Denial of Loan Modification mortgage redlining as a constitutional right

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

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

 

Convincing the Jury

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Bank Of America, Foreclosure Crisis, Foreclosure Crisis, Video, Brad Miller, Foreclosure Settlement, Independent Foreclosure Review, Foreclosure Review, Office Of The Comptroller Of The Currency, Business News

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

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

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

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

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

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

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

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

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

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

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

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

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

Also on HuffPost:

• Columbine Shooting Survivor Fighting Foreclosure With Occupy LA’s Help

  Richard Castaldo survived the shooting at Columbine High School 13 years ago and now he is fighting to <a href=”http://www.huffingtonpost.com/2012/11/27/richard-castaldo-columbine-foreclosure-occupy-la_n_2198146.html?utm_hp_ref=business&#8221; target=”_hplink”>rescue his home from foreclosure</a>. The people of Occupy Los Angeles are helping Castaldo and others like him to save their homes.

• USDA Forecloses On 78-Year-Old Cancer Patient

  The USDA foreclosed on 78-year-old Texas resident Alicia Ramirez, reportedly <a href=”http://www.huffingtonpost.com/2012/08/06/alicia-ramirez-cancer-eviction_n_1747933.html?utm_hp_ref=business&#8221; target=”_hplink”>after she was diagnosed with cancer.</a> While the USDA has thus far allowed Ramirez to remain in her home, a court order evicting the senior citizen could be issued at any time.

• Foreclosure Victims Lose Belongings After Free Yard Sale Goes Wrong

  The Vercher family of Woodstock, Georgia, offered to give away a <a href=”http://www.huffingtonpost.com/2012/10/25/vercher-family-woodstock-craigslist-foreclosed_n_2017738.html?1351188857&#8243; target=”_hplink”>number of household items in a Craigslist ad</a> after their house was foreclosed on. Instead, they ended up losing nearly all of their belongings when people began taking items from inside the house.

• Wells Fargo Offers Cancer Patient ‘Assistance’ Then Forecloses

  Terminal breast cancer patient Cindi Davis could no longer keep up with her mortgage payments due to the cost of her medical bills. Faced with media scrutiny, her lender <a href=”http://www.huffingtonpost.com/2012/09/14/wells-fargo-forecloses-cancer-patient-cindi-davis_n_1883956.html?1347635836&#8243; target=”_hplink”>Wells Fargo told a local radio station it was seeking “assistance”</a> for Davis just weeks before setting the date to auction her home for December 19th, 2012.

• Coca-Cola Heirs Lose $37.5 Million To Foreclosure

  Descendants of Coca-Cola founder Asa Candler have been hit hard by the housing bust with their <a href=”http://www.huffingtonpost.com/2012/09/17/candler-family-foreclosure-losses_n_1890911.html?1347906436&#8243; target=”_hplink”>real estate development company losing $37.5 million to foreclosure since the Great Recession began</a>. (Pictured: the former mansion of Coca-Cola heir Asa Griggs “Buddy” Candler, Jr.)

• Mom Evicted On Mother’s Day

  After she and her husband were allegedly duped into a bad loan, California mom Sheri Prizant faced the possibility of being evicted from her home on Mother’s Day, <a href=”http://www.huffingtonpost.com/2012/05/11/sheri-prizant-eviction-mothers-day_n_1507681.html?1336741860&#8243; target=”_hplink”>MSNBC</a> reports.

• CT Family Never Missed A Payment

  Shock Baitch and his wife Lisa of Connecticut <a href=”http://www.huffingtonpost.com/2010/12/30/bank-of-america-foreclosure_n_802861.html&#8221; target=”_hplink”>were threatened with foreclosure by Bank of America</a> after never missing a payment. BofA mistakenly told credit agencies they were seeking a loan modification. “Now I am literally and financially paying for it,” Baitch told <a href=”http://ctwatchdog.com/finance/bank-of-americas-christmas-present-foreclose-even-though-not-a-payment-missed&#8221; target=”_hplink”>CTWatchdog.com</a>.

• Man Gets Free Home After Lender Shutdown

  Facing foreclosure, Perry Laspina of Jacksonville, Florida ended up with a home practically for free after his mortgage lender was shut down by parent company Wells Fargo, <a href=”http://realestate.aol.com/blog/2011/04/14/foreclosure-foul-up-wins-man-a-free-home/&#8221; target=”_hplink”>AOL Real Estate reports</a>. Laspina got the home “because of the significant decreased value of the property,” a bank spokesman said.

• BofA Forecloses On Building With Own Branch Office

  In Boynton Beach, Florida, Bank of America filed a foreclosure lawsuit against the owner of a building that houses one of its own branches, <a href=”http://www.bizjournals.com/southflorida/news/2011/05/27/foreclosure-roundup.html?page=all&#8221; target=”_hplink”>South Florida Business Journal reports</a>.

• Threatened Over $0.00 Unpaid Mortgage Payment

  A Massachusetts man was told he’d <a href=”http://www.huffingtonpost.com/2011/06/08/massachusetts-homeowner-receives-foreclosure_n_872518.html&#8221; target=”_hplink”>face foreclosure unless he paid an outstanding mortgage payment worth $0.00</a>. “I’m going to write a check to them for zero dollars and have it clear? I couldn’t help but laugh,” he joked with local <a href=”http://www.wwlp.com/dpp/news/i_team/I-Team:Man-gets-a-$0-foreclosure-notice&#8221; target=”_hplink”>News 22 WWLP</a>.

• Home Allegedly Ransacked By Mortgage Company

  Chris Boudreau of Brooksville, Florida <a href=”http://www.huffingtonpost.com/2011/07/06/florida-home-ransacked_n_890656.html&#8221; target=”_hplink”>told local news that his house was ransacked by his mortgage company</a>, 21st Mortgage Corporation, who he says even shredded his wife’s wedding dress. “When she saw what happened…she was crying her eyes out,” <a href=”http://www.wtsp.com/news/local/article/199268/8/Mans-home-trashed-by-mortgage-company&#8221; target=”_hplink”>he told WTSP 10 News</a>.

• Mortgage Payment Made Too Early

  A senior couple in Pasco County, Florida faced foreclosure not for missing payments, <a href=”http://www.huffingtonpost.com/2011/08/22/senior-florida-couple-faces-foreclosure-mortgage-early_n_933147.html&#8221; target=”_hplink”>but for making one too early</a>. According to a Bank of America representative, they made themselves ineligible for a mortgage modification under the Home Affordable Modification Program when they did not make their payment in the “month in which it [was] due.”

• Foreclosure In ‘World’s Richest Apartment Building’

  Property developer Kent Swig and his soon-to-be ex-wife Elizabeth faced foreclosure from their apartment at 740 Park Avenue, <a href=”http://www.huffingtonpost.com/2011/08/26/foreclosure-hits-property-developer-billionaire-building_n_937676.html&#8221; target=”_hplink”>a New York City address often cited as “the world’s richest apartment building.”</a>

• Untransferred Title Leads To Unfair Foreclosure

  Brian and Khanklink Pyron of Houston, Texas were <a href=”http://www.huffingtonpost.com/2011/10/10/brian-khanklink-pyron-foreclosure_n_1003339.html&#8221; target=”_hplink”>threatened with foreclosure despite keeping current on their payments due to an untransferred title</a>. “We did everything we were supposed to do,” Brian Pyron told <a href=”http://www.myfoxhouston.com/dpp/news/local/110926-family-hit-by-surprise-foreclosure?CMP=201110_emailshare&#8221; target=”_hplink”>MyFoxHouston</a>.

• Foreclosure On Hurricane-Destroyed Home

  Brad Gana, of Seabrook, Texas was threatened with foreclosure by Bank of America even though his <a href=”http://www.huffingtonpost.com/2011/10/31/foreclosure-crisis-bank-of-america-hurricane-ike_n_1068080.html&#8221; target=”_hplink”>house had been completely destroyed years earlier in Hurricane Ike</a>. “Bank of America is ruthless in their incompetency,” <a href=”http://www.click2houston.com/news/Bank-Forecloses-On-Home-Destroyed-By-Ike/-/1735978/4718190/-/vpooliz/-/index.html&#8221; target=”_hplink”>he told Houston 2 News</a>.

• $1 Coding Error Leads To Foreclosure

  Utah’s Shantell Curtis and her family were threatened with <a href=”http://www.huffingtonpost.com/2011/11/03/bofa-foreclosure-missing-1-already-sold-home_n_1074538.html&#8221; target=”_hplink”>foreclosure by Bank of America on a home they had already sold years prior</a>. On top of that, the whole episode concerned the matter of just a $1 coding error.

• Investigative Journalist Becomes Foreclosure Victim

  George Knapp, chief investigative reporter for Las Vegas CBS affiliate KLAS, found he was a <a href=”http://www.huffingtonpost.com/2011/11/29/foreclosure-crisis-investigative-reporter-george-knapp-victims_n_1119480.html?ref=business&#8221; target=”_hplink”>victim of the very brand of foreclosure fraud he was investigating</a> for a news report. Him being the reporter, the episode put him in a “very weird spot,” <a href=”http://www.poynter.org/latest-news/als-morning-meeting/153585/local-tv-station-tackles-mortgage-mess-as-investigative-reporter-discovers-hes-a-victim-too/&#8221; target=”_hplink”>he told the Poynter Insitute</a>.

• BofA Falsely Threatens Paralyzed Man With Foreclosure

  Robert Galanida, a 41-year-old man paralyzed from the shoulders down, <a href=”http://www.huffingtonpost.com/2012/01/12/bank-of-america-sends-false-statements-paralyzed-eviction_n_1202463.html&#8221; target=”_hplink”>battled Bank of America for nearly a decade</a> because it repeatedly sent him false statements threatening foreclosure.

• Tracy Morgan Refuses Mother Foreclosure Help

  In January 2012, actor Tracy Morgan reportedly refused to give his mother <a href=”http://www.huffingtonpost.com/2012/01/31/tracy-morgan-foreclosure-mother_n_1244641.html&#8221; target=”_hplink”>$25,000 she needed to avoid foreclosure</a>, instead offering only $2,000.

• Bank Of America Plaza Foreclosure

  The Bank of America Plaza in Atlanta was sold at a foreclosure auction in February after its landlord, BentleyForbes, could no longer afford mortgage payments, <a href=”http://www.businessweek.com/news/2012-02-14/american-foreclosure-bottoms-at-atlanta-tower-auction-mortgages.html&#8221; target=”_hplink”>BusinessWeek reports</a>. BofA <a href=”http://www.huffingtonpost.com/2012/01/10/bank-of-america-plaza-foreclosure_n_1197040.html&#8221; target=”_hplink”>was a tenant in the building at the time</a> but had no other connection besides sharing the tower’s ironic name.

• JPMorgan Tries To Foreclose On Civil Rights Activist

  Even while it promoted a February 2012 campaign to “fulfill” the “vision” of Martin Luther King Jr., <a href=”http://www.huffingtonpost.com/2012/02/07/helen-bailey-foreclosure_n_1260078.html?ref=foreclosure-crisis&#8221; target=”_hplink”>JPMorgan Chase threatened 78-year-old civil rights activist Helen Bailey with foreclosure</a>. The bank ultimately allowed Bailey to stay in her home indefinitely after Occupy Nashville helped bring national attention to the issue, <a href=”http://thinkprogress.org/economy/2012/02/14/425255/helen-bailey-foreclosure/&#8221; target=”_hplink”>Think Progress</a> reports.

• Foreclosure At Luxury Retirement Home

  Despite being billed as “cosmopolitan living for ages 60+,” the luxury <a href=”http://www.huffingtonpost.com/2012/03/02/fox-hill-foreclosure_n_1314970.html&#8221; target=”_hplink”>Fox Hill Senior Condominiums was threatened with foreclosure</a> in March after its lenders said they were backing out.

• Man Fined For Not Mowing His Old Lawn

  David Englett was charged with fines by the city of Arlington, Texas for not mowing the lawn of <a href=”http://www.huffingtonpost.com/2012/03/02/david-englett_n_1317276.html&#8221; target=”_hplink”>a house he had already lost to foreclosure years earlier</a>.

• 101-Year-Old Woman Evicted From Home

  Texana Hollis was evicted from her home due to foreclosure in September 2011, then <a href=”http://www.huffingtonpost.com/2012/01/22/texana-hollis-evicted-detroit-woman_n_1222452.html?ref=foreclosure-crisis&#8221; target=”_hplink”>denied a subsequent promise that she could move back in</a> by the U.S. Department of Housing and Urban Development. It wasn’t until April 2012 that <a href=”http://www.cbsnews.com/8301-201_162-57409700/texana-hollis-evicted-at-101-allowed-back-home/&#8221; target=”_hplink”>she was finally granted permission to return to the home</a> she’s lived in for 60 years.

• BofA Forecloses On Woman After Telling Her To Miss Payments

  According to Pamela Flores, an Atlanta homeowner, <a href=”http://www.huffingtonpost.com/2012/04/10/bank-america-foreclosure-miss-mortgage-payment_n_1414988.html&#8221; target=”_hplink”>Bank of America advised her to stop making payments</a> on her loan in order to negotiate a modification. After doing so, the bank foreclosed on her anyway, claiming she’d missed a trial payment

• Mother, Disabled Daughter Forced Out Of Home Even After BofA Modification

  Dirma Rodriguez and her disabled daughter<a href=”https://editorial.huffingtonpost.com/entry/?blog_id=2&entry_id=1423883&#8243; target=”_hplink”> were forced to flee their home in minutes</a> after Bank of America sold it to a flipper at a foreclosure auction, even though the bank had already modified her loan. But not all hope is lost; Rodriguez may get her home back after the Occupy Fights Foreclosure movement intervened.

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

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

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

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

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

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

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

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

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

Abuses by Mortgage Service Companies

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

Abusive Mortgage Servicing Defined:

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

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

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

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

5 Dec

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

2013 is going to be a good year

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

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

Improper foreclosure or attempted foreclosure

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

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

Improper fees

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

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

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

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

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

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

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

Improperly forced-placed insurance

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

Escrow Account Mismanagement

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

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

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

BILL NUMBER: AB 278	CHAPTERED
	BILL TEXT

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

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

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

                        FEBRUARY 8, 2011

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

	LEGISLATIVE COUNSEL'S DIGEST

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

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

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

    (d) A borrower may designate, with consent given in writing, a
HUD-certified housing counseling agency, attorney, or other adviser
to discuss with the mortgage servicer, on the borrower's behalf, the
borrower's financial situation and options for the borrower to avoid
foreclosure. That contact made at the direction of the borrower shall
satisfy the contact requirements of paragraph (2) of subdivision
(a). Any loan modification or workout plan offered at the meeting by
the mortgage servicer is subject to approval by the borrower.
    (e) A notice of default may be recorded pursuant to Section 2924
when a mortgage servicer has not contacted a borrower as required by
paragraph (2) of subdivision (a) provided that the failure to contact
the borrower occurred despite the due diligence of the mortgage
servicer. For purposes of this section, "due diligence" shall require
and mean all of the following:
   (1) A mortgage servicer shall first attempt to contact a borrower
by sending a first-class letter that includes the toll-free telephone
number made available by HUD to find a HUD-certified housing
counseling agency.
   (2) (A) After the letter has been sent, the mortgage servicer
shall attempt to contact the borrower by telephone at least three
times at different hours and on different days. Telephone calls shall
be made to the primary telephone number on file.
   (B) A mortgage servicer may attempt to contact a borrower using an
automated system to dial borrowers, provided that, if the telephone
call is answered, the call is connected to a live representative of
the mortgage servicer.
   (C) A mortgage servicer satisfies the telephone contact
requirements of this paragraph if it determines, after attempting
contact pursuant to this paragraph, that the borrower's primary
telephone number and secondary telephone number or numbers on file,
if any, have been disconnected.
   (3) If the borrower does not respond within two weeks after the
telephone call requirements of paragraph (2) have been satisfied, the
mortgage servicer shall then send a certified letter, with return
receipt requested.
   (4) The mortgage servicer shall provide a means for the borrower
to contact it in a timely manner, including a toll-free telephone
number that will provide access to a live representative during
business hours.
   (5) The mortgage servicer has posted a prominent link on the
homepage of its Internet Web site, if any, to the following
information:
   (A) Options that may be available to borrowers who are unable to
afford their mortgage payments and who wish to avoid foreclosure, and
instructions to borrowers advising them on steps to take to explore
those options.
   (B) A list of financial documents borrowers should collect and be
prepared to present to the mortgage servicer when discussing options
for avoiding foreclosure.
   (C) A toll-free telephone number for borrowers who wish to discuss
options for avoiding foreclosure with their mortgage servicer.
   (D) The toll-free telephone number made available by HUD to find a
HUD-certified housing counseling agency.
    (f) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
   (g) This section shall apply only to entities described in
subdivision (b) of Section 2924.18.
    (h) This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 5.  Section 2923.5 is added to the Civil Code, to read:
   2923.5.  (a) (1) A mortgage servicer, mortgagee, trustee,
beneficiary, or authorized agent may not record a notice of default
pursuant to Section 2924 until both of the following:
   (A) Either 30 days after initial contact is made as required by
paragraph (2) or 30 days after satisfying the due diligence
requirements as described in subdivision (e).
   (B) The mortgage servicer complies with subdivision (a) of Section
2924.11, if the borrower has provided a complete application as
defined in subdivision (f) of Section 2924.11.
   (2) A mortgage servicer shall contact the borrower in person or by
telephone in order to assess the borrower's financial situation and
explore options for the borrower to avoid foreclosure. During the
initial contact, the mortgage servicer shall advise the borrower that
he or she has the right to request a subsequent meeting and, if
requested, the mortgage servicer shall schedule the meeting to occur
within 14 days. The assessment of the borrower's financial situation
and discussion of options may occur during the first contact, or at
the subsequent meeting scheduled for that purpose. In either case,
the borrower shall be provided the toll-free telephone number made
available by the United States Department of Housing and Urban
Development (HUD) to find a HUD-certified housing counseling agency.
Any meeting may occur telephonically.
   (b) A notice of default recorded pursuant to Section 2924 shall
include a declaration that the mortgage servicer has contacted the
borrower, has tried with due diligence to contact the borrower as
required by this section, or that no contact was required because the
individual did not meet the definition of "borrower" pursuant to
subdivision (c) of Section 2920.5.
   (c) A mortgage servicer's loss mitigation personnel may
participate by telephone during any contact required by this section.

   (d) A borrower may designate, with consent given in writing, a
HUD-certified housing counseling agency, attorney, or other adviser
to discuss with the mortgage servicer, on the borrower's behalf, the
borrower's financial situation and options for the borrower to avoid
foreclosure. That contact made at the direction of the borrower shall
satisfy the contact requirements of paragraph (2) of subdivision
(a). Any loan modification or workout plan offered at the meeting by
the mortgage servicer is subject to approval by the borrower.
   (e) A notice of default may be recorded pursuant to Section 2924
when a mortgage servicer has not contacted a borrower as required by
paragraph (2) of subdivision (a) provided that the failure to contact
the borrower occurred despite the due diligence of the mortgage
servicer. For purposes of this section, "due diligence" shall require
and mean all of the following:
   (1) A mortgage servicer shall first attempt to contact a borrower
by sending a first-class letter that includes the toll-free telephone
number made available by HUD to find a HUD-certified housing
counseling agency.
   (2) (A) After the letter has been sent, the mortgage servicer
shall attempt to contact the borrower by telephone at least three
times at different hours and on different days. Telephone calls shall
be made to the primary telephone number on file.
   (B) A mortgage servicer may attempt to contact a borrower using an
automated system to dial borrowers, provided that, if the telephone
call is answered, the call is connected to a live representative of
the mortgage servicer.
   (C) A mortgage servicer satisfies the telephone contact
requirements of this paragraph if it determines, after attempting
contact pursuant to this paragraph, that the borrower's primary
telephone number and secondary telephone number or numbers on file,
if any, have been disconnected.
   (3) If the borrower does not respond within two weeks after the
telephone call requirements of paragraph (2) have been satisfied, the
mortgage servicer shall then send a certified letter, with return
receipt requested.
   (4) The mortgage servicer shall provide a means for the borrower
to contact it in a timely manner, including a toll-free telephone
number that will provide access to a live representative during
business hours.
   (5) The mortgage servicer has posted a prominent link on the
homepage of its Internet Web site, if any, to the following
information:
   (A) Options that may be available to borrowers who are unable to
afford their mortgage payments and who wish to avoid foreclosure, and
instructions to borrowers advising them on steps to take to explore
those options.
   (B) A list of financial documents borrowers should collect and be
prepared to present to the mortgage servicer when discussing options
for avoiding foreclosure.
   (C) A toll-free telephone number for borrowers who wish to discuss
options for avoiding foreclosure with their mortgage servicer.
   (D) The toll-free telephone number made available by HUD to find a
HUD-certified housing counseling agency.
   (f) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
   (g) This section shall become operative on January 1, 2018.
  SEC. 6.  Section 2923.55 is added to the Civil Code, to read:
   2923.55.  (a) A mortgage servicer, mortgagee, trustee,
beneficiary, or authorized agent may not record a notice of default
pursuant to Section 2924 until all of the following:
    (1) The mortgage servicer has satisfied the requirements of
paragraph (1) of subdivision (b).
   (2) Either 30 days after initial contact is made as required by
paragraph (2) of subdivision (b) or 30 days after satisfying the due
diligence requirements as described in subdivision (f).
   (3) The mortgage servicer complies with subdivision (c) of Section
2923.6, if the borrower has provided a complete application as
defined in subdivision (h) of Section 2923.6.
   (b) (1) As specified in subdivision (a), a mortgage servicer shall
send the following information in writing to the borrower:
   (A) A statement that if the borrower is a servicemember or a
dependent of a servicemember, he or she may be entitled to certain
protections under the federal Servicemembers Civil Relief Act (50
U.S.C. Sec. 501 et seq.) regarding the servicemember's interest rate
and the risk of foreclosure, and counseling for covered
servicemembers that is available at agencies such as Military
OneSource and Armed Forces Legal Assistance.
   (B) A statement that the borrower may request the following:
   (i) A copy of the borrower's promissory note or other evidence of
indebtedness.
   (ii) A copy of the borrower's deed of trust or mortgage.
   (iii) A copy of any assignment, if applicable, of the borrower's
mortgage or deed of trust required to demonstrate the right of the
mortgage servicer to foreclose.
   (iv) A copy of the borrower's payment history since the borrower
was last less than 60 days past due.
   (2) A mortgage servicer shall contact the borrower in person or by
telephone in order to assess the borrower's financial situation and
explore options for the borrower to avoid foreclosure. During the
initial contact, the mortgage servicer shall advise the borrower that
he or she has the right to request a subsequent meeting and, if
requested, the mortgage servicer shall schedule the meeting to occur
within 14 days. The assessment of the borrower's financial situation
and discussion of options may occur during the first contact, or at
the subsequent meeting scheduled for that purpose. In either case,
the borrower shall be provided the toll-free telephone number made
available by the United States Department of Housing and Urban
Development (HUD) to find a HUD-certified housing counseling agency.
Any meeting may occur telephonically.
   (c) A notice of default recorded pursuant to Section 2924 shall
include a declaration that the mortgage servicer has contacted the
borrower, has tried with due diligence to contact the borrower as
required by this section, or that no contact was required because the
individual did not meet the definition of "borrower" pursuant to
subdivision (c) of Section 2920.5.
   (d) A mortgage servicer's loss mitigation personnel may
participate by telephone during any contact required by this section.

   (e) A borrower may designate, with consent given in writing, a
HUD-certified housing counseling agency, attorney, or other adviser
to discuss with the mortgage servicer, on the borrower's behalf, the
borrower's financial situation and options for the borrower to avoid
foreclosure. That contact made at the direction of the borrower shall
satisfy the contact requirements of paragraph (2) of subdivision
(b). Any foreclosure prevention alternative offered at the meeting by
the mortgage servicer is subject to approval by the borrower.
   (f) A notice of default may be recorded pursuant to Section 2924
when a mortgage servicer has not contacted a borrower as required by
paragraph (2) of subdivision (b), provided that the failure to
contact the borrower occurred despite the due diligence of the
mortgage servicer. For purposes of this section, "due diligence"
shall require and mean all of the following:
   (1) A mortgage servicer shall first attempt to contact a borrower
by sending a first-class letter that includes the toll-free telephone
number made available by HUD to find a HUD-certified housing
counseling agency.
   (2) (A) After the letter has been sent, the mortgage servicer
shall attempt to contact the borrower by telephone at least three
times at different hours and on different days. Telephone calls shall
be made to the primary telephone number on file.
   (B) A mortgage servicer may attempt to contact a borrower using an
automated system to dial borrowers, provided that, if the telephone
call is answered, the call is connected to a live representative of
the mortgage servicer.
   (C) A mortgage servicer satisfies the telephone contact
requirements of this paragraph if it determines, after attempting
contact pursuant to this paragraph, that the borrower's primary
telephone number and secondary telephone number or numbers on file,
if any, have been disconnected.
   (3) If the borrower does not respond within two weeks after the
telephone call requirements of paragraph (2) have been satisfied, the
mortgage servicer shall then send a certified letter, with return
receipt requested, that includes the toll-free telephone number made
available by HUD to find a HUD-certified housing counseling agency.
   (4) The mortgage servicer shall provide a means for the borrower
to contact it in a timely manner, including a toll-free telephone
number that will provide access to a live representative during
business hours.
   (5) The mortgage servicer has posted a prominent link on the
homepage of its Internet Web site, if any, to the following
information:
   (A) Options that may be available to borrowers who are unable to
afford their mortgage payments and who wish to avoid foreclosure, and
instructions to borrowers advising them on steps to take to explore
those options.
   (B) A list of financial documents borrowers should collect and be
prepared to present to the mortgage servicer when discussing options
for avoiding foreclosure.
   (C) A toll-free telephone number for borrowers who wish to discuss
options for avoiding foreclosure with their mortgage servicer.
   (D) The toll-free telephone number made available by HUD to find a
HUD-certified housing counseling agency.
   (g) This section shall not apply to entities described in
subdivision (b) of Section 2924.18.
   (h) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
   (i)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 7.  Section 2923.6 of the Civil Code is amended to read:
   2923.6.  (a) The Legislature finds and declares that any duty that
mortgage servicers may have to maximize net present value under
their pooling and servicing agreements is owed to all parties in a
loan pool, or to all investors under a pooling and servicing
agreement, not to any particular party in the loan pool or investor
under a pooling and servicing agreement, and that a mortgage servicer
acts in the best interests of all parties to the loan pool or
investors in the pooling and servicing agreement if it agrees to or
implements a loan modification or workout plan for which both of the
following apply:
   (1) The loan is in payment default, or payment default is
reasonably foreseeable.
   (2) Anticipated recovery under the loan modification or workout
plan exceeds the anticipated recovery through foreclosure on a net
present value basis.
   (b) It is the intent of the Legislature that the mortgage servicer
offer the borrower a loan modification or workout plan if such a
modification or plan is consistent with its contractual or other
authority.
   (c) If a borrower submits a complete application for a first lien
loan modification offered by, or through, the borrower's mortgage
servicer, a mortgage servicer, mortgagee, trustee, beneficiary, or
authorized agent shall not record a notice of default or notice of
sale, or conduct a trustee's sale, while the complete first lien loan
modification application is pending. A mortgage servicer, mortgagee,
trustee, beneficiary, or authorized agent shall not record a notice
of default or notice of sale or conduct a trustee's sale until any of
the following occurs:
   (1) The mortgage servicer makes a written determination that the
borrower is not eligible for a first lien loan modification, and any
appeal period pursuant to subdivision (d) has expired.
   (2) The borrower does not accept an offered first lien loan
modification within 14 days of the offer.
   (3) The borrower accepts a written first lien loan modification,
but defaults on, or otherwise breaches the borrower's obligations
under, the first lien loan modification.
   (d) If the borrower's application for a first lien loan
modification is denied, the borrower shall have at least 30 days from
the date of the written denial to appeal the denial and to provide
evidence that the mortgage servicer's determination was in error.
   (e) If the borrower's application for a first lien loan
modification is denied, the mortgage servicer, mortgagee, trustee,
beneficiary, or authorized agent shall not record a notice of default
or, if a notice of default has already been recorded, record a
notice of sale or conduct a trustee's sale until the later of:
   (1) Thirty-one days after the borrower is notified in writing of
the denial.
   (2) If the borrower appeals the denial pursuant to subdivision
(d), the later of 15 days after the denial of the appeal or 14 days
after a first lien loan modification is offered after appeal but
declined by the borrower, or, if a first lien loan modification is
offered and accepted after appeal, the date on which the borrower
fails to timely submit the first payment or otherwise breaches the
terms of the offer.
   (f) Following the denial of a first lien loan modification
application, the mortgage servicer shall send a written notice to the
borrower identifying the reasons for denial, including the
following:
   (1) The amount of time from the date of the denial letter in which
the borrower may request an appeal of the denial of the first lien
loan modification and instructions regarding how to appeal the
denial.
   (2) If the denial was based on investor disallowance, the specific
reasons for the investor disallowance.
   (3) If the denial is the result of a net present value
calculation, the monthly gross income and property value used to
calculate the net present value and a statement that the borrower may
obtain all of the inputs used in the net present value calculation
upon written request to the mortgage servicer.
   (4) If applicable, a finding that the borrower was previously
offered a first lien loan modification and failed to successfully
make payments under the terms of the modified loan.

         (5) If applicable, a description of other foreclosure
prevention alternatives for which the borrower may be eligible, and a
list of the steps the borrower must take in order to be considered
for those options. If the mortgage servicer has already approved the
borrower for another foreclosure prevention alternative, information
necessary to complete the foreclosure prevention alternative.
   (g) In order to minimize the risk of borrowers submitting multiple
applications for first lien loan modifications for the purpose of
delay, the mortgage servicer shall not be obligated to evaluate
applications from borrowers who have already been evaluated or
afforded a fair opportunity to be evaluated for a first lien loan
modification prior to January 1, 2013, or who have been evaluated or
afforded a fair opportunity to be evaluated consistent with the
requirements of this section, unless there has been a material change
in the borrower's financial circumstances since the date of the
borrower's previous application and that change is documented by the
borrower and submitted to the mortgage servicer.
   (h) For purposes of this section, an application shall be deemed
"complete" when a borrower has supplied the mortgage servicer with
all documents required by the mortgage servicer within the reasonable
timeframes specified by the mortgage servicer.
   (i) Subdivisions (c) to (h), inclusive, shall not apply to
entities described in subdivision (b) of Section 2924.18.
   (j) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
    (k)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 8.  Section 2923.6 is added to the Civil Code, to read:
   2923.6.  (a) The Legislature finds and declares that any duty
mortgage servicers may have to maximize net present value under their
pooling and servicing agreements is owed to all parties in a loan
pool, or to all investors under a pooling and servicing agreement,
not to any particular party in the loan pool or investor under a
pooling and servicing agreement, and that a mortgage servicer acts in
the best interests of all parties to the loan pool or investors in
the pooling and servicing agreement if it agrees to or implements a
loan modification or workout plan for which both of the following
apply:
   (1) The loan is in payment default, or payment default is
reasonably foreseeable.
   (2) Anticipated recovery under the loan modification or workout
plan exceeds the anticipated recovery through foreclosure on a net
present value basis.
   (b) It is the intent of the Legislature that the mortgage servicer
offer the borrower a loan modification or workout plan if such a
modification or plan is consistent with its contractual or other
authority.
   (c) This section shall become operative on January 1, 2018.
  SEC. 9.  Section 2923.7 is added to the Civil Code, to read:
   2923.7.  (a) Upon request from a borrower who requests a
foreclosure prevention alternative, the mortgage servicer shall
promptly establish a single point of contact and provide to the
borrower one or more direct means of communication with the single
point of contact.
   (b) The single point of contact shall be responsible for doing all
of the following:
   (1) Communicating the process by which a borrower may apply for an
available foreclosure prevention alternative and the deadline for
any required submissions to be considered for these options.
   (2) Coordinating receipt of all documents associated with
available foreclosure prevention alternatives and notifying the
borrower of any missing documents necessary to complete the
application.
   (3) Having access to current information and personnel sufficient
to timely, accurately, and adequately inform the borrower of the
current status of the foreclosure prevention alternative.
   (4) Ensuring that a borrower is considered for all foreclosure
prevention alternatives offered by, or through, the mortgage
servicer, if any.
   (5) Having access to individuals with the ability and authority to
stop foreclosure proceedings when necessary.
   (c) The single point of contact shall remain assigned to the
borrower's account until the mortgage servicer determines that all
loss mitigation options offered by, or through, the mortgage servicer
have been exhausted or the borrower's account becomes current.
   (d) The mortgage servicer shall ensure that a single point of
contact refers and transfers a borrower to an appropriate supervisor
upon request of the borrower, if the single point of contact has a
supervisor.
   (e) For purposes of this section, "single point of contact" means
an individual or team of personnel each of whom has the ability and
authority to perform the responsibilities described in subdivisions
(b) to (d), inclusive. The mortgage servicer shall ensure that each
member of the team is knowledgeable about the borrower's situation
and current status in the alternatives to foreclosure process.
   (f) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
   (g) (1) This section shall not apply to a depository institution
chartered under state or federal law, a person licensed pursuant to
Division 9 (commencing with Section 22000) or Division 20 (commencing
with Section 50000) of the Financial Code, or a person licensed
pursuant to Part 1 (commencing with Section 10000) of Division 4 of
the Business and Professions Code, that, during its immediately
preceding annual reporting period, as established with its primary
regulator, foreclosed on 175 or fewer residential real properties,
containing no more than four dwelling units, that are located in
California.
   (2) Within three months after the close of any calendar year or
annual reporting period as established with its primary regulator
during which an entity or person described in paragraph (1) exceeds
the threshold of 175 specified in paragraph (1), that entity shall
notify its primary regulator, in a manner acceptable to its primary
regulator, and any mortgagor or trustor who is delinquent on a
residential mortgage loan serviced by that entity of the date on
which that entity will be subject to this section, which date shall
be the first day of the first month that is six months after the
close of the calendar year or annual reporting period during which
that entity exceeded the threshold.
  SEC. 10.  Section 2924 of the Civil Code, as amended by Section 1
of Chapter 180 of the Statutes of 2010, is amended to read:
   2924.  (a) Every transfer of an interest in property, other than
in trust, made only as a security for the performance of another act,
is to be deemed a mortgage, except when in the case of personal
property it is accompanied by actual change of possession, in which
case it is to be deemed a pledge. Where, by a mortgage created after
July 27, 1917, of any estate in real property, other than an estate
at will or for years, less than two, or in any transfer in trust made
after July 27, 1917, of a like estate to secure the performance of
an obligation, a power of sale is conferred upon the mortgagee,
trustee, or any other person, to be exercised after a breach of the
obligation for which that mortgage or transfer is a security, the
power shall not be exercised except where the mortgage or transfer is
made pursuant to an order, judgment, or decree of a court of record,
or to secure the payment of bonds or other evidences of indebtedness
authorized or permitted to be issued by the Commissioner of
Corporations, or is made by a public utility subject to the
provisions of the Public Utilities Act, until all of the following
apply:
   (1) The trustee, mortgagee, or beneficiary, or any of their
authorized agents shall first file for record, in the office of the
recorder of each county wherein the mortgaged or trust property or
some part or parcel thereof is situated, a notice of default. That
notice of default shall include all of the following:
   (A) A statement identifying the mortgage or deed of trust by
stating the name or names of the trustor or trustors and giving the
book and page, or instrument number, if applicable, where the
mortgage or deed of trust is recorded or a description of the
mortgaged or trust property.
   (B) A statement that a breach of the obligation for which the
mortgage or transfer in trust is security has occurred.
   (C) A statement setting forth the nature of each breach actually
known to the beneficiary and of his or her election to sell or cause
to be sold the property to satisfy that obligation and any other
obligation secured by the deed of trust or mortgage that is in
default.
   (D) If the default is curable pursuant to Section 2924c, the
statement specified in paragraph (1) of subdivision (b) of Section
2924c.
   (2) Not less than three months shall elapse from the filing of the
notice of default.
   (3) Except as provided in paragraph (4), after the lapse of the
three months described in paragraph (2), the mortgagee, trustee, or
other person authorized to take the sale shall give notice of sale,
stating the time and place thereof, in the manner and for a time not
less than that set forth in Section 2924f.
   (4) Notwithstanding paragraph (3), the mortgagee, trustee, or
other person authorized to take sale may record a notice of sale
pursuant to Section 2924f up to five days before the lapse of the
three-month period described in paragraph (2), provided that the date
of sale is no earlier than three months and 20 days after the
recording of the notice of default.
   (5) Until January 1, 2018, whenever a sale is postponed for a
period of at least 10 business days pursuant to Section 2924g, a
mortgagee, beneficiary, or authorized agent shall provide written
notice to a borrower regarding the new sale date and time, within
five business days following the postponement. Information provided
pursuant to this paragraph shall not constitute the public
declaration required by subdivision (d) of Section 2924g. Failure to
comply with this paragraph shall not invalidate any sale that would
otherwise be valid under Section 2924f. This paragraph shall be
inoperative on January 1, 2018.
   (6) No entity shall record or cause a notice of default to be
recorded or otherwise initiate the foreclosure process unless it is
the holder of the beneficial interest under the mortgage or deed of
trust, the original trustee or the substituted trustee under the deed
of trust, or the designated agent of the holder of the beneficial
interest. No agent of the holder of the beneficial interest under the
mortgage or deed of trust, original trustee or substituted trustee
under the deed of trust may record a notice of default or otherwise
commence the foreclosure process except when acting within the scope
of authority designated by the holder of the beneficial interest.
   (b) In performing acts required by this article, the trustee shall
incur no liability for any good faith error resulting from reliance
on information provided in good faith by the beneficiary regarding
the nature and the amount of the default under the secured
obligation, deed of trust, or mortgage. In performing the acts
required by this article, a trustee shall not be subject to Title
1.6c (commencing with Section 1788) of Part 4.
   (c) A recital in the deed executed pursuant to the power of sale
of compliance with all requirements of law regarding the mailing of
copies of notices or the publication of a copy of the notice of
default or the personal delivery of the copy of the notice of default
or the posting of copies of the notice of sale or the publication of
a copy thereof shall constitute prima facie evidence of compliance
with these requirements and conclusive evidence thereof in favor of
bona fide purchasers and encumbrancers for value and without notice.
   (d) All of the following shall constitute privileged
communications pursuant to Section 47:
   (1) The mailing, publication, and delivery of notices as required
by this section.
   (2) Performance of the procedures set forth in this article.
   (3) Performance of the functions and procedures set forth in this
article if those functions and procedures are necessary to carry out
the duties described in Sections 729.040, 729.050, and 729.080 of the
Code of Civil Procedure.
   (e) There is a rebuttable presumption that the beneficiary
actually knew of all unpaid loan payments on the obligation owed to
the beneficiary and secured by the deed of trust or mortgage subject
to the notice of default. However, the failure to include an actually
known default shall not invalidate the notice of sale and the
beneficiary shall not be precluded from asserting a claim to this
omitted default or defaults in a separate notice of default.
  SEC. 11.  Section 2924 of the Civil Code, as amended by Section 2
of Chapter 180 of the Statutes of 2010, is repealed.
  SEC. 12.  Section 2924.9 is added to the Civil Code, to read:
   2924.9.  (a) Unless a borrower has previously exhausted the first
lien loan modification process offered by, or through, his or her
mortgage servicer described in Section 2923.6, within five business
days after recording a notice of default pursuant to Section 2924, a
mortgage servicer that offers one or more foreclosure prevention
alternatives shall send a written communication to the borrower that
includes all of the following information:
   (1) That the borrower may be evaluated for a foreclosure
prevention alternative or, if applicable, foreclosure prevention
alternatives.
   (2) Whether an application is required to be submitted by the
borrower in order to be considered for a foreclosure prevention
alternative.
   (3) The means and process by which a borrower may obtain an
application for a foreclosure prevention alternative.
   (b) This section shall not apply to entities described in
subdivision (b) of Section 2924.18.
   (c) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
   (d)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 13.  Section 2924.10 is added to the Civil Code, to read:
   2924.10.  (a) When a borrower submits a complete first lien
modification application or any document in connection with a first
lien modification application, the mortgage servicer shall provide
written acknowledgment of the receipt of the documentation within
five business days of receipt. In its initial acknowledgment of
receipt of the loan modification application, the mortgage servicer
shall include the following information:
   (1) A description of the loan modification process, including an
estimate of when a decision on the loan modification will be made
after a complete application has been submitted by the borrower and
the length of time the borrower will have to consider an offer of a
loan modification or other foreclosure prevention alternative.
   (2) Any deadlines, including deadlines to submit missing
documentation, that would affect the processing of a first lien loan
modification application.
   (3) Any expiration dates for submitted documents.
   (4) Any deficiency in the borrower's first lien loan modification
application.
   (b) For purposes of this section, a borrower's first lien loan
modification application shall be deemed to be "complete" when a
borrower has supplied the mortgage servicer with all documents
required by the mortgage servicer within the reasonable timeframes
specified by the mortgage servicer.
   (c) This section shall not apply to entities described in
subdivision (b) of Section 2924.18.
   (d) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
   (e)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 14.  Section 2924.11 is added to the Civil Code, to read:
   2924.11.  (a) If a foreclosure prevention alternative is approved
in writing prior to the recordation of a notice of default, a
mortgage servicer, mortgagee, trustee, beneficiary, or authorized
agent shall not record a notice of default under either of the
following circumstances:
   (1) The borrower is in compliance with the terms of a written
trial or permanent loan modification, forbearance, or repayment plan.

   (2) A foreclosure prevention alternative has been approved in
writing by all parties, including, for example, the first lien
investor, junior lienholder, and mortgage insurer, as applicable, and
proof of funds or financing has been provided to the servicer.
   (b) If a foreclosure prevention alternative is approved in writing
after the recordation of a notice of default, a mortgage servicer,
mortgagee, trustee, beneficiary, or authorized agent shall not record
a notice of sale or conduct a trustee's sale under either of the
following circumstances:
   (1) The borrower is in compliance with the terms of a written
trial or permanent loan modification, forbearance, or repayment plan.

   (2) A foreclosure prevention alternative has been approved in
writing by all parties, including, for example, the first lien
investor, junior lienholder, and mortgage insurer, as applicable, and
proof of funds or financing has been provided to the servicer.
   (c) When a borrower accepts an offered first lien loan
modification or other foreclosure prevention alternative, the
mortgage servicer shall provide the borrower with a copy of the fully
executed loan modification agreement or agreement evidencing the
foreclosure prevention alternative following receipt of the executed
copy from the borrower.
   (d) A mortgagee, beneficiary, or authorized agent shall record a
rescission of a notice of default or cancel a pending trustee's sale,
if applicable, upon the borrower executing a permanent foreclosure
prevention alternative. In the case of a short sale, the rescission
or cancellation of the pending trustee's sale shall occur when the
short sale has been approved by all parties and proof of funds or
financing has been provided to the mortgagee, beneficiary, or
authorized agent.
   (e) The mortgage servicer shall not charge any application,
processing, or other fee for a first lien loan modification or other
foreclosure prevention alternative.
   (f) The mortgage servicer shall not collect any late fees for
periods during which a complete first lien loan modification
application is under consideration or a denial is being appealed, the
borrower is making timely modification payments, or a foreclosure
prevention alternative is being evaluated or exercised.
   (g) If a borrower has been approved in writing for a first lien
loan modification or other foreclosure prevention alternative, and
the servicing of that borrower's loan is transferred or sold to
another mortgage servicer, the subsequent mortgage servicer shall
continue to honor any previously approved first lien loan
modification or other foreclosure prevention alternative, in
accordance with the provisions of the act that added this section.
   (h) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
   (i) This section shall not apply to entities described in
subdivision (b) of Section 2924.18.
   (j)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 15.  Section 2924.11 is added to the Civil Code, to read:
   2924.11.  (a) If a borrower submits a complete application for a
foreclosure prevention alternative offered by, or through, the
borrower's mortgage servicer, a mortgage servicer, trustee,
mortgagee, beneficiary, or authorized agent shall not record a notice
of sale or conduct a trustee's sale while the complete foreclosure
prevention alternative application is pending, and until the borrower
has been provided with a written determination by the mortgage
servicer regarding that borrower's eligibility for the requested
foreclosure prevention alternative.
   (b) Following the denial of a first lien loan modification
application, the mortgage servicer shall send a written notice to the
borrower identifying with specificity the reasons for the denial and
shall include a statement that the borrower may obtain additional
documentation supporting the denial decision upon written request to
the mortgage servicer.
   (c) If a foreclosure prevention alternative is approved in writing
prior to the recordation of a notice of default, a mortgage
servicer, mortgagee, trustee, beneficiary, or authorized agent shall
not record a notice of default under either of the following
circumstances:
   (1) The borrower is in compliance with the terms of a written
trial or permanent loan modification, forbearance, or repayment plan.

   (2) A foreclosure prevention alternative has been approved in
writing by all parties, including, for example, the first lien
investor, junior lienholder, and mortgage insurer, as applicable, and
proof of funds or financing has been provided to the servicer.
   (d) If a foreclosure prevention alternative is approved in writing
after the recordation of a notice of default, a mortgage servicer,
mortgagee, trustee, beneficiary, or authorized agent shall not record
a notice of sale or conduct a trustee's sale under either of the
following circumstances:
   (1) The borrower is in compliance with the terms of a written
trial or permanent loan modification, forbearance, or repayment plan.

   (2) A foreclosure prevention alternative has been approved in
writing by all parties, including, for example, the first lien
investor, junior lienholder, and mortgage insurer, as applicable, and
proof of funds or financing has been provided to the servicer.
   (e) This section applies only to mortgages or deeds of trust as
described in Section 2924.15.
   (f) For purposes of this section, an application shall be deemed
"complete" when a borrower has supplied the mortgage servicer with
all documents required by the mortgage servicer within the reasonable
timeframes specified by the mortgage servicer.
   (g) This section shall become operative on January 1, 2018.
  SEC. 16.  Section 2924.12 is added to the Civil Code, to read:
   2924.12.  (a) (1) If a trustee's deed upon sale has not been
recorded, a borrower may bring an action for injunctive relief to
enjoin a material violation of Section 2923.55, 2923.6, 2923.7,
2924.9, 2924.10, 2924.11, or 2924.17.
   (2) Any injunction shall remain in place and any trustee's sale
shall be enjoined until the court determines that the mortgage
servicer, mortgagee, trustee, beneficiary, or authorized agent has
corrected and remedied the violation or violations giving rise to the
action for injunctive relief. An enjoined entity may move to
dissolve an injunction based on a showing that the material violation
has been corrected and remedied.
   (b) After a trustee's deed upon sale has been recorded, a mortgage
servicer, mortgagee, trustee, beneficiary, or authorized agent shall
be liable to a borrower for actual economic damages pursuant to
Section 3281, resulting from a material violation of Section 2923.55,
2923.6, 2923.7, 2924.9, 2924.10, 2924.11, or 2924.17 by that
mortgage servicer, mortgagee, trustee, beneficiary, or authorized
agent where the violation was not corrected and remedied prior to the
recordation of the trustee's deed upon sale. If the court finds that
the material violation was intentional or reckless, or resulted from
willful misconduct by a mortgage servicer, mortgagee, trustee,
beneficiary, or authorized agent, the court may award the borrower
the greater of treble actual damages or statutory damages of fifty
thousand dollars ($50,000).
   (c) A mortgage servicer, mortgagee, trustee, beneficiary, or
authorized agent shall not be liable for any violation that it has
corrected and remedied prior to the recordation of a trustee's deed
upon sale, or that has been corrected and remedied by third parties
working on its behalf prior to the recordation of a trustee's deed
upon sale.
   (d) A violation of Section 2923.55, 2923.6, 2923.7, 2924.9,
2924.10, 2924.11, or 2924.17 by a person licensed by the Department
of Corporations, Department of Financial Institutions, or Department
of Real Estate shall be deemed to be a violation of that person's
licensing law.
   (e) No violation of this article shall affect the validity of a
sale in favor of a bona fide purchaser and any of its encumbrancers
for value without notice.
   (f) A third-party encumbrancer shall not be relieved of liability
resulting from violations of Section 2923.55, 2923.6, 2923.7, 2924.9,
2924.10, 2924.11, or 2924.17 committed by that third-party
encumbrancer, that occurred prior to the sale of the subject property
to the bona fide purchaser.
   (g) A signatory to a consent judgment entered in the case entitled
United States of America et al. v. Bank of America Corporation et
al., filed in the United States District Court for the District of
Columbia, case number 1:12-cv-00361 RMC, that is in compliance with
the relevant terms of the Settlement Term Sheet of that consent
judgment with respect to the borrower who brought an action pursuant
to this section while the consent judgment is in effect shall have no
liability for a violation of Section 2923.55, 2923.6, 2923.7,
2924.9, 2924.10, 2924.11, or 2924.17.
   (h) The rights, remedies, and procedures provided by this section
are in addition to and independent of any other rights, remedies, or
procedures under any other law. Nothing in this section shall be
construed to alter, limit, or negate any other rights, remedies, or
procedures provided by law.
   (i) A court may award a prevailing borrower reasonable attorney's
fees and costs in an action brought pursuant to this section. A
borrower shall be deemed to have prevailed for purposes of this
subdivision if the borrower obtained injunctive relief or was awarded
damages pursuant to this section.
   (j) This section shall not apply to entities described in
subdivision (b) of Section 2924.18.
   (k)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 17.  Section 2924.12 is added to the Civil Code, to read:
   2924.12.  (a) (1) If a trustee's deed upon sale has not been
recorded, a borrower may bring an action for injunctive relief to
enjoin a                                                 material
violation of Section 2923.5, 2923.7, 2924.11, or 2924.17.
   (2) Any injunction shall remain in place and any trustee's sale
shall be enjoined until the court determines that the mortgage
servicer, mortgagee, trustee, beneficiary, or authorized agent has
corrected and remedied the violation or violations giving rise to the
action for injunctive relief. An enjoined entity may move to
dissolve an injunction based on a showing that the material violation
has been corrected and remedied.
   (b) After a trustee's deed upon sale has been recorded, a mortgage
servicer, mortgagee, trustee, beneficiary, or authorized agent shall
be liable to a borrower for actual economic damages pursuant to
Section 3281, resulting from a material violation of Section 2923.5,
2923.7, 2924.11, or 2924.17 by that mortgage servicer, mortgagee,
trustee, beneficiary, or authorized agent where the violation was not
corrected and remedied prior to the recordation of the trustee's
deed upon sale. If the court finds that the material violation was
intentional or reckless, or resulted from willful misconduct by a
mortgage servicer, mortgagee, trustee, beneficiary, or authorized
agent, the court may award the borrower the greater of treble actual
damages or statutory damages of fifty thousand dollars ($50,000).
   (c) A mortgage servicer, mortgagee, trustee, beneficiary, or
authorized agent shall not be liable for any violation that it has
corrected and remedied prior to the recordation of the trustee's deed
upon sale, or that has been corrected and remedied by third parties
working on its behalf prior to the recordation of the trustee's deed
upon sale.
   (d) A violation of Section 2923.5, 2923.7, 2924.11, or 2924.17 by
a person licensed by the Department of Corporations, Department of
Financial Institutions, or Department of Real Estate shall be deemed
to be a violation of that person's licensing law.
   (e) No violation of this article shall affect the validity of a
sale in favor of a bona fide purchaser and any of its encumbrancers
for value without notice.
   (f) A third-party encumbrancer shall not be relieved of liability
resulting from violations of Section 2923.5, 2923.7, 2924.11, or
2924.17 committed by that third-party encumbrancer, that occurred
prior to the sale of the subject property to the bona fide purchaser.

   (g) The rights, remedies, and procedures provided by this section
are in addition to and independent of any other rights, remedies, or
procedures under any other law. Nothing in this section shall be
construed to alter, limit, or negate any other rights, remedies, or
procedures provided by law.
   (h) A court may award a prevailing borrower reasonable attorney's
fees and costs in an action brought pursuant to this section. A
borrower shall be deemed to have prevailed for purposes of this
subdivision if the borrower obtained injunctive relief or was awarded
damages pursuant to this section.
   (i) This section shall become operative on January 1, 2018.
  SEC. 18.  Section 2924.15 is added to the Civil Code, to read:
   2924.15.  (a) Unless otherwise provided, paragraph (5) of
subdivision (a) of Section 2924, and Sections 2923.5, 2923.55,
2923.6, 2923.7, 2924.9, 2924.10, 2924.11, and 2924.18 shall apply
only to first lien mortgages or deeds of trust that are secured by
owner-occupied residential real property containing no more than four
dwelling units. For these purposes, "owner-occupied" means that the
property is the principal residence of the borrower and is security
for a loan made for personal, family, or household purposes.
   (b)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 19.  Section 2924.15 is added to the Civil Code, to read:
   2924.15.  (a) Unless otherwise provided, Sections 2923.5, 2923.7,
and 2924.11 shall apply only to first lien mortgages or deeds of
trust that are secured by owner-occupied residential real property
containing no more than four dwelling units. For these purposes,
"owner-occupied" means that the property is the principal residence
of the borrower and is security for a loan made for personal, family,
or household purposes.
   (b) This section shall become operative on January 1, 2018.
  SEC. 20.  Section 2924.17 is added to the Civil Code, to read:
   2924.17.  (a) A declaration recorded pursuant to Section 2923.5
or, until January 1, 2018, pursuant to Section 2923.55, a notice of
default, notice of sale, assignment of a deed of trust, or
substitution of trustee recorded by or on behalf of a mortgage
servicer in connection with a foreclosure subject to the requirements
of Section 2924, or a declaration or affidavit filed in any court
relative to a foreclosure proceeding shall be accurate and complete
and supported by competent and reliable evidence.
   (b) Before recording or filing any of the documents described in
subdivision (a), a mortgage servicer shall ensure that it has
reviewed competent and reliable evidence to substantiate the borrower'
s default and the right to foreclose, including the borrower's loan
status and loan information.
   (c) Until January 1, 2018, any mortgage servicer that engages in
multiple and repeated uncorrected violations of subdivision (b) in
recording documents or filing documents in any court relative to a
foreclosure proceeding shall be liable for a civil penalty of up to
seven thousand five hundred dollars ($7,500) per mortgage or deed of
trust in an action brought by a government entity identified in
Section 17204 of the Business and Professions Code, or in an
administrative proceeding brought by the Department of Corporations,
the Department of Real Estate, or the Department of Financial
Institutions against a respective licensee, in addition to any other
remedies available to these entities. This subdivision shall be
inoperative on January 1, 2018.
  SEC. 21.  Section 2924.18 is added to the Civil Code, to read:
   2924.18.  (a) (1) If a borrower submits a complete application for
a first lien loan modification offered by, or through, the borrower'
s mortgage servicer, a mortgage servicer, trustee, mortgagee,
beneficiary, or authorized agent shall not record a notice of
default, notice of sale, or conduct a trustee's sale while the
complete first lien loan modification application is pending, and
until the borrower has been provided with a written determination by
the mortgage servicer regarding that borrower's eligibility for the
requested loan modification.
   (2) If a foreclosure prevention alternative has been approved in
writing prior to the recordation of a notice of default, a mortgage
servicer, mortgagee, trustee, beneficiary, or authorized agent shall
not record a notice of default under either of the following
circumstances:
   (A) The borrower is in compliance with the terms of a written
trial or permanent loan modification, forbearance, or repayment plan.

   (B) A foreclosure prevention alternative has been approved in
writing by all parties, including, for example, the first lien
investor, junior lienholder, and mortgage insurer, as applicable, and
proof of funds or financing has been provided to the servicer.
   (3) If a foreclosure prevention alternative is approved in writing
after the recordation of a notice of default, a mortgage servicer,
mortgagee, trustee, beneficiary, or authorized agent shall not record
a notice of sale or conduct a trustee's sale under either of the
following circumstances:
   (A) The borrower is in compliance with the terms of a written
trial or permanent loan modification, forbearance, or repayment plan.

   (B) A foreclosure prevention alternative has been approved in
writing by all parties, including, for example, the first lien
investor, junior lienholder, and mortgage insurer, as applicable, and
proof of funds or financing has been provided to the servicer.
   (b) This section shall apply only to a depository institution
chartered under state or federal law, a person licensed pursuant to
Division 9 (commencing with Section 22000) or Division 20 (commencing
with Section 50000) of the Financial Code, or a person licensed
pursuant to Part 1 (commencing with Section 10000) of Division 4 of
the Business and Professions Code, that, during its immediately
preceding annual reporting period, as established with its primary
regulator, foreclosed on 175 or fewer residential real properties,
containing no more than four dwelling units, that are located in
California.
   (c) Within three months after the close of any calendar year or
annual reporting period as established with its primary regulator
during which an entity or person described in subdivision (b) exceeds
the threshold of 175 specified in subdivision (b), that entity shall
notify its primary regulator, in a manner acceptable to its primary
regulator, and any mortgagor or trustor who is delinquent on a
residential mortgage loan serviced by that entity of the date on
which that entity will be subject to Sections 2923.55, 2923.6,
2923.7, 2924.9, 2924.10, 2924.11, and 2924.12, which date shall be
the first day of the first month that is six months after the close
of the calendar year or annual reporting period during which that
entity exceeded the threshold.
   (d) For purposes of this section, an application shall be deemed
"complete" when a borrower has supplied the mortgage servicer with
all documents required by the mortgage servicer within the reasonable
timeframes specified by the mortgage servicer.
   (e) If a borrower has been approved in writing for a first lien
loan modification or other foreclosure prevention alternative, and
the servicing of the borrower's loan is transferred or sold to
another mortgage servicer, the subsequent mortgage servicer shall
continue to honor any previously approved first lien loan
modification or other foreclosure prevention alternative, in
accordance with the provisions of the act that added this section.
   (f) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
   (g)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 22.  Section 2924.19 is added to the Civil Code, to read:
   2924.19.  (a) (1) If a trustee's deed upon sale has not been
recorded, a borrower may bring an action for injunctive relief to
enjoin a material violation of Section 2923.5, 2924.17, or 2924.18.
   (2) Any injunction shall remain in place and any trustee's sale
shall be enjoined until the court determines that the mortgage
servicer, mortgagee, beneficiary, or authorized agent has corrected
and remedied the violation or violations giving rise to the action
for injunctive relief. An enjoined entity may move to dissolve an
injunction based on a showing that the material violation has been
corrected and remedied.
   (b) After a trustee's deed upon sale has been recorded, a mortgage
servicer, mortgagee, beneficiary, or authorized agent shall be
liable to a borrower for actual economic damages pursuant to Section
3281, resulting from a material violation of Section 2923.5, 2924.17,
or 2924.18 by that mortgage servicer, mortgagee, beneficiary, or
authorized agent where the violation was not corrected and remedied
prior to the recordation of the trustee's deed upon sale. If the
court finds that the material violation was intentional or reckless,
or resulted from willful misconduct by a mortgage servicer,
mortgagee, beneficiary, or authorized agent, the court may award the
borrower the greater of treble actual damages or statutory damages of
fifty thousand dollars ($50,000).
   (c) A mortgage servicer, mortgagee, beneficiary, or authorized
agent shall not be liable for any violation that it has corrected and
remedied prior to the recordation of the trustee's deed upon sale,
or that has been corrected and remedied by third parties working on
its behalf prior to the recordation of the trustee's deed upon sale.
   (d) A violation of Section 2923.5, 2924.17, or 2917.18 by a person
licensed by the Department of Corporations, the Department of
Financial Institutions, or the Department of Real Estate shall be
deemed to be a violation of that person's licensing law.
   (e) No violation of this article shall affect the validity of a
sale in favor of a bona fide purchaser and any of its encumbrancers
for value without notice.
   (f) A third-party encumbrancer shall not be relieved of liability
resulting from violations of Section 2923.5, 2924.17 or 2924.18,
committed by that third-party encumbrancer, that occurred prior to
the sale of the subject property to the bona fide purchaser.
   (g) The rights, remedies, and procedures provided by this section
are in addition to and independent of any other rights, remedies, or
procedures under any other law. Nothing in this section shall be
construed to alter, limit, or negate any other rights, remedies, or
procedures provided by law.
   (h) A court may award a prevailing borrower reasonable attorney's
fees and costs in an action brought pursuant to this section. A
borrower shall be deemed to have prevailed for purposes of this
subdivision if the borrower obtained injunctive relief or damages
pursuant to this section.
   (i) This section shall apply only to entities described in
subdivision (b) of Section 2924.18.
   (j)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 23.  Section 2924.20 is added to the Civil Code, to read:
   2924.20.  Consistent with their general regulatory authority, and
notwithstanding subdivisions (b) and (c) of Section 2924.18, the
Department of Corporations, the Department of Financial Institutions,
and the Department of Real Estate may adopt regulations applicable
to any entity or person under their respective jurisdictions that are
necessary to carry out the purposes of the act that added this
section. A violation of the regulations adopted pursuant to this
section shall only be enforceable by the regulatory agency.
  SEC. 24.  The provisions of this act are severable. If any
provision of this act or its application is held invalid, that
invalidity shall not affect other provisions or applications that can
be given effect without the invalid provision or application.
  SEC. 25.   No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.

The NEW Sevicing abuse cases california Jan1, 2013

Abuses by Mortgage Service Companies

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

Abusive Mortgage Servicing Defined:

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

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

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

Improper foreclosure or attempted foreclosure

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

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

Improper fees

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

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

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

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

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

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

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

Improperly forced-placed insurance

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

Escrow Account Mismanagement

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

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

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

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

Chase–Sucks.org

2. RESOURCES — Pleadings, Orders, and Exhibits

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

Federal District Court

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

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

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

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

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

• First Amended Complaint 10/18/2010
• Declaration of Margaret Carswell 7/13/2010
• Chase’s Motion to Dismiss First Amended Complaint 10/27/2010
• Chase’s Request for Judicial Notice 10/27/2010
• Plaintiff’s Opposition to Motion to Dismiss 12/03/2010
• Plaintiff’s Request for Judicial Notice 12/03/2010 – Congressional Oversight Panel’s Report

 

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

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

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

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

The court also relied upon the doctrine of promissory estoppel. Under this doctrine a promisor is bound when he should reasonably expect a substantial change of position, either by act or forbearance, in reliance on his promise. He who by his language or conduct leads another to do what he would not otherwise have done shall not subject such person to loss or injury by disappointing the expectations upon which he acted.

• Complaint 10/10/2010
• Temporary Restraining Order 10/26/2010

 

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

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

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

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

• Order Granting Hillery’s Motion to Dismiss dated 12/09/2008

 

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

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

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

• Order Granting Motion to Dismiss Without Prejuduce 3/18/2010
• Second Amended Complaint for Wrongful Foreclosure 4/01/2010

 

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

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

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

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

• Complaint for Wrongful Foreclosure 12/21/2009
• Points & Authorities In Support of TRO
• Plaintiff’s Declaration in Support of TRO
• Order Granting Preliminary Injunction 1/08/10

 

Federal Bankruptcy Court

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

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

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

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

• Opinion Denying Relief from Automatic Stay 10/29/2008
• District Court Reversal of Judge Burford’s Order 7/21/2010

 

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

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

• Motion for Stay 7/03/2008
• Order Denying MERS Relief from Stay 10/21/2009
• First Amended Adversary Complaint Case No. 09-01135-SB 1/15/2010
• Opposition to MERS Motion to Dismiss Complaint 2/24/2010

 

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

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

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

• Objection to CitiBank Proof of Claim 4/06/2010
• Declaration in Support of Objection 4/06/2010
• Points & Authorities in Support of Objection 4/06/2010
• Order Disallowing CitiBank Claim 5/20/2010

 

California State Court

Cabalu v. Mission Bishop Real Estate

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

• Complaint to Set Aside Trustee’s Sale filed August 2009

 

Davies v. NDEX West, Case No. INC 090697

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

• Complaint for Fraud dated 4/08/2010

 

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

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

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

• Complaint to Stay Foreclosure 5/24/2010
• Order to Show Cause 5/25/2010

 

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

Moses S. Hall, attorney for Terry and Michael Mabry

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

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

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

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

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

• Court of Appeal’s Stay of Foreclosure Sale 11/25/2009
• Opinion of Court of Appeal, Fourth District 6/2/2010
• Petition for review, California Supreme Court 7/13/2010. Denied 8/18/2010.
• Order granting Preliminary Injunction Orange County Superior Court 11/23/2010.

 

Moreno v. Ameriquest

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

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

• Complaint for Fraud dated January 2008

 

Other State Courts

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

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

• Order Vacating Foreclosure Sale and Dismissing Chase’s Complaint decided 5/04/2010

 

Florida Judge tosses foreclosure lawsuit

Homeowners dispute who owns mortgage

by Steve Patterson
St. Augustine Record
June 15, 2010

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

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

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

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

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

 

Exhibits

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

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

• Evaluation of Federal Oversight of WaMu released 4/16/2010

 

OCC Advisory Letters

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

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

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

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

• OCC Advisory Letter 2000-7 July 25, 2000
• OCC Advisory Letter 2000-9 August 29, 2000
• OCC Advisory Letter 2002-3 March 22, 2002
• OCC Advisory Letter 2003-2 February 21, 2003
• OCC Advisory Letter 2003-3 February 21, 2003
• Guidance from OCC, FDIC, OTS, and Federal Reserve October 4, 2005

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

Bankruptcy Laws, You Have Seen Nothing Yet! Mortgage Chaos?

by Bankruptcy Law Network

There are many bright Real Estate Attorneys out there. Likewise, there are many bright Bankruptcy Attorneys out there. But I don’t think there are that many bright Bankruptcy Real Estate Attorneys out there. And the few that do exist…..well, I don’t think they worked for the Mortgage Companies. Why? Well if they did, the transfer of loans would not have existed the way that it did for the past several years.

Lately, the big news in foreclosures has been the Ohio cases where Judge Boyko dismissed 14 foreclosures on October 31, 2007, and his Colleague, Judge Kathleen O’Malley of the same court, followed suite ordering another 32 dismissals on November 14, 2007.   But that’s only the beginning. It gets worse.

Add a bankruptcy filing to the mix and it’s like adding gas to the fire and recipe for disaster. The reason is a little bankruptcy code section called 11 USC 544. Basically, that section allows a Trustee appointed by the Bankruptcy Court to avoid non-perfected liens.Non-perfected liens are liens that exist, but are not fully noticed to everyone, sort of like secret liens. It’s like if someone loans you $50,000 and takes a lien out on your house, but never records their lien with the county recorder. If that house sells, the lien is not paid since escrow was not aware of it. Had it been recorded by a “deed of trust” or “mortgage,” the Title Company and Escrow Company would not have closed once they saw it, unless it was paid.

Because of all the crazy real estate financing, securitization, and reselling of all the mortgages, sort of the same thing has happened with all the mortgages and trust deeds, but on a much larger scale. Normally, most states require that when a mortgage or real estate loan is sold or transferred to another lender, certain things must happen to maintain perfection, that is, in order to make sure that lien gets paid at a later date. Generally, the purchaser of the Mortgage has it recorded at the County Recorders Office. This is usually done thru a recorded assignment of the underlying note and mortgage or a new Mortgage being recorded and transfer of the Note.  The Note is the most important part of any Mortgage or Deed of Trust. The Mortgage or Deed of Trust is useless without the Note, and usually can not exist without it. It’s a negotiable instrument, just like a check. So when it’s transferred, it needs to be endorsed, just like a check. So essentially, all real estate has documents recorded to evidence the lien, and which are linked to the “checks.”  Well, this is where the problem lies.

In most of the Mortgage Transfers which took place recently, the Mortgage or Deed of Trust was transferred, but not the Note. Whoops! Why? It was just too expensive to track down every note for every mortgage since they were all bundled up together and sold in large trusts, then resold, resold, etc. Imagine trying to find 1 note among thousands, which were sold in different trust pools over time. Pretty hard to do! So shortcuts happened.  Soon enough, shortcuts were accepted and since there were very little foreclosure activity during the last 7 year real estate bubble, no one really noticed in the few foreclosures that took place. Until recently. That’s where the Ohio cases come in. Times have now changed. That little shortcut stopped the foreclosures in Ohio since the most basic element of any lawsuit is that the party bringing the lawsuit is the “real party in interest.” That is, they are the aggrieved party, injured party, relief seeking party.  So in Ohio, the Judge dismissed all the cases since they did not possess the Notes or Assignments on the date of filing, and technically were not the real party in interest to file the suit at the time.But that maybe only a temporary problem until they find the note or assignment. At that point, they will probably just file the foreclosure lawsuit again. So it’s just a delay.

But the bigger problem exists in Bankruptcy.  You see, once a Bankruptcy Case is filed, the Automatic Stay goes into effect. Everything is frozen. Mistakes can no longer be corrected. And if the lender did not have the note or recorded assignment when the bankruptcy case was filed, it was an “unperfected lien” at the time of filing.  Unperfected liens get removed in Bankruptcy.  So finding the note or recording an assignment after filing will no longer fix the problem! Finding the note or or recording an assignment is now simply too late and futile.  That $12 shortcut may now have cost the lender a $500,000 mortgage!The Bankruptcy Trustee now is in charge, puts his 11 USC 544 hat on, and voila, removes the mortgage! Yes, that house that once had no equity worth $450,000 with $500,000 owed on it, is now FREE AND CLEAR! He sells it, and disburses all the proceeds to the creditors.

Mortgage paperwork mess: Next housing shock?

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

• Play CBS Video Video The next housing shockAs more and more Americans face mortgage foreclosure, banks’ crucial ownership documents for the properties are often unclear and are sometimes even bogus, a condition that’s causing lawsuits and hampering an already weak housing market. Scott Pelley reports.

• Video Extra: Eviction reprieveFlorida residents AJ and Brenda Boyd spent more than a year trying to renegotiate their mortgage and save their home. At the last moment, questions about who owns their mortgage saved them from eviction.
• Video Extra: “Save the Dream” eventsBruce Marks, founder and CEO of the nonprofit Neighborhood Assistance Corporation of America talks to Scott Pelley about his “Save the Dream” events and how foreclosures are causing a crisis in America.

(CBS News)If there was a question about whether we’re headed for a second housing shock, that was settled last week with news that home prices have fallen a sixth consecutive month. Values are nearly back to levels of the Great Recession. One thing weighing on the economy is the huge number of foreclosed houses.Many are stuck on the market for a reason you wouldn’t expect: banks can’t find the ownership documents.Who really owns your mortgage?
Scott Pelley explains a bizarre aftershock of the U.S. financial collapse: An epidemic of forged and missing mortgage documents.

It’s bizarre but, it turns out, Wall Street cut corners when it created those mortgage-backed investments that triggered the financial collapse. Now that banks want to evict people, they’re unwinding these exotic investments to find, that often, the legal documents behind the mortgages aren’t there. Caught in a jam of their own making, some companies appear to be resorting to forgery and phony paperwork to throw people – down on their luck – out of their homes.

In the 1930s we had breadlines; venture out before dawn in America today and you’ll find mortgage lines. This past January in Los Angeles, 37,000 homeowners facing foreclosure showed up to an event to beg their bank for lower payments on their mortgage. Some people even slept on the sidewalk to get in line.

So many in the country are desperate now that they have to meet in convention centers coast to coast.

In February in Miami, 12,000 people showed up to a similar event. The line went down the block and doubled back twice.

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

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

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

“It was. And still is,” she replied.

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

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

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

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

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

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

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

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

“Yes,” she replied.

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

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

She told Pelley she asked for copies of those documents.

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

Produced by Robert Anderson and Daniel Ruetenik

Now for the pleading

Timothy L. McCandless, Esq. SBN 147715

LAW OFFICES OF TIMOTHY L. MCCANDLESS

1881 Business Center Drive, Ste. 9A

San Bernardino, CA 92392

Tel:  909/890-9192

Fax: 909/382-9956

Attorney for Plaintiffs

 

SUPERIOR COURT OF THE STATE OF CALIFORNIA

 

COUNTY OF ____________

___________________________________,And ROES 1 through 5,000, Plaintiff, v. SAND CANYON CORPORATION f/k/a OPTION ONE MORTGAGE CORPORATION; AMERICAN HOME MORTGAGE SERVICES, INC.; WELLS FARGO BANK, N.A., as Trustee for SOUNDVIEW HOME LOAN TRUST 2007-OPT2; DOCX, LLC; and PREMIER TRUST DEED SERVICES and all persons unknown claiming any legal or  equitable right, title, estate, lien, or interest  in the property described in the complaint adverse to Plaintiff’s title, or any cloud on Plaintiff’s  title thereto, Does 1 through 10, Inclusive, Defendants.

CASE NO:FIRST AMENDED COMPLAINT FOR QUIET TITLE, DECLARATORY RELIEF, TEMPORARY RESTRAINING ORDER, PRELIMINARY INJUNTION AND PERMANENT INJUNCTION, CANCELATION OF INSTRUMENT AND FOR DAMAGES ARISING FROM: SLANDER OF TITLE; TORTUOUS VIOLATION OF STATUTE [Penal Code § 470(b) – (d); NOTARY FRAUD;

///

///

///

///

Plaintiffs ___________________________ allege herein as follows:

GENERAL ALLEGATIONS

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

Parcel No. 1:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Interested Call our offices now!!!!

Southern California

909-890-9192

Northern California

925-957-9797

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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.http://www.democracynow.org/embed/story/2011/7/22/pushing_crisis_gop_cries_wolf_on

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.

Read more: http://www.rollingstone.com/politics/blogs/taibblog/free-10-million-loans-for-all-and-other-wall-street-notes-20120419#ixzz1sb1efXqu

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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

On February 17, 2012, in Information, News, Securitization, by Dan Edstrom

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:  http://dtc-systems.net/wp-content/uploads/2012/02/Macklin-222-Order.pdf

Download memorandum opinion and decision (part 1) here:  http://dtc-systems.net/wp-content/uploads/2012/02/Macklin-221-Memorandum_Opinion_and_Decision_Part1.pdf

Download memorandum opinion and decision (part 2) here:  http://dtc-systems.net/wp-content/uploads/2012/02/Macklin-221-Memorandum_Opinion_and_Decision_Part2.pdf

Tagged with: breach of contract • California real property records • Civil Code 2932.5 • Daniel Edstrom • DBNTC • Deed of Trust • Deutsche • DTC-Systems • in RE: Macklin • Judge Sargis • nonjudicial foreclosure process • note • Trustee’s Deed • Wrongul Foreclosure

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THE SAN FRANSICO “SMOKING GUN REPORT”

Audit Uncovers Extensive Flaws in Foreclosures

By GRETCHEN MORGENSON

Published: February 15, 2012

An audit by San Francisco county officials of about 400 recent foreclosures there determined that almost all involved either legal violations or suspicious documentation, according to a report released Wednesday.

Annie Tritt for The New York Times

Phil Ting, the San Francisco assessor-recorder, found widespread violations or irregularities in files of properties subject to foreclosure sales.

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Anecdotal evidence indicating foreclosure abuse has been plentiful since the mortgage boom turned to bust in 2008. But the detailed and comprehensive nature of the San Francisco findings suggest how pervasive foreclosure irregularities may be across the nation.

The improprieties range from the basic — a failure to warn borrowers that they were in default on their loans as required by law — to the arcane. For example, transfers of many loans in the foreclosure files were made by entities that had no right to assign them and institutions took back properties in auctions even though they had not proved ownership.

Commissioned by Phil Ting, the San Francisco assessor-recorder, the report examined files of properties subject to foreclosure sales in the county from January 2009 to November 2011. About 84 percent of the files contained what appear to be clear violations of law, it said, and fully two-thirds had at least four violations or irregularities.

Kathleen Engel, a professor at Suffolk University Law School in Boston said: “If there were any lingering doubts about whether the problems with loan documents in foreclosures were isolated, this study puts the question to rest.”

The report comes just days after the $26 billion settlement over foreclosure improprieties between five major banks and 49 state attorneys general, including California’s. Among other things, that settlement requires participating banks to reduce mortgage amounts outstanding on a wide array of loans and provide $1.5 billion in reparations for borrowers who were improperly removed from their homes.

But the precise terms of the states’ deal have not yet been disclosed. As the San Francisco analysis points out, “the settlement does not resolve most of the issues this report identifies nor immunizes lenders and servicers from a host of potential liabilities.” For example, it is a felony to knowingly file false documents with any public office in California.

In an interview late Tuesday, Mr. Ting said he would forward his findings and foreclosure files to the attorney general’s office and to local law enforcement officials. Kamala D. Harris, the California attorney general, announced a joint investigation into foreclosure abuses last December with the Nevada attorney general, Catherine Cortez Masto. The joint investigation spans both civil and criminal matters.

The depth of the problem raises questions about whether at least some foreclosures should be considered void, Mr. Ting said. “We’re not saying that every consumer should not have been foreclosed on or every lender is a bad actor, but there are significant and troubling issues,” he said.

California has been among the states hurt the most by the mortgage crisis. Because its laws, like those of 29 other states, do not require a judge to oversee foreclosures, the conduct of banks in the process is rarely scrutinized. Mr. Ting said his report was the first rigorous analysis of foreclosure improprieties in California and that it cast doubt on the validity of almost every foreclosure it examined.

“Clearly, we need to set up a process where lenders are following every part of the law,” Mr. Ting said in the interview. “It is very apparent that the system is broken from many different vantage points.”

The report, which was compiled by Aequitas Compliance Solutions, a mortgage regulatory compliance firm, did not identify specific banks involved in the irregularities. But among the legal violations uncovered in the analysis were cases where the loan servicer did not provide borrowers with a notice of default before beginning the eviction process; 8 percent of the audited foreclosures had that basic defect.

In a significant number of cases — 85 percent — documents recording the transfer of a defaulted property to a new trustee were not filed properly or on time, the report found. And in 45 percent of the foreclosures, properties were sold at auction to entities improperly claiming to be the beneficiary of the deeds of trust. In other words, the report said, “a ‘stranger’ to the deed of trust,” gained ownership of the property; as a result, the sale may be invalid, it said.

In 6 percent of cases, the same deed of trust to a property was assigned to two or more different entities, raising questions about which of them actually had the right to foreclose. Many of the foreclosures that were scrutinized showed gaps in the chain of title, the report said, indicating that written transfers from the original owner to the entity currently claiming to own the deed of trust have disappeared.

Banks involved in buying and selling foreclosed properties appear to be aware of potential problems if gaps in the chain of title cloud a subsequent buyer’s ownership of the home. Lou Pizante, a partner at Aequitas who worked on the audit, pointed to documents that banks now require buyers to sign holding the institution harmless if questions arise about the validity of the foreclosure sale.

The audit also raises serious questions about the accuracy of information recorded in the Mortgage Electronic Registry System, or MERS, which was set up in 1995 by Fannie Mae and Freddie Mac and major lenders. The report found that 58 percent of loans listed in the MERS database showed different owners than were reflected in other public documents like those filed with the county recorder’s office.

The report contradicted the contentions of many banks that foreclosure improprieties did little harm because the borrowers were behind on their mortgages and should have been evicted anyway. “We can deduce from the public evidence,” the report noted, “that there are indeed legitimate victims in the mortgage crisis. Whether these homeowners are systematically being deprived of legal safeguards and due process rights is an important question.”

A version of this article appeared in print on February 16, 2012, on page A1 of the New York edition with the headline: Audit Uncovers Extensive Flaws in Foreclosures.

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The Top Twelve Reasons Why You Should Hate the Mortgage Settlement

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

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

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

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

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

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

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

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

The Times is also subdued:

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

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

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

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

Here are the top twelve reasons why this deal stinks:

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

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

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

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

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

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

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

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

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

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

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

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

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

Related articles

• $26 Billion Settlement Meager Compared to Damages (loans.org)
• Less than meets the eye in mortgage settlement (seattletimes.nwsource.com)
• Mortgage Servicing Settlement Is Final – What Does it Mean To You? (mickdoesloans.wordpress.com)
• 49-State Foreclosure Fraud Settlement Will Be Finalized Today (news.firedoglake.com)
• If You Read One Paragraph In Attorney General Holder’s Mortgage Settlement Statement, Read This One (businessinsider.com)

The Trustee sale can be set aside

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

THE COURT MUST STRICTLY ENFORCE

THE TECHNICAL REQUIREMENTS FOR A FORECLOSURE.

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

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

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

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

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MARK J. DEMUCHA AND CHERYL M. DEMUCHA, a Reply Brief that worked

No. F059476

IN THE COURT OF APPEAL FOR THE STATE OF CALIFORNIA

FIFTH APPELLATE DISTRICT

                                                                                                                                                           

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Appellants and Plaintiffs

v.

WELLS FARGO HOME MORTGAGE, INC.; WELLS FARGO BANK, NATIONAL ASSOCIATION a.k.a. WELLS FARGO BANK, N.A.; FIRST AMERICAN LOANSTAR TRUSTEE SERVICES; FIRST AMERICAN CORPORATION; AND DOES 1 TO 45

Respondents and Defendants

                                                                                                                                                           

Appeal from the Superior Court of the State of California, County of Kern

Case No.  S-1500-CV-267074

Honorable SIDNEY P. CHAPIN, Judge

Department 4

Tele: 661.868.7205

                                                                                                                                                           

REPLY BRIEF OF APPELLANTS MARK J. DEMUCHA AND CHERYL M. DEMUCHA

                                                                                                                                                           

Michael D. Finley, Esq.

Law Offices of Michael D. Finley

25375 Orchard Village Road, Suite 106

Valencia, CA 91355-3000

661.964.0444

Attorneys for Plaintiffs-Appellants,

MARK J. DEMUCHA and CHERYL M. DEMUCHA

TABLE OF CONTENTS

TABLE OF AUTHORITIES                                                                                                        ii

INTRODUCTION                                                                                                                         1

STATEMENT OF THE FACTS                                                                                                  2

PROCEDURAL HISTORY                                                                                                          4

STANDARD OF REVIEW                                                                                                          4

ARGUMENT                                                                                                                                5

A.   THE DEMURRER WAS NOT PROPERLY SUSTAINED                                    5

B.   THE COMPLAINT VERY PLAINLY CONTAINS A
TENDER, EVEN THOUGH IT IS NOT REQUIRED FOR
A QUIET TITLE ACTION                                                                                        5

C.   SUSTAINING OF THE DEMURRER WAS REVERSIBLE
ERROR BECAUSE CALIFORNIA LAW REQUIRES
WELLS FARGO TO POSSESS THE NOTE IN ORDER TO
ENFORCE THE LOAN                                                                                             7

D.   THE DEFENDANTS’/RESPONDENTS’ ARGUMENTS
REGARDING THE PROPRIETY OF SUSTAINING THE
DEMURRER ON THE CLAIMS TO QUIET TITLE AND
REMOVE CLOUD ARE BASED UPON THE DELIBERATE MISREPRESENTATION OF THE NATURE OF THE
DEMUCHAS’ COMPLAINT                                                                                   8

E.    THE DEFENDANTS’/RESPONDENTS’ ARGUMENTS
REGARDING THE PROPRIETY OF SUSTAINING THE
DEMURRER ON THE CLAIM FOR FRAUD AND MISREPRESENTATION ARE BASED UPON THE
DELIBERATE MISREPRESENTATION OF THE CONTENT
OF THE DEMUCHAS’ COMPLAINT                                                                    9

F.    THE DEFENDANTS’/RESPONDENTS’ ARGUMENTS
REGARDING THE PROPRIETY OF SUSTAINING THE
DEMURRER ON THE CLAIM FOR INFLICTION OF
EMOTIONAL DISTRESS ARE BASED UPON THE
DELIBERATE MISREPRESENTATION OF THE CONTENT
OF THE DEMUCHAS’ COMPLAINT                                                                    9

G.   THE DEFENDANTS’/RESPONDENTS’ ARGUMENTS
REGARDING THE PROPRIETY OF SUSTAINING THE
DEMURRER ON THE CLAIM FOR SLANDER OF
CREDIT ARE BASED UPON THE DELIBERATE MISREPRESENTATION OF THE CONTENT OF THE
DEMUCHAS’ COMPLAINT                                                                                  10

H.   THE DEFENDANTS’/RESPONDENTS’ ARGUMENTS
REGARDING THE PROPRIETY OF SUSTAINING THE
DEMURRER ON THE CLAIM FOR INFLICTION OF
EMOTIONAL DISTRESS ARE BASED UPON THE
DELIBERATE MISREPRESENTATION OF THE
CONTENT OF THE DEMUCHAS’ COMPLAINT                                               10

CONCLUSION                                                                                                                            10

TABLE OF AUTHORITIES

CASES

                                                                                                                                                     Page

Caporale v. Saxon Mortgage, Bankr. North Dist. Cal., San Jose Case No. 07-54109.                  8

In re Foreclosure Cases, 2007 WL 3232430 (Bankr. N.D. Ohio 2007).                                        8

Staff Mortgage v. Wilke (1980) 625 F.2d 281                                                                               8

Starr v. Bruce Farley Corp. (9^th Cir. 1980), 612 F.2d 1197.                                                           8

Whitman v. Transtate Title Co. (1985) 165 Cal.App.3d 312, 322-323.                              6

STATUTES

Commercial Code § 3301.                                                                                                     7, 8, 9,

INTRODUCTION

            Defendants/Respondents continue to mischaracterize the Plaintiffs’/Appellants’ complaint very deliberately, apparently because they realize that the Plaintiff’s complaint as actually plead is beyond their ability to oppose it. Calling the Plaintiffs’ Complaint “inartfully drafted” because it does not state that it is a challenge to a non-judicial foreclosure is wishful thinking. The complaint is very artfully drafted as a Quiet Title action. The plaintiffs are not seeking to “stave off foreclosure of a mortgage,” but seeking to remove a false claim against their title to the property. No non-judicial foreclosure has taken place. No foreclosure sale has occurred, so there is no foreclosure sale to challenge or undo, but the Defendants/Respondents insist on arguing the case at the demurrer level and on this appeal as a complaint to challenge or set aside a non-judicial foreclosure and keep trying to apply those inapplicable pleading requirements to the complaint. The plaintiffs did seek a preliminary injunction against the foreclosure and obtained it because the Defendants/Respondents did not comply with the laws regarding non-judicial foreclosure. However, that does not make their complaint a “central defense” to non-judicial foreclosure as Defendants/Respondents argue throughout their brief. The mischaracterization of the case was a key element of the lower court’s error and continues to be a key element of the Defendants’/Respondents’ false arguments.

Further, Plaintiffs/Appellants never argued that producing the note was a preliminary requirement to non-judicial foreclosure, but Plaintiffs/Appellants have plead very specifically throughout the complaint that possessing the note is a requirement for the Defendants/Respondents to have any right to enforce the note whatsoever, which has been established California law (and in every state that has adopted the Uniform Commercial Code) for a very long time. The references to producing the note were merely offered as evidence demonstrating that the Defendants/Respondents do no possess the note because they repeatedly fail and refuse to produce it. In fact, it is important to note that the Defendants/Respondents have never yet argued that the note is in their possession as required by law.

STATEMENT OF THE FACTS

A.        THE SUBJECT TRANSACTION.

The Defendants’/Respondents’ Statement of Facts has a very subtle attempt at subterfuge and misdirection in that it places a statement made about their finances during litigation after Plaintiffs/Appellants incurred legal fees in a different context as though the statement were made prior to litigation during the time that the prior (and possibly current) note holder CTX Mortgage had the loan and prior to the recording of the notice of default. Defendants/Respondents have gone to great lengths to take this statement out of context and have argued extensively that this constitutes proof that the Plaintiffs/Appellants were unable to tender payment. However, this requires the assumption that only one conclusion may be drawn from the statement rather than a range of possibilities, including the fact that the Plaintiffs/Appellants had incurred attorney’s fees by that time.

B.        THE DEMUCHAS’ CONTENTIONS.

As in the underlying Demurrer, the Defendants/Respondents continue to falsely argue that there was no allegation of Tender in the Complaint. However, as demonstrated in the Appellants’ Opening Brief, there is no requirement of tender to plead Quiet Title. Even so, the Defendants/Respondents quote the allegation of tender that is in the Complaint even while arguing that there is no allegation of tender. This demonstrates the Defendants’/Respondents’ motive in deliberately mischaracterizing the complaint: they wish to apply a non-applicable standard to the complaint. Then when the non-applicable standard has been complied with anyway, they attempt to mislead the court by arguing that a plain allegation of tender is not an allegation of tender. However, as will be shown, the Defendants/Respondents have cited a case that states that tender can be offered in the complaint, and need not have been offered prior to filing the complaint.

C.        DEFENDANTS’/RESPONDENTS’ ASSERTION OF NO ALLEGATION OF TENDER OF ALL AMOUNTS DUE IS BLATANTLY FALSE.

As stated above, Plaintiffs/Appellants have already demonstrated that tendering payment is not a required element of a Quiet Title action, but that they have pleaded tender anyway. The Defendants’/Respondents’ arguments that payments must be tendered “when due” misstates the law, even for cases challenging non-judicial foreclosures, which this case is not. As will be shown below, the Defendants/Respondents cited a case that indicates very clearly that even in non-judicial foreclosure cases, a tender may be made in the complaint and need not have been made prior to filing the complaint.

D.        THE FORECLOSURE PROCEEDINGS AND THE DEMUCHAS’ ATTEMPTS TO DELAY OR HALT THEM.

The Defendants/Respondents’ focus on these extra proceedings within the case is a red herring to distract the court’s focus from the demurrer. The appeal is not about the ex-parte application for a preliminary injunction that was granted due to the fact that the Defendants/Respondents did not comply with California law requiring a specific declaration to be signed under penalty of perjury that was not. The Defendants/Respondents are going well outside the Complaint’s four corners to abuse the details of the ex-parte application that was not about the Complaint nor the Demurrer that are the subjects of this appeal. And once again, they are trying to argue the issue of the Plaintiffs’/Appellants’ financial situation as stated during the ex-parte proceedings after they had already incurred attorney’s fees for the false proposition that the Plaintiffs/Appellants were allegedly incapable of tendering payment prior to incurring the additional attorney’s fees of litigation when that is not the only conclusion that can be drawn from the separate ex-parte pleadings. Finally, they continue to shout endlessly about the issue of tender when it is not a required part of pleading the elements of Quiet Title and when pleading tender is required, an offer made in the complaint itself is deemed sufficient, as will be shown below.

E.        THE ARGUMENTS ABOUT FAILURE TO “PRODUCE THE NOTE” ARE A RED HERRING TO DISTRACT THE COURT FROM THE LEGAL REQUIREMENT THAT THE DEFENDANTS “POSSESS THE NOTE.”

The Defendants/Respondents continue to make a big deal about the fact that in a few places, the Complaint mentions that the defendants have failed to produce the original note. However, their own arguments on this point mention that the complaint further alleges their failure to hold or possess the original note, which is the more key portion of the pleadings.

PROCEDURAL HISTORY

            The parties’ explanations of the case’s procedural history are close enough that no further discussion is necessary.

STANDARD OF REVIEW

            Some of the arguments contained in the Defendants’/Respondents’ Standard of Review section of their brief are specious, especially in the final paragraph arguing the subjects of tender and producing the note. The Defendants/Respondents have never demonstrated that California law requires an allegation of tender for a Quiet Title action, but have only cited as authority for this position cases that are focused on undoing a foreclosure sale after it has been completed. However, even those cases state that tender does not have to be made before filing the complaint, but the tender itself can be made within the complaint, and there cannot be any question that an offer of tender is made within the complaint. The Plaintiffs’/Appellants’ current attorney helped prepare pleadings for them in the trial court case and even made special, limited scope appearances for them, even though they were officially in pro per, so they incurred considerable legal fees during the litigation, which certainly had an effect on their financial situation at the time that they filed their ex parte application for a preliminary injunction, so the Defendants’/Respondents’ argument that the ex parte papers demonstrate that the Plaintiffs/Appellants could not tender payment is false. Further, the Defendants’/Respondents’ argument that “the central premise of each cause of action of the DeMuchas’ First Amendent Complaint [is] that a lender must ‘produce the note’ while conducting a non-judicial foreclosure” is a blatant misstatement of the Complaint’s content. The Complaint is not about non-judicial foreclosure, it is about quieting title. And the central premise is that a lender must possess the note in order to have a right to enforce the note, which is the law in California and every other state that has adopted the Uniform Commercial Code. No non-judicial foreclosure has yet taken place regarding the subject property.

ARGUMENT

A.        THE DEMURRER WAS NOT PROPERLY SUSTAINED.

Defendants/Respondents are demonstrating to this court the same misdirection and deliberate mischaracterization of the pleadings that misled the trial court into committing reversible error by improperly sustaining a demurrer to a valid complaint. The Defendants/Respondents have never demonstrated that tender is a requirement for a Quiet Title action. They have mischaracterized the case as a case to undo a non-judicial foreclosure when no non-judicial foreclosure has ever been completed regarding the subject property. The cases that they cited to the trial court and to this court regarding the requirements of a tender allegation were cases in which the subject property had been sold at a non-judicial foreclosure sale, which was being challenged after the fact. They have mischaracterized the Complaint’s allegations as though they state that “producing the note” is a requirement for non-judicial foreclosure, which is a blatant misstatement. The complaint states the true fact that the defendants have failed and refused to produce the note only as evidence of the fact that they do not possess the note and therefore have no right to enforce the note under California law. It is worth noting that the Defendants’/Respondents’ 34-page Appellate Brief never claims that they are the holders of the note as required by law.

B.        THE COMPLAINT VERY PLAINLY CONTAINS A TENDER, EVEN THOUGH IT IS NOT REQUIRED FOR A QUIET TITLE ACTION.

Defendants/Respondents continue their same improper tactic used with the trial court of citing irrelevant cases seeking to undo a foreclosure sale after the fact. Since no foreclosure sale has yet taken place regarding the subject property and this is a Quiet Title action, those cases are all irrelevant and inapplicable to the First Amended Complaint that is the subject of the Demurrer and this appeal. However, even under the Defendants’/Respondents’ inapplicable cases, the Defendants/Respondents have swerved into something that destroys their arguments completely: Citing Whitman v. Transtate Title Co. (1985) 165 Cal.App.3d 312, 322-323, the Defendants/Respondents correctly stated on page 11 of their brief, “therefore as a condition precedent to any action challenging a foreclosure, a plaintiff must pay or offer to pay the secured debt before an action is commenced or in the complaint.” (Emphasis added).  This is not an action challenging a foreclosure, but even if those standards were inappropriately applied to this action, the tender or offer to pay can be made “in the complaint.” The Verified First Amended Complaint (“VFAC”) states, “Plaintiff offers to pay and mortgage payments on the property to the individual or entity that is the valid holder of the original note as required by California Commercial Code § 3301, et seq. and all property taxes to the appropriate government agency.” (VFAC page 3, line 28 through page 4, line 7). This is a very clear tender, made “in the complaint,” even though it is not required in a Quiet Title Action.

Since tender is not a statutory element of a Quiet Title action, the Defendants’/Respondents’ arguments regarding the difficult financial times mentioned in the Plaintiffs’/Appellants’ ex-parte application for a preliminary injunction are moot. However, it should be noted that by the time the Plaintiffs/Appellants filed their ex-parte application, they had the additional financial burden of paying for attorney’s fees to have the same attorney who now represents them on appeal prepare pleadings for them and make special, limited scope appearances for them on the trial court level, so the conclusion that the Defendants/Respondents are asking the court to make are inaccurate.

Even the Defendants’/Respondents’ arguments regarding “implicit integration” of foreclosure issues are irrelevant, because the cases that they cited specifically involved a non-judicial foreclosure in which the sale had been completed, but no non-judicial foreclosure sale has taken place regarding the subject property. The defendants’ argument that Plaintiffs’/Appellants’ have failed to cite any authority for the fact that no allegation of tender is required is another false statement. Plaintiffs have directly quoted Code of Civil Procedure § 761.020, which fully sets forth the elements of a Quiet Title Action, and there is no requirement of tender. However, even if the court somehow found that a tender allegation was required, the tender allegation has been made in the Complaint in accordance with the Defedants’/Appellants’ own citations as set forth above. Further, the Defendants’/Respondents’ arguments that “a court of equity will not order a useless act performed” (FPCI Re-Hab 01, etc. v. E&G Investments, Ltd. (1989) 207 Cal.App.3d 1018, 1022, and “equity will not interpose its remedial power in the accomplishment of what seemingly would be nothing but an idly and expensively futile act” (Leonard v. Bank of America Ass’n (1936) 16 Cal. App. 2d 341, 344) could and should just as easily be applied to the futile and useless acts that Defendants’/Respondents’ are requesting to be required and plead when they do not possess the original note and therefore have no right to expect payments, seek payments, nor threaten foreclosure because they did not receive payments that they had no right to receive in the first place, pursuant to Commercial Code § 3301. It can and should also be used to destroy their argument that plaintiff must be subjected to the requirements of case law regarding actions seeking to undo foreclosure irregularities before the foreclosure has even been completed, as though plaintiff should be able to foresee every foreclosure irregularity with a crystal ball before the process is even completed!

C.        SUSTAINING OF THE DEMURRER WAS REVERSIBLE ERROR BECAUSE CALIFORNIA LAW REQUIRES WELLS FARGO TO POSSESS THE NOTE IN ORDER TO ENFORCE THE LOAN.

Plaintiffs/Appellants have cited a fully binding California Statute, Commercial Code § 3301, which specifically states that in order to be a “person entitled to enforce an instrument,” the Defendants/Respondents must have been the holder of the instrument, with very limited exceptions. In opposition, the Defendants/Respondents continue their same bad habit engaged in during the trial court proceedings of citing and relying upon federal trial court cases, which are not binding authority in any way, without disclosing to the court that they are citing non-binding authority. In addition, many of their citations do not even contain the full reference, so that it is difficult or impossible to locate and read the case. As for the federal trial court cases, all that they have demonstrated is that there is a need for a California appellate court to clear up the confusion that clearly exists regarding California’s law, and especially Commercial Code § 3301. Further, their statement that every court that has considered the issue has ruled that possessing the note is not necessary for a foreclosure is false. For example, in the U.S. Bankruptcy Court for the Northern District of California in San Jose, a federal trial court judge stopped a foreclosure because the bank could not produce the note in the case of Caporale v. Saxon Mortgage, Case No. 07-54109. Like the Defendants’/Respondents’ authorities, this case is only persuasive authority, not binding, but it was reported on by ABC News, and a copy of the news video is available to be viewed online at http://abclocal.go.com/kgo/story?section=news/7_on_your_side&id=6839404. If the court is going to consider the non-binding federal trial court decisions offered by the Defendants/Respondents, the court should also consider the non-binding persuasive authority of In re Foreclosure Cases, 2007 WL 3232430 (Bankr. N.D. Ohio 2007), wherein U.S. Bankruptcy Court Judge Christopher Boyko dismissed without prejudice fourteen judicial foreclosure actions filed by the trustees of securitized trusts against borrowers who had defaulted on their residential mortgages that had been sold into securitized trusts, based upon the application of Uniform Commercial Code § 3-301 to the mortgages in question.

As for their claim that the commercial code does not apply to a mortgage or a note secured by deed of trust, the Defendants/Respondents are willfully ignoring Staff Mortgage v. Wilke (1980) 625 F.2d 281, 6 Bankr.Ct.Dec. 1385, 29 UCC Rep.Serv. 639, cited in Plaintiffs’/Appellants’ Opening Brief, which clearly states that “notes secured by deeds of trust…were ‘instruments’ under the California Commercial Code.” This holding is repeated in Starr v. Bruce Farley Corp. (9^th Cir. 1980), 612 F.2d 1197. The Defendants/Respondents have offered nothing other than their own opinion for the proposition that the note secured by deed of trust in question is not a “negotiable instrument” within the meaning of Commercial Code § 3301, even though they claim to have purchased the note, which by definition makes it negotiable.

D.        THE DEFENDANTS’/RESPONDENTS’ ARGUMENTS REGARDING THE PROPRIETY OF SUSTAINING THE DEMURRER ON THE CLAIMS TO QUIET TITLE AND REMOVE CLOUD ARE BASED UPON THE DELIBERATE MISREPRESENTATION OF THE NATURE OF THE DEMUCHAS’ COMPLAINT.

As always, the Defendants/Respondents insist upon misrepresenting the nature of the First Amended Complaint. Every element of each of these causes of action was specifically plead, as has been demonstrated. Pursuant to Commercial Code § 3301, the Defendants/Respondents have no right to enforce the note unless they possess the note. Plaintiffs/Appellants rely upon the appellate court to read the First Amended Complaint and comprehend it independently of the Defendants’/Respondents’ misrepresentations.

E.        THE DEFENDANTS’/RESPONDENTS’ ARGUMENTS REGARDING THE PROPRIETY OF SUSTAINING THE DEMURRER ON THE CLAIM FOR FRAUD AND MISREPRESENTATION ARE BASED UPON THE DELIBERATE MISREPRESENTATION OF THE CONTENT OF THE DEMUCHAS’ COMPLAINT.

The content of the First Amended Complaint speaks for itself. The Defendants/Respondents continue to look right at the paragraphs of the document that contain the elements required by law for each cause of action and to falsely state that the required allegations are not there. Plaintiffs/Appellants rely upon the appellate court to read the First Amended Complaint and comprehend it independently of the Defendants’/Respondents’ misrepresentations.

F.         THE DEFENDANTS’/RESPONDENTS’ ARGUMENTS REGARDING THE PROPRIETY OF SUSTAINING THE DEMURRER ON THE CLAIM FOR INFLICTION OF EMOTIONAL DISTRESS ARE BASED UPON THE DELIBERATE MISREPRESENTATION OF THE CONTENT OF THE DEMUCHAS’ COMPLAINT.

The content of the First Amended Complaint speaks for itself. The Defendants/Respondents continue to look right at the paragraphs of the document that contain the elements required by law for each cause of action and to falsely state that the required allegations are not there. Plaintiffs/Appellants rely upon the appellate court to read the First Amended Complaint and comprehend it independently of the Defendants’/Respondents’ misrepresentations.

G.        THE DEFENDANTS’/RESPONDENTS’ ARGUMENTS REGARDING THE PROPRIETY OF SUSTAINING THE DEMURRER ON THE CLAIM FOR SLANDER OF CREDIT ARE BASED UPON THE DELIBERATE MISREPRESENTATION OF THE CONTENT OF THE DEMUCHAS’ COMPLAINT.

The content of the First Amended Complaint speaks for itself. The Defendants/Respondents continue to look right at the paragraphs of the document that contain the elements required by law for each cause of action and to falsely state that the required allegations are not there. Plaintiffs/Appellants rely upon the appellate court to read the First Amended Complaint and comprehend it independently of the Defendants’/Respondents’ misrepresentations.

H.        THE DEFENDANTS’/RESPONDENTS’ ARGUMENTS REGARDING THE PROPRIETY OF SUSTAINING THE DEMURRER ON THE CLAIM FOR INFLICTION OF EMOTIONAL DISTRESS ARE BASED UPON THE DELIBERATE MISREPRESENTATION OF THE CONTENT OF THE DEMUCHAS’ COMPLAINT.

The content of the First Amended Complaint speaks for itself. The Defendants/Respondents continue to look right at the paragraphs of the document that contain the elements required by law for each cause of action and to falsely state that the required allegations are not there. Plaintiffs/Appellants rely upon the appellate court to read the First Amended Complaint and comprehend it independently of the Defendants’/Respondents’ misrepresentations.

CONCLUSION

            The trial court erred in sustaining the demurrer without leave to amend and entering a judgment of dismissal. The rules of a non-judicial foreclosure proceeding and litigation to set aside a non-judicial foreclosure do not apply to a quiet title action that is filed prior to a foreclosure sale. The Commercial Code’s requirements that the entity enforcing a note must possess the original note (with limited exceptions) applies to a Note Secured by Deed of Trust. Even in the context of a non-judicial foreclosure, there is no “breach” unless the entity that did not receive the mortgage payments had a right to receive the mortgage payments through possession of the original note or compliance with another recognized exception under the Commercial Code. Any other result would cause an unnecessary conflict of laws and allow fraudulent “lenders” to engage in non-judicial foreclosures and sales of property so long as they complied with the technical requirements of a non-judicial foreclosure. All of the causes of action of the Verified First Amended Complaint are properly plead, with the exception that “punitive damages” is not technically a cause of action, but that can be resolved by striking the label “Sixth Cause of Action” and just allowing the heading “Punitive Damages” to stand.

RESPECTFULLY SUBMITTED,

            Dated: 23 December 2010                                                                                                                  

Michael D. Finley, Esq.

Counsel for Plaintiffs/Appellants

Mark J. DeMucha & Cheryl M. DeMucha

CERTIFICATE OF COMPLIANCE

Pursuant to rule 8.204(c) of the California Rules of Court, I hereby certify that this brief contains 3,914 words, including footnotes. In making this certification, I have relied on the word count of the computer program used to prepare the brief.

Dated: 23 December 2010                                                                                                                  

Michael D. Finley, Esq.

Counsel for Plaintiffs/Appellants

Mark J. DeMucha & Cheryl M. DeMucha

 PROOF OF SERVICE

STATE OF CALIFORNIA, COUNTY OF LOS ANGELES

I am employed in the County of Los Angeles, State of California. I am over the age of 18 and not a party to the within action; my business address is: 25375 Orchard Village Road, Suite 106, Valencia, CA 91355-3000.

On 23 December 2010 I served the foregoing document described as: Appellant’s Opening Brief on the interested parties in this action by placing a true copy thereof in sealed envelopes addressed as follows:

(Attorneys for Wells Fargo Home Mortgage, Inc. & Wells Fargo Bank, N.A.): Kutak Rock LLP, 18201 Von Karman, Suite 1100, Irvine, CA 92612

(Attorneys for First American Loanstar Trustee Services & First American Corporation): Wright, Finlay & Zak, LLP, 4665 MacArthur Court, Suite 280, Newport Beach, CA 92660

Judge Sidney P. Chapin, Kern County Superior Court, Metropolitan Division, 1415 Truxtun Ave., Bakersfield, CA 93301

BY MAIL: I deposited such envelopes in the mail at Valencia, California. The envelopes were mailed with first class postage thereon fully prepaid.

ALSO, BY ELECTRONIC FILING WITH THE SUPREME COURT: In addition, I filed an electronic copy of the Appellant’s Opening Brief with the Supreme Court of California on 23 December 2010, through the Supreme Court’s website.

Dated: 23 December 2010                                                                                                                  

Michael D. Finley, Esq.

Counsel for Plaintiffs/Appellants

Mark J. DeMucha & Cheryl M. DeMucha

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Challenge Your Lender… Now!

Don’t delay – Opt in to the follow Blog and gain access to over 680 ideas and posts to hold your Lender accountable new post every day!

Do you want to hold your lender responsible for their illegal actions?

Challenge Your Lender… Now!

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

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

WE CAN TRAIN YOU HOW TO CHALLENGE YOUR LENDER

Most Mortgage Assignments are Illegal

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

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

Save your home from foreclosure

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

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

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

Best regards,
Tim

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• The general trend in Seattle Foreclosures – Real Estate – Foreclosures (rawbusinesslaw.com)
• Asset Foreclosure Services, Inc. Presents New Economic Solutions At The CMBA Conference (prweb.com)
• Elizabeth Renuart Article on Ibanez (pubcit.typepad.com)

Three Hundred Billion to compensate homeownners “really?” no probably 50 bucks a case!!!

Millions of current and former homeowners will have a chance to get their foreclosure cases examined to determine whether they should be compensated for banks’ mistakes, under a wide-ranging review being planned by federal regulators. Ssoo let’s see 6 Million foreclosures 50,000.00 each that’s 300 BILLION I think they are going to sweep this under the carpet just like the Countrywide deal and say they fixed it. I believe that the only way to get compensated is through litigation although this is a great admission and could be used in future litigation.

The review process, which could be unveiled in the next few weeks, will be open to borrowers who were in some stage of foreclosure in 2009 or 2010. Estimates prepared by the Office of the Comptroller of the Currency, which will oversee the review, indicate that 4.5 million borrowers could be eligible for review.

John Walsh, acting head of the OCC, unveiled some aspects of the plan in a speech last month to banking executives, when he said the agency was exploring “the best means of ensuring that injured homeowners had the opportunity to seek relief,” when they were harmed by lender improprieties.

WSJ’s Nick Timiraos has details of a plan by which 4.5 million homeowners who faced foreclosure in 2009 and 2010 could face a review of their foreclosure procedures due to errors by banks. Photo by John Moore/Getty Images

The process will include a broad public-outreach campaign, including direct mail to eligible borrowers and a single website and toll-free number. The reviews will be conducted by independent third-party companies that were hired earlier this year by 14 banks that signed consent orders in April with the OCC and the Federal Reserve. The regulators had to sign off on the selection of these companies.

“It’s a substantial undertaking at great expense to the banks,” said Tim Rood, a partner at Collingwood Group, a housing-finance consulting firm.

Borrowers who are determined to have suffered “financial injury” could be eligible for compensation that would be determined on a case-by-case basis by the third-party firms. Borrowers will have to request reviews before a cutoff date, likely to fall near the end of the first quarter of 2012. It hasn’t been determined whether borrowers that accept restitution would have to agree to surrender related legal claims.

Regulators declined to provide estimates of the amount of money that injured borrowers might receive or how much the program might cost lenders.

However, few if any borrowers are expected to have foreclosures overturned.

More

• Developments: Report: Fannie Mae, Regulator Missed Abuses
• Real Time Economics: Fed’s Raskin Calls for Mortgage-Servicing Changes

The review process is one of several continuing efforts to address disclosures that surfaced a year ago over banks’ use of “robo-signers,” bank employees who signed off on huge numbers of legal foreclosure filings daily and falsely claimed in the documents to have personally reviewed each case. The disclosures prompted some judges to question the veracity of other bank foreclosure practices.

The process is separate from the months-long talks between federal agencies, state attorneys general and banks to reach a multibillion-dollar settlement over foreclosure abuses. That effort took a big step backwards Friday, when California Attorney General Kamala D. Harris called the deal “inadequate” and pulled out of the settlement talks.

The loss of California could cripple any settlement because the state has among the nation’s highest volumes of foreclosures. Banks are less likely to agree to the $25 billion price tag pushed by federal and state officials without the participation of California. Banks, federal officials and state attorneys general are set to resume meetings in Washington on Tuesday.

Representatives for both sides said they still hope to reach an agreement despite Friday’s setback. The banks “remain committed to the dialogue and continue to believe that a global settlement would be an effective means of supporting the recovery of the housing market and helping to strengthen the economy,” said one person familiar with the banks’ thinking.

“We are still full-steam ahead,” said a spokesman for Iowa Attorney General Tom Miller, who is spearheading the 50-state negotiations. “With or without some states, we are still moving forward.”

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Bloomberg NewsBorrowers who suffered ‘financial injury’ could be eligible for compensation. Here, a foreclosure sign hangs in front of a house in Canton, Mich., in March.

In the OCC review process, financial injury could cover a wide range of misrepresentations or errors committed by mortgage companies, according to people familiar with the process.

Banks could be liable if they miscalculated mortgage payments or applied impermissible fees or penalties. A handful of borrowers have alleged that mortgage-servicing companies, for example, improperly placed expensive insurance coverage onto their mortgage, pushing them into default and preventing them from becoming current with their payments.

Borrowers may be able to receive compensation if the review finds that the bank moved a borrower to foreclosure while the bank was receiving partial payments as part of a trial or permanent loan modification. Compensation might also be due if borrowers provide evidence that they provided the necessary documentation required to qualify for a modification but were denied the modification.

A separate report to be released on Tuesday raises new questions over Fannie Mae‘s oversight of the attorneys that conduct foreclosures on its behalf. The report, from the inspector general for the Federal Housing Finance Agency, faulted Fannie for inadequate oversight of those firms

Since 2008, Fannie has required its mortgage servicers to use designated law firms that are part of its “retained attorney network.” The network arrangement allows Fannie to negotiate discounted rates with approved firms, which in turn can lock in business from the nation’s largest mortgage investor.

The report said that in June 2010, the FHFA conducted a two-day field visit to Florida, where it found that “documentation problems were evident and law firms…were not devoting the time necessary to their cases due to Fannie Mae’s flat fee structure and volume-based processing model.”

FHFA staff subsequently informed senior Fannie officials that its attorneys were “increasingly unprepared when they enter the courtroom,” leading to a larger backlog of foreclosures.

Fannie Mae declined to comment on the report.

Issues in Foreclosure, Securitization, Litigation, Bankruptcy, The Courts created with Yahoo Pipes

• 

  If the loan was not perfected; then there is no lien; and if the servicer was obligated to make the payment as a co-obligor; then there was no default

  SEE 42-in RE Cruz vs Aurora AURORA LOAN SERVICES LLC, SCME MORTGAGE BANKERS INC, ING BANK FSB, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS ALL BITE THE DUST, SUBJECT TO LIABILITY AND NO ABILITY TO FORECLOSE WITHOUT COMPLYING WITH LAW. Salient points of Judge Mann’s Decision: TRUTH IN LENDING was dismissed because they were time-barred. LESSON: Don’t ignore […]
• 

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

  timothymccandless.wordpress.com recallcitycouncil.wordpress.com chapter11bankruptcy.wordpress.com fairdebtcollectionpracticesact.wordpress.com marionmccandless.wordpress.com trustdeedinvestment.wordpress.com rocketrecoverysystem.wordpress.com mortgagereductionlaw.wordpress.com mortgageregistationsystems.wordpress.com massjoinderlitigation.wordpress.com financialelderabuse.wordpress.com landlordfraud.wordpress.com http://mybk7.com http://mortgagereductionlaw.com http://evictiondefender.com…

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  Mortgage Assignments to Washington Mutual Trusts Are Fraudulent

  Posted on August 7, 2011 by Neil Garfield EDITOR’S NOTE: We know the foreclosures were gross misrepresentations of fact to the Courts, to the Borrowers and to the Investors. This article shows the crossover between the MegaBanks — sharing and diluting the responsibility for these fabrications as they went along. If you are talking about […]

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

  I looked into the records for that entity in the SEC EDGAR online database and discovered that the last annual report was filed in 2007, contemporaneously with a FORM 15 filing.That Form 15 filing claimed a standing under 15d-6 of the 1934 SEC regulations which exempts the entity of filing an annual report, whereby the […]

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  OUR NANCY DREW BLASTS THROUGH THE DEVIL IN THE DETAILS ON NORWEST, GMAC ET AL (via Livinglies’s Weblog)

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE Submitted on 2011/08/24 at 9:08 pm Norwest and Alt-A Land Title & Fidelity National Insurance morpted into Microsoft open platform on CLOUD and portals now through which new GMAC Mortgage & State of Maryland in the pass-thru-agency state portal funded to access FIS, […]

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• 

  Bombshell Admission of Failed Securitization Process in American Home Mortgage Servicing/LPS Lawsuit (via Livinglies’s Weblog)

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE EDITOR’S NOTE: It is comforting to know that at least some people are paying attention. From one of the largest servicers in the country comes an admission that securitization of mortgage loans was an illusion. The facts alleged by AHMSI  in its lawsuit […]

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• 

  KISS: KEEP IT SIMPLE STUPID from Garfield

  Finality versus good and evil. In the battlefield it isn’t about good and evil. It is about winner and losers. In military battles around the world many battles have been one by the worst tyrants imaginable. Just because you are right, just because the banks did bad things, just because they have no right to […]

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  MANDELMAN MATTERS: DEADBEAT BORROWERS AND THIEVES WHO CALL THEM THAT

  “If you’re allowed to foreclose and kick someone out of his or her home without being the party that either owns the loan or represents the person who owns the loan… if you can ignore those laws, why can’t you ignore other laws too? Which laws apply, when one of the parties didn’t make his […]
• 

  $1.2 Trillion in Secret Additional Bailout for Banks with No Collateral and No Commitments (via Livinglies’s Weblog)

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE see VIDEO $1.2 Trillion in EXTRA BAILOUT MONEY FROM FED SECRETLY GIVEN TO DOMESTIC AND FOREIGN BANKS Of course the figure is much higher, but the secrecy surrounding the money given by the Fed to the banks is something to enrage any tea […]

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  GOING AFTER THE NOTARY, STEP BY STEP (via Livinglies’s Weblog)

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE EDITOR’S NOTE: Here is a good place to start — the devil is in the details. You will find that the more you probe the more people and bad documents emerge. Persistence pays. Here is a letter that one homeowner just sent to […]

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  WALLS CLOSING IN ON LAW FIRMS AND SUBSTITUTE TRUSTEES AS FAKED, FORGED DOCUMENTS SURFACE IN ABUNDANCE (via Livinglies’s Weblog)

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE The boys are playing rough now, but US Bank, failing to take its queues from Deutsch is plunging ahead with CalWestern by its side, using forged, fabircated, faked documents that wouldn’t be valid even if they were properly executed. The securitizers tricked and […]

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  Attorney General Kamala D. Harris Sues Law Firms Engaged in National “Mass Joinder” Mortgage Fraud

  SAN FRANCISCO — Attorney General Kamala D. Harris today announced that the California Department of Justice, in conjunction with the State Bar of California, has sued multiple entities accused of fraudulently taking millions of dollars from thousands of homeowners who were led to believe they would receive relief on their mortgages. Attorney General Harris sued […]
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  NY POST: 92% —BANKS STILL FORECLOSING WITHOUT ANY RIGHT (via Livinglies’s Weblog)

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE IF THE BANKS DON’T OWN THE PROPERTY OR THE MORTGAGE, WHO DOES? EDITOR’S NOTE: My figures tracking thousands of foreclosures indicate the same thing that the New York Post found. There are a scattered few foreclosures that are good old-fashioned foreclosures of valid […]

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  Should Borrower File Eviction Against Bank? (via Livinglies’s Weblog)

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE EDITOR’S COMMENT: I was talking with an expert in landlord tenant law and I received an interesting suggestion. The case involved someone who has just been served with a writ of restitution where the owner had to peaceably leave her home — or […]

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  Gomes and the U.S. Supreme court some body had better help these attorneys argue and brief the case

  Wednesday, August 17th, 2011, 2:49 pm A controversial case challenging the ability of Mortgage Electronic Registration Systems to foreclose on a California man was filed with the Supreme Court Monday, making it the first major MERS case to reach the nation’s highest court. If the Supreme Court agrees to hear Gomes v. Countrywide, Gomes’ attorney, […]
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  California man wants foreclosures deemed unconstitutional in the state

  by KERRI PANCHUK Proposed Illinois Legislation Would Freeze Evictions for Four Months California AG Wants Pay Option ARM Answers Does the Senate’s housing bill encourage foreclosures? California Law Freezes Foreclosures, Burns Servicers Short Sales Cost Lenders $310m More Than Necessary, CoreLogic Study Finds Thursday, August 4th, 2011, 7:31 am A California man is on a […]
• 

  JUDGES: ASSUME THE BORROWER IS WRONG

  So you have denied the claims of the pretenders and put that in issue. You have even alleged fraud, forgery and fabrication and the catch-word “robosigning”. But the Judge, alleging that he did not want to “make new law” (which wasn’t true) or allegedly because he didn’t want to start an avalanche of litigation interfering […]

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  SAY NO TO LENDERS FRAUD!

  Contact Us: MortgageReductionLaw.com Dear Homeowner, It’s been widely reported around the country, via internet, blogs and newspapers, how the lenders used the foreclosure mills and other legal ways, to fabricate fraudulent documents to record in the county recorder offices and pretend they have legal standing to initiate the foreclosure procedure. Neil Garfield in his blog […]
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  Keep the trustees deed out of evidence in the unlawful detainer

  TIMOTHY L. MCCANDLESS, ESQ. SBN 147715 LAW OFFICES OF TIMOTHY L. MCCANDLESS 820 Main Street, Ste. 1 Martinez, CA             (925) 957-9797       Telephone             (909) 382-9956       Facsimile Attorney for Defendant Zenkarla S. Salazar SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SANTA CLARA GMAC MORTGAGE, LLC FKA GMAC MORTGAGE CORPORATION, Plaintiff, vs. […]
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  STUDY: Mortgage Assignments to Washington Mutual Trusts Are Fraudulent (via Livinglies’s Weblog)

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE EDITOR’S NOTE: We know the foreclosures were gross misrepresentations of fact to the Courts, to the Borrowers and to the Investors. This article shows the crossover between the MegaBanks — sharing and diluting the responsibility for these fabrications as they went along. If […]

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  The Free House Myth

  posted by Katie Porter As challenges to whether a “bank” (usually actually a securitized trust) has the right to foreclose because it owns the note and mortgage become more common, rumors swirl about the ability to use such tactics to get a “free house.” There are a few instances of consumer getting a free house, […]
• 

  MERS in California

  From LivingLies: I think that everyone is missing the #1 problem MERS has in CA. MERS is a Non-Authorized Agent and cannot legally assign the Promissory Note, making any foreclosure by other than the original lender wrongful, for the following reasons. 1) Under established and binding Ca law, a Nominee can’t assign the Note. Born […]
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  QUIET TITLE IS NOT A DEFENSE — IT IS OFFENSE AND IT IS A HIGHLY EFFECTIVE LAWSUIT

  Posted on August 1, 2011 by Neil Garfield I WRITE THIS BECAUSE WITH SO MANY PRO SE LITIGANTS AND UNINFORMED LAWYERS WEIGHING IN IT IS SOMETIMES NECESSARY TO CLARIFY THE ISSUES. Quiet Title is not a defense. If used defensively you will most likely lose your case and also unintentionally waive rights that you might […]
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  Its about standing

  Pro Per Debtor Stops Attorneys for US Bank – in RE Deamicis Posted: 31 Jul 2011 10:21 PM PDT Pro Per Debtor Stops Attorneys for US Bank – in RE Deamicis By Daniel Edstrom DTC Systems, Inc. She has been fighting tooth and nail. Nobody was listening. The current bankruptcy judge was skeptical when she […]
• 

  Comptroler of the currecy consent orders

  Recent Consent Orders Consent Order, Sovereign Bank, Wyomissing, Pennsylvania, 04410, NE-11-17, April… Order shall be directed to the Comptroller of the Currency, or to the individual, … or office designated by the Comptroller of the Currency. Sovereign Bank Consent Order Page http://www.mortgagedaily.com/forms/OccConsentOrderSovereign041311.pdf Consent Order, OneWest Bank, FSB, Pasadena, California, 18129, WN-11-011,

• 

  David and Goliath as court overturns case dissmissal

  A Bakersfield homeowner is taking on a bank, in a battle that could have sweeping implications for people facing foreclosure. Mark Demucha wants Wells Fargo to prove it owns his home loan. And, if his lawsuit is successful, it could set a legal precedent that slows or even stops foreclosures across the state. “Filled out the […]
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  17 News Investigation: Homeowner challenges bank

  17 News Investigation: Homeowner challenges bank. Filed under: Foreclosure, I Have a Plan, lis pendence, mers, Mortgage modification
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  pending lawsuits and homeowners winnning

  Mark DeMucha v Wells Fargo Bank; Kutak Rock LLP; Homeowner Wins a California Appeal; Reversed and R http://www.scribd.com/doc/60748498/Mark-DeMucha-v-Wells-Fargo-Bank-Kutak-Rock-LLP-Loses-a-California-Appeal-Reversed-and-Remanded Added by PENDING LAWSUIT on July 24, 2011 at 9:30am — No Comments Barry Fagan v Wells Fargo re: KOSAR PETITION WHY ACTION SHOULD NOT BE DISMISSED, WITH PREJUDICE, FO…
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  one west bank and the consent order with admissions of wrongdoing

  One West Bank click to see full order from comptroller of the currency Filed under: I Have a Plan Tagged: one west

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  standing

  A. Standing The party seeking to invoke federal jurisdiction has the burden of establishing standing.28 Constitutional standing analysis includes three elements: (1) the plaintiff must have suffered an injury in fact—an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical; (2) there must […]
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  Is the notary responsible or at least negligent or at least negligent per se !!!

  (1) Notaries Public § 1–Disciplinary Proceedings–Time for Instituting. Disciplinary action taken by the Secretary of State against a notary public was not barred by the fact that the proceeding was instituted more than three years after the notary’s alleged improper act and more than one year after its discovery. Statutes of limitation barring civil actions […]

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  The securitization argument a year later

  SEPARATION OF DEED OF TRUST FROM NOTE: Bellistri Opinion Posted on April 28, 2010 by Neil Garfield There is a lot of conflicting opinions about this. My opinion is that the confusion arises not from the law, not from application of the law and not from what is written on the note or deed of Trust. […]
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  MERS and invalid assignments

  Brand New, Hot Off The Presses MERS Policy Bulletin July 24th, 2011 | Author: Matthew D. Weidner, Esq. After years of claiming that assignments don’t matter and the date of assignment certainly doesn’t matter, the MERS Monster has finally changed its tune, effective July 21, 2011: The Certifying Officer must execute the assignment of the […]

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  Been evicted and need more time ??Appeals from UD actions are governed by CCP §§901–923. [See CCP §1178; Anchor Marine Repair Co. v Magnan (2001) 93 CA4th 525, 528–530.]

  Stay of Execution and Appeal The defendant may request a stay of execution of the judgment whether or not an appeal is taken. [CCP §918(a), (c).] You may stay execution of the judgment for up to 40 days without the landlord’s consent in a limited civil case (or up to 70 days in an unlimited […]

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  Possible Counter-Attack in Unlawful Detainer (Eviction) in Fraudulent Foreclosure Cases (via Livinglies’s Weblog)

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE factual issues for Unlawful Detainer case NFG 7-15-11 Various states have two levels of  jurisdiction that make it difficult to raise the proper issues in eviction even if there has been no preceding judicial action or if the preceding judicial action has been […]

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  FREE HOUSE MYTH DEBUNKED BY PORTER AND LEVITIN (via Livinglies’s Weblog)

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE The Free House Myth posted by Katie Porter As challenges to whether a “bank” (usually actually a securitized trust) has the right to foreclose because it owns the note and mortgage become more common, rumors swirl about the ability to use such tactics […]

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  BOA Feeling the Heat is Striking Back at Foreclosure Defense Lawyers as Lawsuits are Filed Against Firms Who Represent BOA (via Livinglies’s Weblog)

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE EDITOR’S NOTE: The battle is heating up. BOA, for example, is stepping up efforts to cause as much trouble as possible for those foreclosure defense lawyers who are getting traction in the courts. This started some time ago as some people were actually […]

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  Robo-signing continues without consequences (via Livinglies’s Weblog)

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE No Punishment = Continued Misconduct Posted on July 19, 2011 by Mark Stopa Esq. http://www.stayinmyhome.com/blog/?p=1565 In Maine, a group of drug dealers was caught distributing drugs to local middle schoolers. They confessed, yet the District Attorney declined to press charges, so the drug […]

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  Cloud on title forever post foreclosure {but wait the Banks own the title companies}

  Recently Discovered Flaw in Recording System Clouds Titles on Previously Foreclosed Properties   The modern system of mortgage refinancing and assignments created during the housing boom has left behind a wave of title defects on properties that have ever had a foreclosure in their history, due to a loophole in the property records recording system. […]
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  assingmment please?? 2932.5 with a side of Veal

  The brief below as circulated by the California Bar’s: Insolvency Law Committee: Herrera vs. Deutsche Bank National  Trust Co.,  2011 Westlaw 2547979 (Cal.App.)   Facts: A married couple  (“the homeowners”) purchased a home at a foreclosure sale.  Supposedly,  unbeknownst to them, their interest in the home was subject to a prior (and  perhaps unrecorded) deed […]
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  Ask for a 402 hearing and then dissmiss the eviction !!!

  If the court follows the rules of evidence (and they do) if proper objections are filed. No eviction of a secuitized loan should ever prevail on an eviction; they cannot produce the foundation to authenticate the Trustees Deed it is based upon preliminary facts that they are unable and unwilling to bring to court. The […]

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  FINALLY! BOA FACES CLAIMS FOR BOGUS MODIFICATION ACTIONS (via Livinglies’s Weblog)

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE EDITOR’S NOTE: Anyone who has entered into mortgage modification process with BOA or any other bank acting as servicer or otherwise knows the story. The Bank does everything it can to delay the process until the borrower gets into serious trouble and then […]

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  AZ: TRUSTEE CAN BE SUED IF SUBSTITUTION WAS INVALID (via Livinglies’s Weblog)

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE JUDGES ARE STARTING TO EXAMINE DOCUMENTS AND THEY DON’T LIKE WHAT THEY ARE SEEING “Thus, while A.R.S. §33-807(E) may operate to dismiss a trustee in certain instances, if one of the allegations of a complaint is that the entity purporting to act as […]

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  WEIDNER: IT’S THE ALLONGE!!! (via Livinglies’s Weblog)

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE The Allonge- Billions of Dollars in Commerce Hangs on A Single Scrap of Paper EDITOR’S NOTE: If you wrote a check to your next door neighbor, you would expect that he would either cash it or deposit it. But what if your neighbor […]

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  Judicial Notice ?? not so fast

   All banks love to use judicial notice to establish their position but with all the robo signing the evidence is being excluded. ROBERT HERRERA et al., Plaintiffs and Appellants, v. DEUTSCHE 1 BANK NATIONAL TRUST COMPANY et al., Defendants and Respondents. No. C065630.  Court of Appeals of California, Third District, El Dorado.Filed May 31, 2011. […]

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  One West False statements

  False Statements 06/28/2011 California Bankruptcy Judge Laura Stuart Taylor has joined the ranks of judges who will not tolerate fraudulent documents produced by banks to foreclose. Judge Taylor entered an Order To Show Cause why OneWest Bank, FSB, should not incur “a significant coercive sanction intended to deter any future tender of misleading evidence to […]

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  Javaheri v. JPMorgan Chase finally !!

  From ChaseChase.org: Federal District Court Javaheri v. JPMorgan Chase, Case No. CV10-8185 ODW Otis D. Wright II, Judge, U.S. District Court, Central District of California, Los Angeles Douglas Gillies, attorney for Daryoush Javaheri Plaintiff sued to halt a foreclosure initiated by JPMorgan Chase and California Reconveyance Co. Chase responded with a Motion to Dismiss. Two […]

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  The Banksters will get you any way they can

  By Niel Garfield EDITOR’S NOTE AND COMMENT: LAWYERS BEWARE! Starting up an anti-foreclosure venture and making comments criticizing the system has reportedly caused some investigations to begin and may result in bar discipline for technical infractions. From what I can see, the Bar is focused on UPL — unauthorized practice of law. The use of […]
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  Beware of foreclosure scams currently under investigation by the District Atorney

  Each day I get calls from desperate people hoping against hope the there is a magic document that can be filed or recorded the will magically give them their home free and clear without recourse. I tell them if it sounds to good to be true it probably is. That’s not to say that I […]
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  Current articles in foreclosure

  Ohio Judge Steven Terry Found Guilty of Rigging Foreclosure and Mail Fraud Corruption Case AKRON, Ohio – The Cuyahoga County judge charged in the county corruption investigation for allegedly fixing a foreclosure case has been found guilty on three of the five charges he was facing. The federal jury returned the verdict

Homeowners Sue to Block BofA/BNY Deal; Details

Abigail C. Field- The $8.5 billion settlement that Bank of New York and Bank of America hope will resolve all (or almost all) mortgage backed securities claims between them has faced a lot of opposition. The attorneys general of New York and Delaware oppose the deal, as do various investors not involved […]

• U.S. Is Set to Sue a Dozen Big Banks Over Mortgages

  Lets not get to excited just yet as this comes as a complete surprise. What does this mean for the AG’s who are pursuing their own investigations and how will this help homeowners? Or is this another bailout waiting to happen? NYT- The federal agency that oversees the mortgage giants Fannie Mae and Freddie Mac is set […]
• Robo-signed mortgage docs date back to late 1990s

  In case you missed it.. I put together Special Events that Happened in 1999 …Welcome to the 99 Club. It’s incomplete but it was a start to the mess we have today. AP- By PALLAVI GOGOI, AP Business Writer Counties across the United States are discovering that illegal or questionable mortgage paperwork is far more […]
• Goldman Sachs must investigate questionable lending and foreclosure practices in its mortgage unit, Fed says.

  They can start here: Deposition Transcript of Litton Loan Servicing Litigation Manager Christopher Spradling CNN- NEW YORK (CNNMoney) — The Federal Reserve issued an enforcement action Thursday against Goldman Sachs, saying the investment bank must investigate questionable lending and foreclosure practices in its mortgage unit. The action orders Goldman to hire an independent consultant to investigate […]
• Robo-Signing Redux: Servicers Still Fabricating Foreclosure Documents

  American Banker did an outstanding, superb job with this article. Please read. American Banker- Some of the largest mortgage servicers are still fabricating documents that should have been signed years ago and submitting them as evidence to foreclose on homeowners. The practice continues nearly a year after the companies were caught cutting corners in […]
• John O’Brien, Southern Essex District Register of Deeds in Salem, Massachusetts extends an invitation to banks and all attorney generals to visit his registry.

  Commonwealth of Massachusetts Southern Essex District Registry of Deeds Shetland Park 45 Congress Street Suite 4100 Salem, Massachusetts 01970 NEWS FOR IMMEDIATE RELEASE Salem, MA August 30, 2011 Contact: John O’Brien, Register of Deeds             978-542-1722       jl.obrien@sec.state.ma.us . John O’Brien, Southern Essex District Register of Deeds in Salem, […]
• Goldman Sachs, Litton, Ocwen reach deal on robosigning with NY regulator

  WSJ– The mortgage industry will take a step toward cleaning up some of its most controversial practices under a deal between a New York regulator and three financial firms, including Goldman Sachs Group Inc. Under the agreement with the state’s financial-services superintendent, Benjamin M. Lawsky, the three firms—Goldman, its Litton Loan Servicing […]
• Memo: BofA to Sell Correspondent Mortgage Business

  WSJ- From: Home Loan News Sent: Wednesday, August 31, 2011 4:19am Subject: Important Message From Barbara DeSoer To All IMS Associates I wanted to provide this team with information about a strategic announcement our Home Loans business will make today that is consistent with our ongoing efforts to align the business to […]
• BoNY Mellon CEO Robert Kelly steps down

  Aug 31 (Reuters) – Bank of New York Mellon Corp said Robert Kelly, who has held the company’s top job since 2008, has stepped down as chairman and chief executive officer, following differences in approach to managing the company. The company, one of the world’s largest custody banks, said it named board member Gerald Hassell as chairman […]
• New York Attorney General Deposed 53 in Bank of America Case Over Merrill

  Bloomberg- New York Attorney General Eric Schneiderman’s office has taken testimony from 53 witnesses in its investigation into Bank of America Corp. (BAC)’s 2008 acquisition of Merrill Lynch & Co., a federal judge said. U.S. District Judge Kevin Castel in Manhattan said in an order today that “there have been 53 examinations under oath by the […]
• Was president of LPS’ Loan Portfolio Solutions division just let go?

  UPDATE: It was announced that he’s left to spend more time with his family. According to the Yahoo Message boards: Greg Whitworth FIRED If you do a google search under cached it brings you to his info, but when clicked on the message board link it brings you or redirects one to a 404 NOT FOUND. Mysteriously his info […]
• A STATEMENT ON MORTGAGE FRAUD THAT EVERY ATTORNEY GENERAL COULD ISSUE TODAY

  False Statements Limited Purpose Corporate Officers Action Date: August 31, 2011 Location: TALLAHASSEE, FL A STATEMENT ON MORTGAGE FRAUD THAT EVERY ATTORNEY GENERAL COULD ISSUE TODAY There has been widespread, well-documented abuse of corporate officer titles by banks, mortgage companies and mortgage servicing companies on mortgage-related documents. Individuals who are not corporate officers have been directed to […]
• Hagens Berman Announces Securities Investigation Of Bank Of America

  Hagens Berman Sobol Shapiro LLP today announced that it is investigating concerns by hedge funds and institutional investors who believe Bank of America Corp. (NYSE: BAC) may have failed to disclose to investors the risk associated with a $10 billion lawsuit threat from American International Group (“AIG”) (NYSE: AIG). According to […]
• BREAKING: Bank of America to Exit Mortgage Business

  It’s going to tank! WSJ- Bank of America Corp. intends to sell its correspondent mortgage business, as the troubled lender looks to narrow its focus and bolster its financial strength, said people familiar with the situation. Employees could be notified as soon as Wednesday that the lender has decided to exit the […]
• The Countrywide settlement that NV AG Masto says BofA is flagrantly violating was also signed by… Tom Miller.

  H/T David Dayen SURE DID! . For immediate release — Monday, October 6, 2008. Contact Bob Brammer –             515-281-6699      . Miller: AGs Reach Agreement with Countrywide Financial that Will Help Almost 400,000 Borrowers Facing Foreclosure The Iowa Attorney General says the settlement will offer mortgage loan modifications to more than 1,100 Iowans that will help many avoid […]
• Bank of America Accused of Breaching Accord – Gretchen Morgenson

  NEVADA vs. BANK OF AMERICA CORP. | Second Amended Complaint “The Breach, Trusts Never Became Holders of These Mortgages”” NY TIMES- The attorney general of Nevada is accusing Bank of America of repeatedly violating a broad loan modification agreement it struck with state officials in October 2008 and is seeking to rip up the deal so […]
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  MERS ADMITS LINDA GREEN HAD NO AUTHORITY BUT TRIES TO USE IT ANYWAY

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE SEE Corrective+Assignment[2] CHUTZPAH: Look it up if you are not familiar with the term. Here is a document that states on its face that Linda Green had no authority to to sign anything on behalf of MERS. So there goes thousands of documents […]

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  Who owns the loan? Ohio Supreme Court is taking up the question

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE WHY DID THE LOAN SERVICER CLEAR THE LOAN OBLIGATION DOWN TO ZERO? Monday, August 29, 2011 Who owns the loan? The Ohio Supreme Court is taking up the question of what a bank needs to prove to force someone from his home. Story […]

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  EXAMPLE OF NEW TOOLS PROVIDED BY LIVINGLIES: OCC CEASE AND DESIST ORDER V US BANK

  MOST POPULAR ARTICLES CLICK HERE TO RESERVE SEATING AT HAWAII WORKSHOP GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE SEE US BANK OCC ORDER AND COMMENTARY It will be up on the store soon and on the American Homeowners Cooperative at http://www.Americanhomeownerscoop.com. Based upon an in depth analysis of our title and securitization combo […]

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  BLOOMBERG: HOA V BOA: Homeowner Associations Step Up the Pressure on Banks

  MOST POPULAR ARTICLES CLICK HERE TO RESERVE SEATING AT HAWAII WORKSHOP GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE Homeowner Associations Wake Up to Collections and Profit!! FORECLOSING ON THE BANK!! EDITOR’S COMMENT: Becker and Poliakoff in South Florida is probably the largest law firm representing homeowner associations in the U.S. Once upon a […]

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  Yves Smith: BANKS HAVE INSTITUTIONALIZED STEALING HOMES

  MOST POPULAR ARTICLES CLICK HERE AND RESERVE SEATING NOW AT HAWAII WORKSHOP OCTOBER 14 GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE THEY WANT YOUR HOUSE!!! “The banks don’t care whether you made your payments or not. They want your house. They don’t care if someone else made your payments. They want your house. […]

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  Deconsolidation Nation for Mortgages?

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE EDITOR’S NOTE: IT ALL COMES DOWN TO THIS: DO YOU WANT TO SAVE THE BANKS OR DO YOU WANT TO SAVE THE COUNTRY? Submitted on 2011/08/27 at 9:20 am by Nancy Drewe National Mortgage News sign up for your own subscription first 2 […]

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  KISS: KEEP IT SIMPLE STUPID

  MOST POPULAR ARTICLES CLICK HERE TO RESERVE SEATING AT HAWAII WORKSHOP GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE KISS: KEEP IT SIMPLE STUPID 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 […]

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  BOA DEATH WATCH: SETTLEMENT FALLING APART, BOA SCRAMBLES FOR DOLLARS

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE “bank is suddenly open to unlimited downside capital risk” BofA’s $8.5 Billion Settlement Could Fall Apart After Request Made To Move Mortgage Case From State To Federal Court As most know by now, the ridiculously low $8.5 billion putback settlement, which was supposed […]

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  Bombshell Admission of Failed Securitization Process in American Home Mortgage Servicing/LPS Lawsuit

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE EDITOR’S NOTE: It is comforting to know that at least some people are paying attention. From one of the largest servicers in the country comes an admission that securitization of mortgage loans was an illusion. The facts alleged by AHMSI  in its lawsuit […]

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  MANDELMAN MATTERS: DEADBEAT BORROWERS AND THIEVES WHO CALL THEM THAT

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE “If you’re allowed to foreclose and kick someone out of his or her home without being the party that either owns the loan or represents the person who owns the loan… if you can ignore those laws, why can’t you ignore other laws […]

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  MANDELMAN MATTERS WRITER AND DOCUMENTARY MAKER WILL JOIN NEIL GARFIELD AND OTHERS IN HAWAII WORKSHOP OCTOBER 14, 2011

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE REFUNDABLE RESERVATION NOW TO RESERVE SEATING CLICK HERE FOR ONE DAY PASS JOIN LIVINGLIES MEMBERSHIP NOW AND GET THE AUDIO-FILE ON LAST NIGHT’S 90 MINUTE BROADCAST WITH MANDELMAN MATTERS AND LIVINGLIES WRITERS. BLOG MEMBERSHIP SUBSCRIPTION We have twice monthly teleconferences, questions and answers […]

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  OBAMA ADMINISTRATION PRESSURING STATE AG’S TO CAVE IN TO BANKS

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE Bank Of America’s No-Good, Very Bad Enablers By Halah Touryalai | Forbes – Mon, Aug 22, 2011 What’s the worse than Bank of America acting as if it deserves immunity from all its  bad foreclosure behavior? A presidential administration that agrees. President Obama’s administration is […]

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  DEUTSCH LOSES AGAIN: POOL DID NOT RECEIVE LOAN

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE TRANSFER TO POOL AFTER FORECLOSURE INITIATED: VOID “ The fact that Deutsche had possession of the mortgage, however, is irrelevant to its status as mortgagee. While a promissory note endorsed in blank may be enforced by the party in possession of the note, […]

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  TENN FED CT ALLOWS CLAIM AGAINST BOA ON OWNERSHIP OF LOAN

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE TENNESSEE FEDERAL COURT DENIES BANK OF AMERICA’S MOTION TO DISMISS DECLARATORY JUDGMENT ACTION CHALLENGING ALLEGED OWNERSHIP OF LOAN Today, August 23, 2011, 6 hours ago | Jeff Barnes August 23, 2011 A Tennessee Federal court has issued an Order and Memorandum denying a […]

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  $1.2 Trillion in Secret Additional Bailout for Banks with No Collateral and No Commitments

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE see VIDEO $1.2 Trillion in EXTRA BAILOUT MONEY FROM FED SECRETLY GIVEN TO DOMESTIC AND FOREIGN BANKS Of course the figure is much higher, but the secrecy surrounding the money given by the Fed to the banks is something to enrage any tea […]

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  JUDGE MARGERET MANN (SO. CA BKR) PLUNGES INTO DETAILS AND COMES UP WITH WELL-REASONED DECISION

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE SEE 42-in_RE_Cruz_vs_Aurora AURORA LOAN SERVICES LLC, SCME MORTGAGE BANKERS INC, ING BANK FSB, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS ALL BITE THE DUST, SUBJECT TO LIABILITY AND NO ABILITY TO FORECLOSE WITHOUT COMPLYING WITH LAW. Salient points of Judge Mann’s Decision: TRUTH IN LENDING  was […]

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  Servicer Sues LPS-DOCX OVER ROBO-SIGNING — “SURROGATE SIGNING”

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE ROBO-SIGNING IS NOW CALLED SURROGATE SIGNING AHMSI SUIT CONFIRMS PRACTICE IS WRONG, UNAUTHORIZED AND INVALID EDITOR’S NOTE: I find it interesting that LPS continued to fabricate and forge documents after AHMSI told them to stop. It could only mean that they were really […]

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  After The Storm – Foreclosure Fraud & Robo-Signing Continues by Nye Lavalle

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE EDITOR’S NOTE: THE ONLY THING MISSING IS THE LARGEST QUESTION OF ALL: WERE THE MORTGAGE LIENS EVER PERFECTED? DO THEY EXIST? I also contest the issue of whether the banks were ever intending to do things right. I know from interviews I conducted […]

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  AMNESTY FOR BANKS SOUGHT IN NEGOTIATIONS

  MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE SETTLEMENT TARGET: LABOR DAY!! “They wanted to be released from everything, including original sin,” said a U.S. official involved in the discussions. From today’s Wall Street Journal…. FORECLOSURE TALKS SNAG ON BANK LIABILITY By RUTH SIMON, VANESSA O’CONNELL and NICK TIMIRAOS Efforts to […]

KISS: KEEP IT SIMPLE STUPID from Garfield

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

TREBEL THE DAMAGES AND OFFSET THE DEBT

These pretender lenders are not banks and are thereby subject to usury law when you add all the undisclosed profits and appraisal fraud is easy to see that the interest exceeds 10% and this could be offset as against the loan.The trustor also may offset against the amount claimed by the beneficiary any amount due the trustor from the beneficiary. [See Hauger v. Gates (1954) 42 Cal.2d 752, 755; 249 P.2d 609; Richmond v. Lattin (1883) 64 Cal. 273; 30 P. 818; Goodwin v. Alston (1955) 130 Cal.App.2d 664, 669; 280 P.2d 34; Cohen v. Bonnell (1936) 14 Cal.App.2d 38; 57 P.2d 1326; Zarillo v. Le Mesnacer (1921) 51 Cal.App. 442; 1196 P.902 (damages for conversion offset against debt secured by chattel mortgage); Williams v. Pratt (1909) 10 Cal.App. 625, 632; 103 P. 151.]  In Goodwin, supra, the mortgagor established that the mortgagee charged usurious interest, and the penalty of the trebled interest payments along with other amounts were setoff against the mortgage debt. As a result, the debt was effectively satisfied, the mortgage was thereby extinguished and no foreclosure was permitted, and the mortgagee was held liable to the mortgagor for damages.  (See 130 Cal.App.2d at 668-69.)

The Supreme Court made clear in Hauaer, supra, that the trustor, in the context of the nonjudicial foreclosure of a deed of trust, could use the right of setoff. [See 42 Cal.2d at 755.] Normally, setoff is employed defensively through an affirmative defense or cross-complaint (or formerly counterclaim) in response to an action for money. The court in Hauaer, however, saw no distinction between the right of setoff held by a trustor defending a foreclosure action or by a trustor affirmatively attacking a nonjudicial foreclosure proceeding. (Id. at 755-56.) Accordingly, the Supreme Court held that the trustor, as plaintiff, could establish the impropriety of a foreclosure by showing that the trustor was not in default on his obligation since the obligation was offset by an obligation which the beneficiary owed to him. (Id. at 753, 755.) The court further held that the trustor did not have to bring an independent action to establish the setoff. (Id. at 755.) Moreover, the court declared that unliquidated as well as liquidated amounts could be setoff; thus, the court allowed the trustor to setoff an unliquidated claim for damages for breach of contract.

Hauaer and the other cases cited above are based on former Code of Civ. Proc. § 440 which has been superseded by Code of Civ. Proc. § 431.70. The rule of these cases should not be altered because the new section appears broader than the old. Furthermore, the Legislative Committee Comment to section 431.70 not only states that the new section continues the substantive effect of section 440 but also approvingly cites Hauaer.

The right of setoff has substantial significance in contesting the validity of any foreclosure since the trustor may establish that no default occurred or, indeed, no indebtedness exists because of an offsetting amount owed by the beneficiary to the trustor. As discussed above, this offset may be a liquidated or an unliquidated claim. In addition, the claim which the trustor may wish to offset may be barred by the statute of limitations at the time of the foreclosure, but as long as the trustor’s claim and the beneficiary’s claim coexisted at any time when neither claim was barred, the claims are deemed to have been offset. [See Code of Civ. Proc. § 431.70.] The theory is that the competing claims which coexisted when both were enforceable were offset to the extent they equaled each other without the need to bring an action on the claims. Therefore, since the offsetting claim is deemed satisfied to the extent it equaled the other claim, there was no

existing claim against which the statute of limitation operates. See Jones v. Mortimer (1946) 28 Cal.2d 627, 632-33; 170 P.2d 893; Singer Co. v. County of Kings (1975) 46 Cal.App.3d 852, 869; 121 Cal.Rptr. 398; see also Hauger v. Gates, supra, 42 Cal.2d 752, 755.]

The right of setoff not only gives the trustor the ability to setoff liquidated and unliquidated claims for money paid or for damages, but also permits setoffs for statutory penalties to which the trustor may be entitled because of the beneficiary’s violation of the law. In Goodwin v. Alston, supra, 130 Cal.App.2d 664 the debtor in a foreclosure action offset his obligation against the treble damages awarded to him for the creditor’s usury violations. Similarly, the penalty for violating the federal Truth in Lending Act — twice the amount of the finance charge but not less than $100 or more than $1,000 [15 U.S.C. § 1640(a)(2)(A)(i)] — may be offset against the obligation owed the creditor.-‘ [See 15 U.S.C. § 1640(h); Reliable Credit Service, Inc. v. Bernard (La.App. 1976) 339 So.2d 952, 954, cert, den. 341 So.2d 1129, cert, den. 342 So.2d 215; Martin v. Body (Tex.Civ.App. 1976) 533 S.W.2d 461, 467-68].

Although Truth in Lending penalties may be offset against the creditor’s claim, the debtor may not unilaterally deduct the penalty; rather, the offset must be raised in a judicial proceeding, and the offset’s validity must be adjudicated.  [15 U.S.C. § 1640(h); see e.g., Pacific Concrete Fed. Credit Union v. Kauanoe (Haw. 1980) 614 P.2d 936, 942-43; Lincoln First Bank of Rochester v. Rupert (App.Div. 1977) 400 N.Y.S. 618, 621.]

Although no cases have authorized the trustor’s offset of punitive damages against the obligation owed, no reason appears to prevent the offset of punitive damages. Normally, if punitive damages were appropriate, sufficient fraud, oppression, or other misconduct would be established to vitiate the entire transaction. But even if the transaction were rescinded, the injured trustor likely would be required to return any consideration given by the offending beneficiary. The trustor almost always will have spent the money, usually to satisfy another creditor or to purchase goods or services which cannot be returned for near full value. A punitive damage offset may reduce or eliminate the trustor’s obligation to restore consideration paid in a fraudulent, oppressive, or similarly infirm transaction.

Challenges to Foreclosure Docs Reach a Fever Pitch

American Banker | Wednesday, June 16, 2010

By Kate Berry

Correction: An earlier version of this story misidentified the court
where Judge J. Michael Traynor presides. It is a Florida state court,
not a federal one. An editing error was to blame.

The backlash is intensifying against banks and mortgage servicers that
try to foreclose on homes without all their ducks in a row.

Because the notes were often sold and resold during the boom years, many
financial companies lost track of the documents. Now, legal officials
are accusing companies of forging the documents needed to reclaim the
properties.

On Monday, the Florida Attorney General’s Office said it was
investigating the use of “bogus assignment” documents by Lender
Processing Services Inc. and its former parent, Fidelity National
Financial Inc. And last week a state judge in Florida ordered a hearing
to determine whether M&T Bank Corp. should be charged with fraud after
it changed the assignment of a mortgage note for one borrower three
separate times.

“Mortgage assignments are being created out of whole cloth just for the
purposes of showing a transfer from one entity to another,” said James
Kowalski Jr., an attorney in Jacksonville, Fla., who represents the
borrower in the M&T case.

“Banks got away from very basic banking rules because they securitized
millions of loans and moved them so quickly,” Kowalski said.

In many cases, Kowalski said, it has become impossible to establish when
a mortgage was sold, and to whom, so the servicers are trying to
recreate the paperwork, right down to the stamps that financial
companies use to verify when a note has changed hands.

Some mortgage processors are “simply ordering stamps from stamp makers,”
he said, and are “using those as proof of mortgage assignments after the
fact.”

Such alleged practices are now generating ire from the bench.

In the foreclosure case filed by M&T in February 2009, the bank
initially claimed it lost the underlying mortgage note, and then later
claimed the mortgage was owned by First National Bank of Nevada, which
the Federal Deposit Insurance Corp. shut down in 2008, before the
foreclosure had been started.

M&T then claimed Wells Fargo & Co. owned the note, “contradicting all of
its previous claims,” according to Circuit Court Judge J. Michael
Traynor, who ordered the evidentiary hearing last week into whether M&T
perpetrated a fraud on the court.

“The court has been misled by the plaintiff from the beginning,” Judge
Traynor said in his order, which also dismissed M&T’s foreclosure action
with prejudice.

The Marshall Watson law firm in Fort Lauderdale, Fla., which represents
M&T in the case, declined to comment and the bank said it could not
comment.

In a notice on its website, the Florida attorney general said it is
examining whether Docx, an Alpharetta, Ga., unit of Lender Processing
Services, forged documents so foreclosures could be processed more
quickly.

“These documents are used in court cases as ‘real’ documents of
assignment and presented to the court as so, when it actually appears
that they are fabricated in order to meet the demands of the institution
that does not, in fact, have the necessary documentation to foreclose
according to law,” the notice said.

Docx is the largest lien release processor in the United States working
on behalf of banks and mortgage lenders.

Peter T. Sadowski, an executive vice president and general counsel at
Fidelity National in Fort Lauderdale, said that more than a year ago his
company began requiring that its clients provide all paperwork before
the company would process title claims.

Michelle Kersch, a spokeswoman for Lender Processing Services, said the
reference on the Florida attorney general’s website to “bogus
assignments” referred to documents in which Docx used phrases like
“bogus assignee” as placeholders when attorneys did not provide specific
pieces of information.

“Unfortunately, on occasion, incomplete documents were inadvertently
recorded before the missing information was obtained,” Kersch said. “LPS
regrets these errors and the use of this particular placeholder
phrasing.”

The company, which was spun off from Fidelity National two years ago, is
cooperating with the attorney general and conducting its own internal
investigation.

Lender Processing Services disclosed in its annual report in February
that federal prosecutors were reviewing the business processes of Docx.
The company said it was cooperating with that investigation.

“This is systemic,” said April Charney, a senior staff attorney at
Jacksonville Area Legal Aid and a member of the Florida Supreme Court’s
foreclosure task force.

“Banks can’t show ownership for many of these securitized loans,”
Charney continued. “I call them empty-sack trusts, because in the rush
to securitize, the originating lender failed to check the paper trial
and now they can’t collect.”

In Florida, Georgia, Maryland and other states where the foreclosure
process must be handled through the courts, hundreds of borrowers have
challenged lenders’ rights to take their homes. Some judges have
invalidated mortgages, giving properties back to borrowers while lenders
appeal.

In February, the Florida state Supreme Court set a new standard
stipulating that before foreclosing, a lender had to verify it had all
the proper documents. Lenders that cannot produce such papers can be
fined for perjury, the court said.

Kowalski said the bigger problem is that mortgage servicers are working
“in a vacuum,” handing out foreclosure assignments to third-party firms
such as LPS and Fidelity.

“There’s no meeting to get everybody together and make sure they have
their ducks in a row to comply with these very basic rules that banks
set up many years ago,” Kowalski said. “The disconnect occurs not just
between units within the banks, but among the servicers, their bank
clients and the lawyers.”

He said the banking industry is “being misserved,” because mortgage
servicers and the lawyers they hire to represent them in foreclosure
proceedings are not prepared.

“We’re tarring banks that might obviously do a decent job, and the banks
are complicit because they hired the servicers,” Kowalski said.

Pretender Lenders

— read and weep. Game Over. Over the next 6-12 months the entire foreclosure mess is going to be turned on its head as it becomes apparent to even the most skeptical that the mortgage mess is just that — a mess. From the time the deed was recorded to the time the assignments, powers of attorneys, notarization and other documents were fabricated and executed there is an 18 minute Nixonian gap in the record that cannot be cured. Just because you produce documents, however real they appear, does not mean you can shift the burden of proof onto the borrower. In California our legislator have attempted to slow this train wreck but the pretender lenders just go on with the foreclosure by declaring to the foreclosure trustee the borrower is in default and they have all the documents the trustee then records a false document. 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.
Invalid Declaration on Notice of Default and/or Notice of Trustee’s Sale.

The purpose of permitting a declaration under penalty of perjury, in lieu of a sworn statement, is to help ensure that declarations contain a truthful factual representation and are made in good faith. (In re Marriage of Reese & Guy, 73 Cal. App. 4th 1214, 87 Cal. Rptr. 2d 339 (4th Dist. 1999).
In addition to California Civil Code §2923.5, California Code of Civil Procedure §2015.5 states:
Whenever, under any law of this state or under any rule, regulation, order or requirement made pursuant to the law of this state, any matter is required or permitted to be supported, evidenced, established, or proved by the sworn statement, declaration, verification, certificate, oath, or affidavit, in writing of the person making the same, such matter may with like force and effect be supported, evidenced, established or proved by the unsworn statement, declaration, verification, or certificate, in writing of such person which recites that is certified or declared by him or her to be true under penalty of perjury, is subscribed by him or her, and (1), if executed within this state, states the date and place of execution; (2) if executed at any place, within or without this state, states the date of execution and that is so certified or declared under the laws of the State of California. The certification or declaration must be in substantially the following form:
(a) If executed within this state:
“I certify (or declare) under penalty of perjury that the foregoing is true and correct”:
_____________________ _______________________
(Date and Place) (Signature)

For our purposes we need not look any farther than the Notice of Default to find the declaration is not signed under penalty of perjury; as mandated by new Civil Code §2923.5(c). (Blum v. Superior Court (Copley Press Inc.) (2006) 141 Cal App 4th 418, 45 Cal. Reptr. 3d 902 ). The Declaration is merely a form declaration with a check box.

No Personal Knowledge of Declarant
According to Giles v. Friendly Finance Co. of Biloxi, Inc., 199 So. 2nd 265 (Miss. 1967), “an affidavit on behalf of a corporation must show that it was made by an authorized officer or agent, and the officer him or herself must swear to the facts.” Furthermore, in Giles v. County Dep’t of Public Welfare of Marion County (Ind.App. 1 Dist.1991) 579 N.E.2d 653, 654-655 states in pertinent part, “a person who verified a pleading to have personal knowledge or reasonable cause to believe the existence of the facts stated therein.” Here, the Declaration for the Notice of Default by the agent does not state if the agent has personal knowledge and how he obtained this knowledge.
The proper function of an affidavit is to state facts, not conclusions, ¹ and affidavits that merely state conclusions rather than facts are insufficient. ² An affidavit must set forth facts and show affirmatively how the affiant obtained personal knowledge of those facts. ³
Here, The Notice of Default does not have the required agent’s personal knowledge of facts and if the Plaintiff borrower was affirmatively contacted in person or by telephone
to assess the Plaintiff’s financial situation and explore options for the Plaintiff to avoid foreclosure. A simple check box next to the “facts” does not suffice.
Furthermore, “it has been said that personal knowledge of facts asserted in an affidavit is not presumed from the mere positive averment of facts, but rather, a court should be shown how the affiant knew or could have known such facts, and, if there is no evidence from which the inference of personal knowledge can be drawn, then it is
¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬____________________________________________________________________________
¹ Lindley v. Midwest Pulmonary Consultants, P.C., 55 S.W.3d 906 (Mo. Ct. App. W.D. 2001).
² Jaime v. St. Joseph Hosp. Foundation, 853 S.W.2d 604 (Tex. App. Houston 1st Dist. 1993).
³ M.G.M. Grand Hotel, Inc. v. Castro, 8 S.W.3d 403 (Tex. App. Corpus Chrisit 1999).

presumed that from which the inference of personal knowledge can be drawn, then it is presumed that such does not exist.” ¹ The declaration signed by agent does not state anywhere how he knew or could have known if Plaintiff was contacted in person or by telephone to explore different financial options. It is vague and ambiguous if he himself called plaintiff.
This defendant did not adhere to the mandates laid out by congress before a foreclosure can be considered duly perfected. The Notice of Default states,

“That by reason thereof, the present beneficiary under such deed of trust, has executed and delivered to said agent, a written Declaration of Default and Demand for same, and has deposited with said agent such Deed of Trust and all documents evidencing obligations secured thereby, and has declared and does hereby declare all sums secured thereby immediately due and payable and has elected and does hereby elect to cause the trust property to be sold to satisfy the obligations secured thereby.”

However, Defendants do not have and assignment of the deed of trust nor have they complied with 2923.5 or 2923.6 or 2924 the Deed of Trust, nor do they provide any documents evidencing obligations secured thereby. For the aforementioned reasons, the Notice of Default will be void as a matter of law. The pretender lenders a banking on the “tender defense” to save them ie. yes we did not follow the law so sue us and when you do we will claim “tender” Check Mate but that’s not the law.

Recording a False Document
Furthermore, according to California Penal Code § 115 in pertinent part:
(a) Every person who knowingly procures or offers any false or forged instrument to be filed, registered, or recorded in any public office within this state, which instrument, if genuine, might be filed, registered, or recorded under any law of this state or of the United States, is guilty of a felony.

If you say you have a claim, you must prove it. If you say you are the lender, you must prove it. Legislators take notice: Just because bankers give you money doesn’t mean they can change 1000 years of common law, statutory law and constitutional law. It just won’t fly. And if you are a legislator looking to get elected or re-elected, your failure to act on what is now an obvious need to clear title and restore the wealth of your citizens who were cheated and defrauded, will be punished by the votes of your constituents.

Countrywide complaint

countrywide_fin_class_action_defense_mdl

Homecomings TILA complaint GMAC

homecomingstila