shearson – Wholesale
252. Guaranty Bank – Correspondent
251. Citi Residential Lending
250. Montgomery Mortgage Capital Company
249. E*Trade Wholesale Lending
248. Shearson Financial Network, Inc.
247. American Bank Mortgage Group – Wholesale
246. AmeriBanc Corp.
245. Washington Mutual – Wholesale
244. Century Bank, F.S.B. – Wholesale
243. Diversified Mortgage, Inc.
242. National Wholesale Funding
241. Centennial Mortgage and Funding, Inc./Award Mortgage
240. Fidelity Home Mortgage Corp.
239. LMI Funding, Inc.
238. Millennium Mortgage – Wholesale
237. Origen Financial, Inc. (Correspondent)
236. CitiMortgage – Home Equity Wholesale
235. Bear Stearns Residential Mortgage
234. East West Mortgage Co. of VA
233. New Vision Residential Lending
232. Washington Savings Bank, F.S.B. – Wholesale
231. Macquarie Mortgages USA Inc.
230. Global Mortgage, Inc.
229. Unique Mortgage Solutions (UMS, LLC)
228. First Franklin – Merrill Lynch
227. First National Mortgage Sources
226. Resource Mortgage (Wholesale)
225. KH Financial
224. Lydian Mortgage
223. OMG Wholesale Lending
222. Saxon Mortgage (Wholesale)
221. Beazer Mortgage Corp.
220. Allpointe Mortgage (Broker Program)
219. Popular Warehouse Lending
218. Allied Lending Corp. (Wholesale)
217. BF Saul Wholesale Lending
216. Community Resource Mortgage
215. Lehman/Aurora Loan Services
214. Residential Mortgage Capital
213. Maverick Residential Mortgage
212. Countrywide Financial Corp.
211. First NLC Financial Services
210. First American Bank (Wholesale)
209. Soma Financial
208. National City Corp. (Wholesale)
207. Heartland Wholesale Funding
206. Homefront Mortgage Inc.
205. PNC Bank H.E.
204. Family First Mortgage Corp.
203. First Fidelity Financial
202. BSM Financial
201. 1st Choice Mortgage
200. Wescom Credit Union
199. Coast Financial Holdings/Coast Bank
198. WaMu (Subprime)
197. First Madison Mortgage
196. Southern Star Mortgage
195. TransLand Financial
194. Secured Bankers Mortgage Company (SBMC)
193. ComUnity Lending
192. Delta Financial Corp
191. BayRock Mortgage
190. Empire Bancorp
189. Option One – H&R Block
188. Citigroup – FCS Warehouse
187. Charter One (Wholesale)
186. Wells Fargo – Home Equity
185. Paul Financial, LLC
184. Webster Bank (Wholesale)
183. Fieldstone Mortgage Company
182. Tribeca Lending Corp. (Wholesale)
181. WAMU Comm. Correspondent
180. Marlin Mortgage Company
179. Countrywide Specialty Lending
178. UBS Home Finance
177. MortgageIT-DB (Retail)
176. Edgewater Lending Group
175. ResMAE Mortgage Corp.
174. Citimortgage Correspondent (2nds)
173. AMC Lending
172. Liberty American Mortgage
171. Exchange Financial (Wholesale)
170. FirstBank Mortgage
169. Bank of America (Wholesale)
168. Diablo Funding Group Inc.
167. Honor State Bank
166. Spectrum Financial Group
165. Priority Funding Mortgage Bankers
164. BrooksAmerica Mortgage Corp.
163. Valley Vista Mortgage
162. New State Mortgage Company
161. Summit Mortgage Company
160. WMC
159. Paragon Home Lending
158. First Mariner Wholesale
157. The Lending Connection
156. Foxtons, Inc.
155. SCME Mortage Bankers
154. Aapex Mortgage (Apex Financial Group)
153. Wells Fargo (various Correspondent and Non-prime divisions)
152. Nationstar Mortgage
151. Decision One (HSBC)
150. Impac Lending Group
149. Long Beach (WaMu Warehouse/Correspondent)
148. Expanded Mortgage Credit Wholesale
147. The Mortgage Store Financial
146. C & G Financial
145. CFIC Home Mortgage
144. All Fund Mortgage
143. LownHome Financial
142. Sea Breeze Financial Services
141. Castle Point Mortgage
140. Premium Funding Corp
139. Group One Lending
138. Allstate Home Loans / Allstate Funding
137. Home Loan Specialists (HLS)
136. Transnational Finance Wholesale
135. CIT Home Lending
134. Capital Six Funding
133. Mortgage Investors Group (MIG) – Wholesale
132. Amstar Mortgage Corp
131. Quality Home Loans
130. BNC Mortgage (Lehman)
129. First National Bank of Arizona
128. Chevy Chase Bank Correspondent
127. GreenPoint Mortgage – Capital One Wholesale
126. NovaStar, Homeview Lending
125. Quick Loan Funding
124. Calusa Investments
123. Mercantile Mortgage
122. First Magnus
121. First Indiana Wholesale
120. GEM Loans / Pacific American Mortgage (PAMCO)
119. Kirkwood Financial Corporation
118. Lexington Lending
117. Express Capital Lending
116. Deutsche Bank Correspondent Lending Group (CLG)
115. MLSG
114. Trump Mortgage
113. HomeBanc Mortgage Corporation
112. Mylor Financial
111. Aegis
110. Alternative Financing Corp (AFC) Wholesale
109. Winstar Mortgage
108. American Home Mortgage / American Brokers Conduit
107. Optima Funding
106. Equity Funding Group
105. Sunset Mortgage
104. Nations Home Lending
103. Entrust Mortgage
102. Alera Financial (Wholesale)
101. Flick Mortgage/Mortgage Simple
100. Dollar Mortgage Corporation
99. Alliance Bancorp
98. Choice Capital Funding
97. Premier Mortgage Funding
96. Stone Creek Funding
95. FlexPoint Funding (Wholesale & Retail)
94. Starpointe Mortgage
93. Unlimited Loan Resources (ULR)
92. Freestand Financial
91. Steward Financial
90. Bridge Capital Corporation
89. Altivus Financial
88. ACT Mortgage
87. Alliance Mortgage Banking Corp (AMBC)
86. Concord Mortgage Wholesale
85. Heartwell Mortgage
84. Oak Street Mortgage
83. The Mortgage Warehouse
82. First Street Financial
81. Right-Away Mortgage
80. Heritage Plaza Mortgage
79. Horizon Bank Wholesale Lending Group
78. Lancaster Mortgage Bank (LMB)
77. Bryco (Wholesale)
76. No Red Tape Mortgage
75. The Lending Group (TLG)
74. Pro 30 Funding
73. NetBank Funding, Market Street Mortgage
72. Columbia Home Loans, LLC
71. Mortgage Tree Lending
70. Homeland Capital Group
69. Nation One Mortgage
68. Dana Capital Group
67. Millenium Funding Group
66. MILA
65. Home Equity of America
64. Opteum (Wholesale, Conduit)
63. Innovative Mortgage Capital
62. Home Capital, Inc.
61. Home 123 Mortgage
60. Homefield Financial
59. First Horizon Subprime, Equity Lending
58. Platinum Capital Group (Wholesale)
57. First Source Funding Group (FSFG)
56. Alterna Mortgage
55. Solutions Funding
54. People’s Mortgage
53. LowerMyPayment.com
52. Zone Funding
51. First Consolidated (Subprime Wholesale)
50. SouthStar Funding
49. Warehouse USA
48. H&R Block Mortgage
47. Madison Equity Loans
46. HSBC Mortgage Services (correspondent div.)
45. Sunset Direct Lending
44. Kellner Mortgage Investments
43. LoanCity
42. CoreStar Financial Group
41. Ameriquest, ACC Wholesale
40. Investaid Corp.
39. People’s Choice Financial Corp.
38. Master Financial
37. Maribella Mortgage
36. FMF Capital LLC
35. New Century Financial Corp.
34. Wachovia Mortgage (Correspondent div.)
33. Ameritrust Mortgage Company (Subprime Wholesale)
32. Trojan Lending (Wholesale)
31. Fremont General Corporation
30. DomesticBank (Wholesale Lending Division)
29. Ivanhoe Mortgage/Central Pacific Mortgage
28. Eagle First Mortgage
27. Coastal Capital
26. Silver State Mortgage
25. ECC Capital/Encore Credit
24. Lender’s Direct Capital Corporation (wholesale division)
23. Concorde Acceptance
22. DeepGreen Financial
21. American Freedom Mortgage, Inc.
20. Millenium Bankshares (Mortgage Subsidiaries)
19. Summit Mortgage
18. Mandalay Mortgage
17. Rose Mortgage
16. EquiBanc
15. FundingAmerica
14. Popular Financial Holdings
13. Clear Choice Financial/Bay Capital
12. Origen Wholesale Lending
11. SecuredFunding
10. Preferred Advantage
9. MLN
8. Sovereign Bancorp (Wholesale Ops)
7. Harbourton Mortgage Investment Corporation
6. OwnIt Mortgage
5. Sebring Capital Partners
4. Axis Mortgage & Investments
3. Meritage Mortgage
2. Acoustic Home Loans
1. Merit Financial

Securitized Mortgage: A Basic Roadmap

The Parties and Their Roles

The first issue in reviewing a structured residential mortgage transaction is to differentiate between a private-label deal and an “Agency” (or “GSE”) deal. An Agency (or GSE) deal is one involving Fannie Mae, Freddie Mac, or Ginnie Mae, the three Government Sponsored Enterprises (also known as the GSEs). This paper will review the parties, documents, and laws involved in a typical private-label securitization. We also address frequently-occurring practical considerations for counsel dealing with securitized mortgage loans that are applicable across-the-board to mortgages into both private-label and Agency securitizations.

The parties, in the order of their appearance are:

Originator. The “originator” is the lender that provided the funds to the borrower at the loan closing or close of escrow. Usually the originator is the lender named as “Lender” in the mortgage Note. Many originators securitize loans; many do not. The decision not to securitize loans may be due to lack of access to Wall Street capital markets, or this may simply reflect a business decision not to run the risks associated with future performance that necessarily go with sponsoring a securitization, or the originator obtains better return through another loan disposition strategy such as whole loan sales for cash.

Warehouse Lender. The Originator probably borrowed the funds on a line of credit from a short-term revolving warehouse credit facility (commonly referred to as a “warehouse lender”); nevertheless the money used to close the loan were technically and legally the Originator’s funds. Warehouse lenders are either “wet” funders or “dry” funders. A wet funder will advance the funds to close the loan upon the receipt of an electronic request from the originator. A dry funder, on the other hand, will not advance funds until it actually receives the original loan documents duly executed by the borrower.

Responsible Party. Sometimes you may see another intermediate entity called a “Responsible Party,” often a sister company to the lender. Loans appear to be transferred to this entity, typically named XXX Asset Corporation.

Sponsor. The Sponsor is the lender that securitizes the pool of mortgage loans. This means that it was the final aggregator of the loan pool and then sold the loans directly to the Depositor, which it turn sold them to the securitization Trust. In order to obtain the desired ratings from the ratings agencies such as Moody’s, Fitch and S&P, the Sponsor normally is required to retain some exposure to the future value and performance of the loans in the form of purchase of the most deeply subordinated classes of the securities issued by the Trust, i.e. the classes last in line for distributions and first in line to absorb losses (commonly referred to as the “first loss pieces” of the deal).

Depositor. The Depositor exists for the sole purpose of enabling the transaction to have the key elements that make it a securitization in the first place: a “true sale” of the mortgage loans to a “bankruptcy-remote” and “FDIC-remote” purchaser. The Depositor purchases the loans from the Sponsor, sells the loans to the Trustee of the securitization Trust, and uses the proceeds received from the Trust to pay the Sponsor for the Depositor’s own purchase of the loans. It all happens simultaneously, or as nearly so as theoretically possible. The length of time that the Depositor owns the loans has been described as “one nanosecond.”

The Depositor has no other functions, so it needs no more than a handful of employees and officers. Nevertheless, it is essential for the “true sale” and “bankruptcy-remote”/“FDIC-remote” analysis that the Depositor maintains its own corporate existence separate from the Sponsor and the Trust and observes the formalities of this corporate separateness at all times. The “Elephant in the Room” in all structured financial transactions is the mandatory requirement to create at least two “true sales” of the notes and mortgages between the Originator and the Trustee for the Trust so as to make the assets of the Trust both “bankruptcy” and “FDIC” remote from the originator. And, these “true sales” will be documented by representations and attestations signed by the parties; by attorney opinion letters; by asset purchase and sale agreements; by proof of adequate and reasonably equivalent consideration for each purchase; by “true sale” reports from the three major “ratings agencies” (Standard & Poors, Moody’s, and Fitch) and by transfer and delivery receipts for mortgage notes endorsed in blank.

Trustee. The Trustee is the owner of the loans on behalf of the certificate holders at the end of the securitization transaction. Like any trust, the Trustee’s powers, rights, and duties are defined by the terms of the transactional documents that create the trust, and are subject to the terms of the trust laws of some particular state, as specified by the “Governing Law” provisions of the transaction document that created the trust. The vast majority of the residential mortgage backed securitized trusts are subject to the applicable trust laws of Delaware or New York. The “Pooling and Servicing Agreement” (or, in “Owner Trust” transactions as described below, the “Trust Indenture”) is the legal document that creates these common law trusts and the rights and legal authority granted to the Trustee is no greater than the rights and duties specified in this Agreement. The Trustee is paid based on the terms of each structure. For example, the Trustee may be paid out of interest collections at a specified rate based on the outstanding balance of mortgage loans in the securitized pool; the Master Servicer may pay the Trustee out of funds designated for the Master Servicer; the Trustee may receive some on the interest earned on collections invested each month before the investor remittance date; or the Securities Administrator may pay the Trustee out of their fee with no charges assessed against the Trust earnings. Fee amounts ranger for as low as .0025% to as high as .009%.

Indenture Trustee and Owner Trustee. Most private-label securitizations are structured to meet the Internal Revenue Code requirements for tax treatment as a “Real Estate Mortgage Investment Conduit (“REMIC”). However some securitizations (both private-label and GSE) have a different, non-REMIC structure usually called an “Owner Trust.” In an Owner Trust structure the Trustee roles are divided between an Owner Trustee and an Indenture Trustee. As the names suggest, the Owner Trustee owns the loans; the Indenture Trustee has the responsibility of making sure that all of the funds received by the Trust are properly disbursed to the investors (bond holders) and all other parties who have a financial interest in the securitized structure. These are usually Delaware statutory trusts, in which case the Owner Trustee must be domiciled in Delaware.

Primary Servicer. The Primary Servicer services the loans on behalf of the Trust. Its rights and obligations are defined by a loan servicing contract, usually located in the Pooling and Servicing Agreement in a private-label (non-GSE) deal. The trust may have more than one servicer servicing portions of the total pool, or there may be “Secondary Servicers,” “Default Servicers,” and/or “Sub-Servicers” that service loans in particular categories (e.g., loans in default). Any or all of the Primary, Secondary, or Sub-Servicers may be a division or affiliate of the Sponsor; however under the servicing contract the Servicer is solely responsible to the Trust and the Master Servicer (see next paragraph). The Servicers are the legal entities that do all the day-to-day “heavy lifting” for the Trustee such as sending monthly bills to borrowers, collecting payments, keeping records of payments, liquidating assets for the Trustee, and remitting net payments to the Trustee.

The Servicers are normally paid based on the type of loans in the Trust. For example, a typical annual servicing fee structure may be: .25% annually for a prime mortgage; .375% for an Alt-A or Option ARM; and .5% for a subprime loan. In this example, a subprime loan with an average balance over a given year of $120,000 would generate a servicing fee of $600.00 for that year. The Servicers are normally permitted to retain all “ancillary fees” such as late charges, check by phone fees, and the interest earned from investing all funds on hand in overnight US Treasury certificates (sometimes called “interest earned on the float”).

Master Servicer. The Master Servicer is the Trustee’s representative for assuring that the Servicer(s) abide by the terms of the servicing contracts. For trusts with more than one servicer, the Master Servicer has an important administrative role in consolidating the monthly reports and remittances of funds from the individual servicers into a single data package for the Trustee. If a Servicer fails to perform or goes out of business or suffers a major downgrade in its servicer rating, then the Master Servicer must step in, find a replacement and assure that no interruption of essential servicing functions occurs. Like all servicers, the Master Servicer may be a division or affiliate of the Sponsor but is solely responsible to the Trustee. The Master Servicer receives a fee, small compared to the Primary Servicer’s fee, based on the average balance of all loans in the Trust.

Custodian. The Master Document Custodian takes and maintains physical possession of the original hard-copy Mortgage Notes, Mortgages, Deeds of Trust and certain other “key loan documents” that the parties deem essential for the enforcement of the mortgage loan in the event of default.

• This is done for safekeeping and also to accomplish the transfer and due negotiation of possession of the Notes that is essential under the Uniform Commercial Code for a valid transfer to the Trustee to occur.
• Like the Master Servicer, the Master Document Custodian is responsible by contract solely to the Trustee (e.g., the Master Document Custodial Agreement). However unlike the Master Servicer, the Master Document Custodian is an institution wholly independent from the Servicer and the Sponsor.
• There are exceptions to this rule in the world of Fannie Mae/Freddie Mac (“GSE”) securitizations. The GSE’s may allow selected large originators with great secure storage capabilities (in other words, large banks) to act as their own Master Document Custodians. But even in those cases, contracts make clear that the GSE Trustee, not the originator, is the owner of the Note and the mortgage loan.
• The Master Document Custodian must review all original documents submitted into its custody for strict compliance with the specifications set forth in the Custodial Agreement, and deliver exception reports to the Trustee and/or Master Servicer as to any required documents that are missing or fail to comply with those specifications.
• In so doing the Custodian must in effect confirm that for each loan in the Trust there is a “complete and unbroken chain of transfers and assignments of the Notes and Mortgages.”
• This does not necessarily require the Custodian to find assignments or endorsements naming the Depositor or the Trustee. The wording in the Master Document Custodial Agreement must be read closely. Defined terms such as “Last Endorsee” may technically allow the Custodian to approve files in which the last endorsement is from the Sponsor in blank, and no assignment to either the Depositor or the Trustee has been recorded in the local land records.
• In many private-label securitizations a single institution fulfills all of the functions related to document custody for the entire pool of loans. In these cases, the institution might be referred to simply as the “Custodian” and the governing document as the “Custodial Agreement.”

Typical transaction steps and documents (in private-label, non-GSE securitizations)

1. The Originator sells loans (one-by-one or in bundles) to the Securitizer (a/k/a the Sponsor) pursuant to a Mortgage Loan Purchase and Sale Agreement (MLPSA) or similarly-named document. The purpose of the MLPSA is to sell all right, title, claims, legal, equitable and any and all other interest in the loans to the Securitizer-Sponsor. For Notes endorsed in “blank” which are bearer instruments under the UCC, the MLPSA normally requires acceptance and delivery receipts for all such Notes in order to fully document the “true sale.” Frequently a form is prescribed for the acceptance and delivery receipt and attached as an exhibit to the MLPSA.

The MLPSA will contain representations, attestations and warranties as to the enforceability and marketability of each loan, and specify the purchaser’s remedies for a breach of any “rep” or “warrant.” The primary remedy is the purchaser’s right to require the seller to repurchase any loan materially and adversely affected by a breach. Among the defects and events covered by “reps” and “warrants” are “Early Payment Defaults,” commonly referred to as “EPD’s.” An EDP occurs if a loan becomes seriously (usually, 60 or more days) delinquent within a specified period of time after it has been sold to the Trust. The EDP covenants are always limited in time and normally only cover EDPs that occur within 12 to 18 months of the original sale. If an EDP occurs, then the Trust can force the originator to repurchase the EPD note and replace it with a note of similar static qualities (amount, term, type, etc.)

2. The Securitizer-Sponsor sells the loans to the Depositor. This takes place in another MLPSA very similar to the first one and the same documents are created and exchange with the same or similar terms. These are typically included as exhibits to the PSA.

3. Depositor, Trustee, Master Servicer and Servicer enter into a Pooling and Servicing Agreement (“PSA”) in which:

— the Depositor sells all right, title, legal, equitable and any other interest in the mortgage loans to the Trustee, with requirements for acceptance and delivery receipts, often including the prescribed form as an exhibit, in similar fashion to the MLPSA’s;

— the PSA creates the trust, appoints the Trustee, and defines the classes of securities (often called “Certificates”) that the trust will issue to investors and establishes the order of priority between classes of Certificates as to distributions of cash collected and losses realized with respect to the underlying loans (the highest rated Certificates are paid first and the lowest rated Certificates suffer the first losses-thus the basis for the term “structured finance”); and

— the Servicer, Master Servicer and Trustee establish the Servicer’s rights and duties, including limits and extent of a Servicer’s right to deal with default, foreclosure, and Note modifications. Some PSA’s include detailed loss mitigation or modification rules, and others limit any substantive modifications (such as changing the interest rate, reducing the principal debt, waiving default debt, extending the repayment term, etc.)

4. All parties including the Custodian enter into the Custodial Agreement in which:

• the Depositor agrees to cause the Notes and other specified key loan documents (usually including an unrecorded, recordable Assignment “in blank”)(NB that several recent courts have raised serious legal questions about the assignment of a real estate instrument in blank under such theories as the statute of frauds and whether or not an assignment in blank is in fact a “recordable” legal real estate document) to be delivered to the Custodian (with the Securitizer to do the actual physical shipment);
• the Custodian agrees to inspect the Notes and other documents and to certify in designated written documents to the Trustee that the documents meet the required specifications and are in the Custodian’s possession; and
• establishes a (supposedly exclusive) procedure and specified forms whereby the Servicer can obtain possession of any Note, Mortgage, Deed of Trust or other custodial document for foreclosure or payoff purposes.

Finding Documents on the S.E.C.’s website (the EDGAR filing system):

• If you know the name of the Depositor and the name of the Trust (e.g. “Time Bomb Mortgage Trust 2006-2”) that contains the loan in question, then the PSA and Custodial Agreement probably can be found on the SEC’s website (www.sec.gov):
• On the SEC home page look for a link to “Search for Company Filings” and then choose to search by “Company Name,” using the name of the Depositor. (Alternatively, click on the “Contains” button on the search page and then search by the series, i.e. 2006-2 in the above example.)
• Hopefully, this will enable you to find the Trust in question. If so, the PSA and the Custodial Agreement should be available as attachments to one or more of the earliest-filed forms (normally the 8-K) shown on the list of available documents. Sometimes the PSA is listed as a named document but other times you just look for the largest document in terms of megabytes filed with the 8-K form.
• The available documents also should include the Prospectus and/or Prospectus Supplement (Form 424B5) and the Free Writing Prospectus (“FWP”). The latter documents (at least the sections written in English, as opposed to the many tables of financial data) can be very helpful in providing a concise and straightforward description of the parties, documents, and transaction steps and detailed transactional graphs and charts in the particular deal. And because these are SEC documents, the information serves as highly credible evidence on these points, and the Court can take judicial notice of any document filed with the SEC.
• For securitizations created after January 1, 2006, SEC “Regulation AB” requires the parties to file a considerable amount of detailed information about the individual loans included in the Trust. This information may be filed as an Exhibit to the PSA or to a Form 8-K. This loan-level data typically includes loan numbers, interest rates, principal amount of loan, origination date and (sometimes) property addresses and thus can be very useful in proving that a particular loan is in a particular Trust.

Dealing with Notes and Assignments:

There are two basic documents involved in a residential mortgage loan: the promissory note and the mortgage (or deed of trust). For brevity’s sake these are referred to simply as the Note and the Mortgage.

A Note is: a contract to repay borrowed money. It is a negotiable instrument governed by Article 3 of the Uniform Commercial Code (UCC). The Note, by itself, is an unsecured debt. Notes are personal property. Notes are negotiated by endorsement or by transfer and delivery as provided for by the UCC. Notes are separate legal documents from the real estate instruments that secure the loans evidenced by the Notes by liens on real property.

A Mortgage is: a lien on, and an interest in, real estate. It is a security agreement. It creates a lien on the real estate as collateral for a debt, but it does not create the debt itself. The rights created by a Mortgage are classified as real property and these instruments are governed by local real estate law in each jurisdiction. The UCC has nothing to do with the creation, drafting, recording or assignment of these real estate instruments.

A Note can only be transferred by: an “Endorsement” if the Note is payable to a particular party; or by transfer of possession of the Note, if the Note is endorsed “in blank.” Endorsements must be written or stamped on the face of the Note or on a piece of paper physically attached to the Note (the Allonge). See UCC §3-210 through §3-205. The UCC does not recognize an Assignment as a valid means of transferring a Note such that the transferee becomes a “holder”, which is what the owners of securitized mortgage notes universally claim to be.

In most states, an Allonge cannot be used to endorse a note if there is sufficient room at the “foot of the note” for such endorsements. The “foot of the note” refers to the space immediately below the signatures of the borrowers. Also, if an Allonge is properly used, then it must describe the terms of the note and most importantly must be “permanently affixed” to the Note. Most jurisdictions hold that “staples” and “tape” do not constitute a “permanent” attachment. And, the Master Document Custodial Agreement may specify when an Allonge can be used and how it must be attached to the original Note.

Mortgage rights can only be transferred by: an Assignment recorded in the local land records. Mortgage rights are “estates in land” and therefore governed by the state’s real property laws. These vary from state to state but in general Mortgage rights can only be transferred by a recorded instrument (the Assignment) in order to be effective against third parties without notice.

In discussions of exactly what documents are required to transfer a “mortgage loan” confusion often arises between Notes versus Mortgages and the respective documents necessary to accomplish transfers of each. The issue often arises from the standpoint of proof: Has Party A proven that a transfer has occurred to it from Party B? Does Party A need to have an Assignment? The answer often depends on exactly what Party A is trying to prove.

Scenario 1: Party A is trying to prove that the Trustee “owns the loan.” Here the likely questions are, did the transaction steps actually occur as required by the PSA and as represented in the Prospectus Supplement, and are the Trustee’s ownership rights subject to challenge in a bankruptcy case?

The answers lie in the UCC and in documents such as:

• the MLPSA’s;
• conveyancing rules of the PSA (normally Section 2.01);
• transfer and delivery receipts (look for these to be described in the “Conditions to Closing” or similarly named section of MLPSA’s and the PSA);
• funds transfer records (canceled checks, wire transfers, etc);
• compliance and exception reports provided by the Custodian pursuant to the Master Document Custodial Agreement; and
• the “true sale” legal opinions.

Some of these documents may or may not be available on the SEC’s EDGAR system; some may be obtainable only through discovery in litigation. The primary inquiry is whether or not the documents, money and records that were required to have been produced and change hands actually do so as required, and at the times required, by the terms of the transaction documents.

Another question sometimes asked when examining the “validity” of a securitization (or in other words, the rights of a securitization Trustee versus a bankruptcy trustee) is, must the Note be endorsed to the Trustee at the time of the securitization? Here are some points to consider:

• Frequently the only endorsement on the Note is from the Securitizer-Sponsor “in blank” and the only Assignment that exists, pre-foreclosure, is from the Securitizer-Sponsor “in blank” (in other words, the name of the transferee is not inserted in the instrument and this space is blank).
• The concept widely accepted in the securitization world (the issuers and ratings agencies, and the law firms advising them) is that this form of documentation was sufficient for a valid and unbroken chain of transfers of the Notes and assignments of the Mortgages as long as everything was done consistently with the terms of the securitization documents. This article is not intended to validate or defend either this concept or this practice, nor is it intended to represent in any way that the terms of the securitization documents were actually followed to the letter in every real-world case. In fact, and unfortunately for the certificate holders and the securitized mortgage markets, there are many instances in many reported cases where these mandatory rules of the securitization documents have not been followed but in fact, completely ignored.
• Often shortly before foreclosure (or in some cases afterwards) a mortgage assignment is produced from the Originator to the Trustee years after the Trust has closed out for the receipt of all mortgage loans. Such assignments are inconsistent with the mandatory conveyancing rules of the Trust Documents and are also inconsistent with the special tax rules that apply to these special trust structures. Most state law requires the chain of title not to include any mortgage assignments in blank, but assignments from A to B to C to D. Under most state statutes, an assignment in blank would be deemed an “incomplete real estate instrument.” Even more frequent than A to D assignments are MERS to D assignments, which suffer from the same transfer problems noted herein plus what is commonly referred to as the “MERS problem.”

Scenario 2: Party B seeks to prove standing to foreclose or to appear in court with the rights of a secured creditor under the Bankruptcy Code. OK, granted the UCC (§3-301) does provide that a negotiable instrument can be enforced either by “(i) the holder of the instrument, or (ii) a non-holder in possession of the instrument who has the rights of a holder.”

• Servicers and foreclosure counsel have been known to contend that this is the end of the story and that the servicer can therefore do anything that the holder of the Note could do, anywhere, anytime.

• The Fannie Mae and Freddie Mac Guides contain many sections that appear to lend superficial support to this contention and frequently will be cited by Servicers and foreclosure counsel as though the Guides have the force of law, which of course they do not.

• There are many serious problems with this legal position, as recognized by an increasing number of reported court decisions.

Authors’ General Conclusions and Observations:

• Servicers and foreclosure firms are either wrong, or at least not being cautious, if they attempt to foreclose, or appear in court, without having a valid pre-complaint or pre-motion Assignment of the Mortgage. Yet at the same time, Servicers and note holders place themselves at risk of preference and avoidable transfer issues in bankruptcy cases if, for example, endorsements and Assignments that they rely upon to support claims to secured status occur or are recorded after or soon before bankruptcy filing.

• In addition any Servicer, Lender, or Securitization Trustee is either wrong, or at least not being cautious, if it ever: (1) claims in any communications to a consumer or to the Court in a judicial proceeding that it is the Note holder unless they are, at the relevant point in time, actually the holder and owner of the Note as determined under UCC law; or (2) undertakes to enforce rights under a Mortgage without having and recording a valid Assignment.
• The UCC deals only with enforcing the Note. Enforcing the Mortgage on the other hand is governed by the state’s real property and foreclosure laws, which generally contain crucial provisions regarding actions required to be taken by the “note holder” or “beneficiary.” State law may or may not authorize particular actions to be taken by servicers or agents of the holder of the Note.

• For the Servicer to have “the rights of the holder” under the UCC it must be acting in accordance with its contract. For example, if the Servicer claims to have possession of the Note, did it follow the procedures contained in the “Release of Documents” section of the Custodial Agreement in obtaining possession? Does the Servicer really have “constitutional” standing under either Federal or State law to enforce the Note even if it is a “holder” if it does not have any “pecuniary” or economic interest in the Note? In short, the concept of constitutional standing involves some injury in fact and it is hard to see how a mere “place-holder” or “Nominee” could ever over-come such a hurdle unless it actually owned the Note or some real interest in the same.

• The Servicer should have the burden of explaining the legal reasons supporting its standing and authority to act. Sometimes Servicers have difficulty maintaining a consistent story in this regard. Is the Servicer claiming to be the actual holder, or the holder and the owner, or merely an authorized agent of the true holder? If it is claiming some agency, what proof does it have to support such a claim? What proof is required? Sometimes this is just academic legal hair-splitting but many times it involves serious issues of fact. For example, what if the attorney for the Servicer asserts to the court that his or her client actually owns the Note, but the Fannie Mae website reports that Fannie is the owner? What if the MERS website reports that the Plaintiff is just the “Servicer?” What if the pre-complaint correspondence to the borrower names some entirely different party as the holder and indicated that the current plaintiff is only the Servicer?

• Finally, the Servicer always has an obligation to be factually accurate in borrower communications and legal proceedings, and to supervise employees and vendors and attorneys to assure that Note endorsements, Assignments of Mortgage, and affidavits are executed by persons with valid corporate authority, and not falsified nor offered for any improper purpose.

The focus of the default servicing industry must move from “how fast we can get things done” to “how honestly and accurately can we be in presenting the proper documentation to the courts and to the borrowers”. Judicial proceedings are not like NASCAR races where the fastest lawyer always wins. Judicial proceedings are all about finding the truth no matter how long it takes and regardless of the time and difficulties involved.

California Court Rules: MERS Can’t Foreclose, Citibank Can’t Collect

California Court Rules: MERS Can’t Foreclose, Citibank Can’t Collect

“Any attempt to transfer the beneficial interest of a trust deed without ownership of the underlying note is VOID under California Law.”

If you read that sentence and thought… “MERS,” then you’re already in the club. If you’ve never heard of MERS, and have no idea what is meant by being “in the club,” don’t worry, this is a club that just about every homeowner is invited to join. In fact, you may already be a member and not even know it.
MERS is the acronym used to describe Mortgage Electronic Registration Systems, Inc. Best I can tell, our friends in the mortgage banking industry created MERS to make it easier for banks and servicers to sell and transfer our mortgages at the speed of light during the real estate bubble. According to the company’s Website:
MERS was created by the mortgage banking industry to streamline the mortgage process by using electronic commerce to eliminate paper. Our mission is to register every mortgage loan in the United States on the MERS®System.
MERS acts as nominee in the county land records for the lender and servicer. Any loan registered on the MERS®System is inoculated against future assignments because MERS remains the nominal mortgagee no matter how many times servicing is traded.

I have to tell you… I hate these guys already. Their attitude alone bothers me. I looked at pictures of their three top executives on their Website and thought to myself… “No way I’d be friends with these guys.” Probably not very fair of me, but as far as I’m concerned, when it comes to anything that talks like that and was created by the mortgage banking industry… “fair,” is where you go on Sunday to have popcorn and cotton candy. Just so we’re clear.
MERS, which is a company that I hear doesn’t even have employees, has been about as controversial as you get ever since houses started dropping like flies into foreclosure back in 2007-08. God forbid you find yourself losing your home to foreclosure, you’ll very likely find a representative from MERS looking smug and acting like the owner of your mortgage. But, MERS is not the owner of your mortgage, of course, and now a bankruptcy court judge in the Eastern District of California has officially said that he agrees.
MERS is a relatively new development in the mortgage world, and as the foreclosure crisis began the courts pretty much let them do whatever they wanted to do, as the party in interest in a foreclosure action.
But, that was before the foreclosures became a full fledged tsunami, and homeowners watched the bankers first get bailed out, and then pay out billions in bonuses before treating every single American homeowner/taxpayer who applied for a loan modification like insignificant garbage.
In response, homeowners, having been trained for over 200 years in the fine art of pushing back when shoved, went to their lawyers, and those lawyers started asking questions, as they are prone to do. Many started with questions like: “Who the heck is this MERS guy and why does he think he has any right to be foreclosing on my client’s home?”
For almost two full years, it seemed to me that judges, who frankly weren’t used to foreclosures being challenged, basically yawned and gave the house back to the bank. Then, starting about a year ago, give or take, things started to change. Judges started to listen to the points being raised as related to MERS showing up as the party in interest ready to foreclose, and the more the judges learned, the more they saw problems with what MERS was doing. As time went on the tide seemed to shift a bit and several decisions weren’t falling as MERS would have liked for one reason or another.
According to the company’s Website, MERS “is a proper party that can lawfully foreclose as the mortgagee and note-holder of a mortgage loan.” Here’s what it says on the MERS Website:
FORECLOSURES
(“MERS”) is In mortgage foreclosure cases, the plaintiff has standing as the holder of the note and the mortgage. When MERS forecloses, MERS is the mortgagee and it is the holder of the note because a MERS officer will be in possession of the original note endorsed in blank, which makes MERS a holder of the bearer paper.

But, in this latest decision, the bankruptcy judge in California didn’t agree, writing in his opinion:
“Since no evidence of MERS’ ownership of the underlying note has been offered, and other courts have concluded that MERS does not own the underlying notes, this court is convinced that MERS had no interest it could transfer to Citibank. Since MERS did not own the underlying note, it could not transfer the beneficial interest of the Deed of Trust to another. Any attempt to transfer the beneficial interest of a trust deed without ownership of the underlying note is void under California law.”

Did you get that? Since MERS didn’t own the underlying note, it couldn’t transfer the beneficial interest of the Deed of Trust to Citibank.

According to several attorneys, this opinion should serve as legal basis to challenge a foreclosure in California that has been based on a MERS assignment. It could also be used when seeking to void any MERS assignment of the Deed of Trust, or the note, to a third party for purposes of foreclosure; and should be sufficient for a borrower to obtain a TRO against a Trustee’s Sale, and a Preliminary Injunction preventing any sale, pending litigation filed by the borrower that challenges a foreclosure based on a MERS assignment.
In this decision the court found that MERS was acting “only as a nominee,” under the Deed of Trust, and that there was no evidence of the note being transferred. The judge’s opinion in this case also said that “several courts have acknowledged that MERS is not the owner of the underlying note and therefore could not transfer the note, the beneficial interest in the deed of trust, or foreclose on the property secured by the deed”, citing cases of: In Re Vargas, California Bankruptcy Court; Landmark v. Kesler, Kansas decision as to lack of authority of MERS; LaSalle Bank v. Lamy, a New York case; and In Re Foreclosure Cases, the “Boyko” decision from Ohio Federal Court.
And the court concluded by stating:
“Since the claimant, Citibank, has not established that it is the owner of the promissory note secured by the trust deed, Citibank is unable to assert a claim for payment in this case.”

Oh my… well, that really is something. MERS can’t foreclose and Citibank can’t collect? I believe you would have to say that MERS and Citibank were already in a hard place when the judge inserted a rock. MERS can’t foreclose and Citi can’t collect… I am absolutely loving this, I have to say, but I suppose giddy would be an inappropriate response, so I’ll just say, “how interesting”.
This decision means that if a foreclosing party in California, that is not the original lender, claims that payment is due under the note, and that they have the right to foreclose on the basis of a MERS assignment, they’re wrong… based on this opinion. The bottom line is that MERS has no authority to transfer the note because it never owned it, and that’s a view that even seems to be supported by MERS’ own contract, which says that “MERS agrees not to assert any rights to mortgage loans or properties mortgaged thereby”.
What this may mean to California’s homeowners in bankruptcy court…
· It should serve as a legal basis to challenge any foreclosure in California based on a MERS assignment.
· It should serve as the legal basis for voiding a MERS assignment of the Deed of Trust, or the note, to a third party for purposes of foreclosure.
· It should be an adequate basis for obtaining a TRO against a Trustee’s Sale
· It should be the basis for a Preliminary Injunction barring any sale pending litigation filed by the borrower that challenges a foreclosure based on a MERS assignment.
In addition, some lawyers believe that this ruling is relevant to borrowers across the country as well, because the court cited non-bankruptcy cases related to the lack of authority of MERS, and because this opinion is consistent with prior rulings in Idaho and Nevada Bankruptcy courts on the same issue.
I don’t know about you, but I feel like watching a marching band. 76 trombones, baby, 76 trombones.
“Any attempt to transfer the beneficial interest of a trust deed without ownership of the underlying note is VOID under California Law.”

The Proof of Claim at issue, listed as claim number 5 on the court’s official
claims registry, asserts a $1,320,650.52 secured claim. The Debtor objects to
the Claim on the basis that the claimant, Citibank, N.A., did not provided any
evidence that Citibank has the authority to bring the claim, as required by
Federal Rule of Bankruptcy Procedure 3001(c), rendering the claim facially
defective.
The court’s review of the claim shows that the Deed of Trust purports to have
been assigned to Citibank, N.A. by Mortgage Electronic Registration Systems,
Inc. as nominee for Bayrock Mortgage Corporation on March 5, 2010. (Proof of
Claim No. 5 p.36-37, Mar. 19, 2010.) Debtor contends that this does not
establish that Citibank is the owner of the underling promissory note since the
assignor, Mortgage Electronic Registration Systems, Inc. (“MERS”), had no
interest in the note to transfer. Debtors loan was originated by Bayrock
Mortgage Corporation and no evidence of the current owner of the promissory
note is attached to the proof of claim. It is well established law in the
Ninth Circuit that the assignment of a trust deed does not assign the
underlying promissory note and right to be paid, and that the security interest
is incident of the debt. 4 WITKIN SUMMARY OF CALIFORNIA LAW, SECURED TRANSACTIONS IN REAL
PROPERTY §105 (10th ed).

MERS AND CITIBANK ARE NOT THE REAL PARTIES IN INTEREST
Under California law, to perfect the transfer of mortgage paper as collateral
the owner should physically deliver the note to the transferee. Bear v. Golden
Plan of California, Inc., 829 F.2d 705, 709 (9th Cir. 1986). Without physical
transfer, the sale of the note could be invalid as a fraudulent conveyance,
Cal. Civ. Code §3440, or as unperfected, Cal. Com. Code §§9313-9314. See ROGER
BERNHARDT, CALIFORNIA MORTGAGES AND DEEDS OF TRUSTS, AND FORECLOSURE LITIGATION §1.26 (4th
ed. 2009). The note here specifically identified the party to whom it was
payable, Bayrock Mortgage Corporation, and the note therefore cannot be
transferred unless the note is endorsed. See Cal. Com. Code §§3109, 3201, 3203,
3204. The attachments to the claim do not establish that Bayrock Mortgage
Corporation endorsed and sold the note to any other party.
TRANSFER OF AN INTEREST IN THE DEED OF TRUST ALONE IS VOID
MERS acted only as a “nominee” for Bayrock Mortgage under the Deed of Trust.
Since no evidence has been offered that the promissory note has been
transferred, MERS could only transfer what ever interest it had in the Deed of
Trust. However, the promissory note and the Deed of Trust are inseparable.
“The note and the mortgage are inseparable; the former as essential, the later
as an incident. An assignment of the note carries the mortgage with it, while
an assignment of the latter alone is a nullity.” Carpenter v. Longan, 83 U.S.
271, 274 (1872); accord Henley v. Hotaling, 41 Cal. 22, 28 (1871); Seidell v.
Tuxedo Land Co., 216 Cal. 165, 170 (1932); Cal. Civ. Code §2936. Therefore,
if on party receives the note an another receives the deed of trust, the holder
of the note prevails regardless of the order in which the interests were
transferred. Adler v. Sargent, 109 Cal. 42, 49-50 (1895).

Further, several courts have acknowledged that MERS is not the owner of the
underlying note and therefore could not transfer the note, the beneficial
interest in the deed of trust, or foreclose upon the property secured by the
deed. See In re Foreclosure Cases, 521 F. Supp. 2d 650, 653 (S.D. Oh. 2007);
In re Vargas, 396 B.R. 511, 520 (Bankr. C.D. Cal. 2008); Landmark Nat’l Bank
v. Kesler, 216 P.3d 158 (Kan. 2009); LaSalle Bank v. Lamy, 824 N.Y.S.2d 769
(N.Y. Sup. Ct. 2006). Since no evidence of MERS’ ownership of the underlying
note has been offered, and other courts have concluded that MERS does not own
the underlying notes, this court is convinced that MERS had no interest it
could transfer to Citibank.
Since MERS did not own the underling note, it could not transfer the beneficial
interest of the Deed of Trust to another. Any attempt to transfer the
beneficial interest of a trust deed with out ownership of the underlying note
is void under California law. Therefore Citibank has not established that it
is entitled to assert a claim in this case.
MULTIPLE CLAIMS TO THE BENEFICIAL INTEREST IN THE DEED OF TRUST AND OWNERSHIP
OF PROMISSORY NOTE SECURED THEREBY
Debtor also points out that four separate entities have claimed beneficial
ownership of the deed of trust. (Obj. to Claim 3-5, Apr. 6, 2010.) The true
owner of the underling promissory note needs to step forward to settle the
cloud that has been created surrounding the relevant parties rights and
interests under the trust deed.
DECISION
11 U.S.C. §502(a) provides that a claim supported by a Proof of Claim is
allowed unless a party in interest objects. Once an objection has been filed,
the court may determine the amount of the claim after a noticed hearing. 11
U.S.C. §502(b). Since the claimant, Citibank, has not established that it is
the owner of the promissory note secured by the trust deed, Citibank is unable
to assert a claim for payment in this case. The objection is sustained and
Claim Number 5 on the court’s official register is disallowed in its entirety,
with leave for the owner of the promissory note to file a claim in this case
by June 18, 2010.
The court disallowing the proof of claim does not alter or modify the trust
deed or the fact that someone has an interest in the property which can be
subject thereto. The order disallowing the proof of claim shall expressly so
provide.
The court shall issue a minute order consistent with this ruling.

eviction defense court documents

briefsamended ud answer

CABESAS-MOTION LIMINE

Cabesas-Notice and demrrure to complaint

Cabesas-Notice and Demurrer to cmplaint

CAPARAS, Herm UD Plaintiff’s MSC Brief

Dancy+Opening+Brief

Dancy+Opening+Brief-1

defendant michelle cabesas special interrogaroties to plaintiff fannie mae national association

Exerpts+from+1161a+UD+appellate+brief

Motion to Consolidate P & A

notice of demurrer to complaint

Notice of Motion to Consolidate

our points and authorities re mot to consol

plaintiff’s responses to request for admission- genuineness documents

CAPARAS, Herm UD Plaintiff’s MSC Brief

EXHIBITS COMPILATION
declaration of timothy mccandless in opp to mtn for summ judg
SEPARATE STATEMENT OF DISPUTED FACTS
EVIDENTIARY OBJECTION TO DECLARATION OF MAC JOHNSON

Cabesas-Notice and demrrure to complaint

Biggest Defaulters on Mortgages Are the Rich

By DAVID STREITFELD
Published: July 8, 2010

LOS ALTOS, Calif. — No need for tears, but the well-off are losing their master suites and saying goodbye to their wine cellars.

Peter DaSilva for The New York Times

A foreclosed house in Los Altos, Calif., where five such homes were recently set for an auction.

The housing bust that began among the working class in remote subdivisions and quickly progressed to the suburban middle class is striking the upper class in privileged enclaves like this one in Silicon Valley.

Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.

More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.

By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent.

Though it is hard to prove, the CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment.

“The rich are different: they are more ruthless,” said Sam Khater, CoreLogic’s senior economist.

Five properties here in Los Altos were scheduled for foreclosure auctions in a recent issue of The Los Altos Town Crier, the weekly newspaper where local legal notices are posted. Four have unpaid mortgage debt of more than $1 million, with the highest amount $2.8 million.

Not so long ago, said Chris Redden, the paper’s advertising services director, “it was a surprise if we had one foreclosure a month.”

The sheriff in Cook County, Ill., is increasingly in demand to evict foreclosed owners in the upscale suburbs to the north and west of Chicago — like Wilmette, La Grange and Glencoe. The occupants are always gone by the time a deputy gets there, a spokesman said, but just barely.

In Las Vegas, Ken Lowman, a longtime agent for luxury properties, said four of the 11 sales he brokered in June were distressed properties.

“I’ve never seen the wealthy hit like this before,” Mr. Lowman said. “They made their plans based on the best of all possible scenarios — that their incomes would continue to grow, that real estate would never drop. Not many had a plan B.”

The defaulting owners, he said, often remain as long as they can. “They’re in denial,” he said.

Here in Los Altos, where the median home price of $1.5 million makes it one of the most exclusive towns in the country, several houses scheduled for auction were still occupied this week. The people who answered the door were reluctant to explain their circumstances in any detail.

At one house, where the lender was owed $1.3 million, there was a couch out front wrapped in plastic. A woman said she and her husband had lost their jobs and were moving in with relatives. At another house, the family said they were renters. A third family, whose mortgage is $1.6 million, said they would be moving this weekend.

At a vacant house with a pool, where the lender was seeking $1.27 million, a raft and a water gun lay abandoned on the entryway floor.

Lenders are fearful that many of the 11 million or so homeowners who owe more than their house is worth will walk away from them, especially if the real estate market begins to weaken again. The so-called strategic defaults have become a matter of intense debate in recent months.

Fannie Mae and Freddie Mac, the two quasi-governmental mortgage finance companies that own most of the mortgages in America with a value of less than $500,000, are alternately pleading with distressed homeowners not to be bad citizens and brandishing a stick at them.

In a recent column on Freddie Mac’s Web site, the company’s executive vice president, Don Bisenius, acknowledged that walking away “might well be a good decision for certain borrowers” but argues that those who do it are trashing their communities.

Standing argument

Garfield update 2009-2010

1. No governmental relief is in sight for homeowners except in isolated instances of community action together with publicity from the media.
2. State and federal governments continue to sink deeper into debt, cutting social and necessary services while avoiding the elephant in the living room: the trillions of dollars owed and collectible in taxes, recording fees, filing fees, late fees, penalties, financial damages, punitive damages and interest due from the intermediary players on Wall Street who created trading “instruments” based upon conveyance of interests in real property located within state borders. The death grip of the lobby for the financial service industry is likely to continue thus making it impossible to resolve the housing crisis, the state budget crisis or the federal budget deficit.
3. Using taxpayer funds borrowed from foreign governments or created through quantitative easing, trillions of dollars have been paid, or provided in “credit lines” to intermediaries on the false premise that they own or control the mortgage backed securities that have defaulted. Foreclosures continue to hit new highs. Total money injected into the system exceeds 8 trillion dollars. Record profits announced by the financial services industry in which power is now more concentrated than before, making them the strongest influence in Federal and State capitals around the world.
4. Toxic Titles reveal unmarketable properties in and out of foreclosures with no relief in sight because nearly everyone is ignoring this basic problem that is a deal-breaker on every transfer of an interest in real property.
5. Evictions continue to hit new highs as Judges continue to be bombarded with ill-conceived motions that do not address the jurisdiction or authority of the court. The illegal evictions are based upon fraudulent conveyances procured through abuse of the foreclosure process and direct misrepresentations and fraud upon the court and recording system in each county as to the documents fabricated for purposes of foreclosure — creating the illusion of a proper paper trail.
6. 1.7 million new foreclosed properties are due to hit the market according to published statistics. Livinglies estimate the number to be at least 4 million.
7. Downward pressure on both price and marketability continues with no end in sight.
8. Unemployment continues to rise, albeit far more slowly than at the beginning of 2009. Unemployment, underemployment, employment drop-outs, absence of entry-level jobs, low statistics on new business starts, and former members of workforce (particularly men) are harbingers for continued decline in median income combined with higher expenses for key components, particularly health care. The ability to pay anything other than rent is continuing its decline.
9. Concurrent with the increase in foreclosures and the decrease in housing prices, official figures put the number of homes underwater at 25%. Livinglies estimates that when you look at three components not included in official statistics, the figure rises to more than 45%. The components are selling discounts, selling expenses, and continued delusional asking prices that will soon crash when sellers realize that past high prices were an illusion, not a market fluctuation.
10. The number of people walking from their homes is increasing daily, including people who are not behind in their mortgages. This is increasing the inventory of homes that are not officially included in the pipeline because they are not sufficiently advanced in the delinquency or foreclosure process. This is a hidden second wave of pressure on housing prices and marketability.
11. With the entire economy on government life-support that is not completely effective in preventing rises in homelessness and people requiring public assistance, the likelihood of severe social unrest and political upheaval increases month by month. Increasing risks of unrest prompted at least one Wall Street Bank to order enough firearms and ammunition to start an armory.
12. Modification of mortgages has been largely a sham.
13. Short-sales have been largely a sham.
14. Quiet titles in favor of homeowners are increasing at a slow pace as the sophistication of defenses improves on the side of financial services companies seeking free homes through foreclosures.
15. Legislative Intervention has been ineffective and indeed, misleading
16. Executive intervention has been virtually non-existent. The people who perpetrated this fraud not only have evaded prosecution, they maintain close relationships with the Obama administration.
17. Judicial intervention has been spotty and could be much better once people accept the complexity of securitization and the simplicity of STRATEGIES THAT WORK.
18. Legal profession , slow to start went from zero to 15 mph during 2009. Let’s hope they get to 60 mph during 2010.
19. Accounting profession, which has thus far stayed out of the process is expected to jump in on several fronts, including closer scrutiny of the published financial statements of public companies and financial institutions and the cottage industry of examining loan documents for compliance issues and violations of Federal and State lending laws.
20. Prospects for actual economic recovery affecting the average citizen are dim. While there has been considerable improvement from the point of risk we had reached at the end of 2008, the new President and Congress have yet to address essential reforms on joblessness, regulation of financial services (including insurance businesses permitted to write commitments without sufficient assets in reserve to assure the payment of the risk. The economic indicators have been undermined by the intentional fraud perpetrated upon the world economic and financial system. Thus the official figures are further than ever from revealing the truth about about our current status. Without key acceptance of these anomalies it is inconceivable that the economy will, in reality, improve during 2010.
21. Real inflation affecting everyday Americans has already started to rise as credit markets become increasingly remote from the prospective borrowers. Hyperinflation remains a risk although most of us were off on the timing because we underestimated the tenacious grip the dollar had on world commerce. While this assisted us in moving toward a softer landing, the probability that the dollar will continue to fall is still very high, thus making certain non-dollar denominated commodities more valuable. This phenomenon could affect housing prices in an upward direction if the trend continues. However the higher dollar prices will be offset by the fact that the cheaper dollars are required in greater quantities to buy anything. Thus the home prices might rise from $125,000 to $150,000 but the price of a loaf of bread will also be higher by 20%.
22. GDP has been skewed away from including econometrics for actual work performed in the home unless money changes hands. Societal values have thus depreciated the value of child-rearing and stable homes. The results have been catastrophic in education, crime, technological innovation and policy making. While GDP figures are officially announced as moving higher, the country continues to move further into a depression. No actual increase in GDP has occurred for many years, unless the declining areas of the society are excluded from what is counted.
23. The stock market is vastly overvalued again based upon vaporous forward earnings estimates and completely arbitrary price earnings ratios used by analysts. The vapor created by a 1000% increase in money supply caused by deregulation of the private financial institutions together with the illusion of profits created by these institutions trading between themselves has resulted in an increase from 16% to 45% of GDP activity. This figure is impossible to be real. As long as it is accepted as real or even possible, public figures, appointed and elected will base policy decisions on the desires of what is currently seen as the main driver of the U.S. economy. The balance of wealth will continue to move toward the levels of revolutionary France or the American colonies.
24. Perceptible increases in savings and consumer resistance to retail impulse buying bodes well for the long-term prospects of the country. As the savings class becomes more savvy and more wealthy, they will, like their counterparts in the upper echelons of government commence exercising their power in the marketplace and in the voting booth.

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, eviction, Foreclosure, Fraud, litigation, Mortgage modification, Predatory Lending

Categories : 2923.5, 2923.6, 2924, Foreclosure, Predatory Lending, eviction, stop foreclosure

90% Forclosures Wrongful

1 01 2010

A wrongful foreclosure action typically occurs when the lender starts a non judicial foreclosure action when it simply has no legal cause. This is even more evident now since California passed the Foreclosure prevention act of 2008 SB 1194 codified in Civil code 2923.5 and 2923.6. In 2009 it is this attorneys opinion that 90% of all foreclosures are wrongful in that the lender does not comply (just look at the declaration page on the notice of default). The lenders most notably Indymac, Countrywide, and Wells Fargo have taken a calculated risk. To comply would cost hundreds of millions in staff, paperwork, and workouts that they don’t deem to be in their best interest. The workout is not in there best interest because our tax dollars are guaranteeing the Banks that are To Big to Fail’s debt. If they don’t foreclose and if they work it out the loss is on them. There is no incentive to modify loan for the benefit of the consumer.

Sooooo they proceed to foreclosure without the mandated contacts with the borrower. Oh and yes contact is made by a computer or some outsourcing contact agent based in India. But compliance with 2923.5 is not done. The Borrower is never told that he or she have the right to a meeting within 14 days of the contact. They do not get offers to avoid foreclosure there are typically two offers short sale or a probationary mod that will be declined upon the 90th day.

Wrongful foreclosure actions are also brought when the service providers accept partial payments after initiation of the wrongful foreclosure process, and then continue on with the foreclosure process. These predatory lending strategies, as well as other forms of misleading homeowners, are illegal.

The borrower is the one that files a wrongful disclosure action with the court against the service provider, the holder of the note and if it is a non-judicial foreclosure, against the trustee complaining that there was an illegal, fraudulent or willfully oppressive sale of property under a power of sale contained in a mortgage or deed or court judicial proceeding. The borrower can also allege emotional distress and ask for punitive damages in a wrongful foreclosure action.

Causes of Action

Wrongful foreclosure actions may allege that the amount stated in the notice of default as due and owing is incorrect because of the following reasons:

* Incorrect interest rate adjustment
* Incorrect tax impound accounts
* Misapplied payments
* Forbearance agreement which was not adhered to by the servicer
* Unnecessary forced place insurance,
* Improper accounting for a confirmed chapter 11 or chapter 13 bankruptcy plan.
* Breach of contract
* Intentional infliction of emotional distress
* Negligent infliction of emotional distress
* Unfair Business Practices
* Quiet title
* Wrongful foreclosure
* Tortuous violation of 2924 2923.5 and 2923.5 and 2932.5
Injunction

Any time prior to the foreclosure sale, a borrower can apply for an injunction with the intent of stopping the foreclosure sale until issues in the lawsuit are resolved. The wrongful foreclosure lawsuit can take anywhere from ten to twenty-four months. Generally, an injunction will only be issued by the court if the court determines that: (1) the borrower is entitled to the injunction; and (2) that if the injunction is not granted, the borrower will be subject to irreparable harm.

Damages Available to Borrower

Damages available to a borrower in a wrongful foreclosure action include: compensation for the detriment caused, which are measured by the value of the property, emotional distress and punitive damages if there is evidence that the servicer or trustee committed fraud, oppression or malice in its wrongful conduct. If the borrower’s allegations are true and correct and the borrower wins the lawsuit, the servicer will have to undue or cancel the foreclosure sale, and pay the borrower’s legal bills.

Why Do Wrongful Foreclosures Occur?

Wrongful foreclosure cases occur usually because of a miscommunication between the lender and the borrower. Most borrower don’t know who the real lender is. Servicing has changed on average three times. And with the advent of MERS Mortgage Electronic Registration Systems the “investor lender” hundreds of times since the origination. And now they then have to contact the borrower. The don’t even know who the lender truly is. The laws that are now in place never contemplated the virtualization of the lending market. The present laws are inadequate to the challenge.

This is even more evident now since California passed the Foreclosure prevention act of 2008 SB 1194 codified in Civil code 2923.5 and 2923.6. In 2009 it is this attorneys opinion that 90% of all foreclosures are wrongful in that the lender does not comply (just look at the declaration page on the notice of default). The lenders most notably Indymac, Countrywide, and Wells Fargo have taken a calculated risk. To comply would cost hundreds of millions in staff, paperwork, and workouts that they don’t deem to be in their best interest. The workout is not in there best interest because our tax dollars are guaranteeing the Banks that are To Big to Fail’s debt. If they don’t foreclose and if they work it out the loss is on them. There is no incentive to modify loan for the benefit of the consumer.This could be as a result of an incorrectly applied payment, an error in interest charges and completely inaccurate information communicated between the lender and borrower. Some borrowers make the situation worse by ignoring their monthly statements and not promptly responding in writing to the lender’s communications. Many borrowers just assume that the lender will correct any inaccuracies or errors. Any one of these actions can quickly turn into a foreclosure action. Once an action is instituted, then the borrower will have to prove that it is wrongful or unwarranted. This is done by the borrower filing a wrongful foreclosure action. Costs are expensive and the action can take time to litigate.
Impact

The wrongful foreclosure will appear on the borrower’s credit report as a foreclosure, thereby ruining the borrower’s credit rating. Inaccurate delinquencies may also accompany the foreclosure on the credit report. After the foreclosure is found to be wrongful, the borrower must then petition to get the delinquencies and foreclosure off the credit report. This can take a long time and is emotionally distressing.

Wrongful foreclosure may also lead to the borrower losing their home and other assets if the borrower does not act quickly. This can have a devastating affect on a family that has been displaced out of their home. However, once the borrower’s wrongful foreclosure action is successful in court, the borrower may be entitled to compensation for their attorney fees, court costs, pain, suffering and emotional distress caused by the action.

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.5 2923.6 2924 2932.5 Audit bankruptcy california California cram down Chapter 13 civil code 2923.5 civil code 2924 Countrywide Cram down Cramdown criminal acts eviction FCRA FDCPA Federal Jurisdi, 2923.6, 2924, 2932.5, civil code 2924, Countrywide, Foreclosure, Fraud, stop foreclosure

Categories : 2923.5, 2923.6, 2924, Foreclosure, Lender Class action

 

 

TERRY MABRY et al., opinion 2923.5 Cilvil code

7 06 2010

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

TERRY MABRY et al.,

Petitioners,

v.

THE SUPERIOR COURT OF ORANGE COUNTY,

Respondent;

AURORA LOAN SERVICES, et al.,

Real Parties in Interest.

G042911

(Super. Ct. No. 30-2009-003090696)

O P I N I O N

Original proceedings; petition for a writ of mandate to challenge an order of the Superior Court of Orange County, David C. Velazquez, Judge. Writ granted in part and denied in part.
Law Offices of Moses S. Hall and Moses S. Hall for Petitioners.
No appearance for Respondent.
Akerman Senterfitt, Justin D. Balser and Donald M. Scotten for Real Party in Interest Aurora Loan Services.
McCarthy & Holthus, Matthew Podmenik, Charles E. Bell and Melissa Robbins Contts for Real Party in Interest Quality Loan Service Corporation.
Bryan Cave, Douglas E. Winter, Christopher L. Dueringer, Sean D. Muntz and Kamae C. Shaw for Amici Curiae Bank of America and BAC Home Loans Servicing on behalf of Real Parties in Interest.
Wright, Finlay & Zak, Thomas Robert Finlay and Jennifer A. Johnson for Amici Curiae United Trustee’s Association and California Mortgage Association.
Leland Chan for Amicus Curiae California Bankers Association.

I. SUMMARY
Civil Code section 2923.5 requires, before a notice of default may be filed, that a lender contact the borrower in person or by phone to “assess” the borrower’s financial situation and “explore” options to prevent foreclosure. Here is the exact, operative language from the statute: “(2) A mortgagee, beneficiary, or authorized agent shall contact the borrower in person or by telephone in order to assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure.” There is nothing in section 2923.5 that requires the lender to rewrite or modify the loan.
In this writ proceeding, we answer these questions about section 2923.5, also known as the Perata Mortgage Relief Act :
(A) May section 2923.5 be enforced by a private right of action? Yes. Otherwise the statute would be a dead letter.
(B) Must a borrower tender the full amount of the mortgage indebtedness due as a prerequisite to bringing an action under section 2923.5? No. To hold otherwise would defeat the purpose of the statute.
(C) Is section 2923.5 preempted by federal law? No — but, we must emphasize, it is not preempted because the remedy for noncompliance is a simple postponement of the foreclosure sale, nothing more.
(D) What is the extent of a private right of action under section 2923.5? To repeat: The right of action is limited to obtaining a postponement of an impending foreclosure to permit the lender to comply with section 2923.5.
(E) Must the declaration required of the lender by section 2923.5, subdivision (b) be under penalty of perjury? No. Such a requirement is not only not in the statute, but would be at odds with the way the statute is written.
(F) Does a declaration in a notice of default that tracks the language of section 2923.5, subdivision (b) comply with the statute, even though such language does not on its face delineate precisely which one of the three categories set forth in the declaration applies to the particular case at hand? Yes. There is no indication that the Legislature wanted to saddle lenders with the need to “custom draft” the statement required by the statute in notices of default.
(G) If a lender did not comply with section 2923.5 and a foreclosure sale has already been held, does that noncompliance affect the title to the foreclosed property obtained by the families or investors who may have bought the property at the foreclosure sale? No. The Legislature did nothing to affect the rule regarding foreclosure sales as final.
(H) In the present case, did the lender comply with section 2923.5? We cannot say on this record, and therefore must return the case to the trial court to determine which of the two sides is telling the truth. According to the lender, the borrowers themselves initiated a telephone conversation in which foreclosure-avoidance options were discussed, and there were many, many phone calls to the borrowers to attempt to discuss foreclosure-avoidance options. According to the borrowers, no one ever contacted them about nonforeclosure options. The trial judge, however, never reached this conflict in the facts, because he ruled strictly on legal grounds: namely (1) that section 2923.5 does not provide for a private right of action and (2) section 2923.5 is preempted by federal law. As indicated, we have concluded otherwise as to those two issues.
(I) Can section 2923.5 be enforced in a class action in this case? Not under these facts. The operation of section 2923.5 is highly fact-specific, and the details as to what might, or might not, constitute compliance can readily vary from lender to lender and borrower to borrower.
II. BACKGROUND
In December 2006, Terry and Michael Mabry refinanced the loan on their home in Corona from Paul Financial, borrowing about $700,000. In April 2008, Paul Financial assigned to Aurora Loan Services the right to service the loan. In this opinion, we will treat Aurora as synonymous with the lender and use the terms interchangeably.
According to the lender, in mid-July 2008 — before the Mabrys missed their August 2008 loan payment — the couple called Aurora on the telephone to discuss the loan with an Aurora employee. The discussion included mention of a number of options to avoid foreclosure, including loan modification, short sale, deed-in-lieu of foreclosure, and even a special forbearance. The Aurora employee sent a letter following up on the conversation. The letter explained the various options to avoid foreclosure, and asked the Mabrys to forward current financial information to Aurora so it could consider the Mabrys for these options.
According to the lender, the Mabrys missed their September 2008 payment as well, and mid-month Aurora sent them another letter describing ways to avoid foreclosure. Aurora employees called the Mabrys “many times” to discuss the situation. The Mabrys never picked up.
It is undisputed that later in September, the Mabrys filed Chapter 11 bankruptcy and Aurora did not contact the Mabrys while the bankruptcy was pending. (See 11 U.S.C. § 362 [automatic stay].) The Mabrys had their Chapter 11 case dismissed, however, in late March 2009.
According to the lender, Aurora once again began trying to call the Mabrys, calling them “numerous times,” including “three times on different days.” Meanwhile, in mid-April the Mabrys sent an authorization to discuss the loan with their lawyers.
According to the lender, finally, in June, the Mabrys sent two faxes to Aurora, the aggregate effect of which was to propose a short sale to the Mabrys’ attorney, Moses S. Hall, for $350,000. If accepted, the short sale would have meant a loss of over $400,000 on the loan. Aurora rejected that offer, and an attorney in Hall’s law office proposed a sale price of $425,000, which would have meant a loss to the lender of about $340,000.
It is undisputed that on June 18, 2009, Aurora recorded a notice of default. The notice of default used this (obviously form) language: “The Beneficiary or its designated agent declares that it has contacted the borrower, tried with due diligence to contact the borrower as required by California Civil Code section 2923.5, or the borrower has surrendered the property to the beneficiary or authorized agent, or is otherwise exempt from the requirements of section 2923.5.” Aurora sent six copies of the recorded notice of default to the Mabrys’ home by certified mail, and the certifications showed they were delivered.
It is also undisputed that on October 7, the Mabrys filed a complaint in Orange County Superior Court based on Aurora’s alleged failure to comply with section 2923.5.
According to the borrowers, no one had ever contacted them about their foreclosure options. Michael Mabry stated the following in his declaration: “We have never been contacted by Aurora nor [sic] any of its agents in person, by telephone or by first class mail to explore options for us to avoid foreclosure as required in CC § 2923.5.”
The complaint sought a temporary restraining order to prevent the foreclosure sale then scheduled just a week away, on October 14, 2009. Based on the allegation of no contact, the trial court issued a temporary restraining order, and scheduled a hearing for October 20.
But exactly one week before the October 20 hearing, the Mabrys filed an amended complaint, this one specifically adding class action allegations and seeking injunctive relief for an entire class. This new filing came with another request for a temporary restraining order, which was also granted, with a hearing on that temporary restraining order scheduled for October 27 (albeit the order was directed at Aurora only).
The first restraining order was vacated on October 20, the second on October 27. The trial judge did not, however, resolve the conflict in the facts presented by the pleadings. Rather he concluded: (1) the action is preempted by federal law; (2) there is no private right of action under section 2923.5 — the statute can only be enforced by members of pooling and servicing agreements; and (3) the Mabrys were required to at least tender all arrearages to enjoin any foreclosure proceedings.
The Mabrys filed a motion for reconsideration and a third request for a restraining order based on supposedly new law. The new law was a now review-granted Court of Appeal opinion which, let us merely note here, appears to have been quite off-point in regards to any issue which the trial judge had just decided. So it is not surprising that the requested restraining order was denied. The foreclosure sale was now scheduled for November 30, 2009. Six days before that, though, the Mabrys filed this writ proceeding, and two days later this court stayed all proceedings. We invited amicus curiae to give their views on the issues raised by the petition, and subsequently scheduled an order to show cause to consider those issues.
III. DISCUSSION
A. Private Right of Action? Yes
1. Preliminary Considerations
A private right of action may inhere within a statute, otherwise silent on the point, when such a private right of action is necessary to achieve the statute’s policy objectives. (E.g., Cannon v. University of Chicago (1979) 441 U.S. 677, 683 [implying private right of action into Title IX of the Civil Rights Act because such a right was necessary to achieve the statute’s policy objectives]; Basic Inc. v. Levinson (1988) 485 U.S. 224, 230-231 [implying private right of action to enforce securities statute].)
That is, the absence of an express private right of action is not necessarily preclusive of such a right. There are times when a private right of action may be implied by a statute. (E.g., Siegel v. American Savings & Loan Assn. (1989) 210 Cal.App.3d 953, 966 [“Before we reach the issue of exhaustion of administrative remedies, we must determine, therefore, whether plaintiffs have an implied private right of action under HOLA.”].)
California courts have, of recent date, looked to Moradi-Shalal v. Fireman’s Fund Ins. Companies (1988) 46 Cal.3d 287 (Moradi-Shalal) for guidance as to whether there is an implied private right of action in a given statute. In Moradi-Shalal, for example, the presence of a comprehensive administrative means of enforcement of a statute was one of the reasons the court determined that there was no private right of action to enforce a statute (Ins. Code, § 790.03, subd. (h)) regulating general insurance industry practices. (See Moradi-Shalal, supra, 46 Cal.3d at p. 300.)
There is also a pre-Moradi Shalal approach, embodied in Middlesex Ins. Co. v. Mann (1981) 124 Cal.App.3d 558, 570 (Middlesex). (The Middlesex opinion itself copied the idea from the Restatement Second of Torts, section 874A.) The approach looks to whether a private remedy is “appropriate” to further the “purpose of the legislation” and is “needed to assure the effectiveness of the provision.” (Middlesex, supra, 124 Cal.App.3d at p. 570.)
Obviously, where the two approaches conflict, the one used by our high court in Moradi-Shalal trumps the Middlesex approach. But we may note at this point that as regards section 2923.5, there is no alternative administrative mechanism to enforce the statute. By contrast, in Moradi-Shalal, there was an existing administrative mechanism at hand (by way of the Insurance Commissioner) available to enforce section 790.03, subdivision (h) of the Insurance Code.
There are other corollary principles as well.
First, California courts, quite naturally, do not favor constructions of statutes that render them advisory only, or a dead letter. (E.g., Petropoulos v. Department of Real Estate (2006) 142 Cal.App.4th 554, 567; People v. Stringham (1988) 206 Cal.App.3d 184, 197.) Our colleagues in Division One of this District nicely summarized this point in Goehring v. Chapman University (2004) 121 Cal.App.4th 353, 375: “The question of whether a regulatory statute creates a private right of action depends on legislative intent . . . . In determining legislative intent, ‘[w]e first examine the words themselves because the statutory language is generally the most reliable indicator of legislative intent . . . . The words of the statute should be given their ordinary and usual meaning and should be construed in their statutory context. . . . These canons generally preclude judicial construction that renders part of the statute “meaningless or inoperative.”‘” (Italics added.)
Second, statutes on the same subject matter or of the same subject should be construed together so that all the parts of the statutory scheme are given effect. (Lexin v. Superior Court (2010) 47 Cal.4th 1050, 1090-1091.) This canon is particularly important in the case before us, where there is an enforcement mechanism available at hand to enforce section 2923.5, in the form, as we explain below, of section 2924g. Ironically though, the enforcement mechanism at hand, in direct contrast to the one in Moradi-Shalal, is one that strongly implies individual enforcement of the statute.
Third, historical context can also shed light on whether the Legislature intended a private right of action in a statute. As noted by one federal district court that has found a private right of action in section 2923.5, the fact that a statute was enacted as an emergency statute is an important factor in determining legislative intent. (See Ortiz v. Accredited Home Lenders, Inc. (S.D. 2009) 639 F.Supp.2d 1159, 1166 [agreeing with argument that “the California legislature would not have enacted this ‘urgency’ legislation, intended to curb high foreclosure rates in the state, without any accompanying enforcement mechanism”]; cf. County of San Diego v. State of California (2008) 164 Cal.App.4th 580, 609 [admitting that private right of action might exist, even if the Legislature did not imply one, if “‘compelling reasons of public policy'” required “judicial recognition of such a right”].) Section 2923.5 was enacted in 2008 as a manifestation of a felt need for urgent action in the midst of a cascading torrent of foreclosures.
Finally, of course, there is recourse to legislative history. Alas, in this case, there is silence on the matter as regards the existence of a private right of action in the final draft of the statute, and we have been cited to nothing in the history that suggests a clear legislative intent one way or the other. (See generally J.A. Jones Construction Co. v. Superior Court (1994) 27 Cal.App.4th 1568, 1575 (J.A. Jones) [emphasizing importance of clear intent appearing in legislative history].) To be sure, as we were reminded at oral argument, an early version of section 2923.5 had an express provision for a private right of action and that provision did not make its way into the final version of the statute. And we recognize that this factor suggests the Legislature may not have wanted to have section 2923.5 enforced privately.
On the other hand, the bottom line was an outcome of silence, not a clear statement that there should be no individual enforcement. And silence, as this court pointed out in J.A. Jones, has its own implications. There, we cited Professor Eskridge’s work on statutory interpretation (see Eskridge, The New Textualism (1990) 37 U.C.L.A. L.Rev. 621, 670-671 (hereinafter “Eskridge on Textualism”)) to recognize that ambiguity in a statute may itself be the result of both sides in the legislative process agreeing to let the courts decide a point: “[I]f there is ambiguity it is because the legislature either could not agree on clearer language or because it made the deliberate choice to be ambiguous — in effect, the only ‘intent’ is to pass the matter on to the courts.” (J.A. Jones, supra, 27 Cal. App.4th at p. 1577.) As Professor Eskridge put it elsewhere in his article: “The vast majority of the Court’s difficult statutory interpretation cases involve statutes whose ambiguity is either the result of deliberate legislative choice to leave conflictual decisions to agencies or the courts.” (Eskridge on Textualism, supra, 37 UCLA L.Rev. at p. 677.)
We have a concrete example in the case at hand. Amicus curiae, the California Bankers Association, asserts that if section 2923.5 had included an express right to a private right of action, the association would have vociferously opposed the legislation. Let us accept that as true. But let us also accept as a reasonable premise that the sponsors of the bill (2008, Senate Bill No. 1137) would have vociferously opposed the legislation if it had an express prohibition on individual enforcement. The point is, the bankers did not insist on language expressly or even impliedly precluding a private right of action, or, if they did, they didn’t get it. The silence is consonant with the idea that section 2923.5 was the result of a legislative compromise, with each side content to let the courts struggle with the issue.
With these observations, we now turn to the language, structure and function of the statute at issue.
2. Operation of Section 2923.5
Section 2923.5 is one of a series of detailed statutes that govern mortgages that span sections 2920 to 2967. Within that series is yet another long series of statutes governing rules involving foreclosure. This second series goes from section 2924, and then follows with sections 2924a through 2924l. (There is no section 2924m . . . yet.)
Section 2923.5 concerns the crucial first step in the foreclosure process: The recording of a notice of default as required by section 2924. (Just plain section 2924 — this one has no lower case letter behind it.)
The key text of section 2923.5 — “key” because of the substantive obligation it imposes on lenders — basically says that a lender cannot file a notice of default until the lender has contacted the borrower “in person or by telephone.” Thus an initial form letter won’t do. To quote the text directly, lenders must contact the borrower by phone or in person to “assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure.” The statute, of course, has alternative provisions in cases where the lender tries to contact a borrower, and the borrower simply won’t pick up the phone, the phone has been disconnected, the borrower hides or otherwise evades contact.
The contrast between section 2923.5 and one of its sister-statutes, section 2923.6, is also significant. By its terms, section 2923.5 operates substantively on lenders. They must do things in order to comply with the law. In Hohfeldian language, it both creates rights and corresponding obligations.
But consider section 2923.6, which does not operate substantively. Section 2923.6 merely expresses the hope that lenders will offer loan modifications on certain terms. By contrast, section 2923.5 requires a specified course of action. (There is a reason for the difference, as we show in part III.C., dealing with federal preemption. In a word, to have required loan modifications would have run afoul of federal law.)
As noted above, other steps in the foreclosure process are set forth in sections 2924a through 2924l. The topic of the postponement of foreclosure sales is addressed in section 2924g.
Subdivision (c)(1)(A) of section 2924g sets forth the grounds for postponements of foreclosure sales. One of those grounds is the open-ended possibility that any court of competent jurisdiction may issue an order postponing the sale. Section 2923.5 and section 2924g, subdivision (c)(1)(A), when read together, establish a natural, logical whole, and one wholly consonant with the Legislature’s intent in enacting 2923.5 to have individual borrowers and lenders “assess” and “explore” alternatives to foreclosure: If section 2923.5 is not complied with, then there is no valid notice of default, and without a valid notice of default, a foreclosure sale cannot proceed. The available, existing remedy is found in the ability of a court in section 2924g, subdivision (c)(1)(A), to postpone the sale until there has been compliance with section 2923.5. Reading section 2923.5 together with section 2924g, subdivision (c)(1)(A) gives section 2923.5 real effect. The alternative would mean that the Legislature conferred a right on individual borrowers in section 2923.5 without any means of enforcing that right.
By the same token, compliance with section 2923.5 is necessarily an individualized process. After all, the details of a borrower’s financial situation and the options open to a particular borrower to avoid foreclosure are going to vary, sometimes widely, from borrower to borrower. Section 2923.5 is not a statute, like subdivision (h) of section 790.03 of the Insurance Code construed in Moradi-Shalal, which contemplates a frequent or general business practice, and thus its very text is necessarily directed at those who regulate the insurance industry. (Insurance Code section 790.03, subdivision (h) begins with the words, “Knowingly committing or performing with such frequency as to indicate a general business practice any of the following unfair claims settlement practices: . . . .”; see generally Moradi-Shalal, supra, 46 Cal.3d 287.)
Rather, in order to have its obvious goal of forcing parties to communicate (the statutory words are “assess” and “explore”) about a borrower’s situation and the options to avoid foreclosure, section 2923.5 necessarily confers an individual right. The alternative proffered by the trial court — enforcement by the servicer of pooling agreements — involves the facially unworkable problem of fitting individual situations into collective pools.
The suggestion of one amicus that the Legislature intended enforcement of section 2923.5 to reside within the Attorney General’s office is one of which we express no opinion. Our decision today should thus not be read as precluding such enforcement by the Attorney General’s office. But we do note that the same individual-collective problem would dog Attorney General enforcement of the statute. To be sure (which is why the possibility should be left open), there might, ala Insurance Code section 790.03, subdivision (h), be lenders who systematically ignore section 2923.5, and their “general business practice” would be susceptible to some sort of collective enforcement. Even so, the Attorney General’s office can hardly be expected to take up the cause of every individual borrower whose diverse circumstances show noncompliance with section 2923.5.
3. Application
We now put the preceding ideas and factors together.
While the dropping of an express provision for private enforcement in the legislative process leading to section 2923.5 does indeed give us pause, it is outweighed by two major opposing factors. First, the very structure of section 2923.5 is inherently individual. That fact strongly suggests a legislative intention to allow individual enforcement of the statute. The statute would become a meaningless dead letter if no individual enforcement were allowed: It would mean that the Legislature created an inherently individual right and decided there was no remedy at all.
Second, when section 2923.5 was enacted as an urgency measure, there already was an existing enforcement mechanism at hand — section 2924g. There was no need to write a provision into section 2923.5 allowing a borrower to obtain a postponement of a foreclosure sale, since such a remedy was already present in section 2924g. Reading the two statutes together as allowing a remedy of postponement of foreclosure produces a logical and natural whole.
B. Tender Full Amount of Indebtedness? No
The right conferred by section 2923.5 is a right to be contacted to “assess” and “explore” alternatives to foreclosure prior to a notice of default. It is enforced by the postponement of a foreclosure sale. Therefore it would defeat the purpose of the statute to require the borrower to tender the full amount of the indebtedness prior to any enforcement of the right to — and that’s the point — the right to be contacted prior to the notice of default. Case law requiring payment or tender of the full amount of payment before any foreclosure sale can be postponed (e.g., Arnolds Management Corp. v. Eischen (1984) 158 Cal.App.3d 575, 578 [“It is settled that an action to set aside a trustee’s sale for irregularities in sale notice or procedure should be accompanied by an offer to pay the full amount of the debt for which the property was security.”]) arises out of a paradigm where, by definition, there is no way that a foreclosure sale can be avoided absent payment of all the indebtedness. Any irregularities in the sale would necessarily be harmless to the borrower if there was no full tender. (See 4 Miller & Starr, Cal. Real Estate (2d ed. 1989) § 9:154, pp. 507-508.) By contrast, the whole point of section 2923.5 is to create a new, even if limited right, to be contacted about the possibility of alternatives to full payment of arrearages. It would be contradictory to thwart the very operation of the statute if enforcement were predicated on full tender. It is well settled that statutes can modify common law rules. (E.g., Evangelatos v. Superior Court
44 Cal.3d 1188, 1192 [noting that Civil Code sections 1431 to 1431.5 had modified traditional common law doctrine of joint and several liability].)
C. Preempted by Federal Law? No — As Long
As Relief Under Section 2923.5 is Limited to Just Postponement
1. Historical Context
A remarkable aspect of section 2923.5 is that it appears to have been carefully drafted to avoid bumping into federal law, precisely because it is limited to affording borrowers only more time when lenders do not comply with the statute. To explain that, though, we need to make a digression into state debtors’ relief acts as they have manifested themselves in four previous periods of economic distress.
The first period of economic distress was the depression of the mid-1780’s that played a large part in engendering the United States Constitution in the first place. As Chief Justice Charles Evans Hughes would later note for a majority of the United States Supreme Court, there was “widespread distress following the revolutionary period and the plight of debtors, had called forth in the States an ignoble array of legislative schemes for the defeat of creditors and the invasion of contractual obligations.” (Home Building and Loan Ass’n. v. Blaisdell (1934) 290 U.S. 398, 427 (Blaisdell).) Consequently, the federal Constitution of 1789 contains the contracts clause, which forbids states from impairing contracts. (See Siegel, Understanding the Nineteenth Century Contract Clause: The Role of the Property-Privilege Distinction and ‘Takings’ Clause Jurisprudence (1986) 60 So.Cal. L.Rev. 1, 21, fn. 86 [“Although debtor relief legislation was frequently enacted in the Confederation era, it was intensely opposed. It was among the chief motivations for the convening of the Philadelphia convention, and the Constitution drafted there was designed to eliminate such legislation through a variety of means.”].)
The second period of distress arose out of the panic of 1837, which prompted, in 1841, the Illinois state legislature to enact legislation severely restricting foreclosures. The legislation (1) gave debtors 12 months after any foreclosure sale to redeem the property; and (2) prevented any foreclosure sale in the first place unless the sale fetched at least two-thirds of the appraised value of the property. (See Bronson v. Kinzie (1843) 42 U.S. 311 (Bronson); Blaisdell, supra, 290 U.S. at p. 431.) In an opinion, the main theme of which is the interrelationship between contract rights and legal remedies to enforce those rights (see generally Bronson, supra, 42 U.S. at pp. 315-321), the Bronson court reasoned that the Illinois legislation had effectively destroyed the contract rights of the lender as regards a mortgage made in 1838. (See id. at p. 317 [“the obligation of the contract, and the rights of a party under it, may, in effect, be destroyed by denying a remedy altogether”].)
The third period of distress was, of course, the Great Depression of the 1930’s. In 1933, the Minnesota Legislature enacted a mortgage moratorium law that extended the period of redemption under Minnesota law until 1935. (See Blaisdell, supra, 290 U.S. at pp. 415-416.) But — and the high court majority found this significant — the law required debtors, in applying for an extension of the redemption period — to pay the reasonable value of the income of the property, or reasonable rental value if it didn’t produce income. (Id. at. pp. 416-417.) The legislation was famously upheld in Blaisdell. In distinguishing Bronson, the Blaisdell majority made the point that the statute did not substantively impair the debt the way the legislation in Bronson had: “The statute,” said the court, “does not impair the integrity of the mortgage indebtedness.” (Id. at p. 425.) The court went on to emphasize the need to pay the fair rental value of the property, which, it noted, was “the equivalent of possession during the extended period.”
Finally, the fourth period was within the living memory of many readers, namely, the extraordinary inflation and high interest rates of the late 1970’s. That period engendered Fidelity Federal Savings & Loan Association v. de la Cuesta (1982) 458 U.S. 141 (de la Cuesta). Many mortgages had (still have) what is known as a “due-on-sale” clause. As it played out in the 1970’s, the clause effectively required any buyer of a new home to obtain a new loan, but at the then-very high market interest rates. To circumvent the need for a new high rate mortgage, creative wrap-around financing was invented where a buyer would assume the obligation of the old mortgage, but that required the due-on-sale clause not be enforced.
An earlier decision of the California Supreme Court, Wellenkamp v. Bank of America (1978) 21 Cal.3d 943, had encouraged this sort of creative financing by holding that due-on-sale clauses violated California state law as an unreasonable restraint on alienation. Despite that precedent, the trial judge in the de la Cuesta case (Edward J. Wallin, who would later join this court) held that regulations issued by the Federal Home Loan Bank Board, by the authority of the Home Owners’ Loan Act of 1933 preempted state law that invalidated due-on-sale clause. A California appellate court in the Fourth District (in an opinion by Justice Marcus Kaufman, who would later join the California Supreme Court) reversed the trial court. The United States Supreme Court, however, agreed with Judge Wallin’s determination, and reversed the appellate judgment and squarely held the state law to be preempted.
The de la Cuesta court observed that the bank board’s regulations were plain — “even” the California appellate court had been required to recognize that. (de la Cuesta, supra, 458 U.S. at p. 154). On top of the express preemption, Congress had expressed no intent to limit the bank board’s authority to “regulate the lending practices of federal savings and loans.” (Id. at p. 161.) Further, going into the history of the Home Owners’ Loan Act, the de la Cuesta court pointed out that “mortgage lending practices” are a “critical” aspect of a savings and loan’s “‘operation,'” and the Home Loan Bank Board had issued the due-on-sale regulations in order to protect the economic solvency of such lenders. (See id. at pp. 167-168.) In what is perhaps the most significant part of the rationale for our purposes, the bank board had concluded that “the due-on-sale clause is ‘an important part of the mortgage contract,'” consequently its elimination would have an adverse effect on the “financial stability” of federally chartered lenders. (Id. at p. 168.) For example, invalidation of the due-on-sale clause would make it hard for savings and loans “to sell their loans in the secondary markets.” (Ibid.)
With this history behind us, we now turn to the actual regulations at issue in the case before us.
2. The HOLA Regulations
Under the Home Owner’s Loan Act of 1933 (12 U.S.C. § 1461 et seq.) the federal Office of Thrift Supervision has issued section 560.2 of title 12 of the Code of Federal Regulations, a regulation that itself delineates what is a matter for federal regulation, and what is a matter for state law. Interestingly enough, section 560.2 is written in the form of examples, using the “ejusdem generis” approach of requiring a court to figure out what is, and what is not, in the same general class or category as the items given in the example.
On the preempted side, section 560.2 includes:
– “terms of credit, including amortization of loans and the deferral and capitalization of interest and adjustments to the interest rate” (§ 560.2(b)(4));
– “balance, payments due, or term to maturity of the loan” (§ 560.2(b)(4)); and, most importantly for this case,
– the “processing, origination, servicing, sale or purchase of, or investment or participation in, mortgages.” (§ 560.2(b)(10), italics added.)
On the other side, left for the state courts, is “Real property law.” (12 C.F.R. § 560.2(c)(2).)
We agree with the Mabrys that the process of foreclosure has traditionally been a matter of state real property law, a point both noted by the United States Supreme Court in BFP v. Resolution Trust Corp. (1994) 511 U.S. 531, 541-542, and academic commentators (e.g., Alexander, Federal Intervention in Real Estate Finance: Preemption and Federal Common Law (1993) 71 N.C. L. Rev. 293, 293 [“Historically, real property law has been the exclusive domain of the states.”]), including at least one law professor who laments that diverse state foreclosure laws tend to hinder efforts to achieve banking stability at the national level. (See Nelson, Confronting the Mortgage Meltdown: A Brief for the Federalization of State Mortgage Foreclosure Law (2010) 37 Pepperdine L.Rev. 583, 588-590 [noting that mortgage foreclosure law varies from state to state, and advocating federalization of mortgage foreclosure law].) By contrast, we have not been cited to anything in the federal regulations that govern such things as initiation of foreclosure, notice of foreclosure sales, allowable times until foreclosure, or redemption periods. (Though there are commentators, like Professor Nelson, who argue there should be.)
Given the traditional state control over mortgage foreclosure laws, it is logical to conclude that if the Office of Thrift Supervision wanted to include foreclosure as within the preempted category of loan servicing, it would have been explicit. Nothing prevented the office from simply adding the words “foreclosure of” to section 560.2(b)(10).
D. The Extent of Section 2923.5?
More Time and Only More Time
State law should be construed, whenever possible, to be in harmony with federal law, so as to avoid having the state law invalidated by federal preemption. (See Greater Westchester Homeowners Assn. v. City of Los Angeles (1979) 26 Cal.3d 86, 93; California Arco Distributors, Inc. v. Atlantic Richfield Co. (1984) 158 Cal.App.3d 349, 359.)
We emphasize that we are able to come to our conclusion that section 2923.5 is not preempted by federal banking regulations because it is, or can be construed to be, very narrow. As mentioned above, there is no right, for example, under the statute, to a loan modification.
A few more comments on the scope of the statute:
First, to the degree that the words “assess” and “explore” can be narrowly or expansively construed, they must be narrowly construed in order to avoid crossing the line from state foreclosure law into federally preempted loan servicing. Hence, any “assessment” must necessarily be simple — something on the order of, “why can’t you make your payments?” The statute cannot require the lender to consider a whole new loan application or take detailed loan application information over the phone. (Or, as is unlikely, in person.)
Second, the same goes for any “exploration” of options to avoid foreclosure. Exploration must necessarily be limited to merely telling the borrower the traditional ways that foreclosure can be avoided (e.g., deeds “in lieu,” workouts, or short sales), as distinct from requiring the lender to engage in a process that would be functionally indistinguishable from taking a loan application in the first place. In this regard, we note that section 2923.5 directs lenders to refer the borrower to “the toll-free telephone number made available by the United States Department of Housing and Urban Development (HUD) to find a HUD-certified housing counseling agency.” The obvious implication of the statute’s referral clause is that the lender itself does not have any duty to become a loan counselor itself.
Finally, to the degree that the “assessment” or “exploration” requirements impose, in practice, burdens on federal savings banks that might arguably push the statute out of the permissible category of state foreclosure law and into the federally preempted category of loan servicing or loan making, evidence of such a burden is necessary before the argument can be persuasive. For the time being, and certainly on this record, we cannot say that section 2923.5, narrowly construed, strays over the line.
Given such a narrow construction, section 2923.5 does not, as the law in Blaisdell did not, affect the “integrity” of the basic debt. (Cf. Lopez v. World Savings & Loan Assn. (2003) 105 Cal.App.4th 729 [section 560.2 preempted state law that capped payoff demand statement fees].)
E. The Wording of the Declaration:
Okay If Not Under Penalty of Perjury
In addition to the substantive act of contacting the borrower, section 2923.5 requires a statement in the notice of default. The statement is found in subdivision (b), which we quote here: “(b) A notice of default filed pursuant to Section 2924 shall include a declaration that the mortgagee, beneficiary, or authorized agent has contacted the borrower, has tried with due diligence to contact the borrower as required by this section, or that no contact was required pursuant to subdivision (h).” (Italics added.)
The idea that this “declaration” must be made under oath must be rejected. First, ordinary English usage of the word “declaration” imports no requirement that it be under oath. In the Oxford English Dictionary, for example, numerous definitions of the word are found, none of which of require a statement under oath or penalty of perjury. In fact, the second legal definition given actually juxtaposes the idea of a declaration against the idea of a statement under oath: “A simple affirmation to be taken, in certain cases, instead of an oath or solemn affirmation.” (4 Oxford English Dict. (2d. ed. 1991) at p. 336.)
Second, even the venerable Black’s Law Dictionary doesn’t define “declaration” to necessarily be under oath. Its very first definition of the word is: “A formal statement, proclamation or announcement, esp. one embodied in an instrument.” (Black’s Law Dict. (9th ed. 2009) at p. 467.)
Third, if the Legislature wanted to say that the statement required in section 2923.5 must be under penalty of perjury, it knew how to do so. The words “penalty of perjury” are used in other laws governing mortgages. (E.g., § 2941.7, subdivision (b) [“The declaration provided for in this section shall be signed by the mortgagor or trustor under penalty of perjury.”].)
And, finally — back to our point about the inherent individual operation of the statute — the very structure of subdivision (b) belies any insertion of a penalty of perjury requirement. The way section 2923.5 is set up, too many people are necessarily involved in the process for any one person to likely be in the position where he or she could swear that all three requirements of the declaration required by subdivision (b) were met. We note, for example, that subdivision (a)(2) requires any one of three entities (a “mortgagee, beneficiary, or authorized agent”) to contact the borrower, and such entities may employ different people for that purpose. And the option under the statute of no contact being required (per subdivision (h) ) further involves individuals who would, in any commercial operation, probably be different from the people employed to do the contacting. For example, the person who would know that the borrower had surrendered the keys would in all likelihood be a different person than the legal officer who would know that the borrower had filed for bankruptcy.
The argument for requiring the declaration to be under penalty of perjury relies on section 2015.5 of the Code of Civil Procedure, but that reliance is misplaced. We quote all of section 2015.5 in the margin. Essentially the statute says if a statement in writing is required to be supported by sworn oath, making the statement under penalty of perjury will be sufficient. The key language is: “Whenever, under any law of this state . . . made pursuant to the law of this state, any matter is required . . . to be . . . evidenced . . . by the sworn . . . declaration . . . in writing of the person making the same . . . such matter may with like force and effect be . . . evidenced . . . by the unsworn . . . declaration . . . in writing of such person which recites that it is . . . declared by him or her to be true under penalty of perjury . . . .” (Italics added.) The section sheds no light on whether the declaration required in section 2923.5, subdivision (b) must be under penalty of perjury.
F. The Wording of the Declaration:
Okay If It Tracks the Statute
In light of what we have just said about the multiplicity of persons who would necessarily have to sign off on the precise category in subdivision (b) of the statute that would apply in order to proceed with foreclosure (contact by phone, contact in person, unsuccessful attempts at contact by phone or in person, bankruptcy, borrower hiring a foreclosure consultant, surrender of keys), and the possibility that such persons might be employees of not less than three entities (mortgagee, beneficiary, or authorized agent), there is no way we can divine an intention on the part of the Legislature that each notice of foreclosure be custom drafted.
To which we add this important point: By construing the notice requirement of section 2923.5, subdivision (b), to require only that the notice track the language of the statute itself, we avoid the problem of the imposition of costs beyond the minimum costs now required by our reading of the statute.
G. Noncompliance Before Foreclosure
Sale Affect Title After Foreclosure Sale? No
A primary reason for California’s comprehensive regulation of foreclosure in the Civil Code is to ensure stability of title after a trustee’s sale. (Melendrez v. D & I Investment, Inc. (2005) 127 Cal.App.4th 1238, 1249-1250 [“comprehensive statutory scheme” governing foreclosure has three purposes, one of which is “to ensure that a properly conducted sale is final between the parties and conclusive as to a bona fide purchaser” (internal quotations omitted)].)
There is nothing in section 2923.5 that even hints that noncompliance with the statute would cause any cloud on title after an otherwise properly conducted foreclosure sale. We would merely note that under the plain language of section 2923.5, read in conjunction with section 2924g, the only remedy provided is a postponement of the sale before it happens.
H. Lender Compliance in This Case?
Somebody is Not Telling the Truth
and It’s the Trial Court’s Job to
Determine Who It Is
We have already recounted the conflict in the evidence before the trial court regarding whether there was compliance with section 2923.5. Rarely, in fact, are stories so diametrically opposite: According to the Mabrys, there was no contact at all. According to Aurora, not only were there numerous contacts, but the Mabrys even initiated a proposal by which their attorney would buy the property.
Somebody’s not telling the truth, but appellate courts do not resolve conflicts in evidence. Trial courts do. (Butt v. State of California (1992) 4 Cal.4th 668, 697, fn. 23 [“Moreover, Diaz and Bezemek concede the proffered evidence is disputed; appellate courts will not resolve such factual conflicts.”].) This case will obviously have to be remanded for an evidentiary hearing.
I. Is This Case Suitable for
Class Action Treatment? No
As we have seen, section 2923.5 contemplates highly-individuated facts. One borrower might not pick up the telephone, one lender might only call at the same time each day in violation of the statute, one lender might (incorrectly) try to get away with a form letter, one borrower might, like the old Twilight Zone “pitchman” episode, try to keep the caller on the line but change the subject and talk about anything but alternatives to foreclosure, one borrower might, as Aurora asserts here, try to have his or her attorney do a deal that avoids foreclosure, etcetera.
In short, how in the world would a court certify a class? Consider that in this case, there is even a dispute over the basic facts as to whether the lender attempted to comply at all. We do not have, under these facts at least, a question of a clean, systematic policy on the part of a lender that might be amenable to a class action (or perhaps enforcement by the Attorney General). This case is not one, to be blunt, where the lender admits that it simply ignored the statute and proceeded on the theory that federal law had preempted it. We express no opinion as to any scenario where a lender simply ignored the statute wholesale — that sort of scenario is why we do not preclude, a priori, class actions and have not expressed an opinion as to whether the Attorney General or a private party in such a situation might indeed seek to enforce section 2923.5 in a class action.
Consequently, while we must grant the writ petition so as to allow the Mabrys a hearing on the factual merits of compliance, we deny it insofar as it seeks reinstatement of any claims qua class action. By the same token, in light of the limited right to time conferred under section 2923.5, we also deny the writ petition insofar as it seeks reinstatement of any claim for money damages.
IV. CONCLUSION
Let a writ issue instructing the trial court to decide whether or not Aurora complied with section 2923.5. To the degree that the trial court’s order precludes the assertion of any class action claims, we deny the writ. If the trial court finds that Aurora has complied with section 2923.5, foreclosure may proceed. If not, it shall be postponed until Aurora files a new notice of default in the wake of substantive compliance with section 2923.5.
Given that this writ petition is granted in part and denied in part, each side will bear its own costs in this proceeding.

SILLS, P. J.
WE CONCUR:

ARONSON, J.

IKOLA, J.

Edit : Edit
Comments : Leave a Comment »

Tags: stop foreclosure, Mortgage modification, mortgage meltdown, Foreclosure, 2923.5

Categories : 2923.5, 2923.6, Foreclosure

Latest on MERS and “possession of the Note”

3 04 2010

There is a great case re MERS’ authority to operate in CA since it is NOT registered to do business. The case is Champlaie. It
states that MERS is not a foreign lending institution, nor is it creating evidences.

The case is also interesting since it discusses why those who foreclose do not have to be in possession of the promissory note.Here are three paragraphs below from the court, although they are taken from different pages.
It is not helpful for us but the court does question why those who foreclose do not have to be in possession of the note.

“Several courts have held that this language demonstrates that possession of the note is not required, apparently concluding that the statute authorizes initiation of foreclosure by parties who would not be expected to possess the
note. See, e.g., Spencer v. DHI Mortg. Co., No. 09-0925, 2009 U.S. Dist. LEXIS 55191, *23-*24, 2009 WL 1930161 (E.D. Cal. June 30, 2009) (O’Neill, J.).
However, the precise reasoning of these cases is unclear.FN14″

“To say that a trustee’s duties are strictly limited does not appear to this court to preclude possession of the note as a prerequisite to foreclosure. On the other hand, perhaps it is not unreasonable to suggest that such a prerequisite imposes a nonstatutory duty.”

“At some point, however, the opinion of a large number of decisions, while not in a sense binding, are by virtue of the sheer number, determinative. I cannot conclude that the result reached by the district courts is unreasonable or does not accord with the law. I further note that this conclusion is not obviously at odds with the policies underlying the California statutes. The apparent purpose
of requiring possession of a negotiable instrument is to avoid fraud. In the context of non-judicial foreclosures, however, the danger of fraud is minimized by the requirement that the deed of trust be recorded, as must be any assignment or substitution of the parties thereto. While it may be that requiring production of the note would have done something to limit the mischief that led to the economic pain the nation has suffered, the great weight of authority has reasonably concluded that California law does not impose this requirement.”

Edit : Edit
Comments : 1 Comment »

Tags: 2923.5, 2923.5 2923.6 2924 2932.5 Audit bankruptcy california California cram down Chapter 13 civil code 2923.5 civil code 2924 Countrywide Cram down Cramdown criminal acts eviction FCRA FDCPA Federal Jurisdi, Foreclosure, Fraud

Categories : 2923.5, Foreclosure, I Have a Plan, mortgage meltdown, pedatory lending, stop foreclosure

 

Latest ruling on Civil Code 2923.5

26 02 2010

B. Perata Mortgage Relief Act, Cal. Civ. Code § 2923.5

Plaintiffs’ second cause of action arises under the Perata Mortgage Relief Act, Cal. Civ. Code § 2923.5. Plaintiffs argue U.S. Bank is liable for monetary damages under this provision because it “failed and refused to explore” “alternatives to the drastic remedy of foreclosure, such as loan modifications” before initiating foreclosure proceedings. (FAC PP 17-18.) Furthermore, Plaintiffs allege U.S. Bank violated Cal. Civ. Code § 2923.5(c) by failing to include with the notice of sale a declaration that it contacted the borrower to explore such options. (Opp’n at 6.)

Section 2923.5(a)(2) requires a “mortgagee, beneficiary or authorized agent” to “contact the borrower in person or by telephone in order to assess the borrower’s [*1166] financial situation and explore options for the borrower to avoid foreclosure.” For a lender which had recorded a notice of default prior to the effective date of the statute, as is the case here, § 2923.5(c) imposes a duty to attempt to negotiate with a borrower before recording a notice of sale. These provisions cover loans initiated between January 1, 2003 and December 31, 2007. Cal. Civ. Code § 2923.5(h)(3), (i).

U.S. Bank’s primary argument is that Plaintiffs’ claim should be dismissed because neither § 2923.5 nor its legislative history clearly indicate an intent to create a private right of action. (Mot. at 8.) Plaintiffs counter that such a conclusion is unsupported by the legislative history; the California legislature would not have enacted this “urgency” legislation, intended to curb high foreclosure rates in the state, without any accompanying enforcement mechanism. (Opp’n at 5.) The court agrees with Plaintiffs. While the Ninth Circuit has yet to address this issue, the court found no decision from this circuit [**15] where a § 2923.5 claim had been dismissed on the basis advanced by U.S. Bank. See, e.g. Gentsch v. Ownit Mortgage Solutions Inc., 2009 U.S. Dist. LEXIS 45163, 2009 WL 1390843, at *6 (E.D. Cal., May 14, 2009)(addressing merits of claim); Lee v. First Franklin Fin. Corp., 2009 U.S. Dist. LEXIS 44461, 2009 WL 1371740, at *1 (E.D. Cal., May 15, 2009) (addressing evidentiary support for claim).

On the other hand, the statute does not require a lender to actually modify a defaulting borrower’s loan but rather requires only contacts or attempted contacts in a good faith effort to prevent foreclosure. Cal. Civ. Code § 2923.5(a)(2). Plaintiffs allege only that U.S. Bank “failed and refused to explore such alternatives” but do not allege whether they were contacted or not. (FAC P 18.) Plaintiffs’ use of the phrase “refused to explore,” combined with the “Declaration of Compliance” accompanying the Notice of Trustee’s Sale, imply Plaintiffs were contacted as required by the statute. (Doc. No. 7-2, Exh. 4 at 3.) Because Plaintiffs have failed to state a claim under Cal. Civ. Code § 2923.5, U.S. Bank’s motion to dismiss is granted. Plaintiffs’ claim is dismissed without prejudice.

Edit : Edit
Comments : 8 Comments »

Tags: 2923.5, 2923.5 2923.6 2924 2932.5 Audit bankruptcy california California cram down Chapter 13 civil code 2923.5 civil code 2924 Countrywide Cram down Cramdown criminal acts eviction FCRA FDCPA Federal Jurisdi, civil code 2924, Foreclosure, litigation, Mortgage modification, truth in lending 2923.5

Categories : 2923.5, 2924, Foreclosure, Mortgage modification, Predatory Lending, mortgage meltdown

SB 94 and its interferance with the practice

5 09 2009

CA SB 94 on Lawyers & Loan Modifications Passes Assembly… 62-10

The California Assembly has passed Senate Bill 94, a bill that seeks to protect homeowners from loan modification scammers, but could end up having the unintended consequence of eliminating a homeowner’s ability to retain an attorney to help them save their home from foreclosure.

The bill, which has an “urgency clause” attached to it, now must pass the State Senate, and if passed, could be signed by the Governor on October 11th, and go into effect immediately thereafter.

SB 94’s author is California State Senator Ron Calderon, the Chair of the Senate Banking Committee, which shouldn’t come as much of a surprise to anyone familiar with the bigger picture. Sen. Calderon, while acknowledging that fee-for-service providers can provide valuable services to homeowners at risk of foreclosure, authored SB 94 to ensure that providers of these services are not compensated until the contracted services have been performed.

SB 94 prevents companies, individuals… and even attorneys… from receiving fees or any other form of compensation until after the contracted services have been rendered. The bill will now go to the Democratic controlled Senate where it is expected to pass.

Supporters of the bill say that the state is literally teeming with con artists who take advantage of homeowners desperate to save their homes from foreclosure by charging hefty fees up front and then failing to deliver anything of value in return. They say that by making it illegal to charge up front fees, they will be protecting consumers from being scammed.

While there’s no question that there have been some unscrupulous people that have taken advantage of homeowners in distress, the number of these scammers is unclear. Now that we’ve learned that lenders and servicers have only modified an average of 9% of qualified mortgages under the Obama plan, it’s hard to tell which companies were scamming and which were made to look like scams by the servicers and lenders who failed to live up to their agreement with the federal government.

In fact, ever since it’s come to light that mortgage servicers have been sued hundreds of times, that they continue to violate the HAMP provisions, that they foreclose when they’re not supposed to, charge up front fees for modifications, require homeowners to sign waivers, and so much more, who can be sure who the scammers really are. Bank of America, for example, got the worst grade of any bank on the President’s report card listing, modifying only 4% of the eligible mortgages since the plan began. We’ve given B of A something like $200 billion and they still claim that they’re having a hard time answering the phones over there, so who’s scamming who?

To make matters worse, and in the spirit of Y2K, the media has fanned the flames of irrationality with stories of people losing their homes as a result of someone failing to get their loan modified. The stories go something like this:

We gave them 1,000. They told us to stop making our mortgage payment. They promised us a principal reduction. We didn’t hear from them for months. And then we lost our house.

I am so sure. Can that even happen? I own a house or two. Walk me through how that happened again, because I absolutely guarantee you… no way could those things happen to me and I end up losing my house over it. Not a chance in the world. I’m not saying I couldn’t lose a house, but it sure as heck would take a damn sight more than that to make it happen.

Depending on how you read the language in the bill, it may prevent licensed California attorneys from requiring a retainer in advance of services being rendered, and this could essentially eliminate a homeowner’s ability to hire a lawyer to help save their home.

Supporters, on the other hand, respond that homeowners will still be able to hire attorneys, but that the attorneys will now have to wait until after services have been rendered before being paid for their services. They say that attorneys, just like real estate agents and mortgage brokers, will now only be able to receive compensation after services have been rendered.

But, assuming they’re talking about at the end of the transaction, there are key differences. Real estate agents and mortgage brokers are paid OUT OF ESCROW at the end of a transaction. They don’t send clients a bill for their services after the property is sold.

Homeowners at risk of foreclosure are having trouble paying their bills and for the most part, their credit ratings have suffered as a result. If an attorney were to represent a homeowner seeking a loan modification, and then bill for his or her services after the loan was modified, the attorney would be nothing more than an unsecured creditor of a homeowner who’s only marginally credit worthy at best. If the homeowner didn’t pay the bill, the attorney would have no recourse other than to sue the homeowner in Small Claims Court where they would likely receive small payments over time if lucky.

Extending unsecured credit to homeowners that are already struggling to pay their bills, and then having to sue them in order to collect simply isn’t a business model that attorneys, or anyone else for that matter, are likely to embrace. In fact, the more than 50 California attorneys involved in loan modifications that I contacted to ask about this issue all confirmed that they would not represent homeowners on that basis.

One attorney, who asked not to be identified, said: “Getting a lender or servicer to agree to a loan modification takes months, sometimes six or nine months. If I worked on behalf of homeowners for six or nine months and then didn’t get paid by a number of them, it wouldn’t be very long before I’d have to close my doors. No lawyer is going to do that kind of work without any security and anyone who thinks they will, simply isn’t familiar with what’s involved.”

“I don’t think there’s any question that SB 94 will make it almost impossible for a homeowner to obtain legal representation related to loan modifications,” explained another attorney who also asked not to be identified. “The banks have fought lawyers helping clients through the loan modification process every step of the way, so I’m not surprised they’ve pushed for this legislation to pass.”

Proponents of the legislation recite the all too familiar mantra about there being so many scammers out there that the state has no choice but to move to shut down any one offering to help homeowners secure loan modifications that charges a fee for the services. They point out that consumers can just call their banks directly, or that there are nonprofit organizations throughout the state that can help homeowners with loan modifications.

While the latter is certainly true, it’s only further evidence that there exists a group of people in positions of influence that are unfamiliar , or at the very least not adequately familiar with obtaining a loan modification through a nonprofit organization, and they’ve certainly never tried calling a bank directly.

The fact that there are nonprofit housing counselors available, and the degree to which they may or may not be able to assist a given homeowner, is irrelevant. Homeowners are well aware of the nonprofit options available. They are also aware that they can call their banks directly. From the President of the United States and and U.S. Attorney General to the community newspapers found in every small town in America, homeowners have heard the fairy tales about about these options, and they’ve tried them… over and over again, often times for many months. When they didn’t get the desired results, they hired a firm to help them.

Yet, even the State Bar of California is supporting SB 94, and even AB 764, a California Assembly variation on the theme, and one even more draconian because of its requirement that attorneys only be allowed to bill a client after a successful loan modification has been obtained. That means that an attorney would have to guarantee a homeowner that he or she would obtain a modification agreement from a lender or servicer or not get paid for trying. Absurd on so many levels. Frankly, if AB 764 passes, would the last one out of California please turn off the lights and bring the flag.

As of late July, the California State Bar said it was investigating 391 complaints against 141 attorneys, as opposed to nine investigations related to loan modifications in 2008. The Bar hasn’t read anywhere all of the complaints its received, but you don’t have to be a statistician to figure out that there’s more to the complaints that meets the eye. So far the State Bar has taken action against three attorneys and the Attorney General another four… so, let’s see… carry the 3… that’s 7 lawyers. Two or three more and they could have a softball team.

At the federal level they’re still reporting the same numbers they were last spring. Closed 11… sent 71 letters… blah, blah, blah… we’ve got a country of 300 million and at least 5 million are in trouble on their mortgage. The simple fact is, they’re going to have to come up with some serious numbers before I’m going to be scared of bumping into a scammer on every corner.

Looking Ahead…

California’s ALT-A and Option ARM mortgages are just beginning to re-set, causing payments to rise, and with almost half of the mortgages in California already underwater, these homeowners will be unable to refinance and foreclosures will increase as a result. Prime jumbo foreclosure rates are already up a mind blowing 634% as compared with January 2008 levels, according to LPS Applied Analytics.

Clearly, if SB 94 ends up reducing the number of legitimate firms available for homeowners to turn to, everyone involved in its passage is going to be retiring. While many sub-prime borrowers have suffered silently through this horror show of a housing crisis, the ALT-A and Option ARM borrowers are highly unlikely to slip quietly into the night.

There are a couple of things about the latest version of SB 94 that I found interesting:

1. It says that a lawyer can’t collect a fee or any other compensation before serivces have been delivered, but it doesn’t make clear whether attorneys can ask the client to deposit funds in the law firm’s trust account and then bill against thsoe funds as amounts are earned. Funds deposited in a law firm trust account remain the client’s funds, so they’re not a lawyer’s “fees or other compensation”. Those funds are there so that when the fees have been earned, the lawyer doesn’t have to hope his or her bill gets paid. Of course, it also says that an attorney can’t hold any security interest, but money in a trust account a client’s money, the attorney has no lien against it. All of this is a matter of interpretation, of course, so who knows.

2. While there used to be language in both the real estate and lawyer sections that prohibited breaking up services related to a loan modification, in the latest version all of the language related to breaking up services as applied to attorneys has been eliminated. It still applies to real estate licensed firms, but not to attorneys. This may be a good thing, as at least a lawyer could complete sections of the work involved as opposed to having to wait until the very end, which the way the banks have been handling things, could be nine months away.

3. The bill says nothing about the amounts that may be charged for services in connection with a loan modification. So, in the case of an attorney, that would seem to mean that… well, you can put one, two and three together from there.

4. Lawyers are not included in definition of foreclosure consultant. And there is a requirement that new language be inserted in contracts, along the lines of “You don’t have to pay anyone to get a loan modification… blah, blah, blah.” Like that will be news to any homeowner in America. I’ve spoken with hundreds and never ran across one who didn’t try it themselves before calling a lawyer. I realize the Attorney General doesn’t seem to know that, but look… he’s been busy.

Conclusion…

Will SB 94 actually stop con artists from taking advantage of homeowners in distress? Or will it end up only stopping reputable lawyers from helping homeowners, while foreclosures increase and our economy continues its deflationary free fall? Will the California State Bar ever finishing reading the complaints being received, and if they ever do, will they understand what they’ve read. Or is our destiny that the masses won’t understand what’s happening around them until it sucks them under as well.

I surely hope not. But for now, I’m just hoping people can still a hire an attorney next week to help save their homes, because if they can’t… the Bar is going to get a lot more letters from unhappy homeowners.

Edit : Edit
Comments : 3 Comments »

Tags: 2923.5, 2923.6, 2924, bailout, bankruptcy, borrower, brad keiser, Cramdown, credit, credit crisis, depression, eviction, FDG, Federal Bailout, Foreclosure, foreclosure defense, Foreclosure Defense Group, foreclosure offense, foreclosures, Fraud, HAMP, I Have a Plan, lawyers, Lender Liability, lis pendence, Loan Mod, LOAN MODIFICATION, lost note, Mortgage, Mortgage modification, Predatory Lending, quiet title, Real Estate Settlement Procedures Act, Recoupment, rescission, respa, RICO, stop foreclosure, tila, TILA audit, truth in lending Audit

Categories : 2923.5, 2923.6, 2924, Cramdown, FCRA, Foreclosure, I Have a Plan, Lender Class action, Loan Audit, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, United First, bankruptcy, eviction, lis pendence, mortgage meltdown, pedatory lending, respa, stop foreclosure, tila, truth in lending, usury

Don’t get HAMP ED out of your home!

5 09 2009

By Walter Hackett, Esq.
The federal government has trumpeted its Home Affordable Modification Program or “HAMP” solution as THE solution to runaway foreclosures – few things could be further from the truth. Under HAMP a homeowner will be offered a “workout” that can result in the homeowner being “worked out” of his or her home. Here’s how it works. A participating lender or servicer will send a distressed homeowner a HAMP workout agreement. The agreement consists of an “offer” pursuant to which the homeowner is permitted to remit partial or half of their regular monthly payments for 3 or more months. The required payments are NOT reduced, instead the partial payments are placed into a suspense account. In many cases once enough is gathered to pay the oldest payment due the funds are removed from the suspense account and applied to the mortgage loan. At the end of the trial period the homeowner will be further behind than when they started the “workout” plan.
In California, the agreements clearly specify the acceptance of partial payments by the lender or servicer does NOT cure any default. Further, the fact a homeowner is in the workout program does NOT require the lender or servicer to suspend or postpone any non-judicial foreclosure activity with the possible exception of an actual trustee’s sale. A homeowner could complete the workout plan and be faced with an imminent trustee’s sale. Worse, if a homeowner performs EXACTLY as required by the workout agreement, they are NOT assured a loan modification. Instead the agreement will include vague statements that the homeowner MAY receive an offer to modify his or her loan however there is NO duty on the part of the servicer or lender to modify a loan regardless of the homeowner’s compliance with the agreement.

A homeowner who fully performs under a HAMP workout is all but guaranteed to have given away thousands of dollars with NO assurance of keeping his or her home or ever seeing anything resembling an offer to modify a mortgage loan.
While it may well be the case the government was making an honest effort to help, the reality is the HAMP program is only guaranteed to help those who need help least – lenders and servicers. If you receive ANY written offer to modify your loan meet with a REAL licensed attorney and ask them to review the agreement to determine what you are REALLY agreeing to, the home you save might be your own.

Edit : Edit
Comments : Leave a Comment »

Tags: Audit, bailout, bankruptcy, borrower, brad keiser, credit, credit crisis, depression, FDG, Federal Bailout, foreclosure defense, Foreclosure Defense Group, foreclosure offense, foreclosures, Fraud, HAMP, lawyers, Lender Liability, Loan Mod, LOAN MODIFICATION, lost note, Mortgage, quiet title, rescission, respa, RICO, TILA audit

Categories : 2923.5, 2923.6, 2924, Cramdown, Foreclosure, I Have a Plan, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, bankruptcy, eviction, lis pendence, stop foreclosure, tila, truth in lending

Countrywide complaint

27 06 2009

countrywide_fin_class_action_defense_mdl

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stay of eviction2923.5, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, I Have a Plan, pedatory lending, respa, stop foreclosure

Homecomings TILA complaint GMAC

27 06 2009

homecomingstila

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, Foreclosure, I Have a Plan, Lender Class action, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, bankruptcy, eviction, lis pendence, stop foreclosure, usury

Leman Tila complaint

27 06 2009

Lemantilacomp

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, I Have a Plan, bankruptcy, eviction, stop foreclosure, truth in lending

Lender class action

27 06 2009

Mortgageinvestorgroupclass

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, I Have a Plan, Loan Audit, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, bankruptcy, eviction, lis pendence, mortgage meltdown, stop foreclosure, usury

Option One Complaint Pick a payment lawsuit

27 06 2009

optionone

Edit : Edit
Comments : 2 Comments »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, Foreclosure, I Have a Plan, Lender Class action, Predatory Lending, Real Estate Settlement Procedures Act, bankruptcy, eviction, lis pendence, mortgage meltdown, stop foreclosure, usury

Win the eviction by Summary judgement

27 06 2009

When title to the property is still in dispute ie. the foreclosure was bad. They (the lender)did not comply with California civil code 2923.5 or 2923.6 or 2924. Or the didn’t possess the documents to foreclose ie. the original note. Or they did not possess a proper assignment 2932.5. at trial you will be ignored by the learned judge but if you file a Motion for Summary Judgmentevans sum ud
template notice of Motion for SJ
TEMPLATE Points and A for SJ Motion
templateDeclaration for SJ
TEMPLATEProposed Order on Motion for SJ
TEMPLATEStatement of Undisputed Facts
you can force the issue and if there is a case filed in the Unlimited jurisdiction Court the judge may be forced to consider title and or consolidate the case with the Unlimited Jurisdiction Case2nd amended complaint (e) manuel
BAKER original complaint (b)
Countrywide Complaint Form
FRAUDULENT OMISSIONS FORM FINAL
sample-bank-final-complaint1-2.docx

Edit : Edit
Comments : 1 Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, civil code 2923.5, eviction, Foreclosure, Fraud, lis pendence

Categories : 2923.5, 2923.6, Foreclosure, I Have a Plan, Predatory Lending, Real Estate Settlement Procedures Act, eviction, stop foreclosure, truth in lending

What is worse bankruptcy or foreclosure?

25 06 2009

So what is worse, bankruptcy or foreclosure? Which will have the biggest impact on my credit score? Both bankruptcy and foreclosure will have serious negative affects on your personal credit report and your credit score as well. With re-established credit after a bankruptcy and/or foreclosure you can possibly qualify for a good mortgage once again in as little as 24 months. Therefore, it is very difficult to say one is worse than the other, but the bottom line is that they are both very bad for you and should be avoided if all possible.

Foreclosure is worse then bankruptcy because you are actually losing something of value, your home. Once you are in foreclosure you will lose any and all equity in your home. If there is no equity in the home you will be responsible for the remaining balance after the property auction. With chapter 7 bankruptcy all of your unsecured debts are erased and you start over and in most cases you will not lose anything other then your credit rating.

Many times qualifying for a mortgage after a foreclosure is more difficult than applying for a home after a bankruptcy. With that said, that could possibly lead you to believe that foreclosure is worse than bankruptcy. Most people who have a home foreclosed upon end up filing bankruptcy as well.

Bankruptcy and Foreclosure filings are public records, however no one would know about your proceedings under normal circumstances. The Credit Bureaus will record your bankruptcy and a foreclosure. Bankruptcies will remain on your credit record for 10 years while foreclosures can stay on your report for up to 7 years.

In some cases, one can refinance out of a Chapter 13 Bankruptcy with a 12 month trustee payment history and a timely mortgage history. It is much more difficult to obtain financing with a foreclosure on your record.

Foreclosure is worse because of the loss of value. You will not receive any compensation for the equity in your home if it proceeds to foreclosure.

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, Cramdown, Foreclosure, I Have a Plan, eviction, stop foreclosure

Standing argument

7 06 2009

judge-youngs-decision-on-nosek

Ameriquest’s final argument, that the sanctions are a
criminal penalty, is bereft of authority. Ameriquest cites F.J.
Hanshaw Enterprises, Inc. v. Emerald River Development, Inc., 244
F.3d 1128 (9th Cir. 2001), a case about inherent powers – not
Rule 11 –

This is an excerpt from the decision just this bloggers note the Hanshaw Case was my case. I argued this case at the 9th circuit court of appeals

http://openjurist.org/244/f3d/1128/fj-v-emeraldfj-v-emerald

If you will grasp the implications of this judge-youngs-decision-on-nosekdecision all or most all the evictions and  foreclosures are being litigated by the wrong parties that is to say parties who have no real stake in the outcome. they are merely servicers not the real investors. They do not have the right to foreclose or evict. No assignment No note No security interest No standing They do not want to be listed anywhere. They (the lenders) have caused the greatest damage to the American Citizen since the great depression and they do not want to be exposed or named in countless lawsuits. Time and time again I get from the judges in demurer hearings ” I see what you are saying counsel but your claim does not appear to be against this defendant” the unnamed investment pool of the Lehman Brothers shared High yield equity Fund trustee does not exist and so far can’t be sued.

Edit : Edit
Comments : 1 Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending 2923.5, truth in lending, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, Cramdown, Foreclosure, I Have a Plan, Loan Audit, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, bankruptcy, eviction, respa, stop foreclosure

Using the countrywide complaint in your own case

9 05 2009

Using the countrywide complaint in your own casecounrtrywidelanderscomplaintand countrywidelanders and word versionsCountrywide attorney general Complaint Form and templetsCountrywide Complaint Form

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2932.5, civil code 2923.5, Foreclosure, Predatory Lending, stop foreclosure, truth in lending 2923.5

Categories : 2923.5, 2923.6, Foreclosure, I Have a Plan

Coalition sues lenders

9 05 2009

Coalition Sues lenders

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, I Have a Plan, Lender Class action, Loan Audit, bankruptcy, eviction, lis pendence, pedatory lending

They are to give options to foreclosure 2923.5

9 05 2009

(a) (1) A mortgagee, trustee, beneficiary, or authorized

agent may not file a notice of default pursuant to Section 2924 until

30 days after contact is made as required by paragraph (2) or 30

days after satisfying the due diligence requirements as described in

subdivision (g).

(2) A mortgagee, beneficiary, or authorized agent shall contact

the borrower in person (and this does not mean agent for the foreclosure company) or by telephone in order to assess the

borrower’s financial situation and explore options for the borrower

to avoid foreclosure. During the initial contact, the mortgagee,

beneficiary, or authorized agent shall advise the borrower that he or

she has the right to request a subsequent meeting and, if requested,

the mortgagee, beneficiary, or authorized agent shall schedule the

meeting to occur within 14 days. The assessment of the borrower’s

financial situation and discussion of options may occur during the

first contact, or at the subsequent meeting scheduled for that

purpose. In either case, the borrower shall be provided the toll-free

telephone number made available by the United States Department of

Housing and Urban Development (HUD) to find a HUD-certified housing

counseling agency. Any meeting may occur telephonically.

(b) A notice of default filed pursuant to Section 2924 shall

include a declaration from the mortgagee, beneficiary, or authorized

agent that it has contacted the borrower, tried with due diligence to

contact the borrower as required by this section, or the borrower

has surrendered the property to the mortgagee, trustee, beneficiary,

or authorized agent.

(c) If a mortgagee, trustee, beneficiary, or authorized agent had

already filed the notice of default prior to the enactment of this

section and did not subsequently file a notice of rescission, then

the mortgagee, trustee, beneficiary, or authorized agent shall, as

part of the notice of sale filed pursuant to Section 2924f, include a

declaration that either:

(1) States that the borrower was contacted to assess the borrower’

s financial situation and to explore options for the borrower to

avoid foreclosure.

(2) Lists the efforts made, if any, to contact the borrower in the

event no contact was made.

(d) A mortgagee’s, beneficiary’s, or authorized agent’s loss

mitigation personnel may participate by telephone during any contact

required by this section.

(e) For purposes of this section, a “borrower” shall include a

mortgagor or trustor.

(f) A borrower may designate a HUD-certified housing counseling

agency, attorney, or other advisor to discuss with the mortgagee,

beneficiary, or authorized agent, on the borrower’s behalf, options

for the borrower to avoid foreclosure. That contact made at the

direction of the borrower shall satisfy the contact requirements of

paragraph (2) of subdivision (a). Any loan modification or workout

plan offered at the meeting by the mortgagee, beneficiary, or

authorized agent is subject to approval by the borrower.

(g) A notice of default may be filed pursuant to Section 2924 when

a mortgagee, beneficiary, or authorized agent has not contacted a

borrower as required by paragraph (2) of subdivision (a) provided

that the failure to contact the borrower occurred despite the due

diligence of the mortgagee, beneficiary, or authorized agent. For

purposes of this section, “due diligence” shall require and mean all

of the following:

(1) A mortgagee, beneficiary, or authorized agent shall first

attempt to contact a borrower by sending a first-class letter that

includes the toll-free telephone number made available by HUD to find

a HUD-certified housing counseling agency.

(2) (A) After the letter has been sent, the mortgagee,

beneficiary, or authorized agent shall attempt to contact the

borrower by telephone at least three times at different hours and on

different days. Telephone calls shall be made to the primary

telephone number on file.

(B) A mortgagee, beneficiary, or authorized agent may attempt to

contact a borrower using an automated system to dial borrowers,

provided that, if the telephone call is answered, the call is

connected to a live representative of the mortgagee, beneficiary, or

authorized agent.

(C) A mortgagee, beneficiary, or authorized agent satisfies the

telephone contact requirements of this paragraph if it determines,

after attempting contact pursuant to this paragraph, that the

borrower’s primary telephone number and secondary telephone number or

numbers on file, if any, have been disconnected.

(3) If the borrower does not respond within two weeks after the

telephone call requirements of paragraph (2) have been satisfied, the

mortgagee, beneficiary, or authorized agent shall then send a

certified letter, with return receipt requested.

(4) The mortgagee, beneficiary, or authorized agent shall provide

a means for the borrower to contact it in a timely manner, including

a toll-free telephone number that will provide access to a live

representative during business hours.

(5) The mortgagee, beneficiary, or authorized agent has posted a

prominent link on the homepage of its Internet Web site, if any, to

the following information:

(A) Options that may be available to borrowers who are unable to

afford their mortgage payments and who wish to avoid foreclosure, and

instructions to borrowers advising them on steps to take to explore

those options.

(B) A list of financial documents borrowers should collect and be

prepared to present to the mortgagee, beneficiary, or authorized

agent when discussing options for avoiding foreclosure.

(C) A toll-free telephone number for borrowers who wish to discuss

options for avoiding foreclosure with their mortgagee, beneficiary,

or authorized agent.

(D) The toll-free telephone number made available by HUD to find a

HUD-certified housing counseling agency.

(h) Subdivisions (a), (c), and (g) shall not apply if any of the

following occurs:

(1) The borrower has surrendered the property as evidenced by

either a letter confirming the surrender or delivery of the keys to

the property to the mortgagee, trustee, beneficiary, or authorized

agent.

(2) The borrower has contracted with an organization, person, or

entity whose primary business is advising people who have decided to

leave their homes on how to extend the foreclosure process and avoid

their contractual obligations to mortgagees or beneficiaries.

(3) The borrower has filed for bankruptcy, and the proceedings

have not been finalized.

(i) This section shall apply only to loans made from January 1,

2003, to December 31, 2007, inclusive, that are secured by

residential real property and are for owner-occupied residences. For

purposes of this subdivision, “owner-occupied” means that the

residence is the principal residence of the borrower.

(j) This section shall remain in effect only until January 1, 2013,

and as of that date is repealed, unless a later enacted statute,

that is enacted before January 1, 2013, deletes or extends that da

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, I Have a Plan, Predatory Lending, respa, stop foreclosure

Doan on “produce the Note”

3 05 2009

Are Courts in California Truly Limited by Non-Judicial Foreclosure Statutes?

By Michael Doan on May 2, 2009 in Foreclosure Defense, Foreclosure News

Recently, many California Courts have been dismissing lawsuits filed to stop non-judicial foreclosures, ruling that the non-judicial foreclosure statutes occupy the field and are exclusive as long as they are complied with. Thus, in the case where a notice of default is recorded and a lawsuit then filed in response to stop the foreclosure since the foreclosing party does not possess the underlying note, all too often the Court will simply dismiss the case and claim “2924 has no requirement to produce the note.”

Thus, these Courts view the statutes that regulate non-judicial foreclosures as all inclusive of all the requirements and remedies in foreclosure proceedings. Indeed, California Civil Code sections 2924 through 2924k provide a comprehensive framework for the regulation of a nonjudicial foreclosure sale pursuant to a power of sale contained in a deed of trust. This comprehensive statutory scheme has three purposes: ‘”(1) to provide the creditor/beneficiary with a quick, inexpensive and efficient remedy against a defaulting debtor/trustor; (2) to protect the debtor/trustor from wrongful loss of the property; and (3) to ensure that a properly conducted sale is final between the parties and conclusive as to a bona fide purchaser.” [Citations.]’ [Citation.]” (Melendrez v. D & I Investment, Inc. (2005) 127 Cal.App.4th 1238, 1249–1250 [26 Cal. Rptr. 3d 413].)

Notwithstanding, the foreclosure statutes are not exclusive. If someone commits murder during an auction taking place under Civil Code 2924, that does not automatically mean they are immune from criminal and civil liability. Perhaps this is where some of these courts are “missing the boat.”

For example, in Alliance Mortgage Co. v. Rothwell (1995) 10 Cal. 4th 1226, 1231 [44 Cal. Rptr. 2d 352, 900 P.2d 601], the California Supreme Court concluded that a lender who obtained the property with a full credit bid at a foreclosure sale was not precluded from suing a third party who had fraudulently induced it to make the loan. The court concluded that ” ‘the antideficiency laws were not intended to immunize wrongdoers from the consequences of their fraudulent acts’ ” and that, if the court applies a proper measure of damages, ” ‘fraud suits do not frustrate the antideficiency policies because there should be no double recovery for the beneficiary.’ ” (Id. at p. 1238.)

Likewise, in South Bay Building Enterprises, Inc. v. Riviera Lend-Lease, Inc. [*1071] (1999) 72 Cal.App.4th 1111, 1121 [85 Cal. Rptr. 2d 647], the court held that a junior lienor retains the right to recover damages from the trustee and the beneficiary of the foreclosing lien if there have been material irregularities in the conduct of the foreclosure sale. (See also Melendrez v. D & I Investment, Inc., supra, 127 Cal.App.4th at pp. 1257–1258; Lo v. Jensen (2001) 88 Cal.App.4th 1093, 1095 [106 Cal. Rptr. 2d 443] [a trustee’s sale tainted by fraud may be set aside].)

In looking past the comprehensive statutory framework, these other Courts also considered the policies advanced by the statutory scheme, and whether those policies would be frustrated by other laws. Recently, in the case of California Golf, L.L.C. v. Cooper, 163 Cal. App. 4th 1053, 78 Cal. Rptr. 3d 153, 2008 Cal. App. LEXIS 850 (Cal. App. 2d Dist. 2008), the Appellate Court held that the remedies of 2924h were not exclusive. Of greater importance is that the Appellate Court reversed the lower court and specifically held that provisions in UCC Article 3 were allowed in the foreclosure context:

Considering the policy interests advanced by the statutory scheme governing nonjudicial foreclosure sales, and the policy interests advanced by Commercial Code section 3312, it is clear that allowing a remedy under the latter does not undermine the former. Indeed, the two remedies are complementary and advance the same goals. The first two goals of the nonjudicial foreclosure statutes: (1) to provide the creditor/beneficiary with a quick, inexpensive and efficient remedy against a defaulting debtor/trustor and (2) to protect the debtor/trustor from a wrongful loss of the property, are not impacted by the decision that we reach. This case most certainly, however, involves the third policy interest: to ensure that a properly conducted sale is final between the parties and conclusive as to a bona fide purchaser.

This is very significant since it provides further support to lawsuits brought against foreclosing parties lacking the ability to enforce the underlying note, since those laws also arise under Article 3. Under California Commercial Code 3301, a note may only be enforced if one has actual possession of the note as a holder, or has possession of the note not as a non-holder but with holder rights.

Just like in California Golf, enforcing 3301 operates to protect the debtor/trustor from a wrongful loss of the property. To the extent that a foreclosing party might argue that such lawsuits disrupt a quick, inexpensive, and efficient remedy against a defaulting debtor/trustor, the response is that “since there is no enforceable obligation, the foreclosing entity is not a party/creditor/beneficiary entitled to a quick, inexpensive, and efficient remedy,” but simply a declarant that recorded false documents.

This is primarily because being entitled to foreclose non-judicially under 2924 can only take place “after a breach of the obligation for which that mortgage or transfer is a security.” Thus, 2924 by its own terms, looks outside of the statute to the actual obligation to see if there was a breach, and if the note is unenforceable under Article 3, there can simply be no breach. End of story.

Accordingly, if there is no possession of the note or possession was not obtained until after the notice of sale was recorded, it is impossible to trigger 2924, and simple compliance with the notice requirements in 2924 does not suddenly bless the felony of grand theft of the unknown foreclosing entity. To hold otherwise would create absurd results since it would allow any person or company the right to take another persons’ home by simply recording a false notice of default and notice of sale.

Indeed, such absurdity would allow you to foreclose on your own home again to get it back should you simply record the same false documents. Thus it is obvious that these courts improperly assume the allegations contained in the notice of default and notice of sale are truthful. Perhaps these courts simply can not or choose not to believe such frauds are taking place due to the magnitude and volume of foreclosures in this Country at this time. One can only image the chaos that would ensue in America if the truth is known that millions of foreclosures took place unlawfully and millions more are now on hold as a result of not having the ability to enforce the underlying obligation pursuant to Article 3.

So if you are in litigation to stop a foreclosure, you can probably expect the Court will want to immediately dismiss your case. These Courts just can not understand how the law would allow someone to stay in a home without paying. Notwithstanding, laws can not be broken, and Courts are not allowed to join with the foreclosing parties in breaking laws simply because “not paying doesn’t seem right.”

Accordingly, at least for appeal purposes, be sure to argue that 2924 was never triggered since there was never any “breach of the obligation” and that Appellate Courts throughout California have routinely held that other laws do in fact apply in the non-judicial foreclosure process since the policies advanced by the statutory non-judicial foreclosure scheme are not frustrated by these other laws.

Edit : Edit
Comments : 3 Comments »

Tags: 2923.5, 2923.6, 2924, 2932.5, Foreclosure, lis pendence, litigation, stop foreclosure, truth in lending 2923.5

Categories : 2923.5, 2923.6, Foreclosure, I Have a Plan

Another win against Downey Savings

29 06 2010

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.

Edit : Edit
Comments : 1 Comment »

Tags: stop foreclosure, mortgage meltdown, Foreclosure, litigation, Fraud

Categories : 2924, Foreclosure

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

12 06 2010

The court in Mabry pointed out there are provisions in 2924 G to postpone a foreclosure sale. This could go a long way to facilitate the postponement and workout contemplated by 2923.5. This would be without having to Get a Temporary restraining order (TRO) and preliminary injunction. In other words not have to meet the burden to sustain the preliminary injunction and since the holding declares no tender is necessary no posting of a bond. I have attached the provision:
(c)

(1) There may be a postponement or postponements of the sale proceedings, including a postponement upon instruction by the beneficiary to the trustee that the sale proceedings be postponed, at any time prior to the completion of the sale for any period of time not to exceed a total of 365 days from the date set forth in the notice of sale. The trustee shall postpone the sale in accordance with any of the following:

(A) Upon the order of any court of competent jurisdiction.

For all you non lawyers out there this is key.

To sustain a preliminary injunction we have to put on a mini trial demonstrating that the case is more likely than no to prevail at trial;and sustain a permanent injunction. In the early stages this is an impossible burden without discovery.The other side puts up the Tender rule and asks the court to make the plaintiff (our client) put up a bond sometimes as high as the loan balance. If we use the code 2924 G the court has the power to delay the sale pursuant to 2924 G (c)(1)(A) for up to 365 days without using its equitable powers of injunction. The court can postpone the sale as a mater of law.

Edit : Edit
Comments : 3 Comments »

Tags: stop foreclosure, civil code 2924, Foreclosure, 2923.5

Categories : 2924, Mortgage modification, mortgage meltdown, pedatory lending, stop foreclosure

Civil Code 2924

12 06 2010

CA Foreclosure Law – Civil Code 2924
Civil Code 2924

2924.
(a) Every transfer of an interest in property, other than in trust, made only as a security for the performance of another act, is to be deemed a mortgage, except when in the case of personal property it is accompanied by actual change of possession, in which case it is to be deemed a pledge. Where, by a mortgage created after July 27, 1917, of any estate in real property, other than an estate at will or for years, less than two, or in any transfer in trust made after July 27, 1917, of a like estate to secure the performance of an obligation, a power of sale is conferred upon the mortgagee, trustee, or any other person, to be exercised after a breach of the obligation for which that mortgage or transfer is a security, the power shall not be exercised except where the mortgage or transfer is made pursuant to an order, judgment, or decree of a court of record, or to secure the payment of bonds or other evidences of indebtedness authorized or permitted to be issued by the Commissioner of Corporations, or is made by a public utility subject to the provisions of the Public Utilities Act, until all of the following apply:

(1) The trustee, mortgagee, or beneficiary, or any of their authorized agents shall first file for record, in the office of the recorder of each county wherein the mortgaged or trust property or some part or parcel thereof is situated, a notice of default. That notice of default shall include all of the following:

(A) A statement identifying the mortgage or deed of trust by stating the name or names of the trustor or trustors and giving the book and page, or instrument number, if applicable, where the mortgage or deed of trust is recorded or a description of the mortgaged or trust property.

(B) A statement that a breach of the obligation for which the mortgage or transfer in trust is security has occurred.

(C) A statement setting forth the nature of each breach actually known to the beneficiary and of his or her election to sell or cause to be sold the property to satisfy that obligation and any other obligation secured by the deed of trust or mortgage that is in default.

(D) If the default is curable pursuant to Section 2924c, the statement specified in paragraph (1) of subdivision (b) of Section 2924c.

(2) Not less than three months shall elapse from the filing of the notice of default.

(3) After the lapse of the three months described in paragraph (2), the mortgagee, trustee or other person authorized to take the sale shall give notice of sale, stating the time and place thereof, in the manner and for a time not less than that set forth in Section 2924f.

(b) In performing acts required by this article, the trustee shall incur no liability for any good faith error resulting from reliance on information provided in good faith by the beneficiary regarding the nature and the amount of the default under the secured obligation, deed of trust, or mortgage. In performing the acts required by this article, a trustee shall not be subject to Title 1.6c (commencing with Section 1788) of Part 4.

(c) A recital in the deed executed pursuant to the power of sale of compliance with all requirements of law regarding the mailing of copies of notices or the publication of a copy of the notice of default or the personal delivery of the copy of the notice of default or the posting of copies of the notice of sale or the publication of a copy thereof shall constitute prima facie evidence of compliance with these requirements and conclusive evidence thereof in favor of bona fide purchasers and encumbrancers for value and without notice.

(d) All of the following shall constitute privileged communications pursuant to Section 47:

(1) The mailing, publication, and delivery of notices as required by this section.

(2) Performance of the procedures set forth in this article.

(3) Performance of the functions and procedures set forth in this article if those functions and procedures are necessary to carry out the duties described in Sections 729.040, 729.050, and 729.080 of the Code of Civil Procedure.

(e) There is a rebuttable presumption that the beneficiary actually knew of all unpaid loan payments on the obligation owed to the beneficiary and secured by the deed of trust or mortgage subject to the notice of default. However, the failure to include an actually known default shall not invalidate the notice of sale and the beneficiary shall not be precluded from asserting a claim to this omitted default or defaults in a separate notice of default.

2924.3.
(a) Except as provided in subdivisions (b) and (c), a person who has undertaken as an agent of a mortgagee, beneficiary, or owner of a promissory note secured directly or collaterally by a mortgage or deed of trust on real property or an estate for years therein, to make collections of payments from an obligor under the note, shall mail the following notices, postage prepaid, to each mortgagee, beneficiary or owner for whom the agent has agreed to make collections from the obligor under the note:

(1) A copy of the notice of default filed in the office of the county recorder pursuant to Section 2924 on account of a breach of obligation under the promissory note on which the agent has agreed to make collections of payments, within 15 days after recordation.

(2) Notice that a notice of default has been recorded pursuant to Section 2924 on account of a breach of an obligation secured by a mortgage or deed of trust against the same property or estate for years therein having priority over the mortgage or deed of trust securing the obligation described in paragraph (1), within 15 days after recordation or within three business days after the agent receives the information, whichever is later.

(3) Notice of the time and place scheduled for the sale of the real property or estate for years therein pursuant to Section 2924f under a power of sale in a mortgage or deed of trust securing an obligation described in paragraphs (1) or (2), not less than 15 days before the scheduled date of the sale or not later than the next business day after the agent receives the information, whichever is later.

(b) An agent who has undertaken to make collections on behalf of mortgagees, beneficiaries or owners of promissory notes secured by mortgages or deeds of trust on real property or an estate for years therein shall not be required to comply with the provisions of subdivision (a) with respect to a mortgagee, beneficiary or owner who is entitled to receive notice pursuant to subdivision (c) of Section 2924b or for whom a request for notice has been recorded pursuant to subdivision (b) of Section 2924b if the agent reasonably believes that the address of the mortgagee, beneficiary, or owner described in Section 2924b is the current business or residence address of that person.

(c) An agent who has undertaken to make collections on behalf of mortgagees, beneficiaries or owners of promissory notes secured by mortgages or deeds of trust on real property or an estate for years therein shall not be required to comply with the provisions of paragraph (1) or (2) of subdivision (a) if the agent knows or reasonably believes that the default has already been cured by or on behalf of the obligor.

(d) Any failure to comply with the provisions of this section shall not affect the validity of a sale in favor of a bona fide purchaser or the rights of an encumbrancer for value and without notice.

2924.5.
No clause in any deed of trust or mortgage on property containing four or fewer residential units or on which four or fewer residential units are to be constructed or in any obligation secured by any deed of trust or mortgage on property containing four or fewer residential units or on which four or fewer residential units are to be constructed that provides for the acceleration of the due date of the obligation upon the sale, conveyance, alienation, lease, succession, assignment or other transfer of the property subject to the deed of trust or mortgage shall be valid unless the clause is set forth, in its entirety in both the body of the deed of trust or mortgage and the promissory note or other document evidencing the secured obligation. This section shall apply to all such deeds of trust, mortgages, and obligations secured thereby executed on or after July 1, 1972.

2924.6.
(a) An obligee may not accelerate the maturity date of the principal and accrued interest on any loan secured by a mortgage or deed of trust on residential real property solely by reason of any one or more of the following transfers in the title to the real property:

(1) A transfer resulting from the death of an obligor where the transfer is to the spouse who is also an obligor.

(2) A transfer by an obligor where the spouse becomes a coowner of the property.

(3) A transfer resulting from a decree of dissolution of the marriage or legal separation or from a property settlement agreement incidental to such a decree which requires the obligor to continue to make the loan payments by which a spouse who is an obligor becomes the sole owner of the property.

(4) A transfer by an obligor or obligors into an inter vivos trust in which the obligor or obligors are beneficiaries.

(5) Such real property or any portion thereof is made subject to a junior encumbrance or lien.

(b) Any waiver of the provisions of this section by an obligor is void and unenforceable and is contrary to public policy.

(c) For the purposes of this section, “residential real property” means any real property which contains at least one but not more than four housing units.

(d) This act applies only to loans executed or refinanced on or after January 1, 1976.

2924.7.
(a) The provisions of any deed of trust or mortgage on real property which authorize any beneficiary, trustee, mortgagee, or his or her agent or successor in interest, to accelerate the maturity date of the principal and interest on any loan secured thereby or to exercise any power of sale or other remedy contained therein upon the failure of the trustor or mortgagor to pay, at the times provided for under the terms of the deed of trust or mortgage, any taxes, rents, assessments, or insurance premiums with respect to the property or the loan, or any advances made by the beneficiary, mortgagee, or his or her agent or successor in interest shall be enforceable whether or not impairment of the security interest in the property has resulted from the failure of the trustor or mortgagor to pay the taxes, rents, assessments, insurance premiums, or advances.

(b) The provisions of any deed of trust or mortgage on real property which authorize any beneficiary, trustee, mortgagee, or his or her agent or successor in interest, to receive and control the disbursement of the proceeds of any policy of fire, flood, or other hazard insurance respecting the property shall be enforceable whether or not impairment of the security interest in the property has resulted from the event that caused the proceeds of the insurance policy to become payable.

2924a.
If, by the terms of any trust or deed of trust a power of sale is conferred upon the trustee, the attorney for the trustee, or any duly authorized agent, may conduct the sale and act in the sale as the auctioneer for the trustee.

2924b.
(a) Any person desiring a copy of any notice of default and of any notice of sale under any deed of trust or mortgage with power of sale upon real property or an estate for years therein, as to which deed of trust or mortgage the power of sale cannot be exercised until these notices are given for the time and in the manner provided in Section 2924 may, at any time subsequent to recordation of the deed of trust or mortgage and prior to recordation of notice of default thereunder, cause to be filed for record in the office of the recorder of any county in which any part or parcel of the real property is situated, a duly acknowledged request for a copy of the notice of default and of sale. This request shall be signed and acknowledged by the person making the request, specifying the name and address of the person to whom the notice is to be mailed, shall identify the deed of trust or mortgage by stating the names of the parties thereto, the date of recordation thereof, and the book and page where the deed of trust or mortgage is recorded or the recorder’ s number, and shall be in substantially the following form:

“In accordance with Section 2924b, Civil Code, request is hereby made
that a copy of any notice of default and a copy of any notice of sale
under the deed of trust (or mortgage) recorded ______, ____, in
Book_____ page ____ records of ____ County, (or filed for record with
recorder’s serial number ____, _______County) California, executed
by ____ as trustor (or mortgagor) in which ________ is named as
beneficiary (or mortgagee) and ______________ as
trustee be mailed to
_________________ at ____________________________.
Name Address

NOTICE: A copy of any notice of default and of
any notice of sale will be sent only to the address contained in this
recorded request. If your address changes, a new
request must be recorded.

Signature _________________”

Upon the filing for record of the request, the recorder shall index in the general index of grantors the names of the trustors (or mortgagor) recited therein and the names of persons requesting copies.

(b) The mortgagee, trustee, or other person authorized to record the notice of default or the notice of sale shall do each of the following:

(1) Within 10 business days following recordation of the notice of default, deposit or cause to be deposited in the United States mail an envelope, sent by registered or certified mail with postage prepaid, containing a copy of the notice with the recording date shown thereon, addressed to each person whose name and address are set forth in a duly recorded request therefor, directed to the address designated in the request and to each trustor or mortgagor at his or her last known address if different than the address specified in the deed of trust or mortgage with power of sale.

(2) At least 20 days before the date of sale, deposit or cause to be deposited in the United States mail an envelope, sent by registered or certified mail with postage prepaid, containing a copy of the notice of the time and place of sale, addressed to each person whose name and address are set forth in a duly recorded request therefor, directed to the address designated in the request and to each trustor or mortgagor at his or her last known address if different than the address specified in the deed of trust or mortgage with power of sale.

(3) As used in paragraphs (1) and (2), the “last known address” of each trustor or mortgagor means the last business or residence physical address actually known by the mortgagee, beneficiary, trustee, or other person authorized to record the notice of default. For the purposes of this subdivision, an address is “actually known” if it is contained in the original deed of trust or mortgage, or in any subsequent written notification of a change of physical address from the trustor or mortgagor pursuant to the deed of trust or mortgage. For the purposes of this subdivision, “physical address” does not include an e-mail or any form of electronic address for a trustor or mortgagor. The beneficiary shall inform the trustee of the trustor’s last address actually known by the beneficiary. However, the trustee shall incur no liability for failing to send any notice to the last address unless the trustee has actual knowledge of it.

(4) A “person authorized to record the notice of default or the notice of sale” shall include an agent for the mortgagee or beneficiary, an agent of the named trustee, any person designated in an executed substitution of trustee, or an agent of that substituted trustee.

(c) The mortgagee, trustee, or other person authorized to record the notice of default or the notice of sale shall do the following:

(1) Within one month following recordation of the notice of default, deposit or cause to be deposited in the United States mail an envelope, sent by registered or certified mail with postage prepaid, containing a copy of the notice with the recording date shown thereon, addressed to each person set forth in paragraph (2), provided that the estate or interest of any person entitled to receive notice under this subdivision is acquired by an instrument sufficient to impart constructive notice of the estate or interest in the land or portion thereof which is subject to the deed of trust or mortgage being foreclosed, and provided the instrument is recorded in the office of the county recorder so as to impart that constructive notice prior to the recording date of the notice of default and provided the instrument as so recorded sets forth a mailing address which the county recorder shall use, as instructed within the instrument, for the return of the instrument after recording, and which address shall be the address used for the purposes of mailing notices herein.

(2) The persons to whom notice shall be mailed under this subdivision are:

(A) The successor in interest, as of the recording date of the notice of default, of the estate or interest or any portion thereof of the trustor or mortgagor of the deed of trust or mortgage being foreclosed.

(B) The beneficiary or mortgagee of any deed of trust or mortgage recorded subsequent to the deed of trust or mortgage being foreclosed, or recorded prior to or concurrently with the deed of trust or mortgage being foreclosed but subject to a recorded agreement or a recorded statement of subordination to the deed of trust or mortgage being foreclosed.

(C) The assignee of any interest of the beneficiary or mortgagee described in subparagraph (B), as of the recording date of the notice of default.

(D) The vendee of any contract of sale, or the lessee of any lease, of the estate or interest being foreclosed which is recorded subsequent to the deed of trust or mortgage being foreclosed, or recorded prior to or concurrently with the deed of trust or mortgage being foreclosed but subject to a recorded agreement or statement of subordination to the deed of trust or mortgage being foreclosed.

(E) The successor in interest to the vendee or lessee described in subparagraph (D), as of the recording date of the notice of default.

(F) The office of the Controller, Sacramento, California, where, as of the recording date of the notice of default, a “Notice of Lien for Postponed Property Taxes” has been recorded against the real property to which the notice of default applies.

(3) At least 20 days before the date of sale, deposit or cause to be deposited in the United States mail an envelope, sent by registered or certified mail with postage prepaid, containing a copy of the notice of the time and place of sale addressed to each person to whom a copy of the notice of default is to be mailed as provided in paragraphs (1) and (2), and addressed to the office of any state taxing agency, Sacramento, California, which has recorded, subsequent to the deed of trust or mortgage being foreclosed, a notice of tax lien prior to the recording date of the notice of default against the real property to which the notice of default applies.

(4) Provide a copy of the notice of sale to the Internal Revenue Service, in accordance with Section 7425 of the Internal Revenue Code and any applicable federal regulation, if a “Notice of Federal Tax Lien under Internal Revenue Laws” has been recorded, subsequent to the deed of trust or mortgage being foreclosed, against the real property to which the notice of sale applies. The failure to provide the Internal Revenue Service with a copy of the notice of sale pursuant to this paragraph shall be sufficient cause to rescind the trustee’s sale and invalidate the trustee’s deed, at the option of either the successful bidder at the trustee’s sale or the trustee, and in either case with the consent of the beneficiary. Any option to rescind the trustee’s sale pursuant to this paragraph shall be exercised prior to any transfer of the property by the successful bidder to a bona fide purchaser for value. A recision of the trustee’ s sale pursuant to this paragraph may be recorded in a notice of recision pursuant to Section 1058.5.

(5) The mailing of notices in the manner set forth in paragraph (1) shall not impose upon any licensed attorney, agent, or employee of any person entitled to receive notices as herein set forth any duty to communicate the notice to the entitled person from the fact that the mailing address used by the county recorder is the address of the attorney, agent, or employee.

(d) Any deed of trust or mortgage with power of sale hereafter executed upon real property or an estate for years therein may contain a request that a copy of any notice of default and a copy of any notice of sale thereunder shall be mailed to any person or party thereto at the address of the person given therein, and a copy of any notice of default and of any notice of sale shall be mailed to each of these at the same time and in the same manner required as though a separate request therefor had been filed by each of these persons as herein authorized. If any deed of trust or mortgage with power of sale executed after September 19, 1939, except a deed of trust or mortgage of any of the classes excepted from the provisions of Section 2924, does not contain a mailing address of the trustor or mortgagor therein named, and if no request for special notice by the trustor or mortgagor in substantially the form set forth in this section has subsequently been recorded, a copy of the notice of default shall be published once a week for at least four weeks in a newspaper of general circulation in the county in which the property is situated, the publication to commence within 10 business days after the filing of the notice of default. In lieu of publication, a copy of the notice of default may be delivered personally to the trustor or mortgagor within the 10 business days or at any time before publication is completed, or by posting the notice of default in a conspicuous place on the property and mailing the notice to the last known address of the trustor or mortgagor.

(e) Any person required to mail a copy of a notice of default or notice of sale to each trustor or mortgagor pursuant to subdivision (b) or (c) by registered or certified mail shall simultaneously cause to be deposited in the United States mail, with postage prepaid and mailed by first-class mail, an envelope containing an additional copy of the required notice addressed to each trustor or mortgagor at the same address to which the notice is sent by registered or certified mail pursuant to subdivision (b) or (c). The person shall execute and retain an affidavit identifying the notice mailed, showing the name and residence or business address of that person, that he or she is over the age of 18 years, the date of deposit in the mail, the name and address of the trustor or mortgagor to whom sent, and that the envelope was sealed and deposited in the mail with postage fully prepaid. In the absence of fraud, the affidavit required by this subdivision shall establish a conclusive presumption of mailing.

(f) No request for a copy of any notice filed for record pursuant to this section, no statement or allegation in the request, and no record thereof shall affect the title to real property or be deemed notice to any person that any person requesting copies of notice has or claims any right, title, or interest in, or lien or charge upon the property described in the deed of trust or mortgage referred to therein.

(g) “Business day,” as used in this section, has the meaning specified in Section 9.

2924c.
(a)

(1) Whenever all or a portion of the principal sum of any obligation secured by deed of trust or mortgage on real property or an estate for years therein hereafter executed has, prior to the maturity date fixed in that obligation, become due or been declared due by reason of default in payment of interest or of any installment of principal, or by reason of failure of trustor or mortgagor to pay, in accordance with the terms of that obligation or of the deed of trust or mortgage, taxes, assessments, premiums for insurance, or advances made by beneficiary or mortgagee in accordance with the terms of that obligation or of the deed of trust or mortgage, the trustor or mortgagor or his or her successor in interest in the mortgaged or trust property or any part thereof, or any beneficiary under a subordinate deed of trust or any other person having a subordinate lien or encumbrance of record thereon, at any time within the period specified in subdivision (e), if the power of sale therein is to be exercised, or, otherwise at any time prior to entry of the decree of foreclosure, may pay to the beneficiary or the mortgagee or their successors in interest, respectively, the entire amount due, at the time payment is tendered, with respect to (A) all amounts of principal, interest, taxes, assessments, insurance premiums, or advances actually known by the beneficiary to be, and that are, in default and shown in the notice of default, under the terms of the deed of trust or mortgage and the obligation secured thereby, (B) all amounts in default on recurring obligations not shown in the notice of default, and (C) all reasonable costs and expenses, subject to subdivision (c), which are actually incurred in enforcing the terms of the obligation, deed of trust, or mortgage, and trustee’s or attorney’s fees, subject to subdivision (d), other than the portion of principal as would not then be due had no default occurred, and thereby cure the default theretofore existing, and thereupon, all proceedings theretofore had or instituted shall be dismissed or discontinued and the obligation and deed of trust or mortgage shall be reinstated and shall be and remain in force and effect, the same as if the acceleration had not occurred. This section does not apply to bonds or other evidences of indebtedness authorized or permitted to be issued by the Commissioner of Corporations or made by a public utility subject to the Public Utilities Code. For the purposes of this subdivision, the term “recurring obligation” means all amounts of principal and interest on the loan, or rents, subject to the deed of trust or mortgage in default due after the notice of default is recorded; all amounts of principal and interest or rents advanced on senior liens or leaseholds which are advanced after the recordation of the notice of default; and payments of taxes, assessments, and hazard insurance advanced after recordation of the notice of default. Where the beneficiary or mortgagee has made no advances on defaults which would constitute recurring obligations, the beneficiary or mortgagee may require the trustor or mortgagor to provide reliable written evidence that the amounts have been paid prior to reinstatement.

(2) If the trustor, mortgagor, or other person authorized to cure the default pursuant to this subdivision does cure the default, the beneficiary or mortgagee or the agent for the beneficiary or mortgagee shall, within 21 days following the reinstatement, execute and deliver to the trustee a notice of rescission which rescinds the declaration of default and demand for sale and advises the trustee of the date of reinstatement. The trustee shall cause the notice of rescission to be recorded within 30 days of receipt of the notice of rescission and of all allowable fees and costs.

No charge, except for the recording fee, shall be made against the trustor or mortgagor for the execution and recordation of the notice which rescinds the declaration of default and demand for sale.

(b)

(1) The notice, of any default described in this section, recorded pursuant to Section 2924, and mailed to any person pursuant to Section 2924b, shall begin with the following statement, printed or typed thereon:

“IMPORTANT NOTICE (14-point boldface type if printed or in
capital letters if typed)

IF YOUR PROPERTY IS IN FORECLOSURE BECAUSE YOU ARE BEHIND IN YOUR
PAYMENTS, IT MAY BE SOLD WITHOUT ANY COURT ACTION, (14-point boldface
type if printed or in capital letters if typed) and you may have the
legal right to bring your account in good standing by paying all of
your past due payments plus permitted costs and expenses within the
time permitted by law for reinstatement of your account, which is
normally five business days prior to the date set for the sale of
your property. No sale date may be set until three months from the
date this notice of default may be recorded (which date of
recordation appears on this notice).

This amount is ___________________ as of ______________________
(Date)
and will increase until your account becomes current.

While your property is in foreclosure, you still must pay other
obligations (such as insurance and taxes) required by your note and
deed of trust or mortgage. If you fail to make future payments on
the loan, pay taxes on the property, provide insurance on the
property, or pay other obligations as required in the note and deed
of trust or mortgage, the beneficiary or mortgagee may insist that
you do so in order to reinstate your account in good standing. In
addition, the beneficiary or mortgagee may require as a condition to
reinstatement that you provide reliable written evidence that you
paid all senior liens, property taxes, and hazard insurance premiums.

Upon your written request, the beneficiary or mortgagee will give
you a written itemization of the entire amount you must pay. You may
not have to pay the entire unpaid portion of your account, even
though full payment was demanded, but you must pay all amounts in
default at the time payment is made. However, you and your
beneficiary or mortgagee may mutually agree in writing prior to the
time the notice of sale is posted (which may not be earlier than the
end of the three-month period stated above) to, among other things,
(1) provide additional time in which to cure the default by transfer
of the property or otherwise; or (2) establish a schedule of payments
in order to cure your default; or both (1) and (2).
Following the expiration of the time period referred to in the
first paragraph of this notice, unless the obligation being
foreclosed upon or a separate written agreement between you and your
creditor permits a longer period, you have only the legal right to
stop the sale of your property by paying the entire amount demanded
by your creditor.
To find out the amount you must pay, or to arrange for payment to
stop the foreclosure, or if your property is in foreclosure for any
other reason, contact:

______________________________________
(Name of beneficiary or mortgagee)

______________________________________
(Mailing address)

______________________________________
(Telephone)

If you have any questions, you should contact a lawyer or the
governmental agency which may have insured your loan.
Notwithstanding the fact that your property is in foreclosure, you
may offer your property for sale, provided the sale is concluded
prior to the conclusion of the foreclosure.
Remember, YOU MAY LOSE LEGAL RIGHTS IF YOU DO NOT TAKE PROMPT
ACTION. (14-point boldface type if printed or in capital letters if
typed)”

Unless otherwise specified, the notice, if printed, shall appear in at least 12-point boldface type.

If the obligation secured by the deed of trust or mortgage is a contract or agreement described in paragraph (1) or (4) of subdivision (a) of Section 1632, the notice required herein shall be in Spanish if the trustor requested a Spanish language translation of the contract or agreement pursuant to Section 1632. If the obligation secured by the deed of trust or mortgage is contained in a home improvement contract, as defined in Sections 7151.2 and 7159 of the Business and Professions Code, which is subject to Title 2 (commencing with Section 1801), the seller shall specify on the contract whether or not the contract was principally negotiated in Spanish and if the contract was principally negotiated in Spanish, the notice required herein shall be in Spanish. No assignee of the contract or person authorized to record the notice of default shall incur any obligation or liability for failing to mail a notice in Spanish unless Spanish is specified in the contract or the assignee or person has actual knowledge that the secured obligation was principally negotiated in Spanish. Unless specified in writing to the contrary, a copy of the notice required by subdivision (c) of Section 2924b shall be in English.

(2) Any failure to comply with the provisions of this subdivision shall not affect the validity of a sale in favor of a bona fide purchaser or the rights of an encumbrancer for value and without notice.

(c) Costs and expenses which may be charged pursuant to Sections 2924 to 2924i, inclusive, shall be limited to the costs incurred for recording, mailing, including certified and express mail charges, publishing, and posting notices required by Sections 2924 to 2924i, inclusive, postponement pursuant to Section 2924g not to exceed fifty dollars ($50) per postponement and a fee for a trustee’s sale guarantee or, in the event of judicial foreclosure, a litigation guarantee. For purposes of this subdivision, a trustee or beneficiary may purchase a trustee’s sale guarantee at a rate meeting the standards contained in Sections 12401.1 and 12401.3 of the Insurance Code.

(d) Trustee’s or attorney’s fees which may be charged pursuant to subdivision (a), or until the notice of sale is deposited in the mail to the trustor as provided in Section 2924b, if the sale is by power of sale contained in the deed of trust or mortgage, or, otherwise at any time prior to the decree of foreclosure, are hereby authorized to be in a base amount that does not exceed three hundred dollars ($300) if the unpaid principal sum secured is one hundred fifty thousand dollars ($150,000) or less, or two hundred fifty dollars ($250) if the unpaid principal sum secured exceeds one hundred fifty thousand dollars ($150,000), plus one-half of 1 percent of the unpaid principal sum secured exceeding fifty thousand dollars ($50,000) up to and including one hundred fifty thousand dollars ($150,000), plus one-quarter of 1 percent of any portion of the unpaid principal sum secured exceeding one hundred fifty thousand dollars ($150,000) up to and including five hundred thousand dollars ($500,000), plus one-eighth of 1 percent of any portion of the unpaid principal sum secured exceeding five hundred thousand dollars ($500,000). Any charge for trustee’s or attorney’s fees authorized by this subdivision shall be conclusively presumed to be lawful and valid where the charge does not exceed the amounts authorized herein. For purposes of this subdivision, the unpaid principal sum secured shall be determined as of the date the notice of default is recorded.

(e) Reinstatement of a monetary default under the terms of an obligation secured by a deed of trust, or mortgage may be made at any time within the period commencing with the date of recordation of the notice of default until five business days prior to the date of sale set forth in the initial recorded notice of sale.

In the event the sale does not take place on the date set forth in the initial recorded notice of sale or a subsequent recorded notice of sale is required to be given, the right of reinstatement shall be revived as of the date of recordation of the subsequent notice of sale, and shall continue from that date until five business days prior to the date of sale set forth in the subsequently recorded notice of sale.

In the event the date of sale is postponed on the date of sale set forth in either an initial or any subsequent notice of sale, or is postponed on the date declared for sale at an immediately preceding postponement of sale, and, the postponement is for a period which exceeds five business days from the date set forth in the notice of sale, or declared at the time of postponement, then the right of reinstatement is revived as of the date of postponement and shall continue from that date until five business days prior to the date of sale declared at the time of the postponement.

Nothing contained herein shall give rise to a right of reinstatement during the period of five business days prior to the date of sale, whether the date of sale is noticed in a notice of sale or declared at a postponement of sale.

Pursuant to the terms of this subdivision, no beneficiary, trustee, mortgagee, or their agents or successors shall be liable in any manner to a trustor, mortgagor, their agents or successors or any beneficiary under a subordinate deed of trust or mortgage or any other person having a subordinate lien or encumbrance of record thereon for the failure to allow a reinstatement of the obligation secured by a deed of trust or mortgage during the period of five business days prior to the sale of the security property, and no such right of reinstatement during this period is created by this section. Any right of reinstatement created by this section is terminated five business days prior to the date of sale set forth in the initial date of sale, and is revived only as prescribed herein and only as of the date set forth herein.

As used in this subdivision, the term “business day” has the same meaning as specified in Section 9.

2924d.
(a) Commencing with the date that the notice of sale is deposited in the mail, as provided in Section 2924b, and until the property is sold pursuant to the power of sale contained in the mortgage or deed of trust, a beneficiary, trustee, mortgagee, or his or her agent or successor in interest, may demand and receive from a trustor, mortgagor, or his or her agent or successor in interest, or any beneficiary under a subordinate deed of trust, or any other person having a subordinate lien or encumbrance of record those reasonable costs and expenses, to the extent allowed by subdivision (c) of Section 2924c, which are actually incurred in enforcing the terms of the obligation and trustee’s or attorney’s fees which are hereby authorized to be in a base amount which does not exceed four hundred twenty-five dollars ($425) if the unpaid principal sum secured is one hundred fifty thousand dollars ($150,000) or less, or three hundred sixty dollars ($360) if the unpaid principal sum secured exceeds one hundred fifty thousand dollars ($150,000), plus 1 percent of any portion of the unpaid principal sum secured exceeding fifty thousand dollars ($50,000) up to and including one hundred fifty thousand dollars ($150,000), plus one-half of 1 percent of any portion of the unpaid principal sum secured exceeding one hundred fifty thousand dollars ($150,000) up to and including five hundred thousand dollars ($500,000), plus one-quarter of 1 percent of any portion of the unpaid principal sum secured exceeding five hundred thousand dollars ($500,000). For purposes of this subdivision, the unpaid principal sum secured shall be determined as of the date the notice of default is recorded. Any charge for trustee’s or attorney’ s fees authorized by this subdivision shall be conclusively presumed to be lawful and valid where that charge does not exceed the amounts authorized herein. Any charge for trustee’s or attorney’s fees made pursuant to this subdivision shall be in lieu of and not in addition to those charges authorized by subdivision (d) of Section 2924c.

(b) Upon the sale of property pursuant to a power of sale, a trustee, or his or her agent or successor in interest, may demand and receive from a beneficiary, or his or her agent or successor in interest, or may deduct from the proceeds of the sale, those reasonable costs and expenses, to the extent allowed by subdivision (c) of Section 2924c, which are actually incurred in enforcing the terms of the obligation and trustee’s or attorney’s fees which are hereby authorized to be in an amount which does not exceed four hundred twenty-five dollars ($425) or one percent of the unpaid principal sum secured, whichever is greater. For purposes of this subdivision, the unpaid principal sum secured shall be determined as of the date the notice of default is recorded. Any charge for trustee’s or attorney’s fees authorized by this subdivision shall be conclusively presumed to be lawful and valid where that charge does not exceed the amount authorized herein. Any charges for trustee’s or attorney’s fees made pursuant to this subdivision shall be in lieu of and not in addition to those charges authorized by subdivision (a) of this section and subdivision (d) of Section 2924c.

(c)

(1) No person shall pay or offer to pay or collect any rebate or kickback for the referral of business involving the performance of any act required by this article.

(2) Any person who violates this subdivision shall be liable to the trustor for three times the amount of any rebate or kickback, plus reasonable attorney’s fees and costs, in addition to any other remedies provided by law.

(3) No violation of this subdivision shall affect the validity of a sale in favor of a bona fide purchaser or the rights of an encumbrancer for value without notice.

(d) It shall not be unlawful for a trustee to pay or offer to pay a fee to an agent or subagent of the trustee for work performed by the agent or subagent in discharging the trustee’s obligations under the terms of the deed of trust. Any payment of a fee by a trustee to an agent or subagent of the trustee for work performed by the agent or subagent in discharging the trustee’s obligations under the terms of the deed of trust shall be conclusively presumed to be lawful and valid if the fee, when combined with other fees of the trustee, does not exceed in the aggregate the trustee’s fee authorized by subdivision (d) of Section 2924c or subdivision (a) or (b) of this section.

(e) When a court issues a decree of foreclosure, it shall have discretion to award attorney’s fees, costs, and expenses as are reasonable, if provided for in the note, deed of trust, or mortgage, pursuant to Section 580c of the Code of Civil Procedure.

2924e.
(a) The beneficiary or mortgagee of any deed of trust or mortgage on real property either containing one to four residential units or given to secure an original obligation not to exceed three hundred thousand dollars ($300,000) may, with the written consent of the trustor or mortgagor that is either effected through a signed and dated agreement which shall be separate from other loan and security documents or disclosed to the trustor or mortgagor in at least 10-point type, submit a written request by certified mail to the beneficiary or mortgagee of any lien which is senior to the lien of the requester, for written notice of any or all delinquencies of four months or more, in payments of principal or interest on any obligation secured by that senior lien notwithstanding that the loan secured by the lien of the requester is not then in default as to payments of principal or interest.

The request shall be sent to the beneficiary or mortgagee, or agent which it might designate for the purpose of receiving loan payments, at the address specified for the receipt of these payments, if known, or, if not known, at the address shown on the recorded deed of trust or mortgage.

(b) The request for notice shall identify the ownership or security interest of the requester, the date on which the interest of the requester will terminate as evidenced by the maturity date of the note of the trustor or mortgagor in favor of the requester, the name of the trustor or mortgagor and the name of the current owner of the security property if different from the trustor or mortgagor, the street address or other description of the security property, the loan number (if available to the requester) of the loan secured by the senior lien, the name and address to which notice is to be sent, and shall include or be accompanied by the signed written consent of the trustor or mortgagor, and a fee of forty dollars ($40). For obligations secured by residential properties, the request shall remain valid until withdrawn in writing and shall be applicable to all delinquencies as provided in this section, which occur prior to the date on which the interest of the requester will terminate as specified in the request or the expiration date, as appropriate. For obligations secured by nonresidential properties, the request shall remain valid until withdrawn in writing and shall be applicable to all delinquencies as provided in this section, which occur prior to the date on which the interest of the requester will terminate as specified in the request or the expiration date, as appropriate. The beneficiary or mortgagee of obligations secured by nonresidential properties that have sent five or more notices prior to the expiration of the effective period of the request may charge a fee up to fifteen dollars ($15) for each subsequent notice. A request for notice shall be effective for five years from the mailing of the request or the recording of that request, whichever occurs later, and may be renewed within six months prior to its expiration date by sending the beneficiary or mortgagee, or agent, as the case may be, at the address to which original requests for notice are to be sent, a copy of the earlier request for notice together with a signed statement that the request is renewed and a renewal fee of fifteen dollars ($15). Upon timely submittal of a renewal request for notice, the effectiveness of the original request is continued for five years from the time when it would otherwise have lapsed. Succeeding renewal requests may be submitted in the same manner. The request for notice and renewals thereof shall be recorded in the office of the county recorder of the county in which the security real property is situated. The rights and obligations specified in this section shall inure to the benefit of, or pass to, as the case may be, successors in interest of parties specified in this section. Any successor in interest of a party entitled to notice under this section shall file a request for that notice with any beneficiary or mortgagee of the senior lien and shall pay a processing fee of fifteen dollars ($15). No new written consent shall be required from the trustor or mortgagor.

(c) Unless the delinquency has been cured, within 15 days following the end of four months from any delinquency in payments of principal or interest on any obligation secured by the senior lien which delinquency exists or occurs on or after 10 days from the mailing of the request for notice or the recording of that request, whichever occurs later, the beneficiary or mortgagee shall give written notice to the requester of the fact of any delinquency and the amount thereof.

The notice shall be given by personal service, or by deposit in the mail, first-class postage paid. Following the recording of any notice of default pursuant to Section 2924 with respect to the same delinquency, no notice or further notice shall be required pursuant to this section.

(d) If the beneficiary or mortgagee of any such senior lien fails to give notice to the requester as required in subdivision (c), and a subsequent foreclosure or trustee’s sale of the security property occurs, the beneficiary or mortgagee shall be liable to the requester for any monetary damage due to the failure to provide notice within the time period specified in subdivision (c) which the requester has sustained from the date on which notice should have been given to the earlier of the date on which the notice is given or the date of the recording of the notice of default under Section 2924, and shall also forfeit to the requester the sum of three hundred dollars ($300). A showing by the beneficiary or mortgagee by a preponderance of the evidence that the failure to provide timely notice as required by subdivision (c) resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error shall be a defense to any liability for that failure.

(e) If any beneficiary or mortgagee, or agent which it had designated for the purpose of receiving loan payments, has been succeeded in interest by any other person, any request for notice received pursuant to this section shall be transmitted promptly to that person.

(f) Any failure to comply with the provisions of this section shall not affect the validity of a sale in favor of a bona fide purchaser or the rights of an encumbrancer for value and without notice.

(g) Upon satisfaction of an obligation secured by a junior lien with respect to which a notice request was made pursuant to this section, the beneficiary or mortgagee that made the request shall communicate that fact in writing to the senior lienholder to whom the request was made. The communication shall specify that provision of notice pursuant to the prior request under this section is no longer required.

2924f.
(a) As used in this section and Sections 2924g and 2924h, “property” means real property or a leasehold estate therein, and “calendar week” means Monday through Saturday, inclusive.

(b)

(1) Except as provided in subdivision (c), before any sale of property can be made under the power of sale contained in any deed of trust or mortgage, or any resale resulting from a rescission for a failure of consideration pursuant to subdivision (c) of Section 2924h, notice of the sale thereof shall be given by posting a written notice of the time of sale and of the street address and the specific place at the street address where the sale will be held, and describing the property to be sold, at least 20 days before the date of sale in one public place in the city where the property is to be sold, if the property is to be sold in a city, or, if not, then in one public place in the judicial district in which the property is to be sold, and publishing a copy once a week for three consecutive calendar weeks, the first publication to be at least 20 days before the date of sale, in a newspaper of general circulation published in the city in which the property or some part thereof is situated, if any part thereof is situated in a city, if not, then in a newspaper of general circulation published in the judicial district in which the property or some part thereof is situated, or in case no newspaper of general circulation is published in the city or judicial district, as the case may be, in a newspaper of general circulation published in the county in which the property or some part thereof is situated, or in case no newspaper of general circulation is published in the city or judicial district or county, as the case may be, in a newspaper of general circulation published in the county in this state that (A) is contiguous to the county in which the property or some part thereof is situated and (B) has, by comparison with all similarly contiguous counties, the highest population based upon total county population as determined by the most recent federal decennial census published by the Bureau of the Census. A copy of the notice of sale shall also be posted in a conspicuous place on the property to be sold at least 20 days before the date of sale, where possible and where not restricted for any reason. If the property is a single-family residence the posting shall be on a door of the residence, but, if not possible or restricted, then the notice shall be posted in a conspicuous place on the property; however, if access is denied because a common entrance to the property is restricted by a guard gate or similar impediment, the property may be posted at that guard gate or similar impediment to any development community. Additionally, the notice of sale shall conform to the minimum requirements of Section 6043 of the Government Code and be recorded with the county recorder of the county in which the property or some part thereof is situated at least 14 days prior to the date of sale. The notice of sale shall contain the name, street address in this state, which may reflect an agent of the trustee, and either a toll-free telephone number or telephone number in this state of the trustee, and the name of the original trustor, and also shall contain the statement required by paragraph (3) of subdivision (c). In addition to any other description of the property, the notice shall describe the property by giving its street address, if any, or other common designation, if any, and a county assessor’s parcel number; but if the property has no street address or other common designation, the notice shall contain a legal description of the property, the name and address of the beneficiary at whose request the sale is to be conducted, and a statement that directions may be obtained pursuant to a written request submitted to the beneficiary within 10 days from the first publication of the notice. Directions shall be deemed reasonably sufficient to locate the property if information as to the location of the property is given by reference to the direction and approximate distance from the nearest crossroads, frontage road, or access road. If a legal description or a county assessor’s parcel number and either a street address or another common designation of the property is given, the validity of the notice and the validity of the sale shall not be affected by the fact that the street address, other common designation, name and address of the beneficiary, or the directions obtained therefrom are erroneous or that the street address, other common designation, name and address of the beneficiary, or directions obtained therefrom are omitted. The term “newspaper of general circulation,” as used in this section, has the same meaning as defined in Article 1 (commencing with Section 6000) of Chapter 1 of Division 7 of Title 1 of the Government Code.

The notice of sale shall contain a statement of the total amount of the unpaid balance of the obligation secured by the property to be sold and reasonably estimated costs, expenses, advances at the time of the initial publication of the notice of sale, and, if republished pursuant to a cancellation of a cash equivalent pursuant to subdivision (d) of Section 2924h, a reference of that fact; provided, that the trustee shall incur no liability for any good faith error in stating the proper amount, including any amount provided in good faith by or on behalf of the beneficiary. An inaccurate statement of this amount shall not affect the validity of any sale to a bona fide purchaser for value, nor shall the failure to post the notice of sale on a door as provided by this subdivision affect the validity of any sale to a bona fide purchaser for value.

(2) If the sale of the property is to be a unified sale as provided in subparagraph (B) of paragraph (1) of subdivision (a) of Section 9604 of the Commercial Code, the notice of sale shall also contain a description of the personal property or fixtures to be sold. In the case where it is contemplated that all of the personal property or fixtures are to be sold, the description in the notice of the personal property or fixtures shall be sufficient if it is the same as the description of the personal property or fixtures contained in the agreement creating the security interest in or encumbrance on the personal property or fixtures or the filed financing statement relating to the personal property or fixtures. In all other cases, the description in the notice shall be sufficient if it would be a sufficient description of the personal property or fixtures under Section 9108 of the Commercial Code. Inclusion of a reference to or a description of personal property or fixtures in a notice of sale hereunder shall not constitute an election by the secured party to conduct a unified sale pursuant to subparagraph (B) of paragraph (1) of subdivision (a) of Section 9604 of the Commercial Code, shall not obligate the secured party to conduct a unified sale pursuant to subparagraph (B) of paragraph (1) of subdivision (a) of Section 9604 of the Commercial Code, and in no way shall render defective or noncomplying either that notice or a sale pursuant to that notice by reason of the fact that the sale includes none or less than all of the personal property or fixtures referred to or described in the notice. This paragraph shall not otherwise affect the obligations or duties of a secured party under the Commercial Code.

(c)

(1) This subdivision applies only to deeds of trust or mortgages which contain a power of sale and which are secured by real property containing a single-family, owner-occupied residence, where the obligation secured by the deed of trust or mortgage is contained in a contract for goods or services subject to the provisions of the Unruh Act (Chapter 1 (commencing with Section 1801) of Title 2 of Part 4 of Division 3).

(2) Except as otherwise expressly set forth in this subdivision, all other provisions of law relating to the exercise of a power of sale shall govern the exercise of a power of sale contained in a deed of trust or mortgage described in paragraph (1).

(3) If any default of the obligation secured by a deed of trust or mortgage described in paragraph (1) has not been cured within 30 days after the recordation of the notice of default, the trustee or mortgagee shall mail to the trustor or mortgagor, at his or her last known address, a copy of the following statement:

YOU ARE IN DEFAULT UNDER A
___________________________________________________,
Deed of trust or mortgage
DATED ______. UNLESS YOU TAKE ACTION TO PROTECT
YOUR PROPERTY, IT MAY BE SOLD AT A PUBLIC SALE.
IF YOU NEED AN EXPLANATION OF THE NATURE OF THE
PROCEEDING AGAINST YOU, YOU SHOULD CONTACT A LAWYER.

(4) All sales of real property pursuant to a power of sale contained in any deed of trust or mortgage described in paragraph (1) shall be held in the county where the residence is located and shall be made to the person making the highest offer. The trustee may receive offers during the 10-day period immediately prior to the date of sale and if any offer is accepted in writing by both the trustor or mortgagor and the beneficiary or mortgagee prior to the time set for sale, the sale shall be postponed to a date certain and prior to which the property may be conveyed by the trustor to the person making the offer according to its terms. The offer is revocable until accepted. The performance of the offer, following acceptance, according to its terms, by a conveyance of the property to the offeror, shall operate to terminate any further proceeding under the notice of sale and it shall be deemed revoked.

(5) In addition to the trustee fee pursuant to Section 2924c, the trustee or mortgagee pursuant to a deed of trust or mortgage subject to this subdivision shall be entitled to charge an additional fee of fifty dollars ($50).

(6) This subdivision applies only to property on which notices of default were filed on or after the effective date of this subdivision.

2924g.
(a) All sales of property under the power of sale contained in any deed of trust or mortgage shall be held in the county where the property or some part thereof is situated, and shall be made at auction, to the highest bidder, between the hours of 9 a.m. and 5 p.m. on any business day, Monday through Friday.

The sale shall commence at the time and location specified in the notice of sale. Any postponement shall be announced at the time and location specified in the notice of sale for commencement of the sale or pursuant to paragraph (1) of subdivision (c).

If the sale of more than one parcel of real property has been scheduled for the same time and location by the same trustee, (1) any postponement of any of the sales shall be announced at the time published in the notice of sale, (2) the first sale shall commence at the time published in the notice of sale or immediately after the announcement of any postponement, and (3) each subsequent sale shall take place as soon as possible after the preceding sale has been completed.

(b) When the property consists of several known lots or parcels, they shall be sold separately unless the deed of trust or mortgage provides otherwise. When a portion of the property is claimed by a third person, who requires it to be sold separately, the portion subject to the claim may be thus sold. The trustor, if present at the sale, may also, unless the deed of trust or mortgage otherwise provides, direct the order in which property shall be sold, when the property consists of several known lots or parcels which may be sold to advantage separately, and the trustee shall follow that direction. After sufficient property has been sold to satisfy the indebtedness, no more can be sold.

If the property under power of sale is in two or more counties, the public auction sale of all of the property under the power of sale may take place in any one of the counties where the property or a portion thereof is located.

(c)

(1) There may be a postponement or postponements of the sale proceedings, including a postponement upon instruction by the beneficiary to the trustee that the sale proceedings be postponed, at any time prior to the completion of the sale for any period of time not to exceed a total of 365 days from the date set forth in the notice of sale. The trustee shall postpone the sale in accordance with any of the following:

(A) Upon the order of any court of competent jurisdiction.

(B) If stayed by operation of law.

(C) By mutual agreement, whether oral or in writing, of any trustor and any beneficiary or any mortgagor and any mortgagee.

(D) At the discretion of the trustee.

(2) In the event that the sale proceedings are postponed for a period or periods totaling more than 365 days, the scheduling of any further sale proceedings shall be preceded by giving a new notice of sale in the manner prescribed in Section 2924f. New fees incurred for the new notice of sale shall not exceed the amounts specified in Sections 2924c and 2924d, and shall not exceed reasonable costs that are necessary to comply with this paragraph.

(d) The notice of each postponement and the reason therefor shall be given by public declaration by the trustee at the time and place last appointed for sale. A public declaration of postponement shall also set forth the new date, time, and place of sale and the place of sale shall be the same place as originally fixed by the trustee for the sale. No other notice of postponement need be given. However, the sale shall be conducted no sooner than on the seventh day after the earlier of (1) dismissal of the action or (2) expiration or termination of the injunction, restraining order, or stay that required postponement of the sale, whether by entry of an order by a court of competent jurisdiction, operation of law, or otherwise, unless the injunction, restraining order, or subsequent order expressly directs the conduct of the sale within that seven-day period. For purposes of this subdivision, the seven-day period shall not include the day on which the action is dismissed, or the day on which the injunction, restraining order, or stay expires or is terminated. If the sale had been scheduled to occur, but this subdivision precludes its conduct during that seven-day period, a new notice of postponement shall be given if the sale had been scheduled to occur during that seven-day period. The trustee shall maintain records of each postponement and the reason therefor.

(e) Notwithstanding the time periods established under subdivision

(d), if postponement of a sale is based on a stay imposed by Title 11 of the United States Code (bankruptcy), the sale shall be conducted no sooner than the expiration of the stay imposed by that title and the seven-day provision of subdivision (d) shall not apply.

2924h.
(a) Each and every bid made by a bidder at a trustee’s sale under a power of sale contained in a deed of trust or mortgage shall be deemed to be an irrevocable offer by that bidder to purchase the property being sold by the trustee under the power of sale for the amount of the bid. Any second or subsequent bid by the same bidder or any other bidder for a higher amount shall be a cancellation of the prior bid.

(b) At the trustee’s sale the trustee shall have the right (1) to require every bidder to show evidence of the bidder’s ability to deposit with the trustee the full amount of his or her final bid in cash, a cashier’s check drawn on a state or national bank, a check drawn by a state or federal credit union, or a check drawn by a state or federal savings and loan association, savings association, or savings bank specified in Section 5102 of the Financial Code and authorized to do business in this state, or a cash equivalent which has been designated in the notice of sale as acceptable to the trustee prior to, and as a condition to, the recognizing of the bid, and to conditionally accept and hold these amounts for the duration of the sale, and (2) to require the last and highest bidder to deposit, if not deposited previously, the full amount of the bidder’s final bid in cash, a cashier’s check drawn on a state or national bank, a check drawn by a state or federal credit union, or a check drawn by a state or federal savings and loan association, savings association, or savings bank specified in Section 5102 of the Financial Code and authorized to do business in this state, or a cash equivalent which has been designated in the notice of sale as acceptable to the trustee, immediately prior to the completion of the sale, the completion of the sale being so announced by the fall of the hammer or in another customary manner. The present beneficiary of the deed of trust under foreclosure shall have the right to offset his or her bid or bids only to the extent of the total amount due the beneficiary including the trustee’s fees and expenses.

(c) In the event the trustee accepts a check drawn by a credit union or a savings and loan association pursuant to this subdivision or a cash equivalent designated in the notice of sale, the trustee may withhold the issuance of the trustee’s deed to the successful bidder submitting the check drawn by a state or federal credit union or savings and loan association or the cash equivalent until funds become available to the payee or endorsee as a matter of right.

For the purposes of this subdivision, the trustee’s sale shall be deemed final upon the acceptance of the last and highest bid, and shall be deemed perfected as of 8 a.m. on the actual date of sale if the trustee’s deed is recorded within 15 calendar days after the sale, or the next business day following the 15th day if the county recorder in which the property is located is closed on the 15th day. However, the sale is subject to an automatic rescission for a failure of consideration in the event the funds are not “available for withdrawal” as defined in Section 12413.1 of the Insurance Code. The trustee shall send a notice of rescission for a failure of consideration to the last and highest bidder submitting the check or alternative instrument, if the address of the last and highest bidder is known to the trustee.

If a sale results in an automatic right of rescission for failure of consideration pursuant to this subdivision, the interest of any lienholder shall be reinstated in the same priority as if the previous sale had not occurred.

(d) If the trustee has not required the last and highest bidder to deposit the cash, a cashier’s check drawn on a state or national bank, a check drawn by a state or federal credit union, or a check drawn by a state or federal savings and loan association, savings association, or savings bank specified in Section 5102 of the Financial Code and authorized to do business in this state, or a cash equivalent which has been designated in the notice of sale as acceptable to the trustee in the manner set forth in paragraph (2) of subdivision (b), the trustee shall complete the sale. If the last and highest bidder then fails to deliver to the trustee, when demanded, the amount of his or her final bid in cash, a cashier’s check drawn on a state or national bank, a check drawn by a state or federal credit union, or a check drawn by a state or federal savings and loan association, savings association, or savings bank specified in Section 5102 of the Financial Code and authorized to do business in this state, or a cash equivalent which has been designated in the notice of sale as acceptable to the trustee, that bidder shall be liable to the trustee for all damages which the trustee may sustain by the refusal to deliver to the trustee the amount of the final bid, including any court costs and reasonable attorneys’ fees.

If the last and highest bidder willfully fails to deliver to the trustee the amount of his or her final bid in cash, a cashier’s check drawn on a state or national bank, a check drawn by a state or federal credit union, or a check drawn by a state or federal savings and loan association, savings association, or savings bank specified in Section 5102 of the Financial Code and authorized to do business in this state, or a cash equivalent which has been designated in the notice of sale as acceptable to the trustee, or if the last and highest bidder cancels a cashiers check drawn on a state or national bank, a check drawn by a state or federal credit union, or a check drawn by a state or federal savings and loan association, savings association, or savings bank specified in Section 5102 of the Financial Code and authorized to do business in this state, or a cash equivalent that has been designated in the notice of sale as acceptable to the trustee, that bidder shall be guilty of a misdemeanor punishable by a fine of not more than two thousand five hundred dollars ($2,500).

In the event the last and highest bidder cancels an instrument submitted to the trustee as a cash equivalent, the trustee shall provide a new notice of sale in the manner set forth in Section 2924f and shall be entitled to recover the costs of the new notice of sale as provided in Section 2924c.

(e) Any postponement or discontinuance of the sale proceedings shall be a cancellation of the last bid.

(f) In the event that this section conflicts with any other statute, then this section shall prevail.

(g) It shall be unlawful for any person, acting alone or in concert with others, (1) to offer to accept or accept from another, any consideration of any type not to bid, or (2) to fix or restrain bidding in any manner, at a sale of property conducted pursuant to a power of sale in a deed of trust or mortgage. However, it shall not be unlawful for any person, including a trustee, to state that a property subject to a recorded notice of default or subject to a sale conducted pursuant to this chapter is being sold in an “as-is” condition.

In addition to any other remedies, any person committing any act declared unlawful by this subdivision or any act which would operate as a fraud or deceit upon any beneficiary, trustor, or junior lienor shall, upon conviction, be fined not more than ten thousand dollars ($10,000) or imprisoned in the county jail for not more than one year, or be punished by both that fine and imprisonment.

2924i.
(a) This section applies to loans secured by a deed of trust or mortgage on real property containing one to four residential units at least one of which at the time the loan is made is or is to be occupied by the borrower if the loan is for a period in excess of one year and is a balloon payment loan.

(b) This section shall not apply to (1) open end credit as defined in Regulation Z, whether or not the transaction is otherwise subject to Regulation Z, (2) transactions subject to Section 2956, or (3) loans made for the principal purpose of financing the construction of one or more residential units.

(c) At least 90 days but not more than 150 days prior to the due date of the final payment on a loan that is subject to this section, the holder of the loan shall deliver or mail by first-class mail, with a certificate of mailing obtained from the United States Postal Service, to the trustor, or his or her successor in interest, at the last known address of that person, a written notice which shall include all of the following:

(1) A statement of the name and address of the person to whom the final payment is required to be paid.

(2) The date on or before which the final payment is required to be paid.

(3) The amount of the final payment, or if the exact amount is unknown, a good faith estimate of the amount thereof, including unpaid principal, interest and any other charges, such amount to be determined assuming timely payment in full of all scheduled installments coming due between the date the notice is prepared and the date when the final payment is due.

(4) If the borrower has a contractual right to refinance the final payment, a statement to that effect.

If the due date of the final payment of a loan subject to this section is extended prior to the time notice is otherwise required under this subdivision, this notice requirement shall apply only to the due date as extended (or as subsequently extended).

(d) For purposes of this section:

(1) A “balloon payment loan” is a loan which provides for a final payment as originally scheduled which is more than twice the amount of any of the immediately preceding six regularly scheduled payments or which contains a call provision; provided, however, that if the call provision is not exercised by the holder of the loan, the existence of the unexercised call provision shall not cause the loan to be deemed to be a balloon payment loan.

(2) “Call provision” means a loan contract term that provides the holder of the loan with the right to call the loan due and payable either after a specified period has elapsed following closing or after a specified date.

(3) “Regulation Z” means any rule, regulation, or interpretation promulgated by the Board of Governors of the Federal Reserve System under the Federal Truth in Lending Act, as amended (15 U.S.C. Sec. 1601 et seq.), and any interpretation or approval thereof issued by an official or employee of the Federal Reserve System duly authorized by the board under the Truth in Lending Act, as amended, to issue such interpretations or approvals.

(e) Failure to provide notice as required by subdivision (a) does not extinguish any obligation of payment by the borrower, except that the due date for any balloon payment shall be the date specified in the balloon payment note, or 90 days from the date of delivery or mailing of the notice required by subdivision (a), or the due date specified in the notice required by subdivision (a), whichever date is later. If the operation of this section acts to extend the term of any note, interest shall continue to accrue for the extended term at the contract rate and payments shall continue to be due at any periodic interval and on any payment schedule specified in the note and shall be credited to principal or interest under the terms of the note. Default in any extended periodic payment shall be considered a default under terms of the note or security instrument.

(f)

(1) The validity of any credit document or of any security document subject to the provisions of this section shall not be invalidated solely because of the failure of any person to comply with this section. However, any person who willfully violates any provision of this section shall be liable in the amount of actual damages suffered by the debtor as the proximate result of the violation, and, if the debtor prevails in any suit to recover that amount, for reasonable attorney’s fees.

(2) No person may be held liable in any action under this section if it is shown by a preponderance of the evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adopted to avoid any such error.

(g) The provisions of this section shall apply to any note executed on or after January 1, 1984.

2924j.
(a) Unless an interpleader action has been filed, within 30 days of the execution of the trustee’s deed resulting from a sale in which there are proceeds remaining after payment of the amounts required by paragraphs (1) and (2) of subdivision (a) of Section 2924k, the trustee shall send written notice to all persons with recorded interests in the real property as of the date immediately prior to the trustee’s sale who would be entitled to notice pursuant to subdivisions (b) and (c) of Section 2924b. The notice shall be sent by first-class mail in the manner provided in paragraph (1) of subdivision (c) of Section 2924b and inform each entitled person of each of the following:

(1) That there has been a trustee’s sale of the described real property.

(2) That the noticed person may have a claim to all or a portion of the sale proceeds remaining after payment of the amounts required by paragraphs (1) and (2) of subdivision (a) of Section 2924k.

(3) The noticed person may contact the trustee at the address provided in the notice to pursue any potential claim.

(4) That before the trustee can act, the noticed person may be required to present proof that the person holds the beneficial interest in the obligation and the security interest therefor. In the case of a promissory note secured by a deed of trust, proof that the person holds the beneficial interest may include the original promissory note and assignment of beneficial interests related thereto. The noticed person shall also submit a written claim to the trustee, executed under penalty of perjury, stating the following:

(A) The amount of the claim to the date of trustee’s sale.

(B) An itemized statement of the principal, interest, and other charges.

(C) That claims must be received by the trustee at the address stated in the notice no later than 30 days after the date the trustee sends notice to the potential claimant.

(b) The trustee shall exercise due diligence to determine the priority of the written claims received by the trustee to the trustee’ s sale surplus proceeds from those persons to whom notice was sent pursuant to subdivision (a). In the event there is no dispute as to the priority of the written claims submitted to the trustee, proceeds shall be paid within 30 days after the conclusion of the notice period. If the trustee has failed to determine the priority of written claims within 90 days following the 30-day notice period, then within 10 days thereafter the trustee shall deposit the funds with the clerk of the court pursuant to subdivision (c) or file an interpleader action pursuant to subdivision (e). Nothing in this section shall preclude any person from pursuing other remedies or claims as to surplus proceeds.

(c) If, after due diligence, the trustee is unable to determine the priority of the written claims received by the trustee to the trustee’s sale surplus of multiple persons or if the trustee determines there is a conflict between potential claimants, the trustee may file a declaration of the unresolved claims and deposit with the clerk of the superior court of the county in which the sale occurred, that portion of the sales proceeds that cannot be distributed, less any fees charged by the clerk pursuant to this subdivision. The declaration shall specify the date of the trustee’s sale, a description of the property, the names and addresses of all persons sent notice pursuant to subdivision (a), a statement that the trustee exercised due diligence pursuant to subdivision (b), that the trustee provided written notice as required by subdivisions (a) and (d) and the amount of the sales proceeds deposited by the trustee with the court. Further, the trustee shall submit a copy of the trustee’s sales guarantee and any information relevant to the identity, location, and priority of the potential claimants with the court and shall file proof of service of the notice required by subdivision (d) on all persons described in subdivision (a).

The clerk shall deposit the amount with the county treasurer or, if a bank account has been established for moneys held in trust under paragraph (2) of subdivision (a) of Section 77009 of the Government Code, in that account, subject to order of the court upon the application of any interested party. The clerk may charge a reasonable fee for the performance of activities pursuant to this subdivision equal to the fee for filing an interpleader action pursuant to Chapter 5.8 (commencing with Section 70600) of Title 8 of the Government Code. Upon deposit of that portion of the sale proceeds that cannot be distributed by due diligence, the trustee shall be discharged of further responsibility for the disbursement of sale proceeds. A deposit with the clerk of the court pursuant to this subdivision may be either for the total proceeds of the trustee’ s sale, less any fees charged by the clerk, if a conflict or conflicts exist with respect to the total proceeds, or that portion that cannot be distributed after due diligence, less any fees charged by the clerk.

(d) Before the trustee deposits the funds with the clerk of the court pursuant to subdivision (c), the trustee shall send written notice by first-class mail, postage prepaid, to all persons described in subdivision (a) informing them that the trustee intends to deposit the funds with the clerk of the court and that a claim for the funds must be filed with the court within 30 days from the date of the notice, providing the address of the court in which the funds were deposited, and a telephone number for obtaining further information.

Within 90 days after deposit with the clerk, the court shall consider all claims filed at least 15 days before the date on which the hearing is scheduled by the court, the clerk shall serve written notice of the hearing by first-class mail on all claimants identified in the trustee’s declaration at the addresses specified therein. Where the amount of the deposit is twenty-five thousand dollars ($25,000) or less, a proceeding pursuant to this section is a limited civil case. The court shall distribute the deposited funds to any and all claimants entitled thereto.

(e) Nothing in this section restricts the ability of a trustee to file an interpleader action in order to resolve a dispute about the proceeds of a trustee’s sale. Once an interpleader action has been filed, thereafter the provisions of this section do not apply.

(f) “Due diligence,” for the purposes of this section means that the trustee researched the written claims submitted or other evidence of conflicts and determined that a conflict of priorities exists between two or more claimants which the trustee is unable to resolve.

(g) To the extent required by the Unclaimed Property Law, a trustee in possession of surplus proceeds not required to be deposited with the court pursuant to subdivision (b) shall comply with the Unclaimed Property Law (Chapter 7 (commencing with Section 1500) of Title 10 of Part 3 of the Code of Civil Procedure).

(h) The trustee, beneficiary, or counsel to the trustee or beneficiary, is not liable for providing to any person who is entitled to notice pursuant to this section, information set forth in, or a copy of, subdivision (h) of Section 2945.3.

2924k.
(a) The trustee, or the clerk of the court upon order to the clerk pursuant to subdivision (d) of Section 2924j, shall distribute the proceeds, or a portion of the proceeds, as the case may be, of the trustee’s sale conducted pursuant to Section 2924h in the following order of priority:

(1) To the costs and expenses of exercising the power of sale and of sale, including the payment of the trustee’s fees and attorney’s fees permitted pursuant to subdivision (b) of Section 2924d and subdivision (b) of this section.

(2) To the payment of the obligations secured by the deed of trust or mortgage which is the subject of the trustee’s sale.

(3) To satisfy the outstanding balance of obligations secured by any junior liens or encumbrances in the order of their priority.

(4) To the trustor or the trustor’s successor in interest. In the event the property is sold or transferred to another, to the vested owner of record at the time of the trustee’s sale.

(b) A trustee may charge costs and expenses incurred for such items as mailing and a reasonable fee for services rendered in connection with the distribution of the proceeds from a trustee’s sale, including, but not limited to, the investigation of priority and validity of claims and the disbursement of funds. If the fee charged for services rendered pursuant to this subdivision does not exceed one hundred dollars ($100), or one hundred twenty-five dollars ($125) where there are obligations specified in paragraph (3) of subdivision (a), the fee is conclusively presumed to be reasonable.

2924l.
(a) In the event that a trustee under a deed of trust is named in an action or proceeding in which that deed of trust is the subject, and in the event that the trustee maintains a reasonable belief that it has been named in the action or proceeding solely in its capacity as trustee, and not arising out of any wrongful acts or omissions on its part in the performance of its duties as trustee, then, at any time, the trustee may file a declaration of nonmonetary status. The declaration shall be served on the parties in the manner set forth in Chapter 5 (commencing with Section 1010) of Title 14 of the Code of Civil Procedure.

(b) The declaration of nonmonetary status shall set forth the status of the trustee as trustee under the deed of trust that is the subject of the action or proceeding, that the trustee knows or maintains a reasonable belief that it has been named as a defendant in the proceeding solely in its capacity as a trustee under the deed of trust, its reasonable belief that it has not been named as a defendant due to any acts or omissions on its part in the performance of its duties as trustee, the basis for that knowledge or reasonable belief, and that it agrees to be bound by whatever order or judgment is issued by the court regarding the subject deed of trust.

(c) The parties who have appeared in the action or proceeding shall have 15 days from the service of the declaration by the trustee in which to object to the nonmonetary judgment status of the trustee. Any objection shall set forth the factual basis on which the objection is based and shall be served on the trustee.

(d) In the event that no objection is served within the 15-day objection period, the trustee shall not be required to participate any further in the action or proceeding, shall not be subject to any monetary awards as and for damages, attorneys’ fees or costs, shall be required to respond to any discovery requests as a nonparty, and shall be bound by any court order relating to the subject deed of trust that is the subject of the action or proceeding.

(e) In the event of a timely objection to the declaration of nonmonetary status, the trustee shall thereafter be required to participate in the action or proceeding.

Additionally, in the event that the parties elect not to, or fail to, timely object to the declaration of nonmonetary status, but later through discovery, or otherwise, determine that the trustee should participate in the action because of the performance of its duties as a trustee, the parties may file and serve on all parties and the trustee a motion pursuant to Section 473 of the Code of Civil Procedure that specifies the factual basis for the demand. Upon the court’s granting of the motion, the trustee shall thereafter be required to participate in the action or proceeding, and the court shall provide sufficient time prior to trial for the trustee to be able to respond to the complaint, to conduct discovery, and to bring other pretrial motions in accordance with the Code of Civil Procedure.

(f) Upon the filing of the declaration of nonmonetary status, the time within which the trustee is required to file an answer or other responsive pleading shall be tolled for the period of time within which the opposing parties may respond to the declaration. Upon the timely service of an objection to the declaration on nonmonetary status, the trustee shall have 30 days from the date of service within which to file an answer or other responsive pleading to the complaint or cross-complaint.

(g) For purposes of this section, “trustee” includes any agent or employee of the trustee who performs some or all of the duties of a trustee under this article, and includes substituted trustees and agents of the beneficiary or trustee.

Edit : Edit
Comments : Leave a Comment »

Tags: Foreclosure

Categories : 2924

MERS and civil code 2932.5 and Bankruptcy code 547 here is how it comes together

26 05 2010

CA Civil Code 2932.5 – Assignment”Where a power to sell real property is
given to a mortgagee, or other encumbrancer, in an instrument intended
to secure the payment of money, the power is part of the security and
vests in any person who by assignment becomes entitled to payment of the
money secured by the instrument. The power of sale may be exercised by
the assignee if the assignment is duly acknowledged and recorded.”

Landmark vs Kesler – While this is a matter of first impression in
Kansas, other jurisdictions have issued opinions on similar and related
issues, and, while we do not consider those opinions binding in the
current litigation, we find them to be useful guideposts in our analysis
of the issues before us.”

“Black’s Law Dictionary defines a nominee as “[a] person designated to
act in place of another, usu. in a very limited way” and as “[a] party
who holds bare legal title for the benefit of others or who receives and
distributes funds for the benefit of others.” Black’s Law Dictionary
1076 (8th ed. 2004). This definition suggests that a nominee possesses
few or no legally enforceable rights beyond those of a principal whom
the nominee serves……..The legal status of a nominee, then, depends
on the context of the relationship of the nominee to its principal.
Various courts have interpreted the relationship of MERS and the lender
as an agency relationship.”

“LaSalle Bank Nat. Ass’n v. Lamy, 2006 WL 2251721, at *2 (N.Y. Sup.
2006) (unpublished opinion) (“A nominee of the owner of a note and
mortgage may not effectively assign the note and mortgage to another for
want of an ownership interest in said note and mortgage by the
nominee.”)”

The law generally understands that a mortgagee is not distinct from a
lender: a mortgagee is “[o]ne to whom property is mortgaged: the
mortgage creditor, or lender.” Black’s Law Dictionary 1034 (8th ed.
2004). By statute, assignment of the mortgage carries with it the
assignment of the debt. K.S.A. 58-2323. Although MERS asserts that,
under some situations, the mortgage document purports to give it the
same rights as the lender, the document consistently refers only to
rights of the lender, including rights to receive notice of litigation,
to collect payments, and to enforce the debt obligation. The document
consistently limits MERS to acting “solely” as the nominee of the
lender.

Indeed, in the event that a mortgage loan somehow separates interests of
the note and the deed of trust, with the deed of trust lying with some
independent entity, the mortgage may become unenforceable.

“The practical effect of splitting the deed of trust from the promissory
note is to make it impossible for the holder of the note to foreclose,
unless the holder of the deed of trust is the agent of the holder of the
note. [Citation omitted.] Without the agency relationship, the person
holding only the note lacks the power to foreclose in the event of
default. The person holding only the deed of trust will never experience
default because only the holder of the note is entitled to payment of
the underlying obligation. [Citation omitted.] The mortgage loan becomes
ineffectual when the note holder did not also hold the deed of trust.”
Bellistri v. Ocwen Loan Servicing, LLC, 284 S.W.3d 619, 623 (Mo. App.
2009).

“MERS never held the promissory note,thus its assignment of the deed of
trust to Ocwen separate from the note had no force.” 284 S.W.3d at 624;
see also In re Wilhelm, 407 B.R. 392 (Bankr. D. Idaho 2009) (standard
mortgage note language does not expressly or implicitly authorize MERS
to transfer the note); In re Vargas, 396 B.R. 511, 517 (Bankr. C.D. Cal.
2008) (“[I]f FHM has transferred the note, MERS is no longer an
authorized agent of the holder unless it has a separate agency contract
with the new undisclosed principal. MERS presents no evidence as to who
owns the note, or of any authorization to act on behalf of the present
owner.”); Saxon Mortgage Services, Inc. v. Hillery, 2008 WL 5170180
(N.D. Cal. 2008) (unpublished opinion) (“[F]or there to be a valid
assignment, there must be more than just assignment of the deed alone;
the note must also be assigned. . . . MERS purportedly assigned both the
deed of trust and the promissory note. . . . However, there is no
evidence of record that establishes that MERS either held the promissory
note or was given the authority . . . to assign the note.”).

What stake in the outcome of an independent action for foreclosure could
MERS have? It did not lend the money to Kesler or to anyone else
involved in this case. Neither Kesler nor anyone else involved in the
case was required by statute or contract to pay money to MERS on the
mortgage. See Sheridan, ___ B.R. at ___ (“MERS is not an economic
‘beneficiary’ under the Deed of Trust. It is owed and will collect no
money from Debtors under the Note, nor will it realize the value of the
Property through foreclosure of the Deed of Trust in the event the Note
is not paid.”). If MERS is only the mortgagee, without ownership of the
mortgage instrument, it does not have an enforceable right. See Vargas,
396 B.R. 517 (“[w]hile the note is ‘essential,’ the mortgage is only ‘an
incident’ to the note” [quoting Carpenter v. Longan, 16 Wall. 271, 83
U.S. 271, 275, 21 L. Ed 313 (1872)]).

* MERS had no Beneficial Interest in the Note,
* MERS and the limited agency authority it has under the dot does
not continue with the assignment of the mortgage or dot absent a
ratification or a separate agency agreement between mers and the
assignee.
* The Note and the Deed of Trust were separated at or shortly
after origination upon endorsement and negotiation of the note rendering
the dot a nullity
* MERS never has any power or legal authority to transfer the note
to any entity;
* mers never has a beneficial interest in the note and pays
nothing of value for the note.

Bankr. Code 547 provides, among other things, that an unsecured
creditor who had won a race to an interest in the debtor’s property
using the state remedies system within 90 days of the filing of the
bankruptcy petition may have to forfeit its winnings (without
compensation for any expenses it may have incurred in winning the race)
for the benefit of all unsecured creditors. The section therefore
prevents certain creditors from being preferred over others (hence,
section 547 of the Bankruptcy Code is titled “Preferences).” An
additional effect of the section (and one of its stated purposes) may be
to discourage some unsecured creditors from aggressively pursuing the
debtor under the state remedies system, thus affording the debtor more
breathing space outside bankruptcy, for fear that money spent using the
state remedies system will be wasted if the debtor files a bankruptcy
petition.

. Bankr. Code 547(c) provides several important exceptions to the
preference avoidance power.

Bankr. Code 547 permits avoidance of liens obtained within the 90 day
(or one year) period: the creation of a lien on property of the debtor,
whether voluntary, such as through a consensual lien, or involuntary,
such as through a judicial lien, would, absent avoidance, have the same
preferential impact as a transfer of money from a debtor to a creditor
in payment of a debt. If the security interest was created in the
creditor within the 90 day window, and if other requirements of section
547(b) are satisfied, the security interest can be avoided and the real
property sold by the trustee free of the security interest (subject to
homestead exemption). All unsecured creditors of the debtor, including
the creditor whose lien has been avoided, will share, pro rata, in the
distribution of assets of the debtor, including the proceeds of the sale
of the real estate

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5 2923.6 2924 2932.5 Audit bankruptcy california California cram down Chapter 13 civil code 2923.5 civil code 2924 Countrywide Cram down Cramdown criminal acts eviction FCRA FDCPA Federal Jurisdi, 2932.5, bankruptcy, Foreclosure, lis pendence

Categories : 2924, Foreclosure, bankruptcy, stop foreclosure

90% Forclosures Wrongful

1 01 2010

A wrongful foreclosure action typically occurs when the lender starts a non judicial foreclosure action when it simply has no legal cause. This is even more evident now since California passed the Foreclosure prevention act of 2008 SB 1194 codified in Civil code 2923.5 and 2923.6. In 2009 it is this attorneys opinion that 90% of all foreclosures are wrongful in that the lender does not comply (just look at the declaration page on the notice of default). The lenders most notably Indymac, Countrywide, and Wells Fargo have taken a calculated risk. To comply would cost hundreds of millions in staff, paperwork, and workouts that they don’t deem to be in their best interest. The workout is not in there best interest because our tax dollars are guaranteeing the Banks that are To Big to Fail’s debt. If they don’t foreclose and if they work it out the loss is on them. There is no incentive to modify loan for the benefit of the consumer.

Sooooo they proceed to foreclosure without the mandated contacts with the borrower. Oh and yes contact is made by a computer or some outsourcing contact agent based in India. But compliance with 2923.5 is not done. The Borrower is never told that he or she have the right to a meeting within 14 days of the contact. They do not get offers to avoid foreclosure there are typically two offers short sale or a probationary mod that will be declined upon the 90th day.

Wrongful foreclosure actions are also brought when the service providers accept partial payments after initiation of the wrongful foreclosure process, and then continue on with the foreclosure process. These predatory lending strategies, as well as other forms of misleading homeowners, are illegal.

The borrower is the one that files a wrongful disclosure action with the court against the service provider, the holder of the note and if it is a non-judicial foreclosure, against the trustee complaining that there was an illegal, fraudulent or willfully oppressive sale of property under a power of sale contained in a mortgage or deed or court judicial proceeding. The borrower can also allege emotional distress and ask for punitive damages in a wrongful foreclosure action.

Causes of Action

Wrongful foreclosure actions may allege that the amount stated in the notice of default as due and owing is incorrect because of the following reasons:

* Incorrect interest rate adjustment
* Incorrect tax impound accounts
* Misapplied payments
* Forbearance agreement which was not adhered to by the servicer
* Unnecessary forced place insurance,
* Improper accounting for a confirmed chapter 11 or chapter 13 bankruptcy plan.
* Breach of contract
* Intentional infliction of emotional distress
* Negligent infliction of emotional distress
* Unfair Business Practices
* Quiet title
* Wrongful foreclosure
* Tortuous violation of 2924 2923.5 and 2923.5 and 2932.5
Injunction

Any time prior to the foreclosure sale, a borrower can apply for an injunction with the intent of stopping the foreclosure sale until issues in the lawsuit are resolved. The wrongful foreclosure lawsuit can take anywhere from ten to twenty-four months. Generally, an injunction will only be issued by the court if the court determines that: (1) the borrower is entitled to the injunction; and (2) that if the injunction is not granted, the borrower will be subject to irreparable harm.

Damages Available to Borrower

Damages available to a borrower in a wrongful foreclosure action include: compensation for the detriment caused, which are measured by the value of the property, emotional distress and punitive damages if there is evidence that the servicer or trustee committed fraud, oppression or malice in its wrongful conduct. If the borrower’s allegations are true and correct and the borrower wins the lawsuit, the servicer will have to undue or cancel the foreclosure sale, and pay the borrower’s legal bills.

Why Do Wrongful Foreclosures Occur?

Wrongful foreclosure cases occur usually because of a miscommunication between the lender and the borrower. Most borrower don’t know who the real lender is. Servicing has changed on average three times. And with the advent of MERS Mortgage Electronic Registration Systems the “investor lender” hundreds of times since the origination. And now they then have to contact the borrower. The don’t even know who the lender truly is. The laws that are now in place never contemplated the virtualization of the lending market. The present laws are inadequate to the challenge.

This is even more evident now since California passed the Foreclosure prevention act of 2008 SB 1194 codified in Civil code 2923.5 and 2923.6. In 2009 it is this attorneys opinion that 90% of all foreclosures are wrongful in that the lender does not comply (just look at the declaration page on the notice of default). The lenders most notably Indymac, Countrywide, and Wells Fargo have taken a calculated risk. To comply would cost hundreds of millions in staff, paperwork, and workouts that they don’t deem to be in their best interest. The workout is not in there best interest because our tax dollars are guaranteeing the Banks that are To Big to Fail’s debt. If they don’t foreclose and if they work it out the loss is on them. There is no incentive to modify loan for the benefit of the consumer.This could be as a result of an incorrectly applied payment, an error in interest charges and completely inaccurate information communicated between the lender and borrower. Some borrowers make the situation worse by ignoring their monthly statements and not promptly responding in writing to the lender’s communications. Many borrowers just assume that the lender will correct any inaccuracies or errors. Any one of these actions can quickly turn into a foreclosure action. Once an action is instituted, then the borrower will have to prove that it is wrongful or unwarranted. This is done by the borrower filing a wrongful foreclosure action. Costs are expensive and the action can take time to litigate.
Impact

The wrongful foreclosure will appear on the borrower’s credit report as a foreclosure, thereby ruining the borrower’s credit rating. Inaccurate delinquencies may also accompany the foreclosure on the credit report. After the foreclosure is found to be wrongful, the borrower must then petition to get the delinquencies and foreclosure off the credit report. This can take a long time and is emotionally distressing.

Wrongful foreclosure may also lead to the borrower losing their home and other assets if the borrower does not act quickly. This can have a devastating affect on a family that has been displaced out of their home. However, once the borrower’s wrongful foreclosure action is successful in court, the borrower may be entitled to compensation for their attorney fees, court costs, pain, suffering and emotional distress caused by the action.

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.5 2923.6 2924 2932.5 Audit bankruptcy california California cram down Chapter 13 civil code 2923.5 civil code 2924 Countrywide Cram down Cramdown criminal acts eviction FCRA FDCPA Federal Jurisdi, 2923.6, 2924, 2932.5, civil code 2924, Countrywide, Foreclosure, Fraud, stop foreclosure

Categories : 2923.5, 2923.6, 2924, Foreclosure, Lender Class action

Don’t get HAMP ED out of your home!

5 09 2009

By Walter Hackett, Esq.
The federal government has trumpeted its Home Affordable Modification Program or “HAMP” solution as THE solution to runaway foreclosures – few things could be further from the truth. Under HAMP a homeowner will be offered a “workout” that can result in the homeowner being “worked out” of his or her home. Here’s how it works. A participating lender or servicer will send a distressed homeowner a HAMP workout agreement. The agreement consists of an “offer” pursuant to which the homeowner is permitted to remit partial or half of their regular monthly payments for 3 or more months. The required payments are NOT reduced, instead the partial payments are placed into a suspense account. In many cases once enough is gathered to pay the oldest payment due the funds are removed from the suspense account and applied to the mortgage loan. At the end of the trial period the homeowner will be further behind than when they started the “workout” plan.
In California, the agreements clearly specify the acceptance of partial payments by the lender or servicer does NOT cure any default. Further, the fact a homeowner is in the workout program does NOT require the lender or servicer to suspend or postpone any non-judicial foreclosure activity with the possible exception of an actual trustee’s sale. A homeowner could complete the workout plan and be faced with an imminent trustee’s sale. Worse, if a homeowner performs EXACTLY as required by the workout agreement, they are NOT assured a loan modification. Instead the agreement will include vague statements that the homeowner MAY receive an offer to modify his or her loan however there is NO duty on the part of the servicer or lender to modify a loan regardless of the homeowner’s compliance with the agreement.

A homeowner who fully performs under a HAMP workout is all but guaranteed to have given away thousands of dollars with NO assurance of keeping his or her home or ever seeing anything resembling an offer to modify a mortgage loan.
While it may well be the case the government was making an honest effort to help, the reality is the HAMP program is only guaranteed to help those who need help least – lenders and servicers. If you receive ANY written offer to modify your loan meet with a REAL licensed attorney and ask them to review the agreement to determine what you are REALLY agreeing to, the home you save might be your own.

Edit : Edit
Comments : Leave a Comment »

Tags: Audit, bailout, bankruptcy, borrower, brad keiser, credit, credit crisis, depression, FDG, Federal Bailout, foreclosure defense, Foreclosure Defense Group, foreclosure offense, foreclosures, Fraud, HAMP, lawyers, Lender Liability, Loan Mod, LOAN MODIFICATION, lost note, Mortgage, quiet title, rescission, respa, RICO, TILA audit

Categories : 2923.5, 2923.6, 2924, Cramdown, Foreclosure, I Have a Plan, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, bankruptcy, eviction, lis pendence, stop foreclosure, tila, truth in lending

A ‘Little Judge’ Who Rejects Foreclosures, Brooklyn Style

2 09 2009

By Michael Powell – NY Times – 8/30/09

The judge waves you into his chambers in the State Supreme Court building in Brooklyn, past the caveat taped to his wall — “Be sure brain in gear before engaging mouth” — and into his inner office, where foreclosure motions are piled high enough to form a minor Alpine chain.

“I don’t want to put a family on the street unless it’s legitimate,” Justice Arthur M. Schack said.

Every week, the nation’s mightiest banks come to his court seeking to take the homes of New Yorkers who cannot pay their mortgages. And nearly as often, the judge says, they file foreclosure papers speckled with errors.

He plucks out one motion and leafs through: a Deutsche Bank representative signed an affidavit claiming to be the vice president of two different banks. His office was in Kansas City, Mo., but the signature was notarized in Texas. And the bank did not even own the mortgage when it began to foreclose on the homeowner.

The judge’s lips pucker as if he had inhaled a pickle; he rejected this one. “I’m a little guy in Brooklyn who doesn’t belong to their country clubs, what can I tell you?” he says, adding a shrug for punctuation. “I won’t accept their comedy of errors.”

The judge, Arthur M. Schack, 64, fashions himself a judicial Don Quixote, tilting at the phalanxes of bankers, foreclosure facilitators and lawyers who file motions by the bale. While national debate focuses on bank bailouts and federal aid for homeowners that has been slow in coming, the hard reckonings of the foreclosure crisis are being made in courts like his, and Justice Schack’s sympathies are clear. He has tossed out 46 of the 102 foreclosure motions that have come before him in the last two years. And his often scathing decisions, peppered with allusions to the Croesus-like wealth of bank presidents, have attracted the respectful attention of judges and lawyers from Florida to Ohio to California. At recent judicial conferences in Chicago and Arizona, several panelists praised his rulings as a possible national model.

His opinions, too, have been greeted by a cry of affront from a bank official or two, who say this judge stands in the way of what is rightfully theirs. HSBC bank appealed a recent ruling, saying he had set a “dangerous precedent” by acting as “both judge and jury,” throwing out cases even when homeowners had not responded to foreclosure motions. Justice Schack, like a handful of state and federal judges, has taken a magnifying glass to the mortgage industry. In the gilded haste of the past decade, bankers handed out millions of mortgages — with terms good, bad and exotically ugly — then repackaged those loans for sale to investors from Connecticut to Singapore. Sloppiness reigned. So many papers have been lost, signatures misplaced and documents dated inaccurately that it is often not clear which bank owns the mortgage.

Justice Schack’s take is straightforward, and sends a tremor through some bank suites: If a bank cannot prove ownership, it cannot foreclose. “If you are going to take away someone’s house, everything should be legal and correct,” he said. “I’m a strange guy — I don’t want to put a family on the street unless it’s legitimate.”

Justice Schack has small jowls and big black glasses, a thin mustache and not so many hairs combed across his scalp. He has the impish eyes of the high school social studies teacher he once was, aware that something untoward is probably going on at the back of his classroom. He is Brooklyn born and bred, with a master’s degree in history and an office loaded with autographed baseballs and photographs of the Brooklyn Dodgers. His written decisions are a free-associative trip through popular, legal and literary culture, with a sideways glance at the business pages.

Confronted with a case in which Deutsche Bank and Goldman Sachs passed a defaulted mortgage back and forth and lost track of the documents, the judge made reference to the film classic “It’s a Wonderful Life” and the evil banker played by Lionel Barrymore. “Lenders should not lose sight,” Justice Schack wrote in that 2007 case, “that they are dealing with humanity, not with Mr. Potter’s ‘rabble’ and ‘cattle.’ Multibillion-dollar corporations must follow the same rules in the foreclosure actions as the local banks, savings and loan associations or credit unions, or else they have become the Mr. Potters of the 21st century.”

Last year, he chastised Wells Fargo for filing error-filled papers. “The court,” the judge wrote, “reminds Wells Fargo of Cassius’s advice to Brutus in Act 1, Scene 2 of William Shakespeare’s ‘Julius Caesar’: ‘The fault, dear Brutus, is not in our stars, but in ourselves.’ ”

Then there is a Deutsche Bank case from 2008, the juicy part of which he reads aloud:

“The court wonders if the instant foreclosure action is a corporate ‘Kansas City Shuffle,’ a complex confidence game,” he reads. “In the 2006 film ‘Lucky Number Slevin,’ Mr. Goodkat, a hit man played by Bruce Willis, explains: ‘A Kansas City Shuffle is when everybody looks right, you go left.’ “The banks’ reaction? Justice Schack shrugs. “They probably curse at me,” he says, “but no one is interested in some little judge.”

Little drama attends the release of his decisions. Beaten-down homeowners rarely show up to contest foreclosure actions, and the judge scrutinizes the banks’ papers in his chambers. But at legal conferences, judges and lawyers have wondered aloud why more judges do not hold banks to tougher standards.

“To the extent that judges examine these papers, they find exactly the same errors that Judge Schack does,” said Katherine M. Porter, a visiting professor at the School of Law at the University of California, Berkeley, and a national expert in consumer credit law. “His rulings are hardly revolutionary; it’s unusual only because we so rarely hold large corporations to the rules.”

Banks and the cottage industry of mortgage service companies and foreclosure lawyers also pay rather close attention. A spokeswoman for OneWest Bank acknowledged that an official, confronted with a ream of foreclosure papers, had mistakenly signed for two different banks — just as the Deutsche Bank official did. Deutsche Bank, which declined to let an attorney speak on the record about any of its cases before Justice Schack, e-mailed a PDF of a three-page pamphlet in which it claimed little responsibility for foreclosures, even though the bank’s name is affixed to tens of thousands of such motions. The bank described itself as simply a trustee for investors.

Justice Schack came to his recent prominence by a circuitous path, having worked for 14 years as public school teacher in Brooklyn. He was a union representative and once walked a picket line with his wife, Dilia, who was a teacher, too. All was well until the fiscal crisis of the 1970s.

“Why’d I go to law school?” he said. “Thank Mayor Abe Beame, who froze teacher salaries.”

He was counsel for the Major League Baseball Players Association in the 1980s and ’90s, when it was on a long winning streak against team owners. “It was the millionaires versus the billionaires,” he says. “After a while, I’m sitting there thinking, ‘He’s making $4 million, he’s making $5 million, and I’m worth about $1.98.’ ”

So he dived into a judicial race. He was elected to the Civil Court in 1998 and to the Supreme Court for Brooklyn and Staten Island in 2003. His wife is a Democratic district leader; their daughter, Elaine, is a lawyer and their son, Douglas, a police officer.Justice Schack’s duels with the banks started in 2007 as foreclosures spiked sharply. He saw a plague falling on Brooklyn, particularly its working-class black precincts. “Banks had given out loans structured to fail,” he said.

The judge burrowed into property record databases. He found banks without clear title, and a giant foreclosure law firm, Steven J. Baum, representing two sides in a dispute. He noted that Wells Fargo’s chief executive, John G. Stumpf, made more than $11 million in 2007 while the company’s total returns fell 12 percent. “Maybe,” he advised the bank, “counsel should wonder, like the court, if Mr. Stumpf was unjustly enriched at the expense of W.F.’s stockholders.”

He was, how to say it, mildly appalled. “I’m a guy from the streets of Brooklyn who happens to become a judge,” he said. “I see a bank giving a $500,000 mortgage on a building worth $300,000 and the interest rate is 20 percent and I ask questions, what can I tell you?”

Edit : Edit
Comments : Leave a Comment »

Tags: Audit, bailout, bankruptcy, borrower, brad keiser, credit, credit crisis, depression, FDG, Federal Bailout, foreclosure defense, Foreclosure Defense Group, foreclosure offense, foreclosures, Fraud, HAMP, lawyers, Lender Liability, Loan Mod, LOAN MODIFICATION, lost note, Mortgage, quiet title, rescission, respa, RICO, TILA audit

Categories : 2924, Cramdown, Foreclosure, I Have a Plan, bankruptcy, eviction

Countrywide complaint

27 06 2009

countrywide_fin_class_action_defense_mdl

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stay of eviction2923.5, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, I Have a Plan, pedatory lending, respa, stop foreclosure

Homecomings TILA complaint GMAC

27 06 2009

homecomingstila

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, Foreclosure, I Have a Plan, Lender Class action, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, bankruptcy, eviction, lis pendence, stop foreclosure, usury

Leman Tila complaint

27 06 2009

Lemantilacomp

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, I Have a Plan, bankruptcy, eviction, stop foreclosure, truth in lending

Lender class action

27 06 2009

Mortgageinvestorgroupclass

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, I Have a Plan, Loan Audit, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, bankruptcy, eviction, lis pendence, mortgage meltdown, stop foreclosure, usury

Option One Complaint Pick a payment lawsuit

27 06 2009

optionone

Edit : Edit
Comments : 2 Comments »

Tags: stop foreclosure, civil code 2923.5, truth in lending, Mortgage modification, eviction, california, mortgage meltdown, Foreclosure, lis pendence, litigation, bankruptcy, Chapter 13, 2924, 2923.5, 2932.5, Recoupment, Fraud, Predatory Lending, FCRA, 2923.6, Real Estate Settlement Procedures Act, Uncategorized, California cram down, Audit, Countrywide, United First, usury, truth in lending 2923.5

Categories : 2923.5, 2923.6, 2924, FCRA, Foreclosure, I Have a Plan, Lender Class action, Predatory Lending, Real Estate Settlement Procedures Act, bankruptcy, eviction, lis pendence, mortgage meltdown, stop foreclosure, usury

Coalition sues lenders

9 05 2009

Coalition Sues lenders

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, I Have a Plan, Lender Class action, Loan Audit, bankruptcy, eviction, lis pendence, pedatory lending

 

90% Forclosures Wrongful

1 01 2010

A wrongful foreclosure action typically occurs when the lender starts a non judicial foreclosure action when it simply has no legal cause. This is even more evident now since California passed the Foreclosure prevention act of 2008 SB 1194 codified in Civil code 2923.5 and 2923.6. In 2009 it is this attorneys opinion that 90% of all foreclosures are wrongful in that the lender does not comply (just look at the declaration page on the notice of default). The lenders most notably Indymac, Countrywide, and Wells Fargo have taken a calculated risk. To comply would cost hundreds of millions in staff, paperwork, and workouts that they don’t deem to be in their best interest. The workout is not in there best interest because our tax dollars are guaranteeing the Banks that are To Big to Fail’s debt. If they don’t foreclose and if they work it out the loss is on them. There is no incentive to modify loan for the benefit of the consumer.

Sooooo they proceed to foreclosure without the mandated contacts with the borrower. Oh and yes contact is made by a computer or some outsourcing contact agent based in India. But compliance with 2923.5 is not done. The Borrower is never told that he or she have the right to a meeting within 14 days of the contact. They do not get offers to avoid foreclosure there are typically two offers short sale or a probationary mod that will be declined upon the 90th day.

Wrongful foreclosure actions are also brought when the service providers accept partial payments after initiation of the wrongful foreclosure process, and then continue on with the foreclosure process. These predatory lending strategies, as well as other forms of misleading homeowners, are illegal.

The borrower is the one that files a wrongful disclosure action with the court against the service provider, the holder of the note and if it is a non-judicial foreclosure, against the trustee complaining that there was an illegal, fraudulent or willfully oppressive sale of property under a power of sale contained in a mortgage or deed or court judicial proceeding. The borrower can also allege emotional distress and ask for punitive damages in a wrongful foreclosure action.

Causes of Action

Wrongful foreclosure actions may allege that the amount stated in the notice of default as due and owing is incorrect because of the following reasons:

* Incorrect interest rate adjustment
* Incorrect tax impound accounts
* Misapplied payments
* Forbearance agreement which was not adhered to by the servicer
* Unnecessary forced place insurance,
* Improper accounting for a confirmed chapter 11 or chapter 13 bankruptcy plan.
* Breach of contract
* Intentional infliction of emotional distress
* Negligent infliction of emotional distress
* Unfair Business Practices
* Quiet title
* Wrongful foreclosure
* Tortuous violation of 2924 2923.5 and 2923.5 and 2932.5
Injunction

Any time prior to the foreclosure sale, a borrower can apply for an injunction with the intent of stopping the foreclosure sale until issues in the lawsuit are resolved. The wrongful foreclosure lawsuit can take anywhere from ten to twenty-four months. Generally, an injunction will only be issued by the court if the court determines that: (1) the borrower is entitled to the injunction; and (2) that if the injunction is not granted, the borrower will be subject to irreparable harm.

Damages Available to Borrower

Damages available to a borrower in a wrongful foreclosure action include: compensation for the detriment caused, which are measured by the value of the property, emotional distress and punitive damages if there is evidence that the servicer or trustee committed fraud, oppression or malice in its wrongful conduct. If the borrower’s allegations are true and correct and the borrower wins the lawsuit, the servicer will have to undue or cancel the foreclosure sale, and pay the borrower’s legal bills.

Why Do Wrongful Foreclosures Occur?

Wrongful foreclosure cases occur usually because of a miscommunication between the lender and the borrower. Most borrower don’t know who the real lender is. Servicing has changed on average three times. And with the advent of MERS Mortgage Electronic Registration Systems the “investor lender” hundreds of times since the origination. And now they then have to contact the borrower. The don’t even know who the lender truly is. The laws that are now in place never contemplated the virtualization of the lending market. The present laws are inadequate to the challenge.

This is even more evident now since California passed the Foreclosure prevention act of 2008 SB 1194 codified in Civil code 2923.5 and 2923.6. In 2009 it is this attorneys opinion that 90% of all foreclosures are wrongful in that the lender does not comply (just look at the declaration page on the notice of default). The lenders most notably Indymac, Countrywide, and Wells Fargo have taken a calculated risk. To comply would cost hundreds of millions in staff, paperwork, and workouts that they don’t deem to be in their best interest. The workout is not in there best interest because our tax dollars are guaranteeing the Banks that are To Big to Fail’s debt. If they don’t foreclose and if they work it out the loss is on them. There is no incentive to modify loan for the benefit of the consumer.This could be as a result of an incorrectly applied payment, an error in interest charges and completely inaccurate information communicated between the lender and borrower. Some borrowers make the situation worse by ignoring their monthly statements and not promptly responding in writing to the lender’s communications. Many borrowers just assume that the lender will correct any inaccuracies or errors. Any one of these actions can quickly turn into a foreclosure action. Once an action is instituted, then the borrower will have to prove that it is wrongful or unwarranted. This is done by the borrower filing a wrongful foreclosure action. Costs are expensive and the action can take time to litigate.
Impact

The wrongful foreclosure will appear on the borrower’s credit report as a foreclosure, thereby ruining the borrower’s credit rating. Inaccurate delinquencies may also accompany the foreclosure on the credit report. After the foreclosure is found to be wrongful, the borrower must then petition to get the delinquencies and foreclosure off the credit report. This can take a long time and is emotionally distressing.

Wrongful foreclosure may also lead to the borrower losing their home and other assets if the borrower does not act quickly. This can have a devastating affect on a family that has been displaced out of their home. However, once the borrower’s wrongful foreclosure action is successful in court, the borrower may be entitled to compensation for their attorney fees, court costs, pain, suffering and emotional distress caused by the action.

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.5 2923.6 2924 2932.5 Audit bankruptcy california California cram down Chapter 13 civil code 2923.5 civil code 2924 Countrywide Cram down Cramdown criminal acts eviction FCRA FDCPA Federal Jurisdi, 2923.6, 2924, 2932.5, civil code 2924, Countrywide, Foreclosure, Fraud, stop foreclosure

Categories : 2923.5, 2923.6, 2924, Foreclosure, Lender Class action

Countrywide complaint

27 06 2009

countrywide_fin_class_action_defense_mdl

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stay of eviction2923.5, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, I Have a Plan, pedatory lending, respa, stop foreclosure

Homecomings TILA complaint GMAC

27 06 2009

homecomingstila

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, Foreclosure, I Have a Plan, Lender Class action, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, bankruptcy, eviction, lis pendence, stop foreclosure, usury

Leman Tila complaint

27 06 2009

Lemantilacomp

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, I Have a Plan, bankruptcy, eviction, stop foreclosure, truth in lending

Lender class action

27 06 2009

Mortgageinvestorgroupclass

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, I Have a Plan, Loan Audit, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, bankruptcy, eviction, lis pendence, mortgage meltdown, stop foreclosure, usury

Option One Complaint Pick a payment lawsuit

27 06 2009

optionone

Edit : Edit
Comments : 2 Comments »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, Foreclosure, I Have a Plan, Lender Class action, Predatory Lending, Real Estate Settlement Procedures Act, bankruptcy, eviction, lis pendence, mortgage meltdown, stop foreclosure, usury

Win the eviction by Summary judgement

27 06 2009

When title to the property is still in dispute ie. the foreclosure was bad. They (the lender)did not comply with California civil code 2923.5 or 2923.6 or 2924. Or the didn’t possess the documents to foreclose ie. the original note. Or they did not possess a proper assignment 2932.5. at trial you will be ignored by the learned judge but if you file a Motion for Summary Judgmentevans sum ud
template notice of Motion for SJ
TEMPLATE Points and A for SJ Motion
templateDeclaration for SJ
TEMPLATEProposed Order on Motion for SJ
TEMPLATEStatement of Undisputed Facts
you can force the issue and if there is a case filed in the Unlimited jurisdiction Court the judge may be forced to consider title and or consolidate the case with the Unlimited Jurisdiction Case2nd amended complaint (e) manuel
BAKER original complaint (b)
Countrywide Complaint Form
FRAUDULENT OMISSIONS FORM FINAL
sample-bank-final-complaint1-2.docx

Edit : Edit
Comments : 1 Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, civil code 2923.5, eviction, Foreclosure, Fraud, lis pendence

Categories : 2923.5, 2923.6, Foreclosure, I Have a Plan, Predatory Lending, Real Estate Settlement Procedures Act, eviction, stop foreclosure, truth in lending

What is worse bankruptcy or foreclosure?

25 06 2009

So what is worse, bankruptcy or foreclosure? Which will have the biggest impact on my credit score? Both bankruptcy and foreclosure will have serious negative affects on your personal credit report and your credit score as well. With re-established credit after a bankruptcy and/or foreclosure you can possibly qualify for a good mortgage once again in as little as 24 months. Therefore, it is very difficult to say one is worse than the other, but the bottom line is that they are both very bad for you and should be avoided if all possible.

Foreclosure is worse then bankruptcy because you are actually losing something of value, your home. Once you are in foreclosure you will lose any and all equity in your home. If there is no equity in the home you will be responsible for the remaining balance after the property auction. With chapter 7 bankruptcy all of your unsecured debts are erased and you start over and in most cases you will not lose anything other then your credit rating.

Many times qualifying for a mortgage after a foreclosure is more difficult than applying for a home after a bankruptcy. With that said, that could possibly lead you to believe that foreclosure is worse than bankruptcy. Most people who have a home foreclosed upon end up filing bankruptcy as well.

Bankruptcy and Foreclosure filings are public records, however no one would know about your proceedings under normal circumstances. The Credit Bureaus will record your bankruptcy and a foreclosure. Bankruptcies will remain on your credit record for 10 years while foreclosures can stay on your report for up to 7 years.

In some cases, one can refinance out of a Chapter 13 Bankruptcy with a 12 month trustee payment history and a timely mortgage history. It is much more difficult to obtain financing with a foreclosure on your record.

Foreclosure is worse because of the loss of value. You will not receive any compensation for the equity in your home if it proceeds to foreclosure.

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, Cramdown, Foreclosure, I Have a Plan, eviction, stop foreclosure

Standing argument

7 06 2009

judge-youngs-decision-on-nosek

Ameriquest’s final argument, that the sanctions are a
criminal penalty, is bereft of authority. Ameriquest cites F.J.
Hanshaw Enterprises, Inc. v. Emerald River Development, Inc., 244
F.3d 1128 (9th Cir. 2001), a case about inherent powers – not
Rule 11 –

This is an excerpt from the decision just this bloggers note the Hanshaw Case was my case. I argued this case at the 9th circuit court of appeals

http://openjurist.org/244/f3d/1128/fj-v-emeraldfj-v-emerald

If you will grasp the implications of this judge-youngs-decision-on-nosekdecision all or most all the evictions and  foreclosures are being litigated by the wrong parties that is to say parties who have no real stake in the outcome. they are merely servicers not the real investors. They do not have the right to foreclose or evict. No assignment No note No security interest No standing They do not want to be listed anywhere. They (the lenders) have caused the greatest damage to the American Citizen since the great depression and they do not want to be exposed or named in countless lawsuits. Time and time again I get from the judges in demurer hearings ” I see what you are saying counsel but your claim does not appear to be against this defendant” the unnamed investment pool of the Lehman Brothers shared High yield equity Fund trustee does not exist and so far can’t be sued.

Edit : Edit
Comments : 1 Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending 2923.5, truth in lending, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, Cramdown, Foreclosure, I Have a Plan, Loan Audit, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, bankruptcy, eviction, respa, stop foreclosure

Using the countrywide complaint in your own case

9 05 2009

Using the countrywide complaint in your own casecounrtrywidelanderscomplaintand countrywidelanders and word versionsCountrywide attorney general Complaint Form and templetsCountrywide Complaint Form

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2932.5, civil code 2923.5, Foreclosure, Predatory Lending, stop foreclosure, truth in lending 2923.5

Categories : 2923.5, 2923.6, Foreclosure, I Have a Plan

Coalition sues lenders

9 05 2009

Coalition Sues lenders

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, I Have a Plan, Lender Class action, Loan Audit, bankruptcy, eviction, lis pendence, pedatory lending

They are to give options to foreclosure 2923.5

9 05 2009

(a) (1) A mortgagee, trustee, beneficiary, or authorized

agent may not file a notice of default pursuant to Section 2924 until

30 days after contact is made as required by paragraph (2) or 30

days after satisfying the due diligence requirements as described in

subdivision (g).

(2) A mortgagee, beneficiary, or authorized agent shall contact

the borrower in person (and this does not mean agent for the foreclosure company) or by telephone in order to assess the

borrower’s financial situation and explore options for the borrower

to avoid foreclosure. During the initial contact, the mortgagee,

beneficiary, or authorized agent shall advise the borrower that he or

she has the right to request a subsequent meeting and, if requested,

the mortgagee, beneficiary, or authorized agent shall schedule the

meeting to occur within 14 days. The assessment of the borrower’s

financial situation and discussion of options may occur during the

first contact, or at the subsequent meeting scheduled for that

purpose. In either case, the borrower shall be provided the toll-free

telephone number made available by the United States Department of

Housing and Urban Development (HUD) to find a HUD-certified housing

counseling agency. Any meeting may occur telephonically.

(b) A notice of default filed pursuant to Section 2924 shall

include a declaration from the mortgagee, beneficiary, or authorized

agent that it has contacted the borrower, tried with due diligence to

contact the borrower as required by this section, or the borrower

has surrendered the property to the mortgagee, trustee, beneficiary,

or authorized agent.

(c) If a mortgagee, trustee, beneficiary, or authorized agent had

already filed the notice of default prior to the enactment of this

section and did not subsequently file a notice of rescission, then

the mortgagee, trustee, beneficiary, or authorized agent shall, as

part of the notice of sale filed pursuant to Section 2924f, include a

declaration that either:

(1) States that the borrower was contacted to assess the borrower’

s financial situation and to explore options for the borrower to

avoid foreclosure.

(2) Lists the efforts made, if any, to contact the borrower in the

event no contact was made.

(d) A mortgagee’s, beneficiary’s, or authorized agent’s loss

mitigation personnel may participate by telephone during any contact

required by this section.

(e) For purposes of this section, a “borrower” shall include a

mortgagor or trustor.

(f) A borrower may designate a HUD-certified housing counseling

agency, attorney, or other advisor to discuss with the mortgagee,

beneficiary, or authorized agent, on the borrower’s behalf, options

for the borrower to avoid foreclosure. That contact made at the

direction of the borrower shall satisfy the contact requirements of

paragraph (2) of subdivision (a). Any loan modification or workout

plan offered at the meeting by the mortgagee, beneficiary, or

authorized agent is subject to approval by the borrower.

(g) A notice of default may be filed pursuant to Section 2924 when

a mortgagee, beneficiary, or authorized agent has not contacted a

borrower as required by paragraph (2) of subdivision (a) provided

that the failure to contact the borrower occurred despite the due

diligence of the mortgagee, beneficiary, or authorized agent. For

purposes of this section, “due diligence” shall require and mean all

of the following:

(1) A mortgagee, beneficiary, or authorized agent shall first

attempt to contact a borrower by sending a first-class letter that

includes the toll-free telephone number made available by HUD to find

a HUD-certified housing counseling agency.

(2) (A) After the letter has been sent, the mortgagee,

beneficiary, or authorized agent shall attempt to contact the

borrower by telephone at least three times at different hours and on

different days. Telephone calls shall be made to the primary

telephone number on file.

(B) A mortgagee, beneficiary, or authorized agent may attempt to

contact a borrower using an automated system to dial borrowers,

provided that, if the telephone call is answered, the call is

connected to a live representative of the mortgagee, beneficiary, or

authorized agent.

(C) A mortgagee, beneficiary, or authorized agent satisfies the

telephone contact requirements of this paragraph if it determines,

after attempting contact pursuant to this paragraph, that the

borrower’s primary telephone number and secondary telephone number or

numbers on file, if any, have been disconnected.

(3) If the borrower does not respond within two weeks after the

telephone call requirements of paragraph (2) have been satisfied, the

mortgagee, beneficiary, or authorized agent shall then send a

certified letter, with return receipt requested.

(4) The mortgagee, beneficiary, or authorized agent shall provide

a means for the borrower to contact it in a timely manner, including

a toll-free telephone number that will provide access to a live

representative during business hours.

(5) The mortgagee, beneficiary, or authorized agent has posted a

prominent link on the homepage of its Internet Web site, if any, to

the following information:

(A) Options that may be available to borrowers who are unable to

afford their mortgage payments and who wish to avoid foreclosure, and

instructions to borrowers advising them on steps to take to explore

those options.

(B) A list of financial documents borrowers should collect and be

prepared to present to the mortgagee, beneficiary, or authorized

agent when discussing options for avoiding foreclosure.

(C) A toll-free telephone number for borrowers who wish to discuss

options for avoiding foreclosure with their mortgagee, beneficiary,

or authorized agent.

(D) The toll-free telephone number made available by HUD to find a

HUD-certified housing counseling agency.

(h) Subdivisions (a), (c), and (g) shall not apply if any of the

following occurs:

(1) The borrower has surrendered the property as evidenced by

either a letter confirming the surrender or delivery of the keys to

the property to the mortgagee, trustee, beneficiary, or authorized

agent.

(2) The borrower has contracted with an organization, person, or

entity whose primary business is advising people who have decided to

leave their homes on how to extend the foreclosure process and avoid

their contractual obligations to mortgagees or beneficiaries.

(3) The borrower has filed for bankruptcy, and the proceedings

have not been finalized.

(i) This section shall apply only to loans made from January 1,

2003, to December 31, 2007, inclusive, that are secured by

residential real property and are for owner-occupied residences. For

purposes of this subdivision, “owner-occupied” means that the

residence is the principal residence of the borrower.

(j) This section shall remain in effect only until January 1, 2013,

and as of that date is repealed, unless a later enacted statute,

that is enacted before January 1, 2013, deletes or extends that da

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, I Have a Plan, Predatory Lending, respa, stop foreclosure

Doan on “produce the Note”

3 05 2009

Are Courts in California Truly Limited by Non-Judicial Foreclosure Statutes?

By Michael Doan on May 2, 2009 in Foreclosure Defense, Foreclosure News

Recently, many California Courts have been dismissing lawsuits filed to stop non-judicial foreclosures, ruling that the non-judicial foreclosure statutes occupy the field and are exclusive as long as they are complied with. Thus, in the case where a notice of default is recorded and a lawsuit then filed in response to stop the foreclosure since the foreclosing party does not possess the underlying note, all too often the Court will simply dismiss the case and claim “2924 has no requirement to produce the note.”

Thus, these Courts view the statutes that regulate non-judicial foreclosures as all inclusive of all the requirements and remedies in foreclosure proceedings. Indeed, California Civil Code sections 2924 through 2924k provide a comprehensive framework for the regulation of a nonjudicial foreclosure sale pursuant to a power of sale contained in a deed of trust. This comprehensive statutory scheme has three purposes: ‘”(1) to provide the creditor/beneficiary with a quick, inexpensive and efficient remedy against a defaulting debtor/trustor; (2) to protect the debtor/trustor from wrongful loss of the property; and (3) to ensure that a properly conducted sale is final between the parties and conclusive as to a bona fide purchaser.” [Citations.]’ [Citation.]” (Melendrez v. D & I Investment, Inc. (2005) 127 Cal.App.4th 1238, 1249–1250 [26 Cal. Rptr. 3d 413].)

Notwithstanding, the foreclosure statutes are not exclusive. If someone commits murder during an auction taking place under Civil Code 2924, that does not automatically mean they are immune from criminal and civil liability. Perhaps this is where some of these courts are “missing the boat.”

For example, in Alliance Mortgage Co. v. Rothwell (1995) 10 Cal. 4th 1226, 1231 [44 Cal. Rptr. 2d 352, 900 P.2d 601], the California Supreme Court concluded that a lender who obtained the property with a full credit bid at a foreclosure sale was not precluded from suing a third party who had fraudulently induced it to make the loan. The court concluded that ” ‘the antideficiency laws were not intended to immunize wrongdoers from the consequences of their fraudulent acts’ ” and that, if the court applies a proper measure of damages, ” ‘fraud suits do not frustrate the antideficiency policies because there should be no double recovery for the beneficiary.’ ” (Id. at p. 1238.)

Likewise, in South Bay Building Enterprises, Inc. v. Riviera Lend-Lease, Inc. [*1071] (1999) 72 Cal.App.4th 1111, 1121 [85 Cal. Rptr. 2d 647], the court held that a junior lienor retains the right to recover damages from the trustee and the beneficiary of the foreclosing lien if there have been material irregularities in the conduct of the foreclosure sale. (See also Melendrez v. D & I Investment, Inc., supra, 127 Cal.App.4th at pp. 1257–1258; Lo v. Jensen (2001) 88 Cal.App.4th 1093, 1095 [106 Cal. Rptr. 2d 443] [a trustee’s sale tainted by fraud may be set aside].)

In looking past the comprehensive statutory framework, these other Courts also considered the policies advanced by the statutory scheme, and whether those policies would be frustrated by other laws. Recently, in the case of California Golf, L.L.C. v. Cooper, 163 Cal. App. 4th 1053, 78 Cal. Rptr. 3d 153, 2008 Cal. App. LEXIS 850 (Cal. App. 2d Dist. 2008), the Appellate Court held that the remedies of 2924h were not exclusive. Of greater importance is that the Appellate Court reversed the lower court and specifically held that provisions in UCC Article 3 were allowed in the foreclosure context:

Considering the policy interests advanced by the statutory scheme governing nonjudicial foreclosure sales, and the policy interests advanced by Commercial Code section 3312, it is clear that allowing a remedy under the latter does not undermine the former. Indeed, the two remedies are complementary and advance the same goals. The first two goals of the nonjudicial foreclosure statutes: (1) to provide the creditor/beneficiary with a quick, inexpensive and efficient remedy against a defaulting debtor/trustor and (2) to protect the debtor/trustor from a wrongful loss of the property, are not impacted by the decision that we reach. This case most certainly, however, involves the third policy interest: to ensure that a properly conducted sale is final between the parties and conclusive as to a bona fide purchaser.

This is very significant since it provides further support to lawsuits brought against foreclosing parties lacking the ability to enforce the underlying note, since those laws also arise under Article 3. Under California Commercial Code 3301, a note may only be enforced if one has actual possession of the note as a holder, or has possession of the note not as a non-holder but with holder rights.

Just like in California Golf, enforcing 3301 operates to protect the debtor/trustor from a wrongful loss of the property. To the extent that a foreclosing party might argue that such lawsuits disrupt a quick, inexpensive, and efficient remedy against a defaulting debtor/trustor, the response is that “since there is no enforceable obligation, the foreclosing entity is not a party/creditor/beneficiary entitled to a quick, inexpensive, and efficient remedy,” but simply a declarant that recorded false documents.

This is primarily because being entitled to foreclose non-judicially under 2924 can only take place “after a breach of the obligation for which that mortgage or transfer is a security.” Thus, 2924 by its own terms, looks outside of the statute to the actual obligation to see if there was a breach, and if the note is unenforceable under Article 3, there can simply be no breach. End of story.

Accordingly, if there is no possession of the note or possession was not obtained until after the notice of sale was recorded, it is impossible to trigger 2924, and simple compliance with the notice requirements in 2924 does not suddenly bless the felony of grand theft of the unknown foreclosing entity. To hold otherwise would create absurd results since it would allow any person or company the right to take another persons’ home by simply recording a false notice of default and notice of sale.

Indeed, such absurdity would allow you to foreclose on your own home again to get it back should you simply record the same false documents. Thus it is obvious that these courts improperly assume the allegations contained in the notice of default and notice of sale are truthful. Perhaps these courts simply can not or choose not to believe such frauds are taking place due to the magnitude and volume of foreclosures in this Country at this time. One can only image the chaos that would ensue in America if the truth is known that millions of foreclosures took place unlawfully and millions more are now on hold as a result of not having the ability to enforce the underlying obligation pursuant to Article 3.

So if you are in litigation to stop a foreclosure, you can probably expect the Court will want to immediately dismiss your case. These Courts just can not understand how the law would allow someone to stay in a home without paying. Notwithstanding, laws can not be broken, and Courts are not allowed to join with the foreclosing parties in breaking laws simply because “not paying doesn’t seem right.”

Accordingly, at least for appeal purposes, be sure to argue that 2924 was never triggered since there was never any “breach of the obligation” and that Appellate Courts throughout California have routinely held that other laws do in fact apply in the non-judicial foreclosure process since the policies advanced by the statutory non-judicial foreclosure scheme are not frustrated by these other laws.

Edit : Edit
Comments : 3 Comments »

Tags: 2923.5, 2923.6, 2924, 2932.5, Foreclosure, lis pendence, litigation, stop foreclosure, truth in lending 2923.5

Categories : 2923.5, 2923.6, Foreclosure, I Have a Plan

 

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

24 06 2010

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.

Edit : Edit
Comments : 2 Comments »

Tags: wrongful foreclosure, wrongful eviction

Categories : eviction

How to Stop Foreclosure

5 12 2009

This is general information and assumes that you have access to the rest of the material on the blog. Foreclosures come in various flavors.

First of all you have non-judicial and judicial foreclosure states. Non-judicial basically means that instead of signing a conventional mortgage and note, you signed a document that says you give up your right to a judicial proceeding. So the pretender lender or lender simply instructs the Trustee to sell the property, giving you some notice. Of course the question of who is the lender, what is a beneficiary under a deed of trust, what is a creditor and who owns the loan NOW (if anyone) are all issues that come into play in litigation.

In a non-judicial state you generally are required to bring the matter to court by filing a lawsuit. In states like California, the foreclosers usually do an end run around you by filing an unlawful detainer as soon as they can in a court of lower jurisdiction which by law cannot hear your claims regarding the illegality of the mortgage or foreclosure.

In a judicial state the forecloser must be the one who files suit and you have considerably more power to resist the attempt to foreclose.

Then you have stages:

STAGE 1: No notice of default has been sent.

In this case you want to get a forensic analysis that is as complete as humanly possible — TILA, RESPA, securitization, title, chain of custody, predatory loan practices, fraud, fabricated documents, forged documents etc. I call this the FOUR WALL ANALYSIS, meaning they have no way to get out of the mess they created. Then you want a QWR (Qualified Written Request) and DVL (Debt Validation Letter along with complaints to various Federal and State agencies. If they fail to respond or fail to answer your questions you file a suit against the party who received the QWR, the party who originated the loan (even if they are out of business), and John Does 1-1000 being the owners of mortgage backed bonds that are evidence of the investors ownership in the pool of mortgages, of which yours is one. The suit is simple — it seeks to stop the servicer from receiving any payments, install a receiver over the servicer’s accounts, order them to answer the simple question “Who is my creditor and how do I get a full accounting FROM THE CREDITOR? Alternative counts would be quiet title and damages under TILA, RESPA, SEC, etc.

Tactically you want to present the forensic declaration and simply say that you have retained an expert witness who states in his declaration that the creditor does not include any of the parties disclosed to you thus far. This [prevents you from satisfying the Federal mandate to attempt modification or settlement of the loan. You’ve asked (QWR and DVL) and they won’t tell. DON’T GET INTO INTRICATE ARGUMENTS CONCERNING SECURITIZATION UNTIL IT IS NECESSARY TO DO SO WHICH SHOULD BE AFTER A FEW HEARINGS ON MOTIONS TO COMPEL THEM TO ANSWER.

IN OTHER WORDS YOU ARE SIMPLY TELLING THE JUDGE THAT YOUR EXPERT HAS PRESENTED FACTS AND OPINION THAT CONTRADICT AND VARY FROM THE REPRESENTATIONS OF COUNSEL AND THE PARTIES WHO HAVE BEEN DISCLOSED TO YOU THUS FAR.

YOU WANT TO KNOW WHO THE OTHER PARTIES ARE, IF ANY, AND WHAT MONEY EXCHANGED HANDS WITH RESPECT TO YOUR LOAN. YOU WANT EVIDENCE, NOT REPRESENTATIONS OF COUNSEL. YOU WANT DISCOVERY OR AN ORDER TO ANSWER THE QWR OR DVL. YOU WANT AN EVIDENTIARY HEARING IF IT IS NECESSARY.

Avoid legal argument and go straight for discovery saying that you want to be able to approach the creditor, whoever it is, and in order to do that you have a Federal Statutory right (RESPA) to the name of a person, a telephone number and an address of the creditor — i.e., the one who is now minus money as a result of the funding of the loan. You’ve asked, they won’t answer.

Contemporaneously you want to get a temporary restraining order preventing them from taking any further action with respect to transferring, executing documents, transferring money, or collecting money until they have satisfied your demand for information and you have certified compliance with the court. Depending upon your circumstances you can offer to tender the monthly payment into the court registry or simply leave that out.

You can also file a bankruptcy petition especially if you are delinquent in payments or are about to become delinquent.

STAGE 2: Notice of Default Received

Believe it or not this is where the errors begin by the pretender lenders. You want to challenge authority, authenticity, the amount claimed due, the signatory, the notary, the loan number and anything else that is appropriate. Then go back to stage 1 and follow that track. In order to effectively do this you need to have that forensic analysis and I don’t mean the TILA Audit that is offered by so many companies using off the shelf software. You could probably buy the software yourself for less money than you pay those companies. I emphasize again that you need a FOUR WALL ANALYSIS.

Stage 3 Non-Judicial State, Notice of Sale received:

State statutes usually give you a tiny window of opportunity to contest the sale and the statute usually contains exact provisions on how you can do that or else your objection doesn’t count. At this point you need to secure the services of competent, knowledgeable, experienced legal counsel — professionals who have been fighting with these pretender lenders for a while. Anything less and you are likely to be sorely disappointed unless you landed, by luck of the draw, one of the increasing number of judges you are demonstrating their understanding and anger at this fraud.

Stage 4: Judicial State: Served with Process:

You must answer usually within 20 days. Failure to do so, along with your affirmative defenses and counterclaims, could result in a default followed by a default judgment followed by a Final Judgment of Foreclosure. See above steps.

Stage 5: Sale already occurred

You obviously need to reverse that situation. Usually the allegation is that the sale should be vacated because of fraud on the court (judicial) or fraudulent abuse of non-judicial process. This is a motion or Petitioner but it must be accompanied by a lawsuit, properly served and noticed to the other side. You probably need to name the purchaser at sale, and ask for a TRO (Temporary Restraining Order) that stops them from moving the property or the money around any further until your questions are answered (see above). At the risk of sounding like a broken record, you need a good forensic analyst and a good lawyer.

Stage 6: Eviction (Unlawful Detainer Filed or Judgment entered:

Same as Stage 5.

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.5 2923.6 2924 2932.5 Audit bankruptcy california California cram down Chapter 13 civil code 2923.5 civil code 2924 Countrywide Cram down Cramdown criminal acts eviction FCRA FDCPA Federal Jurisdi, 2923.6, 2924, 2932.5, bankruptcy, Chapter 13, civil code 2923.5, stop foreclosure

Categories : Foreclosure, I Have a Plan, eviction, stop foreclosure

The Long-Term Cost of the Mortgage Fraud Meltdown — The Real Legacy of Wall Street

13 11 2009

This is a re-post by Niel Garfield

Posted 21 hours ago by livinglies on Livinglies’s Weblog

Editor’s Note: Why do I do this? Because we are delivering a message to future generations about how the world works contrary to our constitution and contrary to American values and ideals. Conservatives conserve nothing except the wealth of the fantastic few while the liberals liberate nobody from the yoke of economic slavery. Maybe it’s all a game. I won’t play and if you care about this country and wish to avoid a societal collapse, you should stop playing too.

History has shown us with grim clarity what happens to any country or empire when the power and the wealth gets so concentrated in just a few people while the rest of the population can’t keep a roof over their head and can’t eat food and can’t get medical care, all hell breaks loose. Galbraith, IMF economists, World Bank economists, all know what is going to happen do to our failure to police our own, our failure to make it right and our failure to make amends to our allies or would-be allies.

Children are learning an important lesson: in their world, Mom and Dad are powerless to prevent the worst things from happening and there is nobody else they can depend upon. A whole generation is growing up with the notion that the American Dream is an unknown, unknowable fantasy. Every time the far right asserts personal responsibility in the face of a wretched fraud committed on most of the country, they close the gate a little more, waiting for the final slaughter. Every time the far left wimps out on their own paltform, the one the people elected them on for CHANGE NOW, they deceive and abandon our citizens.

And so we are a Prozac nation because everyone is depressed. We are a Xanax nation because everyone is so stressed out we can’t think straight. And those of us who are entering our twilight years see a future where our children and grandchildren and their children will lead bleak lives of quiet desperation in a country which proclaims free speech and assembly but has surrendered that basic right to about 100 institutions that control the lobbyists who control the flow of money in Washington and state houses.

In April, 2007 stocks were up, confidence was high and everyone had been convinced that all was well without questioning anything. Meanwhile in the inner recesses of the Federal Reserve and halls of power of the executive branch and the U.S. Department of Treasury in particular, they knew the collapse was coming and the only reason they did nothing was political — they didn’t want to admit that the free market was not working, that it wasn’t free, that it was controlled by monopoly and oligopoly, and that the government wasn’t working either because we the people had allowed people to get re-elected despite their sell-out of our countries and our lives.

In I did some very simple calculations and determined that the DJIA was not actually worth 14,000, it was worth 8,000. As it came down, more stumps revealed themselves as the high water receded. The equities market is overpriced by about 25%-30%. Housing is still inflated by 15%-20%. Nobody wants to hear this. The dollar is in a swan dive because everyone in the world knows the reality except the citizens of the United States of America where we have a “free press” that would rather entertain us than actually tell us the news.

I’m doing my part. What are you doing to end this catastrophe?

Job Woes Exacting a Toll on Family Life
By MICHAEL LUO

THE WOODLANDS, Tex. — Paul Bachmuth’s 9-year-old daughter, Rebecca, began pulling out strands of her hair over the summer. His older child, Hannah, 12, has become noticeably angrier, more prone to throwing tantrums.

Initially, Mr. Bachmuth, 45, did not think his children were terribly affected when he lost his job nearly a year ago. But now he cannot ignore the mounting evidence.

“I’m starting to think it’s all my fault,” Mr. Bachmuth said.

As the months have worn on, his job search travails have consumed the family, even though the Bachmuths were outwardly holding up on unemployment benefits, their savings and the income from the part-time job held by Mr. Bachmuth’s wife, Amanda. But beneath the surface, they have been a family on the brink. They have watched their children struggle with behavioral issues and a stress-induced disorder. He finally got a job offer last week, but not before the couple began seeing a therapist to save their marriage.

For many families across the country, the greatest damage inflicted by this recession has not necessarily been financial, but emotional and psychological. Children, especially, have become hidden casualties, often absorbing more than their parents are fully aware of. Several academic studies have linked parental job loss — especially that of fathers — to adverse impacts in areas like school performance and self-esteem.

“I’ve heard a lot of people who are out of work say it’s kind of been a blessing, that you have more time to spend with your family,” Mr. Bachmuth said. “I love my family and my family comes first, and my family means more than anything to me, but it hasn’t been that way for me.”

A recent study at the University of California, Davis, found that children in families where the head of the household had lost a job were 15 percent more likely to repeat a grade. Ariel Kalil, a University of Chicago professor of public policy, and Kathleen M. Ziol-Guest, of the Institute for Children and Poverty in New York, found in an earlier study that adolescent children of low-income single mothers who endured unemployment had an increased chance of dropping out of school and showed declines in emotional well-being.

In the long term, children whose parents were laid off have been found to have lower annual earnings as adults than those whose parents remained employed, a phenomenon Peter R. Orszag, director of the White House Office of Management and Budget, mentioned in a speech last week at New York University.

A variety of studies have tied drops in family income to negative effects on children’s development. But Dr. Kalil, a developmental psychologist and director of the university’s Center for Human Potential and Public Policy, said the more important factor, especially in middle-class households, appeared to be changes in family dynamics from job loss.

“The extent that job losers are stressed and emotionally disengaged or withdrawn, this really matters for kids,” she said. “The other thing that matters is parental conflict. That has been shown repeatedly in psychological studies to be a bad family dynamic.”

Dr. Kalil said her research indicated that the repercussions were more pronounced in children when fathers experience unemployment, rather than mothers.

She theorized that the reasons have to do with the importance of working to the male self-image, or the extra time that unemployed female breadwinners seem to spend with their children, mitigating the impact on them.

Certainly, some of the more than a dozen families interviewed that were dealing with long-term unemployment said the period had been helpful in certain ways for their families.

Denise Stoll, 39, and her husband, Larry, 47, both lost their positions at a bank in San Antonio in October 2008 when it changed hands. Mrs. Stoll, a vice president who managed a technology group, earned significantly more than her husband, who worked as a district loan origination manager.

Nevertheless, Mr. Stoll took unemployment much harder than she did and struggled to keep his spirits up, before he landed a new job within several months in the Kansas City area, where the family had moved to be closer to relatives. He had to take a sizable pay cut but was grateful to be working again.

Mrs. Stoll is still looking but has also tried to make the most of the additional time with the couple’s 5-year-old triplets, seeking to instill new lessons on the importance of thrift.

“Being a corporate mom, you work a lot of hours, you feed them dinner — maybe,” she said. “This morning, we baked cookies together. I have time to help them with homework. I’m attending church. The house is managed by me. Just a lot more homemaker-type stuff, which I think is more nurturing to them.”

Other families, however, reported unmistakable ill effects.

Robert Syck, 42, of Fishers, Ind., lost his job as a call-center manager in March. He has been around his 11-year-old stepson, Kody, more than ever before. Lately, however, their relationship has become increasingly strained, Mr. Syck said, with even little incidents setting off blowups. His stepson’s grades have slipped and the boy has been talking back to his parents more.

“It’s only been particularly in the last few months that it’s gotten really bad, to where we’re verbally chewing each other out,” said Mr. Syck, who admitted he had been more irritable around the house. “A lot of that is due to the pressures of unemployment.”

When Mr. Bachmuth was first laid off in December from his $120,000 job at an energy consulting firm, he could not even bring himself to tell his family. For several days, he got dressed in the morning and left the house as usual at 6 a.m., but spent the day in coffee shops, the library or just walking around.

Mr. Bachmuth had started the job, working on finance and business development for electric utilities, eight months earlier, moving his family from Austin. They bought something of a dream home, complete with a backyard pool and spa.

Although she knew the economy was ultimately to blame, Mrs. Bachmuth could not help feeling angry at her husband, both said later in interviews.

“She kind of had something in the back of her mind that it was partly my fault I was laid off,” Mr. Bachmuth said. “Maybe you’re not a good enough worker.”

Counseling improved matters significantly, but Mrs. Bachmuth still occasionally dissolved into tears at home.

Besides quarrels over money, the reversal in the couple’s roles also produced friction. Mrs. Bachmuth took on a part-time job at a preschool to earn extra money. But she still did most, if not all, of the cooking, cleaning and laundry.

Dr. Kalil, of the University of Chicago, said a recent study of how people spend their time showed unemployed fathers devote significantly less time to household chores than even mothers who are employed full-time, and do not work as hard in caring for children.

Mr. Bachmuth’s time with his girls, however, did increase. He was the one dropping off Rebecca at school and usually the one who picked her up. He began helping her more with homework. He and Hannah played soccer and chatted more.

But the additional time brought more opportunities for squabbling. The rest of the family had to get used to Mr. Bachmuth being around, sometimes focused on his search for a job, but other times lounging around depressed, watching television or surfing soccer sites on the Internet.

“My dad’s around a lot more, so it’s a little strange because he gets frustrated he’s not at work, and he’s not being challenged,” Hannah said. “So I think me and my dad are a lot closer now because we can spend a lot more time together, but we fight a lot more maybe because he’s around 24-7.”

When Rebecca began pulling her hair out in late summer in what was diagnosed as a stress-induced disorder, she insisted it was because she was bored. But her parents and her therapist — the same one seeing her parents — believed it was clearly related to the job situation.

The hair pulling has since stopped, but she continues to fidget with her brown locks.

The other day, she suddenly asked her mother whether she thought she would be able to find a “good job” when she grew up.

Hannah said her father’s unemployment had made it harder for her to focus on schoolwork. She also conceded she had been more easily annoyed with her parents and her sister.

At night, she said, she has taken to stowing her worries away in an imaginary box.

“I take all the stress and bad things that happen over the day, and I lock them in a box,” she said.

Then, she tries to sleep.

Your tags: Eviction, foreclosure

Other Tags: conservatives, DJIA, IMF, Prozac, U.S Department of Treasury, World Bank, Xanax, bubble, CDO, CORRUPTION, currency, GTC | Honor, Investor, Mortgage, securities fraud

Published: November 12, 2009 6:04 pm
Livinglies’s Weblog, Eviction, foreclosure

* HideUnhide
* BlockUnblock

* Mark as ReadMark as Unread
* SubscribeUnsubscribe

“Officials” Who Sign for MERS: False, Fraudulent, Fabricated, Forged and Void Documents in the Chain

Posted 3 days ago by livinglies on Livinglies’s Weblog

all we have left is the obligation, unsecured and subject to counterclaims etc. MOST IMPORTANT procedurally, it requires a lawsuit by the would-be forecloser in order to establish the terms of the obligation and the security, if any. This means they must make allegations as to ownership of the receivable and prove it — the kiss of death for all would be lenders except investors who funded these transactions.

sirrowan
sirrowan@peoplepc.com

“I just thought of something. I was reading what was posted a few above me regarding MERS own rules. They claim that their “officers” tend to act without authority from MERS and they do not use any records held by MERS etc.

How can this be? How can they be officers then? They aren’t if you ask me. Now wonder all these judges are telling them they are nothing but agents if even that, lol.

But if they were officers, wouldn’t MERS be liable for the actions of their “officers” on behalf of MERS?”

ANSWER from Neil

Sirrowan: GREAT POINT! The answer is that if they have a user ID and password ANYONE can become a “limited signing officer” for MERS.

Sometimes they say they are vice-president, sometimes they use some other official title. But the fact remains that they have no connection with MERS, no employment with MERS, no access to MERS records, and definitely no direct grant of a POA (Power of attorney). It’s a game.

This is why I have repeatedly say that in every securitized chain, particularly in the case of a MERS chain, there are one or more documents that are fabricated, forged or voidable. Whether this rises the level of criminality is up to future courts to determine.

One thing is sure — a party who signs a document that has no authority to sign it in the capacity they are representing has just committed violations of federal and state statute and common law. And the Notary who knew the party was not authorized as represented has committed a violation as well. Most states have statutes that say a bad notarization renders the document void, even if it was recorded. This breaks the chain of title and reverts back to the originating lender (at best) or voids the documents in the originating transaction (at worst).

In either event, the distinction I draw between the obligation (the substance of the transaction caused by the funding of a “loan product”) and the note (which by law is ONLY EVIDENCE of the obligation and the mortgage which is ONLY incident to the note, becomes very important. If the documents (note and mortgage) are void then all we have left is the obligation, unsecured and subject to counterclaims etc. MOST IMPORTANT procedurally, it requires a lawsuit by the would-be forecloser in order to establish the terms of the obligation and the security, if any. This means they must make allegations as to ownership of the receivable and prove it — the kiss of death for all would be lenders except investors who funded these transactions.

Your tags: Eviction, foreclosure

Other Tags: chain of title, disclosure, evidence, foreclosure defense, foreclosure offense, fraud, investors, lenders, MERS, Obligation, securitization, Signatures, trustee, bubble, CDO, CORRUPTION, currency, GTC | Honor, Investor, Mortgage, securities fraud

Published: November 10, 2009 3:10 pm
Livinglies’s Weblog, Eviction, foreclosure

* HideUnhide
* BlockUnblock

* Mark as ReadMark as Unread
* SubscribeUnsubscribe

What to Look For and Demand Through QWR or Discovery Part II

Posted 4 days ago by livinglies on Livinglies’s Weblog

Dan Edstrom, you are great!

OK I found the loan level details for my deal. It shows my loan in foreclosure and my last payment in 6/2008 (which is accurate). What it doesn’t say (among other things) is what advances were made on the account. Very interesting. This report is generated monthly but they are only reporting the current month. It also shows which pool my loan is in (originally their were approx. 4 pools, now there are 2). This means I can use all of this information to possibly calculate the advances reported – except that two months before I missed my first payment they stopped reporting SUB-servicer advances. [Editor’s Note: Those who are computer savvy will recognize that these are field names, which is something that should be included in your demand and in your QWR. You will also wanat the record data and metadata that is attached to each record. ]

DIST_DATE
SERIES_NAME
LOAN_NUM
POOL_NUM
DEAL_NUM LTV_DISCLOSED_PCT CLTV_PCT CREDIT_SCORE_NBR BACK_END_DTI_PCT
JUNIOR_RATIO LOAN_DOC_TYPE_DSCR LOAN_PURPOSE_TYPE_DSCR OCCUPANCY_TYPE PROPERTY_TYPE_DSCR LIEN_PRIORITY_DSCR STANDALONE_IND SILENT_SECOND_IND PROPERTY_STATE CONFORMING_BAL_IND INT_RATE_TYPE_DSCR MARGIN_GROSS_PCT
PMT_1ST_DATE INT_CHG_FREQ_MTH_QTY INT_CHG_PRD_INCR_CEIL_RATE INT_LIFE_CEIL_RATE INT_LIFE_FLOOR_RATE INT_ONLY_TERM_MTH_QTY INT_CHG_1ST_MTH INT_CHG_FREQ_DSCR INT_CHG_MTH_DIFF_QTY MORTAGE_INSURANCE_PROVIDER MORTAGE_INSURANCE_TYPE_DSCR MATURITY_DATE
NOTE_DATE
PRIN_ORIG_BAL
SOLD_BAL
TERM_ORIG_MTH_QTY PREPMT_PENALTY_TERM_MTH_QTY BORROWER_RESIDUAL_INCOME_AMT RFC_GRADE_CODE PRODUCT_GROUP_FALLOUT_DSCR MI_TYPE_DSCR INDEX_TYPE_CODE INDEX_TYPE_DSCR MLY_CURTAILMENT_AMT MLY_DRAW_GROSS_AMT MLY_COUPON_NET_RATE MLY_COUPON_GROSS_RATE MLY_PRIN_UNPAID_BAL MLY_PRIN_SCHED_BAL LOAN_AGE MLY_TERM_REMAIN_MTH_QTY MLY_UTILIZATION_PCT MLY_DELQ_REPORT_METHOD MLY_LOAN_STATUS_CODE MLY_LOAN_STATUS_DSCR MLY_PREPMT_TYPE_DSCR MLY_PAID_TO_DATE

If anyone wants this file or any of the servicing reports so they can see the actual data shoot me an email.

Thanks,
Dan Edstrom
dmedstrom@hotmail.com

Your tags: Eviction, foreclosure

Other Tags: accounting, disclosure, discovery, Edstrom, foreclosure defense, foreclosure offense, fraud, lost note, Mortgage, quiet title, QWR, TILA audit, trustee, bubble, CDO, CORRUPTION, currency, GTC | Honor, Investor, securities fraud

Published: November 9, 2009 6:24 pm
Livinglies’s Weblog, Eviction, foreclosure

* HideUnhide
* BlockUnblock

* Mark as ReadMark as Unread
* SubscribeUnsubscribe

TENT CITY, California While Vacant Houses Deteriorate

Posted 4 days ago by livinglies on Livinglies’s Weblog

TENT CITY, California While Vacant Houses Deteriorate

From watergatesummer.blogspot.com we have this post on the moronic ideology that misuses our natural and creative resources. It can be said that conservatives do not conserve and liberals do not liberate. I coined that because it is obvious that politics in this country is degrading even while some try to revive it.

Out of pure ideology and ignorance, people are being ejected from homes they own on the pretense that they don’t own the home. This sleight of hand is accomplished by “bridge to nowhere” logic — the pretender lender merely pretends to be authorized to initiate foreclosure proceedings. They come into court with a pile of inconsistent documents with little or no REAL connection with the originating papers and zero connection with the REAL lender.

So we end up with hundreds of thousands of homes that are empty, subject to vandalism and decay from lack of mainteance and lack of anyone living in them, combined with nobody paying utility bills etc that would help take the edge off the crisis. Instead, we choose to allow TENT CITY where there are no decent facilities, where people are living in tents literally, resulting in a greater drain on social services, police, fire, health, schools etc.

Why because some ideologue and people who mindlessly subscribe to such ideology has already played Judge and Jury and convicted these victims of Wall Street fraud. They are certain that these are deadbeats that don’t pay thier bills and won’t listen when someone points out that many of these people had nearly perfect credit scores before tragedy hit. That means the victims were generally considered to have been better credit risks based upon an excellent record of paying their bills, than their ideological detractors.

Someone of this ideology will tell us or anyone who will listen that the victims should have read what they were signing. The is fact that NOBODY reads those closing documents, not even lawyers, not even the ideological (don’t confuse me with the facts) conservatives. So the same people who say you should have read those documents, didn’t read their own.

And now everyone who is NOT in foreclosure or who has already lost possession of their home and who signed a securitized loan package is “underwater” an average of 25% , which means that they are, on average around $70,000 in debt that will never be covered by equity in their lifetime — so they can’t move without coming to the table with the shortfall.

Such ideologues fall short of helping their fellow citizens to be sure. What is astonishing is that they fall short of helping themselves, which means they subject their life partners, spouses, children and other dependents to the same mindless mind-numbing shoot myself in the foot political theology. And somehow it is THESE people who are controlling the pace of the recovery, controlling the correction in housing and social services who are claiming to be angry about their country being taken away from them!

Your tags: Eviction, foreclosure

Other Tags: bailout, housing, lender, POLICY, securitization, tent city, CDO, CORRUPTION, GTC | Honor, Mortgage, securities fraud

Published: November 9, 2009 6:15 pm
Livinglies’s Weblog, Eviction, foreclosure

* HideUnhide
* BlockUnblock

* Mark as ReadMark as Unread
* SubscribeUnsubscribe

U.S. STANDS FIRM IN SUPPORT OF WALL STREET WHILE THE REST OF THE WORLD TAKES THE ECONOMIC CRISIS SERIOUSLY

Posted 5 days ago by livinglies on Livinglies’s Weblog

MR. GEITNER, MR. SUMMERS AND OTHERS WHO ARE ON THE ECONOMIC TEAM DESERVE some CREDIT FOR BRINGING US BACK FROM AN ECONOMIC PRECIPICE THAT WOULD HAVE RESULTED IN A DEPRESSION FAR DEEPER AND LONGER THAN THE GREAT DEPRESSION. AND THEY SHOULD BE CUT SOME SLACK BECAUSE THEY WERE HANDED A PLATE ON WHICH THE ECONOMY WAS BASED LARGELY ON VAPOR — THE CONTRACTION OF WHICH WILL SPELL DISASTER IN MORE WAYS THAN ONE.
THAT SAID, THEY ARE GOING TOO FAR IN PROTECTING INVESTMENT BANKS AND DEPOSITORY BANKS FROM THEIR OWN STUPIDITY AND ENCOURAGING BEHAVIOR THAT THE TAXPAYERS WILL ABSORB — AT LEAST THEY THINK THE TAXPAYERS WILL DO IT.
As the following article demonstrates, the model currently used in this country and dozens of other countries is “pay to play” — and if there is a crash it is the fees the banks paid over the years that bails them out instead of the taxpayers.
For reasons that I don’t think are very good, the economic team is marginalizing Volcker and headed down the same brainless path we were on when Bush was in office, which was only an expansion of what happened when Clinton was in office, which was a “me too” based upon Bush #1 and Reagan. The end result is no longer subject to conjecture — endless crashes, each worse than the one before.
The intransigence of Wall Street and the economic team toward any meaningful financial reform adds salt to the wound we created in the first palce. We were fortunate that the rest of the world did not view the economic meltdown as an act of war by the United States. They are inviting us to be part of the solution and we insist on being part of the problem.
Sooner or later, the world’s patience is going to wear thin. Has anyone actually digested the fact that there is buyer’s run on gold now? Does anyone care that the value of the dollar is going down which means that those countries, companies and individuals who keep their wealth in dollars are dumping those dollars in favor of diversifying into other units of storage?
The short-term “advantage” will be more than offset by the continuing joblessness and homelessness unless we take these things seriously. Culturally, we are looking increasingly barbaric to dozens of countries that take their role of protecting the common welfare seriously.
Bottom Line on these pages is that it shouldn’t be so hard to get a judge to realize that just because the would-be forecloser has a big expensive brand name doesn’t mean they are anything better than common thieves. But like all theft in this country, the bigger you are the more wiggle room you get when you rob the homeless or a bank or the government or the taxpayers. Marcy Kaptur is right. She calls for a change of “generals” (likening Obama’s situation to Lincoln), since their skills were perhaps valuable when Obama first tackled the economic crisis — but now are counterproductive. We need new generals on the economic team that will steer us clear from the NEXT crisis not the LAST crisis.

November 8, 2009
Britain and U.S. Clash at G-20 on Tax to Insure Against Crises
By JULIA WERDIGIER

ST. ANDREWS, Scotland — The United States and Britain voiced disagreement Saturday over a proposal that would impose a new tax on financial transactions to support future bank rescues.

Prime Minister Gordon Brown of Britain, leading a meeting here of finance ministers from the Group of 20 rich and developing countries, said such a tax on banks should be considered as a way to take the burden off taxpayers during periods of financial crisis. His comments pre-empted the International Monetary Fund, which is set to present a range of options next spring to ensure financial stability.

But the proposal was met with little enthusiasm by the United States Treasury secretary, Timothy F. Geithner, who told Sky News in an interview that he would not support a tax on everyday financial transactions. Later he seemed to soften his position, saying it would be up to the I.M.F. to present a range of possible measures.

“We want to make sure that we don’t put the taxpayer in a position of having to absorb the costs of a crisis in the future,” Mr. Geithner said after the Sky News interview. “I’m sure the I.M.F. will come up with some proposals.”

The Russian finance minister, Alexei Kudrin, also said he was skeptical of such a tax. Similar fees had been proposed by Germany and France but rejected by Mr. Brown’s government in the past as too difficult to manage. But Mr. Brown is now suggesting “an insurance fee to reflect systemic risk or a resolution fund or contingent capital arrangements or a global financial transaction levy.”

Supporters of a tax had argued that it would reduce the volatility of markets; opponents said it would be too complex to enact across borders and could create huge imbalances. Mr. Brown said any such tax would have to be applied universally.

“It cannot be acceptable that the benefits of success in this sector are reaped by the few but the costs of its failure are borne by all of us,” Mr. Brown said at the summit. “There must be a better economic and social contract between financial institutions and the public based on trust and a just distribution of risks and rewards.”

At the meeting at the Scottish golf resort, the last to be hosted by Britain during its turn leading the group, the ministers agreed on a detailed timetable to achieve balanced economic growth and reiterated a pledge not to withdraw any economic stimulus until a recovery was certain.

They also committed to enact limits on bonuses and force banks to hold more cash reserves. But they failed to reach an agreement on how to finance a new climate change deal ahead of a crucial meeting in Copenhagen next month.

The finance ministers agreed that economic and financial conditions had improved but that the recovery was “uneven and remains dependent on policy support,” according to a statement released by the group. The weak condition of the economy was illustrated Friday by new data showing the unemployment rate in the United States rising to 10.2 percent in October, the highest level in 26 years.

The finance ministers also acknowledged that withdrawing stimulus packages required a balancing act to avoid stifling the economic recovery that has just begun.

“If we put the brakes on too quickly, we will weaken the economy and the financial system, unemployment will rise, more businesses will fail, budget deficits will rise, and the ultimate cost of the crisis will be greater,” Mr. Geithner said. “It is too early to start to lean against recovery.”

As part of the group’s global recovery plan, the United States would aim to increase its savings rate and reduce its trade deficit while countries like China and Germany would reduce their dependence on exports. Economic imbalances were widely faulted as helping to bring about the global economic downturn.

Mr. Geithner acknowledged on Saturday that the changes would take time but that “what we are seeing so far has been encouraging.”

Your tags: Eviction, foreclosure

Other Tags: bailout, credit, economic team, financial reform, foreclosures, Geitner, Summers, Volker, bubble, CDO, CORRUPTION, currency, GTC | Honor, Investor, Mortgage, securities fraud

Published: November 8, 2009 6:55 pm
Livinglies’s Weblog, Eviction, foreclosure

* HideUnhide
* BlockUnblock

* Mark as ReadMark as Unread
* SubscribeUnsubscribe

I’m OK. Thanks for asking

Posted 6 days ago by livinglies on Livinglies’s Weblog
Livinglies’s Weblog, foreclosure

* HideUnhide
* BlockUnblock

* Mark as ReadMark as Unread
* SubscribeUnsubscribe

FOLLOWING THE MONEY — WHAT TO ASK FOR AND LOOK FOR

Posted 6 days ago by livinglies on Livinglies’s Weblog
Livinglies’s Weblog, Eviction, foreclosure

* HideUnhide
* BlockUnblock

* Mark as ReadMark as Unread
* SubscribeUnsubscribe

Why “too big to fail” has to be dealt with this time

Posted 6 days ago by livinglies on Livinglies’s Weblog
Livinglies’s Weblog, foreclosure

* HideUnhide
* BlockUnblock

* Mark as ReadMark as Unread
* SubscribeUnsubscribe

AIG Reports Profits Increase — More Smoke and Mirrors

Posted 7 days ago by livinglies on Livinglies’s Weblog
Livinglies’s Weblog, Eviction, foreclosure

* HideUnhide
* BlockUnblock

* Mark as ReadMark as Unread
* SubscribeUnsubscribe

Foreclosure Defense: New York Judge Gets It HSBC v Valentin N.Y. Sup., 2008

Posted 7 days ago by livinglies on Livinglies’s Weblog
Livinglies’s Weblog, Eviction, foreclosure

* HideUnhide
* BlockUnblock

* Mark as ReadMark as Unread
* SubscribeUnsubscribe

Edit : Edit
Comments : Leave a Comment »

Tags: bankruptcy, Foreclosure, Fraud, Lender Liability

Categories : Foreclosure, I Have a Plan, Predatory Lending, eviction, stop foreclosure

The lawyer is not competend to testify

5 10 2009

If the lawyer is not a competent witness with personal knowledge, then he should shut up and sit down.

So you sent a QWR and you know the loan is securitized. The orignating lender says talk to the servicer and the servicer declines to answer all the questions because they didn’t originate the loan. Or you are in court and the lawyer is trying to finesse his way past basic rules of evidence and due process by making representations to the Judge as an officer of the court.

He’s lying of course and if you let it go unchallenged, you will lose the case. Basically opposing counsel is saying “trust me Judge I wouldn’t say it if it wasn’t so.” And your answer is that the lawyer is not a witness, that you don’t trust the lawyer or what he has to say, that if he is a witness he should be sworn in and subject to cross examaintion and if he is not a witness you are entitled to be confronted with a real witness with real testimony based upon real knowledge.

First Questions: When did you first learn of this case? What personal knowledge do you have concerning the payments received from the homeowner or third parties? What personal knowledge do you have as to who providing the actual cash from which the subject loan was funded?

Only when pressed relentlessly by the homeowner, the servicer comes up with a more and more restrictive answer as to what role they play. But they always start with don’t worry about a thing we control everything. Not true. Then later after you thought you worked out a modification they tell the deal is off because the investor declined. The investor is and always was the lender. That is the bottom line and any representation to the contrary is a lie and a fraud upon the court.

So whoever you sent the QWR to, always disclaims your right to ask, or tells you the name of the investor (i.e., your lender) is confidential, or that they have authority (but they won’t show it to you). That doesn’t seem to be a lender, does it? In fact they disclaim even knowing enough to answer your questions.

So AFTER THEY SERVE YOU with something file a motion to compel an immediate full answer to your QWR since under TILA service on the servicer is the same as service on the lender. You argue that everyone seems to be claiming rights to be paid under the original obligation, everyone seems to be claiming the right to enforce the note and mortgage, but nobody is willing to state unequivocally that they are the lender.

You are stuck in the position of being unable to seek modification under federal and State rules, unable to sell the property because you don’t know who can sign a satisfaction of mortgage or a release and reconveyance, unable to do a short-sale, and unable to refinance — all because they won’t give a simple answer to a simple question: who is the lender and what is the balance claimed by the real lender on the obligation? At this point you don’t even know that any of the real lenders wish to make a claim.

This is probably because they received TARP funds and insurance proceeds on defaults of pools that they had purchased multiple insurance policies (credit default swaps). But whether they are paid by someone who acquired rights of subrogation or they were not paid, you have a right to a FULL accounting and to know who they are and whether they received any third party money. If they were paid in part or otherwise sold their interest, then you have multiple additional unknown parties.

The reason is simple. They are not the lender and they know it. The lender is a group of investors who funded the transaction with Petitioner/Homeowner and others who purchased similar financial products from the same group of participants in the securitization chain relating to the subject loan.

The people currently in court do not include all the real parties in interest for you to make claims against the lender. Cite to the Massachusetts case where Wells Fargo and its lawyer were subject to an $850,000 sanction for misrepresenting its status to the court.

It is not enough for them to bluff their way by saying that they have already answered the interrogatories. When they lost and it came time to allocate damages and attorneys fees, Wells suddenly said they were NOT the lender, beneficiary or current holder and that therefore the damages and attorneys fees should be assessed against the real lender — who was not a party to the pending litigation and whom they refused to disclose along with their misrepresentation that they were the true lender.

It is not enough that the lawyer makes a representation to the court as an officer of the court. That is not how evidence works. If the lawyer wants to represent facts, then he/she should be sworn in and be subject to (1) voir dire to establish that he/she is opposing counsel that it came from some company.

The witness must be a competent witness who takes an oath, has personal knowledge regarding the content of the document, states that personal knowledge and whose testimony conforms to what is on the document.

There is no such thing as foundation without a witness. There is no such thing as foundation without a competent witness. So if the lawyer tries to finesse the subject by making blanket representations to the court(e.g. the property is “underwater” by $xxx,xxx and we need a lift of stay…yet, there is no certified appraisal entered into evidence with a certified appraiser that can be cross examined…just a statement from opposing counsel) point to Wells, or even point to other inconsistencies between what counsel has represented and what now appears to be the truth, and demand an evidentiary hearing. If the lawyer is not a competent witness with personal knowledge, then he should shut up and sit down.

File a motion to extend time to file adversary proceeding(in BK situation), answer, affirmative defenses and counterclaim UNTIL YOU GET A FULL AND COMPLETE ANSWER TO YOUR QWR so you can determine the real parties in interest and serve them with process. Otherwise, we will have a partial result wherein the real owner of the loan can and will claim damages and injunctive relief probably against all the current parties to this action including the Homeowner.

In short, the opposing counsel cannot just make statements of “fact” and have them accepted by the court as “fact” if they don’t pass the sniff test of real evidence corroborated by a competent witness. …and with every pleading ask for an evidentiary hearing and attorneys fees. Follow rule 11 procedure in Federal Court or the state law counterpart so you can get them later.

Edit : Edit
Comments : Leave a Comment »

Tags: eviction, Foreclosure, litigation, Predatory Lending, Real Estate Settlement Procedures Act, rescission

Categories : I Have a Plan, Predatory Lending, Real Estate Settlement Procedures Act, eviction, lis pendence, pedatory lending, respa, tila

Foreclosure Victory For Nor Cal Area Homeowner!

7 09 2009

A Sacramento area court ruling against the plaintiff came in an unlawful detainer hearing last Friday. Lenders and servicers are taking notice of the “sale” by trustee that was set aside in favor of a loan modification. Submitted by Steve Shafer

February 5, 2009 / Sacramento California – The Bay Area Superior Court decision and judgment against the plaintiff allows the “sale” by the trustee to be set aside in favor of a loan modification.
Lenders nationwide who originate and service loans know California offers them a “safe haven” from homeowner’s who dispute a recent foreclosure. That means overwhelming odds for anyone in foreclosure who loses their home to a lender in a foreclosure. The borrower becomes a holdover and must respond to an unlawful detainer after their home is lost.

That was not the case for an El Dorado area resident at a recent hearing for an unlawful detainer matter heard in a Placerville County superior court room. The recent victory in court was in an unlawful detainer matter for the defendant Ms. Stella Onyeu and mortgage lender and securities sponsor – AURORA LOAN SERVICES v. STELLA D. ONYEU (case number PCU2008032).

AURORA LOAN SERVICES like so many other lender servicing agents has come under greater scrutiny as of late for questionable business practices. According to its web site Aurora Loan Services is operating as usual. The company is a subsidiary of Lehman Brothers Bank, and not part of the Lehman Brothers Holding Inc. bankruptcy filing.

The case was originally filed in October of last year and shortly thereafter was dismissed when the Plaintiff failed to show at a scheduled hearing. Subsequent motions were filed to vacate the dismissal in favor of a motion to dismiss by the plaintiffs. The matter was heard recently heard again by the same court and earlier mentioned presiding judge. Mark Terbeek is the attorney for the Defendant and Maher Soliman a Juris Pro witness provided case development and court expert testimony.

This judgment for the defendant is monumental given the courts limited jurisdiction related to the lenders sole focus to have the borrower removed from the home. The issues at hand are the legal procedural limitations and high attrition rate for defendants and their attorney’s. The problem is the defendant’s lack of standing for pleading a wrongful foreclosure due to jurisdiction of the court.

So what does this all mean? Many homeowners can find some hope, for the moment, in knowing the otherwise unfriendly California UD courts will now hold some promise for hearing arguments as to the foreclosure and the plaintiffs standing. According to foreclosure and REO sales analyst Brenda Michelson of Nationwide Loan Services “It’s hit or miss at this level of the law and the courts willingness to step outside of its jurisdiction.” The smaller outlying courts seem to me to be more willing to entertain defense arguments that the plaintiff may not be the holder in due course and lacks capacity throughout the foreclosure” Terbeek’s response is that if the plaintiff cannot demonstrate a logical and properly conveyed transfer of the beneficial interest – it is not entitled to possession.

After the foreclosure and conveyance back to the trustee, the homeowner is considered unlawfully occupying the dwelling as a holdover. However, the court ruled that AURORA had in fact violated its duty to show good faith and comply accordingly under the recent California statutes and amendments Power of Sale provision. The presiding judge who heard the matter ordered a judgment against the company allowed for Terbeek to enter a request for all legal fees due.

According to legal expert Soliman, “there are more attorneys willing to now jump into the wrongful foreclosure business and fight the court on the jurisdiction issue. However, it is nearly impossible to rely on the judge and courts at this level”. Soliman is an examiner with Nationwide Loan Services and has engagements in multiple cases throughout California through attorneys such as Terbeek who represented the defendant.

Jurisdiction: An Overview

The term jurisdiction is really synonymous with the word “power” and the sovereignty on behalf of which it functions. Any court possesses jurisdiction over matters only to the extent granted to it by the Constitution, or legislation of a paramount fundamental question for lawyers is whether a given court has jurisdiction to preside over a given case. A jurisdictional question may be broken down into various components including whether there is jurisdiction over the person (in personam), the subject matter, or res (in rem), and to render the particular judgment sought.

An unlawful detainer lawsuit is a “summary” court procedure. This means that the court action moves forward very quickly, and that the time given the tenant to respond during the lawsuit is very short. For example, in most cases, the tenant has only five days to file a written response to the lawsuit after being served with a copy of the landlord’s complaint. Normally, a judge will hear and decide the case within 20 days after the borrower now tenant files an answer.

The question of whether a given court has the power to determine a jurisdictional question is itself a jurisdictional question. Such a legal question is referred to as “jurisdiction to determine jurisdiction.” In order to evict the tenant, the landlord must file an unlawful detainer lawsuit in superior court. In an eviction lawsuit, the lender is the “plaintiff” and the prior borrower and homeowners become an occupant holdover and the “defendant.” Immediately after the trustee sale of the home the conveyance by the trustee is entered in favor of the lender. Until recently in most cases the lender is with in its right foreclose if a borrower has missed a number of payments, failed to make the insurance premiums or not paid the property taxes. “But sometimes a lender is wrong and you can fight foreclosure by challenging the foreclosure process and related documents” said Soliman.

As the new owner of record AURORA HOME LOAN SERVICES must follow procedures no different than that of a landlord in a tenant occupancy dispute. The next step is to remove the homeowner from the subject dwelling. If the tenant doesn’t voluntarily move out after the landlord has properly given the required notice to the tenant, the landlord can evict the tenant. If the lender makes a mistake in its filing of the foreclosure documents a court my throw out the whole foreclosure case. In the case of a wrongful foreclosure the borrower’s claims are limited to affirmative defenses.

Affirmative Defenses

Unlike a judicial proceeding, California lenders need to merely wait out the mandatory term for issuing default notices and ensure it has properly served those notices to the borrower. In other words the hearing and trial taken place in the above referenced matter is not subject to arguments brought by the homeowner for wrongful foreclosure versus the question as to lawful possession of the property by the lender.

California lenders are typically limited to only the defenses a landlord will face when opposed and made subject to claims of wrongfully trying to evict a tenant. Claims such as the Plaintiff has breached the warranty to provide habitable premises, plaintiff did not give proper credit before the notice to pay or quit expired or plaintiff waived, changed, or canceled the notice to quit, or filed the complaint to retaliate against defendant are often completely unrelated to the matter at hand. The courts decision to enforce the provisions of an earlier modification in lieu of a foreclosure sends a major wake up call to the lenders who are under siege to avoid foreclose and be done with mortgage mess affecting United States homeowners. Soliman says the decision is unfortunately not likely to be read into as case precedent for future lawyers and wrongful defendants seeking to introduce our case as an example of a lenders wrongful action.

Soliman goes on to say “it’s both interesting and entertaining to see experienced attorneys who jump in and immediately question the issue of the courts authority. Its reality time when they get to their first hearing and see first hand the problematic issues with jurisdiction.”

Servicing agents are never the less on notice they must be ready to defend themselves when the opportunity to argue the plaintiffs standing are allowed in an unlawful detainer motivate by a foreclosure. Therefore, the debate about what the courts hear will remain open and subject to further scrutiny by the lawyers for both sides and judges who preside over the courts at this level.

Nationwide Loan Servicing is an approved Expert Witness who provides court testimoney in matters concerning wrongful foreclosures, Federal Savings Banks regultory violations and SEC filings for private registrations.

Edit : Edit
Comments : 1 Comment »

Tags: 2923.5, 2923.5 2923.6 2924 2932.5 Audit bankruptcy california California cram down Chapter 13 civil code 2923.5 civil code 2924 Countrywide Cram down Cramdown criminal acts eviction FCRA FDCPA Federal Jurisdi, 2923.6, 2924, 2932.5, California cram down, Predatory Lending, stop foreclosure

Categories : Foreclosure, Mortgage modification, eviction, stop foreclosure

A ‘Little Judge’ Who Rejects Foreclosures, Brooklyn Style

2 09 2009

By Michael Powell – NY Times – 8/30/09

The judge waves you into his chambers in the State Supreme Court building in Brooklyn, past the caveat taped to his wall — “Be sure brain in gear before engaging mouth” — and into his inner office, where foreclosure motions are piled high enough to form a minor Alpine chain.

“I don’t want to put a family on the street unless it’s legitimate,” Justice Arthur M. Schack said.

Every week, the nation’s mightiest banks come to his court seeking to take the homes of New Yorkers who cannot pay their mortgages. And nearly as often, the judge says, they file foreclosure papers speckled with errors.

He plucks out one motion and leafs through: a Deutsche Bank representative signed an affidavit claiming to be the vice president of two different banks. His office was in Kansas City, Mo., but the signature was notarized in Texas. And the bank did not even own the mortgage when it began to foreclose on the homeowner.

The judge’s lips pucker as if he had inhaled a pickle; he rejected this one. “I’m a little guy in Brooklyn who doesn’t belong to their country clubs, what can I tell you?” he says, adding a shrug for punctuation. “I won’t accept their comedy of errors.”

The judge, Arthur M. Schack, 64, fashions himself a judicial Don Quixote, tilting at the phalanxes of bankers, foreclosure facilitators and lawyers who file motions by the bale. While national debate focuses on bank bailouts and federal aid for homeowners that has been slow in coming, the hard reckonings of the foreclosure crisis are being made in courts like his, and Justice Schack’s sympathies are clear. He has tossed out 46 of the 102 foreclosure motions that have come before him in the last two years. And his often scathing decisions, peppered with allusions to the Croesus-like wealth of bank presidents, have attracted the respectful attention of judges and lawyers from Florida to Ohio to California. At recent judicial conferences in Chicago and Arizona, several panelists praised his rulings as a possible national model.

His opinions, too, have been greeted by a cry of affront from a bank official or two, who say this judge stands in the way of what is rightfully theirs. HSBC bank appealed a recent ruling, saying he had set a “dangerous precedent” by acting as “both judge and jury,” throwing out cases even when homeowners had not responded to foreclosure motions. Justice Schack, like a handful of state and federal judges, has taken a magnifying glass to the mortgage industry. In the gilded haste of the past decade, bankers handed out millions of mortgages — with terms good, bad and exotically ugly — then repackaged those loans for sale to investors from Connecticut to Singapore. Sloppiness reigned. So many papers have been lost, signatures misplaced and documents dated inaccurately that it is often not clear which bank owns the mortgage.

Justice Schack’s take is straightforward, and sends a tremor through some bank suites: If a bank cannot prove ownership, it cannot foreclose. “If you are going to take away someone’s house, everything should be legal and correct,” he said. “I’m a strange guy — I don’t want to put a family on the street unless it’s legitimate.”

Justice Schack has small jowls and big black glasses, a thin mustache and not so many hairs combed across his scalp. He has the impish eyes of the high school social studies teacher he once was, aware that something untoward is probably going on at the back of his classroom. He is Brooklyn born and bred, with a master’s degree in history and an office loaded with autographed baseballs and photographs of the Brooklyn Dodgers. His written decisions are a free-associative trip through popular, legal and literary culture, with a sideways glance at the business pages.

Confronted with a case in which Deutsche Bank and Goldman Sachs passed a defaulted mortgage back and forth and lost track of the documents, the judge made reference to the film classic “It’s a Wonderful Life” and the evil banker played by Lionel Barrymore. “Lenders should not lose sight,” Justice Schack wrote in that 2007 case, “that they are dealing with humanity, not with Mr. Potter’s ‘rabble’ and ‘cattle.’ Multibillion-dollar corporations must follow the same rules in the foreclosure actions as the local banks, savings and loan associations or credit unions, or else they have become the Mr. Potters of the 21st century.”

Last year, he chastised Wells Fargo for filing error-filled papers. “The court,” the judge wrote, “reminds Wells Fargo of Cassius’s advice to Brutus in Act 1, Scene 2 of William Shakespeare’s ‘Julius Caesar’: ‘The fault, dear Brutus, is not in our stars, but in ourselves.’ ”

Then there is a Deutsche Bank case from 2008, the juicy part of which he reads aloud:

“The court wonders if the instant foreclosure action is a corporate ‘Kansas City Shuffle,’ a complex confidence game,” he reads. “In the 2006 film ‘Lucky Number Slevin,’ Mr. Goodkat, a hit man played by Bruce Willis, explains: ‘A Kansas City Shuffle is when everybody looks right, you go left.’ “The banks’ reaction? Justice Schack shrugs. “They probably curse at me,” he says, “but no one is interested in some little judge.”

Little drama attends the release of his decisions. Beaten-down homeowners rarely show up to contest foreclosure actions, and the judge scrutinizes the banks’ papers in his chambers. But at legal conferences, judges and lawyers have wondered aloud why more judges do not hold banks to tougher standards.

“To the extent that judges examine these papers, they find exactly the same errors that Judge Schack does,” said Katherine M. Porter, a visiting professor at the School of Law at the University of California, Berkeley, and a national expert in consumer credit law. “His rulings are hardly revolutionary; it’s unusual only because we so rarely hold large corporations to the rules.”

Banks and the cottage industry of mortgage service companies and foreclosure lawyers also pay rather close attention. A spokeswoman for OneWest Bank acknowledged that an official, confronted with a ream of foreclosure papers, had mistakenly signed for two different banks — just as the Deutsche Bank official did. Deutsche Bank, which declined to let an attorney speak on the record about any of its cases before Justice Schack, e-mailed a PDF of a three-page pamphlet in which it claimed little responsibility for foreclosures, even though the bank’s name is affixed to tens of thousands of such motions. The bank described itself as simply a trustee for investors.

Justice Schack came to his recent prominence by a circuitous path, having worked for 14 years as public school teacher in Brooklyn. He was a union representative and once walked a picket line with his wife, Dilia, who was a teacher, too. All was well until the fiscal crisis of the 1970s.

“Why’d I go to law school?” he said. “Thank Mayor Abe Beame, who froze teacher salaries.”

He was counsel for the Major League Baseball Players Association in the 1980s and ’90s, when it was on a long winning streak against team owners. “It was the millionaires versus the billionaires,” he says. “After a while, I’m sitting there thinking, ‘He’s making $4 million, he’s making $5 million, and I’m worth about $1.98.’ ”

So he dived into a judicial race. He was elected to the Civil Court in 1998 and to the Supreme Court for Brooklyn and Staten Island in 2003. His wife is a Democratic district leader; their daughter, Elaine, is a lawyer and their son, Douglas, a police officer.Justice Schack’s duels with the banks started in 2007 as foreclosures spiked sharply. He saw a plague falling on Brooklyn, particularly its working-class black precincts. “Banks had given out loans structured to fail,” he said.

The judge burrowed into property record databases. He found banks without clear title, and a giant foreclosure law firm, Steven J. Baum, representing two sides in a dispute. He noted that Wells Fargo’s chief executive, John G. Stumpf, made more than $11 million in 2007 while the company’s total returns fell 12 percent. “Maybe,” he advised the bank, “counsel should wonder, like the court, if Mr. Stumpf was unjustly enriched at the expense of W.F.’s stockholders.”

He was, how to say it, mildly appalled. “I’m a guy from the streets of Brooklyn who happens to become a judge,” he said. “I see a bank giving a $500,000 mortgage on a building worth $300,000 and the interest rate is 20 percent and I ask questions, what can I tell you?”

Edit : Edit
Comments : Leave a Comment »

Tags: Audit, bailout, bankruptcy, borrower, brad keiser, credit, credit crisis, depression, FDG, Federal Bailout, foreclosure defense, Foreclosure Defense Group, foreclosure offense, foreclosures, Fraud, HAMP, lawyers, Lender Liability, Loan Mod, LOAN MODIFICATION, lost note, Mortgage, quiet title, rescission, respa, RICO, TILA audit

Categories : 2924, Cramdown, Foreclosure, I Have a Plan, bankruptcy, eviction

Brown Sues 21 Individuals and 14 Companies Who Ripped Off Homeowners Desperate for Mortgage Relief

17 07 2009

News Release
July 15, 2009
For Immediate Release
Contact: (916) 324-5500 begin_of_the_skype_highlighting              (916) 324-5500      end_of_the_skype_highlighting
Print Version
Attachments

Los Angeles – As part of a massive federal-state crackdown on loan modification scams, Attorney General Edmund G. Brown Jr. at a press conference today announced the filing of legal action against 21 individuals and 14 companies who ripped off thousands of homeowners desperately seeking mortgage relief.

Brown is demanding millions in civil penalties, restitution for victims and permanent injunctions to keep the companies and defendants from offering mortgage-relief services.

“The loan modification industry is teeming with confidence men and charlatans, who rip off desperate homeowners facing foreclosure,” Brown said. “Despite firm promises and money-back guarantees, these scam artists pocketed thousands of dollars from each victim and didn’t provide an ounce of relief.”

Brown filed five lawsuits as part of “Operation Loan Lies,” a nationwide sweep of sham loan modification consultants, which he conducted with the Federal Trade Commission, the U.S. Attorney’s office and 22 other federal and state agencies. In total, 189 suits and orders to stop doing business were filed across the country.

Following the housing collapse, hundreds of loan modification and foreclosure-prevention companies have cropped up, charging thousands of dollars in upfront fees and claiming that they can reduce mortgage payments. Yet, loan modifications are rarely, if ever, obtained. Less than 1 percent of homeowners nationwide have received principal reductions of any kind.

Brown has been leading the fight against fraudulent loan modification companies. He has sought court orders to shut down several companies including First Gov and Foreclosure Freedom and has brought criminal charges and obtained lengthy prison sentences for deceptive loan modification consultants.

Brown’s office filed the following lawsuits in Orange County and U.S. District Court for the Central District (Los Angeles):

– U.S. Homeowners Assistance, based in Irvine;
– U.S. Foreclosure Relief Corp and its legal affiliate Adrian Pomery, based in the City of Orange;
– Home Relief Services, LLC, with offices in Irvine, Newport Beach and Anaheim, and its legal affiliate, the Diener Law Firm;
– RMR Group Loss Mitigation, LLC and its legal affiliates Shippey & Associates and Arthur Aldridge. RMR Group has offices in Newport Beach, City of Orange, Huntington Beach, Corona, and Fresno;
– and
– United First, Inc, and its lawyer affiliate Mitchell Roth, based in Los Angeles.

U.S. Homeowners Assistance
Brown on Monday sued U.S. Homeowners Assistance, and its executives — Hakimullah “Sean” Sarpas and Zulmai Nazarzai — for bilking dozens of homeowners out of thousands of dollars each.

U.S. Homeowners Assistance claimed to be a government agency with a 98 percent success rate in aiding homeowners. In reality, the company was not a government agency and was never certified as an approved housing counselor by the U.S. Department of Housing and Urban Development. None of U.S. Homeowners Assistance’s known victims received loan modifications despite paying upfront fees ranging from $1,200 to $3,500.

For example, in January 2008, one victim received a letter from her lender indicating that her monthly mortgage payment would increase from $2,300 to $3,500. Days later, she received an unsolicited phone call from U.S. Homeowners Assistance promising a 40 percent reduction in principal and a $2,000 reduction in her monthly payment. She paid $3500 upfront for U.S. Homeowners Assistance’s services.

At the end of April 2008, her lender informed her that her loan modification request had been denied and sent her the documents that U.S. Homeowners Assistance had filed on her behalf. After reviewing those documents, she discovered that U.S. Homeowners Assistance had forged her signature and falsified her financial information – including fabricating a lease agreement with a fictitious tenant.

When she confronted U.S. Homeowners Assistance, she was immediately disconnected and has not been able to reach the company.

Brown’s suit contends that U.S. Homeowners Assistance violated:
– California Business and Professions Code section 17500 by falsely stating they were a government agency and misleading homeowners by claiming a 98 percent success rate in obtaining loan modifications;

– California Business and Professions Code section 17200 by failing to perform services made in exchange for upfront fees;

– California Civil Code section 2945.4 for unlawfully collecting upfront fees for loan modification services;

– California Civil Code section 2945.45 for failing to register with the California Attorney General’s Office as foreclosure consultants; and

– California Penal Code section 487 for grand theft.

Brown is seeking $7.5 million in civil penalties, full restitution for victims, and a permanent injunction to keep the company and the defendants from offering foreclosure consultant services.

US Homeowners Assistance also did business as Statewide Financial Group, Inc., We Beat All Rates, and US Homeowners Preservation Center.

US Foreclosure Relief Corporation
Brown last week sued US Foreclosure Relief Corporation, H.E. Service Company, their executives — George Escalante and Cesar Lopez — as well as their legal affiliate Adrian Pomery for running a scam promising homeowners reductions in their principal and interest rates as low as 4 percent. Brown was joined in this suit by the Federal Trade Commission and the State of Missouri.

Using aggressive telemarketing tactics, the defendants solicited desperate homeowners and charged an upfront fee ranging from $1,800 to $2,800 for loan modification services. During one nine-month period alone, consumers paid defendants in excess of $4.4 million. Yet, in most instances, defendants failed to provide the mortgage-relief services. Once consumers paid the fee, the defendants avoided responding to consumers’ inquiries.

In response to a large number of consumer complaints, several government agencies directed the defendants to stop their illegal practices. Instead, they changed their business name and continued their operations – using six different business aliases in the past eight months alone.

Brown’s lawsuit alleges the companies and individuals violated:
– The National Do Not Call Registry, 16 C.F.R. section 310.4 and California Business and Professions Code section 17200 by telemarketing their services to persons on the registry;

– The National Do Not Call Registry, 16 C.F.R. section 310.8 and California Business and Professions Code section 17200 by telemarketing their services without paying the mandatory annual fee for access to telephone numbers within the area codes included in the registry;

– California Civil Code section 2945 et seq. and California Business and Professions Code section 17200 by demanding and collecting up-front fees prior to performing any services, failing to include statutory notices in their contracts, and failing to comply with other requirements imposed on mortgage foreclosure consultants;

– California Business and Professions Code sections 17200 and 17500 by representing that they would obtain home loan modifications for consumers but failing to do so in most instances; by representing that consumers must make further payments even though they had not performed any of the promised services; by representing that they have a high success rate and that they can obtain loan modification within no more than 60 days when in fact these representations were false; and by directing consumers to avoid contact with their lenders and to stop making loan payments causing some lenders to initiate foreclosure proceedings and causing damage to consumers’ credit records.

Victims of this scam include a father of four battling cancer, a small business owner, an elderly disabled couple, a sheriff whose income dropped due to city budget cuts and an Iraq-war veteran. None of these victims received the loan modification promised.

Brown is seeking unspecified civil penalties, full restitution for victims, and a permanent injunction to keep the company and the defendants from offering foreclosure consultant services.

The defendants also did business under other names including Lighthouse Services and California Foreclosure Specialists.

Home Relief Services, LLC
Brown Monday sued Home Relief Services, LLC., its executives Terence Green Sr. and Stefano Marrero, the Diener Law Firm and its principal attorney Christopher L. Diener for bilking thousands of homeowners out of thousands of dollars each.

Home Relief Services charged homeowners over $4,000 in upfront fees, promised to lower interest rates to 4 percent, convert adjustable-rate mortgages to low fixed-rate loans and reduce principal up to 50 percent within 30 to 60 days. None of the known victims received a modification with the assistance of the defendants.

In some cases, these companies also sought to be the lenders’ agent in the short-sale of their clients’ homes. In doing so, the defendants attempted to use their customers’ personal financial information for their own benefit.

Home Relief Services and the Diener Law Firm directed homeowners to stop contacting their lender because the defendants would act as their sole agent and negotiator.

Brown’s lawsuit contends that the defendants violated:
– California Business and Professions Code section 17500 by claiming a 95 percent success rate and promising consumers significant reductions in the principal balance of their mortgages;

– California Business and Professions Code section 17200 by failing to perform on promises made in exchange for upfront fees;

– California Civil Code section 2945.4 for unlawfully collecting upfront fees for loan modification services;

– California Business and Professions Code section 2945.3 by failing to include cancellation notices in their contracts;

– California Civil Code section 2945.45 by not registering with the Attorney General’s office as foreclosure consultants; and

– California Penal Code section 487 for grand theft.

Brown is seeking $10 million in civil penalties, full restitution for victims, and a permanent injunction to keep the company and the defendants from offering foreclosure consultant services.

Two other companies with the same management were also involved in the effort to deceive homeowners: Payment Relief Services, Inc. and Golden State Funding, Inc.

RMR Group Loss Mitigation Group
Brown Monday sued RMR Group Loss Mitigation and its executives Michael Scott Armendariz of Huntington Beach, Ruben Curiel of Lancaster, and Ricardo Haag of Corona; Living Water Lending, Inc.; and attorney Arthur Steven Aldridge of Westlake Village as well as the law firm of Shippey & Associates and its principal attorney Karla C. Shippey of Yorba Linda – for bilking over 500 victims out of nearly $1 million.

The company solicited homeowners through telephone calls and in-person home visits. Employees claimed a 98 percent success rate and a money-back guarantee. None of the known victims received any refunds or modifications with the assistance of defendants.

For example, in July 2008, a 71-year old victim learned his monthly mortgage payments would increase from $2,470 to $3,295. He paid $2,995, yet received no loan modification and no refund.

Additionally, RMR insisted that homeowners refrain from contacting their lenders because the defendants would act as their agents.

Brown’s suit contends that the defendants violated:

– California Business and Professions Code section 17500 by claiming a 98 percent success rate and promising consumers significant reductions in the principal balance of their mortgages;

– California Business and Professions Code section 17200 by failing to perform on promises made in exchange for upfront fees;

– California Civil Code section 2945.4 for unlawfully collecting upfront fees for loan modification services;

– California Business and Professions Code section 2945.3 by failing to include cancellation notices in their contracts;

– California Civil Code section 2945.45 by not registering with the Attorney General’s office as foreclosure consultants; and

– California Penal Code section 487 for grand theft.

Brown is seeking $7.5 million in civil penalties, full restitution for victims, and a permanent injunction to keep the company and the defendants from offering foreclosure consultant services.

United First, Inc.
On July 6, 2009, Brown sued a foreclosure consultant and an attorney — Paul Noe Jr. and Mitchell Roth – who conned 2,000 desperate homeowners into paying exorbitant fees for “phony lawsuits” to forestall foreclosure proceedings.

These lawsuits were filed and abandoned, even though homeowners were charged $1,800 in upfront fees, at least $1,200 per month and contingency fees of up to 80 percent of their home’s value.

Noe convinced more than 2,000 homeowners to sign “joint venture” agreements with his company, United First, and hire Roth to file suits claiming that the borrower’s loan was invalid because the mortgages had been sold so many times on Wall Street that the lender could not demonstrate who owned it. Similar suits in other states have never resulted in the elimination of the borrower’s mortgage debt.

After filing the lawsuits, Roth did virtually nothing to advance the cases. He often failed to make required court filings, respond to legal motions, comply with court deadlines, or appear at court hearings. Instead, Roth’s firm simply tried to extend the lawsuits as long as possible in order to collect additional monthly fees.

United First charged homeowners approximately $1,800 in upfront fees, plus at least $1,200 per month. If the case was settled, homeowners were required to pay 50 percent of the cash value of the settlement. For example, if United First won a $100,000 reduction of the mortgage debt, the homeowner would have to pay United First a fee of $50,000. If United First completely eliminated the homeowner’s debt, the homeowner would be required to pay the company 80 percent of the value of the home.

Brown’s lawsuit contends that Noe, Roth and United First:

– Violated California’s credit counseling and foreclosure consultant laws, Civil Code sections 1789 and 2945

– Inserted unconscionable terms in contracts;

– Engaged in improper running and capping, meaning that Roth improperly partnered with United First, Inc. and Noe, who were not lawyers, to generate business for his law firm violating California Business and Professions Code 6150; and

– Violated 17500 of the California Business and Professions Code.

Brown’s office is seeking $2 million in civil penalties, full restitution for victims, and a permanent injunction to keep the company and the defendants from offering foreclosure consultant services.

Tips for Homeowners
Brown’s office issued these tips for homeowners to avoid becoming a victim:

DON’T pay money to people who promise to work with your lender to modify your loan. It is unlawful for foreclosure consultants to collect money before (1) they give you a written contract describing the services they promise to provide and (2) they actually perform all the services described in the contract, such as negotiating new monthly payments or a new mortgage loan. However, an advance fee may be charged by an attorney, or by a real estate broker who has submitted the advance fee agreement to the Department of Real Estate, for review.

DO call your lender yourself. Your lender wants to hear from you, and will likely be much more willing to work directly with you than with a foreclosure consultant.

DON’T ignore letters from your lender. Consider contacting your lender yourself, many lenders are willing to work with homeowners who are behind on their payments.

DON’T transfer title or sell your house to a “foreclosure rescuer.” Fraudulent foreclosure consultants often promise that if homeowners transfer title, they may stay in the home as renters and buy their home back later. The foreclosure consultants claim that transfer is necessary so that someone with a better credit rating can obtain a new loan to prevent foreclosure. BEWARE! This is a common scheme so-called “rescuers” use to evict homeowners and steal all or most of the home’s equity.

DON’T pay your mortgage payments to someone other than your lender or loan servicer, even if he or she promises to pass the payment on. Fraudulent foreclosure consultants often keep the money for themselves.

DON’T sign any documents without reading them first. Many homeowners think that they are signing documents for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership to the “rescuer.”

DO contact housing counselors approved by the U.S. Department of Housing and Urban Development (HUD), who may be able to help you for free. For a referral to a housing counselor near you, contact HUD at 1-800-569-4287 begin_of_the_skype_highlighting              1-800-569-4287      end_of_the_skype_highlighting (TTY: 1-800-877-8339 begin_of_the_skype_highlighting              1-800-877-8339      end_of_the_skype_highlighting) or http://www.hud.gov.

If you believe you have been the victim of a mortgage-relief scam in California, please contact the Attorney General’s Public Inquiry Unit at http://ag.ca.gov/consumers/general.php.
# # #

Edit : Edit
Comments : 1 Comment »

Tags: 2923.5, 2923.5 2923.6 2924 2932.5 Audit bankruptcy california California cram down Chapter 13 civil code 2923.5 civil code 2924 Countrywide Cram down Cramdown criminal acts eviction FCRA FDCPA Federal Jurisdi, 2923.6, 2924, 2932.5, bankruptcy, california, civil code 2923.5, eviction, Foreclosure, Fraud, lis pendence, litigation, Predatory Lending, Real Estate Settlement Procedures Act, usury

Categories : Foreclosure, I Have a Plan, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, eviction, respa, stop foreclosure, tila, truth in lending

Pretender Lenders

2 07 2009

— read and weep. Game Over. Over the next 6-12 months the entire foreclosure mess is going to be turned on its head as it becomes apparent to even the most skeptical that the mortgage mess is just that — a mess. From the time the deed was recorded to the time the assignments, powers of attorneys, notarization and other documents were fabricated and executed there is an 18 minute Nixonian gap in the record that cannot be cured. Just because you produce documents, however real they appear, does not mean you can shift the burden of proof onto the borrower. In California our legislator have attempted to slow this train wreck but the pretender lenders just go on with the foreclosure by declaring to the foreclosure trustee the borrower is in default and they have all the documents the trustee then records a false document. A notice of default filed pursuant to Section 2924 shall include a declaration from the mortgagee, beneficiary, or authorized agent that it has contacted the borrower, tried with due diligence to contact the borrower as required by this section, or the borrower has surrendered the property to the mortgagee, trustee, beneficiary, or authorized agent.
Invalid Declaration on Notice of Default and/or Notice of Trustee’s Sale.

The purpose of permitting a declaration under penalty of perjury, in lieu of a sworn statement, is to help ensure that declarations contain a truthful factual representation and are made in good faith. (In re Marriage of Reese & Guy, 73 Cal. App. 4th 1214, 87 Cal. Rptr. 2d 339 (4th Dist. 1999).
In addition to California Civil Code §2923.5, California Code of Civil Procedure §2015.5 states:
Whenever, under any law of this state or under any rule, regulation, order or requirement made pursuant to the law of this state, any matter is required or permitted to be supported, evidenced, established, or proved by the sworn statement, declaration, verification, certificate, oath, or affidavit, in writing of the person making the same, such matter may with like force and effect be supported, evidenced, established or proved by the unsworn statement, declaration, verification, or certificate, in writing of such person which recites that is certified or declared by him or her to be true under penalty of perjury, is subscribed by him or her, and (1), if executed within this state, states the date and place of execution; (2) if executed at any place, within or without this state, states the date of execution and that is so certified or declared under the laws of the State of California. The certification or declaration must be in substantially the following form:
(a) If executed within this state:
“I certify (or declare) under penalty of perjury that the foregoing is true and correct”:
_____________________ _______________________
(Date and Place) (Signature)

For our purposes we need not look any farther than the Notice of Default to find the declaration is not signed under penalty of perjury; as mandated by new Civil Code §2923.5(c). (Blum v. Superior Court (Copley Press Inc.) (2006) 141 Cal App 4th 418, 45 Cal. Reptr. 3d 902 ). The Declaration is merely a form declaration with a check box.

No Personal Knowledge of Declarant
According to Giles v. Friendly Finance Co. of Biloxi, Inc., 199 So. 2nd 265 (Miss. 1967), “an affidavit on behalf of a corporation must show that it was made by an authorized officer or agent, and the officer him or herself must swear to the facts.” Furthermore, in Giles v. County Dep’t of Public Welfare of Marion County (Ind.App. 1 Dist.1991) 579 N.E.2d 653, 654-655 states in pertinent part, “a person who verified a pleading to have personal knowledge or reasonable cause to believe the existence of the facts stated therein.” Here, the Declaration for the Notice of Default by the agent does not state if the agent has personal knowledge and how he obtained this knowledge.
The proper function of an affidavit is to state facts, not conclusions, ¹ and affidavits that merely state conclusions rather than facts are insufficient. ² An affidavit must set forth facts and show affirmatively how the affiant obtained personal knowledge of those facts. ³
Here, The Notice of Default does not have the required agent’s personal knowledge of facts and if the Plaintiff borrower was affirmatively contacted in person or by telephone
to assess the Plaintiff’s financial situation and explore options for the Plaintiff to avoid foreclosure. A simple check box next to the “facts” does not suffice.
Furthermore, “it has been said that personal knowledge of facts asserted in an affidavit is not presumed from the mere positive averment of facts, but rather, a court should be shown how the affiant knew or could have known such facts, and, if there is no evidence from which the inference of personal knowledge can be drawn, then it is
¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬____________________________________________________________________________
¹ Lindley v. Midwest Pulmonary Consultants, P.C., 55 S.W.3d 906 (Mo. Ct. App. W.D. 2001).
² Jaime v. St. Joseph Hosp. Foundation, 853 S.W.2d 604 (Tex. App. Houston 1st Dist. 1993).
³ M.G.M. Grand Hotel, Inc. v. Castro, 8 S.W.3d 403 (Tex. App. Corpus Chrisit 1999).

presumed that from which the inference of personal knowledge can be drawn, then it is presumed that such does not exist.” ¹ The declaration signed by agent does not state anywhere how he knew or could have known if Plaintiff was contacted in person or by telephone to explore different financial options. It is vague and ambiguous if he himself called plaintiff.
This defendant did not adhere to the mandates laid out by congress before a foreclosure can be considered duly perfected. The Notice of Default states,

“That by reason thereof, the present beneficiary under such deed of trust, has executed and delivered to said agent, a written Declaration of Default and Demand for same, and has deposited with said agent such Deed of Trust and all documents evidencing obligations secured thereby, and has declared and does hereby declare all sums secured thereby immediately due and payable and has elected and does hereby elect to cause the trust property to be sold to satisfy the obligations secured thereby.”

However, Defendants do not have and assignment of the deed of trust nor have they complied with 2923.5 or 2923.6 or 2924 the Deed of Trust, nor do they provide any documents evidencing obligations secured thereby. For the aforementioned reasons, the Notice of Default will be void as a matter of law. The pretender lenders a banking on the “tender defense” to save them ie. yes we did not follow the law so sue us and when you do we will claim “tender” Check Mate but that’s not the law.

Recording a False Document
Furthermore, according to California Penal Code § 115 in pertinent part:
(a) Every person who knowingly procures or offers any false or forged instrument to be filed, registered, or recorded in any public office within this state, which instrument, if genuine, might be filed, registered, or recorded under any law of this state or of the United States, is guilty of a felony.

If you say you have a claim, you must prove it. If you say you are the lender, you must prove it. Legislators take notice: Just because bankers give you money doesn’t mean they can change 1000 years of common law, statutory law and constitutional law. It just won’t fly. And if you are a legislator looking to get elected or re-elected, your failure to act on what is now an obvious need to clear title and restore the wealth of your citizens who were cheated and defrauded, will be punished by the votes of your constituents.

Edit : Edit
Comments : 3 Comments »

Tags: 2923.5, 2923.5 2923.6 2924 2932.5 Audit bankruptcy california California cram down Chapter 13 civil code 2923.5 civil code 2924 Countrywide Cram down Cramdown criminal acts eviction FCRA FDCPA Federal Jurisdi, 2923.6, 2924, california, California cram down, civil code 2923.5, civil code 2924, Countrywide, eviction, FCRA, Foreclosure, Fraud, HOEPA, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, stop foreclosure, truth in lending, truth in lending 2923.5, usury

Categories : Foreclosure, I Have a Plan, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, eviction, respa, stop foreclosure, tila, truth in lending

Homecomings TILA complaint GMAC

27 06 2009

homecomingstila

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, Foreclosure, I Have a Plan, Lender Class action, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, bankruptcy, eviction, lis pendence, stop foreclosure, usury

Leman Tila complaint

27 06 2009

Lemantilacomp

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, I Have a Plan, bankruptcy, eviction, stop foreclosure, truth in lending

Lender class action

27 06 2009

Mortgageinvestorgroupclass

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, I Have a Plan, Loan Audit, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, bankruptcy, eviction, lis pendence, mortgage meltdown, stop foreclosure, usury

Option One Complaint Pick a payment lawsuit

27 06 2009

optionone

Edit : Edit
Comments : 2 Comments »

Tags: stop foreclosure, civil code 2923.5, truth in lending, Mortgage modification, eviction, california, mortgage meltdown, Foreclosure, lis pendence, litigation, bankruptcy, Chapter 13, 2924, 2923.5, 2932.5, Recoupment, Fraud, Predatory Lending, FCRA, 2923.6, Real Estate Settlement Procedures Act, Uncategorized, California cram down, Audit, Countrywide, United First, usury, truth in lending 2923.5

Categories : 2923.5, 2923.6, 2924, FCRA, Foreclosure, I Have a Plan, Lender Class action, Predatory Lending, Real Estate Settlement Procedures Act, bankruptcy, eviction, lis pendence, mortgage meltdown, stop foreclosure, usury

Win the eviction by Summary judgement

27 06 2009

When title to the property is still in dispute ie. the foreclosure was bad. They (the lender)did not comply with California civil code 2923.5 or 2923.6 or 2924. Or the didn’t possess the documents to foreclose ie. the original note. Or they did not possess a proper assignment 2932.5. at trial you will be ignored by the learned judge but if you file a Motion for Summary Judgmentevans sum ud
template notice of Motion for SJ
TEMPLATE Points and A for SJ Motion
templateDeclaration for SJ
TEMPLATEProposed Order on Motion for SJ
TEMPLATEStatement of Undisputed Facts
you can force the issue and if there is a case filed in the Unlimited jurisdiction Court the judge may be forced to consider title and or consolidate the case with the Unlimited Jurisdiction Case2nd amended complaint (e) manuel
BAKER original complaint (b)
Countrywide Complaint Form
FRAUDULENT OMISSIONS FORM FINAL
sample-bank-final-complaint1-2.docx

Edit : Edit
Comments : 1 Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, civil code 2923.5, eviction, Foreclosure, Fraud, lis pendence

Categories : 2923.5, 2923.6, Foreclosure, I Have a Plan, Predatory Lending, Real Estate Settlement Procedures Act, eviction, stop foreclosure, truth in lending

What is worse bankruptcy or foreclosure?

25 06 2009

So what is worse, bankruptcy or foreclosure? Which will have the biggest impact on my credit score? Both bankruptcy and foreclosure will have serious negative affects on your personal credit report and your credit score as well. With re-established credit after a bankruptcy and/or foreclosure you can possibly qualify for a good mortgage once again in as little as 24 months. Therefore, it is very difficult to say one is worse than the other, but the bottom line is that they are both very bad for you and should be avoided if all possible.

Foreclosure is worse then bankruptcy because you are actually losing something of value, your home. Once you are in foreclosure you will lose any and all equity in your home. If there is no equity in the home you will be responsible for the remaining balance after the property auction. With chapter 7 bankruptcy all of your unsecured debts are erased and you start over and in most cases you will not lose anything other then your credit rating.

Many times qualifying for a mortgage after a foreclosure is more difficult than applying for a home after a bankruptcy. With that said, that could possibly lead you to believe that foreclosure is worse than bankruptcy. Most people who have a home foreclosed upon end up filing bankruptcy as well.

Bankruptcy and Foreclosure filings are public records, however no one would know about your proceedings under normal circumstances. The Credit Bureaus will record your bankruptcy and a foreclosure. Bankruptcies will remain on your credit record for 10 years while foreclosures can stay on your report for up to 7 years.

In some cases, one can refinance out of a Chapter 13 Bankruptcy with a 12 month trustee payment history and a timely mortgage history. It is much more difficult to obtain financing with a foreclosure on your record.

Foreclosure is worse because of the loss of value. You will not receive any compensation for the equity in your home if it proceeds to foreclosure.

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, Cramdown, Foreclosure, I Have a Plan, eviction, stop foreclosure

Standing argument

7 06 2009

judge-youngs-decision-on-nosek

Ameriquest’s final argument, that the sanctions are a
criminal penalty, is bereft of authority. Ameriquest cites F.J.
Hanshaw Enterprises, Inc. v. Emerald River Development, Inc., 244
F.3d 1128 (9th Cir. 2001), a case about inherent powers – not
Rule 11 –

This is an excerpt from the decision just this bloggers note the Hanshaw Case was my case. I argued this case at the 9th circuit court of appeals

http://openjurist.org/244/f3d/1128/fj-v-emeraldfj-v-emerald

If you will grasp the implications of this judge-youngs-decision-on-nosekdecision all or most all the evictions and  foreclosures are being litigated by the wrong parties that is to say parties who have no real stake in the outcome. they are merely servicers not the real investors. They do not have the right to foreclose or evict. No assignment No note No security interest No standing They do not want to be listed anywhere. They (the lenders) have caused the greatest damage to the American Citizen since the great depression and they do not want to be exposed or named in countless lawsuits. Time and time again I get from the judges in demurer hearings ” I see what you are saying counsel but your claim does not appear to be against this defendant” the unnamed investment pool of the Lehman Brothers shared High yield equity Fund trustee does not exist and so far can’t be sued.

Edit : Edit
Comments : 1 Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending 2923.5, truth in lending, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, Cramdown, Foreclosure, I Have a Plan, Loan Audit, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, bankruptcy, eviction, respa, stop foreclosure

Coalition sues lenders

9 05 2009

Coalition Sues lenders

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, I Have a Plan, Lender Class action, Loan Audit, bankruptcy, eviction, lis pendence, pedatory lending

Sample complaint template

26 04 2009

this is the type of complaint to get the lender to the table sample-bank-final-complaint1-2

Edit : Edit
Comments : 4 Comments »

Tags: 2923.5, 2923.6, 2924, 2932.5, California cram down, civil code 2924, Predatory Lending, Real Estate Settlement Procedures Act, stop foreclosure, truth in lending 2923.5

Categories : 2923.5, 2923.6, Foreclosure, I Have a Plan, Predatory Lending, Real Estate Settlement Procedures Act, eviction, respa, stop foreclosure

 

non-judicial sale is NOT an available election for a securitized loan

2 06 2010

Posted 6 days ago by Neil Garfield on Livinglies’s Weblog
NON-JUDICIAL STATES: THE DIFFERENCE BETWEEN FORECLOSURE AND SALE:

FORECLOSURE is a judicial process herein the “lender” files a lawsuit seeking to (a) enforce the note and get a judgment in the amount owed to them (b) asking the court to order the sale of the property to satisfy the Judgment. If the sale price is lower than the Judgment, then they will ask for a deficiency Judgment and the Judge will enter that Judgment. If the proceeds of sale is over the amount of the judgment, the borrower is entitled to the overage. Of course they usually tack on a number of fees and costs that may or may not be allowable. It is very rare that there is an overage. THE POINT IS that when they sue to foreclose they must make allegations which state a cause of action for enforcement of the note and for an order setting a date for sale. Those allegations include a description of the transaction with copies attached, and a claim of non-payment, together with allegations that the payments are owed to the Plaintiff BECAUSE they would suffer financial damage as a result of the non-payment. IN THE PROOF of the case the Plaintiff would be required to prove each and EVERY element of their claim which means proof that each allegation they made and each exhibit they rely upon is proven with live witnesses who are competent — i.e., they take an oath, they have PERSONAL KNOWLEDGE (not what someone else told them),personal recall and the ability to communicate what they know. This applies to documents they wish to use as well. That is called authentication and foundation.

SALE: Means what it says. In non-judicial sale they just want to sell your property without showing any court that they can credibly make the necessary allegations for a judicial foreclosure and without showing the court proof of the allegations they would be required to make if they filed a judicial foreclosure. In a non-judicial state what they want is to SELL and what they don’t want is to foreclose. Keep in mind that every state that allows non-judicial sale treats the sale as private and NOT a judicial event by definition. In Arizona and many other states there is no election for non-judicial sale of commercial property because of the usual complexity of commercial transactions. THE POINT is that a securitized loan presents as much or more complexity than commercial real property loan transactions. Thus your argument might be that the non-judicial sale is NOT an available election for a securitized loan.

When you bring a lawsuit challenging the non-judicial sale, it would probably be a good idea to allege that the other party has ELECTED NON-JUDICIAL sale when the required elements of such an election do not exist. Your prima facie case is simply to establish that the borrower objects the sale, denies that they pretender lender has any right to sell the property, denies the default and that the securitization documents show a complexity far beyond the complexity of even highly complex commercial real estate transactions which the legislature has mandated be resolved ONLY by judicial foreclosure.

THEREFORE in my opinion I think in your argument you do NOT want to concede that they wish to foreclose. What they want to do is execute on the power of sale in the deed of trust WITHOUT going through the judicial foreclosure process as provided in State statutes. You must understand and argue that the opposition is seeking to go around normal legal process which requires a foreclosure lawsuit.

THAT would require them to make allegations about the obligation, note and mortgage that they cannot make (we are the lender, the defendant owes us money, we are the holder of the note, the note is payable to us, he hasn’t paid, the unpaid balance of the note is xxx etc.) and they would have to prove those allegations before you had to say anything. In addition they would be subject to discovery in which you could test their assertions before an evidentiary hearing. That is how lawsuits work.

The power of sale given to the trustee is a hail Mary pass over the requirements of due process. But it allows for you to object. The question which nobody has asked and nobody has answered, is on the burden of proof, once you object to the sale, why shouldn’t the would-be forecloser be required to plead and prove its case? If the court takes the position that in non-judicial states the private power of sale is to be treated as a judicial event, then that is a denial of due process required by Federal and state constitutions. The only reason it is allowed, is because it is private and “non-judicial.” The quirk comes in because in practice the homeowner must file suit. Usually the party filing suit must allege facts and prove a prima facie case before the burden shifts to the other side. So the Judge is looking at you to do that when you file to prevent the sale.

Legally, though, your case should be limited to proving that they are trying to sell your property, that you object, that you deny what would be the allegations in a judicial foreclosure and that you have meritorious defenses. That SHOULD trigger the requirement of re-orienting the parties and making the would-be forecloser file a complaint (lawsuit) for foreclosure. Then the burden of proof would be properly aligned with the party seeking affirmative relief (i.e., the party who wants to enforce the deed of trust (mortgage), note and obligation) required to file the complaint with all the necessary elements of an action for foreclosure and attach the necessary exhibits. They don’t want to do that because they don’t have the exhibits and the note is not payable to them and they cannot actually prove standing (which is a jurisdictional question). The problem is that a statute passed for judicial economy is now being used to force the burden of proof onto the borrower in the foreclosure of their own home. This is not being addressed yet but it will be addressed soon.

Edit : Edit
Comments : Leave a Comment »

Tags: stop foreclosure, Mortgage modification, mortgage meltdown, lis pendence, 2923.5, Predatory Lending, 2923.5 2923.6 2924 2932.5 Audit bankruptcy california California cram down Chapter 13 civil code 2923.5 civil code 2924 Countrywide Cram down Cramdown criminal acts eviction FCRA FDCPA Federal Jurisdi

Categories : Foreclosure, I Have a Plan, Lender Class action, Predatory Lending, stop foreclosure

90% Forclosures Wrongful

1 01 2010

A wrongful foreclosure action typically occurs when the lender starts a non judicial foreclosure action when it simply has no legal cause. This is even more evident now since California passed the Foreclosure prevention act of 2008 SB 1194 codified in Civil code 2923.5 and 2923.6. In 2009 it is this attorneys opinion that 90% of all foreclosures are wrongful in that the lender does not comply (just look at the declaration page on the notice of default). The lenders most notably Indymac, Countrywide, and Wells Fargo have taken a calculated risk. To comply would cost hundreds of millions in staff, paperwork, and workouts that they don’t deem to be in their best interest. The workout is not in there best interest because our tax dollars are guaranteeing the Banks that are To Big to Fail’s debt. If they don’t foreclose and if they work it out the loss is on them. There is no incentive to modify loan for the benefit of the consumer.

Sooooo they proceed to foreclosure without the mandated contacts with the borrower. Oh and yes contact is made by a computer or some outsourcing contact agent based in India. But compliance with 2923.5 is not done. The Borrower is never told that he or she have the right to a meeting within 14 days of the contact. They do not get offers to avoid foreclosure there are typically two offers short sale or a probationary mod that will be declined upon the 90th day.

Wrongful foreclosure actions are also brought when the service providers accept partial payments after initiation of the wrongful foreclosure process, and then continue on with the foreclosure process. These predatory lending strategies, as well as other forms of misleading homeowners, are illegal.

The borrower is the one that files a wrongful disclosure action with the court against the service provider, the holder of the note and if it is a non-judicial foreclosure, against the trustee complaining that there was an illegal, fraudulent or willfully oppressive sale of property under a power of sale contained in a mortgage or deed or court judicial proceeding. The borrower can also allege emotional distress and ask for punitive damages in a wrongful foreclosure action.

Causes of Action

Wrongful foreclosure actions may allege that the amount stated in the notice of default as due and owing is incorrect because of the following reasons:

* Incorrect interest rate adjustment
* Incorrect tax impound accounts
* Misapplied payments
* Forbearance agreement which was not adhered to by the servicer
* Unnecessary forced place insurance,
* Improper accounting for a confirmed chapter 11 or chapter 13 bankruptcy plan.
* Breach of contract
* Intentional infliction of emotional distress
* Negligent infliction of emotional distress
* Unfair Business Practices
* Quiet title
* Wrongful foreclosure
* Tortuous violation of 2924 2923.5 and 2923.5 and 2932.5
Injunction

Any time prior to the foreclosure sale, a borrower can apply for an injunction with the intent of stopping the foreclosure sale until issues in the lawsuit are resolved. The wrongful foreclosure lawsuit can take anywhere from ten to twenty-four months. Generally, an injunction will only be issued by the court if the court determines that: (1) the borrower is entitled to the injunction; and (2) that if the injunction is not granted, the borrower will be subject to irreparable harm.

Damages Available to Borrower

Damages available to a borrower in a wrongful foreclosure action include: compensation for the detriment caused, which are measured by the value of the property, emotional distress and punitive damages if there is evidence that the servicer or trustee committed fraud, oppression or malice in its wrongful conduct. If the borrower’s allegations are true and correct and the borrower wins the lawsuit, the servicer will have to undue or cancel the foreclosure sale, and pay the borrower’s legal bills.

Why Do Wrongful Foreclosures Occur?

Wrongful foreclosure cases occur usually because of a miscommunication between the lender and the borrower. Most borrower don’t know who the real lender is. Servicing has changed on average three times. And with the advent of MERS Mortgage Electronic Registration Systems the “investor lender” hundreds of times since the origination. And now they then have to contact the borrower. The don’t even know who the lender truly is. The laws that are now in place never contemplated the virtualization of the lending market. The present laws are inadequate to the challenge.

This is even more evident now since California passed the Foreclosure prevention act of 2008 SB 1194 codified in Civil code 2923.5 and 2923.6. In 2009 it is this attorneys opinion that 90% of all foreclosures are wrongful in that the lender does not comply (just look at the declaration page on the notice of default). The lenders most notably Indymac, Countrywide, and Wells Fargo have taken a calculated risk. To comply would cost hundreds of millions in staff, paperwork, and workouts that they don’t deem to be in their best interest. The workout is not in there best interest because our tax dollars are guaranteeing the Banks that are To Big to Fail’s debt. If they don’t foreclose and if they work it out the loss is on them. There is no incentive to modify loan for the benefit of the consumer.This could be as a result of an incorrectly applied payment, an error in interest charges and completely inaccurate information communicated between the lender and borrower. Some borrowers make the situation worse by ignoring their monthly statements and not promptly responding in writing to the lender’s communications. Many borrowers just assume that the lender will correct any inaccuracies or errors. Any one of these actions can quickly turn into a foreclosure action. Once an action is instituted, then the borrower will have to prove that it is wrongful or unwarranted. This is done by the borrower filing a wrongful foreclosure action. Costs are expensive and the action can take time to litigate.
Impact

The wrongful foreclosure will appear on the borrower’s credit report as a foreclosure, thereby ruining the borrower’s credit rating. Inaccurate delinquencies may also accompany the foreclosure on the credit report. After the foreclosure is found to be wrongful, the borrower must then petition to get the delinquencies and foreclosure off the credit report. This can take a long time and is emotionally distressing.

Wrongful foreclosure may also lead to the borrower losing their home and other assets if the borrower does not act quickly. This can have a devastating affect on a family that has been displaced out of their home. However, once the borrower’s wrongful foreclosure action is successful in court, the borrower may be entitled to compensation for their attorney fees, court costs, pain, suffering and emotional distress caused by the action.

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.5 2923.6 2924 2932.5 Audit bankruptcy california California cram down Chapter 13 civil code 2923.5 civil code 2924 Countrywide Cram down Cramdown criminal acts eviction FCRA FDCPA Federal Jurisdi, 2923.6, 2924, 2932.5, civil code 2924, Countrywide, Foreclosure, Fraud, stop foreclosure

Categories : 2923.5, 2923.6, 2924, Foreclosure, Lender Class action

Fabrication of Documents: MERS GAP Illuminated

23 12 2009

Posted on July 30, 2009 by livinglies

Another example of why a TILA audit is grossly inadequate. A forensic audit is required covering all bases. Although dated, this article picks up on a continuing theme that demonstrates the title defect, the questionable conduct of pretender lenders and the defects in the foreclosure process when you let companies with big brand names bluff the system. The MERS GAP arises whether MERS is actually the nominee on the deed of trust (or mortgage deed) or not. It is an announcement that there will be off record transactions between parties who have no interest in the loan but who will assert such an interest once they have successfullly fabricated documents, had someone without authority sign them, on behalf of an entity with no real beneficial interest or other economic interest in the loan, and then frequently notarized by someone in another state. we have even seen documents notarized in blank and forged signatures of borrowers on loan closing papers.

NYTimes.com
Lender Tells Judge It ‘Recreated’ Letters
Tuesday January 8, 2008 11:38 pm ET
By GRETCHEN MORGENSON
The Countrywide Financial Corporation fabricated documents related to the bankruptcy case of a Pennsylvania homeowner, court records show, raising new questions about the business practices of the giant mortgage lender at the center of the subprime mess.The documents — three letters from Countrywide addressed to the homeowner — claimed that the borrower owed the company $4,700 because of discrepancies in escrow deductions. Countrywide’s local counsel described the letters to the court as “recreated,” raising concern from the federal bankruptcy judge overseeing the case, Thomas P. Agresti.

“These letters are a smoking gun that something is not right in Denmark,” Judge Agresti said in a Dec. 20 hearing in Pittsburgh.

The emergence of the fabricated documents comes as Countrywide confronts a rising tide of complaints from borrowers who claim that the company pushed them into risky loans. The matter in Pittsburgh is one of 300 bankruptcy cases in which Countrywide’s practices have come under scrutiny in western Pennsylvania.

Judge Agresti said that discovery should proceed so that those involved in the case, including the Chapter 13 trustee for the western district of Pennsylvania and the United States trustee, could determine how Countrywide’s systems might generate such documents.

A spokesman for the lender, Rick Simon, said: “It is not Countrywide’s policy to create or ‘fabricate’ any documents as evidence that they were sent if they had not been. We believe it will be shown in further discovery that the Countrywide bankruptcy technician who generated the documents at issue did so as an efficient way to convey the dates the escrow analyses were done and the calculations of the payments as a result of the analyses.”

The documents were generated in a case involving Sharon Diane Hill, a homeowner in Monroeville, Pa. Ms. Hill filed for Chapter 13 bankruptcy protection in March 2001 to try to save her home from foreclosure.

After meeting her mortgage obligations under the 60-month bankruptcy plan, Ms. Hill’s case was discharged and officially closed on March 9, 2007. Countrywide, the servicer on her loan, did not object to the discharge; court records from that date show she was current on her mortgage.

But one month later, Ms. Hill received a notice of intention to foreclose from Countrywide, stating that she was in default and owed the company $4,166.

Court records show that the amount claimed by Countrywide was from the period during which Ms. Hill was making regular payments under the auspices of the bankruptcy court. They included “monthly charges” totaling $3,840 from November 2006 to April 2007, late charges of $128 and other charges of almost $200.

A lawyer representing Ms. Hill in her bankruptcy case, Kenneth Steidl, of Steidl and Steinberg in Pittsburgh, wrote Countrywide a few weeks later stating that Ms. Hill had been deemed current on her mortgage during the period in question. But in May, Countrywide sent Ms. Hill another notice stating that her loan was delinquent and demanding that she pay $4,715.58. Neither Mr. Steidl nor Julia Steidl, who has also represented Ms. Hill, returned phone calls seeking comment.

Justifying Ms. Hill’s arrears, Countrywide sent her lawyer copies of three letters on company letterhead addressed to the homeowner, as well as to Mr. Steidl and Ronda J. Winnecour, the Chapter 13 trustee for the western district of Pennsylvania.

The Countrywide letters were dated September 2003, October 2004 and March 2007 and showed changes in escrow requirements on Ms. Hill’s loan. “This letter is to advise you that the escrow requirement has changed per the escrow analysis completed today,” each letter began.

But Mr. Steidl told the court he had never received the letters. Furthermore, he noticed that his address on the first Countrywide letter was not the location of his office at the time, but an address he moved to later. Neither did the Chapter 13 trustee’s office have any record of receiving the letters, court records show.

When Mr. Steidl discussed this with Leslie E. Puida, Countrywide’s outside counsel on the case, he said Ms. Puida told him that the letters had been “recreated” by Countrywide to reflect the escrow discrepancies, the court transcript shows. During these discussions, Ms. Puida reduced the amount that Countrywide claimed Ms. Hill owed to $1,500 from $4,700.

Under questioning by the judge, Ms. Puida said that “a processor” at Countrywide had generated the letters to show how the escrow discrepancies arose. “They were not offered to prove that they had been sent,” Ms. Puida said. But she also said, under questioning from the court, that the letters did not carry a disclaimer indicating that they were not actual correspondence or that they had never been sent.

A Countrywide spokesman said that in bankruptcy cases, Countrywide’s automated systems are sometimes overridden, with technicians making manual adjustments “to comply with bankruptcy laws and the requirements in the jurisdiction in which a bankruptcy is pending.” Asked by Judge Agresti why Countrywide would go to the trouble of “creating a letter that was never sent,” Ms. Puida, its lawyer, said she did not know.

“I just, I can’t get over what I’m being told here about these recreations,” Judge Agresti said, “and what the purpose is or was and what was intended by them.”

Ms. Hill’s matter is one of 300 bankruptcy cases involving Countrywide that have come under scrutiny by Ms. Winnecour, the Chapter 13 trustee in Pittsburgh. On Oct. 9, she asked the court to sanction Countrywide, contending that the company had lost or destroyed more than $500,000 in checks paid by homeowners in bankruptcy from December 2005 to April 2007.

Ms. Winnecour said in court filings that she was concerned that even as Countrywide had misplaced or destroyed the checks, it levied charges on the borrowers, including late fees and legal costs. A spokesman in her office said she would not comment on the Hill case.

O. Max Gardner III, a lawyer in North Carolina who represents troubled borrowers, says that he routinely sees lenders pursue borrowers for additional money after their bankruptcies have been discharged and the courts have determined that the default has been cured and borrowers are current. Regarding the Hill matter, Mr. Gardner said: “The real problem in my mind when reading the transcript is that Countrywide’s lawyer could not explain how this happened.”

Filed under: CDO, CORRUPTION, Eviction, GTC | Honor, Investor, Mortgage, bubble, currency, foreclosure, securities fraud | Tagged: borrower, countrywide, disclosure, foreclosure defense, foreclosure offense, fraud, rescission, RESPA, TILA audit, trustee
« Lucrative Fees May Deter Efforts to Alter Loans

Edit : Edit
Comments : Leave a Comment »

Tags: 2932.5, eviction, Foreclosure, Real Estate Settlement Procedures Act

Categories : Foreclosure, Lender Class action, Loan Audit, Predatory Lending, bankruptcy

Homecomings TILA complaint GMAC

27 06 2009

homecomingstila

Edit : Edit
Comments : Leave a Comment »

Tags: stop foreclosure, civil code 2923.5, truth in lending, Mortgage modification, eviction, california, mortgage meltdown, Foreclosure, lis pendence, litigation, bankruptcy, Chapter 13, 2924, 2923.5, 2932.5, Recoupment, Fraud, Predatory Lending, FCRA, 2923.6, Real Estate Settlement Procedures Act, Uncategorized, California cram down, Audit, Countrywide, United First, usury, truth in lending 2923.5

Categories : 2923.5, 2923.6, 2924, FCRA, Foreclosure, I Have a Plan, Lender Class action, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, bankruptcy, eviction, lis pendence, stop foreclosure, usury

Option One Complaint Pick a payment lawsuit

27 06 2009

optionone

Edit : Edit
Comments : 2 Comments »

Tags: stop foreclosure, civil code 2923.5, truth in lending, Mortgage modification, eviction, california, mortgage meltdown, Foreclosure, lis pendence, litigation, bankruptcy, Chapter 13, 2924, 2923.5, 2932.5, Recoupment, Fraud, Predatory Lending, FCRA, 2923.6, Real Estate Settlement Procedures Act, Uncategorized, California cram down, Audit, Countrywide, United First, usury, truth in lending 2923.5

Categories : 2923.5, 2923.6, 2924, FCRA, Foreclosure, I Have a Plan, Lender Class action, Predatory Lending, Real Estate Settlement Procedures Act, bankruptcy, eviction, lis pendence, mortgage meltdown, stop foreclosure, usury

Coalition sues lenders

9 05 2009

Coalition Sues lenders

Edit : Edit
Comments : Leave a Comment »

Tags: stop foreclosure, civil code 2923.5, truth in lending, Mortgage modification, eviction, california, mortgage meltdown, Foreclosure, lis pendence, litigation, bankruptcy, Chapter 13, 2924, 2923.5, 2932.5, Recoupment, Fraud, Predatory Lending, FCRA, 2923.6, Real Estate Settlement Procedures Act, Uncategorized, California cram down, Audit, Countrywide, United First, usury, truth in lending 2923.5

Categories : 2923.5, 2923.6, 2924, FCRA, I Have a Plan, Lender Class action, Loan Audit, bankruptcy, eviction, lis pendence, pedatory lending

 

non-judicial sale is NOT an available election for a securitized loan

2 06 2010

Posted 6 days ago by Neil Garfield on Livinglies’s Weblog
NON-JUDICIAL STATES: THE DIFFERENCE BETWEEN FORECLOSURE AND SALE:

FORECLOSURE is a judicial process herein the “lender” files a lawsuit seeking to (a) enforce the note and get a judgment in the amount owed to them (b) asking the court to order the sale of the property to satisfy the Judgment. If the sale price is lower than the Judgment, then they will ask for a deficiency Judgment and the Judge will enter that Judgment. If the proceeds of sale is over the amount of the judgment, the borrower is entitled to the overage. Of course they usually tack on a number of fees and costs that may or may not be allowable. It is very rare that there is an overage. THE POINT IS that when they sue to foreclose they must make allegations which state a cause of action for enforcement of the note and for an order setting a date for sale. Those allegations include a description of the transaction with copies attached, and a claim of non-payment, together with allegations that the payments are owed to the Plaintiff BECAUSE they would suffer financial damage as a result of the non-payment. IN THE PROOF of the case the Plaintiff would be required to prove each and EVERY element of their claim which means proof that each allegation they made and each exhibit they rely upon is proven with live witnesses who are competent — i.e., they take an oath, they have PERSONAL KNOWLEDGE (not what someone else told them),personal recall and the ability to communicate what they know. This applies to documents they wish to use as well. That is called authentication and foundation.

SALE: Means what it says. In non-judicial sale they just want to sell your property without showing any court that they can credibly make the necessary allegations for a judicial foreclosure and without showing the court proof of the allegations they would be required to make if they filed a judicial foreclosure. In a non-judicial state what they want is to SELL and what they don’t want is to foreclose. Keep in mind that every state that allows non-judicial sale treats the sale as private and NOT a judicial event by definition. In Arizona and many other states there is no election for non-judicial sale of commercial property because of the usual complexity of commercial transactions. THE POINT is that a securitized loan presents as much or more complexity than commercial real property loan transactions. Thus your argument might be that the non-judicial sale is NOT an available election for a securitized loan.

When you bring a lawsuit challenging the non-judicial sale, it would probably be a good idea to allege that the other party has ELECTED NON-JUDICIAL sale when the required elements of such an election do not exist. Your prima facie case is simply to establish that the borrower objects the sale, denies that they pretender lender has any right to sell the property, denies the default and that the securitization documents show a complexity far beyond the complexity of even highly complex commercial real estate transactions which the legislature has mandated be resolved ONLY by judicial foreclosure.

THEREFORE in my opinion I think in your argument you do NOT want to concede that they wish to foreclose. What they want to do is execute on the power of sale in the deed of trust WITHOUT going through the judicial foreclosure process as provided in State statutes. You must understand and argue that the opposition is seeking to go around normal legal process which requires a foreclosure lawsuit.

THAT would require them to make allegations about the obligation, note and mortgage that they cannot make (we are the lender, the defendant owes us money, we are the holder of the note, the note is payable to us, he hasn’t paid, the unpaid balance of the note is xxx etc.) and they would have to prove those allegations before you had to say anything. In addition they would be subject to discovery in which you could test their assertions before an evidentiary hearing. That is how lawsuits work.

The power of sale given to the trustee is a hail Mary pass over the requirements of due process. But it allows for you to object. The question which nobody has asked and nobody has answered, is on the burden of proof, once you object to the sale, why shouldn’t the would-be forecloser be required to plead and prove its case? If the court takes the position that in non-judicial states the private power of sale is to be treated as a judicial event, then that is a denial of due process required by Federal and state constitutions. The only reason it is allowed, is because it is private and “non-judicial.” The quirk comes in because in practice the homeowner must file suit. Usually the party filing suit must allege facts and prove a prima facie case before the burden shifts to the other side. So the Judge is looking at you to do that when you file to prevent the sale.

Legally, though, your case should be limited to proving that they are trying to sell your property, that you object, that you deny what would be the allegations in a judicial foreclosure and that you have meritorious defenses. That SHOULD trigger the requirement of re-orienting the parties and making the would-be forecloser file a complaint (lawsuit) for foreclosure. Then the burden of proof would be properly aligned with the party seeking affirmative relief (i.e., the party who wants to enforce the deed of trust (mortgage), note and obligation) required to file the complaint with all the necessary elements of an action for foreclosure and attach the necessary exhibits. They don’t want to do that because they don’t have the exhibits and the note is not payable to them and they cannot actually prove standing (which is a jurisdictional question). The problem is that a statute passed for judicial economy is now being used to force the burden of proof onto the borrower in the foreclosure of their own home. This is not being addressed yet but it will be addressed soon.

Edit : Edit
Comments : Leave a Comment »

Tags: stop foreclosure, Mortgage modification, mortgage meltdown, lis pendence, 2923.5, Predatory Lending, 2923.5 2923.6 2924 2932.5 Audit bankruptcy california California cram down Chapter 13 civil code 2923.5 civil code 2924 Countrywide Cram down Cramdown criminal acts eviction FCRA FDCPA Federal Jurisdi

Categories : Foreclosure, I Have a Plan, Lender Class action, Predatory Lending, stop foreclosure

90% Forclosures Wrongful

1 01 2010

A wrongful foreclosure action typically occurs when the lender starts a non judicial foreclosure action when it simply has no legal cause. This is even more evident now since California passed the Foreclosure prevention act of 2008 SB 1194 codified in Civil code 2923.5 and 2923.6. In 2009 it is this attorneys opinion that 90% of all foreclosures are wrongful in that the lender does not comply (just look at the declaration page on the notice of default). The lenders most notably Indymac, Countrywide, and Wells Fargo have taken a calculated risk. To comply would cost hundreds of millions in staff, paperwork, and workouts that they don’t deem to be in their best interest. The workout is not in there best interest because our tax dollars are guaranteeing the Banks that are To Big to Fail’s debt. If they don’t foreclose and if they work it out the loss is on them. There is no incentive to modify loan for the benefit of the consumer.

Sooooo they proceed to foreclosure without the mandated contacts with the borrower. Oh and yes contact is made by a computer or some outsourcing contact agent based in India. But compliance with 2923.5 is not done. The Borrower is never told that he or she have the right to a meeting within 14 days of the contact. They do not get offers to avoid foreclosure there are typically two offers short sale or a probationary mod that will be declined upon the 90th day.

Wrongful foreclosure actions are also brought when the service providers accept partial payments after initiation of the wrongful foreclosure process, and then continue on with the foreclosure process. These predatory lending strategies, as well as other forms of misleading homeowners, are illegal.

The borrower is the one that files a wrongful disclosure action with the court against the service provider, the holder of the note and if it is a non-judicial foreclosure, against the trustee complaining that there was an illegal, fraudulent or willfully oppressive sale of property under a power of sale contained in a mortgage or deed or court judicial proceeding. The borrower can also allege emotional distress and ask for punitive damages in a wrongful foreclosure action.

Causes of Action

Wrongful foreclosure actions may allege that the amount stated in the notice of default as due and owing is incorrect because of the following reasons:

* Incorrect interest rate adjustment
* Incorrect tax impound accounts
* Misapplied payments
* Forbearance agreement which was not adhered to by the servicer
* Unnecessary forced place insurance,
* Improper accounting for a confirmed chapter 11 or chapter 13 bankruptcy plan.
* Breach of contract
* Intentional infliction of emotional distress
* Negligent infliction of emotional distress
* Unfair Business Practices
* Quiet title
* Wrongful foreclosure
* Tortuous violation of 2924 2923.5 and 2923.5 and 2932.5
Injunction

Any time prior to the foreclosure sale, a borrower can apply for an injunction with the intent of stopping the foreclosure sale until issues in the lawsuit are resolved. The wrongful foreclosure lawsuit can take anywhere from ten to twenty-four months. Generally, an injunction will only be issued by the court if the court determines that: (1) the borrower is entitled to the injunction; and (2) that if the injunction is not granted, the borrower will be subject to irreparable harm.

Damages Available to Borrower

Damages available to a borrower in a wrongful foreclosure action include: compensation for the detriment caused, which are measured by the value of the property, emotional distress and punitive damages if there is evidence that the servicer or trustee committed fraud, oppression or malice in its wrongful conduct. If the borrower’s allegations are true and correct and the borrower wins the lawsuit, the servicer will have to undue or cancel the foreclosure sale, and pay the borrower’s legal bills.

Why Do Wrongful Foreclosures Occur?

Wrongful foreclosure cases occur usually because of a miscommunication between the lender and the borrower. Most borrower don’t know who the real lender is. Servicing has changed on average three times. And with the advent of MERS Mortgage Electronic Registration Systems the “investor lender” hundreds of times since the origination. And now they then have to contact the borrower. The don’t even know who the lender truly is. The laws that are now in place never contemplated the virtualization of the lending market. The present laws are inadequate to the challenge.

This is even more evident now since California passed the Foreclosure prevention act of 2008 SB 1194 codified in Civil code 2923.5 and 2923.6. In 2009 it is this attorneys opinion that 90% of all foreclosures are wrongful in that the lender does not comply (just look at the declaration page on the notice of default). The lenders most notably Indymac, Countrywide, and Wells Fargo have taken a calculated risk. To comply would cost hundreds of millions in staff, paperwork, and workouts that they don’t deem to be in their best interest. The workout is not in there best interest because our tax dollars are guaranteeing the Banks that are To Big to Fail’s debt. If they don’t foreclose and if they work it out the loss is on them. There is no incentive to modify loan for the benefit of the consumer.This could be as a result of an incorrectly applied payment, an error in interest charges and completely inaccurate information communicated between the lender and borrower. Some borrowers make the situation worse by ignoring their monthly statements and not promptly responding in writing to the lender’s communications. Many borrowers just assume that the lender will correct any inaccuracies or errors. Any one of these actions can quickly turn into a foreclosure action. Once an action is instituted, then the borrower will have to prove that it is wrongful or unwarranted. This is done by the borrower filing a wrongful foreclosure action. Costs are expensive and the action can take time to litigate.
Impact

The wrongful foreclosure will appear on the borrower’s credit report as a foreclosure, thereby ruining the borrower’s credit rating. Inaccurate delinquencies may also accompany the foreclosure on the credit report. After the foreclosure is found to be wrongful, the borrower must then petition to get the delinquencies and foreclosure off the credit report. This can take a long time and is emotionally distressing.

Wrongful foreclosure may also lead to the borrower losing their home and other assets if the borrower does not act quickly. This can have a devastating affect on a family that has been displaced out of their home. However, once the borrower’s wrongful foreclosure action is successful in court, the borrower may be entitled to compensation for their attorney fees, court costs, pain, suffering and emotional distress caused by the action.

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.5 2923.6 2924 2932.5 Audit bankruptcy california California cram down Chapter 13 civil code 2923.5 civil code 2924 Countrywide Cram down Cramdown criminal acts eviction FCRA FDCPA Federal Jurisdi, 2923.6, 2924, 2932.5, civil code 2924, Countrywide, Foreclosure, Fraud, stop foreclosure

Categories : 2923.5, 2923.6, 2924, Foreclosure, Lender Class action

Fabrication of Documents: MERS GAP Illuminated

23 12 2009

Posted on July 30, 2009 by livinglies

Another example of why a TILA audit is grossly inadequate. A forensic audit is required covering all bases. Although dated, this article picks up on a continuing theme that demonstrates the title defect, the questionable conduct of pretender lenders and the defects in the foreclosure process when you let companies with big brand names bluff the system. The MERS GAP arises whether MERS is actually the nominee on the deed of trust (or mortgage deed) or not. It is an announcement that there will be off record transactions between parties who have no interest in the loan but who will assert such an interest once they have successfullly fabricated documents, had someone without authority sign them, on behalf of an entity with no real beneficial interest or other economic interest in the loan, and then frequently notarized by someone in another state. we have even seen documents notarized in blank and forged signatures of borrowers on loan closing papers.

NYTimes.com
Lender Tells Judge It ‘Recreated’ Letters
Tuesday January 8, 2008 11:38 pm ET
By GRETCHEN MORGENSON
The Countrywide Financial Corporation fabricated documents related to the bankruptcy case of a Pennsylvania homeowner, court records show, raising new questions about the business practices of the giant mortgage lender at the center of the subprime mess.The documents — three letters from Countrywide addressed to the homeowner — claimed that the borrower owed the company $4,700 because of discrepancies in escrow deductions. Countrywide’s local counsel described the letters to the court as “recreated,” raising concern from the federal bankruptcy judge overseeing the case, Thomas P. Agresti.

“These letters are a smoking gun that something is not right in Denmark,” Judge Agresti said in a Dec. 20 hearing in Pittsburgh.

The emergence of the fabricated documents comes as Countrywide confronts a rising tide of complaints from borrowers who claim that the company pushed them into risky loans. The matter in Pittsburgh is one of 300 bankruptcy cases in which Countrywide’s practices have come under scrutiny in western Pennsylvania.

Judge Agresti said that discovery should proceed so that those involved in the case, including the Chapter 13 trustee for the western district of Pennsylvania and the United States trustee, could determine how Countrywide’s systems might generate such documents.

A spokesman for the lender, Rick Simon, said: “It is not Countrywide’s policy to create or ‘fabricate’ any documents as evidence that they were sent if they had not been. We believe it will be shown in further discovery that the Countrywide bankruptcy technician who generated the documents at issue did so as an efficient way to convey the dates the escrow analyses were done and the calculations of the payments as a result of the analyses.”

The documents were generated in a case involving Sharon Diane Hill, a homeowner in Monroeville, Pa. Ms. Hill filed for Chapter 13 bankruptcy protection in March 2001 to try to save her home from foreclosure.

After meeting her mortgage obligations under the 60-month bankruptcy plan, Ms. Hill’s case was discharged and officially closed on March 9, 2007. Countrywide, the servicer on her loan, did not object to the discharge; court records from that date show she was current on her mortgage.

But one month later, Ms. Hill received a notice of intention to foreclose from Countrywide, stating that she was in default and owed the company $4,166.

Court records show that the amount claimed by Countrywide was from the period during which Ms. Hill was making regular payments under the auspices of the bankruptcy court. They included “monthly charges” totaling $3,840 from November 2006 to April 2007, late charges of $128 and other charges of almost $200.

A lawyer representing Ms. Hill in her bankruptcy case, Kenneth Steidl, of Steidl and Steinberg in Pittsburgh, wrote Countrywide a few weeks later stating that Ms. Hill had been deemed current on her mortgage during the period in question. But in May, Countrywide sent Ms. Hill another notice stating that her loan was delinquent and demanding that she pay $4,715.58. Neither Mr. Steidl nor Julia Steidl, who has also represented Ms. Hill, returned phone calls seeking comment.

Justifying Ms. Hill’s arrears, Countrywide sent her lawyer copies of three letters on company letterhead addressed to the homeowner, as well as to Mr. Steidl and Ronda J. Winnecour, the Chapter 13 trustee for the western district of Pennsylvania.

The Countrywide letters were dated September 2003, October 2004 and March 2007 and showed changes in escrow requirements on Ms. Hill’s loan. “This letter is to advise you that the escrow requirement has changed per the escrow analysis completed today,” each letter began.

But Mr. Steidl told the court he had never received the letters. Furthermore, he noticed that his address on the first Countrywide letter was not the location of his office at the time, but an address he moved to later. Neither did the Chapter 13 trustee’s office have any record of receiving the letters, court records show.

When Mr. Steidl discussed this with Leslie E. Puida, Countrywide’s outside counsel on the case, he said Ms. Puida told him that the letters had been “recreated” by Countrywide to reflect the escrow discrepancies, the court transcript shows. During these discussions, Ms. Puida reduced the amount that Countrywide claimed Ms. Hill owed to $1,500 from $4,700.

Under questioning by the judge, Ms. Puida said that “a processor” at Countrywide had generated the letters to show how the escrow discrepancies arose. “They were not offered to prove that they had been sent,” Ms. Puida said. But she also said, under questioning from the court, that the letters did not carry a disclaimer indicating that they were not actual correspondence or that they had never been sent.

A Countrywide spokesman said that in bankruptcy cases, Countrywide’s automated systems are sometimes overridden, with technicians making manual adjustments “to comply with bankruptcy laws and the requirements in the jurisdiction in which a bankruptcy is pending.” Asked by Judge Agresti why Countrywide would go to the trouble of “creating a letter that was never sent,” Ms. Puida, its lawyer, said she did not know.

“I just, I can’t get over what I’m being told here about these recreations,” Judge Agresti said, “and what the purpose is or was and what was intended by them.”

Ms. Hill’s matter is one of 300 bankruptcy cases involving Countrywide that have come under scrutiny by Ms. Winnecour, the Chapter 13 trustee in Pittsburgh. On Oct. 9, she asked the court to sanction Countrywide, contending that the company had lost or destroyed more than $500,000 in checks paid by homeowners in bankruptcy from December 2005 to April 2007.

Ms. Winnecour said in court filings that she was concerned that even as Countrywide had misplaced or destroyed the checks, it levied charges on the borrowers, including late fees and legal costs. A spokesman in her office said she would not comment on the Hill case.

O. Max Gardner III, a lawyer in North Carolina who represents troubled borrowers, says that he routinely sees lenders pursue borrowers for additional money after their bankruptcies have been discharged and the courts have determined that the default has been cured and borrowers are current. Regarding the Hill matter, Mr. Gardner said: “The real problem in my mind when reading the transcript is that Countrywide’s lawyer could not explain how this happened.”

Filed under: CDO, CORRUPTION, Eviction, GTC | Honor, Investor, Mortgage, bubble, currency, foreclosure, securities fraud | Tagged: borrower, countrywide, disclosure, foreclosure defense, foreclosure offense, fraud, rescission, RESPA, TILA audit, trustee
« Lucrative Fees May Deter Efforts to Alter Loans

Edit : Edit
Comments : Leave a Comment »

Tags: 2932.5, eviction, Foreclosure, Real Estate Settlement Procedures Act

Categories : Foreclosure, Lender Class action, Loan Audit, Predatory Lending, bankruptcy

, usury

Homecomings TILA complaint GMAC

27 06 2009

homecomingstila

Edit : Edit
Comments : Leave a Comment »

Tags: stop foreclosure, civil code 2923.5, truth in lending, Mortgage modification, eviction, california, mortgage meltdown, Foreclosure, lis pendence, litigation, bankruptcy, Chapter 13, 2924, 2923.5, 2932.5, Recoupment, Fraud, Predatory Lending, FCRA, 2923.6, Real Estate Settlement Procedures Act, Uncategorized, California cram down, Audit, Countrywide, United First, usury, truth in lending 2923.5

Categories : 2923.5, 2923.6, 2924, FCRA, Foreclosure, I Have a Plan, Lender Class action, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, bankruptcy, eviction, lis pendence, stop foreclosure, usury

Option One Complaint Pick a payment lawsuit

27 06 2009

optionone

Edit : Edit
Comments : 2 Comments »

Tags: stop foreclosure, civil code 2923.5, truth in lending, Mortgage modification, eviction, california, mortgage meltdown, Foreclosure, lis pendence, litigation, bankruptcy, Chapter 13, 2924, 2923.5, 2932.5, Recoupment, Fraud, Predatory Lending, FCRA, 2923.6, Real Estate Settlement Procedures Act, Uncategorized, California cram down, Audit, Countrywide, United First, usury, truth in lending 2923.5

Categories : 2923.5, 2923.6, 2924, FCRA, Foreclosure, I Have a Plan, Lender Class action, Predatory Lending, Real Estate Settlement Procedures Act, bankruptcy, eviction, lis pendence, mortgage meltdown, stop foreclosure, usury

Coalition sues lenders

9 05 2009

Coalition Sues lenders

Edit : Edit
Comments : Leave a Comment »

Tags: stop foreclosure, civil code 2923.5, truth in lending, Mortgage modification, eviction, california, mortgage meltdown, Foreclosure, lis pendence, litigation, bankruptcy, Chapter 13, 2924, 2923.5, 2932.5, Recoupment, Fraud, Predatory Lending, FCRA, 2923.6, Real Estate Settlement Procedures Act, Uncategorized, California cram down, Audit, Countrywide, United First, usury, truth in lending 2923.5

Categories : 2923.5, 2923.6, 2924, FCRA, I Have a Plan, Lender Class action, Loan Audit, bankruptcy, eviction, lis pendence, pedatory lending

 

An individual Chapter 11 bankruptcy may be better for you than Chapter 13

28 01 2010

by Chip Parker, Jacksonville Bankruptcy Attorney on October 25, 2009 · Posted in Chapter 11 Bankruptcy

In my 17 years of practicing bankruptcy law, I have never been as excited by anything as the development of the individual Chapter 11 case.

Traditionally, Chapter 13 has been used for personal reorganizations while Chapter 11 has been reserved for more complex corporate reorganizations.� However, a small handful of sophisticated bankruptcy lawyers, like Brett Mearkle of Jacksonville, Florida and BLN contributors Brett Weiss and Kurt O�Keefe, are taking advantage of the debtor-friendly rules of Chapter 11, to provide more meaningful debt restructuring for individual consumers.

Before 2005, individual Chapter 11 cases were virtually non-existent. However, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which has generally been horrible for individual debtors, changed a critical rule in Chapter 11 that has made it the choice for bankruptcy lawyers seeking the best restructuring options for many middle-class Americans.� That rule, known as the Absolute Priority Rule, no longer applies to individuals filing under Chapter 11.� The result is that, unlike corporate debtors, an individual (or married couple) filing under Chapter 11 does not have to repay 100% of his unsecured debts.� Rather, the individual need only pay his �disposable income� over a 5 year period, just like in Chapter 13 cases.

The challenge for bankruptcy lawyers is streamlining the Chapter 11 case for consumers to bring the overall cost of filing down.� Currently, my firm has managed to bring down the cost of a typical Chapter 11, but even so, the individual Chapter 11 case costs $10,000 to $30,000, depending on the facts.� However, in as many as half of all consumer reorganizations, these increased fees and costs are far outweighed by the savings and convenience of Chapter 11.

These savings, like �cram down� of automobiles and elimination of the trustee�s administrative fee, will be discussed in more detail in my upcoming articles.

The change to the Absolute Priority Rule has gone widely unnoticed by consumer bankruptcy lawyers, largely because so few understand Chapter 11.� However, we are starting to realize the power of Chapter 11 for consumers, and a concerted effort is being made by many to understand this complicated area of bankruptcy law.� I’ll be in Tucson next week, attending a three day seminar conducted by The National Association of Consumer Bankruptcy Attorneys to learn how to identify which consumers will benefit from Chapter 11 and how to file these types of bankruptcies.� Of course a three-day seminar is really the beginning of an education in Chapter 11, and I predict there will be more advanced seminars to follow.

Be on the lookout for more articles and videos by me and other BLNers on the advantages and nuances of the individual Chapter 11.

Edit : Edit
Comments : Leave a Comment »

Tags: bankruptcy, California cram down, Chapter 13

Categories : Cramdown, Foreclosure, I Have a Plan, Mortgage modification, bankruptcy, pedatory lending

Bankruptcy Court Wipes Out Mortgage Debt When Servicer Fails to Document Claim

27 10 2009

10/26/2009 By: Darrell Delamaide

A federal bankruptcy judge in New York created new uncertainties for mortgage servicers when he expunged a mortgage debt after the servicer could not provide sufficient documentation that it had a claim on the home.

The ruling came earlier this month in bankruptcy court in the Southern District of New York in a case involving Mount Laurel, New Jersey-based PHH Mortgage and a property in White Plains, the New York Times reported.

Judge Robert Drain wiped out a $461,263 mortgage debt on the property, in another case of how things can go wrong when documentation does not keep up with transfers of mortgages in a world of securitized loans.

A recent ruling by the Kansas Supreme Court similarly denied the Mortgage Electronic Registration Service (MERS) rights to recovery in a foreclosure case, even though MERS often stands in for banks that actually hold the mortgage. As a consequence, the bank holding the mortgage lost out in the foreclosure.

In the PHH case, the homeowner, who was not identified, filed for bankruptcy and PHH claimed its mortgage debt.

When attempts by the homeowner’s lawyer to get PHH to modify the debt met with no success, he asked for proof of PHH’s standing and received a letter stating that PHH was the servicer of the loan but that the holder of the note was U.S. Bank, as trustee of a securitization pool.

When he then asked for proof that U.S. Bank was indeed the holder of the note, he received only an affidavit from an executive at PHH Mortgage, the Times reported.

Among the documents supplied to the court to support PHH’s assertion was a copy of the assignment of the mortgage, but this was signed by the same PHH executive identified this time as an official of MERS, and was dated March 26 of this year, well after the bankruptcy had been filed.

In the hearing, the PHH lawyer argued that in the secondary market, there are many cases where assignment of mortgages or assignment of notes don’t happen at the time they should – that this was standard operating procedure for many years.

Judge Drain rejected that argument, the Times reported. “I think that I have a more than 50 percent doubt that if the debtor paid this claim, it would be paying the wrong person,” the newspaper quoted him as saying. “That’s the problem. And that’s because the claimant has not shown an assignment of a mortgage.”

PHH is appealing Judge Drain’s decision.

The ruling also puts the homeowner in uncharted territory. “Right now I am in bankruptcy court with a house that has no discernible debt on it,” her lawyer told the Times, “yet I have a client with a signed mortgage. We cannot in theory just go out and sell this house because the title company won’t give a clear title on it.”

The lawyer’s options are to file an amended plan or sue to try to get clear title to the property.

Edit : Edit
Comments : Leave a Comment »

Tags: bankruptcy, Foreclosure, foreclosure defense, foreclosure offense, Mortgage modification

Categories : Foreclosure, Mortgage modification, stop foreclosure

Foreclosure Victory For Nor Cal Area Homeowner!

7 09 2009

A Sacramento area court ruling against the plaintiff came in an unlawful detainer hearing last Friday. Lenders and servicers are taking notice of the “sale” by trustee that was set aside in favor of a loan modification. Submitted by Steve Shafer

February 5, 2009 / Sacramento California – The Bay Area Superior Court decision and judgment against the plaintiff allows the “sale” by the trustee to be set aside in favor of a loan modification.
Lenders nationwide who originate and service loans know California offers them a “safe haven” from homeowner’s who dispute a recent foreclosure. That means overwhelming odds for anyone in foreclosure who loses their home to a lender in a foreclosure. The borrower becomes a holdover and must respond to an unlawful detainer after their home is lost.

That was not the case for an El Dorado area resident at a recent hearing for an unlawful detainer matter heard in a Placerville County superior court room. The recent victory in court was in an unlawful detainer matter for the defendant Ms. Stella Onyeu and mortgage lender and securities sponsor – AURORA LOAN SERVICES v. STELLA D. ONYEU (case number PCU2008032).

AURORA LOAN SERVICES like so many other lender servicing agents has come under greater scrutiny as of late for questionable business practices. According to its web site Aurora Loan Services is operating as usual. The company is a subsidiary of Lehman Brothers Bank, and not part of the Lehman Brothers Holding Inc. bankruptcy filing.

The case was originally filed in October of last year and shortly thereafter was dismissed when the Plaintiff failed to show at a scheduled hearing. Subsequent motions were filed to vacate the dismissal in favor of a motion to dismiss by the plaintiffs. The matter was heard recently heard again by the same court and earlier mentioned presiding judge. Mark Terbeek is the attorney for the Defendant and Maher Soliman a Juris Pro witness provided case development and court expert testimony.

This judgment for the defendant is monumental given the courts limited jurisdiction related to the lenders sole focus to have the borrower removed from the home. The issues at hand are the legal procedural limitations and high attrition rate for defendants and their attorney’s. The problem is the defendant’s lack of standing for pleading a wrongful foreclosure due to jurisdiction of the court.

So what does this all mean? Many homeowners can find some hope, for the moment, in knowing the otherwise unfriendly California UD courts will now hold some promise for hearing arguments as to the foreclosure and the plaintiffs standing. According to foreclosure and REO sales analyst Brenda Michelson of Nationwide Loan Services “It’s hit or miss at this level of the law and the courts willingness to step outside of its jurisdiction.” The smaller outlying courts seem to me to be more willing to entertain defense arguments that the plaintiff may not be the holder in due course and lacks capacity throughout the foreclosure” Terbeek’s response is that if the plaintiff cannot demonstrate a logical and properly conveyed transfer of the beneficial interest – it is not entitled to possession.

After the foreclosure and conveyance back to the trustee, the homeowner is considered unlawfully occupying the dwelling as a holdover. However, the court ruled that AURORA had in fact violated its duty to show good faith and comply accordingly under the recent California statutes and amendments Power of Sale provision. The presiding judge who heard the matter ordered a judgment against the company allowed for Terbeek to enter a request for all legal fees due.

According to legal expert Soliman, “there are more attorneys willing to now jump into the wrongful foreclosure business and fight the court on the jurisdiction issue. However, it is nearly impossible to rely on the judge and courts at this level”. Soliman is an examiner with Nationwide Loan Services and has engagements in multiple cases throughout California through attorneys such as Terbeek who represented the defendant.

Jurisdiction: An Overview

The term jurisdiction is really synonymous with the word “power” and the sovereignty on behalf of which it functions. Any court possesses jurisdiction over matters only to the extent granted to it by the Constitution, or legislation of a paramount fundamental question for lawyers is whether a given court has jurisdiction to preside over a given case. A jurisdictional question may be broken down into various components including whether there is jurisdiction over the person (in personam), the subject matter, or res (in rem), and to render the particular judgment sought.

An unlawful detainer lawsuit is a “summary” court procedure. This means that the court action moves forward very quickly, and that the time given the tenant to respond during the lawsuit is very short. For example, in most cases, the tenant has only five days to file a written response to the lawsuit after being served with a copy of the landlord’s complaint. Normally, a judge will hear and decide the case within 20 days after the borrower now tenant files an answer.

The question of whether a given court has the power to determine a jurisdictional question is itself a jurisdictional question. Such a legal question is referred to as “jurisdiction to determine jurisdiction.” In order to evict the tenant, the landlord must file an unlawful detainer lawsuit in superior court. In an eviction lawsuit, the lender is the “plaintiff” and the prior borrower and homeowners become an occupant holdover and the “defendant.” Immediately after the trustee sale of the home the conveyance by the trustee is entered in favor of the lender. Until recently in most cases the lender is with in its right foreclose if a borrower has missed a number of payments, failed to make the insurance premiums or not paid the property taxes. “But sometimes a lender is wrong and you can fight foreclosure by challenging the foreclosure process and related documents” said Soliman.

As the new owner of record AURORA HOME LOAN SERVICES must follow procedures no different than that of a landlord in a tenant occupancy dispute. The next step is to remove the homeowner from the subject dwelling. If the tenant doesn’t voluntarily move out after the landlord has properly given the required notice to the tenant, the landlord can evict the tenant. If the lender makes a mistake in its filing of the foreclosure documents a court my throw out the whole foreclosure case. In the case of a wrongful foreclosure the borrower’s claims are limited to affirmative defenses.

Affirmative Defenses

Unlike a judicial proceeding, California lenders need to merely wait out the mandatory term for issuing default notices and ensure it has properly served those notices to the borrower. In other words the hearing and trial taken place in the above referenced matter is not subject to arguments brought by the homeowner for wrongful foreclosure versus the question as to lawful possession of the property by the lender.

California lenders are typically limited to only the defenses a landlord will face when opposed and made subject to claims of wrongfully trying to evict a tenant. Claims such as the Plaintiff has breached the warranty to provide habitable premises, plaintiff did not give proper credit before the notice to pay or quit expired or plaintiff waived, changed, or canceled the notice to quit, or filed the complaint to retaliate against defendant are often completely unrelated to the matter at hand. The courts decision to enforce the provisions of an earlier modification in lieu of a foreclosure sends a major wake up call to the lenders who are under siege to avoid foreclose and be done with mortgage mess affecting United States homeowners. Soliman says the decision is unfortunately not likely to be read into as case precedent for future lawyers and wrongful defendants seeking to introduce our case as an example of a lenders wrongful action.

Soliman goes on to say “it’s both interesting and entertaining to see experienced attorneys who jump in and immediately question the issue of the courts authority. Its reality time when they get to their first hearing and see first hand the problematic issues with jurisdiction.”

Servicing agents are never the less on notice they must be ready to defend themselves when the opportunity to argue the plaintiffs standing are allowed in an unlawful detainer motivate by a foreclosure. Therefore, the debate about what the courts hear will remain open and subject to further scrutiny by the lawyers for both sides and judges who preside over the courts at this level.

Nationwide Loan Servicing is an approved Expert Witness who provides court testimoney in matters concerning wrongful foreclosures, Federal Savings Banks regultory violations and SEC filings for private registrations.

Edit : Edit
Comments : 1 Comment »

Tags: 2923.5, 2923.5 2923.6 2924 2932.5 Audit bankruptcy california California cram down Chapter 13 civil code 2923.5 civil code 2924 Countrywide Cram down Cramdown criminal acts eviction FCRA FDCPA Federal Jurisdi, 2923.6, 2924, 2932.5, California cram down, Predatory Lending, stop foreclosure

Categories : Foreclosure, Mortgage modification, eviction, stop foreclosure

7 06 2009

judge-youngs-decision-on-nosek

Ameriquest’s final argument, that the sanctions are a
criminal penalty, is bereft of authority. Ameriquest cites F.J.
Hanshaw Enterprises, Inc. v. Emerald River Development, Inc., 244
F.3d 1128 (9th Cir. 2001), a case about inherent powers – not
Rule 11 –

This is an excerpt from the decision just this bloggers note the Hanshaw Case was my case. I argued this case at the 9th circuit court of appeals

http://openjurist.org/244/f3d/1128/fj-v-emeraldfj-v-emerald

If you will grasp the implications of this judge-youngs-decision-on-nosekdecision all or most all the evictions and  foreclosures are being litigated by the wrong parties that is to say parties who have no real stake in the outcome. they are merely servicers not the real investors. They do not have the right to foreclose or evict. No assignment No note No security interest No standing They do not want to be listed anywhere. They (the lenders) have caused the greatest damage to the American Citizen since the great depression and they do not want to be exposed or named in countless lawsuits. Time and time again I get from the judges in demurer hearings ” I see what you are saying counsel but your claim does not appear to be against this defendant” the unnamed investment pool of the Lehman Brothers shared High yield equity Fund trustee does not exist and so far can’t be sued.

 

 

An individual Chapter 11 bankruptcy may be better for you than Chapter 13

28 01 2010

by Chip Parker, Jacksonville Bankruptcy Attorney on October 25, 2009 · Posted in Chapter 11 Bankruptcy

In my 17 years of practicing bankruptcy law, I have never been as excited by anything as the development of the individual Chapter 11 case.

Traditionally, Chapter 13 has been used for personal reorganizations while Chapter 11 has been reserved for more complex corporate reorganizations.� However, a small handful of sophisticated bankruptcy lawyers, like Brett Mearkle of Jacksonville, Florida and BLN contributors Brett Weiss and Kurt O�Keefe, are taking advantage of the debtor-friendly rules of Chapter 11, to provide more meaningful debt restructuring for individual consumers.

Before 2005, individual Chapter 11 cases were virtually non-existent. However, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which has generally been horrible for individual debtors, changed a critical rule in Chapter 11 that has made it the choice for bankruptcy lawyers seeking the best restructuring options for many middle-class Americans.� That rule, known as the Absolute Priority Rule, no longer applies to individuals filing under Chapter 11.� The result is that, unlike corporate debtors, an individual (or married couple) filing under Chapter 11 does not have to repay 100% of his unsecured debts.� Rather, the individual need only pay his �disposable income� over a 5 year period, just like in Chapter 13 cases.

The challenge for bankruptcy lawyers is streamlining the Chapter 11 case for consumers to bring the overall cost of filing down.� Currently, my firm has managed to bring down the cost of a typical Chapter 11, but even so, the individual Chapter 11 case costs $10,000 to $30,000, depending on the facts.� However, in as many as half of all consumer reorganizations, these increased fees and costs are far outweighed by the savings and convenience of Chapter 11.

These savings, like �cram down� of automobiles and elimination of the trustee�s administrative fee, will be discussed in more detail in my upcoming articles.

The change to the Absolute Priority Rule has gone widely unnoticed by consumer bankruptcy lawyers, largely because so few understand Chapter 11.� However, we are starting to realize the power of Chapter 11 for consumers, and a concerted effort is being made by many to understand this complicated area of bankruptcy law.� I’ll be in Tucson next week, attending a three day seminar conducted by The National Association of Consumer Bankruptcy Attorneys to learn how to identify which consumers will benefit from Chapter 11 and how to file these types of bankruptcies.� Of course a three-day seminar is really the beginning of an education in Chapter 11, and I predict there will be more advanced seminars to follow.

Be on the lookout for more articles and videos by me and other BLNers on the advantages and nuances of the individual Chapter 11.

Edit : Edit
Comments : Leave a Comment »

Tags: bankruptcy, California cram down, Chapter 13

Categories : Cramdown, Foreclosure, I Have a Plan, Mortgage modification, bankruptcy, pedatory lending

Bankruptcy Court Wipes Out Mortgage Debt When Servicer Fails to Document Claim

27 10 2009

10/26/2009 By: Darrell Delamaide

A federal bankruptcy judge in New York created new uncertainties for mortgage servicers when he expunged a mortgage debt after the servicer could not provide sufficient documentation that it had a claim on the home.

The ruling came earlier this month in bankruptcy court in the Southern District of New York in a case involving Mount Laurel, New Jersey-based PHH Mortgage and a property in White Plains, the New York Times reported.

Judge Robert Drain wiped out a $461,263 mortgage debt on the property, in another case of how things can go wrong when documentation does not keep up with transfers of mortgages in a world of securitized loans.

A recent ruling by the Kansas Supreme Court similarly denied the Mortgage Electronic Registration Service (MERS) rights to recovery in a foreclosure case, even though MERS often stands in for banks that actually hold the mortgage. As a consequence, the bank holding the mortgage lost out in the foreclosure.

In the PHH case, the homeowner, who was not identified, filed for bankruptcy and PHH claimed its mortgage debt.

When attempts by the homeowner’s lawyer to get PHH to modify the debt met with no success, he asked for proof of PHH’s standing and received a letter stating that PHH was the servicer of the loan but that the holder of the note was U.S. Bank, as trustee of a securitization pool.

When he then asked for proof that U.S. Bank was indeed the holder of the note, he received only an affidavit from an executive at PHH Mortgage, the Times reported.

Among the documents supplied to the court to support PHH’s assertion was a copy of the assignment of the mortgage, but this was signed by the same PHH executive identified this time as an official of MERS, and was dated March 26 of this year, well after the bankruptcy had been filed.

In the hearing, the PHH lawyer argued that in the secondary market, there are many cases where assignment of mortgages or assignment of notes don’t happen at the time they should – that this was standard operating procedure for many years.

Judge Drain rejected that argument, the Times reported. “I think that I have a more than 50 percent doubt that if the debtor paid this claim, it would be paying the wrong person,” the newspaper quoted him as saying. “That’s the problem. And that’s because the claimant has not shown an assignment of a mortgage.”

PHH is appealing Judge Drain’s decision.

The ruling also puts the homeowner in uncharted territory. “Right now I am in bankruptcy court with a house that has no discernible debt on it,” her lawyer told the Times, “yet I have a client with a signed mortgage. We cannot in theory just go out and sell this house because the title company won’t give a clear title on it.”

The lawyer’s options are to file an amended plan or sue to try to get clear title to the property.

Edit : Edit
Comments : Leave a Comment »

Tags: bankruptcy, Foreclosure, foreclosure defense, foreclosure offense, Mortgage modification

Categories : Foreclosure, Mortgage modification, stop foreclosure

Foreclosure Victory For Nor Cal Area Homeowner!

7 09 2009

A Sacramento area court ruling against the plaintiff came in an unlawful detainer hearing last Friday. Lenders and servicers are taking notice of the “sale” by trustee that was set aside in favor of a loan modification. Submitted by Steve Shafer

February 5, 2009 / Sacramento California – The Bay Area Superior Court decision and judgment against the plaintiff allows the “sale” by the trustee to be set aside in favor of a loan modification.
Lenders nationwide who originate and service loans know California offers them a “safe haven” from homeowner’s who dispute a recent foreclosure. That means overwhelming odds for anyone in foreclosure who loses their home to a lender in a foreclosure. The borrower becomes a holdover and must respond to an unlawful detainer after their home is lost.

That was not the case for an El Dorado area resident at a recent hearing for an unlawful detainer matter heard in a Placerville County superior court room. The recent victory in court was in an unlawful detainer matter for the defendant Ms. Stella Onyeu and mortgage lender and securities sponsor – AURORA LOAN SERVICES v. STELLA D. ONYEU (case number PCU2008032).

AURORA LOAN SERVICES like so many other lender servicing agents has come under greater scrutiny as of late for questionable business practices. According to its web site Aurora Loan Services is operating as usual. The company is a subsidiary of Lehman Brothers Bank, and not part of the Lehman Brothers Holding Inc. bankruptcy filing.

The case was originally filed in October of last year and shortly thereafter was dismissed when the Plaintiff failed to show at a scheduled hearing. Subsequent motions were filed to vacate the dismissal in favor of a motion to dismiss by the plaintiffs. The matter was heard recently heard again by the same court and earlier mentioned presiding judge. Mark Terbeek is the attorney for the Defendant and Maher Soliman a Juris Pro witness provided case development and court expert testimony.

This judgment for the defendant is monumental given the courts limited jurisdiction related to the lenders sole focus to have the borrower removed from the home. The issues at hand are the legal procedural limitations and high attrition rate for defendants and their attorney’s. The problem is the defendant’s lack of standing for pleading a wrongful foreclosure due to jurisdiction of the court.

So what does this all mean? Many homeowners can find some hope, for the moment, in knowing the otherwise unfriendly California UD courts will now hold some promise for hearing arguments as to the foreclosure and the plaintiffs standing. According to foreclosure and REO sales analyst Brenda Michelson of Nationwide Loan Services “It’s hit or miss at this level of the law and the courts willingness to step outside of its jurisdiction.” The smaller outlying courts seem to me to be more willing to entertain defense arguments that the plaintiff may not be the holder in due course and lacks capacity throughout the foreclosure” Terbeek’s response is that if the plaintiff cannot demonstrate a logical and properly conveyed transfer of the beneficial interest – it is not entitled to possession.

After the foreclosure and conveyance back to the trustee, the homeowner is considered unlawfully occupying the dwelling as a holdover. However, the court ruled that AURORA had in fact violated its duty to show good faith and comply accordingly under the recent California statutes and amendments Power of Sale provision. The presiding judge who heard the matter ordered a judgment against the company allowed for Terbeek to enter a request for all legal fees due.

According to legal expert Soliman, “there are more attorneys willing to now jump into the wrongful foreclosure business and fight the court on the jurisdiction issue. However, it is nearly impossible to rely on the judge and courts at this level”. Soliman is an examiner with Nationwide Loan Services and has engagements in multiple cases throughout California through attorneys such as Terbeek who represented the defendant.

Jurisdiction: An Overview

The term jurisdiction is really synonymous with the word “power” and the sovereignty on behalf of which it functions. Any court possesses jurisdiction over matters only to the extent granted to it by the Constitution, or legislation of a paramount fundamental question for lawyers is whether a given court has jurisdiction to preside over a given case. A jurisdictional question may be broken down into various components including whether there is jurisdiction over the person (in personam), the subject matter, or res (in rem), and to render the particular judgment sought.

An unlawful detainer lawsuit is a “summary” court procedure. This means that the court action moves forward very quickly, and that the time given the tenant to respond during the lawsuit is very short. For example, in most cases, the tenant has only five days to file a written response to the lawsuit after being served with a copy of the landlord’s complaint. Normally, a judge will hear and decide the case within 20 days after the borrower now tenant files an answer.

The question of whether a given court has the power to determine a jurisdictional question is itself a jurisdictional question. Such a legal question is referred to as “jurisdiction to determine jurisdiction.” In order to evict the tenant, the landlord must file an unlawful detainer lawsuit in superior court. In an eviction lawsuit, the lender is the “plaintiff” and the prior borrower and homeowners become an occupant holdover and the “defendant.” Immediately after the trustee sale of the home the conveyance by the trustee is entered in favor of the lender. Until recently in most cases the lender is with in its right foreclose if a borrower has missed a number of payments, failed to make the insurance premiums or not paid the property taxes. “But sometimes a lender is wrong and you can fight foreclosure by challenging the foreclosure process and related documents” said Soliman.

As the new owner of record AURORA HOME LOAN SERVICES must follow procedures no different than that of a landlord in a tenant occupancy dispute. The next step is to remove the homeowner from the subject dwelling. If the tenant doesn’t voluntarily move out after the landlord has properly given the required notice to the tenant, the landlord can evict the tenant. If the lender makes a mistake in its filing of the foreclosure documents a court my throw out the whole foreclosure case. In the case of a wrongful foreclosure the borrower’s claims are limited to affirmative defenses.

Affirmative Defenses

Unlike a judicial proceeding, California lenders need to merely wait out the mandatory term for issuing default notices and ensure it has properly served those notices to the borrower. In other words the hearing and trial taken place in the above referenced matter is not subject to arguments brought by the homeowner for wrongful foreclosure versus the question as to lawful possession of the property by the lender.

California lenders are typically limited to only the defenses a landlord will face when opposed and made subject to claims of wrongfully trying to evict a tenant. Claims such as the Plaintiff has breached the warranty to provide habitable premises, plaintiff did not give proper credit before the notice to pay or quit expired or plaintiff waived, changed, or canceled the notice to quit, or filed the complaint to retaliate against defendant are often completely unrelated to the matter at hand. The courts decision to enforce the provisions of an earlier modification in lieu of a foreclosure sends a major wake up call to the lenders who are under siege to avoid foreclose and be done with mortgage mess affecting United States homeowners. Soliman says the decision is unfortunately not likely to be read into as case precedent for future lawyers and wrongful defendants seeking to introduce our case as an example of a lenders wrongful action.

Soliman goes on to say “it’s both interesting and entertaining to see experienced attorneys who jump in and immediately question the issue of the courts authority. Its reality time when they get to their first hearing and see first hand the problematic issues with jurisdiction.”

Servicing agents are never the less on notice they must be ready to defend themselves when the opportunity to argue the plaintiffs standing are allowed in an unlawful detainer motivate by a foreclosure. Therefore, the debate about what the courts hear will remain open and subject to further scrutiny by the lawyers for both sides and judges who preside over the courts at this level.

Nationwide Loan Servicing is an approved Expert Witness who provides court testimoney in matters concerning wrongful foreclosures, Federal Savings Banks regultory violations and SEC filings for private registrations.

Edit : Edit
Comments : 1 Comment »

Tags: 2923.5, 2923.5 2923.6 2924 2932.5 Audit bankruptcy california California cram down Chapter 13 civil code 2923.5 civil code 2924 Countrywide Cram down Cramdown criminal acts eviction FCRA FDCPA Federal Jurisdi, 2923.6, 2924, 2932.5, California cram down, Predatory Lending, stop foreclosure

Categories : Foreclosure, Mortgage modification, eviction, stop foreclosure

Standing argument

7 06 2009

judge-youngs-decision-on-nosek

Ameriquest’s final argument, that the sanctions are a
criminal penalty, is bereft of authority. Ameriquest cites F.J.
Hanshaw Enterprises, Inc. v. Emerald River Development, Inc., 244
F.3d 1128 (9th Cir. 2001), a case about inherent powers – not
Rule 11 –

This is an excerpt from the decision just this bloggers note the Hanshaw Case was my case. I argued this case at the 9th circuit court of appeals

http://openjurist.org/244/f3d/1128/fj-v-emeraldfj-v-emerald

If you will grasp the implications of this judge-youngs-decision-on-nosekdecision all or most all the evictions and  foreclosures are being litigated by the wrong parties that is to say parties who have no real stake in the outcome. they are merely servicers not the real investors. They do not have the right to foreclose or evict. No assignment No note No security interest No standing They do not want to be listed anywhere. They (the lenders) have caused the greatest damage to the American Citizen since the great depression and they do not want to be exposed or named in countless lawsuits. Time and time again I get from the judges in demurer hearings ” I see what you are saying counsel but your claim does not appear to be against this defendant” the unnamed investment pool of the Lehman Brothers shared High yield equity Fund trustee does not exist and so far can’t be sued.

 

Fannie Mae Policy Now Admits Loan Not Secured

2 06 2010

Posted 14 hours ago by Neil Garfield on Livinglies’s Weblog

29248253-Mers-May-Not-Foreclosure-for-Fannie-Mae

Editor’s Note: Their intention was to get MERS and servicers out of the foreclosure business. They now say that prior to foreclosure MERS must assign to the real party in interest.

Here’s their problem: As numerous Judges have pointed out, MERS specifically disclaims any interest in the obligation, note or mortgage. Even the language of the mortgage or Deed of Trust says MERS is mentioned in name only and that the Lender is somebody else.

These Judges who have considered the issue have come up with one conclusion, an assignment from a party with no right, title or interest has nothing to assign. The assignment may look good on its face but there still is the problem that nothing was assigned.

Here’s the other problem. If MERS was there in name only to permit transfers and other transactions off-record (contrary to state law) and if the original party named as “Lender” is no longer around, then what you have is a gap in the chain of custody and chain of title with respect to the creditor’s side of the loan. It is all off record which means, ipso facto that it is a question of fact as to whose loan it is. That means, ipso facto, that the presence of MERS makes it a judicial question which means that the non-judicial election is not available. They can’t do it.

So when you put this all together, you end up with the following inescapable conclusions:

* The naming of MERS as mortgagee in a mortgage deed or as beneficiary in a deed of trust is a nullity.
* MERS has no right, title or interest in any loan and even if it did, it disclaims any such interest on its own website.
* The lender might be the REAL beneficiary, but that is a question of fact so the non-judicial foreclosure option is not available.
* If the lender was not the creditor, it isn’t the lender because it had no right title or interest either, legally or equitably.
* Without a creditor named in the security instrument intended to secure the obligation, the security was never perfected.
* Without a creditor named in the security instrument intended to secure the obligation, the obligation is unsecured as to legal title.
* Since the only real creditor is the one who advanced the funds (the investor(s)), they can enforce the obligation by proxy or directly. Whether the note is actually evidence of the obligation and to what extent the terms of the note are enforceable is a question for the court to determine.
* The creditor only has a claim if they would suffer loss as a result of the indirect transaction with the borrower. If they or their agents have received payments from any source, those payments must be allocated to the loan account. The extent and measure of said allocation is a question of fact to be determined by the Court.
* Once established, the allocation will most likely be applied in the manner set forth in the note, to wit: (a) against payments due (b) against fees and (c) against principal, in that order.
* Once applied against payments, due the default vanishes unless the allocation is less than the amount due in payments.
* Once established, the allocation results in a fatal defect in the notice of default, the statements sent to the borrower, and the representations made in court. Thus at the very least they must vacate all foreclosure proceedings and start over again.
* If the allocation is less than the amount of payments due, then the investor(s) collectively have a claim for acceleration and to enforce the note — but they have no claim on the mortgage deed or deed of trust. By intentionally NOT naming parties who were known at the time of the transaction the security was split from the obligation. The obligation became unsecured.
* The investors MIGHT have a claim for equitable lien based upon the circumstances that BOTH the borrower and the investor were the victims of fraud.

Edit : Edit
Comments : 1 Comment »

Tags: stop foreclosure, mortgage meltdown, Foreclosure, bankruptcy, 2924, Predatory Lending

Categories : Foreclosure, Loan Audit, bankruptcy, mortgage meltdown, pedatory lending, stop foreclosure

MERS and civil code 2932.5 and Bankruptcy code 547 here is how it comes together

26 05 2010

CA Civil Code 2932.5 – Assignment”Where a power to sell real property is
given to a mortgagee, or other encumbrancer, in an instrument intended
to secure the payment of money, the power is part of the security and
vests in any person who by assignment becomes entitled to payment of the
money secured by the instrument. The power of sale may be exercised by
the assignee if the assignment is duly acknowledged and recorded.”

Landmark vs Kesler – While this is a matter of first impression in
Kansas, other jurisdictions have issued opinions on similar and related
issues, and, while we do not consider those opinions binding in the
current litigation, we find them to be useful guideposts in our analysis
of the issues before us.”

“Black’s Law Dictionary defines a nominee as “[a] person designated to
act in place of another, usu. in a very limited way” and as “[a] party
who holds bare legal title for the benefit of others or who receives and
distributes funds for the benefit of others.” Black’s Law Dictionary
1076 (8th ed. 2004). This definition suggests that a nominee possesses
few or no legally enforceable rights beyond those of a principal whom
the nominee serves……..The legal status of a nominee, then, depends
on the context of the relationship of the nominee to its principal.
Various courts have interpreted the relationship of MERS and the lender
as an agency relationship.”

“LaSalle Bank Nat. Ass’n v. Lamy, 2006 WL 2251721, at *2 (N.Y. Sup.
2006) (unpublished opinion) (“A nominee of the owner of a note and
mortgage may not effectively assign the note and mortgage to another for
want of an ownership interest in said note and mortgage by the
nominee.”)”

The law generally understands that a mortgagee is not distinct from a
lender: a mortgagee is “[o]ne to whom property is mortgaged: the
mortgage creditor, or lender.” Black’s Law Dictionary 1034 (8th ed.
2004). By statute, assignment of the mortgage carries with it the
assignment of the debt. K.S.A. 58-2323. Although MERS asserts that,
under some situations, the mortgage document purports to give it the
same rights as the lender, the document consistently refers only to
rights of the lender, including rights to receive notice of litigation,
to collect payments, and to enforce the debt obligation. The document
consistently limits MERS to acting “solely” as the nominee of the
lender.

Indeed, in the event that a mortgage loan somehow separates interests of
the note and the deed of trust, with the deed of trust lying with some
independent entity, the mortgage may become unenforceable.

“The practical effect of splitting the deed of trust from the promissory
note is to make it impossible for the holder of the note to foreclose,
unless the holder of the deed of trust is the agent of the holder of the
note. [Citation omitted.] Without the agency relationship, the person
holding only the note lacks the power to foreclose in the event of
default. The person holding only the deed of trust will never experience
default because only the holder of the note is entitled to payment of
the underlying obligation. [Citation omitted.] The mortgage loan becomes
ineffectual when the note holder did not also hold the deed of trust.”
Bellistri v. Ocwen Loan Servicing, LLC, 284 S.W.3d 619, 623 (Mo. App.
2009).

“MERS never held the promissory note,thus its assignment of the deed of
trust to Ocwen separate from the note had no force.” 284 S.W.3d at 624;
see also In re Wilhelm, 407 B.R. 392 (Bankr. D. Idaho 2009) (standard
mortgage note language does not expressly or implicitly authorize MERS
to transfer the note); In re Vargas, 396 B.R. 511, 517 (Bankr. C.D. Cal.
2008) (“[I]f FHM has transferred the note, MERS is no longer an
authorized agent of the holder unless it has a separate agency contract
with the new undisclosed principal. MERS presents no evidence as to who
owns the note, or of any authorization to act on behalf of the present
owner.”); Saxon Mortgage Services, Inc. v. Hillery, 2008 WL 5170180
(N.D. Cal. 2008) (unpublished opinion) (“[F]or there to be a valid
assignment, there must be more than just assignment of the deed alone;
the note must also be assigned. . . . MERS purportedly assigned both the
deed of trust and the promissory note. . . . However, there is no
evidence of record that establishes that MERS either held the promissory
note or was given the authority . . . to assign the note.”).

What stake in the outcome of an independent action for foreclosure could
MERS have? It did not lend the money to Kesler or to anyone else
involved in this case. Neither Kesler nor anyone else involved in the
case was required by statute or contract to pay money to MERS on the
mortgage. See Sheridan, ___ B.R. at ___ (“MERS is not an economic
‘beneficiary’ under the Deed of Trust. It is owed and will collect no
money from Debtors under the Note, nor will it realize the value of the
Property through foreclosure of the Deed of Trust in the event the Note
is not paid.”). If MERS is only the mortgagee, without ownership of the
mortgage instrument, it does not have an enforceable right. See Vargas,
396 B.R. 517 (“[w]hile the note is ‘essential,’ the mortgage is only ‘an
incident’ to the note” [quoting Carpenter v. Longan, 16 Wall. 271, 83
U.S. 271, 275, 21 L. Ed 313 (1872)]).

* MERS had no Beneficial Interest in the Note,
* MERS and the limited agency authority it has under the dot does
not continue with the assignment of the mortgage or dot absent a
ratification or a separate agency agreement between mers and the
assignee.
* The Note and the Deed of Trust were separated at or shortly
after origination upon endorsement and negotiation of the note rendering
the dot a nullity
* MERS never has any power or legal authority to transfer the note
to any entity;
* mers never has a beneficial interest in the note and pays
nothing of value for the note.

Bankr. Code 547 provides, among other things, that an unsecured
creditor who had won a race to an interest in the debtor’s property
using the state remedies system within 90 days of the filing of the
bankruptcy petition may have to forfeit its winnings (without
compensation for any expenses it may have incurred in winning the race)
for the benefit of all unsecured creditors. The section therefore
prevents certain creditors from being preferred over others (hence,
section 547 of the Bankruptcy Code is titled “Preferences).” An
additional effect of the section (and one of its stated purposes) may be
to discourage some unsecured creditors from aggressively pursuing the
debtor under the state remedies system, thus affording the debtor more
breathing space outside bankruptcy, for fear that money spent using the
state remedies system will be wasted if the debtor files a bankruptcy
petition.

. Bankr. Code 547(c) provides several important exceptions to the
preference avoidance power.

Bankr. Code 547 permits avoidance of liens obtained within the 90 day
(or one year) period: the creation of a lien on property of the debtor,
whether voluntary, such as through a consensual lien, or involuntary,
such as through a judicial lien, would, absent avoidance, have the same
preferential impact as a transfer of money from a debtor to a creditor
in payment of a debt. If the security interest was created in the
creditor within the 90 day window, and if other requirements of section
547(b) are satisfied, the security interest can be avoided and the real
property sold by the trustee free of the security interest (subject to
homestead exemption). All unsecured creditors of the debtor, including
the creditor whose lien has been avoided, will share, pro rata, in the
distribution of assets of the debtor, including the proceeds of the sale
of the real estate

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5 2923.6 2924 2932.5 Audit bankruptcy california California cram down Chapter 13 civil code 2923.5 civil code 2924 Countrywide Cram down Cramdown criminal acts eviction FCRA FDCPA Federal Jurisdi, 2932.5, bankruptcy, Foreclosure, lis pendence

Categories : 2924, Foreclosure, bankruptcy, stop foreclosure

An individual Chapter 11 bankruptcy may be better for you than Chapter 13

28 01 2010

by Chip Parker, Jacksonville Bankruptcy Attorney on October 25, 2009 · Posted in Chapter 11 Bankruptcy

In my 17 years of practicing bankruptcy law, I have never been as excited by anything as the development of the individual Chapter 11 case.

Traditionally, Chapter 13 has been used for personal reorganizations while Chapter 11 has been reserved for more complex corporate reorganizations.� However, a small handful of sophisticated bankruptcy lawyers, like Brett Mearkle of Jacksonville, Florida and BLN contributors Brett Weiss and Kurt O�Keefe, are taking advantage of the debtor-friendly rules of Chapter 11, to provide more meaningful debt restructuring for individual consumers.

Before 2005, individual Chapter 11 cases were virtually non-existent. However, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which has generally been horrible for individual debtors, changed a critical rule in Chapter 11 that has made it the choice for bankruptcy lawyers seeking the best restructuring options for many middle-class Americans.� That rule, known as the Absolute Priority Rule, no longer applies to individuals filing under Chapter 11.� The result is that, unlike corporate debtors, an individual (or married couple) filing under Chapter 11 does not have to repay 100% of his unsecured debts.� Rather, the individual need only pay his �disposable income� over a 5 year period, just like in Chapter 13 cases.

The challenge for bankruptcy lawyers is streamlining the Chapter 11 case for consumers to bring the overall cost of filing down.� Currently, my firm has managed to bring down the cost of a typical Chapter 11, but even so, the individual Chapter 11 case costs $10,000 to $30,000, depending on the facts.� However, in as many as half of all consumer reorganizations, these increased fees and costs are far outweighed by the savings and convenience of Chapter 11.

These savings, like �cram down� of automobiles and elimination of the trustee�s administrative fee, will be discussed in more detail in my upcoming articles.

The change to the Absolute Priority Rule has gone widely unnoticed by consumer bankruptcy lawyers, largely because so few understand Chapter 11.� However, we are starting to realize the power of Chapter 11 for consumers, and a concerted effort is being made by many to understand this complicated area of bankruptcy law.� I’ll be in Tucson next week, attending a three day seminar conducted by The National Association of Consumer Bankruptcy Attorneys to learn how to identify which consumers will benefit from Chapter 11 and how to file these types of bankruptcies.� Of course a three-day seminar is really the beginning of an education in Chapter 11, and I predict there will be more advanced seminars to follow.

Be on the lookout for more articles and videos by me and other BLNers on the advantages and nuances of the individual Chapter 11.

Edit : Edit
Comments : Leave a Comment »

Tags: bankruptcy, California cram down, Chapter 13

Categories : Cramdown, Foreclosure, I Have a Plan, Mortgage modification, bankruptcy, pedatory lending

Fabrication of Documents: MERS GAP Illuminated

23 12 2009

Posted on July 30, 2009 by livinglies

Another example of why a TILA audit is grossly inadequate. A forensic audit is required covering all bases. Although dated, this article picks up on a continuing theme that demonstrates the title defect, the questionable conduct of pretender lenders and the defects in the foreclosure process when you let companies with big brand names bluff the system. The MERS GAP arises whether MERS is actually the nominee on the deed of trust (or mortgage deed) or not. It is an announcement that there will be off record transactions between parties who have no interest in the loan but who will assert such an interest once they have successfullly fabricated documents, had someone without authority sign them, on behalf of an entity with no real beneficial interest or other economic interest in the loan, and then frequently notarized by someone in another state. we have even seen documents notarized in blank and forged signatures of borrowers on loan closing papers.

NYTimes.com
Lender Tells Judge It ‘Recreated’ Letters
Tuesday January 8, 2008 11:38 pm ET
By GRETCHEN MORGENSON
The Countrywide Financial Corporation fabricated documents related to the bankruptcy case of a Pennsylvania homeowner, court records show, raising new questions about the business practices of the giant mortgage lender at the center of the subprime mess.The documents — three letters from Countrywide addressed to the homeowner — claimed that the borrower owed the company $4,700 because of discrepancies in escrow deductions. Countrywide’s local counsel described the letters to the court as “recreated,” raising concern from the federal bankruptcy judge overseeing the case, Thomas P. Agresti.

“These letters are a smoking gun that something is not right in Denmark,” Judge Agresti said in a Dec. 20 hearing in Pittsburgh.

The emergence of the fabricated documents comes as Countrywide confronts a rising tide of complaints from borrowers who claim that the company pushed them into risky loans. The matter in Pittsburgh is one of 300 bankruptcy cases in which Countrywide’s practices have come under scrutiny in western Pennsylvania.

Judge Agresti said that discovery should proceed so that those involved in the case, including the Chapter 13 trustee for the western district of Pennsylvania and the United States trustee, could determine how Countrywide’s systems might generate such documents.

A spokesman for the lender, Rick Simon, said: “It is not Countrywide’s policy to create or ‘fabricate’ any documents as evidence that they were sent if they had not been. We believe it will be shown in further discovery that the Countrywide bankruptcy technician who generated the documents at issue did so as an efficient way to convey the dates the escrow analyses were done and the calculations of the payments as a result of the analyses.”

The documents were generated in a case involving Sharon Diane Hill, a homeowner in Monroeville, Pa. Ms. Hill filed for Chapter 13 bankruptcy protection in March 2001 to try to save her home from foreclosure.

After meeting her mortgage obligations under the 60-month bankruptcy plan, Ms. Hill’s case was discharged and officially closed on March 9, 2007. Countrywide, the servicer on her loan, did not object to the discharge; court records from that date show she was current on her mortgage.

But one month later, Ms. Hill received a notice of intention to foreclose from Countrywide, stating that she was in default and owed the company $4,166.

Court records show that the amount claimed by Countrywide was from the period during which Ms. Hill was making regular payments under the auspices of the bankruptcy court. They included “monthly charges” totaling $3,840 from November 2006 to April 2007, late charges of $128 and other charges of almost $200.

A lawyer representing Ms. Hill in her bankruptcy case, Kenneth Steidl, of Steidl and Steinberg in Pittsburgh, wrote Countrywide a few weeks later stating that Ms. Hill had been deemed current on her mortgage during the period in question. But in May, Countrywide sent Ms. Hill another notice stating that her loan was delinquent and demanding that she pay $4,715.58. Neither Mr. Steidl nor Julia Steidl, who has also represented Ms. Hill, returned phone calls seeking comment.

Justifying Ms. Hill’s arrears, Countrywide sent her lawyer copies of three letters on company letterhead addressed to the homeowner, as well as to Mr. Steidl and Ronda J. Winnecour, the Chapter 13 trustee for the western district of Pennsylvania.

The Countrywide letters were dated September 2003, October 2004 and March 2007 and showed changes in escrow requirements on Ms. Hill’s loan. “This letter is to advise you that the escrow requirement has changed per the escrow analysis completed today,” each letter began.

But Mr. Steidl told the court he had never received the letters. Furthermore, he noticed that his address on the first Countrywide letter was not the location of his office at the time, but an address he moved to later. Neither did the Chapter 13 trustee’s office have any record of receiving the letters, court records show.

When Mr. Steidl discussed this with Leslie E. Puida, Countrywide’s outside counsel on the case, he said Ms. Puida told him that the letters had been “recreated” by Countrywide to reflect the escrow discrepancies, the court transcript shows. During these discussions, Ms. Puida reduced the amount that Countrywide claimed Ms. Hill owed to $1,500 from $4,700.

Under questioning by the judge, Ms. Puida said that “a processor” at Countrywide had generated the letters to show how the escrow discrepancies arose. “They were not offered to prove that they had been sent,” Ms. Puida said. But she also said, under questioning from the court, that the letters did not carry a disclaimer indicating that they were not actual correspondence or that they had never been sent.

A Countrywide spokesman said that in bankruptcy cases, Countrywide’s automated systems are sometimes overridden, with technicians making manual adjustments “to comply with bankruptcy laws and the requirements in the jurisdiction in which a bankruptcy is pending.” Asked by Judge Agresti why Countrywide would go to the trouble of “creating a letter that was never sent,” Ms. Puida, its lawyer, said she did not know.

“I just, I can’t get over what I’m being told here about these recreations,” Judge Agresti said, “and what the purpose is or was and what was intended by them.”

Ms. Hill’s matter is one of 300 bankruptcy cases involving Countrywide that have come under scrutiny by Ms. Winnecour, the Chapter 13 trustee in Pittsburgh. On Oct. 9, she asked the court to sanction Countrywide, contending that the company had lost or destroyed more than $500,000 in checks paid by homeowners in bankruptcy from December 2005 to April 2007.

Ms. Winnecour said in court filings that she was concerned that even as Countrywide had misplaced or destroyed the checks, it levied charges on the borrowers, including late fees and legal costs. A spokesman in her office said she would not comment on the Hill case.

O. Max Gardner III, a lawyer in North Carolina who represents troubled borrowers, says that he routinely sees lenders pursue borrowers for additional money after their bankruptcies have been discharged and the courts have determined that the default has been cured and borrowers are current. Regarding the Hill matter, Mr. Gardner said: “The real problem in my mind when reading the transcript is that Countrywide’s lawyer could not explain how this happened.”

Filed under: CDO, CORRUPTION, Eviction, GTC | Honor, Investor, Mortgage, bubble, currency, foreclosure, securities fraud | Tagged: borrower, countrywide, disclosure, foreclosure defense, foreclosure offense, fraud, rescission, RESPA, TILA audit, trustee
« Lucrative Fees May Deter Efforts to Alter Loans

Edit : Edit
Comments : Leave a Comment »

Tags: 2932.5, eviction, Foreclosure, Real Estate Settlement Procedures Act

Categories : Foreclosure, Lender Class action, Loan Audit, Predatory Lending, bankruptcy

A ‘Little Judge’ Who Rejects Foreclosures, Brooklyn Style

2 09 2009

By Michael Powell – NY Times – 8/30/09

The judge waves you into his chambers in the State Supreme Court building in Brooklyn, past the caveat taped to his wall — “Be sure brain in gear before engaging mouth” — and into his inner office, where foreclosure motions are piled high enough to form a minor Alpine chain.

“I don’t want to put a family on the street unless it’s legitimate,” Justice Arthur M. Schack said.

Every week, the nation’s mightiest banks come to his court seeking to take the homes of New Yorkers who cannot pay their mortgages. And nearly as often, the judge says, they file foreclosure papers speckled with errors.

He plucks out one motion and leafs through: a Deutsche Bank representative signed an affidavit claiming to be the vice president of two different banks. His office was in Kansas City, Mo., but the signature was notarized in Texas. And the bank did not even own the mortgage when it began to foreclose on the homeowner.

The judge’s lips pucker as if he had inhaled a pickle; he rejected this one. “I’m a little guy in Brooklyn who doesn’t belong to their country clubs, what can I tell you?” he says, adding a shrug for punctuation. “I won’t accept their comedy of errors.”

The judge, Arthur M. Schack, 64, fashions himself a judicial Don Quixote, tilting at the phalanxes of bankers, foreclosure facilitators and lawyers who file motions by the bale. While national debate focuses on bank bailouts and federal aid for homeowners that has been slow in coming, the hard reckonings of the foreclosure crisis are being made in courts like his, and Justice Schack’s sympathies are clear. He has tossed out 46 of the 102 foreclosure motions that have come before him in the last two years. And his often scathing decisions, peppered with allusions to the Croesus-like wealth of bank presidents, have attracted the respectful attention of judges and lawyers from Florida to Ohio to California. At recent judicial conferences in Chicago and Arizona, several panelists praised his rulings as a possible national model.

His opinions, too, have been greeted by a cry of affront from a bank official or two, who say this judge stands in the way of what is rightfully theirs. HSBC bank appealed a recent ruling, saying he had set a “dangerous precedent” by acting as “both judge and jury,” throwing out cases even when homeowners had not responded to foreclosure motions. Justice Schack, like a handful of state and federal judges, has taken a magnifying glass to the mortgage industry. In the gilded haste of the past decade, bankers handed out millions of mortgages — with terms good, bad and exotically ugly — then repackaged those loans for sale to investors from Connecticut to Singapore. Sloppiness reigned. So many papers have been lost, signatures misplaced and documents dated inaccurately that it is often not clear which bank owns the mortgage.

Justice Schack’s take is straightforward, and sends a tremor through some bank suites: If a bank cannot prove ownership, it cannot foreclose. “If you are going to take away someone’s house, everything should be legal and correct,” he said. “I’m a strange guy — I don’t want to put a family on the street unless it’s legitimate.”

Justice Schack has small jowls and big black glasses, a thin mustache and not so many hairs combed across his scalp. He has the impish eyes of the high school social studies teacher he once was, aware that something untoward is probably going on at the back of his classroom. He is Brooklyn born and bred, with a master’s degree in history and an office loaded with autographed baseballs and photographs of the Brooklyn Dodgers. His written decisions are a free-associative trip through popular, legal and literary culture, with a sideways glance at the business pages.

Confronted with a case in which Deutsche Bank and Goldman Sachs passed a defaulted mortgage back and forth and lost track of the documents, the judge made reference to the film classic “It’s a Wonderful Life” and the evil banker played by Lionel Barrymore. “Lenders should not lose sight,” Justice Schack wrote in that 2007 case, “that they are dealing with humanity, not with Mr. Potter’s ‘rabble’ and ‘cattle.’ Multibillion-dollar corporations must follow the same rules in the foreclosure actions as the local banks, savings and loan associations or credit unions, or else they have become the Mr. Potters of the 21st century.”

Last year, he chastised Wells Fargo for filing error-filled papers. “The court,” the judge wrote, “reminds Wells Fargo of Cassius’s advice to Brutus in Act 1, Scene 2 of William Shakespeare’s ‘Julius Caesar’: ‘The fault, dear Brutus, is not in our stars, but in ourselves.’ ”

Then there is a Deutsche Bank case from 2008, the juicy part of which he reads aloud:

“The court wonders if the instant foreclosure action is a corporate ‘Kansas City Shuffle,’ a complex confidence game,” he reads. “In the 2006 film ‘Lucky Number Slevin,’ Mr. Goodkat, a hit man played by Bruce Willis, explains: ‘A Kansas City Shuffle is when everybody looks right, you go left.’ “The banks’ reaction? Justice Schack shrugs. “They probably curse at me,” he says, “but no one is interested in some little judge.”

Little drama attends the release of his decisions. Beaten-down homeowners rarely show up to contest foreclosure actions, and the judge scrutinizes the banks’ papers in his chambers. But at legal conferences, judges and lawyers have wondered aloud why more judges do not hold banks to tougher standards.

“To the extent that judges examine these papers, they find exactly the same errors that Judge Schack does,” said Katherine M. Porter, a visiting professor at the School of Law at the University of California, Berkeley, and a national expert in consumer credit law. “His rulings are hardly revolutionary; it’s unusual only because we so rarely hold large corporations to the rules.”

Banks and the cottage industry of mortgage service companies and foreclosure lawyers also pay rather close attention. A spokeswoman for OneWest Bank acknowledged that an official, confronted with a ream of foreclosure papers, had mistakenly signed for two different banks — just as the Deutsche Bank official did. Deutsche Bank, which declined to let an attorney speak on the record about any of its cases before Justice Schack, e-mailed a PDF of a three-page pamphlet in which it claimed little responsibility for foreclosures, even though the bank’s name is affixed to tens of thousands of such motions. The bank described itself as simply a trustee for investors.

Justice Schack came to his recent prominence by a circuitous path, having worked for 14 years as public school teacher in Brooklyn. He was a union representative and once walked a picket line with his wife, Dilia, who was a teacher, too. All was well until the fiscal crisis of the 1970s.

“Why’d I go to law school?” he said. “Thank Mayor Abe Beame, who froze teacher salaries.”

He was counsel for the Major League Baseball Players Association in the 1980s and ’90s, when it was on a long winning streak against team owners. “It was the millionaires versus the billionaires,” he says. “After a while, I’m sitting there thinking, ‘He’s making $4 million, he’s making $5 million, and I’m worth about $1.98.’ ”

So he dived into a judicial race. He was elected to the Civil Court in 1998 and to the Supreme Court for Brooklyn and Staten Island in 2003. His wife is a Democratic district leader; their daughter, Elaine, is a lawyer and their son, Douglas, a police officer.Justice Schack’s duels with the banks started in 2007 as foreclosures spiked sharply. He saw a plague falling on Brooklyn, particularly its working-class black precincts. “Banks had given out loans structured to fail,” he said.

The judge burrowed into property record databases. He found banks without clear title, and a giant foreclosure law firm, Steven J. Baum, representing two sides in a dispute. He noted that Wells Fargo’s chief executive, John G. Stumpf, made more than $11 million in 2007 while the company’s total returns fell 12 percent. “Maybe,” he advised the bank, “counsel should wonder, like the court, if Mr. Stumpf was unjustly enriched at the expense of W.F.’s stockholders.”

He was, how to say it, mildly appalled. “I’m a guy from the streets of Brooklyn who happens to become a judge,” he said. “I see a bank giving a $500,000 mortgage on a building worth $300,000 and the interest rate is 20 percent and I ask questions, what can I tell you?”

Edit : Edit
Comments : Leave a Comment »

Tags: Audit, bailout, bankruptcy, borrower, brad keiser, credit, credit crisis, depression, FDG, Federal Bailout, foreclosure defense, Foreclosure Defense Group, foreclosure offense, foreclosures, Fraud, HAMP, lawyers, Lender Liability, Loan Mod, LOAN MODIFICATION, lost note, Mortgage, quiet title, rescission, respa, RICO, TILA audit

Categories : 2924, Cramdown, Foreclosure, I Have a Plan, bankruptcy, eviction

Homecomings TILA complaint GMAC

27 06 2009

homecomingstila

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, Foreclosure, I Have a Plan, Lender Class action, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, bankruptcy, eviction, lis pendence, stop foreclosure, usury

Leman Tila complaint

27 06 2009

Lemantilacomp

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, I Have a Plan, bankruptcy, eviction, stop foreclosure, truth in lending

Lender class action

27 06 2009

Mortgageinvestorgroupclass

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, I Have a Plan, Loan Audit, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, bankruptcy, eviction, lis pendence, mortgage meltdown, stop foreclosure, usury

Option One Complaint Pick a payment lawsuit

27 06 2009

optionone

Edit : Edit
Comments : 2 Comments »

Tags: stop foreclosure, civil code 2923.5, truth in lending, Mortgage modification, eviction, california, mortgage meltdown, Foreclosure, lis pendence, litigation, bankruptcy, Chapter 13, 2924, 2923.5, 2932.5, Recoupment, Fraud, Predatory Lending, FCRA, 2923.6, Real Estate Settlement Procedures Act, Uncategorized, California cram down, Audit, Countrywide, United First, usury, truth in lending 2923.5

Categories : 2923.5, 2923.6, 2924, FCRA, Foreclosure, I Have a Plan, Lender Class action, Predatory Lending, Real Estate Settlement Procedures Act, bankruptcy, eviction, lis pendence, mortgage meltdown, stop foreclosure, usury

Standing argument

7 06 2009

judge-youngs-decision-on-nosek

Ameriquest’s final argument, that the sanctions are a
criminal penalty, is bereft of authority. Ameriquest cites F.J.
Hanshaw Enterprises, Inc. v. Emerald River Development, Inc., 244
F.3d 1128 (9th Cir. 2001), a case about inherent powers – not
Rule 11 –

This is an excerpt from the decision just this bloggers note the Hanshaw Case was my case. I argued this case at the 9th circuit court of appeals

http://openjurist.org/244/f3d/1128/fj-v-emeraldfj-v-emerald

If you will grasp the implications of this judge-youngs-decision-on-nosekdecision all or most all the evictions and  foreclosures are being litigated by the wrong parties that is to say parties who have no real stake in the outcome. they are merely servicers not the real investors. They do not have the right to foreclose or evict. No assignment No note No security interest No standing They do not want to be listed anywhere. They (the lenders) have caused the greatest damage to the American Citizen since the great depression and they do not want to be exposed or named in countless lawsuits. Time and time again I get from the judges in demurer hearings ” I see what you are saying counsel but your claim does not appear to be against this defendant” the unnamed investment pool of the Lehman Brothers shared High yield equity Fund trustee does not exist and so far can’t be sued.

Edit : Edit
Comments : 1 Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending 2923.5, truth in lending, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, Cramdown, Foreclosure, I Have a Plan, Loan Audit, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, bankruptcy, eviction, respa, stop foreclosure

Exponential Usury On Wall Street

24 05 2009

By Edward W. Miller, MD

Thou hast taken usury and increase, and thou hast greedily gained of thy neighbors by extortion, and thou hast forgotten me saith the Lord.” – Ezekiel 22:12 (King James Version)

And Jesus entered the temple of God and drove out all who sold and bought in the temple and turned the tables of the money changers and the seats of those who sold pigeons. He said to them, ‘It is written, ‘My house show be called a house of prayer’; but you make it a den of robbers.'” -Matthew 21: 12

AS for our economy, the ongoing failure of millions of “sub-prime” mortgages with 9 million threatened foreclosures across the country, the increasing reported lack of “affordable housing”, along with a consumer debt of $2.52 trillion, and a major economic recession stretching across the industrial world comes as no surprise to those who have watched Congress, again and again surrender to Wall Street lobbying over the past half century. The first major slide downhill took place on June 23rd, 1947, when a newly elected Republican Congress passed the Taft-Hartley Act over president Truman’s veto. The results of this assault on American labor appeared gradually over the years. Beginning in 1972, statistics show that wages were already falling below the costs of living for the American middle class.

The present huge pyramid of debt, both public and private was made possible by the weakening of labor’s political input plus thirty years of Congress’ relentless deregulation of our financial markets, culminating, during the Clinton Administration, in the 1999 repeal of the Glass-Steagall Act, which Act had prohibited banks from dealing in high-risk securities. In effect, Washington supposed regulators had become passive enablers to Wall Street’s financial binge drinkers.

As columnist Robert Scheer pointed out (March 12th SF Chronicle): “The Clinton-backed Gramm-Leach-Baily Act of 1999 called the “Financial Services Modernization Act,” permitted banks, stock brokers, and insurance companies to merge and was exacerbated by Bush’s appointment of rapacious corporate foxes to watch the corporate hen house.” They will take care of their own…Their action was made possible only by the federal government’s using our tax dollars to pick up the bad debt of the banks.”

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2924, eviction, Foreclosure, lis pendence, litigation, stop foreclosure, usury

Categories : Foreclosure, bankruptcy, usury

Coalition sues lenders

9 05 2009

Coalition Sues lenders

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, I Have a Plan, Lender Class action, Loan Audit, bankruptcy, eviction, lis pendence, pedatory lending

FORECLOSURE DEFENSE: CALIFORNIA SOMETIMES IT’S THE LITTLE THINGS THAT COUNT

25 04 2009

As I continue through this journey through the maze created by lenders, investment bankers, title agents and closing/escrow agents I keep discovering things that end up being quite interesting.

For example: In California the requirements for posting Notice of sale are very clear and yet, I am told that they are routinely ignored. This would invalidate the notice of sale on the most basic of concepts “notice,” by definition and therefore could be attacked at any time as a defect of service and jurisdiction while at the same time bring your claims under TILA, usury, identity theft, fraud, etc. California requires public and private posting as do most other states. The public part is what they ordinarily ignore. see notice-of-the-sale-thereof-shall-be-given-by-posting-a-written-notice

With the new law changes Civil code 2923.5  that became effective Sept 6, 2008 it adds more procedures that are routinely not followed ie. a Declaration must be attached and recorded that recites that the lender has met and assessed the borrowers financial condition and made alternatives to forclosure ie. modification. First they don’t do it and second the declaration is not even under penalty of pujury. So on its face the sale could be set aside.

After the notice of default the lender routinely switches trustee’s and records a Substitution of trustee with an affidavit that is not under penalty of perjury. Again the sale could be set aside for this.

For example. MERS, whose legal status is dubious at best anyway inasmuch as it plainly violates the recording requirements of every state and which supposedly has not one but multiple corporate entities, one of which has been suspended from operation in California, is subject to specific instructions as to what to do with the “master Deed of Trust and what to do with the individual deed of trust, the procedures, language to be inserted etc. These too I am told are routinely ignored especially when it comes to (a) showing that you have provided a copy of the Master Deed of Trust and (b) having the proof as specifically required in the FNMA/Freddie instruction sheet.

As stated in my other posts, the entire MERS concept causes, in my opinion, a separation between the alleged security instrument and provisions, the Trustee’s authority and the note, all of which end up being different people who were all “real parties in interest” receiving fees and value not disclosed in the GFE or settlement statement. In all these closings the borrower is subjected to a series of documents that hide the true nature of the transaction, the true source of funds, the true lender, and the application of funds contrary to the terms of the note.

All of these new requirements create questions of fact, that if not correct, create a method to set aside the sale by way of court action. I guess that’s the point the lenders trustees and servicers are banking on the victims not fighting it.

Edit : Edit
Comments : 2 Comments »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, civil code 2923.5, civil code 2924, Foreclosure, HOEPA, litigation, stop foreclosure, truth in lending 2923.5

Categories : 2923.5, 2923.6, Foreclosure, I Have a Plan, Loan Audit, bankruptcy, stop foreclosure

Borrowers’ Defenses to Forclosure

19 04 2009

A great source of information you can use, and since the Guy is in Washington I can give him all the credit
defensestoforeclosure

Edit : Edit
Comments : Leave a Comment »

Tags: eviction, Foreclosure, Fraud, HOEPA, lis pendence, litigation, Predatory Lending, stop foreclosure, tila, truth in lending 2923.5, truth in lending

Categories : Cramdown, Foreclosure, I Have a Plan, Loan Audit, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, bankruptcy, eviction, respa, stop foreclosure, tila, truth in lending

Doan deal 2

18 04 2009

Mortgage Chaos? Add a Bankruptcy and its a Recipe for Disaster! Part II

My last article laid out the framework for the bankruptcy real estate cocktail. This article will attempt to predict how that cocktail will be served and its ramifications. Remember, this recipe for disaster requires two things: a “Non-Perfected” Mortgage and a Bankruptcy.

So far, about 70 to 80% of the mortgages I see in local Bankruptcy cases here in the Southern District of California Bankruptcy Court appear to be non-perfected. Despite my continued requests to the mortgage companies to produce either proof they possess the underlying note or proof of a recorded assignment, I have received neither. Instead I get the run around, “Yes we have the original note. Really, can I see? Actually no, I thought we had the original, but we have a copy…………Yes we have the assignment. Really, can I see? Sure, here you go. But that was not recorded. Oh…….” Its the same song and dance. So what becomes of this?

Chapter 7: The trustee will most likely put on his “544 hat” and now “strip the lien off the house.”

When he does this, he creates an unencumbered piece of real estate in most cases, with the exception of a small amount of past taxes and HOA fees remaining as liens on the property. The property is then sold and net profits held in trust. A notice is then sent to the creditors of the bankruptcy to submit a claim if they want to get paid.

The claims are then reviewed, and paid pro-rata or objected to with the Bankruptcy Court issuing the final ruling. The Claims process is a complex area too lengthy to discuss for this Blog, but suffice to say, many claims will be objected to as well, since most credit card debt and collection agents have similar problems in proving they too own their debts. Moreover, you might ask what happens to the mortgage lien which has now become a large unsecured debt? It might be paid, provided they can prove they own the note. However, it also may not. There is a Bankruptcy Code section, 11 USC 502(d) which states that a creditor may not be able to share in the distribution if they did not give up there lien when requested by the trustee under 544. So, it could be that any remaining monies may even go back to the debtor if the new unsecured mortgage claim is disallowed! But this remains a grey area, and time will tell.

But what if the debtor wants to keep the house? No problem. Time to make a deal with the trustee. Suppose that the House was bought for $650,000 in 2006 with 100% financing and now is worth $500,000. The debtor is negative $150,000 in equity. Upside Down! Now lets say a bankruptcy is filed. The Mortgage Note was not perfected so Bankruptcy Trustee avoids the lien. Now he has this $500,000 piece of real estate that he wants to sell, but the debtor wants to keep it. So the debtor makes an offer of $430,000 to keep the house and the Trustee agrees. Trustee agrees since he would only net $430,000 anyways after costs of sale, attorney fees, marketing, etc. Debtor gets the $430,000 from a new loan he might qualify for, have cosigned, or have a family member engage their credit. Trustee then takes the $430,000 and distributes to creditors, which include the debtor’

s non-dischargeable taxes, non-dischargeable child support obligations, and non-dischargeable student loans.

Wow! Lets get this straight: Mortgage reduced from $650,000 to $430,000, and over $100,000 in non-dischargeable bankruptcy debt consisting of student loans, taxes, and support obligations also paid, and all other debt wiped out? Sounds like the lemon just turned into lemonade! Also, time to also read the blog on why the credit score is much better after bankruptcy than before now.

Chapter 13: In Chapter 13, the Trustee does not liquidate assets. Instead, he administers a three to five year plan by distributing the monthly payments from the debtor to the creditors, and the avoidance powers of the Chapter 7 Trustee are given to the Debtor(at least here in the Ninth Circuit….western states in the US). This includes the power to remove unperfected liens such as unperfected mortgages.

So now the debtor can remove the mortgage just like a Chapter 7 Trustee.

But that might be a problem. The Chapter 13 Trustee may object now to the bankruptcy since the debtor has too many assets. Well, as discussed above, time to get another smaller mortgage, pay that money into the Chapter 13 plan, and again pay off the non-dischargeable debt. Even better, if not all the creditors filed claims, the money then reverts to the debtor!

In the alternative, the simple threat of litigating the issues to remove the mortgage sure makes for a great negotiating tool to deal with the lender and rewrite the mortgage…..knocking off possibly hundreds of thousands of dollars and also lowering the interest rate substantially.

Involuntary Bankruptcies? Is there such a thing? Unfortunately, YES. And this could be very problematic. If several creditors are owed substantial sums of money, say a SBA Loan, large Medical Bill, or even large credit cards, they could petition the court for an involuntary bankruptcy. The debtor has no control to stop it. Next thing the debtor knows, he is in a bankruptcy and all the property is being liquidated, less the property allowed by exemption law. Then steps up the Chapter 7 Trustee and discovers that the Mortgage is not perfected. Well, there goes the house now! Or does it?

Once again, a smart debtor would argue to the trustee that he will get a loan to pay the trustee as discussed above. Problem solved, and what appears to be disaster at first, may be a blessing in disguise. The debtor keeps his home with a much smaller mortgage and removes non-dischargeable debts. He is better off now than before, even though he did not want this!

So the Recipe for Disaster appears to only affect the Mortgage Companies. They are the losing parties here, and rightly so for getting sloppy…..attempting to save $14 per loan times thousands of loans. Why didn’t they compute losing hundreds of thousands of dollars per loan times thousands of loans? Couldn’

t they connect the dots? No…..like I said, lots of smart Real Estate Attorneys and lots of smart Bankruptcy Attorneys, but not too many Bankruptcy Real Estate Attorneys and none of them worked for the Mortgage industry.

But everyone else now seems to win. The debtor reduces his mortgage, gets a better interest rate, and eliminates the rest of his debts. The trustee makes a healthy profit on distributing such a large dividend to creditors. And the creditors who obey the law now share in a large dividend.

Of course, all the forgoing is Brand New. It has not been done yet in any cases I am aware of. But since talking with other Bankruptcy Attorneys across the Nation for the past couple weeks, its starting to catch on. I’

m told a few trustees back east have started this procedure now. And just today, I get an announcement from our local Chapter 7 Trustee that he is making new requirements concerning producing documents in all cases before him so that he can start avoiding these liens. Coincidentally, this also comes after three of our Local Bankruptcy Judges started denying relief to Mortgage Creditors when coming before the Bankruptcy Court during the past week! Its brand new…but catching on like wildfire.

Housing Bubble? Mortgage Bubble? Well now it’

s a Housing Mortgage Bubble disaster about to happen in Bankruptcy Court. Congress was not able to reform the predatory lending abuses. The Lenders certainly do not seem interested in workout programs. I guess its time for a Bankruptcy Cocktail!

Written by Attorney Michael G. Doan

Edit : Edit
Comments : Leave a Comment »

Tags: bankruptcy, California cram down, Chapter 13, Foreclosure, stop foreclosure

Categories : Foreclosure, I Have a Plan, Loan Audit, bankruptcy

United First Class Action

9 03 2009

On Saturday March 7,2009 a meeting was held for 200 plus victims of the United First equity save your house scam. At that meeting it was determined that a class action should be filed to recover the funds lost by the victims of the unconscionable contract.

As a first step an involuntary Bankruptcy is being filed today March 9, 2009. To be considered as a creditor of said Bankruptcy please Fax the Joint Venture agreement and retainer agreement to 909-494-4214 begin_of_the_skype_highlighting              909-494-4214      end_of_the_skype_highlighting.
Additionally it is this attorneys opinion that said Bankruptcy will act as a “stay” for all averse actions being taken by lenders as against said victims. This opinion is based upon the fact that United First maintained an interest in the real property as a joint venture to 80% of the properties value(no matter how unconscionable this may be) this is an interest that can be protected by the Bankruptcy Stay 11 USC 362.

Edit : Edit
Comments : 8 Comments »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, California cram down, Chapter 13, civil code 2923.5, Countrywide, Cramdown, eviction, FCRA, Federal Jurisdiction, Foreclosure, Fraud, HOEPA, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, respa, stop foreclosure, tila, truth in lending 2923.5, truth in lending, United First

Categories : 2923.6, Cramdown, Foreclosure, I Have a Plan, Loan Audit, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, United First, bankruptcy, eviction, respa, stop foreclosure, tila, truth in lending

Mortgage Chaos? Add a Bankruptcy and its a Recipe for Disaster!

7 03 2009

There are many bright Real Estate Attorneys out there.  Likewise, there are many bright Bankruptcy Attorneys out there.  But I don’t think there are that many bright Bankruptcy Real Estate Attorneys out there.  And the few that do exist…..well, I don’t think they worked for the Mortgage Companies. Why?  Well if they did, the transfer of loans would not have existed the way that did for the past several years.  Lately, the big news in foreclosures has been the Ohio cases where Judge Boyko dismissed 14 foreclosures on October 31, 2007, and his Colleague, Judge Kathleen O’Malley of the same court, followed suite ordering another 32 dismissals on November 14, 2007.    But that’s only the beginning.  It gets worse.  Add a bankruptcy filing to the mix and its like adding gas to the fire.  The reason being, from a little bankruptcy code section called 11 USC 544.  Basically, that section allows a Trustee appointed by the Bankruptcy Court to avoid non-perfected liens.  Non-perfected liens are liens that exist, but are not fully noticed to everyone, sort of like secret liens.  Its like if someone loans you $50,000 and takes a lien out on your house, but never records their lien with the county recorder.  If that house sells, the lien is not paid since escrow was not aware of it.  Had it been recorded by a “deed of trust” or “mortgage,” the Title Company and Escrow Company would not have closed once they saw it, unless it was paid. Because of all the crazy real estate financing, securitization, and reselling of all the mortgages, sort of the same thing has happened with all the mortgages and trust deeds, but on a much larger scale.    Normally, most states require that when a mortgage or real estate loan is sold or transferred to another lender, certain things must happen to maintain perfection, that is, in order to make sure that lien gets paid at a later date.  Generally, the purchaser of the Mortgage has it recorded at the County Recorders Office.  This is usually done thru a recorded assignment of the underlying note and mortgage or a new Mortgage being recorded and transfer of the Note.The Note is the most important part of any Mortgage or Deed of Trust.  The Mortgage or Deed of Trust is useless without the Note, and usually can not exist without it.  It’s a negotiable instrument, just like a check.  So when its transferred, it needs to be endorsed, just like a check.  So essentially, all real estate has documents recorded to evidence the lien, and which are linked to the “checks.”  Well, this is where the problem lies.  In most of the Mortgage Transfers which took place recently, the Mortgage or Deed of Trust was transferred, but not the Note.  Whoops!  Why?  It was just too expensive to track down every note for every mortgage since they were all bundled up together and sold in large trusts, then resold, resold, etc.  Imagine trying to find 1 note among thousands, which were sold in different trust pools over time.  Pretty hard to do!  So shortcuts happened.  Soon enough, shortcuts were accepted and since there were very little foreclosures during the last 7 year real estate bubble, no one really noticed in the few foreclosures that took place.    Until recently. That’s where the Ohio cases come in. Times have now changed.  That little shortcut stopped the foreclosures in Ohio since the most basic element of any lawsuit is that the party bringing the lawsuit is the “real party in interest.”  That is, they are the aggrieved party, injured party, relief seeking party.  So in Ohio, the Judge dismissed all the cases since they did not possess the Notes or Assignments on the date of filing, and technically were not the real party in interest to file the suit at the time.  But that maybe only a temporary problem until they find the note or assignment.  At that point, they will probably just file the foreclosure lawsuit again.  So its just a delay.  But the bigger problem exists in Bankruptcy.  You see, once a Bankruptcy Case is filed, the Automatic Stay goes into effect.  Everything is frozen.  Mistakes can no longer be corrected.  And if the lender did not have the note or recorded assignment when the bankruptcy case was filed, they are no longer “perfected.” And this problem can not be fixed!  Finding the note or assignment at that point is simply too late.  That $12 shortcut may now have cost the lender a $500,000 mortgage!    The Bankruptcy Trustee now is in charge, puts his 11 USC 544 hat on, and voila, removes the mortgage!  Yes, that house that once had no equity worth $450,000 with $500,000 owed on it, is now FREE AND CLEAR!  He sells it, and disburses all the proceeds to the creditors.  Next Issue, I’ll explain the ramifications of this chaos….both beneficial and detrimental.

But the bigger problem exists in Bankruptcy.  You see, once a Bankruptcy Case is filed, the Automatic Stay goes into effect.  Everything is frozen.  Mistakes can no longer be corrected.  And if the lender did not have the note or recorded assignment when the bankruptcy case was filed, they are no longer “perfected.” And this problem can not be fixed!  Finding the note or assignment at that point is simply too late.  That $12 shortcut may now have cost the lender a $500,000 mortgage!    The Bankruptcy Trustee now is in charge, puts his 11 USC 544 hat 

2924.3. (a) Except as provided in subdivisions (b) and (c), a
person who has undertaken as an agent of a mortgagee, beneficiary, or
owner of a promissory note secured directly or collaterally by a
mortgage or deed of trust on real property or an estate for years
therein, to make collections of payments from an obligor under the
note, shall mail the following notices, postage prepaid, to each
mortgagee, beneficiary or owner for whom the agent has agreed to make
collections from the obligor under the note:
(1) A copy of the notice of default filed in the office of the
county recorder pursuant to Section 2924 on account of a breach of
obligation under the promissory note on which the agent has agreed to
make collections of payments, within 15 days after recordation.
(2) Notice that a notice of default has been recorded pursuant to
Section 2924 on account of a breach of an obligation secured by a
mortgage or deed of trust against the same property or estate for
years therein having priority over the mortgage or deed of trust
securing the obligation described in paragraph (1), within 15 days
after recordation or within three business days after the agent
receives the information, whichever is later

Sec. 2932.5

Where a power to sell real property is given to a
mortgagee, or other encumbrancer, in an instrument intended to secure
the payment of money, the power is part of the security and vests in
any person who by assignment becomes entitled to payment of the
money secured by the instrument. The power of sale may be exercised
by the assignee if the assignment is duly acknowledged and recorded.

FROM TIM MCLANDLESS
Most all foreclosures in California can be set aside. The power of sale by non judicial means is contained in the civil code 2932. In order to be valid the assignment must be recorded California civil code 2932.5. Most all notices of default recorded by the “Sub-Prime” lenders have not recorded an assignment till just before or just after the Trustee’s sale. They rely on the MERS agency agreement to protect them but under California law they are wrong.
Law Offices of
TIMOTHY McCandless
15647 Village Dr
Victorville, Ca 92392
TEL (760) 733-8885 begin_of_the_skype_highlighting              (760) 733-8885      end_of_the_skype_highlighting; FAX (909)494-4214

Sec. 2934

Any assignment of a mortgage and any assignment of the
beneficial interest under a deed of trust may be recorded, and from
the time the same is filed for record operates as constructive notice
of the contents thereof to all persons; and any instrument by which
any mortgage or deed of trust of, lien upon or interest in real
property, (or by which any mortgage of, lien upon or interest in
personal property a document evidencing or creating which is required
or permitted by law to be recorded), is subordinated or waived as to
priority may be recorded, and from the time the same is filed for
record operates as constructive notice of the contents thereof, to
all persons.

NOTE SECURED BY REAL ESTATE
HON. SAMUEL L. BUFFORD
UNITED STATES BANKRUPTCY JUDGE
CENTRAL DISTRICT OF CALIFORNIA
LOS ANGELES, CALIFORNIA
(FORMERLY HON.) R. GLEN AYERS
LANGLEY & BANACK
SAN ANTONIO, TEXAS
AMERICAN BANKRUPTCY INSTUTUTE
APRIL 3, 2009
WASHINGTON, D.C.
WHERE’S THE NOTE, WHO’S THE HOLDER
INTRODUCTION
In an era where a very large portion of mortgage obligations have been securitized, by assignment to a trust indenture trustee, with the resulting pool of assets being then sold as mortgage backed securities, foreclosure becomes an interesting exercise, particularly where judicial process is involved. We are all familiar with the securitization process. The steps, if not the process, is simple. A borrower goes to a mortgage lender. The lender finances the purchase of real estate. The borrower signs a note and mortgage or deed of trust. The original lender sells the note and assigns the mortgage to an entity that securitizes the note by combining the note with hundreds or thousands of similar obligation to create a package of mortgage backed securities, which are then sold to investors.
Unfortunately, unless you represent borrowers, the vast flow of notes into the maw of the securitization industry meant that a lot of mistakes were made. When the borrower defaults, the party seeking to enforce the obligation and foreclose on the underlying collateral sometimes cannot find the note. A lawyer sophisticated in this area has speculated to one of the authors that perhaps a third of the notes “securitized” have been lost or destroyed. The cases we are going to look at reflect the stark fact that the unnamed source’s speculation may be well-founded.
UCC SECTION 3-309
If the issue were as simple as a missing note, UCC §3-309 would provide a simple solution. A person entitled to enforce an instrument which has been lost, destroyed or stolen may enforce the instrument. If the court is concerned that some third party may show up and attempt to enforce the instrument against the payee, it may order adequate protection. But, and however, a person seeking to enforce a missing instrument must be a person entitled to enforce the instrument, and that person must prove the instrument’s terms and that person’s right to enforce the instrument. §3-309 (a)(1) & (b).
WHO’S THE HOLDER
Enforcement of a note always requires that the person seeking to collect show that it is the holder. A holder is an entity that has acquired the note either as the original payor or transfer by endorsement of order paper or physical possession of bearer paper. These requirements are set out in Article 3 of the Uniform Commercial Code, which has been adopted in every state, including Louisiana, and in the District of Columbia. Even in bankruptcy proceedings, State substantive law controls the rights of note and lien holders, as the Supreme Court pointed out almost forty (40) years ago in United States v. Butner, 440 U.S. 48, 54-55 (1979).
However, as Judge Bufford has recently illustrated, in one of the cases discussed below, in the bankruptcy and other federal courts, procedure is governed by the Federal Rules of Bankruptcy and Civil Procedure. And, procedure may just have an impact on the issue of “who,” because, if the holder is unknown, pleading and standing issues arise.
BRIEF REVIEW OF UCC PROVISIONS
Article 3 governs negotiable instruments – it defines what a negotiable instrument is and defines how ownership of those pieces of paper is transferred. For the precise definition, see § 3-104(a) (“an unconditional promise or order to pay a fixed amount of money, with or without interest . . . .”) The instrument may be either payable to order or bearer and payable on demand or at a definite time, with or without interest.
Ordinary negotiable instruments include notes and drafts (a check is a draft drawn on a bank). See § 3-104(e).
Negotiable paper is transferred from the original payor by negotiation. §3-301. “Order paper” must be endorsed; bearer paper need only be delivered. §3-305. However, in either case, for the note to be enforced, the person who asserts the status of the holder must be in possession of the instrument. See UCC § 1-201 (20) and comments.
The original and subsequent transferees are referred to as holders. Holders who take with no notice of defect or default are called “holders in due course,” and take free of many defenses. See §§ 3-305(b).
The UCC says that a payment to a party “entitled to enforce the instrument” is sufficient to extinguish the obligation of the person obligated on the instrument. Clearly, then, only a holder – a person in possession of a note endorsed to it or a holder of bearer paper – may seek satisfaction or enforce rights in collateral such as real estate.
NOTE: Those of us who went through the bank and savings and loan collapse of the 1980’s are familiar with these problems. The FDIC/FSLIC/RTC sold millions of notes secured and unsecured, in bulk transactions. Some notes could not be found and enforcement sometimes became a problem. Of course, sometimes we are forced to repeat history. For a recent FDIC case, see Liberty Savings Bank v. Redus, 2009 WL 41857 (Ohio App. 8 Dist.), January 8, 2009.
THE RULES
Judge Bufford addressed the rules issue this past year. See In re Hwang, 396 B.R. 757 (Bankr. C. D. Cal. 2008). First, there are the pleading problems that arise when the holder of the note is unknown. Typically, the issue will arise in a motion for relief from stay in a bankruptcy proceeding.
According F.R.Civ. Pro. 17, “[a]n action must be prosecuted in the name of the real party in interest.” This rule is incorporated into the rules governing bankruptcy procedure in several ways. As Judge Bufford has pointed out, for example, in a motion for relief from stay, filed under F.R.Bankr.Pro. 4001 is a contested matter, governed by F. R. Bankr. P. 9014, which makes F.R. Bankr. Pro. 7017 applicable to such motions. F.R. Bankr. P. 7017 is, of course, a restatement of F. R. Civ. P. 17. In re Hwang, 396 B.R. at 766. The real party in interest in a federal action to enforce a note, whether in bankruptcy court or federal district court, is the owner of a note. (In securitization transactions, this would be the trustee for the “certificate holders.”) When the actual holder of the note is unknown, it is impossible – not difficult but impossible – to plead a cause of action in a federal court (unless the movant simply lies about the ownership of the note). Unless the name of the actual note holder can be stated, the very pleadings are defective.
STANDING
Often, the servicing agent for the loan will appear to enforce the note. Assume that the servicing agent states that it is the authorized agent of the note holder, which is “Trust Number 99.” The servicing agent is certainly a party in interest, since a party in interest in a bankruptcy court is a very broad term or concept. See, e.g., Greer v. O’Dell, 305 F.3d 1297, 1302-03 (11th Cir. 2002). However, the servicing agent may not have standing: “Federal Courts have only the power authorized by Article III of the Constitutions and the statutes enacted by Congress pursuant thereto. … [A] plaintiff must have Constitutional standing in order for a federal court to have jurisdiction.” In re Foreclosure Cases, 521 F.Supp. 3d 650, 653 (S.D. Ohio, 2007) (citations omitted).
But, the servicing agent does not have standing, for only a person who is the holder of the note has standing to enforce the note. See, e.g., In re Hwang, 2008 WL 4899273 at 8.
The servicing agent may have standing if acting as an agent for the holder, assuming that the agent can both show agency status and that the principle is the holder. See, e.g., In re Vargas, 396 B.R. 511 (Bankr. C.D. Cal. 2008) at 520.
A BRIEF ASIDE: WHO IS MERS?
For those of you who are not familiar with the entity known as MERS, a frequent participant in these foreclosure proceedings:
MERS is the “Mortgage Electronic Registration System, Inc. “MERS is a mortgage banking ‘utility’ that registers mortgage loans in a book entry system so that … real estate loans can be bought, sold and securitized, just like Wall Street’s book entry utility for stocks and bonds is the Depository Trust and Clearinghouse.” Bastian, “Foreclosure Forms”, State. Bar of Texas 17th Annual Advanced Real Estate Drafting Course, March 9-10, 2007, Dallas, Texas. MERS is enormous. It originates thousands of loans daily and is the mortgagee of record for at least 40 million mortgages and other security documents. Id.
MERS acts as agent for the owner of the note. Its authority to act should be shown by an agency agreement. Of course, if the owner is unknown, MERS cannot show that it is an authorized agent of the owner.
RULES OF EVIDENCE – A PRACTICAL PROBLEM
This structure also possesses practical evidentiary problems where the party asserting a right to foreclose must be able to show a default. Once again, Judge Bufford has addressed this issue. At In re Vargas, 396 B.R. at 517-19. Judge Bufford made a finding that the witness called to testify as to debt and default was incompetent. All the witness could testify was that he had looked at the MERS computerized records. The witness was unable to satisfy the requirements of the Federal Rules of Evidence, particularly Rule 803, as applied to computerized records in the Ninth Circuit. See id. at 517-20. The low level employee could really only testify that the MERS screen shot he reviewed reflected a default. That really is not much in the way of evidence, and not nearly enough to get around the hearsay rule.
FORECLOSURE OR RELIEF FROM STAY
In a foreclosure proceeding in a judicial foreclosure state, or a request for injunctive relief in a non-judicial foreclosure state, or in a motion for relief proceeding in a bankruptcy court, the courts are dealing with and writing about the problems very frequently.
In many if not almost all cases, the party seeking to exercise the rights of the creditor will be a servicing company. Servicing companies will be asserting the rights of their alleged principal, the note holder, which is, again, often going to be a trustee for a securitization package. The mortgage holder or beneficiary under the deed of trust will, again, very often be MERS.
Even before reaching the practical problem of debt and default, mentioned above, the moving party must show that it holds the note or (1) that it is an agent of the holder and that (2) the holder remains the holder. In addition, the owner of the note, if different from the holder, must join in the motion.
Some states, like Texas, have passed statutes that allow servicing companies to act in foreclosure proceedings as a statutorily recognized agent of the noteholder. See, e.g., Tex. Prop. Code §51.0001. However, that statute refers to the servicer as the last entity to whom the debtor has been instructed to make payments. This status is certainly open to challenge. The statute certainly provides nothing more than prima facie evidence of the ability of the servicer to act. If challenged, the servicing agent must show that the last entity to communicate instructions to the debtor is still the holder of the note. See, e.g., HSBC Bank, N.A. v. Valentin, 2l N.Y. Misc. 3d 1123(A), 2008 WL 4764816 (Table) (N.Y. Sup.), Nov. 3, 2008. In addition, such a statute does not control in federal court where Fed. R. Civ. P. 17 and 19 (and Fed. R. Bankr. P. 7017 and 7019) apply.
SOME RECENT CASE LAW
These cases are arranged by state, for no particular reason.
Massachusetts
In re Schwartz, 366 B.R.265 (Bankr. D. Mass. 2007)
Schwartz concerns a Motion for Relief to pursue an eviction. Movant asserted that the property had been foreclosed upon prior to the date of the bankruptcy petition. The pro se debtor asserted that the Movant was required to show that it had authority to conduct the sale. Movant, and “the party which appears to be the current mortgagee…” provided documents for the court to review, but did not ask for an evidentiary hearing. Judge Rosenthal sifted through the documents and found that the Movant and thecurrent mortgagee had failed to prove that the foreclosure was properly conducted.
Specifically, Judge Rosenthal found that there was no evidence of a proper assignment of the mortgage prior to foreclosure. However, at footnote 5, Id. at 268, the Court also finds that there is no evidence that the note itself was assigned and no evidence as to who the current holder might be.
Nosek v. Ameriquest Mortgage Company (In re Nosek), 286 Br. 374 (Bankr D Mass. 2008).
Almost a year to the day after Schwartz was signed, Judge Rosenthal issued a second opinion. This is an opinion on an order to show cause. Judge Rosenthal specifically found that, although the note and mortgage involved in the case had been transferred from the originator to another party within five days of closing, during the five years in which the chapter 13 proceeding was pending, the note and mortgage and associated claims had been prosecuted by Ameriquest which has represented itself to be the holder of the note and the mortgage. Not until September of 2007 did Ameriquest notify the Court that it was merely the servicer. In fact, only after the chapter 13 bankruptcy had been pending for about three years was there even an assignment of the servicing rights. Id. at 378.
Because these misrepresentations were not simple mistakes: as the Court has noted on more than one occasion, those parties who do not hold the note of mortgage do not service the mortgage do not have standing to pursue motions for leave or other actions arising form the mortgage obligation. Id at 380.
As a result, the Court sanctioned the local law firm that had been prosecuting the claim $25,000. It sanctioned a partner at that firm an additional $25,000. Then the Court sanctioned the national law firm involved $100,000 and ultimately sanctioned Wells Fargo $250,000. Id. at 382-386.
In re Hayes, 393 B.R. 259 (Bankr. D. Mass. 2008).
Like Judge Rosenthal, Judge Feeney has attacked the problem of standing and authority head on. She has also held that standing must be established before either a claim can be allowed or a motion for relief be granted.
Ohio
In re Foreclosure Cases, 521 F.Supp. 2d (S.D. Ohio 2007).
Perhaps the District Court’s orders in the foreclosure cases in Ohio have received the most press of any of these opinions. Relying almost exclusively on standing, theJudge Rose has determined that a foreclosing party must show standing. “[I]n a foreclosure action, the plaintiff must show that it is the holder of the note and the mortgage at the time that the complaint was filed.” Id. at 653.
Judge Rose instructed the parties involved that the willful failure of the movants to comply with the general orders of the Court would in the future result in immediate dismissal of foreclosure actions.
Deutsche Bank Nat’l Trust Co. v. Steele, 2008 WL 111227 (S.D. Ohio) January 8, 2008.
In Steele, Judge Abel followed the lead of Judge Rose and found that Deutsche Bank had filed evidence in support of its motion for default judgment indicating that MERS was the mortgage holder. There was not sufficient evidence to support the claim that Deutsche Bank was the owner and holder of the note as of that date. Following In re Foreclosure Cases, 2007 WL 456586, the Court held that summary judgment would be denied “until such time as Deutsche Bank was able to offer evidence showing, by a preponderance of evidence, that it owned the note and mortgage when the complaint was filed.” 2008 WL 111227 at 2. Deutsche Bank was given twenty-one days to comply. Id.
Illinois
U

Not all federal district judges are as concerned with the issues surrounding the transfer of notes and mortgages. Cook is a very pro lender case and, in an order granting a motion for summary judgment, the Court found that Cook had shown no “countervailing evidence to create a genuine issue of facts.” Id. at 3. In fact, a review of the evidence submitted by U.S. Bank showed only that it was the alleged trustee of the securitization pool. U.S. Bank relied exclusively on the “pooling and serving agreement” to show that it was the holder of the note. Id.
Under UCC Article 3, the evidence presented in Cook was clearly insufficient.
New York
HSBC Bank USA, N.A. v. Valentin, 21 Misc. 3D 1124(A), 2008 WL 4764816 (Table) (N.Y. Sup.) November 3, 2008. In Valentin, the New York court found that, even though given an opportunity to, HSBC did not show the ownership of debt and mortgage. The complaint was dismissed with prejudice and the “notice of pendency” against the property was canceled.
Note that the Valentin case does not involve some sort of ambush. The Court gave every HSBC every opportunity to cure the defects the Court perceived in the pleadings.
California
In re Vargas, 396 B.R. 511 (Bankr. C.D. Cal. 2008)
and
In re Hwang, 396 B.R. 757 (Bankr. C.D. Cal. 2008)
These two opinions by Judge Bufford have been discussed above. Judge Bufford carefully explores the related issues of standing and ownership under both federal and California law.
Texas
In re Parsley, 384 B.R. 138 (Bankr. S.D. Tex. 2008)
and
In re Gilbreath, 395 B.R. 356 (Bankr. S.D. Tex. 2008)
These two recent opinions by Judge Jeff Bohm are not really on point, but illustrate another thread of cases running through the issues of motions for relief from stay in bankruptcy court and the sloppiness of loan servicing agencies. Both of these cases involve motions for relief that were not based upon fact but upon mistakes by servicing agencies. Both opinions deal with the issue of sanctions and, put simply, both cases illustrate that Judge Bohm (and perhaps other members of the bankruptcy bench in the Southern District of Texas) are going to be very strict about motions for relief in consumer cases.
SUMMARY
The cases cited illustrate enormous problems in the loan servicing industry. These problems arise in the context of securitization and illustrate the difficulty of determining the name of the holder, the assignee of the mortgage, and the parties with both the legal right under Article 3 and the standing under the Constitution to enforce notes, whether in state court or federal court.
Interestingly, with the exception of Judge Bufford and a few other judges, there has been less than adequate focus upon the UCC title issues. The next round of cases may and should focus upon the title to debt instrument. The person seeking to enforce the note must show that:
(1) It is the holder of t his note original by transfer, with all necessary rounds;
(2) It had possession of the note before it was lost;
(3) If it can show that title to the note runs to it, but the original is lost or destroyed, the holder must be prepared to post a bond;
(4) If the person seeking to enforce is an agent, it must show its agency status and that its principal is the holder of the note (and meets the above requirements).
Then, and only then, do the issues of evidence of debt and default and assignment of mortgage rights become relevant.
Filed under: CDO, CORRUPTION, Eviction, Investor, MODIFICATION, Mortgage, bubble,foreclosure, securities fraud | Tagged: borrower, disclosure, foreclosure defense, foreclosure offense, fraud, Lender Liability, mortgage meltdown, predatory lending, securitization, trustee
« Text of Obama Speech on Foreclosure Crisis Happy Birthday to our Founder – Neil Garfield »
28 Responses to “This is it! WHERE’S THE NOTE, WHO’S THE HOLDER: ENFORCEMENT OF PROMISSORY NOTE SECURED BY REAL ESTATE”
Alina, on March 6th, 2009 at 2:41 PM Said:
Here is another interesting tidbit. Yesterday, I searched all recorded assignments in my county for the servicing company on my loan. The guy who signed the assignement as Asst. Sec. for MERS, has also signed as Document Control Officer for the servicing company and as either an asst. sec or Document Control Officer for other banks. Each signature was notarized by the same person and witnessed by the same persons acknowledging that this person is ________ of _________ company. Assignors and assignees all have the same address.
Additionally, same law firm and same company prepared the assignment, a company out of Missouri. Definitely smells of fraud, a big smelly fish.
This is right along the lines of the King County, NY decision.
Don’t know how to present this evidence to the Court. Any suggestions? I was thinking of doing a Request for Judicial Notice. Thanks.
MSoliman, on March 6th, 2009 at 12:44 PM Said:
The structure for the Real Estate Trust prohibits ownership of Assets. Depositor and the Pass-through enitities including custodial roles and Master Servicer. must remin bankrupt insulate. Otherwise its debt and a big hypotheication.
If the assets are detemined to be held by any of the above the affilliates the Trust falls apart (I assue that would begin with the Sponsor / Depositor who acts as the TRS in a REIT).
These loans are treated as recievables with no regard for regulatory requirements – NO CAN DO.
SEC and HUD are in conflict and markets remain confused. The security remains tied into the UCC filing and the investors interest is fractionalized as are the other interests in the cash flow.
I have been waiting for this and that is the governments intereference into the real determination of accountability. Bernake revealed a sweeping change to GAAP and FASB interpretations of accounting policy….accountability rests with IRS reporting under the appropriate method of accoounting,
In other words the combinations will pass through revenue or show income and earings on a profit and loss. Basis accountig for the assets and any gain or loss on sale / reversion will likley fall onto the Federal Saving Bank. This is a capital reserves maintenance crisis for the FSB’s who are sheltered uner this mess.
M Soliman admin@borrowerhotline.com
livinglies, on March 6th, 2009 at 1:51 AM Said:
Allan: File motion with the court declaring you have not been served. If you want, go to Florida Bar Website and file grievance.
Allan (still trying to understand “holder in due course”!), on March 5th, 2009 at 6:23 PM Said:
I recorded a lien back in 2004 that put everyone on notice that borrower lacked capacity, that her identity was stolen, that her signatures were forged.
In 2005, after I reinstated the mortgage, it got securitized and placed by WAMU in SASCO 2005 RF5.
USBank N.A. claims it is the trustee for SASCO certificate holders. When I attempt to track down SASCO, all I come up with is Barclay’s. How does one track if SASCO still exists?
The IMPORTANT question here is, in this scenario, with assignments unrecorded and hastily assembled well after the lawsuit, WHO is “holder in due course”? and what rights do they have?
Also, Florida Default Law Group has been engaging in unethical tricks, including scheduling hearings on Summary Judgment Motions WITHOUT notice to me, though it certifies to the Court it has sent copies to me. What to do with such antics? Is there a Board of Bar Overseers? Do they have any teeth?
RSVP
Allan
BeMoved@AOL.com
Bryan Brey, on March 4th, 2009 at 7:07 PM Said:
@ Alina
Brilliant Alina, brilliant!
Alina, on March 4th, 2009 at 6:09 PM Said:
Bryan,
My argument exactly. U.S. Bank would fall under the definition of a “business trust.”
The business trust and its assets are managed for the benefit of persons who hold transferable certificates issued by the trustees. The ownership shares into which the beneficial interest in the property is divided are called “shares of beneficial interest.” These shares can be issued in the names of the beneficiaries or held by the trustees in “bearer form” (no designated owner name for each share).
Both Willey and Corcoran deal with a trust trying to foreclose. Per Willey, the trust cannot bring suit without including the trustee(s).
And per Corcoran, no business trust can bring suit on a mortgage and note in the State of Florida without authorization from its original state.
In my case, the purported assignment is to the trustee, not the trust.
Still researching all this. Also, reseraching FTC Holder in Due Course.
Bryan Brey, on March 4th, 2009 at 4:56 PM Said:
@ Alina
Reading

 Consumer and Saxon lack standing to pursue this litigation. 2 It is well
established that a plaintiff must prove standing by showing: (1) injury in
fact; (2) a causal connection between the injury and the defendant’s
conduct; and (3) a likelihood that a favorable outcome will redress the
injury. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S. Ct.
2130, 119 L. Ed. 2d 351 (1992).
Consumer [*14] seeks, in essence, to “enforce the [Promissory] Note and
Deed of Trust if [Ms.] Hillery does not pay the Rescission Balance by a date
set by this Court.” Compl. P 27. Thus, as Consumer itself acknowledges, to
proceed with this action, it must demonstrate that it is the holder of not
only the deed of trust but also the promissory note. If not, it has no
injury in fact. See In re ForeclosureCases, 521 F. Supp. 2d 650, 653 (S.D.

UNIFORM COMMERCIAL CODE COMMITTEE

WHERE’S THE NOTE, WHO’S THE HOLDER: ENFORCEMENT OF PROMISSORY NOTE SECURED BY REAL ESTATE

HON. SAMUEL L. BUFFORD
UNITED STATES BANKRUPTCY JUDGE
CENTRAL DISTRICT OF CALIFORNIA
LOS ANGELES, CALIFORNIA

(FORMERLY HON.) R. GLEN AYERS
LANGLEY & BANACK
SAN ANTONIO, TEXAS

AMERICAN BANKRUPTCY INSTUTUTE
APRIL 3, 2009
WASHINGTON, D.C.

 

INTRODUCTION

In an era where a very large portion of mortgage obligations have been securitized, by assignment to a trust indenture trustee, with the resulting pool of assets being then sold as mortgage backed securities, foreclosure becomes an interesting exercise, particularly where judicial process is involved. We are all familiar with the securitization process. The steps, if not the process, is simple. A borrower goes to a mortgage lender. The lender finances the purchase of real estate. The borrower signs a note and mortgage or deed of trust. The original lender sells the note and assigns the mortgage to an entity that securitizes the note by combining the note with hundreds or thousands of similar obligation to create a package of mortgage backed securities, which are then sold to investors.

Unfortunately, unless you represent borrowers, the vast flow of notes into the maw of the securitization industry meant that a lot of mistakes were made. When the borrower defaults, the party seeking to enforce the obligation and foreclose on the underlying collateral sometimes cannot find the note. A lawyer sophisticated in this area has speculated to one of the authors that perhaps a third of the notes “securitized” have been lost or destroyed. The cases we are going to look at reflect the stark fact that the unnamed source’s speculation may be well-founded.

UCC SECTION 3-309

If the issue were as simple as a missing note, UCC §3-309 would provide a simple solution. A person entitled to enforce an instrument which has been lost, destroyed or stolen may enforce the instrument. If the court is concerned that some third party may show up and attempt to enforce the instrument against the payee, it may order adequate protection. But, and however, a person seeking to enforce a missing instrument must be a person entitled to enforce the instrument, and that person must prove the instrument’s terms and that person’s right to enforce the instrument. §3-309 (a)(1) & (b).

WHO’S THE HOLDER

Enforcement of a note always requires that the person seeking to collect show that it is the holder. A holder is an entity that has acquired the note either as the original payor or transfer by endorsement of order paper or physical possession of bearer paper. These requirements are set out in Article 3 of the Uniform Commercial Code, which has been adopted in every state, including Louisiana, and in the District of Columbia. Even in bankruptcy proceedings, State substantive law controls the rights of note and lien holders, as the Supreme Court pointed out almost forty (40) years ago in United States v. Butner, 440 U.S. 48, 54-55 (1979).

However, as Judge Bufford has recently illustrated, in one of the cases discussed below, in the bankruptcy and other federal courts, procedure is governed by the Federal Rules of Bankruptcy and Civil Procedure. And, procedure may just have an impact on the issue of “who,” because, if the holder is unknown, pleading and standing issues arise.

BRIEF REVIEW OF UCC PROVISIONS

Article 3 governs negotiable instruments – it defines what a negotiable instrument is and defines how ownership of those pieces of paper is transferred. For the precise definition, see § 3-104(a) (“an unconditional promise or order to pay a fixed amount of money, with or without interest . . . .”) The instrument may be either payable to order or bearer and payable on demand or at a definite time, with or without interest.

Ordinary negotiable instruments include notes and drafts (a check is a draft drawn on a bank). See § 3-104(e).

Negotiable paper is transferred from the original payor by negotiation. §3-301. “Order paper” must be endorsed; bearer paper need only be delivered. §3-305. However, in either case, for the note to be enforced, the person who asserts the status of the holder must be in possession of the instrument. See UCC § 1-201 (20) and comments.

The original and subsequent transferees are referred to as holders. Holders who take with no notice of defect or default are called “holders in due course,” and take free of many defenses. See §§ 3-305(b).

The UCC says that a payment to a party “entitled to enforce the instrument” is sufficient to extinguish the obligation of the person obligated on the instrument. Clearly, then, only a holder – a person in possession of a note endorsed to it or a holder of bearer paper – may seek satisfaction or enforce rights in collateral such as real estate.

NOTE: Those of us who went through the bank and savings and loan collapse of the 1980’s are familiar with these problems. The FDIC/FSLIC/RTC sold millions of notes secured and unsecured, in bulk transactions. Some notes could not be found and enforcement sometimes became a problem. Of course, sometimes we are forced to repeat history. For a recent FDIC case, see Liberty Savings Bank v. Redus, 2009 WL 41857 (Ohio App. 8 Dist.), January 8, 2009.

THE RULES

Judge Bufford addressed the rules issue this past year. See In re Hwang, 396 B.R. 757 (Bankr. C. D. Cal. 2008). First, there are the pleading problems that arise when the holder of the note is unknown. Typically, the issue will arise in a motion for relief from stay in a bankruptcy proceeding.

According F.R.Civ. Pro. 17, “[a]n action must be prosecuted in the name of the real party in interest.” This rule is incorporated into the rules governing bankruptcy procedure in several ways. As Judge Bufford has pointed out, for example, in a motion for relief from stay, filed under F.R.Bankr.Pro. 4001 is a contested matter, governed by F. R. Bankr. P. 9014, which makes F.R. Bankr. Pro. 7017 applicable to such motions. F.R. Bankr. P. 7017 is, of course, a restatement of F.R. Civ. P. 17. In re Hwang, 396 B.R. at 766. The real party in interest in a federal action to enforce a note, whether in bankruptcy court or federal district court, is the owner of a note. (In securitization transactions, this would be the trustee for the “certificate holders.”) When the actual holder of the note is unknown, it is impossible – not difficult but impossible – to plead a cause of action in a federal court (unless the movant simply lies about the ownership of the note). Unless the name of the actual note holder can be stated, the very pleadings are defective.

STANDING

Often, the servicing agent for the loan will appear to enforce the note. Assume that the servicing agent states that it is the authorized agent of the note holder, which is “Trust Number 99.” The servicing agent is certainly a party in interest, since a party in interest in a bankruptcy court is a very broad term or concept. See, e.g., Greer v. O’Dell, 305 F.3d 1297, 1302-03 (11th Cir. 2002). However, the servicing agent may not have standing: “Federal Courts have only the power authorized by Article III of the Constitutions and the statutes enacted by Congress pursuant thereto. … [A] plaintiff must have Constitutional standing in order for a federal court to have jurisdiction.” In re Foreclosure Cases, 521 F.Supp. 3d 650, 653 (S.D. Ohio, 2007) (citations omitted).

But, the servicing agent does not have standing, for only a person who is the holder of the note has standing to enforce the note. See, e.g., In re Hwang, 2008 WL 4899273 at 8.

The servicing agent may have standing if acting as an agent for the holder, assuming that the agent can both show agency status and that the principle is the holder. See, e.g., In re Vargas, 396 B.R. 511 (Bankr. C.D. Cal. 2008) at 520.

A BRIEF ASIDE: WHO IS MERS?

For those of you who are not familiar with the entity known as MERS, a frequent participant in these foreclosure proceedings:

MERS is the “Mortgage Electronic Registration System, Inc. “MERS is a mortgage banking ‘utility’ that registers mortgage loans in a book entry system so that … real estate loans can be bought, sold and securitized, just like Wall Street’s book entry utility for stocks and bonds is the Depository Trust and Clearinghouse.” Bastian, “Foreclosure Forms”, State. Bar of Texas 17th Annual Advanced Real Estate Drafting Course, March 9-10, 2007, Dallas, Texas. MERS is enormous. It originates thousands of loans daily and is the mortgagee of record for at least 40 million mortgages and other security documents. Id.

MERS acts as agent for the owner of the note. Its authority to act should be shown by an agency agreement. Of course, if the owner is unknown, MERS cannot show that it is an authorized agent of the owner.

RULES OF EVIDENCE – A PRACTICAL PROBLEM

This structure also possesses practical evidentiary problems where the party asserting a right to foreclose must be able to show a default. Once again, Judge Bufford has addressed this issue. At In re Vargas, 396 B.R. at 517-19. Judge Bufford made a finding that the witness called to testify as to debt and default was incompetent. All the witness could testify was that he had looked at the MERS computerized records. The witness was unable to satisfy the requirements of the Federal Rules of Evidence, particularly Rule 803, as applied to computerized records in the Ninth Circuit. See id. at 517-20. The low level employee could really only testify that the MERS screen shot he reviewed reflected a default. That really is not much in the way of evidence, and not nearly enough to get around the hearsay rule.

FORECLOSURE OR RELIEF FROM STAY

In a foreclosure proceeding in a judicial foreclosure state, or a request for injunctive relief in a non-judicial foreclosure state, or in a motion for relief proceeding in a bankruptcy court, the courts are dealing with and writing about the problems very frequently.

In many if not almost all cases, the party seeking to exercise the rights of the creditor will be a servicing company. Servicing companies will be asserting the rights of their alleged principal, the note holder, which is, again, often going to be a trustee for a securitization package. The mortgage holder or beneficiary under the deed of trust will, again, very often be MERS.

Even before reaching the practical problem of debt and default, mentioned above, the moving party must show that it holds the note or (1) that it is an agent of the holder and that (2) the holder remains the holder. In addition, the owner of the note, if different from the holder, must join in the motion.

Some states, like Texas, have passed statutes that allow servicing companies to act in foreclosure proceedings as a statutorily recognized agent of the noteholder. See, e.g., Tex. Prop. Code §51.0001. However, that statute refers to the servicer as the last entity to whom the debtor has been instructed to make payments. This status is certainly open to challenge. The statute certainly provides nothing more than prima facie evidence of the ability of the servicer to act. If challenged, the servicing agent must show that the last entity to communicate instructions to the debtor is still the holder of the note. See, e.g., HSBC Bank, N.A. v. Valentin, 2l N.Y. Misc. 3d 1123(A), 2008 WL 4764816 (Table) (N.Y. Sup.), Nov. 3, 2008. In addition, such a statute does not control in federal court where Fed. R. Civ. P. 17 and 19 (and Fed. R. Bankr. P. 7017 and 7019) apply.

SOME RECENT CASE LAW

These cases are arranged by state, for no particular reason.

Massachusetts

In re Schwartz, 366 B.R.265 (Bankr. D. Mass. 2007)

Schwartz concerns a Motion for Relief to pursue an eviction. Movant asserted that the property had been foreclosed upon prior to the date of the bankruptcy petition. The pro se debtor asserted that the Movant was required to show that it had authority to conduct the sale. Movant, and “the party which appears to be the current mortgagee…” provided documents for the court to review, but did not ask for an evidentiary hearing. Judge Rosenthal sifted through the documents and found that the Movant and the current mortgagee had failed to prove that the foreclosure was properly conducted.

Specifically, Judge Rosenthal found that there was no evidence of a proper assignment of the mortgage prior to foreclosure. However, at footnote 5, Id. at 268, the Court also finds that there is no evidence that the note itself was assigned and no evidence as to who the current holder might be.

Nosek v. Ameriquest Mortgage Company (In re Nosek), 286 Br. 374 (Bankr D Mass. 2008).

Almost a year to the day after Schwartz was signed, Judge Rosenthal issued a second opinion. This is an opinion on an order to show cause. Judge Rosenthal specifically found that, although the note and mortgage involved in the case had been transferred from the originator to another party within five days of closing, during the five years in which the chapter 13 proceeding was pending, the note and mortgage and associated claims had been prosecuted by Ameriquest which has represented itself to be the holder of the note and the mortgage. Not until September of 2007 did Ameriquest notify the Court that it was merely the servicer. In fact, only after the chapter 13 bankruptcy had been pending for about three years was there even an assignment of the servicing rights. Id. at 378.

Because these misrepresentations were not simple mistakes: as the Court has noted on more than one occasion, those parties who do not hold the note of mortgage do not service the mortgage do not have standing to pursue motions for leave or other actions arising form the mortgage obligation. Id at 380.

As a result, the Court sanctioned the local law firm that had been prosecuting the claim $25,000. It sanctioned a partner at that firm an additional $25,000. Then the Court sanctioned the national law firm involved $100,000 and ultimately sanctioned Wells Fargo $250,000. Id. at 382-386.

In re Hayes, 393 B.R. 259 (Bankr. D. Mass. 2008).

Like Judge Rosenthal, Judge Feeney has attacked the problem of standing and authority head on. She has also held that standing must be established before either a claim can be allowed or a motion for relief be granted.

Ohio

In re Foreclosure Cases, 521 F.Supp. 2d (S.D. Ohio 2007).

Perhaps the District Court’s orders in the foreclosure cases in Ohio have received the most press of any of these opinions. Relying almost exclusively on standing, the Judge Rose has determined that a foreclosing party must show standing. “[I]n a foreclosure action, the plaintiff must show that it is the holder of the note and the mortgage at the time that the complaint was filed.” Id. at 653.

Judge Rose instructed the parties involved that the willful failure of the movants to comply with the general orders of the Court would in the future result in immediate dismissal of foreclosure actions.

Deutsche Bank Nat’l Trust Co. v. Steele, 2008 WL 111227 (S.D. Ohio) January 8, 2008.

In Steele, Judge Abel followed the lead of Judge Rose and found that Deutsche Bank had filed evidence in support of its motion for default judgment indicating that MERS was the mortgage holder. There was not sufficient evidence to support the claim that Deutsche Bank was the owner and holder of the note as of that date. Following In re Foreclosure Cases, 2007 WL 456586, the Court held that summary judgment would be denied “until such time as Deutsche Bank was able to offer evidence showing, by a preponderance of evidence, that it owned the note and mortgage when the complaint was filed.” 2008 WL 111227 at 2. Deutsche Bank was given twenty-one days to comply. Id.

Illinois

U.S. Bank, N.A. v. Cook, 2009 WL 35286 (N.D. Ill. January 6, 2009).

Not all federal district judges are as concerned with the issues surrounding the transfer of notes and mortgages. Cook is a very pro lender case and, in an order granting a motion for summary judgment, the Court found that Cook had shown no “countervailing evidence to create a genuine issue of facts.” Id. at 3. In fact, a review of the evidence submitted by U.S. Bank showed only that it was the alleged trustee of the securitization pool. U.S. Bank relied exclusively on the “pooling and serving agreement” to show that it was the holder of the note. Id.

Under UCC Article 3, the evidence presented in Cook was clearly insufficient.

New York

HSBC Bank USA, N.A. v. Valentin, 21 Misc. 3D 1124(A), 2008 WL 4764816 (Table) (N.Y. Sup.) November 3, 2008. In Valentin, the New York court found that, even though given an opportunity to, HSBC did not show the ownership of debt and mortgage. The complaint was dismissed with prejudice and the “notice of pendency” against the property was cancelled.

Note that the Valentin case does not involve some sort of ambush. The Court gave every HSBC every opportunity to cure the defects the Court perceived in the pleadings.

California

In re Vargas, 396 B.R. 511 (Bankr. C.D. Cal. 2008)

and

In re Hwang, 396 B.R. 757 (Bankr. C.D. Cal. 2008)

These two opinions by Judge Bufford have been discussed above. Judge Bufford carefully explores the related issues of standing and ownership under both federal and California law.

Texas

In re Parsley, 384 B.R. 138 (Bankr. S.D. Tex. 2008)

and

In re Gilbreath, 395 B.R. 356 (Bankr. S.D. Tex. 2008)

These two recent opinions by Judge Jeff Bohm are not really on point, but illustrate another thread of cases running through the issues of motions for relief from stay in bankruptcy court and the sloppiness of loan servicing agencies. Both of these cases involve motions for relief that were not based upon fact but upon mistakes by servicing agencies. Both opinions deal with the issue of sanctions and, put simply, both cases illustrate that Judge Bohm (and perhaps other members of the bankruptcy bench in the Southern District of Texas) are going to be very strict about motions for relief in consumer cases.

SUMMARY

The cases cited illustrate enormous problems in the loan servicing industry. These problems arise in the context of securitization and illustrate the difficulty of determining the name of the holder, the assignee of the mortgage, and the parties with both the legal right under Article 3 and the standing under the Constitution to enforce notes, whether in state court or federal court.

Interestingly, with the exception of Judge Bufford and a few other judges, there has been less than adequate focus upon the UCC title issues. The next round of cases may and should focus upon the title to debt instrument. The person seeking to enforce the note must show that:

It is the holder of this note original by transfer, with all necessary rounds;
It had possession of the note before it was lost;
If it can show that title to the note runs to it, but the original is lost or destroyed, the holder must be prepared to post a bond;
If the person seeking to enforce is an agent, it must show its agency status and that its principal is the holder of the note (and meets the above requirements).

Then, and only then, do the issues of evidence of debt and default and assignment of mortgage rights become relevant.

 Whether or not Saxon, the servicer of the loan, has standing in the instant
case rises and falls with whether or not Consumer has standing. See In re
Kang Jin Hwang, 393 B.R. 701, 712 (C.D. Cal. 2008)(indicating that a loan
servicer cannot bring an action without the holder of the promissory note).
That is, if Consumer can demonstrate that it is the owner of both the deed
of trust and the promissory note, then it was proper for Saxon to have been
named a plaintiff at the outset of the litigation along with Consumer.

Edit : Edit
Comments : 1 Comment »

Tags: bankruptcy, California cram down, Chapter 13, Foreclosure, Predatory Lending, stop foreclosure

Categories : Foreclosure, bankruptcy

California Issues Foreclosure Moratorium

25 02 2009

Carrie Bay | 02.25.09

California Gov. Arnold Schwarzenegger approved a bill appended to the state’s budget package last week that institutes a 90-day foreclosure moratorium throughout the Golden State. Introduced by Sen. Ellen Corbett (D-San Leandro), the moratorium applies to first mortgages recorded between January 1, 2003 and January 1, 2008.

State regulators, however, can deem loan servicers and lenders exempt from the new law if they have a mortgage modification program already in place that includes principal deferral, interest rate reductions for five years or more, or extended loan terms. The lender’s loan restructuring program also has to ensure new monthly payments are no more than 38 percent of the borrower’s income. The state’s stipulated debt-to-income ratio is significantly lower than the 31 percent target called for in the Obama Administration’s Homeowner Affordability and Stability Plan.

Kevin Stein, associate director of the California Reinvestment Coalition, told the San Francisco Chronicle, “It was a step backward from where things were going from an industry standpoint and a federal standpoint.”

According to the Chronicle, Corbett herself said that she would have liked a bill with stronger enforcement for modifications but was limited from more aggressive measures by the state’s banking regulators.

Mortgageorb.com reported that California’s banking groups, including the California Bankers Association and the California Mortgage Bankers Association, have written strong oppositions to the bill, arguing the moratorium will negatively impact home sales and further delay recovery.

Beth Mills, a spokesperson for the California Bankers Association, told the Chronicle that struggling borrowers and their lenders already have more than enough time to search for mutual solutions. Mills pointed out that a state law passed in 2008 increased the required time span between first notification of foreclosure and final sale of the property by 30 days, to a total of 141 days. According to Mills, more time is not the silver bullet to every troubled loan, the Chronicle said.

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, California cram down, eviction, Foreclosure, Mortgage modification, stop foreclosure

Categories : Cramdown, Foreclosure, I Have a Plan, Mortgage modification, bankruptcy, eviction, stop foreclosure

 

90% Forclosures Wrongful

1 01 2010

A wrongful foreclosure action typically occurs when the lender starts a non judicial foreclosure action when it simply has no legal cause. This is even more evident now since California passed the Foreclosure prevention act of 2008 SB 1194 codified in Civil code 2923.5 and 2923.6. In 2009 it is this attorneys opinion that 90% of all foreclosures are wrongful in that the lender does not comply (just look at the declaration page on the notice of default). The lenders most notably Indymac, Countrywide, and Wells Fargo have taken a calculated risk. To comply would cost hundreds of millions in staff, paperwork, and workouts that they don’t deem to be in their best interest. The workout is not in there best interest because our tax dollars are guaranteeing the Banks that are To Big to Fail’s debt. If they don’t foreclose and if they work it out the loss is on them. There is no incentive to modify loan for the benefit of the consumer.

Sooooo they proceed to foreclosure without the mandated contacts with the borrower. Oh and yes contact is made by a computer or some outsourcing contact agent based in India. But compliance with 2923.5 is not done. The Borrower is never told that he or she have the right to a meeting within 14 days of the contact. They do not get offers to avoid foreclosure there are typically two offers short sale or a probationary mod that will be declined upon the 90th day.

Wrongful foreclosure actions are also brought when the service providers accept partial payments after initiation of the wrongful foreclosure process, and then continue on with the foreclosure process. These predatory lending strategies, as well as other forms of misleading homeowners, are illegal.

The borrower is the one that files a wrongful disclosure action with the court against the service provider, the holder of the note and if it is a non-judicial foreclosure, against the trustee complaining that there was an illegal, fraudulent or willfully oppressive sale of property under a power of sale contained in a mortgage or deed or court judicial proceeding. The borrower can also allege emotional distress and ask for punitive damages in a wrongful foreclosure action.

Causes of Action

Wrongful foreclosure actions may allege that the amount stated in the notice of default as due and owing is incorrect because of the following reasons:

* Incorrect interest rate adjustment
* Incorrect tax impound accounts
* Misapplied payments
* Forbearance agreement which was not adhered to by the servicer
* Unnecessary forced place insurance,
* Improper accounting for a confirmed chapter 11 or chapter 13 bankruptcy plan.
* Breach of contract
* Intentional infliction of emotional distress
* Negligent infliction of emotional distress
* Unfair Business Practices
* Quiet title
* Wrongful foreclosure
* Tortuous violation of 2924 2923.5 and 2923.5 and 2932.5
Injunction

Any time prior to the foreclosure sale, a borrower can apply for an injunction with the intent of stopping the foreclosure sale until issues in the lawsuit are resolved. The wrongful foreclosure lawsuit can take anywhere from ten to twenty-four months. Generally, an injunction will only be issued by the court if the court determines that: (1) the borrower is entitled to the injunction; and (2) that if the injunction is not granted, the borrower will be subject to irreparable harm.

Damages Available to Borrower

Damages available to a borrower in a wrongful foreclosure action include: compensation for the detriment caused, which are measured by the value of the property, emotional distress and punitive damages if there is evidence that the servicer or trustee committed fraud, oppression or malice in its wrongful conduct. If the borrower’s allegations are true and correct and the borrower wins the lawsuit, the servicer will have to undue or cancel the foreclosure sale, and pay the borrower’s legal bills.

Why Do Wrongful Foreclosures Occur?

Wrongful foreclosure cases occur usually because of a miscommunication between the lender and the borrower. Most borrower don’t know who the real lender is. Servicing has changed on average three times. And with the advent of MERS Mortgage Electronic Registration Systems the “investor lender” hundreds of times since the origination. And now they then have to contact the borrower. The don’t even know who the lender truly is. The laws that are now in place never contemplated the virtualization of the lending market. The present laws are inadequate to the challenge.

This is even more evident now since California passed the Foreclosure prevention act of 2008 SB 1194 codified in Civil code 2923.5 and 2923.6. In 2009 it is this attorneys opinion that 90% of all foreclosures are wrongful in that the lender does not comply (just look at the declaration page on the notice of default). The lenders most notably Indymac, Countrywide, and Wells Fargo have taken a calculated risk. To comply would cost hundreds of millions in staff, paperwork, and workouts that they don’t deem to be in their best interest. The workout is not in there best interest because our tax dollars are guaranteeing the Banks that are To Big to Fail’s debt. If they don’t foreclose and if they work it out the loss is on them. There is no incentive to modify loan for the benefit of the consumer.This could be as a result of an incorrectly applied payment, an error in interest charges and completely inaccurate information communicated between the lender and borrower. Some borrowers make the situation worse by ignoring their monthly statements and not promptly responding in writing to the lender’s communications. Many borrowers just assume that the lender will correct any inaccuracies or errors. Any one of these actions can quickly turn into a foreclosure action. Once an action is instituted, then the borrower will have to prove that it is wrongful or unwarranted. This is done by the borrower filing a wrongful foreclosure action. Costs are expensive and the action can take time to litigate.
Impact

The wrongful foreclosure will appear on the borrower’s credit report as a foreclosure, thereby ruining the borrower’s credit rating. Inaccurate delinquencies may also accompany the foreclosure on the credit report. After the foreclosure is found to be wrongful, the borrower must then petition to get the delinquencies and foreclosure off the credit report. This can take a long time and is emotionally distressing.

Wrongful foreclosure may also lead to the borrower losing their home and other assets if the borrower does not act quickly. This can have a devastating affect on a family that has been displaced out of their home. However, once the borrower’s wrongful foreclosure action is successful in court, the borrower may be entitled to compensation for their attorney fees, court costs, pain, suffering and emotional distress caused by the action.

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.5 2923.6 2924 2932.5 Audit bankruptcy california California cram down Chapter 13 civil code 2923.5 civil code 2924 Countrywide Cram down Cramdown criminal acts eviction FCRA FDCPA Federal Jurisdi, 2923.6, 2924, 2932.5, civil code 2924, Countrywide, Foreclosure, Fraud, stop foreclosure

Categories : 2923.5, 2923.6, 2924, Foreclosure, Lender Class action

Countrywide complaint

27 06 2009

countrywide_fin_class_action_defense_mdl

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stay of eviction2923.5, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, I Have a Plan, pedatory lending, respa, stop foreclosure

Homecomings TILA complaint GMAC

27 06 2009

homecomingstila

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, Foreclosure, I Have a Plan, Lender Class action, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, bankruptcy, eviction, lis pendence, stop foreclosure, usury

Leman Tila complaint

27 06 2009

Lemantilacomp

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, I Have a Plan, bankruptcy, eviction, stop foreclosure, truth in lending

Lender class action

27 06 2009

Mortgageinvestorgroupclass

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, I Have a Plan, Loan Audit, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, bankruptcy, eviction, lis pendence, mortgage meltdown, stop foreclosure, usury

Option One Complaint Pick a payment lawsuit

27 06 2009

optionone

Edit : Edit
Comments : 2 Comments »

Tags: stop foreclosure, civil code 2923.5, truth in lending, Mortgage modification, eviction, california, mortgage meltdown, Foreclosure, lis pendence, litigation, bankruptcy, Chapter 13, 2924, 2923.5, 2932.5, Recoupment, Fraud, Predatory Lending, FCRA, 2923.6, Real Estate Settlement Procedures Act, Uncategorized, California cram down, Audit, Countrywide, United First, usury, truth in lending 2923.5

Categories : 2923.5, 2923.6, 2924, FCRA, Foreclosure, I Have a Plan, Lender Class action, Predatory Lending, Real Estate Settlement Procedures Act, bankruptcy, eviction, lis pendence, mortgage meltdown, stop foreclosure, usury

Win the eviction by Summary judgement

27 06 2009

When title to the property is still in dispute ie. the foreclosure was bad. They (the lender)did not comply with California civil code 2923.5 or 2923.6 or 2924. Or the didn’t possess the documents to foreclose ie. the original note. Or they did not possess a proper assignment 2932.5. at trial you will be ignored by the learned judge but if you file a Motion for Summary Judgmentevans sum ud
template notice of Motion for SJ
TEMPLATE Points and A for SJ Motion
templateDeclaration for SJ
TEMPLATEProposed Order on Motion for SJ
TEMPLATEStatement of Undisputed Facts
you can force the issue and if there is a case filed in the Unlimited jurisdiction Court the judge may be forced to consider title and or consolidate the case with the Unlimited Jurisdiction Case2nd amended complaint (e) manuel
BAKER original complaint (b)
Countrywide Complaint Form
FRAUDULENT OMISSIONS FORM FINAL
sample-bank-final-complaint1-2.docx

Edit : Edit
Comments : 1 Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, civil code 2923.5, eviction, Foreclosure, Fraud, lis pendence

Categories : 2923.5, 2923.6, Foreclosure, I Have a Plan, Predatory Lending, Real Estate Settlement Procedures Act, eviction, stop foreclosure, truth in lending

What is worse bankruptcy or foreclosure?

25 06 2009

So what is worse, bankruptcy or foreclosure? Which will have the biggest impact on my credit score? Both bankruptcy and foreclosure will have serious negative affects on your personal credit report and your credit score as well. With re-established credit after a bankruptcy and/or foreclosure you can possibly qualify for a good mortgage once again in as little as 24 months. Therefore, it is very difficult to say one is worse than the other, but the bottom line is that they are both very bad for you and should be avoided if all possible.

Foreclosure is worse then bankruptcy because you are actually losing something of value, your home. Once you are in foreclosure you will lose any and all equity in your home. If there is no equity in the home you will be responsible for the remaining balance after the property auction. With chapter 7 bankruptcy all of your unsecured debts are erased and you start over and in most cases you will not lose anything other then your credit rating.

Many times qualifying for a mortgage after a foreclosure is more difficult than applying for a home after a bankruptcy. With that said, that could possibly lead you to believe that foreclosure is worse than bankruptcy. Most people who have a home foreclosed upon end up filing bankruptcy as well.

Bankruptcy and Foreclosure filings are public records, however no one would know about your proceedings under normal circumstances. The Credit Bureaus will record your bankruptcy and a foreclosure. Bankruptcies will remain on your credit record for 10 years while foreclosures can stay on your report for up to 7 years.

In some cases, one can refinance out of a Chapter 13 Bankruptcy with a 12 month trustee payment history and a timely mortgage history. It is much more difficult to obtain financing with a foreclosure on your record.

Foreclosure is worse because of the loss of value. You will not receive any compensation for the equity in your home if it proceeds to foreclosure.

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, Cramdown, Foreclosure, I Have a Plan, eviction, stop foreclosure

Standing argument

7 06 2009

judge-youngs-decision-on-nosek

Ameriquest’s final argument, that the sanctions are a
criminal penalty, is bereft of authority. Ameriquest cites F.J.
Hanshaw Enterprises, Inc. v. Emerald River Development, Inc., 244
F.3d 1128 (9th Cir. 2001), a case about inherent powers – not
Rule 11 –

This is an excerpt from the decision just this bloggers note the Hanshaw Case was my case. I argued this case at the 9th circuit court of appeals

http://openjurist.org/244/f3d/1128/fj-v-emeraldfj-v-emerald

If you will grasp the implications of this judge-youngs-decision-on-nosekdecision all or most all the evictions and  foreclosures are being litigated by the wrong parties that is to say parties who have no real stake in the outcome. they are merely servicers not the real investors. They do not have the right to foreclose or evict. No assignment No note No security interest No standing They do not want to be listed anywhere. They (the lenders) have caused the greatest damage to the American Citizen since the great depression and they do not want to be exposed or named in countless lawsuits. Time and time again I get from the judges in demurer hearings ” I see what you are saying counsel but your claim does not appear to be against this defendant” the unnamed investment pool of the Lehman Brothers shared High yield equity Fund trustee does not exist and so far can’t be sued.

Edit : Edit
Comments : 1 Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending 2923.5, truth in lending, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, Cramdown, Foreclosure, I Have a Plan, Loan Audit, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, bankruptcy, eviction, respa, stop foreclosure

Using the countrywide complaint in your own case

9 05 2009

Using the countrywide complaint in your own casecounrtrywidelanderscomplaintand countrywidelanders and word versionsCountrywide attorney general Complaint Form and templetsCountrywide Complaint Form

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2932.5, civil code 2923.5, Foreclosure, Predatory Lending, stop foreclosure, truth in lending 2923.5

Categories : 2923.5, 2923.6, Foreclosure, I Have a Plan

Coalition sues lenders

9 05 2009

Coalition Sues lenders

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, bankruptcy, california, California cram down, Chapter 13, civil code 2923.5, Countrywide, eviction, FCRA, Foreclosure, Fraud, lis pendence, litigation, mortgage meltdown, Mortgage modification, Predatory Lending, Real Estate Settlement Procedures Act, Recoupment, stop foreclosure, truth in lending, truth in lending 2923.5, Uncategorized, United First, usury

Categories : 2923.5, 2923.6, 2924, FCRA, I Have a Plan, Lender Class action, Loan Audit, bankruptcy, eviction, lis pendence, pedatory lending

Doan on “produce the Note”

3 05 2009

Are Courts in California Truly Limited by Non-Judicial Foreclosure Statutes?

By Michael Doan on May 2, 2009 in Foreclosure Defense, Foreclosure News

Recently, many California Courts have been dismissing lawsuits filed to stop non-judicial foreclosures, ruling that the non-judicial foreclosure statutes occupy the field and are exclusive as long as they are complied with. Thus, in the case where a notice of default is recorded and a lawsuit then filed in response to stop the foreclosure since the foreclosing party does not possess the underlying note, all too often the Court will simply dismiss the case and claim “2924 has no requirement to produce the note.”

Thus, these Courts view the statutes that regulate non-judicial foreclosures as all inclusive of all the requirements and remedies in foreclosure proceedings. Indeed, California Civil Code sections 2924 through 2924k provide a comprehensive framework for the regulation of a nonjudicial foreclosure sale pursuant to a power of sale contained in a deed of trust. This comprehensive statutory scheme has three purposes: ‘”(1) to provide the creditor/beneficiary with a quick, inexpensive and efficient remedy against a defaulting debtor/trustor; (2) to protect the debtor/trustor from wrongful loss of the property; and (3) to ensure that a properly conducted sale is final between the parties and conclusive as to a bona fide purchaser.” [Citations.]’ [Citation.]” (Melendrez v. D & I Investment, Inc. (2005) 127 Cal.App.4th 1238, 1249–1250 [26 Cal. Rptr. 3d 413].)

Notwithstanding, the foreclosure statutes are not exclusive. If someone commits murder during an auction taking place under Civil Code 2924, that does not automatically mean they are immune from criminal and civil liability. Perhaps this is where some of these courts are “missing the boat.”

For example, in Alliance Mortgage Co. v. Rothwell (1995) 10 Cal. 4th 1226, 1231 [44 Cal. Rptr. 2d 352, 900 P.2d 601], the California Supreme Court concluded that a lender who obtained the property with a full credit bid at a foreclosure sale was not precluded from suing a third party who had fraudulently induced it to make the loan. The court concluded that ” ‘the antideficiency laws were not intended to immunize wrongdoers from the consequences of their fraudulent acts’ ” and that, if the court applies a proper measure of damages, ” ‘fraud suits do not frustrate the antideficiency policies because there should be no double recovery for the beneficiary.’ ” (Id. at p. 1238.)

Likewise, in South Bay Building Enterprises, Inc. v. Riviera Lend-Lease, Inc. [*1071] (1999) 72 Cal.App.4th 1111, 1121 [85 Cal. Rptr. 2d 647], the court held that a junior lienor retains the right to recover damages from the trustee and the beneficiary of the foreclosing lien if there have been material irregularities in the conduct of the foreclosure sale. (See also Melendrez v. D & I Investment, Inc., supra, 127 Cal.App.4th at pp. 1257–1258; Lo v. Jensen (2001) 88 Cal.App.4th 1093, 1095 [106 Cal. Rptr. 2d 443] [a trustee’s sale tainted by fraud may be set aside].)

In looking past the comprehensive statutory framework, these other Courts also considered the policies advanced by the statutory scheme, and whether those policies would be frustrated by other laws. Recently, in the case of California Golf, L.L.C. v. Cooper, 163 Cal. App. 4th 1053, 78 Cal. Rptr. 3d 153, 2008 Cal. App. LEXIS 850 (Cal. App. 2d Dist. 2008), the Appellate Court held that the remedies of 2924h were not exclusive. Of greater importance is that the Appellate Court reversed the lower court and specifically held that provisions in UCC Article 3 were allowed in the foreclosure context:

Considering the policy interests advanced by the statutory scheme governing nonjudicial foreclosure sales, and the policy interests advanced by Commercial Code section 3312, it is clear that allowing a remedy under the latter does not undermine the former. Indeed, the two remedies are complementary and advance the same goals. The first two goals of the nonjudicial foreclosure statutes: (1) to provide the creditor/beneficiary with a quick, inexpensive and efficient remedy against a defaulting debtor/trustor and (2) to protect the debtor/trustor from a wrongful loss of the property, are not impacted by the decision that we reach. This case most certainly, however, involves the third policy interest: to ensure that a properly conducted sale is final between the parties and conclusive as to a bona fide purchaser.

This is very significant since it provides further support to lawsuits brought against foreclosing parties lacking the ability to enforce the underlying note, since those laws also arise under Article 3. Under California Commercial Code 3301, a note may only be enforced if one has actual possession of the note as a holder, or has possession of the note not as a non-holder but with holder rights.

Just like in California Golf, enforcing 3301 operates to protect the debtor/trustor from a wrongful loss of the property. To the extent that a foreclosing party might argue that such lawsuits disrupt a quick, inexpensive, and efficient remedy against a defaulting debtor/trustor, the response is that “since there is no enforceable obligation, the foreclosing entity is not a party/creditor/beneficiary entitled to a quick, inexpensive, and efficient remedy,” but simply a declarant that recorded false documents.

This is primarily because being entitled to foreclose non-judicially under 2924 can only take place “after a breach of the obligation for which that mortgage or transfer is a security.” Thus, 2924 by its own terms, looks outside of the statute to the actual obligation to see if there was a breach, and if the note is unenforceable under Article 3, there can simply be no breach. End of story.

Accordingly, if there is no possession of the note or possession was not obtained until after the notice of sale was recorded, it is impossible to trigger 2924, and simple compliance with the notice requirements in 2924 does not suddenly bless the felony of grand theft of the unknown foreclosing entity. To hold otherwise would create absurd results since it would allow any person or company the right to take another persons’ home by simply recording a false notice of default and notice of sale.

Indeed, such absurdity would allow you to foreclose on your own home again to get it back should you simply record the same false documents. Thus it is obvious that these courts improperly assume the allegations contained in the notice of default and notice of sale are truthful. Perhaps these courts simply can not or choose not to believe such frauds are taking place due to the magnitude and volume of foreclosures in this Country at this time. One can only image the chaos that would ensue in America if the truth is known that millions of foreclosures took place unlawfully and millions more are now on hold as a result of not having the ability to enforce the underlying obligation pursuant to Article 3.

So if you are in litigation to stop a foreclosure, you can probably expect the Court will want to immediately dismiss your case. These Courts just can not understand how the law would allow someone to stay in a home without paying. Notwithstanding, laws can not be broken, and Courts are not allowed to join with the foreclosing parties in breaking laws simply because “not paying doesn’t seem right.”

Accordingly, at least for appeal purposes, be sure to argue that 2924 was never triggered since there was never any “breach of the obligation” and that Appellate Courts throughout California have routinely held that other laws do in fact apply in the non-judicial foreclosure process since the policies advanced by the statutory non-judicial foreclosure scheme are not frustrated by these other laws.

Edit : Edit
Comments : 3 Comments »

Tags: 2923.5, 2923.6, 2924, 2932.5, Foreclosure, lis pendence, litigation, stop foreclosure, truth in lending 2923.5

Categories : 2923.5, 2923.6, Foreclosure, I Have a Plan

Sample complaint template

26 04 2009

this is the type of complaint to get the lender to the table sample-bank-final-complaint1-2

Edit : Edit
Comments : 4 Comments »

Tags: 2923.5, 2923.6, 2924, 2932.5, California cram down, civil code 2924, Predatory Lending, Real Estate Settlement Procedures Act, stop foreclosure, truth in lending 2923.5

Categories : 2923.5, 2923.6, Foreclosure, I Have a Plan, Predatory Lending, Real Estate Settlement Procedures Act, eviction, respa, stop foreclosure

FORECLOSURE DEFENSE: CALIFORNIA SOMETIMES IT’S THE LITTLE THINGS THAT COUNT

25 04 2009

As I continue through this journey through the maze created by lenders, investment bankers, title agents and closing/escrow agents I keep discovering things that end up being quite interesting.

For example: In California the requirements for posting Notice of sale are very clear and yet, I am told that they are routinely ignored. This would invalidate the notice of sale on the most basic of concepts “notice,” by definition and therefore could be attacked at any time as a defect of service and jurisdiction while at the same time bring your claims under TILA, usury, identity theft, fraud, etc. California requires public and private posting as do most other states. The public part is what they ordinarily ignore. see notice-of-the-sale-thereof-shall-be-given-by-posting-a-written-notice

With the new law changes Civil code 2923.5  that became effective Sept 6, 2008 it adds more procedures that are routinely not followed ie. a Declaration must be attached and recorded that recites that the lender has met and assessed the borrowers financial condition and made alternatives to forclosure ie. modification. First they don’t do it and second the declaration is not even under penalty of pujury. So on its face the sale could be set aside.

After the notice of default the lender routinely switches trustee’s and records a Substitution of trustee with an affidavit that is not under penalty of perjury. Again the sale could be set aside for this.

For example. MERS, whose legal status is dubious at best anyway inasmuch as it plainly violates the recording requirements of every state and which supposedly has not one but multiple corporate entities, one of which has been suspended from operation in California, is subject to specific instructions as to what to do with the “master Deed of Trust and what to do with the individual deed of trust, the procedures, language to be inserted etc. These too I am told are routinely ignored especially when it comes to (a) showing that you have provided a copy of the Master Deed of Trust and (b) having the proof as specifically required in the FNMA/Freddie instruction sheet.

As stated in my other posts, the entire MERS concept causes, in my opinion, a separation between the alleged security instrument and provisions, the Trustee’s authority and the note, all of which end up being different people who were all “real parties in interest” receiving fees and value not disclosed in the GFE or settlement statement. In all these closings the borrower is subjected to a series of documents that hide the true nature of the transaction, the true source of funds, the true lender, and the application of funds contrary to the terms of the note.

All of these new requirements create questions of fact, that if not correct, create a method to set aside the sale by way of court action. I guess that’s the point the lenders trustees and servicers are banking on the victims not fighting it.

Edit : Edit
Comments : 2 Comments »

Tags: 2923.5, 2923.6, 2924, 2932.5, Audit, civil code 2923.5, civil code 2924, Foreclosure, HOEPA, litigation, stop foreclosure, truth in lending 2923.5

Categories : 2923.5, 2923.6, Foreclosure, I Have a Plan, Loan Audit, bankruptcy, stop foreclosure

they-must-call-and-offer-to-work-it-out-2923.5

31 03 2009

they-must-call-and-offer-to-work-it-out-29235

Edit : Edit
Comments : Leave a Comment »

Tags: 2923.5, 2923.6, California cram down, eviction, Foreclosure, stop foreclosure, truth in lending 2923.5

Categories : 2923.5, 2923.6, Foreclosure, Mortgage modification, eviction

 

 

 

Bombshell – Judge Orders Injunction Stopping ALL Foreclosure Proceedings by Bank of America; Recontrust; Home Loan Servicing; MERS et al

June 7, 2010 by TheWryEye
Filed under New World order

Leave a comment
0diggsdigg

Posted by Foreclosure Fraud on June 6, 2010
(St. George, UT) June 5, 2010 – A court order issued by Fifth District Court Judge James L. Shumate May 22, 2010 in St. George, Utah has stopped all foreclosure proceedings in the State of Utah by Bank of America Corporation, ; Recontrust Company, N.A; Home Loans Servicing, LP; Bank of America, FSB; http://www.envisionlawfirm.com. The Court Order if allowed to become permanent will force Bank of America and other mortgage companies with home loans in Utah to adhere to the Utah laws requiring lenders to register in the state and have offices where home owners can negotiate face-to-face with their lenders as the state lawmakers intended (Utah Code ‘ 57-1-21(1)(a)(i).). Telephone calls by KCSG News for comment to the law office of Bank of America counsel Sean D. Muntz and attorney Amir Shlesinger of Reed Smith, LLP, Los Angeles, CA and Richard Ensor, Esq. of Vantus Law Group, Salt Lake City, UT were not returned.

The lawsuit filed by John Christian Barlow, a former Weber State University student who graduated from Loyola University of Chicago and receive his law degree from one of the most distinguished private a law colleges in the nation, Willamette University founded in 1883 at Salem, Oregon has drawn the ire of the high brow B of A attorney and those on the case in the law firm of Reed Smith, LLP, the 15th largest law firm in the world.

Barlow said Bank of America claims because it’s a national chartered institution, state laws are trumped, or not applicable to the bank. That was before the case was brought before Judge Shumate who read the petition, supporting case history and the state statute asking for an injunctive relief hearing filed by Barlow. The Judge felt so strong about the case before him, he issued the preliminary injunction order without a hearing halting the foreclosure process. The attorney’s for Bank of America promptly filed to move the case to federal court to avoid having to deal with the Judge who is not unaccustomed to high profile cases and has a history of watching out for the “little people” and citizen’s rights.

The legal gamesmanship has begun with the case moved to federal court and Barlow’s motion filed to remand the case to Fifth District Court. Barlow said is only seems fair the Bank be required to play by the rules that every mortgage lender in Utah is required to adhere; Barlow said, “can you imagine the audacity of the Bank of America and other big mortgage lenders that took billions in bailout funds to help resolve the mortgage mess and the financial institutions now are profiting by kicking people out of them homes without due process under the law of the State of Utah.

Barlow said he believes his client’s rights to remedies were taken away from her by faceless lenders who continue to overwhelm home owners and the judicial system with motions and petitions as remedies instead of actually making a good-faith effort in face-to-face negotiations to help homeowners. “The law is clear in Utah,” said Barlow, “and Judge Shumate saw it clearly too. Mortgage lender are required by law to be registered and have offices in the State of Utah to do business, that is unless you’re the Bank of America or one of their subsidiary company’s who are above the law in Utah.”

Barlow said the Bank of America attorneys are working overtime filing motions to overwhelm him and the court. “They simply have no answer for violating the state statutes and they don’t want to incur the wrath of Judge Shumate because of the serious ramifications his finding could have on lenders in Utah and across the nation where Bank of America and other financial institutions, under the guise of a mortgage lender have trampled the rights of citizens,” he said.

“Bank of America took over the bankrupt Countrywide Home Loan portfolio June 3, 2009 in a stock deal that has over 1100 home owners in foreclosure in Utah this month alone, and the numbers keep growing,” Barlow said.

The second part of the motion, Barlow filed, claims that neither the lender, nor MERS*, nor Bank of America, nor any other Defendant, has any remaining interest in the mortgage Promissory Note. The note has been bundled with other notes and sold as mortgage-backed securities or otherwise assigned and split from the Trust Deed. When the note is split from the trust deed, “the note becomes, as a practical matter, unsecured.” Restatement (Third) of Property (Mortgages) § 5.4 cmt. a (1997). A person or entity only holding the trust deed suffers no default because only the Note holder is entitled to payment. Basically, “[t]he security is worthless in the hands of anyone except a person who has the right to enforce the obligation; it cannot be foreclosed or otherwise enforced.” Real Estate Finance Law (Fourth) § 5.27 (2002).

*MERS is a process that is designed to simplifies the way mortgage ownership and servicing rights are originated, sold and tracked. Created by the real estate finance industry, MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans. http://www.mersinc.org

Does MERS Registration and Mortgage Fractionalization Extinguish Mortgage Rights?

By: Cynthia Kouril Wednesday September 30, 2009 5:00 pm

Mortgage – Rev Dan Catt

The Kansas Court of Appeals has issued a decision that is both stunning in its own right, but also demonstrates the trend in courts all over this nation which spells HUGE changes in the real estate and mortgage landscape. Realtors and banksters take note:

In a long and thoughtful decision in the case of Landmark Nat’l Bank v. Kessler the Kansas Court of Appeals has held that MERS (Mortgage Electronic Registration Systems, Inc.) does not have standing to bring foreclosure actions on behalf of the owners of mortgage notes archived in its system.

Some background:

In the good old days, the legislatures of the various states set up a system for recording mortgages, usually in the County Clerk’s Office. Anyone wishing to know what obligations were imposed upon the real estate, like for instance a title search company, could go to the County Clerk’s Office and look up the block and lot number of the property and know who owned what, who owed what and to whom and whether there were any liens or mortgages on the property and who had what priority.

If you took out a mortgage from bank A, and A later resold your mortgage to refinance company B, well B would go to the County Clerk’s Office and record the transfer of the mortgage. Are you following me so far? B would also receive the original signature copy-the one where you wrote your name in blue ink-of the mortgage paperwork. In order to foreclose, the mortgagee/creditor is supposed to present the original documents in court as one way of proving that it is the true party to whom the debt is own and for whom the mortgage trust (the interest in the real estate) exists.

There are filing fees and costs to have a person go down to the County Clerk’s Office to record the mortgage transfer.

Some “genius” got the bright idea of forming a private entity to circumvent the government filing system; and “poof” MERS was born.

Banks pay a fee to “join” MERS. They then send all their mortgage records or at least their mortgage record information (MERS is very secretive about just how they do what they do) to MERS. MERS is supposed to keep track of the information about each mortgage. Then the mortgage gets split. The Promissory Note, that is the right to receive payments from the borrower, gets either sold or farmed out to a servicer who is paid “fees” to collect the payments and do other administrative tasks like manage any payments for taxes and the like out of escrow funds.

The mortgage deed or mortgage trust, that is the legal interest in the real estate that would normally give a lender the right to foreclose in the event of non-payment-may be sold to someone else. The payments themselves are “securitized” that is bundled with other mortgages and sold as Credit Backed Securities, which we now know as Wall Street Toxic Assets.

Up until recently when a homeowner fell behind in the mortgage payments and the it came time to foreclose, the servicer – who owned no interest whatsoever in the real estate – would appear as plaintiff and the lawyer would fill out an affidavit saying that the actual, blue ink signature, original copy of the mortgage documents were lost, or destroyed, but that the court should waive that requirement because MERS can appear on behalf of the owner of the right to foreclose and certify that the owner is somewhere in the MERS system. The transfers are not recorded in the County Clerk’s Office and all you will see is the transfer to MERS, if that, but not any subsequent transfers within MERS.

In the beginning, homeowners did not realize and often stipulated to waive presentation of the original documents. STUPID, STUPID, STUPID. Then a few wised up and found that their cases got postponed indefinitely. Not a “win” but at least they still had a roof over their heads for the time being.

Then banks got the bright idea of saying that MERS was the agent for the true owner. The Kansas decision says that won’t fly either.

BUT, now for the good part:

The court opined that

Indeed, an assignment of a mortgage without the debt transfers nothing. 55 Am. Jur. 2d, Mortgages § 1002. Thus, the mortgagee, who must have an interest in the debt, is the lender in a typical home mortgage.

Understand the possible implications of this. If other states take the same approach as Kansas, that means the splitting of the debt from the mortgage note effectively cancels the “mortgage interest” that is the power over the real property and converts the debt to a simple unsecured personal debt just on a promissory note. Which means they couldn’t take your house in foreclosure, though they can sue you personally on the debt, just like any other unsecured creditor can. I am assuming, without going to deep into it today, that as a personal debt, it may be dischargeable in bankruptcy. But we will have to wait for a few test cases to prove this.

What this also means is, that in the meantime, if you are trying to buy a house, you have to find out if your seller has a mortgage that may have been repackaged and lodged in MERS because you will have no way of knowing – since your title company cannot tell who actually might own the mortgage interest in your real estate if all the County Clerk’s records say is “MERS”.

This makes for a scary time for title insurers, I’m guessing.

There will be more on this case, I’m sure, it will just take some time to suss out all the ramifications.

Update: The NYTimes take on it.

Possession of the note “NO” recorded assignment “YES” civil code 2932.5 CARTER v. DEUTSCHE BANK NATIONAL TRUST COMPANY (N.D.Cal. 1-27-2010)

Some courts appear to have reasoned that plaintiff’s position
Page 29
would create an explicit conflict with the statute’s provisions.
The statute authorizes the “trustee, mortgagee, or beneficiary,
or any of their authorized agents” to initiate foreclosure. Cal.
Civ. Code § 2924(a)(1). Under California Civil Code
section 2924(b)(4), a “person authorized to record the notice of default
or the notice of sale” includes “an agent for the mortgagee or
beneficiary, an agent of the named trustee, any person designated
in an executed substitution of trustee, or an agent of that
substituted trustee.” Several courts have held that this language
demonstrates that possession of the note is not required,
apparently concluding that the statute authorizes initiation of
foreclosure by parties who would not be expected to possess the
note. See, e.g., Spencer v. DHI Mortg. Co., No. 090925,
2009 U.S. Dist. LEXIS 55191, *23*
24 (E.D. Cal. June 30, 2009)
(O’Neill, J.). However, the precise reasoning of these cases is
unclear.[fn14]
A second argument adopted by sister district courts is that
even if requiring possession of the promissory note does not
contradict the statute’s provisions, it nonetheless extends them,
and such extensions are impermissible. See, e.g., Bouyer v.
Countrywide Bank, FSB, No. C 085583,
2009 U.S. Dist. LEXIS 53940, *23*
24 (N.D. Cal. June 25, 2009). California courts have
described the statute as establishing a “comprehensive scheme”
for nonjudicial
foreclosures. Homestead Sav. v. Darmiento,
Page 30
230 Cal. App. 3d 424, 433 (1991)). Because this scheme “is intended to be
exhaustive,” California courts have refused to incorporate
additional obligations, such as allowing a debtor to invoke a
separate statutory right to cure a default. Moeller,
25 Cal. App. 4th at 834 (refusing to apply Cal. Civ. Code § 3275). The
California Supreme Court has similarly held that “[t]he rights
and powers of trustees in nonjudicial foreclosure proceedings
have long been regarded as strictly limited and defined by the
contract of the parties and the statutes.” I.E. Associates v.
Safeco Title Ins. Co., 39 Cal. 3d 281, 288 (1985). I.E.
Associates held that while a trustee has a statutory duty to
contact a trustor at the trustor’s last known address prior to
nonjudicial
foreclosure, the Court could not impose a further
duty to search for the trustor’s actual current address. Id.
District courts have applied I.E. Associates and Moeller to hold
that the trustee’s duties are “strictly limited” to those
contained specifically in the nonjudicial
foreclosure statute,
section 2924 et seq. See, e.g., Bouyer v. Countrywide Bank, FSB,
2009 U.S. Dist. LEXIS 53940, *23*
24 (N.D. Cal. June 25, 2009).
These courts have held that because section 2924 does not specify
that any party must possess the note, such possession is not
required. Id. Courts have similarly refused to require a trustee
“to identify the party in physical possession of the original
promissory note prior to commencing a nonjudicial foreclosure.”
Ritchie v. Cmty. Lending Corp.,
Page 31
2009 U.S. Dist. LEXIS 73216, *20 (C.D. Cal. Aug. 12, 2009).[fn15]
contained specifically in the nonjudicial
foreclosure statute,
section 2924 et seq. See, e.g., Bouyer v. Countrywide Bank, FSB,
2009 U.S. Dist. LEXIS 53940, *23*
24 (N.D. Cal. June 25, 2009).
These courts have held that because section 2924 does not specify
that any party must possess the note, such possession is not
required. Id. Courts have similarly refused to require a trustee
“to identify the party in physical possession of the original
promissory note prior to commencing a nonjudicial foreclosure.”
Ritchie v. Cmty. Lending Corp.,
Page 31
2009 U.S. Dist. LEXIS 73216, *20 (C.D. Cal. Aug. 12, 2009).[fn15]
Finally, while the above arguments have focused on and rejected
a requirement of production of the note, a series of opinions by
Judge Ishii have held that under California law, possession of
the note is not required either. Garcia v. HomEq Servicing Corp.,
2009 U.S. Dist. LEXIS 77697 *11 (E.D. Cal. Aug. 18, 2009), Topete
v. ETS Servs., LLC, 2009 U.S. Dist. LEXIS 77761 *10*
11(E.D. Cal. Aug. 18, 2009), Wood v. Aegis Wholesale Corp.,
2009 U.S. Dist. LEXIS 57151, *14 (E.D. Cal. July 2, 2009). These opinions
reason as follows. Under Cal. Civ. Code § 2932.5, when the
beneficial interest under the promissory note is assigned, the
assignee may exercise a security interest in real property
provided that the assignment is “duly acknowledged and recorded.”
See, e.g., Wood, 2009 U.S. Dist. LEXIS 57151 at *14. The Ninth
Circuit has applied California law to hold that promissory notes
arising out of real estate loans could be sold without transfer
of possession of the documents themselves. Id. (citing In re
Golden Plan of Cal., Inc., 829 F.2d 705, 707, 708 n. 2, 710 (9th
Cir. 1986)). Judge Ishii concluded that because a party may come
to validly own a beneficial interest in a promissory note without
possession of the promissory note itself, and because this
Page 32
interest, if recorded on the deed of trust, carries with it the
right to foreclose, possession of the promissory note is not a
prerequisite to nonjudicial
foreclosure. Id.
Having reviewed the arguments adopted by the district courts,
the court is left with the sense that reasonable minds could
disagree. Notably, I.E. Associates held that trustee’s duties are
“strictly limited” to those arising under the “statutes,” and a
reasonable jurist could conclude that the plural “statutes”
incorporates the Commercial Code. Although the Civil Code
authorizes a number of parties to initiate nonjudicial
foreclosure, it could be that whichever of those parties
possesses the note may foreclose.
At some point, however, the opinion of a large number of
decisions, while not in a sense binding, are by virtue of the
sheer number, determinative. I cannot conclude that the result
reached by the district courts is unreasonable or does not accord
with the law. I further note that this conclusion is not
obviously at odds with the policies underlying the California
statutes. The apparent purpose of requiring possession of a
negotiable instrument is to avoid fraud. In the context of
nonjudicial
foreclosures, however, the danger of fraud is
minimized by the requirement that the deed of trust be recorded,
as must be any assignment or substitution of the parties thereto.
While it may be that requiring production of the note would have
done something to limit the mischief that led to the economic
pain the nation has suffered, the great weight of authority has
reasonably concluded that California law does not
CARTER v. DEUTSCHE BANK NATIONAL TRUST COMPANY (N.D.Cal. 1-27-2010)

Page 33
impose this requirement.
While the court concludes that neither production nor
possession is required, the court need not decide whether this is
because promissory notes are not “negotiable instruments,” or
instead because Cal. Civ. Code § 2924 et seq. render the
Commercial Code inapplicable. The court leaves that question for
the California courts. The court solely concludes that neither
possession of the promissory note nor identification of the party
in possession is a prerequisite to nonjudicial
foreclosure.

MERS’s Authority to Operate in California CARTER v. DEUTSCHE BANK NATIONAL TRUST COMPANY (N.D.Cal. 1-27-2010)

2. MERS’s Authority to Operate in California
The FAC fleetingly alleges that “MERS [is] not registered to do
business in California.” FAC ¶ 9. While MERS’s registration
status receives no other mention in the complaint, plaintiff’s
opposition memorandum purports to support several of plaintiff’s
claims with this allegation, and defendant’s reply discusses it
on the merits. The court therefore discusses this issue here.
The California Corporations Code requires entities that
“transact[] intrastate business” in California to acquire a
“certificate of qualification” from the California Secretary of
State. Cal. Corp. Code § 2105(a). MERS argues that its activities
fall within exceptions to the statutory definition of transacting
intrastate business, such that these requirement does not apply.
See Cal. Corp. Code § 191. It is not clear to the court that
MERS’s activity is exempt.
Page 23
MERS primarily relies on Cal. Corp. Code § 191(d)(3). Cal.
Corp. Code § 191(d) enumerates various actions that do not
trigger the registration requirement when performed by “any
foreign lending institution.” Because neither the FAC nor the
exhibits indicate that MERS is such an institution, MERS cannot
protect itself under this exemption at this stage. The statute
defines “foreign lending institution” as “including, but not
limited to: [i] any foreign banking corporation, [ii] any foreign
corporation all of the capital stock of which is owned by one or
more foreign banking corporations, [iii] any foreign savings and
loan association, [iv] any foreign insurance company or [v] any
foreign corporation or association authorized by its charter to
invest in loans secured by real and personal property[.]” Cal.
Corp. Code § 191(d). Neither any published California decision
nor any federal decision has interpreted these terms. Because
plaintiff alleges that MERS does not itself invest in loans or
lend money, it appears that [i], [iii], and [v] do not apply.
MERS does not claim to be an insurance company under [ii].
Finally, it is certainly plausible that not all of MERS’s owners
are foreign corporations. At this stage of litigation, the court
cannot conclude that MERS falls within any of the five enumerated
examples of “foreign lending institutions,” and the court
declines to address sua sponte whether MERS otherwise satisfies
subsection (d).
Corp. Code § 191(d). Neither any published California decision
nor any federal decision has interpreted these terms. Because
plaintiff alleges that MERS does not itself invest in loans or
lend money, it appears that [i], [iii], and [v] do not apply.
MERS does not claim to be an insurance company under [ii].
Finally, it is certainly plausible that not all of MERS’s owners
are foreign corporations. At this stage of litigation, the court
cannot conclude that MERS falls within any of the five enumerated
examples of “foreign lending institutions,” and the court
declines to address sua sponte whether MERS otherwise satisfies
subsection (d).
Defendants also invoke a second exemption, Cal. Corp. Code
§ 191(c)(7). While section 191(c) is not restricted to “lending
institutions,” MERS’s acts do not fall into the categories
Page 24
enumerated under the section, including subsection (c)(7).
Plaintiff alleges that MERS directed the trustee to initiate
nonjudicial
foreclosure on the property. Section 191(c)(7)
provides that “[c]reating evidences of debt or mortgages, liens
or security interests on real or personal property” is not
intrastate business activity. Although this language is
unexplained, directing the trustee to initiate foreclosure
proceedings appears to be more than merely creating evidence of a
mortgage. This is supported by the fact that a separate statutory
section, § 191(d)(3) (which MERS cannot invoke at this time, see
supra), exempts “the enforcement of any loans by trustee’s sale,
judicial process or deed in lieu of foreclosure or otherwise.”
Interpreting section (c)(7) to include these activities would
render (d)(3) surplusage, and such interpretations of California
statutes are disfavored under California law. People v. Arias,
45 Cal. 4th 169, 180 (2008), Hughes v. Bd. of Architectural
Examiners, 17 Cal. 4th 763, 775 (1998). Accordingly,
section 191(c)(7) does not exempt MERS’s activity.[fn12]
For these reasons, plaintiff’s argument that MERS has acted
Page 25
in violation of Cal. Corp. Code § 2105(a) is plausible, and
cannot be rejected at this stage in the litigation.
3. Whether MERS Has Acted UltraVires
Plaintiff separately argues that MERS has acted in violation of
its own “terms and conditions.” These “terms” allegedly provide
that
MERS shall serve as mortgagee of record with respect to
all such mortgage loans solely as a nominee, in an
administrative capacity, for the beneficial owner or
owners thereof from time to time. MERS shall have no
rights whatsoever to any payments made on account of
such mortgage loans, to any servicing rights related to
such mortgage loans, or to any mortgaged properties
securing such mortgage loans. MERS agrees not to assert
any rights (other than rights specified in the
Governing Documents) with respect to such mortgage
loans or mortgaged properties. References herein to
“mortgage(s)” and “mortgagee of record” shall include
deed(s) of trust and beneficiary under a deed of trust
and any other form of security instrument under
applicable state law.”
FAC ¶ 10. The FAC does not specify the source of these “terms and
conditions.” Plaintiff’s opposition memorandum states that they
are taken from MERS’s corporate charter, implying that an action
in violation thereof would be ultra vires. Opp’n at 4. Plaintiff
then alleges that these terms do not permit MERS to “act as a
nominee or beneficiary of any of the Defendants.” FAC ¶ 32.
However, the terms explicitly permit MERS to act as nominee.
Plaintiff has not alleged a violation of these terms.
4. Defendants’ Authority to Foreclose
Another theme underlying many of plaintiff’s claims is that
defendants have attempted to foreclose or are foreclosing on the
Page 26
property without satisfying the requirements for doing so.
Plaintiff argues that foreclosure is barred because no defendant
is a person entitled to enforce the deed of trust under the
California Commercial Code and because defendants failed to issue
a renewed notice of default after the initial trustee’s sale was
4. Defendants’ Authority to Foreclose
Another theme underlying many of plaintiff’s claims is that
defendants have attempted to foreclose or are foreclosing on the
Page 26
property without satisfying the requirements for doing so.
Plaintiff argues that foreclosure is barred because no defendant
is a person entitled to enforce the deed of trust under the
California Commercial Code and because defendants failed to issue
a renewed notice of default after the initial trustee’s sale was
rescinded.

A Home Owners Nightmare Sweeping The US And Beyond

Foreclosures

“Foreclosure” A home owners nightmare currently sweeping the US and beyond as result of, principally, the “Sub-Prime Mortgage” market collapse. A market designed by skilled “Gamblers” who, unlike their lesser counter parts playing a straight “Game of Chance” in the Nevada casinos – Set out to established a game, to be backed by vast sums of international money, and, where the principal players could only win irrespective of any monies lost by their organizations at the end of the day.

Recent news articles report that “The FBI’s investigation of sub-prime lending practices could take a long time, officials say” – The SEC has opened about three dozen civil investigations into the sub-prime market collapse” A FBI spokesman has indicated they now have “34 mortgage fraud task forces and working groups that included other federal agencies and state and local law enforcement officials” and that “We consider it a significant and growing crime problem”

So What! at the end of the day, apart from a few “Fall Guys” to feed the media and public needs, the real parties responsible, financially able to buy the best in legal representation, will remain free to sit back to enjoy their gains. Or, perhaps not so this time.

As the full realizations of the effects of the massive negative financial impact on the US economy sweeps the population and its ongoing effects world wide most will appreciate that we are entering into very new era with new economic giants entering the world arena. Some of these financial giants have already provided “bail Out” monies to US financial institutions and no doubt will provide more throughout the coming years(s).

They are not doing it for love. Self interest and investment? yes. As new masters with major interests they may not be conducive to a future repeat performance of such financial set back and are expecting some sign of serious action by the US. One must wonder at how might the Peoples Republic of China or some of the Arab states deal with persons who were responsible for wrecking their economy. It was not to far past in history when the description for such action was called “Treason”

Many, Mr & Mrs decent Americans may lose not only their homes but also possibly their saving and investments to institutions who were once pillars of good ethics, responsibility and ethical standing.

While untold number will effectively be “losers” to this fiasco there will, by the law of nature, also be some “Winners” As in the great depression of 1929 there were those who emerged with greater strength and wealth and, so to will it be again.

Mers class action Nevada

A Reno law firm is preparing a class action lawsuit on behalf of Nevada homeowners who face foreclosure by a surrogate company that represents thousands of mortgage owners but doesn’t actually own the loans themselves. If they succeed, the fallout could halt foreclosures

The company, known as Mortgage Electronic Registration Systems (MERS), was created by the mortgage industry years to keep track of the ownership of mortgages that are packaged inside of mortgage pools and often subject to in a series of transactions. This based in Reston, Virginia company didn’t own the mortgages it registered, but it was listed in public records either as a nominee for the actual owner of the note or as the original mortgage holder. Some 60 million loans are registered in the name of MERS.

Last month the Kansas Supreme Court ruled that MERS had “no right to the underlying debt repayment secured by the mortgage.” The court also said that even though MERS was named as mortgagee in the case at hand, it didn’t have an interest in the underlying property. Even though the Kansas decision directly affects only cases in that state, it raises questions about MERS’ legal right to participate in foreclosure filings elsewhere.

Homeowners in Nevada, which ranked number one in foreclosure filings in August with nearly 18,000 in that month, moved swiftly to determine how the Kansas affects their situation. Foreclosure filings in Kansas, which ranked 35th among all states, were only about 1000 in August.

Nevada is a no judicial foreclosure state, meaning foreclosure doesn’t require a judge’s approval. However, when a delinquent homeowner facing foreclosure files for bankruptcy protection, a lender — or, in this case, MERS — that wants to protect its assets must get permission from the federal bankruptcy judge to foreclose.

Federal Bankruptcy Judge Linda Riegle ruled earlier this year in Las Vegas that MERS had no standing because the company is not the real party in interest — it doesn’t actually own the loan. In other words, in the course of bankruptcy proceedings, MERS had no claim to the house
.

The Reno law firm Hager & Hearne is preparing a class action lawsuit that will seek to invalidate the right of MERS to trigger foreclosure in light of the Kansas decision. If successful, it might force the legal ownership of the nearly one million Nevada mortgages on the MERS system to be transferred to the names of their actual owners and slow or halt foreclosures around the country,

Meanwhile, a spokeswoman for MERS, told the Las Vegas Sun the company will appeal the Kansas ruling.

The Trouble with MERS

As a homeowner begins research into the lending and foreclosure crisis, there will be many unfamiliar terms, names and companies that come to their attention. Chief among these will be MERS.

MERS is the acronym for Mortgage Electronic Registration Systems. It is a national electronic registration and tracking system that tracks the beneficial ownership interests and servicing rights in mortgage loans. The MERS website says:

“MERS is an innovative process that simplifies the way mortgage ownership and servicing rights are originated, sold and tracked. Created by the real estate finance industry, MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans. “

In simple language, MERS is an on-line computer software program for tracking ownership.

MERS was conceived in the early 1990’s by numerous lenders and other entities. Chief among the entities were Bank of America, , Fannie Mae, Freddie Mac, and a host of other such entities. The stated purpose was that the creation of MERS would lead to “consumers paying less” for mortgage loans. Obviously, that did not happen.

This article will attempt to explain MERS in very general detail. It will cover a few issues related to MERS and foreclosure, in order to introduce the reader to the issue of MERS. It is not meant to be a complete discussion of MERS, nor of the legal complexities regarding the arguments for and against MERS. For a more in depth reading of MERS and findings coming out of courts, it is recommended that the reader look at Hawkins, Case No. BK-S-07-13593-LBR (Bankr. Nev. 3/31/2009) (Bankr. Nev., 2009) . It gives a good reading of the issues related to MERS, at least for that particular case. Though in Nevada, it is relevant for California.

(Please note. I am not an attorney and am not giving legal advice. I am just reporting arguments being made against MERS, and also certain case law and applicable statutes in California.

The MERS Process

Traditionally, when a loan was executed, the beneficiary of the loan on the Deed of Trust was the lender. Once the loan was funded, the Deed of Trust and the Note would be recorded with the local County Recorder’s office. The recording of the Deed and the Note created a Public Record of the transaction. All future Assignments of the Note and Deed of Trust were expected to be recorded as ownership changes occurred. The recording of the Assignments created a “Perfected Chain of Title” of ownership of the Note and the Deed of Trust. This allowed interested or affected parties to be able to view the lien holders and if necessary, be able to contact the parties. The recording of the document also set the “priority” of the lien. The priority of the lien would be dependent upon the date that the recording took place. For example, a lien recorded on Jan 1, 2007 for $20,000 would be the first mortgage, and a lien recorded on Jan 2, 2007, for $1,500,000 would be a second mortgage, even though it was a higher amount.

Recordings of the document also determined who had the “beneficial interest” in the Note. An interested party simple looked at the Assignments, and knew who held the Note and who was the legal party of beneficial interest.

(For traditional lending prior to Securitization, the original Deed recording was usually the only recorded document in the Chain of Title. That is because banks kept the loans, and did not sell the loan, hence, only the original recording being present in the banks name.

The advent of Securitization, especially through “Private Investors” and not Fannie Mae or Freddie Mac, involved an entirely new process in mortgage lending. With Securitization, the Notes and Deeds were sold once, twice, three times or more. Using the traditional model would involve recording new Assignments of the Deed and Note as each transfer of the Note or Deed of Trust occurred. Obviously, this required time and money for each recording.

(The selling or transferring of the Note is not to be confused with the selling of Servicing Rights, which is simply the right to collect payments on the Note, and keep a small portion of the payment for Servicing Fees. Usually, when a homeowner states that their loan was sold, they are referring to Servicing Rights.)

The creation of MERS changed the process. Instead of the lender being the Beneficiary on the Deed of Trust, MERS was now named as either the “Beneficiary” or the “Nominee for the Beneficiary” on the Deed of Trust. This meant that MERS was simply acting as an Agent for the true beneficiary. The concept was that with MERS assuming this role, there would be no need for Assignments of the Deed of Trust, since MERS would be given the “power of sale” through the Deed of Trust.

Black’s Law Dictionary defines a nominee as “[a] person designated to act in place of another, usually in a very limited way” and as “[a] party who holds bare legal title for the benefit of others or who receives and distributes funds for the benefit of others.” Black’s Law Dictionary 1076 (8th ed. 2004). This definition suggests that a nominee possesses few or no legally enforceable rights beyond those of a principal whom the nominee serves……..The legal status of a nominee, then, depends on the context of the relationship of the nominee to its principal. Various courts have interpreted the relationship of MERS and the lender as an agency relationship.

The naming of MERS as the Beneficiary meant that certain other procedures had to change. This was a result of the Note actually being made out to the lender, and not to MERS. Before explaining this change, it would be wise to explain the Securitization process.

Securitizing a Loan

Securitizing a loan is the process of selling a loan to Wall Street and private investors. It is a method with many issues to be considered, especially tax issues, which is beyond the purview of this article. The methodology of securitizing a loan generally followed these steps:

· A Wall Street firm would approach other entities about issuing a “Series of Bonds” for sell to investors and would come to an agreement. In other words, the Wall Street firm “pre-sold” the bonds.

· The Wall Street firm would approach a lender and usually offer them a Warehouse Line of Credit. The Warehouse Credit Line would be used to fund the loans. The Warehouse Line would be covered by restrictions resulting from the initial Pooling & Servicing Agreement Guidelines and the Mortgage Loan Purchase Agreement. These documents outlined the procedures for creation of the loans and the administering of the loans prior to, and after, the sale of the loans to Wall Street.

· The Lender, with the guidelines, essentially went out and found “buyers” for the loans, people who fit the general characteristics of the Purchase Agreement,. (Guidelines were very general and most people could qualify.” The Lender would execute the loan and fund it, collecting payments until there were enough loans funded to sell to the Wall Street firm who could then issue the bonds.

· Once the necessary loans were funded, the lender would then sell the loans to the “Sponsor”, usually either a subsidiary of the Wall Street firm, of a specially created Corporation of the lender. At this point, the loans are separated into “tranches” of loans, where they will be eventually turned into bonds.

Next, the loans were “sold” to the “Depositor”. This was a “Special Purpose Vehicle” designed with one purpose in mind. That was to create a “bankruptcy remote vehicle” where the lender or other entities are protected from what might happen to the loans, and/or the loans are “protected” from the lender. The “Depositor” would have once again been created by the Wall Street firm or the Lender.

Then, the “Depositor” places the loans into the Issuing Entity, which is another created entity solely used for the purpose of selling the bonds.

Finally, the bonds would be sold, with a Trustee appointed to ensure that the bondholders received their monthly payments.

As can be seen, each Securitized Loan has had the ownership of the Note transferred two to three times at a minimum, but, no Assignments of Beneficiary are executed under most circumstances. If such an Assignment occurs, it will usually occur after a Notice of Default was filed.

(Note: This is a VERY simplified version of the process, but it gives the general idea. Depending upon the lender, it could change to some degree, especially if Fannie Mae bought the loans. The purpose of such a convoluted process was so that the entities selling the bonds could become a “bankruptcy remote” vehicle, protecting lenders and Wall Street from harm, and also creating a “Tax Favorable” investment entity known as an REIMC. An explanation of this process would be cumbersome at this time.)

New Procedures

As mentioned previously, Securitization and MERS required many changes in established practices. These practices were not and have not been codified, so they are major points of contention today. I will only cover a few important issues which are now being fought out in the courts.

One of the first issues to be addressed was how MERS might foreclose on a property. This was “solved” through an “unusual” practice.

· MERS has only 44 employees. They are all “overhead”, administrative or legal personnel. How could they handle the load of foreclosures, Assignments, etc to be expected of a company with their duties and obligations?

When a lender, title company, foreclosure company or other firm signed up to become a member of MERS, one or more of their people were designated as “Corporate Officers” of MERS and given the title of either Assistant Secretary or Vice President. These personnel were not employed by MERS, nor received income from MERS. They were named “Certify Officers” solely for the purpose of signing foreclosure and other legal documents in the name of MERS. (Apparently, there are some agreements which “authorize” these people to act in an Agency manner for MERS.)

This “solved” the issue of not having enough personnel to conduct necessary actions. It would be the Servicers, Trustees and Title Companies conducting the day-to-day operations needed for MERS to function.

As well, it was thought that this would provide MERS and their “Corporate Officers” with the “legal standing” to foreclose.

However, this brought up another issue that now needed addressing:

* When a Note is transferred, it must be endorsed and signed, in the manner of a person signing his paycheck over to another party. Customary procedure was to endorse it as “Pay to the Order of” and the name of the party taking the Note and then signed by the endorsing party. With a new party holding the Note, there would now need to be an Assignment of the Deed. This could not work if MERS was to be the foreclosing party.

Once a name is placed into the endorsement of the Note, then that person has the beneficial interest in the Note. Any attempt by MERS to foreclose in the MERS name would result in a challenge to the foreclosure since the Note was owned by “ABC” and MERS was the “Beneficiary”. MERS would not have the legal standing to foreclose, since only the “person of interest” would have such authority. So, it was decided that the Note would be endorsed “in blank”, which effectively made the Note a “Bearer Bond”, and anyone holding the Note would have the “legal standing” to enforce the Note under Uniform Commercial Code. This would also suggest to the lenders that Assignments would not be necessary.

MERS has recognized the Note Endorsement problem and on their website, stated that they could be the foreclosing party only if the Note was endorsed in blank. If it was endorsed to another party, then that party would be the foreclosing party.

As a result, most Notes are endorsed in blank, which purportedly allows MERS to be the foreclosing party. However, CA Civil Code 2932.5 has a completely different say in the matter. It requires that the Assignment of the Deed to the Beneficial Interest Holder of the Note.

CA Civil Code 2932.5 – Assignment

Where a power to sell real property is given to a mortgagee, or other encumbrancer, in an instrument intended to secure the payment of money, the power is part of the security and vests in any person who by assignment becomes entitled to payment of the money secured by the instrument. The power of sale may be exercised by the assignee if the assignment is duly acknowledged and recorded.

As is readily apparent, the above statute would suggest that Assignment of the Deed to the Note Holder is a requirement for enforcing foreclosure.

The question now becomes as to whether a Note Endorsed in Blank and transferred to different entities as indicated previously does allow for foreclosure. If MERS is the foreclosing authority but has no entitlement to payment of the money, how could they foreclose? This is especially important if the true beneficiary is not known. Why do I raise the question of who the true beneficiary is? Again, from the MERS website……..

* “On MERS loans, MERS will show as the beneficiary of record. Foreclosures should be commenced in the name of MERS. To effectuate this process, MERS has allowed each servicer to choose a select number of its own employees to act as officers for MERS. Through this process, appropriate documents may be executed at the servicer’s site on behalf of MERS by the same servicing employee that signs foreclosure documents for non-MERS loans.

Until the time of sale, the foreclosure is handled in same manner as non-MERS foreclosures. At the time of sale, if the property reverts, the Trustee’s Deed Upon Sale will follow a different procedure. Since MERS acts as nominee for the true beneficiary, it is important that the Trustee’s Deed Upon Sale be made in the name of the true beneficiary and not MERS. Your title company or MERS officer can easily determine the true beneficiary. Title companies have indicated that they will insure subsequent title when these procedures are followed.”

There, you have it. Direct from the MERS website. They admit that they name people to sign documents in the name of MERS. Often, these are Title Company employees or others that have no knowledge of the actual loan and whether it is in default or not.

Even worse, MERS admits that they are not the true beneficiary of the loan. In fact, it is likely that MERS has no knowledge of the true beneficiary of the loan for whom they are representing in an “Agency” relationship. They admit to this when they say “Your title company or MERS officer can easily determine the true beneficiary.

To further reinforce that MERS is not the true beneficiary of the loan, one need only look at the following Nevada Bankruptcy case, Hawkins, Case No. BK-S-07-13593-LBR (Bankr.Nev. 3/31/2009) (Bankr.Nev., 2009) – ”A “beneficiary” is defined as “one designated to benefit from an appointment, disposition, or assignment . . . or to receive something as a result of a legal arrangement or instrument.” BLACK’S LAW DICTIONARY 165 (8th ed. 2004). But it is obvious from the MERS’ “Terms and Conditions” that MERS is not a beneficiary as it has no rights whatsoever to any payments, to any servicing rights, or to any of the properties secured by the loans. To reverse an old adage, if it doesn’t walk like a duck, talk like a duck, and quack like a duck, then it’s not a duck.”

If one accepts the above ruling, which MERS does not agree with, MERS would not have the ability to foreclose on a property for lack of being a true Beneficiary. This leads us back to the MERS as “Nominee for the Beneficiary” and foreclosing as Agent for the Beneficiary. There may be pitfalls with this argument.

When the initial Deed of Trust is made out in the name of MERS as Nominee for the Beneficiary and the Note is made to ABC Lender, there should be no issues with MERS acting as an Agent for ABC Lender. Hawkins even recognizes this as fact.

The issue does arise when the Note transfers possession. Though the Deed of Trust states “beneficiary and/or successors”, the question can arise as to who the successor is, and whether Agency is any longer in effect. MERS makes the argument that the successor Beneficiary is a MERS member and therefore Agency is still effective. But does this argument hold up under scrutiny?

The original Note Holder, AB Lender, no longer holds the note, nor is entitled to payment.

Furthermore, the Note is endorsed in blank, and no Assignment of the Deed has been made to any other entity, so who is the true beneficiary and Note Holder?

It is now the contention of many that the Agency/Nominee relationship has been completely terminated between MERS and the original lender, so MERS has no authority to foreclose, or even to Assign the Deed.

In Vargas, 396 B.R. 511, 517 (Bankr. C.D. Cal. 2008) (”[I]f FHM has transferred the note, MERS is no longer an authorized agent of the holder unless it has a separate agency contract with the new undisclosed principal. MERS presents no evidence as to who owns the note, or of any authorization to act on behalf of the present owner.”);

Saxon Mortgage Services, Inc. v. Hillery, 2008 WL 5170180 (N.D. Cal. 2008) (unpublished opinion) (”[F]or there to be a valid assignment, there must be more than just assignment of the deed alone; the note must also be assigned. . . . MERS purportedly assigned both the deed of trust and the promissory note. . . . However, there is no evidence of record that establishes that MERS either held the promissory note or was given the authority . . . to assign the note.”).

Separation of the Note and the Deed

In the case of MERS, the Note and the Deed of Trust are held by separate entities. This can pose a unique problem dependent upon the court. There are many court rulings based upon the following:

“The Deed of Trust is a mere incident of the debt it secures and an assignment of the debt carries with it the security instrument. Therefore, a Deed Of Trust is inseparable from the debt and always abides with the debt. It has no market or ascertainable value apart from the obligation it secures.

A Deed of Trust has no assignable quality independent of the debt, it may not be assigned or transferred apart from the debt, and an attempt to assign the Deed Of Trust without a transfer of the debt is without effect. “

This very “simple” statement poses major issues. To easily understand, if the Deed of Trust and the Note are not together with the same entity, then there can be no enforcement of the Note. The Deed of Trust enforces the Note. It provides the capability for the lender to foreclose on a property. If the Deed is separate from the Note, then enforcement, i.e. foreclosure cannot occur.

MERS, actually the servicer, will Assign the Deed to the Note Holder, almost always after the Notice of Default has been filed. This will be an attempt to reunite the Deed and Note. But, as noted previously, MERS would likely no longer have the ability to Assign the Deed, since the Agency/Nominee status has been terminated. This could pose major issues, especially if the original lender is no longer in business.

When viewing a MERS loan, the examiner or attorney must pay careful attention to the following issues.

* The recorded history of the Deed to determine not just the current Deed Holder, but also who the Note Holder is. Are they one and the same, or are they separated, leading to an inability to foreclose unless reunited.

* When the Notice of Default was filed, were the Note and Deed separated, which would suggest that the Notice of Default was potentially unlawful.

* Did MERS have the authority to Foreclose, or even to make Assignments? There are a number of court cases suggesting otherwise.

* Who is signing for MERS? Is it a person with the Title Company, Trustee, or Servicer?

* Does the signer have legitimate authority to sign? Is the person holding factual knowledge of the homeowner being in default?

The entire subject of MERS is fraught with controversy and questions. Certainly, at the very least, MERS actions pose legal issues that are still being addressed each and every day. As to where these actions will ultimate lead, it is anybody’s guess. With some courts, the court sides with the lender, and others side with the homeowner. However, there does appear to be a trend developing that suggests, at least in Bankruptcy Courts, MERS is losing support.

Update:

I would like to point out that there is significant case law developing in other states regarding MERS. However, these are actions in other jurisdictions that do not necessarily apply in California. As a matter of fact, these arguments are generally not being accepted by most judges.
Currently, the state of California litigation is confused to say the least. Most judges are accepting the the California Foreclosure Statutes, Civil Code 2924, is all encompassing with regards to foreclosures. But 2924 only covers the procedural process. It does not take into account other relevant statutes related to Assignments of Beneficiary and Substitution of Trustee. Until such concerns are addressed and there is effective case law to cite, there will continue to be issues.

Mers

MERS

Basic Corporate Information
• MERS is incorporated within the State of Delaware.
• MERS was first incorporated in Delaware in 1999.
• The total number of shares of common stock authorized by MERS’ articles of incorporation is 1,000.
• The total number of shares of MERS common stock actually issued is 1,000.
• MERS is a wholly owned subsidiary of MERSCorp, Inc.
• MERS’ principal place of business at 1595 Spring Hill Road, Suite 310, Vienna, Virginia 22182
• MERS’ national data center is located in Plano, Texas.
• MERS’ serves as a “nominee” of mortgages and deeds of trust recorded in all fifty states.
• Over 50 million loans have been registered on the MERS system.
• MERS’ federal tax identification number is “541927784”.
The Nature of MERS’ Business
• MERS does not take applications for, underwrite or negotiate mortgage loans.
• MERS does not make or originate mortgage loans to consumers.
• MERS does not extend any credit to consumers.
• MERS has no role in the origination or original funding of the mortgages or deeds of trust for which it serves as “nominee”.
• MERS does not service mortgage loans.
• MERS does not sell mortgage loans.
• MERS is not an investor who acquires mortgage loans on the secondary market.
• MERS does not ever receive or process mortgage applications.
• MERS simply holds mortgage liens in a nominee capacity and through its electronic registry, tracks changes in the ownership of mortgage loans and servicing rights related thereto.
• MERS© System is not a vehicle for creating or transferring beneficial interests in mortgage loans.
• MERS is not named as a beneficiary of the alleged promissory note.
Ownership of Promissory Notes or Mortgage Indebtedness
• MERS is never the owner of the promissory note for which it seeks foreclosure.
• MERS has no legal or beneficial interest in the promissory note underlying the security instrument for which it serves as “nominee”.
• MERS has no legal or beneficial interest in the loan instrument underlying the security instrument for which it serves as “nominee”
• MERS has no legal or beneficial interest in the mortgage indebtedness underlying the security instrument for which it serves as “nominee”.
• MERS has no interest at all in the promissory note evidencing the mortgage indebtedness.
• MERS is not a party to the alleged mortgage indebtedness underlying the security instrument for which it serves as “nominee”.
• MERS has no financial or other interest in whether or not a mortgage loan is repaid.
• MERS is not the owner of the promissory note secured by the mortgage and has no rights to the payments made by the debtor on such promissory note.
• MERS does not make or acquire promissory notes or debt instruments of any nature and therefore cannot be said to be acquiring mortgage loans.
• MERS has no interest in the notes secured by mortgages or the mortgage servicing rights related thereto.
• MERS does not acquire any interest (legal or beneficial) in the loan instrument (i.e., the promissory note or other debt instrument).
• MERS has no rights whatsoever to any payments made on account of such mortgage loans, to any servicing rights related to such mortgage loans, or to any mortgaged properties securing such mortgage loans.
• The note owner appoints MERS to be its agent to only hold the mortgage lien interest, not to hold any interest in the note.
• MERS does not hold any interest (legal or beneficial) in the promissory notes that are secured by such mortgages or in any servicing rights associated with the mortgage loan.
• The debtor on the note owes no obligation to MERS and does not pay MERS on the note.
MERS’ Accounting of Mortgage Indebtedness / MERS Not At Risk
• MERS is not entitled to receive any of the payments associated with the alleged mortgage indebtedness.
• MERS is not entitled to receive any of the interest revenue associated with mortgage indebtedness for which it serves as “nominee”.
• Interest revenue related to the mortgage indebtedness for which MERS serves as “nominee” is never reflected within MERS’ bookkeeping or accounting records nor does such interest influence MERS’ earnings.
• Mortgage indebtedness for which MERS serves as the serves as “nominee” is not reflected as an asset on MERS’ financial statements.
• Failure to collect the outstanding balance of a mortgage loan will not result in an accounting loss by MERS.
• When a foreclosure is completed, MERS never actually retains or enjoys the use of any of the proceeds from a sale of the foreclosed property, but rather would remit such proceeds to the true party at interest.
• MERS is not actually at risk as to the payment or nonpayment of the mortgages or deeds of trust for which it serves as “nominee”.
• MERS has no pecuniary interest in the promissory notes or the mortgage indebtedness for which it serves as “nominee”.
• MERS is not personally aggrieved by any alleged default of a promissory note for which it serves as “nominee”.
• There exists no real controversy between MERS and any mortgagor alleged to be in default.
• MERS has never suffered any injury by arising out of any alleged default of a promissory note for which it serves as “nominee”.
MERS’ Interest in the Mortgage Security Instrument
• MERS holds the mortgage lien as nominee for the owner of the promissory note.
• MERS, in a nominee capacity for lenders, merely acquires legal title to the security instrument (i.e., the deed of trust or mortgage that secures the loan).
• MERS simply holds legal title to mortgages and deeds of trust as a nominee for the owner of the promissory note.
• MERS immobilizes the mortgage lien while transfers of the promissory notes and servicing rights continue to occur.
• The investor continues to own and hold the promissory note, but under the MERS® System, the servicing entity only holds contractual servicing rights and MERS holds legal title to the mortgage as nominee for the benefit of the investor (or owner and holder of the note) and not for itself.
• In effect, the mortgage lien becomes immobilized by MERS continuing to hold the mortgage lien when the note is sold from one investor to another via an endorsement and delivery of the note or the transfer of servicing rights from one MERS member to another MERS member via a purchase and sale agreement which is a non-recordable contract right.
• Legal title to the mortgage or deed of trust remains in MERS after such transfers and is tracked by MERS in its electronic registry.
Beneficial Interest in the Mortgage Indebtedness
• MERS holds legal title to the mortgage for the benefit of the owner of the note.
• The beneficial interest in the mortgage (or person or entity whose interest is secured by the mortgage) runs to the owner and holder of the promissory note and/or servicing rights thereunder.
• MERS has no interest at all in the promissory note evidencing the mortgage loan.
• MERS does not acquire an interest in promissory notes or debt instruments of any nature.
• The beneficial interest in the mortgage (or the person or entity whose interest is secured by the mortgage) runs to the owner and holder of the promissory note (NOT MERS).
MERS As Holder
• MERS is never the holder of a promissory note in the ordinary course of business.
• MERS is not a custodian of promissory notes underlying the security instrument for which it serves as “nominee”.
• MERS does not even maintain copies of promissory notes underlying the security instrument for which it serves as “nominee”.
• Sometimes when an investor or servicer desires to foreclose, the servicer obtains the promissory note from the custodian holding the note on behalf of the mortgage investor and places that note in the hands of a servicer employee who has been appointed as an officer (vice president and assistant secretary) of MERS by corporate resolution.
• When a promissory note is placed in the hands of a servicer employee who is also an MERS officer, MERS asserts that this transfer of custody into the hands of this nominal officer (without any transfer of ownership or beneficial interest) renders MERS the holder.
• No consideration or compensation is exchanged between the owner of the promissory note and MERS in consideration of this transfer in custody.
• Even when the promissory note is physically placed in the hands of the servicer’s employee who is a nominal MERS officer, MERS has no actual authority to control the foreclosure or the legal actions undertaken in its name.
• MERS will never willingly reveal the identity of the owner of the promissory note unless ordered to do so by the court.
• MERS will never willingly reveal the identity of the prior holders of the promissory note unless ordered to do so by the court.
• Since the transfer in custody of the promissory note is not for consideration, this transfer of custody is not reflected in any contemporaneous accounting records.
• MERS is never a holder in due course when the transfer of custody occurs after default.
• MERS is never the holder when the promissory note is shown to be lost or stolen.
MERS’ Role in Mortgage Servicing
• MERS does not service mortgage loans.
• MERS is not the owner of the servicing rights relating to the mortgage loan and MERS does not service loans.
• MERS does not collect mortgage payments.
• MERS does not hold escrows for taxes and insurance.
• MERS does not provide any servicing functions on mortgage loans, whatsoever.
• Those rights are typically held by the servicer of the loan, who may or may not also be the holder of the note.
MERS’ Rights To Control the Foreclosure
• MERS must all times comply with the instructions of the holder of the mortgage loan promissory notes.
• MERS only acts when directed to by its members and for the sole benefit of the owners and holders of the promissory notes secured by the mortgage instruments naming MERS as nominee owner.
• MERS’ members employ and pay the attorneys bringing foreclosure actions in MERS’ name.
MERS’ Access To or Control Over Records or Documents
• MERS has never maintained archival copies of any mortgage application for which it serves as “nominee”.
• In its regular course of business, MERS as a corporation does not maintain physical possession or custody of promissory notes, deeds of trust or other mortgage security instruments on behalf of its principals.
• MERS as a corporation has no archive or repository of the promissory notes secured by deeds of trust or other mortgage security instruments for which it serves as nominee.
• MERS as a corporation is not a custodian of the promissory notes secured by deeds of trust or other mortgage security instruments for which it serves as nominee.
• MERS as a corporation has no archive or repository of the deeds of trust or other mortgage security instruments for which it serves as nominee.
• In its regular course of business, MERS as a corporation does not routinely receive or archive copies of the promissory notes secured by the mortgage security instruments for which it serves as nominee.
• In its regular course of business, MERS as a corporation does not routinely receive or archive copies of the mortgage security instruments for which it serves as nominee.
• Copies of the instruments attached to MERS’ petitions or complaints so not come from MERS’ corporate files or archives.
• In its regular course of business, MERS as a corporation does not input the promissory note or mortgage security instrument ownership registration data for new mortgages for which it serves as nominee, but rather the registration information for such mortgages are entered by the “member” mortgage lenders, investors and/or servicers originating, purchasing, and/or selling such mortgages or mortgage servicing rights.
• MERS does not maintain a central corporate archive of demands, notices, claims, appointments, releases, assignments, or other files, documents and/or communications relating to collections efforts undertaken by MERS officers appointed by corporate resolution and acting under its authority.
Management and Supervision
• In preparing affidavits and certifications, officers of MERS, including Vice Presidents and Assistant Secretaries, making representations under MERS’ authority and on MERS’ behalf, are not primarily relying upon books of account, documents, records or files within MERS’ corporate supervision, custody or control.
• Officers of MERS preparing affidavits and certifications, including Vice Presidents and Assistant Secretaries, and otherwise making representations under MERS’ authority and on MERS’ behalf, do not routinely furnish copies of these affidavits or certifications to MERS for corporate retention or archival.
• Officers of MERS preparing affidavits and certifications, including Vice Presidents and Assistant Secretaries, and otherwise making representations under MERS’ authority and on MERS’ behalf are not working under the supervision or direction of senior MERS officers or employees, but rather are supervised by personnel employed by mortgage investors or mortgage servicers.

This should be a pretty good start for those of you faced with a foreclosure in which MERS is falsely asserting that it is the owner of the promissory note. Whether MERS is or was ever the holder is a FACT QUESTION which can be determined only by ascertain the chain of custody of the promissory note. When the promissory note is lost, missing or stolen, MERS is NOT the holder.

New Jersy on MERS standing and lost note

This case wrestles with all issues of MERS and standing read it it is insightful its long but focused upon the MERS and lost note argument. And by the way in this case they did find the note.
nycasewin