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SEE Arizona Law Memorandum



  1. TITLE COMPANIES: Issue a trustee’s sale guarantee for non-judicial foreclosures. This is the supposedly the practice. When you conduct discovery, asking for the guarantee and the work-papers that back it up should be revealing.
  2. BRING-DOWN REPORT: While the normal practice was to do a title review before initiating foreclosure, LPS and others have initiated a practice of doing a credit report, which is less expensive. In conducting discovery, you might ask for the bring-down report, why they don’t have one, and how they knew, as a title company, or Trustee, who the appropriate parties were — along with the all memoranda, correspondence and instructions received from third parties. A second bring-down report is supposed to be run right before the actual sale.
  3. DEADLINE FOR REINSTATED DEBT: According to Arizona law, reinstatement of debt can take place as late as 5PM of the day before the sale date. This implies that the amount of the debt might be an issue that could be brought in court, leading to the more general inquiries of standing and real party in interest. Who decides if the debt is reinstated? If the sale is non-judicial, there has been no accounting or judicial determination as to the amount of the debt.
  4. TRUSTEE’S RESPONSIBILITY FOR AN ACCOUNTING: You can request it in writing while the debt is subject to reinstatement. The Trustee Must respond with (a) unpaid principal, (b) name and address of the record owner of the property and (c) a list of all liens and encumbrances — which means that if the Trustee does not certify the lien or encumbrance of the party initiating the non-judicial sale, there can be no sale.
  5. BROWN V NOWLIN: Unintentional acceptance of late payments prior to acceleration was held to cure the default. By contesting the right of the party to accelerate, and then sneaking a payment in, the default is cured. If the amount of the payment required to cure the default is contested, that is an issue of fact for a court to decide. Thus by bringing an action to reinstate or cure, you have a back door for allegations and discovery that will enable you to challenge standing, real party in interest and status as creditor  (capable of making a credit bid that is valid and not fraudulent).
  6. CINUARELLI V ZIMMERMAN: Strict performance under the terms of the documents may be required in order to enforce acceleration clauses, absent fraud or bad faith by the lender. This case is often cited by lenders, so if you can get to use it, you enhance your strategic position. By alleging fraud and/or bad faith or that the lender is not present, or that the lender is acting in bad faith because it refuses to reveal itself or provide the proper accounting, you again have a back door to provide a general attack.
  7. MILLER V EHRICK: Az Court of Appeals held that notice of default is required where late payments were accepted. If the “lender” could have complained but didn’t, the burden shifts back to the lender to re-start the process. Again, this is a back door to standing, real party in interest, creditor, lender, etc.
  8. INACCURATE ACCOUNTING: Plenty of law and case law on this. It is universally accepted that lenders must maintain payment records and be able to verify them. This means you have a right to test the accounting and the verification process which can lead you to third party payments — including asking the question of to whom payments are or were being sent by the servicer.
  9. SETOFF: NOGALES V ATLANTIC RICHFIELD: Set off is not NOT allowed if it is unliquidated which means that it your claim for damages for appraisal fraud, slander of title, identity theft, fraudulent foreclosure etc., is not a compulsory counterclaim. It might be a smart idea for some people to wait until the process is over and the “lender” has stopped moving the shells around to draw a bead on the defendants who were responsible for the fraud, including predatory lending. This would not supersede the rescission defense, however, which is not set-off. If you have rescinded, then there is no mortgage to foreclose.
  10. WAHL V SOUTHWEST SAVINGS: BROKEN PRIORITY CLAIMS ARE ISSUES OF FACT: They must be resolved prior to going forward in a foreclosure sale — whether it is commercial or residential. This is a back-door entrance to the issue of who are these people and what are they doing in court, much less attempting to sell your property.  The issue of broken priority is normally easily resolved either by corrective instruments, or by a court order. The reason why LPS exists and we have all these robo-signed, fabricated and forged documents is that a corrective instrument signed by the proper party is impossible — for one thing it would require the signature of the borrower, and the only way you could force the borrower to into a corrective instrument is by proving up the parole evidence of the actual transaction — something that the pretenders are loathe to do because the loan originator never touched the money, nor did MERS, the Trustee, etc.

8 Responses

  1. Not an attorney or rpersenting anything deemed to have legal effect or for advisement. Nothing herein is to be used for legal purposes. Know that only an attorney can allow you to protect or enforce your rights. Contact an attorney though this site or contact your local bar for more information. Learn more about how the law works and why only a licensed attorney can explain how to protect your rights.


  2. . . my Condo in mesa has been “sold” at a “Trustee” Sale; ALL of the above mentioned issues have plagued my mind for over 3 years

    Go back and review the chain of title and interests in title . See what you can find out after the fact.

  3. The FDIC employs its statutory process to use for resolution of failed thrifts. Ordinarily, the FDIC will follow least cost, and very strict statutory AUTHORITY OVER THE STATE COURT HAVNG THE RIGHTT O STAY ANY DECISION NOT FAVORABLE TO ITS ASSIGNMENT OF LIQUIDATING TOXINS.

    Fact is their powers assumes shareholders and unsecured debt holders need to take losses before the FDIC takes losses, and that uninsured depositors take losses.

    According to the FDIC – Of course, insured depositors never take losses; S Blair. Therefore a process is in place for doing just that. The FDIC receivership and resolution staff understand liquidation and how to close institutions,and how to do that in an orderly way. Herein is the mindset to impose its will at any cost to try to sell it off Bank “A” assets to Bank “B” another institution to keep it running, as opposed to putting it into some type of a bridge bank [temporary] situation. This is what the FDIC had to do with Freddie Mac, or by selling it off in pieces.

    To this extent the FDIC boasts of its role as an insurer yet fails to acknowledge an insurer is compelled to a duty to defend if the face of the complaint before the court alleges something covered and does not allege exclusion to coverage. Extrinsic facts not alleged in the complaint do not affect the insurer’s duty to defend in these jurisdictions.Is this what the courts refer to as the four-corners approach? “In determining its duty to defend, an insurer, the Federal Deposits Issuance Corporation “FDIC” must not only look to the petition or complaint filed against its insured, but must also investigate and ascertain the relevant facts from all available sources.” In a four-corner jurisdiction, the actual facts (as opposed to the alleged facts) play an important role in determining an insurer’s defense obligation, particularly when the insurer knows about such facts.

    Plaintiffs suing in a judicial foreclosure are always a claimant to government insurance claims proceeds upon which defendant is eligible to entitlement and right of claim. If having already been decided by formal adjudication and granting of a writ of possession, the plaintiffs fail to merit their pleading fails for purposes of preclusion and for ” final judgment between parties; Before the court is a claim between those same parties for matter of possession that is decided conclusive as to that issue; therefore the court is retrained from allowing plaintiff’s to bring Res Judicata into the matter having failed to disclose a writ of possession already entered by adjudication hearing.

    Claimants are represented by a collections firm who are agents under the FDIC and not a fiduciary and not an appropriate substitute ‘trustee”. Claimants can neither accept a payment at this time for resolution of the outstanding balance nor can they foster a cure to the outstanding delinquent balance. Claimants cannot impose upon the Court its rights to claims whereby the pleading is brought in ambiguous complaint and is subject to a subrogor duty to defend the claimant and defendants’ rights to file an actionable claim for award, itself, prior to any monetary amount being awarded by the FDIC…
    In all states the court is bound to consider the matter being brought by a collections firm under the FDCPA on behalf of an alleged claimant, subject to the four corners rule.

    Defendant further alleges the award is in fact a settlement in receivership and for subrogation claims is in a matter for which the Plaintiffs are seeking to perfect title for claims under California foreclosure law CC2924.1. Upon the court granting “possession” and not title, will the alleged claimant “plaintiff” thereby have become fully vested in its right to submit its demand for reimbursement upon which it shall tender its “voucher” the promissory note it repossess at the conclusion of sale. Under the FDIC “Loss Risk Share” program is the basis for determining a preset “credit bid” offered “rigged” in violation of the CA CC 2924.1. The FDIC avoidance powers and Repudiatory rights circumvent any claim and counter claims arguments and can stay any state decision bestowed by the court . In foreclosure the “lender” is a claimant who can enforce their rights unto the court while proffering an ambiguous filing action for possession. In filing claims, an adjusted amount is set as a purchase price by the insurer – the FDIC. Therein the claim is furthered towards payment to the plaintiff’s as a agent acting as debt collector for a successor bank.

    The winning bid at sale by “grantee” is by its own admission one and the same with the beneficiary who brought foreclosure.

    None of the bells and whistles applied in this federally funded grandiose scheme takes into account that mortgage backed securitization platform, defined by “derecognition”, is ill-fated upon which the American citizen loses their home.Thereafter, you pay a tax on charges to the loan in conjunction with an increase in personal taxable income under the massive bailout plan known as TARP.

    Prior Statutory (Involuntary) Lien Foreclosure – RTC and FDIC require that they consent to a foreclosure of a prior statutory (involuntary) lien if they hold title or an inferior lien (e.g., where they take over a failed savings and loan). If a superior mechanics’ lien, judgment lien, tax lien or other involuntary lien is foreclosed, you must require RTC or FDIC consent to the foreclosure. Otherwise, the foreclosure does not extinguish the RTC or FDIC lien or title.

    RTC or FDIC Conservator or Subsidiary – RTC and FDIC will not assert right to consent if the interest is held by RTC or FDIC as conservator or by a subsidiary of a lender in RTC or FDIC receivership or conservatorship.

    Judgment Liens Held by RTC or FDIC – RTC and FDIC policies do not expressly grant consent to foreclosure of superior mortgages if FDIC or RTC, in corporate capacity or receivership capacity, holds a judgment lien in favor of a failed depository institution. You do not need to require consent by RTC or FDIC to a superior mortgage foreclosure if RTC or FDIC is the owner of a judgment lien of a failed institution.

    The RTC and FDIC will not assert a right of redemption in their conservatorship, receivership, or corporate capacity. You do not need to except to right of redemption by the RTC or FDIC except to the extent that state law provides for right of redemption.

    RTC Special Warranty Deeds.

    The RTC has agreed to issue Special Warranty Deeds if it sells property. You should always require a Special Warranty Deed from the RTC.

    Statutory (Involuntary) Liens Against Failed Lending Institutions.

    RTC and FDIC assert that statutory (involuntary) liens such as judgment liens against failed institutions do not attach to the institution’s property if recorded after RTC or FDIC becomes receiver. They rely on 12 U.S.C. §1825(b)(2). We do not rely on this provision. Require a release of all statutory (involuntary) liens recorded before a deed from RTC or FDIC to a new institution or a third-party purchaser is recorded. Require a release of all later filed mechanics’ liens.

    List of Failed Institutions

    A list of each bank and savings institution that has been controlled by the FDIC or RTC is available through the National Legal Department in Houston. If an inferior lien is held by this institution, you should assume that the FDIC or RTC owns that lien as of the noted date unless you confirm otherwise with the successor institution or with FDIC or RTC.

    Deed Versus Copy of Purchase and Assumption Agreement.

    The RTC or FDIC often transfers the assets of a Failed Institution to a New Institution by a Purchase and Assumption Agreement.

    By M Soliman

  4. Altho my Condo in mesa has been “sold” at a “Trustee” Sale; ALL of the above mentioned issues have plagued my mind for over 3 years. There was nothing right , (in my opinion) with the original Mortgage. I’ve made hundreds of inquiries over the past 2 years, and usually the proverbial buck gets passed to the point of giving up. If anyone knows of any recourse; any guidance or suggestions welcomed. thanx, and good luck.

  5. Excellent post. I think it covers some areas that have not been addressed–that is what happens when the final order for foreclosure is in place. “It ain’t over til it’s over” Yogi Berra.

  6. What you need to set-off is the face value of the original promissory note if it hasn’t been surrendered into court.

  7. I need to know about Nevada law as it is so different from the other states as I have been told by an attorney. I have NEVER been late nor missed a payment but my lender has held my payments for months and naot applied them to my loan. Then the lender charges us exhorbitant late payments and other fees. They send us “notices” that if our “late payments’ are not paid within 30 days, that they are going to start foreclosure proceedings. Can I sue thelender for “fraud” in using my “mortgage payments” for other purposes (specifically holding them as late payments” and keeping money from our “escrow account”) They have never given us an accounting as we had requested. They have also ruined our credit so it costs us much higher interest rates on credit cards if we can even get the credit.

  8. Sort of OT on this post, but has to do with 50 state “settlement”:

    “The draft C&D order is a regulatory equivalent of a Potemkin Village….On the surface it looks like a very serious thing–C&D orders are an extraordinary regulatory response in the banking world, where a lot of regulation is done informally….But when one looks at the substance of the C&D order, one is struck by how empty it is. All sizzle, no steak.”

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