What is the effect of TILA Rescission on My title? Can I sue for damages?

I have been getting the same questions from multiple attorneys and homeowners. One of them is preparing a brief to the U.S. Supreme Court on rescission, but is wondering, as things stand whether she has any right to sue for damages. When our team prepares a complaint or other pleading for a lawyer or homeowner we concentrate on the elements of what needs to be present and the logic of what we are presenting. It must be very compelling or the judge will regard it as just another attempt to get out of justly due debt.

Let us help you plan your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult


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Combining fact patterns from multiple inquiries we start with a homeowner who actually sent two notices of rescission (2010 and 2017). Questions vary from who do I sue for damages to how do I get my title back?

Note that the biggest and most common error in rescission litigation is that the homeowner attempts to (a) have the court declare the rescission effective contrary to their own argument that it is already effective by operation of law, 15 USC §1635, and (b) seek to enforce the TILA rescission statutory duties beyond one year after rescission.

Whether you can sue for damages is one question. Whether the rescission had the effect of removing the jurisdiction, right or authority to dispossess you of title is another. And whether title ever changed is yet another. Yes you can sue for damages if not barred by a statute of limitations. Yes authority is vitiated by operation of law regardless of the status of litigation. And NO, title never changed and you probably own your house unless state law restricts your right to claim such ownership.

All three questions are related.
Taking the last question (did title actually change?) first, my opinion is that the rescission was effective when mailed. Therefore the note and mortgage were void. The failure of the alleged “lender” to comply with the rescission duties and then pursue repayment within one year from the date of rescission bars them from pursuing the debt. So at this point in time (equally applicable to the 2017 rescission notice) there is no note, mortgage or enforceable debt.
  • Hence any further activities to enforce the note and mortgage were legally void. And that means that any change of title wherein a party received title via any instrument executed by anyone other than you is equally legally void. In fact, that would be the very definition of a wild deed.
  • The grantor did not have any right, title or interest to convey even if it was a Sheriff, Clerk or Trustee in a deed of trust.
  • Any other interpretation offered by the banks would in substance boil down to arguments about why the rescission notice should not be effective upon mailing, like the statute says and like SCOTUS said 9-0 in Jesinoski.
  • CAUSES OF ACTION would definitely include
    • the equitable remedy of mandatory and prohibitive injunctions to prevent anyone from clouding your title or harassing you for an unenforceable debt would apply. But as we have seen, the trial courts and even the appellate courts refuse to concede that the rescission notice is effective upon mailing by operation of law, voiding the note and mortgage.
    • such a petition could also seek supplemental relief (i.e., monetary damages) and could be pursued as long as the statute of limitations does not bar your claim for damages. This is where it gets academically interesting. You are more likely to be barred if you use the 20010 rescission than you are if you use the 2016 rescission.
    • a lawsuit for misrepresentation (intentional and/or negligent) might also produce a verdict for damages — compensatory and punitive. It can be shown that bank lawyers were publishing all over the internet warning the banks to stop ignoring rescission. They knew. And they did it anyway. Add that to the fact that the foreclosing party was most often a nonexistent trust with no substance to its claim as administrator of the loan, and the case becomes stronger and potentially more lucrative.
    • CLASS ACTION: Mass joinder would probably be the better vehicle but the FTC and AG’s (and other agencies) have bowed to bank pressure and made mass joinder a dirty word. It is the one vehicle that cannot be stopped for failure to certify a class because there is not class — just a group of people who have the same cause fo action with varying damages. The rules for class actions have become increasingly restrictive but it certainly appears that technically the legal elements for certification fo the class are present. It is very expensive for the lawyers, often exceeding $1 million in costs and expenses other than fees.
    • Bottom line is that you legally still own your property but it may take a court to legally unwind all of the wrongful actions undertaken by previous courts at the behest of banks misrepresenting the facts. Legally title never changed, in my opinion.

Taking the second question (the right to dispossess your title) my answer would obviously be in the negative (i.e., NO). Since there was no right to even attempt changing title without the homeowner’s consent and signature, petitions to vacate such actions and for damages would most likely apply.

  • This question is added because the courts are almost certainly going to confuse (intentionally or not) the difference between unauthorized actions and void actions.
  • The proper analysis is obviously that the rescission is effective upon mailing by operation of law.
  • Being effective by operation of law means that the action constitutes an event that has already happened at the moment that the law says it is effective. If a court views this simply as “unauthorized” actions then it will most likely slip back into its original “sin”, to wit: treating rescission as a claim rather than an event that has already transpired.

And lastly the issue of claims for damages. There are different elements to each potential cause of action for damages or supplemental relief. I would group them as negligence, fraud, and breach of statutory duty.

  • As to the last you are barred from enforcing statutory duties in the TILA rescission statute if you are seeking such relief more than one year after rescission. But there are other statutes — RESPA, FDCPA and state statutes that are intended to provide for consumer protection or redress when the statutes are violated. There are statutory limits on the amount of damages that can be awarded to a consumer borrower.
  • Fraud requires specific allegations of misrepresentations — not just an argument that the position taken by the banks and servicers was wrong or even wrongful. It also requires knowledge and intent to deceive. It is harder to prove first because fraud must be proven by clear and convincing evidence which is close to beyond a reasonable doubt. Second it is harder to prove because you must go into “state of mind” of a business entity. The reward for proving fraud is that it might open the door to punitive damages and such awards have been in the millions of dollars.
  • Negligence is the easier to prove that it is more likely than not that the Defendant violated a statutory or common law duty — a duty of care. So the elements are simple — duty, breach of that duty, proximate cause of injury, and the actual injury. Negligent misrepresentation and negligent super vision and gross negligence are popular.

Forbes: TBTF Banks have $3.8 Trillion in Reported Loan Portfolios — How much of it is real?

The five largest U.S. banks have a combined loan portfolio of almost $3.8 trillion, which represents 40% of the total loans handed out by all U.S. commercial banks.

See Forbes: $3.8 Trillion in Portfolio Loans

I can spot around $300 billion that isn’t real.

Let us help you plan your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.

Purchase now Neil Garfield’s Mastering Discovery and Evidence in Foreclosure Defense webinar including 3.5 hours of lecture, questions and answers, plus course materials that include PowerPoint Presentations. Presenters: Attorney and Expert Neil Garfield, Forensic Auditor Dan Edstrom, Attorney Charles Marshall and and Private Investigator Bill Paatalo. The webinar and materials are all downloadable.

Get a Consult and TEAR (Title & Encumbrances Analysis and & Report) 202-838-6345. The TEAR replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments. It’s better than calling!



When interviewing the FDIC receiver back in 2008 he told me that WAMU had originated around $1 Trillion in loans. He also told me that most of them were subject to claims of securitization (i.e., they had been sold). Then when I asked him how much had been sold, he said that Chase had told him the total was around 2/3. Translation: With zero consideration, Chase was about to use the agreement of October 25, 2008 as an excuse to claim ownership and servicing rights on over $300 billion in loans. Chase was claiming ownership when it suited them. By my count they foreclosed on over $100 billion of those “WAMU” loans and, for the most part, collected the proceeds for itself.

Point One: If there really were $300 Billion in loans left in WAMU inventory, there would have been no receivership nor would there have been any bankruptcy.

Point Two: If there were $300 Billion in loans left in WAMU inventory, or even if there was 1/10th that amount, neither the FDIC receiver nor the US Trustee in WAMU bankruptcy would have allowed the portfolio to be given to Chase without Chase paying more than zero. The receiver and the US Trustee would have been liable for civil and even criminal penalties. But they were not liable because there were no loans to sell.

So it should come as no surprise that a class action lawsuit has been filed against Chase for falsely claiming the payments from performing loans and keeping them, and for falsely claiming the proceeds on foreclosure as if they were the creditor when they were most clearly not. whether the lawyers know it or not, they might just have filed the largest lawsuit in history.

see Young v Chase Class Action – WaMu Loans – EDNY June 2018

This isn’t unique. Chase had its WAMU. BofA had its Countrywide. Wells Fargo had its Wachovia. Citi had lots of alter egos. The you have OneWest with its IndyMac. And there are others. All of them had one thing in common: they were claiming ownership rights over mortgages that were falsely claimed to have been “acquired through merger or acquisition using the FDIC (enter Sheila Bair screaming) as a governmental rubber stamp such that it would appear that they purchased over a trillion dollars in residential mortgage loans when in fact they merely created the illusion of those loans which had been sold long ago.

None of this was lost on the insurers that were defrauded when they issued insurance policies that were procured under false pretenses on supposedly non-securities where the truth is that, like the residential loans themselves, the “securities” and the loans were guaranteed to fail.

Simplistically, if you underwrite a loan to an family whose total income is less than the payments will be when the loan resets to full amortization you can be sure of two things: (1) the loan will fail short-term and (2) the “certificates” will fail along with them. If you know that in advance you can bet strong against the loans and the certificates by purchasing insurance from insurers who were inclined to trust the underwriters (a/k/a “Master Servicer” of nonexistent trust issuing the certificates).

see AMBAC Insurance Case vs U.S. Bank

The bottom line is that inside the smoke and mirrors palace, there is around $1 Trillion in loans that probably were sold (leveraged) dozens of times where the debt is owned by nobody in particular — just the TBTF bank that claims it. Once they get to foreclosure, the presumption arises that everything that preceded the foreclosure sale is valid. And its very hard to convince judges that they just rubber stamped another theft.

Bank of American Class-Action Certified: Countrywide via LandSafe used inflated Real Estate Appraisals

First a little background.  On February 6, 2018 a California federal judge certified a nationwide class of borrowers accusing Countrywide Financial Corporation of using inflated real estate appraisals to inflate its loan origination business from 2003 to 2008, overturning successor Bank of America’s claims that borrowers won’t be able to back up their racketeering claims with  proof.

The class-action covers borrowers who received an appraisal from LandSafe Inc. between 2003 to 2008 in connection with a loan that was originated by Countrywide. Countrywide, that owned LandSafe, was acquired by Bank of America in July 2008. LandSafe was sold and is now owned by CoreLogic Inc.

The Plaintiffs have submitted substantial evidence that could be used to prove an alleged RICO scheme existed.  The lead attorney is Roland Tellis who believes the class-action reflects the fact that borrowers were scammed by phony appraisals but never received a refund, despite the fact that there have been massive settlements with regulators and investors.

The suit states that prior to the financial crisis, Countrywide and LandSafe “knowingly, fraudulently, systematically and uniformly” generated false appraisals so Countrywide could close as many home loans as possible.  Borrowers were required to use LandSafe to close, but thought they were paying for an independent, objective appraisal service when the appraisals had a “predetermined value”  to ensure the loans would close rapidly.

The plaintiffs claim they were charged between $300 and $600 each for allegedly corrupt appraisals.  While it is great news that the courts are starting to recognize that a mass-fraud was perpetrated on homeowners, it is unlikely the Appellate court will see the situation the same way as the lower court.  There is also the fact that most class-members receive much in the way of compensation.  The cases typically settle once the numbers get high enough to satisfy the class-action attorneys.

However, there is still a lot of proof that will come out if the case is isn’t settled quickly — damaging proof.  And it is worth noting that the Judge is giving at least some credence to the idea that the entire mortgage meltdown was based upon multiple frauds perpetrated by the banks — not 30 million people waking up one morning and deciding to borrow more than they could afford. I might add that affordability is the responsibility of the lender, not the borrower.  See TILA.  It is presumed by all lending laws that borrowers lack the sophistication to understand the deal they are signing.

Matt Taibbi likened securitization and Goldman Sachs in particular to a vapid squid with many tentacles reaching into the pockets and lives of millions of people. I would extend the analogy further if memory serves, to wit: the squid has three hearts. Appraisal fraud at the instigation of the banks was one of the hearts of the illegal securitization fail scheme — a plan that was, at its heart, nothing more than a Ponzi scheme. They could mollify investors by having them receive monthly payments and even encourage the investors to buy more “mortgage bonds.”
It was the purchases of those bogus securities that fueled everything. When that stopped the entire system collapsed — the hallmark of every Ponzi scheme. And it all happened because of the revolving door between Wall Street and regulators who quickly discovered that by accepting placement inside a regulatory agency, they could emerge within 2 years and take jobs at salaries that were geometrically higher than where they started.
So the people who were working as regulators didn’t want to kill the golden goose, much the same as the appraisers who ultimately caved under pressure from the banks. Of all people the appraisals and the banks knew exactly what was happening. And people who worked in the agencies were loathe to restrain or punish the banks because the banks were their next employer. It was no accident that so many agencies and even the Fed were asleep at the wheel. They were not asleep. They were just biding their time until they left the agency and took a job with the perpetrator of the scheme that they were charged with monitoring.
The banks were flooding the market with money — other people’s money, not their own. I personally witnessed the appraisal fraud in Arizona on several closings where in each case the appraiser came back with an appraisal that pegged the value of the property $20,000 higher than the contract price. In each case the appraiser was given the contract or at least the contract price and the direct or tacit instruction to come back with an appraisal that made the deal appear viable. It wasn’t. Looking at the Case-Schiller Index it is easy at a glance to see how PRICE was driven far above VALUE of property. All housing prices and values were closely related to household income. There was no spike in income for household, but prices were moved ever higher by the banks who were manipulating appraisers.
In 2005 8,000 appraisers petitioned Congress saying that they were being coerced into false appraisals. They either did the appraisal as instructed or they would never see another appraisal job. Congress ignored it. Many appraisers dropped out of the market. The rest were tempted by oversize fees (that in many cases were partially kicked back to the loan originator) or felt compelled to stay in the market because they had nowhere else to go.
The banks were trying all sorts of ways to maximize the amounts of money being moved from the investment sector to the benefit, as it turned out, of themselves and nobody else. The entire time they were driving demand up for loans sold by fraudulent promises from mortgage brokers, who in some cases were convicted felons who had been found guilty of economic crimes. At one point there were 10,000 felons who were registered as salesman for loan products that had no possibility of being sustained.
And it wasn’t that the banks were unaware of the defective loans that violated TILA in multiple ways. They were counting on it. On the way up they sold defective loan products that were never subjected to due diligence by anyone. They, above all others, knew the loans would fail; in fact they were counting on it. They were betting against the performance of the loans by negotiating insurance contracts for either the loans or the “mortgage bonds” or both and selling derivative futures that in many cases were disguised sales of entire loan portfolios that were never owned by the “Seller.”
The big payoff came when the loans and the “mortgage bonds” failed and all sorts of people and entities were caught having to either cough up money or declaring bankruptcy. The AIG insurance [packages were specifically written such that AIG would NOT be subrogated and be able to make claims on the underlying loans nor the “mortgage bonds”].  For a few dollars in premiums the suckers on Wall Street had bought themselves a world of trouble.
Appraisal fraud lies at the heart of the scheme. The illusion of an ever-climbing market kept people refinancing their property, buying overpriced property, and, most importantly buying bogus “mortgage bonds” issued by the underwriter of the bonds utilizing the fictitious name of a REMIC Trust. This was the holy grail of securities underwriting: what if you could sell shares of a nonexistent entity, keep the proceeds, and then sell securities and contracts that derived from the nonexistent value of the Trust?
The average homeowner knows nothing of any of this and reasonably relied upon the representations by sellers of defective loan products; besides reposing trust in such entities just because they appeared to be an institutional lender, borrowers believed the rationale that banks would not lend money they knew they would never collect. That would be true if the banks were making loans. In truth, they were intermediaries with contractual and legal duties to everyone with whom they did business. They breached those duties to everyone in multiple ways but none so glaring as appraisal fraud and kickbacks on fraudulent appraisal fees.

The judge also certified a subclass of Texas borrowers who are bringing an unjust enrichment claim under Texas law and appointed Baron & Budd PC and Hagens Berman Sobol Shapiro LLP to serve as class counsel.

All plaintiffs are represented by Hagens Berman Sobol Shapiro LLP and Baron & Budd PC

The cases are Waldrup v. Countrywide Financial Corp. et al., case number 2:13-cv-08833, and Williams et al. v. Countrywide Financial Corp. et al., case number 2:16-cv-04166, in the U.S. District Court for the Central District of California.

FDCPA Claims Upheld in 9th Circuit Class Action

The court held that the FDCPA unambiguously requires any debt collector – first or subsequent – to send a section 1692g(a) validation notice within five days of its first communication with a consumer in connection with the collection of any debt.


If anyone remembers the Grishom book “The Firm”, also in movies, you know that in the end the crooks were brought down by something they were never thinking about — mail fraud — a federal law that has teeth, even if it sounds dull. Mail fraud might actually apply to the millions of foreclosures that have taken place — even if key documents are sent through private mail delivery services. The end of month statements and other correspondence are definitely sent through US Mail. And as we are seeing, virtually everything they were sending consisted of multiple layers of misrepresentations that led to the detriment of the receiving homeowner. That’s mail fraud.
Like Mail Fraud, claims based on the FDCPA seem boring. But as many lawyers throughout the country are finding out, those claims have teeth. And I have seen multiple cases where FDCPA claims resulted in the settlement of the case on terms very favorable to the homeowner — provided the claim is properly brought and there are some favorable rulings on the initial motions.
Normally the banks settle any claim that looks like it would be upheld. That is why you don’t see many verdicts or judgments announcing fraudulent conduct by banks, servicers and “trustees.”And you don’t see the settlement either because they are all under seal of confidentiality. So for the casual observer, you might see a ruling here and there that favors the borrower, but you don’t see any judgments normally. Here the banks thought they had this one in the bag — because it was a class action and normally class actions are difficult if not impossible to prosecute.
It turns out that FDCPA is both a good cause of action for damages and a great discovery tool — to force the banks, servicers or anyone else that is a debt collector to respond within 5 days giving the basic information about the loan — like who is the actual creditor. Discovery is also much easier in FDCPA actions because it is forthrightly tied to the complaint.
This decision is more important than it might first appear. It removes any benefit of playing musical chairs with servicers, and other debt collectors. This is a core of bank strategy — to layer over all defects. This Federal Court of Appeals holds that it doesn’t matter how many layers you add — all debt collectors in the chain had the duty to respond.

Justia Opinion Summary

Hernandez v Williams, Zinman and Parham, PC No 14-15672 (9th Cir, 2016)

Plaintiff filed a putative class action, alleging that WZP violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692(g)(a), by sending a debt collection letter that lacked the disclosures required by section 1692(g)(a) of the FDCPA. Applying well-established tools of statutory interpretation and construing the language in section 1692g(a) in light of the context and purpose of the FDCPA, the court held that the phrase “the initial communication” refers to the first communication sent by any debt collector, including collectors that contact the debtor after another collector already did. The court held that the FDCPA unambiguously requires any debt collector – first or subsequent – to send a section 1692g(a) validation notice within five days of its first communication with a consumer in connection with the collection of any debt. In this case, the district court erred in concluding that, because WZP was not the first debt collector to communicate with plaintiff about her debt, it had no obligation to comply with the statutory validation notice requirement. Accordingly, the court reversed and remanded.

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OneWest — One Step Up from Donald Duck

For further information please call 954-495-9867 or 520-405-1688


Well at least OneWest legally exists and it didn’t originate any loans even though it sometimes tries to give that appearance. But it is clear that this company was literally formed over a weekend to takeover IndyMac business. In so doing it made a number of dubious deals in which it was not to be liable for the shoddy, fabricated documents, and unlawful practices of IndyMac which claimed ownership of loans that were already sold into the secondary market and then subjected to conflicting claims of ownership. It looks like the return on investment was infinite.

OneWest Bank Targeted By Insurer Over $335M In MBS Losses

Law360, New York (August 13, 2012, 9:41 PM ET) — Assured Guaranty Municipal Corp. fired off a suit against OneWest Bank FSB in California on Thursday, claiming the company’s shoddy loan servicing was to blame for some of the $335 million it has shelled out in insurance claims related to mortgage-backed securities.

The lawsuit in Los Angeles court says that since OneWest took over IndyMac Bank FSB’s role as servicer of mortgage loans underlying residential MBS, the loans have experienced delinquencies and defaults at a severe and unexpected rate. That in turn has forced Assured to…

The question is whose loss was this, and why did the insurance company pay it off? The bigger question is that if the loss was paid off, why wasn’t allocated to the underlying assets whose decline in value was the basis of the loss claim?

OneWest Bank Can’t Shake HAMP Loan Class Action

Law360, New York (October 23, 2012, 3:11 PM ET) — OneWest Bank FSB on Monday failed to escape an Illinois class action accusing it of bungling a mortgage loan modification application by unreasonably delaying its response and imposing late fees for payments that were not actually late.

Judge Sharon Johnson Coleman rejected OneWest’s argument that lead plaintiff Stacey Fletcher lacked standing, finding that her complaint alleged sufficient injury from OneWest’s allegedly unreasonable delay in responding to her request for a modified loan under the Home Affordable Modification Program.

Fletcher further accuses OneWest of reporting her to…

It seems like OneWest was too busy  making claims for loss sharing and insurance and guarantees to actually pursue modifications.

OneWest, Soros Accused Of Mortgage Scam In FCA Suit

Law360, New York (October 16, 2012, 9:47 PM ET) — A Florida resident hit OneWest Bank and billionaire majority shareholder George Soros with a False Claims Act lawsuit Monday, saying that through their connections to President Barack Obama, they had finagled a loss-sharing deal with the government that allowed them to scam homeowners and taxpayers.

James Beekman, who originally took out his mortgage with IndyMac Federal Bank, says when Soros and OneWest took over the fallen bank, they entered into a loss-sharing agreement with the Federal Deposit Insurance Corp. Under the deal, OneWest would shoulder the…

Disclosure. Patrick Giunta and I represent Beekman. No further comment

Loan Info Confidential

By Michael Lipkin

Law360, San Diego (November 10, 2014, 6:13 PM ET) — OneWest Bank NA is trying to stop Lehman Brothers Holding Inc. from accessing confidential information about Lehman-owned loans it used to service, alleging in New York federal court that Lehman is trying to blame OneWest for its own bad investments.
In a complaint filed Friday, OneWest claims Lehman is trying to access regulated information about 27 mortgages OneWest used to service, including confidential data about borrowers that OneWest alleges Lehman doesn’t have a right to access. The loans were eventually liquidated after poor performance, and the service agreements governing them have already expired, according to the complaint.

“This action seeks to end defendants’ misguided campaign to try to force OneWest to provide them with confidential information to which the defendants are no longer entitled,” the bank said. “Doing so could subject OneWest to potential regulatory and civil liability for failing to protect private borrower information.”

Aurora Commercial Corp., formerly Lehman Brothers Bank FSB, is also named as a defendant.

Lehman allegedly bought the loans as part of a pool from IndyMac Bank FSB between 2006 and 2007, with IndyMac retaining the right to service the loans. After IndyMac was shut down by the Office of Thrift Supervision in 2008, OneWest bought the servicing rights from the Federal Deposit Insurance Corp. The deal expressly said OneWest was not liable for previous servicing conduct, according to the complaint.

For the full article see http://www.law360.com


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Editor’s Comment:

Too often lawyers and pro se litigants fail to realize that while a motion for removal is ordinarily granted without hearing, they retain the right to move the Federal Court for remand back to the State Court and the Federal Judge often agrees when it receives the Motion for Remand.  The point is that the laws and procedures governing the case are all state laws, of which there can be no dispute, and the remedy is a state remedy leaving no room for Federal interpretation. In this case MERS was cut off at the pass by a narrower reading of the Class Action Fairness Act. MERS had sent a notice of removal to Federal Court but he parties suing MERS responded that this was a counterclaim by MERS and could not be subject to removal to Federal Court under conventional grounds. They remanded it back to state court where it belongs.

Class Action Act Didn’t Alter Removal Rule

by Ed Wesoloski

A familiar story in troubled economic times has produced a new ruling concerning federal civil procedure from the Sixth Circuit.

A Kentucky couple bought a house with a loan issued by America’s Wholesale Lender, secured by a mortgage with Mortgage Electronic Registration Systems (MERS). Later, the couple defaulted on the mortgage. Countrywide Home Loans foreclosed in state court, claiming MERS assigned the mortgage.

The couple filed a counterclaim against Countrywide, arguing that MERS never had a valid mortgage. Countrywide said the counterclaim was deficient because MERS wasn’t joined as a necessary party.

The couple then filed a third-party class action complaint against MERS. MERS, said the couple, was nothing more than an electronic data base for keeping track of mortgages and did not hold a valid mortgage, having failed to follow Kentucky’s registration procedures.

Here’s where the fresh twist to things begins.

MERS, as a third-party defendant, removed the case to federal district court. Normally, third-party defendants can’t do that. First Nat’l Bank of Pulaski v. Curry, 301 F.3d 456, 461 (6th Cir. 2002).

The Kentucky couple, citing Pulaski and 28 U.S.C. § 1441(a), moved to remand their case to state court.

This time it’s different, MERS argued.

[MERS] sought removal of the action based on 28 U.S.C. § 1453(b). The [Class Action Fairness Act of 2005] provides that a district court has jurisdiction in a civil action where there is diversity of citizenship; the amount in controversy exceeds $5 million; and the proposed class includes at least one hundred members. …

[MERS argued] that under section 1453(b), a qualifying class action “may be removed by any defendant without the consent of all defendants.”

You’re reading the statute way too broadly, the Sixth Circuit ruled.

[MERS] attempts to distinguish Pulaski by arguing that section 1453(b), which includes the term “any defendant,” has expanded the right of removal in Class Action Fairness Act cases.

But that language is used in a specific context — it is part of a larger clause providing that an appropriate action “may be removed by any defendant without the consent of all defendants.” Contrary to [MERS’] position, the provision simply modifies the rule that all defendants must consent to the removal.

What the Class Action Fairness Act doesn’t do is extend removal opportunities to third-party defendants, the Sixth Circuit concluded.

The case is In re Mortgage Electronic Registration Systems



COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary CLICK HERE TO GET COMBO TITLE AND SECURITIZATION REPORT


“Plaintiffs and consumers have paid the ultimate price through bankruptcies, evictions and foreclosures that were predicated upon false, forged, fraudulent and/or inaccurate documents,” the lawsuit charges.

“Keep your eye on the MONEY. That will tell you everything. Not one cent was ever given by the parties who received documents purporting to give them rights over your loan. The documents — nearly all of them — are patent lies. Those lies are intended to deceive the public, the regulators, the investors, the courts and the homeowners into believing that the foreclosures are real. The foreclosures were not, for the most part, real in that their purpose was never to mitigate damages — it was to make money for intermediaries who never had a dime in the deal.” Neil Garfield, livinglies.me

EDITOR’S NOTE: This is why homeowners need the COMBO analysis whether it is from us (see above) or anyone else. The burden of proof SHOULD be on the forecloser but until Judges realize that error, they are looking for the homeowner to come into court loaded with data that can be introduced as evidence and which clearly define issues of fact that are triable by the court and that trigger the right to discovery.

The very presence of LPS and other  document fabrication factories like it provides instant corroboration of the homeowners’ allegations that the mortgages, and the foreclosures were rotten to the core. The notes are improper, the liens probably didn’t attach to the land, the closing documents were essentially vehicles to deliver the signature of borrowers to end the money chase that Wall Street started. As has been repeatedly asserted across the country this was not a case of people chasing money. It was a case of money chasing people. That signature of the borrower was worth more than the borrower ever knew and more than they realize even now.

Think about it. For hundreds of years lenders have been dotting their i’s and crossing their t’s creating near perfect documentary trails in hundreds of millions, perhaps billions of transactions. Suddenly they need to create layers upon layers of plausible deniability with document fabricators, substitute trustees (what was wrong with the old one?) and all sorts of excuses about why they don’t need to prove their case. Here is the truth: THEY HAVE NO CASE.

They were not the lender,the creditor or the assignee at any time. The documents refer to transactions (transfers) that never took place. The origination documents (note, mortgage, deed of trust etc.) refer to transactions that never took place because the actual lender/creditor was not disclosed — instead they put a straw-man on the note and another straw-man on the mortgage.

Keep your eye on the MONEY. That will tell you everything. Not one cent was ever given by the parties who received documents purporting to give them rights over your loan. The documents — nearly all of them — are patent lies. Those lies are intended to deceive the public, the regulators, the investors, the courts and the homeowners into believing that that the foreclosures are real. The foreclosures were not, for the most part, real in that their purpose was never to mitigate damages — it was to make money for intermediaries who never had a dime in the deal.


Nevada homeowners file class-action lawsuit over foreclosure robosignings


by Steve Green

Lender Processing Services Inc., the company targeted by Nevada’s attorney general in a foreclosure robosigning investigation, has been hit with a class-action lawsuit filed by Las Vegas and Henderson homeowners.

Jacksonville, Fla.-based LPS, one of the nation’s largest foreclosure processors, has insisted its robosigning problems in Nevada involved mere paperwork issues, have been addressed and did not involve wrongful foreclosures.

But Tuesday’s homeowner lawsuit said LPS’s use of “forged, fraudulent and/or erroneous” foreclosure documents tainted the foreclosure process to the point where LPS and banks it worked with “did not have authority to foreclose or to continue with the foreclosure process.”

The suit filed in Clark County District Court in Las Vegas alleges violations of Nevada’s Deceptive Trade Practices Act, seeks to block pending foreclosures involving allegedly forged LPS documents and seeks unspecified damages for completed foreclosures.

Besides the Nevada attorney general’s lawsuit filed against LPS last week alleging widespread fraud in its foreclosure paperwork operations, criminal charges have been filed in Las Vegas against two LPS officers and four notaries in what state prosecutors call a scheme in which thousands of foreclosure documents were tainted by forged signatures and bogus notarizations.

Also named as defendants in Tuesday’s class-action lawsuit were lenders and foreclosure trustees that work with LPS. They are Bank of America, its subsidiary ReconTrust Co.; IndyMac Mortgage Services, a division of OneWest Bank; and Regional Service Corp., which acts as a foreclosure trustee.

Tuesdays lawsuit was filed by five homeowners and is proposed as a class action representing “countless” more plaintiffs, likely thousands. Four of the named homeowners face foreclosure and the fifth has been foreclosed on, the suit says.

The proposed class of plaintiffs is defined as borrowers in Nevada who received foreclosure documents, called notices of default, “that were improperly executed by LPS, its predecessors or its subsidiaries.”

Tuesday’s lawsuit seeks a court declaration that LPS and its codefendants violated Nevada’s law governing foreclosure proceedings “in that they proceeded with the foreclosure process despite relying upon forged and falsified notices of default.”

“Plaintiffs and consumers have paid the ultimate price through bankruptcies, evictions and foreclosures that were predicated upon false, forged, fraudulent and/or inaccurate documents,” the lawsuit charges.

The suit also seeks a declaration that the notices of default issued by LPS “are null and void” and asks for an injunction blocking LPS and the codefendants from proceeding with the allegedly tainted foreclosures.

“Plaintiffs’ properties face foreclosure as a result of defendants violations of NRS 107.080 (the foreclosure law),” the suit says.

The suit also seeks unspecified actual and punitive damages and attorney’s fees. It was filed by attorneys at the Las Vegas law firm Callister & Associates LLC.

An LPS spokesman said the company had no immediate comment on Tuesday’s lawsuit but reiterated its earlier statement: “LPS acknowledges the signing procedures on some of these documents were flawed; however, the company also believes these documents were properly authorized and their recording did not result in a wrongful foreclosure.”



COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary

ANOTHER CASE TO WATCH: When this class action is filed, it will contain allegations and details you probably didn’t know. Like the other class actions and AG actions across the country, make the effort to follow what is in the record. The position of the pretender lenders and documents fabricators changes depending upon who is suing them and what causes of action are in the lawsuit.

By watching the court file and the pleadings and responses and memorandums of law from BOTH sides, you will find material you can use in your own case. This is especially true if the class action is against a defendant that is the same entity that claims to have standing in your case. Any action or allegation or representation by counsel may be used as an admission against interest in your own case, which, if accepted by the Court, is presumptively true.

Lender Processing Services, Inc.

  • Issue: Securities fraud


Lieff Cabraser Heimann & Bernstein, LLP is investigating potential illegal conduct as alleged in a class action lawsuit brought on behalf of all persons who purchased or acquired the common stock of Lender Processing Services, Inc. (“Lender Processing” or the “Company”) (NYSE: LPS) between July 29, 2009 and October 4, 2010, inclusive (the “Class Period”).

Background on Lender Processing Services, Inc. Securities Class Litigation

The action, pending in the United States District Court for the Middle District of Florida, was brought against Lender Processing and certain of its officers and directors for violations of the Securities Exchange Act of 1934. Lender Processing, headquartered in Jacksonville, Florida, describes itself as the mortgage industry’s number one provider of mortgage processing services, settlement services and default solutions, and the nation’s leading provider of integrated data, servicing and technology solutions for mortgage lenders.

The action alleges that during the Class Period, defendants made material misrepresentations and omissions regarding Lender Processing’s business practices, financial condition, and prospects. Specifically, the complaint alleges that defendants failed to disclose: (i) that the Company engaged in improper and deceptive business practices; (ii) that the Company’s subsidiary, Docx, falsified documents through the use of “robo signers”; (iii) that the Company engaged in improper fee sharing arrangements with attorneys and/or law firms; (iv) as a result of the its deceptive business practices, the Company’s reported financial results and financial outlook lacked any reasonable basis in fact and were materially false and misleading.

On October 4, 2010, in response to negative media reports and government investigations of the Company relating to possible forged foreclosure documents it provided to mortgage lenders, Lender Processing issued a press release commenting on purported “mischaracterizations of its services.” As a result, the market learned that Lender Processing’s business practices were potentially deceptive and fraudulent, causing its stock price, which had already declined significantly from its Class Period high of $43.99 in October 2009, to fall an additional $2.72 per share, or 8.6 percent, on October 4, 2010 to close at $28.76 per share. On the following day, the price of Lender Processing stock fell another $1.45 per share, or 5 percent, to close at $27.31 per share, on unusually heavy trading volume.

Contact Lieff Cabraser

If you purchased Lender Processing securities during the Class Period, you may move the Court for appointment as lead plaintiff by no later than January 24, 2011. A lead plaintiff is a representative party who acts on behalf of other class members in directing the litigation. Your share of any recovery in this action will not be affected by your decision of whether to seek appointment as lead plaintiff. You may retain Lieff Cabraser, or other attorneys, as your counsel in this action.

If you are a Lender Processing shareholder and you would like Lieff Cabraser to review your claim, please click here to contact a securities attorney at Lieff Cabraser or contact securities attorney Sharon M. Lee by telephone toll-free at (800) 541-7358.

About Lieff Cabraser

Lieff Cabraser Heimann & Bernstein, LLP, with offices in San Francisco, New York and Nashville, is a nationally recognized law firm committed to advancing the rights of investors and promoting corporate responsibility.

Since 2003, the National Law Journal has selected Lieff Cabraser as one of the top plaintiffs’ law firms in the nation. In compiling the list, the National Law Journal examined recent verdicts and settlements in addition to overall track records. Lieff Cabraser is one of only two plaintiffs’ law firms in the United States to receive this honor for the last eight consecutive years.

Michael H. Simmons

$100 million Class Action Robo Suit Against HSBC and Wells Fargo

jones v hsbc 09-2904rwt Maryland

Reginald Jones is the lead Class Action Plaintiff in a Maryland case alleging robo-signed documents. The well-written complaint was filed by Jon D. Pels, Esq. Bar No. 11883
Lawrence J. Anderson, Esq. Bar No. 11390 Justin Reiner, Esquire Bar NO. 16403 Jennifer O. Schiffer, Esquire 4833 Rugby Avenue, 4th Floor
Bethesda, MD 20814 (301) 986-5570 (T) (301) 986-5571 (F) e-mail: jpels@pallaw.com Counsel for the Plaintiffs

The action is filed October 26, 2010 in Federal District Court, District of Maryland, Greenbelt division. Case # 09-2904 RWT. It recites, as many of these cases now do, actual testimony from witnesses who signed documents they knew nothing about. It lists as causes of action the following:

–    Solely Against Buonassissi, Henning & Lash, P.C    –
Violation of the Fair Debt Collection Practices Act (FDCPA) (15 U.S.C. § 1692, et seq.)

–    All Defendants –
Wrongful Foreclosure: Failure to Comply with Maryland Real Property Article, §§ 7-105.1 or 7-105.2

–    All Defendants    –

–    All Defendants    –

–    All Defendants    –

–    All Defendants    –

–    All Defendants    –

FORMS: Kentucky RICO Class Action v MERS, GMAC, DEUTSCH, Nationstar, Aurora, BAC, Citi, US Bank, LSR, DOCX, LPS, and attorneys


“To the judges throughout the Commonwealth and to the homeowners, the foreclosing Plaintiff, a servicing company or “Trust” entity appears to be a bank or lender.    This falsity is due to its name in the style of the case.    They are not banks or lenders to the loan.    They are not a beneficiaries under the loan.    They do not possess a Mortgage in the property.    They will never have a right to posses a mortgage in the property.    It would have been a more honest representation for the foreclosing entity to called itself something like “Billy Bob’s Bill Collectors,”

10.03.10KENTUCKY RICOClassActionComplaint

Salient allegations in very well written complaint, although I still have some doubts about whether they will get the class certified. Kentucky is a non-judicial state”

“Come the Representative Plaintiffs, by counsel, on behalf of themselves and others so situated as putative class members pursuant to Fed. R. Civ. P. 23.    and for their Class Action Complaint against the name Defendants and yet to be named Defendants, make their claim for treble and punitive damages, costs and attorneys fees under 18 U.S.C. 1962 and 1964, otherwise known as the “racketeer Influenced and Corrupt Organizations Act,” hereinafter (“RICO”) and for all violations of law heretofore claimed.

An ongoing criminal investigation has been in place in the state of Florida by both the Florida Attorney General and the Justice Department.    Upon information and belief, a parallel investigation is ongoing in the state of Kentucky and at least three other states.

Defendant Merscorp, Inc., is a foreign corporation created in or about 1998 by conspirators from the largest banks in the United States in order to undermine and eventually eviscerate long-standing principles of real property law, such as the requirement that any person or entity who seeks to foreclose upon a parcel of real property: 1) be in possession of the original note, 2) Have a publicly recorded mortage in the name of the party for whom the underlying debt is actually owed and who is the holder of the original Promissory Note with legally binding assignments, and 3) possess a written assignment giving he, she or it actual rights to the payments due from the borrower pursuant to both the mortgage and note.

MERS is unregistered and unlicensed to conduct mortgage lending or any other type of business in the Commonwealth of Kentucky and has been and continues to knowingly and intentionally illegally and fraudulently record mortgages and conduct business in Kentucky on a large scale and systematic fashion..

LSR Processing LLC, is a document processing company, based in the state of Ohio to generate loan and mortgage documents.    Upon information and belief it is owned by one or more of the partners of LSR law firm.    LSR Processing was created in order to facilitate the conspiratorial acts of the Defendants in relation to the creation of fraudulent Promissory Notes, Note Assignments, Affidavits and Mortgage Assignments LSR Processing has a pattern and practice of drafting missing mortgage and loan documents and in turn, having them executed by their own employees.

This case arises due to the fact that for the Class Plaintiff and the members of this putative class, their Mortgages and in some cases, the foreclosures that followed, were and will be based upon a mortgage and a note in the mortgage that are not held by the same entity or party and are based upon a mortgage that was flawed at the date of origination of the loan because Mortgage Electronic Registration Systems (“MERS”) was named as the beneficiary or nominee of the lender on the mortgage or an assignee and because the naming of MERS as the beneficiary was done for the purpose of deception, fraud, harming the borrower and the theft of revenue from in all one hundred (120) Kentucky Counties through the illegal avoidance of mortgage recording fees. (e.s.)

In the case where a foreclosure has been filed, the entity filing the foreclosure has no pecuniary in the mortgage loan.    The foreclosing entity is a third party.    The entity lacks standing, and most times, the capacity to foreclose.    The entity has no first hand knowledge of the loan, no authority to testify or file affidavits as to the validity of the loan documents or the existence of the loan. The entity has no legal authority to draft mortgage assignments relating to the loan.    The foreclosing entity and its agents regularly commit perjury in relation to their testimony.

The “lender,” on the original Promissory Note was not the lender. The originators of the loan immediately and simultaneously securitized the note.    The beneficial interest in the note was never in the lender.    MERS, acting as the mortgagee or mortgage assignee, was never intended to be the lender nor did it represent the true lender of the funds for the mortgage. The Servicer, like GMAC Mortgage, or some party has or is about to declare the default, is not in privity with the lender.    The true owner or beneficiary of the mortgage loan has not declared a default and usually no longer have an interest in the note. The Servicer is not in privity nor does it have the permission of the beneficial owners of the Note to file suit on their behalf.

The obligations reflected by the note allegedly secured by the MERS mortgage have been satisfied in whole or in part because the investors who furnished the funding for these loans have been paid to the degree that extinguishment of the debts has occurred with the result that there exists no obligations on which to base any foreclosure on the property owned by the Class Plaintiffs. Defendants have and will cloud the title and illegally collect payments and attempt to foreclose upon the property of the Plaintiffs when they do not have lawful rights to foreclose, are not holders in due course of the notes.
42.    Any mortgage loan with a Mortgage recorded in the name of MERS, is at most, an unsecured debt.    The only parties entitled to collect on the unsecured debt would be the holders in due and beneficial owners of the original Promissory Note.
43.    The loan agreements were predatory and the Defendants made false representations to the Class Plaintiffs which induced the Class Plaintiffs to enter into the loans and the Defendants knew the representations were false when they were made.

In these cases, the property could be foreclosed by default, sold and transferred without ANY real party in interest having ever come to Court and with out the name of the “Trust” or the owners of the mortgage loan, ever having been revealed. Many times the Servicer will fraudulently keep the proceeds of the foreclosure sale under the terms of a Pooling and Servicing Agreement as the “Trust” no longer exists or has been paid off.    The Court and the property owner will never know that the property was literally stolen.
52.    After the property is disposed of in foreclosure, the real owners of the mortgage loan are still free to come to Court and lay claim to the mortgage loan for a second time.    These parties who may actually be owed money on the loan are now also the victims of the illegal foreclosure.    The purchaser of the property in foreclosure has a bogus and clouded title, as well as all other unsuspecting buyers down the line.    Title Insurance would be impossible to write on the property.

Although the Plaintiffs attempting to foreclosure refer to themselves as “Trustees” of a “Trust,” the entities are not “Trustees” nor “Trusts” as defined by Kentucky law.    Neither are the entities registered as Business Trusts or Business Trustees as required by Kentucky law. In every case, where one of these MBS have come to a Kentucky Court the entity foreclosing lacked capacity sue to file suit in the State of Kentucky.    There is no “Trust Agreement” in existence.    The entity filing has utilized a Kentucky legal term it has no right to use for the sole purpose of misleading the Court.
55.    Although the “Trust” listed may be registered with the Securities and Exchange Commission (“SEC”) and the Internal Revenue Service (“IRS”) as a Real Estate Mortgage Investment Conduit (“REMIC”), more often than it is not properly registered in any state of the union as a Corporation, Business Trust, or any other type of corporate entity.    Therefore, the REMIC does not legally exist for purposes of capacity for filing a law suit in Kentucky or any other State.

The transfer of mortgage loans into the trust after the “cut off date” (in the example 2006), destroys the trust’s REMIC tax exempt status, and these “Trusts” (and potentially the financial entities who created them) would owe millions of dollars to the IRS and the Kentucky Revenue Cabinet as the income would be taxed at of one hundred percent (100%).
64.    Subsequent to the “cut off date” listed in the prospectus, whereby the mortgage notes and security for these notes had to be identified, and Note and Mortgages transferred,    and    thereafter, the pool is permanently closed to future transfers of mortgage assets.
65.    All Class members have mortgage loans which were recorded in the name of MERS and/or for which were attempted through a Mortgage Assignment to be transferred into a REMIC after that REMIC’s “cut off” and “closing dates.”
66.    In all cases, the lack of acquisition of the Class Members’ mortgage loans violates the prospectus presented to the investors and the IRS REMIC requirements.
67.    If an MBS Trust was audited by the IRS and was found to have violated any of the REMIC requirements, it would lose its REMIC status and all back taxes would be due and owing to the IRS as well as the state of Kentucky.    As previously stated, one hundred percent (100%) of the income will be taxed.



Three cases that show we are on the right track.
Indymac is a bad group that is going down further.





class_action_against_boa1_kahlo HAMP

Editor’s Note: Excellent Pleading on HAMP, TARP and related matters. They also bring up unjust enrichment which might also be applicable to the receipt and non-disclosure of third party payments.

Good facts on illicit “modification” practices and the reasons why the modifications usually don’t become permanent.

behalf of themselves and all others similarly


By: s/ Steve W. Berman
Steve W. Berman, WSBA #12536
Ari Y. Brown, WSBA #29570
1918 Eighth Avenue, Suite 3300
Seattle, Washington 98101
(206) 623-7292

Class Action Firm Seeks Central Missouri Homeowners

 Let’s do some networking here and help the lawyers who are helping us!

The lawyers in MISSOURI are seeking to make contact with homeowners in the central part of the State of Missouri in the following counties:

Howard, Boone, Callaway, Osage, Cole, Miller, Monteau, Camden, Hickory, Benton, Morgan, Pettis, Cooper.

Please send information to ngarfield@msn.com. All information will be kept strictly confidential.

Foreclosure Defense and Offense: Good News For Class Actions and Individual Actions

As with all cases cited here, you should get on line and capture the pleading documents and other pertinent motions, discovery etc. It would help us and thousands of others, if you would send what you find to ngarfield@msn.com.


McKell v. Washington Mutual-Class Action Defense Cases: Defense Motion To
Dismiss Class Action Improperly Granted As To Breach of Contract And UCL
Claims Based On Federal RESPA Violations California Court Holds
California Court Holds as Matter of First Impression that RESPA Prohibits
Lender from Marking Up Costs of Another Provider's Services Without
Providing Additional Services of its Own 

Plaintiffs filed a putative class action lawsuit against Washington Mutual
Bank in California state court alleging inter alia violations of
California’s unfair competition laws (UCL), Consumers Legal Remedies Act
(CLRA), and breach of contract. “The basis of all causes of action was
defendants’ overcharging plaintiffs for underwriting, tax services, and wire
transfer fees in conjunction with home loans. Defendants charged plaintiffs
more for these services than defendants paid the service providers.” McKell
v. Washington Mutual Bank,___ Cal.App.4th___, 2006 WL 2664130 (Cal.App.
September 18, 2006) [Slip Opn., at 2]. Plaintiffs’ UCL claim was premised
upon alleged violations of the California Residential Mortgage Lending Act
(CRMLA) and the federal Real Estate Settlement Procedures Act (RESPA) and
Regulations X, among other state and federal laws. Slip Opn., at 5. The
trial court granted a defense motion to dismiss the class action complaint,
presumably on the ground that the claims “turn on the alleged existence of
an agreement requiring Washington Mutual to charge no more than pass-through
costs for underwriting, tax services, and wire transfers,” id., at 3, which
plaintiffs could not do. The California Court of Appeal affirmed in part and
reversed in part. We do not here discuss those aspects of the trial court’s
ruling that the divided appellate court opinion affirmed. Rather, we focus
on the Court of Appeal’s holdings that plaintiffs had adequately pleaded UCL
and breach of contract claims.

The appellate court first held that the trial court did not err “in
requiring plaintiffs to plead a factual basis for implying an agreement by
[the Bank] to charge only pass-though costs,” Slip Opn., at 8. But in
analyzing the UCL claims, the Court of Appeal explained at page 10,

A cause of action for unfair competition under the UCL may be established
“‘independent of any contractual relationship between the parties.’” . . .
Thus, the determination whether plaintiffs have stated a cause of action for
violation of the UCL is not dependent upon their ability to plead the
existence of an implied agreement to charge only pass-through costs for
underwriting, tax services and wire transfer services.” (Citations omitted.)
Plaintiffs’ fraudulent business practices claims survived demurrer because
“a reasonable consumer likely would believe that fees charged in connection
with a home mortgage loan bore some correlation to services rendered.” Slip
Opn., at 11. The Court rejected the Bank’s argument that Regulation X “only
requires that the HUD-1 statement itemize the charges imposed on the buyer
and seller” because listing the charge “does not preclude a finding [that]
it is deceptive.” Id. (citations omitted).

Plaintiffs’ unfair business practices allegations also survived demurrer
because “the determination whether [a business practice] is unfair is one of
fact which requires a review of the evidence from both parties” and “thus
cannot usually be made on demurrer.” Id., at 12. The Court of Appeal
rejected the Bank’s judicial abstention argument because the Court was
“doing no more than enforcing already-established economic policies.” Id.,
at 13. The Court rejected also the Bank’s argument that the Court “should
not interfere” because “lending practices are strictly regulated” because
plaintiffs are not challenging the amount of the fees per se but rather the
business practice of “lead[ing] borrowers to believe it is charging them for
the cost of certain services it provides, when in reality it is charging
them substantially in excess of such costs.” Id., at 13-14.

Turning to the RESPA claim, the Court of Appeal quoted at length from Kruse
v. Wells Fargo Home Mortgage, Inc., 383 F.3d 49 (2d Cir. 2004), Slip Opn.,
at 16 et seq. Kruse analyzed HUD’s interpretation of section 8(b) and
concluded that it “prohibits a ‘“settlement service provider” from
“mark[ing]-up the cost of another provider’s services without providing
additional settlement services.”’” Id., at 19 (quoting Kruse, at 61-62). As
a matter of first impression, the California appellate court agreed with
Kruse and “adopt[ed] that court’s reasoning as our own.” Id. In accepting
HUD’s interpretation of section 8(b), the Court also noted that “its
interpretation of section 8(b) is consistent with Congress’s stated intent
to protect consumers from unnecessarily high settlement charges.” Id., at 20
(citation omitted).

The Court rejected defense arguments that RESPA and Regulation X expressly
preempt state law claims alleging violations of RESPA and Regulation X, Slip
Opn., at 21-24, and additionally rejected defense claims that plaintiffs’
claims were preempted by the federal Home Owners’ Loan Act (HOLA), 12 U.S.C.
§ 1461 et seq., id., at 24-31. With respect to the HOLA preemption claim,
the appellate court observed that “plaintiffs are not attempting to employ
the UCL to enforce a state law purporting to regulate the lending activities
of a federal savings association” but rather “to enforce federal law
governing the operation of federal savings associations.” Id., at 27. As the
Court explained at page 29,

Insofar as plaintiffs are using the UCL to enforce federal laws as set forth
in RESPA, they are not seeking to enforce “state laws affecting the
operations of federal savings associations.” (§ 560.2(a).) The UCL does not
“purport[] to regulate or otherwise affect [a savings’ association’s] credit
activities” (ibid.) but only provides a means of enforcing federal
requirements. It is thus the type of state law not preempted by federal law.
With respect to the breach of contract claim, the appellate court admitted
that “[p]laintiffs have still failed to identify the contract and
contractual provision under which [the Bank] required them to pay
underwriting and wire transfer costs” but that they identify the deed of
trust for the fee for tax services. Slip Opn., at 32. The Court agreed that
“[t]he deed of trust . . . required that any tax services fee [the Bank]
charged plaintiffs comported with RESPA,” id., at 33. Because plaintiffs
alleged the fee violated RESPA, they adequately pleaded a breach of contract
claim so as to survive demurrer. Id. 

NOTE: The Court of Appeal had no trouble in affirming the dismissal of the
CLRA claim: “Plaintiffs cite no authority or make no argument demonstrating
that Washington Mutual’s actions were undertaken ‘in a transaction intended
to result or which results in the sale or lease of goods or services.’ . . .
Rather, its actions were undertaken in transactions resulting in the sale of
real property. The CLRA thus is inapplicable . . . ” Slip Opn., at 31
(citation and footnote omitted). The Court also affirmed dismissal of the
common law claims for unjust enrichment, bailment, and conversion, id., at

One of the appellate court judges issued a concurring and dissenting opinion
in which he expressed the view that “this entire action is preempted by
federal law,” specifically, the Home Owners’ Loan Act (HOLA). Slip Opn.,
Vogel, J., concurring and dissenting, at 4


Mortgage Meltdown: Foreclosure Offense and Defense: Plan of Engagement

I am researching the possibility that there might be a securities violation that could inure to YOUR benefit (not just the buyers of CDOs). You see there are several breaches that occurred here all stemming from the fact that the market was artificially inflated. The scheme most closely resembles a Ponzi scheme and so it smacks of breach of fiduciary duty, lack of TILA disclosures, AND the sale of a security (which means failure to provide a prospectus, right of rescission, and other elements of registering or offering securities for sale of a security). remember that rescission rights, no matter what you may hear to the contrary, could extend to many years. Most people don’t know that. 

And in securities litigation, failure to provide a prospectus disclosing everything including your rescission rights, risk factors and how the deal is actually working, including use of proceeds, rights can extend far into the future with the statute of limitations running not from the date of the transaction, which sometimes happens, but more often from the date you discovered that you defrauded and how you were defrauded. 

The security in this case was the note and mortgage. You were encouraged by all the predatory participants to believe that the house was worth a certain amount of money (i.e., that fair market value was as stated), that you could sit back and watch it go up further without any action on your part, and without any knowledge on your part that the scheme would only work for YOU if they could continue to artificially inflate the apparent fair market values in the housing market. That way, you were told, you could either refinance and get money out of the deal or sell and get money out of the deal, all without any risk at all, or so it seemed. This then is a passive investment promising a return based upon the offering and the “work” of the offeror. 

All of these legal theories overlap, along with fraud in the inducement, fraud in the execution, failure to disclose under SEC rules, and violations of the various banking regulations which require a lender to do due diligence. In this case the lender did no due diligence (hence the proliferation of “no doc Loans) because they knew in advance that they were not assuming the risk of loss in the event of default. 

If you have a mind to do so I would encourage you to read the 10k and other filings of Countrywide Financial Corporation and you will see that they were selling the CDOs with a return of 8%, which of course is higher than any mortgage rate they were getting. The proceeds from the sale of the securities were allowed to be used for operational expenses INCLUDING service of the debt. Right there in black and white and signed by the executive of the company itself in full disclosure to avoid jail, is an admission of a Ponzi scheme —- which by definition is a scheme in which a greater fool down the line puts in money which is then used to profit the Ponzi operator and to pay prior “investors” until the money runs out.

So I would start with someone that can audit your closing documents from a TILA (Truth in Lending Act). Second I would look up some securities lawyers that really know their stuff, and who might be willing to take this on a contingency. And I would look up the class action lawyers in your neighborhood and have a talk with them. I am certain they will be very interested. Also go see and pester your local City Attorney and County Attorney and State Attorney would be very interested in this because they are ALL (1) under pressure to get relief for the government agency or unit and (2) understaffed and not very knowledgeable about the terms of relief that are available. They need help and you through your connection with me and others, can provide it. You can give them our blogsite so they can be brought up to speed. I can serve as adviser, expert or whatever. 

Here are some of the possible objectives that could be set without regard to any evaluation of the likelihood of success in your situation or any other:

1. Rescission and damages: tricky to get both, but the theory would be that you were deprived of the money you spent, you were deprived of the benefit of the bargain, and you lost money just by moving in and reasonably relying on what appeared to be the due diligence of the lender, appraiser, underwriter, etc., none of whom was doing the normal due diligence because there was no actual risk to them — including the fact that they they all could express plausible deniability. What they didn’t figure on, because they were too short-sighted, was the sudden implosion. So the plausible deniability defense is gone, a casualty of sheer volume. No lender, appraiser, or underwriter can expect to pass the giggle test when they go out and value a house at $250,000 one week and then $275,000 the following week, and then $335,000 the next month without wondering whether these prices are a real. 

2. Reduction of mortgage balance to reflect inflated values. So if your mortgage is $225,000 and the house is now showing a fair market value of $185,000, you should get a $40,000 reduction in the principal due on your mortgage.

3. Reduction in the interest rate, and getting fixed rate.

4. Reduction of payments without negative amortization.

5. Refund of loan origination costs or reduction of mortgage further for those amounts.

6. Refund the down payment you made or reduction of the balance further for that amount.

7. Payment of compensatory damages

8. Payment of Attorney Fees

9. Payment of treble damages under applicable RICO and similar acts.

10. Payment of punitive damages for bad behavior.

11. Payment of exemplary damages to serve as an example to others who might engage in the same wrongful behavior.

12. Settlement (where both parties release each other from claims made in litigation) MIGHT include a provision for reduction of your mortgage balance and reduction of your payments; this could be tied to an agreement wherein over the years if you are able to refinance or sell the house for more than the amount of the reduced mortgage, the lender can participate as an equity partner in the house. If worded properly, this would enable the lender, the investment banking operations and the owners of CDOs to restore the value (all or some) to their balance sheets, thus getting them out of trouble with regulatory authorities in terms of the viability as a continuing business. If such settlements occur on a widespread basis, the housing market will stabilize more quickly and after it stabilizes, the prospects for an earlier recovery are correspondingly enhanced. If real estate values recover, then tax revenues to government will stabilize proportionately and also recover. If people are kept in their homes, the prospect of ghost villages virtually vanishes.

13. With the causes of action for SEC violations, fraud and breach of fiduciary duties involved, there is nothing to stop people who have already been evicted from their homes from bringing these suits and settling with the added factor of taking that vacant house, putting them back in it, with a little money in their pocket so they can right themselves and go on with their lives. 

We are not being so presumptuous to say that we have the key to put ALL the toothpaste back in the tube. However, this approach takes into account the needs of the economy as a whole as well as individual victims and the perpetrators whose downfall might simply hurt more people.

I know this is a nasty business. But it is business. Don’t get mad, get even. And don’t get even, get ahead. When you discuss this with others leave out the the moralizing, and present the “conspiracy” in a calm, deliberate and organized way. Remember that lawyers are busy and some are lazy. You need to get to the meat of the situation quickly to interest them and what you want is someone to take this on a contingency. 

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