Archive | January, 2012

My Dear Fellow Attorneys from Matt Weidner

24 Jan

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Friday, January 20, 2012 8:25 AM
To: Charles Cox
Subject: My Dear Fellow Attorneys from Matt Weidner

My Dear Fellow Attorneys:

January 20th, 2012 | Author: Matthew D. Weidner, Esq.

I have spent this week, the week we celebrate Martin Luther King Jr and his accomplishments during the civil rights movement, thinking about the very real parallels between that tumultuous time and where we are today in this country. Especially today, when I am in a jail of sorts, I have been considering how King and his followers were constantly attacked. The attacks King and his followers suffered are not unlike the attacks that are visited upon those few who are standing up to defend consumers, fight for basic rights and the Rule of Law. It is rumored that the banks will announce a deal soon with the attorney generals from all across the country that have been investigating them. If any deal is indeed inked it will be a most dark day in this nation’s history. A deal between the banks and the attorney generals will indeed be the last nail in the coffin of the fiction that we are still a nation ruled by laws. So as you think about that, close your eyes for a moment and picture Martin Luther King sitting in a Birmingham jail and responding to a letter of complaint that he had recently received:

My Dear Fellow Attorneys:

While confined here in a foreclosure courtroom, I came across your recent statement calling my present activities “unwise and untimely.” Seldom do I pause to answer criticism of myself and the other foreclosure and consumer defense attorneys by those who do not understand that the work of defending the helpless is the highest calling of the legal profession. If I sought to answer all the criticisms that cross my desk, my secretaries would have little time for anything other than such correspondence in the course of the day, and I would have no time for constructive work. But since I feel that you are men of genuine good will and that your criticisms are sincerely set forth, I want to try to answer your statement in what I hope will be patient and reasonable terms.

I think I should indicate why I am here in foreclosure courtrooms, since you have been influenced by the view which argues against defending consumers in court, fearful that all these defendants want is a “Free House”. I have the honor of serving and defending families and good people who find themselves down on their luck and facing foreclosure. Despite some of the unfair, unfortunate and misinformed characterizations of my clients perpetuated by some small segment of the population, my clients are not in foreclosure because they want to be in foreclosure. They are not unemployed because they do not want to work. They are not down on their luck because they sought out a tortured existence in this world. They are in foreclosure because they have no money. They have no money because there are no jobs. There are no jobs because their government has failed them. The industries and institutions that should be providing jobs and providing the money that would permit them to pay their bills and fulfill their obligations have closed down here at home and sent all the jobs offshore. For many of my clients, foreclosure courtroom is their last stop before they disappear into oblivion. They stand in courtrooms gripping onto their homes with white, bleeding knuckles, hoping against all hope that what they have heard about justice and fairness and equity and our nation’s court system really is true.

But more basically, I defend homeowners in court because injustice is here. Just as the prophets of the eighth century B.C. left their villages and carried their “thus saith the Lord” far beyond the boundaries of their home towns, and just as the Apostle Paul left his village of Tarsus and carried the gospel of Jesus Christ to the far corners of the Greco Roman world, so am I compelled to carry the fight for the Rule of Law beyond my own cases and clients. Like Paul, I must constantly respond to the Macedonian call for aid. Moreover, I am cognizant of the interrelatedness of all communities and states. I cannot sit idly by in Saint Petersburg and not be concerned about what happens in Birmingham. Injustice anywhere is a threat to justice everywhere. We are caught in an inescapable network of mutuality, tied in a single garment of destiny. Whatever affects one directly, affects all indirectly. Never again can we afford to live with the narrow, provincial “outside agitator” idea. Anyone who lives inside the United States can never be considered an outsider anywhere within its bounds.

You deplore the defense of foreclosure cases and the Occupy protests that are taking place all across this country. But your statements, I am sorry to say, fail to express a similar concern for the conditions that brought about the demonstrations and the defense. I am sure that none of you would want to rest content with the superficial kind of social and legal analysis that deals merely with effects and does not grapple with underlying causes. It is unfortunate that demonstrations are taking place all across this country, but it is even more unfortunate that this nation’s power structure left the 99% with no alternative. It is terribly unfortunate that attorneys general from states all across this nation are meeting in secret with the banks and their henchmen and that they appear to close to finalizing some sort of deal. If the attorneys general that are supposed to be representing the interests of The People do indeed finalize a deal, it will truly be a deal with the devil. Such a deal will hasten our nation’s descent into a dark pit of white collar criminal lawlessness from which we will never recover.

In any nonviolent campaign there are four basic steps: collection of the facts to determine whether injustices exist; negotiation; self purification; and direct action. We have gone through all these steps in foreclosure courtrooms. There can be no gainsaying the fact that injustice engulfs our entire nation. Foreclosure courtrooms are probably the most clear expression of this injustice in the United States. The ugly record of injustice in foreclosure is widely known. Defendants in foreclosure have experienced grossly unjust treatment in the courts. There have been more violations of the fundamental principles of justice and equity in foreclosures than in any other aspect of our national existence. These are the hard, brutal facts of the case. On the basis of these conditions, homeowners and activists have sought to negotiate with the banks and institutions.

But the latter consistently refused to engage in good faith negotiation. Then, last September, came the opportunity to talk with leaders of banking community. In the course of the negotiations, certain promises were made by them–for example, they would review homeowners for loan modifications. On the basis of these promises, homeowners, attorneys and courts agreed to suspend most pending foreclosure cases. As the weeks and months went by however, we realized that we were the victims of a broken promise. A few temporary modifications were offered then just as quickly removed. As in so many past experiences, our hopes had been blasted, and the shadow of deep disappointment settled upon us. We had no alternative except to prepare for direct action like foreclosure trials, whereby we would continue the defense of homeowners and speaking out against the banks and the corporate elite as a means of laying our case before the conscience of the local and the national community.

You may well ask: “Why direct action? Why motions and discovery, foreclosure trials and so forth? Isn’t mediation a better path? You are quite right in calling for mediation. Indeed, this is the very purpose of direct action. Nonviolent direct action seeks to create such a crisis and foster such a tension that an industry which has constantly refused to negotiate is forced to confront the issues. It seeks so to dramatize the issue that it can no longer be ignored. My citing the creation of tension as part of the work of the nonviolent resister may sound rather shocking. But I must confess that I am not afraid of the word “tension.” I have earnestly opposed violent tension, but there is a type of constructive, nonviolent tension which is necessary for growth. Just as Socrates felt that it was necessary to create a tension in the mind so that individuals could rise from the bondage of myths and half truths to the unfettered realm of creative analysis and objective appraisal, so must we see the need for nonviolent gadflies to create the kind of tension in society that will help men rise from the dark depths of prejudice and racism to the majestic heights of understanding and brotherhood.

The purpose of our direct action program is to create a situation so crisis packed that it will inevitably open the door to successful mediations. I therefore concur with you in your call for mediations. Too long has our beloved court system been bogged down in a tragic effort to live in monologue rather than dialogue. One of the basic points in your statement is that the action that I and my associates have taken in foreclosure courtrooms is untimely. Some have asked: “Why didn’t you give the new mediation programs time to act?” The only answer that I can give to this query is that the programs and the plaintiffs must be prodded about as much as before. We are all sadly mistaken if we feel that these new mediation programs will bring any real changes without pressure on the banks to deal fairly and in good faith. While the new banks and servicers may be different, they are both corporate creatures, dedicated to maintenance of the status quo. I have hope that the banks will be reasonable enough to see the futility of massive resistance to mortgage modifications and solutions. But they will not see this without pressure from devotees of consumer rights.

My friends, I must say to you that we have not made a single gain in consumer rights without determined legal and nonviolent pressure. Lamentably, it is an historical fact that privileged groups seldom give up their privileges voluntarily. Individuals may see the moral light and voluntarily give up their unjust posture; but, as Reinhold Niebuhr has reminded us, groups tend to be more immoral than individuals. We know through painful experience that fair dealings are never voluntarily given by the banks; it must be demanded by the consumers that bailed them out. Some say, “Be patient, pushing these issues is not well-timed.”

Frankly, I have yet to engage in a direct action campaign that was “well timed” in the view of those who have suffered unduly from the tortures of this obscene and unfair economy and its parasitic legal and political system. For years now I have heard the words, “Wait, a solution is coming!” It rings in the ear of every American citizen with piercing familiarity. This “Wait” has almost always meant “Never.” We must come to see, with one of our distinguished jurists, that “justice too long delayed is justice denied.” We have waited for since 2008 for the banks and Wall Street to start treating Americans fairly. The banks and Wall Street are moving with jetlike speed toward gaining extraordinary profitablity, but we still creep at horse and buggy pace toward gaining principle reductions or short sale approvals.

Perhaps it is easy for those who have never felt the stinging darts foreclosure to say, “Wait.” But when you have seen good families thrown into the street, when you have seen the banks kick down doors and change the locks with no court order, when you have seen law enforcement standing idly by and saying, “it is a civil matter”, when you have seen court rulings that are repugnant to fundamental laws, when you have seen the bank and corporate executives reap unconscionable profits, when you have seen clients become sick and die due to the stress and pain of foreclosure and their economic situation, when you have seen single women who live in mortal fear that her front door may be kicked down for the third time, when you see children who have only known their parents suffering–then you will understand why we find it difficult to wait.There comes a time when the cup of endurance runs over, and men are no longer willing to be plunged into the abyss of despair. I hope, sirs, you can understand our legitimate and unavoidable impatience.

You express a great deal of anxiety over our willingness to aggressively pursue foreclosure cases, to stand up for basic laws and argue that certain foreclosure case law should not be followed. You express concern that we some of the recent case law should not be followed. This is certainly a legitimate concern. Since we so diligently urge people to obey the laws. One may well ask: “How can you advocate breaking some laws and obeying others?” The answer lies in the fact that there are two types of laws: just and unjust. I would be the first to advocate obeying just laws. One has not only a legal but a moral responsibility to obey just laws. Conversely, one has a moral responsibility to disobey unjust laws. I would agree with St. Augustine that “an unjust law is no law at all.” Now, what is the difference between the two? How does one determine whether a law is just or unjust? A just law is a man made code that squares with the moral law or the law of God. An unjust law or appellate case is a code that is out of harmony with the moral law and economic reality. A just law and a just outcome in foreclosure recognizes that the homeowners that the banks are using the court process to throw into the street have already paid the banks and institutions through trillions of dollars in tax benefits and direct profits. To put it in the terms of St. Thomas Aquinas: An unjust law is a human law that is not rooted in eternal law and natural law. Any law that uplifts human personality is just. Any law that degrades human personality is unjust.

All homestead foreclosures, when the case is defended because the homeowner has already paid the bank his fair share through bailouts, handouts and direct political corruption. Let us consider a more concrete example of just and unjust laws. An unjust law is a code that a numerical or power majority group compels a minority group to obey but does not make binding on itself. This is difference made legal. By the same token, a just law is a code that a majority compels a minority to follow and that it is willing to follow itself. This is sameness made legal. Let me give another explanation. A law is unjust if it is inflicted on a minority that, as a result of being denied the right to vote, had no part in enacting or devising the law. Who can say that the banks, which have obscenely unequal bargaining power have passed laws that benefit themselves while forcing trauma and the expenses of their ill-conceived laws on the unrepresented taxpayer and consumer who is victimized by their laws?

Throughout this nation all sorts of devious methods are used to prevent the voice of The People from being heard and to silencing advocates and critics. Can any law enacted under such circumstances be considered democratically structured? Sometimes a law is just on its face and unjust in its application. For instance, I have been charged with abusing my First Amendment rights. Now, there is nothing wrong in having an ordinance which restricts speech. But such an ordinance becomes unjust when it is used to punish well-intentioned criticism of our court system and to deny citizens the First-Amendment privilege of peaceful assembly and protest. I hope you are able to see the distinction I am trying to point out. In no sense do I advocate “free homes” as some do. That would lead to anarchy. One who seeks to defend a homeowner must be willing to counsel that homeowner to begin making what payments he can. I submit that an individual who correctly and aggressively defends the correct foreclosure case is in reality expressing the highest respect for law. Of course, there is nothing new about this kind of civil disobedience.

It was evidenced sublimely in the refusal of Shadrach, Meshach and Abednego to obey the laws of Nebuchadnezzar, on the ground that a higher moral law was at stake. It was practiced superbly by the early Christians, who were willing to face hungry lions and the excruciating pain of chopping blocks rather than submit to certain unjust laws of the Roman Empire. To a degree, academic freedom is a reality today because Socrates practiced civil disobedience. In our own nation, the Boston Tea Party represented a massive act of civil disobedience.

We should never forget that everything Adolf Hitler did in Germany was “legal” and everything the Hungarian freedom fighters did in Hungary was “illegal.” It was “illegal” to aid and comfort a Jew in Hitler’s Germany. Even so, I am sure that, had I lived in Germany at the time, I would have aided and comforted my Jewish brothers. If today I lived in a Communist country where certain principles dear to the Christian faith are suppressed, I would openly advocate disobeying that country’s antireligious laws. I must make two honest confessions to you, my fellow attorneys.

First, I must confess that over the past few years I have been gravely disappointed with other attorneys. I have almost reached the regrettable conclusion that the consumer’s great stumbling block in his stride toward fairness is not the banks or the servicers, but the attorneys who are more devoted to “order” than to justice; who prefer a negative peace which is the absence of tension to a positive peace which is the presence of justice; who constantly says: “I agree with you in the goal you seek, but I cannot agree with your methods of direct action”; who paternalistically believes he can set the timetable for demanding economic justice and the return to the Rule of Law in courtrooms; who live by a mythical concept of time and who constantly advises those who are suffering to wait for a “more convenient season.”

Shallow understanding from people of good will is more frustrating than absolute misunderstanding from people of ill will. Lukewarm acceptance is much more bewildering than outright rejection. I had hoped that the other attorneys would understand that law and order exist for the purpose of establishing justice and that when they fail in this purpose they become the dangerously structured dams that block the flow of social and economic progress. I had hoped that the other attorneys would understand that the present tension in the our courts is a necessary phase of the transition from an obnoxious negative peace, in which the consumer accepted his unjust plight, to a substantive and positive peace, in which all consumers wake up and start fighting back.

Actually, we who engage in the defense of consumers are not the creators of tension. We merely bring to the surface the hidden tension that is already alive. We bring it out in the open, where it can be seen and dealt with. Like a boil that can never be cured so long as it is covered up but must be opened with all its ugliness to the natural medicines of air and light, injustice must be exposed, with all the tension its exposure creates, to the light of human conscience and the air of national opinion before it can be cured. In your attacks on consumer attorneys and activists you assert that our actions, even though professionally and ethically appropriate, must be condemned because they slow down the court process.

I have even heard many good judges cry aloud, “The Supreme Court and Legislature demand we conclude foreclosure trials in 18 months!” But is this a logical assertion? What if the legislature demanded that all criminal cases be concluded in some arbitrary period, but the prosecutors did not want to proceed with false evidence? What if family courts were underfunded yet the legislature demanded swift closure…and yet the couple that stands before you did not yet want their divorce….would you still demand they conclude their divorce…or else? You speak of foreclosure defense as extreme. At first I was rather disappointed that fellow attorneys would see my efforts as those of an extremist.

I began thinking about the fact that I stand in the middle of two opposing forces in the economically depressed community. One is a force of complacency, made up in part of those who, as a result of long years of oppression, are so drained of self respect and a sense of “somebodiness” that they have adjusted to their condition; and in part of a few middle-class Americans who, because of a degree of academic and economic security and because in some ways they profit by segregation, have become insensitive to the problems of the masses. The other force is one of bitterness and hatred, and it comes perilously close to advocating violence.

It is expressed in the various Occupy groups that are springing up across the nation, the largest and best known being Occupy Wall Street. Nourished by the frustration over the continued existence of economic and social discrimination, this movement is made up of people who have lost faith in America, who have absolutely repudiated our corrupt form of government, and who have concluded that corporations are an incorrigible “devil.” Oppressed people cannot remain oppressed forever. The yearning for freedom and fairness eventually manifests itself, and that is what has happened to the American people. Something within has reminded him of his birthright of freedom and economic equality and something without has reminded him that it can be gained. I had hoped that the banks and institutions would see this need. Perhaps I was too optimistic; perhaps I expected too much. I suppose I should have realized that few members of the oppressor class can understand the deep groans and passionate yearnings of the oppressed people, and still fewer have the vision to see that injustice must be rooted out by strong, persistent and determined action.

But despite notable exceptions, I must honestly reiterate that I have been disappointed with the church. I do not say this as one of those negative critics who can always find something wrong with the church. I say this as a minister of the gospel, who loves the church; who was nurtured in its bosom; who has been sustained by its spiritual blessings and who will remain true to it as long as the cord of life shall lengthen. When myself and others started defending homeowners in foreclosure a few years ago, I felt we would be supported by other attorneys. Instead, some have been outright opponents, refusing to understand the foreclosure defense movement and misrepresenting its leaders; all too many others have been more cautious than courageous and have remained silent behind the anesthetizing security of their own offices.

In spite of my shattered dreams, I come to court everyday with the hope that other attorneys would see the justice of our cause and, with deep moral concern, would serve as the channel through which our just grievances could reach the power structure. I had hoped that each of you would understand. But again I have been disappointed. Yes, these questions are still in my mind. In deep disappointment I have wept over the laxity of the attorney class. But be assured that my tears have been tears of love. There can be no deep disappointment where there is not deep love. Yes, I love the attorney class. How could I do otherwise? There was a time when the attorney class was very powerful. In those days the attorney class was not merely a thermometer that recorded the ideas and principles of popular opinion; it was a thermostat that transformed the mores of society.

Whenever the good attorneys entered a town, the people in power became disturbed and immediately sought to convict them for being “disturbers of the peace” and “outside agitators.”‘ But the attorneys pressed on, in the conviction that they were “a colony of heaven,” called to obey the Rule of Law rather than man. Small in number, they were big in commitment. Things are different now. So often the attorney class is a weak, ineffectual voice with an uncertain sound. So often it is an archdefender of the status quo. Far from being disturbed by the presence of attorneys, the power structure of the average community is consoled by the attorney class’s silent–and often even vocal–sanction of things as they are.

But the judgment of The People is upon our court system as never before. If today’s court system does not recapture the spirit and integrity of the early courts, it will lose its authenticity, forfeit the loyalty of millions, and be dismissed as an institution with no meaning for the twentieth century. Every day I meet young people whose disappointment with the church has turned into outright disgust. Perhaps I have once again been too optimistic. Are attorneys too inextricably bound to the status quo to save our nation and the world? Perhaps I must turn my faith to the highest called among the ranks, the attorneys above the other attorneys, as the true ekklesia and the hope of the world. But again I am thankful to God that some noble souls from the ranks of attorneys have broken loose from the paralyzing chains of conformity and joined us as active partners in the struggle for foreclosure justice and basic rights.

It is true that the courts have exercised a degree of discipline in handling the foreclosure crisis. In this sense they have conducted themselves rather mechanically. But for what purpose? To preserve the system of foreclosure. Over the past few years I have consistently asserted that the vast magnitude of problems in the pending foreclosure files currently filed demands that most be dismissed in order not to soil the entire court system’s integrity. Never before have I written so long a letter. I’m afraid it is much too long to take your precious time. I can assure you that it would have been much shorter if I had been writing from a comfortable desk, but what else can one do when he is sitting here in a foreclosure courtroom, other than write long letters, think long thoughts and pray long prayers?

If I have said anything in this letter that overstates the truth and indicates an unreasonable impatience, I beg you to forgive me. If I have said anything that understates the truth and indicates my having a patience that allows me to settle for anything less than brotherhood, I beg God to forgive me. I hope this letter finds you strong in the faith. I also hope that circumstances will soon make it possible for me to meet each of you, not as an antagonist on one side of this profound economic and social rights battle but as a fellow attorney all on the side of justice and the Rule of Law.

Let us all hope that the dark clouds of injustice will soon pass away and the deep fog of misunderstanding will be lifted from our fear drenched communities, and in some not too distant tomorrow the radiant stars of love and brotherhood will shine over our great nation with all their scintillating beauty.

Yours for the cause of Peace and Brotherhood, Matthew Weidner

And I especially encourage you to read Luther’s Letter From A Birmingham Jail

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They will protect thier own

24 Jan

Top Justice officials connected to mortgage banks

U.S. Attorney General Eric Holder (R) chats with Assistant Attorney General in the criminal division of the Justice Department Lanny Breuer before their testimony on the second day of the Financial Crisis Inquiry Commission hearing on Capitol Hill in Washington January 14, 2010.     REUTERS/Jason Reed

By Scot J. Paltrow

Fri Jan 20, 2012 9:31am EST

(Reuters) – U.S. Attorney General Eric Holder and Lanny Breuer, head of the Justice Department’s criminal division, were partners for years at a Washington law firm that represented a Who’s Who of big banks and other companies at the center of alleged foreclosure fraud, a Reuters inquiry shows.

The firm, Covington & Burling, is one of Washington’s biggest white shoe law firms. Law professors and other federal ethics experts said that federal conflict of interest rules required Holder and Breuer to recuse themselves from any Justice Department decisions relating to law firm clients they personally had done work for.

Seal of the United States Department of Justice

Image via Wikipedia

Both the Justice Department and Covington declined to say if either official had personally worked on matters for the big mortgage industry clients. Justice Department spokeswoman Tracy Schmaler said Holder and Breuer had complied fully with conflict of interest regulations, but she declined to say if they had recused themselves from any matters related to the former clients.

Reuters reported in December that under Holder and Breuer, the Justice Department hasn’t brought any criminal cases against big banks or other companies involved in mortgage servicing, even though copious evidence has surfaced of apparent criminal violations in foreclosure cases.

The evidence, including records from federal and state courts and local clerks’ offices around the country, shows widespread forgery, perjury, obstruction of justice, and illegal foreclosures on the homes of thousands of active-duty military personnel.

In recent weeks the Justice Department has come under renewed pressure from members of Congress, state and local officials and homeowners’ lawyers to open a wide-ranging criminal investigation of mortgage servicers, the biggest of which have been Covington clients. So far Justice officials haven’t responded publicly to any of the requests.

While Holder and Breuer were partners at Covington, the firm’s clients included the four largest U.S. banks – Bank of America, Citigroup, JP Morgan Chase and Wells Fargo & Co – as well as at least one other bank that is among the 10 largest mortgage servicers.

DEFENDER OF FREDDIE

Servicers perform routine mortgage maintenance tasks, including filing foreclosures, on behalf of mortgage owners, usually groups of investors who bought mortgage-backed securities.

Covington represented Freddie Mac, one of the nation’s biggest issuers of mortgage backed securities, in enforcement investigations by federal financial regulators.

A particular concern by those pressing for an investigation is Covington’s involvement with Virginia-based MERS Corp, which runs a vast computerized registry of mortgages. Little known before the mortgage crisis hit, MERS, which stands for Mortgage Electronic Registration Systems, has been at the center of complaints about false or erroneous mortgage documents.

Court records show that Covington, in the late 1990s, provided legal opinion letters needed to create MERS on behalf of Fannie Mae, Freddie Mac, Bank of America, JP Morgan Chase and several other large banks. It was meant to speed up registration and transfers of mortgages. By 2010, MERS claimed to own about half of all mortgages in the U.S. — roughly 60 million loans.

But evidence in numerous state and federal court cases around the country has shown that MERS authorized thousands of bank employees to sign their names as MERS officials. The banks allegedly drew up fake mortgage assignments, making it appear falsely that they had standing to file foreclosures, and then had their own employees sign the documents as MERS “vice presidents” or “assistant secretaries.”

Covington in 2004 also wrote a crucial opinion letter commissioned by MERS, providing legal justification for its electronic registry. MERS spokeswoman Karmela Lejarde declined to comment on Covington legal work done for MERS.

It isn’t known to what extent if any Covington has continued to represent the banks and other mortgage firms since Holder and Breuer left. Covington declined to respond to questions from Reuters. A Covington spokeswoman said the firm had no comment.

Several lawyers for homeowners have said that even if Holder and Breuer haven’t violated any ethics rules, their ties to Covington create an impression of bias toward the firms’ clients, especially in the absence of any prosecutions by the Justice Department.

O. Max Gardner III, a lawyer who trains other attorneys to represent homeowners in bankruptcy court foreclosure actions, said he attributes the Justice Department’s reluctance to prosecute the banks or their executives to the Obama White House’s view that it might harm the economy.

But he said that the background of Holder and Breuer at Covington — and their failure to act on foreclosure fraud or publicly recuse themselves — “doesn’t pass the smell test.”

Federal ethics regulations generally require new government officials to recuse themselves for one year from involvement in matters involving clients they personally had represented at their former law firms.

President Obama imposed additional restrictions on appointees that essentially extended the ban to two years. For Holder, that ban would have expired in February 2011, and in April for Breuer. Rules also require officials to avoid creating the appearance of a conflict.

Schmaler, the Justice Department spokeswoman, said in an e-mail that “The Attorney General and Assistant Attorney General Breuer have conformed with all financial, legal and ethical obligations under law as well as additional ethical standards set by the Obama Administration.”

She said they “routinely consult” the department’s ethics officials for guidance. Without offering specifics, Schmaler said they “have recused themselves from matters as required by the law.”

Senior government officials often move to big Washington law firms, and lawyers from those firms often move into government posts. But records show that in recent years the traffic between the Justice Department and Covington & Burling has been particularly heavy. In 2010, Holder’s deputy chief of staff, John Garland, returned to Covington, as did Steven Fagell, who was Breuer’s deputy chief of staff in the criminal division.

The firm has on its web site a page listing its attorneys who are former federal government officials. Covington lists 22 from the Justice Department, and 12 from U.S. Attorneys offices, the Justice Department’s local federal prosecutors’ offices around the country.

As Reuters reported in 2011, public records show large numbers of mortgage promissory notes with apparently forged endorsements that were submitted as evidence to courts.

There also is evidence of almost routine manufacturing of false mortgage assignments, documents that transfer ownership of mortgages between banks or to groups of investors. In foreclosure actions in courts mortgage assignments are required to show that a bank has the legal right to foreclose.

In an interview in late 2011, Raymond Brescia, a visiting professor at Yale Law School who has written about foreclosure practices said, “I think it’s difficult to find a fraud of this size on the U.S. court system in U.S. history.”

Holder has resisted calls for a criminal investigation since October 2010, when evidence of widespread “robo-signing” first surfaced. That involved mortgage servicer employees falsely signing and swearing to massive numbers of affidavits and other foreclosure documents that they had never read or checked for accuracy.

Recent calls for a wide-ranging criminal investigation of the mortgage servicing industry have come from members of Congress, including Senator Maria Cantwell, D-Wash., state officials, and county clerks. In recent months clerks from around the country have examined mortgage and foreclosure records filed with them and reported finding high percentages of apparently fraudulent documents.

On Wednesday, John O’Brien Jr., register of deeds in Salem, Mass., announced that he had sent 31,897 allegedly fraudulent foreclosure-related documents to Holder. O’Brien said he asked for a criminal investigation of servicers and their law firms that had filed the documents because they “show a pattern of fraud,” forgery and false notarizations.

(Reporting By Scot J. Paltrow, editing by Blake Morrison)

Bank Amnesty Bending the Rule of Law to Help the Banks: Effort to Draft a National Foreclosure Statue Underway

24 Jan

Bending the Rule of Law to Help the Banks: Effort to Draft a National Foreclosure Statue Underway

They take our payments they take the  investors money  they  take AIG credit default  Swap money  they take  the Private Mortgage Insurance they take the  TARP they take our homes in Foreclosure   THEN THEY  ASK FOR AMNESTY.

Foreclosure auction signs

Image by niallkennedy via Flickr

by Yves Smith SEE FULL ARTICLE ON NAKEDCAPITALISM.COM

There is a slow moving but nevertheless troubling effort underway to change foreclosure laws across the US. The Uniform Law Commission, the same body that created the Uniform Commercial Code, a model set of laws that sought to harmonize commercial laws in all 50 states, has had two full day public but not well publicized meeting of a “study group” on mortgage foreclosure. Note that it took over a decade to draft the first version of the UCC and a protracted period for it to be implemented by states (most states have adopted the updated version of the UCC, although certain articles of the new version have not been implemented in any states).

 

Given its august history, one would think the ULC would be above political influences. That would appear to be a naive assumption these days. The study committee’s public meetings meetings to solicit opinion from “stakeholders” on “problems” with foreclosures. Curiously enough, these “stakeholder” meetings had no representation of investors (Tom Deutsch of the American Securitization Forum would claim he played that role, but everyone in mortgage land knows the ASF is a sell side organization) and effectively no input from homeowners or consumer advocates (none at the first meeting, and only, at the second, in Washington last week).

 

I got reports from three people who attended the latest session, in Washington, last week, na all were disheartening. Tom Cox, the Maine attorney who broke the robosigning scandal, provided a memorandum that argues that the commission has effectively assumed that the “problems” require a legislative solution:

 

Before there can be a determination made as to whether there is a need for a new uniform act dealing with foreclosure issues, there must be an clear accounting of (1) what the problems are that cause legislation to be considered, (2) what has caused those problems to occur, and (3) only then, whether the problems lend themselves to a legislative solution that would be offered by a new uniform act. Unfortunately, it appears that the JEBURPA letter of May 30, 2011 and all of the subsequent steps leading to this stakeholders’ meeting have failed to conduct the step 2 analysis. Further, it appears that the assumption has been made that new legislation is the solution to the perceived problems without there having been analysis of whether other non-­‐legislative solutions might be more appropriate.

 

I suggest you read Cox’s memo in full:

Thomas A. Cox Memo for ULC Study Committee

Pulling Back the Curtain Report

23 Jan

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Monday, January 23, 2012 10:56 AM
To: Charles Cox
Subject: Pulling Back the Curtain Report

See the attached.The-Curtain-Report.pdf

Charles
Charles Wayne Cox – Oregon State Director for the National Homeowners Cooperative
Email: mailto:Charles
Websites: http://www.NHCwest.com; www.BayLiving.com; and www.ForensicLoanAnalyst.com
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The-Curtain-Report.pdf

Mandelman sounds the Alert “Calling All Lawyers to 5,000,000 Crime Scenes”

23 Jan

 

It’s time for me to have an adult conversation with the experienced practicing attorneys in this country.  Other grown-ups are welcome to sit in as well, but it’s time for children to be in bed or occupied elsewhere, okay?

If there’s no money to be made solving something… no profit incentive… then for the most part, we don’t quite have a handle on to solving it.  For example, we’re not very good at cleaning up our oceans in general, and if there weren’t money to be made cleaning up oceans after oil spills, my guess would be that we wouldn’t be very good at doing that either.
To-date, however, BP has reportedly spent $21 billion cleaning up the Gulf of Mexico since its last mega-disaster, and guess what?  The Gulf of Mexico is pretty clean again… just two years later!  I remember hearing environmentalists predict that it could take 100 years to clean up the Gulf after the Deepwater Horizon catastrophe.  I guess they were underestimating just how much solution $21 billion can often buy.

Well, today we have a mammoth size foreclosure problem in this country, and it’s being talked about like it’s damn near an unsolvable problem… as if solving it would require determining the chemical origins of life, or figuring out whether black holes really do exist in space.

The foreclosure crisis, thank goodness, is not a black hole-type problem as many would have us believe.  It is a problem that, political constraints notwithstanding, exists at the juncture of economics and the rule of law.  In other words… it’s an oil spill… perhaps the worst oil spill of which the world has ever conceived… the Exxon Valdez meets Deepwater Horizon x 100, if you will… but it’s still just an oil spill.

It’s also important to note that as an economics problem alone, the foreclosure crisis is not a particularly challenging one to solve.  Some would rush to remind me that any proposed solution would be rife with “moral hazard,” and while that may be true, it doesn’t make the problem insoluble, by any means.

The elephant in the room is that what we’re facing in this country today is not just a foreclosure crisis, what we’re dealing with with is much better described as a FRAUDclosure crisis.

A couple of years ago, many would have said that my use of the word “fraud” before “closure,” is just hyperbole.  Today, however, anyone voicing that sort of opinion is selling something.  Even a cursory review of last year’s scathing “consent orders,” that federal regulators issued after months spent investigating mortgage servicers… or a quick perusal of the complaints filed against the servicers by attorneys general in Massachusetts, Nevada, Maryland, or Arizona… or by reading any number of published court decisions favoring homeowners… and one can only conclude that use of the word “fraud” is, if anything, understatement.

Additionally, this past year has been a turning point for the general public as far as FRAUDclosures are concerned.  Television’s most venerable news magazine, “60 Minutes,” along with newspaper-of-record, “The New York Times,” joined a long list of others documenting the many ways that banks and mortgage servicers are routinely breaking numerous laws in order to take advantage of homeowners in foreclosure.  It’s now widely understood to be something that’s occurring all over the country, and even though the banking industry continues to try to dismiss publicized instances as insignificant dalliances or “isolated incidents,” their sheer number has made such attempts laughable.  And the levels of wholesale anger and dissatisfaction with government felt among the populace are both palpable and rising fast.

Today, even forecasts from the likes of Goldman Sachs and Amherst Securities peg the number of foreclosures between 10.4 and 14 million by year-end 2014, and those numbers could easily go higher should home prices continue to fall… which they invariably will.  Add those numbers to the millions of foreclosures already water under the bridge, and were talking about a crisis that results in ONE IN FOUR Americans with mortgages losing their homes to foreclosure in the next handful of years.

What I’m describing will unquestionably devastate any hope for recovery in our broader economy for any number of reasons.  For one thing, as banks are forced to recognize their losses incurred on the mortgage-backed securities and CDOs that capitalize their balance sheets, they will become insolvent… and this time many will be forced to fail.  For another, home prices will continue falling pushing more and more homeowners underwater and consumer spending will continue to decline and that will lead to rising unemployment, which will in turn fuel further foreclosures.  And those hopelessly underwater will begin walking away en masse, which will further exacerbate the decline in prices and become impossible to combat.

All of these factors and more will combine to reduce future demand for residential real estate dramatically… perhaps by half, but in addition, with no secondary mortgage market… no ability to securitize debt… even those wanting to buy homes going forward will find credit to be tight and tighter, destroying any potential for recovery in the housing market.

And I’m no longer in a small group of people writing about this deteriorating situation as was the case three plus years ago.  Every day others are waking up to the fact that what we’ve been told about foreclosures to-date by our government and the financial services and related industries, has proven itself to be at best mistaken… at worst misdirection… or, not to put too fine a point on it, outright folderol.

As conservative columnist, Peggy Noonan, has pointed out recently, it’s simply impossible to imagine this sort of future without also seeing social unrest on a scale not seen in this country since at least the 1930s.  Writing recently about the Occupy Wall Street (“OWS”) movement, Noonan echoes my sentiments on the situation to a tee…

“OWS is an expression of American discontent, and others will follow.  Protests and social unrest are particularly likely if people feel they are unfairly losing their homes to support irresponsible, law-breaking institutions that have successfully disregarded the fundamental rules of capitalism and good citizenship.”

The harsh truth is that whatever is done in the future at state or federal levels to mitigate the damage caused by foreclosures, it’s simply too late to prevent our FRAUDclosure crisis from pretty much wiping out our nation’s middle class economy for more than a generation.  As a practical matter, the only real question we face today is how many are wounded and how many are killed… none of us is getting out unscathed.

There should be no question in anyone’s mind… there are only two paths ahead from which to choose.  Both involve fighting a war… but on one path the battle is fought by lawyers in our courts… on the other, by citizens in our streets.

Make no mistake about it… if we are to mitigate any of the  damage being caused, uphold the rule of law, and protect the rights of millions of homeowners… it should be obvious to anyone that WE NEED TENS OF THOUSANDS OF LAWYERS trained in foreclosure defense, loss mitigation and bankruptcy.  And yet, more than four years into the FRAUDclosure crisis, we don’t have anywhere near the number of trained, ethical attorneys required to meet the demand.

We’re all adults here, so let’s not kid ourselves about why that’s the case.  

We all know why we don’t have the lawyers we need to marshall a more effective defense of homeowners engulfed by the FRAUDclosure crisis… it’s because THERE’S NO MONEY IN IT.  Or, at least that’s what lawyers have been told they are supposed to believe.  Not only that, but the message has been that there  shouldn’t be any money in representing homeowners at risk of FRAUDclosure. It’s as if attorneys profiting from representing homeowners at risk of FRAUDclosure is somehow a bad thing.

AND THAT’S JUST 100% BANKER-INSPIRED B.S.

Don’t you see what’s happened here?  We’ve allowed the banks, and the government that’s been bailing them out, to essentially criminalize the profit potential in representing homeowners at risk of foreclosure… and wonder of wonders, miracles of miracles… here we sit with what appears to be an unsolvable problem.

Consider this… bankers say that they’ve been overwhelmed by the millions of homeowners unexpectedly seeking loan modifications and that’s why applying for a loan modification has been such a nightmare.  But, what about the number of foreclosures occurring in the same time frame?  Haven’t there been an unprecedented and unexpected number of foreclosures too?  So,why is it that the banks have no problems accommodating the millions of unexpected foreclosures, but the millions of unexpected loan modifications represent an unsolvable problem?

It’s simple… because on the foreclosure side of the equation, banks allow lawyers to be profitably compensated for handling foreclosures, and sure enough those law firms have figured out how to handle any number of foreclosures that come down the pike… in fact, the more the merrier, as they say.  On the loan modification side of the house, however, profits are a dirty word… and wouldn’t you know it, the problem is unsolvable.  Why am I not surprised?

Over the TWO YEARS following the Deepwater Horizon disaster, BP spent $21 billion to clean up the Gulf of Mexico.  In the FOUR YEARS since the tsunami of foreclosures began, we’ve spent roughly ten percent of what BP spent cleaning up the Gulf… $2.4 billion… and the vast majority of that amount paid to mortgage servicers… and we’re wondering why the problem can’t be solved?

 A MESSAGE TO OUR NATION’S LAWYERS…

It’s the biggest financial opportunity for the legal profession

SINCE THE REAR END COLLISION. 

The fact is… there is a HUGE OPPORTUNITY today to build a very profitable legal practice based on the ethical and effective representation of homeowners caught in the FRAUDclosure crisis.

From the very beginning of the mortgage meltdown, banks have tried to make sure that homeowners were not represented by attorneys when trying to save their homes from FRAUDclosure.   The reason is now apparent: Banks knew it was a FRAUDclosure crisis before the rest of us did because they’re the ones who put the FRAUD into FRAUDclosure.  From the earliest days of the crisis, the banks and the Obama Administration have been reinforcing TWO LIES:

  1. Homeowners at risk of foreclosure don’t need lawyers… they can just call their bank directly.  That’s like the police telling someone under arrest that he or she doesn’t need a lawyer because any questions can be answered by the District Attorney.  It’s a damn lie… homeowners DO NEED LAWYERS to help them save their homes because it’s not just a foreclosure crisis, it’s a FRAUDclosure crisis.
  2. A lawyer who charges a homeowner at risk of foreclosure up front… is a “SCAMMER.”  That is not only a LIE, but it’s a lie to achieve two key bank objectives.  One – It stopped many homeowners from seeking legal representation, thus allowing the banks to do whatever they wanted as related to foreclosing on their homes.  Two – It stopped countless attorneys from building a profitable practice based on representing homeowners at risk of foreclosure.

The California Example…

In California, the efforts to stop lawyers from representing homeowners have been more extreme than in any other state.  Here the campaign to malign the legal profession has been driven by legislative committees and supported by the California State Bar Association.  In October 2009, California’s SB 94 created a law that has effectively prevented lawyers from offering to represent homeowners who are seeking to avoid foreclosure through modification of their loans.  Under the guise of “charging up front makes you a scammer,” SB 94 has made it illegal for a lawyer to charge a homeowner an upfront retainer for legal fees.

Quite predictably, the law has made it difficult or even impossible for California homeowners to find quality legal representation related to seeking loan modifications, forcing those at risk of foreclosure who want to be represented by an attorney into either litigation or bankruptcy.  Writing for The New York Times in December 2010, David Streitfeld’s article titled, “Homes at Risk, and No Help from Lawyers,” described the situation in California related to SB 94.

In California, where foreclosures are more abundant than in any other state, homeowners trying to win a loan modification have always had a tough time. 

Now they face yet another obstacle: hiring a lawyer.

Sharon Bell, a retiree who lives in Laguna Niguel, southeast of Los Angeles, needs a modification to keep her home. She says she is scared of her bank and its plentiful resources, so much so that she cannot even open its certified letters inquiring where her mortgage payments may be. Yet the half-dozen lawyers she has called have refused to represent her.

“They said they couldn’t help,” said Ms. Bell, 63. “But I’ve got to find help, because I’m dying every day.”

Lawyers throughout California say they have no choice but to reject clients like Ms. Bell because of a new state law that sharply restricts how they can be paid. Under the measure, passed overwhelmingly by the State Legislature and backed by the state bar association, lawyers who work on loan modifications cannot receive any money until the work is complete. The bar association says that under the law, clients cannot put retainers in trust accounts.

To make matters worse, SB 94 has recently become controversial.  In late September 2011, Suzan Anderson, who is the supervising trial council of the state bar’s special team on loan modifications, made an unscheduled appearance at the bar’s annual conference, presenting what she purported to be the bar’s new interpretation of SB 94.  Literally hundreds of attorneys and legal scholars disagree, however, and litigation has recently been filed against the bar seeking declaratory relief, so we’ll soon see the courts decide the issue.

The core issue is about when a lawyer who represents a homeowner trying to get their loan modified can be compensated.  The bar claims the law requires an attorney to wait until the very end of the case, however, the actual language contained in SB 94 doesn’t say that… it says lawyers cannot be paid until completing “any and all services (the lawyer) has contracted to perform…” Up until Ms. Anderson’s presentation at the annual meeting, lawyers were dividing services into separate contractual arrangements and accepting payments from homeowners as discreet sets of services were completed.

Regardless of which side of the debate you’re on, the issue highlights how far the banking lobby will push a state legislature and state bar association in an attempt to prevent homeowners from being represented by legal council when trying to to avoid foreclosure, and it should come as absolutely no surprise that SB 94 was born in the state’s Senate Banking Committee, sponsored by Sen. Ron Calderon, who chairs that committee.

Advocates of SB 94 claim that it was needed to stop “scammers” who were preying on homeowners in distress from accepting up-front fees.  As quoted from Streitfeld’s article in The New York Times…

A spokesman for the Mortgage Bankers Association said it simply wanted to protect homeowners from fraud. “Be very careful about anyone who wants you to pay them to help you get a loan modification,” said the spokesman, John Mechem.

The evidence of any sort of army of lawyers-turned-scammers ripping off homeowners has always been thin, and by “thin” I mean nonexistant.  In the two years since the bill became law, the bar has taken some type of disciplinary action related to the representation of homeowners in foreclosure against two dozen lawyers, give or take a few.  In a state with more than 200,000 lawyers and 2 million homeowners in foreclosure, two dozen lawyers disciplined would hardly seem justification for a law that effectively prevents lawyers from helping homeowners get their loans modified.

Last December, Suzan Anderson, who heads up the bar’s task force on loan modifications, told The New York Times…

“I wish the law had worked,” Ms. Anderson said.

It’s also telling that no other state in the country has a law anything like SB 94, in fact, the rest of the states follow the FTC’s Mortgage Assistance Relief Services rule, MARS, which was adopted on January 30, 2011, and it does allow attorneys representing homeowners seeking loan modifications to accept funds in advance into their trust accounts.

The New York Times article also offered the perspective of several California homeowners seeking legal assistance in a post SB 94 world…

Mark Stone, a 56-year-old general contractor in Sierra Madre, feels differently. A few years ago, he got sick with hepatitis C. Unable to work full time, he began to miss mortgage payments. The drugs he was taking left him “a little confused,” he said.

Mr. Stone knew that his condition put him at a disadvantage in negotiations with his bank. So he hired Gregory Royston, a real estate lawyer in Redondo Beach. It took Mr. Royston nearly a year, but he restructured the loan.

 Without the lawyer, Mr. Stone said, “I’d be living under a bridge.
The legal bill, paid in advance, was $3,500. “Worth every penny,” said Mr. Stone, who is now back at work.
“This law,” Mr. Royston said, “took the wrong people out of the game.”

A Bleak Picture in California…

California’s approach to discouraging lawyers from representing homeowners at risk of foreclosure has not served the state or its residents well at all.  California is the “hardest hit” of all 50 states, accounting for one of every five foreclosures in the U.S.  Almost half of California’s homeowners are either underwater or effectively underwater today.  Since 2008, there have been 1.2 million foreclosures statewide, and that number is expected to exceed 2 million by the end of 2012.  And, according to the report published by the California Reinvestment Coalition…

The 2 million foreclosures expected by the end of this year are forecasted to cost the state and its residents $650 billion statewide.

Today, in California alone there are roughly TWO MILLION homeowners in foreclosure.  I don’t know exactly how many we have nationwide, estimates vary, but are in the 5 million range.  I do know that if two million people needed just 10 hours of legal assistance, it would take 20 million man hours.  Assuming a six hour work day and a 260 day work year… that’s just under 13,000 years assuming only one lawyer were involved.  To help two million people, assuming 10 hours each, at best would require more than 10,000 lawyers trained and working efficiently.

How many attorneys do we have  trained and ready to help loans get modified, represent homeowners in foreclosure defense matters and/or in bankruptcy.  Nowhere near 13,000 that’s for sure… in fact, we might not find 1300 either… and many would say the number could be closer to 130, and with the proliferating fraudulent documents… the abuses by servicers… the number of people who are foreclosed on illegally… its become easy to see the disease, and trained ethical lawyers would seem the only cure.

Mandelman out.

~~~

We need a literal army of experienced litigators, and Max Gardner’s Bankruptcy Boot Camp has trained close to 900 attorneys to protect the rights of homeowners in foreclosure.  I’ve attended Max’s Boot Camp… I could never recommend it strongly enough… and often do.  But, there’s more than legal training that’s required here… and if we’re going to attract the number of lawyers we need to fight this war…

The Answer is Money…

What Was Your Question?

Ohio’s former Attorney General Marc Dann is a highly experienced foreclosure defense attorney and a graduate of Max Gardner’s Boot Camp. He’s proven in his own successful practice that lawyers have the opportunity to DO GOOD… and DO WELL at the same time by learning the ins and outs of this, unfortunately, very fast growing and specialized field.  And he’s developed a comprehensive training and ongoing support program that allows experienced foreclosure defense attorneys to immediately access new clients and the right clients, improve operations within their firms, and yes… increase their profitability dramatically.

Marc understands our need for an experienced army of foreclosure defense lawyers, but he also understands the reality that lawyers have to make money in order to operate effectively.  In a phrase, a lawyer that can provide effective representation for homeowners at risk of foreclosure today, should not be worried about losing his or her own home to foreclosure because that benefits no one.

So, Marc has developed and employed best practices in building his own successful foreclosure defense practice, and now he’s teaching other attorneys how to make money in foreclosure defense so that ultimately he will have provided countless thousands of homeowners all over the country with access to highly capable, ethical and experienced attorneys.

Marc Dann’s LAW PROFITS program will take experienced and effective attorneys committed to foreclosure defense and protecting the rights of homeowners, and help transform them into vibrant, profitable firms or individual legal practices.  Some of the innovative solutions Marc will be delivering include:

  • How to cut through the noise created by scammers, reaching out to homeowners in a very honest and compelling way.
  • When and how to sue the bad modification company or bad lawyer.
  • Suing the foreclosure mills for fun and profits.
  • Using Fair Debt Collection Practices and State Consumer Protection.
  • Learn about the new practices available under Dodd Frank.
  • Harnessing TILA and RESPA inside and outside bankruptcy court.
  • Unconventional approaches stay one step ahead of servicer practices.
  • Billing structures, methodologies, and practice accounting.
  • Designing compensation programs that balance the needs of homeowners with the needs of your firm.  
  • Never lose clients – Ongoing communications program that’s turn-key and educates clients so they become fans.
  • Fee agreements – for contingency and hourly clients.
  • Become part of a highly visible network of top foreclosure defense attorneys, and strategic partners.
  • Communications strategies and tactics proven effective and unavailable anywhere else.

Making little or no money in foreclosure defense isn’t doing your clients any favors because you cannot be your best without it.  Marc Dann’s LAW PROFITS is not a pot of gold, or a winning lottery ticket, but it is a proven process and suite of best practices that makes a law practice profitable… essentially immediately.  It’s work, no question about it, but it’s important and gratifying work.

I wholeheartedly support Mar’c Dann’s LAW PROFITS initiative.  And I strongly urge all of the lawyers reading this to take action now by clicking the link below, so you can find out more about what his LAW PROFITS program for foreclosure defense and bankruptcy lawyers can do for you and your firm.  The FRAUDclosure crisis and its ancillary topics, I’m sorry to say, are going to be with us for a long time… a decade plus, if we’re lucky.  Longer if we’re not.  It’s time to settle in and start capitalizing on being one of the best at solving on of the worst case scenarios.

Click below to find out more about…

Marc Dann’s

LAW PROFITS

Aside

Stopforeclosure Now

21 Jan

California Financial Code Section 4970

20 Jan

For purposes of this division:
   (a) "Annual percentage rate" means the annual percentage rate for
the loan calculated according to the provisions of the federal Truth in Lending Act and the regulations adopted thereunder by the Federal
Reserve Board.
   (b) "Covered loan" means a consumer loan in which the original
principal balance of the loan does not exceed the most current
conforming loan limit for a single-family first mortgage loan
established by the Federal National Mortgage Association in the case
of a mortgage or deed of trust, and where one of the following
conditions are met:
   (1) For a mortgage or deed of trust, the annual percentage rate at
consummation of the transaction will exceed by more than eight
percentage points the yield on Treasury securities having comparable
periods of maturity on the 15th day of the month immediately
preceding the month in which the application for the extension of
credit is received by the creditor.
   (2) The total points and fees payable by the consumer at or before
closing for a mortgage or deed of trust will exceed 6 percent of the
total loan amount.
   (c) "Points and fees" shall include the following:
   (1) All items required to be disclosed as finance charges under
Sections 226.4(a) and 226.4(b) of Title 12 of the Code of Federal Regulations, including the Official Staff Commentary, as amended from
time to time, except interest.
   (2) All compensation and fees paid to mortgage brokers in
connection with the loan transaction.
   (3) All items listed in Section 226.4(c)(7) of Title 12 of the
Code of Federal Regulations, only if the person originating the
covered loan receives direct compensation in connection with the
charge.
   (d) "Consumer loan" means a consumer credit transaction that is
secured by real property located in this state used, or intended to
be used or occupied, as the principal dwelling of the consumer that
is improved by a one-to-four residential unit. "Consumer loan" does
not include a reverse mortgage, an open line of credit as defined in
Part 226 of Title 12 of the Code of Federal Regulations (Regulation
Z), or a consumer credit transaction that is secured by rental
property or second homes. "Consumer loan" does not include a bridge
loan. For purposes of this division, a bridge loan is any temporary
loan, having a maturity of one year or less, for the purpose of
acquisition or construction of a dwelling intended to become the
consumer's principal dwelling.
   (e) "Original principal balance" means the total initial amount
the consumer is obligated to repay on the loan.
   (f) "Licensing agency" shall mean the Department of Real Estate
for licensed real estate brokers, the Department of Corporations for
licensed residential mortgage lenders and licensed finance lenders
and brokers, and the Department of Financial Institutions for
commercial and industrial banks and savings associations and credit
unions organized in this state.
   (g) "Licensed person" means a real estate broker licensed under
the Real Estate Law (Part 1 (commencing with Section 10000) of
Division 4 of the Business and Professions Code), a finance lender or
broker licensed under the California Finance Lenders Law (Division 9
(commencing with Section 22000)), a residential mortgage lender
licensed under the California Residential Mortgage Lending Act
(Division 20 (commencing with Section 50000)), a commercial or
industrial bank organized under the Banking Law (Division 1
(commencing with Section 99)), a savings association organized under
the Savings Association Law (Division 2 (commencing with Section
5000)), and a credit union organized under the California Credit
Union Law (Division 5 (commencing with Section 14000)). Nothing in
this division shall be construed to prevent any enforcement by a
governmental entity against any person who originates a loan and who
is exempt or excluded from licensure by all of the licensing
agencies, based on a violation of any provision of this division.
Nothing in this division shall be construed to prevent the Department
of Real Estate from enforcing this division against a licensed
salesperson employed by a licensed real estate broker as if that
salesperson were a licensed person under this division. A licensed
person includes any person engaged in the practice of consumer
lending, as defined in this division, for which a license is required
under any other provision of law, but whose license is invalid,
suspended or revoked, or where no license has been obtained.
   (h) "Originate" means to arrange, negotiate, or make a consumer
loan.
   (i) "Servicer" has the same meaning provided in Section 6 (i)(2)
of the Real Estate Settlement Procedures Act of 1974.
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