The FCCPA is one of those statutes that are often missed opportunities to hold the banks and servicers accountable for illegal conduct. It is like “Mail Fraud” which only applies to US Postal Services (the reason why servicers prefer to communicate through Fedex or other private mail carriers.
REMEMBER THE ONE YEAR STATUTE OF LIMITATIONS. THE TIME RUNS FROM EACH NEW ACT PROHIBITED BY THE STATUTES.
Some of the prohibited practices are self explanatory. But others deserve comment and guidance:
THE FOLLOWING ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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§559.72(5): Disclosure of alleged debt. This could be one of the grounds for an FCCPA action. If you accept the premise that in most cases the disclosing party has neither ownership nor authorization over the alleged debt, then it would follow that reporting to third parties about the debt would illegal under this section. This is escalated in the event that the “debt” (i.e., a description of a liability owed by A to B) does not exist. B may not be the creditor. Neither B nor any successor or other third party would be acting appropriately if they communicated with each other if neither “successors” nor B had any ownership or authority over the liability of A.§559.72(6): Failure to disclose to third party that debtor disputes the debt. The catch here is “reasonably disputed.” But as you look at an increasing number of case decisions Judges are finding an absence of evidence supporting the claims of banks and servicers. After a failed attempt t foreclosure, it might be reasonably presumed that the debtor/homeowner was reasonably disputing the debt. After all he/she won the case.§559.72(9): Enforcing an illegitimate debt. This one is self evident and yet it forms the basic structure and strategy of the banks and servicers. Perhaps my labeling is too narrow. The facts are that (A) alleged REMIC Trusts are making completely false claims about the Mortgage Loan Schedule and (B) banks and servicers are directly making false claims without the charade of the alleged trusts. This one has traction.§559.72(15): Improper identification of the debt collector. My reasoning is that when the debt collector calls and says they are the servicer for the creditor, this section is being violated and the breach interferes with the HAMP and other loan modification programs. It is a pretty serious breach designed to lure the homeowner into foreclosure. Continued correspondence with the false servicer and the false or undisclosed creditor probably doesn’t waive anything but it does given them an argument that you never objected. So my suggestion is that homeowners and their attorneys object to all such communications until they provide adequate evidence that they can identify the creditor (with evidence that can be confirmed) and adequate evidence that the creditor has indeed selected the debt collector as the servicer. My thinking is that as soon as they refuse to identify the creditor(s) they are in potential violation of this section.§559.72(18): Communication with person represented by counsel. This is meant to prevent the debt collector from making an end run around the the lawyer. But it does get in the way of efficient communications. The alleged “servicer” starts sending correspondence tot he lawyer thus delaying the response. And the debt collector will call the lawyer to disclose the loan and ask for details about the loan, the property or the alleged debtor that are known only by the homeowner.
Florida Statutes §559.72 Prohibited practices generally.—In collecting consumer debts, no person shall:
(1) Simulate in any manner a law enforcement officer or a representative of any governmental agency.
(2) Use or threaten force or violence.
(3) Tell a debtor who disputes a consumer debt that she or he or any person employing her or him will disclose to another, orally or in writing, directly or indirectly, information affecting the debtor’s reputation for credit worthiness without also informing the debtor that the existence of the dispute will also be disclosed as required by subsection (6).
(4) Communicate or threaten to communicate with a debtor’s employer before obtaining final judgment against the debtor, unless the debtor gives her or his permission in writing to contact her or his employer or acknowledges in writing the existence of the debt after the debt has been placed for collection. However, this does not prohibit a person from telling the debtor that her or his employer will be contacted if a final judgment is obtained.
(5) Disclose to a person other than the debtor or her or his family information affecting the debtor’s reputation, whether or not for credit worthiness, with knowledge or reason to know that the other person does not have a legitimate business need for the information or that the information is false.
(6) Disclose information concerning the existence of a debt known to be reasonably disputed by the debtor without disclosing that fact. If a disclosure is made before such dispute has been asserted and written notice is received from the debtor that any part of the debt is disputed, and if such dispute is reasonable, the person who made the original disclosure must reveal upon the request of the debtor within 30 days the details of the dispute to each person to whom disclosure of the debt without notice of the dispute was made within the preceding 90 days.
(7) Willfully communicate with the debtor or any member of her or his family with such frequency as can reasonably be expected to harass the debtor or her or his family, or willfully engage in other conduct which can reasonably be expected to abuse or harass the debtor or any member of her or his family.
(8) Use profane, obscene, vulgar, or willfully abusive language in communicating with the debtor or any member of her or his family.
(9) Claim, attempt, or threaten to enforce a debt when such person knows that the debt is not legitimate, or assert the existence of some other legal right when such person knows that the right does not exist.
(10) Use a communication that simulates in any manner legal or judicial process or that gives the appearance of being authorized, issued, or approved by a government, governmental agency, or attorney at law, when it is not.
(11) Communicate with a debtor under the guise of an attorney by using the stationery of an attorney or forms or instruments that only attorneys are authorized to prepare.
(12) Orally communicate with a debtor in a manner that gives the false impression or appearance that such person is or is associated with an attorney.
(13) Advertise or threaten to advertise for sale any debt as a means to enforce payment except under court order or when acting as an assignee for the benefit of a creditor.
(14) Publish or post, threaten to publish or post, or cause to be published or posted before the general public individual names or any list of names of debtors, commonly known as a deadbeat list, for the purpose of enforcing or attempting to enforce collection of consumer debts.
(15) Refuse to provide adequate identification of herself or himself or her or his employer or other entity whom she or he represents if requested to do so by a debtor from whom she or he is collecting or attempting to collect a consumer debt.
(16) Mail any communication to a debtor in an envelope or postcard with words typed, written, or printed on the outside of the envelope or postcard calculated to embarrass the debtor. An example of this would be an envelope addressed to “Deadbeat, Jane Doe” or “Deadbeat, John Doe.”
(17) Communicate with the debtor between the hours of 9 p.m. and 8 a.m. in the debtor’s time zone without the prior consent of the debtor.
(a) The person may presume that the time a telephone call is received conforms to the local time zone assigned to the area code of the number called, unless the person reasonably believes that the debtor’s telephone is located in a different time zone.
(b) If, such as with toll-free numbers, an area code is not assigned to a specific geographic area, the person may presume that the time a telephone call is received conforms to the local time zone of the debtor’s last known place of residence, unless the person reasonably believes that the debtor’s telephone is located in a different time zone.
(18) Communicate with a debtor if the person knows that the debtor is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney’s name and address, unless the debtor’s attorney fails to respond within 30 days to a communication from the person, unless the debtor’s attorney consents to a direct communication with the debtor, or unless the debtor initiates the communication.
(19) Cause a debtor to be charged for communications by concealing the true purpose of the communication, including collect telephone calls and telegram fees.
History.—s. 18, ch. 72-81; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 1, 6, ch. 81-314; ss. 2, 3, ch. 81-318; ss. 1, 3, ch. 83-265; ss. 7, 13, ch. 93-275; s. 819, ch. 97-103; s. 1, ch. 2001-206; s. 4, ch. 2010
https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
Filed under: foreclosure | Tagged: borrower, disclosure, FCCPA, Florida Statutes §559.72, foreclosure defense, foreclosure offense, fraud, securitization |
Reblogged this on Matthews' Blog.
Wrongful Foreclosure Lawsuits in California and Cutting Edge Foreclosure Defense Strategies
Attorney CLE Credit 6hrs
October 15, 2016 | San Francisco, CA
9:00am – 4:00pm
ONLY $295 REGISTRATION FEE
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Co-Hosted by:
Rodriguez Law Group, Inc.
Certified Forensic Loan Auditors, LLC
Sponsored by:
CFLA
Certified Forensic Loan Auditors, LLC
The Nation’s Leading Resource for
Mortgage Securitization Auditing,
Chain of Title Analysis, Quiet Title and Training
Download Class Syllabus (PDF)
Recent L.A. Times Article on Wrongful Foreclosure Lawsuits in California
latimes.com | March 6, 2016
During the bust that followed last decade’s housing boom, hundreds of thousands of Californians lost their homes to foreclosure. It was a process later found to be rife with problems, such as overwhelmed bank employees who sometimes didn’t even read the foreclosure documents in front of them. But challenging foreclosures on the basis of paperwork problems proved to be mostly futile, given California courts had ruled that borrowers who weren’t paying their mortgages didn’t suffer financial harm.
Read more
Location
San Francisco Marriott Marquis
780 Mission Street
San Francisco, CA 94103
P: 415-896-1600
Instructors
Patricia Rodriguez, Esq. & George M. Hill, Esq.
Syllabus
Download Class Syllabus (PDF)
Introduction – Outline of Todays Lecture & Lecture Topics
Introduction (9:00 – 9:05) (PROD & George)
Pre Litigation Analysis (9:05 – 9:20) (PROD)
The Process of Non Judicial Foreclosure In California (9:20 – 9:35) (George)
Litigation of Real Property Ownership/Title in California (9:35 – 10:30) (PROD)
15 MINUTE BREAK (10:30 -10:45)
Litigation of Possession of Real Property & Unlawful Detainer (10:45 – 11:30) (George)
CA State Court Analysis of Real Property Claims and Title Actions (11:30 – 12:30) (PROD)
LUNCH (12:30 – 1:30)
Analysis of California Homeowner Bill of Rights – SB 900 (1:30 – 2:15) (George)
California SB 900 – The Application of the Law
California SB 900 – Understanding The Relevant Provisions
15 MINUTE BREAK (2:15 – 2:30)
Federal Court Analysis of Real Property Claims & Title Actions (2:30 – 3:30) (George)
Forum Analysis; Filing of Both Federal & State Cases Simultaneously (3:30 – 3:50) (PROD)
Closing Remarks & Comments (3:50-4pm) (George & PROD)
Pre-Litigation Analysis – PROD
Understanding Loan Originators
Understanding Securitization Audit Experts
See Redacted Hybrid Audit
The Process of Non-Judicial Foreclosure In California – George
The Notice of Default: The Bank is giving the Homeowner notice that according to the Bank Homeowner owes the bank and hasn’t paid.
The Notice of Trustee Sale: This is notice to the Homeowner that the bank is electing to sale the property under the allege authority of the Deed of Trust
The Trustee Sale Date: The date the bank sales the house
Delaying Trustee Sale Dates
Advertisements of Trustee Sale Delays
Litigation of Real Property Ownership/Title in California – PROD
Complaint
When to File?
What to Write? Upon belief – Plaintiffs allege
What to File? Summons; Civil Case Cover Sheet; Attachments; Complaint; Complaint Signature Page; Exhibits
How to File? Filing/Serving Defendants – Jurisdiction Specific
Temporary Restraining Orders/Preliminary Injunctions: Note Use of Bonds
Lis Pendens: A two page document which attaches the lawsuit over title to the property; thus when it’s sold at a trustee sale date no one but the bank will buy the lawsuit – bank must buy it back
Answer: Defendant has 30 days to Answer – unless Trustee files objection to non-monetary status – if Plaintiff objects – Defendant is given 30 days from proof of service of objection to non-monetary status
Three choices: Admit, Deny, Demur (motion to dismiss in federal court)
Demur Hearing
Case Management Conference – CMC – Case Management Conference Statement
Trial Set – 6 months out from initial filing of Complaint
Discovery
Request for Form & Special Interrogatories, Documents, Admissions; Depositions
Trial – 4 to 5 Days
Litigation of Possession of Real Property & Unlawful Detainer In California – George
KEY = The Plaintiff must prove three issues
Defendant in possession
Defendant properly served with three day notice to quit
Plaintiff has a duly perfected security interest
Temporary Restraining Order – temporary stop to the sell of the house
Preliminary Injunction – permanent restraint from selling the house the entire duration of the litigation
Unlawful Detainer Action
Complaint: Three elements: proper notice; still in possession; plaintiff has right to possess
Answer – 5 days for homeowner; 10 days for renter
Motion to consolidate with matter involving Title
If judgment entered – motion to stay judgment until after Title matter decided – irreparable harm (for actually homeowner residing on premises)
Not granted – must appeal BC by law MUST be granted
Wedgewood v. Brown-Wilson: Court reversed a trial court because Plaintiff failed to provde duly perfected title as mandated by CCP Section 1161 and a trustee’s deed upon sale is not prima facie evidence of a duly perfected title contrary to previous holdings in the appellate division. Riverside – not published so persuasive case law.
California State Court Analysis of Real Property Claims and Title Actions – PROD
Proper Defendants – Originator, Servicer, Trustee of Securitized Trust; Foreclosure Trustee (if applicable) and MERS (if applicable)
Proper Origination Documents
Uniform Residential Loan Application
Type of mortgage and terms of loan
Property information and purpose of loan
Borrower information
Employment information
Monthly income and combined housing expense information
Assets and liabilities
Federal Truth-In-Lending Disclosure Statement
Amount of payment
Income v. payment
Buyer’s Closing Statement
New loan charges
Loan processing fee
Banking fee
Appraisal fee
Processing fee
Breach of fiduciary duty
Conspiracy to defraud
Settlement Statement
Adjustable Rate Note
Balloon Rider
Failure to disclose balloon payment Uniform Residential Loan Application
Type of mortgage and terms of loan
Property information and purpose of loan
Borrower information
Employment information
Monthly income and combined housing expense information
Assets and liabilities
Federal Truth-In-Lending Disclosure Statement
Amount of payment
Income v. payment
Buyer’s Closing Statement
New loan charges
Loan processing fee
Banking fee
Appraisal fee
Settlement Statement
Processing fee
Claims of Origination / Fraud
Fraud – Allegations need to meet specificity requirements
Actual Fraud – California Civil Code § 1572(3)(5)
Knowledge of borrower’s lack of ability to afford monthly payments due to income
Violations of Business & Professions Code §17200 Unfair and Deceptive Acts and Practices (UDAP) [Fraudulently Procured Documents];
Substitution of Trustees, Corporate Assignments, and Assignments are red flags for transfer problem
Violation of UDAP [Fairness Doctrine]
Intentional Misrepresentation
The misrepresentation of a material fact;
Knowledge of falsity (scienter);
Intent to induce reliance
Actual and justifiable reliance on the misrepresentation; and resulting damages
Negligent Misrepresentation
the misrepresentation of a material fact;
false statement is made without a reasonable ground for a belief in the truth of the misrepresented fact
intent to induce reliance;
actual and justifiable reliance on the misrepresentation; and
resulting damage
Fraudulent Concealment
affirmative duty to disclose all material facts;
concealment of facts in order to induce plaintiff to enter into a transaction or relationship;
resulting damage
Cancellation of Contract
California Civil Code §1670.5, §1689, §3412
Existence of written instrument
That is void or voidable
Grounds for rescission / when facts discovered
Reasonable apprehension if left outstanding may cause serious injury to Plaintiff
Violation of Finance Lender Law
California Finance Code §§ 4973, et seq., 22000, et seq. and 50000, et seq.
Plaintiff must allege that their loan is covered under this provision. A consumer loan more than $417K is not covered. No exceptions to this rule have been identified.
Conspiracy to Defraud
Falsification of loan application
Set up borrower for certain default
Waiver/Promissory Estoppel
Contractual issue – bank has told HO to stop making payments to be considered for a modification; thus, the bank has waived any right to enforcement of the terms of the contract under the note; it gave that right up to enforce the contract by telling the home owner to stop making payments; homeowner relied on that waiver, stopped making payments for a modification, is denied modification, – bank cannot then come back and state it is entitled to enforce the payments
Intentional Infliction of Emotional Distress
Outrageous Behavior
Injury Breach of Contract
Make sure to allege all elements
What is the breach? Find a provision in the Deed of Trust to support the breach of contract claim
Breach of Oral Contract
Existence of a contract
Terms that establish obligation
Specify whether contract is oral, written or implied by conduct
Plaintiff’s performance or excuse for non-performance
Defendant’s breach
Resulting damage
Breach of fiduciary duty
Conspiracy to defraud
Falsification of loan application
Set up borrower for certain default
Statute of Limitations – The SOL has passed for most if not all of our claims. Therefore, we must allege that Equitable Tolling applies, otherwise, the court may dismiss without leave to amend.
Servicing Fraud (aka Fraud By The Loan Servicer)
Unjust Enrichment
Unwarranted fees/overcharging
Violation of Buss. & Prof. Code Section 17200 (Overcharging of Fees – Unfair, Business Practices)
Unlawful, Unfair, or Fraudulent business practice
Instituting improper or premature foreclosure to generate unwarranted fees
NOD inflates default amount
NTS shows balance owed which is too high
Other Statutory Violations
Violation of 2934(a) (Substitution of Trustee)
Occurs when trustee named in the recorded substitution acted as trustee prior to the date of executon of substitution = unlawfully initiated foreclosure;
Substitution is executed but not recorded prior to or concurrently with notice of default;
Notice of substitution NOT mailed to all interested parties;
Affidavit NOT attached to substitution confirming that such notice was given;
Substitution is effected AFTER notice of default recorded but prior to notice of sale.
Notice of sale must be re-sent with substituted trustee information, otherwise the sale is void.
Effective date drastically different from recordation date.
Violation of 2932.5 (ONLY APPLICABLE IN CERTAIN DISTRICTS)
Occurs where a notice of default or notice of sale is recorded prior to a valid assignment. The entity recording the NOD and/or NTS does not have authority to record the document as they have not received any beneficial interest.
This statutory violation has SERIOUS LIMITATIONS. Several courts have found this section inapplicable to deeds of trust and only apply it to mortgages.
California district where Calvo v. HSBC Bank was upheld:
1st District: Hayes v. EMC Mortgage: April 9, 2012;
2nd District: Calvo was in this district: September 11, 2011;
4th District: Herrera v. Federal Nation Mortgage: May 17, 2012;
6th District: Derbrunner v. Duetsche Bank: March 16, 2012.
There are no cases published or unpublished in the 3rd or 5th districts that have mentioned or upheld 2932.5 in regards to the above. Excerpt from Herrera v. Federal National Mortgage: “we conclude the trial court appropriately sustained the demurrer to the first cause of action without leave to amend since section 2932.5 is inapplicable to deeds of trust.”
Below is a map of California and how it is districted as reference:
map
Analysis of Selling & Fraud For California Complaints
Understanding Securitization
Mortgage Backed Bonds – bonds are not created equal
Table Funding – illegal for a bank to NOT use its own money
Originator – bank that originated the loan
Sponsor/Seller – middle bank bought note from originator and sold it to depositor to package in the trust – most missed the closing date
Depositor – bank that sold the Note to the investor
Lack of Standing
Cause of Action – yes
Title doesn’t matter – only substance
Each court will determine differently whether or not it is a named cause of action
Injury – each time the note was illegal sold the equity in the home significantly decreased
MERS – Mortgage Electronic Registry
Every mortgage is supposed to registered on this system
Intended during the 1990s to cut recording costs/fees for the banking industry; also helped hide chain of title from the public
Approximately 65 million mortgages MERS is beneficiary or nominee
Each time the NOTE was transferred by law there was supposed to be a duly signed assignment (from Originator to Sponsor/Seller to Depositor); this did not occur in most cases.
Viable Causes of Actions Against MERS
Violation of CCP 2932.5 – not valid
Violation of B&P Code 17200
Wrongful Foreclosure (Lack of Standing) – for failing to transfer the loan to the trust by the closing date – See Glaski v. Bank of America
Agent/Principal Issue
NOTE: Current Case Law and the Importance to Distinguish Cases
It is imperative to distinguish these new cases from prior precedential cases already decided on similar issues: Gomes; Jenkins
Role of Glaski v. BOA
In a 2013 United States Court of Appeals Case, in the Fifth District of California, the Appellate Court held that a borrower may challenge the securitized trust’s chain of ownership by alleging the attempts to transfer the deed of trust to the securitized trust (which was formed under New York law) occurred after the trust’s closing date. This case is the highly analyzed Glaski v. Bank of America, N.A., et al, Court of Appeal, Fifth District of California, Case No. F064556.
Glaski held as follows: That transfers that violate the terms of the trust instrument are void under New York trust law, and borrowers have standing to challenge void assignments of their loans even though they are not a party to, or a third party beneficiary of, the assignment agreement. Glaski v. Bank of America, N.A., et al, Court of Appeal, Fifth District of California, Case No. F064556.
The Glaski Court specifically noted “We reject the view that a borrower’s challenge to an assignment must fail once it is determined that the borrower was not a party to, or third party beneficiary of, the assignment agreement. Cases adopting that position “paint with too broad a brush.” Culhane v. Aurora Loan Services of Nebraska, supra, 708 F.3d at p. 290. Instead, courts should proceed to the question whether the assignment was void. Glaski v. Bank of America, N.A., et al, , supra.
Note through a current application of Glaski be aware of the following
State courts do not fully understand the implications of Glaski and are reluctant to follow its legal conclusion
Federal Courts are not favorable to Glaski.
Alternate theories when applying Glaski must be used as part of your analysis.
NOTE: Opposing Parties will argue that Glaski should be analyzed as a minority view held by citing the decision of Jenkins v. J.P. Morgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497.
Therefore, it is imperative that arguments be raised to distinguish your claims from the Jenkins case, specifically; that and wrongful actions, inter alia, the absence of proper assignments of the Note and Deed of Trust to the securitized Trust, preceded any alleged default on Plaintiff’s behalf whereby triggering the purported election to sell under the Deed of Trust. (Further analysis can be found be looking to Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 163 Cal.Rptr.3d 804.)
Yvanova V. New Century Mortgage Corporation (B247188; 226 Cal.App.4th 495; Los Angeles County Superior Court; LC097218.)
In the matter of Yvanova v. New Century Mortgage, the California Court of Appeal affirmed the trial court’s dismissal of the action brought by Yvanova against New Century Mortgage Corporation as well as numerous other financial institutions alleging the mortgage and deed of trust on the plaintiff’s residence were improperly securitized and assigned from the original lender to several successive mortgagees and trustees, and ultimately improperly sold at foreclosure.
On August 27, 2014, the California Supreme Court granted petition for review as to the issue of whether a borrower indeed has standing to challenge an invalid assignment after the California Court of Appeal affirmed the judgment in a civil action. The California Supreme Court held: “The petition for review is granted. Briefing and argument is limited to the following issues: In an action for wrongful foreclosure on a deed of trust securing a home loan, does the borrower have standing to challenge an assignment of the note and deed of trust on the basis of defects allegedly rendering the assignment void?”
Keshtgar v. U.S. Bank, N.A. (B246193; 226 Cal.App.4th 1201, mod. 227 Cal.App.4th 321c; San Luis Obispo County Superior Court; CV120282.)
In the matter of Keshtgar v. U.S. Bank, N.A., the California Court of Appeal affirmed the trial court’s dismissal of the action brought by Keshtgar against U.S. Bank, N.A. and various other financial institutions alleging that after plaintiff executed a note secured by a deed of trust on the real property, the deed was allegedly assigned to U.S. Bank, N.A. as trustee for the certificate holders of the Harborview Mortgage Loan Trust. Plaintiff alleged that U.S. Bank did not receive an assignment of the note, was never in possession of the note, never acquired the rights of nor is it a successor to the original lender or any other entity, and as such, U.S. Bank did not have the legal ability to exercise any rights under the deed of trust, including the power of sale.
On October 1, 2014, the California Supreme Court granted a petition for review after the Court of Appeal affirmed the judgment in the civil action. The Supreme Court has ordered briefing be deferred pending the decision in Yvanova v. New Century Mortgage Corp., which presents the following issue: In an action for wrongful foreclosure o a deed of trust securing a home loan, does the borrower have standing to challenge an assignment of the note and deed of trust on the basis of defects allegedly rendering the assignment void?
Mendoza v. JP Morgan Chase Bank, N.A. (C071882; 228 Cal.App.4th 1020; San Joaquin County Superior Court; 39201100267960CUORSTK.)
In the matter of Mendoza v. JP Morgan Chase Bank, N.A. the Californa Court of Appeal affirmed the trial court’s dismissal of the action brought by Mendoza against JP Morgan Chase Bank and various other financial institutions alleging, similar to Yvanova and Keshtgar, improper securitization and invalid assignments and that Mendoza has standing to challenge the improper securitization of the loan.
On November 12, 2014, the California Supreme Court granted a petition for review after the Court of Appeal affirmed the judgment in the civil action. Similar to the Keshtgar matter, the Supreme Court ordered briefing deferred pending the decision in the Yvanova matter.
Further Legal Analysis:
Ibanez – Massachusetts (View Oral Arguments)
Phyllis – AL – Summary Judgment – Breach of Contract 3rd Party Beneficiary
In re Doble (2011) WL 1465559 (Bkrtcy.S.D.Cal.)
Bank of New York v. Silverberg, 2011 NY Slip Op 5002, 6.
In Re Jessie M. Arizmendi, 09-19263-PB13, United States Bankruptcy Court, Southern District of California, 2011
Aguilar v, III v. Bear Sterans Resid. MTG., et. al.,
Kanno v. First Liberty Mortgage, Superior Court of California, County of Riverside, Case Number 539556, 2010
O’Dell v. Washington Mutual Bank FA et. al., United States Central District Court of California, CV 10-09195 GAF (PLAx), 2011
Javaheri v. JP Morgan Chase Bank, N.A., et. al. , United States Central District Court of California, CV 10-09195 GAF (PLAx), 2011
Robinson v. Countrywide; Herrera v. Deutsche Bank
Bloomberg Level Three Audit
Shows exactly how many times the note has been sold and into which trust (classes); in some instances the note has been sold multiple times as if it was the first time the Note was sold – CLEAR SECURITIES FRAUD
Shows the note has been paid off – answer to tender rule
Lona v. Citibank: Tender exceptions – should be alleging that there is a tender exception in addition to the allegations that tender has already occurred
Unjust Enrichment – Payments made to entity who is NOT the lawful note-holder
Violations of Business & Professions Code §17200 Unfair and Deceptive Acts and Practices (UDAP) [Fraudulently Procured Documents]
“Agency/Principal Relationship & Power of Attorney – violations of additional statutes to be used as underlying violations of Buss. & Prof. Code Section 17200
Express or implied agreement
Granting authority for one party to act on behalf of another
Actions of agent bind the principal
Substitution of Trustees, Corporate Assignments, and Assignments are red flags for transfer problems
Security First Rule
Lender must foreclose before looking to borrower’s other assets
Either judicial foreclosure and seek deficiency judgment OR nonjudicial foreclosure
Violation of CCP 726 if lender accepts payments from Plaintiff WHILE foreclosing
HAMP Guidelines – Breach of Contract
Qualification under HAMP guidelines
Trial Period Modification Plan
Borrower complies with all requirements under trial mod
Lender nevertheless fails to provide permanent modification or fails to suspend foreclosure proceedings
Slander of Title – Publication of disparaging statement about title to real estate; statement is false; made with malice; pecuniary damages
Quiet Title – Seeking court order to establish ownership of property; plausible claim to title
Declaratory Relief -Validity and enforceability of subject loan agreement (contract law)
Illegality
Public Policy
Unconscionability
Damages (Injury-in-fact)
Down Payment
Payments
Improvements
Difference between modified amount and non-modified amount paid
Equitabel Estoppel – Post Foreclosure
Negligence – no duty, causation
Governing Rules
Individual clerk/judge rules
Local County/Court Rules
Civil Code of Procedure
Analysis
Facts of the case
Precedent – Stare Decisis
Elements – Many of the causes of actions do not allege ALL of the elements (e.g. duty, excuse form performance, provision in contract that was breached, etc.)
Analysis of California Homeowner Bill of Rights – SB 900 – George
Procedural History
Refer to CA Senate Rules Committee Conference Report for SB 900
Enacted by CA Senate and Assembly on July 2, 2012
Signed into law by Governor on July 12, 2012
Effective Date: January 1, 2013
Expires: January 1, 2018
Goals of the California Homeowner Bill of Rights
Stabilize CA housing economy
Stop foreclosure abuse by lenders and servicers
Ensure meaningful foreclosure alternatives for borrowers
Meeting the Goals
Expand existing foreclosure protections and add new protections to apply to broadly defined “mortgage servicers”
Prevent mortgage servicers from proceeding with a foreclosure until certain contact with or notice to the borrower
Prevent the recordation of a notice of default or notice of sale while a foreclosure prevention alternative is in process
Require a single point of contact for the borrower once they have requested a foreclosure prevention alternative; and
Give borrowers the right to sue the mortgage servicer for injunctive relief, actual damages and treble damages, for violation of the Act and the right to recover their attorney’s fees and costs if they prevail
California SB 900 – The Application of the Law
Eligibility
First lien Mortgages and Deeds of Trust
Secured by owner-occupied residential property
Containing no more than four dwelling units
Large Lenders
Most of the provisions of the Act only apply to lenders that foreclose on more than 175 residential properties per year.
Some provisions, including dual tracking, apply to smaller lenders, as well
Exclusions
Entity Borrowers
Investment Property
Borrowers in default who are already in bankruptcy
Borrowers who have already surrendered their property to lender
Borrowers who have contracted with someone or an entity whose primary business is advising people on how to extend their foreclosure and avoid their contractual obligations under the loan
California SB 900 – Understanding The Relevant Provisions
Mortgage Servicer Defined
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 either as the current owner of the promissory note or as the current owner’s authorized agent, or subservicing agent to a master servicer by contract.
“Mortgage Servicer” does not include the trustee or the trustee’s authorized agent acting under a power of sale in a deed of trust
Prevent lenders from contracting with separate entities to manage and service the loans to avoid application of the current laws
Dual Tracking
The Act seeks to prevent a lender from proceeding with a foreclosure, while at the same time negotiating with a delinquent residential borrower on a loan modification
If Borrower submits a complete application for modification, the Mortgage Servicer may not record Notice of Default or Notice of Sale until loan modification process has been completed and the time for an appeal of any adverse decision has passed
NOD can be recorded:
If borrower doesn’t accept offer within 14 days
If borrower doesn’t appeal denial within 30 days
If borrower accepts the offer but defaults
Changes to Loan Modification Process
Mortgage servicer must provide a written acknowledgement of receipt within five days of the receipt of the document(s) or completed application
Written acknowledgment of receipt to the borrower must include a description of the loan modification process, its timeframes and any deadlines, any expiration dates for documents submitted, and specify any deficiencies in the application
Written response if the lender denies the application. This written notice must include the specific reasons for the denial and the deadline for the borrower to appeal the denial (30 days).
Mortgage servicer is not 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, unless there has been a material change in the borrower’s financial circumstances
Single Point of Contact Established
Single point of contact throughout the loan modification process and with at least one direct method to reach the point of contact.
The mortgage servicer must ensure that the single point of contact has the knowledge, responsibility and authority to:
Communicate to the borrower the process by which the borrower may apply for available foreclosure prevention alternatives;
Coordinate receipt of all necessary documents and notifying the borrower of any missing documents;
Timely, adequately and accurately inform the borrower of the current status of the foreclosure prevention alternative;
Ensure the borrower is considered for all of the foreclosure prevention options offered by the mortgage servicer; and
Have access to persons with the power to stop foreclosure proceedings
Single point of contact can be a team of personnel, each of whom is knowledgeable about borrower’s current situation
Does not apply to small lenders
New Notice Requirements
After Notice of Default Recorded
Within 5 days of the recording of a notice of default, the mortgage servicer that offers foreclosure prevention alternatives must send a written notice to the borrower informing the borrower of foreclosure prevention alternative
Does not apply to any borrowers who have already exhausted the loan modification process described above in Civil Code section 2924.6.
Postponed Trustee Sale Date
Postponement of at least 10 business days require written notice to the borrower of the new sale date and time within five business days of the date of the postponement.
Failure to comply does not invalidate an otherwise valid trustee’s sale
No Application Fees or Late Fees
Prohibits mortgage servicers from charging borrowers application fees for a first lien loan modification or other foreclosure prevention alternative.
Forbids a mortgage servicer from charging borrowers late fees under the loan for the period during which the loan modification is under consideration, while a borrower has filed an appeal of the denial of a loan modification, or the borrower is making timely modification payments.
Right to Sue Mortgage Servicers
Borrowers can 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 before the trustee’s deed upon sale recorded.
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.
A violation 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.
Court may award reasonable attorney’s fees and costs to borrower as the prevailing party.
Lenders defense: Compliance
Violation of California Civil Code of Procedure 2923.3 – Requirements of an Notice of Default and Notice of Trustee sale be sent to borrower
Did you receive a notice of trustee sale?
Did you receive a notice of default?
Violation of California Civil Code of Procedure 2923.4 – Requires meaningful review of borrower for loss mitigation
Were you reviewed for a loan modification and/or other loss mitigation efforts?
Violation of California Civil Code of Procedure 2923.5 – Cannot record a NOD until contact is made with borrower re loss mitigation options
Were you contacted regarding any loss mitigation options?
NOD filed without due diligence to contact borrower and assess financial situation and explore options to avoid foreclosure
Certificate of compliance by agent
Only applies to owner-occupied principal residence
Only remedy is postponement of sale (Mabry v Superior Court)
Violation of California Civil Code of Procedure 2923.55 – Further requirements for a bank to legally record a NOD – specifically can not record a NOD while a borrower is under loan modification review
Was a NOD recorded while you were under review?
Was a NTS recorded while you were under review?
Was there a sale while you were under review?
Violation of California Civil Code of Procedure 2923.6 – Bank can not record a notice of default, notice of trustee sale, or conduct a trustees sale while a complete loan modification is under review
Did you submit a loan modification?
Was the application complete?
When did you submit the loan modification?
Has a notice of default/notice of trustee sale been recorded? When?
Has there been a trustee’s sale? When?
Violation of California Civil Code of Procedure 2923.7 – Bank must provide a single point of contact for all borrowers who request and are being reviewed for a loan modification (or other loss mitigation alternatives)
Did you request a single point of contact?
Were you given a single point of contact?
Violation of California Civil Code of Procedure 2924 (a) (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 intrest. 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.
The entity foreclosing must be the original lender, assigned beneficiary, original trustee or valid substituted trustee. If this does not exist, there there is a violation.
It is also imperative to analyze the recorded documents, any securitization analysis report, etc.
Violation of California Civil Code of Procedure 2924.8
Upon posting a Notice of Sale, a trustee or authorized agent shall also post a specific notice, concurrently with the Notice of Sale, by first-class mail in an envelope addressed to the “Resident of property subject to foreclosure sale.”
Violation of California Civil Code of Procedure 2924.85
All borrowers must notify any potential tenants of the recorded Notice of Default prior to signing lease agreements.
Do you have any tenants?
Did you notify them of the NOD prior to signing the lease?
Violation of California Civil Code of Procedure 2924.9
Within five business days of recording a notice of default, a mortgage servicer that offers one or more foreclosure prevention alternatives shall send a written communication to the borrower advising the borrower of loss mitigation options.
Did you receive a Notice of Default?
Did you receive a notice of loss mitigation options?
Was the notice received within five (5) business days of recording the NOD?
Violation of California Civil Code of Procedure 2924.10
When a borrower submits a complete loan modification application or any other lien modification application, the bank/servicer shall provide written acknowledgment of receipt of the documentation within five (5) business days of receipt.
Have you submitted a loan modification?
Did you receive a notice each time acknowledging receipt of the documents?
Were all notices received within five (5) business days of the documents arriving at the bank/servicer?
Violation of California Civil Code of Procedure 2924.11
If the bank/servicer approves a loan modification in writing prior to the recordation of a notice of default, the bank/servicer cannot subsequently record a Notice of Default.
Were you approved in writing for a foreclosure prevention?
Was there a notice of default recorded after this approval?
Did you decline the written foreclosure prevention?
Violation of California Civil Code of Procedure 2924.12
Prior to the recording of a trustee’s deed upon sale a borrower can seek injunctive relief to stop the sale of the property.
Have you received a notice of trustee’s sale?
Was the notice of trustee’s sale recorded?
Violation of California Civil Code of Procedure 2924.15
Sections 2923.5, 2923.7 and 2924.11 applies only to first lien mortgages or deeds of trust that are secured by owner-occupied residential real property.
May be able to bring a claim for a non-owner occupied property under a violation of B&P Code 17200.
Violation of California Civil Code of Procedure 2924.17
A declaration recorded pursuant to a notice of default, notice of sale, assignment of a deed of trust, or a substitution of trustee shall be accurate and complete and supported by competent and reliable evidence.
Recorded documents must be reviewed to determine if there is a violation.
Violation of California Civil Code of Procedure 2924.18
If a complete application for a loan modification is submitted by the borrower, the bank/servicer cannot record a notice of default, a notice of sale or conduct a trustee’s sale while the complete loan modification application is pending AND until the borrower has been provided with a written determination by the mortgage servicer regarding the borrower’s eligibility for the requested loan modification.
Were you under review for a loan modification?
Did you submit a COMPLETE application?
Was a notice of default recorded while under review?
Was a notice of sale recorded while under review?
Was there a sale while under review?
Were you denied a loan modification while under review?
Were you provided a written denial?
Were you given thirty (30) days to appeal before a notice of default, or notice of sale was recorded?
Were you given thirty (30) days to appeal before a sale actually occurred?
Federal Court Analysis of Real Property Claims & Title Actions – (George)
Rescission (15 U.S.C. s. 1635)
(a) Disclosure of obligor’s right to rescind: Except as otherwise provided in this section, in the case of any consumer credit transaction (including opening or increasing the credit limit for an open end credit plan) in which a security interest, including any such interest arising by operation of law, is or will be retained or acquired in any property which is used as the principal dwelling of the person to whom credit is extended, the obligor shall have the right to rescind the transaction until midnight of the third business day following the consummation of the transaction or the delivery of the information and rescission forms required under this section together with a statement containing the material disclosures required under this subchapter, whichever is later, by notifying the creditor, in accordance with regulations of the Bureau, of his intention to do so. The creditor shall clearly and conspicuously disclose, in accordance with regulations of the Bureau, to any obligor in a transaction subject to this section the rights of the obligor under this section. The creditor shall also provide, in accordance with regulations of the Bureau, appropriate forms for the obligor to exercise his right to rescind any transaction subject to this section.
(b) Return of money or property following rescission: When an obligor exercises his right to rescind under subsection (a) of this section, he is not liable for any finance or other charge, and any security interest given by the obligor, including any such interest arising by operation of law, becomes void upon such a rescission. Within 20 days after receipt of a notice of rescission, the creditor shall return to the obligor any money or property given as earnest money, downpayment, or otherwise, and shall take any action necessary or appropriate to reflect the termination of any security interest created under the transaction. If the creditor has delivered any property to the obligor, the obligor may retain possession of it. Upon the performance of the creditor’s obligations under this section, the obligor shall tender the property to the creditor, except that if return of the property in kind would be impracticable or inequitable, the obligor shall tender its reasonable value. Tender shall be made at the location of the property or at the residence of the obligor, at the option of the obligor. If the creditor does not take possession of the property within 20 days after tender by the obligor, ownership of the property vests in the obligor without obligation on his part to pay for it. The procedures prescribed by this subsection shall apply except when otherwise ordered by a court.
(c) Rebuttable presumption of delivery of required disclosures: Notwithstanding any rule of evidence, written acknowledgment of receipt of any disclosures required under this subchapter by a person to whom information, forms, and a statement is required to be given pursuant to this section does no more than create a rebuttable presumption of delivery thereof.
(d) Modification and waiver of rights: The Bureau may, if it finds that such action is necessary in order to permit homeowners to meet bona fide personal financial emergencies, prescribe regulations authorizing the modification or waiver of any rights created under this section to the extent and under the circumstances set forth in those regulations.
(e) Exempted transactions; reapplication of provisions
This section does not apply to— (1) a residential mortgage transaction as defined in section 1602 (w) [1] of this title; (2) a transaction which constitutes a refinancing or consolidation (with no new advances) of the principal balance then due and any accrued and unpaid finance charges of an existing extension of credit by the same creditor secured by an interest in the same property; (3) a transaction in which an agency of a State is the creditor; or (4) advances under a preexisting open end credit plan if a security interest has already been retained or acquired and such advances are in accordance with a previously established credit limit for such plan.
(f) Time limit for exercise of right: An obligor’s right of rescission shall expire three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs first, notwithstanding the fact that the information and forms required under this section or any other disclosures required under this part have not been delivered to the obligor, except that if
(1) any agency empowered to enforce the provisions of this subchapter institutes a proceeding to enforce the provisions of this section within three years after the date of consummation of the transaction, (2) such agency finds a violation of this section, and (3) the obligor’s right to rescind is based in whole or in part on any matter involved in such proceeding, then the obligor’s right of rescission shall expire three years after the date of consummation of the transaction or upon the earlier sale of the property, or upon the expiration of one year following the conclusion of the proceeding, or any judicial review or period for judicial review thereof, whichever is later.
(g) Additional relief: In any action in which it is determined that a creditor has violated this section, in addition to rescission the court may award relief under section 1640 of this title for violations of this subchapter not relating to the right to rescind.
(h) Limitation on rescission: An obligor shall have no rescission rights arising solely from the form of written notice used by the creditor to inform the obligor of the rights of the obligor under this section, if the creditor provided the obligor the appropriate form of written notice published and adopted by the Bureau, or a comparable written notice of the rights of the obligor, that was properly completed by the creditor, and otherwise complied with all other requirements of this section regarding notice.
(i) Rescission rights in foreclosure
In general: Notwithstanding section 1649 of this title, and subject to the time period provided in subsection (f) of this section, in addition to any other right of rescission available under this section for a transaction, after the initiation of any judicial or nonjudicial foreclosure process on the primary dwelling of an obligor securing an extension of credit, the obligor shall have a right to rescind the transaction equivalent to other rescission rights provided by this section, if—
(A) a mortgage broker fee is not included in the finance charge in accordance with the laws and regulations in effect at the time the consumer credit transaction was consummated; or
(B) the form of notice of rescission for the transaction is not the appropriate form of written notice published and adopted by the Bureau or a comparable written notice, and otherwise complied with all the requirements of this section regarding notice.
Tolerance for disclosures: Notwithstanding section 1605 (f) of this title, and subject to the time period provided in subsection (f) of this section, for the purposes of exercising any rescission rights after the initiation of any judicial or nonjudicial foreclosure process on the principal dwelling of the obligor securing an extension of credit, the disclosure of the finance charge and other disclosures affected by any finance charge shall be treated as being accurate for purposes of this section if the amount disclosed as the finance charge does not vary from the actual finance charge by more than $35 or is greater than the amount required to be disclosed under this subchapter.
Right of recoupment under State law: Nothing in this subsection affects a consumer’s right of rescission in recoupment under State law.
Applicability: This subsection shall apply to all consumer credit transactions in existence or consummated on or after September 30, 1995.
Truth In Lender Act Section 1641(g)
(g) Notice of new creditor
In general – In addition to other disclosures required by this subchapter, not later than 30 days after the date on which a mortgage loan is sold or otherwise transferred or assigned to a third party, the creditor that is the new owner or assignee of the debt shall notify the borrower in writing of such transfer, including—
(A) the identity, address, telephone number of the new creditor; (B) the date of transfer; (C) how to reach an agent or party having authority to act on behalf of the new creditor; (D) the location of the place where transfer of ownership of the debt is recorded; and (E) any other relevant information regarding the new creditor.
(2) Definition: As used in this subsection, the term “mortgage loan” means any consumer credit transaction that is secured by the principal dwelling of a consumer.
Review the recorded documents and the file to determine if there have been any transfers. If the original lender is not the foreclosing party – which is determined by looking at the notice of default and notice of trustee sale – then there must have been a transfer which may be evidenced by a recorded assignment.
12 C.F.R. § 1024.41(b)(1) – If the servicer deems the loss mitigation application to be incomplete, the servicer must act affirmatively to complete the application. The servicer must exercise “reasonable diligence” to obtain any documents and information it claims to require to complete the application. “A complete loss mitigation application means an application in connection with which a servicer has received all the information that the servicer requires from a borrower in evaluating applications for the loss mitigation options available to the borrower. A servicer shall exercise reasonable diligence in obtaining documents and information to complete a loss mitigation application” Reg. X, 12 C.F.R. § 1024.41(b)(1).
12 C.F.R. § 1024.41(b)(2)(i)(A) – When initially made aware of a communication that can reasonably be deemed to be an application for loss mitigation, the servicer must promptly conduct a review to determine whether the communication represents a complete or an incomplete application. “If a servicer receives a loss mitigation application 45 days or more before a foreclosure sale, a servicer shall: (A) Promptly upon receipt of a loss mitigation application, review the loss mitigation application to determine if the loss mitigation application is complete” Reg. X, 12 C.F.R. § 1024.41(b)(2)(i)(A)
12 C.F.R. § 1024.41(b)(2)(i)(B)
If the servicer determines that the application for loss mitigation is complete, it must send the borrower a notice acknowledging that the application is complete within five business days of receipt of the application. “Notify the borrower in writing within 5 days (excluding legal public holidays, Saturdays, and Sundays) after receiving the loss mitigation application that the servicer acknowledges receipt of the loss mitigation application and that the servicer has determined that the loss mitigation application is either complete or incomplete. If a loss mitigation application is incomplete, the notice shall state the additional documents and information the borrower must submit to make the loss mitigation application complete and the applicable date pursuant to paragraph (2)(ii) of this section” Reg. X, 12 C.F.R. § 1024.41(b)(2)(i)(B)
The servicer must provide a written notice to the borrower describing the documents and information needed to complete the application “Notify the borrower in writing within 5 days (excluding legal public holidays, Saturdays, and Sundays) after receiving the loss mitigation application that the servicer acknowledges receipt of the loss mitigation application and that the servicer has determined that the loss mitigation application is either complete or incomplete. If a loss mitigation application is incomplete, the notice shall state the additional documents and information the borrower must submit to make the loss mitigation application complete and the applicable date pursuant to paragraph (2)(ii) of this section” Reg. X, 12 C.F.R. § 1024.41(b)(2)(i)(B)
12 C.F.R. § 1024.41(b)(2)(ii) – The “written notice” notice must include a “reasonable date” by which the borrower should submit the missing documents and information. “The notice required pursuant to paragraph (b)(2)(i)(B) of this section must include a reasonable date by which the borrower should submit the documents and information necessary to make the loss mitigation application complete” Reg. X, 12 C.F.R. § 1024.41(b)(2)(ii)
Equal Credit Opportunity Act (ECOA) requires a notice of incompleteness within 30 days. SD 09-08 specifically incorporates ECOA’s notice provisions. SD 10-01 expressly states the notice provisions, which precisely mirror ECOA’s notice requirements: Within 30 calendar days from the date an Initial Package is received, the servicer must review the documentation provided by the borrower for completeness. If the documentation is incomplete, the servicer must send the borrower an Incomplete Information Notice …. If the borrower’s documentation is complete, the servicer must either: Send the borrower a Trial Period Plan Notice; or make a determination that the borrower is not eligible for HAMP and [send a Non Approval Notice]. See SD 10-01
2014 Consumer Financial Protection Bureau Mortgage Rules Overview
Governing Rules
Judges Standing Order
District (Northern, Central, Eastern or Southern) Local Rules
Federal Rules of Civil Procedure
Analysis
Facts of the case
Precedent – Stare Decisis
Use of Glaski (see above)
Forum Analysis & Filing of Both Federal & State Cases Simultaneously – (PROD)
Closing Remarks & Comments – (George/PROD)
If you reference a Trust as a beneficiary . . .the trustee is a fiduciary and not a third party incident to trust ! Therefore NO mortgage and for this reason NO servicing Material violation or willful misstatements made by registrants as the sole accredited parties in conflict with the auditors attestations engaged by registrants and accredited….in violation of 1122AB prohibition on servicing rights in vendor transfers sales and assignments registerclaims@live.com
The is NO servicing under 1122 AB .
The FCCPA has a two-year statute of limits. The FDCPA has a one-year statute of limits.