Tag Archives: Foreclosure

Wells Fargo says we don’t dual track you just never really applied for a modification 7944 pages later it was not “complete”

21 Nov

Upon doing the deposition of Joeffery Long Wells Fargo I was amazed that they could be so blatant as against the California Homeowners Bill of Rights but then again it is Wells Fargo

Joffrey Long rough draft

Joffrey Long exhibits

Pacific Western Bank $227,000 in attorney fees for a 2 hour bench trial eviction wow !!!!

23 Dec

Brillouet Trial Brief 7-8-15

Timothy L. McCandless, Esq. SBN 145577
Law Offices of Timothy L. McCandless
26875 Calle Hermosa Suite A,
Capistrano Beach, CA 92624
Telephone: (925) 957-9797

Attorneys for Defendants
Pierrick Briolette and Yong C. Briolette

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF VENTURA
COASTLINE REAL ESTATE HOLDINGS, INC.

Plaintiff,

vs.

PIERRICK BRILLOUET, an individual;
YONG BRILLOUET, an individual; and DOE 1 through DOE 10, INCLUSIVE;
Defendants.
)
)
) Case No. 56-2014-00461981-CU-UD-VTA

DEFENDANTS’ OPPOSITION TO
PLAINTIFF’S MOTION FOR
ATTORNEY’S FEES AND COSTS, MEMORANDUM OF POINTS AND
AUTHORITIES

DATE: January 6, 2016
TIME: 8:30 a.m.
DEPT.: 41

BANKmagesDefendants Pierrick Brillouet and Yong C. Brillouet respectfully submit their Opposition to Plaintiff’s Motion for Attorney’s Fees and Costs as follows:
MEMORANDUM OF POINTS AND AUTHORITIES
I.
INTRODUCTION AND HISTORICAL PERSPECTIVE
Dates relevant to this matter are as follows:
On December 31, 2014, Plaintiff Coastline Real Estate Holdings, LLC filed the instant unlawful detainer action.
A two hour bench trial was conducted on September 8, 2015, and the court awarded possession to the Plaintiff.
Judgment was entered on October 7, 2015. The time to file an appeal was November 6, 2015, because the matter was filed as a limited action.
Additionally, the deadline to file the present Motion For Attorney’s was November 6, 2015, pursuant to California Rules of Court Rule 3.1702(b)(1). However the Motion was not filed until December 4, 2015. As such, the Motion was filed almost one month after the deadline and for that reason alone must be denied.
Plaintiff now seeks the award of $227,084.50 in attorney’s fees. The Declaration of Attorney Richman at Paragraph 19 specifically alleges that he expended 769.85 hours “in this matter.” However, when you review the charges, the hours were actually incurred for by other parties (Western Commercial Bank, Pacific Western Bank), in entirely different actions. The assertion of 769.85 hours by Plaintiff’s counsel related to this action is an intentional misrepresentation pursuant to California Rules of Professional Conduct 5-200(b).
Additionally, the identical charges were already disallowed in a prior motion in a different action, and therefore are barred by collateral estoppel.
Even worse, Defendant redacted in its Motion what attorney services were performed and the amount of time which was expended in completing those tasks. As a result, even if Plaintiff was entitled to recovery attorney’s fees for this case, based on the information served on Defendant, it is impossible to determine: (1) the nature of the service provided, (2) whether that service was necessary, (3) the amount of time which was expended to complete the service, and (4) is the amount of time and charge a reasonable fees for the “alleged” services. Given the foregoing, the Motion must be denied.
II. THE MOTION IS UNTIMELY FILED.
The unlawful detainer action was filed as a limited action, the Plaintiff paid the filing fee for a limited action, and the defendants likewise paid the filing fees for a limited action. The action was tried as a limited action.
Judgment was entered on October 7, 2015.
The deadline to file the present Motion For Attorney’s was thirty (30) days later, or November 6, 2015, pursuant to California Rules of Court Rule 3.1702(b)(1). Section 3.1702 provides in pertinent part:
(b) Attorney’s fees before trial court judgment
(1) Time for motion
“A notice of motion to claim attorney’s fees for services up to and including the rendition of judgment in the trial court-including attorney’s fees on an appeal before the rendition of judgment in the trial court-must be served and filed within the time for filing a notice of appeal under rules 8.104 and 8.108 in an unlimited civil case or under rules 8.822 and 8.823 in a limited civil case.”

The parties did not enter into a stipulation to extend the time for Plaintiff to file its Motion for Attorney’s Fees.
Plaintiff filed the instant Motion on December 4, 2015.
California Rules of Court Rule 8.822(1)(A) provides in pertinent part:
Rule 8.822. Time to appeal
(a) Normal time
(1) “Unless a statute or rule 8.823 provides otherwise, a notice of appeal must be filed on or before the earliest of:

(A) 30 days after the trial court clerk serves the party filing the notice of appeal a document entitled “Notice of Entry” of judgment or a file-stamped copy of the judgment, showing the date it was served;”

As such, the Motion was filed almost one month after the deadline and for that reason alone must be denied.

III. THE INSTANT MOTION IS NOT SUPPORTED IN CONTRACT OR
STATUTE AND MUST BE DENIED.
Plaintiff Coastline Real Estate Holdings, LLC purchased the position of Pacific Western Bank. Defendants believe that Plaintiff is a wholly owned subsidiary of Pacific Western Bank.
Pacific Western Bank (as successor in interest) became a Defendant in Superior Court of California, County of Ventura Case No. 56-2014-00458447-CU-OR-VTA stylized as:
Pierrick Brillouet and Yong Brillouet v. Western Commerical Bank, brought the identical motion for attorney’s fees. That motion was denied. The court adopted its Tentative Ruling which stated:

The Bank is only entitled to an award of attorney fees in this matter if a contractual provision exists which provides for such an award.
The Bank argues that the construction trust deed contains an attorney provision which provides it with a basis for attorney fees. However, the deed only permits an award of attorney fees by a court “[i]f Lender institutes any suit or action to enforce any of the terms of this Deed of Trust, Lender shall be entitled to recover such sum as the court may adjudge reasonable as attorneys’ fees at trial and upon any appeal.” (Emphasis added). Only actions which the “Lender institutes” are subject to the attorney’s fees provision and this action was not brought by the lender. The Bank has made no argument for the extension of the plain language of the provision which would encompass the current suit and as such it has not demonstrated it is entitled to fees under the construction trust deed.
The Bank claims that it is also entitled to attorney fees under the Promissory Note which provides:
Lender may hire or pay someone else to collect this note. Borrower will pay Lender that amount. This includes, subject to any limits under applicable law, Lender’s attorneys’ fee and Lender’s legal expenses, whether or not there is a lawsuit, including attorneys’ fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. Borrower will also pay any court costs, in addition to all other sums provided by law.
This was not a suit brought to collect the note. While “that amount” includes attorney fees and legal expenses, there is no indication that the court is authorized to make an award of these fees and expenses as a result of the current litigation. The Promissory Note does not indicate that the prevailing party in an action such as this is entitled to reasonable attorney fees.
The Bank also points to the assumption agreement as a basis for fees. It allegedly provides that “[i]f any lawsuit, arbitration or other proceedings is brought to interpret or enforce the terms of this Agreement, the prevailing party shall be entitled to recover the reasonable fees and costs of its attorneys in such proceeding.” This lawsuit didn’t involve the interpretation or enforcement of the terms of the assumption agreement. Santisas v. Goodin (1988) 17 Cal.4th 599 is of no help to the Bank as it involved an expansive attorney’s fee clause that clearly applied to the suit and the question was whether Civil Code §1717(b)(2) thwarted its application. That is not the case here.” A true and correct copy of the Tentative Ruling is attached hereto as Exhibit “1” and is incorporated by this reference.
Notwithstanding the court’s prior Order denying the very same attorney’s fees, Plaintiff in the instant action once again argues the identical points and seeks fees which are unsupported, unreasonable, and which are untimely. As such, the Motion for Attorney’s fees must be denied.
IV. MOVANTS HAVE THE BURDEN OF PROVING THE REASONABLE
NATURE OF THE SERVICES ALLEGED.
The Declaration of Attorney Steven N. Richman contains an attachment which purports to be a listing of the attorney services which were provided. However, a summary inspection shows that the listing of services, the time incurred for such service and the amount charged for such services have been redacted.
As such, Plaintiffs cannot determine the propriety of: (1) the nature of the services provided, (2) whether those services were necessary, (3) the amount of time which was expended to complete the services, and (4) whether the amount of time and charge is a reasonable fee for the particular service rendered.
Attorney fee shifting statutes and contractual provisions usually provide only the right to recover “reasonable attorneys’ fees” incurred as a result of the litigation. In order to determine the reasonableness of the fee award requested, courts generally start with the “lodestar amount,” which is the reasonable number of hours spent on the litigation multiplied by the reasonable hourly rate. Serrano v. Priest, 20 Cal.3d 25, 48 (1977); Thayer v. Wells Fargo Bank, N.A., 92 Cal.App.4th 819 (2001).
Once this amount is determined, the court can take into consideration additional factors to adjust the “lodestar” either up or down as appropriate. Such factors include: the novelty or difficulty of the issues involved in the case and the skill required to present those issues; the extent to which the nature of the case precluded the employment of other attorneys; and the fee arrangement of the attorney and the client. Serrano, 20 Cal.3d at 48; Thayer, 92 Cal. App.4th at 833. The party seeking the fees has the burden of proof to establish that the time spent and the hourly fee charged is reasonable. Levy v. Toyota Motor Sales, U.S.A., Inc., 4 Cal.App.4th 807 (1992).
This particular case was an unlawful detainer action, the trial lasted two hours, the trial presented no novel issues, nor did it require herculean efforts. The case was disposed by bench trial within two hours. As such, although Defendants believe that no right to attorney’s fees exists in this matter, if the court is going to award attorney’s fees, then Movant has failed to prove the reasonableness of the fees requested. Given the foregoing the Motion should be denied.
Dated: December 22, 2015 LAW OFFICES OF
TIMOTHY L. MCCANDLESS
By ____________________________
Timothy L. McCandless, Esq.
Attorney for Defendants
Pierrick Brillouet and Yong C. Brillouet

 

Denial of Loan Modification mortgage redlining as a constitutional right

8 Sep

Punitive Damages for Civil Rights – Convincing the Jury and Judge By Jeffrey Needleboa-billboard1“Let this case serve as a lesson for all employers who would ignore the existence of racial harassment in the workplace.” With those introductory words, the Ninth Circuit Court of Appeals affirmed a jury’s verdict for $1 million in punitive damages and $35,612 in compensatory damages. In the process, not only was justice served for the Plaintiff, Troy Swinton, but strong precedent was created for future civil rights claimants. Swinton v. Potomac Corporation, 270 F.3d 794 (9th Cir. Oct. 24, 2001). Although the Defendant portrayed the racial harassment suffered by Mr. Swinton as “jokes”, the Ninth Circuit correctly understood that neither the verdict nor the discrimination was a laughing matter. Id. at 799. Not only did the Plaintiff get what he deserved, but the Defendant, Potomac Corporation, got what it deserved as well.

On the issue of liability, the Court in Swinton analyzed at considerable length the various of theories of holding an employer liable and a variety of evidentiary issues relevant to liability and punitive damages. The Court also considered the legal issues which define the availability of a punitive damages award and the legal standard for keeping the punitive damages once awarded. The Court determined that a ratio of punitive to compensatory damages of 28:1 was not excessive. Satisfying the legal standard concerning an award of punitive damages, however, is only half the battle. Convincing the jury that an award of punitive damages is appropriate can often be the more difficult task.

 

Convincing the Jury

It is uniquely the function of punitive damages to punish the defendant, and to deter future misconduct by the defendant and others similarly situated. Especially for large corporations, relatively insubstantial compensatory damages don’t begin to measure the enormity of the defendant’s wrongful behavior, and have no deterrent effect. It is for that reason that punitive damages are an essential ingredient in all civil rights litigation.

The availability of punitive damages in civil rights cases affords juries the opportunity to enhance the quality of equal opportunity and\or constitutional freedoms, not just for the litigants before the court, but in the community at large. They create an opportunity to give contemporary meaning and vitality to the universal ideals which distinguish this country as a free society. Punitive damages in civil rights cases promotes this highest public purpose.

The challenge to trial lawyers is to communicate to juries the broad and compelling social justification for a punitive damages award. This requires a special focus on social issues which transcend a monetary award from a particular defendant to a particular plaintiff. In order to achieve the intended purpose, it must be clearly explained to the jury that an award of punitive damages doesn’t represent what the plaintiff deserves, but what the defendant deserves for its reckless disregard of fundamental constitutional or civil rights.

exclusionAlmost all Americans are extremely passionate about the Bill of Rights and the right to equal opportunity. The eloquence to convince them that these are ideals which need to be perpetuated can be legitimately borrowed from Thomas Jefferson or James Madison in the case of constitutional rights, or legendary civil rights leaders, such as Martin Luther King, Jr. or Thurgood Marshall for the cases involving equal opportunity. For example, liberal use of quotations from King’s “I have a Dream” speech have almost irresistible appeal. References to Jackie Robinson, the first African American major league baseball player for the Brooklyn Dodgers, or Rosa Parks, who refused to sit on the back of the bus, always resonate with jurors.

A brief historical review of the struggle for equal opportunity is appropriate to communicate to the jury their role in a continuing effort. The Civil Rights Act of 1866, 42 U.S.C. Section 1981, is often utilized in cases involving race harassment or discrimination. This statute was originally enacted to guarantee the civil rights of newly emancipated slaves, and to eliminate the vestiges of slavery which existed immediately after the Civil War. But initially, the statute didn’t fulfill its intended purpose. In the years immediately after the Civil War, newly emancipated slaves were denied the most basic civil rights; they were denied the right to own property, to vote, to enter places of public accommodation and hold employment. African Americans were second class citizens in this county in virtually every sense of the word.

Comparisons to the system of apartheid in South Africa serve to illustrate that the principles the jury is being asked to vindicate are the ideals that distinguish our country as a free society. In our country the repressive system of segregation wasn’t called apartheid, it was called Jim Crow. But the concept was essentially the same. For almost 90 years after the Civil War, Jim Crow was the rule of law. In May of 1954, the Supreme Court rejected the concept and required integration in the public schools. Important civil rights statutes followed. Substantial progress has been made. But the vestiges of slavery still exist in the country. The proof is nowhere more powerfully demonstrated than in the facts presented in this case, Swinton v. Potomac. Mr. Swinton was the only African-American of approximately 140 employees. Swinton, 270 F.3d at 799. At the workplace there were jokes about a wide variety of ethnic groups, including whites, Asians, Polish people, gays, Jews, and Hispanics. A co-worker testified that the majority of the people at U.S. Mat had actually witnessed the use of racially offensive language, and another employee testified that “just about everybody” at U.S. Mat had heard “racial slurs and comments.” Id. at 800. During the short time he was at U.S. Mat, Swinton heard the term “nigger” more than fifty times. Id. Swinton’s immediate superior as supervisor of the shipping department, witnessed the telling of racial jokes and laughed along. The supervisor also acknowledged making “racial jokes or a slur” two or three iStock_000015861187Mediumtimes. The supervisor also overheard one of the two plant managers make racial jokes on several occasions. The supervisor further admitted that although he had an obligation under company policy to report the racial harassment, he never made any such report and never told anyone to stop making such jokes. Id. at 799-800. Some of the racial “jokes” included: “What do you call a transparent man in a ditch? A nigger with the shit kicked out of him. Why don’t black people like aspirin? Because they’re white, and they work. Did you ever see a black man on ‘The Jetsons’? Isn’t it beautiful what the future looks like? Reference to ‘Pontiac’ as an acronym for ‘Poor old nigger thinks it’s a Cadillac.’ Id. at 799. “The jokes and comments ranged from numerous references to Swinton as a ‘Zulu Warrior’ to a comment in the food line, ‘They don’t sell watermelons on that truck, you know, how about a 40-ouncer?’ On the subject of Swinton’s broken-down car, it was suggested why don’t you get behind it and push it and call it black power and why don’t you just jack a car. You’re all good at that.” Id. at 800. The “jokes” and slurs started the day Swinton began to work for the defendant, and didn’t stop until the day six months later he left in disgust.

The civil justice system provides an opportunity for the jury to dispense social justice for the victim of bigotry and to fulfill the purpose of the Civil Rights Act of 1866; the elimination of the vestiges of slavery. Plaintiff’s counsel can explain to the jury that their verdict will help fulfill the purpose of this 140 year old civil rights statute, and give it contemporary meaning and vitality.

Many civil rights cases involve wrongful discharge from employment. For the purpose of compensatory damages, the appropriate focus is the injury to victim, including the economic hardship created and the emotional distress associated with being unemployed for a prolonged and continuing period. For the purpose of punitive damages, however, it is important to maintain a focus on the broader social issues involved. We need the contribution everyone is capable of making so that we can actualize our potential as a society. We can’t afford to exclude people from the workplace. In employment discrimination cases, the damage is not limited to the injury and social injustice suffered by the employee, it extends to the broader society which is deprived of the contribution the employee is capable of making. The jury must be made aware that punitive damages are intended to prevent future civil rights violations and to redress the injury suffered by the broader society.

6a00d83451b7a769e201676871ac87970b-320wiThe focus of Swinton v. Potomac was racial harassment. But these principles apply with equal force to other protected classifications. President Franklin Roosevelt was disabled! He spent the most productive years of his life in a wheel chair. Its hard to imagine what American society would be like without his contribution. Statistics appearing in the Congressional History of the American with Disabilities Act can be utilized to demonstrate the need for reasonable accommodation, not only so the disabled person can live with dignity, but also so that society can reap the benefits of his or her contribution.

Shirley Chisholm was the first female African American representative in the United States Congress. She experienced both racial and sexual discrimination. Ms. Chisholm can be quoted as saying that sexual discrimination was by far the more destructive of the two. The historical fight for women’s equal rights in many ways parallels the fight for racial equality. Historically, women could not own real property, enter into contracts or vote. African Americans got the legal right to vote before women. Counsel can explain the full meaning of dower rights, and that civil rights statutes were required so that women could work without discrimination and receive equal pay. Susan B. Anthony and other historic champions of women’s rights can be quoted liberally. Comparisons to the Taliban in Afghanistan serve to demonstrate the fundamentality of women’s rights in a free society.

Precious few jurors will deny the great value of these fundamental rights. Punitive damages in a civil rights case is just one vehicle for assessing their monetary worth.

Convincing the Judge In Kolstad v. American Dental Association, 527 U.S. 526, 119 S.Ct. 2118 (1999), the Court ruled that the controlling standard required Plaintiff to prove that the defendant acted with malice or with reckless indifference to the federally protected rights of an aggrieved individual. “Applying this standard in the context of §1981a, an employer must at least discriminate in the face of a perceived risk that its actions will violate federal law to be liable in punitive damages.” Id. at 536. The Court rejected the more onerous egregious conduct standard. Id. at 538-539. The Court declined, however, to allow vicarious liability “for the discriminatory employment decisions of managerial agents where these decisions are contrary to the employer’s good faith efforts to comply with Title VII.” Id at 544.

Morgan-Stanley2-300x199The Court in Kolstad also established a standard for imputing punitive damages liability to a corporate wrongdoer. Without briefing, the Court adopted the Restatement (Second) of Agency and the Restatement (Second) of Torts. “Suffice it to say here that the examples provided in the Restatement of Torts suggest that an employee must be “important,” but perhaps need not be the employer’s “top management, officers, or directors,” to be acting “in a managerial capacity.” Id. at 543. “[D]etermining whether an employee meets this description [managerial capacity] requires a fact-intensive inquiry. . . .” Id. In EEOC v. Wal-Mart , 187 F.3d 1241 (10th Cir. 1999), the Tenth Circuit considered, in light of Kolstad, “the evidentiary showing required to recover punitive damages under a vicarious liability theory against an employer accused of violating the American with Disabilities Act.” Id. at 1243. In determining whether the managers had sufficient authority to impute punitive damages, the Court acknowledged that “authority to ‘hire, fire, discipline or promote, or at least to participate in or recommend such actions,’ is an indicium of supervisory or managerial capacity.” (emphasis added). Id. at 1247. Citing Miller v. Bank of America, 600 F.2d 211, 213 (9th Cir. 1979), the Court found that both the supervisor and the store manager had sufficient authority to bind the corporation for punitive damages. Id.

Applying these standards in Swinton, the Court ruled “that the inaction of even relatively low-level supervisors may be imputed to the employer if the supervisors are made responsible, pursuant to company policy, for receiving and acting on complaints of harassment.” Swinton v. Potomac Corp., 270 F.3d at 810. Citing Deters v. Equifax Credit Information Servs., Inc., 202 F.3d 1262 (10th Cir.2000), the Court in Swinton ruled that the good faith defense could not apply “because the very person the company entrusted to act on complaints of harassment failed to do so, and failed with malice or reckless disregard to the plaintiff’s federally protected rights.” Id. In addition, the existence of employment policies is not sufficient. In order to satisfy the good faith defense, employment policies must be implemented and in Swinton they were not. Id.

Remittitur23458820In BMW of North America, Inc. v. Gore, 517 U.S. 559, 116 S.Ct. 1589 (1996), the Supreme Court established the standard for constitutionally excessive awards of punitive damages. As stated repeatedly by the Supreme Court, there is no mathematical bright line. “Only when an award can fairly be categorized as “grossly excessive” in relation to these interests [punishment and deterrence] does it enter the zone of arbitrariness that violates the Due Process Clause.” BMW, supra at 568. The Court announced three “guideposts” to assist courts in determining whether an award violates this standard: the “degree of reprehensibility” of the tortfeasor’s actions; “the disparity between the harm or potential harm suffered by [the plaintiff] and his punitive damage award”; “and the difference between this remedy and the civil penalties authorized or imposed in comparable cases.” Id . at 575.

In reference to reprehensibility, the Court in Swinton recognized the so called “hierarchy of reprehensibility,” with acts and threats of violence at the top, followed by acts taken in reckless disregard for others’ health and safety, affirmative acts of trickery and deceit, and finally, acts of omission and mere negligence. Id. at 818. Although the Court recognized that racial harassment is not the worst kind of tortious conduct, “in sum, we have no trouble concluding that the highly offensive language directed at Swinton, coupled by the abject failure of Potomac to combat the harassment, constitutes highly reprehensible conduct justifying a significant punitive damages award.” Id.

In reference to the ratio of compensatory damages to punitive damages, quoting BMW, the Court acknowledged, “[i]ndeed, low awards of compensatory damages may properly support a higher ratio than high compensatory awards, if, for example, a particularly egregious act has resulted in only a small amount of economic damages. A higher ratio may also be justified in cases in which the injury is hard to detect or the monetary value of non-economic harm might have been difficult to determine.” BMW at 582. Because Swinton made only $8.50 an hour, this was such a case.

For the purpose of evaluating the ratio, the Court also considered Plaintiff’s counsel’s repeated admonition to the jury “not to get carried away,” the financial asserts of the Defendant and “the harm likely to result from the defendant’s conduct as well as the harm that actually has occurred.” Swinton at 819. After comparing similar cases, the Court had no trouble in concluding that a ratio of 28:1 was not excessive. Id . at 819-820.

In reference to analogous civil penalties, the Court refused to impose the cap of $300,000 made applicable to other types of civil rights cases pursuant to the Civil Rights Act of 1991; 42 U.S.C. Section 1981. Id. at 820. There are no caps on punitive damages under 42 U.S.C. Section 1981.

Conclusion Punitive damages in civil rights cases are a meaningful way of promoting important social values.

One dollar damages and 87,525.oo in attorney fees that’s how you spell FAIR DEBT COLLECTION PRACTICES ACT ( You’ve gotta love the courts in Martinez, Ca ie. Contra Costa county)

24 Apr

Heritage Pac. Fin. v. Monroy, 2013 Cal. App. 

Court of Appeal of California, First Appellate District, Division Two

23458820

HERITAGE PACIFIC FINANCIAL, LLC, Plaintiff, Cross-defendant, and Appellant, v. MARIBEL MONROY, Defendant, Cross-complainant, and Respondent.

 

Contra Costa County Super. Ct. No. C10-01607.

 

 

Core Terms


heritage, trial court, promissory note, attorney’s fees, tort claim, cause of action, lender, mortgage, notice, demurrer, hourly rate, loan application, fraud claim, prevailing, trust deed, misrepresent, lawsuit, summary adjudication, debt collector, cross-complaint, foreclosure, spend, borrower, consumer, leave to amend, mortgage loan, consensual, assignee, seller, owed

Judges: Lambden, J.; Kline, P.J., Richman, J. concurred.

Opinion by: Lambden, J.

 

Opinion

Maribel Monroy executed two promissory notes with WMC Mortgage Corp. (WMC) when purchasing a home in Richmond, California in 2006 (the Richmond property). After a foreclosure on the senior deed of trust, Heritage Pacific Financial, LLC (Heritage) acquired Monroy’s second promissory note from WMC. Heritage sent Monroy a letter attached to a complaint and summons advising her that Heritage had filed a lawsuit against her alleging various fraud claims. The letter admonished that any misinformation provided by Monroy on her original loan application with WMC could result in civil liability and that Heritage would proceed with a lawsuit if it were unable to resolve the matter with Monroy. Monroy filed a cross-complaint against Heritage, alleging violations of the Rosenthal Fair Debt Collection Practices Act (Rosenthal Act) and the federal Fair Debt Collection Practices Act (FDCPA or the Act).

After permitting Heritage to amend its complaint three times, the trial court sustained Monroy’s demurrer against Heritage’s pleading on the grounds that Heritage had failed to provide or allege an [2] assignment agreement with sufficient particularity to demonstrate that the assignment of Monroy’s promissory note included an intent to assign WMC’s tort claims against the borrower. Thereafter, Monroy moved for summary judgment or adjudication on her cross-complaint. The court denied her motion as to her claim of a violation of the Rosenthal Act but granted the motion as to a violation of the FDCPA, on the condition that Monroy agree to damages in the amount of one dollar. Monroy agreed to the damage award of one dollar and the court entered judgment in her favor. Subsequently, Monroy requested attorney fees and costs under title15 of the United States Code section 1692k(a)(3), and the court found that Monroy was the prevailing party and entitled to attorney fees and costs in the amount of $89,489.60. The court concluded that the issues regarding the cross-complaint and complaint were interrelated and could not be reasonably separated. Heritage separately appealed the judgment and the award of attorney fees and we, on our own motion, consolidated the appeals.

On appeal, Heritage argues that it sufficiently set forth allegations to support a claim that the assignment from WMC included [3] an intent to assign WMC’s tort claims against Monroy and that the trial court improperly weighed the evidence when sustaining the demurrer without leave to amend. It also contends that triable issues of fact exist regarding Monroy’s FDCPA claim and therefore the trial court erred in granting summary judgment. Finally, it objects to the award and amount of attorney fees. We are not persuaded by Heritage’s argument, and affirm the judgment and the award of attorney fees.

 

BACKGROUND

Monroy is Spanish speaking and works as a housekeeper. On November 26, 2006, she purchased the Richmond property for $425,000. Monroy executed two promissory notes with WMC. She obtained a senior mortgage loan for $340,000 and a junior mortgage loan for $85,000 (the note, the second note, or the promissory note). Both promissory notes were secured by a deed of trust on the property. The beneficiary of each deed of trust was Mortgage Electronic Servicing Corporation.

Both the first and second promissory notes provided in the first paragraph the following: “I understand that the Lender may transfer this Note. The Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this [4] Note will be called the ‘Note holder.'” Monroy signed a form stating that the information in the loan application was true and correct and acknowledged that “any intentional or negligent misrepresentation of this information . . . may result in civil liability, including monetary damages.”

On her loan application, Monroy claimed to make $9,200 per month as the owner of Maribel’s Cleaning Services. Monroy signed a certification that she did not have a family or business relationship with the seller of the property.

The seller of the Richmond property was Marvin E. Monroy, Monroy’s son. He received $53,258.49 as a result of the sale. Monroy bought the house from her son because he was not able to make the mortgage payments.

At this same time, on November 20, 2006, property in Manteca (the Manteca property) was purchased in Monroy’s name and a promissory note was executed for the amount of $312,000. According to Monroy, the Manteca property was purchased under her name as a result of identity theft. She stated that in 2006 she was unaware of this transaction. She averred that she has never been to the Manteca Property. In 2008, Monroy submitted to the credit-reporting agency a verified fraud [5] statement. In this statement, she asserted that a mortgage in Manteca was opened in her name as a result of the identity theft.

Monroy failed to make her mortgage payments on the Richmond property, which resulted in a foreclosure on the senior deed of trust on August 28, 2008.

On May 22, 2009, Heritage acquired Monroy’s second promissory note as part of a “larger pool of loans.” Heritage is a limited liability company organized under the laws of the State of Texas and its principal place of business is in Dallas County, Texas. Heritage sent Monroy a letter stating that it had purchased her second unpaid loan. Heritage was unsuccessful in speaking with Monroy. In October 2009, Heritage sent by certified mail another notice of the transfer of the ownership of the note. Heritage sent Monroy a third notice in December 2009. In this notice, it asserted that she was obligated to pay Heritage the unpaid balance on the second promissory note.

Heritage did further research and concluded that Monroy had misrepresented her income and submitted false documentation regarding her income on her original loan application. Heritage also discovered that Monroy’s son was the seller of the Richmond property. [6] Additionally, it uncovered the documents related to the Manteca property.

On June 1, 2010, Heritage filed a complaint against Monroy for intentional misrepresentation, fraudulent concealment, promise without intent to perform, and negligent misrepresentation based on her loan application with WMC. Heritage alleged that it was not barred from pursuing its action by any antideficiency statute because it was not seeking a deficiency judgment for the balance of a promissory note following foreclosure, but was seeking a judgment for Monroy’s alleged fraud in connection with her loan application. Heritage requested actual damages in the amount of $85,000, the sum owed on the promissory note, and also asked for punitive damages.

On June 27, 2010, Monroy received a letter dated May 25, 2010, from Heritage that attached Heritage’s summons and complaint against her. The letter advised her about its civil action against her and stated in bold type: “Should you wish to voluntarily provide us with your federal tax return transcripts, a signed copy of Form 4506-T (Request for Transcript of Tax Return) and/or your proof of residency in the property made the subject of our Complaint, please contact [7] us at your earliest convenience . . . .” The letter directed: “If you notify us of your intent to voluntarily provide us with this documentation, we may suspend actions to provide you with an opportunity to provide us with copies of the same.” The letter told Monroy to notify Heritage if she wanted to provide a copy of her promissory note as Heritage, “as assignee of the promissory note, has the right to reverify the information contained therein.” The letter admonished Monroy that “any misinformation or misrepresentations provided in the [loan] application are a violation of federal law and may result in ‘civil liability, including monetary damages, to any person who may suffer any loss due to reliance upon any misrepresentation’ for which Heritage . . . currently seeks.” The letter warned that if Heritage was unable to resolve the matter by the date Monroy’s answer to the complaint was due, Heritage would “have no other option but to proceed with litigation against” her. The letter declared that it was “from a debt collector” and was “an attempt to collect a debt.”

On July 28, 2010, Monroy answered Heritage’s complaint and filed a cross-complaint alleging violations of the Rosenthal [8] Act (Civ. Code, § 1788 et seq.) and the FDCPA (15 U.S.C. § 1692 et seq.). A little more than a month later, on September 2, Heritage demurred to the cross-complaint and filed a motion to strike the pleading. On November 16, 2010, Monroy filed a motion for judgment on the pleadings on Heritage’s complaint.

On December 28, 2010, the trial court overruled Heritage’s demurrer to Monroy’s cross-complaint and denied its motion to strike. On this same date, the court granted with leave to amend Monroy’s motion for judgment on Heritage’s complaint. The court explained that Heritage had failed to allege that the lender had assigned its fraud claims to it and Heritage had conceded that no California legal authority held that the assignment of a promissory note automatically constituted an assignment of a lender’s fraud claims. The court added: “If [Heritage] chooses to amend its complaint so as to specifically allege an assignment of the lender’s fraud claims, [Heritage] shall make such allegations with the particularity required of a fraud cause of action, and [Heritage] shall attach as an exhibit to the amended complaint a full and legible copy of any written assignment agreement.”

Heritage [9] filed its first amended complaint for the same four causes of action on December 23, 2010. Heritage attached Monroy’s second promissory note for $85,000, and alleged in the pleading that the assignment was recorded on the last page of the promissory note.

Monroy demurred to the first amended complaint.On April 7, 2011, the trial court sustained Monroy’s demurrer “with one last opportunity” for Heritage to amend. (Bold omitted.) The court explained that Heritage had “still failed to adequately allege an assignment of the original lender’s tort claims, as distinct from an assignment of the original lender’s contractual rights under the subject promissory note.” The court citedSunburst Bank v. Executive Life Ins. Co.(1994) 24 Cal.App.4th 1156, 1164.The court concluded that Heritage had “not attached to its complaint a written assignment agreement, as specified in the court’s ruling on the motion for judgment on the pleadings, and [Heritage]ha[d]not alleged the formation of an oral assignment agreement.”

The trial court noted in the order that Heritage had represented at oral argument that it would amend the pleading to allege “the existence of either a written assignment of the original [10] lender’s tort claims, or an assignment agreement implied in fact from circumstances other than the mere assignment of contractual rights.” The court admonished Heritage that its future pleading must “allege with the particularity required of a fraud cause of action all the circumstances showing the formation and terms” of an implied agreement if Heritage was relying on an assignment implied in fact. The amended complaint also needed to allege “whether the subject promissory note was assigned before or after foreclosure of the first deed of trust and the corresponding extinguishment of the second deed of trust securing the promissory note.”

On May 10, 2011, Heritage filed its second amended complaint (the SAC). The SAC again set forth claims for intentional misrepresentation, fraudulent concealment, promise without intent to perform, and negligent misrepresentation. Heritage alleged that after the foreclosure on the first deed of trust, WMC sold Monroy’s promissory note secured by the second deed of trust on the Richmond property and “assigned any and all rights WMC may have including but not limited to any right to fraud claims against [Monroy]. Such assignment is evidenced by signature [11] and stamp of the secretary of WMC . . . on the last page of the note . . . .” Heritage further alleged: “In assigning [Monroy’s] loan, [Heritage] as assignee of WMC obtained all rights, title and interest in and to the mortgage loan by [Monroy]. The assignment to [Heritage] included assignment of the original lender’s (WMC) tort claim. The assignment of tort claims is implied in the language of the loan sell agreement to [Heritage] including but not limited to language such as ‘Seller does hereby sell, assign and convey to Buyer, its successors and assigns, all right, title and interest in the loan.’ The loan sell agreement also provided that ‘the Seller transfers assign, set-over, quitclaim and convey to Buyer all right, title and interest of the Seller in the mortgage loan.'”

The SAC also added the following language: “The assignment of the tort claim is also implied by conduct of the parties in the secondary mortgage market as it is custom and practice in the mortgage industry to assign any and all rights and interests including any right to tort claim against the borrower when selling mortgage loan. [Heritage] alleges that based on the conduct of the parties and the language included [12] in the buy sell agreement of the loan, and the custom and practice of lenders such as WMC, the assignment of [Monroy’s] loan by WMC included assignment of any and all tort claims.” The SAC also asserted that the language of the loan application signed by Monroy implied the assignment of tort claims.

Monroy demurred to the SAC, and Heritage attached a declaration of Diane Taylor, a representative for WMC Mortgage, LLC, to its “sur-reply in support” of its opposition to Monroy’s demurrer. Taylor’s declaration dated August 4, 2011, stated: “As Assistant Secretary, I am authorized to speak on behalf of WMC Mortgage, LLC, successor to WMC . . . .” She stated that WMC relied on the information provided by the borrower applying for a loan to determine the borrower’s “eligibility for the products offered.” She stated: “When WMC sold its mortgage loans to third parties, WMC assignedallof its legal rights (in tort as well as contract), as the originating lender, to the buyer—including, but not limited to, the right to recover against a borrower for fraud.” (Underline omitted.)

On August 15, 2011, the trial court filed its order sustaining without leave to amend Monroy’s demurrer to Heritage’s [13] SAC. The court explained: “Despite being afforded an opportunity to amend, [Heritage] has still failed to adequately allege an assignment of the original lender’s tort claims, as distinct from an assignment of the original lender’s contractual rights under the subject promissory note. [Citation.] [Heritage] has not attached to its complaint a written assignment agreement . . . , and [Heritage] has not adequately alleged the formation of an oral assignment agreement.”

The trial court stated that there was an independent ground for sustaining the demurrer without leave to amend. The SAC stated that the promissory note was assigned after foreclosure of the first deed of trust and the corresponding extinguishment of the second deed of trust securing the promissory note. The court found that “there was no underlying property interest supporting an incidental assignment of the original lender’s fraud claims.”

On November 18, 2011, Monroy filed a motion for summary judgment or summary adjudication on her cross-complaint. Monroy asserted that Heritage was involved in the business practice of filing invalid fraud claims to avoid California’s antideficiency laws in order to collect on nonrecourse [14] debts or convert them into recourse default judgments. With regard to the claim of violating the FDCPA, Monroy alleged that Heritage was a debt collector and was engaged in a deceptive debt collections practice within the meaning of title 15, United States Code sections1692d, 1692e, and 1692f. Monroy cited the letter Heritage sent her after it had filed the lawsuit against her. Monroy also asserted that Heritage had violated provisions of the Rosenthal Act underCivil Code sections 1788.17and1788.13, subdivision (k). Monroy claimed that she was entitled to $1,000 for Heritage’s violation of the FDCPA and $1,000 for Heritage’s violation of the Rosenthal Act.

Heritage opposed the motion for summary judgment and also requested a continuance to conduct additional discovery. In its opposition to Monroy’s motion for summary judgment, Heritage agreed that it was a debt collector but disputed the contention that the FDCPA applied. Heritage argued that the FDCPA did not apply because Monroy bought the Richmond property for her son and also purchased a home in Manteca. It also disputed the allegation that it engaged in deceptive debt collections practices within the meaning of the FDCPA or [15] that it violated the Rosenthal Act.

On February 21, 2012, the trial court issued its order granting in part and denying in part Monroy’s motion for summary adjudication on her cross-complaint. The court granted Monroy’s motion as to her claim that Heritage violated the FDCPA. The court found that Heritage’s conduct in threatening Monroy with the prosecution of legal claims that had no merit violated the FDCPA. The court noted that Heritage had made a binding judicial admission that it received the assignment of Monroy’s note after the foreclosure of the first deed of trust, and that event extinguished the second deed of trust securing Monroy’s note. The court advised that it could not grant summary adjudication on her cause of action for monetary damages because the issue of the amount of damages remained unresolved; it thus awarded statutory damages in the nominal amount of one dollar. The court added: “If Monroy insists on receiving a greater amount, then summary adjudication must be denied and the matter must proceed to trial.”

The trial court denied Monroy’s summary adjudication motion with regard to her claim that Heritage violated the Rosenthal Act. The court concluded there was [16] a triable issue of fact as to Heritage’s statutory “unclean hands” defense. The court also sustained a number of Heritage’s objections to the declaration of Monroy’s counsel.

The trial court denied Heritage’s request for a continuance to conduct additional discovery. Heritage’s four discovery motions were set for a hearing 10 days after the scheduled trial date and thus the court found that Heritage’s discovery requests were untimely. Further, the court found that there was no good cause for granting a continuance.

On March 12, 2012, the trial court filed its entry of judgment in favor of Monroy and against Heritage and awarded Monroy nominal statutory damages of one dollar on her cross-complaint, the maximum sum she could receive without a trial on her FDCPA claim. The order stated that Monroy was the “prevailing party.”

Heritage filed a timely notice of appeal.

On March 23, 2012, Monroy filed a memorandum of costs. On May 10, 2012, Monroy filed her motion for attorney fees and costs under title15 of the United States Code section 1692k(a)(3). Heritage filed its memorandum in opposition on June 6, 2012.

The trial court held a hearing on Monroy’s fee motion on June 19, 2012. At the conclusion [17] of the hearing, the court stated it was granting Monroy’s motion. The court explained: “As the judge in this case, I did go over the billings and I didn’t see anything that I could say was unreasonable for hours spent on certain tasks. And I felt the hourly rate was within the acceptable parameters for Bay Area attorneys.”

On July 10, 2012, the court filed its order granting Monroy’s motion for an award of attorney fees and expenses. The order stated that Monroy was the prevailing party and entitled “to the full amount of her attorney’s fees relating to the FDCPA claim as well as to Heritage’s complaint.” The court added: “The issues are synonymous and interrelated and cannot reasonably be separated.” The court concluded that counsel’s hourly fee rate of $450 was “within acceptable parameters for attorneys of [counsel’s] skill and experience practicing” in the San Francisco Bay area, and that the time spent was 194.5 hours. The court denied the enhancement requested. The court awarded fees in the amount of $87,525 ($450 x 194.5). The court awarded litigation expenses in the amount of $1,964.60.

On this same date, July 10, 2102, the trial court entered an amended judgment, stating that [18] it had sustained with prejudice Monroy’s demurrer to Heritage’s SAC, and had granted Monroy’s motion for summary adjudication on her claim in her cross-complaint for violations of the FDCPA. The court repeated that Monroy shall take statutory damages of one dollar on her cross-complaint, the maximum she could receive without a trial. The court stated that Monroy was the prevailing party and awarded her $89,489.60 for attorney fees and litigation costs and expenses ($87,525 + $1,964.60). Thus, the total judgment in favor of Monroy and against Heritage was $89,490.60 ($89,489.60 + $1.00 in damages).

Heritage filed a timely notice of appeal from the order awarding attorney fees. This court on its own motion consolidated both of Heritage’s appeals.

On November 8, 2012, Monroy filed a request for judicial notice of an order in a class certification lawsuit against Heritage and of Heritage’s requests for default judgments against other plaintiffs in a different lawsuit. Heritage opposed the request and argued that Monroy is asking this court to take judicial notice of facts in documents and these facts may not be true. On December 5, 2012, we issued an order that the opposed request for judicial [19] notice would be decided with the merits of the appeal.

“‘Taking judicial notice of a document is not the same as accepting the truth of its contents or accepting a particular interpretation of its meaning.’ [Citation.]While courts take judicial notice of public records, they do not take notice of the truth of matters stated therein. [Citation.] ‘When judicial notice is taken of a document, . . . the truthfulness and proper interpretation of the document are disputable.’ [Citation.]” (Herrera v. Deutsche Bank National Trust Co.(2011) 196 Cal.App.4th 1366, 1375.)Accordingly, we take judicial notice of the existence of these court documents (Evid. Code, §§ 452, subd. (d),459, subd. (a)), but do not take notice of the disputed facts in the documents.

 

DISCUSSION

I.The Demurrer against Heritage’s SAC

A.The Standard of Review, The Pleading Requirements for Alleging Fraud, and the Burden of Proof When Alleging an Assignment

The trial court sustained Monroy’s demurrer against Heritage’s SAC without leave to amend. The standard of review governing an appeal from the judgment after the trial court sustains a demurrer without leave to amend is well established. “‘We treat the demurrer as admitting [20] all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed.’ [Citation.] Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action. [Citation.]And when it 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. [Citations.] The burden of proving such reasonable possibility is squarely on the plaintiff.” (Blank v. Kirwan(1985) 39 Cal.3d 311, 318.)

Here, Heritage alleged that it had a right to pursue misrepresentations Monroy made in her loan application to WMC based on a claim that WMC assigned its torts claims against Monroy to it. “The burden of proving an assignment falls upon the party asserting rights thereunder [citations].” (Cockerell v. Title Ins. & Trust Co.(1954) 42 Cal.2d 284, 292.) [21] An assignment agreement “must describe the subject matter of the assignment with sufficient particularity to identify the rights assigned.” (Mission Valley East, Inc. v. County of Kern(1981) 120 Cal.App.3d 89, 97.)An assignment is “a manifestation to another person by the owner of the right indicating his [or her] intention to transfer, without further action or manifestation of intention, the right to such other person, or to a third person.” (Cockerel,at p. 291.)As with contracts generally, the nature of an assignment is determined by ascertaining the intent of the parties. (Cambridge Co. v. City of Elsinore(1922) 57 Cal.App. 245.)

Furthermore, the policy of liberal construction of the pleadings does not apply to fraud causes of action. “In California, fraud must be pled specifically; general and conclusory allegations do not suffice.” (Lazar v. Superior Court(1996) 12 Cal.4th 631, 645.)This requirement serves two purposes.First, it gives the defendant notice of the definite charges to be met. Second, the allegations “should be sufficiently specific that the court can weed out nonmeritorious actions on the basis of the pleadings. Thus the pleading should be sufficient ‘”to [22] enable the court to determine whether, on the facts pleaded, there is any foundation, prima facie at least, for the charge of fraud.'”” (Committee on Children’s Television, Inc. v. General Goods Corp.(1983) 35 Cal.3d 197, 216-217, superseded by statute on another issue.)

 

B.The Adequacy of the Fraud Allegations

Heritage argues that it adequately alleged that WMC assigned its fraud claims against Monroy to it. The trial court’s insistence that it had to attach a document establishing the assignment shows, according to Heritage, that the court improperly considered the sufficiency of the evidence when ruling on the demurrer. For the reasons discussed below, we disagree with Heritage’s contention.

Heritage cites various allegations in its SAC where it asserted in a conclusory fashion that WMC assigned to Heritage its tort claims when WMC transferred to Heritage its rights under Monroy’s promissory note. In particular it cites its allegations that WMC “sold the loan and assigned any and all rights WMC may have including but not limited to any right to fraud claim” against Monroy. It further alleged that this assignment was “evidenced by signature and stamp of the secretary of WMC” on the [23] last page of the note. Heritage set forth in its SAC that as the assignee of WMC, Heritage “obtained all rights, title and interest in and to the mortgage loan by defendant[,]” including WMC’s tort claim. Heritage claimed that the assignment of tort claims was implied by the following language in the agreement between Heritage and WMC: “‘Seller does hereby sell, assign and convey to Buyer, its successors and assigns, all right, title and interest in the loan.’ The loan sell agreement also provided that ‘the Seller transfers assign, set-over, quitclaim and convey to Buyer all rights, title and interest of the Seller in the mortgage loan.'” The SAC added that WMC acknowledged on May 9, 2011, that it assigned to Heritage its tort claims.

Heritage contends that its SAC also alleged assignment of the tort claims based on implied conduct of the parties, as follows: “The assignment of the tort claim is also implied by conduct of the parties in the secondary mortgage market as it is custom and practice in the mortgage industry to assign any and all rights and interests including any right to tort claim against the borrower when selling mortgage loan. [Heritage] alleges that based on the conduct [24] of the parties and the language included in the buy sell agreement of the loan, and the custom and practice of lenders such as WMC, the assignment of [Monroy’s] loan by WMC included assignment of any and all tort claims.”

Heritage also maintains that the language in Monroy’s loan implied an assignment, as Monroy acknowledged the following: “‘Each of the undersigned specifically represents to Lender and to lender’s actual or potential agents, brokers, processors, attorneys, insurers, servicers, successors and assigns and agrees and acknowledges that: (1) the information provided in this application is true and correct as of the date set forth opposite my signature and that any intentional or negligent misrepresentation of this information contained in this application may result in civil liability, including monetary damages, to any person who may suffer any loss due to reliance upon any misrepresentation that I have made on this application. . . . (6) The Lender, its servicers, successors or assigns may rely on this information contained in the application. . . .'” (Bold omitted.)

Heritage insists that the foregoing language and the attached document, which was the written indorsement [25] containing the signature and stamp of the secretary of WMC on the last page of the promissory note, were sufficient, and the trial court should have overruled Monroy’s demurrer.

We agree that the allegations in Heritage’s SAC and the attached indorsement showed an assignment of Monroy’s promissory note. However, the assignment of this contract right did not carry with it a transfer of WMC’s tort rights. While no particular form of assignment is required, it is essential to the assignment of a right that the assignor manifests an intention to transfer “the right.” (Sunburst Bank v. Executive Life Ins. Co., supra,24 Cal.App.4th at p. 1164.)

An assignment of a right generally carries with it an assignment of other rights incident thereto.(Civ. Code, § 1084.)The fraud claims based on Monroy’s loan application with WMC are not “incidental to” the transfer of the promissory note to Heritage.”A suit for fraud obviously does not involve an attempt to recover on a debt or note.” (Guild Mortgage Co. v. Heller(1987) 193 Cal.App.3d 1505, 1512; see alsoMillner v. Lankershim Packing Co.(1936) 13 Cal.App.2d 315, 319-320[assignment of mortgage did not include assignment of right to recover for [26] injury to the mortgaged property];Schauer v. Mandarin Gems of Cal., Inc.(2005) 125 Cal.App.4th 949, 956-957[divorce agreement awarding diamond ring purchased by husband to wife did not automatically transfer husband’s claim against jeweler for fraud].)For example, inWilliams v. Galloway(1962) 211 Cal.App.2d 302, the corporation’s sale and transfer to a second corporation “‘[a]llpersonal property'” and all “‘property held on aleas[e]holdbasis'” did not transfer a claim for money the first corporation had against its former lessor.(Id.at pp. 304-305.)

In the present case, the indorsement and allegations established that WMC assigned the second promissory note to Heritage. The transfer of the promissory note provided Heritage with contract rights. Fraud rights are not, as a matter of law, incidental to the transfer of the promissory note.1

It is true that incidental rights may include certain ancillary causes of action but the assignment agreement “must describe the subject matter of the assignment with sufficient particularity to identify the rights assigned.” (Mission Valley East, Inc. v. County of Kern, supra,120 Cal.App.3d at p. 97.) [27] “[A] basic tenet of California contract law dictates that when a particular right or set of rightsisdefined in an assignment, additional rightsnotsimilarly defined or named cannot be considered part of the rights transferred.” (DC3Entertainment, LLC v. John Galt Entertainment, Inc.(W.D. Wash. 2006) 412 F.Supp.2d 1125, 1144.)

Here, none of the allegations regarding assignment in the SAC specified that the assignment was transferring the ancillary right of a tort claim. The document attached by Heritage did not support any claim of an assignment by WMC to Heritage of its fraud claims against Monroy. This document was the promissory note signed by Monroy, which, on the last page, contained the signature and stamp of the secretary of WMC. Directly under “Pay to the order of” was Heritage’s stamp.The transfer of the promissory note by indorsement did not show a clear intent to assign WMC’s fraud claim. (SeeComm. Code, § 3201 et seq.) The conveyance of the promissory note to Heritage does not establish that WMC assigned to Heritage its right to the performance of other, distinct obligations owed by Monroy, such as the obligation to provide truthful information. (SeeCambridge Co. v. City of Elsinore, supra,57 Cal.App. at pp. 249-250.)

Additionally, [28] the allegations did not show an assignment of the tort claims based on custom and practice. “While no particular form of assignment is necessary, the assignment, to be effectual, must be a manifestation to another person by the owner of the right indicating his intention to transfer, without further action or manifestation of intention, the right to such other person, or to a third person.[Citation.]” (Cockerell v. Title Ins. & Trust Co., supra,42 Cal.2d at p. 291.)The parties’ intention is determined by considering their words and acts as well as the subject matter of the contract. (Lumsden v. Roth(1955) 138 Cal.App.2d 172, 175.)The assignment agreement in the present case is completely silent regarding any tort claim and nothing in the agreement suggests that the assignment included any rights other than those rights incidental to the contract rights. Heritage cannot allege general custom and practice to expand the assignment agreement to include ancillary rights not specified.

Heritage claims that the decision inNational Reserve Co. v. Metropolitan Trust Co.(1941) 17 Cal.2d 827, 833(National Reserve) supports its position that WMC’s tort claims were assigned with the transfer [29] of the note. Our Supreme Court inNational Reservestated that an unqualified assignment of a contract vests in the assignee “all rights and remedies incidental thereto.” (Id.at p. 833.) Heritage then proceeds to cite portions of the following quote: “If . . . an accrued cause of action cannot be asserted apart from the contract out of which it arises or is essential to a complete and adequate enforcement of the contract, it passes with an assignment of the contract as an incident thereof. Thus, the assignment of a contract passes from assignor to assignee an accrued cause of action for rescission [citations], and a creditor’s assignee acquires the right to set aside a prior fraudulent conveyance by the debtor.[Citations.] As a corollary, if an assignor by express provision of a contract is denied the right to assert an accrued cause of action after he has assigned away his interest in the contract, the right to sue passes to his assignee. There would otherwise be no one to enforce the right.” (Ibid.)

Heritage ignores the language inNational Reserve, supra,17 Cal.2d 827, which directly preceded the paragraph it quotes from the decision. In the preceding paragraph, the Supreme Court [30] noted that incidental rights may “include certain ancillary causes of action arising out of the subject of the assignment and accruing before the assignment is made.” (Id.at p. 833.) However, “[u]nlessan assignment specifically or impliedly designates them, accrued causes of action arising out of an assigned contract, whetherex contractuorex delicto,do not pass under the assignment as incidental to the contract if they can be asserted by the assignor independently of his continued ownership of the contract and are not essential to a continued enforcement of the contract.” (Ibid.)

Applying the legal principles set forth inNational Reserveto the present case, Heritage has failed to state a claim for a cause of action for fraud based on Monroy’s loan application. Neither the indorsement nor the other allegations in the SAC authorize the assignment, specifically or impliedly, of WMC’s tort claims. As already stressed, fraud is an ancillary cause of action to the promissory note.

Heritage maintains that it did not have to allege details and could simply allege a clear statement of the ultimate facts necessary to the cause of action. (SeeLyon v. Master Holding Corp.(1942) 50 Cal.App.2d 238, 241.) [31] Heritage claims that it was sufficient for it to plead the ultimate fact of ownership of the property at the time it filed this action and cites a 1924 case,Commercial Credit Co. v. Peak(1924) 195 Cal. 27, 32-33.This case does not help Heritage.Commercial Creditinvolved recovering the value of personal property or chattel. (Id.at p. 29.)This case did not involve a promissory note; it did not involve a claim based on the assignment of a tort; nor did it involve claims based on fraud. Thus,Commercial Credithas no application to the present case. Heritage ignores that every element of a fraud cause of action must be pleaded specifically.

Finally, Heritage complains that the trial court was assessing the veracity of the allegations in the SAC, and cites the court’s order instructing it to attach a writing to show an assignment as proof that the court improperly assessed the weight of the evidence. We disagree with Heritage’s conclusion.

“A written contract may be pleaded either by its terms––set out verbatim in the complaint or a copy of the contract attached to the complaint and incorporated therein by reference––or by its legal effect.[Citation.] In order to plead a contract [32] by its legal effect, plaintiff must ‘allege the substance of its relevant terms. This is more difficult, for it requires a careful analysis of the instrument, comprehensiveness in statement, and avoidance of legal conclusions.’ [Citation.]” (McKell v. Washington Mutual, Inc.(2006) 142 Cal.App.4th 1457, 1489.)Since the allegations in Heritage’s pleadings did not set forth with specificity any assignment of the tort claims, the trial court properly instructed Heritage to attach the written agreement that evinced an intent to assign the tort claims.

Accordingly, we conclude that the trial court did not err when it found that Heritage failed to state causes of action for fraud based on assignment.2

 

C.Denying Heritage Leave to Amend its SAC

Heritage contends that the trial court abused its discretion when it did not permit it to amend its SAC.

The court abuses its discretion in sustaining the demurrer without leave to amend if the plaintiff can show a reasonable possibility of curing the defect in the complaint by amendment.(Blank v. Kirwan, supra,39 Cal.3d at p. 318.) Heritage has the burden of proving that an amendment would cure the defect.(Schifando v. City of Los Angeles(2003) 31 Cal.4th 1074, 1081.)

In support of its argument that it should have been permitted to amend its pleading a third time, Heritage argues that its SAC was sufficient and that it could have amended the pleading to indicate that WMC intended to transfer its tort rights to Heritage. In the trial court, Heritage attached a [34] declaration of Taylor, a representative for WMC Mortgage, LLC. Taylor’s declaration dated August 24, 2011, stated: “As Assistant Secretary, I am authorized to speak on behalf of WMC Mortgage, LLC, successor to WMC . . . .” She confirmed that WMC relied on the information provided by the borrower applying for a loan to determine the borrower’s “eligibility for the products offered.” She declared: “When WMC sold its mortgage loans to third parties, WMC assignedallof its legal rights (in tort as well as contract), as the originating lender, to the buyer—including, but not limited to, the right to recover against a borrower for fraud.” (Underline omitted.)

Taylor’s declaration on August 24, 2011, more than two years after Heritage acquired Monroy’s unpaid note as part of a “larger pool of loans,” does not shed any light on the parties’ intent at the time of the assignment. The assignment agreement contains absolutely no language indicating that WMC intended to transfer any rights ancillary to the right to collect on the promissory note. Contract “rights” do not exist as disembodied abstractions apart from a contract that created them. More precisely, in California, “the intention of the [35] parties as expressed in the contract is the source of contractual rights and duties.” (Pacific Gas & E. Co. v. G.W. Thomas Drayage etc. Co.(1968) 69 Cal.2d 33, 38.) Thus, we assess the intent at the time the agreement is formed, not years later.

The trial court provided Heritage with ample opportunity to cure the defect in its pleading; Heritage failed to demonstrate it could cure the defect. The trial court thus did not abuse its discretion in sustaining the third demurrer against Heritage’s pleading without leave to amend.

 

II.The Grant of Summary Adjudication on Monroy’s Cross-Complaint

A.The Trial Court’s Ruling

Monroy alleged violations of the Rosenthal Act and the FDCPA in her cross-complaint. She claimed that Heritage violated the FDCPA by attempting to collect a debt not owed, by using unconscionable, false, deceptive, and/or misleading means to seek to collect a debt, and by threatening legal actions that could not be legally taken.

Monroy moved for summary adjudication on her claims and the trial court denied the motion as to her claim of violating the Rosenthal Act. It granted her motion as to her claim that Heritage violated the FDCPA, and awarded Monroy damages in the amount [36] of one dollar. The court found that Heritage’s conduct in threatening Monroy with the prosecution of legal claims that had no merit violated the FDCPA.3

 

B.Standard of Review

To prevail on a summary adjudication motion, a cross-complainant must prove “each element of the cause of action entitling the party to judgment on that cause of action. . . .” (Code Civ. Proc., § 437c, subd. (p)(1).) Only if the cross-complainant satisfies this burden will the burden shift to the cross-defendant “to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto.” (Ibid.) The cross-defendant “may not rely upon the mere allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall [37] set forth the specific facts showing that a triable issue of material fact exists as to that cause of action or a defense thereto.” (Ibid.)

“In reviewing whether these burdens have been met, we strictly scrutinize the moving party’s papers and construe all facts and resolve all doubts in favor of the party opposing the motion.[Citations.]” (Innovative Business Partnerships, Inc. v. Inland Counties Regional Center, Inc.(2011) 194 Cal.App.4th 623, 628.) On appeal, the trial court’s ruling is examined under a de novo standard of review.(Brinton v. Bankers Pension Services, Inc.(1999) 76 Cal.App.4th 550, 555.)

 

C.The FDCPA

The purpose of the FDCPA is “to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.” (15 U.S.C. § 1692(e).) “A basic tenet of the Act is that all consumers, even those who have mismanaged their financial affairs resulting in default on their debt, deserve ‘the right to be treated in a reasonable and civil manner.'” (Bass v. Stopler, Koritzinsky, Brewster & Neider, S.C.(7th Cir. 1997) 111 F.3d 1322, 1324 [38] (Bass).) Since the FDCPA is a remedial statute, “it should be construed liberally in favor of the consumer.” (See, e.g.,Johnson v. Riddle(10th Cir. 2002) 305 F.3d 1107, 1117.)

The word “‘creditor’ means any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another.” (15 U.S.C. § 1692a(4).) “The term ‘debt’ means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.” (15 U.S.C. § 1692a(5).)

The FDCPA defines “‘debt collector'” as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. . . .[T]he [39] term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts. . . .” (15 U.S.C. § 1692a(6).)

Under the FDCPA, “A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.” (15 U.S.C. § 1692e.) A violation of this section includes “[t]hefalse representation of” “the character, amount, or legal status of any debt[.]” (15 U.S.C. § 1692e(2)(A).) A violation also includes “[t]hethreat to take any action that cannot legally be taken . . . .” (15 U.S.C. § 1692e(5).) Additionally, a violation occurs if the debt collector uses “any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer” (15 U.S.C. § 1692e(10)) or makes “[t]hefalse representation or implication that accounts have been turned over to innocent purchasers for value” (15 U.S.C. § 1692e(12)).

State courts have concurrent jurisdiction over claims under the FDCPA. (15 U.S.C. § 1692k(d).) The FDCPA will not impose any liability “to any act done or [40] omitted in good faith in conformity with any advisory opinion of the Bureau, notwithstanding that after such act or omission has occurred, such opinion is amended, rescinded, or determined by judicial or other authority to be invalid for any reason.” (15 U.S.C. § 1692k(e).)

 

D.Heritage Violated the FDCPA

When alleging a claim under the FDCPA, a plaintiff must establish that (1) the plaintiff is a consumer, as defined by the FDCPA; (2) the debt arises out of a transaction primarily for personal, family or household purposes; (3) the defendant is a debt collector, as that phrase is defined by the FDCPA; and (4) the defendant violated a provision of the Act. (15 U.S.C. § 1692e;Heintz v. Jenkins(1995) 514 U.S. 291, 294;Wallace v. Washington Mut. Bank, F.A.(6th Cir. 2012) 683 F.3d 323, 326.)

Monroy’s claim was based on the collection letter dated May 25, 2010, sent to her by Heritage. She received the letter on June 28, 2010, and it was attached to the summons and complaint against her. The letter advised that Heritage had commenced a civil action against Monroy and admonished her that “any misinformation or misrepresentations provided in the [loan] application are a violation of federal [41] law and may result in ‘civil liability, including monetary damages, to any person who may suffer any loss due to reliance upon any misrepresentation’ for which Heritage . . . currently seeks.” The letter warned that if Heritage was unable to resolve the matter by the date Monroy’s answer was due, Heritage would “have no other option but to proceed with litigation against” her. The letter declared that it was “from a debt collector” and was “an attempt to collect a debt.” In the trial court, in Heritage’s separate statement of disputed facts in support of its opposition to Monroy’s motion for summary adjudication, Heritage admitted that it was a debt collector and that it was attempting to collect an alleged debt against Monroy.

Thus, the undisputed facts established that Heritage was a debt collector and attempting to collect a debt from Monroy. Monroy’s obligation was to pay for “personal, family, or household purposes” (15 U.S.C. § 1692a(5)), as this was a debt incurred to purchase a home in which, according to Monroy’s declaration, she intended to live. There was evidence that a Manteca property was also purchased in Monroy’s name, but there is no evidence that she ever lived in [42] that home or intended to live in that home. Indeed, the unchallenged evidence was that Monroy was the victim of identity theft and that she did not know anything about the Manteca property. Monroy stated that she lived at the Richmond property and Heritage presented no evidence that she resided at another location.

The evidence also supported a finding that the letter Heritage sent to Monroy violated the FDCPA. The letter attached to the complaint and summons threatened Monroy with a lawsuit for any misinformation she provided on her loan application with WMC. Heritage asserted that Monroy owed it the money for any fraud on her application because it was now the owner of the promissory note. As discussed extensively above, Heritage’s claims based on fraud had no merit. Thus, Heritage violated the FDCPA when it indicated in the letter that it had the right to sue Monroy for any misinformation submitted on the promissory note and when it attempted to induce her to settle with Heritage.

Additionally, according to Ben Ganter, the director of client relations for Heritage, Heritage acquired Monroy’s unpaid note as part of a larger pool of loans that included both secured and unsecured mortgage [43] loans. He acknowledged that Heritage then “seeks to collect on the unpaid balances of the notes it purchased” and that “Heritage’s business model is collecting on the loans it purchases.” Heritage purchased Monroy’s junior loan without any knowledge about the accuracy of the loan application. Before Heritage discovered the alleged fraud, it sent Monroy letters telling her that she was obligated to pay Heritage “for the unpaid balance of the note . . . .” According to Ganter, a third notice of Monroy’s obligation to pay [Heritage] for the unpaid balance on the Note was sent via postal mail in December of 2009. These notices clearly violated the FDCPA because, as the trial court found, Heritage had made a binding judicial admission that it received the assignment of Monroy’s note after the foreclosure of the first deed of trust, and that event extinguished the second deed of trust securing Monroy’s note under the antideficiency statutes (seeCode Civ. Proc., § 580b).

Heritage complains that Monroy alleged that the complaint sent to her attached to the letter violated the FDCPA and a legal action is not a communication covered by the FDCPA. We need not address this argument because Monroy’s [44] claim was not based on a communication under the FDCPA, but based on the debt collector’s using “false, deceptive, or misleading representation or means in connection with the collection of any debt.” (15 U.S.C. § 1692e.)

Heritage also argues that “debt,” as defined by the FDCPA, does not include tort claims. As already noted, Heritage also violated the FDCPA when it sent a notice demanding payment on the money owed on the promissory note when that debt had been extinguished under the antideficiency statutes. Furthermore, we disagree with Heritage’s argument that tort claims are never debts under the FDCPA.

In support of its argument that a “debt” does not include a tort claim, Heritage cites various cases that have held that any obligation to pay damages arising from a tort claim, court judgment, or criminal activity does not constitute a debt under the FDCPA. (See, e.g.,Fleming v. Pickard(9th Cir. 2009) 581 F.3d 922, 925-926[cause of action for tortious conversion is not a debt under the FDCPA];Turner v. Cook(9th Cir. 2004) 362 F.3d 1219, 1227[tort judgment resulting from business-related conduct not a debt under the FDCPA because “‘when we speak of ‘transactions,’ we refer to [45] consensual or contractual arrangements, not damage obligations thrust upon one as a result of no more than her own negligence'”];Hawthorne v. Mac Adjustment, Inc.(11th Cir. 1998) 140 F.3d 1367, 1371[holding that the obligation to pay arose from a tort, and not from a consumer transaction, and therefore was not a debt under the FDCPA];Zimmerman v. HBO Affiliate Group(3d Cir. 1987) 834 F.2d 1163, 1167-1169.)

In the cases cited by Heritage, the obligations to pay were created by something other than a consumer transaction and were not consensual.(See, e.g.,Fleming v. Pickard, supra,581 F.3d at p. 925[“‘at a minimum, a “transaction” under the FDCPA must involve some kind of business dealing or other consensual obligation'”].)Thus, we agree that courts have consistently excluded tort obligations or criminal activity from the FDCPA‘s definition of “debt”whenthe tort obligations do not arise out of a consensual transaction.InZimmerman v. HBO Affiliate Group, supra,834 F.2d 1163, for example, the Third Circuit held that the FDCPA did not apply to attempts by cable television companies to collect money from people who allegedly had stolen cable television signals by installing [46] illegal antennas.(Zimmerman,at pp. 1167-1169.)There was no FDCPA “debt” inZimmermanbecause the obligations arose out of a theft rather than a transaction. Neither the complaint nor the demand letter included any assertion of an offer of extension of credit and therefore no transaction had occurred. (Zimmerman,at pp. 1167-1169.)

As already stressed, a debt or obligation under the FDCPA must be based on a consumer consensual or contractual arrangement, not a damage obligation. (See, e.g.,Hawthorne v. Mac Adjustment, Inc., supra,140 F.3d at p. 1372). Unlike the cases upon which Heritage relies, the present case is not a situation in which Monroy never had a contractual arrangement of any kind with WMC. Rather, Monroy’s alleged debt to Heritage arose out of her transaction with WMC to purchase the Richmond property.The alleged fraud claims clearly arose out of a residential mortgage transaction and Heritage cannot avoid the application of the FDCPA simply because it alleged in its pleading that Monroy’s obligation to it was based on the misrepresentations she made on her loan application rather than on a breach of her obligations under the contract.

Heritage declares that the present [47] case is similar toTurner v. Cook, supra,362 F.3d 1219, butTurneris clearly distinguishable from the present case. InTurner,the appellees obtained a judgment against Stephen Turner and “the judgment arose from allegations of various business interference torts” by Turner against the appellees.(Id.at pp. 1222-1223.) Subsequently, the appellees filed a claim that Turner fraudulently conveyed his real and personal property to prevent the appellees from collecting on the judgment.(Id.at p. 1223.)Turner claimed that the appellees violated the FDCPA when attempting to collect the judgment.(Turner,at pp. 1223-1224.)When rejecting the claim under FDCPA, the Ninth Circuit held that a tort judgment is not a debt under the FDCPA. (Turner,at p. 1227.)Turner had admitted that the judgment was based on alleged business interference torts, not any consumer transaction, and it was immaterial that the fraudulent conveyance action involved Turner’s home. (Id.at p. 1228.)

InTurner v. Cook, supra,362 F.3d 1219, the liability arose from tortious activity, not from a consensual transaction. By contrast, here, Monroy and WMC entered into a consensual loan agreement for the purchase of a [48] residential home.

Heritage argues that the present liability did not arise out of a consensual transaction because WMC did not consent to mortgage fraud. Heritage maintains that the present transaction is the same as the theft of goods or services.

Heritage’s argument is contrary to the court decisions that have held that there is no automatic fraud exception to the FDCPA. (See, e.g.,F.T.C. v. Check Investors, Inc.(3d Cir. 2007) 502 F.3d 159, 170;Keele v. Wexler(7th Cir. 1998) 149 F.3d 589, 595.) “‘Absent an explicit showing that Congress intended a fraud exception to the Act, the wrong occasioned by debtor fraud is more appropriately redressed under the statutory and common law remedies already in place, not by a judicially-created exception that selectively gives a green light to the very abuses proscribed by the Act.'” (F.T.C.,at p. 170.)

The breadth of the phrase “any obligation or alleged obligation” is not limited to a particular set of obligations.(Bass, supra,111 F.3d at p. 1325.) Thus, a replevin action, even though it is a tort claim, may be a debt under the FDCPA.(Rawlinson v. Law Office of William M. Rudow, LLC(4th Cir. 2012) 460 Fed.Appx. 254, 257.)“[A] court should [49] look beyond the label of the debt collection practice to determine whether a ‘debt’ is being collected.” (Ibid.)

Here, WMC and Monroy consented to the loan application. The fraud action, even though it is a tort claim, arose from the consensual loan transaction, and thus it is a debt under the FDCPA.

 

E.No Defense to the Application of the FDCPA

Heritage contends that it has a defense, as a matter of law, to the application of the FDCPA. It claims that it relied on an advisory opinion by the Federal Trade Commission (FTC) that collecting on tort damages is not a debt for purposes of the FDCPA.

The FDCPA provides an affirmative defense for “‘any act done or omitted in good faith in conformity with any [FTC] advisory opinion’ . . . .” (Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA(2010) 599 U.S. 573,[130 S.Ct. 1605, 1607](Jerman), quoting15 U.S.C. § 1692k(e).) However, “ignorance of the law will not excuse any person, either civilly or criminally.” (Jerman,at p.[p. 1611].)

The “advisory opinion” relied upon by Heritage is a letter dated August 27, 1992, written to an attorney in Florida.4The attorney wished to know if the claim for civil damages against an alleged [50] shoplifting offender would be covered under the FDCPA. The letter stated that these torts would not be debts as defined in the FDCPA and admonished that “[t]heviews expressed herin represent an informal staff opinion. As such, they are not binding on the [FTC]. . . .”

This letter is an “informal staff opinion” and not an advisory opinion. Furthermore, the claim of damages arising from a theft, as was the subject of the FTC’s letter, is clearly distinguishable from the present case. As already discussed, Heritage was not collecting on tort damages, but on a claim of fraud arising out of a loan contract.

Courts held as early as 1998 that there is no automatic fraud exception to the FDCPA. (Keele v. Wexler, supra,149 F.3d at p. 595[“neither the text nor underlying legislative history of the FDCPA lends itself to the recognition of a fraud exception”].) Heritage’s ignorance of the law does not provide it with an affirmative [51] defense to the application of the FDCPA.

 

F.No Triable Issue of Fact

Heritage argues that the trial court should not have granted the summary adjudication motion because there was a triable issue of fact as to whether the tort claims had been assigned. It complains that the court refused to consider its evidence of assignment.

In support of this argument, Heritage citesCadlerock Joint Venture, L.P. v. Lobel(2012) 206 Cal.App.4th 1531(Cadlerock). InCadlerock,a single lender provided a borrower with two non-purchase money loans secured by two deeds of trust against the same real property, and then assigned the junior loan to a third party.(Id.at p. 1536.)The court held that the assignee of the junior loan was not precluded from seeking a deficiency judgment against the borrower after the senior loan was extinguished by a foreclosure sale of the property. (Id.at pp. 1546-1547.)The court stressed that the junior loan had been assigned prior to the foreclosure sale. (Ibid.) InCadelrock,the antideficiency statute did not preclude the assignee of the junior loan from seeking a deficiency judgment after the extinguishment of the senior loan, held by a different entity, because there [52] was no evidence that the lender created two loans “as an artifice to evade”Code of Civil Procedure section 580d. (Cadlerock,at p. 1547.)

Cadlerockhas no applicability to the present case. Unlike the situation inCadlerock,Monroy’s loans were purchase money loans and the antideficiency statutes applied to both her senior and junior loans underCode of Civil Procedure section 580b. Furthermore, the junior loan was assigned to Heritageafterthe foreclosure. Critical to the holding inCadlerockwas the fact that the junior loan had been assigned prior to the trustee’s sale. (Cadlerock, supra,206 Cal.App.4th at pp. 1546-1547.)

Here, the undisputed facts establish that Monroy’s loans were covered by the antideficiency statutes and that the junior loan was assigned to Heritage after the foreclosure on the senior loan. Thus, there was no triable issue of fact that Heritage could seek payment for breach of the promissory note. Furthermore, as already discussed, Heritage has failed to identify any evidence that raised a triable issue of material fact as to its argument that the assignment agreement included WMC’s potential tort claims against Monroy. Accordingly, we conclude the trial court [53] did not err in granting Monroy’s motion for summary adjudication on her claim that Heritage violated the FDCPA.

 

III.Attorney Fees

A.Fees Awarded and the Standard of Review

The trial court found that Monroy was the prevailing party and entitled to attorney fees under the FDCPA. (15 U.S.C. § 1692k(a)(3).) The court awarded Monroy attorney fees in the amount of $450 an hour for 194.5 hours for the lodestar amount of $87,525. The court also awarded Monroy litigation expenses in the amount of 1,964.60.

“Unless authorized by either statute or agreement, attorney’s fees ordinarily are not recoverable as costs. [Citations.]” (Reynolds Metals Co. v. Alperson(1979) 25 Cal.3d 124, 127-128.)The FDCPA provides for attorney fees to be awarded to the prevailing party.(15 U.S.C. § 1692k(a)(3).) “Courts have discretion in calculating reasonable attorney’s fees under this statute” (Jerman, supra,599 U.S. at p.[130 S.Ct. at p. 1621]), but the award of at least some modicum of attorney’s fees is mandatory under the FDCPA when the defendant is found to have violated the Act because “congress chose a ‘private attorney general’ approach to assume enforcement of the FDCPA” (Camacho v. Bridgeport Financial, Inc.(9th Cir. 2008) 523 F.3d 973, 978).

“‘On [54] review of an award of attorney fees after trial, the normal standard of review is abuse of discretion. However, de novo review of such a trial court order is warranted where the determination of whether the criteria for an award of attorney fees . . . have been satisfied amounts to statutory construction and a question of law.'” (Connerly v. State Personnel Bd.(2006) 37 Cal.4th 1169, 1175.)

Any challenge based on the amount of the fee awarded is reviewed for an abuse of discretion.(PLCM Group, Inc. v. Drexler(2000) 22 Cal.4th 1084, 1095(PLCM Group) [“the trial court has broad authority to determine the amount of a reasonable fee”].)An appellate court will interfere with the trial court’s determination of the amount of reasonable attorney fees only where there has been a manifest abuse of discretion.(Fed-Mart Corp. v. Pell Enterprises, Inc.(1980) 111 Cal.App.3d 215, 228.)”‘The “experienced trial judge is the best judge of the value of professional services rendered in [the] court, and while [the judge’s] judgment is of course subject to review, it will not be disturbed unless the appellate court is convinced that it is clearly wrong” ‘—meaning that [the trial judge] abused [his [55] or her] discretion.” (PLCM Group,at p. 1095.)

“[T]hefee setting inquiry in California ordinarily begins with the ‘lodestar,’ i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate. ‘California courts have consistently held that a computation of time spent on a case and the reasonable value of that time is fundamental to a determination of an appropriate attorneys’ fee award.’ [Citation.] The reasonable hourly rate is that prevailing in the community for similar work. [Citations.] The lodestar figure may then be adjusted, based on consideration of factors specific to the case, in order to fix the fee at the fair market value for the legal services provided.[Citation.] Such an approach anchors the trial court’s analysis to an objective determination of the value of the attorney’s services, ensuring that the amount awarded is not arbitrary. [Citation.]” (PLCM Group, supra,22 Cal.4th at p. 1095.)

 

B.The Degree of Success

Heritage contends that the trial court did not apply the proper standard of law, and then argues that the attorney fee award was excessive because the trial court did not reduce the award on the basis that Monroy’s success was limited. The [56] decision whether to reduce an award because of a determination that the party enjoyed limited success is not reviewed de novo, as Heritage argues, but for an abuse of discretion.

The United States Supreme Court has held that the level of a party’s success is relevant to the amount of the fees to be awarded, and fees should not be awarded for the work on an unsuccessful claim. (Hensley v. Eckerhart(1983) 461 U.S. 424, 434-435.) The court inHensleydid not discuss the FDCPA, but addressed a nearly identical fee shifting statute applicable to civil rights litigation (42 U.S.C. § 1988).The court recognized that “unrelated claims [may be] unlikely to arise with great frequency” because the case may present a single claim or the claims “will involve a common core of facts or will be based on related legal theories. Much of counsel’s time will be devoted generally to the litigation as a whole, making it difficult to divide the hours expended on a claim-by-claim basis.Such a lawsuit cannot be viewed as a series of discrete claims. Instead the district court should focus on the significance of the overall relief obtained” in relation to the hours reasonably expended on the litigation. (Hensley,at p. 435.)

“If [57] . . . a plaintiff has achieved only partial or limited success, the product of hours reasonably expended on the litigation as a whole times a reasonable hourly ratemaybe an excessive amount. This will be true even where the plaintiff’s claims were interrelated, nonfrivolous, and raised in good faith. . . .[T]hemost critical factor is the degree of success obtained.” (Hensley v. Eckerhart, supra,461 U.S. at p. 436, italics added.)To be compensable, an attorney’s time must be “reasonable in relation to the success achieved.” (Ibid.)

Here, Heritage argues that Monroy’s attorney fees are unreasonably large in comparison to Monroy’s recovery of $1.00. It also maintains that Monroy admitted at her deposition that she did not know what the case was about and, thus, according to Heritage, she had no stake in this action. Heritage complains that the trial court failed to take into consideration the limited amount of success achieved and asserts that its violation of the FDCPA was only a technicality as Monroy could not show any damages.

In support of this argument, Heritage cites federal and California cases involving attorney fees in non-FDCPA cases.(Farrar v. Hobby(1992) 506 U.S. 103; [58] Chavez v. City of Los Angeles(2010) 47 Cal.4th 970, 989;Environmental Protection Information Center v. Department of Forestry & Fire Protection(2010) 190 Cal.App.4th 217, 238;Sokolow v. County of San Mateo(1989) 213 Cal.App.3d 231, 249.) These cases stress that the degree or extent of the plaintiff’s success must be considered when determining reasonable attorney fees. For example, inFarrar,the plaintiff filed a lawsuit alleging a violation of his civil rights under title42 of the United States Code section 1983and demanded $17 million from six defendants and, after 10 years of litigation and two trips to the Court of Appeals, he received one dollar from one defendant.(Farrar,at p. 107.)The United States Supreme Court held that attorney fees should not be awarded because a technical vindication of one’s constitutional rights alone was not enough to justify an award of attorney fees undersection 1988. (Farrar,at p. 115.)The award of only nominal damages highlighted the plaintiff’s failure to prove actual injury or any basis for awarding punitive damages. (Ibid.)

Courts have applied the reasoning ofFarrar v. Hobby, supra,506 U.S. 103to FDCPA cases. (See, e.g.,Zagorski v. Midwest Billing Services, Inc.(7th Cir. 1997) 128 F.3d 1164, 1166 [59] [remanding to the district court to determine reasonable attorney fees in a FDCPA case and instructing the court to use as a guide the methodology “traditionally employed in determining appropriate fees” under title42 United States Code section 1988];Johnson v. Eaton(5th Cir. 1996) 80 F.3d 148, 151[plaintiff awarded no actual or statutory damages and the mere technical violation of the FDCPA was not sufficient to support an award of attorney fees];Tolentino v. Friedman(7th Cir. 1995) 46 F.3d 645, 651.)Although courts when awarding attorney fees in FDCPA cases have followedFarrarby considering limited or partial success, these same courts have generally been reluctant to reduce fee awards on the basis of a low monetary recovery since FDCPA statutory damages are capped at $1,000, and a $1,000 recovery doe not render a plaintiff’s success “limited.” (See, e.g.,Defenbaugh v. JBC & Associates, Inc.(N.D. Cal. Aug. 10, 2004, No. C-03-0651 JCS) 2004 WL 1874978.)Congress created an incentive for attorneys to represent plaintiffs in FDCPA cases by providing for fee shifting, and a requirement of proportionality between attorney fees and damages would discourage attorneys from accepting [60] representation of FDCPA plaintiffs; this would be inconsistent with the FDCPA‘s statutory scheme. (See, e.g.,Phenow v. Johnson, Rodenberg & Lauinger, PLLP(D.Minn. 2011) 766 F.Supp.2d 955, 959.)The fees should be adequate to attract competent counsel, but they should not be “so large that it is a windfall for attorneys––who should not be encouraged to grow fat off of lackluster cases, or pester the court with trifles in the hopes of capturing large attorneys’ fees from dubious claims.” (Obenauf v. Frontier Financial Group, Inc.(D.N.M. 2011) 785 F.Supp.2d 1188, 1214.)

Here, Monroy alleged violations of the FDCPA and the Rosenthal Act and did not allege actual damages, but requested the maximum statutory damages of $1,000 under each statute for a total statutory award of $2,000. Her sole complaint was that Heritage had engaged in an unlawful collections effort, which was evinced by the collection letters and the lawsuit against her. Monroy was completely successful in establishing the unlawfulness of Heritage’s behavior.Monroy agreed to a nominal damage award to avoid the costs of litigation, but she was still the prevailing party. A plaintiff who wins a nominal amount of statutory [61] damages has brought a “successful action” under the FDCPA. (SeeThornton v. Wolpoff & Abramson, LLP(11th Cir. 2008) 312 Fed.Appx. 161, 164.)

Under the FDCPA, the court in awarding damages is to consider “the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, and the extent to which such noncompliance was intentional . . . .” (15 U.S.C. § 1692k(b)(1).) Here, the trial court recognized that Heritage wrote a number of letters to Monroy that violated the FDCPA. The court considered that Monroy did not seek to add unnecessary legal fees by insisting on litigating the damages. It also considered that she did not initiate the lawsuit against Heritage, but filed a counterclaim in response to Heritage’s attempts to force her to pay money that she did not owe.

Lastly, while the award here was nominal, that is not necessarily controlling because “an award of nominal damages can represent a victory in the sense of vindicating rights even though no actual damages are proved.” (Farrar v. Hobby, supra,506 U.S. at p. 121, O’Connor, J., concurring.) Success may be measured by “the significance of the legal issues on which the plaintiff prevailed and [62] the public purpose the litigation served.” (Morales v. City of San Rafael(9th Cir. 1996) 96 F.3d 359, 365.) This lawsuit may spur Heritage to cease unlawful conduct against other consumers, which is an important consideration.

We thus conclude that the trial court did not abuse its discretion in not reducing the attorney fee award based on an argument that Monroy achieved limited success.

 

C.The Number of Hours Expended

Heritage objects to the amount of the fee charged by Peter B. Fredman, counsel for Monroy, and asserts that the calculation included hours for work not reasonably expended in pursuit of Monroy’s successful claim. (See, e.g.,Harman v. City and County of San Francisco(2007) 158 Cal.App.4th 407, 424[appellate court determined trial court properly deleted hours spent on unsuccessful petition for rehearing of a prior appeal].) Specifically, Heritage objects to the following: 2.4 hours spent by Fredman on March 25, 2011, for attending to a letter from Heritage that threatened Fredman with a libel suit; .06 of an hour spent on April 21 and 22, 2011, for drafting a declaration in support of a motion in a different superior court class action lawsuit where Heritage was a party; [63] 9.6 hours for attending to matters regarding the class action case and/or conferring with class counsel; 7.9 hours for communicating with another attorney regarding a demurrer hearing;5.02 of an hour on May 31, 2011, for reviewing investigation material of a defendant in another case involving Heritage; .08 of an hour on July 25, 2011, for a conference with another person involving Heritage in Bankruptcy Court; and 3.2 hours for an appearance at a summary judgment hearing when Fredman missed the hearing but made an appearance later to deliver a proposed order.Heritage claims that awarding fees for the foregoing, which equals 23.26 hours, was an abuse of discretion.

At the hearing on attorney fees, counsel for Heritage made a number of specific complaints about the reasonableness of the hours billed. For example, Heritage argued that Fredman billed his client .6 hours for preparing a declaration for another action; Heritage also objected to billing [64] for work allegedly done on other cases unrelated to the present action. The trial court responded that it did not see “any of this in any of your papers.” Counsel for Heritage answered that it was in its opposition. The court commented that it would have to take another look, but instructed counsel to proceed with argument. At the end of the hearing, the court affirmed its tentative ruling. Heritage maintains that the court made its ruling without reviewing its papers as promised and therefore it clearly abused its discretion.

The record indicates that the trial court reasonably exercised its discretion in determining the number of hours spent on the lawsuit. The trial court considered Heritage’s argument that the abovementioned charges were unreasonable. The court listened to argument and obviously concluded that the argument by Heritage’s counsel lacked merit and that it was unnecessary to read through the opposition papers again to determine if each specific objection had actually been raised in Heritage’s opposition.

The trial court stated, “As the judge in this case, I did go over the billings and I didn’t see anything that I could say was unreasonable for hours spent on certain [65] tasks.” Thus, the court specifically stated that it found the hours worked by Monroy’s attorney to have been reasonably spent, and rejected Heritage’s argument that approximately 24 hours were unreasonably spent.The trial court had a reasonable basis for making this determination in light of the detailed timekeeping records and supporting declarations provided by Fredman. Heritage has failed to demonstrate that the court’s finding that these hours were reasonably expended in pursuit of Monroy’s claim exceed the bounds of reason. (See, e.g.,Maughan v. Google Technology, Inc.(2006) 143 Cal.App.4th 1242, 1250.)

 

D.The Reasonable Hourly Rate

Heritage contends that the hourly rate of $450, which the trial court awarded Fredman, was unreasonable.

In determining hourly rates, the court must look to the “prevailing market rates in the relevant community.” (Bell v. Clackamas County(9th Cir. 2003) 341 F.3d 858, 868.)The rates of comparable attorneys in the forum district are usually used. (SeeGates v. Deukmejian(9th Cir. 1992) 987 F.2d 1392, 1405.)In making its calculation, the court should also consider the experience, skill, and reputation of the attorney requesting fees. (Schwarz v. Secretary of Health & Human Services(9th Cir. 1995) 73 F.3d 895, 906.) [66] The court may rely on its own knowledge and familiarity with the legal market in setting a reasonable hourly rate. (Ingram v. Oroudjian(9th Cir. 2011) 647 F.3d 925, 928.)”Affidavits of the plaintiffs’ attorney and other attorneys regarding prevailing fees in the community, and rate determinations in other cases, particularly those setting a rate for the plaintiffs’ attorney, are satisfactory evidence of the prevailing market rate.” (United Steelworkers of America v. Phelps Dodge Corp.(9th Cir. 1990) 896 F.2d 403, 407.)

Here, Fredman declared that he had 15 years of experience and his “old” hourly rate was $450 per hour. (He declared that his rate had increased to $500-$525 per hour.) He noted that this rate had been approved for his work in a class action settlement in the superior courts and federal court. He added that this hourly rate did not include a contingency risk. Fredman also attached the declaration of Attorney Richard Pearl. Pearl summarized the hourly rates charged by various law firms for comparable services. According to his analysis, fees awarded in class actions cases in 2012, for 12-15 years of experience, varied from $455 to $610 per hour.

The trial court concluded [67] that counsel’s hourly fee rate of $450 was “within acceptable parameters for attorneys of counsel’s skill and experience practice in the San Francisco Bay area” and it denied the enhancement Fredman requested. The court added: “Whether it’s this kind of case or any other kind of case, I know that is a fee that is charged in the community. I can’t say that it’s unreasonable.”

Heritage claims that the trial court abused its discretion in accepting the hourly rate of $450 because it did not consider similar work in the community that was equally complex.It argues that the attorney fees discussed by Pearl in his declaration were not applicable because they were class action cases and more complex than the present case. Heritage also distinguishes the cases cited by Fredman where the courts awarded him his hourly rate of $450 as being complex class action cases that did not allege a violation of the FDCPA. Heritage cites a 2007 federal case where the billing rate in a FDCPA case was reduced to $250. (Navarro v. Eskanos & Adler(N.D. Cal. Nov. 26, 2007, No. C 02-03430 WHA) 2007 WL 4200171(Navarro), vacated byNavarro v. Eskanos & Adler(N.D. Cal. Dec. 11, 2007, No. C 06-2231 WHA) 2007 WL 448306.)

We [68] do not find Heritage’s argument to be persuasive. The attorney fees awarded inNavarro,a 2007 federal case where the legal work was completed in 2006, have little relevance to the hourly rate of fees for legal work done in 2010 through 2012. Monroy’s counsel submitted evidence supporting his hourly rate and Heritage did not submit evidence of current rates contradicting this rate. Accordingly, we conclude that the trial court did not abuse its discretion when it used the hourly rate of $450.

 

E.Block Billing

Heritage asserts that the trial court should have reduced the amount of the attorney fees requested because Fredman used block billing. In support of this argument, Heritage states that Fredman submitted records demonstrating that he billed 182.6 hours in this litigation. Heritage fails to provide any citation to the record to support this statement.

Heritage complains in a conclusory fashion that Fredman assigned a block of time to multiple tasks rather than itemizing the time spent on each task. It asserts that the use of block billing makes it impossible to discern the amount of time spent on each task. In support of this argument, Heritage relies onBell v. Vista United School Dist.(2000) 82 Cal.App.4th 672.6 [69] InBell,the court reversed an attorney fee award because the block billing made it impossible for the court to apportion the fees between a cause of action alleging a Brown Act violation for which statutory fees are allowed and other causes of action. (Id.at p. 689.)Browndoes not suggest that block billing is never appropriate.

Trial courts retain discretion to penalize block billing when the practice prevents them from discerning which tasks are compensable and which are not. (Christian Research Institute v. Alnor(2008) 165 Cal.App.4th 1315, 1324-1325;Bell v. Vista Unified School Dist., supra,82 Cal.App.4th at p. 689.) The trial court identified [70] no such problem here, and Heritage has completely failed to show that block billing occurred or that 182.6 hours billed for litigation was unreasonable.

 

F.Apportionment

Heritage argues that the trial court erred when it awarded attorney fees associated with the litigation in defense of the tort claims against Monroy because no statute or contract provided for fees in defense of these claims. In a separate argument, it asserts that the court should also have separated the fees associated with Monroy’s unsuccessful claim of a violation of the Rosenthal Act.

In attacking the fees awarded, Heritage in its opening brief does not even mention the trial court’s ruling that the issues raised by Heritage’s complaint and Monroy’s counter claims for violating the Rosenthal Act and the FDCPA “are synonymous and interrelated and cannot reasonably be separated.” Noticeably absent from Heritage’s briefs in this court is any discussion of the substantial authority supporting a trial court’s decision not to apportion fees when all of the claims are interrelated.

“When a cause of action for which attorney fees are provided by statute is joined with other causes of action for which attorney fees are not [71] permitted, the prevailing party may recover only on the statutory cause of action. However, the joinder of causes of action should not dilute the right to attorney fees. Such fees need not be apportioned when incurred for representation of an issue common to both a cause of action for which fees are permitted and one for which they are not. All expenses incurred on the common issues qualify for an award.” (Akins v. Enterprise Rent-A-Car Co. of San Francisco(2000) 79 Cal.App.4th 1127, 1133see alsoLiton Gen. Engineering Contractor, Inc. v. United Pacific Insurance(1993) 16 Cal.App.4th 577, 588.)

The record supports the trial court’s conclusion that Heritage’s fraud claims based on WMC’s assignment of the promissory note and Monroy’s counter claims that Heritage violated the Rosenthal Act and FDCPA were interrelated. The facts and issues related to Heritage’s claims and Monroy’s counter claims were almost identical, as they both related to the question whether Heritage had a legal right to collect money from Monroy. We agree with the trial court’s finding that Heritage’s causes of action were closely interrelated with Monroy’s counter claims.

We conclude that nothing in the record indicates [72] that the trial judge, who presided over the entire case, abused her discretion in calculating the award of attorney fees.

 

DISPOSITION

The judgment and the order awarding attorney fees are affirmed. Heritage is to pay the costs of both appeals.

Eviction could validate a void Foreclosure sooo……. Watch out !

2 Apr

Lorenzo VelezBecause an unlawful detainer action is a summary proceeding usually limited to the issue of immediate possession of real property, a judgment in such an action usually has  [21] limited res judicata effect “and will not prevent one who is dispossessed from bringing a subsequent action to resolve questions of title.” (Vella v. Hudgins (1977) 20 Cal.3d 251, 255 (Vella).) An exception to this rule is contained in Code of Civil Procedure section 1161a, which extends the summary eviction remedy beyond the conventional unlawful detainer suit brought by a landlord to include actions by certain purchasers of property. (Vella, at p. 255.) In these cases, title to the property may be an issue.

In Malkoskie, the court applied the exception to the rule that title cannot be tried in unlawful detainer in circumstances similar to the present case. There, Wells Fargo Bank, N.A. (Wells Fargo), after purchasing real property at a nonjudicial foreclosure sale, brought an unlawful detainer action against the previous homeowners pursuant to Code of Civil Procedure section 1161a, subdivision (b)(3). This subdivision permits an unlawful detainer action against a person who holds over and continues possession of real property after receiving a three-day written notice to quit the property, “[w]here the property has been sold in accordance with Section 2924 of the Civil Code, under  [22] a power of sale contained in a deed of trust executed by such person, or a person under whom such person claims, and the title under the sale has been duly perfected.” (Code Civ. Proc., § 1161a, subd. (b)(3), italics added.) In a subsequent action by the previous homeowners seeking to set aside the nonjudicial foreclosure sale, the court held that the judgment in the unlawful detainer action “conclusively resolved” the validity of title to the property in Wells Fargo’s favor. (Malkoskie, supra, 188 Cal.App.4th at p. 974.)

Likewise, in the UD action, the complaint alleged that U.S. Bank purchased the property at a foreclosure sale in accordance with Civil Code section 2924, and that it was seeking possession of the property pursuant to Code of Civil Procedure section 1161a, subdivision (b). Subdivision (b) sets forth five circumstances under which an unlawful detainer action may be commenced, all of which require the plaintiff to purchase the property and to duly perfect title. Subdivision (b)(3) appears to be the only circumstance which applies to the facts stated in the complaint. 10 The complaint in the UD action thus raised the issue of title to the property. (Malkoskie, supra, 188 Cal.App.4th at p. 974.)

Although the judgment in the UD action was obtained by default, the issue of title was necessarily and actually decided. By permitting their default in the UD action to be entered, the Sarkisians confessed the truth of all material allegations in the complaint, including U.S. Bank’s allegations that it purchased the property at a foreclosure sale and thereafter perfected its interest in the property. (Fitzgerald v. Herzer (1947) 78 Cal.App.2d 127, 131.) The Sarkisians therefore are collaterally estopped from denying that U.S. Bank holds title to the property. (Murray v. Alaska Airlines, Inc. (2010) 50 Cal.4th 860, 871 [“Even a judgment of default in a civil proceeding is ‘res judicata as to all issues aptly pleaded in the complaint and defendant  [24] is estopped from denying in a subsequent action any allegations contained in the former complaint’ “].)

Each of plaintiffs’ causes of action in this case rest on the premise that U.S. Bank did not acquire title to the property. Because U.S. Bank conclusively established in the UD action that it holds title to the property, the trial court correctly sustained the bank defendants’ demurrer to the FAC.

Pro Per wins in the First Apellate District against Bank of America

2 Apr

Intenganv.BAC Home Loans Servicing LP, 2013 Cal. App. LEXIS 225 (Copy citation)

Court of Appeal of California, First Appellate District, Division Five

March 22, 2013, Opinion Filed

A135782

Reporter: 2013 Cal. App. LEXIS 225 | 2013 WL 1180435

ARDEN M. INTENGAN, Plaintiff and Appellant, v. BAC HOME LOANS SERVICING LP et al., Defendants and Respondents.

Notice:CERTIFIED FOR PARTIAL PUBLICATION*

Prior History:  [1]Superior Court of San Mateo County, No. CIV 505111, Raymond Swope, Judge.

Core Terms

demurrer, judicial notice, borrower, trust deed, cause of action, foreclosure, notice, third amended complaint, notice of default, beneficiary, sustain a demurrer, wrongful foreclosure, due diligence, lender, default, modify, mortgage, trustee sale, telephone, foreclosure sale, trial court, recording of a notice, foreclose, purported

Case Summary

Procedural Posture
Plaintiff borrower’s third amended complaint sought to preclude corporate defendants from foreclosing on her property. Plaintiff contended that defendants lacked authority to foreclose under the relevant deed of trust and notice of default. The San Mateo County Superior Court, California, entered a judgment of dismissal after it sustained defendants’ demurrer to the third amended complaint without leave to amend.

Overview
Plaintiff alleged that defendants did not contact her or attempt to contact her with due diligence as required byCiv. Code, § 2923.5. The court held that judicial notice could not be taken of defendants’ compliance with§ 2923.5. While judicial notice could be properly taken of the existence of a declaration of compliance, it could not be taken of the facts of compliance asserted in the declaration, at least where plaintiff alleged and argued that the declaration was false and the facts asserted in the declaration were reasonably subject to dispute. Even if the “facts” stated in the declaration could be the subject of judicial notice, the declaration contained only a conclusory assertion that defendant bank complied with the statute; nowhere did it state when, how, or by whom the elements of due diligence were accomplished, or how the declarant knew if they were. The most these averments could do was create a factual dispute as to whether defendants complied with the statute. Because plaintiff stated a cause of action for wrongful foreclosure based on the purported failure to comply with§ 2923.5before recordation of the notice of default, it was error to sustain the demurrer.

Outcome
The judgment of dismissal was reversed.

LexisNexis® HeadnotesHide sectionHide

Civil Procedure > … > Responses > Defenses, Demurrers & Objections > Demurrers
Civil Procedure > Appeals > Standards of Review > De Novo Review
Evidence > Judicial Notice > General Overview
HN1 In its de novo review of an order sustaining a demurrer, the appellate court assumes the truth of all facts properly pleaded in the complaint or reasonably inferred from the pleading, but not mere contentions, deductions, or conclusions of law. The appellate court then determines if those facts are sufficient, as a matter of law, to state a cause of action under any legal theory. In making this determination, the appellate court also considers facts of which the trial court properly took judicial notice.  Shepardize – Narrow by this Headnote

Civil Procedure > … > Responses > Defenses, Demurrers & Objections > Demurrers
Evidence > Judicial Notice > General Overview
HN2 A demurrer may be sustained where judicially noticeable facts render the pleading defective, and allegations in the pleading may be disregarded if they are contrary to facts judicially noticed.  Shepardize – Narrow by this Headnote

Civil Procedure > … > Responses > Defenses, Demurrers & Objections > Demurrers
Civil Procedure > Appeals > Standards of Review > General Overview
HN3 In order to prevail on appeal from an order sustaining a demurrer, the appellant must affirmatively demonstrate error. Specifically, the appellant must show that the facts pleaded are sufficient to establish every element of a cause of action and overcome all legal grounds on which the trial court sustained the demurrer. The appellate court will affirm the ruling if there is any ground on which the demurrer could have been properly sustained.  Shepardize – Narrow by this Headnote

Real Property Law > Financing > Topic Summary ReportForeclosures > General Overview
HN4 As a general rule, a plaintiff may not challenge the propriety of a foreclosure on his or her property without offering to repay what he or she borrowed against the property. A valid tender of performance must be of the full debt, in good faith, unconditional, and with the ability to perform.Civ. Code, §§ 1486,1493,1494,1495.  Shepardize – Narrow by this Headnote

Real Property Law > Financing > Topic Summary ReportForeclosures > General Overview
HN5 SeeCiv. Code, § 2923.6.  Shepardize – Narrow by this Headnote

Real Property Law > Financing > Topic Summary ReportForeclosures > General Overview
HN6 Civ. Code, § 2923.6, does not grant a right to a loan modification. To the contrary, it merely expresses the hope that lenders will offer loan modifications on certain terms and conspicuously does not require lenders to take any action. In other words, there is no “duty” under§ 2923.6to agree to a loan modification.  Shepardize – Narrow by this Headnote

Real Property Law > Financing > Topic Summary ReportForeclosures > General Overview
HN7 Civ. Code, § 2923.5, subd. (a)(1), precludes a trustee or mortgage servicer from recording a notice of default until 30 days after the loan servicer has made initial contact with the borrower to assess the borrower’s financial situation and explore options for avoiding foreclosure, or has satisfied the due diligence requirements of the statute. Due diligence requires sending a letter by first class mail, making three attempts to contact the borrower by telephone, and sending a certified letter if no response is received within two weeks of the telephone attempts.§ 2923.5, subd. (e).  Shepardize – Narrow by this Headnote

Evidence > Judicial Notice > General Overview
Real Property Law > Financing > Topic Summary ReportForeclosures > General Overview
HN8 Civ. Code, § 2923.5, requires not only that a declaration of compliance be attached to the notice of default, but that the bank actually perform the underlying acts (i.e., contacting the borrower or attempting such contact with due diligence) that would constitute compliance. While judicial notice may be properly taken of the existence of the declaration, it may not be taken of the facts of compliance asserted in the declaration, at least where the borrower has alleged and argued that the declaration is false and the facts asserted in the declaration are reasonably subject to dispute.  Shepardize – Narrow by this Headnote

Civil Procedure > … > Responses > Defenses, Demurrers & Objections > Demurrers
HN9 A demurrer is not the appropriate procedure for determining the truth of disputed facts.  Shepardize – Narrow by this Headnote

Headnotes/SyllabusExpand SectionShow

Counsel: Arden M. Intengan, in pro. per., for Plaintiff and Appellant.

Severson & Werson,Jan T. ChiltonandM. Elizabeth Holtfor Defendants and Respondents.

Judges: Opinion byNeedham, J., withJones, P. J., andBruiniers, J., concurring.

Opinion by: Needham, J.

Opinion

NEEDHAM, J.—Arden M. Intengan (Intengan) appeals from a judgment of dismissal entered after the court sustained the demurrer to her third amended complaint without leave to amend. Essentially, Intengan sought to preclude respondents from foreclosing on her property, contending they lack authority to do so under the relevant deed of trust and notice of default. In this appeal, Intengan argues that the demurrer should not have been sustained because she alleged facts sufficient to state a cause of action, including a claim based on respondents’ alleged failure to contact her or attempt with due diligence to contact her before recording the notice of default (Civ. Code, § 2923.5). She also contends the court should have ruled on her motion to strike the demurrer.

We will reverse the judgment. In the published portion of our opinion, we conclude that judicial notice could not be taken of respondents’ [2] compliance withCivil Code section 2923.5, and Intengan’s allegations that respondents did not comply with the statute were sufficient to state a cause of action for wrongful foreclosure. In the unpublished portion of the opinion, we conclude that Intengan failed to state any other cause of action and the court did not err in denying leave to amend.

I. FACTS AND PROCEDURAL HISTORYOn June 26, 2006, Intengan borrowed $696,500 from Countrywide Bank, N.A. (Countrywide). The loan was secured by a deed of trust on Intengan’s real property in Daly City. Under the deed of trust, the beneficiary was Mortgage Electronic Registration Systems, Inc. (MERS), the trustee was respondent ReconTrust Company, N.A. (ReconTrust), and BAC Home Loans Servicing LP (BAC) serviced the note. BAC’s successor is respondentBank of America, N.A.

On or about December 28, 2010, MERS assigned its beneficial interest in Intengan’s deed of trust to “TheBank of New York Mellonfka TheBank of New York,as Successor Trustee toJPMorgan ChaseBank, N.A., as Trustee for the Holders of SAMI II Trust 2006-AR7, Mortgage Pass-Through Certificates, Series 2006-AR7” (Bank of New York).

On December 28, 2010, ReconTrust, as agent [3] for the beneficiary under the deed of trust, recorded a notice of Intengan’s default on Intengan’s loan; the notice of default and election to sell under deed of trust indicated that she was more than $46,000 in arrears.

Purportedly accompanying the notice of default was a declaration by Samantha Jones, “MLO Loan Servicing Specialist of BAC Home Loans Servicing, LP,” in which she states under penalty of perjury thatBank of America“tried with due diligence to contact the borrower in accordance withCalifornia Civil Code Section 2923.5.” The declaration does not provide any facts to support this conclusion, such as the specifics of any attempt to contact Intengan.

A notice of trustee’s sale was recorded by ReconTrust on April 5, 2011, setting a sale date of April 26, 2011. Intengan does not allege that the sale occurred, and the respondents’ brief represents that no sale took place and that Intengan has been in possession of the property for nearly two years without making payments on her loan.

A.Original, First Amended, and Second Amended ComplaintsOn April 25, 2011—the day before the scheduled foreclosure sale—Intengan filed a complaint against defendants, including BAC and ReconTrust, [4] asserting causes of action for declaratory relief, injunctive relief, and an accounting. Before any defendant responded, Intengan filed a first amended complaint and then a second amended complaint.

BAC and ReconTrust filed a demurrer to Intengan’s second amended complaint. The court sustained their special demurrer to the first and second causes of action, with leave to amend in order to state a violation ofCivil Code section 2923.5. The court also sustained their general demurrer to the third cause of action for an accounting, without leave to amend.

B.Third Amended ComplaintIntengan filed her third amended complaint in January 2012 against BAC, ReconTrust, and others. This time, she purported to assert causes of action for wrongful foreclosure, fraud, intentional misrepresentation, breach of contract, breach of the implied covenant of good faith and fair dealing, slander of title, quiet title, declaratory relief, violation ofBusiness and Professions Code section 17200, unjust enrichment, and injunctive relief seeking to enjoin the pending foreclosure sale.

In February 2012, respondents filed a demurrer to the third amended complaint. Although the demurrer is central to the issues [5] on appeal, neither Intengan nor respondents include the demurrer in the record. The record does contain, however, respondents’ request for judicial notice in support of their demurrer, by which they sought judicial notice of the deed of trust on Intengan’s property, the notice of default, the assignment of the deed of trust toBank of New York,and the notice of trustee’s sale.

In June 2012, Intengan filed an opposition and “motion to strike” the demurrer, “on the grounds that Defendant[]Bank of America’sDemurrer does not state facts sufficient to constitute a demurrer, is uncertain, is ambiguous, is unintelligible, is irrelevant, is false, contains improper matters and/or is not drawn or filed in conformity with the laws of California.” She urged that the demurrer misstated facts and ignored the law, and therefore it should be stricken or denied. The purported motion was not accompanied by a notice of hearing.

The court granted respondents’ request for judicial notice and sustained their demurrer to the third amended complaint without leave to amend. A judgment of dismissal was entered on June 15, 2012.

This appeal followed.

II. DISCUSSIONAs mentioned, Intengan argues that the court [6] erred in sustaining the demurrer and further erred in failing to rule on her motion to strike the demurrer.

A.DemurrerHN1 In our de novo review of an order sustaining a demurrer, we assume the truth of all facts properly pleaded in the complaint or reasonably inferred from the pleading, but not mere contentions, deductions, or conclusions of law. (Buller v. Sutter Health(2008) 160 Cal.App.4th 981, 985–986 [74 Cal. Rptr. 3d 47].) We then determine if those facts are sufficient, as a matter of law, to state a cause of action under any legal theory. (Aguilera v. Heiman(2009) 174 Cal.App.4th 590, 595 [95 Cal. Rptr. 3d 18].)

In making this determination, we also consider facts of which the trial court properly took judicial notice. (E.g.,Avila v. Citrus Community College Dist.(2006) 38 Cal.4th 148, 165, fn. 12 [41 Cal. Rptr. 3d 299, 131 P.3d 383].)HN2 A demurrer may be sustained where judicially noticeable facts render the pleading defective (Evans v. City of Berkeley(2006) 38 Cal.4th 1, 6 [40 Cal. Rptr. 3d 205, 129 P.3d 394]), and allegations in the pleading may be disregarded if they are contrary to facts judicially noticed (Hoffman v. Smithwoods RV Park, LLC(2009) 179 Cal.App.4th 390, 400 [102 Cal. Rptr. 3d 72](Hoffman); seeFontenot v. Wells Fargo Bank, N.A.(2011) 198 Cal.App.4th 256, 264–265 [129 Cal. Rptr. 3d 467](Fontenot) [in sustaining [7] demurrer, court properly took judicial notice of recorded documents that clarified and to some extent contradicted plaintiff’s allegations]).

HN3 In order to prevail on appeal from an order sustaining a demurrer, the appellant must affirmatively demonstrate error. Specifically, the appellant must show that the facts pleaded are sufficient to establish every element of a cause of action and overcome all legal grounds on which the trial court sustained the demurrer. (Cantu v. Resolution Trust Corp.(1992) 4 Cal.App.4th 857, 879–880 [6 Cal. Rptr. 2d 151].) We will affirm the ruling if there is any ground on which the demurrer could have been properly sustained. (Debro v. Los Angeles Raiders(2001) 92 Cal.App.4th 940, 946 [112 Cal. Rptr. 2d 329].)

boa-billboard11.Wrongful Foreclosure (First Cause of Action)The first purported cause of action in Intengan’s third amended complaint is for “wrongful foreclosure.” Intengan alleges there was “an unauthorized Trustee, document irregularities, improper signatories, and [a] defective Notice of Default”; she further alleges that “due to the chain of assignments, it is now unknown and doubtful who is the current lender/beneficiary/assignee with legal authority and standing regarding the mortgage on [the] [8] subject property.” Intengan also claims that BAC and ReconTrust failed to comply with a number of Civil Code sections regulating nonjudicial foreclosures, including the requirement of contacting the borrower, or attempting to do so with due diligence, underCivil Code section 2923.5.

a.Failure to tenderHN4 CA(1) (1)As a general rule, a plaintiff may not challenge the propriety of a foreclosure on his or her property without offering to repay what he or she borrowed against the property. (Karlsen v. American Sav. & Loan Assn.(1971) 15 Cal.App.3d 112, 117 [92 Cal.Rptr. 851][judgment on the pleadings properly granted where plaintiff attempted to set aside trustee’s sale for lack of adequate notice, because “[a] valid and viable tender of payment of the indebtedness owing is essential to an action to cancel a voidable sale under a deed of trust”]; seeUnited States Cold Storage v. Great Western Savings & Loan Assn.(1985) 165 Cal.App.3d 1214, 1222–1223 [212 Cal. Rptr. 232][“the law is long-established that atrustoror his successor must tender the obligation in full as a prerequisite to [a] challenge of the foreclosure sale”];FPCI RE-HAB 01 v. E & G Investments, Ltd.(1989) 207 Cal.App.3d 1018, 1021–1022 [255 Cal. Rptr. 157][tender rule is based on “the [9] equitable maxim that a court of equity will not order a useless act performed … [¶] … if plaintiffs could not have redeemed the property had the sale procedures been proper, any irregularities in the sale did not result in damages to the plaintiffs”].)

Intengan’s third amended complaint alleges her willingness “to tender the appropriate and reasonable mortgage payments.” That allegation, however, is plainly insufficient. A valid tender of performance must be of the full debt, in good faith, unconditional, and with the ability to perform. (Civ. Code, §§ 1486,1493,1494,1495.)

Intengan’s third amended complaint also asserts that “tender is not required inasmuch as there is [a] void foreclosure, not a voidable one.” (SeeDimock v. Emerald Properties(2000) 81 Cal.App.4th 868, 877–878 [97 Cal. Rptr. 2d 255].) However, Intengan does not allege that she was fraudulently induced into the loan; nor does she otherwise attack the validity of the debt. Nor do her allegations indicate a defect in the foreclosure procedure that would render a resulting sale voidon its face, particularly when considered in light of the documents that were judicially noticed. On the other hand, as we shall discusspost, Intengan has [10] alleged a defect in the foreclosure procedure—the failure to comply withCivil Code section 2923.5—which, if true, would render the foreclosure either void or voidable. Whether or not this would remove the need to allege tender is an issue we need not address, since an allegation of tender is unnecessary for another reason.

According to the allegations of the third amended complaint—as well as representations in the respondents’ brief—no foreclosure sale had occurred as of the time of the ruling on the demurrer. While the tender requirement may apply to causes of action toset asidea foreclosure sale, a number of California and federal courts have held or suggested that it does not apply to actions seeking toenjoina foreclosure sale—at least where the lenders had allegedly not complied with a condition precedent to foreclosure. (See, e.g.,Pfeifer v. Countrywide Home Loans, Inc.(2012) 211 Cal.App.4th 1250, 1280–1281 [150 Cal. Rptr. 3d 673][failure to allege tender of full amount owed did not bar declaratory relief or injunctive relief based on wrongful foreclosure, where lenders had not yet foreclosed and borrowers alleged that lenders had not complied with servicing regulations that were a [11] condition precedent to foreclosure];Mabry v. Superior Court(2010) 185 Cal.App.4th 208, 225 [110 Cal. Rptr. 3d 201](Mabry) [borrower not required to tender full amount of indebtedness in seeking to enjoin foreclosure sale based on alleged failure to comply withCiv. Code, § 2923.5];Barrionuevo v. Chase Bank, N.A. (N.D.Cal. 2012) 885 F.Supp.2d 964, 969–970 & fn. 4(Barrionuevo) [no tender requirement where foreclosure sale had not yet occurred, in case where noncompliance withCiv. Code, § 2923.5was alleged].)

b.Wrongful foreclosure theoriesIntengan contends that the foreclosing beneficiary under the deed of trust,Bank of New York,has not been shown to have standing to foreclose. She alleges: “Defendants made transfers, assignments of the subject loan and that due to the chain of assignments, it is now unknown and doubtful who is the current lender/beneficiary/assignee with legal authority and standing regarding the mortgage on the subject property.”

Intengan fails to allege wrongful foreclosure on this ground. The records of which the court took judicial notice, without Intengan’s objection, identify the foreclosing beneficiary to be theBank of New York. [12] Specifically, the recorded deed of trust names MERS as the original beneficiary, the recorded assignment of the deed of trust assigns all beneficial interest under the deed of trust from MERS toBank of New Yorkas the new beneficiary, and the notice of trustee sale was dated and recorded afterBank of New Yorkbecame the beneficiary. (SeeFontenot, supra, 198 Cal.App.4th at pp. 264–265[court may take judicial notice of the fact of the existence and legal effect of legally operative documents, such as the identity of the beneficiary designated in the deed of trust, where not subject to reasonable dispute];Scott v.JPMorgan ChaseBank, N.A.(Mar. 18, 2013, A132741) 214 Cal.App.4th ___ [2013 Cal.App.Lexis 211].) While Intengan’s pleading includes the unsupported conclusion that there was no assignment of the deed of trust in favor of “TheBank of New York Mellonfka TheBank of New Yorkas Trustee,” the recorded assignment of which the court took judicial notice shows there was, and Intengan neither alleges nor argues facts from which the assignment might be inferred to be invalid. (SeeFontenot, supra, at pp. 264–265.) Under these circumstances, the judicially noticed facts contradict the conclusory allegations [13] of the third amended complaint, and those allegations may be disregarded. (Id.at p. 265;Hoffman, supra, 179 Cal.App.4th at p. 400.)1

Similarly, Intengan alleges that respondents could not provide a valid “chain of assignments” from previous [14] lenders including Countrywide. From the outset, however, MERS (not Countrywide) was the beneficiary under the deed of trust, and the assignment of the deed of trust shows that MERS assigned its interest toBank of New York.(SeeFontenot, supra, 198 Cal.App.4th at pp. 264–265.)

Intengan also alleges the conclusion that the notice of trustee’s sale arose from an “unauthorized Trustee, document irregularities, [and] improper signatories.” Although she alleges that the substitution of ReconTrust as trustee was not recorded until February 17, 2011, the records of which the court took judicial notice—including the original deed of trust—show that ReconTrust was the trustee from the beginning and throughout the date of the notice of default and notice of trustee sale. (SeeFontenot, supra, 198 Cal.App.4th at pp. 264–265.) Furthermore, both beneficiaries and trustees—and their agents—may record notices of default. (Civ. Code, § 2924, subd. (a)(1).) Thus, ReconTrust was authorized to record the notice of default as the trustee, and it was also authorized to record the notice of default as the agent of the beneficiary. Intengan’s allegations fail to state facts from which it may be inferred [15] that the notice of default or the notice of trustee’s sale was invalid on this ground.

Intengan further alleges that respondents did not comply with the requirements of Civil Code sections 2823.6,2923.5, or2923.6, before proceeding with the foreclosure. There is no Civil Code section 2823.6. Her allegations as toCivil Code section 2923.6are unavailing, but her allegation as toCivil Code section 2923.5suffice to state a cause of action.

CA(2) (2)In January 2012, when Intengan’s third amended complaint was filed, and June 2012, when it was dismissed,Civil Code section 2923.6provided:HN5 “It is the intent of the Legislature that the mortgagee, beneficiary, or authorized agent offer the borrower a loan modification or workout plan if such a modification or plan is consistent with its contractual or other authority.” (Civ. Code, § 2923.6, former subd. (b).)2Intengan alleged that, pursuant to Civil Code section “2823.6”—which we take to mean “2923.6”—“Defendants are now contractually bound to implement the loan modification as provided therein.” ButHN6 Civil Code section 2923.6does not grant a right to a loan modification. To the contrary, it “merely expresses the hope that lenders will offer loan [16] modifications on certain terms” and “conspicuously does not require lenders to take any action.” (Mabry, supra, 185 Cal.App.4th at p. 222 & fn. 9, italics omitted.) In other words, “[t]hereis no ‘duty’ underCivil Code section 2923.6to agree to a loan modification.” (Hamilton v. Greenwich Investors XXVI, LLC(2011) 195 Cal.App.4th 1602, 1617 [126 Cal. Rptr. 3d 174].)

HN7 CA(3) (3)Civil Code section 2923.5precludes a trustee (like respondent ReconTrust) or mortgage servicer (such as BAC/respondentBank of America) from recording a notice of default until 30 days after the loan servicer has made initial contact with the borrower to assess the borrower’s financial situation and explore options for avoiding foreclosure, or has satisfied the due diligence requirements of the statute. (Civ. Code, § 2923.5, subd. (a)(1).) Due diligence requires sending a letter by first-class mail, making three attempts to contact the borrower by telephone, and sending a certified letter if no response is received within two weeks of the telephone attempts. [17] (Civ. Code, § 2923.5, subd. (e).)

Intengan expressly alleged in her third amended complaint that respondents “did not complywith such contact and due diligence requirements pursuant toCivil Code section 2923.5.” (Italics added.) In support of their demurrer, respondents sought judicial notice of the notice of default, including the attached declaration of Samantha Jones, which averred thatBank of America“tried with due diligence to contact [Intengan] in accordance withCalifornia Civil Code Section 2923.5.” But in her opposition to the demurrer, Intengan argued that she had never spoken with Jones in person or over the telephone, heard any recording from Jones “over the telephone or any other method recorded by ‘Ms. Jones’, DefendantsBank of Americaor Mr. Julian,” or “communicated with ‘Ms. Jones’ by any method of communication whatsoever nor received any communication whatsoever from ‘Ms. Jones’ other than by the ‘Ms. Jones’ Declaration DefendantsBank of Americaand Mr. Julian have provided.”

Construing the allegations of the third amended complaint broadly (as we must on demurrer), we conclude that Intengan stated a cause of action for wrongful foreclosure based on respondents’ [18] alleged noncompliance withCivil Code section 2923.5. Intengan alleged that defendants did not contact her or attempt to contact her with due diligence as required by the statute. Although respondents sought judicial notice of Jones’s declaration regarding compliance with the statute, Intengan disputed the truthfulness of Jones’s declaration by denying that she was ever contacted or received any telephone message. She also argued at the demurrer hearing that it was inappropriate to turn the hearing into an evidentiary hearing—in other words, that a demurrer may not be sustained by resolving a conflict in the evidence. And in this appeal Intengan argues that, while judicial notice may be taken of the existence of a document such as a declaration, accepting the truth of itscontentspresents an entirely different matter.

CA(4) (4)Intengan is correct.HN8 Civil Code section 2923.5requires not only that a declaration of compliance be attached to the notice of default, but that the bank actually perform the underlying acts (i.e., contacting the borrower or attempting such contact with due diligence) that would constitute compliance. While judicial notice could be properly taken of theexistenceof Jones’s [19] declaration, it could not be taken of the facts of compliance assertedinthe declaration, at least where, as here, Intengan has alleged and argued that the declaration is false and the facts asserted in the declaration are reasonably subject to dispute. (See, e.g.,Joslin v. H.A.S. Ins. Brokerage(1986) 184 Cal.App.3d 369, 374–376 [228 Cal. Rptr. 878](Joslin) [facts disclosed in a deposition and not disputed could be considered in ruling on a demurrer, but facts disclosed in the deposition that were disputed could not be, since “ ‘judicial notice of matters upon demurrer will be dispositive only in those instances where there is not or cannot be a factual dispute concerning that which is sought to be judicially noticed.’ ”].) Indeed, respondents only sought judicial notice of the documents attached to its request, not the underlying fact of its attempt to contact Intengan.

Taking judicial notice that the bank actually performed certain acts that might constitute compliance with its statutory obligations, based solely on a declaration that avers compliance in a conclusory manner, would of course be vastly different than merely taking judicial notice that the declaration was signed and attached to the notice [20] of default (or, as discussedante, from taking judicial notice of the legal effect of a legally operative deed of trust that names its beneficiary). At least in this case, what the bank actually did to comply with the statute is reasonably subject to dispute and cannot be judicially noticed, even though the existence of the declaration (and the legal effect of a deed of trust) is not reasonably subject to dispute and can be judicially noticed. (SeeSkov v. U.S. Bank National Assn.(2012) 207 Cal.App.4th 690, 696 [143 Cal. Rptr. 3d 694](Skov) [where bank sought judicial notice of a notice of default declaration stating compliance withCiv. Code, § 2923.5, whether the bank “complied withsection 2923.5is the type of fact that is reasonably subject to dispute, and thus, not a proper subject of judicial notice”].)

Furthermore, even if the “facts” stated in Jones’s declarationcouldbe the subject of judicial notice, the declaration contains only a conclusory assertion thatBank of Americacomplied with the statute: nowhere does it state when, how, or by whom the elements of due diligence were accomplished, or how the declarant knew if they were.3More importantly, the most these averments could do is create a factual dispute [21] as to whether respondents complied with the statute. (SeeMabry, supra, 185 Cal.App.4th at pp. 235–236[competing accounts as to possibility of compliance withCiv. Code, § 2923.5created conflict in the evidence].)HN9 A demurrer is “ ‘simply not the appropriate procedure for determining the truth of disputed facts.’ ” (Joslin, supra, 184 Cal.App.3d at p. 374; seeSkov, supra, 207 Cal.App.4th at pp. 696–697[assuming the truth of the plaintiff’s allegations, a disputed issue of compliance withCiv. Code, § 2923.5cannot be resolved at the demurrer stage]; see alsoBarrionuevo, supra, 885 F.Supp.2d 964, 976–977[borrowers’ allegation that bank did not contact them before filing the notice of default was sufficient to state a violation ofCiv. Code, § 2923.5, despite judicial notice taken of declaration in notice of default that asserted statutory compliance];Argueta v. J.P. Morgan Chase(E.D.Cal. 2011) 787 F.Supp.2d 1099, 1107(Argueta) [despite judicial notice of notice of default including declaration of compliance withCiv. Code, § 2923.5, plaintiff’s allegations were sufficient to preclude dismissal where plaintiffs alleged that they did not receive phone calls, [22] phone messages, or letters before the notice of default was recorded].)

On this basis, Intengan stated a cause of action for wrongful foreclosure based on the purported failure to comply withCivil Code section 2923.5before recordation of the notice of default. For this reason, it was error to sustain the demurrer.4

2.–10.* [23]

11.Intengan’s Other ArgumentsIntengan contends that the court’s ruling on the demurrer “is partial and therefore inconsistent with California statutory and case law,” “amounts to a constructive tax” in violation of her constitutional rights, violates her constitutional right to be free from illegal takings, resulted from a misapplication of law and ignorance of the facts, and violates her “Constitutional Right to separation of powers.” She contends that “[n]oevidence exists in the record that Judge Swope had any probable cause to institute any forfeiture action against Appellant Intengan [24] by the Wrongful Demurrer Ruling resulting in the loss of Appellant Intengan’s lawsuit.” She asserts that the “refusals” ofBank of Americaand the trial court “resemble an Orwellian conundrum.” She “further requests that this Court piece together Appellant Intengan’s Constitutional Right that Judge Swope and RespondentsBank of Americashattered Humpty Dumpty-like due to their acts of partiality, misapplication of law, ignorance of facts and unconstitutionality and by their refusals to contemplate the gravity of their decisionmaking before proceeding contrary to law.” Intengan additionally refers us to Lewis Carroll’s Alice’s Adventures in Wonderland (1865). And she urges us to do justice and mercy in this case, providing numerous quotations from the Bible.

We have fully considered all of Intengan’s arguments in arriving at our disposition of her appeal. We conclude the trial court erred in sustaining the demurrer to the third amended complaint, only in that Intengan adequately alleged a violation ofCivil Code section 2923.5, which might be pursued under her theory of wrongful foreclosure. Accordingly, the judgment of dismissal must be reversed, and the order sustaining the demurrer to the [25] third amended complaint must be reversed solely as to her purported cause of action for wrongful foreclosure, based exclusively on the alleged violation ofCivil Code section 2923.5, potentially providing relief only in the form of a postponement of the foreclosure sale.

B., C.*

III. DISPOSITIONThe judgment of dismissal is reversed. The order sustaining the demurrer is reversed, solely as to a cause of action for wrongful foreclosure based on allegations that respondents did not comply withCivil Code section 2923.5. Appellant shall recover her costs on appeal.

Jones, P. J., andBruiniers, J., concurred.

Must contact 2923.5

2 Apr

Barrionuevov.Chase Bank, N.A., 885 F. Supp. 2d 964 (Copy citation)

United States District Court for the Northern District of California

August 6, 2012, Decided; August 6, 2012, Filed

No. C-12-0572 EMC

Reporter: 885 F. Supp. 2d 964 | 2012 U.S. Dist. LEXIS 109935 | 2012 WL 3235953

JOSE BARRIONUEVO, et al., Plaintiffs, v. CHASE BANK, N.A., et. al., Defendants.

Core Terms

notice, foreclosure, trust deed, beneficiary, chase, reconveyance, wrongful foreclosure, borrower, notice of default, mutual, cause of action, motion to dismiss, trustee sale, foreclose, default, mortgagee, deed, beneficial interest, voidable, void, subject property, nonjudicial, authorized agent, slander of title, irregularity, securitize, diligence, convey, entity, bus

Counsel: For Jose Barrionuevo, Flor Barrionuevo, Plaintiffs:Michael James Yesk, LEAD ATTORNEY, Law Offices of Michael Yesk, Pleasant Hill, CA.

For California Reconveyance Corporation, JP Morgan Chase Bank, N.A. as acquirer of certain assets from Washington Mutual Bank, FA, Defendants:John Charles Hedger, Bryan Cave LLP, San Francisco, CA.

Judges: EDWARD M. CHEN, United States District Judge.

Opinion by: EDWARD M. CHEN

Opinion

[966] ORDER DENYING DEFENDANTSJP MORGAN CHASEBANK, N.A. AND CALIFORNIA RECONVEYANCE CO.’S MOTION TO DISMISS

(Docket No. 23)

I.INTRODUCTION

Plaintiffs Jose and Flor Barrionuevo (collectively “the Barrionuevos”) sued DefendantsJP Morgan ChaseBank (“Chase”) and California Reconveyance Corporation (“California Reconveyance”) on February 3, 2012, after California Reconveyance attempted to foreclose on a Deed of Trust (“DOT”) that the Barrionuevos executed for the purchase of a home in California. Pls.’ Opp. to Mot. to Dismiss (Docket No. 25) at 1. Chase is the successor in interest toWashington Mutual Bank(“Washington Mutual”), who executed the DOT with the Barrionuevos and funded the loan for the purchase of the subject property. In their amended complaint, the Barrionuevos assert claims against Defendantsfor wrongful foreclosure, slander of title, violatingCalifornia Civil Code § 2923.5, and violating California’s Unfair Business Practices Act (Cal. Bus. Prof. Code §§ 17200).SeePls.’ Am. Compl. (Docket No. 20). On February 23, 2012, the Barrionuevos movedex partefor a temporary restraining order barring Defendants from completing California’s nonjudicial foreclosure process, which this Court denied on February 29, 2012, after a hearing on the merits.SeePls.’ Mot. for TRO (Docket No. 5); Min. Entry Den. TRO (Docket No. 13). California Reconveyance and Chase thereafter filed a motion to dismiss pursuant toFed. R. Civ. P. 12(b)(6).SeeDefs.’ Mot. to Dismiss (Docket No. 23). Having considered the papers filed in support of and in opposition to the instant Motion, the Court deems the matter appropriate for decision without oral argument.Fed. R. Civ. P. 78;Local Rule. 7-6. For the following reasons, Defendants’ motion isDENIED.

II.FACTUAL & PROCEDURAL BACKGROUND

On February 28, 2006, the Barrionuevos entered into a DOT with Washington Mutual and California Reconveyance for the purchase of a single family home in Dublin, California. Defs.’ Mot. to Dismiss, Ex. A. The DOT was recordedin Alameda County on March 3, 2006, against the subject property (known as 5931 Annadele Way) to secure a promissory note in favor of Washington Mutual for a loan of $1,720,000. Pls.’ Am. Compl. ¶ 9. The DOT conveys title and power of sale to California Reconveyance, and names Washington Mutual as both “Lender” and “Beneficiary.” Defs.’ Mot. to Dismiss, Ex. A at 1-3. In the event of default or breach by the borrower, and after first having been given an opportunity to cure, the DOT grants to the Lender the power [967] “to require immediate payment in full of all sums secured by this security instrument without further demand,” and “the power of sale and any other remedies permitted by Applicable law.” Defs.’ Mot. to Dismiss, Ex. A at 15.

In May of 2006, the Barrionuevos allege that Washington Mutual “securitized and sold Plaintiffs’ Deed of Trust to the WMALT Series 2006-AR4 Trust,” naming La Salle Bank as Trustee. Pls.’ Am. Compl. ¶ 10. In support of this allegation they point to a report prepared by Certified Forensic Loan Auditors, which apparently reaches the same conclusion.SeePls.’ Am. Compl., Ex. A – Property Securitization Analysis Report. In September of 2008, after the purportedsale of the Barrionuevos’ DOT, the U.S. Office of Thrift Supervision closed Washington Mutual and appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver.SeePls.’ Am. Compl. ¶ 11; Defs.’ Mot. to Dismiss at 2. Shortly thereafter, Chase acquired certain assets of Washington Mutual from the FDIC.Id.Having been sold at an earlier point to the WMALT Series 2006-AR4 Trust, the Barrionuevos allege that any beneficial interest under their DOT could not have been purchased or obtained by Chase during this acquisition.SeePls.’ Opp. to Mot. to Dismiss at 3.

About a year later, California Reconveyance initiated nonjudicial foreclosure proceedings against the Barrionuevos regarding the subject property by recording a “Notice of Default and Election to Sell Under Deed of Trust” with the County of Alameda on April 7, 2009. Pls.’ Am. Compl., Ex. B – Notice of Default. The Notice of Default identified Washington Mutual as the beneficiary of record, and included a statement that “the beneficiary or its designated agent declares that it has contacted the borrower” or has “tried with due diligence to contact the borrower as required byCalifornia Civil Code 2923.5.”Id.at 2. TheBarrionuevos allege, contrary to this statement, that neither of the Defendants contacted Plaintiffs “at least 30 days prior to recording the Notice of Default” in violation of§ 2923.5.1SeePls.’ Am. Compl. ¶¶ 28, 32. Thereafter, California Reconveyance recorded three separate Notices of Trustee’s Sales regarding the subject property with the County of Alameda, the most recent having been filed with the County on February 2, 2012. Pls.’ Am. Compl. ¶¶ 13-14;see alsoDefs.’ Mot. to Dismiss, Ex. C, D, and E.2

The Barrionuevos initiated suit against Chase and California Reconveyance on February 3, 2012, with a complaint listing nine causes of action. Compl. (Docket No. 1). They have since filed an amended complaint listing only four causes of action, namely (1) Wrongful Foreclosure, (2) Slander of Title, (3) Violation ofCal. Civ. Code § 2923.5, [968] and (4) Violation of the California Unfair Business Practices Act (Cal. Bus. Prof. Code §§ 17200).SeePls.’ Am. Compl. Soon after Plaintiffs’ amended their complaint, Defendants jointly moved to dismiss the amended complaint “pursuant toRule 12(b)(6) of the Federal Rules of Civil Procedure, in its entirety, for failure to state a claim upon which relief can be granted.” Defs.’ Mot.to Dismiss at 1.

III.DISCUSSION

A.Legal Standard

UnderFederal Rule of Civil Procedure 12(b)(6), a party may move to dismiss based on the failure to state a claim upon which relief may be granted.SeeFed. R. Civ. P. 12(b)(6).A motion to dismiss based onRule 12(b)(6)challenges the legal sufficiency of the claims alleged.SeeParks Sch. of Bus. v. Symington,51 F.3d 1480, 1484 (9th Cir. 1995).In considering such a motion, the Court may consider facts alleged in the complaint, materials incorporated into the complaint by reference, and matters of which the Court may take judicial notice.3Zucco Partners LLC v. Digimarc Corp.,552 F.3d 981, 989 (9th Cir. 2009).A court must also take all allegations of material fact as true and construe them in the light most favorable to the nonmoving party, although “conclusory allegations of law and unwarranted inferences are insufficient to avoid aRule 12(b)(6)dismissal.”Cousins v. Lockyer,568 F.3d 1063, 1067 (9th Cir. 2009).Thus, “a plaintiff’s obligation to provide the “grounds” of his “entitle[ment]to relief” requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.”Bell Atl. Corp. v. Twombly,550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007).

At issue in a12(b)(6)analysis is “not whether a plaintiff will ultimately prevail, but whether the claimant is entitled to offer evidence to support the claims” advanced in his or her complaint.Scheuer v. Rhodes,416 U.S. 232, 236, 94 S. Ct. 1683, 40 L. Ed. 2d 90 (1974). While “a complaint need not contain detailed factual allegations . . . it must plead ‘enough facts to state a claim to relief that is plausible on its face.'”Cousins,568 F.3d at 1067 (9th Cir. 2009).”A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconductalleged.”Ashcroft v. Iqbal,556 U.S. 662, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009);see alsoBell Atl. Corp. v. Twombly,550 U.S. at 556.”The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than sheer possibility that a defendant acted unlawfully.”Id.

B.Tender Rule

Chase and California Reconveyance argue as a threshold matter that “this Motion should be granted and Plaintiffs’ Complaint dismissed, in its entirety” because the Barrionuevos have failed to provide or allege a willingness to “tender the outstanding indebtedness owed under the promissory note and Deed of Trust.” Defs.’ Mot. to Dismiss at 8.They argue that, absent an offer to tender the obligation in full, California law deprives plaintiffs of standing to challenge nonjudicial foreclosure proceedings.SeeId.at 7-8. [969] As this Court explained inTamburri v. Suntrust Mortgage, et. al.,No. C-11-2899 EMC, 2011 U.S. Dist. LEXIS 144442, 2011 WL 6294472 (N.D. Cal. Dec. 15, 2011), the exceptions and qualifications to California’s ‘tender rule’ counsel against such a mechanical application of the rule at the pleading stage.

“The California Court of Appeal has held that the tender rule applies in an action to set aside a trustee’s sale for irregularitiesin the sale notice or procedure and has stated that ‘[t]herationale behind the rule is that if plaintiffs could not have redeemed the property had the sale procedures been proper, any irregularities in the sale did not result in damages to the plaintiffs.'”Cohn v. Bank of America,No. 2:10-cv-00865 MCE KJN PS, 2011 U.S. Dist. LEXIS 3076, 2011 WL 98840, at *9 (E.D. Cal. Jan. 12, 2011)(quotingFPCI RE-HAB 01 v. E & G Invs., Ltd.,207 Cal. App.3d 1018, 1021, 255 Cal. Rptr. 157 (1989)). As Defendants rightly point out, it is a general rule that “an action to set aside a trustee’s sale for irregularities in sale notice or procedure should be accompanied by an offer to pay the full amount of the debt for which the property was security. This rule is premised upon the equitable maxim that a court of equity will not order that a useless act be performed.”Arnolds Mgmt. Corp. v. Eischen,158 Cal. App. 3d 575, 578-79, 205 Cal. Rptr. 15 (1984).

However, as this Court discussed at length inTamburri,”the tender rule is not without exceptions.”Tamburri,2011 U.S. Dist. LEXIS 144442, 2011 WL 6294472 at *3. Several court have recognized a general equitable exception to applying the tender rule where “it would be inequitable to do so.”Onofrio v. Rice,55 Cal. App. 4th 413, 424, 64 Cal. Rptr. 2d 74 (1997)(internalcitations and quotations omitted);see e.g.Humboldt Sav. Bank v. McCleverty,161 Cal. 285, 291, 119 P. 82 (1911)(recognizing that there are “cases holding that, where a party has the right to avoid a sale, he is not bound to tender any payment in redemption;” adding that, “[w]hatevermay be the correct rule, viewing the question generally, it is certainly not the law that an offer to pay the debt must be made, where it would be inequitable to exact such offer of the party complaining of the sale”);Robinson v. Bank of Am.,12-CV-00494-RMW, 2012 U.S. Dist. LEXIS 74212, 2012 WL 1932842, at *3 (N.D. Cal. May 29, 2012)(inequitable to apply tender rule in certain circumstances);Bowe v. Am. Mortg. Network, Inc.,CV 11-08381 DDP SHX, 2012 U.S. Dist. LEXIS 80044, 2012 WL 2071759, at *2 (C.D. Cal. June 8, 2012)(same);Giannini v. American Home Mortg. Servicing, Inc.,No. 11-04489 TEH, 2012 U.S. Dist. LEXIS 12241, 2012 WL 298254, at *3 (N.D. Cal. Feb.1, 2012)(same).In the instant case, the Barrionuevos have a fairly strong argument that tender – or at least full tender – should not be required because they are contesting not only irregularities in sale notice or procedure, but the validity of the foreclosure in the first place.Courts have declined to require tender in just such circumstances.SeeIn re Salazar,448 B.R. 814, 819 (S.D. Cal. 2011)(“If U.S. Bank was not authorized to foreclose the [Deed of Trust] under Civil Codesection 2932.5, the foreclosure sale may be void, and Salazar would not need to tender the full amount of the Loan to set aside the sale.”);Sacchi v. Mortgage Electronic Registration Systems, Inc.,No. CV 11-1658 AHM (CWx), 2011 U.S. Dist. LEXIS 68007, 2011 WL 2533029, at *9-10 (C.D. Cal. June 24, 2011)(declining to require tender in wrongful foreclosure action because it “would permit entities to foreclose on properties with impunity”).

Further, a growing number of federal courts have explicitly held that the tender rule only applies in cases seeking to set aside a completed sale, rather than an action seeking to prevent a sale in the first place.See, e.g.,Vissuet v. Indymac Mortg. Services,No. 09-CV-2321-IEG (CAB), 2010 U.S. Dist. LEXIS 26241, 2010 WL 1031013, at *2 (S.D. Cal. March 19, 2010)(“[T]heCalifornia ‘tender [970] rule’ applies only where the plaintiff is trying to set aside a foreclosure sale due to some irregularity.”);Giannini v. American Home Mortg. Servicing, Inc.,No. 11-04489 TEH, 2012 U.S. Dist. LEXIS 12241, 2012 WL 298254, at *3 (N.D.Cal. Feb. 1, 2012)(“While it is sensible to require tender following a flawedsale – where irregularities in the sale are harmless unless the borrower has made full tender – to do so prior to sale, where any harm may yet be preventable, is not.”);Robinson v. Bank of Am.,12-CV-00494-RMW, 2012 U.S. Dist. LEXIS 74212, 2012 WL 1932842 (N.D. Cal. May 29, 2012)(the court found it “inequitable to apply the tender rule to bar plaintiff’s claims” in part because “there has been no sale of the subject property”).4The cases cited by Defendants in support of applying the tender rule are distinguishable in that each of them addresses challenges levied against completed trustees’ sales, not pre-sale challenges as here.SeeU.S. Cold Storage of Calif. v. Great W. Savings & Loan Assn.,165 Cal. App. 3d 1214, 212 Cal. Rptr. 232 (1985)(plaintiff challenged irregularities in sale notice or procedure after trustee sale was held);Arnolds Mgmt. Corp. v. Eischen,158 Cal. App. 3d 575, 205 Cal. Rptr. 15 (Cal. Ct. App. 1984)(action by junior lienor to set aside a completed trustee sale);Abdallah v. United Sav. Bank,43 Cal. App. 4th 1101, 51 Cal. Rptr. 2d 286 (1996)(action challenging validity of trustee sale after sale occurred);Karlsen v. Am. Sav. & Loan Assn.,15 Cal. App. 3d 112, 92 Cal. Rptr. 851 (Cal. Ct. App. 1971)(action to cancel a completed trustee sale under a deed oftrust).

Finally, as this Court explained in length inTamburri,”where a sale is void, rather than simply voidable, tender is not required.”Tamburri,2011 U.S. Dist. LEXIS 144442, 2011 WL 6294472 at *4(citing Miller & Starr California Real Estate 3d § 10:212 (“When the sale is totally void, a tender usually is not required.”)).A sale that is deemed “void” means, “in its strictest sense [] that [it] has no force and effect,” whereas one that is deemed “voidable” can be “avoided” or set aside as a matter of equity.Little v. CFS Serv. Corp.,188 Cal. App. 3d 1354, 1358, 233 Cal. Rptr. 923 (1987)(internal quotation marks omitted).In a voidable sale, tender is required “based on the theory that one who is relying upon equity in overcoming a voidable sale must show that he is able to performhis obligations under the contract so that equity will not have been employed for an idle purpose.”Dimock v. Emerald Properties LLC,81 Cal. App. 4th 868, 878, 97 Cal. Rptr. 2d 255 [971] (2000).That reasoning does not extend to a sale that is voidab initio,since the contract underlying such a transaction is a “nullity with no force or effect as opposed to one which may be set aside” in reliance on equity.Id.at 876.InDimock,the California Court of Appeal held that where an incorrect trustee had foreclosed on a property and conveyed it to a third party, and the conveyed deed was not merely voidable but void, tender was not required.Id.at 878(“Because Dimock was not required to rely upon equity in attacking the deed, he was not required to meet any of the burdens imposed when, as a matter of equity, a party wishes to set aside a voidable deed…In particular, contrary to the defendants’ argument, he was not required to tender any of the amounts due under the note.”).For the purposes of the ‘tender rule,’ the Court findsDimockto be sufficiently analogous to the present case to counsel against its application here.

Moreover, the relevant documentation in this case supports the finding that the sale isvoid. Where a notice defect provides the basis for challenging a sale under a deed of trust, as is the case here with the Barrionuevos’ allegation of noncompliance withCal. Civ. Code § 2923.5, California courts examine in detail the deed of trust’s language to determine whether it contains “conclusive presumption language in the deed” regarding notice defects that would render the sale merely voidable as opposed to void.Little,at 1359.As was explained inTamburri,

when a notice defect is at issue, it is not the extent of the defect that is determinative.Rather, “what seems to be determinative” is whether the deed of trust contains a provision providing for a conclusive presumption of regularity of sale.Little,188 Cal. App. 3d at 1359, 233 Cal. Rptr. 923.”Where there has been a notice defect and no conclusive presumption language in the deed, the sale has been held void.”Id.(emphasis in original). In contrast, “[w]herethere has been a notice defect and conclusive presumption language in a deed, courts have characterized the sales as ‘voidable.'”Id.(emphasis added).

Tamburri,2011 U.S. Dist. LEXIS 144442, 2011 WL 6294472 at *5.InLittle,the court considered a deed provision stating “[t]herecitals insuch Deed of any matters, proceedings and facts shall be conclusive proof of the truthfulness and regularity thereof” to be conclusive presumption language.Little,at 1360.In this case, the Barrionuevos’ deed of trust provides no such conclusive presumption language. Therefore, “the Court cannot conclude, at least at this juncture, that the sale is merely voidable wherein tender would be required.”Ottolini v. Bank of America,No. C-11-0477 EMC, 2011 U.S. Dist. LEXIS 92900, 2011 WL 3652501, at *4 (N.D.Cal. Aug. 19, 2011);see alsoTamburri,2011 U.S. Dist. LEXIS 144442, 2011 WL 6294472 at *5.

These exceptions and qualifications to the tender rule raise significant doubts as to whether it should be mechanically applied at the pleading stage under the allegations of the complaint herein. Thus, as inTamburri,the Court declines to dismiss the complaint on the basis of the Barrionuevos’ failure to allege tender.

C.Wrongful Foreclosure

The Barrionuevos’ cause of action for wrongful foreclosure is based upon their belief that “Cal Reconveyance cannot conduct a valid foreclosure sale on behalf of Defendant JP Morgan because it is not thetruepresent beneficiary under Plaintiffs’ Deed of Trust.” Pls.’ Am. Compl. ¶ 18. This belief is based upon thefollowing chain of events:

In May of 2006, shortly after Plaintiffs entered into the Deed of Trust, WaMu [Washington Mutual] securitized and sold the beneficial interest in the Deed [972] of Trust to the Series 2006-AR4 Trust. From that point on, the Series 2006-AR4 Trust became the onlytruebeneficiary under Plaintiffs’ Deed of Trust. Thus, whenJP Morgan [Chase]acceded to certain of WaMu’s assets in 2008, it could not have included the beneficial interest in Plaintiffs’ Deed of Trust as WaMu had already sold the beneficial interest two yearsprior,in 2006. Since WaMu no longer owned the beneficial interest in Plaintiffs’ Deed of Trust, it had nothing to convey to Defendant JP Morgan in 2008 and Defendant JP Morgan isnotthetruebeneficiary.Id.

Related to the allegation that Chase did not acquire Plaintiffs’ DOT from Washington Mutual, the Barrionuevos further base their wrongful foreclosure claim on the grounds that the Defendants have failed to comply withCalifornia Civil Code § 2932.5, in that they have not “recorded a document in the public chain of title reflecting from whom [they] acquired the beneficial interest in Plaintiffs’ Deed of Trust,” as required by the statute.Id.at 21.Section 2932.5provides as follows:

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 acknowledged and recorded.

Cal. Civ. Code § 2932.5(emphasis added).

Chase and California Reconveyance question Plaintiffs’ assertion that the DOT for the subject property was securitized into the Series 2006-AR4 Trust.SeeDefs.’ Mot. to Dismiss at 5 (“A careful analysis of the information provided in the prospectus for which the “Property securitization Analysis Report” provides a website address demonstrates the Loan at issue is not part of the WMALT Series 2006-AR4 Trust.”);see alsoDefs.’ Reply Br. ISO Mot. to Dismiss (Docket 26) at p. 2 (“As shown in the analysis of Defendant’s motion, there is no connection between the prospectus for the Series 2006-AR4 Trust and the Plaintiffs’ mortgage loan. There was no securitization.”). Neither the Defendants’ Motion to Dismiss, the Plaintiff’s ResponseBrief, nor the Defendant’s Reply Brief address the§ 2932.5element of the Barrionuevos’ wrongful foreclosure cause of action. The Court will, therefore, confine its analysis of the wrongful foreclosure claim to the Plaintiff’s argument that the Defendants are not the current beneficiaries under the DOT.

Plaintiffs properly assert that only the “true owner” or “beneficial holder” of a Deed of Trust can bring to completion a nonjudicial foreclosure under California law. Pls.’ Response Brief at 4.In California, a “deed of trust containing a power of sale…conveys nominal title to property to an intermediary, the “trustee,” who holds that title as security for repayment of [a] loan to [a] lender, or “beneficiary.”Kachlon v. Markowitz,168 Cal. App. 4th 316, 334, 85 Cal. Rptr. 3d 532 (2008)(internal citations omitted). The “trustee in nonjudicial foreclosure is not a true trustee with fiduciary duties, but rather a common agent for the trustor5and beneficiary.”Id.335(internal citations omitted).The trustee’s duties “are twofold: (1) to “reconvey” the deed of trust to the trustor upon satisfaction of the debt owed to the beneficiary, resulting in a release of the lien created by [973] the deed of trust, or(2) to initiate nonjudicial foreclosure on the property upon the trustor’s default, resulting in a sale of the property.”Id.at 334(internal citations omitted).The beneficiary, ultimately, is the party that initiates nonjudicial foreclosure, since the trustee who records a Notice of Default pursuant toCal. Civ. Code § 2924does so as the authorized agent of beneficiary.SeeCal. Civ. Code § 2924(a)(1);see alsoKachlon,168 Cal. App. 4th at 334(“When the trustor defaults on the debt secured by the deed of trust,the beneficiarymay declare a default and make a demand on the trustee to commence foreclosure.”) (emphasis added).

Several courts have recognized the existence of a valid cause of action for wrongful foreclosure where a party alleged not to be the true beneficiary instructs a trustee to file a Notice of Default and initiate nonjudicial foreclosure.For example, the court inSacchi v. Mortgage Electronic Registration Systems, Inc.,No. CV 11-1658 AHM (CWx), 2011 U.S. Dist. LEXIS 68007, 2011 WL 2533029, at *9-10 (C.D. Cal. June 24, 2011), upheld a plaintiff’s wrongful foreclosure claimagainst an entity alleged to have “no beneficial interest in the Deed of Trust when it acted to foreclose on Plaintiffs’ home.” There, the court expressed dismay when confronted with counsel’s arguments suggesting that “someone . . . can seek and obtain foreclosure regardless of whether he has established the authority to do so.”2011 U.S. Dist. LEXIS 68007, [WL] at *7. The court asked, if defendants’ argument that “the recording and execution date is inconsequential and in no way connotes that the DOT’s beneficial interest was transferred at that precise time” was accepted, “how is one to determine whether (and when) the purported assignment was consummated?How could one ever confirm whether the entity seeking to throw a homeowner out of his residence had the legal authority to do so?”2011 U.S. Dist. LEXIS 68007, [WL] at *6.

Similarly, inJavaheri v. JPMorgan Chase Bank, N.A.,CV10-08185 ODW FFMX, 2011 U.S. Dist. LEXIS 62152, 2011 WL 2173786, at *5-6 (C.D. Cal. June 2, 2011), the court denied Defendant JPMorgan’s motion to dismiss a very similar wrongful foreclosure claim to the one at issue here when the plaintiff alleged that Washington Mutual, plaintiff’s original lender, had “transferred Plaintiff’s Note to Washington Mutual Mortgage Securities Corporation” priorto its closure by the U.S. Office of Thrift Supervision and JPMorgan’s subsequent acquisition of its assets.2011 U.S. Dist. LEXIS 62152, [WL] at *5. The court took note of the fact that the plaintiff had produced specific “facts regarding the transfer of Plaintiff’s Note” suggesting that Washington Mutual had indeed alienated its beneficial interest to plaintiff’s deed of trust prior to JPMorgan’s later acquisition of Washington Mutual’s assets.Id.”Coupled with Plaintiff’s allegation that JPMorgan never properly recorded its claim of ownership in the Subject Property,” the court ruled that the “abovementioned facts regarding the transfer of Plaintiff’s Note prior to JPMorgan’s acquisition of [Washington Mutual]’s assets raise Plaintiff’s right to relief above a speculative level,” and held that plaintiff’s allegation “that JPMorgan did not own his Note and therefore did not have the right to foreclose” was sufficient to withstand JPMorgan’s motion to dismiss.2011 U.S. Dist. LEXIS 62152, [WL] at *5-6.

Likewise inOhlendorf v. Am. Home Mortg. Servicing,279 F.R.D. 575, 583 (E.D. Cal. 2010), the court recognized that, while “proof of possession of the note” is not necessary to “legally institute non-judicial foreclosure proceedings againstplaintiff,” the plaintiff still had a viable claim for wrongful foreclosure insofar as he argued that defendants “are not the proper parties to foreclose.”Id.at 583. “Accordingly,” the court denied “defendants motion to dismiss plaintiff’s wrongful foreclosure [claim]…insofar as it is premised [974] on defendants being proper beneficiaries.”Id.Finally, inCastillo v. Skoba,No. 10cv1838 BTM, 2010 U.S. Dist. LEXIS 108432, 2010 WL 3986953, at*2 (S.D. Cal. Oct. 8, 2010), the court granted a preliminary injunction in a foreclosure case where it concluded that “Plaintiff is likely to succeed on the merits of his claim that neither Aurora nor Cal-Western had authority to initiate the foreclosure sale at the time the Notice of Default was entered.” There, the court ruled on the record before it that the applicable “[d]ocumentsdo not support a finding that either Cal-Western was the trustee or Aurora was the beneficiary on May 20, 2010 when the Notice of Default was recorded.”Id. See alsoRobinson v. Countrywide Home Loans, Inc.,199 Cal. App. 4th 42, 46 Fn. 5, 130 Cal. Rptr. 3d 811 (2011)(“a borrower who believes that the foreclosing entity lacks standing to do so” is not “without a remedy. The borrower can seek to enjoin the trustee’s saleor to set the sale aside.”);Gomes v. Countrywide Home Loans, Inc.,192 Cal. App. 4th 1149, 1156, 121 Cal. Rptr. 3d 819 (2011)(upholding the dismissal of plaintiff’s wrongful foreclosure action, but noting as “significant” the fact that cases cited by plaintiff permitting wrongful foreclosure action “identified aspecific factual basisfor alleging that the foreclosure was not initiated by the correct party.[plaintiff] has not assertedanyfactual basis to suspect that [defendant] lacks authority to proceed with the foreclosure.”) (emphasis in original).

In the present case, the Barrionuevos allege that Chase and California Reconveyance recorded their April 7, 2009, Notice of Default without the legal right to do so, given that the prior alienation of Plaintiff’s DOT by Washington Mutual in 2006 precluded these Defendants from obtaining any beneficial interest in the DOT.SeeAm. Compl. ¶¶ 16-22; Pls.’ Response Brief at 3. In tandem to their § 2935.2 claim, Plaintiffs allege that this prior alienation of the DOT renders Defendants’ Notice of Default and subsequent Notices of Trustee’s Sales invalid. The allegation challenging the validity of Washington Mutual’s assignment of Plaintiffs’ DOT to Chase suggeststhat the foreclosing parties did not have authority to issue the Notices. Despite Defendants’ invitation to the contrary, further examination into the 2006 transaction would require a factual inquiry not suitable in a 12(b)(6) motion. Thus, insofar as Plaintiffs contend that the Notice of Default is invalid due to a lack of authority to foreclose, their wrongful foreclosure claim is similar to those advanced inSacchi, Javaheri, Ohlendorf, Skoba,and, of course, this Court’s ruling inTamburri.

Accordingly, this Court finds that the Plaintiffs have sufficiently stated a claim for wrongful foreclosure. Regardless of whether§ 2932.5applies, under California law a party may not foreclose without the legal power to do so. Plaintiff alleges that the wrong parties issued the Notice of Default. At the12(b)(6)stage, given the factual uncertainties underlying the parties’ arguments, Plaintiffs’ claim is sufficient to withstand a motion to dismiss.

D.Slander of Title

The Barrionuevos next advance a cause of action for slander of title. In their amended complaint, they allege that Chase “acted with malice and a reckless disregard for the truth by simply assuming it was the beneficiary underPlaintiffs’ Deed of Trust” when it recorded a “Notice of Trustee’s Sale…that cannot lead to a valid foreclosure.” Am. Compl. ¶ 24. They further allege that “the recordation of the February 2, 2012 Notice of Trustee’s Sale was therefore false, knowingly wrongful, without justification, in violation of statute, unprivileged, and caused doubt to be placed on Plaintiffs’ title to the property,” and that the “recordation of the [975] foregoing documents directly impairs the vendibility of Plaintiffs’ property on the open market in the amount of a sum to be proved at trial.”Id.¶ 25. Neither Plaintiffs nor Defendants address this cause of action in any of the papers accompanying Defendants’ Motion to Dismiss.

The California Court of Appeals for the Fifth District recently outlined the elements required to successfully bring a cause of action for slander of title. InSumner Hill Homeowners’ Assn., Inc. v. Rio Mesa Holdings, LLC,the court explained that “slander or disparagement of title occurs when a person, without a privilege to do so, publishes a false statement that disparages title to property and causes the owner thereof some special pecuniary loss or damage.”205 Cal. App. 4th 999, 1030, 141 Cal. Rptr. 3d 109(citingFearon v. Fodera169 Cal. 370, 148 P. 200 (1915)). The required elements of this tort are “(1) a publication, (2) without privilege or justification, (3) falsity, and (4) direct pecuniary loss.”Id.(citingTruck Ins. Exchange v. Bennett,53 Cal.App.4th 75, 84, 61 Cal. Rptr. 2d 497 (1997);Howard v. Schaniel,113 Cal.App.3d 256, 263-264, 169 Cal. Rptr. 678 (1980)).

The Barrionuevos’ amended complaint is sufficient to “to state a claim to relief that is plausible on its face'”with regard to this tort.Cousins,568 F.3d at 1067 (9th Cir. 2009).Plaintiffs allege, and Defendants do not appear to question, that they effected a publication regarding Plaintiffs title to the subject property (i.e.the Notice of Default and the three Notices of Trustee’s Sales).Whether that publication was done “without privilege or justification” is somewhat harder to discern.InGudger v. Manton,the California Supreme Court held that “a rival claimant of property is conditionally privileged to disparage or justified in disparaging another’s property in land by an honest and good-faith assertion of an inconsistent legally protected interest in himself.”21 Cal. 2d 537, 545, 134 P.2d 217 (1943).TheGudgerCourt went on to say that an “express finding of lack of goodfaith, or of actual malice…would destroy the privilege or justification here discussed.”Id.at 546.Plaintiffs allege quite clearly that Defendants published the February 2, 2012, Notice of Trustee’s sale with “malice and a reckless disregard for the truth.” Am. Compl. ¶ 24. Broadly construing their amended complaint, it would be fair to conclude that Plaintiffs view the remaining three Notices published by Chase and California Reconveyance in a similar light. Thus, on balance, Plaintiffs have alleged sufficient facts to satisfy this element of the tort at the12(b)(6)stage. Likewise, Plaintiffs allege with some force the apparent falsity of Defendants’ four publications.Finally, the Barrionuevos claim that Defendants’ publications “directlyimpair[ed]the vendibility of Plaintiffs’ property on the open market,” and caused Plaintiffs to incur costs related to bringing “this action to cancel the instruments casting doubt on Plaintiffs’ title,” is sufficient to allege the “direct pecuniary loss” element to a slander of title action.Id.at ¶¶ 25-26.See alsoSumner Hill,205 Cal. App. 4th at 1030(“it is well-established that attorney fees and litigation costs are recoverable aspecuniary damages in slander of title causes of action.”).

Accordingly, to the extent Defendants’ Motion to Dismiss reaches Plaintiffs’ action for slander of title, Plaintiffs have met their burden to plead sufficient “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”Ashcroft v. Iqbal,129 S. Ct. at 1949.

E.California Civil Code § 2923.5

California Civil Code § 2923.5(a)(1)provides that “[a] mortgagee, trustee, beneficiary, [976] or authorized agent may not file a notice of default pursuant toSection 2924until 30 daysafterinitial contact is made as required by paragraph (2) or 30 daysaftersatisfying the due diligence requirements as described in subdivision (g).”Cal. Civ. Code § 2923.5(a)(1)(emphasis added).Underparagraph (2), “[a] mortgagee, beneficiary, or authorized agent shall contact the borrower in person or by telephone in order to assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure.”Id.§ 2923.5(a)(2). Undersubdivision (g), “[a] notice of default may be filed . . . when a mortgagee, beneficiary, or authorized agent hasnotcontacted a borroweras required by paragraph (2) of subdivision (a) provided that the failure to contact borrower occurred despite the due diligence of the mortgagee, beneficiary, or authorized agent.”Id.§ 2923.5(g)(emphasis added). If a mortgagee, beneficiary, or authorized agent fails to comply with§ 2923.5, “then there is no valid notice of default and, without a valid notice of default, a foreclosure sale cannot proceed.”Mabry v. Superior Court,185 Cal. App. 4th 208, 223, 110 Cal. Rptr. 3d 201 (2010).The only remedy for a violation of this section is “to postpone the sale until there has been compliance withsection 2923.5.”Id.(citingCal. Civ. Code § 2924g, subdivision (c)(1)(A)).

In the instant case, the Barrionuevos assert that Chase and California Reconveyance violated§ 2923.5(a)(1)because they failed to contact them prior to filing the notice of default on April 7, 2009. Am. Compl. ¶¶ 28, 32. Despite the fact that the Defendants’ Notice of Default included a statement that “the beneficiary or its designated agent declares that it has contacted the borrower” or has “tried with due diligence to contact the borrower as required byCalifornia Civil Code 2923.5,” Plaintiffs assert that they were, in fact, “nevercontacted.” Am. Compl., Ex. B – Notice of Default; Am. Compl. ¶ 28. Defendants initially argue that the Barrionuevos fail to state a claim under this cause of action because they offer “no specified factual support” for their allegations. Defs.’ Mot. to Dismiss at 9. However, their Reply Brief offers a very different assessment:

Plaintiffs could not be clearer; “Plaintiffs allege that the Declaration is false because Plaintiffs werein factnever contacted.” (Plaintiffs’ opposition,p. 6, ln 21-23). Plaintiffs therefore claim that Defendant never called, never left a voice message, and never knocked on their door to discuss their default on the loan before having the NOD [Notice of Default] recorded. Plaintiffs’ allegation also means that Defendant never offered them a trial loan modification payment plan or even offered to evaluate them for a loan modification before recording the NOD.

Defs.’ Reply Brief at 3 (emphasis in original). Defendants nonetheless contends that “[w]henthe foreclosing entity declares that it tried to contact the borrower, the statutory requirements are satisfied.Id..Defendants are mistaken.

A mortgagee, beneficiary, or authorized agent has satisfied the “duediligence” requirement of§ 2923.5:

if it was not able to contact the borrower after (1) mailing a letter containing certain information; (2) then calling the borrower “by telephone at least three times at different hours and on different days”; (3) mailing a certified letter, with return receipt requested, if the borrower does not call back within two weeks; (4) providing a telephone number to a live representative during business hours; and (5) posting a link on the homepage of its Internet Web site with certain information.

Argueta v. J.P. Morgan Chase,787 F. Supp. 2d 1099, 1107 (E.D. Cal. 2011)(citing [977] Cal. Civ. Code. § 2923.5(g)).Defendants have given no indication that they exercised “due diligence” as defined in the statute in trying to contact the Barrionuevos prior to recording the Notice of Default, other than their declaration in the Notice itself that they complied with the statute. When a plaintiff’s allegations dispute the validity of defendant’s declaration of compliance in a Notice of Default as here, the plaintiff has “plead ‘enough facts to state a claim to relief that is plausible on its face.'”Cousins,568 F.3d at 1067 (9th Cir. 2009).SeeArgueta,787 F. Supp. 2d at 1107;Caravantes v. California Reconveyance Co.,10CV1407, 2010 U.S. Dist. LEXIS 109842, 2010 WL 4055560 (S.D. Cal. Oct. 14, 2010).Accordingly, Plaintiff’s allegations of non-compliance are sufficient to defeat a motion to dismiss.

F.Unfair Business Practices Act

California’s Unfair Business Practices Act, codified asCal. Bus. Prof. Code §§ 17200, prohibits unfair competition, which is defined as,inter alia,”any unlawful, unfair or fraudulent business act or practice.”Cal. Bus. & Prof. Code § 17200. Plaintiffs asserts claims under§ 17200for Chase and California Reconveyance’s violation ofCal Civ. Code § 2923.5, and openly acknowledge that their§ 17200claim “is a derivative cause of action.” Pls.’ Response Brief at 7. They also acknowledge that “plaintiffs’ ability to pursue this cause of action depends on the success or failure of their substantive causes of action.”Id.

Defendants challenge the§ 17200claim on the basis that “a violation [ofCal Civ. Code § 2923.5] does not impact plaintiffs with an actual loss of money or property to give standing underCal. B&P § 17200.” Defs.’ Reply Brief at 3. However, “[i]tis undisputed that foreclosure proceedings were initiated which put [the Barrionuevos] interestin the property in jeopardy; this fact is sufficient to establish standing as this Court has previously held.”Clemens v. J.P. Morgan Chase Nat’l Corporate Services, Inc.,No. C-09-3365 EMC, 2009 U.S. Dist. LEXIS 111646, 2009 WL 4507742, at *7 (N.D. Cal. Dec. 1, 2009)(citingSullivan v. Washington Mut. Bank, FA,No. C-09-2161 EMC, 2009 U.S. Dist. LEXIS 104074, at *13 (N.D. Cal. Oct. 23, 2009).See alsoSacchi,2011 U.S. Dist. LEXIS 68007, 2011 WL 2533029 at *8-9(refusing to dismiss underFRCP 12(b)(6)plaintiff’ssection 17200claim, in part, because plaintiff alleged a violation ofCal Civ. Code § 2923.5).

Second, Defendants repeat their argument that Plaintiffs have “failed to allege facts sufficient to demonstrate that defendants violatedSection 2923.5” Defs.’ Mot. to Dismiss at 9-10. “A plaintiff alleging unfair business practices under [17200] 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, 17 Cal. Rptr. 2d 708 (1993). As a derivative claim based upon defendants’ alleged failure to comply withCal Civ. Code § 2923.5, the Barrionuevos’§ 17200claim rises and falls along with that underlying cause of action.Having already determined thatPlaintiffs’§ 2923.5claim was pled with enough specificity and factual support to withstand Defendant’s motion to dismiss, the Court finds Plaintiffs’§17200claim is likewise sufficiently pled underRule 12(b)(6).

IV.CONCLUSION

For the foregoing reasons, the CourtDENIESDefendants’ motion to dismiss.

This Order disposes of Docket No. 23.

IT IS SO ORDERED.

Dated: August 6, 2012

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

6 Jan

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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:

Related News On Huffington Post:

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Ruling Against Bank In Mortgage Modification Suit

15 Dec

Judge Rules Against Bank In Mortgage Modification Suit

Shah Gilani Shah Gilani, Contributor
Half million dollar house in Salinas, Californ...Image via Wikipedia

A recent ruling by a California appeals court clears the way for fraud charges against a lender that promised a loan modification but then foreclosed on the borrower.

The ruling throws into question the legality of hundreds of thousands of foreclosures.

Not only was the ruling a frontal assault on the empty promises made by servicers and banks, the case highlighted some despicable tactics often employed to force foreclosures.

Claudia Aceves, who originally sued U.S. Bank, NA in the Los Angeles County Superior Court, had taken out an $845,000 mortgage with Option One Mortgage Corporation. Option One later assigned the loan over to U.S. Bank.

The interest on Aceves’ adjustable rate note ratcheted up two years after it was entered into. By January 2008 she was falling behind on her payments. Shortly after March 26, 2008 when the loan’s servicer recorded a “Notice of Default and Election to Sell Under Deed of Trust,” Aceves filed for bankruptcy protection under chapter 7 of the Bankruptcy Code.

The bankruptcy filing imposed an automatic stay on the foreclosure proceedings.

After being offered financial help from her husband, Aceves converted her bankruptcy case from a chapter 7 to a chapter 13 case. Chapter 7, entitled “Liquidation,” would allow Aceves to discharge her debt on the home but not allow her to keep it. Chapter 13, entitled “Adjustment of Debts of an Individual with Regular Income,” has protections for homeowners that allows them to reinstate loan payments, pay arrearages, avoid foreclosure and keep their home.

U.S. Bank, upon learning of the original bankruptcy filing, filed a motion to lift the stay in order to execute a nonjudicial foreclosure and take the house back.

What happens next is indicative of the underhandedness of many servicers and banks.

Aceves’ bankruptcy attorney gets a letter from counsel to the loan’s servicer (American Home Mortgage Servicing, Inc.) that asks for permission to talk directly to Aceves to “explore Loss Mitigation possibilities.”  Aceves calls the servicer’s attorney because she wants a loan modification, which they are promising. But they tell her they can’t do anything or talk to her until their motion to lift the bankruptcy stay is granted.

So, Aceves doesn’t oppose the motion to lift the stay and further decides not to file the chapter 13 bankruptcy. All in the hopes that a modification would be negotiated.

On December 4, 2008 the stay is lifted. And, unbeknownst to Aceves, on December 9, 2008 U.S. Bank schedules the home for public auction one month later on January 9, 2009.

On December 10, 2008 Aceves sends in documents to American Home aiming to modify and reinstate the loan. Then on December 23, 2008 the servicer tells Aceves a “negotiator” will contact her on or before January 13, 2009.

Too bad for Aceves January 13, 2009 is going to be four days after her home is sold at auction. Which it is, with none other than U.S. Bank as the buyer.

But just to cover its promise to modify the loan, one day before the home is to be sold at auction the negotiator for American Home presents a unilateral offer to raise the loan balance from the original $845,000 to $965,926.22 and make the new monthly payments $7,200 as opposed to the original monthly payment amount of $4,857.09.

Aceves told them where to go.

She lost her home and sued. She lost when the Superior Court found that the defendants had met their obligations. The three-judge panel Appeals Court disagreed in its January 27, 2010 ruling.

The crux of the ruling, which in part relied on a decision in a previous case (Garcia v. World Savings, FSB) determined that “To be enforceable, a promise need only be ”’definite enough that a court can determine the scope of the duty.”’

Further illuminating its stance the Court said the point is, “simply whether U.S. Bank made and kept a promise to negotiate with Aceves, not whether the bank promised to make a loan, or more precisely, to modify a loan” is what matters.

As far as the servicer’s offer of a modification, the Appeals Court found that the promise to negotiate is “not based on a promise to make a unilateral offer but on a promise to negotiate in an attempt to reach a mutually agreeable loan modification.”

With all the unkept promises by banks and servicers to negotiate loan modifications that were never entertained, new litigation on top of all the foreclosure cases already being pursued is bound to cloud the future of real estate for the foreseeable future.

Predatory Lending and Predatory Servicing together at last Jan 1, 2013 Civil Code §2924.12(b)

10 Dec

Predatory Lending are abusive practices used in the mortgage industry that strip borrowers of home equity and threaten families with bankruptcy and foreclosure.

Predatory Lending can be broken down into three categories: Mortgage Origination, Mortgage Servicing; and Mortgage Collection and Foreclosure.

Mortgage Origination is the process by which you obtain your home loan from a mortgage broker or a bank.

Predatory lending practices in Mortgage Origination include:
# Excessive points;
# Charging fees not allowed or for services not delivered;
# Charging more than once for the same fee
# Providing a low teaser rate that adjusts to a rate you cannot afford;
# Successively refinancing your loan of “flipping;”
# “Steering” you into a loan that is more profitable to the Mortgage Originator;
# Changing the loan terms at closing or “bait & switch;”
# Closing in a location where you cannot adequately review the documents;
# Serving alcohol prior to closing;
# Coaching you to put minimum income or assets on you loan so that you will qualify for a certain amount;
# Securing an inflated appraisal;
# Receiving a kickback in money or favors from a particular escrow, title, appraiser or other service provider;
# Promising they will refinance your mortgage before your payment resets to a higher amount;
# Having you sign blank documents;
# Forging documents and signatures;
# Changing documents after you have signed them; and
# Loans with prepayment penalties or balloon payments.

Mortgage Servicing is the process of collecting loan payments and credit your loan.

Predatory lending practices in Mortgage Servicing include:
# Not applying payments on time;
# Applying payments to “Suspense;”
# “Jamming” illegal or improper fees;
# Creating an escrow or impounds account not allowed by the documents;
# Force placing insurance when you have adequate coverage;
# Improperly reporting negative credit history;
# Failing to provide you a detailed loan history; and
# Refusing to return your calls or letters.
#

Mortgage Collection & Foreclosure is the process Lenders use when you pay off your loan or when you house is repossessed for non-payment

Predatory lending practices in Mortgage Collection & Foreclosure include:
# Producing a payoff statement that includes improper charges & fees;
# Foreclosing in the name of an entity that is not the true owner of the mortgage;
# Failing to provide Default Loan Servicing required by all Fannie Mae mortgages;
# Failing to follow due process in foreclosure;
# Fraud on the court;
# Failing to provide copies of all documents and assignments; and
# Refusing to adequately communicate with you.

Abuses by Mortgage Service Companies

Although predatory lending has received far more attention than abusive servicing, a significant percentage of consumer complaints over loans involve servicing, not origination. For example, the director of the Nevada Fair Housing Center testified that of the hundreds of complaints of predatory lending issues her office received in 2002, about 42 percent involved servicing once the loan was transferred

Abusive Mortgage Servicing Defined:

Abusive servicing occurs when a servicer, either through action or inaction, obtains or attempts to obtain unwarranted fees or other costs from borrowers, engages in unfair collection practices, or through its own improper behavior or inaction causes borrowers to be more likely to go into default or have their homes foreclosed. Abusive practices should be distinguished from appropriate actions that may harm borrowers, such as a servicer merely collecting appropriate late fees or foreclosing on borrowers who do not make their payments despite proper loss mitigation efforts. Servicing can be abusive either intentionally, when there is intent to obtain unwarranted fees, or negligently, when, for example, a servicer’s records are so disorganized that borrowers are regularly charged late fees even when mortgage payments were made on time.

Abusive servicing often happens to debtors who have filed a Chapter 13 Bankruptcy Plan and are in the process of making payments under the Plan. If you suspect that your mortgage servicer is abusing your relationship by charging unnecessary fees while you are paying off your Chapter 13 Plan, call us. We can help.

There is significant evidence that some Mortgage servicers have engaged in abusive behavior and that borrowers have frequently been the victims. Some servicers have engaged in practices that are not only detrimental to borrowers but also illegal Such abuse has been documented in court opinions and decisions, in the decisions and findings of ratings agencies, in litigation and settlements obtained by government agencies against prominent servicers, in congressional testimony, and in newspaper accounts of borrowers who claim to have been mistreated by servicers. The abusive servicing practices documented in these sources include improper foreclosure or attempted foreclosure, improper fees, improper forced-placed insurance, and improper use or oversight of escrow funds .

Civil Code §2924.12(b) Right to Sue Mortgage Servicers for Injunctive Relief, Damages, Treble Damages, and Right to Attorney’s Fees. : )

5 Dec

prohabition-images

H. Right to Sue Mortgage Servicers for Injunctive Relief, Damages, Treble Damages, and Right to Attorney’s Fees

2013 is going to be a good year

One of the most important provisions of the Act from a lender’s perspective is that it provides borrowers with the right to sue mortgage servicers for injunctive relief before the trustee’s deed upon sale has recorded, or if it has already recorded, to sue for actual economic damages, if the mortgage servicer has not corrected any “material” violation of certain enumerated portions of the Act before the trustee’s deed upon sale recorded. (Civil Code §2924.12(a).) In an area that will certainly open up a Pandora’s Box of litigation, the Act does not define what constitutes a “material” violation of the Act. If a court finds that the violation was intentional, reckless or willful, the court can award the borrower the greater of treble (triple) damages or $50,000. (Civil Code §2924.12(b).) Furthermore, a violation of the enumerated provisions of the Act is also deemed to be a violation of the licensing laws if committed by a person licensed as a consumer or commercial finance lender or broker, a residential mortgage lender or servicer, or a licensed real estate broker or salesman. (Civil Code §2924.12(d).) Lastly, in a one-sided attorney’s fee provision that only benefits borrowers, the court may award a borrower who obtains an injunction or receives an award of economic damages as a result of the violation of the Act their reasonable attorney’s fees and costs as the prevailing party. (Civil Code §2924.12(i).) This provides all the more reason for lenders and mortgage servicers to comply with the terms of the Act. This provision for the recovery by only the borrower of their reasonable attorney’s fees makes it more likely that borrowers will file litigation against mortgage lenders or servicers than they otherwise would. Compliance is the lender’s or mortgage servicer’s best defense to litigation under the Act.

Significantly for lenders, as long as the mortgage servicer remedies the material violation of the Act before the trustee’s deed upon sale has recorded, the Act specifically provides that the mortgage servicer shall not be liable under the Act for any violation or damages. (Civil Code §2924.12(b) & (c).) The Act also clarifies that signatories to the National Mortgage Settlement who are in compliance with the terms of that settlement, as they relate to the terms of the Act, will not face liability under the Act. (Civil Code §2924.12(g).

Improper foreclosure or attempted foreclosure

Because servicers can exact fees associated with foreclosures, such as attorneys’ fees, some servicers have attempted to foreclose on property even when borrowers are current on their payments or without giving borrowers enough time to repay or otherwise working with them on a repayment plan Furthermore, a speedy foreclosure may save servicers the cost of attempting other techniques that might have prevented the foreclosure.

Some servicers have been so brazen that they have regularly claimed to the courts that borrowers were in default so as to justify foreclosure, even though the borrowers were current on their payments. Other courts have also decried the frequent use of false statements to obtain relief from stay in order to foreclose on borrowers’ homes. For example, in Hart v. GMAC Mortgage Corporation, et al., 246 B.R. 709 (2000), even though the borrower had made the payments required of him by a forbearance agreement he had entered into with the servicer (GMAC Mortgage Corporation), it created a “negative suspense account” for moneys it had paid out, improperly charged the borrower an additional monthly sum to repay the negative suspense account, charged him late fees for failing to make the entire payment demanded, and began foreclosure proceedings.

Improper fees

Claiming that borrowers are in default when they are actually current allows servicers to charge unwarranted fees, either late fees or fees related to default and foreclosure. Servicers receive as a conventional fee a percentage of the total value of the loans they service, typically 25 basis points for prime loans and 50 basis points for subprime loans In addition, contracts typically provide that the servicer, not the trustee or investors, has the right to keep any and all late fees or fees associated with defaults. Servicers charge late fees not only because they act as a prod to coax borrowers into making payments on time, but also because borrowers who fail to make payments impose additional costs on servicers, which must then engage in loss mitigation to induce payment.

Such fees are a crucial part of servicers’ income. For example, one servicer’s CEO reportedly stated that extra fees, such as late fees, appeared to be paying for all of the operating costs of the company’s entire servicing department, leaving the conventional servicing fee almost completely profit The pressure to collect such fees appears to be higher on subprime servicers than on prime servicers:

Because borrowers typically cannot prove the exact date a payment was received, servicers can charge late fees even when they receive the payment on time Improper late fees may also be based on the loss of borrowers’ payments by servicers, their inability to track those payments accurately, or their failure to post payments in a timely fashion. In Ronemus v. FTB Mortgage Services, 201 B.R. 458 (1996), under a Chapter 13 bankruptcy plan, the borrowers had made all of their payments on time except for two; they received permission to pay these two late and paid late fees for the privilege. However, the servicer, FTB Mortgage Services, misapplied their payments, then began placing their payments into a suspense account and collecting unauthorized late fees. The servicer ignored several letters from the borrowers’ attorney attempting to clear up the matter, sent regular demands for late fees, and began harassing the borrowers with collection efforts. When the borrowers sued, the servicer submitted to the court an artificially inflated accounting of how much the borrowers owed.

Some servicers have sent out late notices even when they have received timely payments and even before the end of a borrower’s grace period Worse yet, a servicer might pocket the payment, such as an extra payment of principal, and never credit it to the borrower Late fees on timely payments are a common problem when borrowers are making mortgage payments through a bankruptcy plan

Moreover, some servicers have also added false fees and charges not authorized by law or contract to their monthly payment demands, relying on borrowers’ ignorance of the exact amount owed. They can collect such fees or other unwarranted claims by submitting inaccurate payoff demands when a borrower refinances or sells the house). Or they can place the borrowers’ monthly payments in a suspense account and then charge late fees even though they received the payment Worse yet, some servicers pyramid their late fees, applying a portion of the current payment to a previous late fee and then charging an additional late fee even though the borrower has made a timely and full payment for the new month Pyramiding late fees allows servicers to charge late fees month after month even though the borrower made only one late payment

Servicers can turn their fees into a profit center by sending inaccurate monthly payment demands, demanding unearned fees or charges not owed, or imposing fees higher than the expenses for a panoply of actions For example, some servicers take advantage of borrowers’ ignorance by charging fees, such as prepayment penalties, where the note does not provide for them Servicers have sometimes imposed a uniform set of fees over an entire pool of loans, disregarding the fact that some of the loan documents did not provide for those particular fees. Or they charge more for attorneys’, property inspection, or appraisal fees than were actually incurred. Some servicers may add a fee by conducting unnecessary property inspections, having an agent drive by even when the borrower is not in default, or conducting multiple inspections during a single period of default to charge the resulting multiple fees

The complexity of the terms of many loans makes it difficult for borrowers to discover whether they are being overcharged Moreover, servicers can frustrate any attempts to sort out which fees are genuine.

Improperly forced-placed insurance

Mortgage holders are entitled under the terms of the loan to require borrowers to carry homeowners’ insurance naming the holder as the payee in case of loss and to force-place insurance by buying policies for borrowers who fail to do so and charging them for the premiums However, some servicers have force-placed insurance even in cases where the borrower already had it and even provided evidence of it to the servicer Worse yet, servicers have charged for force-placed insurance without even purchasing it. Premiums for force-placed insurance are often inflated in that they provide protection in excess of what the loan.

Escrow Account Mismanagement

One of the benefits of servicing mortgages is controlling escrow accounts to pay for insurance, taxes, and the like and, in most states, keeping any interest earned on these accounts Borrowers have complained that servicers have failed to make tax or insurance payments when they were due or at all. The treasurer of the country’s second largest county estimated that this failure to make timely payments cost borrowers late fees of at least $2 million in that county over a two-year span, causing some to lose their homes. If servicers fail to make insurance payments and a policy lapses, borrowers may face much higher insurance costs even if they purchase their own, non-force-placed policy. Worse yet, borrowers may find themselves unable to buy insurance at all if they cannot find a new insurer willing to write them a policy

You can make a claim for mortgage service abuse, and often the court will award actual and punitive damages. If you think you have been a victim of mortgage service abuse, contact us. We can help you make a claim.

Many a client call me when its toooooo late however sometimes something can be done it would envolve an appeal and this application for a stay. Most likely you will have to pay the reasonable rental value till the case is decided. And … Yes we have had this motion granted. ex-parte-application-for-stay-of-judgment-or-unlawful-detainer3
When title to the property is still in dispute ie. the foreclosure was bad. They (the lender)did not comply with California civil code 2923.5 or 2923.6 or 2924. Or the didn’t possess the documents to foreclose ie. the original note. Or they did not possess a proper assignment 2932.5. at trial you will be ignored by the learned judge but if you file a Motion for Summary Judgmentevans sum ud
template notice of Motion for SJ
TEMPLATE Points and A for SJ Motion
templateDeclaration for SJ
TEMPLATEProposed Order on Motion for SJ
TEMPLATEStatement of Undisputed Facts
you can force the issue and if there is a case filed in the Unlimited jurisdiction Court the judge may be forced to consider title and or consolidate the case with the Unlimited Jurisdiction Case

BILL NUMBER: AB 278	CHAPTERED
	BILL TEXT

	CHAPTER  86
	FILED WITH SECRETARY OF STATE  JULY 11, 2012
	APPROVED BY GOVERNOR  JULY 11, 2012
	PASSED THE SENATE  JULY 2, 2012
	PASSED THE ASSEMBLY  JULY 2, 2012
	AMENDED IN SENATE  SEPTEMBER 1, 2011
	AMENDED IN SENATE  JUNE 23, 2011

INTRODUCED BY   Assembly Members Eng, Feuer, Mitchell, and John A.
Pérez
   (Principal coauthors: Assembly Members Davis, Carter, and Skinner)

   (Principal coauthors: Senators Leno, Evans, Calderon, Corbett,
DeSaulnier, Hancock, Pavley, and Steinberg)

                        FEBRUARY 8, 2011

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

	LEGISLATIVE COUNSEL'S DIGEST

   AB 278, Eng. Mortgages and deeds of trust: foreclosure.
   (1) Existing law, until January 1, 2013, requires a mortgagee,
trustee, beneficiary, or authorized agent to contact the borrower
prior to filing a notice of default to explore options for the
borrower to avoid foreclosure, as specified. Existing law requires a
notice of default or, in certain circumstances, a notice of sale, to
include a declaration stating that the mortgagee, trustee,
beneficiary, or authorized agent has contacted the borrower, or has
tried with due diligence to contact the borrower, or that no contact
was required for a specified reason.
   This bill would add mortgage servicers, as defined, to these
provisions and would extend the operation of these provisions
indefinitely, except that it would delete the requirement with
respect to a notice of sale. The bill would, until January 1, 2018,
additionally require the borrower, as defined, to be provided with
specified information in writing prior to recordation of a notice of
default and, in certain circumstances, within 5 business days after
recordation. The bill would prohibit a mortgage servicer, mortgagee,
trustee, beneficiary, or authorized agent from recording a notice of
default or, until January 1, 2018, recording a notice of sale or
conducting a trustee's sale while a complete first lien loan
modification application is pending, under specified conditions. The
bill would, until January 1, 2018, establish additional procedures to
be followed regarding a first lien loan modification application,
the denial of an application, and a borrower's right to appeal a
denial.
   (2) Existing law imposes various requirements that must be
satisfied prior to exercising a power of sale under a mortgage or
deed of trust, including, among other things, recording a notice of
default and a notice of sale.
   The bill would, until January 1, 2018, require a written notice to
the borrower after the postponement of a foreclosure sale in order
to advise the borrower of any new sale date and time, as specified.
The bill would provide that an entity shall not record a notice of
default or otherwise initiate the foreclosure process unless it is
the holder of the beneficial interest under the deed of trust, the
original or substituted trustee, or the designated agent of the
holder of the beneficial interest, as specified.
   The bill would prohibit recordation of a notice of default or a
notice of sale or the conduct of a trustee's sale if a foreclosure
prevention alternative has been approved and certain conditions exist
and would, until January 1, 2018, require recordation of a
rescission of those notices upon execution of a permanent foreclosure
prevention alternative. The bill would, until January 1, 2018,
prohibit the collection of application fees and the collection of
late fees while a foreclosure prevention alternative is being
considered, if certain criteria are met, and would require a
subsequent mortgage servicer to honor any previously approved
foreclosure prevention alternative.
   The bill would authorize a borrower to seek an injunction and
damages for violations of certain of the provisions described above,
except as specified. The bill would authorize the greater of treble
actual damages or $50,000 in statutory damages if a violation of
certain provisions is found to be intentional or reckless or resulted
from willful misconduct, as specified. The bill would authorize the
awarding of attorneys' fees for prevailing borrowers, as specified.
Violations of these provisions by licensees of the Department of
Corporations, the Department of Financial Institutions, and the
Department of Real Estate would also be violations of those
respective licensing laws. Because a violation of certain of those
licensing laws is a crime, the bill would impose a state-mandated
local program.
   The bill would provide that the requirements imposed on mortgage
servicers, and mortgagees, trustees, beneficiaries, and authorized
agents, described above are applicable only to mortgages or deeds of
trust secured by residential real property not exceeding 4 dwelling
units that is owner-occupied, as defined, and, until January 1, 2018,
only to those entities who conduct more than 175 foreclosure sales
per year or annual reporting period, except as specified.
   The bill would require, upon request from a borrower who requests
a foreclosure prevention alternative, a mortgage servicer who
conducts more than 175 foreclosure sales per year or annual reporting
period to establish a single point of contact and provide the
borrower with one or more direct means of communication with the
single point of contact. The bill would specify various
responsibilities of the single point of contact. The bill would
define single point of contact for these purposes.
   (3) Existing law prescribes documents that may be recorded or
filed in court.
   This bill would require that a specified declaration, notice of
default, notice of sale, deed of trust, assignment of a deed of
trust, substitution of trustee, or declaration or affidavit filed in
any court relative to a foreclosure proceeding or recorded by or on
behalf of a mortgage servicer shall be accurate and complete and
supported by competent and reliable evidence. The bill would require
that before recording or filing any of those documents, a mortgage
servicer shall ensure that it has reviewed competent and reliable
evidence to substantiate the borrower's default and the right to
foreclose, including the borrower's loan status and loan information.
The bill would, until January 1, 2018, provide that any mortgage
servicer that engages in multiple and repeated violations of these
requirements shall be liable for a civil penalty of up to $7,500 per
mortgage or deed of trust, in an action brought by specified state
and local government entities, and would also authorize
administrative enforcement against licensees of the Department of
Corporations, the Department of Financial Institutions, and the
Department of Real Estate.
   The bill would authorize the Department of Corporations, the
Department of Financial Institutions, and the Department of Real
Estate to adopt regulations applicable to persons and entities under
their respective jurisdictions for purposes of the provisions
described above. The bill would provide that a violation of those
regulations would be enforceable only by the regulating agency.
   (4) The bill would state findings and declarations of the
Legislature in relation to foreclosures in the state generally, and
would state the purposes of the bill.
   (5) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.

THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The Legislature finds and declares all of the
following:
   (a) California is still reeling from the economic impacts of a
wave of residential property foreclosures that began in 2007. From
2007 to 2011 alone, there were over 900,000 completed foreclosure
sales. In 2011, 38 of the top 100 hardest hit ZIP Codes in the nation
were in California, and the current wave of foreclosures continues
apace. All of this foreclosure activity has adversely affected
property values and resulted in less money for schools, public
safety, and other public services. In addition, according to the
Urban Institute, every foreclosure imposes significant costs on local
governments, including an estimated nineteen thousand two hundred
twenty-nine dollars ($19,229) in local government costs. And the
foreclosure crisis is not over; there remain more than two million
"underwater" mortgages in California.
   (b) It is essential to the economic health of this state to
mitigate the negative effects on the state and local economies and
the housing market that are the result of continued foreclosures by
modifying the foreclosure process to ensure that borrowers who may
qualify for a foreclosure alternative are considered for, and have a
meaningful opportunity to obtain, available loss mitigation options.
These changes to the state's foreclosure process are essential to
ensure that the current crisis is not worsened by unnecessarily
adding foreclosed properties to the market when an alternative to
foreclosure may be available. Avoiding foreclosure, where possible,
will help stabilize the state's housing market and avoid the
substantial, corresponding negative effects of foreclosures on
families, communities, and the state and local economy.
   (c) This act is necessary to provide stability to California's
statewide and regional economies and housing market by facilitating
opportunities for borrowers to pursue loss mitigation options.
  SEC. 2.  Section 2920.5 is added to the Civil Code, to read:
   2920.5.  For purposes of this article, the following definitions
apply:
   (a) "Mortgage servicer" means a person or entity who directly
services a loan, or who is responsible for interacting with the
borrower, managing the loan account on a daily basis including
collecting and crediting periodic loan payments, managing any escrow
account, or enforcing the note and security instrument, either as the
current owner of the promissory note or as the current owner's
authorized agent. "Mortgage servicer" also means a subservicing agent
to a master servicer by contract. "Mortgage servicer" shall not
include a trustee, or a trustee's authorized agent, acting under a
power of sale pursuant to a deed of trust.
   (b) "Foreclosure prevention alternative" means a first lien loan
modification or another available loss mitigation option.
   (c) (1) Unless otherwise provided and for purposes of Sections
2923.4, 2923.5, 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11,
2924.18, and 2924.19, "borrower" means any natural person who is a
mortgagor or trustor and who is potentially eligible for any federal,
state, or proprietary foreclosure prevention alternative program
offered by, or through, his or her mortgage servicer.
   (2) For purposes of the sections listed in paragraph (1),
"borrower" shall not include any of the following:
   (A) An individual who has surrendered the secured property as
evidenced by either a letter confirming the surrender or delivery of
the keys to the property to the mortgagee, trustee, beneficiary, or
authorized agent.
   (B) An individual who has contracted with an organization, person,
or entity whose primary business is advising people who have decided
to leave their homes on how to extend the foreclosure process and
avoid their contractual obligations to mortgagees or beneficiaries.
   (C) An individual who has filed a case under Chapter 7, 11, 12, or
13 of Title 11 of the United States Code and the bankruptcy court
has not entered an order closing or dismissing the bankruptcy case,
or granting relief from a stay of foreclosure.
   (d) "First lien" means the most senior mortgage or deed of trust
on the property that is the subject of the notice of default or
notice of sale.
  SEC. 3.  Section 2923.4 is added to the Civil Code, to read:
   2923.4.  (a) The purpose of the act that added this section is to
ensure that, as part of the nonjudicial foreclosure process,
borrowers are considered for, and have a meaningful opportunity to
obtain, available loss mitigation options, if any, offered by or
through the borrower's mortgage servicer, such as loan modifications
or other alternatives to foreclosure. Nothing in the act that added
this section, however, shall be interpreted to require a particular
result of that process.
   (b) Nothing in this article obviates or supersedes the obligations
of the signatories to the consent judgment entered in the case
entitled United States of America et al. v. Bank of America
Corporation et al., filed in the United States District Court for the
District of Columbia, case number 1:12-cv-00361 RMC.
  SEC. 4.  Section 2923.5 of the Civil Code is amended to read:
   2923.5.  (a) (1) A mortgage servicer, mortgagee, trustee,
beneficiary, or authorized agent may not record a notice of default
pursuant to Section 2924 until both of the following:
   (A) Either 30 days after initial contact is made as required by
paragraph (2) or 30 days after satisfying the due diligence
requirements as described in subdivision (e).
   (B) The mortgage servicer complies with paragraph (1) of
subdivision (a) of Section 2924.18, if the borrower has provided a
complete application as defined in subdivision (d) of Section
2924.18.
   (2) A mortgage servicer shall contact the borrower in person or by
telephone in order to assess the borrower's financial situation and
explore options for the borrower to avoid foreclosure. During the
initial contact, the mortgage servicer shall advise the borrower that
he or she has the right to request a subsequent meeting and, if
requested, the mortgage servicer shall schedule the meeting to occur
within 14 days. The assessment of the borrower's financial situation
and discussion of options may occur during the first contact, or at
the subsequent meeting scheduled for that purpose. In either case,
the borrower shall be provided the toll-free telephone number made
available by the United States Department of Housing and Urban
Development (HUD) to find a HUD-certified housing counseling agency.
Any meeting may occur telephonically.
   (b) A notice of default recorded pursuant to Section 2924 shall
include a declaration that the mortgage servicer has contacted the
borrower, has tried with due diligence to contact the borrower as
required by this section, or that no contact was required because the
individual did not meet the definition of "borrower" pursuant to
subdivision (c) of Section 2920.5.
   (c) A mortgage servicer's loss mitigation personnel may
participate by telephone during any contact required by this section.

    (d) A borrower may designate, with consent given in writing, a
HUD-certified housing counseling agency, attorney, or other adviser
to discuss with the mortgage servicer, on the borrower's behalf, the
borrower's financial situation and options for the borrower to avoid
foreclosure. That contact made at the direction of the borrower shall
satisfy the contact requirements of paragraph (2) of subdivision
(a). Any loan modification or workout plan offered at the meeting by
the mortgage servicer is subject to approval by the borrower.
    (e) A notice of default may be recorded pursuant to Section 2924
when a mortgage servicer has not contacted a borrower as required by
paragraph (2) of subdivision (a) provided that the failure to contact
the borrower 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.
   (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.
    (f) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
   (g) This section shall apply only to entities described in
subdivision (b) of Section 2924.18.
    (h) This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 5.  Section 2923.5 is added to the Civil Code, to read:
   2923.5.  (a) (1) A mortgage servicer, mortgagee, trustee,
beneficiary, or authorized agent may not record a notice of default
pursuant to Section 2924 until both of the following:
   (A) Either 30 days after initial contact is made as required by
paragraph (2) or 30 days after satisfying the due diligence
requirements as described in subdivision (e).
   (B) The mortgage servicer complies with subdivision (a) of Section
2924.11, if the borrower has provided a complete application as
defined in subdivision (f) of Section 2924.11.
   (2) A mortgage servicer shall contact the borrower in person or by
telephone in order to assess the borrower's financial situation and
explore options for the borrower to avoid foreclosure. During the
initial contact, the mortgage servicer shall advise the borrower that
he or she has the right to request a subsequent meeting and, if
requested, the mortgage servicer shall schedule the meeting to occur
within 14 days. The assessment of the borrower's financial situation
and discussion of options may occur during the first contact, or at
the subsequent meeting scheduled for that purpose. In either case,
the borrower shall be provided the toll-free telephone number made
available by the United States Department of Housing and Urban
Development (HUD) to find a HUD-certified housing counseling agency.
Any meeting may occur telephonically.
   (b) A notice of default recorded pursuant to Section 2924 shall
include a declaration that the mortgage servicer has contacted the
borrower, has tried with due diligence to contact the borrower as
required by this section, or that no contact was required because the
individual did not meet the definition of "borrower" pursuant to
subdivision (c) of Section 2920.5.
   (c) A mortgage servicer's loss mitigation personnel may
participate by telephone during any contact required by this section.

   (d) A borrower may designate, with consent given in writing, a
HUD-certified housing counseling agency, attorney, or other adviser
to discuss with the mortgage servicer, on the borrower's behalf, the
borrower's financial situation and options for the borrower to avoid
foreclosure. That contact made at the direction of the borrower shall
satisfy the contact requirements of paragraph (2) of subdivision
(a). Any loan modification or workout plan offered at the meeting by
the mortgage servicer is subject to approval by the borrower.
   (e) A notice of default may be recorded pursuant to Section 2924
when a mortgage servicer has not contacted a borrower as required by
paragraph (2) of subdivision (a) provided that the failure to contact
the borrower 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.
   (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.
   (f) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
   (g) This section shall become operative on January 1, 2018.
  SEC. 6.  Section 2923.55 is added to the Civil Code, to read:
   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. 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.
  SEC. 7.  Section 2923.6 of the Civil Code is amended to read:
   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.
  SEC. 8.  Section 2923.6 is added to the Civil Code, to read:
   2923.6.  (a) The Legislature finds and declares that any duty
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) This section shall become operative on January 1, 2018.
  SEC. 9.  Section 2923.7 is added to the Civil Code, to read:
   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.
  SEC. 10.  Section 2924 of the Civil Code, as amended by Section 1
of Chapter 180 of the Statutes of 2010, is amended to read:
   2924.  (a) Every transfer of an interest in property, other than
in trust, made only as a security for the performance of another act,
is to be deemed a mortgage, except when in the case of personal
property it is accompanied by actual change of possession, in which
case it is to be deemed a pledge. Where, by a mortgage created after
July 27, 1917, of any estate in real property, other than an estate
at will or for years, less than two, or in any transfer in trust made
after July 27, 1917, of a like estate to secure the performance of
an obligation, a power of sale is conferred upon the mortgagee,
trustee, or any other person, to be exercised after a breach of the
obligation for which that mortgage or transfer is a security, the
power shall not be exercised except where the mortgage or transfer is
made pursuant to an order, judgment, or decree of a court of record,
or to secure the payment of bonds or other evidences of indebtedness
authorized or permitted to be issued by the Commissioner of
Corporations, or is made by a public utility subject to the
provisions of the Public Utilities Act, until all of the following
apply:
   (1) The trustee, mortgagee, or beneficiary, or any of their
authorized agents shall first file for record, in the office of the
recorder of each county wherein the mortgaged or trust property or
some part or parcel thereof is situated, a notice of default. That
notice of default shall include all of the following:
   (A) A statement identifying the mortgage or deed of trust by
stating the name or names of the trustor or trustors and giving the
book and page, or instrument number, if applicable, where the
mortgage or deed of trust is recorded or a description of the
mortgaged or trust property.
   (B) A statement that a breach of the obligation for which the
mortgage or transfer in trust is security has occurred.
   (C) A statement setting forth the nature of each breach actually
known to the beneficiary and of his or her election to sell or cause
to be sold the property to satisfy that obligation and any other
obligation secured by the deed of trust or mortgage that is in
default.
   (D) If the default is curable pursuant to Section 2924c, the
statement specified in paragraph (1) of subdivision (b) of Section
2924c.
   (2) Not less than three months shall elapse from the filing of the
notice of default.
   (3) Except as provided in paragraph (4), after the lapse of the
three months described in paragraph (2), the mortgagee, trustee, or
other person authorized to take the sale shall give notice of sale,
stating the time and place thereof, in the manner and for a time not
less than that set forth in Section 2924f.
   (4) Notwithstanding paragraph (3), the mortgagee, trustee, or
other person authorized to take sale may record a notice of sale
pursuant to Section 2924f up to five days before the lapse of the
three-month period described in paragraph (2), provided that the date
of sale is no earlier than three months and 20 days after the
recording of the notice of default.
   (5) Until January 1, 2018, whenever a sale is postponed for a
period of at least 10 business days pursuant to Section 2924g, a
mortgagee, beneficiary, or authorized agent shall provide written
notice to a borrower regarding the new sale date and time, within
five business days following the postponement. Information provided
pursuant to this paragraph shall not constitute the public
declaration required by subdivision (d) of Section 2924g. Failure to
comply with this paragraph shall not invalidate any sale that would
otherwise be valid under Section 2924f. This paragraph shall be
inoperative on January 1, 2018.
   (6) No entity shall record or cause a notice of default to be
recorded or otherwise initiate the foreclosure process unless it is
the holder of the beneficial interest under the mortgage or deed of
trust, the original trustee or the substituted trustee under the deed
of trust, or the designated agent of the holder of the beneficial
interest. No agent of the holder of the beneficial interest under the
mortgage or deed of trust, original trustee or substituted trustee
under the deed of trust may record a notice of default or otherwise
commence the foreclosure process except when acting within the scope
of authority designated by the holder of the beneficial interest.
   (b) In performing acts required by this article, 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 this article, a trustee shall not be subject to Title
1.6c (commencing with Section 1788) of Part 4.
   (c) A recital in the deed executed pursuant to the power of sale
of compliance with all requirements of law regarding the mailing of
copies of notices or the publication of a copy of the notice of
default or the personal delivery of the copy of the notice of default
or the posting of copies of the notice of sale or the publication of
a copy thereof shall constitute prima facie evidence of compliance
with these requirements and conclusive evidence thereof in favor of
bona fide purchasers and encumbrancers for value and without notice.
   (d) All of the following shall constitute privileged
communications pursuant to Section 47:
   (1) The mailing, publication, and delivery of notices as required
by this section.
   (2) Performance of the procedures set forth in this article.
   (3) Performance of the functions and procedures set forth in this
article if those functions and procedures are necessary to carry out
the duties described in Sections 729.040, 729.050, and 729.080 of the
Code of Civil Procedure.
   (e) There is a rebuttable presumption that the beneficiary
actually knew of all unpaid loan payments on the obligation owed to
the beneficiary and secured by the deed of trust or mortgage subject
to the notice of default. However, the failure to include an actually
known default shall not invalidate the notice of sale and the
beneficiary shall not be precluded from asserting a claim to this
omitted default or defaults in a separate notice of default.
  SEC. 11.  Section 2924 of the Civil Code, as amended by Section 2
of Chapter 180 of the Statutes of 2010, is repealed.
  SEC. 12.  Section 2924.9 is added to the Civil Code, to read:
   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.
  SEC. 13.  Section 2924.10 is added to the Civil Code, to read:
   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.
  SEC. 14.  Section 2924.11 is added to the Civil Code, to read:
   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.
  SEC. 15.  Section 2924.11 is added to the Civil Code, to read:
   2924.11.  (a) If a borrower submits a complete application for a
foreclosure prevention alternative offered by, or through, the
borrower's mortgage servicer, a mortgage servicer, trustee,
mortgagee, beneficiary, or authorized agent shall not record a notice
of sale or conduct a trustee's sale while the complete foreclosure
prevention alternative application is pending, and until the borrower
has been provided with a written determination by the mortgage
servicer regarding that borrower's eligibility for the requested
foreclosure prevention alternative.
   (b) Following the denial of a first lien loan modification
application, the mortgage servicer shall send a written notice to the
borrower identifying with specificity the reasons for the denial and
shall include a statement that the borrower may obtain additional
documentation supporting the denial decision upon written request to
the mortgage servicer.
   (c) 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.
   (d) 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.
   (e) This section applies only to mortgages or deeds of trust as
described in Section 2924.15.
   (f) 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.
   (g) This section shall become operative on January 1, 2018.
  SEC. 16.  Section 2924.12 is added to the Civil Code, to read:
   2924.12.  (a) (1) If a trustee's deed upon sale has not been
recorded, a borrower may bring an action for injunctive relief to
enjoin a material violation of Section 2923.55, 2923.6, 2923.7,
2924.9, 2924.10, 2924.11, or 2924.17.
   (2) Any injunction shall remain in place and any trustee's sale
shall be enjoined until the court determines that the mortgage
servicer, mortgagee, trustee, beneficiary, or authorized agent has
corrected and remedied the violation or violations giving rise to the
action for injunctive relief. An enjoined entity may move to
dissolve an injunction based on a showing that the material violation
has been corrected and remedied.
   (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).
   (c) A mortgage servicer, mortgagee, trustee, beneficiary, or
authorized agent shall not be liable for any violation that it has
corrected and remedied prior to the recordation of a trustee's deed
upon sale, or that has been corrected and remedied by third parties
working on its behalf prior to the recordation of a trustee's deed
upon sale.
   (d) A violation of Section 2923.55, 2923.6, 2923.7, 2924.9,
2924.10, 2924.11, or 2924.17 by a person licensed by the Department
of Corporations, Department of Financial Institutions, or Department
of Real Estate shall be deemed to be a violation of that person's
licensing law.
   (e) No violation of this article shall affect the validity of a
sale in favor of a bona fide purchaser and any of its encumbrancers
for value without notice.
   (f) A third-party encumbrancer shall not be relieved of liability
resulting from violations of Section 2923.55, 2923.6, 2923.7, 2924.9,
2924.10, 2924.11, or 2924.17 committed by that third-party
encumbrancer, that occurred prior to the sale of the subject property
to the bona fide purchaser.
   (g) A signatory to a consent judgment entered in the case entitled
United States of America et al. v. Bank of America Corporation et
al., filed in the United States District Court for the District of
Columbia, case number 1:12-cv-00361 RMC, that is in compliance with
the relevant terms of the Settlement Term Sheet of that consent
judgment with respect to the borrower who brought an action pursuant
to this section while the consent judgment is in effect shall have no
liability for a violation of Section 2923.55, 2923.6, 2923.7,
2924.9, 2924.10, 2924.11, or 2924.17.
   (h) The rights, remedies, and procedures provided by this section
are in addition to and independent of any other rights, remedies, or
procedures under any other law. Nothing in this section shall be
construed to alter, limit, or negate any other rights, remedies, or
procedures provided by law.
   (i) A court may award a prevailing borrower reasonable attorney's
fees and costs in an action brought pursuant to this section. A
borrower shall be deemed to have prevailed for purposes of this
subdivision if the borrower obtained injunctive relief or was awarded
damages pursuant to this section.
   (j) This section shall not apply to entities described in
subdivision (b) of Section 2924.18.
   (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.
  SEC. 17.  Section 2924.12 is added to the Civil Code, to read:
   2924.12.  (a) (1) If a trustee's deed upon sale has not been
recorded, a borrower may bring an action for injunctive relief to
enjoin a                                                 material
violation of Section 2923.5, 2923.7, 2924.11, or 2924.17.
   (2) Any injunction shall remain in place and any trustee's sale
shall be enjoined until the court determines that the mortgage
servicer, mortgagee, trustee, beneficiary, or authorized agent has
corrected and remedied the violation or violations giving rise to the
action for injunctive relief. An enjoined entity may move to
dissolve an injunction based on a showing that the material violation
has been corrected and remedied.
   (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 2923.5,
2923.7, 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).
   (c) A mortgage servicer, mortgagee, trustee, beneficiary, or
authorized agent shall not be liable for any violation that it has
corrected and remedied prior to the recordation of the trustee's deed
upon sale, or that has been corrected and remedied by third parties
working on its behalf prior to the recordation of the trustee's deed
upon sale.
   (d) A violation of Section 2923.5, 2923.7, 2924.11, or 2924.17 by
a person licensed by the Department of Corporations, Department of
Financial Institutions, or Department of Real Estate shall be deemed
to be a violation of that person's licensing law.
   (e) No violation of this article shall affect the validity of a
sale in favor of a bona fide purchaser and any of its encumbrancers
for value without notice.
   (f) A third-party encumbrancer shall not be relieved of liability
resulting from violations of Section 2923.5, 2923.7, 2924.11, or
2924.17 committed by that third-party encumbrancer, that occurred
prior to the sale of the subject property to the bona fide purchaser.

   (g) The rights, remedies, and procedures provided by this section
are in addition to and independent of any other rights, remedies, or
procedures under any other law. Nothing in this section shall be
construed to alter, limit, or negate any other rights, remedies, or
procedures provided by law.
   (h) A court may award a prevailing borrower reasonable attorney's
fees and costs in an action brought pursuant to this section. A
borrower shall be deemed to have prevailed for purposes of this
subdivision if the borrower obtained injunctive relief or was awarded
damages pursuant to this section.
   (i) This section shall become operative on January 1, 2018.
  SEC. 18.  Section 2924.15 is added to the Civil Code, to read:
   2924.15.  (a) Unless otherwise provided, paragraph (5) of
subdivision (a) of Section 2924, and Sections 2923.5, 2923.55,
2923.6, 2923.7, 2924.9, 2924.10, 2924.11, and 2924.18 shall apply
only to first lien mortgages or deeds of trust that are secured by
owner-occupied residential real property containing no more than four
dwelling units. For these purposes, "owner-occupied" means that the
property is the principal residence of the borrower and is security
for a loan made for personal, family, or household purposes.
   (b)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 19.  Section 2924.15 is added to the Civil Code, to read:
   2924.15.  (a) Unless otherwise provided, Sections 2923.5, 2923.7,
and 2924.11 shall apply only to first lien mortgages or deeds of
trust that are secured by owner-occupied residential real property
containing no more than four dwelling units. For these purposes,
"owner-occupied" means that the property is the principal residence
of the borrower and is security for a loan made for personal, family,
or household purposes.
   (b) This section shall become operative on January 1, 2018.
  SEC. 20.  Section 2924.17 is added to the Civil Code, to read:
   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 Corporations,
the Department of Real Estate, or the Department of Financial
Institutions against a respective licensee, in addition to any other
remedies available to these entities. This subdivision shall be
inoperative on January 1, 2018.
  SEC. 21.  Section 2924.18 is added to the Civil Code, to read:
   2924.18.  (a) (1) 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, trustee, mortgagee,
beneficiary, or authorized agent shall not record a notice of
default, notice of sale, or conduct a trustee's sale while the
complete first lien loan modification application is pending, and
until the borrower has been provided with a written determination by
the mortgage servicer regarding that borrower's eligibility for the
requested loan modification.
   (2) If a foreclosure prevention alternative has been 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:
   (A) The borrower is in compliance with the terms of a written
trial or permanent loan modification, forbearance, or repayment plan.

   (B) 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.
   (3) 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:
   (A) The borrower is in compliance with the terms of a written
trial or permanent loan modification, forbearance, or repayment plan.

   (B) 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) This section shall apply only 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.
   (c) 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 subdivision (b) exceeds
the threshold of 175 specified in subdivision (b), 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 Sections 2923.55, 2923.6,
2923.7, 2924.9, 2924.10, 2924.11, and 2924.12, 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.
   (d) 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.
   (e) If a borrower has been approved in writing for a first lien
loan modification or other foreclosure prevention alternative, and
the servicing of the 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.
   (f) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
   (g)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 22.  Section 2924.19 is added to the Civil Code, to read:
   2924.19.  (a) (1) If a trustee's deed upon sale has not been
recorded, a borrower may bring an action for injunctive relief to
enjoin a material violation of Section 2923.5, 2924.17, or 2924.18.
   (2) Any injunction shall remain in place and any trustee's sale
shall be enjoined until the court determines that the mortgage
servicer, mortgagee, beneficiary, or authorized agent has corrected
and remedied the violation or violations giving rise to the action
for injunctive relief. An enjoined entity may move to dissolve an
injunction based on a showing that the material violation has been
corrected and remedied.
   (b) After a trustee's deed upon sale has been recorded, a mortgage
servicer, mortgagee, 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 2923.5, 2924.17,
or 2924.18 by that mortgage servicer, mortgagee, 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, 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).
   (c) A mortgage servicer, mortgagee, beneficiary, or authorized
agent shall not be liable for any violation that it has corrected and
remedied prior to the recordation of the trustee's deed upon sale,
or that has been corrected and remedied by third parties working on
its behalf prior to the recordation of the trustee's deed upon sale.
   (d) A violation of Section 2923.5, 2924.17, or 2917.18 by a person
licensed by the Department of Corporations, the Department of
Financial Institutions, or the Department of Real Estate shall be
deemed to be a violation of that person's licensing law.
   (e) No violation of this article shall affect the validity of a
sale in favor of a bona fide purchaser and any of its encumbrancers
for value without notice.
   (f) A third-party encumbrancer shall not be relieved of liability
resulting from violations of Section 2923.5, 2924.17 or 2924.18,
committed by that third-party encumbrancer, that occurred prior to
the sale of the subject property to the bona fide purchaser.
   (g) The rights, remedies, and procedures provided by this section
are in addition to and independent of any other rights, remedies, or
procedures under any other law. Nothing in this section shall be
construed to alter, limit, or negate any other rights, remedies, or
procedures provided by law.
   (h) A court may award a prevailing borrower reasonable attorney's
fees and costs in an action brought pursuant to this section. A
borrower shall be deemed to have prevailed for purposes of this
subdivision if the borrower obtained injunctive relief or damages
pursuant to this section.
   (i) This section shall apply only 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.
  SEC. 23.  Section 2924.20 is added to the Civil Code, to read:
   2924.20.  Consistent with their general regulatory authority, and
notwithstanding subdivisions (b) and (c) of Section 2924.18, the
Department of Corporations, the Department of Financial Institutions,
and the Department of Real Estate may adopt regulations applicable
to any entity or person under their respective jurisdictions that are
necessary to carry out the purposes of the act that added this
section. A violation of the regulations adopted pursuant to this
section shall only be enforceable by the regulatory agency.
  SEC. 24.  The provisions of this act are severable. If any
provision of this act or its application is held invalid, that
invalidity shall not affect other provisions or applications that can
be given effect without the invalid provision or application.
  SEC. 25.   No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.

The NEW Sevicing abuse cases california Jan1, 2013

10 Dec

Abuses by Mortgage Service Companies

Although predatory lending has received far more attention than abusive servicing, a significant percentage of consumer complaints over loans involve servicing, not origination. For example, the director of the Nevada Fair Housing Center testified that of the hundreds of complaints of predatory lending issues her office received in 2002, about 42 percent involved servicing once the loan was transferred

Abusive Mortgage Servicing Defined:

Abusive servicing occurs when a servicer, either through action or inaction, obtains or attempts to obtain unwarranted fees or other costs from borrowers, engages in unfair collection practices, or through its own improper behavior or inaction causes borrowers to be more likely to go into default or have their homes foreclosed. Abusive practices should be distinguished from appropriate actions that may harm borrowers, such as a servicer merely collecting appropriate late fees or foreclosing on borrowers who do not make their payments despite proper loss mitigation efforts. Servicing can be abusive either intentionally, when there is intent to obtain unwarranted fees, or negligently, when, for example, a servicer’s records are so disorganized that borrowers are regularly charged late fees even when mortgage payments were made on time.

Abusive servicing often happens to debtors who have filed a Chapter 13 Bankruptcy Plan and are in the process of making payments under the Plan. If you suspect that your mortgage servicer is abusing your relationship by charging unnecessary fees while you are paying off your Chapter 13 Plan, call us. We can help.

There is significant evidence that some Mortgage servicers have engaged in abusive behavior and that borrowers have frequently been the victims. Some servicers have engaged in practices that are not only detrimental to borrowers but also illegal Such abuse has been documented in court opinions and decisions, in the decisions and findings of ratings agencies, in litigation and settlements obtained by government agencies against prominent servicers, in congressional testimony, and in newspaper accounts of borrowers who claim to have been mistreated by servicers. The abusive servicing practices documented in these sources include improper foreclosure or attempted foreclosure, improper fees, improper forced-placed insurance, and improper use or oversight of escrow funds .

Improper foreclosure or attempted foreclosure

Because servicers can exact fees associated with foreclosures, such as attorneys’ fees, some servicers have attempted to foreclose on property even when borrowers are current on their payments or without giving borrowers enough time to repay or otherwise working with them on a repayment plan Furthermore, a speedy foreclosure may save servicers the cost of attempting other techniques that might have prevented the foreclosure.

Some servicers have been so brazen that they have regularly claimed to the courts that borrowers were in default so as to justify foreclosure, even though the borrowers were current on their payments. Other courts have also decried the frequent use of false statements to obtain relief from stay in order to foreclose on borrowers’ homes. For example, in Hart v. GMAC Mortgage Corporation, et al., 246 B.R. 709 (2000), even though the borrower had made the payments required of him by a forbearance agreement he had entered into with the servicer (GMAC Mortgage Corporation), it created a “negative suspense account” for moneys it had paid out, improperly charged the borrower an additional monthly sum to repay the negative suspense account, charged him late fees for failing to make the entire payment demanded, and began foreclosure proceedings.

Improper fees

Claiming that borrowers are in default when they are actually current allows servicers to charge unwarranted fees, either late fees or fees related to default and foreclosure. Servicers receive as a conventional fee a percentage of the total value of the loans they service, typically 25 basis points for prime loans and 50 basis points for subprime loans In addition, contracts typically provide that the servicer, not the trustee or investors, has the right to keep any and all late fees or fees associated with defaults. Servicers charge late fees not only because they act as a prod to coax borrowers into making payments on time, but also because borrowers who fail to make payments impose additional costs on servicers, which must then engage in loss mitigation to induce payment.

Such fees are a crucial part of servicers’ income. For example, one servicer’s CEO reportedly stated that extra fees, such as late fees, appeared to be paying for all of the operating costs of the company’s entire servicing department, leaving the conventional servicing fee almost completely profit The pressure to collect such fees appears to be higher on subprime servicers than on prime servicers:

Because borrowers typically cannot prove the exact date a payment was received, servicers can charge late fees even when they receive the payment on time Improper late fees may also be based on the loss of borrowers’ payments by servicers, their inability to track those payments accurately, or their failure to post payments in a timely fashion. In Ronemus v. FTB Mortgage Services, 201 B.R. 458 (1996), under a Chapter 13 bankruptcy plan, the borrowers had made all of their payments on time except for two; they received permission to pay these two late and paid late fees for the privilege. However, the servicer, FTB Mortgage Services, misapplied their payments, then began placing their payments into a suspense account and collecting unauthorized late fees. The servicer ignored several letters from the borrowers’ attorney attempting to clear up the matter, sent regular demands for late fees, and began harassing the borrowers with collection efforts. When the borrowers sued, the servicer submitted to the court an artificially inflated accounting of how much the borrowers owed.

Some servicers have sent out late notices even when they have received timely payments and even before the end of a borrower’s grace period Worse yet, a servicer might pocket the payment, such as an extra payment of principal, and never credit it to the borrower Late fees on timely payments are a common problem when borrowers are making mortgage payments through a bankruptcy plan

Moreover, some servicers have also added false fees and charges not authorized by law or contract to their monthly payment demands, relying on borrowers’ ignorance of the exact amount owed. They can collect such fees or other unwarranted claims by submitting inaccurate payoff demands when a borrower refinances or sells the house). Or they can place the borrowers’ monthly payments in a suspense account and then charge late fees even though they received the payment Worse yet, some servicers pyramid their late fees, applying a portion of the current payment to a previous late fee and then charging an additional late fee even though the borrower has made a timely and full payment for the new month Pyramiding late fees allows servicers to charge late fees month after month even though the borrower made only one late payment

Servicers can turn their fees into a profit center by sending inaccurate monthly payment demands, demanding unearned fees or charges not owed, or imposing fees higher than the expenses for a panoply of actions For example, some servicers take advantage of borrowers’ ignorance by charging fees, such as prepayment penalties, where the note does not provide for them Servicers have sometimes imposed a uniform set of fees over an entire pool of loans, disregarding the fact that some of the loan documents did not provide for those particular fees. Or they charge more for attorneys’, property inspection, or appraisal fees than were actually incurred. Some servicers may add a fee by conducting unnecessary property inspections, having an agent drive by even when the borrower is not in default, or conducting multiple inspections during a single period of default to charge the resulting multiple fees

The complexity of the terms of many loans makes it difficult for borrowers to discover whether they are being overcharged Moreover, servicers can frustrate any attempts to sort out which fees are genuine.

Improperly forced-placed insurance

Mortgage holders are entitled under the terms of the loan to require borrowers to carry homeowners’ insurance naming the holder as the payee in case of loss and to force-place insurance by buying policies for borrowers who fail to do so and charging them for the premiums However, some servicers have force-placed insurance even in cases where the borrower already had it and even provided evidence of it to the servicer Worse yet, servicers have charged for force-placed insurance without even purchasing it. Premiums for force-placed insurance are often inflated in that they provide protection in excess of what the loan.

290924_255783101119832_3781507_o

Escrow Account Mismanagement

One of the benefits of servicing mortgages is controlling escrow accounts to pay for insurance, taxes, and the like and, in most states, keeping any interest earned on these accounts Borrowers have complained that servicers have failed to make tax or insurance payments when they were due or at all. The treasurer of the country’s second largest county estimated that this failure to make timely payments cost borrowers late fees of at least $2 million in that county over a two-year span, causing some to lose their homes. If servicers fail to make insurance payments and a policy lapses, borrowers may face much higher insurance costs even if they purchase their own, non-force-placed policy. Worse yet, borrowers may find themselves unable to buy insurance at all if they cannot find a new insurer willing to write them a policy

You can make a claim for mortgage service abuse, and often the court will award actual and punitive damages. If you think you have been a victim of mortgage service abuse, contact us. We can help you make a claim.

How to chase Chase – People sometimes ask me why do you publish all this stuff. My slogan IF YOUR ENEMY IS MY ENEMY THAN WE ARE FRIENDS !!!!

19 Nov

People sometimes ask me why do you publish all this stuff. My slogan IF YOUR ENEMY IS MY ENEMY THAN WE ARE FRIENDS

ChaseSucks.org

2. RESOURCES — Pleadings, Orders, and Exhibits

On this page you will find descriptions and links to various pleadings, orders, and exhibits filed by attorneys as well as individuals representing themselves. Where the outcome is known, that information is included. These documents are public records and are made available for your information, but their accuracy, competency, and effectiveness have not been verified. Only a judge can rule on a pleading and only an appellate court opinion that is certified for publication can be cited as precedent. That said, it can be both educational and entertaining to see how the great race is unfolding in the historic controversy of People v. Banks. For an entertaining public outing of history’s all-time greatest pickpockets, go see the documentary “Inside Job.”

Federal District Court

Carswell v. JPMorgan Chase, Case No. CV10-5152 GW

George Wu, Judge, U.S. District Court, Central District of California, Los Angeles
Douglas Gillies, attorney for Margaret Carswell

Plaintiff sued to halt a foreclosure initiated by JPMorgan Chase and California Reconveyance Co. on the grounds of failure to contract, wrongful foreclosure, unjust enrichment, RESPA and TILA violations, and fraud. She asked for quiet title and declaratory relief. Chase responded with a Motion to Dismiss. At a hearing on September 30, 2010, Judge Wu granted defendants’ motion to dismiss with leave to amend. Plaintiff’s First Amended Complaint was filed on October 18. It begins:

It was the biggest financial bubble in history. During the first decade of this century, banks abandoned underwriting practices and caused a frenzy of real estate speculation by issuing predatory loans that ultimately lowered property values in the United States by 30-50%. Banks reaped the harvest. Kerry Killinger, CEO of Washington Mutual, took home more than $100 million during the seven years that he steered WaMu into the ground. Banks issued millions of predatory loans knowing that the borrowers would default and lose their homes. As a direct, foreseeable, proximate result, 15 million families are now in danger of foreclosure. If the legions of dispossessed homeowners cannot present their grievances in the courts of this great nation, their only recourse will be the streets.

Chase responded with yet another Motion to Dismiss, Carswell filed her Opposition to the motion, and a hearing is scheduled for January 6, 2011, 8:30 AM in Courtroom 10, US District Court, 312 N. Spring Street, Los Angeles, CA.

 

Khast v. Washington Mutual, JPMorgan Chase, and CRC, Case No. CV10-2168 IEG

Irma E. Gonzalez, Chief Judge, U.S. District Court, Southern District of California
Kaveh Khast in pro se

A loan mod nightmare where Khast did everything right except laugh out loud when WaMu told him that he must stop making his mortgage payments for 90 days in order to qualify for a loan modification. As Khast leaped through the constantly shifting hoops tossed in the air, first by WaMu, then by Chase, filing no less than four applications, Chase issued a Notice of Trustee’s Sale.

Khast filed a pro se complaint in federal court. The District Court granted a Temporary Restraining Order to stop the sale. Hearing on a Preliminary Injunction is now scheduled for December 3. The court wrote that the conduct by WAMU appears to be “immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers,” and thus satisfies the “unfair” prong of California’s Unfair Competition Law, Cal. Bus.&Prof.Code §17200. Plaintiff has stated that he possesses documents which support his contention that Defendant WAMU instructed Plaintiff to purposefully enter into default and assured Plaintiff that, if he did so, WAMU would restructure his loan. Accordingly, Plaintiff has demonstrated that he is likely to succeed on the merits of his claim.

The court also relied upon the doctrine of promissory estoppel. 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. 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.

 

Saxon Mortgage v. Hillery, Case No. C-08-4357

Edward M. Chen, U.S. Magistrate, Northern District of California
Thomas Spielbauer, attorney for Ruthie Hillery

Hillery obtained a home loan from New Century secured by a Deed of Trust, which named MERS as nominee for New Century and its successors. MERS later attempted to assign the Deed of Trust and the promissory note to Consumer. Consumer and the loan servicer then sued Hillery. The court ruled that Consumer must demonstrate that it is the holder of the deed of trust and the promissory note. In re Foreclosure Cases, 521 F. Supp. 2d 650, 653 (S.D. Oh. 2007) held that to show standing in a foreclosure action, the plaintiff must show that it is the holder of the note and the mortgage at the time the complaint was filed. For there to be a valid assignment, there must be more than just assignment of the deed alone; the note must also be assigned. “The note and mortgage are inseparable; the former as essential, the latter as an incident…an assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity.” Carpenter v. Longan, 83 U.S. 271, 274 (1872).

There was no evidence that MERS held the promissory note or was given the authority by New Century to assign the note to Consumer. Without the note, Consumer lacked standing. If Consumer did not have standing, then the loan servicer also lacked standing. A loan servicer cannot bring an action without the holder of the note. In re Hwang, 393 B.R. 701, 712 (2008).

 

Serrano v. GMAC Mortgage, Case No. 8:09-CV-00861-DOC

David O. Carter, Judge, U.S. District Court, Central District of California, Los Angeles
Moses S. Hall, attorney for Ignacio Serrano

Plaintiff alleged in state court that GMAC initiated a non-judicial foreclosure sale and sold his residence without complying with the notice requirements of Cal. Civil Code Sec. 2923.5 and 2924, and without attaching a declaration to the 2923.5 notice under penalty of perjury stating that defendants tried with due diligence to contact the borrower. Defendants removed the case to federal court on the basis of diversity jurisdiction. The District Court granted defendants’ motion to dismiss without prejudice, and described in detail the defects in the Complaint with directions how to correct the defects. Plaintiff filed his Second Amended Complaint on 4/01/2010.

 

Sharma v. Provident Funding Associates, Case No. 3:2009-cv-05968

Vaughn R Walker, Judge, U.S. District Court, Northern District of California
Marc A. Fisher, attorney for Anilech and Parma Sharma

Defendants attempted to foreclose and plaintiffs sued in federal court, alleging that defendants did not contact them as required by Cal Civ Code § 2923.5. In considering plaintiffs’ request for an injunction to stop the foreclosure, the court found that plaintiffs had raised “serious questions going to the merits” and would suffer irreparable injury if the sale were to proceed. Property is considered unique. If defendants foreclosed, plaintiffs’ injury would be irreparable because they might be unable to reacquire it. Plaintiffs’ remedy at law, damages, would be inadequate. On the other hand, defendants would not suffer a high degree of harm if a preliminary injunction were ordered. While they would not be able to sell the property immediately and would incur litigation costs, when balanced against plaintiffs’ potential loss, defendants’ harm was outweighed.

The court issued a preliminary injunction enjoining defendants from selling the property while the lawsuit was pending.

 

Federal Bankruptcy Court

In re: Hwang, 396 B.R. 757 (2008), Case No. 08-15337 Chapter 7

Samuel L. Burford, U.S. Bankruptcy Judge, Los Angeles
Robert K. Lee, attorney for Kang Jin Hwang

As the servicer on Hwang’s promissory note, IndyMac was entitled to enforce the secured note under California law, but it must also satisfy the procedural requirements of federal law to obtain relief from the automatic stay in a Chapter 7 bankruptcy proceeding. These requirements include joining the owner of the note, because the owner of the note is the real party in interest under Rule 17, and it is also a required party under Rule 19. IndyMac failed to join the owner of the note, so its motion for relief from the automatic stay was denied.

Reversed on July 21, 2010. District Court Judge Philip Gutierrez reversed the Judge Burford’s determination that IndyMac is not the real party in interest under Rule 17 and that Rule 19 requires the owner of the Note to join the Motion.

 

In re: Vargas, Case No. 08-17036 Chapter 7

Samuel L. Burford, U.S. Bankruptcy Judge, Los Angeles
Marcus Gomez, attorney for Raymond Vargas

 

In re: Walker, Case No. 10-21656 Chapter 11

Ronald H. Sargis, Judge, U.S. Bankruptcy Court, Sacramento
Mitchell L. Abdallah, attorney for Rickie Walker

MERS assigned the Deed of Trust for Debtor’s property to Citibank, which filed a secured claim. Debtor objected to the claim. Judge Sargis ruled that the promissory note and the Deed of Trust are inseparable. An assignment of the note carries the mortgage with it, while an assignment of the Deed of Trust alone is a nullity. MERS was not the owner of the note, so it could not transfer the note or the beneficial interest in the Deed of Trust. The bankruptcy court disallowed Citibank’s claim because it could not establish that it was the owner of the promissory note.

 

California State Court

Cabalu v. Mission Bishop Real Estate

Superior Court of California, Alameda County
Brian A. Angelini, attorney for Cecil and Natividad Cabalu

 

Davies v. NDEX West, Case No. INC 090697

Randall White, Judge, Superior Court of California, Riverside County
Brian W. Davies, in pro per

 

Edstrom v. NDEX West, Wells Fargo Bank, et. al., Case No. 20100314

Superior Court of California, Eldorado County
Richard Hall, attorney for Daniel and Teri Anne Edstrom

A 61-page complaint with 29 causes of action to enjoin a trustee’s sale of plaintiffs’ residence, requesting a judicial sale instead of a non-judicial sale, declaratory relief, compensatory damages including emotional and mental distress, punitive damages, attorneys’ fees, and rescission.

 

Mabry v. Superior Court and Aurora Loan Services
185 Cal.App.4th 208, 110 Cal. Rptr. 3d 201 (4th Dist. June 2, 2010)
California Court of Appeal, 4th District, Division 3
California Supreme Court, Petition for Review filed July 13, 2010.

Moses S. Hall, attorney for Terry and Michael Mabry

The Mabrys sued to enjoin a trustee’s sale of their home, alleging that Aurora’s notice of default did not include a declaration required by Cal. Civil Code §2923.5, and that the bank did not explore alternatives to foreclosure with the borrowers. The trial court refused to stop the sale. The Mabrys filed a Petition for a Writ of Mandate and the Court of Appeal granted a stay to enjoin the sale. Oral argument was heard in Santa Ana on May 18, 2010.

Aurora argued that a borrower cannot sue a lender that fails to contact the borrower to discuss alternatives to foreclosure before filing a notice of default, as required by §2923.5, because §2923.5 does not explicitly give homeowners a “private right of action.” Aurora also argued that a declaration under penalty of perjury is not required because a trustee, who ordinarily files the notice of default, could not have personal knowledge of a bank’s attempts to contact the borrower. Nobody mentioned that the trustee is not authorized by the statute to make the declaration. §2923.5 states that a notice of default “shall include a declaration from the mortgagee, beneficiary, or authorized agent that it has contacted the borrower…”

The Court of Appeal ruled that a borrower has a private right of action under § 2923.5 and is not required to tender the full amount of the mortgage as a prerequisite to filing suit, since that would defeat the purpose of the statute. Under the court’s narrow construction of the statute, §2923.5 merely adds a procedural step in the foreclosure process. Since the statute is not substantive, it is not preempted by federal law. The declaration specified in §2923.5 does not have to be signed under penalty of perjury. The borrower’s remedy is limited to getting a postponement of a foreclosure while the lender files a new notice of default that complies with §2923.5. If the lender ignores the statute and makes no attempt to contact the borrower before selling the property, the violation does not cloud the title acquired by a third party purchaser at the foreclosure sale. Therefore §2923.5 claims must be raised in court before the sale. It is a question of fact for the trial court to determine whether the lender actually attempted to contact the borrower before filing a notice of default. If the lender takes the property at the foreclosure sale, its title is not clouded by its failure to comply with the statute. Finally, the case is not suitable for class action treatment if the lender asserts that it attempted to comply with the statute because each borrower will present “highly-individuated facts.”

In a petition for review to the California Supreme Court, the Mabrys noted that more than 100 federal district court opinions have considered §2923.5 and an overwhelming majority have rejected a private right of action under the statute. The petition for review was denied.

After the case was remanded to the trial court, Mabry’s motion for preliminary injunction was granted. The trial court found that the Notice of Default contained the form language required by the statute, i.e. that the lender contacted the borrower, tried with due diligence to contact the borrower, etc. However, the declaration on the Notice of Default was not made under panalty of perjury, and therefore had no evidentiary value to show whether the defendant satisfied §2923.5

 

Moreno v. Ameriquest

Superior Court of California, Contra Costa County
Thomas Spielbauer, attorney for Gloria and Carlos Moreno

Complaint for declaratory relief and fraud against lender for misrepresenting the terms of the loan, promising fixed rate with one small step after two years both orally and in the Truth In Lending Statement. Loan was actually variable rate with negative amortization. Morenos would have qualified for fixed rate 5% for 30 years, but instead received an exploding 7% ARM. Notary rushed plaintiffs through signing of documents with little explanation. Complaint requests a declaration the note is invalid, unconscionable and unenforceable and the Notice of Trustees Sale is invalid.

 

Other State Courts

JPMorgan Chase Bank v. George, Case No. 10865/06

Arthur M. Schack, Supreme Court Judge, Kings County, New York
Edward Roberts, attorney for Gertrude George

 

Florida Judge tosses foreclosure lawsuit

Homeowners dispute who owns mortgage

by Steve Patterson
St. Augustine Record
June 15, 2010

Changing stories about who owns a mortgage and seemingly fresh evidence from a long-closed bank led a judge to throw out a foreclosure lawsuit. It’s the second time in as many months that Circuit Judge J. Michael Traynor has dismissed with prejudice a foreclosure case where homeowners disputed who owns the mortgage. Lawyers representing New York-based M&T Bank gave three separate accounts of the ownership, with documentation that kept changing.

“The court has been misled by the plaintiff from the beginning,” the judge wrote in his order. He added that documents filed by M&T’s lawyers seemed to contradict each other and “have changed as needed to benefit the plaintiff.”

The latest account was that Wells Fargo owned the note, and M&T was a servicer, a company paid to handle payments and other responsibilities tied to a mortgage. To believe that, the judge wrote, the “plaintiff is asking the court to ignore the documents filed in the first two complaints.” He added that Wells Fargo can still sue on its own, if it has evidence that it owns the mortgage.

More and more foreclosure cases are being argued on shaky evidence, said James Kowalski, a Jacksonville attorney who represented homeowners Lisa and Larry Smith in the fight over their oceanfront home. “I think it’s very representative of what the banks and their lawyers are currently doing in court,” Kowalski said.

He said lawyers bringing the lawsuits are often pressed by their clients to close the cases quickly. But it’s up to lawyers to present solid evidence and arguments. “We are supposed to be better than that,” Kowalski said. “We are supposed to be officers of the court.”

 

Exhibits

Department of Treasury and FDIC Report on WaMu, 4/16/2010

The Offices of Inspector General for Department of the Treasury and Federal Deposit Insurance Corporation released its evaluation of the regulatory oversight of Washington Mutual on April 16. The table of contents tells the story. WaMu pursued a high-risk lending strategy which included systematic underwriting weaknesses. They didn’t care if borrowers could pay back their loans. WaMu did not have adequate controls in place to manage its reckless “high-risk” strategy. OTS examiners found weaknesses in WaMu’s strategy, operations, and asset portfolio but looked the other way.

 

OCC Advisory Letters

How could the regulators allow this breakdown to happen? Was it really fraud when banks arranged loans for homeowners who would inevitably go into defrault, sold them to Wall Street to be bundled into securities, then purchased insurance so that the bank would collect the unpaid balances when the borrowers lost their homes? Did anybody really know that repealing Glass-Steagall and permitting Wall Street banks to get under the covers with Main Street banks would cause so many borrowers to lose their homes? The Glass-Steagall Act, enacted in 1933, barred any institution from acting as any combination of an investment bank, a commercial bank, and an insurance company. It was repealed in 1999, and the repercussions have been immense.

The Office of the Comptroller of the Currency (OCC) issued Advisory Letter 2000-7 only months after Glass-Steagall was repealed. It warned regulators to be on the lookout for indications of predatory or abusive lending practices, including Collateral or Equity Stripping – loans made in reliance on the liquidation value of the borrower’s home or other collateral, rather than the borrower’s independent ability to repay, with the possible or intended result of foreclosure or the need to refinance under duress.

Proving fraud is a painstaking process. Getting inside the mind of a crook requires a careful foundation, and admissable evidence is not always easy to obtain. Many courts will take judicial notice of official acts of the legislative, executive, and judicial departments of the United States and of any state of the United States. See Cal Evidence Code Sec. 452(c).

Here is a set of smoking guns in the form of a series of Advisory Letters issued by OCC:

The Washington Mutual logo prior to its acquis...

The Washington Mutual logo prior to its acquisition by JPMorgan Chase. (Photo credit: Wikipedia)

California Can Finally Say “Show Me The…..Note!”

26 Oct

Attorneys representing homeowners in all 50 states must undoubtedly feel that their states do not do enough to protect homeowners from preventable foreclosures. In non-judicial states like California, the lack of oversight in the foreclosure process at all levels has led to rampant abuse, fraud and at the very least, negligence. Our courts have done little to diffuse this trend with cases like Chilton v. Federal Nat. Mortg. Ass’n holding: “(n)on-judicial foreclosure under a deed of trust is governed by California Civil Code Section 2924 which relevant section provides that a “trustee, mortgagee or beneficiary or any of their authorized agents” may conduct the foreclosure process.” California courts have held that the Civil Code provisions “cover every aspect” of the foreclosure process, and are “intended to be exhaustive.” There is no requirement that the party initiating foreclosure be in possession of the original note.

Chilton and many other rulings refuse to acknowledge that homeowners have any rights to challenge wrongful foreclosures including Gomes v Countrywide, Fontenot v Wells Fargo, and a long line of tender cases holding that a plaintiff seeking to set aside a foreclosure sale must first allege tender of the amount of the secured indebtedness. Complicating matters further is the conflict between state, federal and bankruptcy cases regarding Civil Code 2932.5 and the requirement of recording an assignment prior to proceeding to foreclosure.
While the specific terms are still evolving, the http://www.nationalmortgagesettlement.com/ information website has released the Servicing Standards Highlights that set forth the basic changes that the banks and servicers have agreed to as part of the settlement. When the AG Settlement is finalized, it will be reduced to a judgment that can be enforced by federal judges, the special independent monitor Joseph Smith, federal agencies and Attorneys General. This judgment can be used by attorneys to define a standard and therefore allow us to fashion a remedy that will improve our chances of obtaining relief for our clients.

Lean Forward

Many have opined about the deficiencies in the AG Settlement, from the lack of investigation to inadequacy of the dollars committed to compensate for wrongful foreclosures, principal reduction or refinancing. The reality is, as tainted as it may be, the AG Settlement leaves us better off than were were for future cases. It does not however, address past wrongs in any meaningful way. The terms make it abundantly clear that this is not the settlement for compensation; if there is any remote possibility of compensation it must be sought in the OCC Independent Foreclosure Review and the homeowner must meet the extreme burden of proving financial harm caused by the wrongful foreclosure. For California, the AG Settlement at best, improves our ability to request crucial documents to challenge wrongful foreclosures which previously were difficult if not impossible to obtain. This will allow us to negotiate better loss mitigation options for clients.

Loan Modification 2008-2011

The homeowner submits an application 10 times, pays on 3 different trial plans, speaks to 24 different representatives who give him various inconsistent versions of status. After two years, and thousands of default fees later, he is advised that the investor won’t approve a modification and foreclosure is imminent. Actually, the truth was that the homeowner was in fact qualified for the modification, the data used for the NPV analysis was incorrect and the investor had in fact approved hundreds of modifications according to guidelines that were known to the servicer from the beginning. How could the AG Settlement not improve on this common scenario?

Foreclosure Rules
14 days prior to initiating foreclosure, the servicer must provide the homeowner with notice which must include:

facts supporting the bank’s right to foreclose
payment history
a copy of the note with endorsements
the identity of the investor
amount of delinquency and terms to bring loan current
summary of loss mitigation efforts
A prompt review of the 14 Day Pre Foreclosure Notice and investigation regarding the securitization aspects of the case can result in the filing of a lawsuit and request for TRO if all terms have not been complied with or the documents provided do not establish the right to foreclose. There will be no issue of tender, prejudice or show me the note that can be raised in opposition by defendants and this is an opportunity that we have not been afforded under current case law. Additionally, a loan level review will reveal improper fees and charges that can be challenged. Deviation from the AG Settlement Servicing Standards should be aggressively pursued through the proper complaint channels.

Loan Modification Guidelines

Notify the homeowner of all loss mitigation options
Servicer shall offer a loan modification if NPV positive
HAMP trial plans shall promptly be converted to permanent modifications
Servicer must review and make determination within 30 days of receipt of complete package
Homeowner must submit package within 120 days of delinquency to receive answer prior to referral to foreclosure (could be problematic since most homeowners are more than 120 days late)
After the loan has been referred to foreclosure, the homeowner must apply for a loan modification within 15 days before sale. Servicer must expedite review.
Servicer must cease all collection efforts while a complete loan modification package is under review or homeowner is making timely trial modification payments
Other significant terms include the requirement that the servicer maintain loan portals where the homeowner can check status which must be updated every ten days, assign a single point of contact to every loan, restriction on default fees and forced placed insurance, modification denials must state reasons and provide document support and the homeowner has 30 days to appeal a negative decision.

Short Sales Will Now Really Be Short

The rules regarding short sales will greatly increase the chances that short sales will be processed in a timely manner and accordingly, will result in more short sales being closed.

Banks/servicers must make short sale requirements public
Banks/servicers must provide a short sale price evaluation upon request by the homeowner prior to listing the property
Receipt of short sale packages must be confirmed and notification of missing documents must be provided within 30 days
Knowledge of all of the new requirements for processing foreclosures, loan modifications and short sales can greatly increase our chances of obtaining successful outcomes for clients. Resolution is the goal, and now, we may have leverage that did not exist before.

Tender rule “ouch” Donna Fields Goldstein.

26 Oct

I was reading tentatives while waiting for courtcall this morning, and saw the following, which may be helpful to y’all.  This is in Burbank, judge Donna Fields Goldstein.

How could a lady with a nice name like Donna be such a wench when it comes to this:

Case Number: EC056981    Hearing Date: May 25, 2012    Dept: B

Demurrer and Motion to Strike

Case Management Conference

The Complaint alleges that the Plaintiffs obtained a loan under a promissory note secured by a deed of trust that was recorded on their real property. The Plaintiffs sought a permanent modification of their loan. When the Plaintiffs could not get an answer from the Defendants regarding the status of a permanent modification, the Plaintiffs stopped making payments. The Defendant then issued a notice of default. The Plaintiffs again sought a modification, but the Defendant advised them that the Plaintiffs were not eligible. A notice of trustee’s sale was issued on August 29, 2011. The Plaintiffs’ home was sold on November 23, 2011. A notice to quit was served on the Plaintiffs on December 12, 2011. Plaintiff alleges the following causes of action in his Complaint:

1) Breach of Written Contract; 2) Breach of Covenant of Good Faith and Fair Dealing; 3) Estoppel; 4) Negligent Misrepresentation; 5) Negligence; 6) Violation of Business and Professions code section 17200; 7) Violation of Civil Code section 2923.6
8) Declaratory Relief; 9) Accounting

The Plaintiffs’ First Amended Complaint includes the following facts in the pleadings and in the exhibits attached to the pleadings:

1) the Plaintiff borrowed $410,000 under a promissory note secured by a deed of trust on their property;
2) a notice of default was recorded on August 17, 2010 on the Plaintiffs’ property that indicated that $13,253.55 was due as of August 16, 2010;
3) a notice of trustee’s sale was recorded on August 29, 2011; and
5) the property was sold on November 23, 2011 at a trustee’s sale to Aurora Loan Services, LLC.

This hearing concerns the demurrer of the Defendants, Aurora Loan Services, LLC and Aurora Bank FSB, to the First Amended Complaint. The Defendants argue that the Plaintiffs cannot maintain any of their claims because the Plaintiffs do not allege that they tendered the amount due. To plead any cause of action for irregularity in the sale procedure, there must be allegations showing that the plaintiff tendered the amount of the secured indebtedness to the defendant. Abdallah v. United Sav. Bank (1996) 43 Cal. App. 4th 1101, 1109 (affirming an order sustaining a demurrer without leave to amend in a case claiming that the foreclosure and sale of a home was improper). A valid tender must be nothing short of the full amount due the creditor. Gaffney v. Downey Sav. & Loan Ass’n (1988) 200 Cal. App. 3d 1154, 1165. The Court of Appeal found that the following summary of the tender rule describes this requirement:

The rules which govern tenders are strict and are strictly applied, and where the rules are prescribed by statute or rules of court, the tender must be in such form as to comply therewith. The tenderer must do and offer everything that is necessary on his part to complete the transaction, and must fairly make known his purpose without ambiguity, and the act of tender must be such that it needs only acceptance by the one to whom it is made to complete the transaction.
Id.

The underlying principle for the tender rule is that “equity will not interpose its remedial power in the accomplishment of what seemingly would be nothing but an idle and expensively futile act, nor will it purposely speculate in a field where there has been no proof as to what beneficial purpose may be subserved through its intervention.” Karlsen v. American Sav. & Loan Assn. (1971) 15 Cal. App. 3d 112, 118.

Further, this applies to any cause of action implicitly integrated with the voidable sale. Id. at 121. In Karlsen, the Court found that causes of action for breach of an oral agreement to delay the sale, for an accounting, and for a constructive trust failed because the plaintiff had not made a valid tender. In Arnolds Management Corp. v. Eischen (1984) 158 Cal. App. 3d 575, the Court found that causes of action for fraud and negligent misrepresentation based on the claim that the defendant had misrepresented the sale date failed because the plaintiff had not made a valid tender. The Court in Karlsen reasoned that absent an effective and valid tender, the foreclosure sale would become valid and proper. Karlsen, 15 Cal.App.3d at 121.

A review of the Plaintiffs’ First Amended Complaint reveals that each cause of action is implicitly integrated with the foreclosure proceeding:

1) The first cause of action for breach of contract claims that the foreclosure sale was caused because the Defendants breached an agreement to modify the loan;
2) The second cause of action for breach of the implied covenant of good faith and fair dealing claims that the foreclosure sale was caused because the Defendants breached an implied covenant in the agreement to modify the loan;
3) the third cause of action for estoppel claims that the foreclose sale was caused because the Defendants did not keep a promise to modify the loan;
4) the fourth cause of action for negligent misrepresentation claims that the foreclosure sale was caused because Defendants negligently misrepresented that the Plaintiffs would receive a permanent loan modification;
5) the fifth cause of action for negligence claims that the foreclosure sale was caused by the Defendants’ breach of a duty of care when they did not provide a permanent loan modification to the Plaintiffs;
6) the sixth cause of action for violation of Business and Professions code section 17200 claims that foreclosure sale was caused by the Defendants unfair business practice of depriving the Plaintiffs of their home and of monthly mortgage payments even though the Plaintiffs expected to obtain a permanent loan modification;
7) the seventh cause of action for violation of Civil Code section 2923.6 claims that the foreclosure sale violated Civil Code section 2923.6 because the Defendants did not provide a loan modification;
8) the eighth cause of action for declaratory relief claims that there is an actual dispute as to the ownership of the property because the foreclosure was wrongful; and
9) the ninth cause of action for an accounting seeks an accounting of the moneys paid and owing on the loan that was subject to the foreclosure proceedings.

Each of these causes of action is implicitly integrated with the foreclosure sale because each of them is based on allegations that the sale of the Plaintiffs’ property was improper. Accordingly, an essential element of each of the causes of action is an allegation that the Plaintiffs satisfied the tender rule.

A review of the Plaintiffs’ First Amended Complaint reveals that they did not plead that they tendered the amount due.

In their opposition, the Plaintiffs argue that they need not plead that they satisfied the tender rule because the tender rule is an equitable rule and their complaint includes legal claims. However, as noted above, to plead any cause of action for irregularity in the sale procedure, there must be allegations showing that the plaintiff tendered the amount of the secured indebtedness to the defendant. Abdallah v. United Sav. Bank (1996) 43 Cal. App. 4th 1101, 1109. There is no distinction between legal and equitable causes of action.

The Plaintiffs also argue that requiring the tender would be inequitable because the Defendants’ breach of contract and negligence caused the Plaintiffs to lose their home. Under California law, the tender rule does not apply when it would be inequitable, such as when the instrument is void. Fleming v. Kagan (1961) 189 Cal. App. 2d 791, 797. If the plaintiffs’ action attacks the validity of the underlying debt, a tender is not required since it would constitute an affirmation of the debt. Onofrio v. Rice (1997) 55 Cal.App.4th 413, 424. However, when the plaintiffs’ action claims that there was fraudulent conduct in the foreclosure procedure, then tender is required. See Arnolds Management Corp. v. Eischen (1984) 158 Cal. App. 3d 575 (holding that causes of action for fraud and negligent misrepresentation based on the claim that the defendant had misrepresented the sale date failed because the plaintiff had not made a valid tender).

There are no allegations that the deed of trust is void. There are no allegations that the underlying debt is void. Instead, the Plaintiffs’ claim is that the foreclosure occurred because the Defendants declined to provide a loan modification. This is not grounds to find that it would be inequitable to require a tender.

Further, the Plaintiffs’ allegations demonstrate that the foreclosure proceedings occurred because they stopped making payments on their loan. In paragraph 17, the Plaintiffs allege the following:

Plaintiffs stopped making payments when they could not get an answer from Defendants regarding the status of a permanent modification following the successful completion of their trial modification.

This demonstrates that the foreclosure proceedings occurred because the Plaintiffs did not make the required payments on the loan.

As noted above, the principle underlying the tender rule is that “equity will not interpose its remedial power in the accomplishment of what seemingly would be nothing but an idle and expensively futile act, nor will it purposely speculate in a field where there has been no proof as to what beneficial purpose may be subserved through its intervention.” Karlsen v. American Sav. & Loan Assn. (1971) 15 Cal. App. 3d 112, 118. If the Plaintiffs cannot tender the amount that they owe on their note, there is no beneficial purpose to intervening because the Defendants would simply begin the foreclosure proceedings again. This would result only in an unjust benefit to the Plaintiffs, who would continue to stay in a property that they agreed to use as security for a loan on which they stopped making payments. Accordingly, it is equitable to require the Plaintiffs to satisfy the tender rule in their pleadings.

Therefore, the Court sustains the Defendants’ demurrer to each cause of action in the First Amended Complaint.

The Court does not grant leave to amend because the copy of the loan modification agreement contradicts the allegations in the complaint. Allegations contradicted by the exhibits to the complaint or by matters of which judicial notice may be taken are not assumed true for the purposes of a demurrer. Vance v. Villa Park Mobilehome Estates (1995) 36 Cal. App. 4th 698, 709. Such facts appearing in exhibits attached to the complaint are given precedence over inconsistent allegations in the complaint. Dodd v. Citizens Bank (1990) 222 Cal.App.3d 1624, 1627.

In the third cause of action for estoppel, the Plaintiffs allege that the Defendant promised to provide a loan modification. The Plaintiff alleges in paragraph 50 that the Defendant made a written promise to provide the Plaintiffs with a permanent modification provided that the Plaintiffs made all of the payments under a trial modification.

However, a review of the loan modification agreement, a copy of which is attached as untabbed exhibit A to the First Amended Complaint, reveals that the Plaintiffs’ allegations are inconsistent with the written promise that was actually made in the agreement. Paragraph 3 on page 2 of the agreement, which is labeled “The Modification”, provides that the Defendant will send a modification agreement if 1) the Plaintiff’s representations in section 1 of the agreement are true, 2) the Plaintiff complies with the requirements in section 2 of the agreement, 3) the Plaintiff provides all required information and documents, and 4) the lender determinates that the Plaintiff qualifies. This demonstrates that the Defendant agreed to provide a modification if four conditions were satisfied. This is inconsistent with the Plaintiffs’ allegation that the Defendant promised to provide a modification if the Plaintiffs made all their payments under the trial modification.
Further, the cause of action for promissory estoppel must plead the following elements:

1) the defendant made a promise;
2) the defendant should have reasonably expected that the promise will induce action or forbearance of a definite and substantial character on the part of the plaintiff;
3) the plaintiff was induced into an action or forbearance; and
4) injustice can be avoided only by enforcement of the promise.
C & K Engineering Contractors v. Amber Steel Co. (1978) 23 Cal. 3d 1, 7-8.

Promissory estoppel is a doctrine that uses equitable principles to replace the requirement that both parties provide consideration to make an agreement legally enforceable. Id. For example, in C&K Engineering, the plaintiff solicited bids from defendant and other subcontractors for the installation of reinforcing steel in the construction of a waste water treatment plant. The plaintiff included defendant’s bid in its master bid to the public sanitation district, which accepted the bid. The defendant then refused to perform in accordance with its bid because it claimed that it had miscalculated its bid. The defendant argued that its bid did not create an enforceable contract because the plaintiff has not paid any money to the defendant.
The plaintiff brought an action to recover damages for the defendant’s refusal to perform in accordance with its bid. The Court of Appeal found that the doctrine of promissory estoppel applied to make the defendant’s bid enforceable. Promissory estoppel was shown in the circumstances because the defendant had made the bid, the defendant could reasonable expect that its bid would induce the plaintiff to act, the plaintiff was induced to act by including the bid in its master bid for the project, and injustice could be avoided only by enforcing the defendant’s bid. The doctrine of promissory estoppel was necessary to make the bid enforceable because neither party had provided consideration.

As mentioned above, the purpose of promissory estoppel is to make a promise binding, under certain circumstances, without consideration in the usual sense of something bargained for and given in exchange. Youngman v. Nevada Irrigation Dist. (1969) 70 Cal. 2d 240, 249. The doctrine is inapplicable, therefore, if the promisee’s performance was requested at the time the promisor made his promise and that performance was bargained for. Id.

In Youngman, the Supreme Court found that no promissory estoppel claim was pleaded because the allegations showed that the plaintiff had provided consideration to the defendant. The plaintiff alleged that the defendant promised him that he would be granted a merit step increase in his pay each year and that plaintiff relied upon this promise in accepting employment with the defendant, continuing in its employ, and refraining from accepting a job elsewhere. Under these allegations that the defendant’s promise that the plaintiff would receive an annual raise was part of the bargain under which the plaintiff entered the defendant’s employ. The plaintiff provided consideration when he remained in his position and rendered satisfactory service to the defendant under the employment contract. The Court found that there was no need to rely upon the doctrine of promissory estoppel in these circumstances.

The same defect exists in the pending case. The modification agreement requested the Plaintiff to make payments under the trial modification agreement and to provide information and documents. The Plaintiff’s performance was bargained for because it was required in order to satisfy the requirements needed to obtain the final modification of the loan. This demonstrates that the Plaintiff’s performance was requested at the time the Defendant made the promise to make the modification and that the Plaintiff’s performance was bargained for. Accordingly, the doctrine of promissory estoppel is inapplicable in this case and the Court does not grant leave to amend the third cause of action.

Under California law, the Plaintiffs must show in what manner they can amend their complaint and how that amendment will change the legal effect of their pleading. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiffs cite this legal authority on page 10 of their opposition papers. However, they do not then follow this legal authority by presenting the means by which they can amend their pleading in order to satisfy the tender rule. At the hearing, if the Plaintiffs cannot demonstrate that they can tender the amount owed, then they cannot plead an essential element of their causes of action and the Court will not grant leave to amend.

Further, the Court does not grant leave to amend the seventh cause of action for violation of Civil Code section 2923.6 because section 2923.6 does not impose an affirmative duty on the Defendant to modify any loan. See Mabry v. Superior Court (2010) 185 Cal. App. 4th 208, 222 (finding that section 2923.6 “merely expresses the hope that lenders will offer loan modifications on certain terms). Accordingly, the Plaintiffs cannot plead a claim for violation of section 2923.6 because the Defendant’s alleged failure to provide a loan modification cannot violate the statute.

In addition, the Court does not grant leave to amend the ninth cause of action for an accounting because the Plaintiffs do not identify a balance due from the Defendants to the Plaintiffs. In order to plead a claim for an accounting, the Plaintiffs must that the Defendants caused losses and are liable to the Plaintiffs and that the true amounts of losses owed to the Plaintiffs cannot be ascertained without an accounting. Kritzer v. Lancaster (1950) 96 Cal. App. 2d 1, 6 to 7. Here, there are no allegations that the Defendants owe money to the Plaintiffs. Instead, this case arises because the Plaintiffs owe money to the Defendants and their house was sold because they did not make the required payments. Accordingly, no cause of action for accounting can be pleaded against the Defendants because they do not owe money to the Plaintiffs.

Finally, in light of the recommended ruling, the Court takes the motion to strike off calendar.

Attorney General Kamala D. Harris Announces Final Components of California Homeowner Bill of Rights Signed into Law

2 Oct

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Tuesday, September 25, 2012 4:21 PM
To: Charles Cox
Subject: Attorney General Kamala D. Harris Announces Final Components of California Homeowner Bill of Rights Signed into Law

State of California Department of Justice, Office of the Attorney General Kamala D. Harris
News ReleaseSeptember 25, 2012

For Immediate Release
(415) 703-5837

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Print Version

Attorney General Kamala D. Harris Announces Final Components of California Homeowner Bill of Rights Signed into Law

SACRAMENTO — Attorney General Kamala D. Harris today announced that the final parts of the California Homeowner Bill of Rights have been signed into law by Governor Jerry Brown.

“California has been the epicenter of the foreclosure and mortgage crisis,” said Attorney General Harris. “The Homeowner Bill of Rights will provide basic fairness and transparency for homeowners, and improve the mortgage process for everyone.”

The Governor signed:

  • Senate Bill 1474 by Senator Loni Hancock, D-Berkeley, which gives the Attorney General’s office the ability to use a statewide grand jury to investigate and indict the perpetrators of financial crimes involving victims in multiple counties.
  • Assembly Bill 1950, by Assemblymember Mike Davis, D-Los Angeles, which extends the statute of limitations for prosecuting mortgage related crimes from one year to three years, giving the Department of Justice and local District Attorneys the time needed to investigate and prosecute complex mortgage fraud crimes.
  • Assembly Bill 2610 by Assemblymember Nancy Skinner, D-Berkeley, which requires purchasers of foreclosed homes to give tenants at least 90 days before starting eviction proceedings. If the tenant has a fixed-term lease, the new owner must honor the lease unless the owner demonstrates that certain exceptions intended to prevent fraudulent leases apply.

Previously signed into law were three other components of the Homeowner Bill of Rights. Assembly Bill 2314, by Assemblymember Wilmer Carter, D-Rialto, provides additional tools to local governments and receivers to fight blight caused by multiple vacant homes in neighborhoods.

Two additional bills, which came out of a two-house conference committee, provide protections for borrowers and struggling homeowners, including a restriction on dual-track foreclosures, where a lender forecloses on a borrower despite being in discussions over a loan modification to save the home. The bills also guarantee struggling homeowners a single point of contact at their lender with knowledge of their loan and direct access to decision makers.

All aspects of the California Homeowner Bill of Rights will take effect on January 1, 2013.

# # #You may view the full account of this posting, including possible attachments, in the News & Alerts section of our website at: http://oag.ca.gov/news/press-releases/attorney-general-kamala-d-harris-announces-final-components-california-homeown-0
© 2012 Department of Justice
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Fighting the eviction with forms and pleadings a recent case

24 Sep

Paragas tble contents mot lemine

Mot lemine exclude evidence in trial

Mot lemine 2 Peragas

Mot in lemine 3

Mot in lemine 4

Mot in lemine 5

Mot in lemine 6

Peragas oppos settlement statement

Plaintff statement of case

Plaintiff witness list

Plaintiff witness list

Plaintiff jury trial brief

Plaintiff req for judicial notice

Mot in liemine to preclude Peragas

A. Peragas opp to mot to liminane

sepstatementparagas

proposedsmjorderparagas

opposition to def’s MIL to preclude TDUS

paragas-oppositions

PARAGAS-RJN RE MOTION IN LIMINE

Peragas order deny MSJ

stipulated-factsparagas

trialbrief-paragas

Here is what not to do Get an injunction, then not post the Bond, then file a frivilious appeal

3 Sep

Filed 4/16/12

CERTIFIED FOR PUBLICTION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

JANE BROWN,

Plaintiff and Appellant,

v.

WELLS FARGO BANK, NA,

Defendant and Respondent.

2d Civil No. B233679

(Super. Ct. No. 56-2010-00378817-CU-OR-VTA)

(Ventura County)

Some appeals are filed to delay the inevitable.  This is such an appeal.  It is frivolous and was ” ‘dead on arrival’ at the appellate courthouse.”  (Estate of Gilkison (1998) 65 Cal.App.4th 1443, 1449.)

Jane Brown was/is in default on a home mortgage.  Foreclosure proceedings were commenced and she filed suit to prevent the sale of her home.  She appeals from a June 8, 2011 order dissolving a preliminary injunction and allowing the sale to go forward.  This was attributable to her failing to deposit $1,700 a month into a trust account as ordered by the trial court.  The preliminary injunction required that the money be deposited in lieu of an injunction bond.  (Code Civ. Proc., § 529, subd. (a).)

In her opening brief appellant claims that the order dissolving the injunction is invalid because it issued “ex parte.”  After calendar notice was sent to him, trial and appellate counsel, Jason W. Estavillo, asked that we dismiss the appeal.  We will deny this request.  We will affirm the judgment and refer the matter to the California State Bar for consideration of discipline.

Facts and Procedural History

In 2010 appellant defaulted on her $480,000 World Savings Bank FSB loan secured by a deed of trust.[1]  Wachovia Mortgage, a division of Wells Fargo Bank NA (respondent) recorded a Notice of Trustee’s Sale on May 12, 2010.  The trustee’s sale was postponed to August 9, 2010.

Appellant sued for declaratory/injunctive relief on August 5, 2010.  The trial court granted a temporary restraining order to stop the trustee’s sale.  On September 7, 2010, the trial court granted a  preliminary injunction on condition that appellant deposit $1,700 a month in a client trust account in lieu of a bond.

On June 2, 2011, respondent filed an ex parte application to dissolve the preliminary injunction  because appellant had not made a single payment.  It argued that “we’re facing a deadline under the trustee sale date of next week.  And we have no reason to believe these payments . . . will be made.  She has not paid anything on her mortgage in over two years.  There is no reason to believe she’s going to make this payment.  It’s all been simply a delay tactic.”

Appellant, represented by Mr. Estavillo, appeared at the June 3, 2011 ex parte hearing and argued that the proposed order should not issue ex parte.  The trial court agreed, set a June 8, 2011 hearing date, and told appellant’s trial counsel “to scramble on this.  Find out from your client what she has done or hasn’t done.  And I should tell you that one of the myths that sometimes creeps into this [type of] case is that if the plaintiff is successful, they end up with a free house.  It doesn’t work that way.”  Counsel told the court that he would “make sure” the payments would “get made.”

On June 7, 2011, appellant filed opposition papers but failed to explain why the money was not deposited in lieu of a bond.  Respondent argued that appellant has “not complied with the preliminary injunction.  They have not made a payment.  There is nothing in there about their ability to make the payment . . . .  They have defied [the] court order since December and they continue to do so.”

The trial court dissolved the preliminary injunction and signed the proposed order.   The June 8, 2011 order provides:  “The foreclosure sale scheduled for June 10, 2011 may go forward as scheduled.”

On June 8, 2011, appellant filed a notice of appeal.  The filing of the notice of appeal works as a “stay” of the trial court’s order and stops the trustee’s sale.  (Code Civ. Proc., § 916, subd. (a); Royal Thrift & Loan Co. v. County Escrow, Inc. (2004) 123 Cal.App.4th 24, 35-36.)

Frivolous Appeal

In the opening brief appellant’s counsel feebly argues that respondent failed to make a good cause showing for ex parte relief and that her due process rights were violated.  She prays for reversal of the order allowing sale of her home.  But rather than granting ex parte relief, the trial court agreed to set the matter for hearing.  So, the premise to the sole contention on appeal, the ex parte nature of the order, is false.  Moreover, at the noticed hearing, appellant expressly waived any claim that the hearing was not properly noticed or was irregular.  (Eliceche v. Federal Land Bank Assn. (2002) 103 Cal.App.4th 1349, 1375.)  Waiver aside, the trial court had good cause to “fast track” the hearing.  The Notice of Trustee’s Sale was about to expire and appellant had not deposited money in lieu of an injunction bond, as ordered.  Code of Civil Procedure section 529, subdivision (a) required that the preliminary injunction be dissolved.

Appellant makes no showing that the trial court abused its discretion in dissolving the preliminary injunction.  Nor does she even suggest that there has been a miscarriage of justice.  She complains that the order has the words “ex parte” in the caption.  This is “form over substance” argument.  (Civ. Code, § 3528.)  On appeal, the substance and effect of the order controls, not its label.  (Crtizer v. Enos (2010) 187 Cal.App.4th 1242, 1250; Viejo Bancorp, Inc. v. Wood (1989) 217 Cal.App.3d 200, 205.)

Conclusion

The appellate courts take a dim view of a frivolous appeal.  Here, with the misguided help of counsel, the trustee’s sale was delayed for over two years.  Use of the appellate process solely for delay is an abuse of the appellate  process.  (In re Marriage of Flaherty(1982) 31 Cal.3d 637, 646; see also In re Marriage of Greenberg  (2011) 194 Cal.App.4th 1095, 1100.)   We give appellant the benefit of the doubt. But we have no doubt about appellate counsel’s decision to bring and maintain this appeal, and at the eleventh hour, seek a dismissal.  No viable issue is raised on appeal and it is frivolous as a matter of law.  (See e.g. In re Marriage of Greenberg, supra, 194 Cal.Ap.4th 1095.)  “[R]espondent is not the only person aggrieved by this frivolous appeal.  Those litigants who have nonfriviolous appeals are waiting in line while we process the instant appeal.”  (Estate of Gilkison, supra, 65 Cal.App.4th at p. 1451.)  Respondent has not asked for monetary sanctions.  We have not issued an order to show cause seeking sanctions payable to the court.  But we do not suffer lightly the abuse of the appellate process.

Appellant’s request to dismiss the appeal is denied.  The June 8, 2010 order dissolving the preliminary injunction is affirmed.  Respondent is awarded costs on appeal.  If there is a standard clause awarding attorney fees to the prevailing party in the note and/or deed of trust, respondent is also awarded reasonable attorney fees in an amount to be determined by the trial court on noticed motion.  The clerk of this court is ordered to send a copy of this opinion to the California State Bar for consideration of discipline.  We express no opinion on what discipline, if any, is to be imposed.  (In re Mariage of Greenberg, supra.)

CERTIFIED FOR PUBLICATION.

YEGAN, J.

We concur:

GILBERT, P.J.

PERREN, J.

Henry Walsh, Judge

Superior Court County of Ventura

______________________________

                        Jason W. Estavillo, for Appellant

Robert A. Bailey; Anglin, Flewell, Rasmusen, Campbell & Trytten, for Respondent.


[1] After World Savings Bank FSB issued the loan in 2006, it changed its name to Wachovia Mortgage FSB.  Wachovia Mortgage merged into and became a division of Wells Fargo Bank NA.

What is a Wrongful Foreclosure Action?

29 Aug

The pretender lender does not have the loan and did not invest any of the servicers money. Yet these frauds are occurring every day. They did not loan you the money yet they are the ones foreclosing, taking the bail out money, the mortgage insurance, and then throwing it back on the investor for the loss. We could stop them if a few plaintiffs where awarded multi million dollar verdicts for wrongful foreclosure.
A wrongful foreclosure action typically occurs when the lender starts a non judicial foreclosure action when it simply has no legal cause. Wrongful foreclosure actions are also brought when the service providers accept partial payments after initiation of the wrongful foreclosure process, and then continue on with the foreclosure process. These predatory lending strategies, as well as other forms of misleading homeowners, are illegal.

The borrower is the one that files a wrongful disclosure action with the court against the service provider, the holder of the note and if it is a non-judicial foreclosure, against the trustee complaining that there was an illegal, fraudulent or willfully oppressive sale of property under a power of sale contained in a mortgage or deed or court judicial proceeding. The borrower can also allege emotional distress and ask for punitive damages in a wrongful foreclosure action.
Causes of Action

Wrongful foreclosure actions may allege that the amount stated in the notice of default as due and owing is incorrect because of the following reasons:

Incorrect interest rate adjustment
Incorrect tax impound accounts
Misapplied payments
forbearance agreement which was not adhered to by the servicer
Unnecessary forced place insurance,
Improper accounting for a confirmed chapter 11 or chapter 13 bankruptcy plan.
Breach of contract
Intentional infliction of emotional distress
Negligent infliction of emotional distress
Unfair Business Practices
Quiet title
Wrongful foreclosure

Injunction

Any time prior to the foreclosure sale, a borrower can apply for an injunction with the intent of stopping the foreclosure sale until issues in the lawsuit are resolved. The wrongful foreclosure lawsuit can take anywhere from ten to twenty-four months. Generally, an injunction will only be issued by the court if the court determines that: (1) the borrower is entitled to the injunction; and (2) that if the injunction is not granted, the borrower will be subject to irreparable harm.
Damages Available to Borrower

Damages available to a borrower in a wrongful foreclosure action include: compensation for the detriment caused, which are measured by the value of the property, emotional distress and punitive damages if there is evidence that the servicer or trustee committed fraud, oppression or malice in its wrongful conduct. If the borrower’s allegations are true and correct and the borrower wins the lawsuit, the servicer will have to undue or cancel the foreclosure sale, and pay the borrower’s legal bills.
Why Do Wrongful Foreclosures Occur?

Wrongful foreclosure cases occur usually because of a miscommunication between the lender and the borrower. This could be as a result of an incorrectly applied payment, an error in interest charges and completely inaccurate information communicated between the lender and borrower. Some borrowers make the situation worse by ignoring their monthly statements and not promptly responding in writing to the lender’s communications. Many borrowers just assume that the lender will correct any inaccuracies or errors. Any one of these actions can quickly turn into a foreclosure action. Once an action is instituted, then the borrower will have to prove that it is wrongful or unwarranted. This is done by the borrower filing a wrongful foreclosure action. Costs are expensive and the action can take time to litigate.
Impact

The wrongful foreclosure will appear on the borrower’s credit report as a foreclosure, thereby ruining the borrower’s credit rating. Inaccurate delinquencies may also accompany the foreclosure on the credit report. After the foreclosure is found to be wrongful, the borrower must then petition to get the delinquencies and foreclosure off the credit report. This can take a long time and is emotionally distressing.

Wrongful foreclosure may also lead to the borrower losing their home and other assets if the borrower does not act quickly. This can have a devastating affect on a family that has been displaced out of their home. However, once the borrower’s wrongful foreclosure action is successful in court, the borrower may be entitled to compensation for their attorney fees, court costs, pain, suffering and emotional distress caused by the action. Fortunately, these wrongful foreclosure incidences are rare. The majority of foreclosures occur as a result of the borrower defaulting on their mortgage payments.

Win the house back at the eviction on summary judgement

26 Aug

Here goes

Timothy L. McCandless, Esq., SBN 147715
LAW OFFICES OF TIMOTHY L. MCCANDLESS
820 Main Street, Suite #1
P.O. Box 149
Martinez, California 94553

Telephone: (925) 957-9797
Facsimile: (925) 957-9799
Email: legal@prodefenders.com

Attorney for Defendant(s):

SUPERIOR COURT OF THE STATE OF CALIFORNIA

IN AND FOR THE COUNTY OF SAN MATEO

SOUTHERN BRANCH – HALL OF JUSTICE & RECORDS

FEDERAL HOME LOAN MORTGAGE
CORPORATION, ITS ASSIGNEES
AND/OR SUCCESSORS,

Plaintiff(s),

VS.

; and DOES 1 -10, Inclusive,

Defendant(s)

CASE NO:

MEMORANDUM OF POINTS AND
AUTHORITIES IN SUPPORT OF MOTION
FOR SUMMARY JUDGMENT BY
DEFENDANT

[Filed concurrently with: Notice of Motion and
Motion for Summary Judgment by Defendant;
Declaration of Alexander B. Paragas in Support
of Motion for Summary Judgment by
Defendant; Defendant’s Separate Statement of
Undisputed Facts and Supporting Evidence on
Motion for Summary Judgment; [Proposed]
Order]

Hearing’s:
Date : September X, 2012
Time : X:XX a.m.
Dept. : Law and Motions
Reservation No.:

Defendant and Movant herein,  (“Defendant”), submits the
following Memorandum of Points and Authorities in Support of his Motion for Summary

Judgment against Plaintiff FEDERAL HOME LOAN MORTGAGE CORPORATION, ITS
ASSIGNEES AND/OR SUCCESSORS,(hereinafter “FHLMC”)(“Plaintiff”).

POINTS AND AUTHORITIES
I
FACTUAL BACKGROUND OF THIS LITIGATION

On or about January 24, 2008, Defendant executed an “Adjustable Rate Note” promising to
pay INDYMAC BANK, F.S.B. (hereinafter “INDYMAC”)1, the sum of $417,000.00, by monthly
payment commencing February 1, 2008.
The Deed of Trust (“DOT”) and the Note are between Defendant, Defendant’s wife Mrs.
Paragas and INDYMAC, Plaintiff was never a signatory to this Note, or DOT. A true and correct
copy of DOT and Adjustable Rate Rider is attached to the Declaration of Alexander B. Paragas
and incorporated herein as Exhibit “1”.
The issue is does Plaintiff has a right as a stranger to the Note to foreclose on the Note and
DOT that was not in its name and for which Plaintiff was not party to the Note or financing
transaction nor a disclosed beneficiary by virtue of a recorded assignment.
Furthermore Defendant alleges that MORTGAGE ELECTRONIC REGISTRATION
SYSTEMS INC., a/k/a MERSCORP, INC. (hereinafter “MERS”) was not listed anywhere on his
Note executed at the same time as DOT. Furthermore Defendant is informed and believes that
directly after INDYMAC caused MERS to go on title as the “Nominee Beneficiary” this is

1 Independent National Mortgage Corporation “INDYMAC” before its failure was the largest savings and loan association in the
Los Angeles area and the seventh largest mortgage originator in the United States. The failure of INDYMAC on July 11, 2008, was the
fourth largest bank failure in United States history, and the second largest failure of a regulated thrift.

The primary causes of INDYMAC’s failure were largely associated with its business strategy of originating and securitizing Alt-
A loans on a large scale. During 2006, INDYMAC originated over $90 billion of mortgages. INDYMAC’s aggressive growth strategy, use
of Alt-A and other nontraditional loan products, insufficient underwriting, credit concentrations in residential real estate in the California
and Florida markets, and heavy reliance on costly funds borrowed from the Federal Home Loan Bank (FHLB) and from brokered deposits,
led to its demise when the mortgage market declined in 2007. As an Alt-A lender, INDYMAC’s business model was to offer loan products
to fit the borrower’s needs, using an extensive array of risky option-adjustable-rate-mortgages (option ARMs), subprime loans, 80/20 loans,
and other nontraditional products. Ultimately, loans were made to many borrowers who simply could not afford to make their payments.
The thrift remained profitable only as long as it was able to sell those loans in the secondary mortgage market.

When home prices declined in the latter half of 2007 and the secondary mortgage market collapsed, INDYMAC was forced to
hold $10.7 billion of loans it could not sell in the secondary market. Its reduced liquidity was further exacerbated in late June 2008 when
account holders withdrew $1.55 billion or about 7.5% of INDYMAC’s deposits. During this time INDYMAC’s financial situation was
unraveling at the seams, culminating on July 11, 2008 when INDYMAC was placed into conservatorship by the Federal Deposit Insurance
Company “FDIC” due to liquidity concerns. A bridge bank, INDYMAC FEDERAL BANK, F.S.B., Defendant in the instant action, was
established to assume control of INDYMAC’s assets and secured liabilities, and the bridge bank was put into conservatorship under the
control of the FDIC.

On March 19, 2009 the Acting Director of Office of Thrift Supervision “OTS” replaced the FDIC as conservator for INDYMAC
pursuant to Section 5(d)(2)(C) of the Home Owners’ Loan Act (HOLA), 12 U.S.C. 1464(d)(2)(C); and appointed the FDIC as the receiver
for INDYMAC pursuant to Section 5(d)(2) of HOLA, 12 U.S.C. 1464(d)(2) and Section 11(c)(5) of the FDIA, 12 U.S.C. 1821(c)(5).

As a result of the OTS Order, INDYMAC became an “inactive institution” on March 19, 2009, the very same day that the Order
was issued. In other words, INDYMAC, as a defunct corporation, was no longer in existence as of March 19, 2009.

routinely done in order to hide the true identity of the successive Beneficiaries when and as the
loan was sold.
Based upon published reports, including MERS’ web site, Defendant believes and hereon
allege, MERS does not: (1) take applications for, underwrite or negotiate mortgage loans; (2)
make or originate mortgage loans to consumers; (3) extend credit to consumers; (4) service
mortgage loans; or (5) invest in mortgage loans.
MERS is used by Plaintiff and foreclosing entities to facilitate the unlawful transfers or
mortgages, unlawful pooling of mortgages and the injection into the United States banking
industry of un-sourced (i.e. unknown) funds, including, without limitation, improper off-shore
funds. Defendant is informed and thereon believes and alleges that MERS has been listed as
beneficiary owner of more than half the mortgages in the United States. MERS is improperly
listed as beneficiary owner of Defendant’s mortgage.
Nationwide, there are courts requiring banks that claim to have transferred mortgages to MERS
to forfeit their claim to repayment of such mortgages.
MERS’ operations undermine and eviscerate long-standing principles of real property law,
such as the requirement that any person who seeks to foreclose upon a parcel of real property: (1)
be in possession of the original Note and mortgage; and (2) possess a written assignment giving it
rights to the payments due from borrower pursuant to the mortgage and Note.
The Plaintiff and its agents did not want to pay the fees associated with recording mortgages
and they did not wanted to bother with the trouble of keeping track of the originals. That is the
significance of the word ‘Electronic’ in Mortgage Electronic Registration Systems, Inc. The
undermined long-established rights and sabotaged the judicial process, eliminating,
“troublesome” documentation requirements. While conversion to electronic loan documentation
may eventually be implemented, it will ultimately be brought about only through duly enacted
legislation which includes appropriate safeguards and counterchecks.
Upon information and belief:
a) MERS is not the original lender for Defendant’s loan;
b) MERS is not the creditor, beneficiary of the underlying debt or an assignee
under the terms of Defendant’s Promissory Note;
c) MERS does not hold the original Defendant’s Promissory Note, nor has it ever
held the originals of any such Promissory Note;

d) At all material times, MERS was unregistered and unlicensed to conduct
mortgage lending or any other type or real estate or loan business in the State of
California and has been and continues to knowingly and intentionally
improperly record mortgages and conduct business in California and elsewhere
on a systematic basis for the benefit of the Plaintiff and other lenders.
Defendant initiated loan modification negotiation efforts with ONEWEST BANK, F.S.B.,
(hereinafter “ONEWEST”) on or about November 2010, after experiencing unforeseen financial
hardship. Defendant believed that his loan servicer would be willing to avoid a foreclosure since
he and his wife Mrs. Paragas were willing to tender unconditionally but needed the monthly
payments restructured to reflect the downturn in their monthly gross income, and reflect the
current market conditions.
Despite Defendant’s efforts, ONEWEST has refused to work in any reasonable way to modify
the loan or avoid foreclosure sale. Furthermore ONEWEST is presently bound by a Consent
Order, WN-11-0112 , with the United States of America Department of the Office of Thrift
Supervision related to its initiation and handling of foreclosure proceedings. The Consent Order is
based in part on foreclosure affidavits that have been found to be false. ONEWEST presently
manages approximately 141 billion dollars in residential mortgage loans in which it has litigated
numerous wrongful foreclosure proceedings and initiated non-judicial foreclosure proceedings
without proper standing.
The challenged foreclosure process is based upon several Assignments of DOT.
a) First Assignment executed and effective January 3, 2011, a true and correct
copy of the Assignment of DOT is attached to the Declaration of Alexander B.
Paragas and incorporated herein as Exhibit “2”;
b) Second Assignment executed and effective May 24, 2011, a true and correct
copy of the Assignment of DOT is attached to the Declaration of Alexander B.
Paragas and incorporated herein as Exhibit “3”; and
c) Third Assignment executed and effective October 3