Category: stop foreclosure

Getting the 50,000 or three times the actual damages after Foreclosure

Getting the 50,000 or three times the actual damages

sanctions-604x270 (b) After a trustee’s deed upon sale has been recorded, a mortgage
servicer, mortgagee, trustee, beneficiary, or authorized agent shall
be liable to a borrower for actual economic damages pursuant to
Section 3281, resulting from a material violation of Section 2923.55,
2923.6, 2923.7, 2924.9, 2924.10, 2924.11, or 2924.17 by that
mortgage servicer, mortgagee, trustee, beneficiary, or authorized
agent where the violation was not corrected and remedied prior to the
recordation of the trustee’s deed upon sale. If the court finds that
the material violation was intentional or reckless, or resulted from
willful misconduct by a mortgage servicer, mortgagee, trustee,
beneficiary, or authorized agent, the court may award the borrower
the greater of treble actual damages or statutory damages of fifty
thousand dollars ($50,000).

2923.55. (a) A mortgage servicer, mortgagee, trustee, beneficiary,
or authorized agent may not record a notice of default pursuant to
Section 2924 until all of the following:
(1) The mortgage servicer has satisfied the requirements of
paragraph (1) of subdivision (b).
(2) Either 30 days after initial contact is made as required by
paragraph (2) of subdivision (b) or 30 days after satisfying the due
diligence requirements as described in subdivision (f).
(3) The mortgage servicer complies with subdivision (c) of Section
2923.6, if the borrower has provided a complete application as
defined in subdivision (h) of Section 2923.6.
(b) (1) As specified in subdivision (a), a mortgage servicer shall
send the following information in writing to the borrower:
(A) A statement that if the borrower is a servicemember or a
dependent of a servicemember, he or she may be entitled to certain
protections under the federal Servicemembers Civil Relief Act (50
U.S.C. Appen. Sec. 501 et seq.) regarding the servicemember’s
interest rate and the risk of foreclosure, and counseling for covered
servicemembers that is available at agencies such as Military
OneSource and Armed Forces Legal Assistance.
(B) A statement that the borrower may request the following:
(i) A copy of the borrower’s promissory note or other evidence of
indebtedness.
(ii) A copy of the borrower’s deed of trust or mortgage.
(iii) A copy of any assignment, if applicable, of the borrower’s
mortgage or deed of trust required to demonstrate the right of the
mortgage servicer to foreclose.
(iv) A copy of the borrower’s payment history since the borrower
was last less than 60 days past due.
(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.
(c) 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.
(d) A mortgage servicer’s loss mitigation personnel may
participate by telephone during any contact required by this section.
(e) 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
(b). Any foreclosure prevention alternative offered at the meeting by
the mortgage servicer is subject to approval by the borrower.
(f) 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 (b), provided that the failure to
contact the borrower 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.
(C) A mortgage servicer satisfies the telephone contact
requirements of this paragraph if it determines, after attempting
contact pursuant to this paragraph, that the borrower’s primary
telephone number and secondary telephone number or numbers on file,
if any, have been disconnected.
(3) If the borrower does not respond within two weeks after the
telephone call requirements of paragraph (2) have been satisfied, the
mortgage servicer shall then send a certified letter, with return
receipt requested, that includes the toll-free telephone number made
available by HUD to find a HUD-certified housing counseling agency.
(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.
(C) A toll-free telephone number for borrowers who wish to discuss
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.
(g) This section shall not apply to entities described in
subdivision (b) of Section 2924.18.
(h) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
(i) 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.

2923.6. (a) The Legislature finds and declares that any duty that
mortgage servicers may have to maximize net present value under their
pooling and servicing agreements is owed to all parties in a loan
pool, or to all investors under a pooling and servicing agreement,
not to any particular party in the loan pool or investor under a
pooling and servicing agreement, and that a mortgage servicer acts in
the best interests of all parties to the loan pool or investors in
the pooling and servicing agreement if it agrees to or implements a
loan modification or workout plan for which both of the following
apply:
(1) The loan is in payment default, or payment default is
reasonably foreseeable.
(2) Anticipated recovery under the loan modification or workout
plan exceeds the anticipated recovery through foreclosure on a net
present value basis.
(b) It is the intent of the Legislature that the mortgage servicer
offer the borrower a loan modification or workout plan if such a
modification or plan is consistent with its contractual or other
authority.
(c) If a borrower submits a complete application for a first lien
loan modification offered by, or through, the borrower’s mortgage
servicer, a mortgage servicer, mortgagee, trustee, beneficiary, or
authorized agent shall not record a notice of default or notice of
sale, or conduct a trustee’s sale, while the complete first lien loan
modification application is pending. A mortgage servicer, mortgagee,
trustee, beneficiary, or authorized agent shall not record a notice
of default or notice of sale or conduct a trustee’s sale until any of
the following occurs:
(1) The mortgage servicer makes a written determination that the
borrower is not eligible for a first lien loan modification, and any
appeal period pursuant to subdivision (d) has expired.
(2) The borrower does not accept an offered first lien loan
modification within 14 days of the offer.
(3) The borrower accepts a written first lien loan modification,
but defaults on, or otherwise breaches the borrower’s obligations
under, the first lien loan modification.
(d) If the borrower’s application for a first lien loan
modification is denied, the borrower shall have at least 30 days from
the date of the written denial to appeal the denial and to provide
evidence that the mortgage servicer’s determination was in error.
(e) If the borrower’s application for a first lien loan
modification is denied, the mortgage servicer, mortgagee, trustee,
beneficiary, or authorized agent shall not record a notice of default
or, if a notice of default has already been recorded, record a
notice of sale or conduct a trustee’s sale until the later of:
(1) Thirty-one days after the borrower is notified in writing of
the denial.
(2) If the borrower appeals the denial pursuant to subdivision
(d), the later of 15 days after the denial of the appeal or 14 days
after a first lien loan modification is offered after appeal but
declined by the borrower, or, if a first lien loan modification is
offered and accepted after appeal, the date on which the borrower
fails to timely submit the first payment or otherwise breaches the
terms of the offer.
(f) Following the denial of a first lien loan modification
application, the mortgage servicer shall send a written notice to the
borrower identifying the reasons for denial, including the
following:
(1) The amount of time from the date of the denial letter in which
the borrower may request an appeal of the denial of the first lien
loan modification and instructions regarding how to appeal the
denial.
(2) If the denial was based on investor disallowance, the specific
reasons for the investor disallowance.
(3) If the denial is the result of a net present value
calculation, the monthly gross income and property value used to
calculate the net present value and a statement that the borrower may
obtain all of the inputs used in the net present value calculation
upon written request to the mortgage servicer.
(4) If applicable, a finding that the borrower was previously
offered a first lien loan modification and failed to successfully
make payments under the terms of the modified loan.
(5) If applicable, a description of other foreclosure prevention
alternatives for which the borrower may be eligible, and a list of
the steps the borrower must take in order to be considered for those
options. If the mortgage servicer has already approved the borrower
for another foreclosure prevention alternative, information necessary
to complete the foreclosure prevention alternative.
(g) In order to minimize the risk of borrowers submitting multiple
applications for first lien loan modifications for the purpose of
delay, the mortgage servicer shall not be obligated to evaluate
applications from borrowers who have already been evaluated or
afforded a fair opportunity to be evaluated for a first lien loan
modification prior to January 1, 2013, or who have been evaluated or
afforded a fair opportunity to be evaluated consistent with the
requirements of this section, unless there has been a material change
in the borrower’s financial circumstances since the date of the
borrower’s previous application and that change is documented by the
borrower and submitted to the mortgage servicer.
(h) For purposes of this section, an application shall be deemed
“complete” when a borrower has supplied the mortgage servicer with
all documents required by the mortgage servicer within the reasonable
timeframes specified by the mortgage servicer.
(i) Subdivisions (c) to (h), inclusive, shall not apply to
entities described in subdivision (b) of Section 2924.18.
(j) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
(k) 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.

2923.7. (a) Upon request from a borrower who requests a foreclosure
prevention alternative, the mortgage servicer shall promptly
establish a single point of contact and provide to the borrower one
or more direct means of communication with the single point of
contact.
(b) The single point of contact shall be responsible for doing all
of the following:
(1) Communicating the process by which a borrower may apply for an
available foreclosure prevention alternative and the deadline for
any required submissions to be considered for these options.
(2) Coordinating receipt of all documents associated with
available foreclosure prevention alternatives and notifying the
borrower of any missing documents necessary to complete the
application.
(3) Having access to current information and personnel sufficient
to timely, accurately, and adequately inform the borrower of the
current status of the foreclosure prevention alternative.
(4) Ensuring that a borrower is considered for all foreclosure
prevention alternatives offered by, or through, the mortgage
servicer, if any.
(5) Having access to individuals with the ability and authority to
stop foreclosure proceedings when necessary.
(c) The single point of contact shall remain assigned to the
borrower’s account until the mortgage servicer determines that all
loss mitigation options offered by, or through, the mortgage servicer
have been exhausted or the borrower’s account becomes current.
(d) The mortgage servicer shall ensure that a single point of
contact refers and transfers a borrower to an appropriate supervisor
upon request of the borrower, if the single point of contact has a
supervisor.
(e) For purposes of this section, “single point of contact” means
an individual or team of personnel each of whom has the ability and
authority to perform the responsibilities described in subdivisions
(b) to (d), inclusive. The mortgage servicer shall ensure that each
member of the team is knowledgeable about the borrower’s situation
and current status in the alternatives to foreclosure process.
(f) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
(g) (1) This section shall not apply to a depository institution
chartered under state or federal law, a person licensed pursuant to
Division 9 (commencing with Section 22000) or Division 20 (commencing
with Section 50000) of the Financial Code, or a person licensed
pursuant to Part 1 (commencing with Section 10000) of Division 4 of
the Business and Professions Code, that, during its immediately
preceding annual reporting period, as established with its primary
regulator, foreclosed on 175 or fewer residential real properties,
containing no more than four dwelling units, that are located in
California.
(2) Within three months after the close of any calendar year or
annual reporting period as established with its primary regulator
during which an entity or person described in paragraph (1) exceeds
the threshold of 175 specified in paragraph (1), that entity shall
notify its primary regulator, in a manner acceptable to its primary
regulator, and any mortgagor or trustor who is delinquent on a
residential mortgage loan serviced by that entity of the date on
which that entity will be subject to this section, which date shall
be the first day of the first month that is six months after the
close of the calendar year or annual reporting period during which
that entity exceeded the threshold.

2924.9. (a) Unless a borrower has previously exhausted the first
lien loan modification process offered by, or through, his or her
mortgage servicer described in Section 2923.6, within five business
days after recording a notice of default pursuant to Section 2924, a
mortgage servicer that offers one or more foreclosure prevention
alternatives shall send a written communication to the borrower that
includes all of the following information:
(1) That the borrower may be evaluated for a foreclosure
prevention alternative or, if applicable, foreclosure prevention
alternatives.
(2) Whether an application is required to be submitted by the
borrower in order to be considered for a foreclosure prevention
alternative.
(3) The means and process by which a borrower may obtain an
application for a foreclosure prevention alternative.
(b) This section shall not apply to entities described in
subdivision (b) of Section 2924.18.
(c) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
(d) 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.

2924.10. (a) When a borrower submits a complete first lien
modification application or any document in connection with a first
lien modification application, the mortgage servicer shall provide
written acknowledgment of the receipt of the documentation within
five business days of receipt. In its initial acknowledgment of
receipt of the loan modification application, the mortgage servicer
shall include the following information:
(1) A description of the loan modification process, including an
estimate of when a decision on the loan modification will be made
after a complete application has been submitted by the borrower and
the length of time the borrower will have to consider an offer of a
loan modification or other foreclosure prevention alternative.
(2) Any deadlines, including deadlines to submit missing
documentation, that would affect the processing of a first lien loan
modification application.
(3) Any expiration dates for submitted documents.
(4) Any deficiency in the borrower’s first lien loan modification
application.
(b) For purposes of this section, a borrower’s first lien loan
modification application shall be deemed to be “complete” when a
borrower has supplied the mortgage servicer with all documents
required by the mortgage servicer within the reasonable timeframes
specified by the mortgage servicer.
(c) This section shall not apply to entities described in
subdivision (b) of Section 2924.18.
(d) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
(e) 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.

2924.11. (a) If a foreclosure prevention alternative is approved in
writing prior to the recordation of a notice of default, a mortgage
servicer, mortgagee, trustee, beneficiary, or authorized agent shall
not record a notice of default under either of the following
circumstances:
(1) The borrower is in compliance with the terms of a written
trial or permanent loan modification, forbearance, or repayment plan.
(2) A foreclosure prevention alternative has been approved in
writing by all parties, including, for example, the first lien
investor, junior lienholder, and mortgage insurer, as applicable, and
proof of funds or financing has been provided to the servicer.
(b) If a foreclosure prevention alternative is approved in writing
after the recordation of a notice of default, a mortgage servicer,
mortgagee, trustee, beneficiary, or authorized agent shall not record
a notice of sale or conduct a trustee’s sale under either of the
following circumstances:
(1) The borrower is in compliance with the terms of a written
trial or permanent loan modification, forbearance, or repayment plan.
(2) A foreclosure prevention alternative has been approved in
writing by all parties, including, for example, the first lien
investor, junior lienholder, and mortgage insurer, as applicable, and
proof of funds or financing has been provided to the servicer.
(c) When a borrower accepts an offered first lien loan
modification or other foreclosure prevention alternative, the
mortgage servicer shall provide the borrower with a copy of the fully
executed loan modification agreement or agreement evidencing the
foreclosure prevention alternative following receipt of the executed
copy from the borrower.
(d) A mortgagee, beneficiary, or authorized agent shall record a
rescission of a notice of default or cancel a pending trustee’s sale,
if applicable, upon the borrower executing a permanent foreclosure
prevention alternative. In the case of a short sale, the rescission
or cancellation of the pending trustee’s sale shall occur when the
short sale has been approved by all parties and proof of funds or
financing has been provided to the mortgagee, beneficiary, or
authorized agent.
(e) The mortgage servicer shall not charge any application,
processing, or other fee for a first lien loan modification or other
foreclosure prevention alternative.
(f) The mortgage servicer shall not collect any late fees for
periods during which a complete first lien loan modification
application is under consideration or a denial is being appealed, the
borrower is making timely modification payments, or a foreclosure
prevention alternative is being evaluated or exercised.
(g) If a borrower has been approved in writing for a first lien
loan modification or other foreclosure prevention alternative, and
the servicing of that borrower’s loan is transferred or sold to
another mortgage servicer, the subsequent mortgage servicer shall
continue to honor any previously approved first lien loan
modification or other foreclosure prevention alternative, in
accordance with the provisions of the act that added this section.
(h) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
(i) This section shall not apply to entities described in
subdivision (b) of Section 2924.18.
(j) 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.

2924.17. (a) A declaration recorded pursuant to Section 2923.5 or,
until January 1, 2018, pursuant to Section 2923.55, a notice of
default, notice of sale, assignment of a deed of trust, or
substitution of trustee recorded by or on behalf of a mortgage
servicer in connection with a foreclosure subject to the requirements
of Section 2924, or a declaration or affidavit filed in any court
relative to a foreclosure proceeding shall be accurate and complete
and supported by competent and reliable evidence.
(b) Before recording or filing any of the documents described in
subdivision (a), a mortgage servicer shall ensure that it has
reviewed competent and reliable evidence to substantiate the borrower’
s default and the right to foreclose, including the borrower’s loan
status and loan information.
(c) Until January 1, 2018, any mortgage servicer that engages in
multiple and repeated uncorrected violations of subdivision (b) in
recording documents or filing documents in any court relative to a
foreclosure proceeding shall be liable for a civil penalty of up to
seven thousand five hundred dollars ($7,500) per mortgage or deed of
trust in an action brought by a government entity identified in
Section 17204 of the Business and Professions Code, or in an
administrative proceeding brought by the Department of Business
Oversight or the Bureau of Real Estate against a respective licensee,
in addition to any other remedies available to these entities. This
subdivision shall be inoperative on January 1, 2018.

Watchdog Report: Foreclosure Review Scrapped On Eve Of Critical, Congressman Says

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Posted: 12/31/2012 3:53 pm EST  |  Updated: 12/31/2012 4:08 pm EST

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The surprising decision by regulators to scrap a massive and expensive foreclosure review program in favor of a $10 billion settlement with 14 banks — reported by The New York Times Sunday night — came after a year of mounting concerns about the independence and effectiveness of the controversial program.

The program, known as the Independent Foreclosure Review, was supposed to give homeowners who believe that their bank made a mistake in handling their foreclosure an opportunity for a neutral third party to review the claim. It’s not clear what factors led banking regulators to abandon the program in favor of a settlement, but the final straw may have been a pending report by the Government Accountability Office, a nonpartisan investigative arm of Congress, which was investigating the review program.

Rep. Brad Miller, a North Carolina Democrat, told The Huffington Post that the report, which has not been released, was “critical” and that the Office of the Comptroller of the Currency, which administers the review, was aware of its findings. Miller said that that one problem the GAO was likely to highlight was an “unacceptably high” error rate of 11 percent in a sampling of bank loan files.

The sample files were chosen at random by the banks from their broader pool of foreclosed homeowners, who had not necessarily applied for relief. The data suggests that of the 4 million families who lost their homes to foreclosure since the housing crash, more than 400,000 had some bank-caused problem in their loan file. It also suggests that many thousands of those who could have applied for relief didn’t — because they weren’t aware of the review, or weren’t aware that their bank had made a mistake. Some of these mistakes pushed homeowners into foreclosure who otherwise could have afforded to keep their homes.

Miller said the news that a settlement to replace the review was in the works caught him by surprise, and stressed that he had no way of knowing whether the impending GAO report had triggered the decision.

It’s not clear what will happen to the 250,000 homeowners who have already applied to the Independent Foreclosure Review for relief. The Times, citing people familiar with the negotiations, said that a deal between the banks and banking regulators, led by the Office of the Comptroller of the Currency, could be reached by the end of the week. It wasn’t clear how that money would be distributed or how many current and former homeowners who lost their homes to foreclosure — or who were hit with an unnecessary fee — might qualify.

Bryan Hubbard, a spokesman for the OCC, which administers the program, declined to comment on the Times’ story. Hubbard told HuffPost, “The Office of the Comptroller of the Currency is committed to ensuring the Independent Foreclosure Review proceeds efficiently and to ensuring harmed borrowers are compensated as quickly as possible.”

Since the housing market crashed in 2007, thousands of foreclosed homeowners have complained that their mortgage company made a mistake in the management of their home loan, such as foreclosing on someone making payments on a loan modification plan. The Independent Foreclosure Review emerged from a legal agreement in April 2011 between 14 mortgage companies and bank regulators over these abusive “servicing” practices. It was supposed to give homeowners an opportunity to have an unbiased third party review their foreclosure and determine whether they might qualify for a cash payout of up to $125,000.

The initial response was tepid, at best. Homeowners and advocates complained that the application forms were confusing and that information about what type of compensation they might get was missing. Some told HuffPost that they were so disillusioned by the federal government’s anemic response to widely reported bank errors that they weren’t going to bother to apply.

In one instance, Daniel Casper, an Illinois wedding videographer, applied to the program in January after years of combat with Bank of America over his home loan. As The Huffington Post reported in October, he was initially rejected, because, according to the bank, his mortgage was not in the foreclosure process during the eligible review period. Promontory Financial Group, which Bank of America hired to review his loan, apparently did not double check Bank of America’s analysis against the extensive documentation that Chase submitted. That documentation clearly showed that his loan was eligible for review.

In recent months ProPublica, an investigative nonprofit, has issued a series of damning articles about the Independent Foreclosure Review. The most recent found that supposedly independent third-party reviewers looking over Bank of America loan files were given the “correct” answers in advance by the bank. These reviewers could override the answers, but they weren’t starting from a blank slate.

Banks, if they did not find a “compensable error,” did not have to pay anything, giving them a strong incentive to find no flaws with their own work.

“It was flawed from the start,” Miller said of the review program. “There was an inherent conflict of interest by just about everyone involved.”

Also on HuffPost:

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California’s antideficiency rules latest holding

 

Bank of America v Mitchell (2012)

The Editor’s Take: Watching our courts attempt to steer California’s antideficiency rules through the treacherous currents of multiple security contexts is always somewhat painful. Code of Civil Procedure §580d, enacted in 1939, prohibits recovery of a deficiency judgment after a nonjudicial sale, which seems straightforward enough at the start. But 24 years later, the California Supreme Court held that this prohibition did not apply to a creditor suing on its junior note after having been sold out in a senior foreclosure sale (the “sold-out junior exception”). Roseleaf Corp. v Chierighino (1963) 59 C2d 35, 41, 27 CR 873. But then, 30 years after that, a court of appeal held that this sold-out junior exception did not apply to a creditor who held both the senior and junior notes. Simon v Superior Court (1992) 4 CA4th 63, 71, 5 CR2d 428. So from then on, we had a “being your own junior” exception to the “sold-out junior” exception.

A decade after that came two more exceptions to the exception to the exception: The court in Ostayan v Serrano Reconveyance Co. (2000) 77 CA4th 1411, 1422, 92 CR2d 577, , allowed a two-note-holding creditor to foreclose on its junior deed of trust and sell the property subject to its own senior encumbrance (although that is not a §580d issue). More importantly, National Enters., Inc. v Woods (2001) 94 CA4th 1217, 115 CR2d 37, allowed the holder of two notes to judicially foreclose on the first one and to sell the second note to a third party, who then was held able to sue on it as a sold-out junior. This was technically not a §580d issue, since the senior foreclosure was not by power of sale, but the reasoning made it look like we were going to have a “third party transferee” or “unbundling the package” exception to the “being your own junior” exception of Simon. It began to look like Simon would be eaten away with exceptions, especially when the original lender made a timely divestment of one of its notes.

But instead, we now learn from Mitchell that the Simon doctrine will be applied against a third party transferee who took the junior paper from the common lender after that lender had trustee sold the property under its senior deed of trust. Both National Enters. and Mitchell involved a transfer of the junior loan after a sale under the senior security, differing only with regard to whether the senior foreclosure was judicial or nonjudicial, which distinction should perhaps matter more to the selling senior than to the nonselling junior.

So many factors potentially affect the outcomes in these situations that it is really impossible to make any confident predictions. How much does it matter whether the two loans were made at the same or different times? Whether they were for related or entirely different purposes? Whether one of them was transferred (and before or after the other was foreclosed)? Whether the transferred loan was the senior or junior? Whether the one foreclosed was the senior or junior? Whether the foreclosure was judicial or nonjudicial? I can point out these distinctions, but that doesn’t mean I can forecast their effect on the outcome of the next case that comes up. —Roger Bernhardt

 

204 Cal.App.4th 1199 (2012)

139 Cal. Rptr. 3d 562

BANK OF AMERICA, N.A., Plaintiff and Appellant,
v.
MICHAEL MITCHELL, Defendant and Respondent.

No. B233924.

Court of Appeals of California, Second District, Division Four.

April 10, 2012.

1202*1202 The Dreyfuss Firm and Bruce Dannemeyer for Plaintiff and Appellant.

Law Offices of Ulric E. J. Usher, Ulric E. J. Usher and Richard Kavonian for Defendant and Respondent.

OPINION

SUZUKAWA, J.—

Appellant Bank of America’s (Bank) predecessor in interest loaned respondent Michael Mitchell (Mitchell) $315,000 to purchase a home, secured by two notes and first and second deeds of trust. When Mitchell defaulted on the loan, the lender foreclosed and sold the property. The lender then assigned the second deed of trust to the Bank, which initiated the present action to recover the indebtedness evidenced by the note. Mitchell demurred, and the court sustained the demurrer without leave to amend, concluding that the Bank’s action was barred by California’s antideficiency law. The Bank appeals from the judgment of dismissal and from the subsequent award of prevailing party attorney fees to Mitchell. We affirm.

STATEMENT OF THE CASE

The Bank filed the present action on September 16, 2010, and it filed the operative first amended complaint (complaint), asserting causes of action for 1203*1203 breach of contract, open book account, and money lent, on December 2, 2010. The complaint alleges that Mitchell obtained a loan from GreenPoint Mortgage Funding, Inc. (GreenPoint), on or about September 14, 2006. The loan was evidenced by a note secured by a deed of trust recorded against real property located at 45245 Kingtree Avenue, Lancaster, California (the property). The security for the loan was eliminated by a senior foreclosure sale in 2009. Because Mitchell defaulted on payments owing on the loan, the complaint alleged that he breached the terms of the contract, resulting in damage to the Bank in the principal sum of $63,000, plus interest at the note rate of 11.625 percent from March 1, 2010, through the date of judgment.

Mitchell demurred. Concurrently with his demurrer, he sought judicial notice of several documents, including two deeds of trust, a notice of trustee’s sale, and a trustee’s deed upon sale. On the basis of these documents, he contended that on September 14, 2006, GreenPoint made him two loans to purchase the property, with a note and deed of trust for each loan recorded against the property. The first note and deed of trust were for $252,000, and the second note and deed of trust were for $63,000. Both deeds of trust were recorded on September 21, 2006. Mitchell defaulted on the notes sometime in 2008. A notice of default was recorded, and the property was sold at trustee sale for $53,955.01 on November 6, 2009. More than a year later, on November 18, 2010, GreenPoint assigned the second deed of trust to Bank of America, which subsequently filed the present action to recover on the second note and deed of trust. Mitchell contended that the action was barred by California’s antideficiency legislation, which bars a deficiency judgment following nonjudicial foreclosure of real property.

The trial court granted Mitchell’s request for judicial notice and sustained the demurrer without leave to amend on January 27, 2011, concluding that the Bank’s breach of contract and common counts claims seek recovery of the balance owed on the obligation secured by the second deed of trust and, thus, are barred by the antideficiency statutes as a matter of law. On April 7, 2011, the court awarded Mitchell prevailing party attorney fees of $8,400 and costs of $534.72.

Judgment for Mitchell was entered on July 8, 2011. The Bank appealed from the award of attorney fees on June 17, 2011, and from the judgment on August 8, 2011. We ordered the two appeals consolidated on October 13, 2011.

STANDARD OF REVIEW

“A demurrer tests the legal sufficiency of the factual allegations in a complaint. We independently review the sustaining of a demurrer and determine de novo whether the complaint alleges facts sufficient to state a cause of 1204*1204 action or discloses a complete defense. (McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412, 415 [106 Cal.Rptr.2d 271, 21 P.3d 1189]; Cryolife, Inc. v. Superior Court (2003) 110 Cal.App.4th 1145, 1152 [2 Cal.Rptr.3d 396].) We assume the truth of the properly pleaded factual allegations, facts that reasonably can be inferred from those expressly pleaded, and matters of which judicial notice has been taken. (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081 [6 Cal.Rptr.3d 457, 79 P.3d 569].) We construe the pleading in a reasonable manner and read the allegations in context. (Ibid.)” (City of Industry v. City of Fillmore (2011) 198 Cal.App.4th 191, 205 [129 Cal.Rptr.3d 433].)

“If we determine the facts as pleaded do not state a cause of action, we then consider whether the court abused its discretion in denying leave to amend the complaint. (McClain v. Octagon Plaza, LLC [(2008)] 159 Cal.App.4th [784,] 791-792 [71 Cal.Rptr.3d 885].) It is an abuse of discretion for the trial court to sustain a demurrer without leave to amend if the plaintiff demonstrates a reasonable possibility that the defect can be cured by amendment. (Schifando v. City of Los Angeles[,supra,] 31 Cal.4th [at p.] 1081. . . .)” (Estate of Dito (2011) 198 Cal.App.4th 791, 800-801 [130 Cal.Rptr.3d 279].)

Attorney fee awards normally are reviewed for abuse of discretion. In the present case, however, the Bank contends that the trial court lacked the authority as a matter of law to award attorney fees in any amount. Accordingly, our review is de novo. (Connerly v. Sate Personnel Bd. (2006) 37 Cal.4th 1169, 1175 [39 Cal.Rptr.3d 788, 129 P.3d 1].)

DISCUSSION

I. The Trial Court Properly Sustained the Demurrer Without Leave to Amend

A. Code of Civil Procedure Section 580d

(1) “`In California, as in most states, a creditor’s right to enforce a debt secured by a mortgage or deed of trust on real property is restricted by statute. Under California law, “the creditor must rely upon his security before enforcing the debt. (Code Civ. Proc., §§ 580a, 725a, 726.) If the security is insufficient, his right to a judgment against the debtor for the deficiency may be limited or barred . . . .” [Citation.]’ [Citation.]” (In re Marriage of Oropallo (1998) 68 Cal.App.4th 997, 1003 [80 Cal.Rptr.2d 669].)

Code of Civil Procedure section 580d (section 580d) prohibits a creditor from seeking a judgment for a deficiency on all notes “secured by a deed of 1205*1205 trust or mortgage upon real property . . . in any case in which the real property . . . has been sold by the mortgagee or trustee under power of sale contained in the mortgage or deed of trust.”[1] The effect of section 580d is that “`the beneficiary of a deed of trust executed after 1939 cannot hold the debtor for a deficiency unless he uses the remedy of judicial foreclosure. . . .'” (Simon v. Superior Court (1992) 4 Cal.App.4th 63, 71 [5 Cal.Rptr.2d 428] (Simon).)

(2) In Roseleaf Corp. v. Chierighino (1963) 59 Cal.2d 35 [27 Cal.Rptr. 873, 378 P.2d 97] (Roseleaf), the California Supreme Court held that where two deeds of trust are held against a single property and the senior creditor nonjudicially forecloses on the property, section 580d does not prohibit the holder of the junior lienor “whose security has been rendered valueless by a senior sale” from recovering a deficiency judgment. (59 Cal.2d at p. 39.) There, defendant Chierighino purchased a hotel from plaintiff Roseleaf Corporation. The consideration for the hotel included three notes, each secured by a second trust deed on parcels owned by Chierighino. After the sale of the hotel, the third parties who held the first trust deeds on the three parcels nonjudicially foreclosed on them, rendering Roseleaf’s second trust deeds valueless. Roseleaf then brought an action to recover the full amount unpaid on the three notes secured by the second trust deeds. (Id. at p. 38.)

The trial court entered judgment for Roseleaf. Chierighino appealed, contending that Roseleaf’s action was barred by section 580d, but the Supreme Court disagreed and affirmed. It explained that the purpose of section 580d was to “put judicial enforcement [of powers of sale] on a parity with private enforcement.” (Roseleaf, supra, 59 Cal.2d at p. 43.) That purpose, the court said, would not be served by applying section 580d against a nonselling junior lienor: “Even without the section the junior has fewer rights after a senior private sale than after a senior judicial sale. He may redeem from a senior judicial sale (Code Civ. Proc., § 701), or he may obtain a deficiency judgment. [Citations.] After a senior private sale, the junior has no right to redeem. This disparity of rights would be aggravated were he also denied a right to a deficiency judgment by section 580d. There is no purpose in denying the junior his single remedy after a senior private sale while leaving 1206*1206 him with two alternative remedies after a senior judicial sale. The junior’s right to recover should not be controlled by the whim of the senior, and there is no reason to extend the language of section 580d to reach that result.” (59 Cal.2d at p. 44.)

In Simon, supra, 4 Cal.App.4th 63, the court held that the rule articulated in Roseleafdid not apply to protect a junior lienor who also held the senior lien. There, Bank of America (Lender) lent the Simons $1,575,000, for which the Simons gave it two separate promissory notes. Each note was secured by a separate deed of trust naming the Bank as beneficiary and describing the same real property (the property). Subsequently, the Simons defaulted on the senior note and the Lender foreclosed. The Lender purchased the property at the nonjudicial foreclosure sale and then filed an action to recover the unpaid balance of the junior note. (Id. at p. 66.)

(3) After detailing the history of the antideficiency legislation and the governing case law, the court held that section 580d barred the Lender’s deficiency causes of action. It noted that in Roseleaf, the Supreme Court explained that the purpose of section 580d was to create parity between judicial and nonjudicial enforcement. Such parity would not be served “if [the Lender] here is permitted to make successive loans secured by a senior and junior deed of trust on the same property; utilize its power of sale to foreclose the senior lien, thereby eliminating the Simons’ right to redeem; and having so terminated that right of redemption, obtain a deficiency judgment against the Simons on the junior obligation whose security [the Lender], thus, made the choice to eliminate.” (Simon, supra, 4 Cal.App.4th at p. 77.) The court continued: “Unlike a true third party sold-out junior, [the Lender’s] right to recover as a junior lienor which is also the purchasing senior lienor is obviously not controlled by the `whim of the senior.’ We will not sanction the creation of multiple trust deeds on the same property, securing loans represented by successive promissory notes from the same debtor, as a means of circumventing the provisions of section 580d. [Fn. omitted.] The elevation of the form of such a contrived procedure over its easily perceived substance would deal a mortal blow to the antideficiency legislation of this state. Assuming, arguendo, legitimate reasons do exist to divide a loan to a debtor into multiple notes thus secured, section 580d must nonetheless be viewed as controlling where, as here, the senior and junior lenders and lienors are identical and those liens are placed on the same real property. Otherwise, creditors would be free to structure their loans to a single debtor, and the security therefor, so as to obtain on default the secured property on a trustee’s sale under a senior deed of trust; thereby eliminate the debtor’s right of redemption thereto; and thereafter effect an excessive recovery by obtaining a deficiency judgment against that debtor on an obligation secured by a junior lien the creditor chose to eliminate.” (Id. at pp. 77-78.)

1207*1207 B. Simon and Roseleaf Bar a Deficiency Judgment in the Present Case

(4) Simon is dispositive of the present case. Here, Mitchell executed two promissory notes, for $252,000 and $63,000, secured by the first and second deeds of trust in the property. As in Simon, the first and second deeds of trust were held by a single lender, GreenPoint. GreenPoint, as beneficiary under the first deed of trust, chose to exercise its power of sale by holding a nonjudicial foreclosure sale. GreenPoint thus was not a “sold-out junior” lienor and would not have been permitted to obtain a deficiency judgment against Mitchell under the rule articulated in Simon. The result is no different because GreenPoint, after the trustee sale, assigned the second deed of trust to the Bank. “An assignment transfers the interest of the assignor to the assignee. Thereafter, `”[t]he assignee `stands in the shoes’ of the assignor, taking his rights and remedies, subject to any defenses which the obligor has against the assignor prior to notice of the assignment.”‘ [Citation.]” (Manson, Iver & York v. Black (2009) 176 Cal.App.4th 36, 49 [97 Cal.Rptr.3d 522].) Accordingly, because GreenPoint could not have obtained a deficiency judgment against Mitchell, the Bank also is precluded from doing so.

The Bank urges that Simon is distinguishable because in that case, the lender ultimately purchased the property for a credit bid at its own foreclosure sale, whereas in this case, the property was sold to a third party. The Bank thus contends that “[u]nder Simon if (a) both loans are held by the same lender and (b) that lender acquires the property at the foreclosure sale, the risk of manipulation by the lender is too great, so no deficiency is allowed. But if either is missing, the risk of manipulation is reduced, and a deficiency should be allowed.” Like the trial court, we reject the contention that the lender must have acquired the property at the foreclosure sale forSimon to apply. Although Simon noted the lender’s purchase at the foreclosure sale, that purchase was not material to its holding. Instead, the court’s focus was on the lender’s dual position as holder of the first and second deeds of trust, and its consequent ability to protect its own interest. (Simon, supra, 4 Cal.App.4th at p. 72 [“[The Lender] was not a third party sold-out junior lienholder as was the case inRoseleaf. As the holder of both the first and second liens, [the Lender] was fully able to protect its secured position. It was not required to protect its junior lien from its own foreclosure of the senior lien by the investment of additional funds. Its position of dual lienholder eliminated any possibility that [the Lender], after foreclosure and sale of the liened property under its first lien, might end up with no interest in the secured property, the principal rationale of the court’s decision in Roseleaf.“].)

The Bank further contends that the present case is distinguishable from Simonbecause the presence of a third party purchaser at the foreclosure sale 1208*1208prevented the kind of “manipulation” possible in Simon. According to the Bank, “[w]hen the foreclosure sale results in acquisition by a third party, who competed with the foreclosing lender and all other bidders at the public auction, a low-ball bid is impossible. If the foreclosing lender bids below market, it will be outbid; it will not acquire the property. The lender cannot manipulate the price. The presence of third party bids demonstrates the market is at work to achieve a fair price. Third party bids provide the functional equivalent of a right of redemption. By outbidding the lender, the third party prevents the lender from manipulating the process.” We disagree. Whatever the merits of the Bank’s argument as a matter of policy, it has no support in the statute, and the Bank suggests none. Indeed, nothing in the antideficiency legislation suggests that the presence of a third party bidder at a foreclosure sale excepts the sale from the legislation and permits the lender to seek a deficiency judgment.[2]

For all the foregoing reasons, section 580d bars the deficiency judgment the Bank seeks in the present case and, thus, the trial court properly sustained the demurrer. Because the Bank suggests no way in which the legal defects identified could be cured by amendment, the demurrer was properly sustained without leave to amend.

II. The Trial Court Properly Awarded Mitchell Attorney Fees

A. Relevant Facts

Following the trial court’s order sustaining Mitchell’s demurrer without leave to amend, Mitchell filed a motion for attorney fees pursuant to Civil Code section 1717. Two days later, on February 10, 2011, the Bank filed a request for dismissal with prejudice. It then filed opposition to the motion for attorney fees, contending that there could be no prevailing party within the meaning of Civil Code section 1717 because it had voluntarily dismissed its action.[3]

On March 8, 2011, the trial court vacated the dismissal and granted Mitchell’s motion for attorney fees. It explained that because it had sustained a demurrer to the Bank’s complaint without leave to amend, the Bank did not have a right pursuant to Code of Civil Procedure section 581 to voluntarily dismiss the action, and the dismissal had been entered in error. It awarded Mitchell attorney fees of $8,400 and costs of $534.72.

1209*1209 B. Analysis

The Bank contends that the trial court lacked authority to award Mitchell attorney fees. It urges that under Code of Civil Procedure section 581, it had an absolute right to dismiss its case voluntarily, so long as it did so with prejudice. Because it did so, there was no prevailing party pursuant to Civil Code section 1717, subdivision (b)(2), and thus the trial court lacked authority to award Mitchell contractual attorney fees.

(5) The Bank is correct that under Civil Code section 1717, a defendant in a contract action is not deemed a prevailing party where the plaintiff voluntarily dismisses the action. (Id., subd. (b)(2) [“Where an action has been voluntarily dismissed or dismissed pursuant to a settlement of the case, there shall be no prevailing party for purposes of this section.”].) Therefore, if the Bank’s dismissal was valid, the Bank is correct that the trial court erred in awarding attorney fees. The trial court determined, however, that the Bank’s dismissal was not valid, the issue to which we now turn.

(6) Pursuant to Code of Civil Procedure section 581, a plaintiff may voluntarily dismiss an action, “with or without prejudice,” at any time before the “actual commencement of trial.” (§ 581, subds. (b)(1), (c).) Further, a plaintiff may voluntarily dismiss an action with prejudice “at any time before the submission of the cause.” (Estate of Somers (1947) 82 Cal.App.2d 757, 759 [187 P.2d 433].) Upon the proper exercise of the right of voluntary dismissal, a trial court “`would thereafter lack jurisdiction to enter further orders in the dismissed action.’ (Wells v. Marina City Properties, Inc. (1981) 29 Cal.3d 781, 784 [176 Cal.Rptr. 104, 632 P.2d 217].) `Alternatively stated, voluntary dismissal of an entire action deprives the court of both subject matter and personal jurisdiction in that case, except for the limited purpose of awarding costs and . . . attorney fees. [Citations.]’ (Gogri v. Jack in the Box, Inc.(2008) 166 Cal.App.4th 255, 261 [82 Cal.Rptr.3d 629].)” (Lewis C. Nelson & Sons, Inc. v. Lynx Iron Corp. (2009) 174 Cal.App.4th 67, 76 [94 Cal.Rptr.3d 468].)

A plaintiff’s right to voluntarily dismiss an action before commencement of trial is not absolute, however. (Lewis C. Nelson & Sons, Inc. v. Lynx Iron Corp., supra, 174 Cal.App.4th at pp. 76-77; Zapanta v. Universal Care, Inc. (2003) 107 Cal.App.4th 1167, 1171 [132 Cal.Rptr.2d 842].) “Code of Civil Procedure section 581 recognizes exceptions to the right; other limitations have evolved through the courts’ construction of the term `commencement of trial.’ These exceptions generally arise where the action has proceeded to a determinative adjudication, or to a decision that is tantamount to an adjudication.” (Harris v. Billings (1993) 16 Cal.App.4th 1396, 1402 [20 Cal.Rptr.2d 718].)

1210*1210 (7) The Supreme Court found such a “determinative adjudication” in Goldtree v. Spreckels (1902) 135 Cal. 666 [67 P. 1091] (Goldtree). There, the defendant’s demurrer to each of the plaintiff’s causes of action was sustained without leave to amend as to the first two. The plaintiff then filed a written request to dismiss the entire case, and the court clerk entered an order of dismissal. The trial court vacated the dismissal, and the plaintiff appealed. (Id. at pp. 667-668.) The Supreme Court affirmed: “In our opinion the subdivision of the section 581 of the Code of Civil Procedure in question cannot be restricted in its meaning to trials of the merits after answer, for there may be such a trial on a general demurrer to the complaint as will effectually dispose of the case where the plaintiff has properly alleged all the facts which constitute his cause of action. If the demurrer is sustained, he stands on his pleading and submits to judgment on the demurrer, and, if not satisfied, has his remedy by appeal. In such a case, we think, there would be a trial within the meaning of the code, and the judgment would cut off the right of dismissal, unless it was first set aside or leave given to amend. [¶] The clerk had no authority, therefore, to enter the dismissal, and being void the court rightly set it aside.” (Id. at pp. 672-673.)

(8) The Supreme Court reached a similar result in Wells v. Marina City Properties, Inc., supra, 29 Cal.3d 781 (Wells). There, the trial court sustained the defendant’s demurrer with leave to amend. The plaintiff failed to amend within the time provided, but instead sought to voluntarily dismiss the action without prejudice. The Supreme Court held that the voluntary dismissal was improperly entered: “[O]nce a general demurrer is sustained with leave to amend and plaintiff does not so amend within the time authorized by the court or otherwise extended by stipulation or appropriate order, he can no longer voluntarily dismiss his action pursuant to section 581, subdivision 1, even if the trial court has yet to enter a judgment of dismissal on the sustained demurrer.” (Id. at p. 789.)

In the present case, the trial court sustained defendant’s demurrer without leave to amend on January 27, 2011. Although the trial court had not yet entered a judgment of dismissal when the Bank filed a request for voluntary dismissal on February 10, 2011, as in Goldtree and Wells, the trial court had already made a determinative adjudication on the legal merits of the Bank’s claim. Accordingly, as in those cases, the Bank no longer had the right to voluntarily dismiss under Code of Civil Procedure section 581.

The Bank contends that the present case is distinguishable from Goldtree and Wellsbecause here it sought to dismiss with prejudice, while in those cases the attempted dismissal was without prejudice. We do not agree. The 1211*1211 court rejected a similar contention in Vanderkous v. Conley (2010) 188 Cal.App.4th 111 [115 Cal.Rptr.3d 249] (Vanderkous). There, the plaintiff and the defendant formerly had lived together on a multilot parcel owned by the plaintiff. An arbitration award entered after their relationship ended directed the parties to cooperate in a lot line adjustment that would result in the home and a garage on a single lot to be owned by the defendant, with the remainder of the parcel to be owned by the plaintiff. The plaintiff was also to have access and utility easements over the garage area for the benefit of his parcel. The easements were executed by the defendant and recorded, but the garage and surrounding property were never transferred because the plaintiff never recorded either the lot line adjustment or the grant deed to the defendant for the garage and setback area. When the plaintiff subsequently sought to record a subdivision map, the title company that was to record the map refused to do so because the grants of easement by the defendant created a cloud on the plaintiff’s title. The plaintiff thus filed a complaint for declaratory relief and to quiet title. (Id. at pp. 114-115.)

Following a trial, the court filed a statement of decision that ordered the defendant to execute a quitclaim deed in favor of the plaintiff, and ordered the plaintiff to compensate the defendant in an amount equal to the full market value of the garage area. If the parties could not agree on the amount the plaintiff was to pay the defendant, each party was ordered to submit an appraisal for the court’s final determination. The defendant submitted an appraisal that valued the garage area at $410,000, and the plaintiff submitted an appraisal that valued the property at $75,000, but also requested a continuance and an evidentiary hearing on the value of the property. The day before the evidentiary hearing, the plaintiff filed a request for dismissal with prejudice with the clerk. The trial court ruled that the plaintiff’s attempt to dismiss was void ab initio and ordered the plaintiff to pay the defendant $199,246 plus attorney fees and costs. (Vanderkous, supra, 188 Cal.App.4th at p. 116.)

(9) The plaintiff appealed, contending that the trial court lacked jurisdiction to set aside his voluntary dismissal of his action and to award attorney fees. (Vanderkous, supra, 188 Cal.App.4th at p. 117.) The court disagreed and affirmed the judgment. It explained: “Section 581, subdivision (d) provides that a complaint may be dismissed with prejudice when the plaintiff abandons it before the final submission of the case.Here, the court’s statement of decision following the three-day court trial, states `[t]he matter was deemed submitted on March 10, 2008, following receipt of closing briefs from both sides.’ The statement of decision resolved Vanderkous’s quiet title cause of action and his claim for declaratory relief, and ordered him to compensate Conley for the fair market value of property she was required to quitclaim to 1212*1212 him. [¶] … [¶] Because Vanderkous has not convinced us that he had an absolute right to dismiss his complaint, we also reject his argument that the trial court lacked jurisdiction to set aside his attempted dismissal. [Citations.] A contrary rule would enable Vanderkous to avoid compliance with the court’s decision and would undermine the trial court’s authority to provide for the orderly conduct of proceedings before it and compel obedience to its judgments, orders, and process. (See § 128, subd. (a).)” (Vanderkous, supra, at pp. 117-118; see also Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2011) ¶ 11:28, p. 11-16 (rev. # 1, 2011) [“[O]nce the case is finally submitted for decision, there is no further right to dismiss with prejudice. At that point, plaintiffs cannot avoid an adverse ruling by abandoning the case.”].)

The present case is analogous. As in Vanderkous, the Bank sought to dismiss afterthe court made a dispositive ruling against it, not before. To allow the Bank to dismiss at that late stage would permit procedural gamesmanship inconsistent with the trial court’s authority to provide for the orderly conduct of proceedings before it.

We do not agree with the Bank that its right to dismiss is supported by this division’s decision in Marina Glencoe, L.P. v. Neue Sentimental Film AG (2008) 168 Cal.App.4th 874 [85 Cal.Rptr.3d 800] (Marina Glencoe). There, after the plaintiff presented its evidence on the single bifurcated issue of alter ego liability, the defendant moved for judgment. The court heard argument on the motion but did not rule; the following day, before a ruling on the pending motion, the plaintiff voluntarily dismissed the action with prejudice. The defendant moved for prevailing party attorney fees, and the court denied the motion, concluding that the defendant was not entitled to such fees under Civil Code section 1717. The defendant appealed. We affirmed, noting that because the plaintiff voluntarily dismissed with prejudice, “[i]ts intent was to end the litigation, not to manipulate the judicial process to avoid its inevitable end. This was entirely proper.” (168 Cal.App.4th at p. 878.)

The present case is distinguishable from Marina Glencoe. In Marina Glencoe, the plaintiff dismissed its action before the trial court ruled on a dispositive motion, and thus judgment in the defendant’s favor was not inevitable. In the present case, in contrast, the trial court had already sustained Mitchell’s demurrer without leave to amend, and thus judgment against the Bank had already “ripened to the point of inevitability.” (Marina Glencoe, supra, 168 Cal.App.4th at p. 878.) Accordingly, unlike in Marina Glencoe, the Bank no longer had the right to voluntarily dismiss its action, either with or without prejudice.

1213*1213 DISPOSITION

We affirm the judgment of dismissal and award of attorney fees. Mitchell shall recover his appellate costs.

Willhite, Acting P. J., and Manella, J., concurred.

[1] The full text of section 580d is as follows: “No judgment shall be rendered for any deficiency upon a note secured by a deed of trust or mortgage upon real property or an estate for years therein hereafter executed in any case in which the real property or estate for years therein has been sold by the mortgagee or trustee under power of sale contained in the mortgage or deed of trust.

“This section does not apply to any deed of trust, mortgage or other lien given to secure the payment of bonds or other evidences of indebtedness authorized or permitted to be issued by the Commissioner of Corporations, or which is made by a public utility subject to the Public Utilities Act (Part 1 (commencing with Section 201) of Division 1 of the Public Utilities Code).”

[2] Although not relevant to our analysis, we note that the property’s foreclosure sale purchase price of $53,955.01 does not convincingly demonstrate, as the Bank asserts, that the presence of a third party bidder made a “low-ball bid . . . impossible.”

[3] In its opposition, the Bank represented to the court as follows: “The litigation is over. There will be no appeal.”

 

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“They found all of your paperwork more than a year after they initially said that they had lost it?” Pelley asked.

“Yes,” she replied.

Asked if that seemed suspicious to her, Szymoniak said, “Yes, absolutely. What do you imagine? It fell behind the file cabinet? Where was all of this? ‘We had it, we own it, we lost it.’ And then more recently, everyone is coming in saying, ‘Hey we found it. Isn’t that wonderful?’”

But what the bank may not have known is that Szymoniak is a lawyer and fraud investigator with a specialty in forged documents. She has trained FBI agents.

She told Pelley she asked for copies of those documents.

Asked what she found, Szymoniak told Pelley, “When I looked at the assignment of my mortgage, and this is the assignment: it looked that even the date they put in, which was 10/17/08, was several months after they sued me for foreclosure. So, what they were saying to the court was, ‘We sued her in July of 2008 and we acquired this mortgage in October of 2008.’ It made absolutely no sense.”

Produced by Robert Anderson and Daniel Ruetenik

Now for the pleading

Timothy L. McCandless, Esq. SBN 147715

LAW OFFICES OF TIMOTHY L. MCCANDLESS

1881 Business Center Drive, Ste. 9A

San Bernardino, CA 92392

Tel:  909/890-9192

Fax: 909/382-9956

Attorney for Plaintiffs

 

SUPERIOR COURT OF THE STATE OF CALIFORNIA

 

COUNTY OF ____________

___________________________________,And ROES 1 through 5,000,

Plaintiff,

v.

SAND CANYON CORPORATION f/k/a OPTION ONE MORTGAGE CORPORATION; AMERICAN HOME MORTGAGE SERVICES, INC.; WELLS FARGO BANK, N.A., as Trustee for SOUNDVIEW HOME LOAN TRUST 2007-OPT2; DOCX, LLC; and PREMIER TRUST DEED SERVICES and all persons unknown claiming any legal or  equitable right, title, estate, lien, or interest  in the property described in the complaint adverse to Plaintiff’s title, or any cloud on Plaintiff’s  title thereto, Does 1 through 10, Inclusive,

Defendants.

 CASE NO:FIRST AMENDED COMPLAINT

FOR QUIET TITLE, DECLARATORY RELIEF, TEMPORARY RESTRAINING ORDER, PRELIMINARY INJUNTION AND PERMANENT INJUNCTION, CANCELATION OF INSTRUMENT AND FOR DAMAGES ARISING FROM:

SLANDER OF TITLE; TORTUOUS

VIOLATION OF STATUTE [Penal

Code § 470(b) – (d); NOTARY FRAUD;

///

///

///

///

Plaintiffs ___________________________ allege herein as follows:

GENERAL ALLEGATIONS

            1.         Plaintiffs ___________ (hereinafter individually and collectively referred to as “___________”), were and at all times herein mentioned are,  residents of the County of _________, State of California and the lawful owner of a parcel of real property commonly known as: _________________, California _______ and the legal description is:

Parcel No. 1:

A.P.N. No. _________ (hereinafter “Subject Property”).

2.         At all times herein mentioned, SAND CANYON CORPORATION f/k/a OPTION ONE MORTGAGE CORPORATION (hereinafter SAND CANYON”), is and was, a corporation existing by virtue of the laws of the State of California and claims an interest adverse to the right, title and interests of Plaintiff in the Subject Property.

3.         At all times herein mentioned, Defendant AMERICAN HOME MORTGAGE SERVICES, INC. (hereinafter “AMERICAN”), is and was, a corporation existing by virtue of the laws of the State of Delaware, and at all times herein mentioned was conducting ongoing business in the State of California.

4.         At all times herein mentioned, Defendant WELLS FARGO BANK, N.A., as Trustee for SOUNDVIEW HOME LOAN TRUST 2007-OPT2 (hereinafter referred to as “WELLS FARGO”), is and was, a member of the National Banking Association and makes an adverse claim to the Plaintiff MADRIDS’ right, title and interest in the Subject Property.

5.         At all times herein mentioned, Defendant DOCX, L.L.C. (hereinafter “DOCX”), is and was, a limited liability company existing by virtue of the laws of the State of Georgia, and a subsidiary of Lender Processing Services, Inc., a Delaware corporation.

6.         At all times herein mentioned, __________________, was a company existing by virtue of its relationship as a subsidiary of __________________.

7.         Plaintiffs are ignorant of the true names and capacities of Defendants sued herein as DOES I through 10, inclusive, and therefore sues these Defendants by such fictitious names and all persons unknown claiming any legal or equitable right, title, estate, lien, or interest in the property described in the complaint adverse to Plaintiffs’ title, or any cloud on Plaintiffs’ title thereto. Plaintiffs will amend this complaint as required to allege said Doe Defendants’ true names and capacities when such have been fully ascertained. Plaintiffs further allege that Plaintiffs designated as ROES 1 through 5,000, are Plaintiffs who share a commonality with the same Defendants, and as the Plaintiffs listed herein.

8.         Plaintiffs are informed and believe and thereon allege that at all times herein mentioned, Defendants, and each of them, were the agent and employee of each of the remaining Defendants.

9.         Plaintiffs allege that each and every defendants, and each of them, allege herein ratified the conduct of each and every other Defendant.

10.       Plaintiffs allege that at all times said Defendants, and each of them, were acting within the purpose and scope of such agency and employment.

11.       Plaintiffs are informed and believe and thereupon allege that circa July 2004, DOCX was formed with the specific intent of manufacturing fraudulent documents in order create the false impression that various entities obtained valid, recordable interests in real

properties, when in fact they actually maintained no lawful interest in said properties.

12.       Plaintiffs are informed and believe and thereupon allege that as a regular and ongoing part of the business of Defendant DOCX was to have persons sitting around a table signing names as quickly as possible, so that each person executing documents would sign approximately 2,500 documents per day. Although the persons signing the documents claimed to be a vice president of a particular bank of that document, in fact, the party signing the name was not the person named on the document, as such the signature was a forgery, that the name of the person claiming to be a vice president of a particular financial institution was not a “vice president”, did not have any prior training in finance, never worked for the company they allegedly purported to be a vice president of, and were alleged to be a vice president simultaneously with as many as twenty different banks and/or lending institutions.

13.       Plaintiffs are informed and believe and thereupon allege that the actual signatories of the instruments set forth in Paragraph 12 herein, were intended to and were fraudulently notarized by a variety of notaries in the offices of DOCX in Alpharetta, GA.

14.       Plaintiffs are informed and believe and thereupon allege that for all purposes the intent of Defendant DOCX was to intentionally create fraudulent documents, with forged signatures, so that said documents could be recorded in the Offices of County Recorders through the United States of America, knowing that such documents would forgeries, contained false information, and that the recordation of such documents would affect an interest in real property in violation of law.

15.       Plaintiffs allege that on or about, ____________, that they conveyed a first deed of  trust (hereinafter “DEED”) in favor of Option One Mortgage, Inc. with an interest of

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The Top Twelve Reasons Why You Should Hate the Mortgage Settlement

As readers may know by now, 49 of 50 states have agreed to join the so-called mortgage settlement, with Oklahoma the lone refusenik. Although the fine points are still being hammered out, various news outlets (New York Times, Financial Times, Wall Street Journal) have details, with Dave Dayen’s overview at Firedoglake the best thus far.

The Wall Street Journal is also reporting that the SEC is about to launch some securities litigation against major banks. Since the statue of limitations has already run out on securities filings more than five years old, this means they’ll clip the banks for some of the very last (and dreckiest) deals they shoved out the door before the subprime market gave up the ghost.

The various news services are touting this pact at the biggest multi-state settlement since the tobacco deal in 1998. While narrowly accurate, this deal is bush league by comparison even though the underlying abuses in both cases have had devastating consequences.

The tobacco agreement was pegged as being worth nearly $250 billion over the first 25 years. Adjust that for inflation, and the disparity is even bigger. That shows you the difference in outcomes between a case where the prosecutors have solid evidence backing their charges, versus one where everyone know a lot of bad stuff happened, but no one has come close to marshaling the evidence.

The mortgage settlement terms have not been released, but more of the details have been leaked:

1. The total for the top five servicers is now touted as $26 billion (annoyingly, the FT is calling it “nearly $40 billion”), but of that, roughly $17 billion is credits for principal modifications, which as we pointed out earlier, can and almost assuredly will come largely from mortgages owned by investors. $3 billion is for refis, and only $5 billion will be in the form of hard cash payments, including $1500 to $2000 per borrower foreclosed on between September 2008 and December 2011.

Banks will be required to modify second liens that sit behind firsts “at least” pari passu, which in practice will mean at most pari passu. So this guarantees banks will also focus on borrowers where they do not have second lien exposure, and this also makes the settlement less helpful to struggling homeowners, since borrowers with both second and first liens default at much higher rates than those without second mortgages. Per the Journal:

“It’s not new money. It’s all soft dollars to the banks,” said Paul Miller, a bank analyst at FBR Capital Markets.

The Times is also subdued:

Despite the billions earmarked in the accord, the aid will help a relatively small portion of the millions of borrowers who are delinquent and facing foreclosure. The success could depend in part on how effectively the program is carried out because earlier efforts by Washington aimed at troubled borrowers helped far fewer than had been expected.

2. Schneiderman’s MERS suit survives, and he can add more banks as defendants. It isn’t clear what became of the Biden and Coakley MERS suits, but Biden sounded pretty adamant in past media presentations on preserving that.

3. Nevada’s and Arizona’s suits against Countrywide for violating its past consent decree on mortgage servicing has, in a new Orwellianism, been “folded into” the settlement.

4. The five big players in the settlement have already set aside reserves sufficient for this deal.

Here are the top twelve reasons why this deal stinks:

1. We’ve now set a price for forgeries and fabricating documents. It’s $2000 per loan. This is a rounding error compared to the chain of title problem these systematic practices were designed to circumvent. The cost is also trivial in comparison to the average loan, which is roughly $180k, so the settlement represents about 1% of loan balances. It is less than the price of the title insurance that banks failed to get when they transferred the loans to the trust. It is a fraction of the cost of the legal expenses when foreclosures are challenged. It’s a great deal for the banks because no one is at any of the servicers going to jail for forgery and the banks have set the upper bound of the cost of riding roughshod over 300 years of real estate law.

2. That $26 billion is actually $5 billion of bank money and the rest is your money. The mortgage principal writedowns are guaranteed to come almost entirely from securitized loans, which means from investors, which in turn means taxpayers via Fannie and Freddie, pension funds, insurers, and 401 (k)s. Refis of performing loans also reduce income to those very same investors.

3. That $5 billion divided among the big banks wouldn’t even represent a significant quarterly hit. Freddie and Fannie putbacks to the major banks have been running at that level each quarter.

4. That $20 billion actually makes bank second liens sounder, so this deal is a stealth bailout that strengthens bank balance sheets at the expense of the broader public.

5. The enforcement is a joke. The first layer of supervision is the banks reporting on themselves. The framework is similar to that of the OCC consent decrees implemented last year, which Adam Levitin and yours truly, among others, decried as regulatory theater.

6. The past history of servicer consent decrees shows the servicers all fail to comply. Why? Servicer records and systems are terrible in the best of times, and their systems and fee structures aren’t set up to handle much in the way of delinquencies. As Tom Adams has pointed out in earlier posts, servicer behavior is predictable when their portfolios are hit with a high level of delinquencies and defaults: they cheat in all sorts of ways to reduce their losses.

7. The cave-in Nevada and Arizona on the Countrywide settlement suit is a special gift for Bank of America, who is by far the worst offender in the chain of title disaster (since, according to sworn testimony of its own employee in Kemp v. Countrywide, Countrywide failed to comply with trust delivery requirements). This move proves that failing to comply with a consent degree has no consequences but will merely be rolled into a new consent degree which will also fail to be enforced. These cases also alleged HAMP violations as consumer fraud violations and could have gotten costly and emboldened other states to file similar suits not just against Countrywide but other servicers, so it was useful to the other banks as well.

8. If the new Federal task force were intended to be serious, this deal would have not have been settled. You never settle before investigating. It’s a bad idea to settle obvious, widespread wrongdoing on the cheap. You use the stuff that is easy to prove to gather information and secure cooperation on the stuff that is harder to prove. In Missouri and Nevada, the robosigning investigation led to criminal charges against agents of the servicers. But even though these companies were acting at the express direction and approval of the services, no individuals or entities higher up the food chain will face any sort of meaningful charges.

9. There is plenty of evidence of widespread abuses that appear not to be on the attorney generals’ or media’s radar, such as servicer driven foreclosures and looting of investors’ funds via impermissible and inflated charges. While no serious probe was undertaken, even the limited or peripheral investigations show massive failures (60% of documents had errors in AGs/Fed’s pathetically small sample). Similarly, the US Trustee’s office found widespread evidence of significant servicer errors in bankruptcy-related filings, such as inflated and bogus fees, and even substantial, completely made up charges. Yet the services and banks will suffer no real consequences for these abuses.

10. A deal on robosiginging serves to cover up the much deeper chain of title problem. And don’t get too excited about the New York, Massachusetts, and Delaware MERS suits. They put pressure on banks to clean up this monstrous mess only if the AGs go through to trial and get tough penalties. The banks will want to settle their way out of that too. And even if these cases do go to trial and produce significant victories for the AGs, they still do not address the problem of failures to transfer notes correctly.

11. Don’t bet on a deus ex machina in terms of the new Federal foreclosure task force to improve this picture much. If you think Schneiderman, as a co-chairman who already has a full time day job in New York, is going to outfox a bunch of DC insiders who are part of the problem, I have a bridge I’d like to sell to you.

12. We’ll now have to listen to banks and their sycophant defenders declaring victory despite being wrong on the law and the facts. They will proceed to marginalize and write off criticisms of the servicing practices that hurt homeowners and investors and are devastating communities. But the problems will fester and the housing market will continue to suffer. Investors in mortgage-backed securities, who know that services have been screwing them for years, will be hung out to dry and will likely never return to a private MBS market, since the problems won’t ever be fixed. This settlement has not only revealed the residential mortgage market to be too big to fail, but puts it on long term, perhaps permanent, government life support.

As we’ve said before, this settlement is yet another raw demonstration of who wields power in America, and it isn’t you and me. It’s bad enough to see these negotiations come to their predictable, sorry outcome. It adds insult to injury to see some try to depict it as a win for long suffering, still abused homeowners.

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 A MESSAGE TO OUR NATION’S LAWYERS…

It’s the biggest financial opportunity for the legal profession

SINCE THE REAR END COLLISION. 

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

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

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

The California Example…

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

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

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

Now they face yet another obstacle: hiring a lawyer.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A Bleak Picture in California…

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

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

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

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

Mandelman out.

~~~

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

The Answer is Money…

What Was Your Question?

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

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

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

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

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

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

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

Click below to find out more about…

Marc Dann’s

LAW PROFITS

Chase Accused of Brazen Bankruptcy Fraud

English: Category:JPMorgan Chase
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LOS ANGELES (CN) – JPMorgan Chase routinely fabricated documents to deceive bankruptcy judges, going so far as to Photoshop documents to “create the illusion” of standing “in tens of thousands of bankruptcy cases,” according to a federal class action.

Lead plaintiff Ernest Michael Bakenie claims that Chase’s “pattern and practice of playing ‘hide-and-seek’ with debtors, judges and other bankruptcy players” bore rich fruit: that Chase secured motions for relief of stay and proofs of claim in 95 percent of its cases.

“Through the use of fabricated assignments, endorsements and affidavits that purport to transfer deeds of trust, notes and the rights to all monies due under the terms of tens of thousands of non-negotiable promissory notes (the ‘MLNs’); Chase has demonstrated a pattern and practice of playing ‘hide-and-seek’ with debtors, judges and other bankruptcy players,” the complaint states.

“Chase intentionally conceals the identity of the true parties in interest entitled to enforce the tens of tens of thousands of residential non-negotiable promissory notes (the ‘MLNs’) for its own financial benefit, at the expense of the class and to the detriment of the integrity of the bankruptcy system.”

Bakenie says Chase used a network of attorneys to file more than 7,000 motions for relief from automatic stay in bankruptcy cases in the Central District of California, “wherein they falsely claim to be the party entitled to monies due under the terms of MLNs.”

Chase rewards attorneys based on how quickly they can secure the stays, and uses fabricated documents to establish chain of title on loans, according to the complaint.

“Rather than incur the cost of ‘proving up’ its own standing or the standing of its principal Mortgage Backed Security Trust, Chase systemically misrepresents Chase or a designated MBST to be a creditor in tens of thousands of bankruptcy cases by utilizing manufactured documents,” the complaint states.

Bakenie claims: “That said practice is utilized for all mortgage loans originated by Chase, and other loan originators, including insolvent Washington Mutual Bank, whose assets were purchased by Chase.

“That said manufactured documents are fabrications intended to create the illusion of a valid transfers MLNs and support the assertion of standing in tens of thousands of bankruptcy cases. …

“That the aforementioned fabricated evidence is ‘photo-shopped’ and is highly persuasive and authentic in appearance so as to ensure legal victory in the bankruptcy courts.

“That said manufactured evidence is systemically utilized to deceive bankruptcy players and increase the profits of Chase, its agents and its principals through massive cost savings and the imposition of attorney fees upon class borrowers.

“As a direct result of this practice, over 95 percent of Chase’s motions for relief of stay and proofs of claim are granted without objection.

“That the use of the fabricated evidence has a chilling effect on class debtors and their attorneys. Said business practices discourages bankruptcy players from offering objections or from questioning the validity of Chase’s false claims based on standing.”

Bakenie adds: “That said practice allows Chase to dump defaulted loans that were never properly securitized by WAMU and other originators acquired by Chase into private mortgage backed security trusts by creating the illusion of a valid transfer.

“Said practice shifts the liability of defaulted loans not properly securitized by WAMU, from Chase to private mortgage backed security trusts. The practice allows Chase to effectively mitigate the millions of dollars in liability of the WAMU acquisition, where WAMU failed to transfer MLNs of its portfolio before its demise. Said practice shifts losses from WAMU toMBST bond investors.

“That after a non-judicial foreclosure sale, class members remain indebted to the true beneficiary for the unsecured note but without credit for the loss of the collateral to Chase’s designated assignee.

“Most egregiously, the network attorneys utilize the inducing documents to obtain attorney fees awards from by the bankruptcy judges ranging from $600-$1,000 for each successful motion for relief of stay.”

Bakenie concludes that “degradation of the integrity of our bankruptcy court system cannot be justified in the name of Chase’s cost savings and unjust enrichment.”

Bakenie seeks class certification, disgorgement, compensatory, statutory and punitive damages for unfair and deceptive trade, and “an order vacating all bankruptcy orders, claims and awards granted based on Chase’s misrepresentation and deceptive business practices”.

He is represented by Joseph Arthur Roberts of Newport Beach.

Related articles

2932.5 is dead in 2nd district they can’t read “or other encumbrance”

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION EIGHT

EUGENIA CALVO,

Plaintiff and Appellant,

v.

HSBC BANK USA, N.A., as Trustee etc.,

Defendant and Respondent.

       B226494

(Los Angeles County

Super. Ct. No. BC415545)

 

APPEAL from the judgment of the Superior Court of Los Angeles County.  Mark V. Mooney, Judge.  Affirmed.

Dennis Moore for Plaintiff and Appellant.

Houser & Allison, Eric D. Houser, Robert W. Norman, Jr., and Carrie N. Heieck for Defendant and Respondent.

_______________________

Plaintiff Eugenia Calvo obtained a loan secured by a deed of trust against her residence.  The original lender assigned the loan and deed of trust to HSBC Bank USA, N.A. (HSBC Bank).  A new trustee was also substituted after the loan was originated.  Plaintiff defaulted in payment of the loan.  The new trustee initiated foreclosure proceedings and executed a foreclosure sale of plaintiff’s residence.  Notice of the assignment of the deed of trust appeared only in the substitution of trustee, which was recorded on the same date as the notice of trustee’s sale.  The second amended complaint seeks to set aside the trustee’s sale for an alleged violation of Civil Code section 2932.5,[1] which requires the assignee of a mortgagee to record an assignment before exercising a power to sell real property.  HSBC Bank and its agent, the nominal beneficiary under the deed of trust, demurred to the second amended complaint, and the trial court sustained the demurrer without leave to amend.

We find defendant HSBC Bank did not violate section 2932.5 because that statute does not apply when the power of sale is conferred in a deed of trust rather than a mortgage.  We affirm the judgment dismissing the complaint.

BACKGROUND

            Plaintiff sued HSBC Bank and Mortgage Electronic Registration Systems, Inc. (MERS), its agent and nominal beneficiary under the deed of trust recorded against her residence.  Plaintiff had borrowed money from CBSK Financial Group, Inc., which is not a defendant in this lawsuit.  Her loan was secured by a deed of trust against her residence that was recorded on September 1, 2006.  The deed of trust identified plaintiff as the trustor, CBSK Financial Group as the lender, MERS as the nominal beneficiary and lender’s agent, and Lawyers Title Company as the trustee.  In the deed of trust, plaintiff granted title to her residence to the trustee, in trust, with the power of sale.  The deed of trust stated:  “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; and to take any action required of Lender including, but not limited to, releasing and canceling the Security Instrument.”

Aztec Foreclosure Corporation was substituted as trustee under the deed of trust on or about June 2, 2008.  The substitution of trustee stated that MERS, as nominee for HSBC Bank, “is the present Beneficiary” under the deed of trust, as MERS had been for the original lender.  The substitution of trustee was not recorded until October 14, 2008, the same date on which Aztec Foreclosure Corporation recorded a notice of trustee’s sale.  More than three months before recordation of the substitution of trustee, Aztec Foreclosure Corporation had recorded a notice that plaintiff was in default in payment of her loan and that the beneficiary had elected to initiate foreclosure proceedings.  The notice of default advised plaintiff to contact HSBC Bank to arrange for payment to stop the foreclosure.

HSBC Bank bought plaintiff’s residence in the foreclosure sale, and a trustee’s deed upon sale was recorded on January 9, 2009.  The gist of the complaint is that HSBC Bank initiated foreclosure proceedings under the deed of trust without any recordation of the assignment of the deed of trust to HSBC Bank in violation of section 2932.5.

DISCUSSION

A demurrer tests the legal sufficiency of the complaint.  We review the complaint de novo to determine whether it alleges facts sufficient to state a cause of action.  For purposes of review, we accept as true all material facts alleged in the complaint, but not contentions, deductions or conclusions of fact or law.  We also consider matters that may be judicially noticed.  (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)  When a demurrer is sustained without leave to amend, “we decide whether there is a reasonable possibility that the defect can be cured by amendment:  if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discretion and we affirm.”  (Ibid.)  Plaintiff has the burden to show a reasonable possibility the complaint can be amended to state a cause of action.  (Ibid.)

The trial court did not err in sustaining the demurrer without leave to amend.  Plaintiff’s lawsuit rests on her claim that the foreclosure sale was void and should be set aside because HSBC Bank invoked the power of sale without complying with the requirement of section 2932.5 to record the assignment of the deed of trust from the original lender to HSBC Bank.  We find no merit in this contention.

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

It has been established since 1908 that this statutory requirement that an assignment of the beneficial interest in a debt secured by real property must be recorded in order for the assignee to exercise the power of sale applies only to a mortgage and not to a deed of trust.  In Stockwell v. Barnum (1908) 7 Cal.App. 413 (Stockwell), the court affirmed the judgment against a plaintiff who sought to set aside and vacate a sale of real property under a deed of trust.  In Stockwell, a couple borrowed money from two individuals and gave them a promissory note that provided, in case of default in the payment of interest, the holder of the note had the option to demand payment of all the principal and interest.  To secure payment of the note, the borrowers executed and delivered a deed of trust by which they conveyed to the trustee legal title to a parcel of real estate, with the power of sale on demand of the beneficiaries of the promissory note.  The borrowers defaulted.  The original lenders assigned the note to another individual who elected to declare the whole amount of principal and interest due and made demand on the trustee to sell the property.  Before the trustee’s sale was made, but on the same day as the trustee’s sale, the defaulting couple conveyed the real property to plaintiff, who then sued to set aside the trustee’s sale.

One of the bases on which the plaintiff in Stockwell sought to set aside the sale was that no assignment of the beneficial interests under the deed of trust was recorded and therefore the original lender’s assignee had no right to demand a trustee’s sale of the property.  The plaintiff in Stockwell relied on former section 858, the predecessor of section 2932.5, as support for this contention.  (The parties correctly acknowledge that section 2932.5 continued section 858 without substantive change.)  (Law Revision Com. com., Deering’s Ann., § 2932.5 (2005 ed.) p. 454.)  The Stockwell court found the statute did not apply to a trustee’s sale.

The Stockwell court distinguished a trust deed from a mortgage, explaining that a mortgage creates only a lien, with title to the real property remaining in the borrower/mortgagee, whereas a deed of trust passes title to the trustee with the power to transfer marketable title to a purchaser.  The court reasoned that since the lenders had no power of sale, and only the trustee could transfer title, it was immaterial who held the note.  (Stockwell, supra, 7 Cal.App. at p. 416.)  “The transferee of a negotiable promissory note, payment of which is secured by a deed of trust whereby the title to the property and power of sale in case of default is vested in a third party as trustee, is not an encumbrancer to whom power of sale is given, within the meaning of section 858.”  (Id. at p. 417.)

The holding of Stockwell has never been reversed or modified in any reported California decision in the more than 100 years since the case was decided.  The rule that section 2932.5 does not apply to deeds of trust is part of the law of real property in California.  After 1908, only the federal courts have addressed the question whether section 2932.5 applies to deeds of trust, and only very recently.  Every federal district court to consider the question has followed Stockwell.  (See, e.g., Roque v. Suntrust Mortg., Inc. (N.D.Cal. Feb. 10, 2010) 2010 U.S.Dist. Lexis 11546, *8 [“Section 2932.5 applies to mortgages, not deeds of trust.  It applies only to mortgages that give a power of sale to the creditor, not to deeds of trust which grant a power of sale to the trustee.”]; Parcray v. Shea Mortg., Inc. (E.D.Cal. April 23, 2010) 2010 U.S.Dist. Lexis 40377, *31 [“There is no requirement under California law for an assignment to be recorded in order for an assignee beneficiary to foreclose.”]; Caballero v. Bank of Am. (N.D.Cal. Nov. 4, 2010) 2010 U.S.Dist. Lexis 122847, *8 [“§ 2932.5 does not require the recordation of an assignment of a beneficial interest for a deed of trust, as opposed to a mortgage”].)[2]

Plaintiff argues that Stockwell is “[o]utdated” and, that in the “modern era,” there is no difference between a mortgage and a deed of trust.  Plaintiff misconstrues Bank of Italy, supra, 217 Cal. 644 as holding that deeds of trust are the same as mortgages with a power of sale, and therefore, as supporting her argument that section 2932.5 applies to both mortgages and deeds of trust.  First, our Supreme Court in Bank of Italy did not consider or construe section 2932.5 or its predecessor statute.

Second, the court in Bank of Italy did not hold that a mortgage is the same as a deed of trust.  Far from it; the Bank of Italy court recognized that the distinction between a mortgage, which creates only a lien, and a deed of trust, which passes title to the trustee, “has become well settled in our law and cannot now be disturbed.”  (Bank of Italy, supra, 217 Cal. at p. 655.)  Third, the court’s holding was expressly limited to the question (not in issue here) whether in California it is permissible to sue on a promissory note secured by a deed of trust without first exhausting the security or showing that it is valueless.  The trial court had found “that no action may be brought on a note secured by a deed of trust unless and until the security is exhausted.  The correctness of this conclusion is the sole point involved on this appeal.”  (Id. at pp. 647, 648, 650.)

The plaintiff in Bank of Italy had argued the only statute requiring that security be exhausted before suing on the note was limited to mortgages and did not include the distinctly different deeds of trust.  (Bank of Italy, supra, 217 Cal. at p. 653.)  The Bank of Italy court therefore considered whether the differences between a mortgage and a deed of trust under California law should permit the holder of a note secured by a deed of trust to sue on the note without exhausting the security by a sale of the property.  The court recognized there were an increasing number of cases that applied the same rules to deeds of trust that are applied to mortgages and concluded that “merely because ‘title’ passes by a deed of trust while only a ‘lien’ is created by a mortgage,” in both situations the security must be exhausted before suit on the personal obligation.  (Bank of Italy, supra, 217 Cal. at pp. 657-658.) Nothing in the holding or analysis of the Bank of Italy opinion supports plaintiff’s position here that we should find section 2932.5 applies to a deed of trust.

Plaintiff also is mistaken in contending that Strike v. Trans-West Discount Corp. (1979) 92 Cal.App.3d 735 (Strike) supports her position.  In Strike, a homeowner had a judgment entered against him on a business debt he had guaranteed.  The homeowner later defaulted in payments on a bank loan that was secured by a deed of trust against his home, and he asked the judgment creditor to help him out.  The judgment creditor agreed to buy an assignment of the home loan and deed of trust from the bank, consolidate the indebtedness on the home loan with the amount owed to satisfy the judgment, and extend the maturity date of these obligations.

The homeowner defaulted again, and the judgment creditor initiated nonjudicial foreclosure proceedings.  The homeowner sued in an attempt to avoid foreclosure and eviction but did not prevail at trial.  The court of appeal affirmed.  Among the homeowner’s arguments that were rejected on appeal was the contention that the judgment creditor’s interest in his home was an equitable lien that could only be foreclosed by judicial process.  The court of appeal found the creditor had the right to pursue nonjudicial foreclosure, distinguishing an equitable subrogee from an assignee of a deed of trust with the power of sale.  The court stated:  “A recorded assignment of note and deed of trust vests in the assignee all of the rights, interests of the beneficiary [citation] including authority to exercise any power of sale given the beneficiary ([§ 858]).”  (Strike, supra, 92 Cal.App.3d at p. 744).

Plaintiff contends the sentence quoted above establishes that section 2932.5 (formerly codified at section 858) applies to deeds of trust.  But the Strike court was not asked to consider or construe the predecessor of section 2932.5.  The Strike court briefly referred to the predecessor of section 2932.5 by way of illustrating the difference between an equitable subrogee and an assignee under a deed of trust with a power of sale.  (Strike, supra, 92 Cal.App.3d at p. 744.)  “ ‘It is axiomatic, of course, that a decision does not stand for a proposition not considered by the court.’ ”  (Agnew v. State Bd. of Equalization (1999) 21 Cal.4th 310, 332.)

In California, over the course of the past century, deeds of trust have largely replaced mortgages as the primary real property security device.  (See 4 Miller & Starr, Cal. Real Estate (3d ed. 2000), § 10:2, p. 15.)  Thus, section 2932.5 (and its predecessor, section 858) became practically obsolete and were generally ignored by borrowers, creditors, and the California courts.  On the other hand, other statutes expressly give MERS the right to initiate foreclosure on behalf of HSBC Bank irrespective of the recording of a substitution of trustee.  Section 2924, subdivision (a)(1), states that a “trustee, mortgagee, or beneficiary, or any of their authorized agents,” may initiate the foreclosure process.  MERS was both the nominal beneficiary and agent (nominee) of the original lender and also of HSBC Bank, which held the note at the time of the foreclosure sale of plaintiff’s residence.  Thus, MERS had the statutory right to initiate foreclosure on behalf of HSBC Bank pursuant to section 2924, subdivision (a)(1).

MERS also had the right to initiate foreclosure on behalf of HSBC Bank pursuant to the express language of the deed of trust.  Plaintiff agreed in the deed of trust that MERS had the right to initiate foreclosure and instruct the trustee to exercise the power of sale as nominee (i.e., agent) of the original lender and its successors and assigns.  (Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1157, fn. 9 [construing a deed of trust identical in pertinent part to the trust deed in this case as granting MERS power to initiate foreclosure as the agent of the noteholder, even if not also as beneficiary].)  HSBC Bank was the assignee of the original lender.  Accordingly, HSBC Bank and MERS, its nominal beneficiary and agent, were entitled to invoke the power of sale in the deed of trust, and plaintiff has alleged no legal basis for setting aside the sale in this case.

We affirm the judgment of dismissal.  Respondent is to recover its costs of appeal.

CERTIFIED FOR PUBLICATION

GRIMES, J.

WE CONCUR:

BIGELOW, P. J.

FLIER, J.

[1]          All statutory references are to the Civil Code unless otherwise specified.

[2]          Plaintiff cited only one bankruptcy court decision in support of her argument that section 2932.5 applies to deeds of trust.  (U.S. Bank N.A. v. Skelton (In re Salazar) (Bankr. S.D.Cal. 2011) 448 B.R. 814.)  We find the analysis in that case unpersuasive.  Holdings of the federal courts are not binding or conclusive on California courts, though they may be entitled to respect and careful consideration.  (Bank of Italy etc. Assn. v. Bentley (1933) 217 Cal. 644, 653 (Bank of Italy).)  A federal bankruptcy court decision interpreting California law, however, is not due the same deference.  (See Stern v. Marshall (2011) 131 S.Ct. 2594.)

CA Civil Code § 2932.5, In Re Urdahl, Bank’s Motion For Relief From Stay Denied

by US Bankruptcy Court, Southern District of California
Sunday, October 16th, 2011

 

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

The Court is aware of no California case law interpreting this section. However, it appears to indicate that a security interest runs with the obligation – in terms of the case at hand, that is, an assignment of the Note amounts to an assignment of the Deed of Trust.

DISCUSSION

It is undisputed that the subject Property is, as the saying goes, underwater. All parties seem to agree that the claim secured by the Property exceeds the value of the Property. The Debtors are prepared to abandon the Property. The only issue before the Court is whether Deutsche Bank is in a position to seek relief from the stay.

Bankruptcy Code section 362(d) provides for relief from stay on request of a “party in interest.” Party in interest for the purposes of a motion for relief from stay is not defined.  However, the Court agrees with the court in In re Maisel, that “[a] party seeking relief from the automatic stay to exercise rights as to property must demonstrate at least a colorable claim to the property.” 378 B.R. 19, 21 (Bankr.D.Mass. 2007) (citing In re Huggins, 357 B.R. 180, 185 (Bankr.D.Mass. 2006). That is, since Deutsche Bank seeks relief from stay to proceed against the Property, it must establish that it, or more accurately the party it represents, HE1 Trust, has a security interest in such property. As movant, Deutsche Bank has the responsibility to convince the Court that the party seeking relief from the staywith respect to the Property has an interest in the Property. Deutsche Bank has failed to do so.

In support of the motion, Deutsche Bank has provided the copies of the original Note and Deed of Trust. However, both the Note and the Deed of Trust run in favor of WAMU.Though it is undisputed that WAMU held a security interest in the Property by virtue of the Deed of Trust, Deutsche Bank has provided no evidence at all that any interest in the Deed of Trust was ever assigned from WAMU to Deutsche Bank, or to anyone else for that matter. In her supplemental declaration Ms. Brecheen declares that the Deed of Trust was “transferred” to Deutsche Bank.  However, Deutsche Bank has provided no authority (and the Court is aware of none) for the apparent proposition that transfer of the Deed of Trust without assignment, let alone recordation, is sufficient to give Deutsche Bank or HEl Trust a security interest in the Property.  As it stands on the record before the Court, the Deed of Trust remains in the name (and possession) of WAMU. 1Nothing in the Deed of Trust as written or in the way in which it has been handled gives any indication that Deutsche Bank or Hel Trust has a security interest in the Property. Not surprisingly therefor, Deutsche Bank focuses the Court’s attention on the Note.

The Note too runs solely in favor of WAMU. The copy of the Note produced in connection with the Motion gave no indication that anyone but WAMU had an interest therein. In response to theTrustee’s opposition, Deutsche Bank eventually produced a copy of the Note with an additional, unnumbered, undated page attached, which appears to bean endorsement by WAMU. However, the “Pay to the order of” line of the endorsement is blank. There is no indication from the face of the Note as endorsed that it was endorsed to Deutsche Bank and/or HEl Trust.

The sole evidence that Deutsche Bank provides which would indicate to the Court that Deutsche Bank might have any interest at all in the Property, is the supplemental declaration of Ms. Brecheen that the Note had been transferred to Deutsche Bank.  Assuming for the sake of argument that this “transfer” amounts to an “assignment,” such an assignment of the Note appears to be sufficient under California to give Deutsche Bank a security interest in the Property.

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

The Court is aware of no California case law interpreting this section. However, it appears to indicate that a security interest runs with the obligation – in terms of the case at hand, that is, an assignment of the Note amounts to an assignment of the Deed of Trust. 2 However, as indicated, Deutsche Bank has provided no convincing evidence that the Note was ever assigned to Deutsche Bank. Furthermore, even if the Note was assigned to Deutsche Bank, Deutsche Bank is not the party asserting a security interest in the Property. Rather, the motion is brought by Deutsche Bank as Trustee for HEI Trust. The record is devoid of any further assignment to HEI Trust.

In summary, the only question before this Court is whether Deutsche Bank and/or HEI Trust has an interest in the Property. The Court holds that Deutsche Bank has failed to provide evidence that it, let alone HEI Trust, has a security interest in the Property. 3 Accordingly, the motion is denied.

http://www.casb.uscourts.gov/pdf/opinions/07_07227.pdf

HSBC bank sign
Image by exfordy via Flickr
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Foreclosure Cases 2011 in review California

Trustees Catherine Ripley and Ken Gibson
Image by dave.cournoyer via Flickr

California Cases – 2004 to Present
Including Federal cases interpreting California law
LISTED WITH MOST RECENT CASES FIRST
Go to cases 2000 – 2003

Lona v. Citibank     Docket
Cal.App. 6th Dist (H036140)  12/21/11TRUSTEE‘S SALES: The court reversed a summary judgment in favor of defendants in an action seeking to set aside a trustee’s sale on the basis that the loan was unconscionable. The court held that summary judgment was improper for two reasons:
1. The homeowner presented sufficient evidence of triable issues of material fact regarding unconscionability. Plaintiff asserted that the loan broker ignored his inability to repay the loan (monthly loan payments were four times his monthly income) and, as a person with limited English fluency, little education, and modest income, he did not understand many of the details of the transaction which was conducted entirely in English.
2. Plaintiff did not tender payment of the debt, which is normally a condition precedent to an action by the borrower to set aside the trustee’s sale, but defendants’ motion for summary judgment did not address the exceptions to this rule that defendant relied upon.

The case contains a good discussion of four exceptions to the tender requirement: 1. If the borrower’s action attacks the validity of the underlying debt, a tender is not required since it would constitute an affirmation of the debt. 2. A tender will not be required when the person who seeks to set aside the trustee’s sale has a counter-claim or set-off against the beneficiary. 3. A tender may not be required where it would be inequitable to impose such a condition on the party challenging the sale. 4. No tender will be required when the trustor is not required to rely on equity to attack the deed because the trustee’s deed is void on its face.Pioneer Construction v. Global Investment Corp.     Docket
Cal.App. 2nd Dist. (B225685)  12/21/11MECHANICS LIENS: The court held that:
1. A mechanics lien claimant who provided labor and materials prepetition to a debtor in bankruptcy can record a mechanics lien after the property owner files for bankruptcy without violating the automatic stay. (11 U.S.C. §362(b)(3).)
2. A mechanics lienor must, and defendant did, file a notice of lien in the debtor’s bankruptcy proceedings to inform the debtor and creditors of its intention to enforce the lien. (11 U.S.C. §546(b)(2).)
3. The 90-day period to file an action after recording a mechanics lien is tolled during the pendency of the property owner’s bankruptcy. Accordingly, an action to enforce the lien was timely when filed 79 days after a trustee’s sale by a lender who obtained relief from the automatic stay. (The property ceased to be property of the estate upon completion of the trustee’s sale.)Harbour Vista v. HSBC Mortgage Services     Docket
Cal.App. 4th Dist., Div. 3 (G044357)  12/19/11QUIET TITLE: Code of Civil Procedure Section 764.010 states that “[t]he court shall not enter judgment by default. . .” The court held that, while default may be entered, Section 764.010 requires that before issuing a default judgment the trial court must hold an evidentiary hearing in open court, and that a defendant is entitled to participate in the hearing even when it has not yet answered the complaint and is in default. Normally, a defendant has no right to participate in the case after its default has been entered.Park v. First American Title Insurance Company     Docket
Cal.App. 4th Dist., Div. 3 (G044118)  11/23/11 (Pub. Order 12/16/11)TRUSTEE’S SALES: A trustee’s sale was delayed due to defendant’s error in preparing the deed of trust. However, the court held that plaintiff could not establish damages because she could not prove that a potential buyer was ready, willing and able to purchase the property when the trustee’s sale was originally scheduled. Such proof would require showing that a prospective buyer made an offer, entered into a contract of sale, obtained a cashier’s check, or took any equivalent step that would have demonstrated she was ready, willing, and able to purchase plaintiff’s property. Also, plaintiff would need to show that the prospective buyer was financially able to purchase the property, such as by showing that the prospective buyer had obtained financing for the sale, preapproval for a loan or had sufficient funds to purchase the property with cash.Bardasian v. Superior Court     Docket
Cal.App. 3rd Dist. (C068488)  12/15/11TRUSTEE’S SALES: Civil Code Section 2923.5 requires that before a notice of default can be filed, a lender must attempt to contact the borrower and explore options to prevent foreclosure. Where the trial court ruled on the merits that a lender failed to comply with Section 2923.5, it was proper to enjoin the sale pending compliance with that section, but it was not proper to require plaintiff to post a bond and make rent payments. Also, discussions in connection with a loan modification three years previously did not constitute compliance with the code section.Lang v. Roche     Docket
Cal.App. 2nd Dist. (B222885)  11/29/11SHERIFF’S SALES: Plaintiff sought to set aside a Sheriff’s sale arising from the execution on a judgment rendered in another action. Defendant had obtained that judgment by default after service by publication even though plaintiff was defendant’s next door neighbor and could easily be found. The court set the sale aside, holding that even though C.C.P. 701.780 provides that an execution sale is absolute and cannot be set aside, that statute does not eliminate plaintiff’s right of equitable redemption where the judgment is void due to lack of personal jurisdiction.Promenade at Playa Vista HOA v. Western Pacific Housing     Docket
Cal.App. 2nd Dist. (B225086)  11/8/11CC&R’S: In a construction defect action brought by a condominium homeowners association, the court held that a developer cannot compel binding arbitration of the litigation pursuant to an arbitration provision in the Declaration of Covenants, Conditions, and Restrictions. CC&R’s are not a contract between the developer and the homeowners association. Instead, the provisions in the CC&R’s are equitable servitudes and can be enforced only by the homeowners association or the owner of a condominium, not by a developer who has sold all the units.Alpha and Omega Development v. Whillock Contracting     Docket
Cal.App. 4th Dist., Div. 1 (D058445)  11/2/11LIS PENDENS: This is a slander of title and malicious prosecution action brought after defendant’s unsuccessful action to foreclose a mechanics lien. Plaintiff’s slander of title allegation is based on defendant’s recordation of a lis pendens in the prior mechanics lien action. The appellate court upheld the trial court’s granting of defendant’s anti-SLAPP motion and striking the slander of title cause of action, because recording a lis pendens is privileged under Civil Code Section 47(b)(4).Biancalana v. T.D. Service Company     Docket     Sup.Ct. Docket
Cal.App. 6th Dist. (H035400)  10/31/11     Petition for review by Cal Supreme Ct. filed 12/9/11TRUSTEE’S SALES: Inadequacy of the sale price is not a sufficient ground for setting aside a trustee’s sale of real property in the absence of any procedural errors. The unpaid balance of the loan secured by the subject deed of trust was $219,105. The trustee erroneously told the auctioneer to credit bid the delinquency amount ($21,894.17). Plaintiff was the successful bidder with a bid of $21,896. The court refused to set aside the sale because there were no procedural errors and the mistake was within the discretion and control of the trustee, who was acting as agent for the lender. The court distinguished Millennium Rock Mortgage, Inc. v. T.D. Service Co. because here the mistake was made by defendant in the course and scope of its duty as the beneficiary’s agent, not by the auctioneer as in Millennium Rock.

The case also contains a discussion of the rule that once the trustee’s deed has been delivered, a rebuttable presumption arises that the foreclosure sale has been conducted regularly and properly. But where the deed has not been transferred, the sale may be challenged on the grounds of procedural irregularity.First Bank v. East West Bank     Docket
Cal.App. 2nd Dist. (B226061)  10/17/11     Case complete 12/19/11RECORDING: Where two deeds of trust secured by the same real property were simultaneously time-stamped for recording by the County Recorder’s Office but were indexed at different times, the lenders have equal priority. The recording laws protect subsequent purchasers and neither bank was a subsequent purchaser. The court acknowledged that a subsequent purchaser (or lender) who records his interest before the prior interest is indexed has priority, but this rule does not apply when both deeds of trust were recorded simultaneously.Dollinger DeAnza Assoc. v. Chicago Title Insurance Company     Docket     Sup.Ct. Docket
Cal.App. 6th Dist. (H035576)  9/9/11 (Pub. Order 10/6/11     Request for depublication filed 11/4/11TITLE INSURANCE: Plaintiff’s title insurance policy, which was issued in 2004, insured property that originally consisted of seven parcels, but which had been merged into a single parcel pursuant to a Notice of Merger recorded by the City of Cupertino in 1984. The policy did not except the Notice of Merger from coverage. Plaintiff filed this action after Chicago Title denied its claim for damages alleged to result from the inability to sell one of the parcels separately. The court ruled in favor of Chicago, holding:
1. While the notice of merger may impact Plaintiff’s ability to market the separate parcel, it has no affect on Plaintiff’s title to that parcel, so it does not constitute a defect in title. It does not represent a third person’s claim to an interest in the property.
2. Chicago is not barred by principals of waiver or estoppel from denying plaintiff’s claim, after initially accepting the claim, because 1) waiver only applies to insurers that do not reserve rights when accepting a tender of defense and 2) plaintiff failed to show detrimental reliance, which is one of the elements of estoppel.
3. Plaintiff’s claim for breach of the implied covenant of good faith and fair dealing cannot be maintained where benefits are not due under plaintiff’s insurance policy.
4. Since the court held that the Notice of Merger was not a defect in title, it did not need to consider Chicago’s contention that the Notice of Merger was void because the County Recorder indexed it under the name of the City, rather than the name of the property owner.
[Ed. note: This case must have dealt with an ALTA 1992 policy. The ALTA 2006 policy made changes to the Covered Risks.]Sukut Construction v. Rimrock CA     Docket     Sup.Ct. Docket
Cal.App. 4th Dist., Div. 1 (D057774)  9/30/11     Petition for review by Cal Supreme Ct. DENIED 12/14/11MECHANICS LIENS: Plaintiff could not establish a mining lien under Civil Code Section 3060 for removing rocks from a quarry because a quarry is not a mine and the rocks were not minerals. The court did not address whether plaintiff could establish a regular mechanics lien because it held that plaintiff was judicially estopped from asserting that position after leading defendant to believe that it was asserting only a mining claim. UNPUBLISHED: First American Title Insurance Company v. Ordin     Docket
Cal.App. 2nd Dist. (B226671)  9/14/11     Case complete 11/17/11TITLE INSURANCE: An arbitrator found that defendants did not lose coverage under their title policy when they conveyed title to their wholly owned corporation, then to themselves as trustees of their family trust and finally to a wholly owned limited liability company. This conflicts with the holding in Kwok v. Transnation Title Insurance Company and this could have been an interesting case, except that whether the ruling was right or wrong was not before the court. The court held only that the arbitrator’s award could not be overturned, even if the the law was applied incorrectly, because there was no misconduct by the arbitrator.Calvo v. HSBC Bank     Docket     Sup.Ct. Docket
199 Cal.App.4th 118 – 2nd Dist. (B226494)  9/13/11     Petition for review by Cal Supreme Ct. filed 10/25/11TRUSTEE’S SALES: Notice of the assignment of a deed of trust appeared only in the substitution of trustee, which was recorded on the same date as the notice of trustee’s sale, and which stated that MERS, as nominee for the assignee lender, was the present beneficiary. Plaintiff sought to set aside the trustee’s sale for an alleged violation of Civil Code section 2932.5, which requires the assignee of a mortgagee to record an assignment before exercising a power to sell real property. The court held that the lender did not violate section 2932.5 because that statute does not apply when the power of sale is conferred in a deed of trust rather than a mortgage.Robinson v. Countrywide Home Loans     Docket
199 Cal.App.4th 42 – 4th Dist., Div. 2 (E052011)  9/12/11     Case complete 11/15/11TRUSTEE’S SALES: The trial court properly sustained defendant lender’s demurrer without leave to amend because 1) the statutory scheme does not provide for a preemptive suit challenging MERS authority to initiate a foreclosure and 2) even if such a statutory claim were cognizable, the complaint did not allege facts sufficient to challenge the trustee’s authority to initiate a foreclosure.Hacienda Ranch Homes v. Superior Court (Elissagaray)     Docket
198 Cal.App.4th 1122 – 3rd Dist. (C065978)  8/30/11     Case complete 11/1/11ADVERSE POSSESSION: Plaintiffs (real parties in interest) acquired a 24.5% interest in the subject property at a tax sale. The court rejected plaintiffs’ claim of adverse possession under both 1) “color of title” because the tax deed by which they acquired their interest clearly conveyed only a 24.5% interest instead of a 100% interest, and 2) “claim of right” because plaintiffs’ claims of posting for-sale signs and clearing weeds 2 or 3 times a year did not satisfy the requirement of protecting the property with a substantial enclosure or cultivating or improving the property, as required by Code of Civil Procedure Section 325. The court also pointed out that obtaining adverse possession against cotenants requires evidence much stronger than that which would be required against a stranger, and plaintiffs failed to establish such evidence in this case.Gramercy Investment Trust v. Lakemont Homes Nevada, Inc.     Docket
198 Cal.App.4th 903 – 4th Dist., Div. 2 (E051384)  8/24/11     Case complete 10/27/11ANTIDEFICIENCY: After a judicial foreclosure, the lender obtained a deficiency judgment against a guarantor. The court held that the choice of law provision designating the law of New York was unenforceable because there were insufficient contacts with New York. California is where the contract was executed, the debt was created and guaranteed, the default occurred and the real property is located. Also, Nevada law does not apply, even though the guarantor was a Nevada corporation, because Nevada had no connection with the transaction. The court also held that the guarantor was not entitled to the protection of California’s antideficiency statutes because the guaranty specifically waived rights under those statutes in accordance with Civil Code Section 2856.Hill v. San Jose Family Housing Partners     Docket
198 Cal.App.4th 764 – 6th Dist. (H034931)  8/23/11     Case complete 10/25/11EASEMENTS: Plaintiff, who had entered into an easement agreement with defendant’s predecessor to maintain a billboard on a portion of defendant’s property, filed an action to prevent defendant from constructing a multi-unit building that would allegedly block the view of the billboard. Defendant asserted that the easement was unenforceable because it violated city and county building codes. The court held:
1. The easement was enforceable because the property’s use for advertising purposes is not illegal in and of itself. Although the instrumentality of that use, i.e., the billboard, may be illegal, that is not a bar to the enforcement of the agreement.
2. The easement agreement did not specifically state that it included the right to view the billboard from the street, but the parties necessarily intended the easement to include that right since viewing the billboard by passing traffic is the purpose of the easement.
3. Nevertheless, the trial court improperly denied a motion for a retrial to re-determine damages based on new evidence that the city had instituted administrative proceedings to have the billboard removed. The award of damages was based on plaintiff’s expected revenue from the billboard until 2037, and such damages will be overstated if the city forces plaintiff to remove the billboard.Fontenot v. Wells Fargo Bank     Docket     Sup.Ct. Docket
198 Cal.App.4th 256 – 1st Dist. (A130478)  8/11/11     Depublication request DENIED 11/30/11FORECLOSURE / MERS: Plaintiff alleged a foreclosure was unlawful because MERS made an invalid assignment of an interest in the promissory note and because the lender had breached an agreement to forbear from foreclosure. The appellate court held that the trial court properly sustained a demurrer to the fourth amended complaint without leave to amend. The court held that MERS had a right to assign the note even though it was not the beneficiary of the deed of trust because in assigning the note it was acting on behalf of the beneficiary and not on its own behalf. Additionally, Plaintiff failed to allege that the note was not otherwise assigned by an unrecorded document. The court also held that plaintiff failed to properly allege that the lender breached a forbearance agreement because plaintiff did not attach to the complaint a copy of a letter (which the court held was part of the forbearance agreement) that purportedly modified the agreement. Normally, a copy of an agreement does not have to be attached to a complaint, but here the trial court granted a previous demurrer with leave to amend specifically on condition plaintiff attach a copy of the entire forbearance agreement to the amended pleading.Boschma v. Home Loan Center     Docket
198 Cal.App.4th 230 – 4th Dist., Div. 3 (G043716)  8/10/11     Case complete 10/11/11LOAN DISCLOSURE: Borrowers stated a cause of action that survived a demurrer where they alleged fraud and a violation of California’s Unfair Competition Law (B&PC 17200, et seq.) based on disclosures indicating that borrowers’ Option ARM loan may result in negative amortization when, in fact, making the scheduled payments would definitely result in negative amortization. However, the court also pointed out that at trial in order to prove damages plaintiffs will have to present evidence that, because of the structure of the loans, they suffered actual damages beyond their loss of equity. For every dollar by which the loan balances increased, plaintiffs kept a dollar to save or spend as they pleased, so they will not be able to prove damages if their “only injury is the psychological revelation . . . that they were not receiving a free lunch from defendant”.Thorstrom v. Thorstrom     Docket
196 Cal.App.4th 1406 – 1st Dist. (A127888)  6/29/11     Case complete 8/30/11EASEMENTS: Plaintiffs were not able to preclude defendants’ use of a well on plaintiffs’ property. The historic use of the well by the common owner (the mother of the current owners) indicated an intent for the well to serve both properties, and an implied easement was created in favor of defendants when the mother died and left one parcel to each of her two sons. However, the evidence did not establish that defendants were entitled to exclusive use of the well, so both properties are entitled to reasonable use of the well consistent with the volume of water available at any given time.Herrera v. Deutsche Bank     Docket
196 Cal.App.4th 1366 – 3rd Dist. (C065630)  5/31/11 (Cert. for pub. 6/28/11)     Case complete 8/30/11TRUSTEE’S SALES: Plaintiffs sought to set aside a trustee’s sale, claiming that the Bank had not established that it was the assignee of the note, and that the trustee (“CRC”) had not established that it was properly substituted as trustee. To establish that the Bank was the beneficiary and CRC was the trustee, defendants requested that the trial court take judicial notice of the recorded Assignment of Deed of Trust and Substitution of Trustee, and filed a declaration by an employee of CRC referring to the recordation of the assignment and substitution, and stating that they “indicated” that the Bank was the assignee and CRC was the trustee. The trial court granted defendants’ motion for summary judgment and the appellate court reversed. The Court acknowledged that California law does not require the original promissory note in order to foreclose. But while a court may take judicial notice of a recorded document, that does not mean it may take judicial notice of factual matters stated therein, so the recorded documents do not prove the truth of their contents. Accordingly, the Bank did not present direct evidence that it held the note.

Ed. notes: 1. It seems that the Bank could have avoided this result if it had its own employee make a declaration directly stating that the Bank is the holder of the note and deed of trust, 2. In the unpublished portion of the opinion, the Court held that if the Bank is successful in asserting its claim to the Property, there is no recognizable legal theory that would require the Bank to pay plaintiffs monies they expended on the property for back taxes, insurance and deferred maintenance.Tashakori v. Lakis     Docket     Sup.Ct. Docket
196 Cal.App.4th 1003 – 2nd Dist. (B220875)  6/21/11     Petition for review by Cal Supreme Ct. DENIED 9/21/11EASEMENTS: The court granted plaintiffs an “equitable easement” for driveway purposes. Apparently, plaintiffs did not have grounds to establish a prescriptive easement. But a court can award an equitable easement where the court applies the “relative hardship” test and determines, as the court did here, that 1) the use is innocent, which means it was not willful or negligent, 2) the user will suffer irreparable harm if relief is not granted and 3) there is little harm to the underlying property owner.Conservatorship of Buchenau (Tornel v. Office of the Public Guardian)     Docket
196 Cal.App.4th 1031 – 2nd Dist. (B222941)  5/31/11 (Pub. order 6/21/11)     Case complete 8/24/11CONTRACTS: A purchaser of real property was held liable for damages for refusing to complete the purchase contract, even though the seller deposited the deed into escrow 19 days after the date set for close of escrow. The escrow instructions did not include a “time is of the essence” clause, so a reasonable time is allowed for performance. The purchaser presented no evidence that seller’s delay of 19 days was unreasonable following a two-month escrow. Diamond Heights Village Assn. v. Financial Freedom Senior Funding Corp.     Docket     Sup.Ct. Docket
196 Cal.App.4th 290 – 1st Dist. (A126145)  6/7/11     Petition for review by Cal Supreme Ct. DENIED 9/21/11HOMEOWNERS ASSOCIATION LIENS:
1. A homeowner’s association recorded a notice of assessment lien, judicially foreclosed and obtained a judgment against the homeowners. However, it did not record an abstract of judgment, which would have created a judgment lien, nor did it record a writ of execution, which would have created an execution lien. The court held that a subsequently recorded deed of trust had priority because when an assessment lien is enforced through judicial action, the debt secured by the lien is merged into the judgment. The association’s previous rights were merged into the judgment, substituting in their place only such rights as attach to the judgment.
2. After defendant lender prevailed on summary judgment as to the single cause of action naming the lender, trial proceeded as to the owners of the property, including a cause of action for fraudulent conveyance of a 1/2 interest in the property pertaining to a transfer from the original owner to himself and his mother. The trial court ruled in favor of the Association on the fraudulent conveyance cause of action AND held that defendant lender’s deed of trust was set aside as to that 1/2 interest. The appellate court held that trial of those remaining claims was proper, including trial of the Association’s cause of action against the homeowners for fraudulent conveyance of their condominium unit. It was not proper, however, to void the lender’s security interest in the property (in whole or part) when the lender had not been joined as a party to the fraudulent conveyance cause of action, and final judgment had already been entered in its favor.Hamilton v. Greenwich Investors XXVI      Modification     Docket
195 Cal.App.4th 1602 – 2nd Dist. (B224896)  6/1/11     Case complete 8/17/11TRUSTEE’S SALES:
1. Plaintiff/borrower’s failure to disclose, in earlier bankruptcy proceedings, the existence of his breach of contract and fraud claims against the lender bars the borrower from litigating those claims now. The court distinguished several cases that permitted a debtor in bankruptcy from subsequently pursuing a cause of action that was not disclosed in the bankruptcy pleadings on the basis that in those cases the defendant was not a creditor in the bankruptcy and because the schedules specifically asked the debtor to disclose any offsets against the debts that were listed. This action against the lender amounts to an offset against the loan, so by listing the loan and failing to list this claim, the borrower’s bankruptcy schedules were inaccurate.
2. The borrower’s causes of action for breach of contract and fraud fail in any event because the borrower did not allege the essential fact of payment of sums due from the borrower (i.e. performance by the borrower) or set forth an excuse for performance.
3. The borrower cannot state a cause of action for violations of Civil Code Section 2923.5, which requires lenders to contact borrowers to explore options to avoid foreclosure, because the only remedy for such violations is postponement of the foreclosure sale, and borrower’s house has been sold.***DECERTIFIED***
Ferguson v. Avelo Mortgage     Modification     Docket     Sup.Ct. Docket
Cal.App. 2nd Dist. (B223447)  6/1/11     Petition for review by Cal Supreme Ct. DENIED & DECERTIFIED 9/14/11FORECLOSURE / MERS:
1. A Notice of Default was defective because it was signed by a trustee before recordation of the substitution of trustee substituting it in place of the original trustee. But the Notice of Sale was properly given because it recorded at the same time as the substitution and included the statutorily required affidavit attesting to the mailing of a copy of the substitution to all persons to whom an NOD must be mailed. Since the NOS was valid, the court held that the sale was merely voidable and not void. Therefore, unlike a void sale (such as where a substitution of trustee is not recorded until after the trustee’s sale is completed), where the sale is merely voidable the plaintiff must tender full payment of the debt in order to bring an action setting aside the sale. The plaintiff did not make such a tender, so the trial court properly refused to set aside the sale.
2. Mortgage Electronic Registration Systems (MERS), as nominee of the original lender had the authority to assign the note and deed of trust to defendant, even if MERS does not possess the original note.Creative Ventures, LLC v. Jim Ward & Associates     Docket     Sup.Ct. Docket
195 Cal.App.4th 1430 – 6th Dist. (H034883)  5/31/11     Petition for review by Cal Supreme Ct. DENIED 8/10/11USURY:
1. The real estate broker arranged loan exception to the Usury Law does not apply were a corporation was not licensed as a broker, even though the officer who negotiated the loan was licensed, where the officer was acting on behalf of the corporation and not on his own behalf.
2. The payee of the note assigned the note to multiple investors. In order to take free of the borrower’s defenses against the original payee, the assignees would have had to be holders in due course. They were not holders in due course because a) the original payee did not endorse the note and transfer possession of the note to the assignees, both of which are requirements for holder in due course status, and b) each investor was assigned a partial interest and partial assignees cannot be holders in due course.
3. The individual investors did not receive usurious interest because the interest rate itself was not usurious. But since the overall interest was usurious when the payee’s brokerage fee was included, the investors must refund the illegal interest each received.
4. The fact that the investors did not intend to violate the Usury Law is irrelevant because the only intent required is the intent to receive payment of interest.
5. An award of treble damages is within the discretion of the trial court, and the trial court properly exercised its discretion not to award treble damages because the conduct of defendants was not intentional.Ribeiro v. County of El Dorado     Docket     Sup.Ct. Docket
195 Cal.App.4th 354 – 3rd Dist. (C065505)  5/10/111     Petition for review by Cal Supreme Ct. DENIED 8/24/11TAX SALES: “Caveat emptor” applies to tax sales. Accordingly, plaintiff/tax sale purchaser could not rescind the tax sale and obtain his deposit back where he was unaware of the amount of 1915 Act bond arrearages and where the County did not mislead him.The Main Street Plaza v. Cartwright & Main, LLC     Docket
194 Cal.App.4th 1044 – 4th Dist., Div. 3 (G043569)  4/27/11     Case complete 6/27/11EASEMENTS: Plaintiff sought to establish a prescriptive easement for parking and access. The trial court granted a motion for summary judgment against plaintiff because it had not paid taxes on the easement. The appellate court reversed because, while payment of property taxes is an element of a cause of action for adverse possession, payment of taxes is not necessary for an easement by prescription, unless the easement has been separately assessed. A railway easement over the same area was separately assessed, but that is irrelevant because the railway easement and the prescriptive easement were not coextensive in use.Liberty National Enterprises v. Chicago Title Insurance Company     Docket
194 Cal.App.4th 839 – 2nd Dist. (B222455)  4/6/11 (pub. order 4/26/11)     Case complete 6/28/11NOTE: This case is not summarized because it deals with disqualification of a party’s attorney, and not with issues related to title insurance. It is included here only to point out that fact.Barry v. OC Residential Properties     Docket     Sup.Ct. Docket
194 Cal.App.4th 861 – 4th Dist., Div. 3 (G043073)  4/26/11     Petition for review by Cal Supreme Ct. DENIED 7/13/11TRUSTEE’S SALES: Under C.C.P. 729.035 a trustee’s sale to enforce a homeowners association lien is subject to a right of redemption for 90 days after the sale, and under C.C.P. 729.060 the redemption price includes reasonable amounts paid for maintenance, upkeep and repair. Defendant purchased plaintiff’s interest in a common interest development at a foreclosure sale of a homeowners association lien. Plaintiff sought to redeem the property and defendant included certain repair costs in the redemption amount. Plaintiff asserted that the costs were not for reasonable maintenance, upkeep and repair. The court held that the costs were properly included because the person seeking to redeem has the burden of proof, and plaintiff failed to carry that burden in this case. Plaintiff also asserted that she should not have to pay the repair costs because the work was performed by an unlicensed contractor. The court held that the cost of the repair work was properly included because plaintiff would receive a windfall if she did not have to reimburse those costs and because this is not an action in which a contractor is seeking compensation.McMackin v. Ehrheart     Docket
194 Cal.App.4th 128 – 2nd Dist. (B224723)  4/8/11     Case complete 6/9/11CONTRACTS / PROBATE: This case involves a “Marvin” agreement, which is an express or implied contract between nonmarital partners. Plaintiff sought to enforce an alleged oral agreement with a decedent to leave plaintiff a life estate in real property. The court held that since the agreement was for distribution from an estate, it is governed by C.C.P. Section 366.3, which requires the action to be commenced within one year after the date of death. But the court further concluded that, depending on the circumstances of each case, the doctrine of equitable estoppel may be applied to preclude a party from asserting the statute of limitations set forth in section 366.3 as a defense to an untimely action where the party’s wrongdoing has induced another to forbear filing suit.Ferwerda v. Bordon     Docket
193 Cal. App. 4th 1178 – 3rd Dist. (C062389)  3/25/11     Petition for review by Cal Supreme Ct. DENIED 6/8/11CC&R’s
In the published portion of the opinion, the court held:
1. The following language in the CC&R’s gave the Homeowners Association the authority to adopt new design standards pertaining to development of lots in the subdivision: “in the event of a conflict between the standards required by [the Planning] Committee and those contained herein, the standards of said Committee shall govern”; and
2. The Planning Committee could not adopt a rule that allowed for attorney’s fees to be awarded to the prevailing party in a lawsuit because such a provision was not contained in the CC&R’s. Adopting the rule was an attempt by the committee to insert a new provision that binds homeowners without their approval.

In the unpublished portion of the opinion, the court held that the Planning Committee acted properly in denying the plaintiff’s building plans. (The details are not summarized here because that part of the opinion is not certified for publication.)Capon v. Monopoly Game LLC     Docket
193 Cal. App. 4th 344 – 1st Dist. (A124964)  3/4/11     Case complete 5/5/11HOME EQUITY SALES CONTRACT ACT: In the published portion of the opinion, the court held that plaintiff was entitled to damages under the Home Equity Sales Contract Act because the purchaser was subject to the Act and the purchase contract did not comply with it. There is an exception in the Act for a purchaser who intends to live in the property. The principal member of the LLC purchase asserted that he intended to live in the property, but the court held the exception does not apply because the purchaser was the LLC rather than the member, so his intent was irrelevant.Gomes v. Countrywide Home Loans     Docket     Cal. Sup.Ct. Docket     U.S. Supreme Ct. Docket
192 Cal. App. 4th 1149 – 4th Dist., Div. 1 (D057005)  2/18/11     Petition for review by Cal Supreme Ct. DENIED 5/18/11, Petition for a writ of certiorari DENIED 10/11/11FORECLOSURE / MERS: A borrower brought an action to restrain a foreclosure of a deed of trust held by MERS as nominee for the original lender. A Notice of Default had been recorded by the trustee, which identified itself as an agent for MERS. The court held that 1) There is no legal basis to bring an action in order to determine whether the person electing to sell the property is duly authorized to do so by the lender, unless the plaintiff can specify a specific factual basis for alleging that the foreclosure was not initiated by the correct party; and 2) MERS has a right to foreclose because the deed of trust specifically provided that MERS as nominee has the right to foreclose.Schuman v. Ignatin     Docket
191 Cal. App. 4th 255 – 2nd Dist. (B215059)  12/23/10     Case complete 2/23/11CC&R’s: The applicable CC&R’s would have expired, but an amendment was recorded extending them. Plaintiff filed this action alleging that defendant’s proposed house violated the CC&R’s. The trial court held that the amendment was invalid because it was not signed by all of the lot owners in the subdivision. Since the CC&R’s had expired, it did not determine whether the proposed construction would have violated them. The appellate court reversed and remanded, holding that the defect in the amendment rendered it voidable, not void, and it could no longer be challenged because the four-year statute of limitations contained in C.C.P. 343 had run.Schelb v. Stein     Docket
190 Cal. App. 4th 1440 – 2nd Dist. (B213929)  12/17/10     Case complete 2/16/11MARKETABLE RECORD TITLE ACT: In a previous divorce action, in order to equalize a division of community property, the husband was ordered to give the wife a note secured by a deed of trust on property awarded to the husband. In this case (many years later), the court held that under the Marketable Record Title Act, the deed of trust had expired. (Civil Code Section 882.020.) However, under Family Code Section 291, the underlying family law judgment does not expire until paid, so it is enforceable as an unsecured judgment.Vuki v. Superior Court     Docket
189 Cal. App. 4th 791 – 4th Dist., Div. 3 (G043544)  10/29/10     Case complete 1/3/11TRUSTEE’S SALES: Unlike section 2923.5 as construed by this court in Mabry v. Superior Court (2010) 185 Cal.App.4th 208, neither Section 2923.52 or Section 2923.53 provides any private right of action, even a very limited one as this court found in Mabry. Civil Code section 2923.52 imposes a 90-day delay in the normal foreclosure process. But Civil Code section 2923.53 allows for an exemption to that delay if lenders have loan modification programs that meet certain criteria. The only enforcement mechanism is that a violation is deemed to be a violation of lenders license laws. Section 2923.54 provides that a violation of Sections 2923.52 or 2923.53 does not invalidate a trustee’s sale, and plaintiff also argued that a lender is not entitled to a bona fide purchaser protection. The court rejected that argument because any noncompliance is entirely a regulatory matter, and cannot be remedied in a private action.Abers v. Rounsavell     Mod Opinion     Docket
189 Cal. App. 4th 348 – 4th Dist., Div. 3 (G040486)  10/18/10     Case complete 12/20/10LEASES: Leases of residential condominium units required a re-calculation of rent after 30 years based on a percentage of the appraised value of the “leased land”. The term “leased land” was defined to consist of the condominium unit and an undivided interest in the common area of Parcel 1, and did not include the recreational area (Parcel 2), which was leased to the Homeowners Association. The Court held that the language of the leases was clear. The appraisals were to be based only on the value of the lessees’ interest in Parcel 1 and not on the value of the recreational parcel.UNPUBLISHED: Residential Mortgage Capital v. Chicago Title Ins. Company     Docket
Cal.App. 1st Dist. (A125695)  9/20/10     Case complete 11/23/10ESCROW: An escrow holder released loan documents to a mortgage broker at the broker’s request in order to have the borrowers sign the documents at home. They were improperly backdated and the broker failed to provide duplicate copies of the notice of right to rescind. Due these discrepancies, the lender complied with the borrower’s demand for a rescission of the loan, and filed this action against the escrow holder for amounts reimbursed to the borrower for finance charges and attorney’s fees. The Court held that the escrow holder did not breach a duty to the lender because it properly followed the escrow instructions, and it is common for escrow to release documents to persons associated with the transaction in order for them to be signed elsewhere.Starr v. Starr     Docket
189 Cal. App. 4th 277 – 2nd Dist. (B219539)  9/30/10     Case complete 12/16/10COMMUNITY PROPERTY: In a divorce action the Court ordered the husband to convey title to himself and his former wife. Title had been taken in the husband’s name and the wife executed a quitclaim deed. But Family Code Section 721 creates a presumption that a transaction that benefits one spouse was the result of undue influence. The husband failed to overcome this presumption where the evidence showed that the wife executed the deed in reliance on the husband’s representation that he would subsequently add her to title. The husband was, nevertheless, entitled to reimbursement for his separate property contribution in purchasing the property.Malkoskie v. Option One Mortgage Corp.     Docket
188 Cal. App. 4th 968 – 2nd Dist. (B221470)  9/23/10     Case complete 11/23/10TRUSTEE’S SALES: After plaintiff stipulated to a judgment in an unlawful detainer action, she could not challenge the validity of the trustee’s sale in a subsequent action because the subsequent action is barred by collateral estoppel. Because the action was barred, the court did not reach the question of the validity of the trustee’s sale based on the substitution of trustee being recorded after trustee’s sale proceedings had commenced and based on assignments of the deed of trust into the foreclosing beneficiary being recorded after the trustee’s deed.Lee v. Fidelity National Title Ins. Co.     Docket     Sup.Ct. Docket
188 Cal. App. 4th 583 – 1st Dist. (A124730)  9/16/10     Petition for review and depublication by Cal Supreme Ct. DENIED 12/1/10TITLE INSURANCE:
1. The insureds could have reasonably expected that they were buying a title insurance policy on APN 22, and not just APN 9, where both the preliminary report and policy included a reference to APN 22, listed exclusions from coverage that were specific to APN 22, and attached an assessor’s parcel map with an arrow pointing to both APN 9 and 22.
2. A preliminary report is merely an offer to issue a title policy, but an insured has the right to expect that the policy will be consistent with the terms of the offer.
3. There was a triable issue of fact as to whether a neighbor’s construction of improvements on APN 22 was sufficient to commence the running of the statute of limitations, where the insureds testified that they did not know the precise location of APN 22 and assumed that the neighbors constructed the improvements on their own property.
4. There was a triable issue of fact as to whether Fidelity National Title Insurance Company acted as escrow holder or whether the escrow was conducted by its affiliate, Fidelity National Title Company (only the insurance company was named as a defendant).Chicago Title Insurance Company v. AMZ Insurance Services     Docket     Sup.Ct. Docket
188 Cal. App. 4th 401 – 4th Dist., Div. 3 (G041188)  9/9/10     Petition for review and depublication by Cal Supreme Ct. DENIED 12/15/10ESCROW: A document entitled “Evidence of Property Insurance” (“EOI”) constitutes a binder under Insurance Code Section 382.5(a). In this case an EOI was effective to obligate the insurer to issue a homeowner’s policy even though the escrow failed to send the premium check. In order to cancel the EOI the insured has to be given notice pursuant to Insurance Code Section 481.1, which the insurer did not do. The escrow holder paid the insured’s loss and obtained an assignment of rights. The court held that the escrow holder did not act as a volunteer in paying the amount of the loss, and is entitled to be reimbursed by the insurance company under the doctrine of equitable subrogation.Vanderkous v. Conley     Docket
188 Cal. App. 4th 111 – 1st Dist (A125352)  9/2/10     Case complete 11/3/10QUIET TITLE: 1) In a quiet title action the court has equitable powers to award compensation as necessary to do complete justice, even though neither party’s pleadings specifically requested compensation. 2) Realizing that the court was going to require plaintiff to compensate defendant in exchange for quieting title in plaintiff’s favor, plaintiff dismissed the lawsuit. However, the dismissal was invalid because it was filed following trial after the case had been submitted to the court.Purdum v. Holmes     Docket
187 Cal. App. 4th 916 – 2nd Dist. (B216493)  7/29/10     Case complete 10/22/10NOTARIES: A notary was sued for notarizing a forged deed. He admitted that he knew the grantor had not signed the deed, but the lawsuit was filed more than six years after the deed was signed and notarized. The court held that the action was barred by the six-year limitation period in C.C.P. 338(f)(3) even though plaintiff did not discover the wrongful conduct until well within the six year period.Perlas v. GMAC Mortgage     Docket
187 Cal. App. 4th 429 – 1st Dist. (A125212)  8/11/10     Case complete 10/10/10DEEDS OF TRUST: Borrowers filed an action against a lender to set aside a deed of trust, setting forth numerous causes of action. Borrowers’ loan application (apparently prepared by a loan broker) falsely inflated the borrowers’ income. In the published portion of the opinion. The court held in favor of the lender, explaining that a lender is not in a fiduciary relationship with borrowers and owes them no duty of care in approving their loan. A lender’s determination that the borrowers qualified for the loan is not a representation that they could afford the loan. One interesting issue in the unpublished portion of the opinion was the court’s rejection of the borrowers’ argument that naming MERS as nominee invalidated the deed of trust because, as borrower argued, the deed of trust was a contract with MERS and the note was a separate contract with the lender.Soifer v. Chicago Title Company     Modification     Docket     Sup.Ct. Docket
187 Cal. App. 4th 365 – 2nd Dist. (B217956)  8/10/10     Petition for review by Cal Supreme Ct. DENIED 10/27/10TITLE INSURANCE: A person cannot recover for errors in a title company’s informal communications regarding the condition of title to property in the absence of a policy of title insurance or the purchase of an abstract of title. There are two ways in which an interested party can obtain title information upon which reliance may be placed: an abstract of title or a policy of title insurance. Having purchased neither, plaintiff cannot recover for title company’s incorrect statement that a deed of trust in foreclosure was a first lien.In re: Hastie (Weinkauf v. Florez)     Docket     Sup.Ct. Docket
186 Cal. App. 4th 1285 – 1st Dist. (A127069)  7/22/10     Petition for review by Cal Supreme Ct. filed late and DENIED 9/21/10DEEDS: An administrator of decedent’s estate sought to set aside two deeds on the basis that the grantees were the grandson and granddaughter of decedent’s caregiver. Defendant did not dispute that the transfers violated Probate Code Section 21350, which prohibits conveyances to a fiduciary, including a caregiver, or the fiduciary’s relatives, unless specified conditions are met. Instead, defendant asserted only that the 3-year statute of limitations had expired. The court held that the action was timely because there was no evidence indicating that the heirs had or should have had knowledge of the transfer, which would have commenced the running of the statute of limitations.Bank of America v. Stonehaven Manor, LLC     Docket     Sup.Ct. Docket
186 Cal. App. 4th 719 – 3rd Dist. (C060089)  7/12/10     Petition for review by Cal Supreme Ct. DENIED 10/20/10ATTACHMENT: The property of a guarantor of a debt–a debt which is secured by the real property of the principal debtor and also that of a joint and several co-guarantor–is subject to attachment where the guarantor has contractually waived the benefit of that security (i.e. waived the benefit of Civil Code Section 2849).Jackson v. County of Amador     Docket
186 Cal. App. 4th 514 – 3rd Dist. (C060845)  7/7/10     Depublication request DENIED 9/15/10RECORDING LAW: An owner of two rental houses sued the county recorder for recording a durable power of attorney and two quitclaim deeds that were fraudulently executed by the owner’s brother. The superior court sustained the recorder’s demurrer without leave to amend. The court of appeal affirmed, holding that the legal insufficiency of the power of attorney did not provide a basis for the recorder to refuse to record the power of attorney under Government Code Section 27201(a) and the recorder did not owe the owner a duty to determine whether the instruments were fraudulently executed because the instruments were notarized.Luna v. Brownell     Docket
185 Cal. App. 4th 668 – 2nd Dist. (B212757)  6/11/10     Case complete 8/17/10DEEDS: A deed transferring property to the trustee of a trust is not void as between the grantor and grantee merely because the trust had not been created at the time the deed was executed, if (1) the deed was executed in anticipation of the creation of the trust and (2) the trust is in fact created thereafter. The deed was deemed legally delivered when the Trust was established.Mabry v. Superior Court     Docket     Sup.Ct. Docket
185 Cal. App. 4th 208 – 4th Dist., Div. 3 (G042911)  6/2/10     Petition for review by Cal Supreme Ct. DENIED 8/18/10TRUSTEE’S SALES: The court answered, and provided thorough explanations for, a laundry list of questions regarding Civil Code Section 2923.5, which requires a lender to explore options for modifying a loan with a borrower prior to commencing foreclosure proceedings.
1. May section 2923.5 be enforced by a private right of action?  Yes.
2. Must a borrower tender the full amount of the mortgage indebtedness due as a prerequisite to bringing an action under section 2923.5?  No.
3. Is section 2923.5 preempted by federal law?  No.
4. What is the extent of a private right of action under section 2923.5?  It is limited to obtaining a postponement of a foreclosure to permit the lender to comply with section 2923.5.
5. Must the declaration required of the lender by section 2923.5, subdivision (b) be under penalty of perjury?  No.
6. Does a declaration in a notice of default that tracks the language of section 2923.5(b) comply with the statute, even though such language does not on its face delineate precisely which one of three categories applies to the particular case at hand?  Yes.
7. If a lender forecloses without complying with section 2923.5, does that noncompliance affect the title acquired by a third party purchaser at the foreclosure sale?  No.
8. Did the lender comply with section 2923.5?  Remanded to the trial court to determine which of the two sides is telling the truth.
9. Can section 2923.5 be enforced in a class action in this case?  Not under these facts, which are highly fact-specific.
10. Does section 2923.5 require a lender to rewrite or modify the loan? No.612 South LLC v. Laconic Limited Partnership     Docket
184 Cal. App. 4th 1270 – Cal.App. 4th Dist., Div. 1 (D056646)  5/25/10     Case complete 7/26/10ASSESSMENT BOND FORECLOSURE:
1. Recordation of a Notice of Assessment under the Improvement Act of 1911 imparted constructive notice even though the notice did not name the owner of the subject property and was not indexed under the owner’s name. There is no statutory requirement that the notice of assessment be indexed under the name of the property owner.
2. A Preliminary Report also gave constructive notice where it stated: “The lien of special tax for the following municipal improvement bond, which tax is collected with the county taxes. . .”
3. A property owner is not liable for a deficiency judgment after a bond foreclosure because a property owner does not have personal liability for either delinquent amounts due on the bond or for attorney fees incurred in prosecuting the action.Tarlesson v. Broadway Foreclosure Investments     Docket
184 Cal. App. 4th 931 – 1st Dist. (A125445)  5/17/10     Case complete 7/20/10HOMESTEADS: A judgment debtor is entitled to a homestead exemption where she continuously resided in property, even though at one point she conveyed title to her cousin in order to obtain financing and the cousin subsequently conveyed title back to the debtor. The amount of the exemption was $150,000 (later statutorily changed to $175,000) based on debtor’s declaration that she was over 55 years old and earned less than $15,000 per year, because there was no conflicting evidence in the record.UNPUBLISHED: MBK Celamonte v. Lawyers Title Insurance Corporation     Docket     Sup.Ct. Docket
Cal.App. 4th Dist., Div. 3 (G041605)  4/28/10     Petition for review by Cal Supreme Ct. DENIED 7/21/10TITLE INSURANCE / ENCUMBRANCES: A recorded authorization for a Mello Roos Assessment constitutes an “encumbrance” covered by a title policy, even where actual assessments are conditioned on the future development of the property.Plaza Home Mortgage v. North American Title Company     Docket     Sup.Ct. Docket
184 Cal. App. 4th 130 – 4th Dist., Div. 1 (D054685)  4/27/10     Depublication request DENIED 8/11/10ESCROW / LOAN FRAUD: The buyer obtained 100% financing and managed to walk away with cash ($54,000) at close of escrow. (Actually, the buyer’s attorney-in-fact received the money.) The lender sued the title company that acted as escrow holder, asserting that it should have notified the lender when it received the instruction to send the payment to the buyer’s attorney-in-fact after escrow had closed. The court reversed a grant of a motion for summary judgment in favor of the escrow, pointing out that its decision is narrow, and holding only that the trial court erred when it determined the escrow did not breach the closing instructions contract merely because escrow had closed. The case was remanded in order to determine whether the escrow breached the closing instructions contract and if so, whether that breach proximately caused the lender’s damages.Garcia v. World Savings     Docket     Sup.Ct. Docket
183 Cal. App. 4th 1031 – 2nd (B214822)  4/9/10     Petition for review and depublication by Cal Supreme Ct. DENIED 6/23/10TRUSTEE’S SALES: A lender told plaintiffs/owners that it would postpone a trustee’s sale by a week to give plaintiffs time to obtain another loan secured by other property in order to bring the subject loan current. Plaintiffs obtained a loan the following week, but the lender had conducted the trustee’s sale on the scheduled date and the property was sold to a third party bidder. Plaintiffs dismissed causes of action pertaining to setting aside the sale and pursued causes of action for breach of contract, wrongful foreclosure and promissory estoppel. The court held that there was no consideration that would support the breach of contract claim because plaintiffs promised nothing more than was due under the original agreement. Plaintiffs also could not prove a cause of action for wrongful foreclosure because that cause of action requires that the borrower tender funds to pay off the loan prior to the trustee’s sale. However, plaintiffs could recover based on promissory estoppel because procuring a high cost, high interest loan by using other property as security is sufficient to constitute detrimental reliance.LEG Investments v. Boxler     Docket
183 Cal. App. 4th 484 – 3rd Dist. (C058743)  4/1/10     Certified for Partial Publication     Case complete 6/2/10PARTITION: A right of first refusal in a tenancy in common agreement does not absolutely waive the right of partition. Instead, the right of first refusal merely modifies the right of partition to require the selling cotenant to first offer to sell to the nonselling cotenant before seeking partition. [Ed. note: I expect that the result would have been different if the right of partition had been specifically waived in the tenancy in common agreement.]Steiner v. Thexton     Docket
48 Cal. 4th 411 – Cal. Supreme Court (S164928)  3/18/10OPTIONS: A contract to sell real property where the buyer’s performance was entirely conditioned on the buyer obtaining regulatory approval to subdivide the property is an option. Although plaintiffs’ promise was initially illusory because no consideration was given at the outset, plaintiffs’ part performance of their bargained-for promise to seek a parcel split cured the initially illusory nature of the promise and thereby constituted sufficient consideration to render the option irrevocable.Grotenhuis v. County of Santa Barbara     Docket
182 Cal. App. 4th 1158 – 2nd Dist. (B212264)  3/15/10     Case complete 5/18/10PROPERTY TAXES: Subject to certain conditions, a homeowner over the age of 55 may sell a principle residence, purchase a replacement dwelling of equal or lesser value in the same county, and transfer the property tax basis of the principal residence to the replacement dwelling. The court held that this favorable tax treatment is not available where title to both properties was held by an individual’s wholly owned corporation. The court rejected plaintiffs’ argument that the corporation was their alter ego because that concept is used to pierce the corporate veil of an opponent, and not to enable a person “to weave in and out of corporate status when it suits the business objective of the day.”Clear Lake Riviera Community Assn. v. Cramer     Docket
182 Cal.App. 4th 459 – 1st Dist. (A122205)  2/26/10     Case complete 4/29/10HOMEOWNER’S ASSOCIATIONS: Defendant homeowners were ordered to bring their newly built house into compliance with the homeowners association’s guidelines where the house exceed the guidelines’ height restriction by nine feet. Even though the cost to the defendants will be great, they built the house with knowledge of the restriction and their hardship will not be grossly disproportionate to the loss the neighbors would suffer if the violation were not abated, caused by loss in property values and loss of enjoyment of their properties caused by blocked views. The height restriction was contained in the associations guidelines and not in the CC&R’s, and the association did not have records proving the official adoption of the guidelines. Nevertheless, the court held that proper adoption was inferred from the circumstantial evidence of long enforcement of the guidelines by the association.Forsgren Associates v. Pacific Golf Community Development     Docket     Sup. Ct. Docket
182 Cal.App. 4th 135 – 4th Dist., Div. 2 (E045940)  2/23/10     Petition for review by Cal Supreme Ct. DENIED 6/17/10MECHANIC’S LIENS: 1. Owners of land are subject to mechanic’s liens where they were aware of the work being done by the lien claimant and where they failed to record a notice of non-responsibility.
2. Civil Code Section 3128 provides that a mechanic’s lien attaches to land on which the improvement is situated “together with a convenient space about the same or so much as may be required for the convenient use and occupation thereof”. Accordingly, defendant’s land adjacent to a golf course on which the lien claimant performed work is subject to a mechanic’s lien, but only as to the limited portions where a tee box was located and where an irrigation system was installed.
3. The fact that adjacent property incidentally benefits from being adjacent to a golf course does not support extending a mechanic’s lien to that property.
4. The owners of the adjacent property were liable for interest, but only as to their proportionate share of the amount of the entire mechanic’s lien.Steinhart v. County of Los Angeles      Docket
47 Cal.4th 1298 – Cal. Supreme Court (S158007)  2/4/10PROPERTY TAXES: A “change in ownership”, requiring a property tax reassessment, occurs upon the death of a trust settlor who transferred property to a revocable trust, and which became irrevocable upon the settlor’s death. The fact that one trust beneficiary was entitled to live in the property for her life, and the remaining beneficiaries received the property upon her death, did not alter the fact that a change in ownership of the entire title had occurred.Kuish v. Smith     Docket
181 Cal.App.4th 1419 – 4th Dist., Div. 3 (G040743)  2/3/10     Case complete 4/12/10CONTRACTS: 1. Defendants’ retention of a $600,000 deposit designated as “non-refundable” constituted an invalid forfeiture because a) the contract did not contain a valid liquidated damages clause, and b) plaintiff re-sold the property for a higher price, so there were no out-of-pocket damages. 2. The deposit did not constitute additional consideration for extending the escrow because it was labeled “non-refundable” in the original contract.Kendall v. Walker (Modification attached)     Docket
181 Cal.App.4th 584 – 1st Dist. (A105981)  12/30/09     Case complete 3/29/10WATER RIGHTS: An owner of land adjoining a navigable waterway has rights in the foreshore adjacent to his property separate from that of the general public. The court held that the boundary in the waterway between adjacent parcels of land is not fixed by extending the boundary lines into the water in the direction of the last course ending at the shore line. Instead, it is fixed by a line drawn into the water perpendicular to the shore line. Accordingly, the court enjoined defendants from allowing their houseboat from being moored in a manner that crossed onto plaintiffs’ side of that perpendicular boundary line.Junkin v. Golden West Foreclosure Service     Docket
180 Cal.App.4th 1150 – 1st Dist. (A124374)  1/5/10     Case complete 3/12/10USURY: The joint venture exception to the Usury Law, which has been developed by case law, provides that where the relationship between the parties is a bona fide joint venture or partnership, an advance by a joint venturer is an investment and not a loan, making the Usury Law inapplicable. The court applied the exception to a loan by one partner to the other because instead of looking at the loan in isolation, it looked at the entire transaction which it determined to be a joint venture. The case contains a good discussion of the various factors that should be weighed in determining whether the transaction is a bona fide joint venture. The presence or absence of any one factor is not, alone, determinative. The factors include whether or not: 1) there is an absolute obligation of repayment, 2) the investor may suffer a loss, 3) the investor has a right to participate in management, 4) the subject property was purchased from a third party and 5) the parties considered themselves to be partners.Banc of America Leasing & Capital v. 3 Arch Trustee Services     Docket
180 Cal.App.4th 1090 – 4th Dist., Div. 3 (G041480)  12/11/09     Case complete 3/8/10TRUSTEE’S SALES: A judgment lien creditor is not entitled to receive a notice of default, notice of trustee’s sale or notice of surplus sale proceeds unless the creditor records a statutory request for notice. The trustee is required to disburse surplus proceeds only to persons who have provided the trustee with a proof of claim. The burden rests with the judgment creditor to keep a careful watch over the debtor, make requests for notice of default and sales, and to submit claims in the event of surplus sale proceeds.Park 100 Investment Group v. Ryan     Docket
180 Cal.App.4th 795 – 2nd Dist. (B208189)  12/23/09     Case complete 2/26/10LIS PENDENS: 1. A lis pendens may be filed against a dominant tenement when the litigation involves an easement dispute. Although title to the dominant tenement would not be directly affected if an easement right was shown to exist, the owner’s right to possession clearly is affected

2.A recorded lis pendens is a privileged publication only if it identifies an action previously filed with a court of competent jurisdiction which affects the title or right of possession of real property. If the complaint does not allege a real property claim, or the alleged claim lacks evidentiary merit, the lis pendens, in addition to being subject to expungement, is not privileged.Millennium Rock Mortgage v. T.D. Service Company     Modification     Docket
179 Cal.App.4th 804 – 3rd Dist. (C059875)  11/24/09     Case complete 1/26/10TRUSTEE’S SALES: A trustee’s sale auctioneer erroneously read from a script for a different foreclosure, although the correct street address was used. The auctioneer opened the bidding with the credit bid from the other foreclosure that was substantially less than the correct credit bid. The errors were discovered after the close of bidding but prior to the issuance of a trustee’s deed. The court held that the errors constituted an “irregularity” sufficient to give the trustee the right to rescind the sale.

The court distinguished 6 Angels v. Stuart-Wright Mortgage, in which the court held that a beneficiary’s negligent miscalculation of the amount of its credit bid was not sufficient to rescind the sale. In 6 Angelsthe error was totally extrinsic to the proper conduct of the sale itself. Here there was inherent inconsistency in the auctioneer’s description of the property being offered for sale, creating a fatal ambiguity in determining which property was being auctioned.Fidelity National Title Insurance Company v. Schroeder     Docket
179 Cal.App.4th 834 – 5th Dist. (F056339)  11/24/09     Case complete 1/25/10JUDGMENTS: A judgment debtor transferred his 1/2 interest in real property to the other cotenant prior to the judgment creditor recording an abstract of judgment. The court held that if the trial court on remand finds that the transfer was intended to shield the debtor’s property from creditors, then the transferee holds the debtor’s 1/2 interest as a resulting trust for the benefit of the debtor, and the creditor’s judgment lien will attach to that interest. The court also held that the transfer cannot be set aside under the Uniform Fraudulent Transfer Act because no recoverable value remained in the real property after deducting existing encumbrances and Gordon’s homestead exemption.

The case contains a good explanation of the difference between a resulting (“intention enforcing”) and constructive (“fraud-rectifying”) trust. A resulting trust carries out the inferred intent of the parties; a constructive trust defeats or prevents the wrongful act of one of them.Zhang v. Superior Court     Docket     Sup.Ct. Docket
Cal.App. 4th Dist., Div. 2 (E047207) 10/29/09     Petition for review by Cal Supreme Ct. GRANTED 2/10/10INSURANCE / BAD FAITH: Fraudulent conduct by an insurer does not give rise to a private right of action under the Unfair Insurance Practices Act (Insurance Code section 790.03 et seq.), but it can give rise to a private cause of action under the Unfair Competition Law (Business and Professions Code section 17200 et seq.).Presta v. Tepper     Docket
179 Cal.App.4th 909 – 4th Dist., Div. 3 (G040427)  10/28/09     Case complete 1/25/10TRUSTS: An ordinary express trust is not an entity separate from its trustee, like a corporation is. Instead, a trust is merely a relationship by which one person or entity holds property for the benefit of some other person or entity. Consequently, where two men entered into partnership agreements as trustees of their trusts, the provision of the partnership agreement, which required that upon the death of a partner the partnership shall purchase his interest in the partnership, was triggered by the death of one of the two men.Wells Fargo Bank v. Neilsen      Modification     Docket     Sup.Ct. Docket
178 Cal.App.4th 602 – 1st Dist. (A122626)  10/22/09 (Mod. filed 11/10/09)     Petition for review by Cal Supreme Ct. DENIED 2/10/10CIRCUITY OF PRIORITY: The Court follows the rule in Bratcher v. Buckner, even though Bratcher involved a judgment lien and two deeds of trust and this case involves three deeds of trust. The situation is that A, B & C have liens on the subject property, and A then subordinates his lien to C’s lien. The problem with this is that C appears to be senior to A, which is senior to B, which is senior to C, so that each lien is senior and junior to one of the other liens.

The Court held that the lien holders have the following priority: (1) C is paid up to the amount of A’s lien, (2) if the amount of A’s lien exceeds C’s lien, A is paid the amount of his lien, less the amount paid so far to C, (3) B is then paid in full, (4) C is then paid any balance still owing to C, (5) A is then paid any balance still owing to A.

This is entirely fair because A loses priority as to the amount of C’s lien, which conforms to the intent of the subordination agreement. B remains in the same position he would be in without the subordination agreement since his lien remains junior only to the amount of A’s lien. C steps into A’s shoes only up to the amount of A’s lien.

NOTE: The odd thing about circuity of priority cases is that they result in surplus proceeds after a foreclosure sale being paid to senior lienholders. Normally, only junior lienholders and the foreclosed out owner are entitled to share in surplus proceeds, and the purchaser takes title subject to the senior liens.Schmidli v. Pearce     Docket
178 Cal.App.4th 305 – 3rd Dist. (C058270)  10/13/09      Case complete 12/15/09MARKETABLE RECORD TITLE ACT: This case was decided under the pre-2007 version of Civil Code Section 882.020, which provided that a deed of trust expires after 10 years if the maturity date is “ascertainable from the record”. The court held that this provision was not triggered by a Notice of Default, which set forth the maturity date and which was recorded prior to expiration of the 10-year period. NOTE: In 2007, C.C. Section 882.020 was amended to make it clear that the 10-year period applies only where the maturity date is shown in the deed of trust itself.Nielsen v. Gibson     Docket
178 Cal.App.4th 318 – 3rd Dist. (C059291)  10/13/09     Case complete 12/15/09ADVERSE POSSESSION: 1. The “open and notorious” element of adverse possession was satisfied where plaintiff possessed the subject property by actual possession under such circumstances as to constitute reasonable notice to the owner. Defendant was charged with constructive knowledge of plaintiff’s possession, even though defendant was out of the country the entire time and did not have actual knowledge.

2. The 5-year adverse possession period is tolled under C.C.P. Section 328 for up to 20 years if the defendant is “under the age of majority or insane”. In the unpublishedportion of the opinion the court held that although the defendant had been ruled incompetent by a court in Ireland, there was insufficient evidence that defendant’s condition met the legal definition of “insane”.Ricketts v. McCormack     Docket     Sup.Ct. Docket
177 Cal.App.4th 1324 – 2nd Dist. (B210123)  9/27/09     Petition for review by Cal Supreme Ct. DENIED 12/17/09RECORDING LAW: Civil Code Section 2941(c) provides in part, “Within two business days from the day of receipt, if received in recordable form together with all required fees, the county recorder shall stamp and record the full reconveyance or certificate of discharge.” In this class action lawsuit against the County recorder, the court held that indexing is a distinct function, separate from recording a document, and is not part of section 2941(c)’s stamp-and-record requirement.

The court distinguished indexing, stamping and recording:
Stamping: The “stamping” requirement of Section 2941(c) is satisfied when the Recorder endorses on a reconveyance the order of receipt, the day and time of receipt and the amount of fees paid.
Recording: The reconveyance is “recorded” once the Recorder has confirmed the document meets all recording requirements, created an entry for the document in the “Enterprise Recording Archive” system, calculated the required fees and confirmed payment of the correct amount and, finally, generated a lead sheet containing, among other things, a bar code, a permanent recording number and the words “Recorded/Filed in Official Records.”
Indexing: Government Code Section 27324 requires all instruments “presented for recordation” to “have a title or titles indicating the kind or kinds of documents contained therein,” and the recorder is “required to index only that title or titles captioned on the first page of a document.Starlight Ridge South Homeowner’s Assn. v. Hunter-Bloor     Docket
177 Cal.App.4th 440 – 4th Dist., Div. 2 (E046457)  8/14/09 (Pub. Order 9/3/09)     Case complete 10/19/09CC&R’s: Under Code Civ. Proc. Section 1859, where two provisions appear to cover the same matter, and are inconsistent, the more specific provision controls over the general provision. Here the provision of CC&R’s requiring each homeowner to maintain a drainage ditch where it crossed the homeowners’ properties was a specific provision that controlled over a general provision requiring the homeowner’s association to maintain landscape maintenance areas.First American Title Insurance Co. v. XWarehouse Lending Corp.     Docket
177 Cal.App.4th 106 – 1st Dist. (A119931)  8/28/09      Case complete 10/30/09TITLE INSURANCE: A loan policy provides that “the owner of the indebtedness secured by the insured mortgage” becomes an insured under the loan policy. Normally, this means that an assignee becomes an insured. However, where the insured lender failed to disburse loan proceeds for the benefit of the named borrower, an indebtedness never existed, and the warehouse lender/assignee who disbursed money to the lender did not become an insured. The court pointed out that the policy insures against defects in the mortgage itself, but not against problems related to the underlying debt.

NOTE: In Footnote 8 the court distinguishes cases upholding the right of a named insured or its assignee to recover from a title insurer for a loss due to a forged note or forged mortgage because in those cases, and unlike this case, moneys had been actually disbursed or credited to the named borrower by either the lender or its assignee.Wells Fargo v. D & M Cabinets     Docket
177 Cal.App.4th 59 – 3rd Dist. (C058486)  8/28/09     Case complete 10/28/09JUDGMENTS: A judgment creditor, seeking to sell an occupied dwelling to collect on a money judgment, may not bypass the stringent requirements of C.C.P. Section 704.740 et seq. when the sale is conducted by a receiver appointed under C.C.P Section 708.620. The judgment creditor must comply with Section 704.740, regardless of whether the property is to be sold by a sheriff or a receiver.Sequoia Park Associates v. County of Sonoma     Docket     Sup.Ct. Docket
176 Cal.App.4th 1270 – 1st Dist. (A120049)  8/21/09     Petition for review by Cal Supreme Ct. DENIED 12/2/09PREEMPTION: A County ordinance professing to implement the state mobilehome conversion statutes was preempted for the following reasons: (1) Gov. Code Section 66427.5 expressly preempts the power of local authorities to inject other factors when considering an application to convert an existing mobilehome park from a rental to a resident-owner basis, (2) the ordinance is impliedly preempted because the Legislature has established a dominant role for the state in regulating mobilehomes, and has indicated its intent to forestall local intrusion into the particular terrain of mobilehome conversions and (3) the County’s ordinance duplicates several features of state law, a redundancy that is an established litmus test for preemption.Citizens for Planning Responsibly v. County of San Luis Obispo     Docket     Sup.Ct. Docket
176 Cal.App.4th 357 – 2nd Dist (B206957)  8/4/09     Petition for review by Cal Supreme Ct. DENIED 10/14/09PREEMPTION: The court held that the State Aeronautics Act, which regulates the development and expansion of airports, did not preempt an initiative measure adopted by the voters because none of the following three factors necessary to establish preemption was present: (1) The Legislature may so completely occupy the field in a matter of statewide concern that all, or conflicting, local legislation is precluded, (2) the Legislature may delegate exclusive authority to a city council or board of supervisors to exercise a particular power over matters of statewide concern, or (3) the exercise of the initiative power would impermissibly interfere with an essential governmental function.Delgado v. Interinsurance Exchange of the Auto Club of So. Cal.     Docket
47 Cal.4th 302 – Cal. Supreme Court (S155129)  8/3/09INSURANCE / BAD FAITH: The case is not as relevant to title insurance as the lower court case, which held that an insurance company acted in bad faith as a matter of law where a potential for coverage was apparent from the face of the complaint. The Supreme Court reversed, basing its decision on the meaning of “accident” in a homeowner’s policy, and holding that an insured’s unreasonable belief in the need for self-defense does not turn the resulting intentional act of assault and battery into “an accident” within the policy’s coverage clause. Therefore, the insurance company had no duty to defend its insured in the lawsuit brought against him by the injured party.1538 Cahuenga Partners v. Turmeko Properties     Docket
176 Cal.App.4th 139 – 2nd Dist. (B209548)  7/31/09     Case complete 10/7/09RECONVEYANCE: [This is actually a civil procedure case that it not of much interest to title insurance business, but it is included here because the underlying action sought to cancel a reconveyance.] The court ordered that a reconveyance of a deed of trust be cancelled pursuant to a settlement agreement. The main holding was that a trial court may enforce a settlement agreement against a party to the settlement that has interest in the subject matter of the action even if the party is not named in the action, where the non-party appears in court and consents to the settlement.Lee v. Lee     Docket
175 Cal.App.4th 1553 – 5th Dist. (F056107)  7/29/09     Case complete 9/28/09DEEDS / STATUTE OF FRAUDS:
1. The Statute of Frauds does not apply to an executed contract, and a deed that is executed by the grantor and delivered to the grantee is an executed contract. The court rejected defendants’ argument that the deed did not reflect the terms of sale under a verbal agreement.
2. While the alteration of an undelivered deed renders the conveyance void, the alteration of a deed after it has been delivered to the grantee does not invalidate the instrument as to the grantee. The deed is void only as to the individuals who were added as grantees after delivery.White v. Cridlebaugh     Docket
178 Cal.App.4th 506 – 5th Dist. (F053843)  7/29/09  (Mod. 10/20/09)     Case complete 12/21/09MECHANIC’S LIENS: Under Business and Professions Code Section 7031, a property owner may recover all compensation paid to an unlicensed contractor, in addition to not being liable for unpaid amounts. Furthermore, this recovery may not be offset or reduced by the unlicensed contractor’s claim for materials or other services.Linthicum v. Butterfield     Docket     Sup.Ct. Docket
175 Cal.App.4th 259 – 2nd Dist. (B199645)  6/24/09     Petition for review by Cal Supreme Ct. DENIED 9/9/09NOTE: This is a new opinion following a rehearing. The only significant changes from the original opinion filed 4/2/09 (modified 4/8/09) involve the issue of a C.C.P. 998 offer, which is not a significant title insurance or escrow issue.
EASEMENTS: The court quieted title to an easement for access based on the doctrine of “balancing conveniences ” or “relative hardship”. Prohibiting the continued use of the roadway would cause catastrophic loss to the defendants and insignificant loss to the plaintiffs. However, the court remanded the case for the trial court to determine the width of the easement, which should be the minimal width necessary. The court reversed the judgment insofar as it awarded a utility easement to the defendants because they did not seek to quiet title to an easement for utilities, even though they denied the material allegations of that cause of action.United Rentals Northwest v. United Lumber Products     Docket
174 Cal.App.4th 1479 – 5th Dist. (F055855)  6/18/09     Case complete 8/18/09MECHANIC’S LIENS: Under Civil Code Section 3106, a “work of improvement” includes the demolition and/or removal of buildings. The court held that lumber drying kilns are “buildings” so the contractor who dismantled and removed them was entitled to a mechanic’s lien.People v. Shetty     Docket     Sup.Ct. Docket
174 Cal.App.4th 1488 – 2nd Dist. (B205061)  6/18/09     Petition for review by Cal Supreme Ct. DENIED 9/30/09HOME EQUITY SALES CONTRACT ACT: This case is not significant from a title insurance standpoint, but it is interesting because it is an example of a successful prosecution under the Home Equity Sales Contract Act (Civil Code Section 1695 et seq.).Strauss v. Horton     Modification     Docket
46 Cal.4th 364 – Cal. Supreme Court (S168047)  5/26/09SAME SEX MARRIAGE: The California Supreme Court upheld Proposition 8, which amended the California State Constitution to provide that: “Only marriage between a man and a woman is valid or recognized in California.” Proposition 8 thereby overrode portions of the ruling of In re Marriage Cases, which allowed same-sex marriages. But the Court upheld the marriages that were performed in the brief time same-sex marriage was legal between June 17, 2008 (In re Marriage Cases) through November 5, 2008 (Proposition 8).In re Marriage of Lund     Docket
174 Cal.App.4th 40 – 4th Dist., Div. 3 (G040863)  5/21/09     Case complete 7/27/09COMMUNITY PROPERTY: An agreement accomplished a transmutation of separate property to community property even though it stated that the transfer was “for estate planning purposes”. A transmutation either occurs for all purposes or it doesn’t occur at all.St. Marie v. Riverside County Regional Park, etc.     Docket
46 Cal.4th 282 – Cal. Supreme Court (S159319)  5/14/09OPEN SPACE DEDICATION: Property granted to a Regional Park District is not “actually dedicated” under Public Resources Code Section 5540 for open space purposes until the district’s Board of Directors adopts a resolution dedicating the property for park or open space purposes. Therefore, until the Board of Directors adopts such a resolution, the property may be sold by the District without voter or legislative approval.Manhattan Loft v. Mercury Liquors     Docket     Sup.Ct. Docket
173 Cal.App.4th 1040 – 2nd Dist. (B211070)  5/6/09     Petition for review by Cal Supreme Ct. DENIED 8/12/09LIS PENDENS: An arbitration proceeding is not an “action” that supports the recordation of a notice of pendency of action. The proper procedure is for a party to an arbitration agreement to file an action in court to support the recording of a lis pendens, and simultaneously file an application to stay the litigation pending arbitration.Murphy v. Burch     Docket
46 Cal.4th 157 – Cal. Supreme Court (S159489)  4/27/09EASEMENT BY NECESSITY: This case contains a good discussion of the law of easements by necessity, which the court held did not apply in this case to provide access to plaintiff’s property. This means plaintiff’s property is completely landlocked because the parties had already stipulated that a prescriptive easement could not be established.

An easement by necessity arises by operation of law when 1) there is a strict necessity as when a property is landlocked and 2) the dominant and servient tenements were under the same ownership at the time of the conveyance giving rise to the necessity. The second requirement, while not categorically barred when the federal government is the common grantor, requires a high burden of proof to show 1) the intent of Congress to establish the easement under federal statutes authorizing the patent and 2) the government’s lack of power to condemn the easement. Normally, a reservation of an easement in favor of the government would not be necessary because the government can obtain the easement by condemnation.

The court pointed out that there is a distinction between an implied grant and implied reservation, and favorably quotes a treatise that observes: “an easement of necessity may be created against the government, but the government agency cannot establish an easement by necessity over land it has conveyed because its power of eminent domain removes the strict necessity required for the creation of an easement by necessity.”Abernathy Valley, Inc. v. County of Solano     Docket
173 Cal.App.4th 42 – 1st Dist. (A121817)  4/17/09     Case complete 6/22/09SUBDIVISION MAP ACT: This case contains a very good history of California’s Subdivision Map Act statutes. The court held that parcels shown on a 1909 map recorded pursuant to the 1907 subdivision map law are not entitled to recognition under the Subdivision Map Act’s grandfather clause (Government Code Section 66499.30) because the 1907 act did not regulate the “design and improvement of subdivisions”. The court also held that a local agency may deny an application for a certificate of compliance that seeks a determination that a particular subdivision lot complies with the Act, where the effect of issuing a certificate would be to effectively subdivide the property without complying with the Act.Linthicum v. Butterfield     Modification     Docket     Sup.Ct. Docket
172 Cal.App.4th 1112 – 2nd Dist. (B199645)  4/2/09
SEE NEW OPINION FILED 6/24/09
EASEMENTS: The court quieted title to an easement for access based on the doctrine of “balancing conveniences ” or “relative hardship”. Prohibiting the continued use of the roadway would cause catastrophic loss to the defendants and insignificant loss to the plaintiffs. However, the court remanded the case for the trial court to determine the width of the easement, which should be the minimal width necessary. The court reversed the judgment insofar as it awarded a utility easement to the defendants because they did not seek to quiet title to an easement for utilities, even though they denied the material allegations of that cause of action.McAvoy v. Hilbert     Docket
172 Cal.App.4th 707 – 4th Dist., Div 1 (D052802)  3/24/09     Case complete 5/27/09ARBITRATION: C.C.P. Section 1298 requires that an arbitration provision in a real estate contract be accompanied by a statutory notice and that the parties indicate their assent by placing their initials on an adjacent space or line. The court held that a listing agreement that is part of a larger transaction for the sale of both a business and real estate is still subject to Section 1298, and refused to enforce an arbitration clause that did not comply with that statute.Peak-Las Positas Partners v. Bollag     Modification     Docket
172 Cal.App.4th 101 – 2nd Dist. (B205091)  3/16/09     Case complete 5/27/09ESCROW: Amended escrow instructions provided for extending the escrow upon mutual consent which “shall not be unreasonably withheld or delayed”. The court held that substantial evidence supported the trial court’s determination that the seller’s refusal to extend escrow was unreasonable. The court pointed out the rule that equity abhors a forfeiture and that plaintiff had paid a non-refundable deposit of $465,000 and spent $5 million in project costs to obtain a lot line adjustment that was necessary in order for the property to be sold.Alfaro v. Community Housing Improvement System & Planning Assn     Modification     Docket     Sup.Ct. Docket
171 Cal.App.4th 1356 6th Dist. (H031127)  2/19/09     Petition for review by Cal Supreme Ct. DENIED 5/13/09CC&R’s: The court upheld the validity of recorded CC&R’s containing an affordable housing restriction that required property to remain affordable to buyers with low to moderate income. The court reached several conclusions:
1. Constructive notice of recorded CC&R’s is imparted even if they are not referenced in a subsequent deed,
2. CC&R’s may describe an entire tract, and do not need to describe individual lots in the tract,
3. An affordable housing restriction is a reasonable restraint on alienation even if it is of indefinite duration,
4. Defendants had a duty as sellers to disclose the existence of the CC&R’s. Such disclosure was made if plaintiffs were given, prior to close of escrow, preliminary reports that disclosed the CC&R’s.
5. The fact that a victim had constructive notice of a matter from public records is no defense to fraud. The existence of such public records may be relevant to whether the victim’s reliance was justifiable, but it is not, by itself, conclusive.
6. In the absence of a claim that defendants somehow prevented plaintiffs from reading the preliminary reports or deeds, or misled them about their contents, plaintiffs cannot blame defendants for their own neglect in reading the reports or deeds. Therefore, the date of discovery of alleged fraud for failing to disclose the affordable housing restriction would be the date plaintiffs received their preliminary reports or if they did not receive a preliminary report, the date they received their deeds.Kwok v. Transnation Title Insurance Company     Docket     Sup.Ct. Docket
170 Cal.App.4th 1562 – 2nd Dist. (B207421)  2/10/09     Petition for review by Cal Supreme Ct. DENIED 4/29/09TITLE INSURANCE: Plaintiffs did not succeed as insureds “by operation of law” under the terms of the title insurance policy after transfer of the property from a wholly owned limited liability company, of which appellants were the only members, to appellants as trustees of a revocable family trust. This case highlights the importance of obtaining a 107.9 endorsement, which adds the grantee as an additional insured under the policy.Pro Value Properties v. Quality Loan Service Corp.     Docket
170 Cal.App.4th 579 – 2nd Dist. (B204853)  1/23/09     Case complete 3/27/09TRUSTEE’S SALES: A Trustee’s Deed was void because the trustee failed to record a substitution of trustee. The purchaser at the sale was entitled to a return of the money paid plus interest. The interest rate is the prejudgment interest rate of seven percent set forth in Cal. Const., Art. XV, Section 1. A trustee’s obligations to a purchaser are based on statute and not on a contract. Therefore, Civil Code Section 3289 does not apply, since it only applies to a breach of a contract that does not stipulate an interest rate.Sixells v. Cannery Business Park     Docket     Sup.Ct. Docket
170 Cal.App.4th 648 – 3rd Dist. (C056267)  12/29/08     Petition for review by Cal Supreme Ct. DENIED 3/25/09CONTRACTS: The Subdivision Map Act (Gov. Code, Section 66410 et seq.) prohibits the sale of a parcel of real property until a final subdivision map or parcel map has been filed unless the contract to sell the property is “expressly conditioned” upon the approval and filing of a final map (66499.30(e)). Here, the contract satisfied neither requirement because it allowed the purchaser to complete the purchase if, at its election, the subject property was made into a legal parcel by recording a final map or if the purchaser “waived” the recording of a final map. Therefore the contract was void.Patel v. Liebermensch     Docket
45 Cal.4th 344 – Cal. Supreme Court (S156797)  12/22/08SPECIFIC PERFORMANCE: The material factors required for a  written contract are the seller, the buyer, the price to be paid, the time and manner of payment, and the property to be transferred, describing it so it may be identified. Here, specific performance of an option was granted even though it was not precise as to the time and manner of payment because where a contract for the sale of real property specifies no time of payment, a reasonable time is allowed. The manner of payment is also a term that may be supplied by implication.In re Marriage of Brooks and Robinson     Docket     Sup.Ct. Docket
169 Cal.App.4th 176 – 4th Dist., Div. 2 (E043770)  12/16/08     Request for review and depublication by Cal Supreme Ct. DENIED 3/25/09COMMUNITY PROPERTY: The act of taking title to property in the name of one spouse during marriage with the consent of the other spouse effectively removes that property from the general presumption that the property is community property. Instead, there is a presumption that the parties intended title to be held as stated in the deed. This presumption can only be overcome by clear and convincing evidence of a contrary agreement, and not solely by tracing the funds used to purchase the property or by testimony of an intention not disclosed at the time of the execution of the conveyance. Because the court found that there was no agreement to hold title other than as the separate property of the spouse who acquired title in her own name, it did not reach the issue of whether a purchaser from that spouse was a BFP or would be charged with knowledge of that the seller’s spouse had a community property interest in the property.The Formula, Inc. v. Superior Court     Docket
168 Cal.App.4th 1455 – 3rd Dist. (C058894)  12/10/09     Case complete 2/10/09LIS PENDENS: A notice of litigation filed in another state is not authorized for recording under California’s lis pendens statutes. An improperly filed notice of an action in another state is subject to expungement by a California court, but not under the authority of C.C.P. Section 405.30, and an order of expungement is given effect by being recorded in the chain of title to overcome the effect of the earlier filing.Ekstrom v. Marquesa at Monarch Beach HOA     Docket     Sup.Ct. Docket
168 Cal.App.4th 1111 – 4th Dist., Div. 3 (G038537)  12/1/08     Depublication request DENIED 3/11/09CC&R’s: A provision in CC&R’s requiring all trees on a lot to be trimmed so as to not exceed the roof of the house on the lot, unless the tree does not obstruct views from other lots, applies to palm trees even though topping a palm tree will kill it. All trees means “all trees”, so palm trees are not exempt from the requirement that offending trees be trimmed, topped, or removed.Spencer v. Marshall     Docket
168 Cal.App.4th 783 – 1st Dist. (A119437)  11/24/08     Case complete 1/26/09HOME EQUITY SALES: The Home Equity Sales Contract Act applies even where the seller is in bankruptcy and even where the seller’s Chapter 13 Bankruptcy Plan allows the seller to sell or refinance the subject property without further order of the court.Kachlon v. Markowitz     Docket
168 Cal.App.4th 316 – 2nd Dist. (B182816)  11/17/08     Case complete 1/27/09TRUSTEE’S SALES:
1. The statutorily required mailing, publication, and delivery of notices in nonjudicial foreclosure, and the performance of statutory nonjudicial foreclosure procedures, are privileged communications under the qualified, common-interest privilege, which means that the privilege applies as long as there is no malice. The absolute privilege for communications made in a judicial proceeding (the “litigation privilege”) does not apply.
2. Actions seeking to enjoin nonjudicial foreclosure and clear title based on the provisions of a deed of trust are actions on a contract, so an award of attorney fees under Civil Code Section 1717 and provisions in the deed of trust is proper.
3. An owner is entitled to attorney fees against the trustee who conducted trustee’s sale proceedings where the trustee did not merely act as a neutral stakeholder but rather aligned itself with the lender by denying that the trustor was entitled to relief.Hines v. Lukes     Docket
167 Cal.App.4th 1174 – 2nd Dist. (B199971)  10/27/08     Case complete 12/31/08EASEMENTS: [Not significant from a title insurance standpoint]. The underlying dispute concerns an easement but the case involves only civil procedure issues pertaining to the enforcement of a settlement agreement.Satchmed Plaza Owners Association v. UWMC Hospital Corp.     Docket
167 Cal.App.4th 1034 – 4th Dist., Div. 3 (G038119)  10/23/08     Case complete 12/23/08RIGHT OF FIRST REFUSAL: [Not significant from a title insurance standpoint]. The underlying dispute concerns a right of first refusal but the case involves only civil procedure issues pertaining to a party’s waiver of its right to appeal where it has accepted the benefits of the favorable portion of judgment.Gray v. McCormick     Docket     Sup.Ct. Docket
167 Cal.App.4th 1019 – 4th Dist., Div. 3 (G039738)  10/23/08     Petition for review by Cal Supreme Ct. DENIED 1/14/09EASEMENTS: Exclusive easements are permitted under California law, but the use by the owner of the dominant tenement is limited to the purposes specified in the grant of easement, not all conceivable uses of the property.In re Estate of Felder     Docket
167 Cal.App.4th 518 – 2nd Dist.   (B205027)  10/9/08     Case complete 12/11/08CONTRACTS: [Not significant from a title insurance standpoint]. The case held that an estate had the right to retain the entire deposit upon a purchaser’s breach of a sales contract even though the estate had only a 1/2 interest in the subject property.Secrest v. Security National Mortgage Loan Trust     Order Modifying Opinion     Docket     Sup.Ct. Docket
167 Cal.App.4th 544 – 4th Dist., Div. 3 (G039065)  10/9/08, Modified 11/3/08     Petition for review by Cal Supreme Ct. DENIED 12/17/08LOAN MODIFICATION: Because a note and deed of trust come within the statute of frauds, a Forbearance Agreement also comes within the statute of frauds pursuant to Civil Code section 1698. Making the downpayment required by the Forbearance Agreement was not sufficient part performance to estop Defendants from asserting the statute of frauds because payment of money alone is not enough as a matter of law to take an agreement out of the statute, and the Plaintiffs have legal means to recover the downpayment if they are entitled to its return. In addition to part performance, the party seeking to enforce the contract must have changed position in reliance on the oral contract to such an extent that application of the statute of frauds would result in an unjust or unconscionable loss, amounting in effect to a fraud.FDIC v. Dintino     Docket
167 Cal.App.4th 333 – 4th Dist., Div. 1 (D051447)  9/9/08 (Pub. Order 10/2/08)     Case complete 12/2/08TRUST DEEDS: A lender who mistakenly reconveyed a deed of trust could not sue under the note because it would violate the one action rule. However, the lender prevailed on its unjust enrichment cause of action. The applicable statute of limitations was the 3-year statute for actions based on fraud or mistake, and not the 4-year statute for actions based on contract. Nevertheless, the action was timely because the statute did not begin to run until the lender reasonably discovered its mistake, and not from the date of recordation of the reconveyance. Finally, the court awarded defendant attorney’s fees attributable to defending the contract cause of action because defendant prevailed on that particular cause of action even though he lost the lawsuit.California Coastal Commission v. Allen     Docket     Sup.Ct. Docket
167 Cal.App.4th 322 – 2nd Dist. (B197974)  10/1/08     Petition for review by Cal Supreme Ct. DENIED 1/14/09HOMESTEADS:
1. The assignees of a judgment properly established their rights as assignees by filing with the clerk of the court an acknowledgement of assignment of judgment.
2. The subject property was not subject to a homestead exemption because the debtor transferred the property to a corporation of which he was the sole shareholder. The homestead exemption only applies to the interest of a natural person in a dwelling.
3. The debtor could not claim that he was only temporarily absent from a dwelling in order to establish it as his homestead where he leased it for two years. This is true even though the debtor retained the right to occupy a single car section of the garage and the attic.In re Marriage of Holtemann     Docket     Sup.Ct. Docket
162 Cal.App.4th 1175 – 2nd Dist. (B203089)  9/15/08     Petition for review by Cal Supreme Ct. DENIED 12/10/08COMMUNITY PROPERTY: Transmutation of separate property to community property requires language which expressly states that the characterization or ownership of the property is being changed. Here, an effective transmutation occurred because the transmutation agreement clearly specified that a transmutation was occurring and was not negated by arguably confusing language in a trust regarding the parties’ rights to terminate the trust. The court also stated that it was not aware of any authority for the proposition that a transmutation can be conditional or temporary. However, while questioning whether a transmutation can be conditional or temporary, the court did not specifically make that holding because the language used by the parties was not conditional.Mission Shores Association v. Pheil     Docket
166 Cal.App.4th 789 – 4th Dist., Div. 2 (E043932)  9/5/08     Case complete 11/7/08CC&R’s: Civil Code Section 1356 allows a court to reduce a super-majority voting requirement to amend CC&R’s where the court finds that the amendment is reasonable. Here the court reduced the 2/3 majority requirement to a simple majority for an amendment to limit rentals of homes to 30 days or more.Zanelli v. McGrath     Docket
166 Cal.App.4th 615 – 1st Dist. (A117111)  9/2/08     Case complete 11/4/08EASEMENTS:
1. The doctrine of merger codified in Civil Code Sections 805 and 811 applies when “the right to the servitude,” and “the right to the servient tenement” are not vested in a single individual, but in the same persons;

2. The doctrine of merger applies regardless of whether the owners held title as joint tenants or tenants in common. Also, the fact that one owner held his interest in one of the properties as trustee for his inter vivos revocable trust does not preclude merger because California law recognizes that when property is held in this type of trust the settlor has the equivalent of full ownership of the property. (If he had held title only in a representative capacity as a trustee for other beneficiaries under the terms of an irrevocable trust, then his ownership might not result in extinguishment by merger because he would only hold the legal title for the benefit of others.) The court cites Galdjie v. Darwish (2003) 113 Cal.App.4th 1331, stating that a revocable inter vivos trust is recognized as simply a probate avoidance device, but does not prevent creditors of the settlers from reaching trust property.

(3) After being extinguished by merger, an easement is not revived upon severance of the formerly dominant and servient parcels unless it is validly created once again.Ritter & Ritter v. The Churchill Condominium Assn.     Docket
166 Cal.App.4th 103 – 2nd Dist. (B187840) 7/22/08  (pub. order 8/21/08)     Case complete 10/21/08HOMEOWNERS’ ASSOCIATIONS: A member of a condominium homeowners’ association can recover damages from the association which result from a dangerous condition negligently maintained by the association in the common area. However, the court found in favor of the individual directors because a greater degree of fault is necessary to hold unpaid individual board members liable, and such greater degree of fault was not present here.Kempton v. City of Los Angeles     Docket     Sup.Ct. Docket
165 Cal.App.4th 1344 – 2nd Dist. (B201128) 8/13/08     Request for Depublication by Cal Supreme Ct. DENIED 11/12/08NUISANCE: A private individual may bring an action against a municipality to abate a public nuisance when the individual suffers harm that is specially injurious to himself, or where the nuisance is a public nuisance per se, such as blocking a public sidewalk or road. The court held that plaintiff’s assertions that neighbors’ fences were erected upon city property, prevent access to plaintiff’s sidewalk area, and block the sightlines upon entering and exiting their garage were sufficient to support both a public nuisance per se and specific injury.Claudino v. Pereira     Docket     Sup.Ct. Docket
165 Cal.App.4th 1282 – 3rd Dist. (C054808) 8/12/08     Petition for review by Cal Supreme Ct. DENIED 11/12//08SURVEYS: Determining the location of a boundary line shown on a plat recorded pursuant to the 1867 Townsite Acts requires an examination of both the plat and the surveyor’s field notes. Here, the plat showed the boundary as a straight line, but the court held that the boundary followed the center line of a gulch because the field notes stated that the boundary was “down said gulch”.Zack’s, Inc. v. City of Sausalito     Docket
165 Cal.App.4th 1163 – 1st Dist. (A118244) 8/11/08     Case complete 10/14/08TIDELANDS / PUBLIC STREETS: A statute authorizing the City’s lease of tidelands does not supersede other state laws establishing procedures for the abandonment of public streets. Because the City failed to follow the normal procedure for abandonment of the portion of the street upon which it granted a lease, the leasehold was not authorized and can therefore be deemed a nuisance.Gehr v. Baker Hughes Oil Field Operations     Docket     Sup.Ct. Docket
165 Cal.App.4th 660 – 2nd Dist. (B201195) 7/30/08     Petition for review by Cal Supreme Ct. DENIED 10/16/08NUISANCE: Plaintiff purchased from Defendant real property that was contaminated, and Defendant had begun the remediation process. The 3-year statute of limitations for suing under a permanent nuisance theory had expired. So Plaintiff sued for nuisance damages under a continuing nuisance theory, seeking interest rate differential damages based on the difference in the interest rate between an existing loan and a loan that plaintiff could have obtained if not for the contamination.

The court held that plaintiff’s claim for interest rate differential damages is actually a claim for diminution in value, which may not be recovered under a continuing nuisance theory. Damages for diminution in value may only be recovered for permanent, not continuing, nuisances. When suing for a continuing nuisance, future or prospective damages are not allowed, such as damages for diminution in the value of the subject property. A nuisance can only be considered “continuing” if it can be abated, and therefore a plaintiff suing under this theory may only recover the costs of abating the nuisance.

If the nuisance has inflicted a permanent injury on the land, the plaintiff generally must bring a single lawsuit for all past, present, and future damages within three years of the creation of the nuisance. But if the nuisance is one which may be discontinued at any time, it is considered continuing in character and persons harmed by it may bring successive actions for damages until the nuisance is abated. Recovery is limited, however, to actual injury suffered prior to commencement of each action.Witt Home Ranch v. County of Sonoma     Docket     Sup.Ct. Docket
165 Cal.App.4th 543 – 1st Dist. (A118911) 7/29/08     Petition for review by Cal Supreme Ct. DENIED 5/28/08SUBDIVISION MAP ACT: This case contains a good history of California’s Subdivision Map Act statutes. The court held that the laws governing subdivision maps in 1915 did not regulate the “design and improvement of subdivisions,” as required by the grandfather clause of Government Code Section 66499.30. The subdivision map in this case was recorded in 1915 and no lots were subsequently conveyed, so the map does not create a valid subdivision.T.O. IX v. Superior Court     Docket     Sup.Ct. Docket
165 Cal.App.4th 140 – 2nd Dist. (B203794) 7/24/08     Petition for review by Cal Supreme Ct. DENIED 9/10/08MECHANIC’S LIENS: A mechanic’s lien claimant recorded a mechanic’s lien against each of the nine parcels in a project, each lien for the full amount due under the contract. The court held that defendant could record a single release bond under Civil Code Section 3143 to release all of the liens.Kassir v. Zahabi     Docket
164 Cal.App.4th 1352 – 4th Dist., Div. 3 (G038449) 3/5/08 (Pub. Order 4/3/08, Received 7/16/08)     Case complete 5/9/08SPECIFIC PERFORMANCE: The trial court ordered Defendant to specifically perform his contract to sell real property to Plaintiff, and further issued a judgment ordering Defendant to pay Plaintiff for rents accruing during the time Defendant was able to perform the agreement but refused to do so. The court held that because the property was overencumbered, Defendant would have received nothing under the agreement and no offset was required.

The court explained that because execution of the judgment in a specific performance action will occur later than the date of performance provided by the contract, financial adjustments must be made to relate their performance back to the contract date, namely: 1) when a buyer is deprived of possession of the property pending resolution of the dispute and the seller receives rents and profits, the buyer is entitled to a credit against the purchase price for the rents and profits from the time the property should have been conveyed to him, 2) a seller also must be treated as if he had performed in a timely fashion and is entitled to receive the value of his lost use of the purchase money during the period performance was delayed, 3) if any part of the purchase price has been set aside by the buyer with notice to the seller, the seller may not receive credit for his lost use of those funds and 4) any award to the seller representing the value of his lost use of the purchase money cannot exceed the rents and profits awarded to the buyer, for otherwise the breaching seller would profit from his wrong.Grant v. Ratliff     Docket     Sup.Ct. Docket
164 Cal.App.4th 1304 – 2nd Dist. (B194368) 7/16/08     Request for depublication by Cal Supreme Ct. DENIED 10/1/08PRESCRIPTIVE EASEMENTS: The plaintiff/owner of Parcel A sought to establish a prescriptive easement to a road over Parcel B. In order to establish the requisite 5-year period of open and notorious possession, the plaintiff needed to include the time that the son of the owner of Parcel B spent living in a mobile home on Parcel A. The court held that the son’s use of Parcel A was not adverse but was instead a matter of “family accommodation” and, therefore, a prescriptive easement was not established. The court also discussed: 1) a party seeking to establish a prescriptive easement has the burden of proof by clear and convincing evidence and 2) once the owner of the dominant tenement shows that use of an easement has been continuous over a long period of time, the burden shifts to the owner of the servient tenement to show that the use was permissive, but the servient tenement owner’s burden is a burden of producing evidence, and not a burden of proof.SBAM Partners v. Wang     Docket
164 Cal.App.4th 903 – 2nd Dist. (B204191) 7/9/08     Case complete 9/10/08HOMESTEADS: Under C.C.P. Section 704.710, a homestead exemption is not allowed on property acquired by the debtor after the judgment has been recorded unless it was purchased with exempt proceeds from the sale, damage or destruction of a homestead within the six-month safe harbor period.Christian v. Flora     Docket
164 Cal.App.4th 539 – 3rd Dist. (C054523) 6/30/08     Case complete 9/2/08EASEMENTS: Where parcels in a subdivision are resubdivided by a subsequent parcel map, the new parcel map amends the provisions of any previously recorded parcel map made in compliance with the Map Act. Here, although the deeds to plaintiffs referred to the original parcel map, since the intent of the parties was that the easement shown on the amended parcel map would be conveyed, the grantees acquired title to the easement shown on the amended map.Lange v. Schilling     Docket
163 Cal.App.4th 1412 – 3rd Dist. (C055471) 5/28/08; pub. order 6/16/08     Case Complete 8/18/08REAL ESTATE AGENTS: The clear language of the standard California real estate purchase agreement precludes an award of attorney’s fees if a party does not attempt mediation before commencing litigation. Because plaintiff filed his lawsuit before offering mediation, there was no basis to award attorney’s fees.Talbott v. Hustwit     Docket     Sup.Ct. Docket
164 Cal.App.4th 148 – 4th Dist., Div. 3 (G037424) 6/20/08     Petition for review and depublication DENIED by Cal Supreme Ct. 9/24/08GUARANTEES:
1. C.C.P. 580a, which requires an appraisal of the real property security before the court may issue a deficiency judgment, does not apply to an action against a guarantor.
2. A lender cannot recover under a guaranty where there the debtor and guarantor already have identical liability, such as with general partners or trustees of a revocable trust in which the debtor is the settlor, trustee and primary beneficiary. Here, however, a  guarantee signed by the trustees of the debtors’ trust is enforceable as a “true guarantee” because, although the debtors were the settlors, they were a) secondary, not primary, beneficiaries and b) were not the trustees.Mayer v. L & B Real Estate     Sup.Ct. Docket
43 Cal.4th 1231 – Cal. Supreme Court (S142211) 6/16/08TAX SALES: The one-year statute of limitations for attacking a tax sale does not begin to run against a property owner who is in “undisturbed possession” of the subject property until that owner has actual notice of the tax sale. Ordinarily, a property owner who has failed to pay property taxes has sufficient knowledge to put him on notice that a tax sale might result. However, in this case the property owners did not have notice because they purchased a single piece of commercial property and received a single yearly tax bill. They had no reason to suspect that due to errors committed by the tax assessor, a small portion of their property was being assessed separately and the tax bills were being sent to a previous owner.

NOTE: This creates a hazard for title companies insuring after a tax sale in reliance on the one-year statute of limitations in Revenue and Taxation Code Section 3725.California Golf v. Cooper     Docket     Sup.Ct. Docket
163 Cal.App.4th 1053 – 2nd Dist. (B195211) 6/9/08     Petition for review by Cal Supreme Ct. DENIED 9/17/08TRUSTEE’S SALES:
1. A bidder at a trustee’s sale may not challenge the sale on the basis that the lender previously obtained a decree of judicial foreclosure because the doctrine of election of remedies benefits only the trustor or debtor.
2. A lender’s remedies against a bidder who causes a bank to stop payment on cashier’s checks based on a false affidavit asserting that the checks were lost is not limited to the remedies set forth in CC Section 2924h, and may pursue a cause of  action for fraud against the bidder.
(The case contains a good discussion (at pp. 25 – 26) of the procedure for stopping payment on a cashier’s check by submitting an affidavit to the issuing bank.)Biagini v. Beckham     Docket
163 Cal.App.4th 1000 – 3rd Dist. (C054915) 6/9/08     Case complete 8/11/08DEDICATION:
1. Acceptance of a dedication may be actual or implied. It is actual when formal acceptance is made by the proper authorities, and implied when a use has been made of the property by the public 1) of an  intensity that is reasonable for the nature of the road and 2) for such a length of time as will evidence an intention to accept the dedication. BUT the use in this case was not sufficient because the use was by neighbors whose use did not exceed what was permitted pursuant to a private easement over the same area.
2. A statutory offer of dedication can be revoked as to the public at large by use of the area that is inconsistent with the dedication, but the offer remains open for formal acceptance by the public entity to which the offer was made. Steiner v. Thexton     Docket     Sup.Ct. Docket
Cal.App. 3rd Dist. (C054605) 5/28/08     REVERSED by Cal. Supreme Ct.OPTIONS: A contract to sell real property where the buyer’s performance was entirely conditioned on the buyer obtaining regulatory approval to subdivide the property is an option. An option must be supported by consideration, but was not here, where the buyer could back out at any time. Buyer’s promise to deliver to seller copies “of all information, reports, tests, studies and other documentation” was not sufficient consideration to support the option.In re Marriage Cases     Docket
43 Cal.4th 757 – Cal. Supreme Court (S147999) 5/15/08MARRIAGE: The language of Family Code Section 300 limiting the designation of marriage to a union “between a man and a woman” is unconstitutional and must be stricken from the statute, and the remaining statutory language must be understood as making the designation of marriage available both to opposite-sex and same-sex couples.Harvey v. The Landing Homeowners Association     Docket
162 Cal.App.4th 809 – 4th Dist., Div. 1 (D050263) 4/4/08 (Cert. for Pub. 4/30/08)     Case complete 6/30/08HOMEOWNERS ASSOCIATIONS: The Board of Directors of an HOA has the authority to allow owners to exclusively use common area accessible only to those owners where the following provision of the CC&R’s applied: “The Board shall have the right to allow an Owner to exclusively use portions of the otherwise nonexclusive Common Area, provided that such portions . . . are nominal in area and adjacent to the Owner’s Exclusive Use Area(s) or Living Unit, and, provided further, that such use does not unreasonably interfere with any other Owner’s use . . .” Also, this is allowed under Civil Code Section 1363.07(a)(3)(E).Salma v. Capon     Docket
161 Cal.App.4th 1275 – 1st Dist. (A115057) 4/9/08     Case complete 6/11/08HOME EQUITY SALES: A seller claimed he sold his house for far less than it was worth “due to the duress of an impending trustee’s sale and the deceit of the purchasers”. The case involves procedural issues that are not relevant to this web site. However, it is included here because it demonstrates the kind of mess that can occur when you are dealing with property that is in foreclosure. Be careful, folks.Aviel v. Ng     Docket
161 Cal.App.4th 809 – 1st Dist. (A114930) 2/28/08; pub. order 4/1/08     Case complete 5/6/08LEASES / SUBORDINATION: A lease provision subordinating the lease to “mortgages” also applied to deeds of trust because the two instruments are functionally and legally the same. Therefore a foreclosure of a deed of trust wiped out the lease.People v. Martinez     Docket
161 Cal.App.4th 754 – 4th Dist., Div. 2 (E042427) 4/1/08     Case complete 6/2/08FORGERY: This criminal case involves a conviction for forgery of a deed of trust. [NOTE: The crime of forgery can occur even if the owner actually signed the deed of trust. The court pointed out that “forgery is committed when a defendant, by fraud or trickery, causes another to execute a document where the signer is unaware, by reason of such trickery, that he is executing a document of that nature.”Pacific Hills Homeowners Association v. Prun     Docket
160 Cal.App.4th 1557 – 4th Dist., Div. 3 (G038244) 3/20/08     Case complete 5/27/08CC&R’s: Defendants built a gate and fence within the setback required by the CC&R’s. 1) The court held that the 5-year statute of limitations of C.C.P. 336(b) applies to unrecorded as well as recorded restrictions, so that the shorter 4-year statute of limitations of C.C.P. 337 is inapplicable. 2) The court upheld the trial court’s equitable remedy of requiring the HOA to pay 2/3 of the cost of relocation defendant’s gate based upon the HOA’s sloppiness in not pursuing its case more promptly.Nicoll v. Rudnick     Docket
160 Cal.App.4th 550 – 5th Dist. (F052948) 2/27/08     Case complete 4/28/08WATER RIGHTS: An appropriative water right established in a 1902 judgment applied to the entire 300 acre parcel so that when part of the parcel was foreclosed and subsequently re-sold, the water rights must be apportioned according to the acreage of each parcel, not according to the prior actual water usage attributable to each parcel. NOTE: This case contains a good explanation of California water rights law.Real Estate Analytics v. Vallas     Docket
160 Cal.App.4th 463 – 4th Dist., Div. 1 (D049161) 2/26/08     Case complete 5/29/08SPECIFIC PERFORMANCE: Specific performance is appropriate even where the buyer’s sole purpose and entire intent in buying the property was to earn money for its investors and turn a profit as quickly as possible. The fact that plaintiff was motivated solely to make a profit from the purchase of the property does not overcome the strong statutory presumption that all land is unique and therefore damages were inadequate to make plaintiff whole for the defendant’s breach.Fourth La Costa Condominium Owners Assn. v. Seith     Docket
159 Cal.App.4th 563 – 4th Dist., Div. 1 (D049276) 1/30/08     Case complete 4/1/08CC&R’s/HOMEOWNER’S ASSOCIATIONS: The court applied CC 1356(c)(2) and Corp. Code 7515, which allow a court to reduce the supermajority vote requirement for amending CC&R’s and bylaw because the amendments were reasonable and the balloting requirements of the statutes were met.02 Development, LLC v. 607 South Park, LLC     Docket
159 Cal.App.4th 609 – 2nd Dist. (B200226) 1/30/08     Case complete 4/3/08SPECIFIC PERFORMANCE: 1) An assignment of a purchaser’s rights under a purchase agreement prior to creation of the assignee as an LLC is valid because an organization can enforce pre-organization contracts if the organization adopts or ratifies them. 2) A purchaser does not need to prove that it already had the necessary funds, or already had binding commitments from third parties to provide the funds, when the other party anticipatorily repudiates the contract. All that plaintiff needed to prove was that it would have been able to obtain the necessary funding (or funding commitments) in order to close the transaction on time.Richeson v. Helal     Docket     Sup.Ct. Docket
158 Cal.App.4th 268 – 2nd Dist. (B187273) 11/29/07; Pub. & mod. order 12/21/07 (see end of opinion)     Petition for review by Cal Supreme Ct. DENIED 2/20/08CC&R’s / MUNICIPALITIES: An Agreement Imposing Restrictions (“AIR”) and CC&R’s did not properly lend themselves to an interpretation that would prohibit the City from changing the permitted use or zoning and, were they so construed, the AIR and CC&R’s would be invalid as an attempt by the City to surrender its future right to exercise its police power respecting the property. Here, the AIR and CC&R’s did not prohibit the City from issuing a new conditional use permit allowing the continued use of the subject property as a neighborhood market.Bill Signs Trucking v. Signs Family Ltd. Partnership     Docket     Sup.Ct. Docket
157 Cal.App.4th 1515 – 4th Dist., Div. 1 (D047861) 12/18/07     Petition for review by Cal Supreme Ct. DENIED 4/9/08LEASES / RIGHT OF FIRST REFUSAL: A tenant’s right of first refusal under a commercial lease is not triggered by the conveyance of an interest in the property between co-partners in a family limited partnership that owns the property and is the landlord.Schweitzer v. Westminster Investments     Docket     Sup.Ct. Docket
157 Cal.App.4th 1195 – 4th Dist., Div. 1 (D049589) 12/13/07     Petition for review by Cal Supreme Ct. DENIED 3/26/08EQUITY PURCHASERS:
1) The bonding requirement of the Home Equity Sales Contracts Act (Civil Code Section 1695.17) is void for vagueness under the due process clause and may not be enforced. Section 1695.17 is vague because it provides no guidance on the amount, the obligee, the beneficiaries, the terms or conditions of the bond, the delivery and acceptance requirements, or the enforcement mechanisms of the required bond.
2) Although the bond requirement may not be enforced, the remainder of the statutory scheme remains valid because the bond provisions are severable from the balance of the enactment.
3) The court refused to set aside the deed in favor of the equity purchaser because, first, the notice requirements of Civil Code Section 1695.5 appear to have been met and, second, the seller’s right to rescind applies before the deed is recorded but the statute “does not specify that a violation of section 1695.5 provides grounds for rescinding a transaction after recordation of the deed”.Crestmar Owners Association v. Stapakis     Docket
157 Cal.App.4th 1223 – 2nd Dist. (B191049) 12/13/07     Case complete 2/15/07CC&R’s: Where a developer failed to convey title to two parking spaces as required by the CC&R’s, the homeowner’s association was able to quiet title even though more than 20 years had passed since the parking spaces should have been conveyed. The statute of limitations does not run against someone, such as the homeowner’s association here, who is in exclusive and undisputed possession of the property.Washington Mutual Bank v. Blechman     Docket     Sup.Ct. Docket
157 Cal.App.4th 662 – 2nd Dist. (B191125) 12/4/07     Petition for review by Cal Supreme Ct. DENIED 3/19/08TRUSTEE’S SALES: The foreclosing lender and trustee are indispensable parties to a lawsuit which seeks to set aside a trustee’s sale. Therefore, a default judgment against only the purchaser at the trustee’s sale is subject to collateral attack.Garretson v. Post     Docket     Sup.Ct. Docket
156 Cal.App.4th 1508 – 4th Dist., Div.2 (E041858) 11/20/07     Petition for review by Cal Supreme Ct. DENIED 2/27/08TRUSTEE’S SALES: A cause of action for wrongful foreclosure does not fall within the protection of Code of Civil Procedure section 425.16, commonly referred to as the anti-SLAPP statute (strategic lawsuit against public participation).Murphy v. Burch     Docket     Sup.Ct. Docket
Cal.App. 1st Dist. (A117051) 11/19/07
AFFIRMED by Cal Supreme Ct. 4/27/09EASEMENT BY NECESSITY: An easement by necessity arises by operation of law when 1) there is a strict necessity as when a property is landlocked and 2) the dominant and servient tenements were under the same ownership at the time of the conveyance giving rise to the necessity. However, the second requirement is not met when the properties were owned by the federal government because the Government has the power of eminent domain, rendering it unnecessary to resort to the easement by necessity doctrine in order to acquire easements.

The court attempts to distinguish Kellogg v. Garcia, 102 Cal.App.4th 796, by pointing out that in that case the issue of eminent domain did not arise because the dominant tenement was owned by a private party and the servient tenements by the federal government. [Ed. Note: the court does not adequately address the fact that the government does not always have the power of eminent domain. It only has that power if a public purpose is involved. Also, I do not think the court adequately distinguishes Kellogg, which seems to hold that common ownership by the federal government satisfies the requirement of common ownership.]Elias Real Estate v. Tseng     Docket     Sup.Ct. Docket
156 Cal.App.4th 425 – 2nd Dist. (B192857) 10/25/07     Petition for review by Cal Supreme Ct. DENIED 2/13/08SPECIFIC PERFORMANCE: Acts of a partner falling within Corp. Code 16301(1) (acts in ordinary course of business) are not subject to the statute of frauds. Acts of a partner falling within Corp. Code 16301(2) (acts not in the ordinary course of business) are subject to the statute of frauds. In this case, a sale of the partnership’s real property was not in the ordinary course of business, so it fell within Corp. Code 16301(2) and plaintiff could not enforce a contract of sale signed by only one partner.Strong v. State Board of Equalization     Docket     Sup.Ct. Docket
155 Cal.App.4th 1182 – 3rd Dist. (C052818) 10/2/07     Petition for review by Cal Supreme Ct. DENIED 1/3/08CHANGE OF OWNERSHIP: The statute that excludes transfers between domestic partners from property tax reassessment is constitutional.County of Solano v. Handlery     Docket     Sup.Ct. Docket
155 Cal.App.4th 566 – 1st Dist. (A114120) 9/21/07     Petition for review by Cal Supreme Ct. DENIED 12/12/07DEEDS: The County brought an action against grantors’ heirs to invalidate restrictions in a deed limiting the subject property to use as a county fair or similar public purposes. The court refused to apply the Marketable Record Title Act to eliminate the power of termination in favor of the grantors because the restrictions are enforceable under the public trust doctrine.Baccouche v. Blankenship     Docket
154 Cal.App.4th 1551 – 2nd Dist (B192291) 9/11/07     Case complete 11/16/07EASEMENTS: An easement that permits a use that is prohibited by a zoning ordinance is not void. It is a valid easement, but cannot be enforced unless the dominant owner obtains a variance. As is true with virtually all land use, whether a grantee can actually use the property for the purposes stated in the easement is subject to compliance with any applicable laws and ordinances, including zoning restrictions.WRI Opportunity Loans II LLC v. Cooper     Docket
154 Cal.App.4th 525 – 2nd Dist. (B191590) 8/23/07     Case complete 10/26/07USURY: The trial court improperly granted a motion for summary judgment on the basis that the loan was exempt from the usury law.

1. The common law exception to the usury law known as the “interest contingency rule” provides that interest that exceeds the legal maximum is not usurious when its payment is subject to a contingency so that the lender’s profit is wholly or partially put in hazard. The hazard in question must be something over and above the risk which exists with all loans – that the borrower will be unable to pay.
2. The court held that the interest contingency rule did not apply to additional interest based on a percentage of the sale price of completed condominium units because the lender was guaranteed additional interest regardless of whether the project generated rents or profits.
3. The loan did not qualify as a shared appreciation loan, permitted under Civil Code Sections 1917-1917.006, because the note guaranteed the additional interest regardless of whether the property appreciated in value or whether the project generated profits.
4. The usury defense may not be waived by guarantor of a loan. (No other published case has addressed this issue.)Archdale v. American International Specialty Lines Ins. Co.     Docket
154 Cal.App.4th 449 – 2nd Dist. (B188432) 8/22/07     Case complete 10/26/07INSURANCE: The case contains good discussions of 1) an insurer’s liability for a judgment in excess of policy limits where it fails to accept a reasonable settlement offer within policy limits and 2) the applicable statutes of limitation.REVERSED by Cal. Supreme Court 12/22/08
Patel v. Liebermensch     Docket     Sup.Ct. Docket
154 Cal.App.4th 373 – 4th, Div. 1 (D048582) 8/21/07REVERSED: SPECIFIC PERFORMANCE: Specific performance of an option was denied where the parties never reached agreement on the amount of  the deposit, the length of time of the escrow or payment of escrow expenses if there were a delay. One judge dissented on the basis that the option contract was sufficiently clear to be specifically enforced and the court should insert reasonable terms in place of the uncertain terms.In Re Marriage of Ruelas     Docket
154 Cal.App.4th 339 – 2nd Dist. (B191655) 8/20/07     Case complete 10/26/07RESULTING TRUST: A resulting trust was created where a daughter acquired property in her own name and the evidence showed that she was acquiring the property for her parents who had poor credit.Stoneridge Parkway Partners v. MW Housing Partners     Docket     Sup.Ct. Docket
153 Cal.App.4th 1373 – 3rd Dist. (C052082) 8/3/07     Petition for review by Cal Supreme Ct. DENIED 11/14/07USURY: The exemption to the usury law for loans made or arranged by real estate brokers applies to a loan in which the broker who negotiated the loan was an employee of an affiliate of the lender, but nevertheless acted as a third party intermediary in negotiating the loan. Kinney v. Overton     Docket     Sup.Ct. Docket
153 Cal.App.4th 482 – 4th Dist., Div. 3 (G037146) 7/18/07     Petition for review by Cal Supreme Ct. DENIED 10/10/07EASEMENTS: Former Civil Code Section 812 provided that

“[t]he vacation . . . of streets and highways shall extinguish all private easements therein claimed by reason of the purchase of any lot by reference to a map or plat upon which such streets or highways are shown, other than a private easement necessary for the purpose of ingress and egress to any such lot from or to a public street or highway, except as to any person claiming such easement who, within two years from the effective date of such vacation or abandonment . . . shall have recorded in the office of the recorder of the county in which such vacated or abandoned streets or highways are located a verified notice of his claim to such easement . . .” [Emphasis added.]

The court held that cross-complainant could not maintain an action against the person occupying the disputed abandoned parcel because it was not necessary for access and he did not record the notice required by C.C. Section 812. The court specifically did not address the state of title to the disputed parcel or what interest, if any, cross-defendant may have in the parcel.Hartzheim v. Valley Land & Cattle Company     Docket     Sup.Ct. Docket
153 Cal.App.4th 383 – 6th Dist. (H030053) 7/17/07     Petition for review by Cal Supreme Ct. DENIED 10/10/07LEASES / RIGHT OF FIRST REFUSAL: A right of first refusal in a lease was not triggered by a partnership’s conveyance of property to the children and grandchildren of its partners for tax and estate planning purposes because it did not constitute a bona fide offer from any third party. The court considered three factors: 1) the contract terms must be reviewed closely to determine the conditions necessary to invoke the right, 2) where a right of first refusal is conditioned upon receipt of a bona fide third party offer to purchase the property, the right is not triggered by the mere conveyance of that property to a third party and 3) the formalities of the transaction must be reviewed to determine its true nature.Berryman v. Merit Property Mgmt.     Docket     Sup.Ct. Docket
152 Cal.App.4th 1544 – 4th Dist., Div. 3 (G037156) 5/31/07     Petition for review by Cal Supreme DENIED 10/10/07HOMEOWNER’S ASSOCIATIONS: Fees charged by a homeowner’s association upon a transfer of title by a homeowner are limited by Civil Code Section 1368 to the association’s actual costs. The court held that this limitation does not apply to fees charged by a management company hired by the association.Cal-Western Reconveyance Corp. v. Reed     Docket
152 Cal.App.4th 1308 – 2nd Dist. (B193014) 6/29/07     Case complete 8/29/07TRUSTEE’S SALES: After a trustee’s sale, the trustee deposited the surplus proceeds into court under CC 2924j in order to determine who was entitled to the excess proceeds. The court held that:
(1) The distribution of surplus proceeds to satisfy child and spousal support arrearages was proper because the County had properly recorded an abstract of support judgment,
(2) The trial court erred in distributing proceeds to the debtor’s former wife to satisfy her claims for a community property equalization payment and for attorney fees ordered in the dissolution proceeding, because no recorded lien or encumbrance secured those claims, which in any event were discharged in the debtor’s bankruptcy proceeding (because child and spousal support obligations are not dischargeable, but property settlement payments are dischargeable), and
(3) The trial court erred in distributing proceeds to the debtor’s former lawyer, who was retained to assist the debtor in the collection of proceeds from the trustee’s sale, because an attorney’s lien on the prospective recovery of a client must be enforced in a separate action.
(4) The debtor failed to produce sufficient evidence to support his claim that he was entitled to the $150,000 homestead exemption applicable when a debtor is physically disabled and unable to engage in substantial gainful employment (so he was entitled to only the standard $50,000 homestead exemption).Poseidon Development v. Woodland Lane Estates     Order Modifying Opinion     Docket
152 Cal.App.4th 1106 – 3rd Dist. (C052573) 6/28/07     Case complete 8/31/07PROMISSORY NOTES: A penalty that applied to late payments of installments did not apply to a late payment of the final balloon payment of principal. The penalty was 10% of the amount due, which made sense for regular installments, but bore no reasonable relationship to actual damages if applied to the balloon payment.Carr v. Kamins     Docket
151 Cal.App.4th 929 – 2nd Dist. (B191247) 5/31/07     Case complete 8/1/07QUIET TITLE: A quiet title judgment was set aside by defendant’s heir four years after being entered because the heir was not named and served. The plaintiff believed the defendant to be deceased, but made no effort to locate and serve the defendant’s heirs. [Even though this case contains some unique facts, the fact that a default judgment can be set aside four years after being entered demonstrates the danger of relying on default judgments and the need to closely examine the court file and surrounding circumstances before doing so.]Estate of Yool     Docket
151 Cal.App.4th 867 – 1st Dist. (A114787) 5/31/07     Case complete 7/31/07RESULTING TRUST: A decedent held title with her daughter for the purpose of facilitating financing and did not intend to acquire beneficial title. A probate court properly ordered the Special Administrator to convey title to the daughter based on the Resulting Trust Doctrine. It held that the four-year statute of limitations under C.C.P. 343 applied and not C.C.P. 366.2, which limits actions to collect on debts of the decedent to one year after the date of death.Kalway v. City of Berkeley     Docket
151 Cal.App.4th 827 – 1st Dist. (A112569) 5/31/07     Case complete 8/1/07SUBDIVISION MAP ACT: Plaintiff husband transferred title of a parcel to his wife in order to avoid merger under the Subdivision Map Act of a substandard parcel into their adjoining lot. The court held that plaintiffs could not evade the Map Act in this manner. It also held that the City had no authority to obtain an order canceling the deed, but that the wife also had no right to further transfer title to the substandard lot except back to her husband.Delgado v. Interinsurance Exchange of the Auto Club of So. Cal.     Docket     Sup.Ct. Docket
Cal.App. 2nd Dist. (B191272) 6/25/07
REVERSED BY CALIFORNIA SUPREME COURTBAD FAITH: An insurance company acted in bad faith as a matter of law where a potential for coverage was apparent from the face of the complaint. The insured allegedly assaulted plaintiff and there was a potential for coverage because the insured may have acted in self defense. The case contains a thorough analysis of the duties of defense and indemnity.Blackmore v. Powell     Docket     Sup.Ct. Docket
150 Cal.App.4th 1593 – 2nd Dist. (B185326) 5/22/07     Request for depublication DENIED 8/29/07EASEMENTS: An easement “for parking and garage purposes” includes the exclusive right to build and use a garage. Granting an exclusive easement may constitute a violation under the Subdivision Map act, but here there is no violation because the exclusive use of the garage covers only a small portion of the easement and is restricted to the uses described in the easement deed. Amalgamated Bank v. Superior Court     Docket     Sup.Ct. Docket
149 Cal.App.4th 1003 – 3rd Dist. (C052156, C052395) 4/16/07     Petition for review by Cal Supreme Ct. DENIED 8/8/07LIS PENDENS:
1. In deciding a writ petition from an order granting or denying a motion to expunge a lis pendens after judgment and pending appeal, an appellate court must assess whether the underlying real property claim has “probable validity”. This is the same test that is used before judgment. “Probable validity” post-judgment means that it is more likely than not the real property claim will prevail at the end of the appellate process.
2. A judicial foreclosure sale to a third party is absolute, subject only to the right of redemption, and may not be set aside, except that under C.C.P. Section 701.680(c)(1) the judgment debtor may commence an action to set aside the sale within 90 days only if the purchaser at the sale was the judgment creditor. Here, a potential bidder who was stuck in traffic and arrived too late to the sale could not set it aside because only the judgment debtor can do that and because a third party purchased at the sale. L&B Real Estate v. Housing Authority of Los Angeles     Docket
149 Cal.App.4th 950 – 2nd Dist. (B189740) 4/13/07     Case complete 6/13/07TAX DEEDS: Because public property is exempt from taxation, tax deeds purporting to convey such property for nonpayment of taxes are void. Two parcels were inadvertently not included in a deed to the State (subsequently conveyed to the Housing Authority of Los Angeles). Accordingly, the tax collector thought that those parcels were still owned by the seller and sold them at a tax sale after real estate taxes were not paid on them. The court also points out that plaintiff was not a good faith purchaser because it had constructive and actual knowledge of the fact that the Housing Authority’s low income housing was partially located on the two parcels sold at the tax sale.Ulloa v. McMillin Real Estate     Docket
149 Cal.App.4th 333 – 4th Dist., Div. 1 (D048066) 3/7/07 (Cert. for pub. 4/4/07)     Case complete 6/4/07STATUTE OF FRAUDS: The Statute of Frauds requires the authority of an agent who signs a sales agreement to be in writing if the agent signs on behalf of the party to be charged. However, a plaintiff purchaser whose agent signed her name with only verbal authorization is not precluded by the Statute of Frauds from bringing the action because the defendant is the party to be charged.Jordan v. Allstate Insurance Company     Docket     Sup.Ct. Docket
148 Cal.App.4th 1062 – 2nd Dist. (B187706) 3/22/07      Petition for review and depublication DENIED 6/27/07BAD FAITH: Where there is a genuine issue as to the insurer’s liability under the policy, there can be no bad faith liability imposed on the insurer for advancing its side of that dispute. However, there can be bad faith liability where an insurer denies coverage but a reasonable investigation would have disclosed facts showing the claim was covered under other provisions of the policy. The court clarified that an insurer’s failure to investigate can result in bad faith liability only if there is coverage. If there is no coverage, then any failure to properly investigate cannot cause the insured any damage.Shah v. McMcMahon     Docket
148 Cal.App.4th 526 – 2nd Dist. (B188972) 3/12/07     Case complete 5/16/07LIS PENDENS: Plaintiffs could not appeal an order for attorney’s fees awarded in a hearing of a motion to expunge a lis pendens. The only remedy is to challenge the award by way of a petition for writ of mandate.Sterling v. Taylor     Docket
40 Cal.4th 757 – Cal. Supreme Court (S121676) 3/1/07STATUTE OF FRAUDS: If a memorandum signed by the seller includes the essential terms of the parties’ agreement (i.e. the buyer, seller, price, property and the time and manner of payment), but the meaning of those terms is unclear, the memorandum is sufficient under the statute of frauds if extrinsic evidence clarifies the terms with reasonable certainty. Because the memorandum itself must include the essential contractual terms, extrinsic evidence cannot supply those required terms, however, it can be used to explain essential terms that were understood by the parties but would otherwise be unintelligible to others. In this case, the memorandum did not set forth the price with sufficient clarity because it was uncertain whether it was to be determined by a multiplier applied to the actual rent role or whether the price specified was the agreed price even though it was based on the parties’ incorrect estimate of the rent role.Jet Source Charter v. Doherty     Docket
148 Cal.App.4th 1 – 4th Dist., Div. 1 (D044779) 1/30/07     (Pub. order and modification filed 2/28/07 – see end of opinion) Case complete 5/1/07PUNITIVE DAMAGES: Parts I, II, III and IV NOT certified for publication: Where the defendant’s conduct only involves economic damage to a single plaintiff who is not particularly vulnerable, an award which exceeds the compensatory damages awarded is not consistent with due process.Dyer v. Martinez     Docket     Sup.Ct. Docket
147 Cal.App.4th 1240 – 4th Dist., Div. 3 (G037423) 2/23/07     Petition for review by Cal Supreme Ct. DENIED 6/13/07RECORDING: A lis pendens that was recorded but not indexed does not impart constructive notice, so a bona fide purchaser for value takes free of the lis pendens. The party seeking recordation must ensure that all the statutory requirements are met and the recorder is deemed to be an agent of the recording party for this purpose.Behniwal v. Mix     Docket
147 Cal.App.4th 621 – 4th Dist., Div. 3 (G037200) 2/7/07     Case complete 4/13/07SPECIFIC PERFORMANCE: In a specific performance action, a judgment for plaintiff’s attorneys’ fees cannot be offset against the purchase price that the successful plaintiff must pay defendant for the property. A judgment for attorneys’ fees is not an incidental cost that can be included as part of the specific performance judgment, and it is not a lien that relates back to the filing of the lis pendens. Instead, it is an ordinary money judgment that does not relate back to the lis pendens. So, while plaintiff’s title will be superior to defendant’s liens that recorded subsequent to the lis pendens, those liens are nevertheless entitled to be paid to the extent of available proceeds from the full purchase price.Castillo v. Express Escrow     Docket
146 Cal.App.4th 1301 – 2nd Dist. (B186306) 1/18/07     Case complete 3/20/07MOBILEHOME ESCROWS:
1) Health and Safety Code Section 18035(f) requires the escrow agent for a mobile home sale to hold funds in escrow upon receiving written notice of a dispute between the parties, even though the statute specifically states “unless otherwise specified in the escrow instructions” and even though the escrow instructions provided that escrow was to close unless “a written demand shall have been made upon you not to complete it”.
2) Section 18035(f) does not require the written notice of dispute to cite the code section, or to be in any particular form, or that the notice be addressed directly to the escrow holder, or that the notice contain an express request not to close escrow. The subdivision requires nothing more than that the escrow agent receive notice in writing of a dispute between the parties. So receiving a copy of the buyer’s attorney’s letter to the seller was sufficient to notify the escrow agent that a dispute existed.Rappaport-Scott v. Interinsurance Exchange     Docket
146 Cal.App.4th 831 – 2nd Dist (B184917) 1/11/07     Case complete 3/14/07INSURANCE: An insurer’s duty to accept reasonable settlement offers within policy limits applies only to third party actions and not to settlement offers from an insured. An insurer has a duty not to unreasonable withhold payments due under a policy. But withholding benefits under a policy is not unreasonable if there is a genuine dispute between the insurer and the insured as to coverage or the amount of payment due, which is what occurred in this case.In re: Rabin
BAP 9th Circuit 12/8/06BANKRUPTCY/HOMESTEADS: Under California law, the homestead exemption rights of registered domestic partners are identical to those of people who are married. Therefore, domestic partners are limited to a single combined exemption, in the same manner as people who are married. In the absence of a domestic partnership or marriage, each cotenant is entitled to the full homestead exemption.Wachovia Bank v. Lifetime Industries     Docket
145 Cal.App.4th 1039 – 4th Dist., Div. 2 (E037560) 12/15/06     Case complete 2/16/07OPTIONS:
1. When the holder of an option to purchase real property exercises the option and thereby obtains title to the property, the optionee’s title relates back to the date the option was given, as long as the optionee has the right to compel specific performance of the option. But where the optionee acquires title in a transaction unconnected with the option, such as where there has been a breach of the option agreement so that the optionee did not have the right to specific performance, the optionee takes subject to intervening interests just like any other purchaser.
2. Civil Code Section 2906 provides a safe harbor for a lender to avoid the rule against “clogging” the equity of redemption as long as the option is not dependent on the borrower’s default. But even if the lender falls outside the safe harbor because the exercise of the option is dependent upon borrower’s default, it does not automatically follow that the option is void. Instead, the court will analyze the circumstances surrounding the transaction and the intent of the parties to determine whether the option is either void or a disguised mortgage. Also, even if the transaction is a disguised mortgage the optionee (now mortgagee) has a right to judicially foreclose, which will wipe out intervening interests.Wright v. City of Morro Bay     Docket     Sup.Ct. Docket
144 Cal.App.4th 767, 145 Cal.App.4th 309a – 2nd Dist (B176929) 11/7/06     Modification of Opinion 12/6/06     Petition for review by Cal Supreme Ct. DENIED 2/21/07DEDICATION/ABANDONMENT: C.C.P. 771.010, which provides for termination of an offer of dedication if not accepted within 25 years, did not apply because 1) the statute cannot be applied retroactively to the City’s acceptance occurring more than 25 years after the offer of dedication and 2) the area covered by the dedicated road has never been used by anyone, so the requirement that the property be “used as if free of the dedication” was not met.State Farm General Insurance Co. v. Wells Fargo Bank     Docket
143 Cal.App.4th 1098 – 1st Dist. (A111643) 10/10/06     Case complete 12/11/06The “superior equities rule” prevents an insurer, who is subrogated to the rights of the insured after paying a claim, from recovering against a party whose equities are equal or superior to those of the insurer. Thus, an insurer may not recover from an alleged tortfeasor where the tortfeasor’s alleged negligence did not directly cause the insured’s loss. The court questioned the continued vitality of the superior equities rule in California, but felt compelled to follow a 1938 Supreme Court case that applied the rule. The court suggests that the Supreme Court should re-address the issue in light of modern day fault principles.Corona Fruits & Veggies v. Frozsun Foods     Docket     Sup.Ct. Docket
143 Cal.App.4th 319 – 2nd Dist. (B184507) 9/25/06     Petition for review by Cal Supreme Ct. DENIED 12/20/06UCC: A UCC-1 financing statement filed in the name of Armando Munoz is not effective where the debtor’s true name was Armando Munoz Juarez.Warren v. Merrill     Docket
143 Cal.App.4th 96 – 2nd Dist. (B186698) 9/21/06     Case complete 11/21/06QUIET TITLE: The Court quieted title in plaintiff where title was taken in the real estate agent’s daughter’s name as part of a fraudulent scheme perpetrated by the agent. This is not a significant title insurance case, but I posted it for reference since it involves quiet title.McKell v. Washington Mutual     Docket     Sup.Ct. Docket
142 Cal.App.4th 1457 – 2nd Dist. (B176377) 9/18/06     Request for depublication DENIED 1/17/07RESPA: Washington Mutual (i) charged hundreds of dollars in “underwriting fees” when the underwriting fee charged by Fannie Mae and Freddie Mac to WAMU was only $20 and (ii) marked up the charges for real estate tax verifications and wire transfer fees. The court followed Kruse v. Wells Fargo Home Mortgage (2d Cir. 2004) 383 F.3d 49, holding that marking up costs, for which no additional services are performed, is a violation of RESPA. Such a violation of federal law constitutes an unlawful business practice under California’s Unfair Competition Law (“UCL”) and a breach of contract. Plaintiffs also stated a cause of action for an unfair business practice under the UCL based on the allegation that WAMU led them to believe they were being charged the actual cost of third-party services.Reilly v. City and County of San Francisco     Docket     Sup.Ct. Docket
142 Cal.App.4th 480 – 1st Dist. (A109062) 8/29/06     Request for depublication DENIED 12/13/06PROPERTY TAX: A change in ownership of real property held by a testamentary trust occurs when an income beneficiary of the trust dies and is succeeded by another income beneficiary. Also, for purposes of determining change in ownership, a life estate either in income from the property or in the property itself is an interest equivalent in value to the fee interest.Markowitz v. Fidelity     Docket     Sup.Ct. Docket
142 Cal.App.4th 508 – 2nd Dist. (B179923) 5/31/06     Publication ordered by Cal. Supreme Court 8/30/06ESCROW: Civil Code Section 2941, which permits a title insurance company to record a release of a deed of trust if the lender fails to do so, does not impose an obligation on an escrow holder/title company to record the reconveyance on behalf of the trustee. Citing other authority, the Court states that an escrow holder has no general duty to police the affairs of its depositors; rather, an escrow holder’s obligations are limited to faithful compliance with the parties’ instructions, and absent clear evidence of fraud, an escrow holder’s obligations are limited to compliance with the parties’ instructions. The fact that the borrower had an interest in the loan escrow does not mean that he was a party to the escrow, or to the escrow instructions.Cebular v. Cooper Arms Homeowners Association     Docket     Sup.Ct. Docket
142 Cal.App.4th 106 – 2nd Dist. (B182555) 8/21/06     Request for review by Cal Supreme Ct. DENIED 11/15/06; Request to publish Part III, Sec. B filed 10/24/06COVENANTS, CONDITIONS AND RESTRICTIONS: It is not unreasonable for CC&R’s to allocate dues obligations differently for each unit, along with the same allocation of voting rights, even though each unit uses the common areas equally. Although the allocation does not make much sense, courts are disinclined to question the wisdom of agreed-to restrictions.Bernard v. Foley     Docket
39 Cal.4th 794 – Cal. Supreme Court (S136070) (8/21/06)TESTAMENTARY TRANSFERS: Under Probate Code Section 21350, “care custodians” are presumptively disqualified from receiving testamentary transfers from dependent adults to whom they provide personal care, including health services. The Court held that the term “care custodian” includes unrelated persons, even where the service relationship arises out of a preexisting personal friendship rather than a professional or occupational connection. Accordingly, the Court set aside amendments to decedent’s will that were made shortly before decedent’s death, which would have given most of the estate to the care providers.Regency Outdoor Advertising v. City of Los Angeles     Docket
39 Cal.4th 507 – Cal. Supreme Court (S132619) 8/7/06     Modification of Opinion 10/11/06ABUTTER’S RIGHTS: There is no right to be seen from a public way, so the city is not liable for damages resulting from the view of plaintiff’s billboard caused by planting trees along a city street. The court pointed out that a private party who blocks the view of someone’s property by obstructing a public way would be liable to someone in plaintiff’s position.Kleveland v. Chicago Title Insurance Company     Docket     Sup.Ct. Docket
141 Cal.App.4th 761 – 2nd Dist. (B187427) 7/24/06     Case complete 10/5/06     Request for depublication DENIED 10/25/06TITLE INSURANCE: An arbitration clause in a title policy is not enforceable where the preliminary report did not contain an arbitration clause and did not incorporate by reference the arbitration clause in the CLTA policy actually issued. (The preliminary report incorporated by reference the provisions of a Homeowner’s Policy of Title Insurance with a somewhat different arbitration clause, but a CLTA policy was actually issued.)Essex Insurance Company v. Five Star Dye House     Docket
38 Cal.4th 1252 – Cal. Supreme Court (S131992) 7/6/06INSURANCE: When an insured assigns a claim for bad faith against the insurer, the assignee may recover Brandt (attorney) fees. Although purely personal causes of action are not assignable, such as claims for emotional distress or punitive damages, Brandt fees constitute an economic loss and are not personal in nature.Peak Investments v. South Peak Homeowners Association     Docket
140 Cal.App.4th 1363 – 4th Dist., Div. 3 (G035851) 6/28/06     Case complete 8/31/06HOMEOWNER’S ASSOCIATIONS: Where CC&R’s require approval by more than 50 percent of owners in order to amend the Declaration, Civil Code Section 1356(a) allows a court, if certain conditions are met, to reduce the percentage of votes required, if it was approved by “owners having more than 50 percent of the votes in the association”. The Court held that the quoted phrase means a majority of the total votes in the HOA, not merely a majority of those votes that are cast.CTC Real Estate Services v. Lepe     Docket
140 Cal.App.4th 856 – 2nd Dist. (B185320) 6/21/06     Case complete 8/23/06TRUSTEE’S SALES: The victim of an identity theft, whose name was used to obtain a loan secured by a purchase money deed of trust to acquire real property, may, as the only claimant, recover undistributed surplus proceeds that remained after a trustee sale of the property and the satisfaction of creditors. The Court pointed out that a victim of theft is entitled to recover the assets stolen or anything acquired with the stolen assets, even if the value of those assets exceeds the value of that which was stolen.Slintak v. Buckeye Retirement Co.     Docket     Sup.Ct. Docket
139 Cal.App.4th 575 – 2nd Dist. (B182875) 5/16/06     Request for review by Cal Supreme Ct. DENIED 9/13/06MARKETABLE RECORD TITLE ACT
1) Under Civil Code Section 882.020(a)(1), a deed of trust expires after 10 years where “the final maturity date or the last date fixed for payment of the debt or performance of the obligation is ascertainable from the record”. Here, the October 1992 Notice of Default was recorded and contained the due date of the subject note; thus, the due date is “ascertainable from the record” and the 10-year limitations period of section 882.020(a)(1) applies.

2) Under C.C. Section 880.260, if an action is commenced and a lis pendens filed by the owner to quiet or clear title, the running of the 10-year limitations period is reset and a new 10-year limitations period commences on the date of the recording of the lis pendens. After the expiration of the recommenced 10-year period, the power of sale in the trust deed expires. Preciado v. Wilde     Docket     Sup.Ct. Docket
139 Cal.App.4th 321 – 2nd Dist. (B182257) 5/9/06     Request for review by Cal Supreme Ct. DENIED 8/16/06ADVERSE POSSESSION: Plaintiffs failed to establish adverse possession against defendant, with whom they held title as tenants in common. Before title may be acquired by adverse possession as between cotenants, the occupying tenant must impart notice to the tenant out of possession, by acts of ownership of the most open, notorious and unequivocal character, that he intends to oust the latter of his interest in the common property. Such evidence must be stronger than that which would be required to establish title by adverse possession in a stranger. UNPUBLISHED Harbor Pipe v. Stevens
Cal.App. 4th Dist., Div. 3 (G035530) 4/4/06     Case complete 6/6/06JUDGMENTS: A judgment lien against the settlor of a revocable trust attached to trust property where the identity of the settlor is reflected in the chain of title, so a purchaser takes subject to the judgment lien. NOTE: In other words, title companies need to check the names of the settlors in the General Index when title is held in trust.Aaron v. Dunham     Docket     Sup.Ct. Docket
137 Cal.App.4th 1244 – 1st Dist. (A109488) 3/15/06     Request for review by Cal Supreme Ct. DENIED 6/21/06PRESCRIPTIVE EASEMENTS: 1) Permission granted to an owner does not constitute permission to a successor. 2) Under Civil Code Section 1008, signs preventing prescriptive rights must be posted by an owner or his agent, so signs posted by a lessee without the knowledge of the owner, do not qualify.***DECERTIFIED***
Newmyer v. Parklands Ranch     Docket     Sup.Ct. Docket
Cal.App. 2nd Dist. (B180461) 3/23/06     Request for review by Cal Supreme Ct. DENIED; CA opinion DECERTIFIED 6/14/06EASEMENTS: The owner of the dominant tenement possessing over the servient tenement an access easement that includes the right to grant other easements for “like purposes” may convey to an owner of property adjoining the dominant tenement an enforceable easement for access over the servient tenement.Marion Drive LLC v. Saladino     Docket     Sup.Ct. Docket
136 Cal.App.4th 1432 – 2nd Dist. (B182727) 2/27/06     Request for review by Cal Supreme Ct. DENIED 5/24/06ASSESSMENT LIEN: After a tax sale, the holder of a bond secured by a 1911 Act assessment lien has priority as to surplus tax sale proceeds over a subsequently recorded deed of trust. This is true even though the bond holder purchased the property from the tax sale purchaser. The Court rejected defendant’s argument that fee title had merged with the assessment lien.Barnes v. Hussa     Docket
136 Cal.App.4th 1358 – 3rd Dist. (C049163) 2/24/06     Case complete 4/26/06LICENSES / WATER RIGHTS: The Plaintiff did not overburden a license to run water in a pipeline across defendant’s property where he extended the pipeline to other property he owned because there was no increase in the burden on the servient tenement and no harm to defendants. A couple of interesting things pointed out by the Court are: 1) A person entitled to use water may use it elsewhere as long as others are not injured by the change, and 2) “An irrevocable license . . . is for all intents and purposes the equivalent of an easement.”***REVERSED***
Mayer v. L & B Real Estate     Docket     Sup.Ct. Docket
Cal.App. 2nd Dist. (B180540) 2/14/06     REVERSED by Cal Supreme Ct. 6/16/08TAX SALES: The one-year statute of limitations for attacking a tax sale applies to preclude an action by a property owner who had actual notice of the tax sale, even where the tax collector’s conduct was egregious. The Court did not reach the question of whether the tax collector satisfied its due process obligations, but refers to a Supreme Court case which held that the limitations period is enforceable even if the defect is constitutional in nature. That case recognized a limited exception where an owner is in “undisturbed possession” such that the owner lacked any reasonable means of alerting himself to the tax sale proceedings.Wright Construction Co. v. BBIC Investors     Docket     Sup.Ct. Docket
136 Cal.App.4th 228 – 1st Dist. (A109876) 1/31/06     Request for review by Cal Supreme Ct. DENIED 4/26/06MECHANICS’ LIENS: A mechanic’s lien is premature and invalid under Civil Code Section 3115 if it is recorded before the contractor “completes his contract”. A contract is complete for purposes of commencing the recordation period under section 3115 when all work under the contract has been performed, excused, or otherwise discharged. Here, because of the tenant’s anticipatory breach of the contract, plaintiff had “complete[d] [its] contract” within the meaning of section 3115 the day before the claim of lien was recorded, so the claim of lien was not premature. In a previous writ proceeding, the Court held that the landlord’s notice of nonresponsibility was invalid under the “participating owner doctrine” because the landlord caused the work of improvement to be performed by requiring the lessee to make improvements.Torres v. Torres     Docket     Sup.Ct. Docket
135 Cal.App.4th 870 – 2nd Dist. (B179146) 1/17/06     Request for review by Cal Supreme Ct. DENIED 4/12/06POWER OF ATTORNEY: 1) A statutory form power of attorney is not properly completed where the principal marks the lines specifying the powers with an “X” instead of initials, as required by the form. However, the form is not the exclusive means of creating a power of attorney, so even though it is not valid as a statutory form, it is valid as regular power of attorney. 2) Under Probate Code Section 4264, an attorney in fact may not make a gift of the principal’s property unless specifically authorized to do so in the power of attorney. Here, the principal quitclaimed the property to himself, the other attorney in fact and the principal as joint tenants. However, the court refused to invalidate the conveyance because the plaintiff failed to produce any evidence that the conveyance was not supported by consideration.Ung v. Koehler     Order Modifying Opinion     Docket     Sup.Ct. Docket
135 Cal.App.4th 186 – 1st Dist. (A109532) 12/28/05     Request for review by Cal Supreme Ct. DENIED 4/12/06TRUSTEE’S SALES:
1. Expiration of the underlying obligation does not preclude enforcement of the power of sale under a deed of trust.
2. A power of sale expires after 60 years or, if the last date fixed for payment of the debt is ascertainable from the record, 10 years after that date.
3. In order to avoid a statutory absurdity, a notice of default that is recorded more than 10 years after “the last date fixed for payment of the debt” does not constitute a part of the “record” for purposes of Civil Code Section 882.020(a).Trust One Mortgage v. Invest America Mortgage     Docket
134 Cal.App.4th 1302 – 4th Dist., Div. 3 (G035111) 12/15/05     Case complete 2/21/06TRUSTEE’S SALES/ANTI-DEFICIENCY: An indemnification agreement is enforceable after a non-judicial foreclosure where the indemnitor is not the same person as the obligor. If the indemnitor and obligor were the same, the indemnity would be void as an attempt to circumvent antideficiency protections.UNPUBLISHED OPINION
Citifinancial Mortgage Company v. Missionary Foundation     Docket
Cal.App. 2nd (B178664) 12/14/05     Case complete 2/16/06MARKETABLE RECORD TITLE ACT: (UNPUBLISHED OPINION) Under Civil Code Section 882.020(a)(1), a deed of trust becomes unenforceable 10 years after the final maturity date, or the last date fixed for payment of the debt or performance of the obligation, if that date is ascertainable from the record. Here, the record showed via an Order Confirming Sale of Real Property that the obligation was due five years after close of escrow. The Court held that since “close of escrow” is an event, and not a date certain, Section 882.020(a)(1) did not apply in spite of the fact that escrow must have closed in order for the deed of trust to have been recorded.McElroy v. Chase Manhattan Mortgage Corp.     Docket
134 Cal.App. 4th 388 – 4th Dist., Div. 3 (G034588) 11/1/05     Case complete 2/1/06TRUSTEE’S SALES: The Court refused to set aside a trustee’s sale where the lender foreclosed after the trustors tendered payment in the form of a “Bonded Bill of Exchange Order”. The Court determined that “the Bill is a worthless piece of paper, consisting of nothing more than a string of words that sound as though they belong in a legal document, but which, in reality, are incomprehensible, signifying nothing.”***DECERTIFIED***
The Santa Anita Companies v. Westfield Corporation     Docket     Sup.Ct. Docket
134 Cal.App.4th 77 – 2nd Dist. (B175820) 11/17/05     Request for review by Cal Supreme Ct. DENIED and DECERTIFIED 01/25/06DEEDS: The 3-year statute of limitations under C.C.P. 338(d) to seek relief on the ground of mistake does not begin to run until discovery of the mistake or receiving facts that would put a reasonable person on notice of the mistake. The fact that carefully reading the deed would have revealed the mistake is not sufficient to charge the plaintiff with notice, so the statute of limitations did not begin to run until plaintiff actually became aware of the error, and this action was therefore timely.Big Valley Band of Pomo Indians v. Superior Court     Docket
133 Cal.App.4th 1185 – 1st Dist. (A108615) 11/1/05     Case complete 1/4/06INDIANS: An employment agreement with an Indian tribe contained the following clause: “Any claim or controversy arising out of or relating to any provisions of this Agreement, or breach thereof, shall . . . be resolved by arbitration under the rules of the American Arbitration Association in San Francisco, California, and judgment on any award by the arbitrators may be entered in any court having such jurisdiction”. The court held that the effect of the arbitration clause as limited to a consent to arbitrate and enforce any award in state court. But this clause was insufficient to waive the tribe’s immunity from a breach of contract action brought in state court. So plaintiffs are apparently free to bring the same breach of contract claims in an arbitration proceeding.Behniwal v. Mix     Docket
133 Cal.App.4th 1027 – 4th Dist., Div. 3 (G034074) 9/30/05     Case complete 1/3/06STATUTE OF FRAUDS: A sales contract signed on the sellers’ behalf by their real estate agent did not satisfy the Statute of Frauds because the agent did not have written authority to sign for the sellers. However, a contract which must be in writing can be ratified if the ratification is also in writing. Here the sellers ratified the contract by a sufficient written ratification where they subsequently signed disclosure documents that specifically referred to the contract signed by the real estate agent.Behniwal v. Superior Court     Docket
133 Cal.App.4th 1048 – 4th Dist., Div. 3 (G035299) 9/30/05     Case complete 1/3/06LIS PENDENS: (Related to Mix v. Superior Court, several cases below.) Having determined that the plaintiffs have at least a “probably valid” real property claim, the Court issued a peremptory writ of mandate directing the Superior Court to vacate its order expunging the lis pendens. The lis pendens will therefore protect plaintiff’s claim until the time for appeal to the Supreme Court expires or unless the Supreme Court issues its own writ directing that the lis pendens be expunged.Zipperer v. County of Santa Clara     Docket
133 Cal.App.4th 1013 – 6th Dist. (H028455) 9/30/05 (Mod. 10/28/05)     Case complete 12/28/05EASEMENTS:
PUBLISHED PORTION: The Solar Shade Control Act provides that “. . . no person owning, or in control of a property shall allow a tree or shrub to be placed, or, if placed, to grow on such property, subsequent to the installation of a solar collector on the property of another so as to cast a shadow greater than 10 percent of the collector absorption area”. The County is exempt from the Act because it adopted an ordinance pursuant to a statute allowing cities and counties to exempt themselves from the Act. The Court did not address the issue of whether the act applies where a tree is not “placed” by a property owner.

UNPUBLISHED PORTION: A common law easement for light and air generally may be created only by express written instrument. A statutory “solar easement” under Civil Code Section 801.5 may be created only by an instrument containing specified terms. The Court held that the County did not have an obligation to trim trees to avoid shading plaintiff’s solar panels, rejecting several theories asserted by plaintiff.Fishback v. County of Ventura     Docket
133 Cal.App.4th 896 – 2nd Dist. (B177462) 10/26/05     Case complete 1/9/06SUBDIVISION MAP ACT: Under the 1937 and 1943 Subdivision Map Acts, “subdivision” was defined as “any land or portion thereof shown on the last preceding tax roll as a unit or as contiguous units which is divided for the purpose of sale . . . into five or more parcels within any one year period.” The Court makes numerous points interpreting those statutes, some of the most significant being: 1) Once the fifth parcel is created within a one-year period, all the parcels created within that year constitute a subdivision; 2) Even though a unit of land is defined as a unit as shown on the last tax roll preceding the division, that does not mean the unit shown on the last preceding tax roll is a legal parcel, and legal parcels cannot be created by dividing that illegal parcel; and 3) If land is divided for the purpose of sale, it is irrelevant that the retained parcel is not held for the purpose of sale. Thus, for example, if the owner of a unit of land divides it in half, the unit is divided for the purpose of sale even if the owner intends to sell only one half and keep the other.Attorney General Opinion No. 04-1105
10/3/05ASSESSOR’S RECORDS: County Assessors maintain parcel boundary map data, which is detailed geographic information used to describe and define the precise geographic boundaries of assessor’s parcels. When maintained in electronic format, Assessors must make copies in electronic format available to the public. The fee charged for producing the copy is limited to the direct cost of producing the copy in electronic format, and may not include expenses associated with the county’s initial gathering of the information, with initial conversion of the information into electronic format, or with maintaining the information.Villacreses v. Molinari     Docket     Sup.Ct. Docket
132 Cal.App.4th 1223 – 4th Dist., Div. 3 (G034719) 9/26/05     Request for review by Cal Supreme Ct. DENIED 12/14/05ARBITRATION: Section 1298 requires that an arbitration provision in a real estate contract be accompanied by a statutory notice and that the parties indicate their assent by placing their initials on an adjacent space or line. The arbitration notice, standing alone, does not constitute an arbitration provision. So the Defendants could not compel arbitration where the contract contained only the notice, but did not contain a separate arbitration provision.

The Court has a good sense of humor. The opinion contains the following memorable quotes:

1. “If the first rule of medicine is ‘Do no harm,’ the first rule of contracting should be ‘Read the documents’.”

2. “. . . to paraphrase the immortal words of a former President of the United States, the applicability of this purported arbitration agreement to the instant dispute ‘depends upon what the meaning of the word “it” is.'”Campbell v. Superior Court (La Barrie)     Docket     Sup.Ct. Docket
132 Cal.App.4th 904 – 4th Dist., Div. 1 (D046064) 9/14/05     Request for review by Cal Supreme Ct. DENIED 12/14/05LIS PENDENS: A cause of action for a constructive trust or an equitable lien does not support a lis pendens where it is merely for the purpose of securing a judgment for money damages. [Ed. Note: The Court in this and similar cases make the absolute statement that “an equitable lien does not support a lis pendens”, and explain that the lien is sought merely to secure a money judgment. But it is unclear whether the Court would reach the same conclusion in a pure equitable lien case. For example, where a loan is paid off with the proceeds of a new loan, but the new mortgage accidentally fails to be recorded, an action to impose an equitable lien seeks more than a mere money judgment. It seeks to allow the new lender to step into the shoes of the old lender and, in my opinion, a lis pendens should be allowed.]Fripp v. Walters Docket     Docket     Sup.Ct. Docket
132 Cal.App.4th 656 – 3rd Dist. (C046733) 9/7/05 (ONLY PART I CERTIFIED FOR PUBLICATION)     Request for review by Cal Supreme Ct. DENIED 11/16/05BOUNDARIES / SURVEYS: A conveyance referring to a parcel map cannot convey more property than the creator of the parcel map owned. The Court rejected Defendant’s claim that the recorded parcel map was a “government sanctioned survey” which precludes a showing that the boundaries established by the parcel map are erroneous. The court explained that the rule cited by Defendants applies only to official survey maps that create boundaries. Boundary lines cannot be questioned after the conveyance of public land to a private party, even if they are inaccurate.Title Trust Deed Service Co. v. Pearson     Docket
132 Cal.App.4th 168 – 2nd Dist (B175067) 8/25/05     Case complete 10/28/05HOMESTEADS: A declared homestead exemption applies to surplus proceeds from a trustee’s sale. [Comment: Applying the declared homestead exemption to trustee’s sales is fine. But the Court also seems to want to pay surplus proceeds to the debtor up to the amount of the exemption before paying the holder of a junior trust deed. This should be wrong since the homestead exemption does not apply to voluntary liens. I think the Court does not adequately address what appears to me to be a circuity of priority problem: The homestead exemption is senior to the judgment lien, which in this case happens to be senior to a junior TD, which is senior to the homestead exemption.]In re Marriage of Benson     Docket
36 Cal.4th 1096 – Cal. Supreme Court (S122254) 8/11/05COMMUNITY PROPERTY: The doctrine of partial performance, which is an exception to the Statute of Frauds, is not an exception to the requirement of Family Code Section 852 that an agreement to transmute property be in writing. The concurring opinion points out that the Court does not decide what statutory or equitable remedy would be available to make whole a spouse who has been disadvantaged by an illusory oral promise to transmute property, or what sanction may be employed against a spouse who has used section 852(a) as a means of breaching his or her fiduciary duty and gaining unjust enrichment.First Federal Bank v. Fegen     Docket
131 Cal.App.4th 798 – 2nd Dist. (B174252) 7/29/05     Case complete 9/29/05JUDGMENTS: The Court dismissed an appeal as being moot where the debtor did not post a bond after a sheriff’s sale of real property. C.C.P. Section 917.4 provides that an appeal of an order directing the sale of real property does not stay enforcement of the order. A sheriff’s sale is final, except that the debtor can commence an action within 90 days to set aside the sale if the judgment creditor is the successful bidder. Here, the debtor failed to file an action within 90 days so the sale is final.Bear Creek Master Association v. Edwards     Docket     Sup.Ct. Docket
130 Cal.App.4th 1470 – 4th Dist. Div. 2 (E034859) 7/13/05     Request for review by Cal Supreme Ct. DENIED 10/19/05CONDOMINIUMS: The definition of “condominium” in Civil Code Section 1351(f) does not require that an actual structure has been built; rather it only requires that it be described in a recorded condominium plan. (Note, however, that under CC 1352 the condominium does not come into existence until a condominium unit has been conveyed.) The case also contains an extensive discussion of the procedural requirements for foreclosing on an assessment lien recorded by the homeowner’s association.Woodridge Escondido Property Owners Assn. v. Nielsen     Docket     Sup.Ct. Docket
130 Cal.App.4th 559 – 4th Dist. Div. 1 (D044294) 5/25/05 (pub. order 6/16/05)     Request for review by Cal Supreme Ct. DENIED 8/31/05CC&R’s: A provision in CC&R’s that prohibited construction of a permanent structure in an easement area applied to a deck because it was attached to the house and had supporting posts that were buried in the ground, such that it was designed to continue indefinitely without change and was constructed to last or endure.Beyer v. Tahoe Sands Resort     Docket
129 Cal.App.4th 1458 – 3rd Dist. (C045691) 6/8/05     Case complete 8/8/05EASEMENTS: California Civil Code Section 805 provides that a servitude cannot be held by the owner of the servient tenement. The Court held that the term “owner” under Section 805 means the owner of the full fee title, both legal and equitable, such that a property owner who owns less than full title may validly create easements in his own favor on his land. Here, the Court held that the grantor could reserve an easement over property conveyed to a time-share trustee where the grantor held all beneficial interest in the trust and the grantee held just bare legal title.Bank of America v. La Jolla Group     Docket     Sup.Ct. Docket
129 Cal.App.4th 706 – 5th Dist. (F045318) 5/19/05     Request for review by Cal Supreme Ct. DENIED 9/7/05TRUSTEE’S SALES: A trustee’s sale, which was accidentally held after the owner and lender agreed to reinstate the loan, is invalid. The conclusive presumptions in Civil Code Section 2924 pertain only to notice requirements, not to every defect or inadequacy. The Court points out that the advantages of being a bona fide purchaser are not limited to the presumptions set forth in Section 2924, but does not discuss it further because the defendant did not argue that its bona fide purchaser status supports its position in any way other than the statutory presumptions.Zabrucky v. McAdams     Docket
129 Cal.App.4th 618 – 2nd Dist. (B167590) 5/18/05     Case complete 7/20/05COVENANTS, CONDITIONS & RESTRICTIONS: The Court interpreted a provision in CC&R’s to prohibit an addition to a house which would unreasonably obstruct a neighbor’s view. The Court painstakingly nit-picked through the provisions of the CC&R’s and compared the provisions and the facts to other cases where courts have done the same. The main conclusion I draw is that these cases are each unique and it is very difficult to determine in advance what a court will do. In fact, one judge dissented in this case. This means it can be very dangerous to issue endorsements such as CLTA Endorsement No. 100.6 or 100.28, insuring against this kind of provision in CC&R’s.Anolik v. EMC Mortgage Corp.     Docket     Sup.Ct. Docket
Cal.App. 3rd Dist. (C044201) 4/29/05 (Mod. 5/26/05)     Request for review by Cal Supreme Ct. DENIED and DECERTIFIED 8/10/05***DECERTIFIED***
 TRUSTEE’S SALES:
1. To be valid, a notice of default must contain at least one correct statement of a breach, and it must be substantial enough to authorize use of the drastic remedy of nonjudicial foreclosure.
2. An assertion in a notice of default of one or more breaches qualified with the words “if any” does not satisfy the requirements of section 2924 because it indicates that the lender has no clue as to the truth or falsity of the assertion.
3. It is not proper to declare a payment in default when the time for imposing a late fee on that payment has not expired because the default is not sufficiently substantial at that point.
4. Under Civil Code Section 2954, a lender cannot force impound payments for property taxes until the borrower has failed to pay two consecutive tax installments.Kangarlou v. Progressive Title Company     Docket
128 Cal.App.4th 1174 – 2nd Dist. (B177400) 4/28/05     Case complete 6/29/05ESCROW: 1. Under Civil Code Section 1717, plaintiff can recover attorney’s fees after prevailing in an action against the escrow holder, even though the escrow instructions limited attorney’s fees to actions to collect escrow fees.
2. Under Business and Professions Code Section 10138, an escrow holder has a duty to obtain evidence that a real estate broker was regularly licensed before delivering compensation.Paul v. Schoellkopf     Docket     Sup.Ct. Docket
128 Cal.App.4th 147 – 2nd Dist. (B170379) 4/5/05     Request for review by Cal Supreme Ct. DENIED 6/15/05ESCROW: A provision for attorneys’ fees in escrow instructions limited to fees incurred by the escrow company in collecting for escrow services does not apply to other disputes between the buyer and seller.Knight v. Superior Court     Docket     Sup.Ct. Docket
128 Cal.App.4th 14 – 3rd Dist. (C048378) 4/4/05     Request for review by Cal Supreme Ct. DENIED 6/29/05DOMESTIC PARTNERSHIPS: Family Code Section 308.5, enacted by Proposition 22, 3/7/00, states: “Only marriage between a man and a woman is valid or recognized in California.” This statute did not prohibit the legislature from enacting California’s Domestic Partnership Law, Family Code Section 297, et seq., because Section 308.5 pertains only to marriages, not to other relationships.Estate of Seifert     Docket     Sup.Ct. Docket
128 Cal.App.4th 64 – 3rd Dist. (C046456) 4/4/05     Request for review by Cal Supreme Ct. DENIED 6/22/05ADVERSE POSSESSION: A fiduciary, including an executor, may not acquire title by adverse possession against the heirs. Once the executor was appointed, the statutory period for his adverse possession of the subject property ceased to run.Melendrez v. D & I Investment     Docket     Sup.Ct. Docket
127 Cal.App.4th 1238 – 6th Dist. (H027098) 3/29/05     Request for review by Cal Supreme Ct. DENIED 6/22/05 TRUSTEE’S SALES: A trustee’s sale cannot be set aside where the purchaser at the sale is a bona fide purchaser (“BFP”). The elements of being a BFP are that the buyer 1) purchase the property in good faith for value, and 2) have no knowledge or notice of the asserted rights of another. The value paid may be substantially below fair market value. Also, the buyer’s sophistication and experience in purchasing at trustee’s sales does not disqualify him from being a BFP, although in evaluating whether the buyer is a BFP, the buyer’s foreclosure sale experience may be considered in making the factual determination of whether he had knowledge or notice of the conflicting claim.Radian Guaranty v. Garamendi     Docket     Sup.Ct. Docket
127 Cal.App.4th 1280 – 1st Dist. (A105789) 3/29/05     Request for review by Cal Supreme Ct. DENIED 7/20/05TITLE INSURANCE: Radian’s Lien Protection Policy constitutes title insurance pursuant to Insurance Code Section 12340.1. Because Radian does not possess a certificate of authority to transact title insurance, it is not authorized to sell the policy in California or anywhere else in the United States, pursuant to California’s monoline statutes: Ins. Code Section 12360 (title insurance) and Ins. Code Section 12640.10 (mortgage guaranty insurance).Gardenhire v. Superior Court     Docket     Sup.Ct. Docket
128 Cal.App.4th 426a – 6th Dist. (H026601) 3/22/05     Request for review by Cal Supreme Ct. DENIED 6/8/05TRUSTS: A trust can be revoked by a will where the trust provided for revocation by “any writing” and the will expressed a present intent to revoke the trust. The Court pointed out that a will, which is inoperative during the testator’s life, can nevertheless have a present and immediate effect upon delivery, such as notice of intent to revoke.Jones v. Union Bank of California     Docket     Sup.Ct. Docket
127 Cal.App.4th 542 – 2nd Dist. (B173302) 3/11/05     Request for review by Cal Supreme Ct. DENIED 6/8/05When a lender successfully defends an action to set aside or enjoin a foreclosure sale, the antideficiency provisions of C.C.P. Section 580d do not prohibit an award of attorney fees. In addition, Civil Code sections 2924c and 2924d do not limit the amount of fees the court may award.O’Toole Company v. Kingsbury Court HOA     Docket
126 Cal.App.4th 549 – 2nd Dist. (B172607) 2/3/05     Case complete 4/8/05HOMEOWNER’S ASSOCIATIONS: In a suit to enforce a judgment, the trial court properly appointed a receiver and levied a special emergency assessment when defendant-homeowners association failed to pay. The Court pointed out that regular assessments are exempt from execution, but not special assessments.State of California ex rel. Bowen v. Bank of America     Docket     Sup.Ct. Docket
126 Cal.App.4th 225 – 2nd Dist. (B172190) 1/31/05     Request for review by Cal Supreme Ct. DENIED 5/18/05ESCHEAT: This is a qui tam action filed on behalf of the State Controller. The court held that unused reconveyance fees do not need to be escheated because the obligation to return a specific sum of money is neither certain nor liquidated under Civil Code Section 2941 or under the provisions of the deeds of trust. This case was against lenders and I believe it would not apply in the context of escrow and title insurance.Van Klompenburg v. Berghold     Docket     Sup.Ct. Docket
126 Cal.App.4th 345 – 3rd Dist. (C045417) 1/31/05     Request for review by Cal Supreme Ct. DENIED 5/11/05EASEMENTS: Where the grant of easement states that the right of way shall be “kept open” and “wholly unobstructed”, the normal rule does not apply, which would otherwise allow the owner of the servient estate to erect a locked gate as long as the owner of the dominant estate is given a key and the gate does not unreasonably interfere with the use of the easement.State of California v. Old Republic Title Company     Docket     Sup.Ct. Docket
125 Cal.App.4th 1219 – 1st Dist. (A095918) 1/20/05     NOTE: request for order directing republication of court of appeal opinion DENIED 8/16/06.
Overruled in part on issue not significant to title insurance – SEE BELOW.TITLE INSURANCE: Old Republic was found liable for 1) failing to escheat unclaimed funds in escrow accounts, 2) failing to return fees collected for reconveyances which were not used and 3) failing to pay interest collected on escrow funds to the depositing party.

Of particular interest, the Court stated:
“Insurance Code Section 12413.5 provides that interest on escrow funds must be paid to the depositing party ‘unless the escrow is otherwise instructed by the depositing party . . . .’ Any title company is free to draft escrow instructions that, with full disclosure to and agreement from the depositing party, direct that the arbitrage interest differential be paid to the company. It is a matter of disclosing the pertinent costs and benefits to the customer.”

State of California v. PriceWaterhouseCoopers
39 Cal.4th 1220 – Cal. Supreme Court (S131807) 8/31/06

FALSE CLAIMS ACT: A political subdivision may not bring an action under Government Code section 12652, subdivision (c), to recover funds on behalf of the state or another political subdivision.Frei v. Davey     Docket
124 Cal.App.4th 1506 – 4th Dist., Div. 3 (G033682) 12/17/04     Case complete 2/22/05CONTRACTS: Under the most recent version of the CAR purchase contract, the prevailing party is barred from recovering attorney fees if he refused a request to mediate.Mix v. Superior Court     Docket      Sup.Ct. Docket
124 Cal.App.4th 987 – 4th Dist., Div. 3  12/7/04  (G033875)     Request for review by Cal Supreme Ct. DENIED 2/16/05LIS PENDENS: (Related to Behniwal v. Superior Court, several cases above.) After the claimant loses at trial, the trial court must expunge a lis pendens pending appeal unless claimant can establish by a preponderance of the evidence the probable validity of the real property claim. Claimants will rarely be able to do this because it requires a trial court to determine that its own decision will probably be reversed on appeal. The court points out that this strict result is tempered by claimant’s ability to petition the appellate court for a writ of mandate, so that the appellate court can make its own determination of the probability of the trial court’s decision being reversed on appeal.D’Orsay International Partners v. Superior Court     Docket     Sup.Ct. Docket
123 Cal.App.4th 836 – 2nd Dist. 10/29/04 (B174411)     Request for review by Cal Supreme Ct. DENIED 1/26/05MECHANIC’S LIENS: The court ordered the release of a mechanic’s lien because there was no actual visible work on the land or the delivery of construction materials. The criteria applicable to a design professional’s lien do not apply where the claimant filed a mechanic’s lien. The court specifically did not address the question of whether a contractor performing design services or employing design professionals may assert a design professionals’ lien.Gibbo v. Berger     Docket     Sup.Ct. Docket
123 Cal.App.4th 396 – 4th Dist., Div. 2 10/22/04 (E035201)     Case complete 12/27/04    Req. for Depublication by Cal. Supreme Ct. DENIED 2/16/05USURY: The usury exemption for loans arranged by real estate brokers does not apply where the broker functioned as an escrow whose involvement was limited to preparing loan documents on the terms provided by the parties, ordering title insurance, and dispersing funds, all in accordance with the parties’ instructions. In order to “arrange a loan” the broker must act as a third party intermediary who causes a loan to be obtained or procured. Such conduct includes structuring the loan as the agent for the lender, setting the interest rate and points to be paid, drafting the terms of the loan, reviewing the loan documents, or conducting a title search.Knapp v. Doherty     Docket
123 Cal.App.4th 76 – 6th Dist. 9/20/04 (H026670)     Case complete 12/21/04TRUSTEE’S SALES:
1. Civil Code Section 2924 requires the trustee to give notice of sale only “after the lapse of the three months” following recordation of the notice of default. The Notice of Sale technically violated this requirement because it was served by mail on the property owner several days prior to the end of three months. However, this did not invalidate the sale because the owner did not suffer prejudice from the early notice.
2. Incorrectly stating the date of the default in the Notice of Default did not invalidate the sale because the discrepancy was not material.Royal Thrift and Loan v. County Escrow     Docket
123 Cal.App.4th 24 – 2nd Dist. 10/15/04 (B165006)     Case complete 12/16/04TRUSTEE’S SALES:
1. Postponements of a trustee’s sale during an appeal were reasonable, so they do not count toward the 3-postponement limit of Civil Code Section 2924g(c)(1). The postponements fall under the “stayed by operation of law” exception. However, the Court recognized that the better course would have been to re-notice the trustee’s sale after the appeal.
2. The court indicated that an appeal from an action to quiet title against a deed of trust should stay the trustee’s sale proceedings under Code of Civil Procedure Section 916 pending the appeal. However, the court did not formally make that holding because the owner did not appeal and the issues involving the appellants (escrow holder and bonding company) did not require a holding on that issue.Tesco Controls v. Monterey Mechanical Co.     Docket
124 Cal.App.4th 780 – 3rd Dist. 12/6/04 (C042184) (Opinion on rehearing)     Case complete 2/7/05MECHANIC’S LIENS: A mechanic’s lien release that waives lien rights up to the date stated in the release is effective to waive lien rights up to that date, even if the progress payments did not fully compensate the lien claimant.Gale v. Superior Court     Docket
122 Cal.App.4th 1388 – 4th Dist., Div. 3  10/6/04 (G033968) (Mod. 10/22/04)     Rehearing Denied 10/22/04; Case Complete 12/10/04LIS PENDENS / DIVORCE
1. The automatic stay contained in a divorce summons does not apply to the sale by the husband, as managing member of a family-owned management company, of real property vested in the management company.
2. A petition for dissolution of marriage which does not allege a community interest in specific real property does not support the filing of a lis pendens.Nwosu v. Uba     Docket
122 Cal.App.4th 1229 – 6th Dist. 10/1/04 (H026182)     Case complete 12/01/04The court held that a transaction was a bona fide sale and not an equitable mortgage. The complicated facts provide little of interest to the title insurance business, other than to note the fact that a deed can be held to be a mortgage if the deed was given to secure a debt. The case contains a good discussion of the distinction between legal claims, for which there is a right to a jury trial, and equitable claims, for which there is no right to a jury trial.Moores v. County of Mendocino     Docket
122 Cal.App.4th 883 – 1st Dist. 9/24/04 (A105446)     Case complete 11/24/04SUBDIVISION MAP ACT: The enactment of an ordinance requiring the County to record notices of merger did not result in the unmerger of parcels that had previously merged under the County’s previous automatic merger ordinance. The County properly sent a subsequent notice under Gov. Code Section 66451.302 notifying property owners of the possibility of a merger. Accordingly, plaintiff’s parcels remain merged.Larsson v. Grabach     Docket     Sup.Ct. Docket
121 Cal.App.4th 1147 – 5th Dist. 8/25/04 (F042675)     Request for review by Cal Supreme Ct. DENIED 12/15/04EASEMENTS: An easement by implication can be created when an owner of real property dies intestate and the property is then divided and distributed to the intestate’s heirs by court decree.Felgenhauer v. Soni     Docket
121 Cal.App.4th 445 – 2nd Dist. 8/5/04 (B157490)     Case complete 10/8/04PRESCRIPTIVE EASEMENTS: To establish a claim of right, which is one of the elements necessary to establish a prescriptive easement, the claimant does not need to believe he is entitled to use of the easement. The phrase “claim of right” has caused confusion because it suggests the need for an intent or state of mind. But it does not require a belief that the use is legally justified; it simply means that the property was used without permission of the owner of the land.Jonathan Neil & Assoc. v. Jones     Docket
33 Cal.4th 917 – Cal. Supreme Court (S107855) 8/5/04 (Mod. 10/20/04)INSURANCE: A tort action for breach of the duty of good faith and fair dealing exists only in regard to the issues of bad faith payment of claims and unreasonable failure to settle. It does not pertain to the general administration of an insurance policy or to other contract settings. In this case, a tort cause of action does not lie for the insurer’s bad faith conduct in setting an unfairly high insurance premium.Bello v. ABA Energy Corporation     Docket
121 Cal.App.4th 301 – 1st Dist. 8/2/04 (A102287)     Case complete 10/6/04RIGHTS OF WAY: A grant of a public right of way includes uses made possible by future development or technology, which are not in existence at the time of the grant. Here, the Court held that a right of way included the right to install a pipeline to transport natural gas.California National Bank v. Havis     Docket
120 Cal.App.4th 1122 – 2nd Dist. 7/23/04 (B167152)     Case complete 9/22/04DEEDS OF TRUST: A bank holding a deed of trust holder was paid outside of escrow with a check. The bank sent a letter to escrow stating that it had “received payoff funds . . . it is our policy to issue the Full Reconveyance 10 days after receipt of the payoff check. Therefore, a Full Reconveyance will be sent to the County Recorder on or about August 5, 2002”. The escrow relied on the letter and closed escrow without paying off the lender. The check bounced and the lender began foreclosure.

The Court reversed a summary judgment in favor of defendants, holding that the letter did not constitute a payoff demand statement binding on the bank under CC 2943. The Court determined that there was a triable issue of fact as to whether the parties could reasonably have relied on the letter. [Ed. note: The Court exhibited a scary lack of understanding of real estate transactions, and could not come to grips with the fact that reconveyances from institutional lenders never record at close of escrow.]Kirkeby v. Sup. Ct. (Fascenelli)     Docket
33 Cal.4th 642 – Cal. Supreme Court 7/22/04 (S117640)LIS PENDENS: An action to set aside a fraudulent conveyance supports the recording of a lis pendens. The court stated that “[b]y definition, the voiding of a transfer of real property will affect title to or possession of real property”. (Ed. note: Several appellate court decisions have held that actions to impose equitable liens and constructive trusts do not support a lis pendens. The Supreme Court did not deal with those issues but it seems that, using the court’s language, it could similarly be said that “by definition imposing an equitable lien or constructive trust will affect title to or possession of real property.”)Tom v. City and County of San Francisco     Docket     Sup.Ct. Docket
120 Cal.App.4th 674 – 1st Dist. 6/22/04 (A101950)     Request for review by Cal Supreme Ct. DENIED 10/13/04TENANCY IN COMMON AGREEMENTS: In order to evade burdensome regulations for converting apartments to condominiums, it has become a common practice in San Francisco for a group of people to acquire a multi-unit residential building and enter into a tenancy in common agreement establishing an exclusive right of occupancy for each dwelling unit. Seeking to end this practice, the People’s Republic of San Francisco enacted an ordinance prohibiting exclusive right of occupancy agreements. The Court held that the ordinance is unconstitutional because it violates the right of privacy set forth in Article I, section I of the California Constitution.California Attorney General Opinion No. 03-1108
6/9/04RECORDING: A memorandum of lease is a recordable instrument.Yeung v. Soos     Docket
119 Cal.App.4th 576 – 2nd Dist. 6/16/04 (B165939) (Mod. 7/2/04)     Case complete 9/10/04QUIET TITLE: A default judgment after service by publication is permissible in a quiet title action. However, the judgment may not be entered by the normal default prove-up methods; the court must require evidence of the plaintiff’s title, including live witnesses and complete authentication of the underlying real property records. Nevertheless, the judgment is not rendered void because the default prove-up method was used rather than an evidentiary hearing.Villa de Las Palmas HOA v. Terifaj     Docket
33 Cal.4th 73 – Cal. Supreme Court 6/14/04 (S109123)RESTRICTIONS: Use restrictions in amended declarations are binding on owners who purchased prior to recordation of the amendment. They are also subject to the same presumption of validity as the original declaration.In re Marriage of Gioia     Docket
119 Cal.App.4th 272 – 2nd Dist. 6/9/04 (B166803)     Case complete 8/11/04BANKRUPTCY: A bankruptcy trustee’s notice of abandonment of property was effective even though it was ambiguous because it did not specifically state that the trustee will be deemed to have abandoned the property 15 days from the date of mailing of the notice. The court also states that an abandonment is irrevocable even if the property later becomes more valuable.Dieckmeyer v. Redevelopment Agency of Huntington Beach     Docket     Sup.Ct. Docket
127 Cal.App.4th 248 – 4th Dist., Div. 3  2/28/05 (G031869) (2nd Opinion)     Case complete 5/5/05DEEDS OF TRUST: Where a deed of trust secures both payment of a promissory note and performance of contractual obligations (CC&R’s in this case), the trustor is not entitled to reconveyance of the deed of trust after the note is paid off, but before the contractual obligations are satisfied.Textron Financial v. National Union Fire Insurance Co.     Docket      Sup.Ct. Docket
118 Cal.App.4th 1061 – 4th Dist., Div. 3  5/20/04 (G020323) (Mod. 6/18/04)     Req. for rev. and depub. by Cal Supreme Ct. DENIED 9/15/04INSURANCE / PUNITIVE DAMAGES:
1. The amount of attorney’s fees incurred by an insured in obtaining policy benefits and recoverable under Brandt v. Sup. Ct. are limited to the fees under the contingency fee agreement between the insured and its counsel, and not a higher figure based on the reasonable value of the attorney’s services.
2. Punitive damages must be based on compensatory damages awarded for tortious conduct, including breach of the implied covenant of good faith and fair dealing, excluding the sum recovered on the breach of contract claim.
3. When compensatory damages are neither exceptionally high nor low, and the defendant’s conduct is neither exceptionally extreme nor trivial, the outer constitutional limit on the amount of punitive damages is approximately four times the amount of compensatory damages.
4. The wealth of a defendant cannot justify an otherwise unconstitutional punitive damages award.Blackburn v. Charnley     Docket     Sup.Ct. Docket
117 Cal.App.4th 758 – 2nd Dist. 4/8/04 (B166080)     Request for review by Cal Supreme Ct. DENIED 7/21/04SPECIFIC PERFORMANCE: Specific performance is available even though the contract referred to lots which had not yet been subdivided. This violation of the Subdivision Map Act made the contract voidable at the option of the buyer, who chose to enforce the contract instead. The requirement in the standard CAR contract to mediate in order to collect attorney’s fees does not apply where an action is filed in order to record a lis pendens and where mediation was conducted pursuant to the court’s own practices.Hedges v. Carrigan     Docket
117 Cal.App.4th 578 – 2nd Dist. 4/6/04 (B166248)     Case complete 6/11/04ARBITRATION: The Federal Arbitration Act preempts C.C.P. Section 1298, which requires that an arbitration clause in a real estate contract contain a specified notice and be in a specified type size. Preemption requires that the transaction affect interstate commerce, which the court found existed because the anticipated financing involved an FHA loan, and the purchase agreement was on a copyrighted form that stated it could only be used by members of the National Association of Realtors. [Ed. note: the form does not say that!] However, in the unpublished portion of the opinion, the court held that the arbitration clause could not be enforced because it required that the parties initial it in order to acknowledge their agreement to arbitration, and they did not all do so. [Ed. note: the concurring opinion makes much more sense than the majority opinion!]Kapner v. Meadowlark Ranch Assn.     Docket
116 Cal.App.4th 1182 – 2nd Dist. 3/17/04 (B163525)     Case complete 5/25/04ADVERSE POSSESSION / PRESCRIPTIVE EASEMENTS: A prescriptive easement cannot be established where the encroacher’s use is exclusive. The Court affirmed the trial court’s order requiring the property owner to sign an encroachment agreement or remove the encroachment.Harrison v. Welch     Docket     Sup.Ct. Docket
116 Cal.App.4th 1084 – 3rd Dist. 3/12/04 (C044320)     Request for depublication DENIED 6/23/04ADVERSE POSSESSION / PRESCRIPTIVE EASEMENTS:
1) In the uncertified Part I of the opinion, the court rejected Defendant’s claim of adverse possession because real property taxes were not paid on any area outside of Defendant’s lot. The court rejected defendant’s creative argument that real property taxes were paid on all land within the setback area where defendant’s house was 3-1/2 feet from the property line, and a zoning ordinance required a 5-foot setback.
2) A prescriptive easement cannot be established where the encroacher’s use is exclusive. The opinion contains an excellent discussion of the case law on this issue.
3) The 5-year statute of limitations in C.C.P. Sections 318 and 321, within which a plaintiff must bring an action to recover real property, does not commence until the encroacher’s use of the property has ripened into adverse possession.Brizuela v. CalFarm Insurance Company     Docket     Sup.Ct. Docket
116 Cal.App.4th 578 – 2nd Dist. 3/3/04 (B160875)     Review by Cal Supreme Ct. DENIED 6/9/04INSURANCE: Where an insurance policy requires an insured who has filed a claim to submit to an examination under oath, that obligation is a condition precedent to obtaining benefits under the policy. The insurer is entitled to deny the claim without showing it was prejudiced by the insured’s refusal.Hanshaw v. Long Valley Road Assn.     Docket     Sup.Ct. Docket
116 Cal.App.4th 471 – 3rd Dist. 3/2/04 (C041796)     Review by Cal Supreme Ct. DENIED 5/19/04PUBLIC STREETS: An offer of dedication of a public street that is not formally accepted may, nevertheless, be accepted by subsequent public use. This is known as common law dedication. However, counties have a duty to maintain only those roads that are “county roads”, and a public road does not become a county road unless specifically accepted as such by the appropriate resolution of the Board of Supervisors.Miner v. Tustin Avenue Investors     Docket
116 Cal.App.4th 264 – 4th Dist., Div.3  2/27/04 (G031703)     Case complete 5/4/04LEASES / ESTOPPEL CERTIFICATES: A lease contained an option to renew for 5 years, but the tenant signed an estoppel certificate stating that the lease was in full force and effect, and that the tenant had no options except the following: (blank lines that followed were left blank). The Court held that the tenant was not bound by the estoppel certificate because it was ambiguous as to whether it referred only to options outside of the lease or whether the tenant had somehow given up his option rights.Tremper v. Quinones     Docket
115 Cal.App.4th 944 – 2nd Dist. 2/17/04 (B165218)     Case complete 5/3/04GOOD FAITH IMPROVER: Attorney’s fees and costs may be included in the calculation of damages awarded against a person bringing an action as a good faith improver under C.C.P. Section 871.3, regardless of whether the costs and fees were incurred in prosecuting a complaint or defending against a cross complaint, and even where the good faith improver issues are part of a quiet title action which would not ordinarily support an award of attorney’s fees and costs.Kertesz v. Ostrovsky     Docket
115 Cal.App.4th 369 – 4th Dist., Div.3  1/28/04 (G030640)     Case complete 4/2/04JUDGMENTS / BANKRUPTCY: The time for renewing a judgment was 10 years from entry of the judgment, plus the amount of time between the debtor’s filing of a bankruptcy petition and the date of the Bankruptcy Court’s order of nondischargeability, plus an additional 30 days under Bankruptcy Code Section 108(c). The court reached this conclusion even though the judgment was entered before the bankruptcy petition was filed, and the 10-year period for renewing the judgment expired long after the bankruptcy was closed.

NOTE: I believe the judge misunderstood the automatic stay and Bankruptcy Code Section 108(c). I do not believe the automatic stay applies when a period of time for taking an action commences prior to bankruptcy, and expires after the bankruptcy case is closed.Rancho Santa Fe Association v. Dolan-King     Docket     Sup.Ct. Docket
115 Cal.App.4th 28 – 4th Dist., Div.1  1/7/04 (D040637/D041486)     Pet. for Review by Cal Supreme Ct. DENIED 4/28/04HOMEOWNER’S ASSOCIATIONS: Regulations adopted and interpreted by a Homeowner’s Association must be reasonable from the perspective of the entire development, not by determining on a case-by-case basis the effect on individual homeowners.Gray Cary Ware & Freidenrich v. Vigilant Insurance Co.     Docket
114 Cal.App.4th 1185 – 4th Dist., Div.1  1/12/04 (D041811)     Case complete 3/15/04INSURANCE: Civil Code Section 2860(c) provides for the arbitration of disputes over the amount of legal fees or the hourly billing rate of Cumis counsel, but does not apply to other defense expenses.

Go to cases 2000 – 2003

The Trustee sale can be set aside

Bank of America, N.A. v. La Jolla Group II, 129 Cal. App. 4th 706, 15 710,717 (5th Dist. 2005) (void foreclosure sale required rescission of trustee’s deed returning title to the status quo prior to the foreclosure sale); Dimock v. Emerald Properties, 81 Cal. App. 4th 868, 874 (4th Dist. 2000) (sale under deed of trust by former trustee void, and tender of the amount due is unnecessary).

THE COURT MUST STRICTLY ENFORCE

THE TECHNICAL REQUIREMENTS FOR A FORECLOSURE.

The harshness of non-judicial foreclosure has been recognized. “The exercise of the power of sale is a harsh method of foreclosing the rights of the grantor.” Anderson v. Heart Federal Savings (1989) 208 Cal.App.3d 202, 6 215, citing to System Inv. Corporation v. Union Bank (1971) 21 Cal.App.3d 137, 153.  The statutory requirements are intended to protect the trustor from a wrongful or unfair loss of his property Moeller v. Lien (1994) 25 Cal.App.4th 822, 830; accord, Hicks v. E.T. Legg & Associates (2001) 89 Cal.App.4th 496, 503; Lo Nguyen v. Calhoun (6th District 2003) 105 Cal.App.4th 428, 440, and a valid foreclosure by the private power of sale requires strict compliance with the requirements of the statute. Miller & Starr, California Real Estate (3d ed.), Deeds of Trust and Mortgages, Chapter 10 §10.179; Anderson v. Heart Federal Sav. & Loan Assn., 208 Cal. App. 3d 202, 211 (3d Dist. 1989), reh’g denied and opinion modified, (Mar. 28, 1989); Miller v. Cote (4th Dist. 1982) 127 Cal. App. 3d 888, 894; System Inv. Corp. v. Union Bank (2d Dist. 1971) 21 Cal. App. 3d 137, 152-153; Bisno v. Sax (2d Dist. 1959) 175 Cal. App. 2d 714, 720.

It has been a cornerstone of foreclosure law that the statutory requirements, intending to protect the Trustor and or Grantor from a wrongful or unfair loss of the property, must be complied with strictly. Miller & Starr, California Real Estate (3d ed.), Deeds of Trust and Mortgages, Chapter 10 §10.182.   “Close” compliance does not count. As a result, any trustee’s sale based on a statutorily deficient Notice of Default is invalid (emphasis added). Miller & Starr, California Real Estate (3d ed.), Deeds of Trust and Mortgages, Chapter 10 §10.182; Anderson v. Heart Federal Sav. & Loan Assn. (3dDist. 1989) 208 Cal. App. 3d 202, 211, reh’g denied and opinion modified, (Mar. 28, 1989); Miller v. Cote (4th Dist. 1982) 127 Cal. App. 3d 888, 894; System Inv. Corp. v. Union Bank (2d Dist. 1971) 21 Cal. App. 3d 137, 152-153; Saterstrom v. Glick Bros. Sash, Door & Mill Co.(3d Dist. 1931) 118 Cal. App. 379.

Additionally, any Trustee’s Sale based on a statutorily deficient Notice of Trustee Sale is invalid.  Anderson v. Heart Federal Sav. & Loan Assn. (3d Dist. 1989) 11 208 Cal.App. 3d 202, 211, reh’g denied and opinion modified, (Mar. 28, 1989). The California Sixth District Court of Appeal observed, “Pursuing that policy [of judicial interpretation], the courts have fashioned rules to protect the debtor, one of them being that the notice of default will be strictly construed and must correctly set forth the amounts required to cure the default.” Sweatt v. The Foreclosure Co., Inc. (1985 – 6th District) 166 Cal.App.3d 273 at 278, citing to Miller v. Cote (1982) 127 Cal.App.3d 888, 894 and SystemInv. Corp. v. Union Bank (1971) 21 Cal.App.3d 137, 152-153.

The same reasoning applies even to a Notice of Trustee’s Sale.  Courts will set aside a foreclosure sale when there has been fraud, when the sale has been improperly, unfairly, or unlawfully conducted, or when there has been such a mistake that it would be inequitable to let it stand. Bank of America Nat. Trust & Savings Ass’n v. Reidy (1940) 15 Cal. 2d 243, 248; Whitman v. Transtate Title Co.(4th Dist. 1985) 165 Cal. App. 3d 312, 322-323; In re Worcester (9th Cir. 1987) 811 F.2d 1224, 1228.  See also Smith v. Williams (1961) 55 Cal. 2d 617, 621; Stirton v. Pastor (4th Dist. 1960) 177 Cal. App. 2d 232, 234; Brown v. Busch (3d Dist. 1957) 152 Cal.App. 2d 200, 203-204.

English: Foreclosure auction 2007
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Challenge Your Lender… Now!

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My name is Timothy McCandless, and I’m here to tell you what most banks and mortgage loan servicers don’t want you to know: More than 65 million homes in the US may not be subject to foreclosure after all, and your home is very likely one of the “safe” homes. The reason these homes are not technically subject to foreclosure is because the lenders, mortgage companies, mortgage servicers, and title companies broke the law throughout the process of managing your loan, both at the inception of your loan and throughout the life of the loan. Because of their fraudulent actions, they are unable to produce a title for, or show ownership of, your property. This causes what we call a “defect of title”, and legally prohibits your lender or servicer from foreclosing, regardless of whether or not your loan is current.

This situation is all over the news, and now, starting today, you can learn how to protect yourself from unlawful foreclosure.

WE CAN TRAIN YOU HOW TO CHALLENGE YOUR LENDER

Most Mortgage Assignments are Illegal

In a major ruling in the Massachusetts Supreme Court today, US Bank National Association and Wells Fargo lost the “Ibanez case”, meaning that they don’t have standing to foreclose due to improper mortgage assignment. The ruling is likely to send shock waves through the entire judicial system, and seriously raise the stakes on foreclosure fraud. Bank stocks plummeted after this ruling. These assignments are what people need to challenge in their own mortgages.

I am prepared to show you the most amazing information on how you can actually Challenge Your Lender. Once you opt in for our free ebook (just enter your email address above and to the right), you’ll get immediate access to our first, very informative webinar, as well as to our free ebook. You’ll learn more about the Challenge Your Lender program, and more importantly, how the US mortgage system is rigged to take advantage of you and how to can fight back. My program will show you exactly how to get a copy of your loan documents that your lender or loan servicer currently has in their possession, and then how to begin examining these documents to learn more about how your lender, as well as other parties involved, has used your name and credit to make millions of dollars. Analyzing your loan documents is a crucial first step in beginning the Challenge Your Lender process.


Save your home from foreclosure

The information that you will be receiving in my free material and webinar will further your knowledge on what most lenders are doing to homeowners, and how you can save yourself from foreclosure. You will have the opportunity to acquire a free copy of my Challenge Your Lender workbook and learn how to begin building the paper trail that you will need to defend yourself and to prove the wrongdoings of your lender and loan servicer. Once you go through the workbook and listen in on the free webinar, you will be on top of your Challenge and ready to begin the program.

The Challenge Your Lender program will help put you in a position of power and control over your loan, and will allow you to decide what you would like to do with your property. This leverage will be advantageous when you begin negotiating your foreclosure. Most importantly, your lender or loan servicer should not be able to foreclose on you once you notify them that you have identified fraudulent activity. My program is your first step in saving your property from foreclosure.

Don’t wait – opt in today. Every day counts in the battle against your lender.

Best regards,
Tim

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Foreclosure Fraud in a Nutshell why its FRAUD

Freddie Mac
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and How Newt Gingrich Abetted the Theft of Average Joe’s Home – by Bill ButlerThe untold story in the foreclosure crisis unfolding across America is that, following a foreclosure perpetrated by one of the October 2008 Bailout Banks (e.g. Bank of America, Citibank, JPMorgan, Wells Fargo) Fannie Mae or Freddie Mac suddenly appear as the record owner of Average Joe’s home. These federal government sponsored entities then go into local housing court and get a court order authorizing them to evict Joe. If Joe resists, these supposedly charitable institutions obtain a writ ordering the local sheriff to forcibly remove Joe from his home.

Newt Gingrich recently admitted to accepting $1.8 million from Freddie Mac ($25,0000 to $30,000 a month during one span of time) for advising this proto-fascist entity. Gingrich claims that he supports Fannie and Freddie because he believes the federal government “should have programs to help low income people acquire the ability to buy homes.” But Fannie and Freddie don’t do this and never have. When government “helps” someone by subsidizing the purchase of something (through easy credit or lower-than-market rates), it makes that something more expensive. Helping someone buy something that is overpriced because of your help is not help. Fannie/Freddie subsidies not only hurt the low income people they intend to help, they hurt everyone by subsidizing, and therefore distorting, the entire housing market. Fannie/Freddie’s charity has now taken a dark turn. Like their Depression-era New Deal predecessor the Regional Agricultural Credit Corp., Fannie/Freddie are now repossessing homes at an increasing and alarming rate.

Mr. Gingrich either does not understand economics – government subsidies make things more expensive, not less expensive, and therefore hurt their intended beneficiaries – or he is a vain, selfish, and cynical man with no interest in actually helping his neighbor.

You decide.

THE OCTOBER 2008 BAILOUT PAID OFF THE HOLDERS OF MORTGAGE BACKED SECURITES AND DERIVATIVE INSUREDS

The facts indicate that the Federal Reserve “printed” at least 16 trillion dollars as part of the 2008 bailouts. The bigger questions, however, who got it, why and what did the Fed get in return? The Fed doesn’t just print money. It prints money to buy stuff. Most often this is U.S. Treasuries. That changed in October of 2008. In and after October 2008 the Fed printed new money to buy mortgage-backed securities (MBS) that were defaulting at a rapid rate. Want proof? Here is a link to the Federal Reserve balance sheet which shows that the Fed is holding over a trillion dollars in mortgage backed securities that it began acquiring in 2008.

Why is the Federal Reserve holding all these MBS? Because when “the market” collapsed in September of 2008, what really collapsed is the Fannie/Freddie/Wall Street mortgage “daisy chain” securitization scheme. As increasing numbers of MBS went into default, the purchasers of derivatives (naked insurance contracts betting on MBS default) began filing claims against the insurance writers (e.g. AIG) demanding payment. This started in February 2007 when HSBC Bank announced billions in MBS losses, gained momentum in June of 2007 when Bear Stearns announced $3.8 billion in MBS exposure in just one Bear Stearns fund, and further momentum with the actual collapse of Bear Stears in July and August of 2007. By September of 2008, the Bear Stearns collapse proved to be the canary in the coal mine as the claims on off-balance sheet derivatives became the cascading cross defaults that Alan Greenspan warned could collapse the entire Western financial system.

Part of what happened in October 2008 is that the Federal Reserve paid AIG’s and others’ derivative obligations to the insureds (pension funds, hedge funds, major banks, foreign banks) who held the naked insurance contracts guaranteeing Average Joe’s payments. To understand this, imagine that a cataclysmic event occurred in the U.S. that destroyed nearly every car in the U.S. and further that Allstate insured all of these cars. That is what happened to AIG. When the housing market collapsed and borrowers began defaulting on their securitized loans, AIG’s derivative obligations exceeded its ability (or willingness) to pay. So the Fed stepped in as the insurer of last resort and bailed out AIG (and probably others). When an insurer pays on a personal property claim, it has “subrogation” rights. This means when it pays it has the right to demand possession of the personal property it insured or seek recovery from those responsible for the loss. In Allstate’s case this is wrecked cars. In the case of AIG and the Fed, it is MBS. That is what the trillions of MBS on the Fed’s balance sheet represent: wrecked cars that Fannie and Freddie are now liquidating for scrap value.

Thank you Mr. Gingrich. Great advice.

BUT FANNIE/FREDDIE WASN’T MY LENDER AND WASN’T MY MORTGAGEE, SO HOW CAN THEY TAKE MY HOUSE?

To understand how it came to be that the Fed has paid Average Joe’s original actual lender (the MBS purchaser) and now Fannie and Freddie are trying to take Joe’s home, you first have to understand some mortgage law and securitization basics.

The Difference Between Notes and Mortgages

When you close on the purchase of your home, you sign two important documents. You sign a promissory note that represents your legal obligation to pay. You sign ONE promissory note. You sign ONE promissory note because it is a negotiable instrument, payable “to the order of” the “lender” identified in the promissory note. If you signed two promissory notes on a $300,000 loan from Countrywide, you could end up paying Countrywide (or one of its successors) $600,000.

At closing you also sign a Mortgage (or a Deed of Trust in Deed of Trust States). You may sign more than one Mortgage. You may sign more than one Mortgage because it does not represent a legal obligation to pay anything. You could sign 50 Mortgages relating to your $300,000 Countrywide loan and it would not change your obligation. A Mortgage is a security instrument. It is security and security only. Without a promissory note, a mortgage is nothing. Nothing.

You “give” or “grant” a mortgage to your original lender as security for the promise to pay as represented by the promissory note. In real estate law parlance, you “give/grant” the “mortgage” to the “holder” of your “promissory note.”

If you question my bona fides in commenting on the important distinction between notes and mortgages, I know what I am talking about. I tried and won perhaps the first securitized mortgage lawsuit ever in the country in First National Bank of Elk River v. Independent Mortgage Services, 1996 WL 229236 (Minn. Ct. App. No. DX-95-1919).

In FNBER v. IMS a mortgage assignee (IMS) claimed the ownership of two mortgages relating to loans (promissory notes) held by my client, the First National Bank of Elk River (FNBER). After a three-day trial where IMS was capably represented by a former partner of the international law firm Dorsey & Whitney, my client prevailed and the Court voided the recorded mortgage assignments to IMS. My client prevailed not because of my great skill but because it had actual, physical custody of the original promissory notes (payable to the order of my client) and had been “servicing” (receiving payments on) the loans for years notwithstanding the recorded assignment of mortgage. The facts at trial showed that IMS rejected the loans because they did not conform to their securitization parameters. In short, IMS, as the “record owner” of the mortgages without any provable connection to the underlying notes, had nothing. FNBER, on the other hand, had promissory notes payable to the order of FNBER but did not have “record title” to the mortgages. FNBER was the winner because its possession of and entitlement to enforce the notes made it the “legal owner” of the mortgages.

The lesson: if you have record title to a mortgage but cannot show that you have possession of and/or entitlement to enforce the promissory notes that the mortgage secures, you lose.

This is true for 62 million securitized loans.

Securitization – The Car That Doesn’t Go In Reverse

There is nothing per se illegitimate about securitization. The law has for a long time recognized the rights of a noteholder to sell off pro-rata interests in the note. So long as the noteholder remains the noteholder he has the right to exercise rights in a mortgage (take the house) when there is a default on the note. Securitization does not run afoul of traditional real estate and foreclosure law when the mortgage holder can prove his connection to the noteholder.

But modern securitization doesn’t work this way.

The “securitization” of a “mortgage loan” today involves multiple parties but the most important parties and documents necessary for evaluating whether a bank has a right to foreclose on a mortgage are:

(1) the Borrower (Average Joe);

(2) the Original Lender (Mike’s Baitshop and Mortgages or Bailey Savings & Loan – whoever is across the closing table from Joe);

(3) the Original Mortgagee (could be Mike’s B&M, but could be anyone, including Fannie’s Creature From the Black Lagoon, the mortgagee “nominee” MERS);

(4) the “Servicer” of the loan as identified in the PSA (usually a Bank or anyone with “servicer” in its name, the entity to whom Joe makes his payments);

(5) the mortgage loan “pooling and servicing agreement” (PSA) and the PSA Trust created by the PSA;

(6) the “PSA Trust” is the “special purpose entity” created by the PSA. The PSA Trust is the heart of the PSA. It holds all securitized notes and mortgages and also sells MBS securities to investors; and

(7) the “Trustee” of the PSA Trust is the entity responsible for safekeeping of Joe’s promissory note and mortgage and the issuer of MBS.

The PSA Servicer is essentially the Chief Operating Officer and driver of the PSA. Without the Servicer, the securitization car does not go. The Servicer is the entity to which Joe pays his “mortgage” (really his note, but you get it) every month. When Joe’s loan gets “sold” multiple times, the loan is not actually being sold, the servicing rights are. The Servicer has no right, title or interest in either the promissory note or the mortgage. Any right that the Servicer has to receive money is derived from the PSA. The PSA, not Joe’s Note or Joe’s Mortgage, gives the Servicer the right to take droplets of cash out of Joe’s monthly payments before distributing the remainder to MBS purchasers.

The PSA Trustee and the sanctity of the PSA Trust are vitally important to the validity of the PSA. The PSA promoters (the usual suspects, Goldman Sachs, Lehman Bros., Merrill, Deutchebank, Barclays, etc.) persuaded MBS purchasers to part with trillions of dollars based on the idea that they would ensure that Joe’s Note would be properly endorsed by every person or entity that touched it after Joe signed it, that they would place Joe’s Note and Joe’s Mortgage in the vault-like PSA Trust and the note and mortgage would remain in the PSA Trust with a green-eyeshade, PSA Trustee diligently safekeeping them for 30 years. Further, the PSA promoters hired law firms to persuade the MBS purchasers that the PSA Trust, which is more than100 percent funded (that is, oversold) by the MBS purchasers, was the real owner of Joe’s Note and Joe’s Mortgage and that the PSA Trust, using other people’s money, had purchased or soon would purchase thousands of similar notes and mortgages in a “true sale” in accordance with FASB 140.

The PSA does not distribute pool proceeds that can be tracked pro rata to identifiable loans. In this respect, in the wrong hands (e.g. Countrywide’s Angelo Mozilo) PSAs have the potential to operate like a modern “daisy chain” fraud whereby the PSA oversells the loans in the PSA Trust, thus defrauding the MBS investors. The PSA organizers also do not inform Joe at the other end of the chain that they have sold his $300,000 loan for $600,000 and that the payout to the MBS purchasers (and other derivative side-bettors) when Joe defaults is potentially multiples of $300,000.

The PSA organizers can cover the PSA’s obligations to MBS purchasers through derivatives. Derivatives are like homeowners’ fire insurance that anyone can buy. If everyone in the world can bet that Joe’s home is going to burn down and has no interest in preventing it, odds are that Joe’s home will burn down. This is part of the reason Warren Buffet called derivatives a “financial weapon of mass destruction.” They are an off-balance sheet fiat money multiplier (the Fed stopped reporting the explosive expansion of M3 in 2006 most likely because of derivatives and mortgage loan securitization fraud), and create incentive for fraud. On the other end of the chain, Joe has no idea that the “Lender” across the table from him has no skin in the game and is more than likely receiving a commission for dragging Joe to the table.

A serious problem with modern securitization is that it destroys “privity.” Privity of contract is the traditional notion that there are two parties to a contract and that only a party to the contract can enforce or renegotiate that contract. Put simply, if A and B have a contract, C cannot enforce B’s rights against A (unless A expressly agrees or C otherwise shows a lawful agency relationship with B). The frustration for Joe is that he cannot find the other party to his transaction. When Joe talks to his “bank” (really his Servicer) and tries to renegotiate his loan, his bank tells him that a mysterious “investor” will not approve. He can’t do this because they don’t exist, have been paid or don’t have the authority to negotiate Joe’s loan.

Joe’s ultimate “investor” is the Fed, as evidenced by the trillion of MBSs on its balance sheet. Although Fannie/Freddie purportedly now “own” 80 percent of all U.S. “mortgage loans,” Fannie/Freddie are really just the Fed’s repo agents. Joe has no privity relationship with Fannie/Freddie. Fannie, Freddie and the Fed know this. So they are using the Bailout Banks to frontrun the process – the Bailout Bank (who also have no cognizable connection to the note and therefore no privity relationship with Joe) conducts a fraudulent foreclosure by creating a “record title” right to foreclose and, when the fraudulent process is over, hands the bag of stolen loot (Joe’s home) to Fannie and Freddie.

Record Title and Legal Title

Virtually all 62 million securitized notes define the “Noteholder” as “anyone who takes this Note by transfer and who is entitled to receive payment under this Note…” Very few of the holders of securitized mortgages can establish that they both hold (have physical possession of) the note AND are entitled to receive payments on the notes. For whatever reason, if a Bailout Bank has possession of an original note, it is usually endorsed payable to the order of some other (often bankrupt) entity.

If you are a Bailout Bank and you have physical possession of an original securitized note, proving that you are “entitled to receive payment” on the note is nearly impossible. First, you have to explain how you obtained the note when it should be in the hands of a PSA Trustee and it is not endorsed by the PSA Trustee. Second, even if you can show how you obtained the note, explaining why you are entitled to receive payments when you paid nothing for it and when the Fed may have satisfied your original creditors is a very difficult proposition. Third, because a mortgage is security for payments due to the noteholder and only the noteholder, if you cannot establish legal right to receive payments on the note but have a recorded mortgage all you have is “record” title to the mortgage. You have the “power” to foreclose (because courts trust recorded documents) but not necessarily the legal “right” to foreclose. Think FNBER v. IMS.

The “robosigner” controversy, reported by 60 Minutes months ago, is a symptom of the banks’ problem with “legal title” versus “record title.” The 60 Minutes reports shows that Bailout Banks are hiring 16 year old, independent contractors from Backwater, Georgia to pose as vice presidents and sign mortgage assignments which they “record” with local county recorders. This is effective in establishing the Bailout Banks’ “record title” to the “mortgage.” Unlike real bank vice presidents subject to Sarbanes-Oxley, Backwater 16-year olds have no reason to ask: “Where is the note?”; “Is my bank the noteholder?”; or “Is my Bank entitled to receive payments on the note?”

The Federal Office of the Comptroller of the Currency and the Office of Thrift Supervision agree with this analysis. In April of 2011 the OCC and OTS reprimanded the Bailout Banks for fraudulently foreclosing on millions of Average Joe’s:

…without always ensuring that the either the promissory note or the mortgage document were properly endorsed or assigned and, if necessary, in the possession of the appropriate party at the appropriate time…

The OCC and OTS further found that the Bailout Banks “failed to sufficiently oversee outside counsel and other third-party providers handling foreclosure-related services.”

Finally, Bailout Banks consented to the OCC and OTS spanking by admitting that they have engaged in “unsafe and unsound banking practices.”

In these “Order and Consent Decrees,” the OCC and the OTS reprimanded all of the usual suspects: Bank of America, Citibank, HSBC, JPMorgan Chase, MetLife, MERSCorp, PNC Bank, US Bank, Wells Fargo, Aurora Bank, Everbank, OneWest Bank, IMB HoldCo LLC, and Sovereign Bank.

Although the OCC and OTS Orders are essentially wrist slaps for what is a massive fraud, these orders at least expose some truth. In response to the OCC Order, the Fannie/Freddie-created Mortgage Electronic Registration Systems (MERS), changed its rules (see Rule 8) to demand that foreclosing lawyers identify the “noteowner” prior to initiating foreclosure proceedings.

NEWT’S FANNIE/FREDDIE ENDGAME: PLANTATION USA

Those of us fighting the banks began to see a disturbing trend starting about a year ago. Fannie and Freddie began showing up claiming title and seeking to evict homeowners from their homes.

The process works like this, using Bank of America as an example. Average Joe had a securitized loan with Countrywide. Countrywide, which might as well have been run by the Gambino family with expertise in “daisy chain” fraud, never followed the PSA, did not care for the original notes and almost never deposited the original notes in the PSA Trust. Countrywide goes belly up. Bank of America (BOA) takes over Countrywide in perhaps the worst deal in the history of corporate America, acquiring more liabilities than assets. Bank of America realizes that it has acquired a big bag of dung (no notes = no mortgages = big problem) and so sets up an entity called “BAC Home Loans LLP” whose general partner is another BOA entity.

The purpose of these BOA entities is to execute the liquidation the Countrywide portfolio as quickly as possible and, at the same time, isolate the liability to two small BOA subsidiaries. BOA uses BAC Home Loans LLP to conduct the foreclosure on Joe’s home. BAC Home Loans LLP feeds local foreclosure lawyers phony, robosigned documents that establish an “of record” transfer of the Countrywide mortgage to BAC Home Loans LLP. BAC Home Loans LLP, “purchases” Joe’s home at a Sheriff’s sale by bidding Joe’s debt owed to Countrywide. BAC Home Loans LLP does not have and cannot prove any connection to Joe’s note so BAC Home Loans LLP quickly deeds Joe’s property to Fannie and Freddie.

When it is time to kick Joe out of his home, Fannie Mae shows up in the eviction action. When compelled to show its cards, Fannie will claim title to Joe’s house via a “quit claim deed” or an assignment of the Sheriff’s Certificate of sale. Adding insult to injury, while Joe may have spent years trying to get BOA to “modify” his loan, and may have begged BOA for the right to pay BOA $1000 a month if only BOA will stop the foreclosure, Fannie now claims that BOA deeded Joe’s property to Fannie for nothing. That right, nothing. All county recorders require that a real estate purchaser claim how much they paid for the property to determine the tax value. Fannie claims on these recorded documents that it paid nothing for Joe’s home and, further, falsely claims that it is exempt because it is a US government agency. It isn’t. It is a government sponsored entity that is currently in conservatorship and run by the US government.

Great advice Newt.

CONCLUSION

It is apparent that the US government is so broke that it will do anything to pay its bills, including stealing Average Joe’s home.

That’s change that both Barack Obama and Newt Gingrich can believe in.

APPENDIX

More and more courts are agreeing that the banks “inside” the PSA do not have legal standing (they have no skin in the game and so cannot show the necessary “injury in fact”), are not “real parties in interest” (they cannot show that they followed the terms of the PSA or are otherwise “entitled to enforce” the note) and that there are real questions of whether any securitized mortgage can ever be properly perfected.

The banks’ weakness is exposed most often in bankruptcy courts because it is there that they have to show their cards and explain how they claim a legal right, rather than the “of record” right, to foreclose the mortgage. More and more courts are recognizing that, without proof of ownership of the underlying note, holding a mortgage means nothing.

The most recent crack in the Banks’s position is evidenced by the federal Eight Circuit Court of Appeals’ decision in In Re Banks, No. 11-6025 (8th Cir., Sept. 13, 2011). In Banks, a bank attempted to execute a foreclosure within a bankruptcy case. The bank had a note payable to the order of another entity; that is, the foreclosing bank was “Bank C” but had a note payable to the order of “Bank B” and endorsed in blank by Bank B. The bank, Bank C, alleged that, because the note was endorsed in blank and “without recourse,” that it had the right to foreclose. The Court held that this was insufficient to show a sufficient chain of title to the note, reversed the lower court’s decision and remanded for findings regarding when and how Bank C acquired the note.

See also, In Re Aagard, No. 810-77338-reg (Bankr. E.D.N.Y., Feb. 10, 2011) (Judge Grossman slams MERS as lacking standing, working as both principal and agent in same transaction, and exposes MERS’ alleged principal US Bank as unable to produce or provide evidence that it is in fact the holder of the note); In Re Vargas, No. 08-17036SB (Bankr. C.D. Cal., Sept. 30, 2008) (Judge Bufford correctly applied rules of evidence and held that MERS could not establish right to possession of the 83-year old Mr. Vargas’ home through the testimony of a low-level employee who had no foundation to testify about the legal title to the original note); In Re Walker, Bankr. E.D. Cal. No. 10-21656-E-11 (May 20, 2010) (holding that neither MERS nor its alleged principal could show that they were “real parties in interest” because neither could provide any evidence of the whereabouts of, much less legal title to, the original note); Landmark v.Kesler, 216 P.2d 158 (Kan. 2009) (in this case the Kansas Supreme Court provides the most cogent state court analysis of the problem created by securitization – the “splitting” of the note and the mortgage and the real party in interest and standing problems that the holder of the mortgage has when it cannot also show that it has clean and clear legal title to the note); U.S. Bank Nat’l Ass’n v. Ibanez, 941 NE 40 (Mass. 2011), (the Massachusetts Supreme Court denied two banks’ attempts to “quiet title” following foreclosure because the banks’ proffered evidence did not show ownership of the mortgages – or for that matter, the notes – prior to the Sheriff’s sale); and Jackson v. MERS, 770 N.W.2d 489 (Minn. 2009) (this federal-gun-to-the-head – certified question from federal court asking for state court blessing of its already decided ruling – to the Minnesota Supreme Court is most notable for the courageous dissent of NFL Hall of Fame player and only popularly elected Justice Alan Page who opined that MERS should pound sand and obey state recording standards).

November 28, 2011

Bill Butler [send him mail] is a Minneapolis attorney and the owner of Butler Liberty Law.

Copyright © 2011 by LewRockwell.com. Permission to reprint in whole or in part is gladly granted, provided full credit is given.

Clouds on Title

 

 

ALTA Counsel Discusses Recourse for Homeowners in Foreclosure Scandal

 

Many homeowners who lost their homes over the past few years are wondering what the robo-signing scandal means for them. Steve Gottheim, ALTA’s Legislative Counsel, tells a reporter at NBC News that homeowners who purchased a house at a foreclosure sale should have obtained an Owner’s Title Insurance Policy.

 

The statements by Steve Gottheim, ALTA’s Legislative Counsel, are not doubt the last thing the four surviving major commercial members of the title insurance industry wanted publicly stated by a major player in that industry. In prior correspondence with the group and others we have expressed the potential affect and concerns the ongoing mortgage fraud foreclosure crisis has had upon the title insurance industry. The issue first appeared in a DIRT discussion relating to “insuring title to foreclosed properties in the face of litigation” back in mid-May of this year. It confirms what we had previously then stated. To which Ms. Charney replied (i) “the knowledge of the defects are open, notorious and obvious to all, the defect may be fatally defective . . . so egregious as to render the title serving as the underlying security for the debt to be defective and pass no insurable interest whatsoever along to the alleged assignee.” Professor Whitman then chimed in stating: “Bill – actually, I think you are right on target. There have been many questionable foreclosures, and in some cases the defects are doubtless sufficient to make the foreclosure either void or voidable (the latter meaning that the sale won’t be set aside if the property has passed to a BFP). Moreover, since the defects in many cases are a matter of public record, it could be very difficult for a buyer to satisfy a court that he is a BFP. To which he added (iii) “In time many of these sales are going to come back and bite the title insurers who insured them. Obviously, the industry would rather not call attention to this likelihood, but it is there all the same.” And again, (iv) “if the defect is curable, it is important the curing documents be placed of record for the benefit of future title examiners”. To which both I and the recent Report of the ACS concluded (v) “the burden of proving the right to foreclose must be placed on the foreclosing party; i.e., if a remote assignee or securitization trustee claims the right to foreclose, it must prove the legal basis for that claim. It cannot be the case that a remote party can claim the right to foreclose, with the property owner then forced to disprove its entitlement to that action.”

 

The statements of the ALTA Legislative Counsel only confirm our prior warning. They

may be found at Questions for Homeowners in Foreclosure Scandal, NBC News | November 17, 2011.

Fighting Foreclosure in California

Using the Courts to Fight a California or Other Non-Judicial Foreclosure – 3-Stage Analysis – including a Homeowner Action to “Foreclose” on the Bank’s Mortgage Security Interest – rev.

image003

 

California real property foreclosures are totally different from foreclosures in New York and many other states. The reason is that more than 99% of the California foreclosures take place without a court action, in a proceeding called a “non-judicial foreclosure”. Twenty-one states do not have a non-judicial foreclosure. [These states are CT, DE, FL, IL, IN, KS, KY, LA, ME, MD, MA, NE, NJ, NM, NY, ND, OH, PA, SC, UT, VT. – Source: realtytrac.com] In California, the lending institution can go through a non-judicial foreclosure in about 4 months from the date of the filing and recording of a “Notice of Default”, ending in a sale of the property without any court getting involved. The California homeowner can stop the sale by making full payment of all alleged arrears no later than 5 days prior to the scheduled sale. Unlike a judicial foreclosure, the homeowner will have no right to redeem the property after the sale (“equity of redemption”, usually a one-year period after judicial foreclosure and sale). For a visual presentation of the timeline for California and other state non-judicial foreclosures, go to Visual Timeline for California Non-Judicial Foreclosures.

A 50-state analysis of judicial and non-judicial foreclosure procedures is available at 50-State Analysis of Judicial and Non-Judicial Foreclosure Procedures.]

The problem I am going to analyze and discuss is under what circumstances can a homeowner/mortgagor go into court to obtain some type of judicial relief for wrongful or illegal conduct by the lender or others relating to the property and mortgage. My discussion applies as to all states in which non-judicial foreclosures are permitted.

There are three distinct stages that need to be separately discussed. These stages are the borrower’s current situation. The three stages are:

 

  • Homeowner is not in any mortgage arrears [declaratory judgment action]
  • Homeowner is behind in mortgage payments – at least 5 days before auction [injunction action, which could even be called an action by a homeowner to “foreclose” upon or eliminate the lending institution’s mortgage security interest]
  • Property was sold at auction [wrongful foreclosure action]

 

I. Homeowner Is Not in any Mortgage Arrears [Declaratory Judgment Action]

As long as a homeowner keeps making the mortgage payments, and cures any occasional short-term default, the homeowner is in a position to commence an action in federal or state court for various types of relief relating to the mortgage and the obligations thereunder. One typical claim is a declaratory judgment action to declare that the mortgage and note are invalid or that the terms are not properly set forth. There are various other types of claims, as well. The filing of such an action would not precipitate a non-judicial foreclosure. Compare this to a regular foreclosure, in which the homeowner stops paying on the mortgage, gets sued in a foreclosure action, and then is able in the lawsuit to raise the issues (as “defenses”) which the California homeowner would raise as “claims” or “causes of action” in the lawsuit being discussed for this first stage.

II. Homeowner Is Behind in Mortgage Payments – at Least 5 Days before Auction [Injunction Action seeking TRO and Preliminary Injunction, which you might say is a homeowner’s own “foreclosure proceeding against the bank and its mortgage interest”]

This is the most difficult of the three stages for making use of the courts to oppose foreclosure. The reasons are: foreclosure and sale is apt to take place too quickly; the cost of seeking extraordinary (injunctive) relief is higher because of the litigation papers and hearing that have to be done in a very short period of time to obtain fast TRO and preliminary injunctive relief to stop the threatened sale; the cost of this expensive type of injunctive litigation is probably much higher for many homeowners than just keeping up the mortgage payments; and, finally, you would have to show a greater probability of success on the merits of the action than you would need to file a lawsuit as in Stage 1, so that the homeowner’s chances of prevailing (and getting the requested injunction) are low and the costs and risks are high.

Nevertheless, when the facts are in the homeowner’s favor, the homeowner should consider bringing his plight to the attention of the court, to obtain relief from oppressive lending procedures. The problem with most borrower-homeowners is that they do not have any idea what valid bases they may have to seek this kind of relief. What anyone should do in this case is talk with a competent lawyer as soon as possible, to prevent any further delay from causing you to lose an opportunity to fight back. You need to weigh the cost of commencing a court proceeding (which could be $5,000 more or less to commence) against the loss of the home through non-judicial foreclosure.

 

III. Property Was Sold at Auction [Wrongful Foreclosure Action]

If the property has already been sold, you still have the right to pursue your claims, but in the context of a “wrongful foreclosure” lawsuit, which has various legal underpinnings including tort, breach of contract and statute. This type of suit could not precipitate any foreclosure and sale of the property because the foreclosure and sale have already taken place. Your remedy would probably be monetary damages, which you would have to prove. You should commence the action as soon as possible after the wrongful foreclosure and sale, and particularly within a period of less than one year from the sale. The reason is that some of your claims could be barred by a short, 1-year statute of limitations.

If you would like to talk about any possible claims relating to your mortgage transaction, please give me a call. There are various federal and state statutes and court decisions to consider, with some claims being substantially better than others. I am available to draft a complaint in any of the 3 stages for review by your local attorney, and to be counsel on a California or other-state action “pro hac vice” (i.e., for the one case) when associating with a local lawyer.

Fannie Mae Foreclosure Lawyers Acted Improperly

Thumbnail image for Foreclosure.jpgHomeowners in Northern California have questioned the practices of Fannie Mae and Freddie Mac in foreclosure proceedings. If you are facing a foreclosure, you may be able to keep the property by filing for bankruptcy. You should consult with an attorney regarding your legal options.

After news reports in mid-2010 began to describe the dubious practices, like the routine filing of false pleadings in bankruptcy courts, Fannie Mae’s overseer started to scrutinize the conduct of its attorneys. The inspector general of the Federal Housing Finance Agency severely criticized the FHFA’s oversight of Fannie Mae and the practices of its foreclosure attorneys in a report issued Tuesday. “American homeowners have been struggling with the effects of the housing finance crisis for several years, and they shouldn’t have to worry whether they will be victims of foreclosure abuse,” Inspector General Steve Linick told the New York Times. “Increased oversight by F.H.F.A. could help to prevent these abuses.”

According to the New York Times, the report is the second in two weeks in which the inspector general has outlined lapses at both the Federal Housing Finance Agency and the companies it oversees Federal National Mortgage Assn (Fannie Mae) and Federal Home Loan Mortgage Corp (Freddie Mac). The agency has acted as conservator for the companies since they were taken over by the government in 2008. Its duty is to ensure that their operations do not pose additional risk to the taxpayers who now own them. The companies have tapped the taxpayers to cover mortgage losses totaling about $160 billion. The new report from the inspector general tracks Fannie Mae’s dealings with the law firms handling its foreclosures from 1997, when the company created its so-called retained attorney network. At the time, Fannie Mae was a highly profitable and powerful institution, and it devised the legal network to ensure that borrower defaults would be resolved with efficiency and speed.

The law firms in the network agreed to a flat-rate fee structure and pricing model based on the volume of foreclosures they completed. The companies that serviced the loans for Fannie Mae, were supposed to monitor the law firms’ performance and practices, the report noted

After receiving information from a shareholder in 2003 about foreclosure abuses by its law firms, Fannie Mae assigned its outside counsel to investigate, according to the report. That law firm concluded in a 2006 analysis that “foreclosure attorneys in Florida are routinely filing false pleadings and affidavits,” and that the practice could be occurring elsewhere. “It is axiomatic that the practice is improper and should be stopped,” the law firm said.

The inspector general’s report said that it could not be determined whether Fannie Mae had alerted its regulator, then the Office of Federal Housing Enterprise Oversight, to the legal improprieties identified by its internal investigation.

The inspector general said that both Fannie Mae and its regulator appear to have ignored other signs of problems in their foreclosure operations. For example, the Federal Housing Finance Agency did not respond to borrower complaints about improper actions taken by law firms in foreclosures received as early as August 2009, even though foreclosure abuse poses operational and financial risks to Fannie Mae.

The report cited a media report from early 2008 detailing foreclosure abuses by law firms doing work for Fannie Mae. Nevertheless, a few months later and just before its takeover by the government, Fannie Mae began requiring the banks that serviced its loans to use only those law firms that were in its network. By then, 140 law firms in 31 jurisdictions were in the group. Fannie Mae, the mortgage finance giant, learned as early as 2003 of extensive foreclosure abuses among the law firms it had hired to remove troubled borrowers from their homes. But the company did little to correct the firms’ practices,.

Finally last fall, after an outcry over apparently forged foreclosure documents and other improprieties, the Federal Housing Finance Agency began investigating the company’s process. In a report issued early this year, it determined that Fannie Mae’s management of its network of lawyers did not meet safety and soundness standards. Among the reasons: the company’s controls to prevent or detect foreclosure abuses were inadequate, as was the company’s monitoring of the law firms. “If a law firm self-reported no issues as it processed cases,” the inspector general said, “then Fannie Mae presumed the firm was doing a good job.” The agency is still deciding how to handle the lawyer network, the inspector general said.

Officials at the housing agency have agreed with the recommendations in the inspector general’s report. Corinne Russell, a spokeswoman for F.H.F.A. said the agency was concluding its supervisory work in this area and would direct Fannie Mae to take necessary action when the work was completed.

In a response, the agency said that by Sept. 29, 2012, it would review its existing supervisory practices and act to resolve “deficiencies in the management of risks associated with default-related legal services vendors.”

If you are having problems with a loan or foreclosure, we provide free legal consultations for bankruptcy in San Francisco County, Sacramento County, Alameda County, Contra Costa County, San Mateo County, Santa Clara County, Stanislaus County, San Joaquin County, Marin County, Solano County and throughout Northern California. Contact us for a free legal consultation today.925-957-9797

Forget Mass Joinder just use Consumer Legal Remedies Act Civil Code 1750

CALIFORNIA CIVIL CODE
SECTION 1750 et seq
Consumers Legal Remedies Act

1750. This title may be cited as the Consumers Legal Remedies Act.

1751. Any waiver by a consumer of the provisions of this title is contrary to public policy and shall be unenforceable and void.

1752. The provisions of this title are not exclusive. The remedies provided herein for violation of any section of this title or for conduct proscribed by any section of this title shall be in addition to any other procedures or remedies for any violation or conduct provided for in any other law.
Nothing in this title shall limit any other statutory or any common law rights of the Attorney General or any other person to bring class actions. Class actions by consumers brought under the specific provisions of Chapter 3 (commencing with Section 1770) of this title shall be governed exclusively by the provisions of Chapter 4 (commencing with Section 1780); however, this shall not be construed so as to deprive a consumer of any statutory or common law right to bring a class action without resort to this title. If any act or practice proscribed under this title also constitutes a cause of action in common law or a violation of another statute, the consumer may assert such common law or statutory cause of action under the procedures and with the remedies provided for in such law.

1753. If any provision of this title or the application thereof to any person or circumstance is held to be unconstitutional, the remainder of the title and the application of such provision to other persons or circumstances shall not be affected thereby.

1754. The provisions of this title shall not apply to any transaction which provides for the construction, sale, or construction and sale of an entire residence or all or part of a structure designed for commercial or industrial occupancy, with or without a parcel of real property or an interest therein, or for the sale of a lot or parcel of real property, including any site preparation incidental to such sale.

1755. Nothing in this title shall apply to the owners or employees of any advertising medium, including, but not limited to, newspapers, magazines, broadcast stations, billboards and transit ads, by whom any advertisement in violation of this title is published or disseminated, unless it is established that such owners or employees had knowledge of the deceptive methods, acts or practices declared to be unlawful by Section 1770.

1756. The substantive and procedural provisions of this title shall only apply to actions filed on or after January 1, 1971.

1760. This title shall be liberally construed and applied to promote its underlying purposes, which are to protect consumers against unfair and deceptive business practices and to provide efficient and economical procedures to secure such protection.

1761. As used in this title:

  • (a) “Goods” means tangible chattels bought or leased for use primarily for personal, family, or household purposes, including certificates or coupons exchangeable for these goods, and including goods which, at the time of the sale or subsequently, are to be so affixed to real property as to become a part of real property, whether or not severable therefrom.
  • (b) “Services” means work, labor, and services for other than a commercial or business use, including services furnished in connection with the sale or repair of goods.
  • (c) “Person” means an individual, partnership, corporation, limited liability company, association, or other group, however organized.
  • (d) “Consumer” means an individual who seeks or acquires, by purchase or lease, any goods or services for personal, family, or household purposes.
  • (e) “Transaction” means an agreement between a consumer and any other person, whether or not the agreement is a contract enforceable by action, and includes the making of, and the performance pursuant to, that agreement.
  • (f) “Senior citizen” means a person who is 65 years of age or older.
  • (g) “Disabled person” means any person who has a physical or mental impairment which substantially limits one or more major life activities.
    • (1) As used in this subdivision, “physical or mental impairment” means any of the following:
      • A. Any physiological disorder or condition, cosmetic disfigurement, or anatomical loss substantially affecting one or more of the following body systems: neurological; muscoloskeletal; special sense organs; respiratory, including speech organs; cardiovascular; reproductive; digestive; genitourinary; hemic and lymphatic; skin; or endocrine.
      • B. Any mental or psychological disorder, such as mental retardation, organic brain syndrome, emotional or mental illness, and specific learning disabilities. The term “physical or mental impairment” includes, but is not limited to, such diseases and conditions as orthopedic, visual, speech and hearing impairment, cerebral palsy, epilepsy, muscular dystrophy, multiple sclerosis, cancer, heart disease, diabetes, mental retardation, and emotional illness.
    • (2) “Major life activities” means functions such as caring for one’ s self, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, and working.
  • (h) “Home solicitation” means any transaction made at the consumer’ s primary residence, except those transactions initiated by the consumer. A consumer response to an advertisement is not a home solicitation.

1770.

  • (a) The following unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or which results in the sale or lease of goods or services to any consumer are unlawful:
    • (1) Passing off goods or services as those of another.
    • (2) Misrepresenting the source, sponsorship, approval, or certification of goods or services.
    • (3) Misrepresenting the affiliation, connection, or association with, or certification by, another. (MERS)and Securitization
    • (4) Using deceptive representations or designations of geographic origin in connection with goods or services.
    • (5) Representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities which they do not have or that a person has a sponsorship, approval, status, affiliation, or connection which he or she does not have.
    • (6) Representing that goods are original or new if they have deteriorated unreasonably or are altered, reconditioned, reclaimed, used, or secondhand.
    • (7) Representing that goods or services are of a particular standard, quality, or grade, or that goods are of a particular style or model, if they are of another.
    • (8) Disparaging the goods, services, or business of another by false or misleading representation of fact.
    • (9) Advertising goods or services with intent not to sell them as advertised.
    • (10) Advertising goods or services with intent not to supply reasonably expectable demand, unless the advertisement discloses a limitation of quantity.
    • (11) Advertising furniture without clearly indicating that it is unassembled if that is the case.
    • (12) Advertising the price of unassembled furniture without clearly indicating the assembled price of that furniture if the same furniture is available assembled from the seller.
    • (13) Making false or misleading statements of fact concerning reasons for, existence of, or amounts of price reductions.
    • (14) Representing that a transaction confers or involves rights, remedies, or obligations which it does not have or involve, or which are prohibited by law.
    • (15) Representing that a part, replacement, or repair service is needed when it is not.
    • (16) Representing that the subject of a transaction has been supplied in accordance with a previous representation when it has not. Sign this transaction now and when the option ARM adjusts we will refinance at no cost to you
    • (17) Representing that the consumer will receive a rebate, discount, or other economic benefit, if the earning of the benefit is contingent on an event to occur subsequent to the consummation of the transaction.
    • (18) Misrepresenting the authority of a salesperson, representative, or agent to negotiate the final terms of a transaction with a consumer.
    • (19) Inserting an unconscionable provision in the contract.
    • (20) Advertising that a product is being offered at a specific price plus a specific percentage of that price unless (1) the total price is set forth in the advertisement, which may include, but is not limited to, shelf tags, displays, and media advertising, in a size larger than any other price in that advertisement, and (2) the specific price plus a specific percentage of that price represents a markup from the seller’s costs or from the wholesale price of the product. This subdivision shall not apply to in-store advertising by businesses which are open only to members or cooperative organizations organized pursuant to Division 3 (commencing with Section 12000) of Title 1 of the Corporations Code where more than 50 percent of purchases are made at the specific price set forth in the advertisement.
    • (21) Selling or leasing goods in violation of Chapter 4 (commencing with Section 1797.8) of Title 1.7.
    • (22)
      • (A) Disseminating an unsolicited prerecorded message by telephone without an unrecorded, natural voice first informing the person answering the telephone of the name of the caller or the organization being represented, and either the address or the telephone number of the caller, and without obtaining the consent of that person to listen to the prerecorded message.
      • (B) This subdivision does not apply to a message disseminated to a business associate, customer, or other person having an established relationship with the person or organization making the call, to a call for the purpose of collecting an existing obligation, or to any call generated at the request of the recipient.
    • (23) The home solicitation, as defined in subdivision (h) of Section 1761, of a consumer who is a senior citizen where a loan is made encumbering the primary residence of that consumer for the purposes of paying for home improvements and where the transaction is part of a pattern or practice in violation of either subsection (h) or (i) of Section 1639 of Title 15 of the United States Code or subsection (e) of Section 226.32 of Title 12 of the Code of Federal Regulations.
      A third party shall not be liable under this subdivision unless (1) there was an agency relationship between the party who engaged in home solicitation and the third party or (2) the third party had actual knowledge of, or participated in, the unfair or deceptive transaction. A third party who is a holder in due course under a home solicitation transaction shall not be liable under this subdivision.

(b)

    • (1) It is an unfair or deceptive act or practice for a mortgage broker or lender, directly or indirectly, to use a home improvement contractor to negotiate the terms of any loan that is secured, whether in whole or in part, by the residence of the borrower and which is used to finance a home improvement contract or any portion thereof. For purposes of this subdivision, “mortgage broker or lender” includes a finance lender licensed pursuant to the California Finance Lenders Law (Division 9 (commencing with Section 22000) of the Financial Code), a residential mortgage lender licensed pursuant to the California Residential Mortgage Lending Act (Division 20 (commencing with Section 50000) of the Financial Code), or a real estate broker licensed under the Real Estate Law (Division 4 (commencing with Section 10000) of the Business and Professions Code).
    • (2) This section shall not be construed to either authorize or prohibit a home improvement contractor from referring a consumer to a mortgage broker or lender by this subdivision. However, a home improvement contractor may refer a consumer to a mortgage lender or broker if that referral does not violate Section 7157 of the Business and Professions Code or any other provision of law. A mortgage lender or broker may purchase an executed home improvement contract if that purchase does not violate Section 7157 of the Business and Professions Code or any other provision of law. Nothing in this paragraph shall have any effect on the application of Chapter 1 (commencing with Section 1801) of Title 2 to a home improvement transaction or the financing thereof.

1780.

  • (a) Any consumer who suffers any damage as a result of the use or employment by any person of a method, act, or practice declared to be unlawful by Section 1770 may bring an action against such person to recover or obtain any of the following:
    • (1) Actual damages, but in no case shall the total award of damages in a class action be less than one thousand dollars ($1,000).
    • (2) An order enjoining such methods, acts, or practices.
    • (3) Restitution of property.
    • (4) Punitive damages.
    • (5) Any other relief which the court deems proper.
  • (b) Any consumer who is a senior citizen or a disabled person, as defined in subdivisions (f) and (g) of Section 1761, as part of an action under subdivision (a), may seek and be awarded, in addition to the remedies specified therein, up to five thousand dollars ($5,000) where the trier of fact (1) finds that the consumer has suffered substantial physical, emotional, or economic damage resulting from the defendant’s conduct, (2) makes an affirmative finding in regard to one or more of the factors set forth in subdivision (b) of Section 3345, and (3) finds that an additional award is appropriate. Judgment in a class action by senior citizens or disabled persons under Section 1781 may award each class member such an additional award where the trier of fact has made the foregoing findings.
  • (c) An action under subdivision (a) or (b) may be commenced in the county in which the person against whom it is brought resides, has his or her principal place of business, or is doing business, or in the county where the transaction or any substantial portion thereof occurred.
    If within any such county there is a municipal or justice court, having jurisdiction of the subject matter, established in the city and county or judicial district in which the person against whom the action is brought resides, has his or her principal place of business, or is doing business, or in which the transaction or any substantial portion thereof occurred, then such court is the proper court for the trial of such action. Otherwise, any municipal or justice court in such county having jurisdiction of the subject matter is the proper court for the trial thereof.
    In any action subject to the provisions of this section, concurrently with the filing of the complaint, the plaintiff shall file an affidavit stating facts showing that the action has been commenced in a county or judicial district described in this section as a proper place for the trial of the action. If a plaintiff fails to file the affidavit required by this section, the court shall, upon its own motion or upon motion of any party, dismiss any such action without prejudice.
  • (d) The court shall award court costs and attorney’s fees to a prevailing plaintiff in litigation filed pursuant to this section. Reasonable attorney’s fees may be awarded to a prevailing defendant upon a finding by the court that the plaintiff’s prosecution of the action was not in good faith.

1781.

  • (a) Any consumer entitled to bring an action under Section 1780 may, if the unlawful method, act, or practice has caused damage to other consumers similarly situated, bring an action on behalf of himself and such other consumers to recover damages or obtain other relief as provided for in Section 1780.
  • (b) The court shall permit the suit to be maintained on behalf of all members of the represented class if all of the following conditions exist:
    • (1) It is impracticable to bring all members of the class before the court.
    • (2) The questions of law or fact common to the class are substantially similar and predominate over the questions affecting the individual members.
    • (3) The claims or defenses of the representative plaintiffs are typical of the claims or defenses of the class.
    • (4) The representative plaintiffs will fairly and adequately protect the interests of the class.
  • (c) If notice of the time and place of the hearing is served upon the other parties at least 10 days prior thereto, the court shall hold a hearing, upon motion of any party to the action which is supported by affidavit of any person or persons having knowledge of the facts, to determine if any of the following apply to the action:
    • (1) A class action pursuant to subdivision (b) is proper.
    • (2) Published notice pursuant to subdivision (d) is necessary to adjudicate the claims of the class.
    • (3) The action is without merit or there is no defense to the action.
      A motion based upon Section 437c of the Code of Civil Procedure shall not be granted in any action commenced as a class action pursuant to subdivision (a).
    • (d) If the action is permitted as a class action, the court may direct either party to notify each member of the class of the action.
      The party required to serve notice may, with the consent of the court, if personal notification is unreasonably expensive or it appears that all members of the class cannot be notified personally, give notice as prescribed herein by publication in accordance with Section 6064 of the Government Code in a newspaper of general circulation in the county in which the transaction occurred.
    • (e) The notice required by subdivision (d) shall include the following:
      • (1) The court will exclude the member notified from the class if he so requests by a specified date.
      • (2) The judgment, whether favorable or not, will include all members who do not request exclusion.
      • (3) Any member who does not request exclusion, may, if he desires, enter an appearance through counsel.
    • (f) A class action shall not be dismissed, settled, or compromised without the approval of the court, and notice of the proposed dismissal, settlement, or compromise shall be given in such manner as the court directs to each member who was given notice pursuant to subdivision (d) and did not request exclusion.
    • (g) The judgment in a class action shall describe those to whom the notice was directed and who have not requested exclusion and those the court finds to be members of the class. The best possible notice of the judgment shall be given in such manner as the court directs to each member who was personally served with notice pursuant to subdivision (d) and did not request exclusion.

1782.

  • (a) Thirty days or more prior to the commencement of an action for damages pursuant to the provisions of this title, the consumer shall do the following:
    • (1) Notify the person alleged to have employed or committed methods, acts or practices declared unlawful by Section 1770 of the particular alleged violations of Section 1770.
    • (2) Demand that such person correct, repair, replace or otherwise rectify the goods or services alleged to be in violation of Section 1770.
      Such notice shall be in writing and shall be sent by certified or registered mail, return receipt requested, to the place where the transaction occurred, such person’s principal place of business within California, or, if neither will effect actual notice, the office of the Secretary of State of California.
  • (b) Except as provided in subdivision (c), no action for damages may be maintained under the provisions of Section 1780 if an appropriate correction, repair, replacement or other remedy is given, or agreed to be given within a reasonable time, to the consumer within 30 days after receipt of such notice.
  • (c) No action for damages may be maintained under the provisions of Section 1781 upon a showing by a person alleged to have employed or committed methods, acts or practices declared unlawful by Section 1770 that all of the following exist:
    • (1) All consumers similarly situated have been identified, or a reasonable effort to identify such other consumers has been made.
    • (2) All consumers so identified have been notified that upon their request such person shall make the appropriate correction, repair, replacement or other remedy of the goods and services.
    • (3) The correction, repair, replacement or other remedy requested by such consumers has been, or, in a reasonable time, shall be, given.
    • (4) Such person has ceased from engaging, or if immediate cessation is impossible or unreasonably expensive under the circumstances, such person will, within a reasonable time, cease to engage, in such methods, act, or practices.
  • (d) An action for injunctive relief brought under the specific provisions of Section 1770 may be commenced without compliance with the provisions of subdivision (a). Not less than 30 days after the commencement of an action for injunctive relief, and after compliance with the provisions of subdivision (a), the consumer may amend his complaint without leave of court to include a request for damages. The appropriate provisions of subdivision (b) or (c) shall be applicable if the complaint for injunctive relief is amended to request damages.
  • (e) Attempts to comply with the provisions of this section by a person receiving a demand shall be construed to be an offer to compromise and shall be inadmissible as evidence pursuant to Section 1152 of the Evidence Code; furthermore, such attempts to comply with a demand shall not be considered an admission of engaging in an act or practice declared unlawful by Section 1770. Evidence of compliance or attempts to comply with the provisions of this section may be introduced by a defendant for the purpose of establishing good faith or to show compliance with the provisions of this section.

1783. Any action brought under the specific provisions of Section 1770 shall be commenced not more than three years from the date of the commission of such method, act, or practice.

1784. No award of damages may be given in any action based on a method, act, or practice declared to be unlawful by Section 1770 if the person alleged to have employed or committed such method, act, or practice

  • (a) proves that such violation was not intentional and resulted from a bona fide error notwithstanding the use of reasonable procedures adopted to avoid any such error and
  • (b) makes an appropriate correction, repair or replacement or other remedy of the goods and services according to the provisions of subdivisions (b) and (c) of Section 1782.

 

A TRUSTEE CANNOT MAINTAIN AN ACTION ON BEHALF OF A TRUST THAT DOESN ‘T EXIST

I looked into the records for that entity in the SEC EDGAR online database and discovered that the last annual report was filed in 2007, contemporaneously with a FORM 15 filing.That Form 15 filing claimed a standing under 15d-6 of the 1934 SEC regulations which exempts the entity of filing an annual report, whereby the number of claimed investors had fallen below the SEC registration and reporting threshold of 300 persons. ( To my understanding, the same Form 15 filing is also used when a registered, reporting, entity is dissolved.)

I then began looking at many other securitized trusts in the EDGAR database. Literally dozens and dozens of these securitized trusts have done exactly the same thing. The trust is established and appropriate SEC documents are filed for a period of time, usually 1 or 2 years. The trust then files a Form 15 claiming exemption of the obligation to file reports with the SEC under 15d-6
The paper trail for the Trust with the SEC thereby ends. Many of these trusts have not filed anything with the SEC for years. Many as far back as 2005 and 2006. Some of the SEC Form 15d-6 filings disclosed as few as 15 or less investors . Bear in mind, these are for trusts that purportedly hold well over $1 BILLION in mortgages, and there are dozens and dozens of these trusts with a mere hand full of investors! I also noted that the agents of record of many of these trusts have changed many times, and are very infrequently named, but list only an address and phone number, (usually in New York). In several of the cases I ‘ve looked at in the EDGAR database, I actually called some of the phone number listed at 3:00am EST and got the voicemail of someone at a bank in N.Y. Note that the answering party was NEVER a bank listed as the Trustee, (as Deutsche Bank is in my case), or the trust administrator as listed in the PSA or any subsequent SEC filings. I actually got the voicemail of some fellow at HSBC Bank who was the anonymous contact in my case! My point is this — Has anyone actually verified that the securitized trusts claimed to be under the trusteeship of some of these banks still ACTUALLY EXIST? We ‘ve been so focused on the NOTE and the fraudulent paper being slung about for assignment of those notes, and whether or not the plaintiff has standing to bring the foreclosure action, has anyone thought to see if the plaintiff trust is even still active or not? Were many of these trusts actually dissolved after payouts from credit default swaps and TARP funds and the actual investors now long gone? We have no records to show whether they are alive or dead. Most of these trusts haven ‘t filed anything with anyone in years as far as I can tell. Certainly, as in my case, Deutsche Bank, (as Trustee), still exists, but can these plaintiff securitized trusts be made to prove they still exist? What happens to a foreclosure case if the plaintiff entity,(the securitized trust, not the Trustee for it), no longer exists or cannot prove it exists? IT ‘S TIME FOR ME TO GET BACK TO AN ISSUE THAT I HAVEN ‘T TALKED ABOUT FOR A WHILE AND IT IS THIS CAPACITY ISSUE BECAUSE IT STRIKES AT THE HEART OF THESE CASES. SIMPLY PUT, A TRUSTEE CANNOT MAINTAIN AN ACTION ON BEHALF OF A TRUST THAT DOESN ‘T EXIST.

KISS: KEEP IT SIMPLE STUPID from Garfield

Finality versus good and evil. In the battlefield it isn’t about good and evil. It is about winner and losers. In military battles around the world many battles have been one by the worst tyrants imaginable.

Just because you are right, just because the banks did bad things, just because they have no right to do what they are doing, doesn’t mean you will win. You might if you do it right, but you are up against a superior army with a dubious judge looking on thinking that this deadbeat borrower wants to get out of paying.

The court system is there to mediate disputes and bring them to a conclusion. Once a matter is decided they don’t want it to be easy to reopen a bankruptcy or issues that have already been litigated. The court presumably wants justice to prevail, but it also wants to end the dispute for better or for worse.

Otherwise NOTHING would end. Everyone who lost would come in with some excuse to have another trial. So you need to show fundamental error, gross injustice or an error that causes more problems that it solves.

These are the same issues BEFORE the matter is decided in court. Foreclosures are viewed as a clerical act or ministerial act. The outcome is generally viewed as inevitable.

And where the homeowner already admits the loan exists (a mistake), that the lien is exists and was properly filed and executed (a mistake) and admits that he didn’t make payments — he is admitting something he doesn’t even know is true — that there were payments due and he didn’t make them, which by definition puts him in default.

It’s not true that the homeowner would even know if the payment is due because the banks refuse to provide any accounting on the third party payments from bailout, insurance CDS, and credit enhancement.

That’s why you need reports on title, securitization, forensic reviews for TILA compliance and loan level accounting. If the Judges stuck to the law, they would require the proof first from the banks, but they don’t. They put the burden on the borrowers —who are the only ones who have the least information and the least access to information — to essentially make the case for the banks and then disprove it. The borrowers are litigating against themselves.

In the battlefield it isn’t about good and evil, it is about winners and losers. Name calling and vague accusations won’t cut it.

Sure you want to use the words surrogate signing, robo-signing, forgery, fabrication and misrepresentation. You also want to show that the court’s action would or did cloud title in a way that cannot be repaired without a decision on the question of whether the lien was perfected and whether the banks should be able to say they transferred bad loans to investors who don’t want them — just so they can foreclose.

But you need some proffers of real evidence — reports, exhibits and opinions from experts that will show that there is a real problem here and that this case has not been heard on the merits because of an unfair presumption: the presumption is that just because a bank’s lawyer says it in court, it must be true.

Check with the notary licensing boards, and see if the notaries on their documents have been disciplined and if not, file a grievance if you have grounds. Once you have that, maybe you have a grievance against the lawyers. After that maybe you have a lawsuit against the banks and their lawyers.

But the primary way to control the narrative or at least trip up the narrative of the banks is to object on the basis that counsel for the bank is referring to things not in the record. That is simple and the judge can understand that.

Don’t rely on name-calling, rely on the simplest legal requirements that you can find that have been violated. Was the lien perfected?

If the record shows that others were involved in the original transaction with the borrowers at the inception of the deal, then you might be able to show that there were only nominees instead of real parties in interest named on the note and mortgage.

Without disclosure of the principal, the lien is not perfected because the world doesn’t know who to go to for a satisfaction of that lien. If you know the other parties involved were part of a securitization scheme, you should say that — these parties can only be claiming an interest by virtue of a pooling and servicing agreement. And then make the point that they are only now trying to transfer what they are calling a bad loan into the pool that the investors bought — which is expressly prohibited for multiple reasons in the PSA.

This is impersonation of the investor because the investors don’t want to come forward and get countersued for the bad and illegal lending practices that were used in getting the borrower’s signature.

Point out that the auction of the property was improperly conducted where you can show that to be the case. Nearly all of the 5 million foreclosures were allowed to be conducted with a single bid from a non-creditor.

If you are not a creditor you must bid cash, put up a portion before you bid, and then pay the balance usually within 24-72 hours.

But instead they pretended to be the creditor when their own documents show they were supposed to be representing the investors who were not part of the lawsuit nor the judgment.

SO they didn’t pay cash and they didn’t tender the note. THEY PAID NOTHING. In Florida the original note must actually be filed with the court to make sure that the matter is actually concluded.

There is a whole ripe area of inquiry of inspecting the so-called original notes and bringing to the attention the fraud upon the court in submitting a false original. It invalidates the sale, by operation of law.

California man wants foreclosures deemed unconstitutional in the state

by KERRI PANCHUK

Proposed Illinois Legislation Would Freeze Evictions for Four Months
California AG Wants Pay Option ARM Answers
Does the Senate’s housing bill encourage foreclosures?
California Law Freezes Foreclosures, Burns Servicers
Short Sales Cost Lenders $310m More Than Necessary, CoreLogic Study Finds

Thursday, August 4th, 2011, 7:31 am

A California man is on a mission to end foreclosures across his state, claiming an outright ban on the practice would force banks to help distressed borrowers.

In documents filed with California’s secretary of state, Sacramento resident David Benson said he’s trying to gain enough signatures – 807,615 to be exact – to get his foreclosure ban considered by voters across the state.

Benson wants to amend the California constitution, making homeownership a fundamental right.

His plan would require lenders to assist borrowers unable to pay for their homes due to financial distress and illness.

It also would force lenders to reduce a loan’s principal amount to reflect declines in property value that go beyond 10%.

Benson’s proposal says any “loan issued for and secured by a home or property by any lending institutions, loan servicers, mortgagee, trustees and beneficiaries doing business in the state of California, shall be able to be refinanced without credit review or penalty at minimum cost, within 45 days of being requested.”

That provision would automatically apply if a borrower has maintained the mortgage for at least three years.

Anthony Laura, an attorney at Patton Boggs who reviewed the proposal, said the amendment “would have the opposite effect of diminishing, not enhancing, homeownership in California.”

“While homeownership may be part of what many consider to be the American Dream, I have a hard time conceiving it as a constitutional right. Should this proposed amendment make it on the ballot and ultimately pass, it would only serve to discourage lenders from making mortgage loans in California.”

Laura said without those mortgages, few people could afford homes.

Write to Kerri Panchuk.

JUDGES: ASSUME THE BORROWER IS WRONG

So you have denied the claims of the pretenders and put that in issue. You have even alleged fraud, forgery and fabrication and the catch-word “robosigning”. But the Judge, alleging that he did not want to “make new law” (which wasn’t true) or allegedly because he didn’t want to start an avalanche of litigation interfering with judicial economy (and therefore allowing fraud and theft on the largest scale ever known to human history) has not only denied your claims and motions, but refused to even put the matter at issue, thus enabling you to at least use discovery to prove your point.

So the pretenders have their way: no evidence has been introduced into the record. You have proffered, they have proffered, but somehow their proffer means something more than your proffer even though no proffer is evidence.

Attorneys recognize this as low hanging fruit on appeal, where the trial judge is going to get the case back on remand with instructions to listen to the evidence and allow each side to produce real evidence, not proffers from counsel, and allow each side to conduct discovery. It’s not guaranteed but it is very likely. And the pretenders know that if it ever gets down to real evidence as opposed to arguments of counsel, they are dead in the water, subject to sanctions and liability for slander of title and other claims.

So they have come up with this strategy of setting supersedeas bond higher and higher so that the order appealed from goes into effect and they are able to kick the can down the road with a foreclosure sale, more transfers etc in the title chain, thus enabling them to argue the deed is done and the “former” homeowner must be relegated to only claiming damages, not the home itself. People can be kicked out by eviction proceedings that typically are conducted in courts of limited jurisdiction where in most states you are not allowed to even allege that the title is not real or that it was illegally obtained.

Initially supersedeas bond was set at levels that could be met by homeowners — sometimes as little as $500 or a monthly amount equal to a small fraction of the former monthly payment. Now, Judges who are heavily influenced by banks and large law firms, especially chief Judges who stick their noses into cases not assigned to them, are making sure that the case does NOT go to jury trial and essentially influencing the presiding Judge ex parte, to set a high supersedeas bond thus preventing the homeowner from obtaining a stay of execution on the eviction or the final judgment regarding title.

Of course it is wrong. But it is happening. You counter this by (1) making the record on appeal as to the merits of the appeal (2) adding to the record actual affidavits and testimony as to value, rental value etc. and (3) of course demanding and evidential hearing on the proper amount of the bond. Here you want to search out and produce the bond set in similar cases in the county in which your case is pending. Make sure you have a court reporter and a transcript on appeal and that the record on appeal is complete. It is not uncommon for certain documents to get “lost” or allegedly not “introduced” so when the appellate court gets it you can be met with the question of “what document?”

The other reason they are increasing supersedeas bond is because of a misconception by many pro se litigants and even some attorneys. They have the impression that the appeal is over if the bond is NOT posted with the clerk. And they have the impression that they can’t challenge the amount of bond set, or even go to the appellate court just on that issue and ask the appellate court to set bond — something they might not do but when they remand it, it is usually with instructions to the trial judge to hear evidence on the relevant issues — again something the pretenders don’t want.

Supersedeas bond ONLY applies to execution of the order or judgment that you are appealing. You can AND should continue with the appeal and if you win, the Judgment might be overturned — which means by operation of law you probably get your house back.

All these things are technical matters. Listening to other pro se litigants or even relying upon this other sites intended to help you is neither wise nor helpful. Before you act or fail to act, you should be in close contact with an attorney licensed in the jurisdiction in which your property is located. Local rules can sometimes spell the difference between the life or death of your case.

The Free House Myth

posted by Katie Porter
As challenges to whether a “bank” (usually actually a securitized
trust) has the right to foreclose because it owns the note and mortgage become more common, rumors swirl about the ability to use such tactics to get a “free house.” There are a few instances of consumer getting a free house, see here and here, for examples, but these are extreme situations not premised on ownership, but on a more fundamental flaw with the mortgage. In general, the idea that even a successful ownership challenge will create a free house to the borrower is an urban myth. I’ll explain why below, but there is a policy point here. The myth of the free house drives policymakers to complain about the moral hazard risks of holding mortgage companies to the law and tries to set up homeowners who are paying their mortgages against those who are not. It serves the banks’ political agenda to be able to point to the “free house” as an obviously unacceptable alternative of consumers winning legal challenges. It’s key then to understand that the “free house” is largely a creature of consumers’
and banks’ over-active imaginations.

In sorting out why even a successful ownership challenge does not give homeowners a free house, it is helpful to parse some key concepts. The first one is standing, which is the right of a party to ask a court for the relief it seeks. This comes in different flavors, including constitutional standing, but in the foreclosure context, usually boils down to whether the moving party is the “real party in interest.” In re Veal, the recent decision from the 9th Circuit BAP authored by Judge Bruce Markell, mentioned previously on Credit Slips , contains a discussion of standing in the foreclosure context. At least in part, the concern of the real party in interest doctrine is to make sure that the plaintiff is the right person to get legal relief in order to protect the defendant from a later action by the person truly entitled to relief. Note that standing is a concept that only applies in court; here that means in judicial foreclosures. In states that allow non-judicial foreclosure, the issue is slightly different. Does the party initiating the non-judicial foreclosure have the authority to do so under the state statute authorizing the sale? For example, cases such as In re Salazar discuss whether a recorded assignment of the mortgage is needed, as opposed to an unrecorded assignment, to initiate a foreclosure. Under either standing or statutory authority, a “win” by the homeowner leads to the same result. The foreclosure cannot proceed.

But this win is not the same as a free house. Just because a party lacked standing or statutory authority does not mean that there is not some party out there that does have the authority to foreclosure. Nor does a win on standing mean that there cannot be action taken to give the initial foreclosing party the authority that they need, which might occur by transferring possession of the note or by executing a series of assignments, to foreclose at a later date. Unless other problems exist, there is still a valid note that obligates the homeowner to pay money due and there is still a mortgage encumbering the house. The homeowner does not get a free house. Rather, the homeowner just doesn’t lose her house today to foreclosure. These are pretty different outcomes!

This doesn’t mean that I think the standing/ownership issue is inconsequential. For homeowners, a successful challenge that results in the dismissal of a foreclosure can lead to a loan modification or the delay itself can give the homeowner the time to find another solution. For investors in mortgage-backed securities, the problems with paperwork likely increase their loss severities in foreclosure, both because of increased litigation costs and because of delay in correcting problems. (And there may be even more serious problems for investors relating to whether the transfers even succeeded in putting the homes in the trust.) But we shouldn’t confuse these issues with the idea that what is at stake in sorting out this mess is giving a “free house” to some Americans, despite the lamentations of this LaSalle Bank lawyer after a judge ruled that LaSalle as trustee lacked standing to foreclose. A fruitful discussion of these issues needs to begin with a clear understanding of the consequences of the problem, as well as empirical evidence on how widespread these problems are.
The free house is political handwringing, not legal reality.

July 18, 2011 at 4:22 AM in Mortgage Debt & Home Equity Comments It’s certainly not a “free” house. I think it’ll be a nightmare for homeowners who prevail in one of these actions to try and sell their homes. Just because party X can’t foreclose doesn’t mean that there isn’t a valid mortgage still on the property. No buyer is going to want to buy (and no title insurer will want to insure) unless that mortgage is paid off. And that means determining who is the mortgagee.
Adverse possession and/or quiet title actions might help solve some of this, but they are not self-executing solutions. Homeowners will have to go to court and litigate. That’s expensive and it takes time. So, at best, these homeowners are getting not “free” houses but houses with a severely depressed value.

Posted by: Adam Levitin | July 18, 2011 at 06:46 AM

The author skims the surface of the latte and finds after skimming the surface there is no more cream. Duh.
The Banks are often appearing as trustees on behalf of NY Trusts most of which died on or about 2008. If the trusts are dead than who has the right to appear in court? Nemo est hires viventis. No one is the heir of a living person and I would suggest, no one is the a trustee able to act on behalf of a dead trust. If the paper was successfully transferred to the trust, then perhaps the thousands of suckers who bought a RMBS are the owners. But if the paper was never successfully transferred, then the trusts and the trustees are certainly not the owners with standing. The original lenders might be but after phony documents have been created assigning the note and the mortgage to dead trusts, how could they possibly have the right of ownership?
The “myth” of the free houses was created not by consumers “oy!!” but by the very Banks who are picking up “free” houses every day by pretending to be trustees acting on behalf of dead trusts or trusts that never properly held the mortgages and notes. It is very much like Ronald Reagan calling a nuclear submarine the Corpus Christie or calling armed combatants “peacekeepers.” The “free house” was the Orwellian double speak created by Bankers for Bankers and their judicial minions and hand maidens have adopted their language very well.

—
Jake Naumer
Resolution Advisors
3187 Morgan Ford
St Louis Missouri 63116
314 961 7600
Fax Voice Mail 314 754 9086

pending lawsuits and homeowners winnning

Barry Fagan v Wells Fargo Bank and The Office of the Comptroller of the Currency (OCC) FOIA COVER-UP

http://www.scribd.com/doc/57585259/OCC-Letter-Re-Fagan-v-Wells-Fargo-Bank-Denial-of-Documents-through-FOIA

Ten pages are being withheld by the authority of the Privacy Act of 1974, 5 U.S.C. 552a (k)(2) and the Freedom of Information Act, 5 U.S.C. 552 (b)(8) and 12 C.F.R. 4.12(b)(8), relating to a record contained in or related to an examination,…

MERS and invalid assignments

Brand New, Hot Off The Presses MERS Policy Bulletin

July 24th, 2011 | Author:

After years of claiming that assignments don’t matter and the date of assignment certainly doesn’t matter, the MERS Monster has finally changed its tune, effective July 21, 2011:

The Certifying Officer must execute the assignment of the Security Instrument from MERS before initiating foreclosure proceedings or filing Legal Proceedings and promptly send the assignment of the Security Instrument for recording in the applicable public land records

Well, harumph says I…what of all those damn post filing assignments?  What about all them specious arguments made in courtrooms all across this country that said the date of assignment didn’t matter?  What about the absurd argument that an “equitable assignment” had already occurred? (despite the fact that neither the pooling and servicing a agreement nor law permit such assignments)  For foreclosure cases already adjudged this is problematic and for all those hundreds of thousands still pending, this change in policy is exhibit #1 in the argument that a post filing assignment cannot confer standing.

This certainly ain’t “Ding Dong The Witch Is Dead”, it’s just another stanza in “Humpty Dumpty Sat on A Wall”

And all the kings horses and all the kings men couldn’t put Humpty Dumpty back together again.

Humpty Dumpty is our real property recording system that was developed over hundreds of years in this country.  A key read is Hernando Desoto’s “The Mystery of Capital” for a long explanation that our country’s success is tied largely to our real property record system that has been completely obliterated in just a few short years by all this mortgage madness.  What is most astonishing (and the biggest indictment of the whole MERS madness) is the fact that no law, legislation or court decision was ever rendered to justify the MERS system prior to its widespread implementation.  It was merely spread all across this country like a virulent virus that was transmitted and lay dormant in the property records impacting millions of homes all across America.

MERS Policy Bulletin

Ask for a 402 hearing and then dissmiss the eviction !!!

If the court follows the rules of evidence (and they do) if proper objections are filed. No eviction of a secuitized loan should ever prevail on an eviction; they cannot produce the foundation to authenticate the Trustees Deed it is based upon preliminary facts that they are unable and unwilling to bring to court. The Assignments Civil code 2932.5 , The Servicer, The Accounting, The Trustee, MERS, The Robo signer, The person that purportedly contacted the Borrower Trustor, The compliance documents with Civil Code 2924, all these are preliminary facts upon which the admission of the Trustees Deed depend Evidence code 400,401,402,403. Check out this motion !!

Timothy L. McCandless, Esq.  (SBN 147715)

LAW OFFICES OF TIMOTHY L. MCCANDLESS

Attorney for Defendant,

SUPERIOR COURT OF CALIFORNIA

IN AND FOR THE COUNTY OF SOLANO

SOLANO COURT/ LIMITED JURISDICTION

FANNIE MAE et al,

Plaintiff,

v.

Defendant.

)

)

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DEFENDANT’S IN LIMINE MOTION TO EXCLUDE ALL EVIDENCE (RE:FACIALLY INVALID DEED OF TRUST)

TRIAL DATE:  Tues., June 15, 2010 ) 

To the Court, to Plaintiff FANNIE MAE, and its attorney of record:

            PLEASE TAKE NOTICE that, on Tuesday, June 15, 2010, at 8:30 AM, or as soon thereafter as the matter may be heard, Defendant, MICHELLE CABESAS, will in limine judicii move the court, and hereby does move, for an order excluding from trial all evidence proffered by Plaintiff FANNIE MAE.

          The motion will be heard in Department  26, at 1:30 p.m. in front of the Honorable Judge Davis  of the Solano Court of the above-captioned court.

The motion will be brought pursuant to Evidence Code sections 353 and 400 et seq., Code of Civil Procedure section 430.10(b), and related decisional law.

The ground of the motion will be that the Unlawful Detainer Complaint, together with the publicly-filed “Deed of Trust” that is necessarily incorporated into it, is facially invalid because the  Beneficiary did not have the power of sale. Such irregularities should constitute sufficient grounds to set aside the entire non-judicial foreclosure process. Therefore, the Trustee’s Deed After Sale should not be admitted as no lawful basis exists for its execution. Additionally, the Notice of Default, and Notice of Default Declaration should be excluded.

The failure of Plaintiff and/or Plaintiff’s agent to perform a condition precedent pursuant to Civil Code Section 2923.5 is fatal. The Notice of Default Declaration fails is several regards, (1) the language of the Notice does not comply with the statute because it does not set forth facts of how the statute was performed; (2) the Declaration is not sworn under penalty of perjury; (3) the only date of the Declaration is the date of execution which is one day prior to the Notice of Default which was recorded only five days later, thus, thirty days did not pass from the date of execution of the Declaration and the date of recordation. As such, under Section 2923.5, the Notice of Default Declaration is void and could not support the recordation of the Notice of Default.  Because the non-judicial foreclosure process is subject to strict scrutiny, and given the material failure of a condition precedent by Plaintiff and/or Plaintiff’s agent, the entire non-judicial foreclosure process is invalid.  Therefore, the Trustee’s Deed After Sale cannot be admitted into evidence, as no lawful foundation can be laid.

//

DATED:  June 14, 2010.                  ________________________________________

LAW OFFICES OF TIMOTHY L. MCCANDLESS

By: Timothy P. McCandless, Esq.

Attorney for Defendant,

MEMORANDUM OF POINTS AND AUTHORITIES

I.

FACTUAL BACKGROUND

The court’s records for this case will show that Plaintiff FANNIE MAE filed its Complaint on or about  August 4, 2009.   The apparent foreclosing beneficiary was plaintiff, FANNIE MAE.  [See attachment to Unlawful Detainer Complaint entitled “Trustee’s Deed Upon Sale.”]

This motion ensued in its present form, because sufficient time did not remain before trial, in order to permit Defendant CABESAS to bring a regularly-noticed general demurrer or “motion for judgment on the pleadings”.

II.

THE COURT HAS POWER TO EXCLUDE ALL EVIDENCE FROM TRIAL, ON GROUNDS ANALOGOUS TO A GENERAL DEMURRER.

            The court has power to consider and grant an objection to all evidence under Evidence Code sections 353 and 400 et seq.  If no cause of action or defense is stated by the respective pleading, then no “factual issue” any longer exists, and therefore no evidence may be admitted on grounds of “relevance” under Evidence Code sections 400 et seq.

It is well established that a party may bring an in limine objection in order to exclude all evidence, as a sort of general demurrer or “motion for judgment on the pleadings”.  “Although not in form a motion, this method of attacking the pleading is identical in purpose to a general demurrer and motion for judgment on the pleadings and is governed by the same rules.  [Citations.]”  5 WITKIN, Cal.Proc.3rd page 386, “Pleading” at §953.  See also 6 WITKIN, Cal.Proc.3rd pages 571-573, “Proceedings Without Trial” at §§272-273.

According to 5 WITKIN, Cal.Proc.3rd page 340, “Pleading” at §899, a “general” demurrer concerns only the defense that the pleading does not state facts sufficient to constitute a cause of action or defense.  That is precisely what defendant contends here: the Unlawful Detainer Complaint fails to state a claim for which relief may be granted.

III.

THE COURT MUST STRICTLY ENFORCE

THE TECHNICAL REQUIREMENTS FOR A FORECLOSURE.

            The harshness of non-judicial foreclosure has been recognized. “The exercise of the power of sale is a harsh method of foreclosing the rights of the grantor.” Anderson v. Heart Federal Savings (1989) 208 Cal.App.3d 202, 6 215, citing to System Inv. Corporation v. Union Bank (1971) 21 Cal.App.3d 137, 153.  The statutory requirements are intended to protect the trustor from a wrongful or unfair loss of his property Moeller v. Lien (1994) 25 Cal.App.4th 822, 830; accord, Hicks v. E.T. Legg & Associates (2001) 89 Cal.App.4th 496, 503; Lo Nguyen v. Calhoun (6th District 2003) 105 Cal.App.4th 428, 440, and a valid foreclosure by the private power of sale requires strict compliance with the requirements of the statute. Miller & Starr, California Real Estate (3d ed.), Deeds of Trust and Mortgages, Chapter 10 §10.179; Anderson v. Heart Federal Sav. & Loan Assn., 208 Cal. App. 3d 202, 211 (3d Dist. 1989), reh’g denied and opinion modified, (Mar. 28, 1989); Miller v. Cote (4th Dist. 1982) 127 Cal. App. 3d 888, 894; System Inv. Corp. v. Union Bank (2d Dist. 1971) 21 Cal. App. 3d 137, 152-153; Bisno v. Sax (2d Dist. 1959) 175 Cal. App. 2d 714, 720.

It has been a cornerstone of foreclosure law that the statutory requirements, intending to protect the trustor from a wrongful or unfair loss of the property, must be complied with strictly. Miller & Starr, California Real Estate (3d ed.), Deeds of Trust and Mortgages, Chapter 10 §10.182.   “Close” compliance does not count. As a result, any trustee’s sale based on a statutorily deficient Notice of Default is invalid (emphasis added). Miller & Starr, California Real Estate (3d ed.), Deeds of Trust and Mortgages, Chapter 10 §10.182; Anderson v. Heart Federal Sav. & Loan Assn. (3dDist. 1989) 208 Cal. App. 3d 202, 211, reh’g denied and opinion modified, (Mar. 28, 1989); Miller v. Cote (4th Dist. 1982) 127 Cal. App. 3d 888, 894; System Inv. Corp. v. Union Bank (2d Dist. 1971) 21 Cal. App. 3d 137, 152-153; Saterstrom v. Glick Bros. Sash, Door & Mill Co.(3d Dist. 1931) 118 Cal. App. 379.

Additionally, any trustee’s sale based on a statutorily deficient Notice of Trustee Sale is invalid.  Anderson v. Heart Federal Sav. & Loan Assn. (3d Dist. 1989) 11 208 Cal.App. 3d 202, 211, reh’g denied and opinion modified, (Mar. 28, 1989). The California Sixth District Court of Appeal observed, “Pursuing that policy [of judicial interpretation], the courts have fashioned rules to protect the debtor, one of them being that the notice of default will be strictly construed and must correctly set forth the amounts required to cure the default.” Sweatt v. The Foreclosure Co., Inc. (1985 – 6th District) 166 Cal.App.3d 273 at 278, citing to Miller v. Cote (1982) 127 Cal.App.3d 888, 894 and SystemInv. Corp. v. Union Bank (1971) 21 Cal.App.3d 137, 152-153.

The same reasoning applies even to a notice of a trustee’s sale.  Courts will set aside a foreclosure sale when there has been fraud, when the  sale has been improperly, unfairly, or unlawfully conducted, or when there has  been such a mistake that it would be inequitable to let it stand. Bank of America Nat. Trust & Savings Ass’n v. Reidy (1940) 15 Cal. 2d 243, 248; Whitman v. Transtate Title Co.(4th Dist. 1985) 165 Cal. App. 3d 312, 322-323; In re Worcester (9th Cir. 1987) 811 F.2d 1224, 1228.  See also Smith v. Williams (1961) 55 Cal. 2d 617, 621; Stirton v. Pastor (4th Dist. 1960) 177 Cal. App. 2d 232, 234; Brown v. Busch (3d Dist. 1957) 152 Cal.App. 2d 200, 203-204.

If somehow these foreclosing predecessor-in-interest can establish this standing, or right, to extrajudicially foreclose, still it should be prevented from pursuing this eviction action, because such an action, if successful, would result in a wrongful foreclosure, due to the predecessor-in-interest’s exercise of a non-existent extrajudicial power.

IV.

PLAINTIFF, OR PLAINTIFF’S PREDECESSOR-IN-INTEREST,

DID NOT HAVE THE RIGHT TO EXTRAJUDICIALLY FORECLOSE

The foreclosing predecessor-in-interest simply did not have the right to foreclose under the subject trust deed, because the notice of default  facially invalid.

The reason why the security instrument is not valid, is because it is facially void        !  A copy of the subject trust deed – a public record!! — is attached hereto.  Further, the trueness of the copy is readily verifiable, since it is a publicly-recorded document.  Clear as daylight, contact with the trustor 30 days prior to the notice was imjpossible. The was no lender MERS is not a lender Plaintiff  did not get the assignment  till 7/8/2009  . The notice of default was recorded 7/31/2009 only 23 days after the assignment.

A trust deed adds a third party, of sorts, namely the beneficiary.  It has been observed that a trust deed naming a purely fictitious person as beneficiary may be void.  Woodward v. McAdam (1894), 101 Cal. 438.  It has been held that a trust deed might be void for uncertainty, where the deed of trust does not name or describe any of the beneficiaries, but only classified them by reference to a common attribute.  Watkins v. Bryant (1891), 91 Cal. 492.  There seems to be no common-sense reason why the same principle should not apply to the designation of the grantee/ trustee, even were the law of deeds not generally applicable to trust deeds.

Beneficiary did not have the power of sale. Such irregularities should constitute sufficient grounds to set aside the entire non-judicial foreclosure process. Therefore, the Trustee’s Deed After Sale should not be admitted as no lawful basis exists for its execution. Additionally, the Notice of Default, and Notice of Default Declaration should be excluded.

The failure of Plaintiff and/or Plaintiff’s agent to perform a condition precedent pursuant to Civil Code Section 2923.5 is fatal. The Notice of Default Declaration fails is several regards, (1) the language of the Notice does not comply with the statute because it does not set forth facts of how the statute was performed; (2) the Declaration is not sworn under penalty of perjury; (3) the only date of the Declaration is the date of execution which is one day prior to the Notice of Default which was recorded only five days later, thus, thirty days did not pass from the date of execution of the Declaration and the date of recordation. As such, under Section 2923.5, the Notice of Default Declaration is void and could not support the recordation of the Notice of Default.  Because the non-judicial foreclosure process is subject to strict scrutiny, and given the material failure of a condition precedent by Plaintiff and/or Plaintiff’s agent, the entire non-judicial foreclosure process is invalid.  Therefore, the Trustee’s Deed After Sale cannot be admitted into evidence, as no lawful foundation can be laid.

CONCLUSION

          The Plaintiff’s entire case rests upon the “facial” or “on the public record” legitimacy of the extrajudicial foreclosure by its predecessor-in-interest.  The foreclosure was facially void.  The case should be dismissed, upon the court’s determination that no factual “issue” remains.

Respectfully submitted,

DATED:  June 14, 2010             _______________________________________

LAW OFFICES OF TIMOTHY L. MCCANDLESS

By: Timothy P. McCandless

ATTORNEY FOR DEFENDANT

One West False statements

False Statements

06/28/2011

California Bankruptcy Judge Laura Stuart Taylor has joined the ranks of judges who will not tolerate fraudulent documents produced by banks to foreclose. Judge Taylor entered an Order To Show Cause why OneWest Bank, FSB, should not incur “a significant coercive sanction intended to deter any future tender of misleading evidence to any court of this district.” Judge Taylor ordered OneWest to appear before her on July 29, 2011, to show cause as to why it should not be subject to compensatory and/or coercive sanctions, in the case In re Jessie M. Arizmendi, Bk. No. 09-19263-PB13, U.S. Bankruptcy Court, Southern District of California. The case involves a motion for relief from stay filed by OneWest supported with a declaration of Brian Burnett, who declared under penalty of perjury that OneWest was the real party in interest in connection with the Motion because OneWest was the current beneficiary under the terms of a promissory note and Deed of Trust.

According to the Burnett declaration, OneWest received its interest in the Trust Deed pursuant to an Assignment from MERS. The assignment of the Trust Deed and the Note showed the transfer from MERS as nominee for the original lender directly to OneWest in 2010.

At trial, however, OneWest’s witness, Charles Boyle, testified that the beneficiary of the loan was actually Freddie Mac. Based on this conflict, the Court required post-trial briefings.

According to the Court, “OneWest, in its post-trial brief, provided a standing argument based on a new version of the Note, which attached an allonge dated July 24, 2007 evidencing a transfer from Original Lender to IndyMac Bank, FSB and bore an endorsement in blank from IndyMac Bank, FSB. This was new information not presented in the OneWest Declaration and this note was not identical to the note authenticated by the OneWest Declaration and attached to the OneWest Proof of Claim.

This Court is concerned, thus, that OneWest provided false or misleading evidence to the Court and that OneWest did so willfully, maliciously, in bad faith, and/or for an inappropriate purpose.”

According to research by Fraud Digest, Brian Burnett has used many different job titles when signing mortgage-related documents for OneWest, often using different titles on the same day, including:

– Assistant Vice President, Mortgage Electronic Registration Systems, Inc., as Nominee for Acoustic Home Loans;

– Assistant Vice President, Mortgage Electronic Registration Systems, Inc., as Nominee for Aegis Wholesale Corporation;

– Assistant Vice President, Mortgage Electronic Registration Systems, Inc., as Nominee for American Brokers Conduit;

– Assistant Vice President, Mortgage Electronic Registration Systems, Inc., as Nominee for Beach First National Bank;

– Assistant Vice President, Mortgage Electronic Registration Systems, Inc., as Nominee for Credit Suisse Financial Corp.;

– Assistant Vice President, Mortgage Electronic Registration Systems, Inc., as Nominee for CTX Mortgage Company, LLC;

– Assistant Vice President, Mortgage Electronic Registration Systems, Inc., as Nominee for DHI Mortgage Company, Ltd.;

– Assistant Vice President, Mortgage Electronic Registration Systems, Inc., as Nominee for Express Capital Lending;

– Assistant Vice President, Mortgage Electronic Registration Systems, Inc., as Nominee for Finasure Home Loans, LLC;

– Assistant Vice President, Mortgage Electronic Registration Systems, Inc., as Nominee for First Magnus Financial Corporation;

– Assistant Vice President, Mortgage Electronic Registration Systems, Inc., as Nominee for First Meridian Mortgage;

– Assistant Vice President, Mortgage Electronic Registration Systems, Inc., as Nominee for Flick Mortgage Investors, Inc.;

– Assistant Vice President, Mortgage Electronic Registration Systems, Inc., as Nominee for Home Loan Center, Inc. d/b/a LendingTree Loans;

– Assistant Vice President, Mortgage Electronic Registration Systems, Inc., as Nominee for Impac Funding Corp., d/b/a Impac Lending Group;

– Assistant Vice President, Mortgage Electronic Registration Systems, Inc., as Nominee for IndyMac Bank, FSB;

– Assistant Vice President, Mortgage Electronic Registration Systems, Inc., as Nominee for LoanCity;

– Assistant Vice President, Mortgage Electronic Registration Systems, Inc., as Nominee for MortgageIt, Inc.;

– Assistant Vice President, Mortgage Electronic Registration Systems, Inc., as Nominee for NetBank, a Federal Savings Bank;

– Assistant Vice President, Mortgage Electronic Registration Systems, Inc., as Nominee for New American Funding, a California Corporation;

– Assistant Vice President, Mortgage Electronic Registration Systems, Inc., as Nominee for Opteum Financial Services, LLC;

– Assistant Vice President, Mortgage Electronic Registration Systems, Inc., as Nominee for OneWest Bank, FSB;

– Assistant Vice President, Mortgage Electronic Registration Systems, Inc., as Nominee for Quicken Loans, Inc.;

– Assistant Vice President, Mortgage Electronic Registration Systems, Inc., as Nominee for Sloan Mortgage Group, Inc.;

– Assistant Vice President, Mortgage Electronic Registration Systems, Inc., as Nominee for Taylor, Bean & Whitaker;

– Assistant Vice President, Mortgage Electronic Registration Systems, Inc., as Nominee for TM Capital, Inc.

– Assistant Vice President, Mortgage Electronic Registration Systems, Inc., as Nominee for d/b/a Fedfirst Mortgage Corporation; and

– Assistant Vice President, Mortgage Electronic Registration Systems, Inc., as Nominee for UBS AG.

July 29, 2011, may be the day that Brian Burnett and OneWest are held accountable for the thousands of mortgage assignments – with false statements regarding the history and ownership of mortgages – presented to courts to foreclose.

The Banksters will get you any way they can

By Niel Garfield

EDITOR’S NOTE AND COMMENT: LAWYERS BEWARE! Starting up an anti-foreclosure venture and making comments criticizing the system has reportedly caused some investigations to begin and may result in bar discipline for technical infractions. From what I can see, the Bar is focused on UPL — unauthorized practice of law. The use of non-licensed people to do either intakes or provide services COULD subject the lawyer to discipline, which the Banks would just love to see. Be careful how you structure and supervise your organization. If grievances pile up (which they will, because you can’t save everyone), the Bar will be at your door-step. Document everything you do and stay in constant contact in writing with each client.

Daily Business Review.com: Lawyers investigated for criticizing system

No attorneys are facing disciplinary charges for their work in foreclosure cases despite a firestorm of complaints about purported fraudulent court filings on behalf of lenders.

But two foreclosure defense attorneys have been actively investigated for publicly criticizing the gridlocked foreclosure process.

The Bar investigated Jacksonville attorney Chip Parker for telling CNN, “Foreclosure courts throughout the state of Florida have adopted a system of ramming foreclosure cases through the final judgments and sale — with very little regard to the rule of law.” He also said, “What I am seeing now is an attack upon the citizens of the state of Florida by retired judges.”

The Bar also is investigating Tampa lawyer Matthew Weidner for “exercising free speech in the courtroom” in violation of a Pinellas County ordinance. Weidner, a prominent foreclosure defense lawyer, runs a blog critical of the state’s foreclosure process and is frequently quoted in national publications.

The article then goes on to say this…

Parker learned he was under scrutiny in a letter from Bar counsel Shanell Schuyler last Dec. 3. The letter, obtained by the Review, includes a link to Parker’s CNN interview and advises him to explain his on-camera statements in writing by Dec. 20 in light of The Bar’s Rule of Professional Conduct 4-8.2 prohibiting lawyers from making false or reckless comments about court personnel.

“I was shocked,” Parker said. “I said, ‘This is a joke, right?’ I have a First Amendment right to free speech. I’ve said a lot worse and been more pointed in my speech in the past. CNN actually toned down my comments.”

Parker responded to The Bar by quoting Oliver Wendell Holmes Jr., the late associate justice of the U.S. Supreme Court, saying his criticism was “consistent with the great traditions of American lawyers.”

Parker said he hasn’t been told who filed the complaint due to confidentiality rules, but he heard it was an offended judge. He reached out to constitutional lawyer Talbot “Sandy” D’Alemberte, a former president of the American Bar Association and Florida State University, whom he had met at a recent dinner honoring Parker. D’Alemberte intervened at The Bar, and the case was dropped Jan. 13, 2011.

D’Alemberte also is helping Weidner at the request of the Florida Press Association and the First Amendment Foundation, which were contacted by Weidner. He declined comment on his pending investigation. But D’Alemberte said he believes the case also will be dropped.

You can check out the article in full here…
(Free registration required)

Unfortunately, these two “good guys” are not the only defense attorneys being investigated. I personally know of a few others that are being “probed” as well…

So there you have it folks. You stand up against the banksters and they come at you any way they can…

But, don’t forget, it’s okay to join a Foreclosure Mill if you are a chief judge….

Beware of foreclosure scams currently under investigation by the District Atorney

Each day I get calls from desperate people hoping against hope the there is a magic document that can be filed or recorded the will magically give them their home free and clear without recourse. I tell them if it sounds to good to be true it probably is. That’s not to say that I don’t agree with the position that the documents that now exist as to these securitized loans are not defective. I do believe that the real party in interest is not the one foreclosing. I also believe that the party who is out the money or the true lender has been paid with insurance (one such insurer was AIG), or is being paid under the pooling and servicing agreement, or has a guarantee from a bailout program. They are going to get paid and they are going to take the house based upon forged documents.

The homeowner is being told he doesn’t qualify for a principal reduction. That although they qualified for a $4,000.00 monthly payment when they got the loan now they do not qualify for a $2,400.00 payment.

The world is crazy right now. Take a look at what the Los Angeles County District Attorney’s Office is investigating now.

Los Angeles County District Attorney’s Office
Responses to Preventing Foreclosures
and Foreclosure Rescue Fraud

1. Types of Foreclosure Rescue Fraud Cases Being Investigated
• Home Equity Sales Contract Fraud: Suspects convince homeowners to grant title of the property to them and pay them rent. Suspects usually promise to return property back to the victims in a year or two when their credit is improved. Suspects either take out loans against the property or sell the property and pocket the equity.
•Mortgage Foreclosure Consultant Fraud: Suspect contacts homeowner whose home is in foreclosure and claims to be able to assist in delaying or preventing foreclosure by obtaining new financing. Suspect instructs homeowner to transfer title of property to an individual (suspect or suspect’s accomplice) who can qualify for new financing. Suspect obtains new loan including all equity. Usually within months, the homeowner receives a notice of default in the mail and the suspect has already absconded with sales proceeds.
•Bankruptcy Fraud: Suspects file fraudulent bankruptcy cases using a fictitious business and/or trust using fractionalized deeds. Homeowners pay a monthly fee to the suspects while foreclosure is being delayed because of the bankruptcy proceedings. When a fraudulent bankruptcy case is dismissed, suspects file another fraudulent bankruptcy case.
•Loan Modification Fraud: Suspects charge an upfront fee and/or monthly fees to negotiate with lenders on the behalf of the homeowners. Typically, they provide no service or minimal service and just take the money.
•Forged Reconveyance Fraud: Suspects file a forged reconveyance on a property, making it appear that the property is owned free and clear. Suspects encumber the property with a new loan and run off with the new loan proceeds.
•Rent Skimming: Trespassing on vacant property and renting to unsuspecting tenants.
2. How Are We Addressing the Crisis
•Cases are investigated where there are a significant number of victims and losses. Consideration to investigate a case is also based on the facts of a complaint submitted to our office for review.
• The Los Angeles County Real Estate Fraud Task Force meets monthly and shares
information on current trends and cases being investigated. The task force has
been in existence for approximately ten years. The task force is comprised of the
following agencies: Department of Real Estate, County Department of Consumer
Affairs, County Registrar Recorder, Los Angeles Police Department, Los Angeles
County Sheriff’s Department and County Assessor. Other law
enforcement/county agencies also attend the task force meetings.
• We coordinate with outside agencies to investigate cases that have multiple
victims in various jurisdictions.
3. Type of Scams
• Phony counseling: Scam artists convince homeowners that they can negotiate a
deal with lenders. Once they collect the fee, they take off.
• Rent-To-Buy Scam/Rent Skimming: Suspects convince homeowners to grant title
of the property to them and pay them rent. Suspects usually promise to return the
property back to the victims in a year or two when their credit is improved.
Suspects either take out loans against the property or sell the property and pocket
the equity. Suspects benefit from rent money and the equity they stole.
• Bankruptcy Foreclosure: Suspects file fraudulent bankruptcy cases using a
fictitious business and/or trust using fractionalized deeds. Sometimes scam artists
file bankruptcy in homeowners’ names – sometimes without their knowledge.
Often attorneys are involved in this scam.
4. Challenges
• Thousands of complaints are received throughout the county annually and due to
limited personnel (e.g. detectives, prosecutors, etc.) many cases are often not
investigated.
• Cases investigated are often complex and labor intensive.
• Many of the companies have gone out of business that have the records to prove
the crime (e.g. Title Company, Escrow Company, financial institution, etc.).
5. Tools or Resources Needed
•Additional investigators and prosecutors.
•Continue Community Outreach Programs to educate the public on what government programs are available to assist them.
•Enhance current statutes with greater punishment (longer prison sentences) and reconvey clear title through the criminal process thus returning the property to the original owner.
•Greater regulatory oversight and accountability over all of the players involved in all real estate transactions (e.g. Appraisers, loan brokers, title companies, etc.) .
•Improve the manner/verification in which records for recordation are accepted.
•Restrict access to real estate records by the general public (Need-to-Know/ Right-to-Know).

Paragraph 22 in ALL Deeds of Trust lenders don’t follow the contract

BOMBSHELL- ANOTHER 2ND DCA SMACKDOWN- KONSULIAN! June 1st, 2011 Paragraph 22 of almost every mortgage contains a provision that requires the plaintiff to provide notice and an opportunity to cure the default prior to foreclosure. The principle behind this paragraph and the right to cure is not just a helpful little piece for the defendant, the default and cure provisions recited are an essential element of the entire legal process of foreclosure, deeply rooted in our American Jurisprudence. This is a subject that is discussed in some length in the recent Cardozo Law Review Article on Foreclosures. (attached) That’s all some deep stuff, but here’s where the rubber behind all that hits the road…in an opinion just released today….. Under Florida law, contracts are construed in accordance with their plain language, as bargained for by the parties. Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29, 34 (Fla. 2000). Further, Busey did not refute Konsulian’s defenses nor did it establish that Konsulian’s defenses were legally insufficient. Because Busey did not prove that it met the conditions precedent to filing for foreclosure, it failed to meet its burden, and it is not entitled to judgment as a matter of law. In addition to being prematurely filed, Konsulian claims that the acceleration letter failed to state the default as required by the mortgage terms. We agree and reverse. Now there are default letters floating all around in Foreclosureland, but I doubt that many of them comply with the express terms of the contract the banks created…..

Wrongful foreclosure and California Judge Firmat

Orange County (Cali) Superior Court Judge Firmat posted these notes on
the law and motion calendar to assist attorneys pleading various
theories in wrongful foreclosure cases etc.  Some interesting
points….

FOOTNOTES TO DEPT. C-15 LAW AND MOTION CALENDARS

Note 1 – Cause of Action Under CCC § 2923.5, Post Trustee’s Sale –
There is no private right of action under Section 2923.5 once the
trustee’s sale has occurred.  The “only remedy available under the
Section is a postponement of the sale before it happens.”  Mabry v.
Superior  Court, 185 Cal. App. 4th 208, 235 (2010).

Note 2 – Cause of Action Under CCC § 2923.6 – There is no private
right of action under Section 2923.6, and it does not operate
substantively.  Mabry v. Superior Court, 185 Cal. App. 4th 208,
222-223 (2010).  “Section 2923.6 merely expresses the hope that
lenders will offer loan modifications on certain terms.”  Id. at 222.

Note 3 – Cause of Action for Violation of CCC §§ 2923.52 and / or
2923.53 – There is no private right of action.  Vuki v. Superior
Court, 189 Cal. App. 4th 791, 795 (2010).

Note 4 –  Cause of Action for Fraud, Requirement of Specificity – “To
establish a claim for fraudulent misrepresentation, the plaintiff must
prove: (1) the defendant represented to the plaintiff that an
important fact was true; (2) that representation was false; (3) the
defendant knew that the representation was false when the defendant
made it, or the defendant made the representation recklessly and
without regard for its truth; (4) the defendant intended that the
plaintiff rely on the representation; (5) the plaintiff reasonably
relied on the representation; (6) the plaintiff was harmed; and, (7)
the plaintiff’s reliance on the defendant’s representation was a
substantial factor in causing that harm to the plaintiff. Each element
in a cause of action for fraud must be factually and specifically
alleged. In a fraud claim against a corporation, a plaintiff must
allege the names of the persons who made the misrepresentations, their
authority to speak for the corporation, to whom they spoke, what they
said or wrote, and when it was said or written.”  Perlas v. GMAC
Mortg., LLC, 187 Cal. App. 4th 429, 434 (2010) (citations and
quotations omitted).

Note 5 –Fraud – Statute of Limitations- The statute of limitations for
fraud is three years.  CCP § 338(d).  To the extent Plaintiff wishes
to rely on the delayed discovery rule, Plaintiff must plead the
specific facts showing (1) the time and manner of discovery and (2)
the inability to have made earlier discovery despite reasonable
diligence.”  Fox v. Ethicon Endo-Surgery, Inc., 35 Cal. 4th 797, 808
(2005).

Note 6 – Cause of Action for Negligent Misrepresentation – “The
elements of negligent misrepresentation are (1) the misrepresentation
of a past or existing material fact, (2) without reasonable ground for
believing it to be true, (3) with intent to induce another’s reliance
on the fact misrepresented, (4) justifiable reliance on the
misrepresentation, and (5) resulting damage.  While there is some
conflict in the case law discussing the precise degree of
particularity required in the pleading of a claim for negligent
misrepresentation, there is a consensus that the causal elements,
particularly the allegations of reliance, must be specifically
pleaded.”  National Union Fire Ins. Co. of Pittsburgh, PA v. Cambridge
Integrated Services Group, Inc., 171 Cal. App. 4th 35, 50 (2009)
(citations and quotations omitted).

Note 7 – Cause of Action for Breach of Fiduciary Duty by Lender –
“Absent special circumstances a loan transaction is at arm’s length
and there is no fiduciary relationship between the borrower and
lender. A commercial lender pursues its own economic interests in
lending money. A lender owes no duty of care to the borrowers in
approving their loan. A lender is under no duty to determine the
borrower’s ability to repay the loan. The lender’s efforts to
determine the creditworthiness and ability to repay by a borrower are
for the lender’s protection, not the borrower’s.”  Perlas v. GMAC
Mortg., LLC, 187 Cal. App. 4th 429, 436 (2010) (citations and
quotations omitted).

Note 8 – Cause of Action for Constructive Fraud – “A relationship need
not be a fiduciary one in order to give rise to constructive fraud.
Constructive fraud also applies to nonfiduciary “confidential
relationships.” Such a confidential relationship may exist whenever a
person with justification places trust and confidence in the integrity
and fidelity of another. A confidential relation exists between two
persons when one has gained the confidence of the other and purports
to act or advise with the other’s interest in mind. A confidential
relation may exist although there is no fiduciary relation ….”
Tyler v. Children’s  Home Society, 29 Cal. App. 4th 511, 549 (1994)
(citations and quotations omitted).

Note 9 – Cause of Action for an Accounting – Generally, there is no
fiduciary duty between a lender and borrower.  Perlas v. GMAC Mortg.,
LLC, 187 Cal. App. 4th 429, 436 (2010).  Further, Plaintiff (borrower)
has not alleged any facts showing that a balance would be due from the
Defendant lender to Plaintiff.  St. James Church of Christ Holiness v.
Superior Court, 135 Cal. App. 2d 352, 359 (1955).  Any other duty to
provide an accounting only arises when a written request for one is
made prior to the NTS being recorded.  CCC § 2943(c).

Note 10 – Cause of Action for Breach of the Implied Covenant of Good
Faith and Fair Dealing – “[W]ith the exception of bad faith insurance
cases, a breach of the covenant of good faith and fair dealing permits
a recovery solely in contract.  Spinks v. Equity Residential Briarwood
Apartments, 171 Cal. App. 4th 1004, 1054 (2009).  In order to state a
cause of action for Breach of the Implied Covenant of Good Faith and
Fair Dealing, a valid contract between the parties must be alleged.
The implied covenant cannot be extended to create obligations not
contemplated by the contract.  Racine & Laramie v. Department of Parks
and Recreation, 11 Cal. App. 4th 1026, 1031-32 (1992).

Note 11 – Cause of Action for Breach of Contract – “A cause of action
for damages for breach of contract is comprised of the following
elements: (1) the contract, (2) plaintiff’s performance or excuse for
nonperformance, (3) defendant’s breach, and (4) the resulting damages
to plaintiff. It is elementary that one party to a contract cannot
compel another to perform while he himself is in default. While the
performance of an allegation can be satisfied by allegations in
general terms, excuses must be pleaded specifically.”  Durell v. Sharp
Healthcare, 183 Cal. App. 4th 1350, 1367 (2010) (citations and
quotations omitted).

Note 12 – Cause of Action for Injunctive Relief – Injunctive relief is
a remedy and not a cause of action.  Guessous v. Chrome Hearts, LLC,
179 Cal. App. 4th 1177, 1187 (2009).

Note 13 – Cause of Action for Negligence – “Under the common law,
banks ordinarily have limited duties to borrowers. Absent special
circumstances, a loan does not establish a fiduciary relationship
between a commercial bank and its debtor. Moreover, for purposes of a
negligence claim, as a general rule, a financial institution owes no
duty of care to a borrower when the institution’s involvement in the
loan transaction does not exceed the scope of its conventional role as
a mere lender of money. As explained in Sierra-Bay Fed. Land Bank
Assn. v. Superior Court (1991) 227 Cal.App.3d 318, 334, 277 Cal.Rptr.
753, “[a] commercial lender is not to be regarded as the guarantor of
a borrower’s success and is not liable for the hardships which may
befall a borrower. It is simply not tortious for a commercial lender
to lend money, take collateral, or to foreclose on collateral when a
debt is not paid. And in this state a commercial lender is privileged
to pursue its own economic interests and may properly assert its
contractual rights.”  Das v. Bank of America, N.A., 186 Cal. App. 4th
727, 740-741 (2010) (citations and quotations omitted).

Note 14 – Cause of Action to Quiet Title – To assert a cause of action
to quiet title, the complaint must be verified and meet the other
pleading requirements set forth in CCP § 761.020.

Note 15 – Causes of Action for Slander of Title – The recordation of
the Notice of Default and Notice of Trustee’s Sale are privileged
under CCC § 47, pursuant to CCC § 2924(d)(1), and the recordation of
them cannot support a cause of action for slander of title against the
trustee.  Moreover, “[i]n performing acts required by [the article
governing non-judicial foreclosures], the trustee shall incur no
liability for any good faith error resulting from reliance on
information provided in good faith by the beneficiary regarding the
nature and the amount of the default under the secured obligation,
deed of trust, or mortgage. In performing the acts required by [the
article governing nonjudicial foreclosures], a trustee shall not be
subject to [the Rosenthal Fair Debt Collection Practices Act].”  CCC §
2924(b).

Note 16 – Cause of Action for Violation of Civil Code § 1632 – Section
1632, by its terms, does not apply to loans secured by real property.
CCC § 1632(b).

Note 17 – Possession of the original promissory note – “Under Civil
Code section 2924, no party needs to physically possess the promissory
note.” Sicairos v. NDEX West, LLC, 2009 WL 385855 (S.D. Cal. 2009)
(citing CCC § 2924(a)(1); see also Lomboy v. SCME Mortgage Bankers,
2009 WL 1457738 * 12-13 (N.D. Cal. 2009) (“Under California law, a
trustee need not possess a note in order to initiate foreclosure under
a deed of trust.”).

Note 18 – Statute of Frauds, Modification of Loan Documents – An
agreement to modify a note secured by a deed of trust must be in
writing signed by the party to be charged, or it is barred by the
statute of frauds.  Secrest v. Security Nat. Mortg. Loan Trust 2002-2,
167 Cal. App. 4th 544, 552-553 (2008).

Note 19 – Statute of Frauds, Forebearance Agreement – An agreement to
forebear from foreclosing on real property under a deed of trust must
be in writing and signed by the party to be charged or it is barred by
the statute of frauds.  Secrest v. Security Nat. Mortg. Loan Trust
2002-2, 167 Cal. App. 4th 544, 552-553 (2008).

Note 20 – Tender – A borrower attacking a voidable sale must do equity
by tendering the amount owing under the loan.  The tender rule applies
to all causes of action implicitly integrated with the sale.  Arnolds
Management Corp. v. Eischen, 158 Cal. App. 3d 575, 579 (1984).

Note 21 – Cause of Action for Violation of Bus. & Prof. Code § 17200 –
“The UCL does not proscribe specific activities, but broadly prohibits
any unlawful, unfair or fraudulent business act or practice and
unfair, deceptive, untrue or misleading advertising. The UCL governs
anti-competitive business practices as well as injuries to consumers,
and has as a major purpose the preservation of fair business
competition. By proscribing “any unlawful business practice,” section
17200 “borrows” violations of other laws and treats them as unlawful
practices that the unfair competition law makes independently
actionable.  Because section 17200 is written in the disjunctive, it
establishes three varieties of unfair competition-acts or practices
which are unlawful, or unfair, or fraudulent. In other words, a
practice is prohibited as “unfair” or “deceptive” even if not
“unlawful” and vice versa.”  Puentes v. Wells Fargo Home Mortg., Inc.,
160 Cal. App. 4th 638, 643-644 (2008) (citations and quotations
omitted).

“Unfair” Prong

[A]ny finding of unfairness to competitors under section 17200 [must]
be tethered to some legislatively declared policy or proof of some
actual or threatened impact on competition. We thus adopt the
following test: When a plaintiff who claims to have suffered injury
from a direct competitor’s “unfair” act or practice invokes section
17200, the word “unfair” in that section means conduct that threatens
an incipient violation of an antitrust law, or violates the policy or
spirit of one of those laws because its effects are comparable to or
the same as a violation of the law, or otherwise significantly
threatens or harms competition.

Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co.,
20 Cal. 4th 163, 186-187 (1999).

“Fraudulent” Prong

The term “fraudulent” as used in section 17200 does not refer to the
common law tort of fraud but only requires a showing members of the
public are likely to be deceived. Unless the challenged conduct
targets a particular disadvantaged or vulnerable group, it is judged
by the effect it would have on a reasonable consumer.

Puentes, 160 Cal. App. 4th at 645 (citations and quotations
omitted).

“Unlawful” Prong

By proscribing “any unlawful” business practice, Business and
Professions Code section 17200 “borrows” violations of other laws and
treats them as unlawful practices that the UCL makes independently
actionable. An unlawful business practice under Business and
Professions Code section 17200 is an act or practice, committed
pursuant to business activity, that is at the same time forbidden by
law. Virtually any law -federal, state or local – can serve as a
predicate for an action under Business and Professions Code section
17200.

Hale v. Sharp Healthcare, 183 Cal. App. 4th 1373, 1382-1383 (2010)
(citations and quotations omitted).

“A plaintiff alleging unfair business practices under these statutes
must state with reasonable particularity the facts supporting the
statutory elements of the violation.”  Khoury v. Maly’s of California,
Inc., 14 Cal. App. 4th 612, 619 (1993) (citations and quotations
omitted).

Note 22 – Cause of Action for Intentional Infliction of Emotional
Distress –  Collection of amounts due under a loan or restructuring a
loan in a way that remains difficult for the borrower to repay is not
“outrageous” conduct.  Price v. Wells Fargo Bank, 213 Cal. App. 3d
465, 486 (1989).

Note 23 – Cause of Action for Negligent Infliction of Emotional
Distress – Emotional distress damages are not recoverable where the
emotional distress arises solely from property damage or economic
injury to the plaintiff.  Butler-Rupp v. Lourdeaux, 134 Cal. App. 4th
1220, 1229 (2005).

Note 24 – Cause of Action for Conspiracy – There is no stand-alone
claim for conspiracy.  Applied Equipment Corp. v. Litton Saudi Arabia
Ltd., 7 Cal. 4th 503, 510-511 (1994).

Note 25 – Cause of Action for Declaratory Relief – A claim for
declaratory relief is not “proper” since the dispute has crystallized
into COA under other theories asserted in other causes of actions in
the complaint.  Cardellini v. Casey, 181 Cal. App. 3d 389, 397-398
(1986).

Note 26 – Cause of Action for Violation of the Fair Debt Collection
Practices Acts – Foreclosure activities are not considered “debt
collection” activities.  Gamboa v. Trustee Corps, 2009 WL 656285, at
*4 (N.D. Cal. March 12, 2009).

Note 27 – Duties of the Foreclosure Trustee – The foreclosure
trustee’s rights, powers and duties regarding the notice of default
and sale are strictly defined and limited by the deed of trust and
governing statutes.  The duties cannot be expanded by the Courts and
no other common law duties exist.  Diediker v. Peelle Financial Corp.,
60 Cal. App. 4th 288, 295 (1997).

Note 28 – Unopposed Demurrer – The Demurrer is sustained [w/ or w/o]
leave to amend [and the RJN granted].  Service was timely and good and
no opposition was filed.
Failure to oppose the Demurrer may be construed as having abandoned
the claims.  See, Herzberg v. County of Plumas, 133 Cal. App. 4th 1,
20 (2005) (“Plaintiffs did not oppose the County’s demurrer to this
portion of their seventh cause of action and have submitted no
argument on the issue in their briefs on appeal.  Accordingly, we deem
plaintiffs to have abandoned the issue.”).

Note 29 – Responding on the Merits Waives Any Service Defect – “It is
well settled that the appearance of a party at the hearing of a motion
and his or her opposition to the motion on its merits is a waiver of
any defects or irregularities in the notice of the motion.”  Tate v.
Superior Court, 45 Cal. App. 3d 925, 930 (1975) (citations omitted).

Note 30 – Unargued Points – “Contentions are waived when a party fails
to support them with reasoned argument and citations to authority.”
Moulton Niguel Water Dist. v. Colombo, 111 Cal. App. 4th 1210, 1215
(2003).

Note 31 – Promissory Estoppel – “The doctrine of promissory estoppel
makes a promise binding under certain circumstances, without
consideration in the usual sense of something bargained for and given
in exchange. Under this doctrine a promisor is bound when he should
reasonably expect a substantial change of position, either by act or
forbearance, in reliance on his promise, if injustice can be avoided
only by its enforcement. The vital principle is that he who by his
language or conduct leads another to do what he would not otherwise
have done shall not subject such person to loss or injury by
disappointing the expectations upon which he acted. In such a case,
although no consideration or benefit accrues to the person making the
promise, he is the author or promoter of the very condition of affairs
which stands in his way; and when this plainly appears, it is most
equitable that the court should say that they shall so stand.”  Garcia
v. World Sav., FSB, 183 Cal. App. 4th 1031, 1039-1041 (2010)
(citations quotations and footnotes omitted).

Note 32 – Res Judicata Effect of Prior UD Action – Issues of title are
very rarely tried in an unlawful detainer action and moving party has
failed to meet the burden of demonstrating that the title issue was
fully and fairly adjudicated in the underlying unlawful detainer.
Vella v. Hudgins, 20 Cal. 3d 251, 257 (1977).  The burden of proving
the elements of res judicata is on the party asserting it.  Id. The
Malkoskie case is distinguishable because, there, the unlimited
jurisdiction judge was convinced that the title issue was somehow
fully resolved by the stipulated judgment entered in the unlawful
detainer court.  Malkoskie v. Option One Mortg. Corp., 188 Cal. App.
4th 968, 972 (2010).

Note 33 – Applicability of US Bank v. Ibanez – The Ibanez case, 458
Mass. 637 (January 7, 2011), does not appear to assist Plaintiff in
this action.  First, the Court notes that this case was decided by the
Massachusetts Supreme Court, such that it is persuasive authority, and
not binding authority.  Second, the procedural posture in this case is
different than that found in a case challenging a non-judicial
foreclosure in California.  In Ibanez, the lender brought suit in the
trial court to quiet title to the property after the foreclosure sale,
with the intent of having its title recognized (essentially validating
the trustee’s sale).  As the plaintiff, the lender was required to
show it had the power and authority to foreclose, which is
established, in part, by showing that it was the holder of the
promissory note.  In this action, where the homeowner is in the role
of the plaintiff challenging the non-judicial foreclosure, the lender
need not establish that it holds the note.

Note 34 – Statutes of Limitations for TILA and RESPA Claims – For TILA
claims, the statute of limitations for actions for damages runs one
year after the loan origination.  15 U.S.C. § 1640(e).  For actions
seeking rescission, the statute of limitations is three years from
loan origination.  15 U.S.C. § 1635(f).  For RESPA, actions brought
for lack of notice of change of loan servicer have a statute of
limitation of three years from the date of the occurrence, and actions
brought for payment of kickbacks for real estate settlement services,
or the conditioning of the sale on selection of certain title services
have a statute of limitations of one year from the date of the
occurrence.  12 U.S.C. § 2614.

Wrongfull foreclosure lawsuit vallejo

http://ahref=

http://www.balitangamerica.tv/foreclosure-lawsuits/?sms_ss=facebook&at_xt=4dd2daa3410e4e26%2C0

CA Class Action gets a TRO; Credit Default Swaps addressed; HAMP’s bogus nature addressed

CA Class Action gets a TRO; Credit Default Swaps addressed; HAMP’s bogus nature addressed

This complaint from California is remarkable in its treatment of HAMP as well as Credit Default Swaps (CDS) and the rest of the securitization scam.  For research buffs, the complaint can be found here.The federal government is either utterly stupid or in cahoots with the rip-offs on Wall Street.  I tend to believe it is the latter.  Too many “mistakes” lately, especially those related to the “bail-outs.”  The complaint sets forth a clear demonstration of how all the players in the chain (primarily the Servicer and the Securitization Trustee) are incentivized NOT to modify loans, but to foreclose.  To add insult to injury, these rip-offs collect homeowners’ last money, collect the money from the government for MERELY making an ILLUSORY promise of a modification, and collect their own “insurance” (CDSs) on the loans designed to fail (“Subprime”/”Alt-A”).

As the complaint rightly points out, CDSs are line fire insurance on a neighbor’s house: the incentive for arson is too great.

Most of the claim are CA-specific because, apparently, in that state foreclosers need not re-notice a sale once it’s been postponed for pretend-loan-mod efforts, and can sell the property without further notice, notwithstanding apparent loan mod “review.”

This again goes to show: don’t rely on any loan mod promises; instead — modify, but also nullify.

linda green robo signer notary fraud complaint

If Linda Green or any of the other docx companies signed any of your assignments or substitution of trustee this might be your complaint:

mccandlessrobosignercomplaintlindagreenrobo signer

Timothy L. McCandless, Esq. SBN 147715

LAW OFFICES OF TIMOTHY L. MCCANDLESS

1881 Business Center Drive, Ste. 9A

San Bernardino, CA 92392

Tel:  909/890-9192

Fax: 909/382-9956

Attorney for Plaintiffs

 

SUPERIOR COURT OF THE STATE OF CALIFORNIA

 

COUNTY OF ____________

___________________________________,

And ROES 1 through 5,000,

Plaintiff,

v.

SAND CANYON CORPORATION f/k/a OPTION ONE MORTGAGE CORPORATION; AMERICAN HOME MORTGAGE SERVICES, INC.; WELLS FARGO BANK, N.A., as Trustee for SOUNDVIEW HOME LOAN TRUST 2007-OPT2; DOCX, LLC; and PREMIER TRUST DEED SERVICES and all persons unknown claiming any legal or  equitable right, title, estate, lien, or interest  in the property described in the complaint adverse to Plaintiff’s title, or any cloud on Plaintiff’s  title thereto, Does 1 through 10, Inclusive,

Defendants.

 CASE NO:

FIRST AMENDED COMPLAINT

FOR QUIET TITLE, DECLARATORY RELIEF, TEMPORARY RESTRAINING ORDER, PRELIMINARY INJUNTION AND PERMANENT INJUNCTION, CANCELATION OF INSTRUMENT AND FOR DAMAGES ARISING FROM:

SLANDER OF TITLE; TORTUOUS

VIOLATION OF STATUTE [Penal

Code § 470(b) – (d); NOTARY FRAUD;

///

///

///

///

Plaintiffs ___________________________ allege herein as follows:

GENERAL ALLEGATIONS

            1.         Plaintiffs ___________ (hereinafter individually and collectively referred to as “___________”), were and at all times herein mentioned are,  residents of the County of _________, State of California and the lawful owner of a parcel of real property commonly known as: _________________, California _______ and the legal description is:

Parcel No. 1:

A.P.N. No. _________ (hereinafter “Subject Property”).

2.         At all times herein mentioned, SAND CANYON CORPORATION f/k/a OPTION ONE MORTGAGE CORPORATION (hereinafter SAND CANYON”), is and was, a corporation existing by virtue of the laws of the State of California and claims an interest adverse to the right, title and interests of Plaintiff in the Subject Property.

3.         At all times herein mentioned, Defendant AMERICAN HOME MORTGAGE SERVICES, INC. (hereinafter “AMERICAN”), is and was, a corporation existing by virtue of the laws of the State of Delaware, and at all times herein mentioned was conducting ongoing business in the State of California.

4.         At all times herein mentioned, Defendant WELLS FARGO BANK, N.A., as Trustee for SOUNDVIEW HOME LOAN TRUST 2007-OPT2 (hereinafter referred to as “WELLS FARGO”), is and was, a member of the National Banking Association and makes an adverse claim to the Plaintiff MADRIDS’ right, title and interest in the Subject Property.

5.         At all times herein mentioned, Defendant DOCX, L.L.C. (hereinafter “DOCX”), is and was, a limited liability company existing by virtue of the laws of the State of Georgia, and a subsidiary of Lender Processing Services, Inc., a Delaware corporation.

6.         At all times herein mentioned, __________________, was a company existing by virtue of its relationship as a subsidiary of __________________.

7.         Plaintiffs are ignorant of the true names and capacities of Defendants sued herein as DOES I through 10, inclusive, and therefore sues these Defendants by such fictitious names and all persons unknown claiming any legal or equitable right, title, estate, lien, or interest in the property described in the complaint adverse to Plaintiffs’ title, or any cloud on Plaintiffs’ title thereto. Plaintiffs will amend this complaint as required to allege said Doe Defendants’ true names and capacities when such have been fully ascertained. Plaintiffs further allege that Plaintiffs designated as ROES 1 through 5,000, are Plaintiffs who share a commonality with the same Defendants, and as the Plaintiffs listed herein.

8.         Plaintiffs are informed and believe and thereon allege that at all times herein mentioned, Defendants, and each of them, were the agent and employee of each of the remaining Defendants.

9.         Plaintiffs allege that each and every defendants, and each of them, allege herein ratified the conduct of each and every other Defendant.

10.       Plaintiffs allege that at all times said Defendants, and each of them, were acting within the purpose and scope of such agency and employment.

11.       Plaintiffs are informed and believe and thereupon allege that circa July 2004, DOCX was formed with the specific intent of manufacturing fraudulent documents in order create the false impression that various entities obtained valid, recordable interests in real

properties, when in fact they actually maintained no lawful interest in said properties.

12.       Plaintiffs are informed and believe and thereupon allege that as a regular and ongoing part of the business of Defendant DOCX was to have persons sitting around a table signing names as quickly as possible, so that each person executing documents would sign approximately 2,500 documents per day. Although the persons signing the documents claimed to be a vice president of a particular bank of that document, in fact, the party signing the name was not the person named on the document, as such the signature was a forgery, that the name of the person claiming to be a vice president of a particular financial institution was not a “vice president”, did not have any prior training in finance, never worked for the company they allegedly purported to be a vice president of, and were alleged to be a vice president simultaneously with as many as twenty different banks and/or lending institutions.

13.       Plaintiffs are informed and believe and thereupon allege that the actual signatories of the instruments set forth in Paragraph 12 herein, were intended to and were fraudulently notarized by a variety of notaries in the offices of DOCX in Alpharetta, GA.

14.       Plaintiffs are informed and believe and thereupon allege that for all purposes the intent of Defendant DOCX was to intentionally create fraudulent documents, with forged signatures, so that said documents could be recorded in the Offices of County Recorders through the United States of America, knowing that such documents would forgeries, contained false information, and that the recordation of such documents would affect an interest in real property in violation of law.

15.       Plaintiffs allege that on or about, ____________, that they conveyed a first deed of  trust (hereinafter “DEED”) in favor of Option One Mortgage, Inc. with an interest of

approximately $_________________.

16.       Plaintiffs are informed and believe and thereupon allege that Option One Mortgage sold interest in the aforementioned DEED to unknown parties as a derivative security, who then repeatedly resold their respective interests, if any, in said DEED on at least six different occasions.

17.       Plaintiffs allege that pursuant to California Civil Code section 2932.5, an assignee may effectuate the power of sale provided the assignment is properly acknowledged and recorded. Plaintiffs further allege that due to acts and/or omissions of Defendants, and each of them, that none of the named Defendants herein are holders in due course and do not maintain an interest in the Subject Property, including but, not limited to: there are no lawful records connecting Defendants to this property other that Sand Canyon Corporation f/k/a Option One Mortgage Corporation, and the interest of Sand Canyon Corporation f/k/a Option One Mortgage Corporation was long ago sold-off to unrelated third parties for which there is no proper “paper trail” to establish the true holder in due course. Plaintiffs allege that as will be seen hereinafter that Defendants, and each of them, resorted to forged instruments in an attempt to create the appearance that Defendant Wells Fargo Bank, N.A. as Trustee of the Soundview Home Loan Trust 2007-OPT2.

18.       Plaintiffs allege that due to certain acts and/or omissions once the DEED was “assigned” to various parties the DEED was detrimentally affected in a number ways, including but, not limited to: that the power of sale inherent in the DEED was severed, because the subsequent parties were no longer holders in due course as a matter of law.

19.       On April 3, 2011, on the national program “60 Minutes”, two former employees of DOCX made admissions which entirely support the allegations set forth in Paragraphs 12 and 13, herein. During said program, former employee, Chris Pendley [sic] stated that he personally drafted the name of “Linda Green” on thousands and thousands of assignments, although he was not Linda Green, that he was signing in excess of 2,500 documents per day, and that he was paid the sum of ten ($10.00) per hour to forge the name of “Linda Green” and that he made no inspection of any documents to determine whether the execution of the assignment was lawful, had no training to make an inspection of documents to determine if the assignment was lawful, and was told by his superiors that his execution of the name Linda Green was lawful.

20.       On April 3, 2011, Linda Green, a former employee of DOCX, appeared on the aforementioned “60 Minutes” program and stated that she worked in the mailroom of DOCX and

eventually signed some documents, that although she was listed as a vice president of several

companies, that she had no connection with those companies, and that she was aware that her signature was being used by several other persons on assignments because her name was short and easy to spell.

21.       Plaintiffs are informed and believe and thereupon allege that Linda Green, acting in her capacity as an employee of DOCX allowed her name to forged upon literally thousands of purported assignments, although Linda Green never executed those assignments, never inspected those assignments, and that DOCX simply listed that Linda Green was a vice president at various

Banks and lending institutions, however, Linda Green was not lawfully a vice president, and the assertion that Linda Green was a vice president was an artifice. Plaintiffs further allege that Linda Green’s name fraudulent appeared on documents for the following institutions: 11-11-2004 & 06-22-2006 Vice President, Loan Documentation, Wells Fargo Bank, N.A., successor by merger to Wells Fargo Home Mortgage, Inc.; 08-11-2008 & 08-14-2008 Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American Home Mortgage Acceptance, Inc.; 08-27-2008 Vice President, American Home Mortgage Servicing as successor-in-interest to Option One Mortgage Corporation; 09-19-2008 Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American Brokers Conduit; 09-30-2008;

Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American Home

Mortgage Acceptance, Inc.; 09-30-2008 Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American Brokers Conduit; 10-08-2009 Vice President & Asst. Secretary, American Home Mortgage Servicing, Inc., as servicer for Ameriquest Mortgage Corporation; 10-16-2008 Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American Home Mortgage Acceptance, Inc.; 10-17-2008, 11-20-2008

Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American

Brokers Conduit; 11-20-2008 Vice President, Option One Mortgage Corporation; 12-08-2008

Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American Brokers Conduit; 12-15-2008 Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for HLB Mortgage; 12-24-2008 Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American Home Mortgage Acceptance, Inc.; 12-26-2008 Vice President, American Home Mortgage Servicing, Inc.; 01-13-2009 Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for Family Lending Services, Inc.; 01-15-2009

Vice President, Mortgage Electronic Registration Systems, Inc., acting solely as nominee for

American Home Mortgage Acceptance, Inc.; 02-03-2009 Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American Brokers Conduit; 02-05-2009 Vice President, Mortgage Electronic Registration Systems, Inc., acting solely as nominee for

American Home Mortgage Acceptance, Inc.; 02-24-2009 Vice President, American Home Mortgage Servicing, Inc. as successor-in-interest to Option One Mortgage Corporation;

02-25-2009 Vice President, Bank of America, N.A.; 02-27-2009 Vice President, American Home Mortgage Servicing, Inc., as successor-in-interest to Option One Mortgage Corporation;

03-02-2009 Vice President, Mortgage Electronic Registration Systems, Inc., acting solely as nominee for American Home Mortgage; 03-04-2009 Vice President, Argent Mortgage Company, LLC by Citi Residential Lending Inc., attorney-in-fact; 03-06-2009 & 03-20-2009 Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American Home

Mortgage Acceptance, Inc.; 04-15-2009, 04-17-2009, 04-20-2009 Vice President, Bank of America, N.A.; 05-11-2009, 07-06-2009 Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American Home Mortgage Acceptance, Inc.; 07-14-2009 Vice

President, Bank of America, N.A.; 07-15-2009 Vice President & Asst. Secretary, American

Home Mortgage Servicing, Inc., as servicer for Deutsche Bank National Trust Company, as trustee for, Ameriquest Mortgage Securities, Inc. asset-backed pass through certificates, series 2004-R7, under the pooling and servicing agreement dated July 1, 2004; 07-30-2009 Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American Home

Mortgage Acceptance, Inc.; 08-12-2009 Vice President, Sand Canyon Corporation f/k/a Option One Mortgage Corporation; 08-28-2009 Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American Home Mortgage Acceptance, Inc.; 09-03-2009

Asst. Vice President, Sand Canyon Corporation formerly known as Option One Mortgage

Corporation; 09-03-2009 Asst. Secretary, Mortgage Electronic Registration Systems, Inc., acting solely as nominee for American Home Mortgage; 09-04-2009 Asst. Secretary, Mortgage Electronic Registration Systems, Inc., acting solely as nominee for American Home Mortgage;

09-08-2009 Vice President, Bank of America, N.A.; 09-21-2009 & 09-22-2009 Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American Home Mortgage Acceptance, Inc. Plaintiffs further allege that Linda Green was never lawfully the vice president of any entity, more particularly the foregoing listed entities.

22.       Plaintiffs are informed and believe and thereupon allege that Defendant DOCX was a continuing criminal enterprise whose sole function was to create and forge fraudulent assignments which would purport to convey interests in real property and the entities listed in Paragraph 21 hereinabove, were complicate in Defendants’ fraud.

23.       Plaintiffs are informed and believe from beginning circa 2007 and continuing until sometime in 2010, DOCX produced thousands upon thousands of false and fraudulent assignments which were recorded in the Offices of the County Recorders of the State of

California, and several other States in the United States of America as well.

24.       Plaintiffs are informed and believe and thereupon allege that during the “60 Minutes” program on April 3, 2011, another former DOCX employee, Savonna Krite [sic] acted as a notary public and notarized that the signatures of Linda Green and others, were valid, however, she admitted that the notarizations were not that of Linda Green. Savonna Krite [sic] further admitted that she was told by officers of DOCX that it was “alright” for her to notarize signatures as being valid. Savonna Krite [sic] also admitted as of the program that she now understands that her notarizations of said assignments were “not alright.”

25.       Plaintiffs are informed and believe and thereupon allege that because the entire company structure of DOCX was to manufacture forged assignments by the thousands per day, without any consideration whatsoever that the information contained on those assignments was valid, and that the notarizations were in fact fraudulent, that no reasonable expectation can be made that any of the assignments executed by DOCX employees were or are valid.

26.       Plaintiffs are informed and believe and thereupon allege that circa _______,

Defendants, and each of them, utilized the services of DOCX in order to manufacture a fraudulent assignment from Defendant AMERICAN to WELLS FARGO, because WELLS FARGO could not find documents which would demonstrate that it owned an interest in the Plaintiffs’ subject property.

27.       Plaintiffs are informed and believe and thereupon allege that WELLS FARGO never had a lawful interest in the Plaintiffs’ subject property, either in its own capacity or as that as Trustee for the SOUNDVIEW HOME LOAN TRUST 2007-OPT2.

28.       Plaintiffs allege that they fully tendered all mortgage payments which were

lawfully due under the DEED, and that they are not in default of their payments, having lawfully

tendered all amounts due and owing.

29.       Plaintiffs allege that WELLS FARGO made demands for payment as against the DEED, however, Plaintiffs allege that WELLS FARGO was not a lawful holder in due course, that SOUNDVIEW HOME LOAN TRUST 2007-OPT2 was not a lawful holder in due course, and that neither party had any lawful right, title and interest in the DEED.

30.       Plaintiffs are informed and believe and thereupon allege that on or about, _______________, Defendant DOCX at the request of Defendants, and each of them, forged an instrument (hereinafter “FORGED ASSIGNMENT”) with the name “Linda Green” which was notarized by

“Ellis Simmons.”

31.       Plaintiffs are informed and believe and thereupon allege that on or about, _______________, an unknown employee of DOCX, in the course and scope of their employment, signed the name “Linda Green” and that such document had a notary stamp placed upon the FORGED ASSIGNMENT which purported to be lawfully notarized by “Ellis Simmons.”

32.       Plaintiffs are informed and believe and thereupon allege that the FORGED

ASSIGNMENT was then sent by DOCX through the United States Postal Service or transmitted by facsimile over the telephone and telegraph wires of the United States of America to Defendants, and each of them, in order that such FORGED ASSIGNMENT would be recorded in the Office of the County Recorder of the County of _______________.

32.       Plaintiffs are informed and believe and thereupon allege that on or about _______________, that Defendants, and each of them, their employees and/or agents, caused the FORGED ASSIGNMENT which unlawfully affected Plaintiffs’ subject property to be recorded in the Office of the Country Recorder of the County of _______________ as Instrument No. _______________. A true and correct copy of the assignment set forth in Paragraphs 30 – 31, is attached hereto as Exhibit “A”, and is incorporated by this reference.

33.       Plaintiffs are informed and believe and thereupon allege that the sole claim of Defendants, and each of them, as to their right, title and/or interest in the Plaintiffs’ Subject Property is the  FORGED ASSIGNMENT.

34.       Plaintiffs allege that the FORGED ASSIGNMENT as a matter of law is void and that it did not constitute a conveyance of an interest to Defendants, or to anyone at all, and that the FORGED ASSIGNMENT is a legal nullity.

35.       Plaintiffs allege that Defendants, and each of them, are presently relying upon the FORGED ASSIGNMENT and are knowingly and intentionally prosecuting a non-judicial foreclosure based solely upon the recordation of the FORGED ASSIGNMENT, necessitating the instant action.

FIRST CLAIM FOR RELIEF

(Slander of Title As Against All Defendants)

            36.       Plaintiffs incorporate Paragraphs 1 through 35 of the General Allegations as though such have been fully set forth herein.

37.       Plaintiffs allege that on or about, _______________, Defendants, and each of them, in some measure actively, directly, indirectly, openly and secretly contributed to the preparation of the FORGED ASSIGNMENT and the recordation of said Instrument in the Official Records of the Office of the County Recorder of _______________ County.

38.       Plaintiffs allege that the recordation of the FORGED ASSIGNMENT, by Defendants and each of them, rendered Plaintiffs’ title to the Subject Property as unmarketable.

39.       Plaintiffs allege that Defendants, and each of them, recorded the FORGED

ASSIGNMENT without privilege, knowledge and/or consent of Plaintiffs, the information contained in said FORGED ASSIGNMENT is false in that no lawful conveyance ever existed between the parties thereto, and said FORGED ASSIGNMENT when recorded published the information therein which disparaged Plaintiffs’ title as would lead a reasonable man to falsely assume that Defendants, and each of them, in some measure actually maintained some right, title and interest in Plaintiffs’ Subject Property, whereas, some of the information contained in the FORGED ASSIGNMENT is false. A true and correct copy of the FORGED ASSIGNMENT  is attached hereto as Exhibit “A”, and is incorporated by this reference.

40.       Plaintiffs allege that they actually and proximately suffered damages due to the planning, preparation and recordation of the FORGED ASSIGNMENT in an amount the totality of which has not been fully ascertained, but in no event less than the jurisdictional limitations of this court.

41.       Plaintiffs allege that the slander of the Subject Properties title was intentional,

fraudulent, malicious, oppressive and burdensome and deserving the imposition of punitive

damages in an amount sufficient that such conduct will not be repeated.

SECOND CAUSE OF ACTION

(Tortuous Violation of Statute Penal Code §§ 470(b), 470(d)

As Against Sand Canyon Corporation f/k/a Option One Mortgage Corporation;

American Home Mortgage Services, Inc.; Wells Fargo Bank, N.A., as Trustee

for Soundview Home Loan Trust 2007-OPT2; DOCX, LLC)

42.       Plaintiffs re-allege and incorporate Paragraphs 1 through 35 of the General Allegations and Paragraphs 36 through 41 of the First Cause of Action as though such have been fully set forth herein.

43.       Plaintiffs are informed and believe and thereupon allege that circa July 2004, Defendants, and each of them, contrived a scheme to replace missing documents which purported to assert interests in real properties through-out the United States of America.

44.       Plaintiffs are informed and believe and thereupon allege that by August 2008, Defendants, and each of them, had in some measure participated in the request for production of forged instruments from DOCX, as well as other document forgery mills, the purpose of which was to effect title to real properties through-out the United States of America.

45.       Plaintiffs are informed and believe and thereupon allege that on or about, August 8, 2008, the agents and/or employees of Defendants and each of them, knowingly and intentionally with the intent to defraud Plaintiffs’ interest in the Subject Property, prepared the FORGED ASSIGNMENT and caused said FORGED ASSIGNMENT to be recorded in the Official Records of the Office of the Recorder of the County of _______________ as Instrument No. _______________. A true and correct copy of the FORGED ASSIGNMENT, is attached hereto as Exhibit “A”, and is incorporated by this reference.

46.       Plaintiffs allege that Defendants, and each of them, tortuously forged the

signature of Linda Green, on the FORGED ASSIGNMENT, with the intent to defraud Plaintiffs, and such forgery directly affected Plaintiffs’ interest in the Subject Property in tortuous violation of California Penal Code sections 470(b) and 470(d).

47.       Plaintiffs allege that they actually and proximately suffered damages due to the planning, preparation and recordation of the FORGED ASSIGNMENT in an amount the totality of which has not been fully ascertained, but in no event less than the jurisdictional limitations of this court.

48.       Plaintiffs allege that the tortuous violation of Penal Code sections 470(b) and 470(d), by and through the preparation of the FORGED ASSIGNMENT, and subsequent recordation thereof was in willful disregard for Plaintiffs’ right, title and interest in the Subject Property,  intentional, fraudulent, malicious, oppressive and burdensome and deserving the imposition of punitive damages in an amount sufficient that such conduct will not be repeated.

THIRD CAUSE OF ACTION

(Notary Fraud  As Against DOCX, LLC and Defendants 1 through 10, Inclusive)

49.       Plaintiffs re-allege and incorporate Paragraphs 1 through 35 of the General Allegations, Paragraphs 35 through 41 and Paragraphs 42 through 48 of  the First and Second Causes of Action as though such have been fully set forth herein.

50.       Plaintiffs are informed and believe and thereupon allege that circa July 2004, Defendants, and each of them, contrived a scheme to replace missing documents which purported to assert interests in real properties through-out the United States of America.

51.       Plaintiffs are informed and believe and thereupon allege that by August 2008, Defendants, and each of them, had in some measure participated in the request for production of forged instruments from DOCX, as well as other document forgery mills, the purpose of which

was to effect title to real properties through-out the United States of America.

52.       Plaintiffs are informed and believe and thereupon allege that on or about, _____________, the agents and/or employees of Defendants and each of them, knowingly and

intentionally with the intent to defraud Plaintiffs’ interest in the Subject Property, prepared the FORGED ASSIGNMENT and caused said FORGED ASSIGNMENT to be recorded in the Official Records of the Office of the Recorder of the County of _______________ as Instrument No. _______________. A true and correct copy of the FORGED ASSIGNMENT, is attached hereto as Exhibit “A”, and is incorporated by this reference.

53.       Plaintiffs are informed and believe and thereupon allege that the FORGED ASSIGNMENT contained knowingly false statements including, but not limited to: that Wells Fargo Bank, N.A., as Trustee for Soundview Home Loan Trust 2007-OPT2, that Linda Green was a vice president of American Home Mortgage Services, Inc., and that Ellis Simmons lawfully notarized the FORGED ASSIGNMENT.

54.       Plaintiffs allege that they actually and proximately suffered damages due to the planning, preparation and recordation of the FORGED ASSIGNMENT in an amount the totality of which has not been fully ascertained, but in no event less than the jurisdictional limitations of this court.

55.       Plaintiffs allege that Defendants, and each of them, committed notary fraud by and through the preparation and notarization of the FORGED ASSIGNMENT, and subsequent recordation thereof was in willful disregard for Plaintiffs’ right, title and interest in the Subject Property, intentional, fraudulent, malicious, oppressive and burdensome and deserving the imposition of punitive damages in an amount sufficient that such conduct will not be repeated.

FOURTH CAUSE OF ACTION

(Cancellation of Instrument As Against Wells Fargo Bank, N.A. as Trustee for

  Soundview Home Loan Trust 2007-OPT2 and Defendants 1 through 10, Inclusive)

56.       Plaintiffs re-allege and incorporate Paragraphs 1 through 35 of the General

Allegations, Paragraphs 35 through 41 and Paragraphs 42 through 48 and Paragraphs 49 through 55 of  the First, Second and Third Causes of Action as though such have been fully set forth herein.

57.       Plaintiffs allege that a FORGED ASSIGNMENT was recorded in the Official

Records of the Office of the County Recorder for the County of _______________ as Instrument No. _______________.

58.       Plaintiffs seek an Order of the above-entitled court cancelling Instrument No. _______________, in as much as said document contains false information and affects Plaintiffs’ right, title and interest in the Subject Property.

FIFTH CAUSE OF ACTION

(Quiet Title As Against All Defendants)

59.       Plaintiffs re-allege and incorporate Paragraphs 1 through 35 of the General Allegations, Paragraphs 35 through 41 and Paragraphs 42 through 48 and Paragraphs 49 through 55 of  the First, Second and Third Causes of Action as though such have been fully set forth herein.

60.       For all the facts alleged herein, Plaintiffs seek an Order quieting title as of

_______________.

SIXTH CAUSE OF ACTION

(Declaratory Relief As Against All Defendants)

61.       An actual controversy has arisen.

62.       The parties desire a judicial determine that they may ascertain their respective

right, title and interest in the Subject Property.

63.       A judicial determination is necessary that the parties may  right, title and interest in the Subject Property.

64.       Plaintiffs allege that as a regular and ongoing part of the business of Defendant

DOCX was to have persons sitting around a table signing names as quickly as possible, so that

each person executing documents would sign approximately 2,500 documents per day. Although the persons signing the documents claimed to be a vice president of a particular bank of that document, in fact, the party signing the name was not the person named on the document, as such the signature was a forgery, that the name of the person claiming to be a vice president of a particular financial institution was not a “vice president”, did not have any prior training in finance, never worked for the company they allegedly purported to be a vice president of, and were alleged to be a vice president simultaneously with as many as twenty different banks and/or lending institutions, that the actual signatories of the instruments set forth in Paragraph 12 herein, were intended to and were fraudulently notarized by a variety of notaries in the offices of DOCX in Alpharetta, Georgia,  that for all purposes the intent of Defendant DOCX was to intentionally create fraudulent documents, with forged signatures, so that said documents could be recorded in the Offices of County Recorders through the United States of America, knowing that such documents would forgeries, contained false information, and that the recordation of such documents would affect an interest in real property in violation of law, that on or about, May 7, 2007, that they conveyed a first deed of trust (hereinafter “DEED”) in favor of Option One Mortgage, Inc. with an interest of approximately $815,000, that Option One Mortgage sold interest in the aforementioned DEED to unknown parties as a derivative security, who then repeatedly resold their respective interests, if any, in said DEED on at least six different occasions, that pursuant to California Civil Code section 2932.5, an assignee may effectuate the power of sale provided the assignment is properly acknowledged and recorded. Plaintiffs further allege that due to acts and/or omissions of Defendants, and each of them, that none of the named Defendants herein are holders in due course and do not maintain an interest in the Subject Property, including but, not limited to: there are no lawful records connecting Defendants to this property other that Sand Canyon Corporation f/k/a Option One Mortgage Corporation, and the interest of Sand Canyon Corporation f/k/a Option One Mortgage Corporation was long ago sold-off to unrelated third parties for which there is no proper “paper trail” to establish the true holder in due course. Plaintiffs allege that as will be seen hereinafter that Defendants, and each of them, resorted to forged instruments in an attempt to create the appearance that Defendant Wells Fargo Bank, N.A. as Trustee of the Soundview Home Loan Trust 2007-OPT2, that due to certain acts and/or omissions once the DEED was “assigned” to various parties the DEED was detrimentally affected in a number ways, including but, not limited to: that the power of sale inherent in the DEED was severed, because the subsequent parties were no longer holders in due course as a matter of law,  that on April 3, 2011, on the national program “60 Minutes”, two former employees of DOCX made admissions which entirely support the allegations set forth in Paragraphs 12 and 13, herein. During said program, former employee, Chris Pendley [sic] stated that he personally drafted the name of “Linda Green” on thousands and thousands of assignments, although he was not Linda Green, that he was signing in excess of 2,500 documents per day, and that he was paid the sum of ten ($10.00) per hour to forge the name of “Linda Green” and that he made no inspection of any documents to determine whether the execution of the assignment was lawful, had no training to make an inspection of documents to determine if the assignment was lawful, and was told by his superiors that his execution of the name Linda Green was lawful, on April 3, 2011, Linda Green, a former employee of DOCX, appeared on the aforementioned “60 Minutes” program and stated that she worked in the mailroom of DOCX and eventually signed some documents, that although she was listed as a vice president of several companies, that she had no connection with those companies, and that she was aware that her signature was being used by several other persons on assignments because her name was short and easy to spell, that Linda Green, acting in her capacity as an employee of DOCX allowed her name to forged upon literally thousands of purported assignments, although Linda Green never executed those assignments, never inspected those assignments, and that DOCX simply listed that Linda Green was a vice president at various Banks and lending institutions, however, Linda Green was not lawfully a vice president, and the assertion that Linda Green was a vice president was an artifice. Plaintiffs further allege that Linda Green’s name fraudulent appeared on documents for the following institutions: 11-11-2004 & 06-22-2006 Vice President, Loan Documentation, Wells Fargo Bank, N.A., successor by merger to Wells Fargo Home Mortgage, Inc.; 08-11-2008 & 08-14-2008 Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American Home Mortgage Acceptance, Inc.; 08-27-2008 Vice President, American Home Mortgage Servicing as successor-in-interest to Option One Mortgage Corporation; 09-19-2008 Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American Brokers Conduit; 09-30-2008; Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American Home Mortgage Acceptance, Inc.; 09-30-2008 Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American Brokers Conduit; 10-08-2009 Vice President & Asst. Secretary, American Home Mortgage Servicing, Inc., as servicer for Ameriquest Mortgage Corporation; 10-16-2008 Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American Home Mortgage Acceptance, Inc.; 10-17-2008, 11-20-2008 Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American Brokers Conduit; 11-20-2008 Vice President, Option One Mortgage Corporation; 12-08-2008 Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American Brokers Conduit; 12-15-2008 Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for HLB Mortgage; 12-24-2008 Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American Home Mortgage Acceptance, Inc.; 12-26-2008 Vice President, American Home Mortgage Servicing, Inc.; 01-13-2009 Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for Family Lending Services, Inc.; 01-15-2009 Vice President, Mortgage Electronic Registration Systems, Inc., acting solely as nominee for American Home Mortgage Acceptance, Inc.; 02-03-2009 Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American Brokers Conduit; 02-05-2009 Vice President, Mortgage Electronic Registration Systems, Inc., acting solely as nominee for

American Home Mortgage Acceptance, Inc.; 02-24-2009 Vice President, American Home Mortgage Servicing, Inc. as successor-in-interest to Option One Mortgage Corporation;

02-25-2009 Vice President, Bank of America, N.A.; 02-27-2009 Vice President, American Home Mortgage Servicing, Inc., as successor-in-interest to Option One Mortgage Corporation;

03-02-2009 Vice President, Mortgage Electronic Registration Systems, Inc., acting solely as nominee for American Home Mortgage; 03-04-2009 Vice President, Argent Mortgage Company, LLC by Citi Residential Lending Inc., attorney-in-fact; 03-06-2009 & 03-20-2009 Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American Home

Mortgage Acceptance, Inc.; 04-15-2009, 04-17-2009, 04-20-2009 Vice President, Bank of America, N.A.; 05-11-2009, 07-06-2009 Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American Home Mortgage Acceptance, Inc.; 07-14-2009 Vice

President, Bank of America, N.A.; 07-15-2009 Vice President & Asst. Secretary, American

Home Mortgage Servicing, Inc., as servicer for Deutsche Bank National Trust Company, as trustee for, Ameriquest Mortgage Securities, Inc. asset-backed pass through certificates, series 2004-R7, under the pooling and servicing agreement dated July 1, 2004; 07-30-2009 Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American Home

Mortgage Acceptance, Inc.; 08-12-2009 Vice President, Sand Canyon Corporation f/k/a Option One Mortgage Corporation; 08-28-2009 Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American Home Mortgage Acceptance, Inc.; 09-03-2009

Asst. Vice President, Sand Canyon Corporation formerly known as Option One Mortgage

Corporation; 09-03-2009 Asst. Secretary, Mortgage Electronic Registration Systems, Inc., acting solely as nominee for American Home Mortgage; 09-04-2009 Asst. Secretary, Mortgage Electronic Registration Systems, Inc., acting solely as nominee for American Home Mortgage;

09-08-2009 Vice President, Bank of America, N.A.; 09-21-2009 & 09-22-2009 Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American Home Mortgage Acceptance, Inc. Plaintiffs further allege that Linda Green was never lawfully the vice president of any entity, more particularly the foregoing listed entities, that Defendant DOCX was a continuing criminal enterprise whose sole function was to create and forge fraudulent assignments which would purport to convey interests in real property and the entities listed in Paragraph 21 hereinabove, were complicate in Defendants’ fraud, that beginning circa 2007 and continuing until sometime in 2010, DOCX produced thousands upon thousands of false and fraudulent assignments which were recorded in the Offices of the County Recorders of the State of California, and several other States in the United States of America as well, allege that during the “60 Minutes” program on April 3, 2011, another former DOCX employee, Savonna Krite [sic] acted as a notary public and notarized that the signatures of Linda Green and others, were valid, however, she admitted that the notarizations were not that of Linda Green. Savonna Krite [sic] further admitted that she was told by officers of DOCX that it was “alright” for her to notarize signatures as being valid. Savonna Krite [sic] also admitted as of the program that she now understands that her notarizations of said assignments were “not alright,” that because the entire company structure of DOCX was to manufacture forged assignments by the thousands per day, without any consideration whatsoever that the information contained on those assignments was valid, and that the notarizations were in fact fraudulent, that no reasonable expectation can be made that any of the assignments executed by DOCX employees were or are valid, that circa July 2008, Defendants, and each of them, utilized the services of DOCX in order to manufacture a fraudulent assignment from Defendant AMERICAN to WELLS FARGO, because WELLS FARGO could not find documents which would demonstrate that it owned an interest in the Plaintiffs’ subject property, that WELLS FARGO never had a lawful interest in the Plaintiffs’ subject property, either in its own capacity or as that as Trustee for the SOUNDVIEW HOME LOAN TRUST 2007-OPT2, that they fully tendered all mortgage payments which were

lawfully due under the DEED, and that they are not in default of their payments, having lawfully

tendered all amounts due and owing, that WELLS FARGO made demands for payment as against the DEED, however, Plaintiffs allege that WELLS FARGO was not a lawful holder in due course, that SOUNDVIEW HOME LOAN TRUST 2007-OPT2 was not a lawful holder in due course, and that neither party had any lawful right, title and interest in the DEED, that on or about, _______________, Defendant DOCX at the request of Defendants, and each of them, forged an instrument (hereinafter “FORGED ASSIGNMENT”) with the name “Linda Green” which was notarized by “Ellis Simmons,” that on or about, _______________, an unknown employee of DOCX, in the course and scope of their employment, signed the name “Linda Green” and that such document had a notary stamp placed upon the FORGED ASSIGNMENT which purported to be lawfully notarized by “Ellis Simmons,” that the FORGED ASSIGNMENT was then sent by DOCX through the United States Postal Service or transmitted by facsimile over the telephone and telegraph wires of the United States of America to Defendants, and each of them, in order that such FORGED ASSIGNMENT would be recorded in the Office of the County Recorder of the County of _______________, that on or about _______________, that Defendants, and each of them, their employees and/or agents, caused the FORGED ASSIGNMENT which unlawfully affected Plaintiffs’ subject property to be recorded in the Office of the Country Recorder of the County of _______________ as Instrument No. _______________. A true and correct copy of the assignment set forth in Paragraphs 30 – 31, is attached hereto as Exhibit “A”, and is incorporated by this reference, that the sole claim of Defendants, and each of them, as to their right, title and/or interest in the Plaintiffs’ Subject Property is the  FORGED ASSIGNMENT, that the FORGED ASSIGNMENT as a matter of law is void and that it did not constitute a conveyance of an interest to Defendants, or to anyone at all, and that the FORGED ASSIGNMENT is a legal nullity, that Defendants, and each of them, are presently relying upon the FORGED ASSIGNMENT and are knowingly and intentionally prosecuting a non-judicial foreclosure based solely upon the recordation of the FORGED ASSIGNMENT, necessitating the instant action, and as such, the Defendants set forth herein have no right, title and interest in the Subject Property, whereas, Defendants contend that all of their acts and/or omissions were lawful and that Wells Fargo Bank, N.A. as Trustee of the Soundview Home Loan Trust 2007-OPT2.

WHEREAS, Plaintiffs Manuel A Madrid and Virginia J. Madrid pray for Judgment as follows:

FOR THE FIRST AND THIRD CAUSES OF ACTION:

1.         For an Order, restraining Defendants, and their agents, employees, officers, attorneys, and representatives from engaging in or performing any of the following acts: (i) proceeding with the non-judicial foreclosure without an Order of this court, (ii) offering, or advertising this property for sale and (ii) attempting to transfer title to this property and or (iii) holding any auction therefore;

2.         For general damages subject to proof at time of trial;

3.         For special damages subject to proof at time of trial;

4.         For punitive damages subject to proof at time of trial;

5.         For costs of suit herein;

6.         For reasonable attorney’s fees provided by contract or statute; and

7.         For such other and further relief as the court may deem just and proper.

FOR THE SECOND CAUSE OF ACTION:

1.         For general damages according to proof at time of trial;

2.         For special damages according to proof at time of trial;

3.         For costs of suit incurred herein;

4.         For reasonable attorney’s fees provided by contract or statute; and

5.         For such other and further relief as the court may deem just and proper.

FOR THE FOURTH CAUSE OF ACTION:

1.         For an Order cancelling Instrument No. _______________, which was recorded on August in the

Office of the Country Recorder of the County of _______________;

2.         For costs of suit incurred herein;

3.         For reasonable attorney’s fees as provided by contract or statute; and

4.         For such other and further relief as the court may deem just and proper.

FOR THE FIFTH CAUSE OF ACTION:

1.         For an Order quieting title to the Subject Property from _______________;

2.         For costs of suit incurred herein;

3.         For reasonable attorney’s fees subject to proof at time of trial; and

4.         For such other and further relief as the court may deem just and proper.

FOR THE SIXTH CAUSE OF ACTION:

1.         For a declaration that Defendants do not have a right, title and interest in the Subject Property;

2.         For costs of suit incurred herein;

3.         For reasonable attorney’s fees subject to proof at time of trial; and

4.         For such other and further relief as the court may deem just and proper.

Dated:  _______, 2011                                                LAW OFFICES OF

                                                                                    TIMOTHY L. MCCANDLESS

 

 

 

                                                                                    __________________________________

                                                                                          Timothy L. McCandless, Esq.,

Attorney for Plaintiffs

VERIFICATION

I, Timothy L. McCandless am the attorney of record for Plaintiffs in the above-entitled action. The Plaintiffs are either absent from the County of Los Angeles where my office is located, or is otherwise unable to verify this complaint, or the facts are within the knowledge of the undersigned. For this reason, I am making this verification.

I have read the foregoing Complaint and know of its contents. I am informed and believe the matters therein to be true, and on that ground, allege that the matters stated in it are true.  I declare under penalty of perjury that the foregoing is true and correct and that this declaration was executed at San Bernardino, California

DATED: __________, 2011

         ____________________________

                         Timothy L. McCandless, Esq.

THE GREAT SECURITIZATION SCAM AND THE GREAT RECESSION

By Neil Garfield

 

            Both the class action lawyers and the AG offices are looking for settlements that will cure the “foreclosure” problem. This is based upon the perceived benefit of getting the foreclosures either litigated or settled, SO THE “MARKET” CAN RESUME “FORWARD” MOTION. But what if the basic transaction was so defective as to be incapable of understanding, much less enforcement?  We ignore the fact that the basic transaction was a lie, that lies are not enforceable and while they could be modified by agreement into enforceable written instruments (completely absent from the current landscape) the inescapable fact is that in order to do so, you will need the signature of borrowers on loans that are based upon fair market values, reality and set-off for the damages inflicted on the homeowners by the Great Securitization Scam.

 

            So we start with the myth that there was a valid legal contract at origination, an assumption that upon examination by a paralegal, much less a first-year law student, is patently untrue.  Thus we proceed with the following ten (10) lies that form the foundation of our impotent financial and economic policies in the Great Recession triggered by the housing crisis:

  1. 1.       VALID MORTGAGE TRANSACTION: There was a loan of money, but not by either the payee, the mortgagee, the trustee or anyone else that is mentioned in the closing papers or the foreclosure papers filed anywhere. That is why the pretenders would rather play with the word “holder” than “creditor.”
  1. 2.       LEGAL MORTGAGE TRANSACTION: Even if the right parties were at the table, the transaction was illegal because of appraisal fraud, underwriting fraud, Securities Fraud and Servicing Fraud.
  1. 3.       LEGAL LOAN: Even if the right parties were at two different tables, the transaction was illegal because of ratings fraud, securities fraud, common law fraud, predatory loan practices and servicing fraud.
  1. 4.       KNOWN CREDITOR: Neither the investor who was the source of funds, nor the investment banker who only committed SOME of those funds to loan transactions, nor the borrower (homeowner) even knew of the existence of each other. After the “reconstituted” bogus mortgage pools that never existed in the first place, payments by insurance, credit de fault swaps, and federal  bailouts, it is at the very least a question of fact to determine the identity of the creditor at any given point in time — i.e., to whom is an obligation owed and how many parties have liability to pay on that transaction either as borrower, guarantors, insurers, or anything else? The dart board approach currently used in foreclosures and mortgage modifications, prepayments and refinancing has generally been frowned upon by the Courts.
  1. 5.       KNOWN OBLIGATION AMOUNT: The amount advanced by the Lender (investor in bogus mortgage bonds) was far in excess of that amount used by intermediaries to fund mortgages — the rest was used to create synthetic derivative trading devices and charge fees every step of the way. Part of the difference between the funding of the residential loans and the amount advanced by the lender (investor) is easily computed by applying the same formula used to compute a yield spread premium that was paid to mortgage brokers under the table. By obscuring the real nature of the loans in the mix that offered (sold forward without ownership by the investment bank with the intent of acquiring he mortgages later) a 6% return promised to an investor could result in a yield spread premium of perhaps 12% if the loan was toxic waste and the nominal rate was 18%. Thus a $900,000 investment was converted into a $300,000 loan with no hope of repayment based upon a wildly inflated appraisal. Payments by servicers, counterparties, guarantors, insurers and bailout agencies were neither credited to the investor nor to the obligation owed to that investor. Since there was no obligor other than the homeowner according to the documents creating the securitization scam infrastructure, the borrower was part of a transaction where he “borrowed” $900,000 but only received $300,000. Third party payments made under expressly and carefully written waivers of subrogation were not applied to the amount owed to the investor and therefore not applied to the amount owed by the borrower. The absence of this information makes the servicer “accounting” a farce.
  1. VALID ACCOUNTING BY ALL PARTIES: Continuing with the facts illuminated in the preceding paragraph, both mortgage closing documents and foreclosure documents are devoid of any reference to the dozens of transactions carried out in the name of, or under agency of, or as constructive trustee of the investor who as lender is obliged to account for the balance due after third party payments.

How To Handle Bank of America Loan Modification Denials

April 30, 2011 by Filed under Loan modification advice Leave a comment One of the most tough financial institutions to deal with, it seems, when it comes to Loan Modification is Bank of America, here is the experience of successful mortgage owners when dealing with Bank of America: “For the last year I have been working with a good friend of mine in order to get her Bank of America first mortgage modified. And they finally approved the modification. Payments are going from around $1800 to $1300. To make a long story short, your income, how much you owe and other factors doesn’t determine whether you get a modification or not. Persistance is key with dealing with these people. Another thing key is putting pressure on the bank, through complaints, repeated phone calls and letters. You have to realize that Bank of America really doesn’t want to approve any modificiations, at least in California and most of the ones they do approve are completely inadequate. So it requires a lot in order to get them to approve an adequate one.” Here is Another advice: “You are going to have to play very hard ball with Bank of America. Be prepared for to call them at least twice a week for some months. The loan modification for my friend took a year. Never take no for an answer from B of A. Continue to pressure the bank and you will achieve victory. Start by calling the office of the CEO. The phone number is 704-386-5687 begin_of_the_skype_highlighting 704-386-5687 end_of_the_skype_highlighting. If that number is busy, you can call the numbers for Bank of America headquarters. The number is 704-386-5972 begin_of_the_skype_highlighting 704-386-5972 end_of_the_skype_highlighting. When you get the operator, you ask for the office of the CEO. When you get someone on the phone, explain that you need someone to help you modify the mortgage and nobody else was willing to work with you. You have been a customer with the bank for a long time and really want to work with them, but in all honesty, you are facing financial issues and you don’t want to be forced to file for bankruptcy. You also have to explain that you want to stay in your home but you need a heavy reduction in the payment, at least 50%. I know that they most likely aren’t going to give that to you, but you have to propose something. They will transfer you to a manager who should start the ball rolling. However, even with a manager helping you, it is best, at the same time to reach out to government officials and agencies so that they can apply pressure on Bank of America. You should start by reaching out to your senator and congressperson about this situation. Write them letters and request assistance. Also file a complaint on Bank of America with the OCC, Office of the Comptroller of the Currency which is the regulator of Bank of America. One tactic which I used while helping my friend is in addition to filling a complaint myself, I reached out to one of the aide’s to her congressman. I got that person to complain to the OCC about Bank of America and our situation. Drumming up external pressure on this bank is KEY. As I said before, they do not want to help you or any homeowner but if you generate enough pressure through complaints they will eventually act. But be prepared for a battle.” For those who are finding hard to get loan modification from Bank of America, try to implement these strategies, and best of luck.

Foreclosure Trustee duties and obligations

Because of the significant increase in defaults and foreclosures, mortgage servicers need to understand the duties and liabilities the law imposes upon foreclosure trustees.

Litigation based upon trustee error can slow, stop or invalidate foreclosures and impair the servicer’s ability to dispose of properties following foreclosure. When borrowers refinance or pay off during foreclosure, trustees are often responsible for the payoffs and reconveyances. After foreclosure, the trustee is responsible for distribution of surplus funds – the funds in excess of the debt due under the foreclosed deed of trust. All these responsibilities are sources of claims against trustees.

Foreclosure litigation plaintiffs often name and seek to hold lenders and servicers responsible for trustee errors on the theory that the trustee is the agent of the lender and servicer. According to Miller & Starr’s “California Real Estate,” this claim is particularly easy to make when the lender or servicer uses an in-house trustee and especially when the trustee acquires the property by credit bid for the lender or servicer at its own foreclosure sale. This article examines a trustee’s liability for damages under California law for conduct of the foreclosure sale, payoffs, reconveyances and distribution of surplus funds. The scope of a trustee’s duties differs for each of these services, and a breach of one of these duties can subject the trustee, lender and servicer to substantial compensatory damages, punitive damages and even criminal sanctions. Foreclosure sales In the I.E. Associates v. Safeco case, the California Supreme Court limited the scope of the trustee’s duties in conducting foreclosure sales. The issue in that case was whether a trustee breached its duty to a trustor by failing to ascertain the current address of the trustor where the current address was different from the address of record. The trustee did not have actual knowledge of the current address, but through reasonable diligence could have discovered it. The Supreme Court held that the trustee did not have a duty to find the current address. The court found that a foreclosure trustee is not a true trustee, such as a trustee of a person or a trustee under a trust agreement. Instead, a foreclosure trustee is merely “a middleman” between the beneficiary and the trustor who only carries out the specific duties that the deed of trust and foreclosure law specifically impose upon it.

The deed of trust and the statute are the exclusive source of the rights, duties and liabilities governing notice of nonjudicial foreclosure sales. Because neither the deed of trust nor the statute required the trustee to search for an address it did not have, the court held that the trustee had no duty to do so. The Stephens v. Hollis case reiterated the rule that a foreclosure trustee is not a true trustee: “Just as a panda is not an ordinary bear, a trustee of a deed of trust is not an ordinary trustee. ‘A trustee under a deed of trust has neither the powers nor the obligations of a strict trustee. He serves as a kind of common agent for the parties.’”

It is critical to recognize, however, that these rules of limited duty only apply to the trustee’s duty to provide proper notice of the sale. The trustee also has a broad common law duty to conduct a sale that is fair in all respects. In Hatch v. Collins, the court noted that “A trustee has a general duty to conduct the sale ‘fairly, openly, reasonably and with due diligence,’ exercising sound discretion to protect the rights of the mortgagor and others…A breach of the trustee’s duty to conduct an open, fair and honest sale may give rise to a cause of action for professional negligence, breach of an obligation created by statute, or fraud.” Examples of such a breach could be conspiring to “chill the bidding” by overstating the debt, thereby dissuading others from appearing and bidding at the sale. California Civil Code Section 2924h(g) states that it is “unlawful for any person, acting alone or in concert with others, (1) to offer to accept or accept from another any consideration of any type not to bid, or (2) to fix or restrain bidding in any manner at a sale of property conducted pursuant to a power of sale in a deed of trust or mortgage.” The code continues: “In addition to any other remedies, any person committing any act declared unlawful by this subdivision or any act which would operate as a fraud or deceit upon any beneficiary, trustor or junior [lien holder] shall, upon conviction, be fined not more than $10,000 or imprisoned in the county jail for not more than one year, or be punished by both that fine and imprisonment.” In addition to imposing criminal penalties, this section also imposes civil liability upon the trustee.

The courts will review foreclosure sale proceedings to make sure they have been fair in all respects. A trustee who violates its contractual duties under the deed of trust or its statutory or common law duties is liable to the trustor or to an affected junior lien holder for such person’s lost equity in the property. This is measured by the difference between the fair market value of the property and the liens senior to the affected person’s interest at the time of the sale. In addition, pursuant to Civil Code Section 3333, the trustee has liability for all other damages proximately caused by its wrongful conduct, whether those damages were foreseeable or not. A willful violation of these duties can subject the trustee to punitive damages under Civil Code Section 3294. Payoffs and reconveyances Civil Code Section 2943(c) requires a beneficiary or its representative, which is frequently the trustee, to provide a payoff statement to an “entitled person” within 21 days after a written request for a payoff demand. An “entitled person” means the trustor, a junior lien holder, their successors or assigns, or an escrow. Failure to provide a timely payoff demand makes the beneficiary or its representative liable to the entitled person for all actual damages such a person may sustain due to a failure to provide a timely payoff demand, plus $300 in statutory damages. Failure to provide an accurate payoff demand can have dire consequences. If the entitled person closes a sale or refinance in reliance upon a payoff demand that understates the payoff, the beneficiary must reconvey its lien. The beneficiary is then left with only an unsecured claim against the entitled person. A trustee who is responsible for such an error could have substantial liability to its beneficiary. After the note and deed of trust are paid off, Civil Code Section 2941 requires the beneficiary to deliver the original note, the deed of trust and a request for reconveyance to the trustee. Within 21 days thereafter, the trustee must record the reconveyance and deliver the original note to the trustor. If the reconveyance has not been recorded within 60 days after the payoff, upon the trustee’s written request, the beneficiary must substitute himself as trustee and record the reconveyance. If the reconveyance is not recorded within 75 days after payoff, any title company may prepare and record a release of the obligation. A person who violates any of these provisions is liable for $500 in statutory damages and all actual damages caused by the violation. These can include damages for emotional distress. A willful violation of these requirements is a misdemeanor which can subject the violator to a $400 fine, plus six months’ imprisonment in the county jail. Surplus funds Civil Code Sections 2924j and 2924k impose upon the trustee a duty to distribute surplus funds that the trustee receives at a sale to lien holders and trustors whose interests are junior to the foreclosed deed of trust. Surplus funds are defined as funds in excess of the debt due to the holder of the foreclosed lien and the costs of the foreclosure sale. As previously referenced in the I. E. Associates and Stephens cases, those courts held that with respect to the conduct of the foreclosure sale, a foreclosure trustee is not a true trustee – only a middleman. Further, in Hatch v. Collins, the court held that a breach of the trustee’s duties in the conduct of the sale does not constitute a breach of a fiduciary duty. While no case holds that a trustee is a fiduciary with respect to surplus funds, a trustee’s surplus funds duties closely resemble those of a fiduciary – a fiduciary is one who holds and manages property for the benefit of another. Fiduciaries are held to a higher standard of care than others in discharging their duties. If a trustee has a fiduciary duty in handling surplus funds, a trustee may have a duty to do more than simply follow the statute with respect to giving notice of and distributing the surplus funds. For instance, a trustee may have a duty to take reasonable steps to find an interested party whose address is unknown to the trustee if the trustee has reason to believe such an address can be found. This is particularly so because the trustee can pay for the expense of the investigation from the surplus funds. Also, a trustee as a fiduciary may face greater exposure to punitive damages, which can be awarded for breach of fiduciary duty when coupled with fraud, malice or oppression. Servicers Using In-House Foreclosure Trustees Must Beware in Mortgage Servicing > Foreclosure by John Clark Brown Jr. on Tuesday 19 June 2007 email the content item print the content item comments: 0 Servicing Management, June 2007. Because of the significant increase in defaults and foreclosures, mortgage servicers need to understand the duties and liabilities the law imposes upon foreclosure trustees. Litigation based upon trustee error can slow, stop or invalidate foreclosures and impair the servicer’s ability to dispose of properties following foreclosure. When borrowers refinance or pay off during foreclosure, trustees are often responsible for the payoffs and reconveyances. After foreclosure, the trustee is responsible for distribution of surplus funds – the funds in excess of the debt due under the foreclosed deed of trust. All these responsibilities are sources of claims against trustees. Foreclosure litigation plaintiffs often name and seek to hold lenders and servicers responsible for trustee errors on the theory that the trustee is the agent of the lender and servicer. According to Miller & Starr’s “California Real Estate,” this claim is particularly easy to make when the lender or servicer uses an in-house trustee and especially when the trustee acquires the property by credit bid for the lender or servicer at its own foreclosure sale. This article examines a trustee’s liability for damages under California law for conduct of the foreclosure sale, payoffs, reconveyances and distribution of surplus funds. The scope of a trustee’s duties differs for each of these services, and a breach of one of these duties can subject the trustee, lender and servicer to substantial compensatory damages, punitive damages and even criminal sanctions. Foreclosure sales In the I.E. Associates v. Safeco case, the California Supreme Court limited the scope of the trustee’s duties in conducting foreclosure sales. The issue in that case was whether a trustee breached its duty to a trustor by failing to ascertain the current address of the trustor where the current address was different from the address of record. The trustee did not have actual knowledge of the current address, but through reasonable diligence could have discovered it. The Supreme Court held that the trustee did not have a duty to find the current address. The court found that a foreclosure trustee is not a true trustee, such as a trustee of a person or a trustee under a trust agreement. Instead, a foreclosure trustee is merely “a middleman” between the beneficiary and the trustor who only carries out the specific duties that the deed of trust and foreclosure law specifically impose upon it. The deed of trust and the statute are the exclusive source of the rights, duties and liabilities governing notice of nonjudicial foreclosure sales. Because neither the deed of trust nor the statute required the trustee to search for an address it did not have, the court held that the trustee had no duty to do so. The Stephens v. Hollis case reiterated the rule that a foreclosure trustee is not a true trustee: “Just as a panda is not an ordinary bear, a trustee of a deed of trust is not an ordinary trustee. ‘A trustee under a deed of trust has neither the powers nor the obligations of a strict trustee. He serves as a kind of common agent for the parties.’” It is critical to recognize, however, that these rules of limited duty only apply to the trustee’s duty to provide proper notice of the sale. The trustee also has a broad common law duty to conduct a sale that is fair in all respects. In Hatch v. Collins, the court noted that “A trustee has a general duty to conduct the sale ‘fairly, openly, reasonably and with due diligence,’ exercising sound discretion to protect the rights of the mortgagor and others…A breach of the trustee’s duty to conduct an open, fair and honest sale may give rise to a cause of action for professional negligence, breach of an obligation created by statute, or fraud.” Examples of such a breach could be conspiring to “chill the bidding” by overstating the debt, thereby dissuading others from appearing and bidding at the sale. California Civil Code Section 2924h(g) states that it is “unlawful for any person, acting alone or in concert with others, (1) to offer to accept or accept from another any consideration of any type not to bid, or (2) to fix or restrain bidding in any manner at a sale of property conducted pursuant to a power of sale in a deed of trust or mortgage.” The code continues: “In addition to any other remedies, any person committing any act declared unlawful by this subdivision or any act which would operate as a fraud or deceit upon any beneficiary, trustor or junior [lien holder] shall, upon conviction, be fined not more than $10,000 or imprisoned in the county jail for not more than one year, or be punished by both that fine and imprisonment.” In addition to imposing criminal penalties, this section also imposes civil liability upon the trustee. The courts will review foreclosure sale proceedings to make sure they have been fair in all respects. A trustee who violates its contractual duties under the deed of trust or its statutory or common law duties is liable to the trustor or to an affected junior lien holder for such person’s lost equity in the property. This is measured by the difference between the fair market value of the property and the liens senior to the affected person’s interest at the time of the sale. In addition, pursuant to Civil Code Section 3333, the trustee has liability for all other damages proximately caused by its wrongful conduct, whether those damages were foreseeable or not. A willful violation of these duties can subject the trustee to punitive damages under Civil Code Section 3294. Payoffs and reconveyances Civil Code Section 2943(c) requires a beneficiary or its representative, which is frequently the trustee, to provide a payoff statement to an “entitled person” within 21 days after a written request for a payoff demand. An “entitled person” means the trustor, a junior lien holder, their successors or assigns, or an escrow. Failure to provide a timely payoff demand makes the beneficiary or its representative liable to the entitled person for all actual damages such a person may sustain due to a failure to provide a timely payoff demand, plus $300 in statutory damages. Failure to provide an accurate payoff demand can have dire consequences. If the entitled person closes a sale or refinance in reliance upon a payoff demand that understates the payoff, the beneficiary must reconvey its lien. The beneficiary is then left with only an unsecured claim against the entitled person. A trustee who is responsible for such an error could have substantial liability to its beneficiary. After the note and deed of trust are paid off, Civil Code Section 2941 requires the beneficiary to deliver the original note, the deed of trust and a request for reconveyance to the trustee. Within 21 days thereafter, the trustee must record the reconveyance and deliver the original note to the trustor. If the reconveyance has not been recorded within 60 days after the payoff, upon the trustee’s written request, the beneficiary must substitute himself as trustee and record the reconveyance. If the reconveyance is not recorded within 75 days after payoff, any title company may prepare and record a release of the obligation. A person who violates any of these provisions is liable for $500 in statutory damages and all actual damages caused by the violation. These can include damages for emotional distress. A willful violation of these requirements is a misdemeanor which can subject the violator to a $400 fine, plus six months’ imprisonment in the county jail. Surplus funds Civil Code Sections 2924j and 2924k impose upon the trustee a duty to distribute surplus funds that the trustee receives at a sale to lien holders and trustors whose interests are junior to the foreclosed deed of trust. Surplus funds are defined as funds in excess of the debt due to the holder of the foreclosed lien and the costs of the foreclosure sale. As previously referenced in the I. E. Associates and Stephens cases, those courts held that with respect to the conduct of the foreclosure sale, a foreclosure trustee is not a true trustee – only a middleman. Further, in Hatch v. Collins, the court held that a breach of the trustee’s duties in the conduct of the sale does not constitute a breach of a fiduciary duty. While no case holds that a trustee is a fiduciary with respect to surplus funds, a trustee’s surplus funds duties closely resemble those of a fiduciary – a fiduciary is one who holds and manages property for the benefit of another. Fiduciaries are held to a higher standard of care than others in discharging their duties. If a trustee has a fiduciary duty in handling surplus funds, a trustee may have a duty to do more than simply follow the statute with respect to giving notice of and distributing the surplus funds. For instance, a trustee may have a duty to take reasonable steps to find an interested party whose address is unknown to the trustee if the trustee has reason to believe such an address can be found. This is particularly so because the trustee can pay for the expense of the investigation from the surplus funds. Also, a trustee as a fiduciary may face greater exposure to punitive damages, which can be awarded for breach of fiduciary duty when coupled with fraud, malice or oppression.

Recording false documents ? and getting the house, the insurence, the tarp, the fdic guarentee, and whatever else the American taxpayer will give the pretender lender

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

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

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

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

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

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

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

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

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

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

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

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

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

Accordingly, at least for appeal purposes, be sure to argue that 2924 was never triggered since there was never any “breach of the obligation” and that Appellate Courts throughout California have routinely held that other laws do in fact apply in the non-judicial foreclosure process since the policies advanced by the statutory non-judicial foreclosure scheme are not frustrated by these other laws. The recent exposure and discovery of Robosigners and notary fraud has added another dimension to the “exclusive 2924 argument as seen in the 22/20 special aired April 3, 2011.

Scott Pelley reports how problems with mortgage documents are prompting lawsuits and could slow down the weak housing market

  • Play CBS Video Video The next housing shockAs more and more Americans face mortgage foreclosure, banks’ crucial ownership documents for the properties are often unclear and are sometimes even bogus, a condition that’s causing lawsuits and hampering an already weak housing market. Scott Pelley reports.
  • Video Extra: Eviction reprieveFlorida residents AJ and Brenda Boyd spent more than a year trying to renegotiate their mortgage and save their home. At the last moment, questions about who owns their mortgage saved them from eviction.
  • Video Extra: “Save the Dream” eventsBruce Marks, founder and CEO of the nonprofit Neighborhood Assistance Corporation of America talks to Scott Pelley about his “Save the Dream” events and how foreclosures are causing a crisis in America.
(CBS News)If there was a question about whether we’re headed for a second housing shock, that was settled last week with news that home prices have fallen a sixth consecutive month. Values are nearly back to levels of the Great Recession. One thing weighing on the economy is the huge number of foreclosed houses.Many are stuck on the market for a reason you wouldn’t expect: banks can’t find the ownership documents.Who really owns your mortgage?
Scott Pelley explains a bizarre aftershock of the U.S. financial collapse: An epidemic of forged and missing mortgage documents.It’s bizarre but, it turns out, Wall Street cut corners when it created those mortgage-backed investments that triggered the financial collapse. Now that banks want to evict people, they’re unwinding these exotic investments to find, that often, the legal documents behind the mortgages aren’t there. Caught in a jam of their own making, some companies appear to be resorting to forgery and phony paperwork to throw people – down on their luck – out of their homes.In the 1930s we had breadlines; venture out before dawn in America today and you’ll find mortgage lines. This past January in Los Angeles, 37,000 homeowners facing foreclosure showed up to an event to beg their bank for lower payments on their mortgage. Some people even slept on the sidewalk to get in line.So many in the country are desperate now that they have to meet in convention centers coast to coast.In February in Miami, 12,000 people showed up to a similar event. The line went down the block and doubled back twice.

Video: The next housing shock
Extra: Eviction reprieve
Extra: “Save the Dream” events

Dale DeFreitas lost her job and now fears her home is next. “It’s very emotional because I just think about it. I don’t wanna lose my home. I really don’t,” she told “60 Minutes” correspondent Scott Pelley.

“It’s your American dream,” he remarked.

“It was. And still is,” she replied.

These convention center events are put on by the non-profit Neighborhood Assistance Corporation of America, which helps people figure what they can afford, and then walks them across the hall to bank representatives to ask for lower payments. More than half will get their mortgages adjusted, but the rest discover that they just can’t keep their home.

For many that’s when the real surprise comes in: these same banks have fouled up all of their own paperwork to a historic degree.

“In my mind this is an absolute, intentional fraud,” Lynn Szymoniak, who is fighting foreclosure, told Pelley.

While trying to save her house, she discovered something we did not know: back when Wall Street was using algorithms and computers to engineer those disastrous mortgage-backed securities, it appears they didn’t want old fashioned paperwork slowing down the profits.

“This was back when it was a white hot fevered pitch to move as many of these as possible,” Pelley remarked.

“Exactly. When you could make a whole lotta money through securitization. And every other aspect of it could be done electronically, you know, key strokes. This was the only piece where somebody was supposed to actually go get documents, transfer the documents from one entity to the other. And it looks very much like they just eliminated that stuff all together,” Szymoniak said.

Szymoniak’s mortgage had been bundled with thousands of others into one of those Wall Street securities traded from investor to investor. When the bank took her to court, it first said it had lost her documents, including the critical assignment of mortgage which transfers ownership. But then, there was a courthouse surprise.

“They found all of your paperwork more than a year after they initially said that they had lost it?” Pelley asked.

“Yes,” she replied.

Asked if that seemed suspicious to her, Szymoniak said, “Yes, absolutely. What do you imagine? It fell behind the file cabinet? Where was all of this? ‘We had it, we own it, we lost it.’ And then more recently, everyone is coming in saying, ‘Hey we found it. Isn’t that wonderful?'”

But what the bank may not have known is that Szymoniak is a lawyer and fraud investigator with a specialty in forged documents. She has trained FBI agents.

She told Pelley she asked for copies of those documents.

Asked what she found, Szymoniak told Pelley, “When I looked at the assignment of my mortgage, and this is the assignment: it looked that even the date they put in, which was 10/17/08, was several months after they sued me for foreclosure. So, what they were saying to the court was, ‘We sued her in July of 2008 and we acquired this mortgage in October of 2008.’ It made absolutely no sense.”

Produced by Robert Anderson and Daniel Ruetenik

Now for the pleading

Timothy L. McCandless, Esq. SBN 147715

LAW OFFICES OF TIMOTHY L. MCCANDLESS

1881 Business Center Drive, Ste. 9A

San Bernardino, CA 92392

Tel:  909/890-9192

Fax: 909/382-9956

Attorney for Plaintiffs

 

SUPERIOR COURT OF THE STATE OF CALIFORNIA

 

COUNTY OF ____________

___________________________________,

And ROES 1 through 5,000,

Plaintiff,

v.

SAND CANYON CORPORATION f/k/a OPTION ONE MORTGAGE CORPORATION; AMERICAN HOME MORTGAGE SERVICES, INC.; WELLS FARGO BANK, N.A., as Trustee for SOUNDVIEW HOME LOAN TRUST 2007-OPT2; DOCX, LLC; and PREMIER TRUST DEED SERVICES and all persons unknown claiming any legal or  equitable right, title, estate, lien, or interest  in the property described in the complaint adverse to Plaintiff’s title, or any cloud on Plaintiff’s  title thereto, Does 1 through 10, Inclusive,

Defendants.CASE NO:

FIRST AMENDED COMPLAINT

FOR QUIET TITLE, DECLARATORY RELIEF, TEMPORARY RESTRAINING ORDER, PRELIMINARY INJUNTION AND PERMANENT INJUNCTION, CANCELATION OF INSTRUMENT AND FOR DAMAGES ARISING FROM:

SLANDER OF TITLE; TORTUOUS

VIOLATION OF STATUTE [Penal

Code § 470(b) – (d); NOTARY FRAUD;

///

///

///

///

Plaintiffs ___________________________ allege herein as follows:

GENERAL ALLEGATIONS

            1.         Plaintiffs ___________ (hereinafter individually and collectively referred to as “___________”), were and at all times herein mentioned are,  residents of the County of _________, State of California and the lawful owner of a parcel of real property commonly known as: _________________, California _______ and the legal description is:

Parcel No. 1:

A.P.N. No. _________ (hereinafter “Subject Property”).

2.         At all times herein mentioned, SAND CANYON CORPORATION f/k/a OPTION ONE MORTGAGE CORPORATION (hereinafter SAND CANYON”), is and was, a corporation existing by virtue of the laws of the State of California and claims an interest adverse to the right, title and interests of Plaintiff in the Subject Property.

3.         At all times herein mentioned, Defendant AMERICAN HOME MORTGAGE SERVICES, INC. (hereinafter “AMERICAN”), is and was, a corporation existing by virtue of the laws of the State of Delaware, and at all times herein mentioned was conducting ongoing business in the State of California.

4.         At all times herein mentioned, Defendant WELLS FARGO BANK, N.A., as Trustee for SOUNDVIEW HOME LOAN TRUST 2007-OPT2 (hereinafter referred to as “WELLS FARGO”), is and was, a member of the National Banking Association and makes an adverse claim to the Plaintiff MADRIDS’ right, title and interest in the Subject Property.

5.         At all times herein mentioned, Defendant DOCX, L.L.C. (hereinafter “DOCX”), is and was, a limited liability company existing by virtue of the laws of the State of Georgia, and a subsidiary of Lender Processing Services, Inc., a Delaware corporation.

6.         At all times herein mentioned, __________________, was a company existing by virtue of its relationship as a subsidiary of __________________.

7.         Plaintiffs are ignorant of the true names and capacities of Defendants sued herein as DOES I through 10, inclusive, and therefore sues these Defendants by such fictitious names and all persons unknown claiming any legal or equitable right, title, estate, lien, or interest in the property described in the complaint adverse to Plaintiffs’ title, or any cloud on Plaintiffs’ title thereto. Plaintiffs will amend this complaint as required to allege said Doe Defendants’ true names and capacities when such have been fully ascertained. Plaintiffs further allege that Plaintiffs designated as ROES 1 through 5,000, are Plaintiffs who share a commonality with the same Defendants, and as the Plaintiffs listed herein.

8.         Plaintiffs are informed and believe and thereon allege that at all times herein mentioned, Defendants, and each of them, were the agent and employee of each of the remaining Defendants.

9.         Plaintiffs allege that each and every defendants, and each of them, allege herein ratified the conduct of each and every other Defendant.

10.       Plaintiffs allege that at all times said Defendants, and each of them, were acting within the purpose and scope of such agency and employment.

11.       Plaintiffs are informed and believe and thereupon allege that circa July 2004, DOCX was formed with the specific intent of manufacturing fraudulent documents in order create the false impression that various entities obtained valid, recordable interests in real

properties, when in fact they actually maintained no lawful interest in said properties.

12.       Plaintiffs are informed and believe and thereupon allege that as a regular and ongoing part of the business of Defendant DOCX was to have persons sitting around a table signing names as quickly as possible, so that each person executing documents would sign approximately 2,500 documents per day. Although the persons signing the documents claimed to be a vice president of a particular bank of that document, in fact, the party signing the name was not the person named on the document, as such the signature was a forgery, that the name of the person claiming to be a vice president of a particular financial institution was not a “vice president”, did not have any prior training in finance, never worked for the company they allegedly purported to be a vice president of, and were alleged to be a vice president simultaneously with as many as twenty different banks and/or lending institutions.

13.       Plaintiffs are informed and believe and thereupon allege that the actual signatories of the instruments set forth in Paragraph 12 herein, were intended to and were fraudulently notarized by a variety of notaries in the offices of DOCX in Alpharetta, GA.

14.       Plaintiffs are informed and believe and thereupon allege that for all purposes the intent of Defendant DOCX was to intentionally create fraudulent documents, with forged signatures, so that said documents could be recorded in the Offices of County Recorders through the United States of America, knowing that such documents would forgeries, contained false information, and that the recordation of such documents would affect an interest in real property in violation of law.

15.       Plaintiffs allege that on or about, ____________, that they conveyed a first deed of  trust (hereinafter “DEED”) in favor of Option One Mortgage, Inc. with an interest of

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Foreclosure and too big to Fail – Bank Of America vs Wikileaks

TBR News February 20, 2011
Feb 20 2011
The Voice of the White House
Washinigton, D.C., February 20, 2011: “The most hated person today in Washington is Julian Assange, head of the WikiLeaks

An overall view of the Bank of America material now held by WikiLeaks reveals that starting in 2008, the Bank of America acquired Countrywide Mortgage, a very aggressive mortgage company that specialized in creating fraudulent loans to individuals that were unable to make continuing payments on their mortgages. Countrywide then sold these fraudulent mortgages to larger banking houses like Bank of America, JP Morgan Chase, Goldman Sachs and others. The results of this takeover of Countrywide? The Bank of America now has over 1.3 mortgage holders in foreclosure.

Bank of America was subsequently sued by California, Illinois and eight other states over its predatory lending policies. The bank was forced to produce a settlement of over $8.4 billion in loan relief plans for those victims holding Countrywide mortgages.

In June of 2010, Bank of America had to pay out $108 million because of a suit by the Federal Trade Commission (FTC) for “having extracted excessive fees” from their borrowers facing foreclosure. In August of 2010, Bank of America was forced to pay out $600 million to settle shareholder lawsuits which claimed that Bank of America’s Countrywide Mortgage had “concealed the riskiness” of its lending standards. In June of 2010, the State of Illinois once more had to sue the Bank of America for “racial discrimination” in its lending practices. The WikiLeaks documentation shows thousands of in-house emails circulating among top Bank of American personnel showing with shocking clarity that the bank was not only fully cognizant of the illegality of their actions but were, in fact, continuing these actions because of the assurance of protection by “senior American legislators and officials.”

Additional material in the WikiLeaks fundus concerns the brokerage house of Merrill Lynch which Bank of America acquired for $50 billion in January of 2009. The aforesaid “senior American legislators and officials: quicklyi loaned the Bank of America $20 billion in loans to facilitate this purchase. Subsequently, it was revealed that Merrill Lynch had lost over $16 billion at the end of 2008 but had paid out over $4 billion in bonuses to all the top Merrill Lynch personnel. In sum, the Merrill Lynch people, secure in the knowledge of a connived Federal bailout, took the funds for personal gain. The WikiLeaks documents clearly show all of this in detail, complete with boasting emails on the part of the recipients of the monies.

As another aspect of this enormous financial scandal furthered purely for gain, corporate and personal, the Bank of America has been the instigator of the so-called “robo-signing” scandal As a single example of this illegal conduct, in February of 2010, a Bank of American employee testified on deposition that they had personally signed over 8,000 official foreclosure documents without ever reading any of them. This is a clearcut violation of the law but there are so many such examples of this, not limited to the Bank of America alone, that there is not sufficient space to list them all. The WikiLeaks documents clearly show that these illegal actions were fully known to senior Bank of America officials and that extensive cover-ups were ordered from the very top levels of that bank.

WikiLeaks documentation shows clearly that the “senior American legislators and officials.” Who connived with the Bank of America include the leadership of the Federal Reserve, top Congressional leaders (mostly Republican) and even senior members of the White House staff, both in the Bush and Obama administrations.
With this pending dam collapse release to the public, it is no wonder that the government itself, the officials of the Bank of America and the U.S. Chamber of Commerce, the most powerful, arch-conservative business cabal would all join forces in an attempt to discredit or permanently silence Assange and his organization.

The front organization, HBGary Federal, a specialist in computer manipulations, was hired by the U.S. Chamber of Commerce and the Bank of America to attempt to plant false information with WikiLeaks, double-heading frantic government attempts to get Assange physically into their hands. When WiliLeaks struck back and, in turn, infiltrated the government and private sector’s attempts to infiltrate them, it was discovered that HBGary Federal was involved with Stuxtnet, a very sophisticated computer virus developed by Israeli and American experts and designed to infiltrate and destroy computer systems deemed “unacceptable” to Washington.

Bank of American officials have been warning Washington that if they crash, the damage to the American ecnomoy wouild be catastrophic because of their size and pervasiveness and this message has resonated very clearly in official circles, prompting frantic but clumsy attacks on Assange and his organization.”

Now they have to admit it they violated the law and will be liable for Billions

BofA, Wells, Citi see foreclosure probe fines

By Joe Rauch and Clare Baldwin
CHARLOTTE, N.C./NEW YORK | Fri Feb 25, 2011 9:20pm EST
CHARLOTTE, N.C./NEW YORK (Reuters) – Bank of America, Citigroup and Wells Fargo — three of the biggest banks in the United States — said they could face fines from a regulatory probe into the industry’s foreclosure practices.
The statements, made in regulatory filings on Friday, are the most direct admission yet from major banks that they could have to pay significant amounts of money to settle probes and lawsuits alleging that they improperly foreclosed on homes.
Bank of America Corp (BAC.N), the largest U.S. bank by assets, said the probe could lead to “material fines” and “significant” legal expenses in 2011.
Wells Fargo & Co (WFC.N), the largest U.S. mortgage lender, said it is likely to face fines or sanctions, such as a foreclosure moratorium or suspension, imposed by federal or state regulators. It said some government agency enforcement action was likely and could include civil money penalties.
Citigroup Inc (C.N) said it could pay fines or set up principal reduction programs.
The biggest U.S. mortgage lenders are being investigated by 50 state attorneys general and U.S. regulators for foreclosing on homes without having proper paperwork in place or without having properly reviewed paperwork before signing it.
The bad documentation threatens to slow down the foreclosure process and invalidate some repossessions.
Sources familiar with discussions among federal authorities have said they could seek as much as $20 billion in total from lenders to settle the foreclosure probe, which began last fall.
Analysts said the acknowledgment of potential foreclosure liabilities highlights the continuing struggles of the largest U.S. banks after the world financial crisis.
“Are they trying? Sure, but this is not an easy fix and these kinds of problems are going to hang around the banks for years,” said Matt McCormick, a portfolio manager with Cincinnati-based Bahl & Gaynor Investment Counsel.
McCormick said he has sold nearly all of his U.S. bank holdings because of concerns over foreclosures and other losses.
Beyond direct fines due to regulators, banks may also end up paying government-controlled mortgage giants Freddie Mac and Fannie Mae for the foreclosure delays.
Bank of America said it recorded $230 million in compensatory fees in the fourth quarter that it expects to owe the government mortgage companies.
The bank said its projected costs for settlements for all legal matters it is facing, including mortgage issues, could be $145 million to $1.5 billion beyond what it has already reserved.
Wells Fargo said that in the worst-case scenario, as of the end of 2010, it could have to pay $1.2 billion more than it has set aside to cover legal matters.
Citigroup said it could face up to about $4 billion more in losses from all sorts of lawsuits, including but not limited to those relating to mortgages and foreclosures.
Wells Fargo said in October that it plans to amend 55,000 foreclosure filings nationwide, amid signs that documentation for some foreclosures was incomplete or incorrect. Other banks made similar moves.
Other banks echoed the concern over foreclosures in a wave of annual report filings with the Securities and Exchange Commission on Friday.
Atlanta-based SunTrust said it expects regulators may issue a consent order, which will require the largest mortgage lenders to fix problems with their foreclosure processes, and potentially levy fines.
Wells Fargo shares closed 3.1 percent higher at $32.40 on the New York Stock Exchange. Bank of America shares closed 1.6 percent higher at $14.20 and Citi shares closed 0.2 percent higher at $4.70, also on the New York Stock Exchange.
(Reporting by Joe Rauch, Clare Baldwin and Maria Aspan; Editing by Gary Hill)

The FHA Short Refinance Option—Help For Non-FHA Borrowers

Starting September 7, 2010, the FHA offers help to qualifying non-FHA borrowers who are “underwater” on their home loans. The FHA Short Refinance option is open to those who are current on their existing mortgage—but the lender must agree to forgive at least 10% of the unpaid principal on the original note to bring the combined loan-to-value ratio to a maximum 115%. The new FHA-guaranteed loan must have a loan-to-value ratio of no more than 97.75%.

Non-FHA borrowers who meet these guidelines and additional credit qualifications (see below) are allowed to apply to refinance into new FHA-insured home loan. The program is not open-ended—the original FHA press release announcing the start date of the FHA Short Refinance option says the program is expected to help as many as four million homeowners through the end of 2012.

The FHA press release says the FHA Short Refinance program is voluntary and “requires the cooperation of all lien holders”. This program is not automatically open to any homeowner who is underwater on a conventional home loan; as stated previously, there is a requirement that the borrower be current on all mortgage payments. They must also qualify for the FHA Short Refinance program by having a credit score of 500 or better and meet other typical FHA loan
prerequisites.

FHA Short Refinancing is only for borrowers who are underwater on properties that are considered the borrower’s primary residence, and is intended only for those with non-FHA guaranteed home loans. A borrower said to be “underwater” on a conventional home loan is basically stuck with a property that isn’t worth as much as the amount owed on the note—usually because of declining property values.

Commercial Bailout property values down 3 Trillion

The financial disaster of continuing to bailout commercial real estate through the shadows of Federal Reserve jargon. Why you haven’t heard of this trillion dollar bailout.

The financial disaster of continuing to bailout commercial real estate through the shadows of Federal Reserve jargon. Why you haven’t heard of this trillion dollar bailout.

The media has done a fantastic job painting over the enormous sinkhole of a problem that is commercial real estate (CRE). U.S. banks hold over $3 trillion in commercial real estate loans on properties that were once valued at over $6 trillion. Today those values are down to roughly $3 to $3.5 trillion depending on what metric you believe. How is it possible for a market that has lost $2.5 to $3 trillion to become largely hidden in the dark from the mainstream media? We constantly hear about $3 billion deficits or other issues but is the trillion dollar figure just so enormous that they don’t even bother investigating? It is probably more likely that the Federal Reserve has concealed massive failures in CRE by allowing banks to play a game of extend and pretend that continues today. The shadowy problems of empty shopping centers, vacant car dealership lots, and misplaced strip malls is largely a taxpayer problem now. Banks made these irresponsible loans but had the Fed hand over taxpayer loot in exchange for worthless real estate.

empty strip mall

“Another empty strip mall”

CRE bringing down FDIC banks

commercial real estate mit

Source: MIT

CRE values are still hovering near their trough and are likely to move lower. The only reason these prices haven’t moved lower is because banks are more generous with the borrowers of CRE debt since these holders are grappling with multi-million dollar cuts in each deal. Banks would rather pretend a mall is valued at $100 million instead of marking it to a real value of $40 million or less. The fact that the Federal Reserve allows this to happen is financial chicanery. Can you pretend to the government that you really don’t make $100,000 a year so instead you will act as if you make $30,000 a year and act accordingly? This is what is happening here. Banks are essentially allowing these toxic loans to be laundered through the system in exchange for taxpayer dollars. The Fed is betting that the public doesn’t wake up to this scam.

CRE is a giant and pernicious problem. With residential real estate it hits directly home and many American families are considered home owners. This bubble has garnered most media attention as it should. Yet CRE debt is enormous, larger than every state budget deficit combined by many times! In fact, the losses on CRE loans is larger than the state budget issues. Of course the Fed wants the public to look away from the real culprit behind the decline of the American middle class. The scheme was to build junk and pawn off the loans to average Americans whether they wanted to accept the debt or not.

The cost of CRE problems

commercial loans

Banks have no faith in this recovery. Look at the above regarding commercial loans. Banks continue to claim that the reason for the taxpayer bailouts was to help the American public weather the economic storm and for banks to continue lending to average Americans. Instead, as you can see above, commercial loan lending has collapsed and banks have hoarded money and speculated on the stock market casino on the taxpayer dime. This money was used to shore up bad balance sheet problems and for gambling on the stock market to boost profits. In short it was one giant swindle perpetrated on the public.

And think about the supposed recovery we are experiencing. If we were truly growing and expanding don’t you think there would be healthy demand for loans as businesses expand their workforce? Wouldn’t it be logical to conclude that commercial loans would reflect the supposed increased demand from a booming American economy? Of course the only boom occurring is for the top 1 percent who are siphoning off the wealth from average Americans to spin their continuing speculation in the stock market. Many are starting to wake up from this collective sleepwalk where taxpayers were robbed in open daylight.

The problems are coming up

Source: ZeroHedge

What is even more problematic is many of the CRE loans are going bad in the next few years. Just like residential real estate is now experiencing a second collapse, CRE will have another move lower. Banks can only carry fantasy paper for so long. So far we have been paying for it through QE1, QE2, TARP, and other convoluted programs to launder money and devalue the U.S. dollar and decrease the quality of life of average Americans. The public did not sign up for this. The banks talk about shared responsibility and many are paying for it by losing their homes and going bankrupt. Millions are facing this economic “responsibility” on a daily basis. What penalty for the banks? Instead, they get bailouts and continue to pretend the junk loans they made on concrete disasters are worth inflated values only to shovel them off to taxpayers. How is it that there are no buyers for these supposedly highly priced items?

CRE debt exposes the worst aspect of the bubble. Pure profit motive by supposed sophisticated investors on both sides of the coin with no financial responsibility or ownership. This isn’t some poor family in a low-income neighborhood taking out a subprime loan. This is actually a supposed responsible bank and a supposed financially savvy investor. There is no justification for one penny of a bailout here. Yet the Federal Reserve continues with their hidden bailout where they support malls in Oklahoma to Chick-fil-A. Don’t expect to hear about this on your nightly news

Agard MERS a nominee is not an agent

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NEW YORK
—————————————————————–x
In re:
Case No. 810-77338-reg
FERREL L. AGARD,
Chapter 7
Debtor.
—————————————————————–x
MEMORANDUM DECISION
Before the Court is a motion (the “Motion”) seeking relief from the automatic stay
pursuant to 11 U.S.C. § 362(d)(1) and (2), to foreclose on a secured interest in the Debtor’s real
property located in Westbury, New York (the “Property”). The movant is Select Portfolio
Servicing, Inc. (“Select Portfolio” or “Movant”), as servicer for U.S. Bank National Association,
as Trustee for First Franklin Mortgage Loan Trust 2006-FF12, Mortgage Pass-Through
Certificates, Series 2006-FF12 (“U.S. Bank”). The Debtor filed limited opposition to the Motion
contesting the Movant’s standing to seek relief from stay. The Debtor argues that the only
interest U.S. Bank holds in the underlying mortgage was received by way of an assignment from
the Mortgage Electronic Registration System a/k/a MERS, as a “nominee” for the original
lender. The Debtor’s argument raises a fundamental question as to whether MERS had the legal
authority to assign a valid and enforceable interest in the subject mortgage. Because U.S. Bank’s
rights can be no greater than the rights as transferred by its assignor – MERS – the Debtor argues
that the Movant, acting on behalf of U.S. Bank, has failed to establish that it holds an
enforceable
Case 8-10-77338-reg Doc 41 Filed 02/10/11 Entered 02/10/11 14:13:10
right against the Property.1 The Movant’s initial response to the Debtor’s opposition was that
MERS’s authority to assign the mortgage to U.S. Bank is derived from the mortgage itself which
allegedly grants to MERS its status as both “nominee” of the mortgagee and “mortgagee of
record.” The Movant later supplemented its papers taking the position that U.S. Bank is a
creditor with standing to seek relief from stay by virtue of a judgment of foreclosure and sale
entered in its favor by the state court prior to the filing of the bankruptcy. The Movant argues
that the judgment of foreclosure is a final adjudication as to U.S. Bank’s status as a secured
creditor and therefore the Rooker-Feldman doctrine prohibits this Court from looking behind the
judgment and questioning whether U.S. Bank has proper standing before this Court by virtue of a
valid assignment of the mortgage from MERS.
The Court received extensive briefing and oral argument from MERS, as an intervenor in
these proceedings which go beyond the arguments presented by the Movant. In addition to the
rights created by the mortgage documents themselves, MERS argues that the terms of its
membership agreement with the original lender and its successors in interest, as well as New
York state agency laws, give MERS the authority to assign the mortgage. MERS argues that it
holds legal title to mortgages for its member/lenders as both “nominee” and “mortgagee of
1 The Debtor also questions whether Select Portfolio has the authority and the standing to
seek relief from the automatic stay. The Movant argues that Select Portfolio has standing
to bring the Motion based upon its status as “servicer” of the Mortgage, and attaches an
affidavit of a vice president of Select Portfolio attesting to that servicing relationship.
Caselaw has established that a mortgage servicer has standing to seek relief from the
automatic stay as a party in interest. See, e.g., Greer v. O’Dell, 305 F.3d 1297
(11th Cir. 2002); In re Woodberry, 383 B.R. 373 (Bankr. D.S.C. 2008). This presumes,
however, that the lender for whom the servicer acts validly holds the subject note and
mortgage. Thus, this Decision will focus on whether U.S. Bank validly holds the subject
note and mortgage.
Page 2 of 37
Case 8-10-77338-reg Doc 41 Filed 02/10/11 Entered 02/10/11 14:13:10
record.” As such, it argues that any member/lender which holds a note secured by real property,
that assigns that note to another member by way of entry into the MERS database, need not also
assign the mortgage because legal title to the mortgage remains in the name of MERS, as agent
for any member/lender which holds the corresponding note. MERS’s position is that if a MERS
member directs it to provide a written assignment of the mortgage, MERS has the legal
authority, as an agent for each of its members, to assign mortgages to the member/lender
currently holding the note as reflected in the MERS database.
For the reasons that follow, the Debtor’s objection to the Motion is overruled and the
Motion is granted. The Debtor’s objection is overruled by application of either the Rooker-
Feldman doctrine, or res judicata. Under those doctrines, this Court must accept the state court
judgment of foreclosure as evidence of U.S. Bank’s status as a creditor secured by the Property.
Such status is sufficient to establish the Movant’s standing to seek relief from the automatic stay.
The Motion is granted on the merits because the Movant has shown, and the Debtor has not
disputed, sufficient basis to lift the stay under Section 362(d).
Although the Court is constrained in this case to give full force and effect to the state
court judgment of foreclosure, there are numerous other cases before this Court which present
identical issues with respect to MERS and in which there have been no prior dispositive state
court decisions. This Court has deferred rulings on dozens of other motions for relief from stay
pending the resolution of the issue of whether an entity which acquires its interests in a mortgage
by way of assignment from MERS, as nominee, is a valid secured creditor with standing to seek
relief from the automatic stay. It is for this reason that the Court’s decision in this matter will
address the issue of whether the Movant has established standing in this case notwithstanding the
Page 3 of 37
Case 8-10-77338-reg Doc 41 Filed 02/10/11 Entered 02/10/11 14:13:10
existence of the foreclosure judgment. The Court believes this analysis is necessary for the
precedential effect it will have on other cases pending before this Court.
The Court recognizes that an adverse ruling regarding MERS’s authority to assign
mortgages or act on behalf of its member/lenders could have a significant impact on MERS and
upon the lenders which do business with MERS throughout the United States. However, the
Court must resolve the instant matter by applying the laws as they exist today. It is up to the
legislative branch, if it chooses, to amend the current statutes to confer upon MERS the requisite
authority to assign mortgages under its current business practices. MERS and its partners made
the decision to create and operate under a business model that was designed in large part to avoid
the requirements of the traditional mortgage recording process. This Court does not accept the
argument that because MERS may be involved with 50% of all residential mortgages in the
country, that is reason enough for this Court to turn a blind eye to the fact that this process does
not comply with the law.
Facts
Procedural Background
On September 20, 2010, the Debtor filed for relief under Chapter 7 of the Bankruptcy
Code. In Schedule A to the petition, the Debtor lists a joint ownership interest in the Property
described as follows:
A “[s]ingle family home owned with son, deed in son’s name since 2007; used as
primary residence . . .. Debtor was on original deed and is liable on the mortgage,
therefore has equitable title. Debtor is in default of the mortgage with a principal
balance of over $450,000.00. The house is worth approximately $350,000. A
Page 4 of 37
Case 8-10-77338-reg Doc 41 Filed 02/10/11 Entered 02/10/11 14:13:10
foreclosure sale was scheduled 9/21/10.”
According to Schedule D, the Property is valued at $350,000 and is encumbered by a mortgage
in the amount of $536,920.67 held by “SPS Select Portfolio Servicing.”
On October 14, 2010, the Movant filed the Motion seeking relief from the automatic stay
pursuant to 11 U.S.C. §362(d) to foreclose on the Property. The Motion does not state that a
foreclosure proceeding had been commenced or that a judgment of foreclosure was granted prior
to the filing of the bankruptcy petition. Nor does it mention that the Debtor holds only equitable
title and does not hold legal title to the Property. Instead, Movant alleges that U.S. Bank is the
“holder” of the Mortgage; that the last mortgage payment it received from the Debtor was
applied to the July, 2008 payment; and that the Debtor has failed to make any post-petition
payments to the Movant. Movant also asserts that as of September 24, 2010, the total
indebtedness on the Note and Mortgage was $542,902.33 and the Debtor lists the value of the
Property at $350,000 in its schedules. On that basis, Movant seeks entry of an order vacating the
stay pursuant to 11 U.S.C. § 362(d)(1) and (d)(2).
Annexed to the Motion are copies of the following documents:
• Adjustable Rate Note, dated June 9, 2006, executed by the Debtor as borrower and listing
First Franklin a Division of Na. City Bank of In. (“First Franklin”) as the lender
(“Note”);
• Balloon Note Addendum to the Note, dated June 9, 2006;
• Mortgage, dated June 9, 2006 executed by the Debtor and listing First Franklin as lender,
and MERS as nominee for First Franklin and First Franklin’s successors and assigns
(“Mortgage”);
• Adjustable Rate and Balloon Rider, dated June 9, 2006;
• Addendum to Promissory Note and Security Agreement executed by the Debtor; and
Page 5 of 37
Case 8-10-77338-reg Doc 41 Filed 02/10/11 Entered 02/10/11 14:13:10
• Assignment of Mortgage, dated February 1, 2008, listing MERS as nominee for First
Franklin as assignor, and the Movant, U.S. Bank National Association, as Trustee for
First Franklin Mortgage Loan Trust 2006- FF12, Mortgage Pass-through Certificates,
Series 2006-FF12, as assignee (“Assignment of Mortgage”).
The Arguments of the Parties
On October 27, 2010, the Debtor filed “limited opposition” to the Motion, alleging that
the Movant lacks standing to seek the relief requested because MERS, the purported assignor to
the Movant, did not have authority to assign the Mortgage and therefore the Movant cannot
establish that it is a bona fide holder of a valid secured interest in the Property.
The Movant responded to the Debtor’s limited opposition regarding MERS’s authority to
assign by referring to the provisions of the Mortgage which purport to create a “nominee”
relationship between MERS and First Franklin. In conclusory fashion, the Movant states that it
therefore follows that MERS’s standing to assign is based upon its nominee status.
On November 15, 2010, a hearing was held and the Court gave both the Debtor and
Movant the opportunity to file supplemental briefs on the issues raised by the Debtor’s limited
opposition.
On December 8, 2010, the Movant filed a memorandum of law in support of the Motion
arguing that this Court lacks jurisdiction to adjudicate the issue of whether MERS had authority
to assign the Mortgage, and even assuming the Court did have jurisdiction to decide this issue,
under New York law the MERS assignment was valid. In support of its jurisdictional argument,
the Movant advises the Court (for the first time) that a Judgement of Foreclosure and Sale
(“Judgment of Foreclosure”) was entered by the state court in favor of the Movant on November
24, 2008, and any judicial review of the Judgment of Foreclosure is barred by the doctrines of
Page 6 of 37
Case 8-10-77338-reg Doc 41 Filed 02/10/11 Entered 02/10/11 14:13:10
res judicata, Rooker-Feldman, and judicial estoppel.2 The Movant argues that the Debtor had a
full and fair opportunity to litigate these issues in state court, but chose to default, and cannot
now challenge the state court’s adjudication as to the Movant’s status as a secured creditor or
holder of the Note and Mortgage, or its standing to seek relief from the automatic stay in this
Court. The Movant also notes that the Debtor admits in her petition and schedules that she is
liable on the Mortgage, that it was in default and the subject of a foreclosure sale, and thus
judicial estoppel bars her arguments to the contrary.
In addition to its preclusion arguments, on the underlying merits of its position the
Movant cites to caselaw holding that MERS assignments similar to the assignment in this case,
are valid and enforceable. See U.S. Bank, N.A. v. Flynn, 897 N.Y.S. 2d 855, 858 (N.Y. Sup. Ct.
2010); Kiah v. Aurora Loan Services, LLC, 2010 U.S. Dist. LEXIS 121252, at *1 (D. Mass. Nov.
16, 2010); Perry v. Nat’l Default Servicing Corp., 2010 U.S. Dist. LEXIS 92907, at *1 (Dist.
N.D. Cal. Aug. 20, 2010). It is the Movant’s position that the provisions of the Mortgage grant
to MERS the right to assign the Mortgage as “nominee,” or agent, on behalf of the lender, First
Franklin. Specifically, Movant relies on the recitations of the Mortgage pursuant to which the
“Borrower” acknowledges that MERS holds bare legal title to the Mortgage, but has the right
“(A) to exercise any or all those rights, including, but not limited to, the right to foreclose and
2
The Judgment of Foreclosure names the Debtor and an individual, Shelly English, as
defendants. Shelly English is the Debtor’s daughter-in-law. At a hearing held on
December 13, 2010, the Debtor’s counsel stated that he “believed” the Debtor transferred
title to the Property to her son, Leroy English, in 2007. This is consistent with
information provided by the Debtor in her petition and schedules. Leroy English,
however, was not named in the foreclosure action. No one in this case has addressed the
issue of whether the proper parties were named in the foreclosure action. However,
absent an argument to the contrary, this Court can only presume that the Judgment of
Foreclosure is a binding final judgment by a court of competent jurisdiction.
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sell the Property; and (B) to take any action required of Lender including, but not limited to,
releasing and canceling [the Mortgage].” In addition, the Movant argues that MERS’s status as a
“mortgagee” and thus its authority to assign the Mortgage is supported by the New York Real
Property Actions and Proceedings Law (“RPAPL”) and New York Real Property Law (“RPL”).
Movant cites to RPAPL § 1921-a which allows a “mortgagee” to execute and deliver partial
releases of lien, and argues that MERS falls within the definition of “mortgagee” which includes
the “current holder of the mortgage of record . . . or . . . their . . . agents, successors or assigns.”
N.Y. Real Prop. Acts. Law § 1921(9)(a) (McKinney 2011). Although the definition of
“mortgagee” cited to by the Movant only applies to RPAPL § 1921, Movant argues that it is a
“mortgagee” vested with the authority to execute and deliver a loan payoff statement; execute
and deliver a discharge of mortgage and assign a mortgage pursuant to RPL §§ 274 and 275.
In addition to its status as “mortgagee,” Movant also argues that the assignment is valid
because MERS is an “agent” of each of its member banks under the general laws of agency in
New York, see N.Y. Gen. Oblig. Law § 5-1501(1) (McKinney 2011),3 and public policy requires
the liberal interpretation and judicial recognition of the principal-agent relationship. See Arens v.
Shainswitt, 37 A.D.2d 274 (N.Y. App. Div. 1971), aff’d 29 N.Y.2d 663 (1971). In the instant
case, Movant argues, the Mortgage appoints MERS as “nominee,” read “agent,” for the original
3 Movant cites to New York General Obligations Law for the proposition that “an agency
agreement may take any form ‘desired by the parties concerned.’” The direct quote
“desired by the parties concerned” seems to be attributed to the General Obligations Law
citation, however, the Court could find no such language in the current version of § 5-
1501(1). That provision, rather, defines an agent as “a person granted authority to act as
attorney-in-fact for the principal under a power of attorney, and includes the original
agent and any co-agent or successor agent. Unless the context indicates otherwise, an
‘agent’ designated in a power of attorney shall mean ‘attorney-in-fact’ for the purposes of
this title. An agent acting under a power of attorney has a fiduciary relationship with the
principal.” N.Y. Gen. Oblig. Law § 5-1501(1) (McKinney 2011) (emphasis added).
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lender and the original lender’s successors and assigns. As nominee/agent for the lender, and as
mortgagee of record, Movant argues MERS had the authority to assign the Mortgage to the
Movant, U.S. Bank, “in accordance with the principal’s instruction to its nominee MERS, to
assign the mortgage lien to U.S. Bank . . . .”
Finally, Movant argues that even absent a legally enforceable assignment of the
Mortgage, it is entitled to enforce the lien because U.S. Bank holds the Note. The Movant
argues that if it can establish that U.S. Bank is the legal holder the Note, the Mortgage by
operation of law passes to the Movant because the Note and the Mortgage are deemed to be
inseparable. See In re Conde-Dedonato, 391 B.R. 247 (Bankr. E.D.N.Y. 2008). The Movant
represents, but has not proven, that U.S. Bank is the rightful holder of the Note, and further
argues that the assignment of the Note has to this point not been contested in this proceeding.
MERS moved to intervene in this matter pursuant to Fed. R. Bankr. P. 7024 because:
12. The Court’s determination of the MERS Issue directly affects the
business model of MERS. Additionally, approximately 50% of all consumer
mortgages in the United States are held in the name of MERS, as the mortgagee
of record.
13. The Court’s determination of the MERS Issue will have a
significant impact on MERS as well as the mortgage industry in New York and
the United States.
14. MERS has a direct financial stake in the outcome of this contested
matter, and any determination of the MERS Issue has a direct impact on MERS.
(Motion to Intervene, ¶¶12-14).
Permission to intervene was granted at a hearing held on December 13, 2010.
In addition to adopting the arguments asserted by the Movant, MERS strenuously
defends its authority to act as mortgagee pursuant to the procedures for processing this and other
mortgages under the MERS “system.” First, MERS points out that the Mortgage itself
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designates MERS as the “nominee” for the original lender, First Franklin, and its successors and
assigns. In addition, the lender designates, and the Debtor agrees to recognize, MERS “as the
mortgagee of record and as nominee for ‘Lender and Lender’s successors and assigns’” and as
such the Debtor “expressly agreed without qualification that MERS had the right to foreclose
upon the premises as well as exercise any and all rights as nominee for the Lender.” (MERS
Memorandum of Law at 7). These designations as “nominee,” and “mortgagee of record,” and
the Debtor’s recognition thereof, it argues, leads to the conclusion that MERS was authorized as
a matter of law to assign the Mortgage to U.S. Bank.
Although MERS believes that the mortgage documents alone provide it with authority to
effectuate the assignment at issue, they also urge the Court to broaden its analysis and read the
documents in the context of the overall “MERS System.” According to MERS, each
participating bank/lender agrees to be bound by the terms of a membership agreement pursuant
to which the member appoints MERS to act as its authorized agent with authority to, among
other things, hold legal title to mortgages and as a result, MERS is empowered to execute
assignments of mortgage on behalf of all its member banks. In this particular case, MERS
maintains that as a member of MERS and pursuant to the MERS membership agreement, the
loan originator in this case, First Franklin, appointed MERS “to act as its agent to hold the
Mortgage as nominee on First Franklin’s behalf, and on behalf of First Franklin’s successors and
assigns.” MERS explains that subsequent to the mortgage’s inception, First Franklin assigned
the Note to Aurora Bank FSB f/k/a Lehman Brothers Bank (“Aurora”), another MERS member.
According to MERS, note assignments among MERS members are tracked via self-effectuated
and self-monitored computer entries into the MERS database. As a MERS member, by
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operation of the MERS membership rules, Aurora is deemed to have appointed MERS to act as
its agent to hold the Mortgage as nominee. Aurora subsequently assigned the Note to U.S. Bank,
also a MERS member. By operation of the MERS membership agreement, U.S. Bank is deemed
to have appointed MERS to act as its agent to hold the Mortgage as nominee. Then, according to
MERS, “U.S. Bank, as the holder of the note, under the MERS Membership Rules, chose to
instruct MERS to assign the Mortgage to U.S. Bank prior to commencing the foreclosure
proceedings by U.S. Bank.” (Affirmation of William C. Hultman, ¶12).
MERS argues that the express terms of the mortgage coupled with the provisions of the
MERS membership agreement, is “more than sufficient to create an agency relationship between
MERS and lender and the lender’s successors in interest” under New York law and as a result
establish MERS’s authority to assign the Mortgage. (MERS Memorandum of Law at 7).
On December 20, 2010, the Debtor filed supplemental opposition to the Motion. The
Debtor argues that the Rooker-Feldman doctrine should not preclude judicial review in this case
because the Debtor’s objection to the Motion raises issues that could not have been raised in the
state court foreclosure action, namely the validity of the assignment and standing to lift the stay.
The Debtor also argues that the Rooker-Feldman doctrine does not apply because the Judgment
of Foreclosure was entered by default. Finally, she also argues that the bankruptcy court can
review matters “which are void or fraudulent on its face.” See In re Ward, 423 B.R. 22 (Bankr.
E.D.N.Y. 2010). The Debtor says that she is “alleging questionable, even possibly fraudulent
conduct by MERS in regards to transferring notes and lifting the stay.” (Debtor’s Supplemental
Opposition at 3).
The Movant filed supplemental papers on December 23, 2010 arguing that the Motion is
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moot because the Property is no longer an asset of the estate as a result of the Chapter 7
Trustee’s “report of no distribution,” and as such, the Section 362(a) automatic stay was
dissolved upon the entry of a discharge on December 14, 2010. See Brooks v. Bank of New York
Mellon, No. DKC 09-1408, 2009 WL 3379928, at *2 (D. Md. Oct. 16, 2009); Riggs Nat’l Bank
of Washington, D.C. v. Perry, 729 F.2d 982, 986 (4th Cir. 1984).
The Movant also maintains that Rooker-Feldman does apply to default judgments
because that doctrine does not require that the prior judgment be a judgment “on the merits.”
Charchenko v. City of Stillwater, 47 F.3d 981, 983 n.1 (8th Cir. 1995); see also Kafele v. Lerner,
Sampson & Rothfuss, L.P.A., No. 04-3659, 2005 WL 3528921, at *2-3 (6th Cir. Dec. 22, 2005);
In re Dahlgren, No. 09-18982, 2010 WL 5287400, at *1 (D.N.J. Dec. 17, 2010). The Movant
points out that the Debtor seems to be confusing the Rooker-Feldman doctrine with issue and
claim preclusion and that the Debtor has misapplied Chief Judge Craig’s ruling in In re Ward.
Discussion
As a threshold matter, this Court will address the Movant’s argument that this Motion has
been mooted by the entry of the discharge order.
Effect of the Chapter 7 discharge on the automatic stay
Section 362(c) provides that:
Except as provided in subsections (d), (e), (f), and (h) of this section–
(1) the stay of an act against property of the estate under subsection (a) of this
section continues until such property is no longer property of the estate;
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(2) the stay of any other act under subsection (a) of this section continues until the
earliest of–
(A) the time the case is closed;
(B) the time the case is dismissed; or
(C) if the case is a case under chapter 7 of this title concerning an individual or a case
under chapter 9, 11, 12, or 13 of this title, the time a discharge is granted or denied;
11 U.S.C. § 362(c) (emphasis added).
Pursuant to Section 362(c)(1), the automatic stay which protects “property of the estate,”
as opposed to property of the debtor, continues until the property is no longer property of the
estate regardless of the entry of the discharge. The provision of the statute relied upon by the
Movant for the proposition that the automatic stay terminates upon the entry of a discharge,
relates only to the stay of “any other act under subsection(a),”, i.e., an act against property that is
not property of the estate, i.e., is property “of the debtor.” The relationship between property of
the estate and property of the debtor is succinctly stated as follows:
Property of the estate consists of all property of the debtor as of the date of the
filing of the petition. 11 U.S.C. § 541. It remains property of the estate until it has
been exempted by the debtor under § 522, abandoned by the trustee under §
554(a), or sold by the trustee under § 363. If property of the estate is not claimed
exempt, sold, or abandoned by the trustee, it is abandoned to the debtor at the
time the case is closed if the property was scheduled under § 521(1). If the
property is not scheduled by the debtor and is not otherwise administered, it
remains property of the estate even after the case has been closed.
If the property in question is property of the estate, it remains subject to the
automatic stay until it becomes property of the debtor and until the earlier of the
time the case was closed, the case is dismissed, or a discharge is granted or denied
in a chapter 7 case.
In re Pullman, 319 B.R. 443, 445 (Bankr. E.D. Va. 2004).
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Movant’s position seems to be that the Chapter 7 Trustee’s filing of a “report of no
distribution,” otherwise known as a “no asset report,” effectuated an abandonment of the real
property at issue in this case, and therefore the Property has reverted back to the Debtor.
However, Movant fails to cite the relevant statute. Section 554(c) provides that “[u]nless the
court orders otherwise, any property scheduled under section 521(1) of this title not otherwise
administered at the time of the closing of a case is abandoned to the debtor and administered for
purposes of section 350 of this title.” 11 U.S.C. § 554(c) (emphasis added); Fed. R. Bankr. P.
6007. Cases interpreting Section 554(c) hold that the filing of a report of no distribution does
not effectuate an abandonment of estate property. See, e.g., In re Israel, 112 B.R. 481, 482 n.3
(Bankr. D. Conn. 1990) (“The filing of a no-asset report does not close a case and therefore does
not constitute an abandonment of property of the estate.”) (citing e.g., Zlogar v. Internal Revenue
Serv. (In re Zlogar), 101 B.R. 1, 3 n.3 (Bankr. N.D. Ill. 1989); Schwaber v. Reed (In re Reed), 89
B.R. 100, 104 (Bankr. C.D. Cal. 1988); 11 U.S.C. § 554(c)).
Because the real property at issue in this case has not been abandoned it remains property
of the estate subject to Section 362(a) unless and until relief is granted under Section 362(d).
Rooker-Feldman and res judicata4
The Movant argues that U.S. Bank’s status as a secured creditor, which is the basis for its
standing in this case, already has been determined by the state court and that determination
cannot be revisited here. The Movant relies on both the Rooker-Feldman doctrine and res
4 Because the Debtor’s objection is overruled under Rooker-Feldman and res judicata, the
Court will not address the merits of the Movant’s judicial estoppel arguments.
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judicata principles to support this position.
The Rooker-Feldman doctrine is derived from two Supreme Court cases, Rooker v.
Fidelity Trust Co., 263 U.S. 413 (1923), and D.C. Court of Appeals v. Feldman, 460 U.S. 462
(1983), which together stand for the proposition that lower federal courts lack subject matter
jurisdiction to sit in direct appellate review of state court judgments. The Rooker-Feldman
doctrine is a narrow jurisdictional doctrine which is distinct from federal preclusion doctrines.
See McKithen v. Brown, 481 F.3d 89, 96-97 (2d Cir. 2007) (citing Exxon Mobil Corp. v. Saudi
Basic Indus. Corp., 544 U.S. 280, 284 (2005), and Hoblock v. Albany County Board of Elections,
422 F.3d 77, 85 (2d Cir. 2005)). In essence, the doctrine bars “cases brought by state-court
losers complaining of injuries caused by state-court judgments rendered before the district court
proceedings commenced and inviting district court review and rejection of those judgments.
Rooker-Feldman does not otherwise override or supplant preclusion doctrine or augment the
circumscribed doctrines that allow federal courts to stay or dismiss proceedings in deference to
state-court actions.” Exxon Mobil, 544 U.S. at 283.
The Second Circuit has delineated four elements that must be satisfied in order for
Rooker-Feldman to apply:
First, the federal-court plaintiff must have lost in state court. Second, the plaintiff
must “complain [ ] of injuries caused by [a] state-court judgment[.]” Third, the
plaintiff must “invit[e] district court review and rejection of [that] judgment [ ].”
Fourth, the state-court judgment must have been “rendered before the district
court proceedings commenced”-i.e., Rooker-Feldman has no application to
federal-court suits proceeding in parallel with ongoing state-court litigation. The
first and fourth of these requirements may be loosely termed procedural; the
second and third may be termed substantive.
McKithen, 481 F.3d at 97 (internal citation omitted and alteration in original) (quoting Hoblock,
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422 F.3d at 85).
In a case with facts similar to the instant case, Chief Judge Craig applied the Rooker-
Feldman doctrine to overrule a debtor’s objection to a motion for relief from the automatic stay.
See In re Ward, 423 B.R. 22 (Bankr. E.D.N.Y. 2010). In In re Ward, a foreclosure sale was
conducted prior to the filing of the bankruptcy petition. When the successful purchaser sought
relief from stay in the bankruptcy case to proceed to evict the debtor, the debtor opposed the
motion. The debtor argued that the foreclosure judgment was flawed because “no original note
was produced”, “the mortgage was rescinded”, “the plaintiff in the action doesn’t exist” or “was
not a proper party to the foreclosure action”, and that “everything was done irregularly and
underneath [the] table.” In re Ward, 423 B.R. at 27. Chief Judge Craig overruled the debtor’s
opposition and found that each of the elements of the Rooker-Feldman doctrine were satisfied:
The Rooker-Feldman doctrine applies in this case because the Debtor lost in the
state court foreclosure action, the Foreclosure Judgment was rendered before the
Debtor commenced this case, and the Debtor seeks this Court’s review of the
Foreclosure Judgment in the context of her opposition to the Purchaser’s motion
for relief from the automatic stay. The injury complained of, i.e., the foreclosure
sale to the Purchaser, was “caused by” the Foreclosure Judgment because “the
foreclosure [sale] would not have occurred but-for” the Foreclosure Judgment.
Accordingly, the Rooker-Feldman doctrine does not permit this Court to
disregard the Foreclosure Judgment.
In re Ward, 423 B.R. at 28 (citations omitted and alteration in original).
In the instant case, the Debtor argues that the Rooker-Feldman doctrine does not apply
because the Judgment of Foreclosure was entered on default, not on the merits. She also argues
that Rooker-Feldman should not apply because she is alleging that the Judgment of Foreclosure
was procured by fraud in that the MERS system of mortgage assignments was fraudulent in
nature or void. However, this Court is not aware of any exception to the Rooker-Feldman
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doctrine for default judgments, or judgments procured by fraud and the Court will not read those
exceptions into the rule. See Salem v. Paroli, 260 B.R. 246, 254 (S.D.N.Y. 2001) (applying
Rooker-Feldman to preclude review of state court default judgment); see also Lombard v.
Lombard, No. 00-CIV-6703 (SAS), 2001 WL 548725, at *3-4 (S.D.N.Y. May 23, 2001)
(applying Rooker-Feldman to preclude review of stipulation of settlement executed in
connection with state court proceeding even though applicant argued that the stipulation should
be declared null and void because he was under duress at the time it was executed).
The Debtor also argues that Rooker-Feldman does not apply in this case because she is
not asking this Court to set aside the Judgment of Foreclosure, but rather is asking this Court to
make a determination as to the Movant’s standing to seek relief from stay. The Debtor argues
that notwithstanding the Rooker-Feldman doctrine, the bankruptcy court must have the ability to
determine the standing of the parties before it.
Although the Debtor says she is not seeking affirmative relief from this Court, the net
effect of upholding the Debtor’s jurisdictional objection in this case would be to deny U.S. Bank
rights that were lawfully granted to U.S. Bank by the state court. This would be tantamount to a
reversal which is prohibited by Rooker-Feldman.
Even if Rooker-Feldman were found not to apply to this determination, the Court still
would find that the Debtor is precluded from questioning U.S. Bank’s standing as a secured
creditor under the doctrine of res judicata. The state court already has determined that U.S.
Bank is a secured creditor with standing to foreclose and this Court cannot alter that
determination in order to deny U.S. Bank standing to seek relief from the automatic stay.
The doctrine of res judicata is grounded in the Full Faith and Credit Clause of the United
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States Constitution. U.S. Const. art. IV, § 1. It prevents a party from re-litigating any issue or
defense that was decided by a court of competent jurisdiction and which could have been raised
or decided in the prior action. See Burgos v. Hopkins, 14 F.3d 787, 789 (2d Cir. 1994) (applying
New York preclusion rules); Swiatkowski v. Citibank, No. 10-CV-114, 2010 WL 3951212, at
*14 (E.D.N.Y. Oct. 7, 2010) (citing Waldman v. Vill. of Kiryas Joel, 39 F.Supp.2d 370, 377
(S.D.N.Y. 1999)). Res judicata applies to judgments that were obtained by default, see Kelleran
v. Andrijevic, 825 F.2d 692, 694-95 (2d Cir. 1987), but it may not apply if the judgment was
obtained by extrinsic fraud or collusion. “Extrinsic fraud involves the parties’ ‘opportunity to
have a full and fair hearing,’ while intrinsic fraud, on the other hand, involves the ‘underlying
issue in the original lawsuit.’” In re Ward, 423 B.R. at 29. The Debtor’s assertions that the
MERS system of assignments may have been fraudulent is more appropriately deemed an
intrinsic fraud argument. The Debtor has not alleged any extrinsic fraud in the procurement of
the Judgment of Foreclosure which prevented a full and fair hearing before the state court.
As a result, the Court finds that the Judgment of Foreclosure alone is sufficient evidence
of the Movant’s status as a secured creditor and therefore its standing to seek relief from the
automatic stay. On that basis, and because the Movant has established grounds for relief from
stay under Section 362(d), the Motion will be granted.
MERS
Because of the broad applicability of the issues raised in this case the Court believes that
it is appropriate to set forth its analysis on the issue of whether the Movant, absent the Judgment
of Foreclosure, would have standing to bring the instant motion. Specifically MERS’s role in
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the ownership and transfer of real property notes and mortgages is at issue in dozens of cases
before this Court. As a result, the Court has deferred ruling on motions for relief from stay
where the movants’ standing may be affected by MERS’s participation in the transfer of the real
property notes and mortgages. In the instant case, the issues were resolved under the Rooker-
Feldman doctrine and the application of res judicata. Most, if not all, of the remainder of the
“MERS cases” before the Court cannot be resolved on the same basis. For that reason, and
because MERS has intervened in this proceeding arguing that the validity of MERS assignments
directly affects its business model and will have a significant impact on the national mortgage
industry, this Court will give a reasoned opinion as to the Movant’s standing to seek relief from
the stay and how that standing is affected by the fact that U.S. Bank acquired its rights in the
Mortgage by way of assignment from MERS.
Standing to seek relief from the automatic stay
The Debtor has challenged the Movant’s standing to seek relief from the automatic stay.
Standing is a threshold issue for a court to resolve. Section 362(d) states that relief from stay
may be granted “[o]n request of a party in interest and after notice and a hearing.” 11 U.S.C. §
362(d). The term “party in interest” is not defined in the Bankruptcy Code, however the Court
of Appeals for the Second Circuit has stated that “[g]enerally the ‘real party in interest’ is the
one who, under the applicable substantive law, has the legal right which is sought to be enforced
or is the party entitled to bring suit.” See Roslyn Savings Bank v. Comcoach (In re Comcoach),
698 F.2d 571, 573 (2d Cir. 1983). The legislative history of Section 362 “suggests that,
notwithstanding the use of the term ‘party in interest’, it is only creditors who may obtain relief
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from the automatic stay.” Id. at 573-74. (citing H.R. Rep. No. 95-595, 95th Cong., 1st Sess. 175,
reprinted in 1978 U.S.Code Cong. & Ad. News 5787, 6136); see also Greg Restaurant Equip.
And Supplies v. Toar Train P’ship (In re Toar Train P’ship), 15 B.R. 401, 402 (Bankr. D.
Vt.1981) (finding that a judgment creditor of the debtor was not a “party in interest” because the
judgment creditor was not itself a direct creditor of the bankrupt).
Using the standard established by the Second Circuit, this Court must determine whether
the Movant is the “one who, under applicable substantive law, has the legal right” to enforce the
subject Note and Mortgage, and is therefore a “creditor” of this Debtor. See In re Toar, 15 B.R.
at 402; see also In re Mims, 438 B.R. 52, 55 (Bankr. S.D.N.Y. 2010). The Bankruptcy Code
defines a “creditor” as an “entity that has a claim against the debtor that arose at the time of or
before the order for relief . . . .” 11 U.S.C. § 101(10). “Claim” is defined as the “right to
payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured . . .
.” 11 U.S.C. § 101(5)(A). In the context of a lift stay motion where the movant is seeking to
commence or continue with an action to foreclose a mortgage against real property, the movant
must show that it is a “party in interest” by showing that it is a creditor with a security interest in
the subject real property. See Mims, 438 B.R. at 57 (finding that as movant “failed to prove it
owns the Note, it has failed to establish that it has standing to pursue its state law remedies with
regard to the Mortgage and Property”). Cf. Brown Bark I L.P. v. Ebersole (In re Ebersole), 440
B.R. 690, 694 (Bankr. W.D. Va. 2010) (finding that movant seeking relief from stay must prove
that it is the holder of the subject note in order to establish a ‘colorable claim’ which would
establish standing to seek relief from stay).
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Noteholder status
In the Motion, the Movant asserts U.S. Bank’s status as the “holder” of the Mortgage.
However, in order to have standing to seek relief from stay, Movant, which acts as the
representative of U.S. Bank, must show that U.S. Bank holds both the Mortgage and the Note.
Mims, 438 B.R. at 56. Although the Motion does not explicitly state that U.S. Bank is the holder
of the Note, it is implicit in the Motion and the arguments presented by the Movant at the
hearing. However, the record demonstrates that the Movant has produced no evidence,
documentary or otherwise, that U.S. Bank is the rightful holder of the Note. Movant’s reliance
on the fact that U.S. Bank’s noteholder status has not been challenged thus far does not alter or
diminish the Movant’s burden to show that it is the holder of the Note as well as the Mortgage.
Under New York law, Movant can prove that U.S. Bank is the holder of the Note by
providing the Court with proof of a written assignment of the Note, or by demonstrating that
U.S. Bank has physical possession of the Note endorsed over to it. See, eg., LaSalle Bank N.A. v.
Lamy, 824 N.Y.S.2d 769, 2006 WL 2251721, at *1 (N.Y. Sup. Ct. Aug. 7, 2006). The only
written assignment presented to the Court is not an assignment of the Note but rather an
“Assignment of Mortgage” which contains a vague reference to the Note. Tagged to the end of
the provisions which purport to assign the Mortgage, there is language in the Assignment stating
“To Have and to Hold the said Mortgage and Note, and also the said property until the said
Assignee forever, subject to the terms contained in said Mortgage and Note.” (Assignment of
Mortgage (emphasis added)). Not only is the language vague and insufficient to prove an intent
to assign the Note, but MERS is not a party to the Note and the record is barren of any
representation that MERS, the purported assignee, had any authority to take any action with
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respect to the Note. Therefore, the Court finds that the Assignment of Mortgage is not sufficient
to establish an effective assignment of the Note.
By MERS’s own account, it took no part in the assignment of the Note in this case, but
merely provided a database which allowed its members to electronically self-report transfers of
the Note. MERS does not confirm that the Note was properly transferred or in fact whether
anyone including agents of MERS had or have physical possession of the Note. What remains
undisputed is that MERS did not have any rights with respect to the Note and other than as
described above, MERS played no role in the transfer of the Note.
Absent a showing of a valid assignment of the Note, Movant can demonstrate that U.S.
Bank is the holder of the Note if it can show that U.S. Bank has physical possession of the Note
endorsed to its name. See In re Mims, 423 B.R. at 56-57. According to the evidence presented
in this matter the manner in which the MERS system is structured provides that, “[w]hen the
beneficial interest in a loan is sold, the promissory note is [] transferred by an endorsement and
delivery from the buyer to the seller [sic], but MERS Members are obligated to update the
MERS® System to reflect the change in ownership of the promissory note. . . .” (MERS
Supplemental Memorandum of Law at 6). However, there is nothing in the record to prove that
the Note in this case was transferred according to the processes described above other than
MERS’s representation that its computer database reflects that the Note was transferred to U.S.
Bank. The Court has no evidentiary basis to find that the Note was endorsed to U.S. Bank or
that U.S. Bank has physical possession of the Note. Therefore, the Court finds that Movant has
not satisfied its burden of showing that U.S. Bank, the party on whose behalf Movant seeks relief
from stay, is the holder of the Note.
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Mortgagee status
The Movant’s failure to show that U.S. Bank holds the Note should be fatal to the
Movant’s standing. However, even if the Movant could show that U.S. Bank is the holder of the
Note, it still would have to establish that it holds the Mortgage in order to prove that it is a
secured creditor with standing to bring this Motion before this Court. The Movant urges the
Court to adhere to the adage that a mortgage necessarily follows the same path as the note for
which it stands as collateral. See Wells Fargo Bank, N.A. v. Perry, 875 N.Y.S.2d 853, 856 (N.Y.
Sup. Ct. 2009). In simple terms the Movant relies on the argument that a note and mortgage are
inseparable. See Carpenter v. Longan, 83 U.S. 271, 274 (1872). While it is generally true that a
mortgage travels a parallel path with its corresponding debt obligation, the parties in this case
have adopted a process which by its very terms alters this practice where mortgages are held by
MERS as “mortgagee of record.” By MERS’s own account, the Note in this case was
transferred among its members, while the Mortgage remained in MERS’s name. MERS admits
that the very foundation of its business model as described herein requires that the Note and
Mortgage travel on divergent paths. Because the Note and Mortgage did not travel together,
Movant must prove not only that it is acting on behalf of a valid assignee of the Note, but also
that it is acting on behalf of the valid assignee of the Mortgage.5
5 MERS argues that notes and mortgages processed through the MERS System are never
“separated” because beneficial ownership of the notes and mortgages are always held by
the same entity. The Court will not address that issue in this Decision, but leaves open
the issue as to whether mortgages processed through the MERS system are properly
perfected and valid liens. See Carpenter v. Longan, 83 U.S. at 274 (finding that an
assignment of the mortgage without the note is a nullity); Landmark Nat’l Bank v. Kesler,
216 P.3d 158, 166-67 (Kan. 2009) (“[I]n the event that a mortgage loan somehow
separates interests of the note and the deed of trust, with the deed of trust lying with some
independent entity, the mortgage may become unenforceable”).
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MERS asserts that its right to assign the Mortgage to U.S. Bank in this case, and in what
it estimates to be literally millions of other cases, stems from three sources: the Mortgage
documents; the MERS membership agreement; and state law. In order to provide some context
to this discussion, the Court will begin its analysis with an overview of mortgage and loan
processing within the MERS network of lenders as set forth in the record of this case.
In the most common residential lending scenario, there are two parties to a real property
mortgage – a mortgagee, i.e., a lender, and a mortgagor, i.e., a borrower. With some nuances
and allowances for the needs of modern finance this model has been followed for hundreds of
years. The MERS business plan, as envisioned and implemented by lenders and others involved
in what has become known as the mortgage finance industry, is based in large part on amending
this traditional model and introducing a third party into the equation. MERS is, in fact, neither a
borrower nor a lender, but rather purports to be both “mortgagee of record” and a “nominee” for
the mortgagee. MERS was created to alleviate problems created by, what was determined by the
financial community to be, slow and burdensome recording processes adopted by virtually every
state and locality. In effect the MERS system was designed to circumvent these procedures.
MERS, as envisioned by its originators, operates as a replacement for our traditional system of
public recordation of mortgages.
Caselaw and commentary addressing MERS’s role in the mortgage recording and
foreclosure process abound. See Christopher L. Peterson, Foreclosure, Subprime Mortgage
Lending, and the Mortgage Electronic Registration System, 78 U. Cin. L. Rev. 1359 (2010). In a
2006 published opinion, the New York Court of Appeals described MERS system as follows:
In 1993, the MERS system was created by several large participants in the real
estate mortgage industry to track ownership interests in residential mortgages.
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Mortgage lenders and other entities, known as MERS members, subscribe to the
MERS system and pay annual fees for the electronic processing and tracking of
ownership and transfers of mortgages. Members contractually agree to appoint
MERS to act as their common agent on all mortgages they register in the MERS
system.
The initial MERS mortgage is recorded in the County Clerk’s office with
‘Mortgage Electronic Registration Systems, Inc.’ named as the lender’s nominee
or mortgagee of record on the instrument. During the lifetime of the mortgage,
the beneficial ownership interest or servicing rights may be transferred among
MERS members (MERS assignments), but these assignments are not publicly
recorded; instead they are tracked electronically in MERS’s private system. In the
MERS system, the mortgagor is notified of transfers of servicing rights pursuant
to the Truth in Lending Act, but not necessarily of assignments of the beneficial
interest in the mortgage.
Merscorp, Inc., v. Romaine, 8 N.Y.3d 90 (N.Y. 2006) (footnotes omitted).
In the words of MERS’s legal counsel, “[t]he essence of MERS’ business is to hold legal
title to beneficial interests under mortgages and deeds of trust in the land records. The MERS®
System is designed to allow its members, which include originators, lenders, servicers, and
investors, to accurately and efficiently track transfers of servicing rights and beneficial
ownership.” (MERS Memorandum of Law at 5). The MERS® System “. . . eliminate[s] the
need for frequent, recorded assignments of subsequent transfers.” (MERS Supplemental
Memorandum of Law at 4). “Prior to MERS, every time a loan secured by a mortgage was sold,
the assignee would need to record the assignment to protect the security interest. If a servicing
company serviced the loan and the servicing rights were sold, – an event that could occur
multiple times during the life of a single mortgage loan – multiple assignments were recorded to
ensure that the proper servicer appeared in the land records in the County Clerk’s office.”
(MERS Supplemental Memorandum of Law at 4-5).
“When the beneficial interest in a loan is sold, the promissory note is still transferred by
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an endorsement and delivery from the buyer to the seller, but MERS Members are obligated to
update the MERS® System to reflect the change in ownership of the promissory note. . . . So
long as the sale of the note involves a MERS Member, MERS remains the named mortgagee of
record, and continues to act as the mortgagee, as the nominee for the new beneficial owner of the
note (and MERS’ Member). The seller of the note does not and need not assign the mortgage
because under the terms of that security instrument, MERS remains the holder of title to the
mortgage, that is, the mortgagee, as the nominee for the purchaser of the note, who is then the
lender’s successor and/or assign.” (MERS Supplemental Memorandum of Law at 6). “At all
times during this process, the original mortgage or an assignment of the mortgage to MERS
remains of record in the public land records where the security real estate is located, providing
notice of MERS’s disclosed role as the agent for the MERS Member lender and the lender’s
successors and assigns.” (Declaration of William C. Hultman, ¶9).
MERS asserts that it has authority to act as agent for each and every MERS member
which claims ownership of a note and mortgage registered in its system. This authority is based
not in the statutes or caselaw, but rather derives from the terms and conditions of a MERS
membership agreement. Those terms and conditions provide that “MERS shall serve as
mortgagee of record with respect to all such mortgage loans solely as a nominee, in an
administrative capacity, for the beneficial owner or owners thereof from time to time.”
(Declaration of William C. Hultman, ¶5). MERS “holds the legal title to the mortgage and acts
as the agent or nominee for the MERS Member lender, or owner of the mortgage loan.”
(Declaration of William C. Hultman, ¶6). According to MERS, it is the “intent of the parties . . .
for MERS to serve as the common nominee or agent for MERS Member lenders and their
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successors and assigns.” (MERS Supplemental Memorandum of Law at 19) (emphasis added by
the Court). “Because MERS holds the mortgage lien for the lender who may freely transfer its
interest in the note, without the need for a recorded assignment document in the land records,
MERS holds the mortgage lien for any intended transferee of the note.” (MERS Supplemental
Memorandum of Law at 15) (emphasis added by the Court). If a MERS member subsequently
assigns the note to a non-MERS member, or if the MERS member which holds the note decides
to foreclose, only then is an assignment of the mortgage from MERS to the noteholder
documented and recorded in the public land records where the property is located. (Declaration
of William C. Hultman, ¶12).
Before commenting on the legal effect of the MERS membership rules or the alleged
“common agency” agreement created among MERS members, the Court will review the relevant
portions of the documents presented in this case to evaluate whether the documentation, on its
face, is sufficient to prove a valid assignment of the Mortgage to U.S. Bank.
The Mortgage
First Franklin is the “Lender” named in the Mortgage. With reference to MERS’s role in
the transaction, the Mortgage states:
MERS is a separate corporation that is acting solely as a nominee for Lender and
Lender’s successors and assigns. MERS is organized and existing under the laws
of Delaware, and has an address and telephone number of P.O. Box 2026, Flint,
MI 48501-2026, tel. (888) 679 MERS. FOR PURPOSES OF RECORDING
THIS MORTGAGE, MERS IS THE MORTGAGEE OF RECORD.
(Mortgage at 1 (emphasis added by the Court)).
The Mortgage also purports to contain a transfer to MERS of the Borrower’s (i.e., the
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Debtor’s) rights in the subject Property as follows:
BORROWER’S TRANSFER TO LENDER OF RIGHTS IN THE PROPERTY
[The Borrower] mortgage[s], grant[s] and convey[s] the Property to MERS
(solely as nominee for Lender and Lender’s successors in interest) and its
successors in interest subject to the terms of this Security Instrument. This means
that, by signing this Security Instrument, [the Borrower is] giving Lender those
rights that are stated in this Security Instrument and also those rights that
Applicable Law gives to lenders who hold mortgage on real property. [The
Borrower is] giving Lender these rights to protect Lender from possible losses
that might result if [the Borrower] fail[s] to [comply with certain obligations
under the Security Instrument and accompanying Note.]
[The Borrower] understand[s] and agree[s] that MERS holds only legal title to the
rights granted by [the Borrower] in this Security Instrument, but, if necessary to
comply with law or custom, MERS (as nominee for Lender and Lenders’s
successors and assigns) has the right: (A) to exercise any or all those rights,
including, but not limited to, the right to foreclose and sell the Property; and (B)
to take any action required of Lender including, but not limited to, releasing and
canceling this Security Instrument.
[The Borrower gives] MERS (solely as nominee for Lender and Lender’s
successors in interest), rights in the Property . . .
(Mortgage at 3) (emphasis added).
The Assignment of Mortgage references the Mortgage and defines the “Assignor” as
“‘Mers’ Mortgage Electronic Registration Systems, Inc., 2150 North First Street, San Jose,
California 95131, as nominee for First Franklin, a division of National City Bank of IN, 2150
North First Street San Jose, California 95153.” (Emphasis added by the Court). The “Assignee”
is U.S. Bank.
Premised on the foregoing documentation, MERS argues that it had full authority to
validly execute the Assignment of Mortgage to U.S. Bank on February 1, 2008, and that as of the
date the foreclosure proceeding was commenced U.S. Bank held both the Note and the
Mortgage. However, without more, this Court finds that MERS’s “nominee” status and the
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rights bestowed upon MERS within the Mortgage itself, are insufficient to empower MERS to
effectuate a valid assignment of mortgage.
There are several published New York state trial level decisions holding that the status of
“nominee” or “mortgagee of record” bestowed upon MERS in the mortgage documents, by
itself, does not empower MERS to effectuate an assignment of the mortgage. These cases hold
that MERS may not validly assign a mortgage based on its nominee status, absent some evidence
of specific authority to assign the mortgage. See Bank of New York v. Mulligan, No. 29399/07,
2010 WL 3339452, at *7 (N.Y. Sup. Ct. Aug. 25, 2010); One West Bank, F.S.B. v. Drayton, 910
N.Y.S.2d 857, 871 (N.Y. Sup. Ct. 2010); Bank of New York v. Alderazi, 900 N.Y.S.2d 821, 824
(N.Y. Sup. Ct. 2010) (the “party who claims to be the agent of another bears the burden of
proving the agency relationship by a preponderance of the evidence”); HSBC Bank USA v.
Yeasmin, No. 34142/07, 2010 WL 2089273, at *3 (N.Y. Sup. Ct. May 24, 2010); HSBC Bank
USA v. Vasquez, No. 37410/07, 2009 WL 2581672, at *3 (N.Y. Sup. Ct. Aug. 21, 2010); LaSalle
Bank N.A. v. Lamy, 824 N.Y.S.2d 769, 2006 WL 2251721, at *2 (N.Y. Sup. Ct. Aug. 7, 2006)
(“A nominee of the owner of a note and mortgage may not effectively assign the note and
mortgage to another for want of an ownership interest in said note and mortgage by the
nominee.”). See also MERS v. Saunders, 2 A.3d 289, 295 (Me. 2010) (“MERS’s only right is to
record the mortgage. Its designation as the ‘mortgagee of record’ in the document does not
change or expand that right…”). But see US Bank, N.A. v. Flynn, 897 N.Y.S.2d 855 (N.Y. Sup.
Ct. 2010) (finding that MERS’s “nominee” status and the mortgage documents give MERS
authority to assign); Crum v. LaSalle Bank, N.A., No. 2080110, 2009 WL 2986655, at *3 (Ala.
Civ. App., Sept. 18, 2009) (finding MERS validly assigned its and the lender’s rights to
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assignee); Blau v. America’s Servicing Company, et al., No. CV-08-773-PHX-MHM, 2009 WL
3174823, at *8 (D. Ariz. Sept. 29, 2009) (finding that assignee of MERS had standing to
foreclose).
In LaSalle Bank, N.A. v. Bouloute, No. 41583/07, 2010 WL 3359552, at *2 (N.Y. Sup.
Aug. 26, 2010), the court analyzed the relationship between MERS and the original lender and
concluded that a nominee possesses few or no legally enforceable rights beyond those of a
principal whom the nominee serves. The court stated:
MERS . . . recorded the subject mortgage as “nominee” for FFFC. The word
“nominee” is defined as “[a] person designated to act in place of another, usu. in a
very limited way” or “[a] party who holds bare legal title for the benefit of
others.” (Black’s Law Dictionary 1076 [8th ed 2004] ). “This definition suggests
that a nominee possesses few or no legally enforceable rights beyond those of a
principal whom the nominee serves.” (Landmark National Bank v. Kesler, 289
Kan 528, 538 [2009] ). The Supreme Court of Kansas, in Landmark National
Bank, 289 Kan at 539, observed that:
The legal status of a nominee, then, depends on the context of the
relationship of the nominee to its principal. Various courts have
interpreted the relationship of MERS and the lender as an agency
relationship. See In re Sheridan, 2009 WL631355, at *4 (Bankr. D. Idaho,
March 12, 2009) (MERS “acts not on its own account. Its capacity is
representative.”); Mortgage Elec. Registrations Systems, Inc. v. Southwest,
2009 Ark. 152 —-, 301 SW3d 1, 2009 WL 723182 (March 19, 2009)
(“MERS, by the terms of the deed of trust, and its own stated purposes,
was the lender’s agent”); La Salle Nat. Bank v. Lamy, 12 Misc.3d 1191[A],
at *2 [Sup Ct, Suffolk County 2006] ) … (“A nominee of the owner of a
note and mortgage may not effectively assign the note and mortgage to
another for want of an ownership interest in said note and mortgage by the
nominee.”).
LaSalle Bank, N.A. v. Bouloute, No. 41583/07, 2010 WL 3359552, at *2; see also Bank of New
York v. Alderazi, 900 N.Y.S.2d 821, 823 (N.Y. Sup. Ct. 2010) (nominee is “‘[a] person
designated to act in place of another, usually in a very limited way.’”) (quoting Black’s Law
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Dictionary)).
In LaSalle Bank, N.A. v. Bouloute the court concluded that MERS must have some
evidence of authority to assign the mortgage in order for an assignment of a mortgage by MERS
to be effective. Evidence of MERS’s authority to assign could be by way of a power of attorney
or some other document executed by the original lender. See Bouloute, 2010 WL 3359552, at
*1; Alderazi, 900 N.Y.S.2d at 823 (“‘To have a proper assignment of a mortgage by an
authorized agent, a power of attorney is necessary to demonstrate how the agent is vested with
the authority to assign the mortgage.’”) (quoting HSBC Bank USA, NA v. Yeasmin, 866 N.Y.S.2d
92 (N.Y. Sup. Ct. 2008)).
Other than naming MERS as “nominee”, the Mortgage also provides that the Borrower
transfers legal title to the subject property to MERS, as the Lender’s nominee, and acknowledges
MERS’s rights to exercise certain of the Lender’s rights under state law. This too, is insufficient
to bestow any authority upon MERS to assign the mortgage. In Bank of New York v. Alderazi,
the court found “[t]he fact that the borrower acknowledged and consented to MERS acting as
nominee of the lender has no bearing on what specific powers and authority the lender granted
MERS.” Alderazi, 900 N.Y.S.2d at 824. Even if it did bestow some authority upon MERS, the
court in Alderazi found that the mortgage did not convey the specific right to assign the
mortgage.
The Court agrees with the reasoning and the analysis in Bouloute and Alderazi, and the
other cases cited herein and finds that the Mortgage, by naming MERS a “nominee,” and/or
“mortgagee of record” did not bestow authority upon MERS to assign the Mortgage.
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The MERS membership rules
According to MERS, in addition to the alleged authority granted to it in the Mortgage
itself, the documentation of the Assignment of Mortgage comports with all the legal
requirements of agency when read in conjunction with the overall MERS System. MERS’s
argument requires that this Court disregard the specific words of the Assignment of Mortgage or,
at the very least, interpret the Assignment in light of the overall MERS System of tracking the
beneficial interests in mortgage securities. MERS urges the Court to look beyond the four
corners of the Mortgage and take into consideration the agency relationship created by the
agreements entered into by the lenders participating in the MERS System, including their
agreement to be bound by the terms and conditions of membership.
MERS has asserted that each of its member/lenders agrees to appoint MERS to act as its
agent. In this particular case, the Treasurer of MERS, William C. Hultman, declared under
penalty of perjury that “pursuant to the MERS’s Rules of Membership, Rule 2, Section 5. . . First
Franklin appointed MERS to act as its agent to hold the Mortgage as nominee on First Franklin’s
behalf, and on behalf of First Franklin’s successors and assigns.” (Affirmation of William C.
Hultman, ¶7). However, Section 5 of Rule 2, which was attached to the Hultman Affirmation as
an exhibit, contains no explicit reference to the creation of an agency or nominee relationship.
Consistent with this failure to explicitly refer to the creation of an agency agreement, the rules of
membership do not grant any clear authority to MERS to take any action with respect to the
mortgages held by MERS members, including but not limited to executing assignments. The
rules of membership do require that MERS members name MERS as “mortgagee of record” and
that MERS appears in the public land records as such. Section 6 of Rule 2 states that “MERS
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shall at all times comply with the instructions of the holder of mortgage loan promissory notes,”
but this does not confer any specific power or authority to MERS.
State law
Under New York agency laws, an agency relationship can be created by a “manifestation
of consent by one person to another that the other shall act on his behalf and subject to his
control, and the consent by the other to act.” Meisel v. Grunberg, 651 F.Supp.2d 98, 110
(S.D.N.Y. 2009) (citing N.Y. Marine & Gen. Ins. Co. v. Tradeline, L.L.C., 266 F.3d 112, 122 (2d
Cir.2001)).
‘Such authority to act for a principal may be actual or apparent.’ . . . Actual
authority arises from a direct manifestation of consent from the principal to the
agent. . . . . The existence of actual authority ‘depends upon the actual interaction
between the putative principal and agent, not on any perception a third party may
have of the relationship.’
Meisel v. Grunberg, 651 F.Supp.2d at 110 (citations omitted).
Because MERS’s members, the beneficial noteholders, purported to bestow upon MERS
interests in real property sufficient to authorize the assignments of mortgage, the alleged agency
relationship must be committed to writing by application of the statute of frauds. Section 5-
703(2) of the New York General Obligations Law states that:
An estate or interest in real property, other than a lease for a term not exceeding
one year, or any trust or power, over or concerning real property, or in any
manner relating thereto, cannot be created, granted, assigned, surrendered or
declared, unless by act or operation of law, or by a deed or conveyance in writing,
subscribed by the person creating, granting, assigning, surrendering or declaring
the same, or by his lawful agent, thereunto authorized by writing.
See N.Y. Gen. Oblig. Law § 5-703(1) (McKinney 2011); Republic of Benin v. Mezei, No. 06 Civ.
870 (JGK), 2010 WL 3564270, at *3 (S.D.N.Y. Sept. 9, 2010); Urgo v. Patel, 746 N.Y.S.2d 733
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(N.Y. App. Div. 2002) (finding that unwritten apparent authority is insufficient to satisfy the
statute of frauds) (citing Diocese of Buffalo v. McCarthy, 91 A.D.2d 1210 (4th Dept. 1983)); see
also N.Y. Gen. Oblig. Law § 5-1501 (McKinney 2011) (“‘agent’ means a person granted
authority to act as attorney-in-fact for the principal under a power of attorney. . .”). MERS asks
this Court to liberally interpret the laws of agency and find that an agency agreement may take
any form “desired by the parties concerned.” However, this does not free MERS from the
constraints of applicable agency laws.
The Court finds that the record of this case is insufficient to prove that an agency
relationship exists under the laws of the state of New York between MERS and its members.
According to MERS, the principal/agent relationship among itself and its members is created by
the MERS rules of membership and terms and conditions, as well as the Mortgage itself.
However, none of the documents expressly creates an agency relationship or even mentions the
word “agency.” MERS would have this Court cobble together the documents and draw
inferences from the words contained in those documents. For example, MERS argues that its
agent status can be found in the Mortgage which states that MERS is a “nominee” and a
“mortgagee of record.” However, the fact that MERS is named “nominee” in the Mortgage is
not dispositive of the existence of an agency relationship and does not, in and of itself, give
MERS any “authority to act.” See Steinbeck v. Steinbeck Heritage Foundation, No. 09-18360cv,
2010 WL 3995982, at *2 (2d Cir. Oct. 13, 2010) (finding that use of the words “attorney in fact”
in documents can constitute evidence of agency but finding that such labels are not dispositive);
MERS v. Saunders, 2 A.3d 289, 295 (Me. 2010) (designation as the ‘mortgagee of record’ does
not qualify MERS as a “mortgagee”). MERS also relies on its rules of membership as evidence
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of the agency relationship. However, the rules lack any specific mention of an agency
relationship, and do not bestow upon MERS any authority to act. Rather, the rules are
ambiguous as to MERS’s authority to take affirmative actions with respect to mortgages
registered on its system.
In addition to casting itself as nominee/agent, MERS seems to argue that its role as
“mortgagee of record” gives it the rights of a mortgagee in its own right. MERS relies on the
definition of “mortgagee” in the New York Real Property Actions and Proceedings Law Section
1921 which states that a “mortgagee” when used in the context of Section 1921, means the
“current holder of the mortgage of record . . . or their agents, successors or assigns.” N.Y. Real
Prop. Acts. L. § 1921 (McKinney 2011). The provisions of Section 1921 relate solely to the
discharge of mortgages and the Court will not apply that definition beyond the provisions of that
section in order to find that MERS is a “mortgagee” with full authority to perform the duties of
mortgagee in its own right. Aside from the inappropriate reliance upon the statutory definition
of “mortgagee,” MERS’s position that it can be both the mortgagee and an agent of the
mortgagee is absurd, at best.
Adding to this absurdity, it is notable in this case that the Assignment of Mortgage was
by MERS, as nominee for First Franklin, the original lender. By the Movant’s and MERS’s
own admission, at the time the assignment was effectuated, First Franklin no longer held any
interest in the Note. Both the Movant and MERS have represented to the Court that subsequent
to the origination of the loan, the Note was assigned, through the MERS tracking system, from
First Franklin to Aurora, and then from Aurora to U.S. Bank. Accordingly, at the time that
MERS, as nominee of First Franklin, assigned the interest in the Mortgage to U.S. Bank, U.S.
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Bank allegedly already held the Note and it was at U.S. Bank’s direction, not First Franklin’s,
that the Mortgage was assigned to U.S. Bank. Said another way, when MERS assigned the
Mortgage to U.S. Bank on First Franklin’s behalf, it took its direction from U.S. Bank, not First
Franklin, to provide documentation of an assignment from an entity that no longer had any rights
to the Note or the Mortgage. The documentation provided to the Court in this case (and the
Court has no reason to believe that any further documentation exists), is stunningly inconsistent
with what the parties define as the facts of this case.
However, even if MERS had assigned the Mortgage acting on behalf of the entity which
held the Note at the time of the assignment, this Court finds that MERS did not have authority,
as “nominee” or agent, to assign the Mortgage absent a showing that it was given specific
written directions by its principal.
This Court finds that MERS’s theory that it can act as a “common agent” for undisclosed
principals is not support by the law. The relationship between MERS and its lenders and its
distortion of its alleged “nominee” status was appropriately described by the Supreme Court of
Kansas as follows: “The parties appear to have defined the word [nominee] in much the same
way that the blind men of Indian legend described an elephant – their description depended on
which part they were touching at any given time.” Landmark Nat’l Bank v. Kesler, 216 P.3d
158, 166-67 (Kan. 2010).
Conclusion
For all of the foregoing reasons, the Court finds that the Motion in this case should be
granted. However, in all future cases which involve MERS, the moving party must show that it
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validly holds both the mortgage and the underlying note in order to prove standing before this
Court.
Dated: Central Islip, New York
February 10, 2011 /s/ Robert E. Grossman
Hon. Robert E. Grossman
United States Bankruptcy Judge
Page 37 of 37
Case 8-10-77338-reg Doc 41 Filed 02/10/11 Entered 02/10/11 14:13:10

Commercial Mortgage Modification: What They Are and How to Get One




Image Source:  © Copyright 2009  Roy Tennant
Introduction
This article will discuss, in basic terms, the process for obtaining a commercial mortgage modification.  For more detailed information, contact an attorney in your area competent in this specialized field of law. This article is not meant to be construed as legal advice, and is for educational and informative purposes only.
Definition of Commercial Mortgage Modification
First off, the term “Commercial Mortgage Modification” refers to a renegotiation in payment terms of a mortgage secured by real property that is not 1-4 unit residential real estate.  Commercial mortgages can be secured by hotels, golf courses, shopping malls, apartment complexes, office buildings, shipping warehouses, or any other type of commercial property (that is, not 1-4 unit residential).
The Best Circumstances for a Commercial Mortgage Modification
The circumstances under which commercial mortgage modification negotiations occur include any foreseeably pending default by the commercial mortgage borrower.  These circumstances will fall into one of two categories: debt service default, or balloon payment default.
“Debt service default” arises where a borrower does not have the monthly cash flow to continue to pay the monthly mortgage payment during the life of the loan (usually, 3, 5, or 7 years).  “Balloon Payment default,” on the other hand, occurs at the end of the life of the commercial mortgage, when the borrower must pay back the majority of the loan principal to the lender in a single lump sum (or, “balloon payment”).  Either debt service default or balloon payment default can lead to a borrower request for commercial mortgage modification.
The Process of Obtaining a Commercial Mortgage Modification
Obtaining a commercial mortgage modification from your lender is essentially a 3-step process that involves first a pre-negotiation agreement or letter your bank will send you upon your request to negotiate, a process of supplying information for your bank to review in consideration of your commercial mortgage modification request, and finally, negotiation of the terms of your commercial mortgage modification.
Pre-negotiation letter. The pre-negotiation agreement or letter which accompanies most negotiations for commercial mortgage modifications is usually an agreement about the negotiation process itself.  A pre-negotiation agreement will set the ground rules regarding whether each party reserves or waives certain legal rights during negotiation, such as the common law duty of good faith and fair dealing. It is very important to read, understand, and if necessary, negotiate the terms of the pre-negotiation agreement itself, so that you do not unwittingly waive potential rights or claims.
Informing your bank. The process of informing your bank will be similar to your original loan application.  You will provide your bank with tax and income information for consideration of whether you qualify for new terms.  Tax returns, profit and loss schedules, and proof of accounts receivable are common items the bank will want to see.  If you are a landlord, the bank may require you to provide information as to the nature of your leases and their respective payment histories.
Negotiating Terms. The final stage of the process, negotiating the terms of your commercial mortgage modification, involves the give-and-take process during which you set, for example, a new loan duration, interest rate, balloon amount, or other concessions for you to avoid defaulting on your mortgage and going into foreclosure.
Who to Call
You should always rely on a skilled professional whenever you are going to sign any legal documents, and so it is highly recommended that you contact an attorney in your area familiar with lending laws, banking regulations, and best practices in the field of commercial mortgage modification.  Conclusion
Commercial Mortgage Modification should be a consideration for anyone who owns a business and who is likely to default on a commercial mortgage obligation in the foreseeable future.  The process can be relatively simple, but involves highly complex legal documents for which a skilled professional should be sought.

Southern California (909)890-9192 begin_of_the_skype_highlighting              (909)890-9192      end_of_the_skype_highlighting      end_of_the_skype_highlighting in Northern California(925)957-9797

Home Affordable Modification Plan – Checklist For Approval

Are you applying for HAMP Program which is also known as Home Affordable Modification Program? The program is federally subsidized and that would pay lenders over and above servicers to modify eligible loans using the consistent terms state with the Treasury Department. What are the advantages of this loan workout programs and what are the necessities to partake?

“Obama’s HAMP loan modification program is part of the $75 billion dollar housing stimulus program that is planned to help out around 4 million homeowners out of foreclosure.”

The advantages of Obama’s HAMP loan modification program include:

  • Trim down payments to equal 31% of monthly total earnings
  • Stopping foreclosure procedure
  • Let off late fees and penalties
  • Include past outstanding payments in new loan
  • Lower interest rate as low as 2%*
  • Lengthen loan term to forty years
  • Defer or forgive principal balance

Unfortunately, not everyone could get eligible for aid under this program, nevertheless if you can meet the necessary eligibility requirements you can submit a loan modification program request for consideration. Here’re the requirements to apply for a loan workout:

  • Individual should stay in the home as your primary residence
  • Loan amount should be less than $729,750
  • Present payment equals more than 31% of monthly total income
  • Facing financial hardship

Majority lenders as well as servicers are contributing in Obama’s home affordable modification program, and concerned homeowners are positive to start the application process. Only borrowers who can prove they meet the appropriate guidelines would be accepted for a lower mortgage payment. There is a standard formula that lenders make use of to decide who would get eligible for approval. Homeowners can use a software program that uses this very similar program to help out them to organizing an exact and suitable application. Just input income and expenses, and the debt ratio, new target payment with new interest rate, disposable income and additional calculations are done automatically. Save hours of frustration and pass up mistakes.

Act Now – To Apply For Bad Credit Mortgage Refinance Loan »

Temporary injunction granted !

Attorney Lenore L. Albert in Huntington beach, CA, attorney for Plaintiffs and the Class Action has secured an order that is worth reading both from the standpoint of what you should be looking for as well as what should be in your pleadings. The Court has obviously been convinced that Deutsch, Aurora, Quality Loan Service et al are involved in an enterprise that if not criminal, does not meet the standards of due process or even just plain common sense and fairness.


J Selna is paving the way for a permanent injunction against them for much the same reasons as we have seen in the high Court decisions around the country including the recent Ibanez decision in Massachusetts, and the very recent New jersey decision. The Order is important not only for its content but because of its form which is why I want you to read it.

The Order 1st prohibits the Defendants from taking ANY action with respect to the properties, and second sets the stage for making that prohibition permanent. What is interesting to me about this order is the specificity of the order and the timing in which it takes effect. See if you don’t agree.

selna-ca-tro-deutsch-aurora-quality

mass joinder litigation complaint

And the first “meaty” part of the complaint….

5. The fraud perpetrated by the Countrywide Defendants from 2003 through 2007, including by BofA starting no later than 2007, was willful and pervasive. It begin with simple greed and then accelerated when Countrywide founder and CEO Angelo Mozilo (“Mozilo”) discovered that Countrywide could not sustain its business, unless it used its size and large market share in California to systematically create false and inflated property appraisals throughout California. Countrywide then used these false property valuations to induce Plaintiffs and other borrowers into ever-larger loans on increasingly risky terms. As Mozilo knew from no later than 2004, these loans were unsustainable for Countrywide and the borrowers and to a certainty would result in a crash that would destroy the equity invested by Plaintiffs and other Countrywide borrowers.

In other words, Countrywide is alleged to not only have made bad loans, but also to have intentionally inflated appraisals.

6. Hand-in-hand with its fraudulently-obtained mortgages, Mozilo and others at Countrywide hatched a plan to “pool” the foregoing mortgages and sell the pools for inflated value. Rapidly, these two intertwined schemes grew into a brazen plan to disregard underwriting standards and fraudulently inflate property values – county-by-county, city-by-city, person-by-person – in order to take business from legitimate mortgage-providers, and moved on to massive securities fraud hand-in-hand with concealment from, and deception of, Plaintiffs and other mortgagees on an unprecedented scale.

Oh, that’s rich. So not only (it is alleged) did Countrywide bamboozle borrowers, they also bamboozled investors.

9. It is now all too clear that this was the ultimate high-stakes fraudulent investment scheme of the last decade. Couched in banking and securities jargon, the deceptive gamble with consumers’ primary assets – their homes – was nothing more than a financial fraud perpetrated by Defendants and others on a scale never before seen. This scheme led directly to a mortgage meltdown in California that was substantially worse than any economic problems facing the rest of the United States. From 2008 to the present, Californians’ home values decreased by considerably more than most other areas in the United States as a direct and proximate result of the Defendants’ scheme set forth herein. The Countrywide Defendants’ business premise was to leave the borrowers, including Plaintiffs, holding the bag once Countrywide and its executives had cashed in reaping huge salaries and bonuses and selling Countrywide’s shares based on their inside information, while investors were still buying the increasingly overpriced mortgage pools and before the inevitable dénouement. This massive fraudulent scheme was a disaster both foreseen by Countrywide and waiting to happen. Defendants knew it, and yet Defendants still induced the Plaintiffs into their scheme without telling them.

There’s the base of it all….

24. Defendants have gone to great lengths to avoid producing documents in this litigation because they know that such documents will establish all details of the massive fraud they perpetrated on Plaintiffs and other Californians. PennyMac, the Granada Network and Defendants’ overseas operations are used by Defendants to systematically hide documents. By delaying production of documents, the Defendants are buying time as they (a) accept the benefits of the scheme described herein, (b) cover up their fraud, and (c) make it materially more expensive and difficult for Plaintiffs and their counsel to obtain a just result.

Of course there’s the famous “let’s hide Waldo” game once the gig is pretty much up. After all, if we have to produce the documents, well, our goose might be cooked – and that would be bad.

So what else is presented in here? Oh, all sorts of good stuff. Here’s a sampling:

275. Defendant CT REAL ESTATE SERVICES, INC. is a California corporation – corporation number C0570795 – and is a resident of Ventura County, California. Defendant CT REAL ESTATE SERVICES has acted alongside and in concertwith BofA in carrying out the concealment described herein and in continuing to conceal from Plaintiffs, from the California general public, and from regulators the details of the securitization and sale of deeds of trust and mortgages (including those of Plaintiffs herein) that would expose all Defendants herein to liability for sale of mortgages of California citizens – including all Plaintiffs herein – for more than the actual value of the mortgage loans. The sale and particularly the undisclosed sale of mortgage loans in excess of actual value violates California Civil Code, §§ 1709 and 1710, and California Business and Professions Code § 17200 et seq., 15 U.S.C. §§ 1641 et seq. and other applicable laws.

That sounds like a problem to me……

290. At the time of entering into the notes and deeds of trust referenced herein with respect to each Plaintiff, the Countrywide Defendants were bound and obligated to fully and accurately disclose:

a. Who the true lender and mortgagee were.

b. That to induce a Plaintiff to enter into the mortgage, the Countrywide Defendants caused the appraised value of Plaintiff’s home to be overstated.

c. That to disguise the inflated value of Plaintiff’s home, Countrywide was orchestrating the over-valuation of homes throughout Plaintiff’s community.

d. That to induce a Plaintiff to enter into a mortgage, the Countrywide Defendants disregarded their underwriting requirements, thereby causing Plaintiff to falsely believe that Plaintiff was financially capable of performing Plaintiff’s obligations under the mortgage, when the Countrywide Defendants knew that was untrue. One way they systematically disregarded the underwriting requirements was through the use of the Granada Network, another fact which Defendants systematically failed to disclose to any California borrower.

Ding ding ding ding ding ding!

One of the keys to this mess is that the lenders knew full well that the borrowers could not pay “as agreed”, yet made the loans anyway.

i. The sales would include sales to nominees who were not authorized under law at the time to own a mortgage, including, among others, Mortgage Electronic Registration Systems Inc., a/k/a MERSCORP, Inc. (“MERS”), which according to its website was created by mortgage banking industry participants to be only a front or nominee to “streamline” the mortgage re-sale and securitization process;

ii. Plaintiff’s true financial condition and the true value of Plaintiff’s home and mortgage would not be disclosed to investors to whom the mortgage would be sold;

iii. Countrywide intended to sell the mortgage together with other mortgages as to which it also intended not to disclose the true financial condition of the borrowers or the true value of their homes or mortgages;

iv. The consideration to be sought from investors would be greater than the actual value of the said notes and deeds of trust;

and

v.The consideration to be sought from investors would be greater than the income stream that could be generated from the instruments even assuming a 0% default rate thereon;

You mean basically everything important about the loans, their quality, who they were going to be sold to, why and how was all bogus? And in addition, the price to be sought from investors exceeded the income stream that could be achieved even if nobody defaulted at all?

Heh, that’s a good gig if you can get it – and if you can find a way to do it legally.

Are there some facts behind this? Oh it appears there are…

The credit losses experienced by Countrywide in 2007 not only were foreseeable by the proposed defendants, they were in fact foreseen at least as early as September 2004. [¶ 33 (Emphasis in original)]

. . .

The credit risk described in the September 2004 warning worsened from September 2004 to August 2007. [¶ 35 (Emphasis in original)]

. . .

By no later than 2006, Mozilo and Sambol were on notice that Countrywide’s exotic loan products might not continue to be saleable into the secondary market, yet this material risk was not disclosed in Countrywide’s periodic filings. [¶ 45]

. . .

Mozilo and Sambol made affirmative misleading public statements in addition to those in the periodic filings that were designed to falsely reassure investors about the nature and quality of Countrywide’s underwriting. [¶ 91]

Oh my. 2004 eh? I seem to remember tAngelo on CNBS making multiple appearances talking about how his company was going to take market share from all these subprime lenders that collapsed, and this was going to be great for his company. Indeed, I remember chortling at the time that I believed he was a lying SOB, and of course the so-called “Fantastic Mainstream Media” lapped it up – and helped support his stock price.

It appears that the intrepid attorneys who filed this action remember that too…. and the pages surrounding 100 in the complaint document a whole bunch of them, including statements in 10Ks and 10Qs that, it is alleged, were flatly false.

And, of course, there’s this one, which I have referred to many times over the last three and a half years:

363. In the January 30, 2007 earnings conference call, Mozilo attempted to distinguish Countrywide from other lenders by stating “we backed away from the subprime area because of our concern over credit quality.” On March 13, 2007, in an interview with Maria Bartiromo on CNBC, Mozilo said that it would be a “mistake” to compare monoline subprime lenders to Countrywide. He then went on to state that the subprime market disruption in the first quarter of 2007 would “be great for Countrywide at the end of the day because all of the irrational competitors will be gone.”

I distinctly remember the cheesy suits and ties, not to mention the sprayed-on-looking tan.

370. In fact, the appraisals were inflated. Countrywide did not utilize quality underwriting processes. Countrywide’s financial condition was not sound, but was a house of cards ready to collapse, as Countrywide well knew, but Plaintiffs did not. Further, Plaintiffs’ mortgages were not refinanced with fixed rate mortgages and neither Agate nor Countrywide ever intended that they would be.

As I have repeatedly pointed out, the entire intent of these loans was not to be a mortgage at all. It was, I allege, more akin to an asset-stripping scheme where the borrower would be effectively forced to come back to the lender after a couple of years when the teaser expired or the inevitable reset or recast occurred and effectively hand over his accumulated “appreciation” in price through yet more fees to be paid to the “lender.”

I believe that for all intents and purposes, from the lender’s point of view, this was nothing more than renting the house, as passing of a clear title to the buyer was never part of what was contemplated by the lender – but of course the borrower wasn’t told this in advance – or at all.

There’s much more in the complaint, but this will do for a start.

Incidentally, the banks tried to get this removed to Federal Court and kill it, and were rebuffed, so it appears that it’s headed to trial. Plaintiff’s Bar 1, Banksters 0 thus far – I will be providing updates on this case as I become aware of them. Southern California (909)890-9192 begin_of_the_skype_highlighting (909)890-9192 end_of_the_skype_highlighting in Northern California(925)957-9797

joinder cases now forming

Group Seeking Plaintiffs In Massive Lawsuit Against Bank of America (Countrywide) / Chase / Wells Fargo / Citi / Onewest / GMAC

We are currently seeking homeowners in the State of California, to join our legal action against PREDATOR BANKS, for their complicity in the massive mortgage fraud schemes, known as ‘Mortgage Gate’:

The time has finally come! Law suits are exploding all over the country, because … We The People … are now going to fight back. We are going after the following banks:

Bank of America (Countrywide) / Chase / Wells Fargo / Citi / Onewest / GMAC.

Below is the link to the case Stien firm filed last summer. It’s the 117 page Complaint against Bank of America: Ronald, et al vs. Bank of America (Countrywide), Case No. BC409444.

Click to access Complaint_Ronald_TAC_7-7-10_Conformed.pdf

This case is a ‘joinder’ with currently 1,100 homeowners already onboard. Joinders are different than class actions in that, clients receive only a small share of the winnings in a class action. Eg: $100 out of a $5 Million settlement. In a joinder, however, each Complaint is settled SEPARATELY, according to the damages they directly sustained. And yet, the entire group is represented under one Complaint.

Recently our clients racked up some really great, CONSECUTIVE WINS against B of A. Take a look:

1. Five injunctions.

2. The order of Judge Chaney RESCINDING 9 notices of default (never before done in California legal history).

3. An order “Ordering Bank of America” to submit to discovery. (Heretofore, they had the audacity to refuse furnishing proof that they actually “owned” the property they stole from homeowners.)

4. An order throwing Bank of America’s motion out of Federal Court, because Ronald et al v. Bank of America is not “Preempted by Federal Law.”

5. And COUNTLESS additional orders to stop homes from being sold.

In addition, our attorneys are demanding various damages, deepening upon each unique situation of the homeowner. Those being:

1. Monetary compensation for those already foreclosed upon.
2. Principle reduction to 80% or less than current market value
3. FULL Lien striping

Folks, I’m a legal assistant and former loan modification processor. Like you, I’ve seen it all.

Let me tell you what happened to one of my clients, Mr. Flores, of Orange County, CA. Mr. Flores is a small business owner (“Beach Transmission” … cross street Lampson). He owns a little transmission shop on Beach Boulevard. He has been renting out two units at his shop for well over ten years. Mr. Flores collects $3,600 in rent each month from his two shop tenants. During the entire ten years, the IRS recognized this as certifiable INCOME on his tax returns.

But when Mr. Flores applied for a home-loan modification with Bank of America, they refused to recognize his shop rentals as income (even though the IRS has for years!). As a result, B of A tabulated his income as NEGATIVE $1,500 because they refused to factor in his $3,600 of rental income. Mr. Flores didn’t qualify for the modification, couldn’t keep up the payments, and they sold his house.

To add insult to injury, the B of A rep told me, bold-faced, over the phone that …”Mr. Flores is a high risk mortgagor according to our charts.”

I asked the rep what he meant by ‘charts’ and he said…”Well, we check the SPENDING HABITS of each borrower by age, marital status, number of children, line of work, and income, in that particular neighborhood to see who is most likely to default on a loan, or not.”

We had this person on speaker-phone and our whole office was SPEECHLESS! Were these charts part of the Lehman Brothers’ BETS that they placed against your neighborhood? (You saw the documentary on MSNBC, right?)

In other words, banks have also been foreclosing on you, not based on your income and ability to pay, but on PROBABILITY CHARTS that suggest you’re a dead-beat … based on what your neighbor down the street did.

And that was a day in the life of a loan modification processor, like me. Well, all that is about to change, folks. Just today, my colleagues told me, there is talk on several business blogs that some of the bank CEO’s are about to be indicted and will have to go to prison.

Class Actions or Mass joinder cases Widespread Wrongful Foreclosures, Failure to Reinstate Loans

It is no secret that the United States remains in the throes of one of the worst “mortgage meltdowns” in history. The problem is so widespread that the numbers are almost hard to believe. The consensus is that it will take years for the effects of this economic disaster to be unwound through any process, whether free market, government run or a combination of both. Just days ago, CNBC reported that the monthly foreclosures for January was an ALL TIME HIGH. This story ran simultaneously with the emergence of allegations of widespread “robo-signing” borrowerrs into foreclosure without regard to the actual status of their loan.

In the case of the wrongful foreclosure, the fact pattern generally goes as follows. First, borrower takes out a mortgage on his property and lender takes back a promissory note and deed of trust. Second, the borrower misses one or two payments, or falls behind one or two payments, and then catches up. Third, the lender notifies the borrower that the loan is in default, fails to reinstate the loan, and begins to generate fees and costs that must be paid by the borrower — before the lender will reinstate its loan — including but not limited to: (1) attorneys fees; (2) default interest; (3) late charges; (4) appraisal fees and (5) other costs. The lender goes on to threaten the buyer with foreclosure if the buyer fails to pay all the banks fees and costs, in addition to the principal and interest on the underlying loan this is called reinstatement.

What’s the big deal? These “default” fees and costs are quickly piled on, eroding any equity that the borrower may have slowly built up on the property (in effect paying it to the Bank), draining the borrower’s bank account and leaving the borrower unable to make up the payments or resist foreclosure. On the bank side, it’s a beautifully profitable transaction, they bleed the borrower dry, and then take the property back. Additionally they could not even initiate foreclosure in California till they comply with civil code 2923.5. One problem…..it’s illegal.

The recent case against Bank of America was based on abusive practices such as these, and resulted in a settlement of $108 million, affecting nearly 200,000 borrowers!

In California, borrowers also have the protection of a special statute, California Civil Code Section 2924c. California Civil Code § 2924c applies to any obligation secured by a deed of trust on real property, and permits the trustor, who is in default under the terms of the deed of trust, to cure the default unilaterally, by paying to the beneficiary or the successor in interest:

“(A) all amounts of principal, interest, taxes, assessments, insurance premiums, or advances actually known by the beneficiary to be, and that are, in default and shown by the beneficiary to be, and that are, in default and shown in the notice of default, under the terms of the deed of trust or mortgage and the obligation secured thereby, (B) all amounts in default on recurring obligations not shown in the notice of default, and (C) all reasonable costs and expenses, subject to subdivision (c), which are actually incurred in enforcing the terms of the obligation, deed of trust, or mortgage, and trustee’s or attorney’s fees, subject to subdivision (d), other than the portion of principal as would not then be due had no default occurred…”

If the trustor cures the default pursuant to this section, then “all proceedings theretofore had or instituted shall be dismissed or discontinued and the obligation and deed of trust or mortgage shall be reinstated and shall be and remain in force and effect, the same as if the acceleration had not occurred”. Bottom line, if a borrower tenders payment to the lender as required under 2924c, reinstatement is mandatory!

A recently filed a class action in LA Superior Court against Greystone Bank for alleged violations of California Civil Code 2924c. Read Complaint. If you are a borrower that has been: (1) subjected to, or threatened with wrongful foreclosure, or (2) forced to pay improper fees and costs in order to avoid foreclosure, by Greystone Bank or Greystone Servicing Corporation, we would like to talk with you about your situation.

Also, if you have had a wrongful foreclosure experience with any other large bank, other than Greystone Bank or Greystone Servicing Corporation, we would like to talk with you about your experience as well. Call Southern California 909-890-9192 in Northern California 925-957-9797

BofA Unit Ordered to Halt Foreclosures in Nevada

Thanks to Charles Cox for forwarding this article
By David McLaughlin – Jan 25, 2011 4:19 PM PT
A Bank of America Corp. unit, ReconTrust Co. N.A., was ordered by a Nevada judge to temporarily stop foreclosures in the state that aren’t approved by a court order.
Judge Robert W. Lane in Nye County, Nevada, issued a preliminary ruling that blocks ReconTrust from conducting nonjudicial foreclosures until he holds a hearing Feb. 28 on whether to make the ban permanent, according to a Jan. 20 order provided by the court. The injunction was sought in a Nevada homeowner’s lawsuit against Bank of America and ReconTrust.
Stopping the foreclosures is necessary to prevent the “irreparable injury” that would result from “unlawful” seizure of the plaintiff’s home by ReconTrust Co., the judge wrote. The ruling applies to any real estate or personal property in Nevada.
In nonjudicial foreclosures, lenders can seize property without a court order. Some states require a court order, other don’t, and in some, including Nevada, both are used, according to RealtyTrac, which collects foreclosure data. Nevada foreclosures are primarily executed out of court, according to RealtyTrac’s website.
‘Ecstatic’
Suzanne North, the homeowner suing Bank of America and ReconTrust, said in a telephone interview that she’s “ecstatic” about the ruling. She received a default notice after seeking a loan modification from Bank of America and going through a trial period. When she received the notice at her Pahrump, Nevada, home, she contacted the bank and learned she didn’t qualify for the modification, she said.
“I think it’s great because I’m not the only one in this boat,” North said about the judge’s order.
Nevada had the highest U.S. foreclosure rate in 2010 for the fourth consecutive year, with more than 9 percent of the state’s households receiving a filing. Arizona was second at 5.7 percent and Florida third at 5.5 percent.
Jumana Bauwens, a Bank of American spokeswoman, said ReconTrust faced such an order in Utah and “prevailed in challenging that order in federal court.”
“Until the current situation is resolved, ReconTrust intends to comply with the order,” Bauwens said by e-mail. She didn’t respond to a question about how many properties are affected by the ruling.
John Christian Barlow, a lawyer who represents North, said the lawsuit claims ReconTrust doesn’t have the authority to foreclose on homes in Nevada. Bank of America and other banks use ReconTrust to seize homes in Nevada, he said. Barlow said he will seek class-action, or group, status for the lawsuit.
“If a company’s going to foreclose, they’ve got to do it right,” he said.
The case is North v. Bank of America Corp., CV31506, Fifth Judicial District, Nevada, Nye County.
Editors: Fred Strasser, Charles Carter
To contact the reporter on this story: David McLaughlin in New York at dmclaughlin9@bloomberg.net
To contact the editor responsible for this story: David Rovella at drovella@bloomberg.net