Fix Income Inequality with $10 million Loans for Everyone the 99 solution

“I wonder how many audience members know that Bair’s plan is more or less exactly the revenue model for all of America’s biggest banks. You go to the Fed, get a buttload of free money, lend it out at interest (perversely enough, including loans right back to the U.S. government), then pocket the profit.” Matt Taibbi

From Rolling Stone’s Matt Taibbi on Sheila Bair’s Sarcastic Piece

I hope everyone saw ex-Federal Deposit Insurance Corporation chief Sheila Bair’s editorial in the Washington Post, entitled, “Fix Income Inequality with $10 million Loans for Everyone!” The piece might have set a world record for public bitter sarcasm by a former top regulatory official.

In it, Bair points out that since we’ve been giving zero-interest loans to all of the big banks, why don’t we do the same thing for actual people, to solve the income inequality program? If the Fed handed out $10 million to every person, and then got each of those people to invest, say, in foreign debt, we could all be back on our feet in no time:

Under my plan, each American household could borrow $10 million from the Fed at zero interest. The more conservative among us can take that money and buy 10-year Treasury bonds. At the current 2 percent annual interest rate, we can pocket a nice $200,000 a year to live on. The more adventuresome can buy 10-year Greek debt at 21 percent, for an annual income of $2.1 million. Or if Greece is a little too risky for you, go with Portugal, at about 12 percent, or $1.2 million dollars a year. (No sense in getting greedy.)

Every time I watch a Republican debate, and hear these supposedly anti-welfare crowds booing the idea of stiffer regulation of Wall Street, I wonder how many audience members know that Bair’s plan is more or less exactly the revenue model for all of America’s biggest banks. You go to the Fed, get a buttload of free money, lend it out at interest (perversely enough, including loans right back to the U.S. government), then pocket the profit.

Logo of the United States Federal Deposit Insu...
Logo of the United States Federal Deposit Insurance Corporation, which incorporates the seal. (Photo credit: Wikipedia)

Considering that we now know that the Fed gave out something like $16 trillion in secret emergency loans to big banks on top of the bailouts we actually knew about, you might ask yourself: How are these guys in financial trouble? How can they not be making mountains of money, risk-free? But they are in financial trouble:

• We’re about to see yet another big blow to all of the usual suspects – Goldman, Citi, Bank of America, and especially Morgan Stanley, all of whom face potential downgrades by Moody’s in the near future.

We’ve known this was coming for some time, but the news this week is that the giant money-managing firm BlackRock is talking about moving its business elsewhere. Laurence Fink, BlackRock’s CEO, told the New York Times: “If Moody’s does indeed downgrade these institutions, we may have a need to move some business around to higher-rated institutions.”

It’s one thing when Zero Hedge, William Black, myself, or some rogue Fed officers in Dallas decide to point fingers at the big banks. But when big money players stop trading with those firms, that’s when the death spirals begin.

Morgan Stanley in particular should be sweating. They’re apparently going to be downgraded three notches, where they’ll be joining Citi and Bank of America at a level just above junk. But no worries: Bank CFO Ruth Porat announced that a three-level downgrade was “manageable” and that only losers rely totally on agencies like Moody’s to judge creditworthiness. “A lot of clients are doing their own credit work,” she said.

• Meanwhile, Bank of America reported its first-quarter results yesterday. Despite that massive ongoing support from the Fed, it earned just $653 million in the first quarter, but astonishingly the results were hailed by most of the financial media as good news. Its home-turf paper, the San Francisco Chronicle, crowed that BOA “Posts Higher Profits As Trading Results Rebound.” Bloomberg, meanwhile, summed up results this way: “Bank of America Beats Analyst Estimates As Trading Jumps.”

But the New York Times noted that BOA’s first-quarter profit of $653 million was down from $2 billion a year ago, and paled compared to results of more successful banks like Chase and Wells Fargo.

Zero Hedge, meanwhile, posted an amusing commentary on BOA’s results, pointing out that the bank quietly reclassified nearly two billion dollars’ worth of real estate loans. This is from BOA’s report:

During 1Q12, the bank regulatory agencies jointly issued interagency supervisory guidance on nonaccrual policies for junior-lien consumer real estate loans. In accordance with this new guidance, beginning in 1Q12, we classify junior-lien home equity loans as nonperforming when the first-lien loan becomes 90 days past due even if the junior-lien loan is performing. As a result of this change, we reclassified $1.85B of performing home equity loans to nonperforming.

In other words, Bank of America described nearly two billion dollars of crap on their books as performing loans, until the government this year forced them to admit it was crap.

ZH and others also noted that BOA wildly underestimated its exposure to litigation, but that’s nothing new. Anyway, despite the inconsistencies in its report, and despite the fact that it’s about to be downgraded – again – Bank of America’s shares are up again, pushing $9 today.

WRONGFUL FORECLOSURE IN BANKRUPTCY (most bankruptcy judges won’t hear it the send you to state court)

in RE: Macklin: Deutsche Must Answer Wrongful Foreclosure and Quiet Title

By Daniel Edstrom
DTC Systems, Inc.

Excerpts on Wrongful Foreclosure (changed by the Judge Sargis to Breach of Contract)

… a record has been created that someone not of record title purported to take action on a Deed of Trust prior to compliance with Civil Code 2932.5.

The court will not sanction conduct by this Defendant which puts into question the validity of the nonjudicial foreclosure process and California real property records.  Though this issue could have been simply addressed by the recording of a new notice of default months ago, the ninety days under the new notice of default allowed to run and this creditor be on the door step of conducting a nonjudicial foreclosure sale consistent with the California statutes, it has elected to continue with the existing notice of default, subsequent substitution of trustee, and sale.

The contract between the parties is the Note and Deed of Trust.

Excerpt on Quiet Title

Though not artfully done, Macklin sufficiently explains that he asserts superior title to the Property over the Trustee’s Deed through which DBNTC asserts its interest in the Property.  Given that Macklin has asserted that DBNTC cannot show that it complied with the minimal requirements for properly conducting a nonjudicial foreclosure sale, the motion to dismiss the Tenth Cause of Action is denied.

Download order here:

Download memorandum opinion and decision (part 1) here:

Download memorandum opinion and decision (part 2) here:

Tagged with:

The Trustee sale can be set aside

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



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

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

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

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

English: Foreclosure auction 2007
Image via Wikipedia

Tim McCandless Blogs its amazing what you can do if you don’t watch TV


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

tila statute of limitations

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

TILA law: Truth in Lending $2,000.00 for violation, statutory damages; I paid more for the Audit ?? !!




TILA seeks to assure meaningful disclosure of credit terms and conditions that the consumer will be informed with accurate costs and benefits of their credit transaction, allowing them to shop for the best credit terms available on the market. 15 U.S.C. § 1601(a).


Since TILA specifically remedial in nature, its provisions must be strictly construed. A creditor must comply with TILA in all credit transactions and “misleading disclosure is as much a violation of TILA as a failure to disclose at all.” Smith v. Chapman, 614 F.2d 968, 977 (5th Cir. 1980). It is not sufficient to attempt to comply with the Act, but rather, creditors are required to strictly comply with all the requirements of the Act. There is no need to show that the consumer was misled or deceived by ambiguous credit terms in order to prevail. Noel v. Fleet Finance, Inc., 971 F. Supp. 1102 (E.D. Mich. 1997).

Congress did not intend for creditors to escape liability for merely technical violations, that even minor or technical violations impose liability upon the creditors. Huff v. Steward-Gwinn Furniture Co., 713 F.2d 67, 69 (4th Cir. 1983). See also, Washington v. Ameriquest Mortg. Co., 2006 W.L. 1980201 (N.D. Ill.).


TILA applies to most consumer credit transactions and was specifically enacted to ensure accurate and meaningful disclosure of the charges involved in a transaction, allowing consumers to make their own decisions about obtaining a loan.

A lawsuit for violation of TILA may be based upon a lenders failure to comply with disclosure requirements. U.S.C. §§ 1631-34. Most of TILA violations involve the creditor’s failure to charge the correct amount, failure to disclose all the material terms, or failure to provide necessary forms or documents required by the Act.

TILA does not apply to the following transactions:

  1. Transactions that are made for business, commercial, or agricultural purposes. 15 U.S.C. § 1603(1); Reg. Z § 226.3(a)(1).
  2. Extensions of Credit to Organizations as opposed to natural persons. U.S.C. § 1603(1); Reg. Z. § 2026.3(a)(2).
  3. Credit over $25,000 Not Secured by Real Property or a Dwelling. U.S.C. § 1603(3); Reg. Z. § 226.3(b).
  4. Student Loans. U.S.C. § 1603(7); Reg. Z. § 226.3(f).
  5. Transactions under Public Utility Tariffs. U.S.C. § 1603(4); Reg. Z. § 226.3(c).
  6. Securities or Commodities transactions that are registered with the Securities and Exchange Commission. U.S.C. § 1603(2); Reg. Z. § 226.3(d).


When a violation of TILA occurs, the one-year limitations period applicable to actions for statutory and actual damages begins to run. U.S.C. § 1641(e).

A TILA violation may occur at the consummation of the transaction between a creditor and its consumer if the transaction is made without the required disclosures.

A creditor may also violate TILA by engaging in fraudulent, misleading, and deceptive practices that conceal the TILA violation occurring at the time of closing. Often consumers do not discover any violation until after they have paid excessive charges imposed by their creditors. Consumers who later learn of the creditor’s TILA violations can allege an equitable tolling of the statute of limitations. When the consumer has an extended right to rescind or pursue other statutory remedies because a violation occurs, the statute of limitations for all the damages the consumers seek extends to three years from the date the violation is revealed. McIntosh v. Irwin Union Bank & Trust Co., 215 F.R.D. 26, 30 (D. Mass. 2003).


Congress delegated authority for the implementation of TILA to the Federal Reserve Board (FRB). The Board of Governors (the Board) of the FRB interpreted TILA and promulgated a detailed and comprehensive set of rules that sets out the Board’s interpretation known as Regulation Z. Regulation Z is an official set of rules and most pleadings alleging TILA violations also alleging violations of Regulation Z as well.


  1. 1. Form Of Disclosure

TILA requires specific disclosures before the closing of a credit transaction. Disclosures must be “clear and conspicuously, in writing, in a form that the consumer may keep.” § 1632(a); § 226.5(a)(1).

Disclosure statement is a written document that a creditor is required to provide the consumer prior to closing, which contains TILA required material terms[1] related to the costs of the credit transaction. In this statement, a creditor must disclose to the person who is obligated on a consumer credit transaction the information required under TILA.

The Act calls for disclosures to be made in a manner that is reasonably to understand by ordinary persons. Most courts agree that “sufficiency of TILA mandated disclosures is to be viewed from the standpoint of an ordinary consumer, not the perspective of a Federal Reserve Board member, federal judge, or English professor.” Smith v. Cash Store Mgmt., 195 F.3d 325, 328 (7th Cir. 1999). Edmondson v. Allen-Russell Ford, Inc., 577 F.2d 291, 296 (5th Cir. 1978) (“we must assess the adequacy of disclosure […] by the audience for which disclosure was intended).

  1. a. Required Disclosures Must be Clear and Conspicuous. U.S.C. § 1632(a). Courts usually look at the particular Disclosure Statement and its content to determine whether it was sufficiently clear and conspicuous.

1)                  Creditor violates TILA for failure to clearly and conspicuously disclose the requirements by disclosing required information in fine print. There was “nothing in the disclosure statement that would call a person’s attention to the relevant clause.” Violation found when disclosures were buried near the bottom of the form. Re Wright, 11 B.R. 590, 592 (S.D. Miss. 1981).

2)                  TILA violation found where a financial company fails to disclose the cost of credit life and disability insurance in the disclosure statement, making the interest of the loan appear less than its actual cost. Woods v. Beneficial Finance Co. of Eugene, 395 F. Supp. 9, 12 (DC Or 1975).

3)                  Disclosures are not clear and conspicuous when the disclosure statement includes contradicting terms. Varner v. Century Finance Co. Inc., 738 F.2d 1143 (11th Cir. 1984) (disclosing two different dollar amounts under the same heading is confusing). See also Andrews v. Chevy Chase Bank, 240 F.R.D 612, 618 (E.D. Wis. 2007) (Disclosure found unclear where the Truth-In-Lending Disclosure Statement shows the APR is 4.047 percent and other disclosure that “strongly implie[s] that the cost of the loan expressed as a yearly rate” at 1.950 percent); Ralls v. Bank of N.Y., 230 B.R. 508, 516 (E.D. Pa. 1999) (where there is a contradiction between TILA disclosures and other information provided by the lender, the disclosures are unclear).

  1. b. The terms “finance charge” and “annual percentage rate” (APR) shall be more conspicuous than any other terms. U.S.C. § 1632(a). These terms can be disclosed more conspicuously by using a contrasting type size or boldness and/or placing borders around them. Commentary § 226.5(a)(2)-2.

1)                  Violate for printing the terms “finance charge” and annual percentage rate” in the same typeface as other material terms. Brown v. Payday Check Advance, Inc., 202 F.3d 987, 990 (7th Cir. Ill. 2000). See also, Herrera v. First Northern Sav. & Loan Asso’n, 805 F.2d 896, 898 (NM 1986) (TILA violated when the term “annual percentage rate” appeared on the disclosure statement in identical size, style, and boldness with over 30 other terms and phrases).

2)                  No violation where the term “annual percentage rate” appears in a bolded box and is highlighted by all capital and bolded letter.” Robinson v. First Franklin Financial Corp., 2006 WL 2540777 (E.D. Pa.).

  1. c. TILA disclosures must be grouped together and segregated from all unrelated information. U.S.C. § 1632(a). Disclosures must be organized in the contrast so that each section of the disclosure statement is complete without any extra information that confuses the consumers. Reg. Z. § 226.5(b)(1).

1)                  A paragraph at the bottom of the contract referring to the “property described above” is ambiguous and does not comply with the requirement that disclosures be grouped together. Leathers v. Toyota-Volvo, 824 F. Supp. 155 (C.D. Ill. 1993). See also, In re Cook, 76 B.R. 661, 663 (C.D. Ill. 1987) (information in the disclosure statement referred back and forth violates TILA, because the required disclosures must be simplified and grouped in a single location and segregated from everything else).

2)                  Failure to disclose time of payment in the disclosure statement violates TILA because “the timing of payments […] must be grouped with the other required disclosure” such as number of payments and amount of payments. Jones v. Ameriquest Mort. Co., 2006 WL 273545 (N.D. Ill.). See Andrews v. Chevy Chase Bank, 240 F.R.D at 617 (the creditor listed the period of payments in a different place than the number and amount of payments violate TILA requires to group related information together).

  1. d. Additional information. Lenders can include additional information on the disclosure statement so long as the additional information relates to the required disclosures. U.S.C. § 1632(b).

1)                  Disclosure of an additional interest rate of 1.950 percent, which only applied to the first monthly payment, in the disclosure statement is violation, because it causes the loan to “appear more attractive than it actually was and serve no useful purpose.” Andrews v. Chevy Chase Bank, 240 F.R.D at 620.

2)                  Additional information setting out the Note Rate disclosed on the Disclosure Statement found “helpful and important to consumers.” Smith v. Anderson, 801 F.2d 661, 663 (Ct. App. Va. 1986).

  1. e. The home equity brochure published by the Board or a suitable substitute shall be provided. U.S.C. § 1637A(e). Creditors are required to provide the consumer with a brochure prepared by the FRB describing the home equity plans. If a creditor provides a substitute brochure, the brochure must be comparable to the Board’s brochure in substance and comprehensiveness. Reg. Z. § 226.5b(e)-1. When a third party has provided the consumer with a brochure, the creditor does not have to give the consumer a second copy of the brochure. Reg. Z. § 226.5b(e)-2.
  2. 2. Time of Disclosures: “The disclosures and brochure required … shall be provided at the time an application is provided to the consumer.”
    1. a. Creditor failed to provide the consumer disclosure statement at the consummation of the credit transaction violates TILA. Family Fed. Sav. & Loan v. Davis, 172 B.R. 437 (D.C. 1994); In re Schweizer, 354 B.R. 272, 281 (Id. 2006).
    2. b. No Violation where the creditor presents to the consumer, prior to the consummation of the credit transaction, a contract with multiple copies and allows the consumer to keep one of the copies before signing the contract. Queen v. Lynch Jewelers, LLC, 55 P.3d 914, 916 (Kan. App. 2002).
  3. 3. Required Disclosures for Open-End Credit Plan

TILA requires the following information to be disclosed, to the extent applicable. U.S.C. § 1637(a).

  1. a. Disclosure of the Finance Charge Accrual Date: The conditions under which a finance charge may be imposed together with either the time period, if any in which the customer may pay without incurring additional finance charges or there is no free ride period. Reg. Z. § 226.6(a)(1).
  2. b. Disclosure of the Periodic Rate, Range of Balances, and APR: For each period, a creditor must disclose the periodic rate that will be used to compute the finance charge; the balances to which the rate is applied; the corresponding nominal annual percentage rate; if deferent rates apply to different types of transactions, they must be disclosed; and penalty rate and possible conditions that trigger the penalty rate. Reg. Z. § 226.6(a)(2).
  3. c. Disclosure of the Periodic Rate, Range of Balances, and APR: The method used to determine the balance on which the finance charged is imposed, and a complex method calls for a more detailed explanation. Reg. Z. § 226.6(a)(3).
  4. d. Disclosure of the Finance Charge Amount: The method used to determine the amount of finance charge, including any minimum or fixed amount. Reg. Z. § 226.6(a)(4).
  5. e. Disclosure of Charges Other than Finance Charge: Identification of other charges which may be imposed and their method of computation in accordance with the FRB regulations. Significant charges such as membership fees, late charges, default charges, charges for exceeding the credit limit of an account, fee for providing copies of documents, taxes imposed on the credit transaction, real estate charges, and other charges must be disclosed. Reg. Z. §§ 226.6(b), 226.4.
  6. f. Disclosure of Security Interest: If a security interest will be secured in connection with the transaction, the collateral must be identified, even if the property is not owed by the consumer. Reg. Z. § 26.2(a)(25).
  7. g. Disclosure of Billing Error Right: A statement as to billing error rights and the right to assert claims and defenses in a form prescribed by the FRB must be provided to the consumer at the consummation of a transaction. Reg. Z. § 226.2(a)(d).
  8. 4. Required Disclosures of Residential Mortgage Transactions

Most home mortgages are subject to the disclosure requirements of TILA. U.S.C. § 1638. The required disclosures must be provided to the homeowner prior to the consummation of a credit transaction. Homeowners have the right to rescind most credit transactions, including home equity loans and home improvement loans, in which the home is taken as collateral.

  1. a. Disclosure of the Creditor: The name of the creditor must be provided and the address and/or telephone number are not required but may be included. U.S.C. § 1602(f); Reg. Z. § 226.2(a)(17).

Failure to disclose of the creditor’s identity properly entitles the consumer only actual damages, if any.

  1. b. Amount Financed: This term must be used in disclosure statement, and a brief description of the amount financed must be provided. U.S.C. § 1638(a)(2)(A).

Failures to properly disclose the amount financed gives rise to statutory damages, attorney’s fees, and any actual damages. Reg. Z. § 1640(a)(3). Its violation may also extend the consumer’s right to rescind. U.S.C. § 1602(u); Reg. Z. § 226.23 n. 48.

  1. c. Finance Charge: The term “finance charge” must be used and A brief description must be provided. U.S.C. § 1638(a)(3); Reg. Z. § 226.18(d). It can be disclosed only as a total amount, and there is no requirement to itemize finance charge, and overstating finance charge does not violate TILA. Vandenbroeck v. Commonpoint Mortg. Co., 22 F.Supp. 2d 677 (W.D. Mich. 1998).

In real estate closing charges, fees may be excluded from the finance charge are real property and title-related fees; document fees; closing agent, attorney fees; and notary, appraisal, and credit report fees. U.S.C. § 1605(e); Reg. Z. § 226.4(c)(7).

  1. d. APR: The term must be used and disclosure must be accurate. U.S.C. §1638(a)(4); Reg. Z. §§ 226.18(e). The APR is accurately disclosed when it is not more than 1/8 of 1 percentage point (.125%) above or below the actual APR. In variable-rate transactions, the description must inform the consumer that the interest rate is subject to change. A historical example illustrating the effects of interest rate changes implemented according to the loan program may be provided to the borrowers. U.S.C. § 1638(a)(14); Reg. Z. § 226.18(f).

Improper disclosure of the APR is a material violation of TILA that extends the consumer’s right to rescind. U.S.C. § 1602(u); Reg. Z. § 226.23 n 48. Statutory damage, attorney’s fee, and actual damage are also available. U.S.C. § 1640(a)(3).

  1. e. Payment Schedule: Payment schedule includes the number of payments, the amount of each payment, and the timing of payments scheduled to repay the obligation. U.S.C. § 1638(5)-(6); Reg. Z. § 226.18(g). Failure to disclose that payments were due monthly violates TILA. Andrews v. Chevy Chase Bank, 240 F.R.D. at 617.

Violation of these requirements entitles the consumer statutory damages, attorney’s fees, and actual damages. U.S.C. § 1640(a)(3) Improper disclosure is also a material violation for purposes of rescission. U.S.C. § 1602(u); U.S.C. § 1602(u); Reg. Z. § 226.23 n 48.

  1. f. Total Sale Price in a Sale of Property: The total of the cash price of the property or services, additional charges, and the finance charge must be disclosed. U.S.C. § 1638(a)(7). Reg. Z. § 226.18(j). Actual damages may be available for violation to disclose this factor. U.S.C. § 1640(a).
  2. g. A statement regarding the taking of the security interest in the property: The creditor must disclose whether it acquires a security interest in the property being purchased, or in other property, as part of the transaction.

Violate this requirement will give rise to statutory damages, attorney’s fees, and actual damages. U.S.C. § 1640(a)(3).

  1. h. Late charges: The dollar amount or the percentage charge may be imposed for late charge. U.S.C. § 1638(a)(10); Reg. Z. § 226.18(l). Actual damages may be available for failure to state the late charges. U.S.C. § 1640(a).
  2. i. Any Rebate Available: Any funds given to the consumer must be disclose whether it is in the form of cash, check, deposit in a savings or checking account. Reg. Z. § 226.18(r). Actual damages may be available for this violation. U.S.C. § 1640(a).
  3. j. Disclosure of Reference to Additional Documents: Information regarding nonpayment, default, and the right to accelerate the maturity of the debt. Prepayment rebates and penalties are not required to be disclosed to simplify the closing process. Instead, the creditor can provide appropriate documents that consumer could refer to. Reg. Z. § 226.17(a)(4). Actual damages may be available for failure to disclose this requirement. U.S.C. § 1640(a).
  4. 5. Required Disclosures for Adjustable Rate Mortgages

Adjustable rate mortgages (ARMs), which secured by the borrower’s principal dwelling with a maturity longer than one year, are required to be disclosed with additional information. To simplify disclosure requirements for variable rate loans, creditors may disclose any variable rate transaction applying the ARMs disclosure rule. However, the reverse is not allowed. Reg. Z. § 226.18(f); 52 Fed. Reg. 48665 (Dec. 24, 1987).

Failure to disclose properly and accurately the requirements of variable rate loans entitles the consumer statutory and actual damages and also rescission right. In re Fidler, 210 B.R. 411 (D. Mass. 1997).

  1. a. Rate Cap Disclosure: The maximum interest rate that may be imposed during the term of the obligation must be disclosed to the borrower. Reg. Z. § 226.30(a); Fed. Reg. 45611 (Dec. 1, 1987).
  2. b. ARM brochure: The Consumer Handbook on Adjustable Rate Mortgages, published by the Board and the Federal Home Loan Bank Board, may be provided to the consumer to fulfill this requirement. Creditors can also provide a suitable consumer handbook that is comparable to the Board’s Consumer Handbook in substance and comprehensiveness. Reg. Z. § 226.19(b)(1).
  3. c. Timing of Disclosures: The required disclosures and the Consumer Handbook must be provided to the borrower when an application form is furnished or before the payment of a non-refundable fee is made, whichever earlier. Reg. Z. § 226.19(b). Where the borrower receives the application by mail or a third party agent, the required information must be placed in the mail or delivered within three business days. Reg. Z. § 226.19 (b), n. 45b.
  4. d. Specific Disclosures Required for Variable Rate Loan: Major aspects of the variable rate loan program, which the consumer is considering, must be specifically disclosed.

1)                  The Index: Identification of the index will be used to calculate the interest rate and a brief description of the method used in calculating the interest rate are required by the Regulation. § 226.19(b)(2)(ii).

2)                  Current Margin Value and Interest Rate: A statement must be provided to the consumer suggesting the consumer ask for the current margin and interest rate. Reg. Z. § 226.19(b)(2)(iv).

3)                  Frequency of rate change and payment adjustment must be disclosed. Reg. Z. § 226.19(b)(2)(vi).

4)                  Negative Amortization: A statement to inform the consumer the consequences of negative amortization. A creditor must disclose the rules relating to the option, including the effects of exercising the option such as the increase of interest rate will occur and the payment amount will increase. Reg. Z. § 226.19(b)(2)(vii); commentary § 226.19(2). Andrews v. Chevy Chase Bank, 240 F.R.D at 620 (no violation found where the creditor informs the borrowers what will occur when the interest rate increases).

5)                  Conversion Feature: If the loan has a conversion feature, the amount of fees will be charge and the method of the fixed rate interest to be determined must be disclosed. Reg. Z. § 226.19(b)(2)(vii)-3.

  1. e. Historical Example Disclosure: Creditors have the option to disclose the maximum interest rate and payment amount for a $10,000 loan amount or the historical example of changes in the index being used. U.S.C. § 1638; Reg. Z. 226.9(b)(2)(viii). If the former method is used, a statement that the periodic payment may increase or decrease substantially. Reg. Z. § 226.19(b)(2)(viii)(B).
  2. f. Subsequent Disclosures: Disclosures concerning rate adjustments are required for all variable rate loans. Reg. Z. § 226.19(b). Notice of the adjusted payment amount, interest rate, index rate, and loan balance is required to disclose to the borrower in a timely manner. Reg. Z. § 226.20(c)(1)-(4).

If payment adjustment may accompany interest rate adjustment, creditors are required to send borrowers notice at least 25, but not more than 120, days prior to the due date of a payment at the new interest rate. Notice is required to be sent to borrowers whenever there is an adjustment in interest rate. Reg. Z. § 226.20(c).

If interest rate adjustments are made without a corresponding payment adjustment, the notice can be sent to the borrower once a year. Id.

Incorrect adjustment or used of index value or incorrect disclosing the new payment amount that does not comport with the contract terms violate TILA requirements, giving rise to statutory and actual damages. U.S.C. § 1640(a).

Statue of limitations for an affirmative violation is “one year from the date of the occurrence of the violation” that starts running when the erroneous notice is sent. U.S.C. § 1604(e).

  1. 6. Required Disclosure of Rescission Rights: Rescission rights arise when the transaction is a consumer credit transaction, in which a non-purchase lien or security interest is placed on the consumer’s principal dwelling unit. TILA rescission remedies reflect Congress’ intent to keep homeowners from placing their homes in jeopardy without a reasonably clear understanding of the financial risks and benefits of the transaction.
    1. a. Rescission right is vested in the owner of the property that is the subject of the security interest. Reg. Z. §§ 226.15(a)(1)(i), 226.15(b), 226.23(a)(1).
    2. b. The security interest must be the principal residence of the owner of the interest. Reg. Z. § 226.2(a)(11).
    3. c. Time of Delivery: The rescission notice may be given after consummation, though the rescission period does not begin to run until it is effectively delivered. Official Staff Commentary § 226.23(b)-4. It is not effectively delivered until it is given in a form the consumer can keep. Reg. Z. § 226.15(b). A written acknowledgement of receipt of rescission notice creates a rebuttable presumption of delivery. Cole v. Lovett, 672 F. Supp. 947 (S.D. Miss. 1987).
    4. d. Providing Rescission Notice: Each person who has the right to rescind a credit transaction must be provided two copies of rescission notice and the required disclosures in a credit transaction. U.S.C. § 1635(a); Reg. Z. §§ 226.5(b), 226.15(b). Notice of the right to rescind is also required for non-purchase money mortgages. U.S.C. § 1635(a). Giving the TILA notice and another notice of rescission at the same time, which have different rescission dates, confuses an ordinary consumer, violating the “clear and conspicuous” disclosure requirement. Jones v. Ameriquest.
    5. e. Time to Exercise Rescission Right: The consumers have until midnight of the third business day following the delivery of the rescission notice, the transaction, or the receiving of the Truth-In-Lending statement, whichever occurs last. See, Jones v. Ameriquest. Right to rescind can be exercised prior to the consummation of the loan. Community Mutual Sav. Bank v. Gillen, 655 N.Y.S.2d 271 (City Ct. 1997) (the consumer properly rescinds her loan at closing recovering fees paid to the creditor).

If the creditor fails to deliver the required notice of material disclosures, the consumer’s right to rescind is automatically extended from three business days to three years. Reg. Z. § 226.23(a)(3).

  1. f. Assignee’s Liability: An assignee is liable for statutory damages for violations by failure to disclosure TILA requirements by its predecessors and its own violation if it fails to respond properly to a rescission notice. Palmer v. Champion Mortg., 465 F.3d 24, 27 (1st Cir. 2006) (“if a creditor does not respond to a rescission request within twenty days, the debtor may file suit in federal court to enforce the rescission right). See also U.S.C. § 1635(b).
  2. g. Rescission Process: The consumer must send a written notice to the creditor to trigger the rescission process. When the notice of rescission has been mailed, the notice is considered given. Reg. Z. §§ 226.15(a)(2), 226.23(a)(2).

When the consumer rescinds, the security interest automatically becomes void. The consumer is relieved of any obligation to pay any finance charge or any other charge. U.S.C. § 1635(b); Reg. Z. §§ 226.15(d)(1), 226.23(d)(1). Rescission voids the mortgage and is a complete defense to foreclosure. Yslas v. K.K. Guenther Builders, Inc., 342 So.2d 859 (Fla.2d D.C.A. 1977). See Beach v. Great Western Bank, 670 So.2d 986 (Fla. 4th  D.C.A. 1996).

The creditor has twenty days from receipt of the consumer’s rescission notice to return any money or property given to anyone and to take appropriate and necessary action to reflect the termination of the security interest. U.S.C. § 1635(b); Reg. Z. §§ 226.15(d)(2), 226.23(d)(2).

After the creditor has complied with the preceding mandate, the consumer tenders back to the creditor any money or property received. U.S.C. § 1635(b); Reg. Z. §§ 226.15(d)(3), 226.23(d)(3).


Only creditors are subject to the civil penalties of TILA. U.S.C. § 1640(a). Civil damages are appropriate when disclosure requirements have been violated, and liability is imposed despite the creditor’s alleged good faith and reasonableness. Ratner v. Chemical Bank N.Y. Trust Co., 329 F. Supp. 270 (S.D.N.Y. 1971).

  1. 1. Statutory Damages

Violations of the general requirements and rescission requirements give rise to statutory damage claims. U.S.C. § 1640(a). For open-end credit transactions, statutory damages are awarded in the amount twice of the amount of finance charge. If the action arises out of a credit transaction secured by a dwelling, the consumer is entitled to a minimum award of $200 but not more than $2,000. U.S.C. § 1640(a)(2)(A)(i-iii). Only one statutory recovery is allowed even there are multiple disclosure violations in a transaction. U.S.C. § 1640(g).

  1. 2. Attorney’s Fees

Consumers are awarded attorney’s fees in a successful action or when they are “determined to have a right of rescission under section 1635,” even if the consumer is not obligated to pay his or her attorney. U.S.C. § 1640(3); Andrews v. Chevy Chase Bank, 240 F.R.D. at 621 (“because […] plaintiffs have a right of rescission, they are entitled to attorneys’ fees”); Kessler v. Associates Financial Servs. Co. of HI, Inc., 639 F.2d 498, 499 (C.A. Hi. 1981) (attorney’s fees are awarded even the plaintiffs are represented without charge by legal services attorneys). Attorney’s fees include the cost of the action and “a reasonable attorney’s fee as determined by the court.” U.S.C. § 1640(3).

  1. 3. Actual Damages

A consumer is entitled for actual damages when a creditor fails to comply with the requirements imposed by TILA, in the amount equal to the sum of any actual damage sustained by the consumer as a result of the creditor’s violation. U.S.C. § 1640(a)(1). Courts may require the consumer to show actual reliance upon the accuracy of the disclosures in order to claim actual damages. Perrone v. General Motors Acceptance Corp., 232 F.3d 433, 435-439 (5th Cir. 2000); Peters v. Jim Lupient Oldsmobile Co., 220 F.3d 915, 917 (8th Cir. 2000) (detrimental reliance is established when the plaintiff shows that she read and understood the disclosures and that if the disclosures have been accurate, she would have sought and obtained a lower loan).

[1] Material terms are annual percentage rate, finance charge, method of determining the finance charge and the balance, amount financed, total of payments, the number and amount of payments, due dates or periods of payments scheduled to repay the indebtedness. U.S.C. § 1602(u); Reg. Z. § 226.23 n. 48.

SB 94 and its interferance with the practice

CA SB 94 on Lawyers & Loan Modifications Passes Assembly… 62-10

The California Assembly has passed Senate Bill 94, a bill that seeks to protect homeowners from loan modification scammers, but could end up having the unintended consequence of eliminating a homeowner’s ability to retain an attorney to help them save their home from foreclosure.

The bill, which has an “urgency clause” attached to it, now must pass the State Senate, and if passed, could be signed by the Governor on October 11th, and go into effect immediately thereafter.

SB 94’s author is California State Senator Ron Calderon, the Chair of the Senate Banking Committee, which shouldn’t come as much of a surprise to anyone familiar with the bigger picture. Sen. Calderon, while acknowledging that fee-for-service providers can provide valuable services to homeowners at risk of foreclosure, authored SB 94 to ensure that providers of these services are not compensated until the contracted services have been performed.

SB 94 prevents companies, individuals… and even attorneys… from receiving fees or any other form of compensation until after the contracted services have been rendered. The bill will now go to the Democratic controlled Senate where it is expected to pass.

Supporters of the bill say that the state is literally teeming with con artists who take advantage of homeowners desperate to save their homes from foreclosure by charging hefty fees up front and then failing to deliver anything of value in return. They say that by making it illegal to charge up front fees, they will be protecting consumers from being scammed.

While there’s no question that there have been some unscrupulous people that have taken advantage of homeowners in distress, the number of these scammers is unclear. Now that we’ve learned that lenders and servicers have only modified an average of 9% of qualified mortgages under the Obama plan, it’s hard to tell which companies were scamming and which were made to look like scams by the servicers and lenders who failed to live up to their agreement with the federal government.

In fact, ever since it’s come to light that mortgage servicers have been sued hundreds of times, that they continue to violate the HAMP provisions, that they foreclose when they’re not supposed to, charge up front fees for modifications, require homeowners to sign waivers, and so much more, who can be sure who the scammers really are. Bank of America, for example, got the worst grade of any bank on the President’s report card listing, modifying only 4% of the eligible mortgages since the plan began. We’ve given B of A something like $200 billion and they still claim that they’re having a hard time answering the phones over there, so who’s scamming who?

To make matters worse, and in the spirit of Y2K, the media has fanned the flames of irrationality with stories of people losing their homes as a result of someone failing to get their loan modified. The stories go something like this:

We gave them 1,000. They told us to stop making our mortgage payment. They promised us a principal reduction. We didn’t hear from them for months. And then we lost our house.

I am so sure. Can that even happen? I own a house or two. Walk me through how that happened again, because I absolutely guarantee you… no way could those things happen to me and I end up losing my house over it. Not a chance in the world. I’m not saying I couldn’t lose a house, but it sure as heck would take a damn sight more than that to make it happen.

Depending on how you read the language in the bill, it may prevent licensed California attorneys from requiring a retainer in advance of services being rendered, and this could essentially eliminate a homeowner’s ability to hire a lawyer to help save their home.

Supporters, on the other hand, respond that homeowners will still be able to hire attorneys, but that the attorneys will now have to wait until after services have been rendered before being paid for their services. They say that attorneys, just like real estate agents and mortgage brokers, will now only be able to receive compensation after services have been rendered.

But, assuming they’re talking about at the end of the transaction, there are key differences. Real estate agents and mortgage brokers are paid OUT OF ESCROW at the end of a transaction. They don’t send clients a bill for their services after the property is sold.

Homeowners at risk of foreclosure are having trouble paying their bills and for the most part, their credit ratings have suffered as a result. If an attorney were to represent a homeowner seeking a loan modification, and then bill for his or her services after the loan was modified, the attorney would be nothing more than an unsecured creditor of a homeowner who’s only marginally credit worthy at best. If the homeowner didn’t pay the bill, the attorney would have no recourse other than to sue the homeowner in Small Claims Court where they would likely receive small payments over time if lucky.

Extending unsecured credit to homeowners that are already struggling to pay their bills, and then having to sue them in order to collect simply isn’t a business model that attorneys, or anyone else for that matter, are likely to embrace. In fact, the more than 50 California attorneys involved in loan modifications that I contacted to ask about this issue all confirmed that they would not represent homeowners on that basis.

One attorney, who asked not to be identified, said: “Getting a lender or servicer to agree to a loan modification takes months, sometimes six or nine months. If I worked on behalf of homeowners for six or nine months and then didn’t get paid by a number of them, it wouldn’t be very long before I’d have to close my doors. No lawyer is going to do that kind of work without any security and anyone who thinks they will, simply isn’t familiar with what’s involved.”

“I don’t think there’s any question that SB 94 will make it almost impossible for a homeowner to obtain legal representation related to loan modifications,” explained another attorney who also asked not to be identified. ”The banks have fought lawyers helping clients through the loan modification process every step of the way, so I’m not surprised they’ve pushed for this legislation to pass.”

Proponents of the legislation recite the all too familiar mantra about there being so many scammers out there that the state has no choice but to move to shut down any one offering to help homeowners secure loan modifications that charges a fee for the services. They point out that consumers can just call their banks directly, or that there are nonprofit organizations throughout the state that can help homeowners with loan modifications.

While the latter is certainly true, it’s only further evidence that there exists a group of people in positions of influence that are unfamiliar , or at the very least not adequately familiar with obtaining a loan modification through a nonprofit organization, and they’ve certainly never tried calling a bank directly.

The fact that there are nonprofit housing counselors available, and the degree to which they may or may not be able to assist a given homeowner, is irrelevant. Homeowners are well aware of the nonprofit options available. They are also aware that they can call their banks directly. From the President of the United States and and U.S. Attorney General to the community newspapers found in every small town in America, homeowners have heard the fairy tales about about these options, and they’ve tried them… over and over again, often times for many months. When they didn’t get the desired results, they hired a firm to help them.

Yet, even the State Bar of California is supporting SB 94, and even AB 764, a California Assembly variation on the theme, and one even more draconian because of its requirement that attorneys only be allowed to bill a client after a successful loan modification has been obtained. That means that an attorney would have to guarantee a homeowner that he or she would obtain a modification agreement from a lender or servicer or not get paid for trying. Absurd on so many levels. Frankly, if AB 764 passes, would the last one out of California please turn off the lights and bring the flag.

As of late July, the California State Bar said it was investigating 391 complaints against 141 attorneys, as opposed to nine investigations related to loan modifications in 2008. The Bar hasn’t read anywhere all of the complaints its received, but you don’t have to be a statistician to figure out that there’s more to the complaints that meets the eye. So far the State Bar has taken action against three attorneys and the Attorney General another four… so, let’s see… carry the 3… that’s 7 lawyers. Two or three more and they could have a softball team.

At the federal level they’re still reporting the same numbers they were last spring. Closed 11… sent 71 letters… blah, blah, blah… we’ve got a country of 300 million and at least 5 million are in trouble on their mortgage. The simple fact is, they’re going to have to come up with some serious numbers before I’m going to be scared of bumping into a scammer on every corner.

Looking Ahead…

California’s ALT-A and Option ARM mortgages are just beginning to re-set, causing payments to rise, and with almost half of the mortgages in California already underwater, these homeowners will be unable to refinance and foreclosures will increase as a result. Prime jumbo foreclosure rates are already up a mind blowing 634% as compared with January 2008 levels, according to LPS Applied Analytics.

Clearly, if SB 94 ends up reducing the number of legitimate firms available for homeowners to turn to, everyone involved in its passage is going to be retiring. While many sub-prime borrowers have suffered silently through this horror show of a housing crisis, the ALT-A and Option ARM borrowers are highly unlikely to slip quietly into the night.

There are a couple of things about the latest version of SB 94 that I found interesting:

1. It says that a lawyer can’t collect a fee or any other compensation before serivces have been delivered, but it doesn’t make clear whether attorneys can ask the client to deposit funds in the law firm’s trust account and then bill against thsoe funds as amounts are earned. Funds deposited in a law firm trust account remain the client’s funds, so they’re not a lawyer’s “fees or other compensation”. Those funds are there so that when the fees have been earned, the lawyer doesn’t have to hope his or her bill gets paid. Of course, it also says that an attorney can’t hold any security interest, but money in a trust account a client’s money, the attorney has no lien against it. All of this is a matter of interpretation, of course, so who knows.

2. While there used to be language in both the real estate and lawyer sections that prohibited breaking up services related to a loan modification, in the latest version all of the language related to breaking up services as applied to attorneys has been eliminated. It still applies to real estate licensed firms, but not to attorneys. This may be a good thing, as at least a lawyer could complete sections of the work involved as opposed to having to wait until the very end, which the way the banks have been handling things, could be nine months away.

3. The bill says nothing about the amounts that may be charged for services in connection with a loan modification. So, in the case of an attorney, that would seem to mean that… well, you can put one, two and three together from there.

4. Lawyers are not included in definition of foreclosure consultant. And there is a requirement that new language be inserted in contracts, along the lines of “You don’t have to pay anyone to get a loan modification… blah, blah, blah.” Like that will be news to any homeowner in America. I’ve spoken with hundreds and never ran across one who didn’t try it themselves before calling a lawyer. I realize the Attorney General doesn’t seem to know that, but look… he’s been busy.


Will SB 94 actually stop con artists from taking advantage of homeowners in distress? Or will it end up only stopping reputable lawyers from helping homeowners, while foreclosures increase and our economy continues its deflationary free fall? Will the California State Bar ever finishing reading the complaints being received, and if they ever do, will they understand what they’ve read. Or is our destiny that the masses won’t understand what’s happening around them until it sucks them under as well.

I surely hope not. But for now, I’m just hoping people can still a hire an attorney next week to help save their homes, because if they can’t… the Bar is going to get a lot more letters from unhappy homeowners.

Borrowers’ Defenses to Forclosure

A great source of information you can use, and since the Guy is in Washington I can give him all the credit

United First Class Action

On Saturday March 7,2009 a meeting was held for 200 plus victims of the United First equity save your house scam. At that meeting it was determined that a class action should be filed to recover the funds lost by the victims of the unconscionable contract.

As a first step an involuntary Bankruptcy is being filed today March 9, 2009. To be considered as a creditor of said Bankruptcy please Fax the Joint Venture agreement and retainer agreement to 909-494-4214.
Additionally it is this attorneys opinion that said Bankruptcy will act as a “stay” for all averse actions being taken by lenders as against said victims. This opinion is based upon the fact that United First maintained an interest in the real property as a joint venture to 80% of the properties value(no matter how unconscionable this may be) this is an interest that can be protected by the Bankruptcy Stay 11 USC 362.

My plan for Loan Modifications i.e. Attorney loan mod

Recent Loan Modification studies have shown that a large percentage of traditional loan modifications put the borrowers more upside down than when they started.
Unfortunately many loan mods are leaving people with higher monthly payments. In many loan modifcation the money you did not pay gets tacked on to the back of the loan… Increasing your loan balance and making you more upside down. This is why over 50% of all loan mods are in default. They are not fixing the problem they are just postponing it.

Before you go into default on your loans at the advice of some former subprime loan seller, make sure you understand that absent finding some legal leverage over the lender you have a good chance of seeing your payments going up.

Our Loan Modification program includes

1. Upside Down Analysis

2. Qualified Written Request and offer of Loan Modification

3. Letter informing lender of clients election to pursue remedies carved out by recent California Law under 2923.6 and or Federal Programs under the Truth in lending Act and the Fair Debt collection practices Act.

4. Letter Disputing debt (if advisable)

5. Cease and Desist letters (if advisable)

6. Follow up, contact with negotiator, and negotiation by an attorney when needed.
By now many of you have read about all the Federal Governments Loan Modification Programs. Others have been cold called by a former loan brokers offering to help you with your Loan Modification. Its odd that many of the brokers who put people into these miserable loans are now charging people up front to get out of the them.

Before you spend thousands of dollars with someone, do an investigation:

1. Is the person licensed by the California Department of Real Estate? Or, the California State Bar?

2. Are your potential representatives aware that have to be licensed according to the DRE?

3. Are they asking you for money up front? They are violating the California Foreclosure Consultant act if they are neither CA attorneys nor perhaps Real Estate brokers in possesion of a no opinion letter from the California Department of Real Estate? Note… if a Notice of Default has been filed against your residence only attorneys acting as your attorney can take up front fees. Don’t fall for “attorney backed” baloney. Are you retaining the services of the attorney or not? Did you sign a retainer agreement ?

4. If your potential representative is not an attorney make sure he or she is a Real Estate Broker capable of proving their upfront retainer agreement has been given a no opinon letter by the DRE. (As of November 2008 – only 14 non attorney entites have been “approved by the DRE.)

5. If somone says they are attorney backed – ask to speak with the attorney. What does attorney backed mean? From what we have seen it is usually a junk marketing business being run by someone who can not get a proper license to do loan modifications.

6. Find out how your loan modification people intend to gain leverage over the lender.

7. If you are offered a loan audit or a Qualfied Written Request under RESPA letter – will an attorney be doing the negotiating against the lender? Will you have to hire the attorney after you pay for your loan audit? Doesn’t that put cart before the horse?

8. Will it do you any good to have a loan audit done if you later have to go out and retain an attorney. You want to retain their services of an attorney before you pay for the audit. The loan audit is the profit center; negotiation takes time.
9. What kind of results should you expect?

10. Who will be doing your negotiating?

11. Will the Loan Modification request go out on Legal Letterhead?

12. How much will you have to pay? Are you looking for a typical loan mod result or are you looking to leverage the law in the hopes of getting a better than average loan mod result.

13. What if your are not satisfied with the loan modification offered by the lender?

14. Should you go into default on both loans prior to requesting a loan modification? Why? What happens if the loan mod does not work out to your satisfaction? (very important question.)

15. Will an attorney review the terms of your loan modification with you? Will you have to waive your anti-deficiency protections if you sign your loan modification paperwork? Will an attorney help you leverage recent changes in California law in an attempt to get a substantial reduction in the principle?

HOEPA audit checklist


You should never be evicted


Countrywide and truth in predatory lending


California v Countrywide


Litigate truth in lending or be evicted


Lets go to federal court


They agree but foreclose anyway


Get the injuction and stop the sale


Sample class action

Some textfraudulent-omissions-form-finalfraudulent-omissions-form-final1

13 things you can do to stop the foreclosure


Banks gone

307. LIME Financial Svcs. – Wholesale
306. Mortgage Network Inc. – Wholesale
305. Fortes Financial – Wholesale
304. HSBC Mortgage Corp. – Wholesale
303. CBRE Realty Finance
302. Franklin Bank, SSB
301. Mortgage Lion, Inc. – Wholesale
300. HMS Capital, Inc.
299. American Sterling Bank – Wholesale
298. CTX Mortgage Co. – Retail
297. Equity One Commercial
296. Coldstream Financial Svcs.
295. Banco Popular North America – Wholesale
294. Ace Mortgage Funding, LLC
293. E-Loan
292. Gateway Bank, F.S.B. – Wholesale
291. First Call Mortgage Co.
290. Downey Savings and Loan – Wholesale
289. Prospect’s Metrocities Mortgage – Wholesale
288. ComCor Mortgage – Wholesale
287. Chevy Chase Bank – Wholesale
286. Washington Mutual – Retail and Warehouse
285. Hometown Commercial Capital
284. Mid Atlantic Capital LLC
283. Kemper Mortgage, Inc.
282. Liberty Mortgage Funding Co.
281. Freddie Mac
280. Fannie Mae
279. Pacific Community Mortgage, Inc. – Gold Reverse, Inc.
278. Homecomings Financial, LLC
277. Thornburg Mortgage
276. CSB Mortgage
275. Carteret Mortgage Corporation
274. Accredited Home Lenders, Lone Star Funds – Wholesale
273. Western Residential Mortgage
272. Liberty Home Lending – Wholesale
271. Equipoint Financial Network, Inc.
270. Ideal Mortgage Bankers, Ltd. – Wholesale
269. Silver State Bank – Wholesale
268. Irwin Union Bank & Trust Co. – Wholesale
267. SunTrust Bank Equity Wholesale
266. Wachovia Mortgage, FSB – Wholesale
265. Lehman Brothers SBF
264. IndyMac Bancorp
263. Mortgages Ltd.
262. Wilmington Finance – Wholesale
261. Accredited Home Lenders, Home Funds Direct
260. Assured Lending Corp. – Wholesale
259. Homewide Lending Corporation
258. Vanguard Mortgage & Title, Inc.
257. Chase Home Equity – Wholesale
256. Chase Subprime – Wholesale
255. Evergreen Investment & Carnation Banc
254. Casa Blanca Mortgage/Shearson – Wholesale
253. Guaranty Bank – Correspondent
252. Citi Residential Lending
251. Montgomery Mortgage Capital Company
250. E*Trade Wholesale Lending
249. Shearson Financial Network, Inc.
248. American Bank Mortgage Group – Wholesale
247. AmeriBanc Corp.
246. Washington Mutual – Wholesale
245. Century Bank, F.S.B. – Wholesale
244. Diversified Mortgage, Inc.
243. National Wholesale Funding
242. Centennial Mortgage and Funding, Inc./Award Mortgage
241. Fidelity Home Mortgage Corp. – Wholesale
240. LMI Funding, Inc.
239. Millennium Mortgage – Wholesale
238. Origen Financial, Inc. (Correspondent)
237. CitiMortgage – Home Equity Wholesale
236. Bear Stearns Residential Mortgage
235. East West Mortgage Co. of VA
234. New Vision Residential Lending
233. Washington Savings Bank, F.S.B. – Wholesale
232. Macquarie Mortgages USA Inc.
231. Global Mortgage, Inc.
230. Unique Mortgage Solutions (UMS, LLC)
229. First Franklin – Merrill Lynch
228. First National Mortgage Sources
227. Resource Mortgage (Wholesale)
226. KH Financial
225. Lydian Mortgage
224. OMG Wholesale Lending
223. Saxon Mortgage (Wholesale)
222. Beazer Mortgage Corp.
221. Allpointe Mortgage (Broker Program)
220. Popular Warehouse Lending
219. Allied Lending Corp. (Wholesale)
218. BF Saul Wholesale Lending
217. Community Resource Mortgage
216. Lehman/Aurora Loan Services
215. Residential Mortgage Capital
214. Maverick Residential Mortgage
213. Countrywide Financial Corp.
212. First NLC Financial Services
211. First American Bank (Wholesale)
210. Soma Financial
209. National City Corp. (Wholesale)
208. Heartland Wholesale Funding
207. Homefront Mortgage Inc.
206. PNC Bank H.E.
205. Family First Mortgage Corp.
204. First Fidelity Financial
203. BSM Financial
202. 1st Choice Mortgage
201. Wescom Credit Union
200. Coast Financial Holdings/Coast Bank
199. WaMu (Subprime)
198. First Madison Mortgage
197. Southern Star Mortgage
196. TransLand Financial
195. Secured Bankers Mortgage Company (SBMC)
194. ComUnity Lending
193. Delta Financial Corp
192. BayRock Mortgage
191. Empire Bancorp
190. Option One – H&R Block
189. Citigroup – FCS Warehouse
188. Charter One (Wholesale)
187. Wells Fargo – Home Equity
186. Paul Financial, LLC
185. Webster Bank (Wholesale)
184. Fieldstone Mortgage Company
183. Tribeca Lending Corp. (Wholesale)
182. WAMU Comm. Correspondent
181. Marlin Mortgage Company
180. Countrywide Specialty Lending
179. UBS Home Finance
178. MortgageIT-DB (Retail)
177. Edgewater Lending Group
176. ResMAE Mortgage Corp.
175. Citimortgage Correspondent (2nds)
174. AMC Lending
173. Liberty American Mortgage
172. Exchange Financial (Wholesale)
171. FirstBank Mortgage
170. Bank of America (Wholesale)
169. Diablo Funding Group Inc.
168. Honor State Bank
167. Spectrum Financial Group
166. Priority Funding Mortgage Bankers
165. BrooksAmerica Mortgage Corp.
164. Valley Vista Mortgage
163. New State Mortgage Company
162. Summit Mortgage Company
161. WMC
160. Paragon Home Lending
159. First Mariner Wholesale
158. The Lending Connection
157. Foxtons, Inc.
156. SCME Mortage Bankers
155. Aapex Mortgage (Apex Financial Group)
154. Wells Fargo (various Correspondent and Non-prime divisions)
153. Nationstar Mortgage
152. Decision One (HSBC)
151. Impac Lending Group
150. Long Beach (WaMu Warehouse/Correspondent)
149. Expanded Mortgage Credit Wholesale
148. The Mortgage Store Financial
147. C & G Financial
146. CFIC Home Mortgage
145. All Fund Mortgage
144. LownHome Financial
143. Sea Breeze Financial Services
142. Castle Point Mortgage
141. Premium Funding Corp
140. Group One Lending
139. Allstate Home Loans / Allstate Funding
138. Home Loan Specialists (HLS)
137. Transnational Finance Wholesale
136. CIT Home Lending
135. Capital Six Funding
134. Mortgage Investors Group (MIG) – Wholesale
133. Amstar Mortgage Corp
132. Quality Home Loans
131. BNC Mortgage (Lehman)
130. First National Bank of Arizona
129. Chevy Chase Bank Correspondent
128. GreenPoint Mortgage – Capital One Wholesale
127. NovaStar, Homeview Lending
126. Quick Loan Funding
125. Calusa Investments
124. Mercantile Mortgage
123. First Magnus
122. First Indiana Wholesale
121. GEM Loans / Pacific American Mortgage (PAMCO)
120. Kirkwood Financial Corporation
119. Lexington Lending
118. Express Capital Lending
117. Deutsche Bank Correspondent Lending Group (CLG)
116. MLSG
115. Trump Mortgage
114. HomeBanc Mortgage Corporation
113. Mylor Financial
112. Aegis
111. Alternative Financing Corp (AFC) Wholesale
110. Winstar Mortgage
109. American Home Mortgage / American Brokers Conduit
108. Optima Funding
107. Equity Funding Group
106. Sunset Mortgage
105. Nations Home Lending
104. Entrust Mortgage
103. Alera Financial (Wholesale)
102. Flick Mortgage/Mortgage Simple
101. Dollar Mortgage Corporation
100. Alliance Bancorp
99. Choice Capital Funding
98. Premier Mortgage Funding
97. Stone Creek Funding
96. FlexPoint Funding (Wholesale & Retail)
95. Starpointe Mortgage
94. Unlimited Loan Resources (ULR)
93. Freestand Financial
92. Steward Financial
91. Bridge Capital Corporation
90. Altivus Financial
89. ACT Mortgage
88. Alliance Mortgage Banking Corp (AMBC)
87. Concord Mortgage Wholesale
86. Heartwell Mortgage
85. Oak Street Mortgage
84. The Mortgage Warehouse
83. First Street Financial
82. Right-Away Mortgage
81. Heritage Plaza Mortgage
80. Horizon Bank Wholesale Lending Group
79. Lancaster Mortgage Bank (LMB)
78. Bryco (Wholesale)
77. No Red Tape Mortgage
76. The Lending Group (TLG)
75. Pro 30 Funding
74. NetBank Funding, Market Street Mortgage
73. Columbia Home Loans, LLC
72. Mortgage Tree Lending
71. Homeland Capital Group
70. Nation One Mortgage
69. Dana Capital Group
68. Millenium Funding Group
67. MILA
66. Home Equity of America
65. Opteum (Wholesale, Conduit)
64. Innovative Mortgage Capital
63. Home Capital, Inc.
62. Home 123 Mortgage
61. Homefield Financial
60. First Horizon Subprime, Equity Lending
59. Platinum Capital Group (Wholesale)
58. First Source Funding Group (FSFG)
57. Alterna Mortgage
56. Solutions Funding
55. People’s Mortgage
53. Zone Funding
52. First Consolidated (Subprime Wholesale)
51. EquiFirst
50. SouthStar Funding
49. Warehouse USA
48. H&R Block Mortgage
47. Madison Equity Loans
46. HSBC Mortgage Services (correspondent div.)
45. Sunset Direct Lending
44. Kellner Mortgage Investments
43. LoanCity
42. CoreStar Financial Group
41. Ameriquest, ACC Wholesale
40. Investaid Corp.
39. People’s Choice Financial Corp.
38. Master Financial
37. Maribella Mortgage
36. FMF Capital LLC
35. New Century Financial Corp.
34. Wachovia Mortgage (Correspondent div.)
33. Ameritrust Mortgage Company (Subprime Wholesale)
32. Trojan Lending (Wholesale)
31. Fremont General Corporation
30. DomesticBank (Wholesale Lending Division)
29. Ivanhoe Mortgage/Central Pacific Mortgage
28. Eagle First Mortgage
27. Coastal Capital
26. Silver State Mortgage
25. ECC Capital/Encore Credit
24. Lender’s Direct Capital Corporation (wholesale division)
23. Concorde Acceptance
22. DeepGreen Financial
21. American Freedom Mortgage, Inc.
20. Millenium Bankshares (Mortgage Subsidiaries)
19. Summit Mortgage
18. Mandalay Mortgage
17. Rose Mortgage
16. EquiBanc
15. FundingAmerica
14. Popular Financial Holdings
13. Clear Choice Financial/Bay Capital
12. Origen Wholesale Lending
11. SecuredFunding
10. Preferred Advantage
9. MLN
8. Sovereign Bancorp (Wholesale Ops)
7. Harbourton Mortgage Investment Corporation
6. OwnIt Mortgage
5. Sebring Capital Partners
4. Axis Mortgage & Investments
3. Meritage Mortgage
2. Acoustic Home Loans
1. Merit Financial

Beating Foreclosure legally

Facing Foreclosure in California?
The number of Foreclosures in California and across the Nation are on the rise. If you are facing foreclosure in California we can help. The foreclosure relief department at McCandless Firm, is comprised of a dedicated team of highly trained professionals, attorneys, underwriters, and brokers in the mortgage and loan industry. Our team will work diligently with your lender and/or invoke Federal Court Remedies to facilitate a solution that fits your budget and goals. The following are the most common ways we assist homeowners facing foreclosure.
Mortgage Modification:
The Mortgage Modification program allows most homeowners who can make payments keep their homes. Often, personal circumstances or an upward payment adjustment or “reset” will cause the homeowner to fall behind n their monthly payments. By actively counseling our clients and aggressively negotiating with their lenders we are capable of modifying the original loan to give our clients a fresh start in managing their home finances. Depending upon the individual needs of each client, modifications can range from a simple interest rate reduction resulting in a lower monthly payment to what is known as a “recapitalization agreement.” A recapitalization agreement takes all the “arrears” or monthly amounts that should have been paid but wasn’t paid, interest, fees, and missed payments and adds it to the principal of the mortgage loan. In many instances, we will negotiate the complete removal of principal above the current fair market value and “arrears”. Finally, we may be able to extend the life of your loan so that your payments are more easily manageable. This is a unique department of McCandless Law Firm that can be reach directly at (760) 733-8885
Lien Stripping:
The lien stripping program is available for individuals desiring to reorganize their debt using Federal Laws under Title 11 of the United States Code. The mortgage removal program can only be used in the context of a reorganization, often referred to as Chapter 13(see below). If you own a home with more than one mortgage, you may be able to completely remove or “avoid” the second and subsequent junior mortgages from your home and county records, thus leaving only the first original mortgage! If you qualify, all mortgages except the first would no longer be secured by your home, and you would stop all payments except the first immediately. There is nothing the creditor can do, provided you qualify for a simpe three part test: 1) The First Mortgage is equal to or higher than the fair market value of the home, 2) You have income, and 3) Your total unsecured debt is under 336,900 and your secured debt is under 1,010,650.
As of 2002, the Ninth Circuit Court of Appeals ruled in In Re: Sieglinde E Zimmer, that these mortgages on residential properties can removed if you qualify. In today’s declining real estate market, this ruling pretty much allows junior lien removal on most properties bought or refinanced since 2004. For instance, suppose you have a first mortgage of $500,000 and second mortgage of $150,000, and the house is worth $490,000.00. Under this program, the $150,000 gets removed and you only need to make monthly payments on the $500,000.
Wouldnt it be much easier to save your home if you only had a first mortgage and no other payments? Moreover, if the market turns around, think of all the equity you could build back up years from now.
Chapter 13 Reorganization:
The Chapter 13 “Reorganization,” allows you to consolidate all your debts into one low monthly payment. The payment amount is tailored to your budget. Chapter 13 is technically a Bankruptcy, but viewed at differently since it is not a “straight bankruptcy” which simply eliminates all debt without any payment whatsoever. Instead, it consolidates all missed mortgage payments or “arrears” and then spreads the repayment out over 3-5 years. The net result is that your mortgage is legally reinstated by Federal Court Order and you continue to make your normal mortgage payments. The lender is also under strict scrutiny to account to the Federal Court any fees they attempt to assert over your normal mortgage payments. For example, if you are $9,000 in arrears on your mortgage and your monthly mortgage payment is currently $3,000, your Chapter 13 payment would be approximately $150 per month. (60 months x $150 =$9,000) The new total monthly house payment would be $3,150. The Chapter 13 program results in a more realistic repayment plan than the short term plans currently offered by most lender outside of the laws under Title 11, and you maintain all your rights under TILA, RESPA, HOEPA, FDCPA, FCRA, etc.
Short Sale:
With our short sale program we are able to market and sell your property for at or below market value even though you may owe substantially more than that on the mortgage(s). A short sale will not only stop the foreclosure but will prevent the adverse credit implications associated with a foreclosure. If the short sale is done in conjunction with a bankruptcy filing the results are even more beneficial to the homeowner. Not only will the tax consequences be completely eliminated, but any shortage or “deficiency” will be discharged in the bankruptcy. The sale is generally easier to do since the lender knows there is no longer any personal recourse against the homeowner. Finally, with the filing of the bankruptcy, you are generally able to extend the length of time remaining in the property. Its not uncommon to remain a year of longer in your property without paying using a short sale combined with a bankruptcy.
Equity Recoupment:
The Equity Recoupment program allows our clients to recoup what they may have lost as a result of predatory lending and the current mortgage crisis. Strategically, by using a combination of the above programs and state consumer protection laws, McCandless Law Firm developed and pioneered a program that allows homeowners to legally remain in their home for 8-12 months or even years without making a single payment! Though it may sound to good to be true, the program is rooted in both California and Federal consumer protection statutes and the civil code, and the illegal shortcuts lenders have been taking over the past decade. Many homeowners are not aware of the vast state and federal laws that have been created over the last 20 years to address the very issues we are facing today with widespread foreclosures and predatory lending. For example if your monthly payment is $3,000 per month, in 8 months you will recoup $24,000, in 16 months that is nearly $50,000. Your recoupment will continue to grow the longer we are able to keep you in your home.
Deed In Lieu of Foreclosure:
If you are behind on your monthly mortgager payments and are unable to sell your home at the current market value, a deed in lieu of foreclosure may be an option to prevent a foreclosure from tarnishing your credit. The process involves giving the property directly back to the lender, or “deeding it back in lieu of foreclosure.” The lender benefits as they are able to mitigate the additional losses they would incur from having to proceed with a lengthy foreclosure. Often times the lender will offer this option at the onset of a foreclosure proceeding, however in our experiences lenders will seldom follow through and effectuate the transfer without Attorney intervention. By stepping in and advocating for our clients we are able to 1) Get the homeowner released from most or all of the personal indebtedness associated with the defaulted loan 2) Prevent the homeowner from experiencing the public notoriety of a foreclosure and subsequent credit implications, and 3) Put money in our client’s pocket via “Cash for Keys”. Though it may appear to be a viable means of walking from your home unscathed, it is a complicated process requiring competent legal and tax advice.
Resource Links on Foreclosure:

Advanced Reading:

Stop foreclosure for 50.00 bucks

Law Offices of
TIMOTHY McCandless
15647 Village Dr
Victorville, Ca 92392
TEL (760) 733-8885; FAX (909)494-4214

California as of Sept 6, 2008 has added the following provisions that must be complied with prior to effectuating a foreclosure. It is hoped that lenders will work out things with borrowers as a result of this addition to civil code 2923.5.

The lenders however are running roughshod over borrowers and claiming to make telephonic contact. When they make contact they merely say you are $26,580.00 behind how are you going to pay. That’s working it out.

Most folks don’t have the 10,000.00 retainer to pay an attorney to file the lawsuit to make the lender do the right thing. Here is a way for under $50.00 to get the lender to the table.

File a declaration of non-compliance with 2923.5. In this declaration state that the real beneficiary has not contacted you and has not assessed your financial situation as mandated in 2923.5 (a) (2).

In this declaration state that you do not even know who the beneficiary is that is to say most lenders are not the true beneficiary.

Lastly you should claim the loan you want and the amount that you are willing to pay. When I say file I mean record at the county recorder and be sure to include the legal description of your property. You must have your signature notarized by a notary public. Then send this conformed copy of the recorded document to anyone that is trying to foreclose. The trustee the title company, MERS, the servicer.(update Dec 2008) Some counties would not record the former form advised for this form. However there is provision for recording a declaration. I have renamed it a declaration and put a penalty of perjury statement at the signature line.

This may cause the title company not to insure the title upon completion of the foreclosure. This may force the lender to undergo a judicial foreclosure in most cases in the subprime world they don’t even have the promissory note so a judicial foreclosure would be impossible.

CC 2923.5

(a) (1) A mortgagee, trustee, beneficiary, or authorized agent may not file a notice of default pursuant to Section 2924 until 30 days after contact is made as required by paragraph (2) or 30
days after satisfying the due diligence requirements as described in
subdivision (g).
(2) A mortgagee, beneficiary, or authorized agent shall contact
the borrower in person or by telephone in order to assess the
borrower’s financial situation and explore options for the borrower
to avoid foreclosure. During the initial contact, the mortgagee,
beneficiary, or authorized agent shall advise the borrower that he or
she has the right to request a subsequent meeting and, if requested,
the mortgagee, beneficiary, or authorized agent shall schedule the
meeting to occur within 14 days. The assessment of the borrower’s
financial situation and discussion of options may occur during the
first contact, or at the subsequent meeting scheduled for that
purpose. In either case, the borrower shall be provided the toll-free
telephone number made available by the United States Department of
Housing and Urban Development (HUD) to find a HUD-certified housing
counseling agency. Any meeting may occur telephonically.
(b) A notice of default filed pursuant to Section 2924 shall
include a declaration from the mortgagee, beneficiary, or authorized
agent that it has contacted the borrower, tried with due diligence to
contact the borrower as required by this section, or the borrower
has surrendered the property to the mortgagee, trustee, beneficiary,
or authorized agent.
(c) If a mortgagee, trustee, beneficiary, or authorized agent had
already filed the notice of default prior to the enactment of this
section and did not subsequently file a notice of rescission, then
the mortgagee, trustee, beneficiary, or authorized agent shall, as
part of the notice of sale filed pursuant to Section 2924f, include a
declaration that either:
(1) States that the borrower was contacted to assess the borrower’
s financial situation and to explore options for the borrower to
avoid foreclosure.
(2) Lists the efforts made, if any, to contact the borrower in the
event no contact was made.
(d) A mortgagee’s, beneficiary’s, or authorized agent’s loss
mitigation personnel may participate by telephone during any contact
required by this section.
(e) For purposes of this section, a “borrower” shall include a
mortgagor or trustor.
(f) A borrower may designate a HUD-certified housing counseling
agency, attorney, or other advisor to discuss with the mortgagee,
beneficiary, or authorized agent, on the borrower’s behalf, 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 mortgagee, beneficiary, or
authorized agent is subject to approval by the borrower.
(g) A notice of default may be filed pursuant to Section 2924 when
a mortgagee, beneficiary, or authorized agent 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 mortgagee, beneficiary, or authorized agent. For
purposes of this section, “due diligence” shall require and mean all
of the following:
(1) A mortgagee, beneficiary, or authorized agent 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 mortgagee,
beneficiary, or authorized agent 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 mortgagee, beneficiary, or authorized agent 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 mortgagee, beneficiary, or
authorized agent.
(C) A mortgagee, beneficiary, or authorized agent 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
mortgagee, beneficiary, or authorized agent shall then send a
certified letter, with return receipt requested.
(4) The mortgagee, beneficiary, or authorized agent 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 mortgagee, beneficiary, or authorized agent 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 mortgagee, beneficiary, or authorized
agent when discussing options for avoiding foreclosure.
(C) A toll-free telephone number for borrowers who wish to discuss
options for avoiding foreclosure with their mortgagee, beneficiary,
or authorized agent.
(D) The toll-free telephone number made available by HUD to find a
HUD-certified housing counseling agency.
(h) Subdivisions (a), (c), and (g) shall not apply if any of the
following occurs:
(1) The borrower has surrendered the 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
(2) The borrower 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.
(3) The borrower has filed for bankruptcy, and the proceedings
have not been finalized.
(i) This section shall apply only to loans made from January 1,
2003, to December 31, 2007, inclusive, that are secured by
residential real property and are for owner-occupied residences. For
purposes of this subdivision, “owner-occupied” means that the
residence is the principal residence of the borrower.
(j) This section shall remain in effect only until January 1, 2013,
and as of that date is repealed, unless a later enacted statute,
that is enacted before January 1, 2013, deletes or extends that date.



________________________________________________ SPACE ABOVE THIS LINE FOR RECORDER’S USE


Them (Your lender ,trustee ETC.



Notice is given that the LENDERS AND OR TRUSTEES LISTED ABOVE has not complied with civil code 2923.5. As such all notices of default and or trustee sales and such other recordings and actions are void as a matter of law.
I have in good faith attempted to mediate the loan and the true beneficiary has refused to negotiate in good faith. They have not complied with the provisions in which they were to meet with me in person or by telephone in order to assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure. During the initial contact, the mortgagee,
Beneficiary, or authorized agent shall advise the borrower that he or she has the right to request a subsequent meeting and, if requested, the mortgagee, beneficiary, or authorized agent shall schedule the meeting to occur within 14 days. The assessment of the borrower’s financial situation and discussion of options may occur during the first contact, or at the subsequent meeting scheduled for that purpose.

If we had met the property would have reflected a value of ______________. I am willing to pay an interest rate of _____and I will be able to make monthly payments of__________. The principal balance of my loan should be reduced the present market value of ____________.

In the event this is not acceptable I hereby exercise my right to have the security interest in this property rescinded pursuant to the Truth in Lending Act.

APN: ______ ________ ___________

And with a legal description of:
Lot __ of Tract No. _________, in the City of _____________________, County of ___________, State of California, as per Map recorded in Book ________, Pages ___ and ____ of Maps, in the Office of the County Recorder of said County
I declare under penalty of perjury that the forgoing is true and correct.
Dated ______________ .


Subscribed and sworn to before me this ______
day of ____, 2008
Notary Public in and for the County of _______________, State of California

Predatory lending respa tila Foreclosure Lender Liability loan modification

Predatory home loans, like all home mortgages, are increasingly subject to assignment. Now, more than ever before, a market in assignment of loans casts a shadow over how those loans are originated and serviced. While assignment of loans has always been common, relatively new and complex patterns, alternatively referred to as structured finance or securitization, have rendered the assumptions of traditional assignment law quaintly over-generalized.

Today mortgage loans, particularly more expensive loans marketed to those with poor credit histories, are likely to be purchased by investment trusts, bundled into large geographically diverse pools with many other loans, and sold as securities to investors. Unlike the law, which has been slow to react to this trend, mortgage lenders, brokers, and servicers now actively bargain with a shrewd eye on the ultimate destination of the loans they facilitate.

Many scholars of mortgage lending and secured credit have for the past several years gone about the project of explaining, predicting, and attempting to influence this secondary market in home mortgages. Some have pointed out that lenders no longer “lend” in the sense that they themselves expect repayment. Rather they manufacture a commercial product – borrowers – that are measured, sold, and at times discarded by a consuming capital market. Many of today’s mortgage lenders are assignment production companies that create income streams for the nation’s capital markets.

Several scholars have demonstrated significant benefits from this process. Collectively, investors have large amounts of capital, but a limited ability to originate and monitor individual loans. Conversely, mortgage lenders are well situated to make loans, but are typically constrained in the number of loans they can make by their limited access to capital. Provided they can surmount hurdles like trust, information asymmetry, transaction costs, and taxes, these two groups have much to offer each other by way of mutually beneficial exchange.

The engineering of securitization conduits is a financial science of overcoming the hurdles separating these two groups. All this is well and good, in that homeowners receive new access to cheap capital, making (other things being equal) home ownership more affordable at the margins. When everything goes according to plan, society has much to gain from securitization of home mortgage loans.
But sadly, like many new technologies, securitization comes with a dark side.

The contours of this side began to emerge, like so many other consumer problems, in the caseloads of legal aid lawyers serving the working poor. In the late 1980s and early 1990s, legal aid lawyers began seeing growth in the volume of families and senior citizens losing their homes to loan terms and marketing practices removed in degree from theft only ever so slightly by the black magic of boilerplate. Horror stories of breathtaking creditor avarice became common features in newspapers around the country: a seventy-six year-old Georgia widower with monthly mortgage payment in excess of his social security income; a blind Ohio couple duped with a fraudulent appraisal, forged paperwork, and thousands of dollars in kickbacks to a deceitful broker; and, a New York retiree with two amputated legs, $ 472 in monthly social security income, and a $ 424 mortgage payment. For years these stories were dismissed as either anecdotal or impossible, since, after all, Adam Smith’s great invisible hand must inevitably protect consumers through forcing bad actors from the marketplace with the Darwin-like natural selection born of rational, self-interested, autonomous market behavior. Who are you going to believe, the local legal aid lawyer or Adam Smith?

Since then, facts have forced a consensus that the term predatory lending – which no longer needs to be surrounded by quotation marks – is real, pervasive, and destructive. A host of empirical studies leaves no serious doubt that predatory mortgage lending is a significant problem for American society. More controversial is this: who should bear the liability for predatory lending practices?

Predatory lenders and brokers themselves specialize in maintaining judgment-proof operations. In fact predatory lenders operate on the edge of bankruptcy, quickly folding up and moving on whenever the heat gets close. This is possible because in today’s market, mortgage originators and brokers quickly assign predatory loans through a complex and opaque series of transactions involving nearly a dozen different litigation-savvy companies.

Predatory lending victims (as well as courts) are left mystified when each blames the other and no one takes responsibility for unfair commercial practices. Often victims are left asserting predatory lending claims as defenses against a faceless investment trust when it attempts to foreclose on their family home. Universally, the trust claims ignorance of predatory practices committed by other parties to the transaction.

This scenario, seen again and again by consumer attorneys all around the country, has forced policy makers to ask whether investors in subprime mortgages have the opportunity and ability to screen their portfolios for predatory practices, and in effect police the behavior of originators, brokers, and servicers. Indeed, this question – should investors be required to monitor lenders for predatory practices – has become the most controversial and important question in the debate over substantive mortgage lending regulatory reform. First, I wiould argues that the concept of predatory lending has been cast too narrowly. I suggest that some of the institutions that sponsor and administer mortgage securitization are complicit in predatory lending. By encouraging, facilitating, and profiting from predatory loans, these financiers have themselves slipped into predation. The notion of “predatory structured finance” is a necessary addendum to the lexicon of predatory lending.

A historical argument that structured finance has rendered much of the existing fabric of consumer credit protection law obsolete. Most consumer protection statutes were adopted before Wall Street learned to securitize home mortgages. As a result, the terminology of those statutes frequently leaves predatory home mortgage loans beyond their scope. Developing within these conceptual cracks in the nation’s consumer protection edifice, securitization has allowed much of the subprime mortgage market to evolve unconfined by many of the substantive standards in consumer protection law.

A closer look at the history of structured finance reveals that organizational technology has outpaced our consumer protection law, in effect deregulating much of the consumer mortgage market.
I would argue that the reform strategy favored by many legislators and a growing number of scholars – assignee liability law – is only a partial solution. Assignee liability rules render the holder of an assigned mortgage loan liable for legal violations made in the origination of the loan. I argue that this strategy, while a necessary component of the law, is by itself inadequate because it excuses many of the most culpable parties from accountability. In addition to limited assignee liability, I would advocates further maturation of an emerging common law trend of using imputed liability theories to hold structured financiers liable for their own predatory behavior.

Lender liability predatory lending foreclosure

Loans (Photo credit: zingbot)

Today mortgage loans, particularly more expensive loans marketed to those with poor credit histories, are likely to be purchased by investment trusts, bundled into large geographically diverse pools with many other loans, and sold as securities to investors. … Assignee liability rules render the holder of an assigned mortgage loan liable for legal violations made in the origination of the loan. … If a mortgage loan is covered by the relatively narrow scope of HOEPA, then the lender must deliver a special advance warning at least three days prior to consummation. … HOEPA goes further than any other federal statute in creating assignee liability for predatory mortgage lending. … Similarly, it may not be clear how state predatory lending statute assignee liability provisions should be interpreted if the underlying mortgage includes a waiver of defense clause, and the state has not banned those clauses in consumer contracts. … the primary mechanism for distributing liability to a secondary wrongdoer for predatory origination is by assignee liability rules, including the common law of assignment, section 141 of the TILA, the HOEPA’s due diligence standard, and various state predatory lending provisions. … The FTC’s holder-notice rule steers a responsible middle road on this question by capping investor liability at the amount paid by a consumer under the loan in question. …

No assignment no sale no foreclosure cancellation of sale

Law Offices of
TIMOTHY McCandless
15647 Village Dr
Victorville, Ca 92392
TEL (760) 733-8885; FAX (909)494-4214

Most all foreclosures in California can be set aside. The power of sale by non judicial means is contained in the civil code 2932. In order to be valid the assignment must be recorded California civil code 2932.5. Most all notices of default recorded by the “Sub-Prime” lenders have not recorded an assignment till just before or just after the Trustee’s sale. They rely on the MERS agency agreement to protect them but under California law they are wrong.