Archive | July, 2012

Important new bankruptcy case you need to read

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Tuesday, May 01, 2012 3:45 PM
To: Charles Cox
Subject: Important new bankruptcy case you need to read

Charles W. Trainor

Attorney at Law

Trainor Fairbrook

916-929-7000

Begin forwarded message:

Subject: Important new case you need to read

The summary below highlights an important (and disturbing, from a lender’s viewpoint) new court ruling out of the 9th Circuit BAP (which is composed of bankruptcy judges and not the regular, notoriously liberal 9th Circuit judges). I commend it to your reading and encourage you to ask me questions if you don’t understand it. It’s a major game-changer for under-water, single asset real estate cases where the borrower is a single-asset LLC and there’s a separate guarantor. Everyone, whether you’re a transactional attorney or a litigator, needs to understand the implications of this case.

With the issuance of this decision, instead of borrowers just letting the property get foreclosed on and facing the need to defend the inevitable lawsuit on the guaranty, many owners are going to choose to file a chapter 11 and try to keep the property, successfully confirming a plan that bifurcates the lender’s claim into a secured and unsecured portion (the latter of which is now classified separately from the other general unsecured creditors), and then cramming down the plan over the lender’s objections, paying only pennies on the dollar on that unsecured portion. Previously, separate classification was not permitted, and because the deficiency claim of a lender was usually so high that it could control the voting of the unsecured class, it would also veto any plan that didn’t pay out 100 cents on the dollar to the unsecured class, invoking the absolute priority rule. Now, with separate classification permitted, the lender’s leverage is eliminated and it will no longer be able to preclude plan confirmation. Of course, the lender still retains its rights against the guarantor and can immediately demand payment of the unrealized portion of the unsecured claim from the guarantor, and sue if payment thereof isn’t received. But the leverage that the borrower/owner has by threatening a cram-down through a bankruptcy will be a major negotiating point on the enforcement of those guarantees.

And yes, Chuck, I’ll be writing a client bulletin about it right away.

From: Gall, Travis
To: Sections: Bus Law Insolvency Constituency List
Subject: Update from the State Bar Business Law Section’s INSOLVENCY LAW COMMITTEE

Insolvency Law Committee – Business Law Section of the State Bar of California
Bankruptcy e-Bulletin
Robert G. Harris
Co-Chair
Binder & Malter LLP
2775 Park Avenue
Santa Clara, CA 95050
408-295-1700
rob

Elissa D. Miller
Co-Chair
Sulmeyer Kupetz
333 S. Hope Street, 35th Fl.
Los Angeles, CA 90071
213-626-2311
emiller

Thomas R. Phinney
Co-Vice Chair
Parkinson Phinney
400 Capitol Mall, Suite 2560
Sacramento, CA 95814
916-449-1444
tom

James P. Hill
Co-Vice Chair
Sullivan Hill Lewin Rez & Engel
550 West C Street, 15th Floor
San Diego, CA 92101
619-233-4100
hill

March 6, 2012

Dear constituency list members of the Insolvency Law Committee, the following is a recent case update:

The United States Bankruptcy Appellate Panel of the Ninth Circuit recently affirmed the separate classification of a lender’s deficiency claim based on the existence of a third-party source of payment for the subject deficiency claim. Wells Fargo Bank, N.A. v. Loop 76, LLC (In re Loop 76, LLC), ___ B.R. ___ (9th Cir. BAP February 23, 2012). To read the decision, click: HERE.

FACTS:

The facts are straightforward. In 2005, Wells Fargo Bank provided a construction loan in the approximate amount of $23 million to Loop 76, LLC, repayment of which was secured by an office/retail complex in Scottsdale, Arizona. Loop 76 was unable to secure replacement financing before the construction loan’s maturity date, and, Wells Fargo ultimately sued Loop 76 in state court seeking appointment of a receiver. Loop 76 responded by filing its single asset Chapter 11 case. Wells Fargo countered by filing a separate lawsuit in state court against the non-debtor guarantors of the construction loan.

As the loan exceeded the stipulated value of Wells Fargo’s real estate collateral, Loop 76’s plan bifurcated Wells Fargo’s $23 million claim into two separate claims: (i) a secured claim for $17 million; and (ii) an unsecured deficiency claim for the $6 million balance. The plan also classified Wells Fargo’s deficiency claim separate from Loop 76’s other general unsecured claims. This separate classification is significant because Wells Fargo’s deficiency claim was substantially greater in amount than the approximate $181,000 of other general unsecured claims; as such, if the deficiency claim had been classified together with the other unsecured claims, Wells Fargo would have been able control the vote of the general unsecured claims, thereby jeopardizing confirmation of the plan overall.

Wells Fargo objected to the plan and argued, among other things, that Loop 76’s separate classification of its deficiency claim violated Bankruptcy Code section 1122(a), because the debtor classified Wells Fargo’s unsecured deficiency claim “solely to gerrymander an affirmative vote on the plan.” Rejecting Wells Fargo’s contention, the bankruptcy court ultimately held that the existence of a third-party source of payment – the guarantors for the construction loan – rendered Wells Fargo’s deficiency claim dissimilar to the unsecured trade claims. As a result, the bankruptcy court determined that 11 U.S.C. § 1122(a) mandated that Wells Fargo’s deficiency claim be separately classified.

HOLDING:

On appeal, the BAP affirmed the ruling of the bankruptcy court on the claims classification issue, and concluded that a third party source for recovery on a creditor’s unsecured claim is a factor which the bankruptcy court may consider when determining whether claims are substantially similar under section 1122(a).

Significantly, Wells Fargo alleged that the law in the Ninth Circuit requires classification “to be based on the nature of the claim as it relates to the assets of the debtor” as stated in pre-Code case law, including the case of In re Los Angeles Land & Invs., Ltd., 282 F.Supp. 448 (D. Haw. 1968), aff’d, 447 F.2d 1366 ( 9th Cir. 1971) (“Los Angeles Land”).

The BAP disagreed with Wells Fargo’s contention in that regard. According to the BAP, the Ninth Circuit’s more flexible approach to claim classification is demonstrated in the more recently published opinion of Steelcase Inc. v. Johnston (In re Johnston), 21 F.3d 323 (9th Cir. 1994), which allowed separate classification of an unsecured claim based on factors not related to the debtor’s assets, including that: (i) the claim was partially secured; (ii) the debtor and the creditor were embroiled in litigation and the debtor’s claim against the creditor might offset or exceed the creditor’s claim against the debtor; and (iii) if the creditor was successful in its litigation, it could be paid in full before other unsecured creditors. As a result, the BAP determined , Johnston (which looked beyond the assets of the debtor and considered third party sources of recovery for the creditor’s unsecured claim as a basis for dissimilarity) did not expressly overrule Los Angeles Land, but did reject Los Angeles Land’s narrow consideration of the “nature” of a creditor’s claim in any section 1122(a) analysis.

Alternatively, Wells Fargo argued that the bankruptcy court’s holding was inconsistent with Ninth Circuit precedent as stated in Johnston and Barakat v. Life Ins. Co. of Va. (In re Barakat), 99 F.3d 1520, 1526 ( 9th Cir. 1996) because neither of those cases expressly held that a third-party source of payment made the claim at issue dissimilar to the other unsecured claims. Distinguishing Johnson and Barakat, the BAP made short shrift of this argument, by pointing out that the third-party source of recovery in Johnston was collateral, not cash, while there was no third party source of recovery in Barakat.

Finally, Wells Fargo argued that the bankruptcy court’s ruling was inconsistent with Barakat’s express holding, in that deficiency claims are so “substantially similar” to other unsecured claims that they cannot be classified separately from other unsecured claims absent a business or economic justification. Rejecting this argument, the BAP pointed out that in the Loop 76 case, Wells Fargo did in fact have a “special circumstance” which did not apply to any other unsecured creditors:– Wells Fargo had a third party source of recovery for its deficiency claim in the form of the nondebtor guarantors. Therefore, the BAP opined, even if the debtor were able to pay its proposed pro rata distribution to Wells Fargo under the plan, Wells Fargo still had the right to collect its entire debt from the guarantors, unlike any other of the debtor’s unsecured creditors. Discussing Johnson in detail, the BAP also clarified that the same analysis applies if the third party source of recovery is collateral rather than cash.

Accordingly, the BAP affirmed the bankruptcy court and held that, “at minimum, a bankruptcy court may consider sources outside of the debtor’s assets, such as the potential for recovery from a non-debtor or nonestate source” when determining whether unsecured claims are substantially similar under section 1122(a).

AUTHORS’ NOTE:

This case is significant in that it enables a Chapter 11 debtor to reduce and/or eliminate a significant point of leverage for most commercial lenders, especially in single asset Chapter 11 cases – the ability to use an unsecured deficiency claim to control the vote of the class of unsecured non-priority claims. Indeed, a commercial lender in single asset Chapter 11 cases often has its loan bifurcated into two separate claims: (i) a secured claim to the extent of the value of the real property collateral; and (ii) an unsecured deficiency claim for the balance of the loan amount. If the unsecured deficiency claim is classified together with other general unsecured claims, the unsecured deficiency claim will usually be greater than one-third of the total unsecured non-priority claims, thereby giving the lender veto power over the treatment of unsecured non-priority claims. See 11 U.S.C. § 1126(c), which provides that a class of claims has accepted a plan if at least two-thirds in amount and more than one-half in number of the allowed claims in such class have voted to accept the plan.

This veto power can be devastating to a Chapter 11 debtor in a single asset case with only one class of impaired unsecured claims. While the debtor may be in a position to “cram down” the lender’s secured claim over the lender’s objection, the debtor will be unable to confirm a plan making less than 100% distributions on unsecured claims if because the lender votes its deficiency claim to block the plan and therefore causes the sole impaired class of unsecured claims to reject the plan.

The Loop 76 case reduces the partially secured creditor’s power to veto a Chapter 11 plan. This is because a commercial lender with an undersecured claim in a single asset real estate Chapter 11 case usually finds itself in the unique position of having recourse to third parties via personal guaranties – a characteristic that other unsecured non-priority claims do not typically share. The Loop 76 case confirms that the Chapter 11 debtor may use that unique characteristic to separately classify the lender’s unsecured deficiency claim without violating section 1122(a), thereby providing the debtor with a stronger opportunity to “cram down” its plan over the secured creditor’s objection.

These materials were prepared by Martin A. Eliopulos of Higgs Fletcher & Mack, LLP, San Diego, California, with editorial contributions from Monique Jewett-Brewster, of MacConaghy & Barnier, PLC, Sonoma, California. Mr. Eliopulos is a member of the Insolvency Law Committee.

Thank you for your continued support of the Committee.

Best regards,

Insolvency Law Committee

The Insolvency Law Committee of the Business Law Section of the California State Bar provides a forum for interested bankruptcy practitioners to act for the benefit of all lawyers in the areas of legislation, education and promoting efficiency of practice. For more information about the Business Law Standing Committees, please see the standing committees web page.

These periodic e-mails are being sent to you because you expressed interest in receiving updates from the Insolvency Law Committee of the State Bar of California’s Business Law Section. As a Section member, if you would also like to sign up to receive e-bulletins from other standing committees, simply click HERE and follow the instructions for updating your e-bulletin subscriptions in My State Bar Profile. If you have any difficulty or need assistance, please feel free to contact Travis Gall. If you are not a member, or know of friends or colleagues who might wish to join the Section to receive e-bulletins such as this, please click HERE to join online.

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Eighth Circuit affirms dismissal of RICO suit over alleged inflated appraisals

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Monday, April 23, 2012 6:22 AM
To: Charles Cox
Subject: Eighth Circuit affirms dismissal of RICO suit over alleged inflated appraisals

Eighth Circuit affirms dismissal of RICO suit over alleged inflated appraisals

· Goodwin Procter LLP

· USA

·

· April 17 2012

The Eighth Circuit affirmed a lower court’s dismissal of plaintiffs’ lawsuit over an alleged “inflated appraisal fee scheme.” Plaintiffs filed a putative class action alleging violations of the Racketeer Influenced and Corrupt Organizations Act, the Real Estate Settlement Procedures Act, and several state laws. Plaintiffs alleged the defendants “skimmed the difference” between the actual cost of the appraisal and that which was disclosed and charged in the HUD-1 settlement statement. Plaintiffs maintained that defendants required appraisers into performing appraisals at below market rate, but did not pass along the reduced appraisal fees to plaintiffs. The lower court held that plaintiffs lacked standing under RICO and the state anti-racketeering statute because the alleged RICO violations did not cause plaintiffs to suffer any “concrete financial loss.” More specifically, the lower court held that the plaintiffs would have been in the same financial position in the absence of the alleged RICO violations. The Eighth Circuit agreed.

Notably, the Eighth Circuit affirmed the lower court’s dismissal of plaintiffs’ Section 8(a) RESPA claim, noting that the company which arranged real-property appraisals did not appraise properties, but simply hired an appraiser on an approved list and “merely forwarded the appraisal” to the lender. The Eighth Circuit held further that plaintiffs would have to allege “more than the mere fact of a referral and the possibility of improper control to sustain a claim under Section 8(a).” The Eighth Circuit also agreed with the lower court’s dismissal of plaintiffs’ Section 8(b) RESPA claim, pointing to its ruling in Haug v. Bank of America, N.A., 317 F.3d 832 (8th Cir. 2003), in which it held that Section 8(b) is an anti-kickback provision which “unambiguously requires at least two parties to share a settlement fee in order to violate the statute.” Like the allegations in Haug, plaintiffs’ allegations were about marking up the appraisal fee, and “an overcharge, standing alone, does not violate Section 8(b) of RESPA.”


MN-RICO Suit Dismissed.pdf

MERS, Sued by Louisiana Counties – PRESENTING KENTUCY v. MERS!

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Sunday, April 29, 2012 2:11 PM
To: Charles Cox
Subject: MERS, Sued by Louisiana Counties – PRESENTING KENTUCY v. MERS!

MERS, Sued by Louisiana Counties, and NOW PRESENTING KENTUCY v. MERS!

April 28th, 2012 | Author: Matthew D. Weidner, Esq.

The list of lawsuits against MERS just keeps on growing and growing and growing. Attached below is the latest attempt by 14 counties in Texas to recover monies they claim are due from MERS.

For all of you new to the whole MERS as the villain game, I encourage you to Google MERS v. Azize and read what a good judge from right here in Pinellas County had to say about the whole MERS thing. I encourage everyone in this country, especially all those elected officials that remain content to continue accepting the lies and the catastrophe presented to us by the banking sector and their attorneys to ask yourselves,

What if the world had listened to Judge Walt Logan in his 2004 opinion, MERS v. Azize?

And now from the complaint itself:

For hundreds of years, the combination of recorded deeds, recorded mortgages and recorded mortgage assignments have provided the public in Kentucky with the tools necessary to effectuate real estate transactions with the knowledge that all potential interests in the property have been addressed with legal finality. The county recording system in Kentucky has been in place since the Commonwealth joined the United States.

Defendants have failed to record mortgage assignments in contravention of Kentucky law depriving Kentucky counties of millions of dollars in unpaid fees for mortgage assignments. The Defendants have taken advantage of the protections afforded by Kentucky’s laws by recording mortgages in land records maintained by Kentucky’s counties while at the same time they have failed to comply with Kentucky’s laws requiring accurate information.

Kentucky counties are charged with maintaining a property records system that provides Kentucky citizens with accurate notice of property interests in land. Kentucky specifically requires that all mortgages be recorded in the county clerk’s office: “All deeds, mortgages and other instruments required by law to be recorded to be effectual against purchasers without notice, or creditors, shall be recorded in the county clerk’s office…” KRS382.110(1). After the initial recording of a mortgage, Kentucky law requires that all assignments of a mortgage be recorded in the county clerk’s office, KRS 382.360(3), and that a fee be paid for each assignment by the assignee. KRS 64.012(1)(a)

KY-USDC-Complaint-KY-v-MERS.pdf

New post How To Tell The Judge “NO” and MAYBE Not Have Him /Her Get Pissed Off

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, June 21, 2012 9:11 PM
To: Charles Cox
Subject: [New post] How To Tell The Judge “NO” and MAYBE Not Have Him/Her Get Pissed Off

New post on Livinglies’s Weblog

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This article was prompted by a very reasoned argument presented by CA Attorney Dan Hanacek:

Even In the Event the Court Finds the "Assignment" Valid, the Assigning of the Note to a Co-Obligor Makes it Functus Officio

"It has long been established in California that the assignment of a joint and several debt to one of the co-obligors extinguishes that debt." (Gordon v. Wansey (1862) 21 Cal. 77, 79.) "The assignment amounts to payment and consequently the evidence of that debt, i.e., the note or judgment, becomes functus officio (of no further effect)"-and precludes any further action on the note itself. Any action would not be on the note itself, but rather one for contribution. (Id.; Quality Wash Group V, Ltd. V. Hallak (1996) 50 Cal.App.4th 1687, 1700; Civ. Code §1432.) In the instant case, even if the alleged assignment is seen to be valid, then a co-obligor was assigned the note and the debt has been extinguished.

Note: the trustee of the securitized trust is a co-obligor.

Note: Fannie Mae, Freddie Mac and Ginnie Mae are co-obligors.

Note: the servicer is almost always a co-obligor.

Questions for Neil:

Have they extinguished this debt by endorsing it and/or assigning it to the transaction parties?

Does this only apply in CA? I cannot believe that this would be the case.

CA – Single Lender Making Two Nonpurchase Money Loans Assigns Junior Loan; Junior Loan Can Pursue Money Judgment.

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, June 21, 2012 9:15 AM
To: Charles Cox
Subject: CA – Single Lender Making Two Nonpurchase Money Loans Assigns Junior Loan; Junior Loan Can Pursue Money Judgment.

When a single lender contemporaneously makes two nonpurchase money loans secured by two deeds of trust referencing a single real property and soon thereafter assigns the junior loan to a different entity, the assignee of the junior loan, who is subsequently "sold out" by the senior lienholder’s nonjudicial foreclosure sale, can pursue the borrower for a money judgment in the amount of the debt owed. Trial court’s grant of summary judgment to defendant is reversed.

Cadlerock Joint Venture v Lobel.docx

Yet more disgusting layers of BS to wade through – “Who’s on First?” and “We’re From the Government and We’re Here to Help.” Yeah, right…

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, June 21, 2012 6:53 AM
To: Charles Cox
Subject: Yet more disgusting layers of BS to wade through – "Who’s on First?" and "We’re From the Government and We’re Here to Help." Yeah, right…

HUD No. 12-096
Tiffany Thomas Smith
(202) 708-0980
FOR RELEASE
Friday
June 8, 2012

HUD TO EXPAND SALE OF TROUBLED MORTGAGES THROUGH PROGRAM DESIGNED TO HELP BORROWERS AVOID COSTLY, LENGTHY FORECLOSURES
Enhanced FHA note sale program part of Obama Administration effort to address shadow inventory, target relief to hardest hit communities

CHICAGO – Thousands of borrowers severely delinquent on loans insured by the Federal Housing Administration (FHA) will have help from a new servicer to explore affordable mortgage solutions or achieve a favorable resolution under an enhanced government note sale program announced today. In a press conference held at the 2012 Clinton Global Initiative America Meeting, U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan and Acting FHA Commissioner Carol Galante launched the Distressed Asset Stabilization Program, an expansion of an FHA pilot program that allows private investors to purchase pools of mortgages headed for foreclosure and charges them with helping to bring the loan out of default.

“While our housing market has momentum we haven’t seen since before the crisis, there are still thousands of FHA borrowers who are severely delinquent today – who have exhausted their options and could lose their homes in a matter of months,” said HUD Secretary Shaun Donovan. “With this program, we will increase by as much as ten times the number of loans available for purchase while making it easier for borrowers to avoid foreclosure. Finding ways to bring these loans out of default not only helps the borrower, but helps the entire neighborhood avoid the disinvestment and decline in value that accompanies a distressed property.”

The FHA note sales program began as a pilot in 2010 and has resulted in the purchase of more than 2,100 single family loans to date. A servicer can place a loan into the loan pool if the following criteria are met:

  • The borrower is at least six months delinquent on their mortgage;
  • The servicer has exhausted all steps in the FHA loss mitigation process;
  • The servicer has initiated foreclosure proceedings; and
  • The borrower is not in bankruptcy.

Under the program, FHA-insured notes are sold competitively at a market-determined price generally below the outstanding principal balance. Once the note is purchased, foreclosure is delayed for a minimum of six additional months as the borrower gets direct help from their servicer to help to find an affordable solution to avoid foreclosure. The investor purchases the loan at a discount and then takes additional steps to help the borrower avoid default, whether through modifying their loan terms or helping them through a short sale, in order to maximize the return on the sale.

“The Distressed Asset Stabilization Program offers a better shot for the struggling homeowner and lower losses to the FHA,” said Acting FHA Commissioner Carol Galante. “By addressing the growing back log of distressed mortgages, FHA is helping to mitigate the negative effects of the foreclosure process as part of the Administration’s broader commitment to community stabilization.”

Beginning with the September 2012 scheduled sale, FHA will increase the number of loans available for purchase from approximately 1,800 each year to a quarterly rate of up to 5,000, and add a new neighborhood stabilization pool to encourage investment in communities hardest hit by the foreclosure crisis.

In an additional safeguard against blight, HUD will require that no more than 50 percent of the loans within a purchased pool become real-estate owned (REO) properties and – if the servicer and borrower are unable to bring the loan out of default – that the servicer hold the loan for at least three years.

“Currently, FHA’s inventory of REO properties available for sale is at its lowest level since FY 2009,” added Galante. “At the same time, the inventory of seriously delinquent loans is near an all time high. With many neighborhoods still fighting to recover from the housing crisis, going upstream will allow us to help more borrowers before they go through foreclosure and their homes ever come into the REO portfolio.”

“As the court explained in (Wigod v. Wells Fargo Bank),while the TPP did not set forth the specific terms of repayment, Wells Fargo was required to offer a modification that was consistent with HAMP . . .

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Friday, May 11, 2012 9:12 AM
To: Charles Cox
Subject: "As the court explained in (Wigod v. Wells Fargo Bank),while the TPP did not set forth the specific terms of repayment, Wells Fargo was required to offer a modification that was consistent with HAMP . . .

Inline image 6Inline image 1

Wells Fargo Loses Bid to Dismiss Homeowner Suit

By CHRIS MARSHALL

SAN FRANCISCO (CN) – A federal judge dismissed part of a class action accusing Wells Fargo of offering temporary loan modifications without the intention of ever making the modifications permanent.

U.S. Magistrate Joseph Spero found the class failed to state a claim for breach of contract or debt collection violations while allowing unfair competition claims to remain. Spero also gave the class leave to amend the complaint to allege damages from the bank’s alleged contract breach.

Lead plaintiffs Vicki and Richard Sutcliffe claim Wells Fargo offered them a temporary home loan modification after they fell behind on their mortgage payments. The Sutcliffes made the required reduced payments but did not receive paperwork for a loan modification at the end of the trial period. Instead Wells Fargo sent paperwork indicating the loan was in default and another letter stating it was not going to permanently modify their loan. Over a month later Wells Fargo sent another letter offering them a "Special Forbearance Plan," under which they would make more reduced payments. Plaintiffs made the payments, only to be sent another letter again stating the loan was in default. The bank returned one payment and told the Sutcliffes not to make any more. Soon after they received a letter from a law firm indicating they had been retained by Wells Fargo to initiate foreclosure proceedings. Plaintiffs asked Wells Fargo again to reconsider the loan modification. The bank responded by putting them on another forbearance plan. Plaintiffs accepted the offer and began making payments. They soon received another letter saying the property would be sold at a trustee’s sale.

Plaintiffs filed suit on behalf of "all homeowners nationwide who received a trial loan modification proposal substantially similar to the TPP (Home Affordable Modification Program Trial Period) from any of the Defendants; made the payments set forth in the proposal; provided true information with respect to all representations required by the proposal; and were either (a) denied a permanent loan modification; (b) offered an illusory ‘modification’ on terms substantially similar to their unmodified loan; and/or (c) who received, entered into, and complied with the above described Forbearance Plans from Wells Fargo, consisting of the Offer Letter and Agreement, in substantially the same form(s) presented to Plaintiffs."

Plaintiffs accuse Wells Fargo of unfair competition, breach of contract and bad faith. Claims for rescission and restitution were rendered moot when the Sutcliffes recently accepted a permanent loan modification from Wells Fargo, according to the ruling.

The court rejected Wells Fargo’s argument that the other claims were not ripe, finding their claims "turn on conduct that had already occurred at the time the action was filed, namely, Wells Fargo’s failure to offer them a permanent modification after Plaintiffs allegedly complied with all requirements of the TPP."

The court also noted that "the allegations were sufficient to show that denying judicial consideration would have imposed significant hardship on Plaintiffs because they had received notices that they were in default on their loan and that their file had been passed on to Wells Fargo’s counsel to initiate foreclosure proceedings."

Spero similarly refuted Wells Fargo’s argument that by offering a permanent modification, all plaintiffs’ claims are moot. According to the ruling, "claims that are related to a foreclosure but which are based on alleged wrongful conduct that goes beyond the wrongful foreclosure are not necessarily rendered moot where the foreclosure is vacated… The Court finds that is the case here because Plaintiffs’ claims are based on Wells Fargo’s alleged unfair and deceptive conduct in connection with the two forbearance offers and the TPP and not on wrongful conduct committed in foreclosure proceedings."

The court found Wells Fargo’s assertion that the relevant conduct in the case did not occur in California to be a factual question that may be suitable at summary judgment but does not support dismissal. Wells Fargo had tried to have plaintiffs’ allegations under California’s unfair competition law tossed on the grounds that the conduct did not occur in California.

Concluding that the public would likely be deceived by communications from Wells Fargo that claim the borrower would be offered a modification if the borrower complied with the terms of the TPP and forbearance the court found the allegations sufficient to hold up at this stage of the litigation.

While noting disagreements among courts about whether an enforceable contract was created when the TPP was sent to plaintiffs Spero ultimately found it was, at least for the purposes of surviving a motion to dismiss, rejecting multiple arguments by Wells Fargo, including that the TPP could not create an enforceable contract because it did not set forth the terms of repayment that would apply to the modified loan.

According to the ruling, "As the court explained in (Wigod v. Wells Fargo Bank),while the TPP did not set forth the specific terms of repayment, Wells Fargo was required to offer a modification that was consistent with HAMP (Home Affordable Modification Program) guidelines and therefore, the agreement did not give Wells Fargo unlimited discretion as to the repayment terms… Because Wells Fargo was required to comply with HAMP guidelines in determining the terms of repayment under a modification agreement, the Court concludes, at least at the pleading stage, that the terms of the TPP are sufficiently definite to support the existence of a contract."

And since plaintiffs were required to submit financial documents not required under the original loan and agreed to go to credit counseling they adequately alleged consideration to survive a motion to dismiss.

Spero did end up dismissing the claim for breach of contract, however, agreeing with the bank that the only alleged damages are the reduced payments made under the TPP and these payments do not constitute damages because plaintiffs had a pre-existing duty to make payments on their loan.

The court gave leave to amend that part of the complaint, however, noting that plaintiffs represented at oral argument that they could allege other types of damages, including adverse credit consequences in an increase in the principal amount owed on the loan.

CA-USDC-Northern-Order-Sutcliffe-v-WellsFargo.pdf

Vacating the Trustee

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Sunday, May 06, 2012 5:30 PM
To: Charles Cox
Subject: Vacating the Trustee

Reading the Codes, I ran across this I was wondering about:

Cal.Civ.Code

2934b. Sections 15643 and 18102 of the Probate Code apply to trustees under deeds of trust given to secure obligations.

Cal. Probate Code

15643. There is a vacancy in the office of trustee in any of the following circumstances:

(a) The person named as trustee rejects the trust.

(b) The person named as trustee cannot be identified or does not exist.

(c) The trustee resigns or is removed.

(d) The trustee dies.

(e) A conservator or guardian of the person or estate of an individual trustee is appointed.

(f) The trustee is the subject of an order for relief in bankruptcy.

(g) A trust company’s charter is revoked or powers are suspended, if the revocation or suspension is to be in effect for a period of 30 days or more.

(h) A receiver is appointed for a trust company if the appointment is not vacated within a period of 30 days.

CA-Deutsche Bank Loses Appeal – Order Reversed – Failed to Act Diligently in Bringing Motion for Relief Under Section 473.5

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, May 03, 2012 1:28 PM
To: Charles Cox
Subject: CA-Deutsche Bank Loses Appeal – Order Reversed – Failed to Act Diligently in Bringing Motion for Relief Under Section 473.5

Attached.

Deutsche didn’t answer in time…too bad!

Charles
Charles Wayne Cox
Email: mailto:Charles
Websites: http://www.NHCwest.com; www.BayLiving.com; and www.ForensicLoanAnalyst.com
1969 Camellia Ave.
Medford, OR 97504-5403
(541) 727-2240 direct
(541) 610-1931 eFax

Paralegal; CA Licensed Real Estate Broker; Forensic Loan Analyst. Litigation Support and Expert Witness Services.

CA-4thAppellate-SALUTO- v- DEUTSCHE BANK- et-al.pdf

Bank of America and Syncora settle countrywide MBS suit for $375 million

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Wednesday, July 25, 2012 5:34 AM
To: Charles Cox
Subject: Bank of America and Syncora settle countrywide MBS suit for $375 million

Bank of America and Syncora settle countrywide MBS suit for $375 million

· Kelley Drye & Warren LLP

· Alison L. MacGregor

· USA

· July 20 2012

·

We have previous reported on MBIA v. Countrywide and Syncora v. Countrywide, two cases proceeding before Justice Bransten in the New York Supreme Court’s Commercial Division. This week, the parties to Syncora v. Countrywide announced the case would be settled for $375 million. As a recap, Syncora (like MBIA) alleged that Countrywide fraudulently induced Syncora to issue insurance agreements governing MBS transactions, and materially breached its warranties and obligations to repurchase.

In January, 2012, Justice Bransten ruled in both the Syncora and MBIA cases that (i) for the fraud claims, plaintiffs must show only that “misrepresentations by the defendant(s) induced [plaintiffs] to issue insurance policies on terms to which [they] otherwise would not have agreed and that [plaintiffs are] not required to establish a direct causal link between defendant(s) misrepresentations and [plaintiffs’] claims payments made pursuant to the insurance policies at issue” and (ii) for the breach of warranty claims, plaintiffs need only show that defendants’ “breach of warranties in the issued insurance policies’ transaction documents increased the risk profile of the issued insurance policies and [plaintiffs are] not required to establish a direct causal connection between proven warranty breaches by [defendants] and [plaintiffs’] claim payments made pursuant to the insurance policies at issue.”

As we reported, the Countrywide defendants appealed the decisions in both cases, and Syncora also appealed, seeking a ruling that it need only prove that Syncora’s interest in the loan was “materially or adversely affected” in order to establish a breach of warranty.

In a press release dated July 17, 2012, Syncora announced the settlement. This announcement revealed that the settlement covered not only the five transactions at issue in the litigation, but also included a release of Syncora’s claims as to nine other MBS transactions:

Syncora Holdings Ltd. (“Syncora”) today announced that its wholly owned, New York financial guarantee insurance subsidiary,Syncora Guarantee Inc. (“Syncora Guarantee” or the “Company”), had settled its RMBS-related claims and other claims, with Countrywide Financial Corporation, Bank of America Corporation and affiliates thereof.

In return for releases of all claims the Company has against Countrywide and Bank of America Corporation arising from its provision of insurance in relation to five second lien transactions that were the subject of litigation and all of the Company’s claims in relation to nine other first and second lien transactions, the Company received a cash payment of $375 Million. In addition, in an effort to terminate other relationships between the parties, the Company transferred assets to subsidiaries of Bank of America Corporation and subsidiaries of Bank of America Corporation transferred or agreed to transfer to the Company certain of the Company’s and Syncora’s preferred shares, surplus notes and other securities.

According to reports, during an analyst call, BofA said that the settlement resolved about 20 percent of its $3 billion in reported put-back claims by bond insurers, or about $600 million in claims.

MBIA v Countrywide Home Loans et al.pdf
Syncora Guraantee v Countrywide Home Loans.pdf
MBIA-CW-PreArg-Statement.pdf
Syncora-CW-Pre-Arg-Statement.pdf
MBIA-APPEAL.pdf
Syncora-CW-NOTICE-APPEAL.pdf
Syncora-Appeal.pdf

If you are an attorney trying to help people save their home s, you had better be PSA literate or you won’t even begin to scr atch the surface of all you can do to save their homes.

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, May 24, 2012 6:35 AM
To: Charles Cox
Subject: If you are an attorney trying to help people save their homes, you had better be PSA literate or you won’t even begin to scratch the surface of all you can do to save their homes.

Are You PSA Literate?

Written on August 16, 2010

by April Charney.

If you are an attorney trying to help people save their homes, you had better be PSA literate or you won’t even begin to scratch the surface of all you can do to save their homes. This is an open letter to all attorneys who aren’t PSA literate but show up in court to protect their client’s homes.

First off, what is a PSA? After the original loans are pooled and sold, a trust hires a servicer to service the loans and make distributions to investors. The agreement between depositor and the trust and the trustee and the servicer is called the Pooling and Servicing Agreement (PSA).

According to UCC § 3-301 a “person entitled to enforce” the promissory note, if negotiable, is limited to:

(1) The holder of the instrument;

(2) A nonholder in possession of the instrument who has the rights of a holder; or

(3) A person not in possession of the instrument who is entitled to enforce the instrument pursuant to section 3-309 or section 3-418(d).

A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument.

Although “holder” is not defined in UCC § 3-301, it is defined in § 1-201 for our purposes to mean a person in possession of a negotiable note payable to bearer or to the person in possession of the note.

So we now know who can enforce the obligation to pay a debt evidenced by a negotiable note. We can debate whether a note is negotiable or not, but I won’t make that debate here.

Under § 1-302 persons can agree “otherwise” that where an instrument is transferred for value and the transferee does not become a holder because of lack of indorsement by the transferor, that the transferee is granted a special right to enforce an “unqualified” indorsement by the transferor, but the code does not “create” negotiation until the indorsement is actually made.

So, that section allows a transferee to enforce a note without a qualifying endorsement only when the note is transferred for value.
 Then, under § 1-302 (a) the effect of provisions of the UCC may be varied by agreement. This provision includes the right and ability of persons to vary everything described above by agreement.

This is where you MUST get into the PSA. You cannot avoid it. You can get the judges to this point. I did it in an email. Show your judge this post.

If you can’t find the PSA for your case, use the PSA next door that you can find on at www.secinfo.com. The provisions of the PSA that concern transfer of loans (and servicing, good faith and almost everything else) are fairly boilerplate and so PSAs are fairly interchangeable for many purposes. You have to get the PSA and the mortgage loan purchase agreement and the hearsay bogus electronic list of loans before the court. You have to educate your judge about the lack of credibility or effect of the lifeless list of loans as the Uniform Electronic Transactions Act specifically exempts Residential Mortgage-Backed Securities from its application. Also, you have to get your judge to understand that the plaintiff has given up the power to accept the transfer of a note in default and under the conditions presented to the court (out of time, no delivery receipts, etc). Without the PSA you cannot do this.

Additionally the PSA becomes rich when you look at § 1-302 (b) which says that the obligations of good faith, diligence, reasonableness and care prescribed by the code may not be disclaimed by agreement, but may be enhanced or modified by an agreement which determine the standards by which the performance of the obligations of good faith, diligence reasonableness and care are to be measured. These agreed to standards of good faith, etc. are enforceable under the UCC if the standards are “not manifestly unreasonable.”

The PSA also has impact on when or what acts have to occur under the UCC because § 1-302 (c) allows parties to vary the “effect of other provisions” of the UCC by agreement.

Through the PSA, it is clear that the plaintiff cannot take an interest of any kind in the loan by way of an “A to D” assignment of a mortgage and certainly cannot take an interest in the note in this fashion.

Without the PSA and the limitations set up in it “by agreement of the parties”, there is no avoiding the mortgage following the note and where the UCC gives over the power to enforce the note, so goes the power to foreclose on the mortgage.

So, arguing that the Trustee could only sue on the note and not foreclose is not correct analysis without the PSA.
Likewise, you will not defeat the equitable interest “effective as of” assignment arguments without the PSA and the layering of the laws that control these securities (true sales required) and REMIC (no defaulted or nonconforming loans and must be timely bankruptcy remote transfers) and NY trust law and UCC law (as to no ultra vires acts allowed by trustee and no unaffixed allonges, etc.).

The PSA is part of the admissible evidence that the court MUST have under the exacting provisions of the summary judgment rule if the court is to accept any plaintiff affidavit or assignment.

If you have been successful in your cases thus far without the PSA, then you have far to go with your litigation model. It is not just you that has “the more considerable task of proving that New York law applies to this trust and that the PSA does not allow the plaintiff to be a “nonholder in possession with the rights of a holder.”

And I am not impressed by the argument “This is clearly something that most foreclosure defense lawyers are not prepared to do.”
Get over that quick or get out of this work! Ask yourself, are you PSA adverse? If your answer is yes, please get out of this line of work. Please.

I am not worried about the minds of the Circuit Court Judges unless and until we provide them with the education they deserve and which is necessary to result in good decisions in these cases.

It is correct that the PSA does not allow the Trustee to foreclose on the Note. But you only get there after looking at the PSA in the context of who has the power to foreclose under applicable law.

It is not correct that the Trustee has the power or right to sue on the note and PSA literacy makes this abundantly clear.

Are you PSA literate? If not, don’t expect your judge to be. But if you want to become literate, a good place to start is by attending Max Gardner’s Mortgage Servicing and Securitization Seminar.

April Carrie Charney

WA-Trustee Sale Invalid For Procedural Defects and Trustee Conducted Sale Without Statutory Authority

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, May 24, 2012 8:23 AM
To: Charles Cox
Subject: WA-Trustee Sale Invalid For Procedural Defects and Trustee Conducted Sale Without Statutory Authority

The trial court ruled that despite procedural noncompliance, the purchaser was a BFP under the statute and quieted title in the purchaser. The Court of Appeals

reversed, holding that failure to comply with the statutory requirements was reason to set the sale aside and that factually, the purchaser did not qualify as a BFP. We

affirm the Court of Appeals.

Charles
Charles Wayne Cox
Email: mailto:Charles
Websites: http://www.NHCwest.com; www.BayLiving.com; and www.ForensicLoanAnalyst.com
1969 Camellia Ave.
Medford, OR 97504-5403
(541) 727-2240 direct
(541) 610-1931 eFax

Paralegal; CA Licensed Real Estate Broker; Forensic Loan Analyst. Litigation Support and Expert Witness Services.

WA-Supreme-Ruling-Albice-v-PremierMortgage.pdf

FORECLOSURE STRATEGISTS – $50M Foreclosure Settlement Funds Sweep Lawsuit Filed Today

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, May 24, 2012 2:37 PM
To: Charles Cox
Subject: FORECLOSURE STRATEGISTS – $50M Foreclosure Settlement Funds Sweep Lawsuit Filed Today

From Darrell Blomberg.

Charles
Charles Wayne Cox
Email: mailto:Charles
Websites: http://www.NHCwest.com; www.BayLiving.com; and www.ForensicLoanAnalyst.com
1969 Camellia Ave.
Medford, OR 97504-5403
(541) 727-2240 direct
(541) 610-1931 eFax

Paralegal; CA Licensed Real Estate Broker; Forensic Loan Analyst. Litigation Support and Expert Witness Services.

2012-05-24a, Verified Complaint for Declaratory and Injunctive Relief.pdf
2012-05-24b, Ps Motion for TRO and PI.pdf

Participation agreements: originator beware

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Monday, June 11, 2012 6:58 AM
To: Charles Cox
Subject: Participation agreements: originator beware

Participation agreements: originator beware

· Vorys Sater Seymour and Pease LLP

· USA

· June 4 2012

·

In recent examinations, the FDIC has focused on the existence of "optionality" provisions in participation agreements that provide the originating lender with the option of repurchasing the participated portion of the loan upon a borrower default. Such "optionality" provisions have been determined to cause the interest sold by the originating lender to be classified by the FDIC as a "secured borrowing" rather than constituting a "true sale" of the participation interest under applicable accounting guidance. Accountants and auditors may well react likewise in recommending restatements with respect to the institution’s previously issued financial statements and call reports, and categorization of the participation interests as "secured borrowings" in future financial statements and call report filings subject to amendment of participation documents discussed below.

In these circumstances, the FDIC has also required participation originators to file restated call reports to reflect the change in classification. Call report restatements can, in turn, lead to the determination that the financial statements included in filings made by publicly traded financial institutions and financial holding companies with the Securities and Exchange Commission and/or state securities regulators, or in pending registration statements or made available to potential investors in connection with pending offerings, must be restated and the related securities filings amended.

Reclassifying the participation interest as "secured borrowing" by the originating lender can also result in "loan to one borrower" issues as well as, in some instances, Reg O issues depending on the nature of the credit, the impact of aggregation rules, and nature of the borrower. Covered individuals employed at institutions participating in federal programs and initiatives such as SPLF and TARP may also be impacted by restated financial results that, in turn, impact compensation previously earned and received (i.e. through a mandatory "clawback"). In addition, originating institutions with participation interests that are held by the FDIC as receiver for a failed institution may, due to the failed institution’s own circumstances, be forced to accept significantly reduced loan settlement payments as a result of the failure of the FDIC to recognize the "optionality" provision.

Originating institutions should consult with their legal, accounting and credit professionals to evaluate whether it may be appropriate to amend existing participation agreements, as well as participation agreements that may be entered into in the future, to eliminate "optionality" provisions that afford a repurchase option for the originator. However, even if amendments are adopted with regard to outstanding participations, the FDIC may still require classification and restatement with respect to the related participations by the originating institution.

Oregon Supreme Court Hearing Certified Questions Regarding Oregon’s Statutory Definition of Beneficiary and MERS

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Sunday, June 10, 2012 5:59 PM
To: Charles Cox
Subject: Oregon Supreme Court Hearing Certified Questions Regarding Oregon’s Statutory Definition of Beneficiary and MERS

JUNE 10, 2012

Oregon Supreme Court Hearing Certified Questions Regarding Oregon’s Statutory Definition of Beneficiary and MERS

On April 2, 2012, this Court certified the following four questions to the Oregon Supreme Court pursuant to Or.Rev.Stat. § 28.200 and LU. 8345(a):

1. May an entity such as MERS, that is neither a lender nor successor to a lender, be a “beneficiary” as that term is used in the Oregon Trust Deed Act?

2. May MERS be designated as beneficiary under the Oregon Trust Deed Act where the trust deed provides that MERS “holds only legal title to the interests granted by Borrower in this Security Instrument, but, if necessary to comply with law or custom, MERS (as nominee for Lender and Lender’s successors and assigns) has the right: to exercise any or all of those interests”?

3. Does the transfer of a promissory note from the lender to a successor result in an automatic assignment of the securing trust deed that must be recorded prior to the commencement of nonjudicial foreclosure proceedings under ORS 86.735(1)?

4. Does the Oregon Trust Deed Act allow MERS to retain and transfer legal title to a trust deed as nominee for the lender, after the note secured by the trust deed is transferred from the lender to a successor or series of successors?

See Brandrup v. ReconTrust Co., Civ, No. 3:11–cv–1390–HZ (D.Or. Apr. 2, 2012) (doc. 20). To date, the Oregon Supreme Court has not issued a decision regarding the certified questions.

However, it is precisely these requirements, and others under the OTDA, that are designed to protect the borrower from the “unauthorized foreclosure and wrongful sale of property.” Staffordshire, 209 Or.App. at 542, 149 P.3d 150 (emphasis added). I do not find that Oregon statutory requirements should be disregarded so easily. Thus, I proceed to the merits of plaintiff’s claims.

Celestino v. Recontrust Co., N.A., 6:11-CV-6367-AA, 2012 WL 1805495 (D. Or. May 16, 2012)

OR-USDC-Order-Celestino-v-Recontrust.docx

Default Judgment in Quiet Title Not Allowed – California

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Friday, June 08, 2012 7:02 AM
To: Charles Cox
Subject: Default Judgment in Quiet Title Not Allowed – California

A note from attorney Mark Didak:

Default Judgment in Quiet Title Not Allowed

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Tuesday, June 05, 2012 10:05 AM
To: Charles Cox
Subject: Default Judgment in Quiet Title Not Allowed

In a quiet title action, default judgment entered against defendants is reversed where the trial court did not allow the defaulting defendants to put on evidence at a prejudgment evidentiary hearing to determine the merits of the quiet title action, as required by Code Civ. Procedure section 764.010

Cal.App.4th-Nickell v. Matlock.docx

Richard Kessler – Mortgage Defense adn the Law of Restitution

28 Jul

M

emorandum:
April 16, 2012

Mortgage Defense and the Law
of Restitution
Richard F. Kessler, Esq.
richardfkessler@verizon.net
______________________________________________

Wanton and willful financial misconduct in the origination, securitization, servicing and foreclosure of a mortgage debt will not bar collection and enforcement of the debt. Notwithstanding the creditor’s misconduct, the sanctity of debt is the controlling and paramount variable. Judges believe that absent strict enforcement of the obligation to repay debt, the engine of commerce will grind to a halt without lubrication of the gears with commercial credit. Courts throughout the country faced with the choice of enforcing rules or protecting the flow of commercial credit have overwhelmingly found it in the public interest to enforce debt. Accordingly the courts have accorded judicial license for continued egregious and demonstrable financial misconduct by banks engaged in single family residential mortgage lending. Robosigning, forged signatures, fraudulent documents, non-compliance with the requirements prescribed by Chapter III and Chapter IX of the UCC, payment by a third party of debt installments, lack of possession of the original mortgage note endorsed in blank have all been disregarded or disallowed by courts as defenses to the enforcement of a mortgage debt.
What price has this expedient accommodation of commerce exacted? By overlooking wanton and willful financial misconduct, we have sacrificed transparency, accountability, regulatory oversight judicial integrity, objectivity and neutrality and due process. The foray into judicial activism and realism has preferred the certainty of an outcome favorable to the creditor banks over disinterested adherence to legal authorities.
Unarticulated has been the rationale which underpins the legal outcomes. Often, it seems as if the judge knows the destination to be reached without being able to explain how the court got there. The substructure is predicated upon the law of restitution. Judges realize that current statutory and case law are woefully behind the curve when it comes to the technological transformation of the business landscape. The courts have still not caught up with the changes wrought in the secondary mortgage market by the impact of digital technology upon the origination, securitization, servicing and foreclosure of mortgages.
Courts have had great difficulty reconciling digitized transactions customarily used in mortgage based transactions and the legal requirements for paper records, signatures, precisely defined legal instruments. Business practices have changed while legal requirements have not. Accordingly, the courts have felt themselves constrained to fight a vanguard action to buy time for legislative changes to be made. In the meantime, business must continue to be conducted. There is no timeout or half time interval in commerce.
Instinctively, because most judges appear to be unaware of this, the courts have created a new rule of restitution. Restitution is a claim by a person to recover property which belongs to the person from another person to whom the property does not belong. It is based upon the theory of :”unjust enrichment”. To allow the other person to keep property which does not belong to the person thereby working its deprivation upon the person to whom it does belong creates a windfall of unearned enrichment and justifies restoring the property to its rightful owner. The bottom line is the bottom line: so long as a debtor is in default, the debtor has suffred no harm as a result of creditor’s enforcement of the mortgage agreed to by both parties.
In a nutshell, the law of restitution has been relied upon in foreclosure. Acting under equity, courts have determined that, notwithstanding the misconduct of the creditor and its agents, to disallow the debt works a greater injustice. Enforcing the debt to prevent unjust enrichment of the debtor is the paramount and controlling variable. Courts have used a variety to legal constructs to implement this rule including theories of equitable assignment, restitution, equitable subrogation and constructive trust. To reach the desired outcome, courts have barred procedural and substantive foreclosure defenses. For example courts have ruled:
• that affirmative defenses are “outside the four corners” of the document,
• the Master Pooling and Servicing Agreement is a contract of sale and assignment of the mortgage portfolio, and
• a copy of a note endorsed in blank suffices for a claim of payment and foreclosure in the event of default.
To prevent unjust enrichment, courts have, for example:
• overlooked forged documents,
• disregarded noncompliance with notice and service requirements,
• ignored robosigning,
• relied upon meretricious documents,
• waived lack of standing,
• disregarded Chapter III of the UCC, Negotiable Instruments,
• disregarded Chapter IX of the UCC, Secured Transactions,
• circumvented the law of contracts,
• refused to apply the “unclean hands” doctrine in an equity proceeding.
The outcome is always the same. The right guy got paid. The wrong guy was not unjustly enriched. Consequently, wanton and willful financial misconduct in the origination, securitization, servicing and foreclosure of a mortgage debt will not bar collection and enforcement of the debt.
This still leaves the question precisely what must the creditor show. A court may require a showing that the creditor is the right guy to get paid as well as the debtor is the wrong guy to be enriched. Alternatively, the court could simply require a showing that the debtor is in default to enforce the mortgage. In this event, there would be no requirement of evidence that the debtor is legally entitled to collect the debt. The law of restitution would allow the right creditor to file suit to collect from the wrong creditor. However, the debtor could not raise a defense that the creditor was not legally entitled to receive payment. In the later case, so long as there is evidence that the debtor is in default, even a ham sandwich can foreclose. The latter rule invites thieves and miscreants to attempt to collect and foreclose in the event of default a loan owned by another party. Nevertheless, courts routinely disregard evidence that the plaintiff seeking to enforce the loan does not own the loan.
What does all this mean for mortgage defense. It means the tactics used have implemented an incorrect strategy. The arguments typically made result s in a defense which will be ignored by the court. Defense counsel is unable to make an argument that can convince the court, namely that curing the default by foreclosure works a greater harm than forgiveness of the debt. When it comes to foreclosure, restitution talks; every other defense walks.
What problems are created by reflexive use of the restitution rationale?
1. It rewards creditor misconduct and noncompliance with legal authorities, enacted, decisional and regulatory. When it comes to blanket use of the restitution rule, as one notorious foreclosure mill operator phrased it: “Su casa es mi casa.” It does not matter what a creditor does to a debtor, it still remains “Give me my money or I take your house.” The restitution doctrine is a license for predatory banking and investment practices.
2. If the putative creditor does not have to submit evidence showing ownership of the debt, anyone-including a thief in the night-can foreclose on a home in default.
3. The rule as applied flouts federal and state efforts to regulate loan origination, securitization, servicing and foreclosure.
4. It invites the court to ignore the substantive and procedural due process rights of the debtor. It makes default the necessary and sufficient condition for foreclosure.
What is missing from this picture? Defense counsel must recognize not ignore the restitution rationale. If allowing the debtor to avoid repayment of the debt is wrong, overlooking misconduct by the creditor is also wrong even if the lesser wrong. The new rule of the case appears to be that unjust enrichment by disallowing the debt is an inequitable remedy for creditor misbehavior. Nevertheless, this rule does not hold that every remedy against the misbehavior of the creditor is inequitable. Restitution is a two edged sword.
If it is wrong to enrich the debtor by allowing the claim, it is also wrong to enrich the creditor for its misconduct. Equity should never tolerate such asymmetric, invidious imbalance. There is no reason in law or in equity to require the creditor not to be held accountable for proven misconduct. Typically, court rules have sanctions for misbehavior in court proceedings by counsel or counsel’s client. Similarly, most state court rules of civil procedure provide for setoff and counterclaim, in many cases making such pleadings mandatory. Mandatory pleading means that unless the pleading is made, it is waived and cannot be raised in subsequent litigation.
What I am suggesting is a revision of defense strategy as follows:
(a) Where possible, argue that the creditor is not a holder in due course.
(b) For every affirmative defense, raise a setoff or counterclaim for monetary damages.
(c) Demonstrate that each counterclaim is mandatory and must be pled in the foreclosure proceeding. Otherwise, it is waived.
(d) Raise claims related to origination, securitzation, servicing including unfair debt collection practices and foreclosure.
(e) Oppose creditor’s motion to set off the counterclaim with the mortgage debt or a deficiency judgment because:
(i) Such a set off is premature prior to conduct of the foreclosure auction.
(ii) The remedy of damages is inadequate and inequitable if set of against the mortgage debt given creditor misconduct.
(iii) The set off is against public policy because it would not deter the misconduct in the future since the set off makes the award of damages for mortgage based misconduct pointless.
(f) Request the court to stay the foreclosure (preempting creditor’s Motion for Partial Summary Judgment to allow the foreclosure to proceed) pending a completion of the proceeding to allow the court to determine and debtor to argue that monetary compensation for creditor misconduct will be inadequate restitution to debtor.

The use of the counterclaim strategy promotes the use of alternate dispute resolutions instead of foreclosure. When it comes to the business of banking, it is all about the money. When a home is foreclosed, the lender usually realizes less than 50% of the amount of indebtedness. If added to this discount is a sizeable counterclaim which must be paid to the debtor and which cannot be set off against the debt, the net amount recoverable by foreclosure significantly exceeds the cost of the outcome of an alternate dispute resolution. In short, implementation of the counterclaim strategy will allow the courts to continue to collect filing fees for foreclosure cases which nevertheless are likely to be more expeditiously resolved with extra-judicial settlements.
The counterclaim strategy is not a “slam dunk” for mortgage defense. It takes time and money to discover and produce the evidence needed to support each counterclaim. In other words, the counterclaim strategy imposes time and expense costs upon debtor and creditor. For the debtor, winning a case is not cheap. For the creditor having to pay a counterclaim can become expensive. Business common sense should motivate each side to reach a compromise and accommodation. The whole point to drive home to the creditor is that successful foreclosure may become counterproductive for debt recovery. The creditor may win the battle, i.e. the foreclosure will take place but make an improvident recovery where the light cast is not worth the price of the candle.

Just because a court determines that the remedy of judicial cancellation of the debt is not warranted does not mean that willful mortgage related misconduct does not result in liability compensable by monetary damages.

ALLONGES, ASSIGNMENTS AND ENDORSEMENTS: THE REAL DEAL

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Monday, June 04, 2012 10:52 AM
To: Charles Cox
Subject: ALLONGES, ASSIGNMENTS AND ENDORSEMENTS: THE REAL DEAL

ALLONGES, ASSIGNMENTS AND ENDORSEMENTS: THE REAL DEAL

Posted on June 4, 2012 by Neil Garfield

ALLONGES, ASSIGNMENTS AND INDORSEMENTS

Excerpt from 2nd Edition Attorney Workbook, Treatise and Practice Manual

AND Subject Matters to be Covered in July Workshop

ALLONGE: An allonge is variously defined by different courts and sources. But the one thing they all have in common is that it is a very specific type of writing whose validity is presumed to be invalid unless accompanied by proof that the allonge was executed by the Payor (not the Payee) at the time of or shortly after the execution of a negotiable instrument or a promissory note that is not a negotiable instrument. People add all sorts of writing to notes but the additions are often notes by the payee that are not binding on the Payor because that is not what the Payor signed. In the context of securitization, it is always something that a third party has done after the note was signed, sometimes years after the note was signed.

A Common Definition is “An allonge is generally an attachment to a legal document that can be used to insert language or signatures when the original document does not have sufficient space for the inserted material. It may be, for example, a piece of paper attached to a negotiable instrument or promissory note, on which endorsements can be written because there isn’t enough room on the instrument itself. The allonge must be firmly attached so as to become a part of the instrument.”

So the first thing to remember is that an allonge is not an assignment nor is it an indorsement (UCC spelling) or endorsement (common spelling). This distinction was relatively unimportant until claims of “securitization” were made asserting that loans were being transferred by way of an allonge. By definition that is impossible. An allonge is neither an amendment, nor an assignment nor an endorsement of a loan, note, mortgage or obligation. Lawyers who miss this point are conceding something that is basic to contract law, the UCC and property law in each state.

It is important to recognize the elements of an allonge:

  1. By definition it is on a separate piece of paper containing TERMS that could not fit on the instrument itself. Since the documents are prepared in advance of the “closing” with the borrower, I can conceive of no circumstances where the note or other instrument would be attached to an allonge when there was plenty of time to reprint the note with all the terms and conditions. The burden would then shift to the pretender lender to establish why it was necessary to put these “terms” on a separate piece of paper.
  2. The separate piece of paper must be affixed to the note in such a manner as to demonstrate that the allonge was always there and formed the basis of the agreement between all signatories intended to be bound by the instrument (note). The burden is on the pretender lender to prove that the allonge was always present — a burden that is particularly difficult without the signature or initials of the party sought to be bound by the “terms” expressed in the allonge.
  3. The attached paper must contain terms, conditions or provisions that are relevant to the duties and obligations of the parties to the original instrument — in this case the original instrument is a promissory note. The burden of proof in such cases might include foundation testimony from a live witness who can testify that the signor on the note knew the allonge existed and agreed to the terms.
  4. ERROR: An allonge is not just any piece of paper attached to the original instrument. If it is being offered as an allonge but it is actually meant to be used as an assignment or indorsement, then additional questions of fact arise, including but not limited to consideration. In the opinion of this writer, the reason transfers are often “documented” with instruments called an “allonge” is that by its appearance it gives the impression that (1) it was there since inception of the instrument and (2) that the borrower agreed to it. An additional reason is that the issue consideration for the transfer is avoided completely if the “allonge” is accepted as a document of transfer.
  5. As a practice pointer, if the document contains terms and conditions of the loan or repayment, then it is being offered as an allonge. But it is not a valid allonge unless the signor of the original instrument (the note) agreed to the contents expressed on the allonge, since the proponent of this evidence wishes the court to consider the allonge part of the note itself.
  6. If the instrument contains language of transfer then it is not an allonge in that it fails to meet the elements required for proffering evidence of the instrument as an allonge.

ASSIGNMENT: All contracts require an offer, acceptance and consideration to be enforced. An assignment is a contract. In the context of mortgage loans and litigation, an assignment is a document that recites the terms of a transaction in which the loan, note, obligation, mortgage or deed of trust is transferred and accepted by the assignee in exchange for consideration. Within the context of loans that are subject to securitization claims or claims of assignment the documents proffered by the pretender lender are missing two out of three components: consideration and acceptance. The assignment in this context is an offer that cannot and in fact must not be accepted without violating the authority of the manager or “trustee” of the SPV (REMIC) pool.

Like all contracts it must be supported by consideration. An assignment without consideration is probably void, almost certainly voidable and at the very least requires the proponent of this instrument as evidence to be admitted into the record to meet the burden of proof as to foundation.

The typical assignment offered in foreclosure litigation states that “for value received” the assignor, being the owner of the note described, hereby assigns, transfers and conveys all right, title and interest to the assignee. The problem is obvious — there was no value received if the loan was not funded by the assignee or was being purchased by the assignee at the time of the alleged transfer. A demand for records of the assignor and assignee would show how the parties actually treated the transaction from an accounting point of view.

In the same way as we look at the bookkeeping records of the “payee” on the original note to determine if the payee was in fact the “lender” as declared in the note and mortgage, we look to the books and records of the assignor and assignee to determine the treatment of the transaction on their own books and records.

The highest probability is that there will be no entry on either the balance sheet categories or the income statement categories because the parties were already paid a fee at the inception of the “loan” which was not disclosed to the borrower in violation of TILA. At most there might be the recording of an additional fee for “processing” the “assignment”. At no time will the assignor nor the assignee show the transaction as a loan receivable, the absence of which is powerful evidence that the assignor did not own the loan and therefore conveyed nothing, and that the assignee paid nothing in the assignment “transaction” because there was no transaction.

Any accountant (CPA) should be able to render a report on this limited aspect. Such an accountant could recite the same statements contained herein as the reason why you are in need of the discovery and what it will show. Such a statement should not say that the evidence will prove anything, but rather than this information will lead to the discovery of admissible evidence as to whether the party whose records are being produced was acting in the capacity of servicer, nominee, lender, real party in interest, assignee or assignor.

The foundation for the assignment instrument must be by way of testimony (I doubt that “business records” could suffice) explaining the transaction and validating the assignment and the facts showing consideration, offer and acceptance. Acceptance is difficult in the context of securitization because the assignment is usually prepared (a) long after the close out date in the pooling and servicing agreement and (b) after the assignor or its agents have declared the loan to be in default. Both points violate virtually all pooling and servicing agreements that require performing loans to be pooled, ownership of the loan to be established by the assignor, the assignment executed in recordable form and many PSA’s require actual recording — a point missed by most analysts.

If we assume for the moment that the origination of the loan met the requirements for perfecting a mortgage lien on the subject property, the party managing the “pool” (REMIC, Trust etc.) would be committing an ultra vires act on its face if they accepted the loan, debt, obligation, note, mortgage or deed of trust into the pool years after the cut-off date and after the loan was declared in default. Acceptance of the assignment is a key component here that is missed by most judges and lawyers. The assumption is that if the assignment was offered, why wouldn’t the loan be accepted. And the answer is that by accepting the loan the manager would be committing the pool to an immediate loss of principal and income or even the opportunity for income.

Thus we are left with a Hobson’s choice: either the origination documents were void or the assignments of the origination documents were void. If the origination documents were void for lack of consideration and false declarations of facts, there could not be any conditions under which the elements of a perfected mortgage lien would be present. If the origination was valid, but the assignments were void, then the record owner of the loan is party who is admitted to have been paid in full, thus releasing the property from the encumbrance of the mortgage lien. Note that releasing the original lien neither releases any obligation to whoever paid it off nor does it bar a judgment lien against the homeowner — but that must be foreclosed by judicial means (non-judicial process does not apply to judgment liens under any state law I have reviewed).

INDORSEMENTS OR ENDORSEMENTS: The spelling varies depending upon the source. The common law spelling and the one often used in the UCC begins with the letter “I”. They both mean the same thing and are used interchangeably.

An indorsement transfers rights represented by the instruments to another individual other than the payee or holder. Indorsements can be open, qualified, conditional, bearer, with recourse, without recourse, requiring a subsequent indorsement, as a bailment (collection), or transferring all right title and interest. The types of indorsements vary as much as human imagination which is why an indorsement, alone, it frequently insufficient to establish the rights of the parties without another evidence, such as a contract of assignment.

The typical definition starts with an overall concept: “An indorsement on a negotiable instrument, such as a check or a promissory note, has the effect of transferring all the rights represented by the instrument to another individual. The ordinary manner in which an individual endorses a check is by placing his or her signature on the back of it, but it is valid even if the signature is placed somewhere else, such as on a separate paper, known as an allonge, which provides a space for a signature.” Another definition often appearing in cases and treatises is “ the act of the owner or payee signing his/her name to the back of a check, bill of exchange, or other negotiable instrument so as to make it payable to another or cashable by any person. An endorsement may be made after a specific direction (“pay to Dolly Madison” or “for deposit only”), called a qualified endorsement, or with no qualifying language, thereby making it payable to the holder, called a blank endorsement. There are also other forms of endorsement which may give credit or restrict the use of the check.”

Entire books have been written about indorsements and they have not exhausted all the possible interpretations of the act or the words used to describe the writing dubbed an “indorsement” or the words contained within the words described as an indorsement. As a result, courts are justifiably reluctant to accept an indorsed instrument on its face with parole evidence — unless the other party makes the mistake of failing to object to the foundation, and in the case of the mortgage meltdown practices of fabrication, forgery and fraud, by failing to deny the indorsement was ever made except for the purposes of litigation and has no relation to any legitimate business transaction.

Once the indorsement is put in issue as a material fact that is disputed, then the discovery must proceed to determine when the indorsement was created, where it was done, the parties involved in its creation and the parties involved in the execution of the indorsement, as well as the circumstantial evidence causing the indorsement to be made. A blank indorsement is no substitute for an assignment nor is it evidence that any transaction took place win which consideration (money) exchanged hands. Further blank indorsements might be yet another violation of the PSA, in which the indorsement must be with recourse and be unqualified naming the assignee.

A “trustee” of an alleged SPV (REMIC) who accepts such a document would no doubt be acting ultra vires (acting outside of the authority vested in the person purported to have acted) and it is doubtful that any evidence exists where the trustee was informed that the proposed indorsement or assignment involved a loan and a pool which was five years past the cutoff, already declared in default and which failed to meet the formal terms of assignment set forth in the PSA. A deposition upon written questions or oral deposition might clear the matter up by directing the right questions to the right person designated to be the person who represents the entity that claims to manage the SPV (REMIC) pool. In order to accomplish that, prior questions must be asked and answered as to the identity of such individuals and entities “with sufficient specificity such that they can be identified in subsequent demands for discovery or the issuance of a subpoena.”

Throughout this process, the defender in foreclosure must be ever vigilant in maintaining control of the narrative lest the other side wrest control and redirect the Judge to the allegation (without any evidence in the record) that the debt exists (or worse, has been admitted), the default occurred (or worse, has been admitted) and that the pretender is the lender (or worse, has been admitted as such).

U.S. Audit Cites OCC Lapses In Oversight Of Foreclosure Process

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Monday, June 04, 2012 8:39 AM
To: Charles Cox
Subject: U.S. Audit Cites OCC Lapses In Oversight Of Foreclosure Process

http://www.treasury.gov/about/organizational-structure/ig/Recent%20Audit%20Reports%20and%20Testimonies/OIG12054.pdf Link to the report for judicial notice.

http://www.bloomberg.com/news/2012-06-01/u-s-audit-cites-occ-lapses-in-oversight-of-foreclosure-process.html for Bloomberg Report

U.S. Audit Cites OCC Lapses In Oversight Of Foreclosure Process

By Carter Dougherty – Jun 1, 2012 10:50 AM PT

The Office of the Comptroller of the Currency underestimated the risks in bank foreclosure practices from 2008 to 2010 and gave examiners a 13-year-old handbook that didn’t address how securitization affects loan documentation, a Treasury Department audit found.

Treasury’s inspector general’s office reviewed the OCC’s work in the years following the onset of the credit crisis. The period was later found to be rife with abusive foreclosure practices including use of fraudulent documentation by servicers. Five major banks, including JPMorgan Chase & Co. (JPM), Bank of America Corp. and Wells Fargo & Co. (WFC), settled claims from 49 states and the federal government for $25 billion on Feb. 9.

“During this time OCC did not consider foreclosure documentation and processing to be an area of significant risk and, as a result, did not focus examination resources on this function,” Jeffrey Dye, the inspector general’s director of banking audits, wrote in the May 31 report.

In missing what “turned out to be serious foreclosure issues,” the OCC relied too heavily on the banks’ own internal quality-control procedures, he said. The bank programs, in turn, focused on loss mitigation and compliance with investor guidelines, not foreclosure documentation, the report found.

The inspector general also faulted the OCC, the primary federal supervisor for national banks, for failing to update its handbook on mortgage banking examinations for 13 years. The guide didn’t address the effects of securitization or new mortgage products that were at the heart of the housing bust, the report concludes.

Comptroller Thomas Curry told the inspector general in a May 15 letter that the OCC manual will be updated, but stressed that the agency issued supplemental guidance to examiners in 2006 and 2007.

OCC spokesman Robert Garsson declined to comment on the Treasury report.

To contact the reporter on this story: Carter Dougherty in Washington at cdougherty6

To contact the editor responsible for this story: Maura Reynolds at mreynolds34

OIG12054.pdf

Judges Sue California Over Pensions

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Sunday, June 03, 2012 7:58 AM
To: Charles Cox
Subject: Judges Sue California Over Pensions

http://www.courthousenews.com/2012/03/15/44718.htm

I guess siding with the banksters isn’t helping them save their pensions after all…imagine that!

Charles
Charles Wayne Cox
Email: mailto:Charles
Websites: http://www.NHCwest.com; www.BayLiving.com; and www.ForensicLoanAnalyst.com
1969 Camellia Ave.
Medford, OR 97504-5403
(541) 727-2240 direct
(541) 610-1931 eFax

Paralegal; CA Licensed Real Estate Broker; Forensic Loan Analyst. Litigation Support and Expert Witness Services.

Lender’s oral promise to postpone foreclosure unenforceable, Eighth Circuit holds

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Monday, June 11, 2012 6:58 AM
To: Charles Cox
Subject: Lender’s oral promise to postpone foreclosure unenforceable, Eighth Circuit holds

Lender’s oral promise to postpone foreclosure unenforceable, Eighth Circuit holds

· Ballard Spahr LLP

· Alan S. Kaplinsky

· USA

· June 4 2012

A lender’s oral promise to postpone a foreclosure sale of a borrower’s home is a “credit agreement” that must be in writing to be enforceable under the Minnesota Credit Agreement Statute (MCA), the U.S. Court of Appeals for the Eighth Circuit has ruled.

The May 21, 2012, decision in Brisbin v. Aurora Loan Services, LLC, should deter attempts by borrowers to unwind foreclosure sales based on alleged oral promises by lenders or servicers. The MCA prohibits a debtor from suing on a “credit agreement” unless it is in writing and defines a “credit agreement” to mean “an agreement to lend or forbear repayment of money … to otherwise extend credit, or to make any other financial accommodation.”

Asserting the MCA did not bar her claim for promissory estoppel, the borrower argued that the lender’s promise to postpone the sale while it reviewed her request for a loan modification was not a forbearance agreement under the MCA because the lender retained its contractual right to foreclose after completing the review process. The Eighth Circuit disagreed, observing that a forbearance agreement “does not necessarily negate the underlying contractual obligation for eventual payment.”

The Eighth Circuit also rejected the plaintiff’s attempt to invalidate the foreclosure sale based on the lender’s alleged failure to comply with Minnesota’s foreclosure-by-advertisement statute that allows a mortgagee to postpone a scheduled foreclosure but requires notice of the postponement to be published by “the party requesting the postponement.” The Eighth Circuit found that, even if the postponement had been requested by the lender rather than the plaintiff, the statute’s notice requirement was not triggered because the foreclosure sale was not actually postponed.

The plaintiff had also asserted claims for negligent and intentional misrepresentation, which the Eighth Circuit rejected based on “the overwhelming evidence that reinstatement of the mortgage was impracticable” and the plaintiff’s failure to provide “a more concrete statement” of how she would have raised the large sum necessary to reinstate the loan. Finally, the plaintiff also failed in her attempt—raised for the first time on appeal—to claim detrimental reliance. The Eighth Circuit found that the plaintiff had not identified any evidence in the record that she had considered filing for bankruptcy or invoking her statutory right to a five-month postponement of the foreclosure sale, or that the lender’s promise specifically induced her to forgo those options

www.ballardspahr.com_~_media_Files_Alerts_2012-06-04-Brisbin-Aurora-Loan.pdf

New ruling from Texas upholding Carpenter v Longan

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, June 21, 2012 5:49 AM
To: Charles Cox
Subject: New ruling from Texas upholding Carpenter v Longan

New ruling from Texas upholding Carpenter v Longan…opinion attached. Finally some logic!

On page 2 Lexis 147685 in the case of Jane McCarthy vs BAC, Ft.Worth, Western TX District, Judge John McBryde opined; "MERS did not own the note, thus it could not assign the note, and it’s assignment of the deed of trust to BOA separate from the note was of no force or effect."

USCOURTS-txnd-4_11-cv-00356-0.pdf

California Paralegal Ex Parte Application Filing Tips

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Monday, June 25, 2012 8:08 AM
To: Charles Cox
Subject: California Paralegal Ex Parte Application Filing Tips

Ex Parte Application Filing Tips

By Barbara Haubrich-Hass, ACP/CAS

Your attorney comes into your office to talk to you about a case development. In that particular case, the pre-trial motion filing cut-off is only days away, and an unexpected discovery dispute has arisen. Your attorney says, “I need a motion to compel the deposition of witness, I. C. Everything, and I need the motion heard next week!” What do you do? Thankfully, California Rules of Court (“CRC”) Rules 3.1200 through 3.1207 provide a way to request an ex parte application from the court for an order shortening time to file and serve a notice of motion for particular relief sought.

Ex Parte relief is requested when it is impractical or impossible to wait the minimum statutory period for the court to hear a regular motion. CRC Rules 3.1200 through 3.1207 set forth very specific guidelines for when and how ex parte relief is to be requested. A court will only grant ex parte relief for good cause. The party seeking relief must demonstrate irreparable harm, immediate danger, or some other statutory basis for granting relief.

Background:

  1. Important Cut-Offs to Remember: California Code of Civil Procedure (“CCP”) § 2024.020(a) states that discovery in a civil matter must be completed on or before the 30th day before the initial trial date, and to have motions concerning discovery heard on or before the 15th day before trial. Additionally, CCP § 2024.030 states that expert witness discovery must be completed on or before the 15th day, and to have all motions concerning expert witnesses heard on or before the 10th day prior to the initial trial date.
  2. Motion Filing Requirements: CCP § 1005(b) states that all motions shall be served and filed at least 16 court days prior to the hearing. If the notice is served by mail within California, the notice period shall be increased by five calendar days, 10 calendar days if either the place of mailing or the place of address is outside of California but within the United States, 20 calendar days if either the place of mailing or the place of address is outside the United States, and if the notice is served by facsimile or overnight mail, the notice period is increased by two calendar days.
  3. Ex Parte Application: CCP § 1005(b) and CRC Rule 3.1300(b) both state that the Court may prescribe a shorter time for filing and service of a Motion than the time specified in CCP § 1005.

Procedural Requirements:

Parties seeking ex parte relief must comply with all of the statutes and rules applicable to the specific relief being sought. Below are a few of the essential requirements that parties must comply with:

  1. Required Documents: A request for ex parte relief must be in writing and must include all of the following documents: “(1)An application containing the case caption and stating the relief requested; (2)A declaration in support of the application making the factual showing required under Rule 3.1202(c); (3)A declaration based on personal knowledge of the notice given under Rule 3.1204; (4)A memorandum; and (5)A proposed order.” [CRC Rule 3.1201]
  2. Contents of the Application: “(a) An ex parte application must state the name, address, and telephone number of any attorney known to the applicant to be an attorney for any party or, if no such attorney is known, the name, address, and telephone number of the party if known to the applicant. (b) If an ex parte application has been refused in whole or in part, any subsequent application of the same character or for the same relief, although made upon an alleged different state of facts, must include a full disclosure of all previous applications and of the court’s actions. (c) An applicant must make an affirmative factual showing in a declaration containing competent testimony based on personal knowledge of irreparable harm, immediate danger, or any other statutory basis for granting relief ex parte.” [CRC Rule 3.1201]
  3. Time of Notice to Other Parties: “A party seeking an ex parte order must notify all parties no later than 10:00 a.m. the court day before the ex parte appearance, absent a showing of exceptional circumstances that justify a shorter time for notice.” [CRC 3.1203]
  4. Content of Notice: “When notice of an ex parte application is given, the person giving notice must: (1)State with specificity the nature of the relief to be requested and the date, time, and place for the presentation of the application; and (2)Attempt to determine whether the opposing party will appear to oppose the application.” [CRC Rule 3.1204(a)]
  5. Declaration Regarding Notice: “An ex parte application must be accompanied by a declaration regarding notice stating: (1)The notice given, including the date, time, manner, and name of the party informed, the relief sought, any response, and whether opposition is expected and that, within the applicable time under Rule 3.1203, the applicant informed the opposing party where and when the application would be made; (2)That the applicant in good faith attempted to inform the opposing party but was unable to do so, specifying the efforts made to inform the opposing party; or (3)That, for reasons specified, the applicant should not be required to inform the opposing party. If notice was provided later than 10:00 a.m. the court day before the ex parte appearance, the declaration regarding notice must explain the exceptional circumstances that justify the shorter notice.” [Rule 3.1204(b)(c)]
  6. Service of papers: “Parties appearing at the ex parte hearing must serve the ex parte application or any written opposition on all other appearing parties at the first reasonable opportunity. Absent exceptional circumstances, no hearing may be conducted unless such service has been made.” [Rule 3.1206]
  7. Personal Appearance Requirements: A party seeking ex parte relief must personally appear to present the application, unless the relief sought falls into three narrow categories: “(1) Applications to file a memorandum in excess of the applicable page limit; (2) Applications for extensions of time to serve pleadings; (3) Setting of hearing dates on alternative writs and orders to show cause; and (4) Stipulations by the parties for an order.” [Rule 3.1207]

When my attorney comes to me and tells me that he needs a motion heard next week, what he is really telling me is that I need to write a draft motion and ex parte application for his review and to have it prepared and ready for filing immediately. When faced with this task, this is how I go about it. As always, do not implement these tips without your attorney’s approval.

  1. I check on the court’s website for the county within which I am filing the ex parte application to read the local rules of court for filing an ex parte application. Each county has their own local rules of court that you must follow in order to file an ex parte application.
  2. I check my attorney’s calendar to see when he is available for the ex parte hearing. This will provide me with an internal deadline to finalize and file the documents so that the hearing can be heard on a date that my attorney is already available.
  3. I do not call the court clerk to secure a date for the ex parte hearing until after I have prepared the motion and ex parte application, and the attorney approves it for filing. The reason I wait until the documents are prepared is because once you obtain the date for the ex parte hearing, the clock starts ticking on the deadline to file the documents with the court. For example, in Kern County Superior Court, the ex parte documents must be filed with the court no later than 12:00 noon the day before the scheduled hearing time. Therefore, I wait until the documents are prepared, then I call the court to obtain the date, making it easier and less stressful to meet the very narrow filing deadline.
  4. The Ex Parte Application will require a filing fee. If the court requires the actual motion to be filed at the same time as the Ex Parte Application, then you will need an additional filing fee for the motion.
  5. Twenty-Four (24) hours’ notice must be given to opposing counsel of the ex parte hearing. When calling opposing counsel to place them on notice of the ex parte hearing, I first ask to speak to the attorney. It is always best to try to speak with an attorney first. If the opposing attorney is not available, the next person I ask to speak to is the opposing attorney’s paralegal. If the paralegal is not available, I then ask to speak to a person authorized to accept ex parte hearing notification on behalf of the firm. I jot down on a piece of paper the date and time that I made the telephone call, the name of the person that I spoke to and his or her capacity (such as an attorney, paralegal, or secretary) and the substance of the conversation. This helps me when preparing the required declaration that notice has been given in a timely fashion.
  6. As a matter of professional courtesy, in addition to mailing a copy of the documents, I fax or scan and e-mail a copy of the Ex Parte Application and Motion to opposing counsel on the same day that I provided notice of the hearing.

California Dept. 53 Ruling Today

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Wednesday, June 27, 2012 12:42 PM
To: Charles Cox
Subject: California Dept. 53 Ruling Today

Judge Brown seems to be slowly moving to our side. See attached.

Luangrath v. Citimortgage PI will be teed up for July 31, 2012 at 2:00 pm in Dept. 53. "Getcha popcorn ready" – Terrell Owens.

Regards,

Dan

Thanks Dan,

Charles
Charles Wayne Cox
Email: mailto:Charles
Websites: http://www.NHCwest.com; www.BayLiving.com; and www.ForensicLoanAnalyst.com
1969 Camellia Ave.
Medford, OR 97504-5403
(541) 727-2240 direct
(541) 610-1931 eFax

Paralegal; CA Licensed Real Estate Broker; Forensic Loan Analyst. Litigation Support and Expert Witness Services.

Ziolkowski v. HSBC – Sac Dmr Dept 53.pdf

MERS’ Owners Offer Bogus Title Certification

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Friday, June 29, 2012 5:10 AM
To: Charles Cox
Subject: MERS’ Owners Offer Bogus Title Certification

WE’VE GOT THEM ON THE RUN

Banks and servicers concede that title is probably not going their way in the courts

Editor’s Notes (from Neil Garfield):

SECURITIZATION SCAM REACHES NEW HIEGHTS IN DOCUMENT FABRICATION

In a bold move to head off obviously correct arguments about the lack of authenticity of title or authority to pursue fake foreclosures, the banks and services and title companies have come up with a new product: A Title Guarantee Certificate and Policy, that on its face will get Judges, lawyers and even homeowners thinking they were wrong to challenge the chain of ownership and that the foreclosure is legitimate. This gives cover to the investment bank who can now pitch bad loans over the fence onto investors who were explicitly and expressly protected from risks associated with bad or shaky loans.

Taken straight out of the pages of the con man’s playbook, the banks and servicers have come up with another fabricated piece of paper to waive in front of ignorant judges to prove that the chain of title "is what it is." This ignores the basic rule of evidence that while the title report and policy may be admitted into evidence they are not admitted (if the lawyer does his job) as to what is contained in them — nor, more importantly are they proof of title. But the newly minted "Foreclosure Title Guarantee Certificate and Policy" issued by 1st American title is probably going to shift the burden of persuasion over to the borrower at least temporarily. The only remedy for the homeowner is to file for discovery an convince the judge that you are entitled to full, complete, and accurate answers.

Here is the scam once used extensively with Lloyd’s of London. I had a client whose business was conning people out of their money but he stuck with large institutions and people with enough wealth they could afford to lose some money. He borrows several bars of lead made up in the shape of platinum bars. He buys a Lloyd’s certificate for a fee and his indemnification of Lloyd’s that neither he, nor anyone through him or even as co-beneficiary of the insurance policy will make a claim and if they do, he will pay for the defense and pay the damage award.

At the same time he has already sold the lead to someone else under an arrangement whereby he maintains the lead bars in the vault for safe-keeping. So like the rating companies and appraisers, Lloyd’s issues the policies, collects the fee, gets the signature of the buyer of the policy that no claims will be made, and Lloyd’s retreats into the background. So if Lloyd’s wants good faith money on deposit, this only reduces the "profit" or reward from the scam but it doesn’t eliminate it. At worst one scam will pay for the other.

The lead/iron bars are put into a high security vault with the Lloyd’s of London certificate, appearing to authenticate the bars as platinum and insuring them for millions of dollars. My client goes out and buys 3 Sheraton hotels in Houston using the "platinum" as collateral. He drains the hotels dry in three or four months, holds onto them another month or two and then gives the hotels back to the previous owners in lieu of foreclosure.

When the hapless former owners go to the vault and collect the collateral they bring it to a professional who states that it is not platinum it is lead and pretty rough lead at that looking nothing like platinum. So then they go to Lloyd’s who confirmed the issuance of the certificate and policy of insurance who informs them that the policy no longer covers the loss because of a breach of the indemnification.

This is what the banks, service companies and title companies who own MERS are suddenly coming up with and it is advertised that this special certificate and title insurance policy can be procured at the beginning or in the middle of a foreclosure. No such insurance product ever existed before and none will exist for very long now, but it might be enough to convince judges and demoralize homeowner and their attorneys to get another few hundred thousand foreclosures through the system.

What lawyer should do in practice is to demand to see the entire transaction and correspondence file. The title company will be forced to reveal the separate declaration in which the promise is made not to ever make a claim and that if there is one, the bank or servicer "indemnifies" the tile company and holds the title company harmless from any potential payment of any potential claim, although the payment will appear to look like it came from the title carrier. If they don’t show it, then they really are on the hook for the money supposedly guaranteed in the policy.

This is the same story as the fake securitization of badly originated loans in which the paperwork from the very start was wrong and the parties who loaned and borrowed money were left with no documents setting forth the terms of repayment — except the documentation contained in the PSA that establishes co-obligors and guarantors of payment.

Thus the newest document from the fake securitizers is another official looking instrument that effectively disposes of the issue of title — unless it is tested in court. The carrier dare not withhold the declaration that they can’t be responsible for payment without becoming responsible for payment bringing their exposure up from zero to hundreds of thousands of dollars on each transaction.

DO NOT ACCEPT TITLE POLICIES WITHOUT ASSURANCES THAT THEY WILL PAY AND THAT NO OTHER AGREEMENT EXISTS IN WHICH THE TITLE COMPANY IS PROTECTED FROM PAYING. ATTORNEYS SOULD BE ALERT FOR THIS IS A DEFINITE AREA OF POTENTIAL MALPRACTICE THAT IS MOST CERTAINLY GOING TO HIT OUR SHORES. HOMEOWNERS SHOULD MAKE CERTAIN THEY HIRE A LICENSED ATTORNEY WITH PLENTY OF EXPERIENCE IN NEGOTIATING THE TERMS OF THE TITLE COMMITMENT AND TITLE POLICY.

1 lender 2 notes in Cal

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Friday, June 29, 2012 3:12 PM
To: Charles Cox
Subject: 1 lender 2 notes in Cal

In Bank of America v Mitchell (2012) 204 CA4th 1199, a lender, originally made two loans to the borrower, secured by first & second deeds of trust on the property, conducted a nonjudicial foreclosure sale on the first deed of trust after a default, and then – a year later – sold the second note to a third party, who sought to recover under it as a sold out junior, but was held barred from recovering under California’s complex antideficiency scheme. Attached is` my "Editor’s Take" on the decision in the CEB California Real Property Law Reporter of last month, which gives a brief history of the problems California attorneys confront in this area. (But stay tuned since an even more interesting variation just came down which I will report on next month

Roger Bernhardt, Professor of Law
Golden Gate University
536 Mission Street
San Francisco CA 94105-2968

Bank of America v Mitchell.doc
BofA v Mitchell.docx

CA – Legislature passes homeowners’ B.S. bill of rights

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Tuesday, July 03, 2012 5:03 PM
To: Charles Cox
Subject: CA – Legislature passes homeowners’ B.S. bill of rights

And from another attorney:

Thoughts on California Homeowners Bill of Rights – From one attorney

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Tuesday, July 03, 2012 5:03 PM
To: Charles Cox
Subject: Thoughts on California Homeowners Bill of Rights – From one attorney

“Giant poison pills:

Civ. Code sec. 2920.5(c)(2)(B) and (C)

Sec. 2923.5(b) [but see subd. (d), which allows HUD-certified counseling agencies and attorneys to help]

Good provisions

Sec. 2923.55 (a) and (b)(1)(B)(i) requires sending the borrower a copy of the note if requested.

Great provisions:

Sec. 2924 (a) (5) and (6)—(5) requires written notice of new sale date is foreclosure is postponed by at least 10 days.

2924(a)(6) precludes recording of notice of default or otherwise initiating foreclosure process by any entity who is not the holder of the beneficial interest under the mortgage or trust deed, the original trustee, the original trustee or substituted trustee under the DOT. No notice of default or initiation of foreclosure can be done by any agent of the holder of the beneficial interest, the original or substituted trustee, except “when acting within the scope of authority designated by the holder of the beneficial interest.”

Sec. 2924.12(a) authorizes an action for injunctive relief to enjoin a material violation of secs. 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, or 2924.17. (sec. 2924.19 authorizes a borrower to seek an injunction for violations of secs. 2923.5, 2924.17, or 2924.18.)

Sec. 2924.12(b) authorizes an action for damages following recordation of a trustee’s deed upon sale. The borrower can recover actual economic damages under CC 3281 for material violation of the above sections unless the violation is corrected and remedied prior to recordation. Court may award the borrower the greater of treble actual damages or $50,000 if it finds the material violation was intentional, reckless, or resulted by willful misconduct. These remedies “are in addition to and independent of any other rights, remedies, or procedures under any other law. Nothing in this section shall be construed to alter, limit, or negate any other rights, remedies provided by law.” 2924.12(h). Reasonable attorney’s fees and costs may be awarded to a prevailing borrower by the court. 2924.12(i). However, no claim lies against a signatory to the consent decree in U.S. v. Bank of America, Dist. Of D.C., case no. 1:12-cv-00361RMC if that signatory is in compliance with the relevant terms of the Settlement Term Sheet with respect to the particular borrower. 2924.12(g).

Sec. 2924.17 requires declarations of compliance under sec. 2923.5 or 2923.55 (until 1-1-18), or notices of default, notices of sale, assignments of DIT’s, or substitutions of trustee, to be accurate and complete and supported by competent and reliable evidence. Government entities may obtain civil penalties per mortgage or DOT from any servicer that engages in multiple and repeated uncorrected violations in recording documents or filing them in any court.

I had understood previously that this law will take effect next January, but after reading it, I’m not sure it won’t be effective upon the governor’s signature. It wasn’t adopted as an urgency measure—does anyone know if that means we wait until January?”

FL – COURSEN VS JP MORGAN CHASE, FIDELITY NATIONAL FINANCIAL (FNF) MTD DENIED – RICO, RACKETEERING, PERJURY, FRAUD, SHAM, FABRICATED, MANUFACTURED EVIDENCE

28 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Friday, July 27, 2012 7:38 AM
To: Charles Cox
Subject: FL – COURSEN VS JP MORGAN CHASE, FIDELITY NATIONAL FINANCIAL (FNF) MTD DENIED – RICO, RACKETEERING, PERJURY, FRAUD, SHAM, FABRICATED, MANUFACTURED EVIDENCE

Posted by 4closurefraud:

FL-USDC-Middle-Corsen-v-JPMorgan.pdf

Bank of America and Syncora settle countrywide MBS suit for $375 million

25 Jul

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Wednesday, July 25, 2012 5:34 AM
To: Charles Cox
Subject: Bank of America and Syncora settle countrywide MBS suit for $375 million

Bank of America and Syncora settle countrywide MBS suit for $375 million

· Kelley Drye & Warren LLP

· Alison L. MacGregor

· USA

· July 20 2012

·

We have previous reported on MBIA v. Countrywide and Syncora v. Countrywide, two cases proceeding before Justice Bransten in the New York Supreme Court’s Commercial Division. This week, the parties to Syncora v. Countrywide announced the case would be settled for $375 million. As a recap, Syncora (like MBIA) alleged that Countrywide fraudulently induced Syncora to issue insurance agreements governing MBS transactions, and materially breached its warranties and obligations to repurchase.

In January, 2012, Justice Bransten ruled in both the Syncora and MBIA cases that (i) for the fraud claims, plaintiffs must show only that “misrepresentations by the defendant(s) induced [plaintiffs] to issue insurance policies on terms to which [they] otherwise would not have agreed and that [plaintiffs are] not required to establish a direct causal link between defendant(s) misrepresentations and [plaintiffs’] claims payments made pursuant to the insurance policies at issue” and (ii) for the breach of warranty claims, plaintiffs need only show that defendants’ “breach of warranties in the issued insurance policies’ transaction documents increased the risk profile of the issued insurance policies and [plaintiffs are] not required to establish a direct causal connection between proven warranty breaches by [defendants] and [plaintiffs’] claim payments made pursuant to the insurance policies at issue.”

As we reported, the Countrywide defendants appealed the decisions in both cases, and Syncora also appealed, seeking a ruling that it need only prove that Syncora’s interest in the loan was “materially or adversely affected” in order to establish a breach of warranty.

In a press release dated July 17, 2012, Syncora announced the settlement. This announcement revealed that the settlement covered not only the five transactions at issue in the litigation, but also included a release of Syncora’s claims as to nine other MBS transactions:

Syncora Holdings Ltd. (“Syncora”) today announced that its wholly owned, New York financial guarantee insurance subsidiary,Syncora Guarantee Inc. (“Syncora Guarantee” or the “Company”), had settled its RMBS-related claims and other claims, with Countrywide Financial Corporation, Bank of America Corporation and affiliates thereof.

In return for releases of all claims the Company has against Countrywide and Bank of America Corporation arising from its provision of insurance in relation to five second lien transactions that were the subject of litigation and all of the Company’s claims in relation to nine other first and second lien transactions, the Company received a cash payment of $375 Million. In addition, in an effort to terminate other relationships between the parties, the Company transferred assets to subsidiaries of Bank of America Corporation and subsidiaries of Bank of America Corporation transferred or agreed to transfer to the Company certain of the Company’s and Syncora’s preferred shares, surplus notes and other securities.

According to reports, during an analyst call, BofA said that the settlement resolved about 20 percent of its $3 billion in reported put-back claims by bond insurers, or about $600 million in claims.

MBIA v Countrywide Home Loans et al.pdf
Syncora Guraantee v Countrywide Home Loans.pdf
MBIA-CW-PreArg-Statement.pdf
Syncora-CW-Pre-Arg-Statement.pdf
MBIA-APPEAL.pdf
Syncora-CW-NOTICE-APPEAL.pdf
Syncora-Appeal.pdf

Skov v. U.S. Bank N.A. (2012) , Cal.App.4th

18 Jul

[No. H036483. Sixth Dist. June 8, 2012.]

ANDREA SKOV, Plaintiff and Appellant, v. U.S. BANK NATIONAL ASSOCIATION, Defendant and Respondent.

[Opinion Certified For Partial Publication. fn. * ]

(Superior Court of Santa Clara County, No. CV153635, Mark H. Pierce, Judge.)

(Opinion by Mihara, J., with Premo, Acting P. J., and Elia, J., concurring.)

COUNSEL

Holland Law Firm, George Holland, Jr. for Plaintiff and Appellant.

Severson & Werson, Jan T. Chilton, Donald J. Querio and Jason M. Julian for Defendant and Respondent. {Slip Opn. Page 2}

OPINION

MIHARA, J.-

Plaintiff Andrea Skov filed an action against defendant U.S. Bank National Association, as trustee for Credit Suisse First Boston CSFB 2004-AR3 (U.S. Bank), and others in which she alleged improprieties in the nonjudicial foreclosure process involving her residence. fn. 1 The trial court sustained U.S. Bank’s demurrer to the second amended complaint and dismissed the action. Skov contends: (1) the trial court improperly took judicial notice of various recorded documents; and (2) the second amended complaint sufficiently pleaded her causes of action for wrongful foreclosure, unlawful business practices, and declaratory relief. We conclude that the second amended complaint sufficiently pleaded a violation of Civil Code section 2923.5. fn. 2 Accordingly, we reverse the judgment.

I. FACTUAL AND PROCEDURAL BACKGROUND

In December 2003, Skov obtained a loan of $1.5 million, which was secured by a deed of trust in her residential property in Saratoga. The deed of trust identified Skov as the “Borrower,” Gateway as the “Lender,” Financial Title Company as “Trustee,” and MERS as “acting solely as a nominee for Lender and Lender’s successors and assigns.” MERS is also identified as “the beneficiary under this Security Instrument.” The deed of trust further stated that “Borrower understands and agrees that MERS holds only legal title to the interests granted by the Borrower in this Security Instrument, but, if necessary to comply with law or custom, MERS (as nominee for Lender and Lender’s successors and assigns) has the right: to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property.”

After Skov stopped making payments pursuant to the terms of the promissory note, NDEx, which identified itself as an agent for MERS, served Skov with a notice of default on June 10, 2009. A declaration of compliance with section 2923.5 was recorded with the notice of default. On July 16, 2009, MERS assigned all beneficial interest in the deed of trust to U.S. Bank. On July 20, 2009, U.S. Bank substituted NDEx as trustee for Financial Title Company. On September 18, 2009, NDEx recorded a notice of trustee’s sale, which had been sent to Skov.

On June 10, 2010, Skov filed her second amended complaint and alleged nine causes of action, only three of which are the subject of the present appeal. The first cause of action for wrongful disclosure alleged that there were several improprieties in the assignment, transfer and exercise of the power of sale in the deed of trust. More {Slip Opn. Page 3} specifically, Skov alleged that since U.S. Bank and MERS were not assignees of the original note identified in the deed of trust, they did not have the right to exercise the power of sale contained in the deed of trust, and thus U.S. Bank was not entitled to any debt on the property. It was also alleged that U.S. Bank failed to comply with section 2923.5 “until on or about July 10, 2009.” The eighth cause of action for unlawful business practices (Bus. & Prof. Code, § 17200 et seq.) alleged that U.S. Bank failed to comply with section 2923.5 because it did not contact or attempt to contact her to discuss her options to avoid foreclosure prior to filing the notice of default. The ninth cause of action for declaratory and injunctive relief sought a determination of the parties’ legal rights and duties and that the foreclosure of the property be permanently enjoined. Skov also sought compensatory and punitive damages.

U.S. Bank filed a demurrer to the second amended complaint. In support of its demurrer, U.S. Bank requested judicial notice of the deed of trust, the notice of default, the notice of default declaration, the assignment of the deed of trust from MERS to U.S. Bank, the substitution of trustee, and the notice of trustee’s sale. The trial court granted the request for judicial notice, sustained the demurrer without leave to amend, and dismissed the action with prejudice. Skov filed a timely appeal.

II. DISCUSSION

A. Standard of Review

In reviewing an order sustaining a demurrer, ” ‘we examine the complaint de novo to determine whether it alleges facts sufficient to state a cause of action under any legal theory, such facts being assumed true for this purpose. [Citations.]’ (McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412, 415 [(McCall)].) We may also consider matters that have been judicially noticed. [Citations.]” (Committee for Green Foothills v. Santa Clara County Bd. of Supervisors (2010) 48 Cal.4th 32, 42.) “Generally it is an {Slip Opn. Page 4} abuse of discretion to sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment. [Citation.]” (Cooper v. Leslie Salt Co. (1969) 70 Cal.2d 627, 636.)

B. fn. * Judicial Notice

Conceding that the trial court could properly take judicial notice of recorded documents, Skov contends it improperly took judicial notice of “the truth, validity and/or legal effect of [U.S. Bank’s] foreclosure documents . . . .” (Capitalization & boldface omitted.)

This issue was recently considered in Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256(Fontenot). In Fontenot, the complaint sought injunctive relief and damages for wrongful foreclosure, and alleged, among other things, the improper transfers of the promissory note and security. (Id. at p. 261.) In ruling on the defendant’s demurrer to the complaint, the trial court took judicial notice of two deeds of trust, an assignment of a deed of trust, and other documents required by the nonjudicial foreclosure procedure. (Id. at p. 262.)

Fontenot began its analysis by summarizing the principles regarding judicial notice: “We review the trial court’s ruling on the request for judicial notice for abuse of discretion. [Citation.] [¶] ‘ ” ‘Judicial notice is the recognition and acceptance by the court, for use by the trier of fact or by the court, of the existence of a matter of law or fact that is relevant to an issue in the action without requiring formal proof of the matter.’ ” ‘ [Citation.] When ruling on a demurrer, ‘[a] court may take judicial notice of something that cannot reasonably be controverted, even if it negates an express allegation of the pleading.’ [Citation.] Accordingly, Evidence Code section 452, subdivisions (c) and (h), respectively, permit a court, in its discretion, to take judicial notice of ‘[o]fficial acts . . . of any state of the United States’ and ‘[f]acts and propositions that are not reasonably {Slip Opn. Page 5} subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.’ ” (Fontenot, at p. 264.) Reasoning that recordation and use of a notary public in the execution of real property records ensures their reliability, and their maintenance in the recorder’s office enables them to be readily confirmed, Fontenot concluded that “a court may take judicial notice of the fact of a document’s recordation, the date the document was recorded and executed, the parties to the transaction reflected in a recorded document, and the document’s legally operative language, assuming that there is no genuine dispute regarding the document’s authenticity.” (Fontenot, at pp. 264-265.)

Fontenot then rejected the plaintiff’s argument that the trial court improperly took judicial notice of the defendant’s designation as beneficiary in the deed of trust. (Fontenotsupra, 198 Cal.App.4th at p. 266.) Fontenot explained that the defendant’s “status as beneficiary was not the type of fact that is generally an improper subject of judicial notice . . . since its status was not a matter of fact existing apart from the document itself. Rather, [the defendant] was the beneficiary under the deed of trust because, as a legally operative document, the deed of trust designated [the defendant] as the beneficiary. Given this designation, [the defendant’s] status was not reasonably subject to dispute.” (Ibid.) Accordingly, Fontenot concluded that the trial court had not abused its discretion in taking judicial notice of the documents. (Ibid.)

In Fontenot, as in the present case, the plaintiff relied on Mangini v. R. J. Reynolds Tobacco Co. (1994)7 Cal.4th 1057, overruled on other grounds in In re Tobacco Cases II (2007) 41 Cal.4th 1257, 1276,Herrera v. Deutsche Bank National Trust Co. (2011) 196 Cal.App.4th 1366, and Abernathy Valley, Inc. v. County of Solano (2009) 173 Cal.App.4th 42, and argued that the trial court had improperly taken judicial notice of the truth of the contents of the recorded documents. (Fontenotsupra, 198 Cal.App.4th at pp. 266-267.) In Mangini, the court held that judicial notice could not be taken of the {Slip Opn. Page 6} truth of the conclusions in a report issued by the United States Surgeon General or the truth of matters reported in newspaper articles. (Id. at p. 266.) Fontenot distinguished Mangini, pointing out that the documents in that case “were fundamentally informative documents, and the parties sought judicial notice of the facts contained in the documents without demonstrating the facts were ‘not reasonably subject to dispute.’ [Citation.]” (Ibid.Fontenot also distinguished Herrera, stating that “the facts of which the trial court here took judicial notice arose from the legal effect of the documents, rather than any statements of fact within them.” (Id. at p. 276.) Fontenot summarily rejected Abernathy, stating that it “appears to differ with the weight of California authority. That case declined to take judicial notice of deeds, judgments, and indentures ‘as evidence of actual conveyances’ because such use would require accepting the ‘truth of the facts stated therein.’ [Citation.] Because its holding is stated in a conclusory manner, the exact reasoning of the decision is unclear, and we do not find it to be persuasive authority in this context.” (Id. at p. 266, fn. 6.)

We agree with the analysis in Fontenot. Thus, we conclude that the trial court properly granted judicial notice of the facts arising from the legal effect of the documents, such as the status of an entity as the beneficiary, trustee, or its agent. However, as we conclude, infra, to the extent that the trial court took judicial notice of any disputed statements of fact contained within these documents, such as whether there was statutory compliance with section 2923.5, it erred.

C. fn. * MERS’s Authority to Initiate Foreclosure

Skov contends that MERS lacked authority to execute the notice of default and the assignment of the deed of trust, and thus each of the foreclosure documents was void. Skov acknowledges that MERS could have properly acted under the deed of trust when such action was “required” and “necessary to comply with law or custom.” However, she {Slip Opn. Page 7} contends that U.S. Bank failed to establish that these two conditions had occurred. We reject her contention.

An assignment of a deed of trust is legally permissible. (§ 2934.) One commentator has acknowledged that such assignments are customary, stating: “Because the lien of the trust deed is merely an incident of the debt, the assignment by endorsement and delivery of the promissory note accomplishes the transfer of the security without the necessity of a formal assignment of the trust deed itself. . . . [¶] The better practice, however, is to assign the mortgage or trust deed also by a formal written document that is duly acknowledged and recorded.” (4 Miller & Starr, Cal. Real Estate (3d ed. 2003) § 10.38, fns. omitted & italics added.) Moreover, an assignment of the deed of trust is usually signed by the beneficiary, not the party that the deed of trust identifies as “Lender.” (See 3 Miller & Starr, Cal. Real Estate Forms (2d ed. 2006) § 3.60.) fn. 3 Thus, here, the assignment was executed by MERS rather than Gateway. fn. 4

Similarly, the recordation of a notice of default is required by law. A notice of default must be recorded by the trustee, beneficiary, or an agent of either. (§ 2924, subd. (a)(1).) Thus, NDEx properly signed the notice of default as the agent of MERS, the beneficiary.

Accordingly, statutes and standard legal texts establish that MERS’s execution of the assignment of the deed of trust and its authorization of the notice of default were “required” and “necessary to comply with law or custom.” fn. 5 {Slip Opn. Page 8}

D. Section 2923.5

Skov also contends that the trial court erred in concluding that the declaration of compliance with section 2923.5 conclusively proved such compliance. U.S. Bank argues: (1) the second amended complaint does not allege facts showing noncompliance with section 2923.5; (2) section 2923.5 does not create a private claim of action; and (3) the National Bank Act preempts section 2923.5.

1. Statutory Compliance

Section 2923.5 provides that a mortgagee, trustee, beneficiary, or authorized agent must 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” or satisfy due diligence requirements before a notice of default is filed. fn. 6 Section 2923.5 does not {Slip Opn. Page 9} require the lender to modify the loan. (Mabrysupra, 185 Cal.App.4th at p. 214.) The only remedy for noncompliance with the statute is the postponement of the foreclosure sale. (Ibid.)

Whether a defendant has complied with a statute is a question of fact. (See Daum v. SpineCare Medical Group, Inc. (1997) 52 Cal.App.4th 1285, 1306.) Here, the second amended complaint alleged in relevant part: Skov “was fully available to meet with U.S. Bank” to explore foreclosure options; she hired attorneys or other representatives, who telephoned and sent letters to U.S. Bank which were unanswered; U.S. Bank failed and refused to evaluate her finances, to advise her of her right to meet with U.S. Bank to discuss foreclosure avoidance options, and to give her a HUD telephone number; and U.S. Bank did not comply with the requirements of section 2923.5 because it did not contact her until “on or about July 10, 2009,” which was after it had recorded the notice of default on June 12, 2009. In response, U.S. Bank requested judicial notice of the notice of default declaration that stated that the requirements of section 2923.5 had been met on June 9, 2009. However, whether U.S. Bank complied with section 2923.5 is the type of fact that is reasonably subject to dispute, and thus, not a proper subject of judicial notice. (See Fontentotsupra, 198 Cal.App.4th at p. 266.)

U.S. Bank also argues that Skov has failed to allege any facts to support her claim. U.S. Bank asserts that her allegation that she was “fully available” to meet with U.S. Bank does not establish noncompliance with section 2923.5, claiming that “despite Skov’s supposed ‘full availability,’ U.S. Bank may have complied with section 2923.5 by attempting, unsuccessfully but in good faith, to contact Skov.” (Italics added.) However, as U.S. Bank’s argument recognizes, it may not have complied with the statutory {Slip Opn. Page 10} requirements. Assuming the truth of Skov’s allegations, the issue of compliance cannot be resolved at this stage of the litigation. (McCallsupra, 25 Cal.4th at p. 415.)

2. Private Right of Action

U.S. Bank next contends that there is no private right of action for noncompliance with section 2923.5. Relying on Lu v. Hawaiian Gardens Casino, Inc. (2010) 50 Cal.4th 592 (Lu), U.S. Bank asserts thatMabrysupra185 Cal.App.4th 208, which held to the contrary, was wrongly decided. fn. 7

Lusupra50 Cal.4th 592 considered whether Labor Code section 351, which provides that a gratuity is the sole property of the employee to whom it was given, contains a private right to sue. Relying onMoradi-Shalal v. Fireman’s Fund Ins. Companies (1988) 46 Cal.3d 287, 305, Lu stated that “whether a party has a right to sue depends on whether the Legislature has ‘manifested an intent to create such a private cause of action’ under the statute. [Citations.]” (Lu, at p. 596.) However, when the statutory language does not “strongly and directly indicate that the Legislature intended to create a private cause of action [citation,]” then courts must examine the legislative history. (Lu, at p. 597.) Turning to the language of Labor Code section 351, Lu noted that it did not expressly state that an employee had a right to bring an action for any violation of the statute. (Lu, at p. 598.) Lu also observed that related statutes provided that an employer who violated Labor Code section 351 was guilty of a misdemeanor and subject to a fine and/or imprisonment, and that the Department of Industrial Relations was charged with enforcement of the statute. (Lu, at p. 598.) After reviewing the legislative history, Luconcluded that there was “no clear indication” that the Legislature intended to create a private right to sue under Labor Code section 351. (Lu, at pp. 598-601.) {Slip Opn. Page 11}

Relying on the Restatement test for determining tort liability for a statutory violation, the plaintiff inLu argued that a private action was implied from the statute. (Lusupra, 50 Cal.4th at pp. 601-602.) “The ‘Restatement approach allows the court itself to create a new private right to sue, even if the Legislature never considered creation of such a right if the court is of the opinion that a private right to sue is “appropriate” and “needed.” ‘ [Citation.]” (Id. at p. 602.) The plaintiff further argued that this approach was confirmed in Katzberg v. Regents of University of California (2002) 29 Cal.4th 300. (Lu, at p. 602.) Lu rejected the plaintiff’s arguments and distinguished Katzberg on the ground that it involved a private action to remedy a constitutional violation. (Lu, at pp. 602-603.) Lu also noted that there was no language ” ‘expressly entitl[ing] individuals to a refund or any other type of payment for violation of the statute.’ [Citation.]” (Lu, at p. 603, fn. 8.) In response to the plaintiff’s arguments that the Department of Industrial Relations had no authority to recover misappropriated gratuities, Lustated that there were other remedies available to the plaintiff, such as an action for conversion. (Id. at pp. 603-604.)

Here, as in Lu, section 2923.5 does not expressly provide for a private right of action. However, unlike in Lu, there are no statutes which provide either a penalty for noncompliance with section 2923.5 or designate any administrative agency with enforcement of the statute. Moreover, unlike in Lu, there are no other remedies available to a borrower if there is a violation of the statute.

Mabry recognized that “courts . . . do not favor constructions of statutes that render them advisory only, or a dead letter. [Citations]” (Mabrysupra, 185 Cal.App.4th at pp. 218-219.) Mabry next noted that “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. [Citation.]” (Id. at p. 219.) Mabry then examined section 2924g, subdivision (c)(1), which outlines the grounds for postponing a foreclosure sale, in {Slip Opn. Page 12} conjunction with section 2923.5. “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.” (Mabry, at pp. 223-224.)

Mabry also considered the legislative history of section 2923.5. (Mabrysupra, 185 Cal.App.4th at pp. 219-220.) Mabry recognized that an early version of section 2923.5 expressly provided for a private right of action, which was not included in the final version, thus suggesting that “the Legislature may not have wanted to have section 2923.5 enforced privately.” (Mabry, at pp. 219-220.) However,Mabry stated that this factor was not dispositive, reasoning that “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.” (Mabry, at p. 220.)

Mabry also observed that “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. . . . [¶] . . . [I]n 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.” (Mabrysupra, 185 Cal.App.4th at p. 224.) Thus, Mabry {Slip Opn. Page 13} noted that Moradi-Shalal was distinguishable on the ground that the statute in that case “contemplates a frequent or general business practice, and thus its very text is necessarily directed at those who regulate the insurance industry.” (Ibid.)

Mabry concluded that two factors outweighed the Legislature’s dropping of an express provision for a private right of action. (Mabrysupra, 185 Cal.App.4th at p. 225.) “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.” (Ibid.) Given that Lu is distinguishable from the present case, we find the analysis in Mabry persuasive. Accordingly, we conclude that the Legislature intended to allow a private right of action under section 2923.5.

3. Preemption

U.S. Bank also contends that the National Bank Act (12 U.S.C. § 21 et seq.) preempts section 2923.5.

The National Bank Act “vests national banks . . . with authority to exercise ‘all such incidental powers as shall be necessary to carry on the business of banking.’ (12 U.S.C. § 24 (Seventh).) Real estate lending is expressly designated as part of the business of banking. (12 U.S.C. § 371(a).) [¶] As the agency charged with administering the [National Bank] Act, the Office of the Comptroller of the Currency (‘OCC’) has the primary responsibility for the surveillance of the ‘business of banking’ authorized by the Act. [Citation.] To carry out this responsibility, the OCC has the {Slip Opn. Page 14} power to promulgate regulations and to use its rulemaking authority to define the ‘incidental powers’ of national banks beyond those specifically enumerated in the statute. [Citations.] OCC regulations possess the same preemptive effect as the Act itself. [Citation.]” (Martinez v. Wells Fargo Home Mortg., Inc. (9th Cir. 2010) 598 F.3d 549, 555.)

The OCC regulations, which outline the powers of national banks, include 12 Code of Federal Regulations § 34.4, subdivision (a). It provides that “state laws that obstruct, impair, or condition a national bank’s ability to fully exercise its Federally authorized real estate lending powers do not apply to national banks.” More specifically, “a national bank may make real estate loans . . . without regard to state law limitations concerning . . . [p]rocessing, origination, servicing, sale or purchase of, or investment or participation in, mortgages.” (12 C.F.R. § 34.4, subd. (a)(10).) However, “[s]tate laws on the following subjects are not inconsistent with the real estate lending powers of national banks and apply to national banks to the extent that they only incidentally affect the exercise of national banks’ real estate lending powers: [¶] . . . [¶] . . . Acquisition and transfer of real property.” (12 C.F.R. § 34.4, subd. (b)(6).)

Mabrysupra185 Cal.App.4th 208 held that 12 Code of Federal Regulations section 560.2, subdivision (b)(10), which is the Office of Thrift Supervision’s parallel regulation under the Home Owners’ Loan Act, fn. 8 did not preempt section 2923.5. As does 12 Code of Federal Regulation section 34.4, this regulation sets forth which matters are regulated by federal law and which matters are left to state regulation. (Mabry, at pp. 228-229.) State laws, including “[r]eal property law,” are not preempted “to the extent that they only incidentally affect the lending operations of Federal saving associations . . . .” (12 C.F.R. section 560.2 (c)(2).) Mabry reasoned: “[T]he process of foreclosure {Slip Opn. Page 15} has traditionally been a matter of state real property law, a point noted both 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 Common Law (1993) 71 N.C. L.Rev. 293, [‘Historically, real property law has been the exclusive domain of the states.’ (italics omitted)]), 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 Pepp. 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 governs 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 Regs. section 560.2(b)(10).” (Mabry, at pp. 230-231, fn. omitted.)

U.S. Bank argues that “[w]hile a state law governing foreclosure procedure may not be preempted, section 2923.5 is not such a law.” As Mabry noted, however, ” ‘the States have created diverse networks of judicially and legislatively crafted rules governing the foreclosure process, to achieve what each of them considers the proper balance between the needs of lenders and borrowers. . . . [A]bout half of the States also permit foreclosure by exercising a private power of sale provided in the mortgage documents. . . . Foreclosure laws typically require notice to the defaulting borrower, a {Slip Opn. Page 16} substantial lead time before the commencement of foreclosure proceedings, publication of a notice of sale, and strict adherence to prescribed bidding rules and auction procedures. . . . (BFP v. Resolution Trust Corp.supra, 511 U.S. at pp. 541-542)’ ” (Mabrysupra, 185 Cal.App.4th at p. 230, fn. 17.) By requiring a lender to contact a borrower prior to filing a notice of default to “assess” his financial situation and to “explore” options to avoid foreclosure, section 2923.5 merely sets forth one of the steps in foreclosure proceedings. Moreover, given that section 2923.5 does not require the lender to modify the loan and a lender’s failure to comply with the statute is limited to providing borrowers with more time, it only incidentally affects the lending operations of a bank. fn. 9

U.S. Bank claims that section 2923.5 “seeks to compel loan modifications as a means of avoiding foreclosures and curbing high foreclosure rates, mandates specific disclosures to borrowers, and requires burdensome reviews of borrower financials and proposed loan modifications” thus regulating “loan servicing and processing . . . .” As Mabry pointed out, however, section 2923.5 must be very narrowly construed to avoid federal preemption. (Mabrysupra, 185 Cal.App.4th at pp. 231-232.) Section 2923.5 does not require the lender “to consider a whole new loan application or take detailed {Slip Opn. Page 17} loan application information” from the borrower. (Mabry, at p. 232.) Moreover, the exploration of options to avoid foreclosure “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.” (Ibid.) We find Mabry’s analysis convincing. Thus, since the federal regulation of national banks is essentially the same as that of federal savings association, we conclude that section 2923.5 is not preempted by federal law.

In sum, there is a factual issue as to whether there was compliance with the requirements of section 2923.5 prior to the filing of the notice of default. Accordingly, the trial court erred in sustaining the demurrer.

III. DISPOSITION

The judgment is reversed. The parties shall bear their own costs on appeal.

Premo, Acting P. J., and Elia, J., concurred.

FN *. Under California Rules of Court, rules 8.1105(c), 8.110, and 8.1120, only the Introduction, sections I, IIA, IID, and III are certified for publication..

FN 1. Defendants Gateway Bank, FSB (Gateway), Mortgage Electronic Registration Systems, Inc. (MERS), NDEx West, L.L.C. (NDEx), Tariq Alsami, and Money Loan Financial Services, Inc. are not involved in this appeal.

FN 2. All further statutory references are to the Civil Code unless otherwise stated.

FN *. See footnote, ante, page 1.

FN *. See footnote, ante, page 1.

FN 3. This court may judicially notice statutes (Evid. Code, § 451, subd. (a)) and “[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy,” such as standard legal texts. (Evid. Code, § 452, subd. (h).)

FN 4. Since MERS properly executed the assignment to U.S. Bank, U.S. Bank could then properly substitute NDEx as trustee. (See § 2934a, subd. (a)(1).)

FN 5. Since we conclude that MERS was authorized to assign the deed of trust and commence foreclosure, we need not consider U.S. Bank’s alternative contention that Skov’s claim “fails for the added reason that she does not allege she tendered payment of the sums owing under her promissory note.” However, we note that Mabry v. Superior Court (2010) 185 Cal.App.4th 208 (Mabry) held that a borrower need not tender the full amount of indebtedness prior to seeking to enjoin a foreclosure sale for violations of section 2923.5. (Mabry, at pp. 225-226.)

FN 6. Section 2923.5 states in relevant part: “(a)(1) A mortgagee, trustee, beneficiary, or authorized agent may not file a notice of default pursuant to Section 2924 until 30 days after initial 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 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 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).” A notice of default may also be filed when the borrower has not been contacted if such failure occurred despite the due diligence of the mortgagee, beneficiary, or agent. (§ 2923.5, subd. (g).) Section 2923.5 defines “due diligence.” (§ 2923.5, subd. (g).)

FN 7. The California Supreme Court denied review in Mabrysupra185 Cal.App.4th 208 nine days after it filed Lusupra50 Cal.4th 592.

FN 8. The Home Owners’ Loan Act preempts state law regarding the “[p]rocessing, origination, servicing, sale or purchase of, or investment or participation in, mortgages.” (12 C.F.R. § 560.2, subd. (b)(10).)

FN 9. One federal district court has held that section 2923.5 is preempted by the National Bank Act. (Acosta v. Wells Fargo Bank, N.A. (N.D.Cal., May 21, 2010, No. C 10-991 JF (PVT)) [2010 WL 2077209].) Others have reached the same result under the Home Owner’s Loan Act. (Gonzalez v. Alliance Bancorp (N.D.Cal., Apr. 19, 2010, No. C 10-00805 RS) [2010 WL 1575963]; Murillo v. Lehman Bros. Bank FSB (N.D.Cal., July 17, 2009, No. C 09-00500 JW) [2009 WL 2160578]; Odinma v. Aurora Loan Services (N.D.Cal., Mar. 23, 2010, No. C 09-4674 EDL) [2010 WL 1199886]; Parcay v. Shea Mortg., Inc. (E.D.Cal., Apr. 23, 2010, No. CV-F-09-1942 OWW/GSA) [2010 WL 1659369];Quintero Family Trust v. OneWest Bank, F.S.B. (S.D.Cal., Jun. 25, 2010, No. 09-CV-1561-IEG (WVG)) [2010 WL 2618729]; DeLeon v. Wells Fargo Bank, N.A. (N.D.Cal. 2010) 729 F.Supp.2d 1119.) These cases reason that section 2923.5 is preempted by federal law because it involves the processing and servicing of the plaintiffs’ mortgages. This court is not bound by the decisions of lower federal courts interpreting federal law. (People v. Williams (1997) 16 Cal.4th 153, 190.)

Sixth Circuit issues authorizes MERS role as foreclosing mortgagee in Michigan – One more State ignoring the Supreme Court Law of the land in Carptenter v. Longan…

11 Jul

Sent from my HTC on the Now Network from Sprint!

Key Provisions in California Foreclosure Bill

3 Jul

By The Associated Press
SACRAMENTO, Calif. July 2, 2012 (AP)

Here are key provisions in California’s homeowner protection bill, which writes into state law the national mortgage settlement reached with five top lenders, and expands it to all mortgages:

— Lets homeowners sue mortgage providers if they violate state law, but only if there is a significant violation. Homeowners could ask judges to halt pending foreclosures but could collect monetary damages only if the foreclosure took place.

— Requires lenders to provide a single point of contact for borrowers who want to discuss foreclosures or refinancing, with an exemption for lenders that process fewer than 175 foreclosures per year.

— Bans what are known as “dual-track foreclosures” by barring lenders from filing notices of default, notices of sale, or conducting trustees’ sales while they are also considering alternatives to foreclosures like loan modifications or short sales.

— Increases penalties for banks that sign off on foreclosures without properly reviewing the documentation, a process known as robo-signing.

Vote set on writing foreclosure settlement into Calif law

2 Jul

 

8:44 AM, Jul 2, 2012   |   0  comments
Written by

The Associated Press

 

SACRAMENTO (AP) – California will become the first state to write into law much of the national mortgage settlement negotiated this year with the nation’s top five banks, if state lawmakers approve wide-ranging legislation on Monday.

Majority Democrats say they have the votes to approve the homeowner protection package despite opposition from business and lending organizations.

The legislation would require large lenders to provide a single point of contact for homeowners who want to discuss loan modifications. It would prohibit lenders from foreclosing while they consider alternatives to foreclosures. And it would let California homeowners sue lenders to stop foreclosures or seek monetary damages if the lender violates state law.

The protections would benefit all California homeowners, not just those whose mortgages are with the five banks that signed the national settlement.

The Associated Press

CHILD SUPPORT IN CALIFORNIA

1 Jul

This sheet is designed to provide basic information about child support. Specific questions and requests for help with a particular case should be presented to your local support enforcement office (647-7732), your own attorney, or the Presidio of Monterey Legal Assistance Office (242-5084). An excellent, free resource for information, workshops, child support calculations, and assistance in completion of court forms is the County Family Law Facilitator. Call 755-5167 for details.
The general rule is that all children, including those whose parents were never married to each other, have a legal right to be supported by both parents. The amount of support is based on the incomes of the parents and the needs of the children. Support will be paid to the one with actual custody of the children, usually a parent, or to a public agency where welfare assistance is being paid. Unless welfare is paid, the parents are free to settle the case on their own, and are not required to use a county enforcement agency. However, any agreements should be put into the form of a court order to protect both parties in the event of a later disagreement. The time and expense of a court order are well spent if there is a dispute later.
Can I handle a child support case on my own?
Yes and there are some very good self-help books on how to do your own divorce and how to get and enforce child support orders that can provide meaningful information. However, most people should retain the services of a private attorney or let the matter be handled by the local child support enforcement agency, a “IV-D” agency, in California, the County District Attorney. In Monterey County that agency can be reached by phone at 647-7732, by mail at P.O. Box 2059, Salinas, CA 93902, and visited at 752 La Guardia near the Salinas airport.
How much is the support going to be?
Child support in California is set by an algebraic formula established by the Legislature. The basic factors in setting child support are the parties’ gross incomes and the amount of time each parent spends taking care of the children. Other factors will have a varying impact on the level of support. Union dues, mandatory retirement payments, child support paid for other children, etc. will move the guideline support level slightly. If a parent has other natural or adopted children (step-children do not count) in the home, the formula provides for a “hardship” deduction. This adjustment to the obligated parent’s (obligor’s) income is equal to the amount of support set. NOTE: No “hardship” deduction for other children in the home is available if public assistance (welfare) is being paid. All hardship adjustments to the formula are within the discretion of the court. Your attorney or the Family Law Facilitator should have the software to run the numbers for you.
Examples:
E-4 w/3 years, 1 child, other parent has minimum wage job:
20% visitation (every other weekend, 3 weeks in the summer);
Guideline support about $500/month.
Plus ½ of work-related day care.
O-4 w/8 years, 2 kids, 20% visitation,
Other parent not working: about $2200
Other parent earning $1800/month: $1060 + ½ work-related day care
Other standard terms of a child support order are: A wage assignment order will issue; each parent will provide health insurance for the children if available through employment at reasonable cost. The parties will divide equally any unreimbursed health care costs. Both parties must notify the enforcing agency of any change of residence or employment.
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What do I have to do to collect child support?
To get a court order requiring another person to pay child support, you must prove that the other person is a parent of the child and present financial information that will enable the court to make a legally proper support order.
Can I get help with my child support case?
Yes. The local “IV-D” agency can handle all aspects of a child support case. In California, child support cases are handled by the District Attorney of the county in which you live. In California, these cases are handled at no charge to the custodial parent; however, in some other states, there may be a nominal charge of up to $25 for support enforcement services.
What information should I take to my lawyer or to the District Attorney?
Required information may include the full legal name, date of birth, Social Security Number, physical description, address, and employer of the non-custodial parent; full names and dates of birth of all children; marriage license, if there is one; divorce or separation agreement or judgment, if there is one; information about income and assets of the non-custodial parent; evidence of your own financial condition, such as pay check stubs; and evidence of any special educational or medical needs of the children.
What can I do if the other parent will not pay?
Courts can issue earnings assignment orders which require the other parent’s employer to withhold child support from the other parent’s pay.
What if I am unsure of which person is the father of the children?
Parentage blood testing has reached a point where it is highly reliable and the test results can be used in court to determine parentage.
I have a newborn baby. They’re not going to stick her with a needle, are they?
Most paternity testing labs are equipped to do “buccal swabs”: a Q-tip rolled on the inside of the cheek to collect cells. This method is scientifically accepted and avoids the requirement for needles for infants and persons with religious objections. The process is somewhat more complicated to process, so it is not used unless necessary.
What if I do not know where the other parent is?
Local support enforcement agencies, such as the District Attorney, have access to a wide range of services that can be used to locate non-custodial parents.
What if I do not have much information about the other parent?
Provide such information as you have. The local support enforcement agency will use its resources to help with the identification and location of the other parent.
What if I have been wrongly named as a parent of a child?
You can always seek the services of an attorney to represent you in the matter. Since disputes about parentage are usually resolved by blood tests, you may try to work out arrangements for the tests on your own. If the County is trying to establish paternity, DNA blood testing should be available at reasonable rates. Because of volume discounts, County blood tests usually cost about $250, and the defendant only pays if he is found to be the father. Results should be available within 3 weeks of the blood testing. In a recent survey of child support enforcement agencies in California, about 30% of the DNA tests were proving that the wrong father had been sued.
What if I think the amount of child support should be changed?
If your financial circumstances, the financial condition of the other parent, or the needs of the children have changed, the amount of child support may be modified. You can file a motion for modification with the court that issued the support order or you can ask the local support enforcement agency to conduct a
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review of the support amount. California courts now have an Office of the Family Court Facilitator, which has court staff who can assist you with filling out the paperwork to get a modification.
How long will it take to get child support?
This, of course, depends on how complicated the case is. If the parties are able to agree, the matter may be resolved in a very short period of time. On the other hand, if the whereabouts of the other parent are unknown or if parentage is disputed, resolution of the case can take a substantial period of time.
Are efforts to get child support always successful?
Unfortunately, they are not. In some cases, the other parent can not be identified or located. In others, such as where the non-custodial parent is in prison, the other parent has no ability to provide the needed support.
What if the other parent makes threats after I try to get child support?
Threats should be reported to your attorney, the child support enforcement agency handling your case, or, if appropriate, to the police department.
What if the other parent has a new family?
The existence of another family may affect the amount of money available for child support. However, it does not eliminate the obligation to provide support for other children.
The “Obligor” parent has been injured on the job. Can I still get support?
The enforcing agency can file a lien against workers’ compensation benefits, and can intercept up to 25% of disability payments. Tell the District Attorney what you know about the job, the injury, etc. If the Obligor gets a lump-sum settlement of the case, the DA may be able to get a portion of that sum to pay back support.
The Obligor parent says he’s going to file bankruptcy. Will I lose my rights to the back support owed?
No, child support is not discharged in bankruptcy. The enforcement agency needs to know that he’s filed so they can file a claim.
The other parent won’t let me see the child/I don’t know where they are.
Your local District Attorney Child Abduction Unit (CAU) will assist you in locating your family and in getting you visitation or custody orders. Interference with visitation IS NOT a defense to failure to pay. If you know where to make the payments, continue and seek help from the CAU.
I’ve just been served papers naming me as the father of a child. What do I do?
First, and most importantly, seek legal advice promptly. You have less than 30 days to file an answer or otherwise respond to the suit, and if no answer is filed, a judgment can be entered against you. You can file an answer yourself, get advice from the Legal Assistance Office, go to the Family Law Facilitator at the County Courthouse (755-5167), or seek a private attorney. Private attorneys can be expensive (up to $2000 to walk you through paternity testing, 2 or 3 court appearances, setting support if necessary). However, when compared to the expense of a child support order, the amount spent on dealing with the case properly from the outset is minimal. A $500/month child support order is worth over $110,000 before the child becomes an adult. You may have an attorney file the answer, or you can do this yourself (you should have received a blank “Answer to governmental Complaint” or “Answer” when you were served). You will have to pay a filing fee (in California, about $355.00) or obtain a waiver of those fees if you cannot afford the fee. Do Not ignore the complaint, even if the mother tells you its been taken care of. Do not assume that mistakes will be corrected by the other parent or the governmental agency. After a judgment is entered naming you as the father of a child, your ability to set aside that judgment is very limited.
Rev. 2/10 4
The papers say that welfare was paid for the child starting three years ago. I never even knew about this
child!
If the enforcement agency isn’t able to find you promptly, they can ask for back child support. In welfare cases, the court can order “reimbursement” to the county for welfare paid out to support the child UP TO THREE YEARS back from the date of filing of the complaint. The court will consider an obligor’s earnings during that period when setting the arrears amount. It is no defense that an obligor did not know about the child. Example: An obligor earning $2000/month for the past three years gets a notice of a child from a relationship that ended several years ago. After paternity is established, the court determines ongoing support of approximately $390/month. Arrears for the period aid was paid (36 months at guideline support of $390/month = $14,040, which will accrue interest at the legal rate of 10% per year, or $115/month.
This does not apply unless welfare is paid. In non-welfare cases, child support can only be ordered back to the date the child support motion was filed, after you are served.
I have a child support order against me. What if I don’t pay?
If the obligor is in the military, once an order is established, the enforcing agency will send a wage withholding order to DFAS, and the support will come directly out of the service member’s check. It is a violation of service regulations to fail to support dependents, and members may be subject to discipline for attempts to evade an obligation.
As a result of the 1997 Welfare Reform legislation, most states have similar child support enforcement tools. This information is specifically oriented to California, but is true in most states. Some of the tools available to collect child support are:
Wage withholding orders: Wage orders are directed at the employer and require that he or she deducts the support out of an obligor’s check every pay period. A wage order is REQUIRED by law, unless payments are current and the obligee agrees to not issue the order. Employers failing to honor a wage order can be prosecuted for contempt. Employers who deduct the support from an employee’s checks, but fail to send in the money, can be charged with a crime.
New Hire Registry: Every time an employer hires a new person, he notifies the State of that person’s identity. That list is compared to the list of people who owe child support. If no payment has been made in the last 30 days, the State notifies the employer to deduct 50% of the employee’s net pay until a wage assignment order can be placed. (That’s why when an obligor gets a new job, he should call or write to the agency enforcing the obligation immediately, so that a wage assignment or other arrangement can be placed.)
Passive Intercepts: On a regular basis, a computer list is submitted to the State and Federal governments by child support enforcement agencies, listing people who owe child support. That list is automatically compared to people due tax refunds, lottery winnings, state work contracts, Social Security payments, disability payments, unemployment benefits, bank accounts, financial institution records, etc.
License Suspension: Every month, enforcement agencies send a list of people who are behind in their support payments to the State Department of Motor Vehicles. If an obligor’s license is due to be renewed, and he or she is behind in support payments, they will receive a notice that in 150 days their license will be suspended until they get a clearance from the enforcing agency. The agency is allowed to take up to 90 days to issue or deny a release, so an obligor should not wait to go to the agency until the last minute. Most releases can be done on the same day or next day, once a wage assignment is confirmed. The warning notice is sent to the last address DMV has, so an obligor should always make sure that DMV has a current address. Other licenses are subject to suspension, including professional licenses (doctors, lawyers, nurses, etc.); business licenses (auto repair shops, barbers, security guards, etc. ); and recreational licenses for hunting and fishing.
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Civil Enforcement: A child support enforcement agency can file requests for examination of financial records, cite non-paying obligors for contempt of court, file writs of execution against property or money held or controlled by a child support obligor, can divide or seize certain pension assets, record liens against real property, order assets sold, and take other civil actions through the court to collect support. Contempt citations can result in jail time or community service for non-compliance with the court order.
Criminal Enforcement: Local agencies can file criminal charges against a parent who does not support their child. These charges can be misdemeanors or felonies, and can result in jail or prison time. If a non-paying parent is in another state, the US Attorney’s Office can, in certain serious cases, file federal criminal charges against a parent.

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