Non-judical sale is not exactly a foreclosure

The problem is that a statute passed for judicial economy is now being used to force the burden of proof onto the borrower in the foreclosure of their own home

I think the main issue in non-judicial states is what does “non-judicial” mean.

I think in your argument you do NOT want to concede that they wish to foreclose. What they want to do is execute on the power of sale in the deed of trust WITHOUT going through the judicial foreclosure process as provided in state statutes.

You must understand that the opposition is seeking to go around normal legal process which requires a foreclosure lawsuit. THAT would require them to make allegations about the obligation, note and mortgage that they cannot make (we are the lender, the defendant owes us money, we are the holder of the note, the note is payable to us, he hasn’t paid, the unpaid balance of the note is xxx etc.) and they would have to prove those allegations before you had to say anything. In addition they would subject to discovery in which you could test their assertions before an evidentiary hearing. That is how lawsuits work.

The power of sale given to the trustee is a hail Mary pass over the requirements of due process. But it allows for you to object.

The question which nobody has asked and nobody has answered, is on the burden of proof, once you object to the sale, why shouldn’t the would-be forecloser be required to plead and prove its case? If the court takes the position that in non-judicial states the private power of sale is to be treated as a judicial event, then that is a denial of due process required by Federal and state constitutions.

The only reason it is allowed, is because it is private and “non-judicial.” The quirk comes in because in practice the homeowner must file suit. Usually the party filing suit must allege facts and prove a prima facie case before the burden shifts to the other side. So the Judge is looking at you to do that when you file to prevent the sale.

Legally, though, your case should be limited to proving that they are trying to sell your property and that you have meritorious defenses. That SHOULD trigger the requirement of re-orienting the parties and making the would-be forecloser file a complaint (lawsuit) for foreclosure.

Then the burden of proof would be properly aligned with the party seeking affirmative relief (i.e., the party who wants to enforce the deed of trust (mortgage), note and obligation) required to file the complaint with all the necessary elements of an action for foreclosure and attach the necessary exhibits.

They don’t want to do that because they don’t have the exhibits and the note is not payable to them and they cannot actually prove standing (which is a jurisdictional question). The problem is that a statute passed for judicial economy is now being used to force the burden of proof onto the borrower in the foreclosure of their own home. This is not being addressed yet but it will be addressed soon.

21 Responses

  1. Hi Alina

    Yes, I agree – “The foreclosing entities are not and will most probably not produce any document showing that they acquired the mortgage prior to default”.

    Need to recover documents from the custodian for the trust to ascertain what documents were submitted to custodian and if any documents (required by the SPV Trust for securitization) were omitted – and request all documents from original servicer as to payment history.

    Custodians are likely long gone – but the foreclosure attorneys will claim they still exist. Custodian is located on original Prospectus for Trust. Need a subpeona to request documents from Custodian. Then need to look at prospectus to see what documents were required for securitization into Trust – and whether Custodian ever received all these documents.

    Many loans were put into “default” not by failure to pay – but because of missing documents. In fact, there are documents filed with the SEC for “servicing error” as to default payment. Thus, many loans were put into default for missing documents and not for late or missed payment. Default is not exclusive to non-payment.

    I am not an attorney and this is not to be construed as legal advise and only for educational purposes.

  2. I have filed a Petition for a Writ of Mandate to the Court of Appeals of California, making the Constitutional Argument. If anyone wants a copy of my Petition please advise by email.




    But I think everyone is missing my point. I am not getting into the whole securitization process but rather what the documents filed state.

    The foreclosing entities are not and will most probably not produce any document showing that they acquired the mortgage prior to default. One reason is because they have filed an assignment claiming that to be the only assignment. If they then they produce another one, they risk getting the case dismissed for fraud on the court.

    They rely on the assignments filed shorlty before a foreclosure action is initiated. That assignment is prima facie evidence that the loan was acquired AFTER tthe loan went into default. Thereby making the foreclosing entity a debt collector.

    In defending an action under FDCPA, the foreclosing entity will need to prove they acquired the debt before the default.

    I am not attorney but this is just the way it looks to me. I would love to get an attorney to comment. Of course everyone needs to bear in mind that you cannot file a FDCPA claim unless you win the underlying lawsuit so all this may be irrelevant.

  4. avirani0203:

    First, you have show that the “debt” (i.e. mortgage) was acquired after default. But this is another problem because loans was were put into default when they were not even in default – and this was also for other reasons than missing a payment. If any documents were withheld to “Custodian” to Trust (often intentionally), loans were deemed “in default” – rejects from securitized trust – repurchases – scratch and dents – whatever you want to call them – they were defaults. So, you need to also establish that loan was knocked out of trust for reasons not related to payment. Then, how does the FDCPA define “default”????

    This is crazy – and if you lose first go around in court – you are done. They will play with words until you are finished.

  5. Sal,

    My point exactly. These loans are “assigned” shortly before a foreclosure. Therefore, the foreclosing entity should be considered a “debt collector” under the FDCPA because they acquired a defaulted loan.

    However, established case law states that foreclosure is not debt collection without distinguishing the difference between a debt acquired before default or one acquired after default.

    My question is – if a foreclosure is not debt collection under the FDCPA, they why did SCOTUS grant cert in the Jerman v. Carlisle?

    Most cases I have read simply state right off the bat – foreclosure is not debt collection and dismiss the FDCPA count with no more explanation than that.

  6. Just so you know, I did not get what I wrote from that case you mentioned. It is actually from the California Points and Authorities under contract law.

    As for the question raised by avirani0203 regarding if foreclosure is a debt collection, it depends on when the party collecting the debt was assigned or purchased the debt.

    For purposes of applying the Fair Debt Collection Practices Act (Act) to a particular debt, the categories of debt collectors and creditors are mutually exclusive.

    However, for debts that do not originate with the one attempting collection, but are acquired from another, the collection activity related to that debt could logically fall into either category. If the one who acquired the debt continues to service it, it is acting much like the original creditor that created the debt. On the other hand, if it simply acquires the debt for collection, it is acting more like a debt collector.

    To distinguish between these two possibilities, the Act uses the status of the debt at the time of the assignment: the term “debt collector” means any person who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. The term does not include any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity concerns a debt which was not in default at the time it was obtained by such person. 15 U.S.C.S. § 1692a. In other words, the Act treats assignees as debt collectors if the debt sought to be collected was in default when acquired by the assignee, and as creditors if it was not.

  7. Dying Truth,
    Are you explaining the case you posted or my ?/Comment on BK to settle debt.
    My situation is I am able to pay, maybe not all of the second, which was armed robbery after the signing, and will be due next year, but is so small in comparison. All other ratio’s add up. In fact my 2nd was sold to a different “servicer” after I stopped making payments by 4 months, searched that a foreign Asian Bank owns 80%.
    But just curious of the jest of the case you posted.
    Thank you,

  8. JoAnne,
    Bankruptcy in these times with an imposing or oppressive economy is nothing more than criminal extortion especially in Cali where they will grant relief from stay to clearly has no right to a claim secured or not because the “debtors” are currently unable to make payments, but will have a bk trustee exercise a debtors valid TILA Rescission right(& opine that is was automatic and question whether they have a claim at all due to their inaction in response to the notice) and deny a claimant relief from stay against homeowner/debtors who are currently making payments to the bk court but would not rule on that the rescission was automatic and that the “debt-collector” in fact had no claim.

    ESPECIALLY When both of these cases were both decided in N.D. California

  9. According to the following section from the FDCPA, an action by a debt collector to enforce a security interest in real property can ONLY be brought in a judicial district.
    This section, however, conflicts with established case law that states that a foreclosure is not debt collection. Can someone please comment on this?
    If a foreclosure is not debt collection, then why is it that SCOTUS not only granted cert to an FDCPA claim arising from a foreclosure action but ruled in favor of the homeowner? Why is there a mountain of decisions dismissing FDCPA claims based on the premise that a foreclosure is not debt colelction brought by homeowners in similar circumstances?
    § 1692i. Legal actions by debt collectors
    (a) Venue
    Any debt collector who brings any legal action on a debt against any consumer shall–
    (1) in the case of an action to enforce an interest in real property securing the consumer’s obligation, bring such action only in a judicial district or similar legal entity in which such real property is located; or
    (2) in the case of an action not described in paragraph (1), bring such action only in the judicial district or similar legal entity–
    (A) in which such consumer signed the contract sued upon; or
    (B) in which such consumer resides at the commencement of the action.
    (b) Authorization of actions
    Nothing in this subchapter shall be construed to authorize the bringing of legal actions by debt collectors.

    so what is this stating, the homeowner basically got no where?

  11. How do you think they can come up with something to weed out the confusion? That the judges can have a status to go by. Still think Bankruptcy judges are best to set what is fair for who. The homeowners are made out like they lost nothing. I put everything into it and almost half that to save it but they won’t talk to me, or take payments toward the bill.

  12. Judge & co.

    These cases are currently proceeding with the these careful Arizona State Judges understanding the problem and doing the right thing!

    All of these have the TRO and/or Preliminary granted to date and proceeding forward on this very issue!

    Slikker v. Kondaur, Maricopa Sup Ct.,
    Judge RONAN – CV2010-092634

    Hathaway v. Old Republic, Maricopa Sup Ct., East Valley,
    Judge RONAN – CV2009-036711

    McKinney v. Kondaur, Maricopa Sup Ct, East Valley (now transferred to Pinal)
    Judge POTTS – CV2010-090122

    Also atty Doug Rhoads won a TRO in Central Phx’s Superior Court this week. Still trying to locate the case #.


  13. hey, I know where sal got that. It’s from Horton v. California Credit Corp., 2009 WL 700223 (S.D.Cal. 2009) see opinion here>

  14. Yeah we know this. But Neil, they do more than that, like how you said that they have different entities for every part of the scheme, well the same pattern is used in courts by attorneys as well. Many attorneys when filing on behalf of whatever ficticious co. via ecf will never make a court appearance(themselves) unless they’ve managed to get the homeowners in the case to execute a release forfeiting their rights eg. Loan modification and will pretty much always have another attorney appear for them, for god’s sake they’ve even created a market out of it “attorneys appearing for attorneys” Look> , , , These creeps are Scum and the judiciary fairs no better, being that they’re all part of the same E legal profession that is never held accountable as whole for its malicious behaviour. It’s only a matter of time before the lot of them get dealt with, because it’s wrong what fake banks are doing to us and all, but it’s outright Treason when our public servants enable, allow and mostly attribute to this tyrannical oppression.

  15. Howdy Jan

    Are you in AZ? You read like one smart cookie! Would enjoy buying you lunch 🙂
    Oh yeah! the courts will take your $ and the lawyers will take your $ , but have any state judges made a decision in favor of a Pro Se Plaintiff trying to stop a foreclosure using Invalid assignments, etc in discovery? Or in any federal court in the AZ jurisdiction?

  16. Dear “Judge:”

    Could you please explain further your comment that AZ judges have shut the door on foreclosure lawsuits? How is that? I never heard of a Court that refuses access by aggrieved persons.

    In partial response to your query on going to the USDC, not the USBC, the classic prongs of the test for jurisdiction in the USDC are: “original federal Question) e.g. breach of a Federal Statute by the defendant); diversity of jurisdiction under 28 USC 1334; money claim in excess of $75,000.

    Diversity of jurisdiction is an interesting one, in that “citizenship” is defined by the Federal Courts ONLY for these litigation tests as being equivalent to “residency.” There was a very recent USSC Opinion (sorry, I forgot the cite Heading) that Ruled that for litigation purposes the principal place of business of the party was appropriate for diversity and venue issues, not just State of Incorporation. Apparently this was responsive to the vast number of incorporations in Delaware and Nevada. So: if you are an “undocumented immigrant” in Arizona you might well be considered an Arizona citizen by virtue of your domicile in the State. An interesting wrinkle, to be sure.

  17. sal

    nice application of these facts!

  18. Judge & co.

    These cases are currently proceeding with the these careful Arizona State Judges understanding the problem and to date, doing the right thing. All have granted TRO and/or Preliminary granted to date and proceeding forward on this very issue!

    Slikker v. Kondaur, Maricopa Sup Ct., East Valley
    Judge Ronan – CV2010-092634

    Hathaway v. Old Republic, Maricopa Sup Ct., East Valley,
    Judge Ronan CV2009-036711

    McKinney v. Kondaur, Maricopa Sup Ct, East Valley,
    Judge Potts – CV2010-090122 (now transferred to Pinal)

    And a new one in a central Phoenix court was award this week, with atty Doug Rhoads, that I am waiting for the name & case #.


    Note this very applicable Arizona case:

    “Sales in actions to foreclose mortgages are subject to judicial review for substantive fairness as well as for procedural compliance. Thus, it is well established that such sales can be overturned based on price alone. “Where a grossly inadequate price is bid, such as shocks one’s conscience, an equity court may set aside the sale, thus insuring within limited bounds a modicum of protection to a party who has absolutely no control over the amount bid and this, in effect, insures that the fore¬closed property is not ‘given away.’ ”

    Nussbaumer v. Superior Court, 107 Ariz. 504, 507, 489 P.2d 843, 846 (1971).

    Says it all.

    Thanks Neil.


  19. Also since the AZjudges have shut the door on foreclosure lawsuits. what would be a good argument to open a case up in Federal Court ( not bankruptcy court) ? Anyone doing that now?

  20. Hey Sal.

    Any current cases pending in AZ using any of these defenses?

  21. I would think that following the same reasoning you discussed above, that you could directly attack the “power of sale” clause as the first step in going to court based on the fact that it was a contract of adhesion.

    A. Right to Present Evidence Regarding Unconscionability. When it is claimed or appears to the court that a con-tract or any provision of it may be unconscionable, the parties must be afforded a reasonable opportunity to present evi-dence as to its commercial setting, purpose, and effect (Civ. Code § 1670.5(b); Perdue v. Crocker National Bank (1985) 38 Cal. 3d 913, 926, 928-929, 216 Cal. Rptr. 345, 702 P.2d 503 ; see U.S. Roofing, Inc. v. Credit Alliance Corp. (1991) 228 Cal. App. 3d 1431, 1450, 279 Cal. Rptr. 533 ).

    B. Indicia of Unconscionability. Under California law, the doctrine of unconscionability has a procedural and a subs-tantive element. Procedural unconscionability turns on adhesiveness–a set of circumstances in which the weaker or ”adhering” party is presented a contract drafted by the stronger party on a take it or leave it basis. Substantive uncons-cionability involves basic fairness of the agreement. Both elements must appear in order to invalidate a contract or one of its individual terms. These elements, however, need not be present in the same degree. The more substantively op-pressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa. ( Little v. Auto Stiegler (2003) 29 Cal. 4th 1064, 1071-1072, 1076, 130 Cal. Rptr. 2d 892, 63 P.3d 979 ; Armendariz v. Foundation Health Psychcare Service, Inc. (2000) 24 Cal. 4th 83, 113-114, 6 P.3d 669 ).

    C. Contract of Adhesion Defined. The term ”contract of adhesion” signifies a standardized contract that, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it. The adhering party’s freedom to choose not to contract at all is irrelevant. The ques-tion is whether he or she is free to negotiate and alter the printed terms of the proffered agreement. A signature card, drafted by the bank and offered to the customer without negotiation, is a classic example of a contract of adhesion ( Perdue v. Crocker National Bank (1985) 38 Cal. 3d 913, 924-925, 216 Cal. Rptr. 345, 702 P.2d 503 ; Pardee Con-struction Company v. Superior Court (2002) 100 Cal. App. 4th 1081, 1086-1087, 123 Cal. Rptr. 2d 288 ; Flores v. Transamerica Homefirst, Inc. (2001) 93 Cal. App. 4th 846, 853-855, 113 Cal. Rptr. 2d 376 ; Parr v. Superior Court (1983) 139 Cal. App. 3d 440, 444, 188 Cal. Rptr. 801 ).

Contribute to the discussion!

%d bloggers like this: