Thursday, August 4, 2011


California law requires that an action to quiet title include: (1) a description of the property in question; (2) the basis for plaintiff's title; and (3) the adverse claims to plaintiff's title. Cal.Code Civ. Proc. § 761.020; Kelley v. Mortgage Electronic Registration Systems, Inc., 642 F.Supp.2d 1048, 1057 (N.D.Cal.2009). However, “[u]nder California law, a borrower may not quiet title without first paying the outstanding debt on the property.” Roberts v. JP Morgan Chase Bank, N.A., Nos. 09–CV–01855–LHK, 09–CV–01879, 2011 WL 864949, at *7 (N.D.Cal. Mar.11, 2011) (citing Miller v. Provost, 26 Cal.App.4th 1703, 1707, 33 Cal.Rptr.2d 288 (1994) (“a mortgagor of real property cannot, without paying his debt, quiet his title against the mortgagee”)). Here, Murphy does not allege that she has tendered the outstanding debt or has the ability to do so.
Moreover, Murphy's action to quiet title is premised upon the theory that Wells Fargo had no beneficial interest in the Properties at the time of foreclosure. However, the judicially-noticed facts outlined above contradict this allegation. World Savings Bank, FSB, and its successors and/or assigns are identified as the “lender” and “beneficiary” in both deeds of trust. RJN Exs. F, L. Wells Fargo is a successor to World Savings Bank, FSB, and thus is a beneficiary.4 It is clear from the notices of default that Cal–Western Reconveyance and NDEX West were acting on behalf of Wells Fargo through Wells Fargo's predecessor World Savings Bank.5 Nothing in the FAC establishes that Wells Fargo as the legal beneficiary lacked authority to commence foreclosure proceedings through its agents Cal–Western Reconveyance and NDEX West. Cf. Gomes v. Countrywide Home Loans, Inc., No. D057005, 2011 WL 566737, at *5 (Cal.App. 4 Dist. Feb.18, 2011) (“MERS is the owner and holder of the note as nominee for the lender, and thus MERS can enforce the note on the lender's behalf.”) (citation omitted). Instead, Murphy's argument is contradicted by the deeds of trust, which grant the express power of sale to the beneficiary in the event of default, stating that the beneficiary may “take action to have the Property sold under applicable law ...” RJN Exs. F, L.
A recent decision from the California Court of Appeal has addressed this very issue and in turn has solidified the so-called “tender rule” even further, holding that a beneficiary is authorized “to initiate foreclosure proceedings and invoke the tender rule against a defaulting borrower, even when the beneficiary is not the holder of the original promissory note.” Ferguson v. Avelo Mortgage, LLC, No. B223447, 2011 WL 2139143, at *5 (Cal.App. 2 Dist. June 1, 2011) (citations omitted). Ferguson made clear that “California law ‘does not require possession of the note as a precondition to [nonjudicial] foreclosure under a Deed of Trust.’ “ Id. (citing Jensen v. Quality Loan Service Corp., 702 F.Supp.2d 1183, 1189 (E.D.Cal.2010); Odinma v. Aurora Loan Services, No. C–09–4674 EDL, 2010 WL 1199886, at *4 (N.D.Cal. Mar.23, 2010); Morgera v. Countrywide Home Loans, Inc., No. 2:09–cv–01476–MCE–GGH, 2010 WL 160348, at *8 (E.D.Cal. Jan.11, 2010).); See also Gandrup v. GMAC Mortg., No. 11–CV–0659–LHK, 2011 WL 703753, at *2 (N.D.Cal. Feb.18, 2011) (“[U]nder California law, there is no requirement that the trustee have possession of the physical note before initiating foreclosure proceedings.”).

Murphy v. Wells Fargo Bank, N.A., 5:10-CV-05837-JF PSG, 2011 WL 2893069 (N.D. Cal. July 19, 2011)

Monday, August 1, 2011

City of Los Angeles Foreclosure Registry

BookmarkARTICLE 4

(Article Added by Ord. No. 181,185, Eff. 7/8/10.)
164.00     Title.
164.01     Intent.
164.02     Definitions.
164.03     Recordation of Transfer of Loan and/or Deed of Trust and/or Assignment of Rents.
164.04     Registration of Properties in Foreclosure.
164.05     Maintenance and Enforcement of Maintenance Requirements.
164.06     Maintenance of Vacant Properties and Enforcement of Vacant Property Maintenance Requirements.
164.07     Utilities.
164.08     Violation/Penalty.
164.09     Severability.
BookmarkSEC. 164.00.  TITLE.
     This article shall be known as the City of Los Angeles Foreclosure Registry Program.
BookmarkSEC. 164.01.  INTENT.
     It is the intent of the Los Angeles City Council, through the adoption of this chapter, to establish an abandoned residential property registration program as a mechanism to protect residential neighborhoods from becoming blighted through the lack of adequate maintenance and security of abandoned properties as a result of the foreclosure crisis.
BookmarkSEC. 164.02.  DEFINITIONS.
     The following words and phrases, whenever used in this article, shall be construed as defined in this section unless the context within individual section clearly indicates otherwise.  Words and phrases not defined here shall be construed as defined in Sections 12.03, 12.20.3, 91.8901, et seq., and 98.0702, et seq.:
     A.     "Abandoned" means a property that is vacant and is under a Notice of Default and/or Notice of Trustee's Sale, pending tax assessor's lien sale and/or properties that have been the subject of a previous foreclosure sale in which title was retained by the beneficiary of a deed of trust involved in the foreclosure and any properties transferred under a deed in lieu of foreclosure and/or sale.
     B.     "Assignment of Rents" means an instrument that transfers the beneficial interest under a deed of trust from one lender/entity to another.
     C.     "Beneficiary" means a lender under a note secured by a deed of trust.
     D.     "Days" means consecutive calendar days.
     E.     "Deed of Trust" means an instrument by which title to real estate is transferred to a third party trustee as security for a real estate loan.  This definition applies to all deeds of trust regardless of priority.
     F.     "Deed in Lieu of Foreclosure and/or Sale" means a recorded document that transfers ownership of a property from the trustor upon consent of the beneficiary of the deed of trust.
     G.     "Default" means the failure to fulfill a contractual obligation, monetary or nonmonetary.
     H.     "Foreclosure" means the process by which a property, placed as security for a real estate loan, is sold at auction to satisfy the debt if the trustor (borrower) defaults.
     I.     "Local" means within 100 road/driving miles distance of the subject property.
     J.     "Notice of Default" means a recorded notice that a default has occurred under a deed of trust.
     K.     "Out of Area" means in excess of 100 road/driving miles distance of the subject property.
     L.     "Property" means any unimproved or improved residential real property, or portion thereof, situated in the City of Los Angeles and includes the buildings or structures located on the property regardless of condition.
     M.     "Property in Foreclosure" means any Property upon which a Notice of Default has been issued by a lender, mortgagee, or beneficiary of any deed of trust.
     N.     "Trustee" means the person, firm or corporation holding a deed of trust on a property.
     O.     "Trustor" means a borrower under a deed of trust, who deeds property to a trustee as security for the payment of a debt.
     Within 10 days of the purchase and/or transfer of a loan and/or deed of trust secured by Property the new beneficiary/trustee shall record, with the Los Angeles County Recorder's Office, an assignment of rents, or similar document, that lists the name of the corporation, and/or individual, the mailing address and contact phone number of the new beneficiary and/or trustee responsible for receiving payments associated with the loan and/or deed of trust.
     Any beneficiary or trustee, who holds, or has an interest in, a deed of trust on a Property in Foreclosure located within the City of Los Angeles ("City") shall register the Property in Foreclosure with the Housing Department of the City of Los Angeles ("LAHD").  If the beneficiary or trustee issues a Notice of Default after the Effective Date of this Ordinance, they shall register such property with LAHD within thirty days of the issuance of such Notice of Default.  If the beneficiary or trustee issues a Notice of Default prior to the Effective Date of this Ordinance, and such Notice of Default has not been rescinded, the beneficiary or trustee shall register the Property in Foreclosure with LAHD within 30 days of the Effective Date of this Ordinance.
     The registration requirements of this Ordinance shall be satisfied by providing LAHD with contact information including street address and telephone number for the person or persons directly responsible for the Property in Foreclosure.  If such person or persons are located Out of Area, such person or persons shall also provide the contact information, including street address and phone number for the staff of any applicable property management or property preservation company responsible for the security, maintenance, and marketing of the property.  Such person or persons responsible for the property must be empowered to (1) comply with code enforcement orders issued by the City, (2) provide a trespass authorization upon request of local law enforcement authorities if the property is unlawfully occupied, (3) conduct weekly inspections of the Property, (4) accept rental payments from tenants of the property if no management company is otherwise employed for such person.
     An annual registration fee in the amount of $155.00 shall be paid to LAHD at the time of registration.  The fee and registration shall be valid for the calendar year, or remaining portion of the calendar year, in which the registration was initially required.  Subsequent registrations and fees are due January 1st of each year and must be received no later than January 31st of the year due.
     The registration shall contain the name of the beneficiary and/or trustee (corporation or individual), the direct street and/or office mailing address of the beneficiary and/or trustee (P.O. boxes are insufficient), a direct contact name and phone number for the beneficiary and/or trustee and, in the case of a corporation or Out of Area beneficiary and/or trustee, the local property management company responsible for the security, maintenance and marketing of the property.  Registration fees will not be prorated.
     The registration requirements of this section may be satisfied by providing the information required above to the Mortgage Electronic Registration System (MERS).  Lenders that register properties with MERS will not be required to pay the registration fee to LAHD.
     Any beneficiary or trustee who holds a deed of trust on a Property in Foreclosure shall perform an inspection of the property that is the security for the deed of trust, upon default by the trustor, prior to recording a Notice of Default with the Los Angeles County Recorder's Office.
     If the property is occupied but remains in default it shall be inspected by the beneficiary and/or trustee, or his designee, monthly until the trustor other or party remedies the default.
     This section shall also apply to properties that have been the subject of a foreclosure sale where the title was transferred to the beneficiary of a deed of trust involved in the foreclosure and any properties transferred under a deed in lieu of foreclosure/sale.
     Properties subject to this chapter shall remain under the annual registration requirement, security and maintenance standards of this section as long as they remain vacant.
     Any person, firm or corporation that has registered a property under this chapter must report any change of information contained in the registration with LAHD within 10 days of the change.
     If LAHD determines that the beneficiary and/or trustee has failed to comply with the registry requirements of this section, LAHD shall notify the beneficiary and/or trustee at the last known address as provided in Section 161.409 of the failure to comply with this section.  If the beneficiary and/or trustee fails to comply with this section within 30 days of LAHD's notification, the beneficiary and/or trustee shall pay a penalty in the amount of $250 per day for each day subsequent to LAHD's notification.
     Properties shall be maintained by the beneficiary/ trustee in accordance with the standards set forth in Section 91.8104.
     The provisions of Article 1, Division 89 (Section 91.8901, et seq.) and all requirements described therein shall apply to properties subject to this section.  Should a property be deemed a nuisance, hazardous, or substandard by the City, the abatement procedures described in Article 1, Division 89 may be initiated against beneficiary/trustee by the City.
     If a property subject to this section is found to be vacant, the provisions of Article 8, Division 7 (Section 98.0701, et seq.), and all maintenance and security requirements described therein, shall apply.  Enforcement by the Los Angeles Department of Building and Safety shall be pursuant to the provisions of Article 8, Division 7.
BookmarkSEC. 164.07.  UTILITIES.
     The beneficiary and/or trustee shall ensure that utility services to the property are not terminated if the property is lawfully occupied.
BookmarkSEC. 164.08.  VIOLATION/PENALTY.
     Violations of this chapter shall be treated as a strict liability offense regardless of intent.  Any person, firm and/or corporation that violates any portion of this section shall be subject to prosecution and/or administrative enforcement under the Los Angeles Municipal Code.  Administrative penalties imposed pursuant to this ordinance shall not exceed $100,000 per property.
BookmarkSEC. 164.09.  SEVERABILITY.
     Should any provision, section, paragraph, sentence or word of this chapter be determined or declared invalid by any final court action in a court of competent jurisdiction or by reason of any preemptive legislation, the remaining provisions, sections, paragraphs, sentences or words of this chapter shall remain in full force and effect.