Attorney General Kamala D. Harris Announces $1 Million Grant to Benefit California Homeowners

From: Charles Cox []
Sent: Thursday, March 28, 2013 1:35 PM
To: Charles Cox
Subject: Attorney General Kamala D. Harris Announces $1 Million Grant to Benefit California Homeowners

State of California Department of Justice, Office of the Attorney General Kamala D. Harris
News Release

March 28, 2013

For Immediate Release
(415) 703-5837

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Attorney General Kamala D. Harris Announces $1 Million Grant to Benefit California Homeowners

SAN FRANCISCO — Attorney General Kamala D. Harris today announced a $1 million California Homeowner Bill of Rights implementation grant to The National Housing Law Project.

“Californians were hit hard by the mortgage crisis and many people are still struggling to stay in their homes,” Attorney General Harris said. “The California Homeowner Bill of Rights gives borrowers more opportunities to stay in their homes, and this grant will help make sure the law is applied across the state and that everyone gets the protection they are entitled to.”

The California Homeowner Bill of Rights (HBOR) is a set of landmark laws that extend key mortgage and foreclosure protections to California homeowners and borrowers. The laws, which took effect at the beginning of this year, restrict dual-track foreclosures, guarantee struggling homeowners a reliable point of contact at their lender, impose civil penalties on fraudulently signed mortgage documents and require loan servicers to document their right to foreclose.

This grant will maximize consumer benefits from the HBOR, while minimizing abuses of the law by providing training to California consumer and housing attorneys from both private and non-profit firms.

The National Housing Law Project will partner with Western Center on Law and Poverty, National Consumer Law Center and Tenants Together to implement this grant.

The National Housing Law Project and its partners will use the grant to:

  • Provide high-quality, on-site trainings and webinars to consumer and housing attorneys on how to maximize the HBOR’s protections.
  • Train more than 800 lawyers.
  • Provide support in cases that raise important legal issues or have potential for broad impact.
  • Create a library of litigation materials to help attorneys maximize the HBOR’s benefits.
  • Produce a report that analyzes the HBOR’s statewide impact and identifies compliance problems.

Funds provided through this grant were secured by Attorney General Harris through the $18 billion National Mortgage Settlement.

Established in 1968, The National Housing Law Project seeks to advance housing justice by advocating for affordable housing, litigating to uphold homeowners’ and tenants’ rights and offering technical assistance to legal aid attorneys who work with low-income families.

The State Bar has partnered with the Attorney General’s Office to administer the grant and monitor compliance. The National Housing Law Project will provide quarterly financial and program reports to the State Bar and the Attorney General’s Office.

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You may view the full account of this posting, including possible attachments, in the News & Alerts section of our website at:

© 2013 Department of Justice

Using the Four-Letter Word “Note” in Court May Cost You

Show me the Note

From: Charles Cox []
Sent: Friday, March 29, 2013 8:29 AM
To: Charles Cox
Subject: Using the Four-Letter Word "Note" in Court May Cost You

Good article by Bill.

Charles Wayne Cox
Email: mailto:Charles
Websites:; and
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.


Results of some legal research for an appellate case I’m working on – California case law Headnotes

From: Charles Cox []
Sent: Friday, March 29, 2013 11:41 AM
To: Charles Cox
Subject: Results of some legal research for an appellate case I’m working on – California case law Headnotes

Those of you getting hit with the standard BS about CCP 2924 being a “comprehensive statutory scheme” might find this quote interesting and useful in your litigations:

“The mere existence of a comprehensive statutory scheme does not necessarily eliminate all further remedies without the consideration of the relevant policy concerns. Indeed, California courts have repeatedly allowed parties to pursue additional remedies for misconduct arising out of a nonjudicial foreclosure sale when not inconsistent with the policies behind the statutes.” Pfeifer v. Countrywide Home Loans, Inc., 211 Cal. App. 4th 1250 (Cal. App. 1st Dist. 2012)


“The rights and powers of trustees in nonjudicial foreclosure proceedings have long been regarded as strictly limited and defined by the contract of the parties and the statutes. The fact that a borrower is in arrears does not allow the trustee to circumvent the conditions precedent to foreclosure. Indeed, the conditions precedent in the deed of trust that govern the accrual of the trustee’s latent power to foreclose do not become relevant until the borrower has first breached the deed of trust in some way. Therefore, prohibiting the borrower who has breached from bringing an action to enforce the conditions precedent in a deed of trust would nullify such conditions. The mere fact of the borrower’s breach alone would become, de facto, the only condition precedent to foreclosure. Lenders require deeds of trust precisely because they contemplate the possibility of non-payment, and the deed of trust is a contract in which the parties have agreed that material breach of the note by nonpayment will not deprive borrowers of their rights to enforce conditions precedent.” Pfeifer, Id.


“A full tender must be made to set aside a foreclosure sale, based on equitable principles. Courts, however, have not required tender when the lender has not yet foreclosed and has allegedly violated laws related to avoiding the necessity for a foreclosure.” Pfeifer, Id.

“Courts have recognized various exceptions to the tender rule, including an exception based on an allegation that a foreclosure sale is void.” Pfeifer, Id.

Cal.App.4th – Partial Loss to BAC

From: Charles Cox []
Sent: Saturday, March 30, 2013 9:32 AM
To: Charles Cox
Subject: Cal.App.4th – Partial Loss to BAC

Judgment dismissing plaintiff’s complaint alleging defendants lacked authority to foreclose on her property is reversed as to the cause of action for wrongful foreclosure, where: 1) judicial notice could not be taken of defendants’ compliance with Civil Code section 2923.5; and 2) plaintiff’s allegations that defendants did not comply with the statute were sufficient to state a cause of action for wrongful foreclosure.

See case attached.

Charles Wayne Cox
Email: mailto:Charles
Websites:; and
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.

Intenganv.BAC Home Loans Serving.docx

Strip 2nd Trust Deeds in a 7 ??

Bankruptcy Ruling Allows Homeowners to Keep their Home

In a recent earth-shattering decision by the United States Court of Appeals for the 11th Circuit, which includes Georgia and Florida, the Circuit Court ruled on May 11, 2012 that it is possible for a Chapter 7 Debtor to strip off a second mortgage on their home pursuant to the Bankruptcy Code. Prior to this decision, a Debtor was only allowed to strip off a second mortgage in a Chapter 13 filing.

To more fully explain the significance of this ruling, I must first give you some background on what it means to strip off a mortgage and the difference between a Chapter 7 and a Chapter 13 filing. Prior to this decision, a Debtor was only allowed to strip off a second mortgage in a Chapter 13 case. In order to strip off a second mortgage, the Debtor is required to show that the value of the house on her primary home is less than the value of the first mortgage. In the case where the first mortgage exceeds the value of the property, the second mortgage is thereby rendered totally unsecured. Traditionally, in a Chapter 13, if the Debtors desired to keep their home, they would be able to make payments of the first mortgage and stop making payments on the second as the second was totally unsecured and would be treated like other unsecured creditors such as a credit card. Upon completion of a Debtor’s Chapter 13 payments over a period from anywhere from 36 to 60 months, the Discharge would render the second mortgage removed as a lien of record, the Debtor would be relieved from that obligation, and the bank would be left to filing a Proof of Claim and receiving its pro rata share of distribution to unsecured creditors.

The reason Debtors were not allowed to strip down a second mortgage in a Chapter 7 case, was based upon the United States Supreme Court’s decision in Dewsnup v. Timm, 112 S.Ct. 773 (1992), in which the Supreme Court ruled that a Chapter 7 Debtor could not “strip down” a partially secured lien under the Bankruptcy Code. However, in a decision prior to the Supreme Court’s decision, the 11th Circuit ruled in Felendore v. United States Small Business Administration, 862 F 2d. 1537 (11th Cir. 1989), that the claim was wholly unsecured, it was avoidable under the Bankruptcy Code. In a very narrow and precise interpretation of the Supreme Court’s decision in Dewsnup, the 11th Circuit Court in its recent decision of In re: Lorraine McNeal, concluded that since the Supreme Court’s decision in Dewsnup did not specifically address the issue where a second mortgage was wholly unsecured, its ruling was not controlling on it and that its decision in Felendore was still the binding law in the 11th Circuit.

The 11th Circuit Court stated “that the reasoning of an intervening high court decision is at odds with that of our prior decision is no basis for a panel to depart from our prior decision. As we have stated, obedience to a Supreme Court decision is one thing, extrapolating from its implications a holding on an issue that was not before that Court in order to have upend settled circuit law is another thing.”

This is a great decision for potential Chapter 7 Debtors in the future, since it will allow them the opportunity to strip off a second mortgage without having to go through the repayment process of anywhere from 36 to 60 months in a Chapter 13. Under a Chapter 7, a Debtor may receive a Discharge in as quickly as four to six months from the date of filing. This will certainly open up additional opportunities for individual to keep their homes and force second mortgage holders to be more creative in attempting to be paid prior to a bankruptcy filing. This may allow more underwater homeowners to save their homes.

Order Re Cross Motion for Summary Judgment – USDC WA

From: Charles Cox []
Sent: Tuesday, March 12, 2013 7:53 AM
To: Charles Cox
Subject: Order Re Cross Motion for Summary Judgment – USDC WA

Posted on March 12, 2013 by Neil Garfield

McDonald v OneWest

This case should be read more than once

When I started writing about legal defenses to foreclosures that appeared patently fraudulent to me, I thought it might only take a few months for things to catch on. About the timing I have been consistently wrong. About the substance I have been consistently right.

Here again, the party seeking foreclosure not only failed in its current effort to do so, but was ordered to pay $25,000 within 7 days for forcing the homeowner’s attorney to fight tooth and nail for items that were or should have been at their fingertips, they had no reason to withhold, and should have been anxious to supply if the foreclosure was real.

The only potential error I see in the homeowner’s case is that there appears to be an admission that Indy Mac was indeed the party who was the source of the loan — a fact which is nearly universally presumed and virtually always wrong in today’s foreclosures. Not knowing the actual facts of the case I can only speculate that this was an oversight, but it is possible that it wasn’t an oversight and that Indy Mac did in fact make the loan, booked it as a loan receivable, and then sold it into the secondary market for securitization.

There are several very important issues discussed rationally and without bias in this very well-written decision:

  1. Dates DO Matter: If the authorization to sign something is received after the signature is executed it isn’t any good. Lying about it and then fabricating documents to cover up the first lie are grounds for sanctions.
  2. Allegations of holder status are no substitute for facts and evidence. The supposed right to request it is not the same as holding, possessing or owning the note. Execution and recording of substitution of trustee, notice of default, notice of sale are all void if the party stated as the holder is not the holder.
  3. Ownership counts, which means that in order to submit a credit bid at a foreclosure action, the books and records of all the relevant parties must be open to inspection and review to determine what balance, if any, exists, on the records of the owner of the debt — i.e., the party who would actually lose money if the loan was not paid, and the amount of the principal and accrued interest due, if any, after deductions for all receipts.
  4. Agency either exists or it doesn’t. And the paramount element of agency is control by the principal of the agent. There is, however, contractual obligations that come into play here. So if the investment bank received payments to mitigate damages on loans it either did so as agent for the investor or because they were contractually bound to do so as a vendor thus reducing the balance due on the bond. Either way, the balance due is reduced as to that creditor. It might be shifted to the party who paid who in turn might have a right of contribution unless they waived that right (which the insurance companies and CDS counterparts did in fact waive), but either way the new debt is no secured unless there was a purchase of the loan.
  5. Rules of Civil Procedure do matter and are “not optional.” If discovery requests, qualified written requests, debt validation letters are sent, answers are expected and due. The fact that the QWR is long does not mean it is invalid.
  6. Damages are possible, but you need to plead and prove them and that pretty much goes to whether these parties ever had any right to collect any money or enforce any note or any debt or enforce any mortgage against the homeowner. If the answer is yes, that if they get their act together, they can foreclose, there will likely be no damages. If the answer is no, which more likely than not is the case in current foreclosures, then damages properly pleaded and proven are easily sustained.
  7. Discovery is not a toy. The answer or the production is due.
  8. Hearsay is inadmissible and the business records exception, as stated by dozens of courts before this one, where the witness or declarant testified for “defendants chose to offer up what can only be described as a “Rule 30(b)(6) declarant” who regurgitated information provided by other sources” then we are taking hearsay and turning it into evidence without any personal knowledge or testing of the truth of the matter asserted.
  9. Judges are not stupid. They know a lie when they hear it. But what happens after that depends upon the trial experience and knowledge of the lawyer. Don’t expect the Judge to go into orbit and give you everything just because he found that the other side lied. You still have a case to prove.

McDonald v Onewest Bank.pdf
McDonald ROA.pdf
McDonald v Onewest Bank MSJ.pdf
McDonald v Onewest Bank Cross-MSJ.pdf

The Latest from The UCL Practitioner by Kimberly A. Kralowec

From: Charles Cox []
Sent: Friday, March 22, 2013 6:13 AM
To: Charles Cox
Subject: The Latest from The UCL Practitioner by Kimberly A. Kralowec

New UCL "unfair" prong opinion: West v. JPMorgan Chase Bank, N.A.

Posted: 22 Mar 2013 05:00 AM PDT

In West v. JPMorgan Chase Bank, N.A., ___ Cal.App.4th ___ (Mar. 18, 2013), the Court of Appeal (Fourth Appellate District, Division Three) summarized the three-way split in authority on "unfair" conduct in UCL consumer actions:

Several definitions of “unfair” under the UCL have been formulated. They are:

1. “An act or practice is unfair if the consumer injury is substantial, is not outweighed by any countervailing benefits to consumers or to competition, and is not an injury the consumers themselves could reasonably have avoided.” (Daugherty v. American Honda Motor Co., Inc. (2006) 144 Cal.App.4th 824, 839.)

2. “‘[A]n “unfair” business practice occurs when that practice “offends an established public policy or when the practice is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.” [Citation.]’ [Citation.]” (Smith v. State Farm Mutual Automobile Ins. Co. (2001) 93 Cal.App.4th 700, 719.)

3. An unfair business practice means “‘the public policy which is a predicate to the action must be “tethered” to specific constitutional, statutory or regulatory provisions.’” (Scripps Clinic v. Superior Court (2003) 108 Cal.App.4th 917, 940.)

Slip op. at 28. The Court held that the plaintiff’s complaint adequately alleged that the defendant "engaged in unfair business practices under any of the three definitions," and that the trial court had improperly sustained the defendant’s demurrer to the UCL cause of action. Id. at 29.

West v JPMorgan Chase Bank, N.A..doc

Re Fraud Exception to Parol Evidence Rule

From: Charles Cox []
Sent: Monday, February 25, 2013 5:21 AM
To: Charles Cox
Subject: Re Fraud Exception to Parol Evidence Rule

Lenders beware

Reed Smith LLP
Peter S. Clark, II and Marsha A. Houston
February 18 2013

A new troubling case from California allows borrowers to present evidence of prior oral statements of a lender which contradict the terms of the written agreement between the parties with a standard integration clause. Marsha Houston of our Los Angeles office writes more about the case below.

On January 14 2013, the California Supreme Court overturned a rule that lenders and parties to contracts have long relied upon to prohibit the admission of parol evidence of terms outside the four corners of the agreement. In Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Association, No. S190518, 2013 Cal. LEXIS 253 (Cal. Jan. 14, 2013), Riverisland Cold Storage (and related borrowers and guarantors) defaulted on a loan provided by Fresno-Madera PCA in 2007. On March 26 2007, the parties entered into a written forbearance agreement with a standard integration clause that provided that the lender would forbear from collection efforts until July 1 2007 in exchange for the borrowers’ pledge of eight parcels of additional real estate to secure the loan. Thereafter, the borrowers defaulted under the forbearance agreement and the lender began foreclosure proceedings. Although the borrowers repaid the loan in full and the foreclosure proceedings were dismissed, the borrowers and guarantors filed suit against the lender, seeking damages for fraud and negligent misrepresentation, and including causes of action for rescission and reformation of the forbearance agreement.

Plaintiffs alleged that they met with the lender’s senior vice-president, who represented to them that the lender would forbear from collection for two years and would require the pledge of only two parcels of real estate in connection with the forbearance agreement. Plaintiffs acknowledged that they signed the agreement (and presumably eight separate deeds of trust), and claimed that they did not read it, relying instead upon the representations of the lender’s representative.

The lender successfully moved for summary judgment, alleging that the plaintiffs’ claims were barred by the parol evidence rule from presenting evidence of prior oral agreements which contradicted the terms of the written agreement. Plaintiffs asserted that this was consistent with the 70-year-old decision of the California Supreme Court in Pendergrass, which held that a “fraud exception” to the parol evidence rule could not be asserted to prove a fraudulent oral promise that directly contradicted the written terms of the agreement. Plaintiffs won on appeal when the California Court of Appeals held that the fraud at issue was a misrepresentation of fact, not a fraudulent promise (a distinction recognized in Pendergrass and its progeny).

The California Supreme Court affirmed the Appellate Court and overturned its own decision in Pendergrass, finding that the decision was confusing, difficult to apply and did not account for the principle that fraud undermines the very validity of the parties’ agreement and that when fraud is proven, it cannot be held that the parties had a meeting of the minds.

For decades, lenders have relied upon Pendergrass and integration clauses in agreements to protect them against claims by borrowers of fraudulent misrepresentations by loan officers. Apparently, lenders and contracting parties will no longer be able to rely upon this defense in California. While one cannot prevent a party from asserting fraudulent misrepresentation, and it is not clear exactly what precautions might convince the courts to exclude parol evidence, we recommend: insisting that borrowers and guarantors have counsel review the documents; providing a separate document acknowledging that borrowers and guarantors were represented by counsel and that each of them and counsel have read and understood the terms of the loan documents which are named and providing at least the salient terms of any restructure in the separate document; insisting upon a pre-negotiation agreement; providing sufficient time for the borrowers and guarantors to review the documents; and, stating such in the documents.

Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Assn..docx

The Honorable(?) Judge Carolyn Ellsworth has some EXPLAINING to do

From: Charles Cox []
Sent: Wednesday, February 27, 2013 4:51 AM
To: Charles Cox
Subject: The Honorable(?) Judge Carolyn Ellsworth has some EXPLAINING to do

The judicial corruption never ceases to amaze.

Judge tosses mortgage ‘robosigning’ case in Vegas

By KEN RITTER, Associated Press
Updated 3:28 pm, Tuesday, February 26, 2013

MERS wins again

From: Charles Cox []
Sent: Wednesday, February 27, 2013 4:51 AM
To: Charles Cox
Subject: MERS wins again

Sixth Circuit upholds dismissal of putative class action

Squire Sanders
Pierre H. Bergeron
February 20 2013

In Christian County Clerk v. Mortgage Electronic Registration Systems, Inc., the Sixth Circuit upheld dismissal of an action brought by various Kentucky county clerks against the MERS system and a variety of banks that utilized it. The clerks essentially alleged that the defendant banks established MERS to enable its members to avoid recording mortgage assignments and paying the associated recording fees to the country clerks. The district court dismissed the case on 12(b)(6) grounds, and the country clerks appealed.

The first issue addressed by the Court concerned the standing of the county clerks. The defendants insisted that the clerks lacked constitutional standing because the clerks purportedly only have an official, but not a personal, stake in the litigation. The Sixth Circuit, however, found that because the clerks alleged that the defendant’s actions deprived them of fees and interfered with their duties as custodians of property records, they had alleged sufficient injury to pass constitutional muster.

Turning to the merits of the claim, the Court assessed whether the Kentucky statutes upon which the clerks sued afforded them a private right of action. The statutes relied upon by the clerks did not provide any express cause of action, and therefore the clerks invoked a Kentucky negligence per se statute, which can create a private right of action for a violation of certain state statutes. The Sixth Circuit, however, rejected this argument, concluding that the clerks were not within the class of persons the Kentucky legislature intended to protect under the recording statutes. While the recording statutes served multiple purposes, the Sixth Circuit found “no indication that the legislature intended to protect the officers who administer those laws and collect fees.” This case is a blow to county officers who have sought to recoup fees that they claim are lost through the use of the MERS system, and it certainly begs the question of whether states will pursue other statutory efforts to prevent the loss of those revenues.

Kentucky MERS.pdf

OCC News Release: Amendments to Consent Orders Memorialize $9.3 Billion Foreclosure Agreement

From: Charles Cox []
Sent: Thursday, February 28, 2013 8:09 AM
To: Charles Cox
Subject: OCC News Release: Amendments to Consent Orders Memorialize $9.3 Billion Foreclosure Agreement

Amendment to Consent Orders:

Comptroller of the Currency, Administrator of National Banks Office of the Comptroller of the Currency, Ensuring a safe and sound national banking system for all America
NR 2013-35
February 28, 2013
Board of Governors of the Federal Reserve System
Office of the Comptroller of the Currency

Amendments to Consent Orders Memorialize $9.3 Billion Foreclosure Agreement

WASHINGTON — The Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board today released amendments to their enforcement actions against 13 mortgage servicers for deficient practices in mortgage loan servicing and foreclosure processing. The amendments require the servicers to provide $9.3 billion in payments and other assistance to borrowers.

The amendments memorialize agreements in principle announced in January with Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo. The amount includes $3.6 billion in cash payments and $5.7 billion in other assistance to borrowers such as loan modifications and forgiveness of deficiency judgments.

Borrowers covered by the amendments include 4.2 million people whose homes were in any stage of the foreclosure process in 2009 or 2010 and whose mortgages were serviced by one of the companies listed above. These borrowers are expected to be contacted by the Paying Agent—Rust Consulting, Inc.—by the end of March 2013 with payment details. The Paying Agent will send payments and correspondence.

Borrowers covered by the amendments are expected to receive compensation ranging from hundreds of dollars up to $125,000. Borrowers are not required to take any additional steps to receive the payments. In addition, borrowers will not be required to execute a waiver of any legal claims they may have against their servicer as a condition for receiving payment.

Borrowers can call the Paying Agent at 1-888-952-9105 to update their contact information or to verify that they are covered by the amendments.

In providing the $5.7 billion in assistance, the 13 servicers are expected to undertake well-structured loss mitigation efforts focused on foreclosure prevention, with preference given to activities designed to keep borrowers in their homes through affordable, sustainable, and meaningful home preservation actions.

Borrowers seeking assistance should work directly with their servicer or a counselor approved by the U.S. Department of Housing and Urban Development (HUD). Borrowers can reach HUD-approved counselors by calling 888-995-HOPE (4673).

OCC and Federal Reserve examiners continue to monitor the servicers’ implementation of corrective actions required by the original enforcement actions to address unsafe and unsound mortgage servicing and foreclosure practices.

For the 13 servicers, these amendments to the enforcement actions replace the requirements related to the Independent Foreclosure Review. For GMAC Mortgage, Everbank, and OneWest, which did not enter agreements in principle with federal regulators, the Independent Foreclosure Review process continues. Regulators expect the reviews for these servicers to be completed over the course of the coming year. These companies service 457,000 mortgages that were in some stage of foreclosure in 2009 or 2010.

Media Contacts

Federal Reserve Barbara Hagenbaugh 202-452-2955
OCC Bryan Hubbard 202-649-6870

Related Links

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OCC shield The Office of the Comptroller of the Currency (OCC) charters and oversees a nationwide system of national banks and federal savings associations and assures that these banking institutions are safe and sound, competitive, and capable of serving the banking needs of their customers in the best possible manner. OCC press releases and other information are available at To receive OCC press releases and issuances by e-mail,


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