Monday, December 7, 2009


Dear NACBA Member,

YOUR ACTION IS NEEDED NOW! Later this week, key members of the House of Representatives will offer an amendment to the financial services regulatory overhaul bill that would incorporate the substance of H.R. 1106, approved earlier this year by the House of Representatives. You will recall that H.R. 1106 provided for mortgage modification of principal residences in bankruptcy. This latest effort to pass cramdown legislation is due in large part to the continuing focus by the NACBA Board, membership, our legislative team in Washington, and our allies on the failed efforts to stem the home foreclosure crisis.

We have been keeping a spotlight on the complete failure of the banks to offer meaningful loan modifications across the country, as well as the dismal results to date for families trying to save their homes under the Treasury Department's modification programs. No one has a better knowledge of those failures than you do as a bankruptcy attorney. And no one better understands the huge impact that this legislation would have in saving families' homes and stabilizing neighborhoods and communities. That is why we need your help today!

H.R. 4173, the Wall Street Reform and Consumer Protection Act (details at will be considered by the full House of Representatives beginning this Wednesday, December 9th. The amendment providing for mortgage modification in bankruptcy is being offered by a bipartisan group of Members, including Representatives Conyers (D, MI), Turner (R, OH), Lofgren (D, CA), Marshall (D, GA), Cohen (D, TN), Miller (D, NC), Nadler (D, NY), Delahunt (D, MA) and Waters (D, CA).

In order to be successful in passing the amendment, we need every NACBA member to:

1. Identify your Member of Congress. If you don't know who it is, go to and fill in your zip code in the box provided on the left hand side of the page. You will learn who your member is. For the contact information for your Member, go to the same Web site and look for your representative. The web page for individual members will include contact information. Alternatively, you can find the DC phone number for your representative by going to

2. Know how that Member voted on H.R. 1106 when it was before the House of Representatives this year. That vote may be found at

3. Call your Representative and ask to speak with the staff person who is handling H.R. 4173, the Wall Street Reform and Consumer Protection Act. Identify yourself as being a constituent.

4. Here are some key messages for speaking with the staff person or leaving a voice mail message:

* Urge Rep. __________ to support an amendment to H.R. 4173 being offered by Reps. Conyers, Turner, Lofgren, Marshall and others that will help financially distressed families avoid foreclosure.
* The number of homes in foreclosure continues to rise dramatically, with up to 3 million new foreclosure starts this year alone. This continued foreclosure crisis undermines the prospect for any kind of economic recovery. (Add any local examples or flavor that you can.)
* The latest adjustments by the Obama Administration to its nine-month old foreclosure program do little but highlight the continued failure of the lenders' voluntary efforts to stop the foreclosure crisis. Lenders have insisted for almost 3 years now that they will voluntarily address the foreclosure crisis. But the record is abundantly clear that the voluntary programs have not worked.
* For those Members who voted yes on HR 1106: This amendment is identical to H.R. 1106, a bill Rep. _______supported when it came up for a vote earlier in the year.
* For those Members who voted no on HR 1106: I understand that Rep. __________ had concerns about a similar bill when it passed the House earlier this year. What you should know is that in the intervening months, the foreclosure crisis has gotten worse, not better. If our economy is to recover, we need the housing market to stabilize first.

Additional Background information that you might want to use:

* The amendment that will be offered on the floor would empower bankruptcy judges to modify mortgages on primary residences as the "stick" that financially-strapped homeowners desperately need to get their lenders to work with them to prevent avoidable foreclosures.
* This narrowly-tailored change to the bankruptcy code would not cost the U.S. taxpayer one penny for stopping foreclosures and stabilizing the economy by providing homeowners access to court-supervised mortgage modifications.
* The amendment will not excuse families from paying their mortgage or encourage a rush to bankruptcy court. Rather, it will give judges the authority to modify unaffordable loans for families who are facing foreclosure and cannot obtain a voluntary modification.
* The clear objective of the amendment is to encourage the servicers of troubled homeowners to offer aggressive loan modifications that would help keep families in their homes, which, when compared to foreclosure, is more profitable to banks, more secure for the families, and more stable for the surrounding neighborhood and community.

Calls to your Representative should be made tomorrow (Tuesday) and Wednesday. If you have questions, want an email address for a staffer, or need more information, please contact Maureen Thompson, NACBA's legislative director, (, 703-276-3251) or Alex Grodin in her office (, 703-276-3254).


Carey Ebert Ike Shulman

NACBA President NACBA Legislative Chair


Why Treasury Needs a Plan B for Mortgages, New York Times, December 6, 2009

The Continuing Foreclosure Crisis

Friday, December 4, 2009

Loan Servicers and Lenders set up homeowners to fail loan modification applications in bad faith. Is anyone listening?

On Fri, Dec 4, 2009 at 8:25 AM, Jean asked:

I am wondering if any of you have experience with the Obama Administration’s modification program, HAMP. If so, I am wondering if you think the NY Times has it right in this column about why so few of these modifications are becoming permanent. To move from trial to permanent modification, a borrower needs to make the payments for three months and get in required paperwork (hardship statement and proof of income). The story reports on experience at just one servicer, Chase, and says that there about a quarter of those with trial modifications made no payments during the three-month trial and in total nearly half failed to make all three payments. Of the half that made all three payments, only a quarter got in all the required paperwork—a hardship statement and proof of income. The column makes it sound like servicers are doing everything they can and borrowers are failing to follow through. There is no mention of whether servicers might be making it a little difficult or unclear how and what to submit.

Dear Jean:

Great book written years ago entitled something like "How to Lie with Statistics." Tells you all the ways news media skews statistics to get a desired result. In this case, it won't matter whether the statistics are right or not. What isn't being reported is how those statistics are being measured.

Three quarters of the people who make no payments consists of those very same people who were sent a Trial Loan modification on a Friday and did not get paperwork until Monday, and the paperwork states that it must be returned by Tuesday, and must be notarized. I had one yesterday, Bank dated letter last Friday, didn't mail out until Monday. Didn't arrive until Wednesday and paperwork was due on Tuesday. So we called Home Retention, and they stated that they were very sorry that the homeowner didn't return the paperwork on time and now he no longer qualifies for a loan modification. He will have to reapply and wait for another trial loan modification package to come out. What crap is that? So when they say that no payments were made usually its because the homeowner didn't get timely paperwork.

Let's look at another reason no payments are made. The bank sends out a trial loan modification which does not conform to the HAMP program guidelines. They require the homeowner to pay two or three reasonable payments followed by a balloon payment for all the arrearages. I can fax you proof of this statement of all the trial loan mods that were sent to my clients which required a balloon payment in writing. The contract REQUIRED them to promise to make a payment that the bank fully knows well that it is impossible. So we contact the bank and the representative is instructed to tell us not to worry about the balloon payment because that last payment will be waived if they make the first 2 or three payments. I am assured that the final loan modification will be issued before the final ballon payment. So I ask the representative if I can record this assurance because I know that the contract doesn't have an integration clause and I could use the permissive recording as parol evidence. What happens? REFUSAL. I ask for a fax number so I can send something in writing to confirm the understanding. REFUSAL to give a fax number. I ask if I can fax to home retention and told that they will have to get back to me. More bank Crap.

I have other colleagues who have sent in these agreements and when the client did not make the balloon payment they got a rejection letter from the lender stating that because they didn't make all the payments they didn't qualify for the Hamp program.

I have yet another client who made all of the payments except the last balloon payment. Before that payment came due the lender sent us a letter telling the client to keep making the same monthly mortgage payment and they would then send a final loan modification out once we provided additional information. I have the fax confirmation sheet proving that I sent all the information they requested on a timely basis. Proof that the mortgage payment was made, was sent with the information. They credited the account with over 15K in payments in a four month period. The lender then sent a letter stating that the borrower no longer qualified. They stated in the letter that we had 14 days to dispute the determination. This letter was sent on August 18, 2009, The letter arrived in California on August 22, 2009, However, their property had been sold at a foreclosure auction on August 21, 2009. More Lender Crap. I called to find out what happened as was told that because he didn't make all of his payments (the 22K ballon payment) he failed hsi trial loan modification plan! More bank crap. Now mind you on this one I sued the bank and am fighting off the eviction now.

Now let's look at the documentation issue. The banks are constantly reporting that they didn't get documents. I have learned to use a fax confirmation sheet which copies the first page of the document faxed onto the confirmation sheet. I have learned to fax documents one at a time. Because if I fax more than one page at a time, the lenders generally claim to deny getting the documentation. So I then follow up with sending to them the Fax Confirmation Sheets proving what was faxed. The new denial letter comes stating "oh yeah we found the paperwork, but you no longer qualify." I point out to them that the documenttation has not materially changed in any way, and ask "How is they qualified over the phone, yet not on paper when the paper PROVES what was stated over the phone. The response generally is "The lender is no longer participating in the loan modification." MORE BANK CRAP!

I can assure you that the statistics are ALARMING as to how many times the bank claims that paperwork was not sent, when in fact it was sent both by fax and by mail. I have over 50 fax confirmation sheets in one instances where the lender keeps stating that I have the correct number but nothing is coming to them.

I sure would like to know who is buying off the media in the servicing industry. Homeowners don't have the resources, neither do all the solo attorneys who are trying to help these homeowners to run an add in a newspaper to show the world what lying, incompetent, and bad faith acting the servicers really are.

Also think about this. I have one client who lost her job and wen to train with Bank of America as a customer service representative. She informed me that she quit the program 2 weeks in because it sickened her to be trained to stonewall homeowners. She was told that when she got the initial phone call she was to run a program on her computer that would say whether the borrower qualified for a loan modification. She got curious to run some numbers when every number she put in for one home owner came back as either the borrower made too much money or too little. She said to me that despite repeated attempts to ascertain a number that would work, no amount of income would every qualify the borrower. The average homeowner will call in, see they are not qualified for one reason or another and just give up.

In California they passed SB 94 which makes it a crime to take any money or anything of value like a post-dated check, or a deposit into an attorney client trust fund, in order to apply for a loan modification. One can only be paid after the months of aggravation one goes through to get a loan modification if one is had at all.

Now let's add insult to injury, there is a case in California that states that unless the lender signs the loan modification agreement it is absolutely unenforceable under statute of frauds. The same case states that unless new and additional consideration is given for the loan modification, other than the payment of money which is already owed, the agreement is invalid. I can't believe the banks are really going to do this, but seeing all of the bad faith tactics I have seen in the past two years, I firmly believe that they will NEVER in most instances send back a signed agreement. I firmly believe that the day will come that the banks will sell off the notes and the new note holders will demand full payment of all the arrears and CLAIM that the Loan modification agreement is not enforceable as against them.

It is absolutely sickening to see who the banks are acting under the circumstances.

So if you ask me, those statistics are probably right. But they are twisted and skewed by the banks own bad faith tactics that virtually guarantee that most homeowners, whether they have an attorney or not, will not get a loan modification that was contemplated by the HAMP program, no matter how well qualified they may be.

Thanks for reading the rantings. Maybe someone high enough up in the world will read this and understand that we are really trying here, but there is as much incentive for these lenders and servicers to give a fair and reasonable loan modification as there is in offering 13 year old a dollar to go out and clear a cow pasture of cow pies.

Okay enough of my ranting and raving.

Best regards,

R. Grace Rodriguez

Tuesday, December 1, 2009

Aurora Home Loan Services takes another punch for bad faith loan modifications.

In a recent tentative ruling in the Fresno Superior Court, let us all congratulate Judge Simpson of starting to understand what is happening with the loan modification process. There is authority to uphold a partially performed loan modification agreement. Read the tentative ruling below.

Now of Mr. Whitener can argue that a BANKRUPTCY CHAPTER 13 PLAN could be deemed TENDER OF PAYMENT and find that a lender is not going to be damaged because the value of the home will not diminish anymore than it already has been diminished, and that the bank is not entitled to rental value during the time of the TRO, then this could be a successful way to pursue the return of a home wrongfully foreclosed upon!

CHECK OUT TENTATIVE RULING: NOTE this is not binding on any other court in any other case.

Re: Whitener v. Aurora Home Loan Services, et al
Superior Court Case No. 09CECG02521
Hearing Date: October 29, 2009 (Dept. 97C)
Motion: By plaintiff for preliminary injunction
Tentative Ruling:
To require defendant Aurora Home Loan Services to provide admissible
evidence on the issues described below, and to require both sides to further
address application of the bond requirement to this case.
In support of the request for preliminary injunction, plaintiff offered his own
declaration confirming under oath that he made all required payments on his loan
through January, 2008, except for the one payment of $771.62 that he failed to
send for August, 2008. He also states that he subsequently made payments that
exceeded the monthly minimum, and that after receiving the two “workout
agreements” attached to the complaint on file as exhibits B and C, he executed
those documents and returned them with the required payments.
While Aurora claims that there were several missed payments including
one for November, 2007, it offers no declarations to support its claims, relying
only on several unauthenticated documents attached to its request for judicial
notice, and on a “customer account activity statement” that only goes back to
April 4, 2008 and doesn’t adequately explain the various entries.
Defendant acknowledges that two “forbearance agreements” were entered
into following the original default. Plaintiff’s supporting declaration is evidence
that defendant represented that if plaintiff signed the documents and returned
them with required payments, he could avoid foreclosure. He claims he did that,
but was then told that the requests for loan modifications had been denied based
on his failure to provide additional information that he claims had never been
Plaintiff has arguably made a prima facie showing of negligence and bad
faith by defendant, and to the extent plaintiff can prove that he followed the
instructions he was given and made the payments directed in the workout
agreements, he may also be able to prove either promissory estoppel or partial
execution of oral loan modification agreements. See Raedeke v. Gibraltar Sav.
& Loan Assn. (1974) 10 Cal. 3d 665, 673.
Defendant has claimed that the various statements and notices it sent
plaintiff “established” that certain payments were missed and that as of March,
2008, plaintiff owed $4,290.24 (see exhibit C to Whitener’s supporting
declaration), as of July, 2008 he owed $6,530.99 (exhibit C to the complaint), and
as of December, 2008 he owed $8,688.01 (exhibit B to the complaint).
But these amounts aren’t fully explained in any of those documents. For
example if, as plaintiff stated in his declaration, the only payment he missed as of
2/08 was one payment of $771.62 in August of 2007, it’s not clear how he owed
$4,290.24 by March, 2008.
Then, in the workout agreement of July, 2008, Aurora was claiming that he
owed $5,456.87 in monthly payments as of July 3rd, but it’s not clear if Aurora
credited him for the payments plaintiff claims he made. Nor is it clear what
months the $5,456.87 represented (and defendant hasn’t offered any evidence of
any missed payments, including, for example, a declaration under penalty of
perjury from someone with personal knowledge of its business records).
The July 2008 document (exhibit C to the complaint) also includes a
charge of $1,301.14 for “corporate advances” without any evidence to support
that figure or any clear explanation of what it includes.
Similarly the December, 2008 document (exhibit B to the complaint)
claims $8,688.01 in missed monthly payments without identifying what months
were missed or offering any evidence of the alleged non-payments, making it
impossible for plaintiff to offer controverting evidence. Those documents
specifically include $50 in legal fees suggesting that the corporate advances
referred to in exhibit C did not include attorney’s fees. But again there is neither
an explanation of the listed fees nor any evidence to support that they were
actually incurred.
And while defendant claims that plaintiff defaulted under the two
forbearance agreements by failing to make the payments required for November,
2008 and February, 2009, those defaults aren’t clearly established by the
documentation offered to date. For example, defendants aren’t claiming that
plaintiff failed to make the October, 2008 payment, and yet there are no entries
for 10/08.
Before the court is willing to lift the TRO and allow the UD action to
proceed, it will require a full accounting from defendant (supported by admissible
evidence) of what the arrearages it is claiming represents, including how it
calculated the amounts due in the two “workout agreements.”
Aurora will also be required to explain (and produce supporting evidence
of) what documents or information plaintiff failed to provide that led Aurora to
deny the requested workouts. Again plaintiff has offered a declaration confirming
that he executed the two proposed agreements and sent them to Aurora with the
required payments.
His signature on those documents was part of the performance demanded
(i.e. an acknowledgment of disputed arrearages), and the payments he claim he
made were additional acts of performance under those agreements. Plaintiff
claims to have relied on the representations included in those agreements, and
unless defendant can show that he failed to perform some act that was a
condition to consummating the agreement, Raedeke v. Gibraltar Sav. & Loan
Assn., supra, 10 Cal. 3d at 673 appears to be authority for finding that the
partially performed agreements were binding on Aurora as well.
While plaintiff may not ultimately be able to prevail on the merits unless he
can show that he is in a position to tender payment of any confirmed past due
payments and all authorized penalties and fees, at this point Aurora hasn’t
established by admissible evidence what payments are actually due and what
fees are actually authorized. The court is also concerned about whether CC
§2923.5 has any application to this case and if so, whether it has been complied
And while plaintiff hasn’t demonstrated an attempt to use procedures
authorized by the Discovery Act to obtain information he claims in his reply is
needed to support his case and to establish a likelihood that he can succeed on
the merits, it appears reasonable to provide additional time for formal discovery
to be conducted so that the court and the parties are fully informed before the UD
action is allowed to proceed.
The court will therefore issue a preliminary injunction enjoining the eviction
from proceeding pending a further hearing on this matter which will be set for
Thursday, April 29, 2010 at which time plaintiff will be required to submit further
evidence establishing the likelihood that he will succeed on the merits.
Issuance of the preliminary injunction will be conditioned on plaintiff
making regular monthly payments to defendants of $771.62, beginning on
November 2, 2009, and continuing on the first court day of each month until the
next hearing.
The court will also consider requiring an undertaking to cover any
damages defendants can prove at the 10/29/09 hearing they are likely to incur
during the period they are enjoined from proceeding with the eviction, but it will
also consider any proof offered by plaintiff concerning his financial condition and
whether he is in a position to post a bond or undertaking while continuing to
make his monthly payments to defendant. Both sides will be required to address
the bond issue at this hearing.
Pursuant to California Rules of Court, Rule 3.1312, subd. (a) and Code of
Civil Procedure section 1019.5, subd. (a), no further written order is necessary.
The minute order adopting this tentative ruling will serve as the order of the court
and service by the clerk will constitute notice of the order.
Tentative Ruling A.M. Simpson 10-28-2009
Issued By: on .
(Judge’s initials) (Date)