January 2013 – Mortgage Asistance 877-227-4341

paragraph 22 Condition precedent

In standard FNMA deed of trust in paragraph 22 there exists a condition precedent of contact prior to Notice of Default that is routinely ignored by most lenders and or servicers and it is a defense to Foreclosure see attached ruling in Florida

Final Judgment Paragraph 22 Judge Tepper Brendan Riley.pdf

Suarez case – set for jury trial

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Monday, January 28, 2013 5:27 AM
To: Charles Cox
Subject: Suarez case – set for jury trial

This is the first one I know of actually set for jury trial. Almost the same dirt bags as in our own case (they’ve got Bryan Cave, the S. California counter-part to our Severson & Werson group of scum bags.) Looks like Prosper is making some headway.

Good on them!

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

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

PrintCase.pdf
121066708-Suarez-v-Bank-of-New-York-Mellon.pdf

Suarez Case – Complaint

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, January 31, 2013 5:19 AM
To: Charles Cox
Subject: Suarez Case – Complaint

Initial complaint attached.

SuarezCase Complaint.pdf

Follow up-Williamson County Texas – Clerk Report and findings

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, January 31, 2013 6:21 AM
To: Charles Cox
Subject: Follow up-Williamson County Texas – Clerk Report and findings

Follow up to the Williamson County Clerk Audit Findings…link here to posting on my website due to file size: http://www.fdnpro.com/reference-material/documents/TexasRecorder-Audit.pdf (about 21mb…177 pages)

Remember Phil Ting and the similar report done in San Francisco? I think you’ll like this one even more.

If her allegations are taken as true, she has satisfied the tender requirement

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, January 24, 2013 5:22 AM
To: Charles Cox
Subject: If her allegations are taken as true, she has satisfied the tender requirement

From Deontos (I’ve attached the Order):

Martin v. LITTON LOAN SERVICING LP, Dist. Court, ED California 2013

RENEE’L. MARTIN, Plaintiff,
v.
LITTON LOAN SERVICING LP, et al., Defendants.

No. 2:12-cv-00970-MCE-EFB PS.

United States District Court, E.D. California.

January 16, 2013.

ORDER AND FINDINGS AND RECOMMENDATIONS

EDMUND F. BRENNAN, Magistrate Judge.

I. BACKGROUND

Defendants have submitted a request for judicial notice which indicates that the deed of trust was assigned to defendant Deutsche Bank on March 19, 2004 and that Western Progressive is an agent for Deutsche Bank; the assignment was recorded on August 16, 2012. Defs.’ Req. for Jud. Notice, Dckt. No. 33, Exs. B, C. Although not specifically alleged in plaintiff’s first amended complaint, plaintiff contends that the assignment is fraudulent. Dckt. No. 42.

b. Failure to Respond to QWR

Here, plaintiff vaguely alleges that she sent Litton and Ocwen a QWR for an accounting and those defendants failed to respond, and defendants failed to disclose to plaintiff the true holders of the loan, after repeated attempts by plaintiff to ascertain that information. As an initial matter, those allegations lack specificity and are too speculative under Twombly andIqbal. Plaintiff does not allege, among other things, when the QWR or other requests were sent. Nonetheless, as discussed above, alleging a breach of RESPA duties alone does not state a claim under RESPA. Plaintiff must, at a minimum, also allege that the breach resulted in actual damages. See 12 U.S.C. § 2605(f)(1)(A) ("Whoever fails to comply with this section shall be liable to the borrower . . . [for] any actual damages to the borrower as a result of the failure."); Hutchinson v. Delaware Savings Bank FSB, 410 F. Supp. 2d 374, 383 (D.N.J. 2006)(citations omitted) (a claimant under 12 U.S.C. § 2605 must allege a pecuniary loss attributable to the alleged violation). Here, plaintiff does not specify any damages resulting from an alleged failure to respond to her QWR or requests regarding the true holder of the loan. Therefore, plaintiff’s RESPA claim against Litton and Ocwen based on a failure to respond to a QWR and/or requests for information about the true holders of the loan should be dismissed with leave to amend.

5. Quiet Title

Plaintiff seeks to quiet title as of March 8, 2004. Plaintiff seeks a judicial declaration that the title to the subject property is vested in plaintiff alone and that the defendants have no interest, right, or title to the property. First Am. Compl. ¶ 99. Defendants move to dismiss this claim, arguing that it fails because plaintiff has not alleged valid and/or viable tender of the indebtedness. Dckt. No. 32 at 17.

To establish a claim for quiet title, plaintiff must file a verified complaint that alleges: (a) a description of the property; (b) plaintiff’s title as to which a determination is sought; (c) the adverse claims to the title; (d) the date as to which the determination is sought; and (e) a prayer for the determination of title. Cal. Civ. Proc. Code § 761.020. Additionally, plaintiff must allege that she has tendered her indebtedness. See Kelley v. Mortg. Elec. Registration, 642 F. Supp. 2d 1048, 1057 (N.D. Cal. 2009) ("Plaintiffs have not alleged . . . that they have satisfied their obligation under the Deed of Trust. As such, they have not stated a claim to quiet title.");see also Distor v. U.S. Bank, NA, 2009 WL 3429700, at *6 (N.D. Cal. Oct. 22, 2009) ("plaintiff has no basis to quiet title without first discharging her debt, and . . . she has not alleged that she has done so and is therefore the rightful owner of the property").

Here, defendants contend that plaintiff fails to allege tender or the ability to tender. However, plaintiff’s first amended complaint specifically alleges that she does not owe anything to any of the defendants. The fundamental essence of her claim is that she sent the regular payment of her mortgage every month but defendants wrongfully refused to process those payments because of the dispute over the amount and, because defendants did not have the authority to pay taxes on her behalf, they lacked authority to alter the amount due on her payments. Therefore, according to plaintiff, she has submitted her payments as due and there is nothing further to tender.

At the hearing, plaintiff specifically stated that she did not agree to paragraphs 4 or 9 of the deed of trust, which required her to pay taxes and which authorized the lender to pay the taxes on her behalf, nor did she agree to paragraph 10 of the loan modification agreement, which also reaffirmed plaintiff’s obligation to pay her taxes. If her allegations are taken as true, she has satisfied the tender requirement.[2] In light of plaintiff’s allegations that she has timely submitted her payments, and her allegations that she did not agree to all of the terms in the deed of trust, plaintiff’s quiet title claim is sufficient to withstand defendants’ motion to dismiss.

Martin v. Litton Loan Servicing.docx

Well well well…what do we have here?

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, January 24, 2013 5:22 AM
To: Charles Cox
Subject: Well well well…what do we have here?

From PI Bill Paatalo in Portland.

Assignment of DOT – Manos.pdf

MERSCORP Shell Game Attacked by Kentucky Attorney General Jack Conway

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, January 24, 2013 8:20 AM
To: Charles Cox
Subject: MERSCORP Shell Game Attacked by Kentucky Attorney General Jack Conway

One more try!

Posted by Neil Garfield:

EDITOR’S NOTES AND COMMENTS: My congratulations to Kentucky Attorney General Jack Conway and his staff. They nailed one of the key issues that cut revenues on transfers of interests in real property AND they nailed one of the key issues in perfecting the mortgage lien.

As we all know now MERSCORP has been playing a shell game with multiple corporate identities, the purpose of which, as explained in Conway’s complaint, was to add mud to the waters already polluted by predatory loan practices and outright fraud in the appraisal and identification of the lender. This of course is in addition to the very gnarly issue of using a nominee that explicitly disclaims any interest in the property or loan.

The use of MERS, just like the use of fabricated, forged, robo-signed documents doesn’t necessarily wipe out the debt. The debt is created when the borrower accepts the money, regardless of what the paperwork says — unless the state’s usury laws penalize the lender by eliminating the debt entirely and adding treble damages.

But the use of a nominee that has no interest in the loan or the property creates a problem in the perfection of the mortgage lien. The use of TWO nominees doubles the problem. It eliminates the most basic disclosure required by Federal and state lending laws — who is the creditor?

By intentionally naming the originator as the lender when it was merely a nominee and by using MERS, as nominee to have the rights under the security interest, the Banks created layers of bankruptcy remote protection as they intended, as well as the moral hazard of stealing or "borrowing" the loan to create fictitious transactions in which the bank kept part of the money intended for mortgage funding. Since the mortgage or deed of trust contains no stakeholders other than the homeowner and the note fails to name any actual creditor with a loan receivable account, the mortgage lien is fatally defective rendering the loan unsecured.

When you take into consideration that the funding of the loan came from a source unrelated (stranger tot he transaction) then the debt doesn’t exist either — as it relates to any of the parties named at the "closing" of the mortgage loan. So you end up with no debt, no note, and no mortgage. You also end up with a debt that is undocumented wherein the homeowner is the debtor and the source of funds is the creditor — in a transaction that neither of them knew took place and neither of them had agreed.

The lender/investors were expecting to participate in a REMIC trust which was routinely ignored as the money was diverted by the banks to their own pockets before they made increasingly toxic over-priced loans on over-valued property. The borrower ended up in limbo with no place to go to settle, modify or even litigate their loan, mortgage or foreclosure. This is not the statutory scheme in any state and Conway in Kentucky spotted it. Besides the usual "dark side" rhetoric, the plan as executed by the banks creates fatal uncertainty that cannot be cured as to who owns the loan or the lien or the debt, note or mortgage. The answer clearly does not lie in the documents presented to the borrower.

Now Conway has added the hidden issue of the MERS shell game. Confirming what we have been saying for years, the Banks, using the MERS model, have made it nearly impossible for ANY borrower to know the identity of the actual lender/creditor before during and even one day after the "closing" of the loan (which I have postulated may never have been completed because the money didn’t come from MERS nor the other nominee identified as the "lender").

The Banks are trying to run the clock on the statute of limitations with these settlements, like the the last one in which Bank of America would have owed tens of millions of dollars had the review process continued, and instead they cancelled the program with a minor settlement in which homeowners will get some pocket change while BofA walks off with the a mouthful of ill-gotten gains.

The plain truth is that in most cases BofA never paid a dime for the funding or purchase of the loan. That is called lack of consideration and in order for the rules of negotiable paper to apply, there must be transfer for value. There was no value, there was no cancelled check and there was no wire transfer receipt in which BofA was the lender or acquirer of the loan. Now add this ingredient: more than 50% of the REMIC trusts BofA says it "represents no longer exist, having been long since dissolved and settled.

The same holds true for US Bank, Mellon, Chase, Deutsch and others. Applying basic black letter law, the only possible conclusion here is that the mortgages cannot be foreclosed, the notes cannot be enforced, the debt can be collected ONLY upon proof of payment and proof of loss. This is how it always was, for obvious reasons, and this is what we should re turn to, providing a degree of certainty to the marketplace that does not and will never exist without the massive correction in title corruption and the wrongful foreclosures conducted by what the reviewers in the San Francisco audit called "strangers to the transaction."

See Louisville Morning Call here

See Bloomberg Article here

CALL TO ACTION CONTACT THE COUNSEL REPRESENTING INVESTORS!

From: rene powers [mailto:gpanda26@yahoo.com]
Sent: Friday, January 25, 2013 6:23 AM
To: CJ Holmes
Subject: CALL TO ACTION CONTACT THE COUNSEL REPRESENTING INVESTORS!

CJ! I am on fire to get to the attorneys and the judge so we homeowners can be heard. Apparently it looks like we could have been by the deadlines noted BUT I don’t know about the rest of those affected but I never got notice to participate! The verbiage in the notice "mentions" anyone affected could be heard..They had ALL the addresses in the 530 trusts but I did not get a notice in the mail??? Anyhow, I have sent an email to Kenneth Warner through his AVVO account, will be calling his office and want this CALL TO ACTION to go out! THIS IS WHAT IT TAKES!! I know BJ will be on today and you are doing updates, this is HUGE for all homeowners to start making noise! It was like they threw a party and never invited the guest of honor!! THANK YOU!!!

Please cut and paste the message below

CALL TO ACTION! Are you affected by ANY of the Countrywide Trust Pools? If you are CONTACT ME! Doc Wood sent me the link to the case going on with BONY and investors I am linking here. I sent an email to one of the attorneys asking WHY ARE HOMEOWNERS LEFT OUT OF THIS SETTLEMENT??? The investors think THEY were duped? WHAT ABOUT THE HOMEOWNERS?? We MUST have a voice and I want to direct those affected to READ THE LINKS IN THIS CASE AND START MAKING NOISE!!! WE MUST STAND TOGETHER AND BE HEARD AS WE HAVE BEEN SILENCED TOO LONG!! FIND EMAIL ADDRESSES FOR THESE ATTORNEYS AND LET’s CALL THEIR OFFICES TOO! PLEASE CONTACT ME FOR ORGANIZATION OF OUR EFFORTS AND WE WILL MAKE OUR VOICES HEARD!!address for addressing the court is included as well! GET LETTERS WRITTEN AND TELL YOUR STORY! WE were victims ALONG WITH the investors! WITH 530 affected trusts that is A LOT of homeowners affected! DO IT! FAX EMAIL CALL SEND MAIL. Thank you! Rene gpanda26!! Put "affected by one of the "TRUSTS" " in the subject line please!

http://www.cwrmbssettlement.com/index.php

Rene’ Powers

Real Estate & Mortgage Consultant/Agent

949.648-3655 Cell

gpanda26
"Integrity & Service Coming To You"

license# 01797666

Foreclosure Homeowners Bill of Rights

On January 1, 2013 a new California law, the Homeowner Bill of Rights, will go into effect. The new law reforms some aspects of the California foreclosure process in order to better protect homeowners in foreclosure.

Between 2008 and 2011, more than one million homes in California were foreclosed. In many cases, lenders did not provide homeowners with a significant opportunity to obtain loss mitigation options to avoid foreclosure and also engaged in extensive mortgage servicing misconduct. To address this issue, Governor Jerry Brown signed the California Homeowner Bill of Rights into law on July 11, 2012.

The Homeowner Bill of Rights makes the nonjudicial foreclosure process in California more fair and transparent. Read on to learn about the new protections for homeowners and how the Homeowner Bill of Rights can help you if you are facing foreclosure in California.

(See our article Summary of California Foreclosure Laws for more information on the California foreclosure process).

What Is the California Homeowner Bill of Rights?

The purpose of the Homeowner Bill of Rights is to provide protections for homeowners facing foreclosure and to reform some aspects of the foreclosure process. It aims to ensure that homeowners are considered for, and have a meaningful opportunity to obtain, available loss mitigation options, such as loan modifications or other alternatives to foreclosure. (Learn more in our Alternatives to Foreclosure area.)

The Homeowner Bill of Rights is part of California Attorney General Kamala D. Harris’ response to the state’s foreclosure crisis and largely came about as a result of the recent national mortgage settlement between 49 states and certain lenders. (Learn more about the the national mortgage settlement.)

However, whereas the national mortgage settlement is only applicable to the five settling banks and their customers, the Homeowner Bill of Rights extends the reforms addressed in the national mortgage settlement to almost all mortgage lenders and servicers.

Key Reforms in the California Homeowner Bill of Rights

The Homeowner Bill of Rights contains four key reforms:

No Dual-Tracking

Under current law, a lender may foreclose on a homeowner even if a loan modification application is pending, which is a process called “dual-tracking.” The Homeowner Bill of Rights bans the dual-tracking of foreclosures. This means loan servicers must make a decision to grant or deny a first lien loan modification application before starting or continuing the foreclosure process.

What does this mean for homeowners? Once the homeowner submits a complete loan modification application, the foreclosure is stalled while the loan servicer reviews the application and makes a decision. Even if the lender denies the loan modification, it still cannot foreclose until any applicable appeals period has expired (this is generally 30 days from the date of the written denial).

Lenders Must Provide Homeowners With a Single Point of Contact

In the past, homeowners who called their lender to get help with mortgage problems have had to explain their circumstances repeatedly, often to several different representatives. Under the Homeowner Bill of Rights, mortgage servicers must designate a single point of contact for homeowners who are potentially eligible for loan modifications or other foreclosure prevention alternatives. The homeowner must be given one or more direct means of communication with the single point of contact.

The point of contact may be an individual person or a team of personnel each of whom has:

knowledge of the homeowner’s status
information regarding foreclosure prevention alternatives
access to decision-makers, and
the responsibility to coordinate the flow of documents between the homeowner and mortgage servicer.

The single point of contact will remain assigned to the account until all loss mitigation options are exhausted or until the account is brought current.

Penalties for Robo-Signing

“Robo-signing” occurs when a representative of the lender or servicer signs foreclosure documents without reading them or having any personal knowledge about the accuracy of the information contained in them. The Homeowner Bill of Rights imposes a civil penalty up to $7,500 per loan on lenders or servicers that record or file multiple, unverified documents. (Learn more about robo-signing in the mortgage industry.)

Homeowners Have the Right to Sue for Violations

Homeowners may sue the lender or servicer for violations of the California Homeowner Bill of Rights. Potential relief includes:

injunctive relief, such as a halt to the foreclosure sale (if the foreclosure sale hasn’t happened yet), or
actual economic damages if the foreclosure sale has already occurred.

In addition, if the court finds that the violation was intentional, reckless, or resulted from willful misconduct by a loan servicer or lender, the court may award the borrower the greater of treble actual damages or statutory damages of $50,000.

Effective Date of the New Law

The Homeowner Bill of Rights goes into effect on January 1, 2013. It is scheduled to sunset on January 1, 2018.

Applicability of the California Homeowner Bill of Rights

The protections afforded to homeowners by the Homeowner Bill of Rights generally apply to first lien mortgage loans for properties that are:

owner-occupied
residential, and
no more than four units.

Smaller servicers (entities that conduct fewer than 175 foreclosure sales per year or annual reporting period) are exempt from some of the procedural requirements.

To Learn More About the California Homeowner Bill of Rights

For more information, go to the State of California Department of Justice’s webpage at www.oag.ca.gov and click on the link to “CA Homeowner Bill of Rights”.

by: Amy Loftsgordon

6th USCCA Appeal Rules Foreclosures are Debt Collection under FDCPA and Attorneys Must Comply

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Saturday, January 19, 2013 7:43 AM
To: Charles Cox
Subject: 6th USCCA Appeal Rules Foreclosures are Debt Collection under FDCPA and Attorneys Must Comply

The U.S. Court of Appeals for the Sixth Circuit Monday handed down an opinion that defined mortgage foreclosure actions as “debt collection” under the Fair Debt Collection Practices Act (FDCPA), reversing a lower court decision.

In Glazer v. Chase Home Finance, LLC, et. al., the appellate panel said that third parties initiating foreclosure actions must comply with the provisions of the FDCPA.

The case was brought by plaintiff Glazer after he inherited a home that still had an outstanding and active mortgage serviced by Chase. After six missed payments, Chase engaged with law firm Reimer, Arnovitz, Chernek & Jeffrey Co., LPA (RACJ) to begin foreclosure proceedings.

In a complicated twist indicative of the time, Chase did not own the mortgage in question. In fact, the bank had not even originated it. The loan was owned by Fannie Mae and Chase had been assigned as the servicer from the originator. When RACJ moved to foreclose, it represented as owner of the loan Chase.

When Glazer asked for verification that Chase was the owner, he claims RACJ did not comply, prompting a lawsuit seeking FDCPA damages. A district judge in Ohio sided with Chase and RACJ and dismissed the case, which Glazer appealed.

The Sixth Circuit panel said Monday that Chase was not a “debt collector” under the FDCPA:

…we hold that mortgage foreclosure is debt collection under the, Act. Lawyers who meet the general definition of a “debt collector” must comply with, the FDCPA when engaged in mortgage foreclosure. And a lawyer can satisfy that definition if his principal business purpose is mortgage foreclosure or if he “regularly” performs this function. In this case, the district court held that RACJ was not engaged in debt collection when it sought to foreclose on the property. That decision was erroneous, and the judgment must be reversed.

The case will now go back to the lower court for further consideration.

Glazer v. Chase.pdf

California – Oral promises can be used in fraud case – Parol Evidence Rule Issues

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Sunday, January 20, 2013 5:58 AM
To: Charles Cox
Subject: California – Oral promises can be used in fraud case – Parol Evidence Rule Issues

Oral promises can be used in fraud case

STATE SUPREME COURT Ruling favors couple facing foreclosure who maintain terms of loan differed from what they had been told

Bob Egelko

Published 9:18 pm, Monday, January 14, 2013

Borrowers facing default on a loan can try to prove that the lender orally promised them an extension that didn’t appear in the written contract, the state Supreme Court ruled Monday while overturning a 1935 decision that restricted evidence of fraud in contract disputes.

A lawyer for the borrowers, a Fresno County couple, called the unanimous ruling a victory for consumers. The lender’s lawyer said the court had eliminated important protections for written contracts.

The couple, Lance and Pamela Workman, fell behind on repaying a $776,000 loan from the Fresno-Madera Production Credit Association and signed an agreement in March 2007 pledging eight properties as security in return for a three-month extension.

The lender sought foreclosure after the Workmans failed to meet the three-month deadline. But the couple said the credit association’s vice president had told them two weeks before the agreement was signed, and repeated at the time of signing, that they would actually have two years to make the payments and would have to put up only two ranches as security.

The Workmans later repaid the loan – selling the eight properties at a loss, according to their lawyer, Steven Paganetti – and then sued the lender for fraud for allegedly misleading them about the terms of the loan.

The credit association argued that the vice president’s alleged promise to the couple was inadmissible because, under the law, a written contract overrides any previous oral statements between the signing parties.

The California Bankers Association and other lending organizations took the same position when the case reached the state’s high court. Arguing that contracts should be enforced as written, they asked the court to reaffirm the 1935 ruling that allowed oral evidence in such cases only to prove that a contract was procured by fraud and not to contradict any of its stated terms.

But the court, in an opinion by Justice Carol Corrigan, said the 1935 ruling was poorly reasoned, had been rejected by other states and "may actually provide a shield for fraudulent conduct."

Monday’s decision allows the Workmans to offer the lending officer’s promise as evidence that the credit association had deceived them into signing the agreement or misled them about its contents.

The ruling will "protect consumers from the old bait-and-switch" and should allow the Workmans to take their case to a jury, said Paganetti, their lawyer.

Scott Ivy, the credit association’s lawyer, said the ruling allows California courts to refuse to enforce written contracts "based upon alleged oral statements that directly conflict with the written terms." He said the lender will now try to get the suit dismissed on the grounds that the Workmans acted unreasonably by failing to review the contract before signing it.

Source: http://www.sfgate.com/news/article/Oral-promises-can-be-used-in-fraud-case-4194025.php

Workman.pdf

An act to amend and add Sections 2923.5 and 2923.6 of, to amend and repeal Section 2924 of, to add Sections 2920.5, 2923.4, 2923.7, 2924.17, and 2924.20 to, to add and rRepeal Sections 2923.55, 2924.9, 2924.10, 2924.18, and 2924.19 of, and to add, repeal, and add Sections 2924.11, 2924.12, and 2924.15 of, the Civil Code, relating to mortgages

CALIFORNIA HOMEOWNER BILL OF RIGHTS

Kamala D. Harris, Attorney General of California

The 2012 California Homeowner Bill of Rights is a legislative package designed to bring fairness, accountability and transparency to the state’s mortgage and foreclosure process.

More than one million California homes were lost to foreclosure between 2008 and 2011—with an additional 500,000 currently in the foreclosure pipeline. Seven of the nation’s 10 hardest-hit cities by foreclosure rate in 2011 were in California.

The California Homeowner Bill of Rights marks the third step in Attorney General Harris’ response to the state’s foreclosure and mortgage crisis. The first step was to create the Mortgage Fraud Strike Force, which has been investigating and prosecuting misconduct at all stages of the mortgage process. The second step was to extract a commitment from the nation’s five largest banks of an estimated $18 billion for California borrowers. The settlement contained thoughtful reforms but are only applicable for three years, and only to loans serviced by the settling banks.

Two key bills contain significant mortgage and foreclosure reforms. AB 278 (Eng/Feuer/Mitchell/Pérez) and SB 900 (Leno/Evans/Corbett/DeSaulnier/Pavley/Steinberg) have been thoroughly considered by a legislative conference committee. The major provisions of the bills include:

Dual track foreclosure ban – The legislation would require a mortgage servicer to render a decision on a loan modification application before advancing the foreclosure process by filing a notice of default or notice of sale, or by conducting a trustee’s sale. The foreclosure process is essentially paused upon the completion of a loan modification application for the duration of the lender’s review of that application.

Single point of contact – The legislation would require a mortgage servicer to designate a “single point of contact” for borrowers who are potentially eligible for a federal or proprietary loan modification application. The single point of contact is an individual or team which must have knowledge of the borrower’s status and foreclosure prevention alternatives, access to decision makers, and the responsibility to coordinate the flow of documentation between borrower and mortgage servicer.

Enforceability – Includes authority for borrowers to seek redress of “material” violations of the legislation. Injunctive relief would be available prior to a foreclosure sale and recovery of damages would be available following a sale.

Verification of documents – The legislation would subject the recording and filing of multiple unverified documents to a civil penalty of up to $7,500 per loan in an action brought by a civil prosecutor. It would also allow enforcement under a violator’s licensing statute by the Department of Corporations, Department of Real Estate or Department of Financial Institutions.

v v v v

The other bills in the California Homeowner Bill of Rights are:

BLIGHT PREVENTION LEGISLATION: AB 2314 (Carter) & SB 1472 (Pavley and DeSaulnier) to help combat the blight and crime associated with foreclosed properties.

v AB 2314: Passed out of Assembly (71-0). It was passed out of Senate Judiciary on June 26 (4-0). It will be heard next on the Senate floor.

v SB 1472: Passed out of Senate (36-0). It passed out of Assembly Housing and Community Development (7-0) on June 27, and will be heard next in Assembly Judiciary Committee on July 3.

TENANT PROTECTION LEGISLATION: AB 2610 (Skinner) and SB 1473 (Hancock) to help protect tenants in foreclosed properties.

v AB 2610: Passed out of Assembly (56-14). It will be heard next in Senate Judiciary on July 3.

v SB 1473: Passed out of Senate (25-13). It passed out the Assembly Housing and Community Development on June 27 (6-1) and will be heard next in Assembly Judiciary on July 3.

ENHANCEMENT OF ATTORNEY GENERAL ENFORCEMENT ACT: AB 1950 (Davis) to strengthen the law enforcement response to mortgage and foreclosure fraud.

v AB 1950: Passed out of Assembly (56-22). It passed out of Senate Banking (5-0) on June 27 and will be heard next in the Senate Judiciary, July 3, 2012.

ATTORNEY GENERAL SPECIAL GRAND JURY ACT: AB 1763 (Davis) and SB 1474 (Hancock) to strengthen prosecutions of complex, multi-jurisdictional fraud and crimes.

v SB 1474: Passed out of Senate (38-0). Passed out of Assembly Public Safety (4-0) and will be heard next in Assembly Appropriations.

v AB 1763: Passed out of Assembly (78-0). Passed out of Senate Public Safety on June 26 (7-0). It will be heard next in Senate Appropriations.

Assembly Bill No. 278

CHAPTER 86

An act to amend and add Sections 2923.5 and 2923.6 of, to amend and

repeal Section 2924 of, to add Sections 2920.5, 2923.4, 2923.7, 2924.17,

and 2924.20 to, to add and repeal Sections 2923.55, 2924.9, 2924.10,

2924.18, and 2924.19 of, and to add, repeal, and add Sections 2924.11,

2924.12, and 2924.15 of, the Civil Code, relating to mortgages.

[Approved by Governor July 11, 2012. Filed with

Secretary of State July 11, 2012.]

legislative counsel’s digest

AB 278, Eng. Mortgages and deeds of trust: foreclosure.

(1) Existing law, until January 1, 2013, requires a mortgagee, trustee,

beneficiary, or authorized agent to contact the borrower prior to filing a

notice of default to explore options for the borrower to avoid foreclosure,

as specified. Existing law requires a notice of default or, in certain

circumstances, a notice of sale, to include a declaration stating that the

mortgagee, trustee, beneficiary, or authorized agent has contacted the

borrower, or has tried with due diligence to contact the borrower, or that no

contact was required for a specified reason.

This bill would add mortgage servicers, as defined, to these provisions

and would extend the operation of these provisions indefinitely, except that

it would delete the requirement with respect to a notice of sale. The bill

would, until January 1, 2018, additionally require the borrower, as defined,

to be provided with specified information in writing prior to recordation of

a notice of default and, in certain circumstances, within 5 business days

after recordation. The bill would prohibit a mortgage servicer, mortgagee,

trustee, beneficiary, or authorized agent from recording a notice of default

or, until January 1, 2018, recording a notice of sale or conducting a trustee’s

sale while a complete first lien loan modification application is pending,

under specified conditions. The bill would, until January 1, 2018, establish

additional procedures to be followed regarding a first lien loan modification

application, the denial of an application, and a borrower’s right to appeal a

denial.

(2) Existing law imposes various requirements that must be satisfied

prior to exercising a power of sale under a mortgage or deed of trust,

including, among other things, recording a notice of default and a notice of

sale.

The bill would, until January 1, 2018, require a written notice to the

borrower after the postponement of a foreclosure sale in order to advise the

borrower of any new sale date and time, as specified. The bill would provide

that an entity shall not record a notice of default or otherwise initiate the

foreclosure process unless it is the holder of the beneficial interest under

the deed of trust, the original or substituted trustee, or the designated agent

of the holder of the beneficial interest, as specified.

The bill would prohibit recordation of a notice of default or a notice of

sale or the conduct of a trustee’s sale if a foreclosure prevention alternative

has been approved and certain conditions exist and would, until January 1,

2018, require recordation of a rescission of those notices upon execution of

a permanent foreclosure prevention alternative. The bill would, until January

1, 2018, prohibit the collection of application fees and the collection of late

fees while a foreclosure prevention alternative is being considered, if certain

criteria are met, and would require a subsequent mortgage servicer to honor

any previously approved foreclosure prevention alternative.

The bill would authorize a borrower to seek an injunction and damages

for violations of certain of the provisions described above, except as

specified. The bill would authorize the greater of treble actual damages or

$50,000 in statutory damages if a violation of certain provisions is found

to be intentional or reckless or resulted from willful misconduct, as specified.

The bill would authorize the awarding of attorneys’ fees for prevailing

borrowers, as specified. Violations of these provisions by licensees of the

Department of Corporations, the Department of Financial Institutions, and

the Department of Real Estate would also be violations of those respective

licensing laws. Because a violation of certain of those licensing laws is a

crime, the bill would impose a state-mandated local program.

The bill would provide that the requirements imposed on mortgage

servicers, and mortgagees, trustees, beneficiaries, and authorized agents,

described above are applicable only to mortgages or deeds of trust secured

by residential real property not exceeding 4 dwelling units that is

owner-occupied, as defined, and, until January 1, 2018, only to those entities

who conduct more than 175 foreclosure sales per year or annual reporting

period, except as specified.

The bill would require, upon request from a borrower who requests a

foreclosure prevention alternative, a mortgage servicer who conducts more

than 175 foreclosure sales per year or annual reporting period to establish

a single point of contact and provide the borrower with one or more direct

means of communication with the single point of contact. The bill would

specify various responsibilities of the single point of contact. The bill would

define single point of contact for these purposes.

(3) Existing law prescribes documents that may be recorded or filed in

court.

This bill would require that a specified declaration, notice of default,

notice of sale, deed of trust, assignment of a deed of trust, substitution of

trustee, or declaration or affidavit filed in any court relative to a foreclosure

proceeding or recorded by or on behalf of a mortgage servicer shall be

accurate and complete and supported by competent and reliable evidence.

The bill would require that before recording or filing any of those documents,

a mortgage servicer shall ensure that it has reviewed competent and reliable

evidence to substantiate the borrower’s default and the right to foreclose,

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including the borrower’s loan status and loan information. The bill would,

until January 1, 2018, provide that any mortgage servicer that engages in

multiple and repeated violations of these requirements shall be liable for a

civil penalty of up to $7,500 per mortgage or deed of trust, in an action

brought by specified state and local government entities, and would also

authorize administrative enforcement against licensees of the Department

of Corporations, the Department of Financial Institutions, and the Department

of Real Estate.

The bill would authorize the Department of Corporations, the Department

of Financial Institutions, and the Department of Real Estate to adopt

regulations applicable to persons and entities under their respective

jurisdictions for purposes of the provisions described above. The bill would

provide that a violation of those regulations would be enforceable only by

the regulating agency.

(4) The bill would state findings and declarations of the Legislature in

relation to foreclosures in the state generally, and would state the purposes

of the bill.

(5) The California Constitution requires the state to reimburse local

agencies and school districts for certain costs mandated by the state. Statutory

provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for

a specified reason.

The people of the State of California do enact as follows:

SECTION 1. The Legislature finds and declares all of the following:

(a) California is still reeling from the economic impacts of a wave of

residential property foreclosures that began in 2007. From 2007 to 2011

alone, there were over 900,000 completed foreclosure sales. In 2011, 38 of

the top 100 hardest hit ZIP Codes in the nation were in California, and the

current wave of foreclosures continues apace. All of this foreclosure activity

has adversely affected property values and resulted in less money for schools,

public safety, and other public services. In addition, according to the Urban

Institute, every foreclosure imposes significant costs on local governments,

including an estimated nineteen thousand two hundred twenty-nine dollars

($19,229) in local government costs. And the foreclosure crisis is not over;

there remain more than two million “underwater” mortgages in California.

(b) It is essential to the economic health of this state to mitigate the

negative effects on the state and local economies and the housing market

that are the result of continued foreclosures by modifying the foreclosure

process to ensure that borrowers who may qualify for a foreclosure

alternative are considered for, and have a meaningful opportunity to obtain,

available loss mitigation options. These changes to the state’s foreclosure

process are essential to ensure that the current crisis is not worsened by

unnecessarily adding foreclosed properties to the market when an alternative

to foreclosure may be available. Avoiding foreclosure, where possible, will

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help stabilize the state’s housing market and avoid the substantial,

corresponding negative effects of foreclosures on families, communities,

and the state and local economy.

regional economies and housing market by facilitating opportunities for

borrowers to pursue loss mitigation options.

SEC. 2. Section 2920.5 is added to the Civil Code, to read:

2920.5. For purposes of this article, the following definitions apply:

(a) “Mortgage servicer” means a person or entity who directly services

a loan, or who is responsible for interacting with the borrower, managing

the loan account on a daily basis including collecting and crediting periodic

loan payments, managing any escrow account, or enforcing the note and

security instrument, either as the current owner of the promissory note or

as the current owner’s authorized agent. “Mortgage servicer” also means a

subservicing agent to a master servicer by contract. “Mortgage servicer”

shall not include a trustee, or a trustee’s authorized agent, acting under a

power of sale pursuant to a deed of trust.

(b) “Foreclosure prevention alternative” means a first lien loan

modification or another available loss mitigation option.

2923.5, 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, 2924.18, and

2924.19, “borrower” means any natural person who is a mortgagor or trustor

and who is potentially eligible for any federal, state, or proprietary

foreclosure prevention alternative program offered by, or through, his or

her mortgage servicer.

(2) For purposes of the sections listed in paragraph (1), “borrower” shall

not include any of the following:

(A) An individual who has surrendered the secured property as evidenced

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

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

(B) An individual who has contracted with an organization, person, or

entity whose primary business is advising people who have decided to leave

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

contractual obligations to mortgagees or beneficiaries.

Title 11 of the United States Code and the bankruptcy court has not entered

an order closing or dismissing the bankruptcy case, or granting relief from

a stay of foreclosure.

(d) “First lien” means the most senior mortgage or deed of trust on the

property that is the subject of the notice of default or notice of sale.

SEC. 3. Section 2923.4 is added to the Civil Code, to read:

2923.4. (a) The purpose of the act that added this section is to ensure

that, as part of the nonjudicial foreclosure process, borrowers are considered

for, and have a meaningful opportunity to obtain, available loss mitigation

options, if any, offered by or through the borrower’s mortgage servicer,

such as loan modifications or other alternatives to foreclosure. Nothing in

Ch. 86 — 4 —

the act that added this section, however, shall be interpreted to require a

particular result of that process.

(b) Nothing in this article obviates or supersedes the obligations of the

signatories to the consent judgment entered in the case entitled United States

of America et al. v. Bank of America Corporation et al., filed in the United

States District Court for the District of Columbia, case number

1:12-cv-00361 RMC.

SEC. 4. Section 2923.5 of the Civil Code is amended to read:

2923.5. (a) (1) A mortgage servicer, mortgagee, trustee, beneficiary,

or authorized agent may not record a notice of default pursuant to Section

2924 until both of the following:

(A) Either 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 (e).

(B) The mortgage servicer complies with paragraph (1) of subdivision

(a) of Section 2924.18, if the borrower has provided a complete application

as defined in subdivision (d) of Section 2924.18.

(2) A mortgage servicer 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

mortgage servicer shall advise the borrower that he or she has the right to

request a subsequent meeting and, if requested, the mortgage servicer 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 recorded pursuant to Section 2924 shall include

a declaration that the mortgage servicer has contacted the borrower, has

tried with due diligence to contact the borrower as required by this section,

or that no contact was required because the individual did not meet the

definition of “borrower” pursuant to subdivision (c) of Section 2920.5.

telephone during any contact required by this section.

(d) A borrower may designate, with consent given in writing, a

HUD-certified housing counseling agency, attorney, or other adviser to

discuss with the mortgage servicer, on the borrower’s behalf, the borrower’s

financial situation and options for the borrower to avoid foreclosure. That

contact made at the direction of the borrower shall satisfy the contact

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

workout plan offered at the meeting by the mortgage servicer is subject to

approval by the borrower.

(e) A notice of default may be recorded pursuant to Section 2924 when

a mortgage servicer has not contacted a borrower as required by paragraph

(2) of subdivision (a) provided that the failure to contact the borrower

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occurred despite the due diligence of the mortgage servicer. For purposes

of this section, “due diligence” shall require and mean all of the following:

(1) A mortgage servicer shall first attempt to contact a borrower by

sending a first-class letter that includes the toll-free telephone number made

available by HUD to find a HUD-certified housing counseling agency.

(2) (A) After the letter has been sent, the mortgage servicer shall attempt

to contact the borrower by telephone at least three times at different hours

and on different days. Telephone calls shall be made to the primary telephone

number on file.

(B) A mortgage servicer may attempt to contact a borrower using an

automated system to dial borrowers, provided that, if the telephone call is

answered, the call is connected to a live representative of the mortgage

servicer.

this paragraph if it determines, after attempting contact pursuant to this

paragraph, that the borrower’s primary telephone number and secondary

telephone number or numbers on file, if any, have been disconnected.

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

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

shall then send a certified letter, with return receipt requested.

(4) The mortgage servicer shall provide a means for the borrower to

contact it in a timely manner, including a toll-free telephone number that

will provide access to a live representative during business hours.

(5) The mortgage servicer has posted a prominent link on the homepage

of its Internet Web site, if any, to the following information:

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

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

to borrowers advising them on steps to take to explore those options.

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

prepared to present to the mortgage servicer when discussing options for

avoiding foreclosure.

options for avoiding foreclosure with their mortgage servicer.

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

HUD-certified housing counseling agency.

(f) This section shall apply only to mortgages or deeds of trust described

in Section 2924.15.

(g) This section shall apply only to entities described in subdivision (b)

of Section 2924.18.

(h) This section shall remain in effect only until January 1, 2018, and as

of that date is repealed, unless a later enacted statute, that is enacted before

January 1, 2018, deletes or extends that date.

SEC. 5. Section 2923.5 is added to the Civil Code, to read:

2923.5. (a) (1) A mortgage servicer, mortgagee, trustee, beneficiary,

or authorized agent may not record a notice of default pursuant to Section

2924 until both of the following:

Ch. 86 — 6 —

(A) Either 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 (e).

(B) The mortgage servicer complies with subdivision (a) of Section

2924.11, if the borrower has provided a complete application as defined in

subdivision (f) of Section 2924.11.