The Truth re Loan Modification, Bankruptcy & Foreclosure in California

Wells Fargo Convenes Home Preservation Workshop in Ontario, California

2012-02-16T04:19:00.000-08:00

Dear Readers:

TODAY WELLS FARGO BANK is continuing their home preservation workshop at the Ontario Convention Center. Unfortunately they don't pubically announce these events always in advance. But I heard about it today. SOOOOO

Gather up the following:

1. 3 months of Paystubs
2. 6 months of bank statements
3. 2011 tax return if you have it, if not 2010
4. bring any rental agreements you have to prove people inside your house are giving you money to rent a room
if you are doing that.
5. Bring a utility bill so that you can prove you are living at the house.
7. Prepare a hardship letter. TO WHOM IT MAY CONCERN: Explain why you need a loan modification
and what has happened to your income. If someone died who brought income into the house bring the death
certificate. If you got sick bring something to document your illness.
8. If you are self-employed bring 6 months of business bank statements and print out a PROFIT LOSS statement from your accounting software. If you don't have this, make one on an excel spreadsheet.

With all of this documentation be prepared to show that at the very least if the balance of your loan was stretched out to 40 years at 2 percent, the payment plus taxes and insurance would not be greater than 31 percent of your income. If that is the case you will improve your chances of obtaining a permanent loan modification.

There is no mystery to loan modification. Loan modification should not cost you thousands of dollars by the real estate fraudsters out there who want to charge you by the month for each month they keep you in your home. That will be my next article.

So if you have a Wells Fargo Loan.... please go there today if you need help!

Best to all of
Grace

Fair Debt Collection Practices Part I of V

2011-12-15T11:23:00.000-08:00

Its 7 am on a Sunday morning..... you are lying cozily in your bed when the cell phone next to your pillow starts its annoying ringing and vibration..... Your bleary eyes pick it up to look and its the dreaded unknown 800-NUMBER. You groan with disgust, turn off the phone roll over hoping they won't call back. But they do. Again, and again..... and again.....

Stay tuned readers as I take you through the myriad of tactics used by Debt Collectors to revive debts which are older than four years old for which they no longer have a right to sue you to recover..... the illegal phone calls threatening arrests, the lies..... the fake lawsuits.....

Stay tuned to find out legally what they can do and what rights you have to stop harassment so you can answer your phone again!

Have a great weekend friends......

Renay

WHERE IS THE ASSIGNMENT!!!!!! (the California Equivalent of WHERE'S THE NOTE?!?!?)

2011-11-17T14:52:00.000-08:00

Hey gang.... Civil code section 2932.5 Check your Trustee's Deed upon Sale. Who was foreclosing beneficiary? Is there an assignment recorded to that Beneficiary? If not your foreclosure sale might have been VOID!!!!

SHORT SALE FRAUD - BE C.A.R.-EFUL! in parts published by the California Association of Realtors Legal Department

2011-11-03T08:21:00.000-07:00

Dear Readers:

Right now the economy is so bad that many of you couldn't or even wouldn't want to in a bankruptcy. So dump the house you live in you are contemplating doing a short-sale transaction. There is a right way to do it and a wrong way to do it. If you do it the wrong way, when it comes time to do your bankruptcy (if needed) you could be facing a lawsuit for fraud by your lender. It won't matter that your potentially unscrupulous broker PROMISED you that it was perfectly legal to do what you are doing. If you get busted by your lender, chances are you won't be able to find that broker any more easily than you could find the mortgage broker who may have given you your bad loan. So please read this information so you can educate yourself and help yourself understand when a broker is scamming you.

For my broker friends, I post this because it is educational to help you understand where the line is between a good short-sale transaction and a bad one. Nothing is worth putting your license at risk.

Thanks for reading!

Q1. What is short sale fraud?

A Short sale fraud is a loose term for describing fraud, deceit, or trickery in connection with a short sale transaction. As background, a short sale is a sales transaction where: (1) the sales price is less than the seller’s existing mortgage loan balance, other liens, and costs; and (2) the existing creditors agree to a payoff of less than what’s owed. Short sales help homeowners to avoid the stress and stigma of foreclosure. Short sales also help mortgage lenders by avoiding the costs of foreclosure, including the burden of maintaining and reselling properties acquired through the foreclosure process.

Q 2. What are some examples of short sale scams?

A Like other types of scams, short sale fraud can take many forms. At one end of the spectrum, a short sale scam can be part of large, well-organized fraud ring, and at the other end, it can be one isolated incident.

Examples of short sale fraud include, but are not limited to, the following:

• Fraudulent short sale flips (see Questions 9 to 13);
• Short sale negotiator scams (see Questions 14 to 19);
• Short sale package scams (see Questions 20 and 21); and
• Improper payments (see Questions 22 to 25).

Q 3. How could a homeowner fall victim to a short sale scam?

A Short sale transactions are highly susceptible to scams. A typical short sale is complicated, difficult, and can drag on for many months. Yet, short sale sellers are often too financially strained to hire experts to advise them on the complicated financial, legal, tax, credit, and other issues raised by their situations. Sellers are also likely to be anxious to finalize their short sales quickly to avoid the possibility of losing their homes through foreclosure. On top of the stress and stigma of a looming foreclosure, short sale sellers may be dealing with other financial and emotional hardships, such as job loss, death of a loved one, divorce, or illness. Given these circumstances, the sellers can easily succumb to a scam artist’s lure of a guaranteed quick fix. As one victim of a foreclosure rescue scam said, “When you’re down and out you’ll believe anything.”

Q 5. Is there an easy way to detect a short sale scam?

A No. Short sale scams may not be easy to detect, but see Questions 6 and 7 for helpful guidelines. Outwardly, scam artists do not act or appear dastardly. On the contrary, the typical scam artists look nice and clean-cut, and they seem kind, helpful, patient, and trustworthy. Their purported companies are likely to appear well-established, reputable, and qualified to do the tasks at hand. The companies may even have names that sound altruistic, such as Community Short Sale Services or Short Sale Advocates. Some outfits may appear to be related to the government, such as administered by or an agency of the government. For instance, a scammer may pretend to offer a short sale under the U.S. Treasury’s Home Affordable Foreclosure Alternatives (HAFA) program, knowing that most people are unfamiliar with the details of this new government-subsidized program.

Scammers come from all walks of life, including, but not limited to, appraisers, accountants, attorneys, bank officers, landlords, tenants, friends, and colleagues. Scam artists may engage in "affinity marketing" tactics to attempt to lure people into their fraudulent schemes. Affinity marketing tactics involve scam artists who are, or pretend to be, members of the same racial, religious, social, or other group as their victims. For example, a scam artist may claim to be in the military, and use military terms and mannerisms, in an attempt to befriend someone in the military. Or a scammer may join a church to gain the trust of other members of that church before attempting to defraud them.

Q 6. What are the red flags for detecting a short sale scam?

A REALTORS® and their clients contemplating or engaging in short sale transactions should be aware of the different types of scams (see Questions 9 to 25). In addition, they should be wary when dealing with someone who does any of the following:

• Makes an offer that sounds too good to be true;
• Gives an unqualified promise, such as to obtain short sale approval, stop foreclosure, or other assurances;
• Is unconcerned about the sales price, possession of the property, and other significant terms of sale;
• Is unconcerned about the short sale seller’s financial situation;
• Is involved in a sales transaction where the seller is not the current owner of the property;
• Is involved in a sales transaction where a notice of default has been filed against the property;
• Is involved in a sales transaction under the Home Equity Sales Contract law (see C.A.R.’s legal article athttp://www.car.org/legal/2008articles/home-equity-sales-contracts/);
• Is involved in a sales transaction where the property owner has purportedly given someone an option to purchase;
• Represents that the buyer is an entity (such as a trust or LLC), rather than an individual person;
• Creates more than one sales contract for the same property;
• Asks for the payment of money upfront before providing any service;
• Asks for payment only in the form of cash, cashier’s check, or wire transfer;
• Asks for something to be done immediately without delay;
• Asks for a power of attorney;
• Asks for a transfer of title or an interest in the property outside of escrow;
• Asks for signatures on a grant deed or deed of trust;
• Asks for signatures without giving a lot of time to review the documents;
• Asks for signatures on a document that has lines left blank;
• Fails to provide copies of documents signed;
• Refuses or fails to provide written confirmation of an oral promise;
• Instructs the seller, listing agent, escrow officer, or someone else not to contact the short sale lender;
• Instructs a client not to discuss his or her situation with a housing counselor, banker, accountant, attorney, family, friends, or others;
• Has an answer for everything; and
• Engages in “shop talk” that sounds glib, but doesn’t in fact make sense.

Q 7. What should sellers, buyers, agents, and others do to protect themselves against short sale scams?

A The basic rule is "if it sounds too good to be true, it probably is." In addition to watching out for the red flags in Question 6, affirmative measure to take to protect against scams include, but are not limited to, the following:

• Before doing business with someone, check the legitimacy and qualifications of both the individual person and business entity. Check whether the individual person and business entity are properly licensed (see Questions 26 to 38). Ask for references and check out those references. Also check someone's background, credentials, and reputation. Search the Internet and check public records and trade group memberships. Remember, however, that even if someone has the proper credentials or comes highly recommended, the risk of a scam is less, but is not eliminated entirely.

• Do not panic. Do not make any rash decisions. It’s precisely when your chips are down that you must keep a clear head.

• Before entering into an agreement or arrangement, understand every aspect of what it entails. Read documents carefully and thoroughly before signing. If you do not understand a document or the consequences of a document, seek the advice of an attorney, accountant, or other professional as appropriate. If you do not speak the same language as the person you’re negotiating with, don’t use that person’s interpreter or translator -- bring your own instead.

• Do not sign your name to any false statements or documents with spaces left blank, especially if you’re told that signing will be harmless or inconsequential.

• Get as much information as you possibly can before making a decision. Ask questions. Conduct as much research and investigation as you can upfront. Look into different options and their financial, legal, tax, and other ramifications. Ask for advice and help from trusted family, friends, and professionals if appropriate.

• Always try to stay a step ahead of scam artists. As society comes to know one type of scam, con artists will attempt to catch their victims off guard by devising new schemes. For example, with greater public awareness not to pay upfront for a short sale negotiator’s fee, scam artists may shift to structuring a short sale to include a buyer’s credit to pay the fee.

Q 11. What are the legal problems with a fraudulent short sale flip?

A Depending on the specific circumstances, the legal claims that may be raised a fraudulent short sale flip include, but are not limited to, the following:

• Mortgage Fraud: Sellers, buyers, agents, and others who misrepresent or actively conceal a short sale flip may be liable for, among other things, mortgage fraud, common law fraud, misrepresentation, and unlawful business practices. Under federal law, mortgage fraud includes anyone who knowingly makes a false statement for the purpose of influencing a federally-insured mortgage lender or other financial institution as specified (18 U.S.C. § 1014). A violation of federal mortgage fraud law is punishable by 30 years imprisonment, plus a $1 million fine (18 U.S.C. § 1014). For example, concealing the BC transaction from Seller A’s short sale lender or concealing the AB transaction from Buyer C’s mortgage lender may constitute mortgage fraud, among other things.
• Breach of contract: Sellers, buyers, and agents who make false statements in lenders’ short sale agreements may be liable for breach of contract. For example, in a lender’s short sale agreement, Seller A may falsely certify that the sales transaction is for fair market value, no other offers have been received, and the seller has no hidden understandings or secret proceeds. Those types of false assertions could be grounds for a breach of contract claim against the seller in a civil lawsuit seeking monetary damages or rescission.
• Breach of fiduciary duty: Agents involved in fraudulent short sale flips who fail to exercise due care may be liable to their clients for monetary damages suffered. If, for example, a listing agent both convinces Seller A to sell to Buyer B for $300,000, and facilitates Buyer B’s simultaneous resale to Buyer C for $350,000, the listing agent may have serious difficulty explaining why the seller only deserved the $300,000 Buyer B, not the $350,000 Buyer C procured during the listing agent’s listing period (see also Question 12).
• Licensing Violation: Agents involved in a fraudulent scheme could also face license revocation or other disciplinary action taken by the DRE (Cal. Bus. & Prof. Code §§ 10176 and 10177).
• Other Criminal Violations: In addition to mortgage fraud, illicit short sale flips may expose sellers, buyers, and their agents to other criminal claims, such as perjury (Cal. Penal Code § 118), conspiracy, and aiding and abetting a criminal scheme.

Q 13. How do I do a legitimate short sale flip?

A Legitimate short sale flips may be structured in many different ways. Some factors to consider to help ensure that an AB-BC short sale flip passes legal muster through the judicial process include, but are not limited to, the following:

• How close the sales price for the AB transaction is to fair market value.

• How well the property is listed and marketed to find prospective buyers.

• Whether Seller A and Buyer C are well represented by their own real estate agents, attorneys, accountants, and other professionals as appropriate.

• Whether the parties negotiated an arms-length transaction.

• Whether the different aspects of the transaction, including the profit to be made, are fully disclosed in a meaningful manner to, and approved by, the parties and lenders involved.

• How much time lapses between the close of escrow of the AB transaction and the close of escrow of the BC transaction.

• The extent of repairs, renovations, and improvements that Buyer B makes to the property.

• How much money Buyer B invests to purchase, maintain, repair, renovate, improve, and resell the property.

• Whether the profit Buyer B makes is reasonable under the circumstances, including existing housing market conditions.

• Whether the parties comply with licensing, agency, RESPA, and other laws.

• Whether compliance with these factors is in writing and well-documented.

The above list is an illustrative, not exhaustive list of factors to consider for a legitimate short sale flip. Compliance with all these factors does not guarantee that a short sale flip is legitimate. Similarly, not complying with one or more factor does not necessarily mean, depending on the specific circumstances, that a short sale flip is illegal, as ultimately decided by a judge, jury, arbitrator, or DRE Commissioner.

B. SHORT SALE NEGOTIATOR SCAMS

Q 14. What is a short sale negotiator?

A A short sale negotiator is generally someone who negotiates and facilitates a short payoff with a seller’s mortgage lender. Because short sales often involve very thick short sale packages and frequent attempts to contact the short sale lender, a legitimate short sale negotiator can facilitate and expedite the short sale process. A short sale negotiator can be the listing agent, someone else in the listing office, or someone in another office.

With full disclosure, among other things, hiring and paying for a short sale negotiator is not an illegal activity. However, certain scam artists impersonate or use short sale negotiators in furtherance of their improper and illegal schemes.

Q 15. What are some examples of short sale negotiator scams?

A As with any profession, some short sale negotiators are reputable, legitimate, and qualified to negotiate and facilitate short sales, whereas others are not. Scammers may lure homeowners and their agents into their schemes by promising to expedite the short sale process and obtain approval from the short sale lender. What scammers in fact do include putting together and submitting bogus short sale packages to the short sale lenders (see Questions 20 and 21), performing little or no service (see Questions 24 and 25), or engaging in other wrongdoing.

Some scams revolve around the payment of the short sale negotiator’s fee. A seller’s short sale lender may disapprove payment to a third-party short sale negotiator, so the scammer makes a secret agreement for the seller, buyer, agent, or someone else to pay that fee, usually outside of escrow. As one variation of the scheme, the purchase agreement may indicate that the seller will give the buyer a credit, but a secret agreement is made for the buyer to use that credit to surreptitiously pay the short sale negotiator fee.

For legal claims that may be raised in a fraudulent scheme involving a short sale negotiator, see Question 16.

Q 16. What are the legal problems with unscrupulous short sale negotiator?

A Depending on the specific circumstances, the legal claims that can be asserted against a short sale negotiator scam include, but are not limited to, the following:

• Licensing Violation: Short sale negotiator, short sale facilitators, and other individuals negotiating the short sale with the seller’s lender should generally be licensed by the DRE (see Questions 26 to 33). Furthermore, agents involved in a scam could face license revocation or other disciplinary action taken by the DRE (Cal. Bus. & Prof. Code §§ 10176 and 10177).
• Mortgage Fraud: Sellers, buyers, agents, and others who misrepresent or actively conceal a short sale negotiator fee from a seller’s short sale lender may be liable for, among other things, mortgage fraud, common law fraud, misrepresentation, and unlawful business practices. Under federal law, mortgage fraud broadly includes anyone who knowingly makes a false statement for the purpose of influencing a federally-insured mortgage lender or other financial institution as specified (18 U.S.C. § 1014). A violation of federal mortgage fraud law is punishable by 30 years imprisonment, plus a $1 million fine (18 U.S.C. § 1014). As an example, deliberately waiting until the last minute to insert the short sale negotiator fee into the final HUD-1 Statement may not suffice as a meaningful disclosure to the short sale lender.
• Breach of contract: Sellers, buyers, and agents who make false statements about short sale negotiators in the lenders’ short sale agreement may be liable for breach of contract. For example, if a seller certifies in a lender’s short sale agreement that there are no hidden terms, a secret agreement to pay a short sale negotiator may constitute a breach of contract.
• Breach of fiduciary duty: A short sale negotiator who creates an agency relationship with a seller or buyer and fails to exercise due care may breach his or her fiduciary duty to do what is in the client’s best interest. Additionally, the listing agent or buyer’s agent in a transaction who fail to exercise due care with respect to a third-party short sale negotiator may also be liable to their clients. For example, a listing brokerage attempting to collect short sale negotiation fees to pad its own pocket with no regard for the seller’s best interest may be in breach of its fiduciary duty to the seller. Also, absent the seller’s consent, a listing agent’s refusal to present a buyer’s offer to the seller unless the buyer agrees to pay the short sale negotiator fee may also constitute a breach of the fiduciary duty the listing agent owes to the seller.
• RESPA Violation (HUD-1 Statement): Omitting from a HUD-1 Statement any short sale negotiator charges paid at settlement by either a buyer or seller may violate the Real Estate Settlement Procedures Act (RESPA) (Appendix A to 24 C.F.R. Part 3500). RESPA generally pertains to transactions of one-to-four residential units with a federally-related mortgage loan (12 U.S.C. § 2602(1)).
• RESPA Violation (Unearned Fee): Charging or accepting a short sale negotiator fee without performing any actual service may violate RESPA (12 U.S.C. § 2607(b); see also Martinez v. Wells Fargo Home Mortgage, Inc., 598 F.3d 549, 554 (9th Cir. 2010) (holding that RESPA’s prohibition against unearned fees does not extend to overcharges)). RESPA generally pertains to transactions of one-to-four residential units with a federally-related mortgage loan (12 U.S.C. § 2602(1)).
• Other Criminal Violations: Depending on the circumstances, improper short sale negotiator activities may expose sellers, buyers, and their agents to other criminal claims, such as perjury (Cal. Penal Code § 118), conspiracy, and aiding and abetting in a criminal scheme. Additionally, anyone who pays an unlicensed person for performing licensed activities is guilty of a misdemeanor punishable by a $100 fine (Cal. Bus. & Prof. Code § 10138).

Q 17. How do I check whether a short sale negotiator is legitimate?

A Factors to consider to help ensure that a short sale negotiator is legitimate include, but are not limited to, the following:

• Whether the negotiator and the negotiator’s employing broker if any are both properly licensed with the DRE or registered and bonded as a foreclosure consultant (see Questions 26 to 38).

• Whether the negotiator is qualified to perform short sale negotiation services.

• Whether the negotiator actually performs services to facilitate and expedite the short sale process.

• Whether the negotiator’s fee is fully disclosed in a meaningful manner to, and approved by, the parties and lenders involved.

• Whether the negotiator’s fee is reasonable, based upon, among other things, the negotiator’s qualifications to conduct short sale negotiations and the fee charged by other negotiators.

• Whether the individual paying for the negotiator’s services voluntarily agrees to pay for those services, and is given an opportunity to consult with a real estate agent, attorney, accountant, or other professional as deemed appropriate.

• Whether the negotiator does not get paid until after the negotiator fully completes each and every service the negotiator promises to perform.

• Whether the negotiator complies with agency laws, RESPA, laws against fraud, and other laws and MLS rules.

The above list is an illustrative, not exhaustive list of factors to consider for a legitimate short sale negotiator. Compliance with all these factors does not guarantee that a short sale negotiator is legitimate or qualified. Similarly, not complying with one or more factor does not necessarily mean, depending on the specific circumstances, that a short sale negotiator is a scam artist, as ultimately decided by a judge, jury, arbitrator, or DRE Commissioner.

Q 20. What is a scam involving a short sale package?

A A short sale package scam generally involves intentional misrepresentations made in a short sale package for the purpose of obtaining a short sale lender’s approval. These misrepresentations may be made in the original short sale package submitted to the lender or in subsequent dealings with the lender. Knowing a short sale lender’s general requirements, a scam artist will manipulate the truth to improve the chances that a short sale package will be approved by the lender and the deal will close escrow.

Some of the improper tactics that may be used include, but are not limited to, misstating the truth, making up stories, concealing pertinent facts, submitting false documents, and forging signatures. More specifically, examples of improper tactics involving short sale packages include, without limitation, the following:

• Fabricating a seller hardship and creating bogus supporting documentation, when in fact the seller does not have a hardship that satisfies the short sale lender’s requirements.
• Making a sales transaction appear to be an arms-length transaction, such as using a straw buyer (e.g., a relative with a different last name), when in fact the seller is selling the property to a related person in contradiction of the short sale lender’s requirements.
• Making a property appear to be owner-occupied to improve the chances of a short sale approval, when in fact the property is being rented out to, and occupied by, a tenant.
• Making it appear as if a property has been actively listed for sale in an open market for many months and sold for fair market value, when in fact the sale is a prearranged sale to a straw buyer for a price below fair market value to effectuate the AB sale in an AB-BC short sale flip.
• Making it appear as if the property has been sold in good faith to a buyer for fair market value, when in fact the scammer used improper means to ascertain the lowest price the short sale lender would approve and simply wrote that price into the sales contract.
• Making it appear to the short sale lender that the sales documents are the sum total of the agreement between the seller, buyer, and others, when in fact other arrangements have been secretly made for money to exchange hands (see also Questions 22 and 23).

For a discussion of the legal claims that may be asserted against fraud in short sale packages, see Question 21.

Q 21. What are the legal problems with fraudulent short sale packages?

A Illegal or improper tactics used in a short sale package may give rise to a host of legal claims. Most notably, submitting false information in a short sale package to a short sale lender may constitute mortgage fraud. As discussed above, mortgage fraud is broadly defined to include anyone who knowingly makes a false statement for the purpose of influencing a federally-insured mortgage lender or other financial institution as specified (18 U.S.C. § 1014). A violation of federal mortgage fraud law is punishable by 30 years imprisonment, plus a $1 million fine (18 U.S.C. § 1014).

Depending on the specific circumstances, other legal claims that may be asserted against submitting false information in short sale packages includes, without limitation, breach of contract, common law fraud, RESPA, and perjury. Depending on the extent of a real estate agent’s participation in a scheme, these civil and criminal claims may be raised against the agent, who may also be subject to license revocation or other disciplinary action taken by the DRE.

D. IMPROPER PAYMENTS

Short sale scams often involve the improper payment of money, such as undisclosed payments (see Question 22 and 23) and upfront fees (see Questions 24 and 25).

Q 22. What is a scam involving undisclosed payments in a short sale transaction?

A An undisclosed payment in a short sale transaction involves the payment of money or other things of value without the knowledge of an interested party, such as the seller’s short sale lender or buyer’s lender. The undisclosed payment is typically paid outside of escrow in an attempt to escape the purview of interested parties.

One common scenario is when a short sale seller's senior lender authorizes a payment of, for example, $3,000 to extinguish a junior lien, but the junior lender demands that the buyer or someone else pays an additional $9,000 outside of escrow. Concealing this additional payment from the senior lender may constitute mortgage fraud as discussed above (18 U.S.C. § 1014). Furthermore, omitting from the HUD-1 Statement any charges paid at settlement by either a buyer or seller may violate RESPA (Appendix A to 24 C.F.R. Part 3500).

Another common scenario is when a scam artist uses monetary incentives to lure a seller into participating in a fraudulent scheme. A scam artist may arrange for money to be paid to the seller by the scam artist, buyer, buyer’s agent, listing agent, or someone else. Sometimes the arrangement is simply for the payment of money, whereas other times the payment is presumably for the purchase of the seller’s furniture, for the seller’s moving expenses, or for other reasons. Oftentimes, the payment is made outside of escrow to escape the purview of the short sale lender. Again, this type of undisclosed payment may constitute, among other things, mortgage fraud and a violation of RESPA.

Undisclosed payments may also violate other laws and regulations, and depending on a real estate agent's participation in the scheme, these civil and criminal claims may be raised against the agent, who may also be subject to a breach of fiduciary duty claim, as well as license revocation or other disciplinary action taken by the DRE.
Payments made outside of escrow have other risks and consequences as well. For example, absent the safeguards provided by escrow as a neutral third-party, someone who receives cash outside of escrow could abscond with the money without performing on the sales contract.

Q 23. Why is it problematic for the buyer of a short sale property to pay cash for the seller’s furniture outside of escrow?

A In a short sale scam situation, funds are paid to the seller outside of escrow to conceal that arrangement from the short sale lender. Oftentimes, a scam artist will urge others into a fraudulent scheme by claiming that a payment for the seller’s furniture or similar arrangement need not be disclose to the short sale lender because it is unrelated to the real estate transaction, when in fact it is related. Additionally, such payment directly contradicts a short sale lender’s requirement, if any, for the seller to certify the absence of any hidden arrangements or receipt of funds. If the short sale lender knew that the buyer had, for example, $5,000 for the seller’s furniture, the lender would likely want that money for itself to lessen its own loss.

Q 24. What is a short sale scam involving an upfront fee?

A In this type of scam, the scam artist offers to negotiate with the short sale lender or perform other short sale services in exchange for an upfront fee. Also known as phantom help, the scammer will in reality perform little or no service at all and eventually absconds with the money. Whatever services the scam artist does provide, the scam victim typically could have done on his or her own. The victim ends up not only losing the money, but often loses valuable time to make other short sale arrangements before foreclosure.

To dupe unsuspecting victims out of their money, a phantom help scam artist usually knows exactly what to offer, how to pitch the offer, and what twists to add to lend credibility to the scheme. For example, a scammer posing as a short sale negotiator may guarantee a short sale lender’s approval in two weeks, which may be precisely what a homeowner facing foreclosure wants to hear. To bolster the claim, the scammer may explain that, as a close relative of the loan officer or loss mitigator, the negotiator has special access to an inside track at the bank.

Q 25. What are the legal problems with an upfront fee in a short sale situation?

A The law generally prohibits anyone who negotiates, attempts to negotiate, arranges, attempts to arrange, or offers to perform a loan modification or other form of mortgage loan forbearance, from claiming or demanding any upfront compensation (Cal. Civil Code § 2944.7(a)). This rule, which is likely to encompass short sale negotiations, pertains to loans secured by one-to-four residential units (Cal. Civil Code § 2944.7(d)). This rule will remain in effect until January 1, 2013 (Cal. Civil Code § 2944.7(e)).

The statutory prohibition against upfront fees applies to both real estate licensees and attorneys, among others. Advance fees for real estate licensees are further regulated under Cal. Bus. & Prof. Code § 10026.

III. LICENSING GUIDELINES

In the subprime aftermath, legislative authorities have beefed up regulations protecting consumers against unscrupulous practices. Checking someone’s legitimacy and qualifications to conduct short sale activities should include looking up real estate licenses, and foreclosure consultant registrations if applicable.

Q 32. How do unlicensed scam artists get around the licensing requirements?

A A common tactic used by unlicensed scam artists is to make bogus excuses as to why they do not need a real estate license. Some of the false claims that may be made to justify the lack of a real estate license when conducting short sale negotiation are as follows:

• “I don’t need to be licensed to help the seller negotiate debt forgiveness.”

• “We have an in-house attorney who will negotiate the short sale” (see Question 35).

• “We’re merely processing the paperwork.”

• “I’m negotiating the short sale on my own behalf as the buyer of the property.”

• “Everyone else is doing it.”

Another common tactic is for unlicensed individuals to work for a licensed company. For example, let’s say an unscrupulous and unlicensed individual, John Doe, purports to work for Short Sale Advocates, Inc. doing short sale negotiations. If the client asks for licensing information, John Doe would just show the client that Short Sale Advocates, Inc. is properly licensed, and not reveal to the client that John Doe himself is not but should also be licensed to conduct short sale negotiations through Short Sale Advocates, Inc. John Doe may also not reveal to the client that Short Sale Advocates, Inc. is just a shell company that could be here today and gone tomorrow.

Q 33. What are the penalties for real estate license violations?

A Any person acting as a real estate broker or salesperson without a license is guilty of a crime punishable by six months imprisonment in the county jail, plus a fine up to $20,000 (Cal. Bus. & Prof. Code § 10139). Anyone who pays an unlicensed person for performing real estate licensed activities is guilty of a misdemeanor punishable by a fine up to $100 for each offense (Cal. Bus. & Prof. Code § 10138). Additionally, if a real estate licensee engages in misrepresentations, fraud, dishonest dealings, or improperly pays an unlicensed person, the licensee may be subjected to license revocation or other disciplinary action taken by the DRE (Cal. Bus. & Prof. Code §§ 10138, 10176 and 10177).

B. ATTORNEYS

Q 34. Is an attorney engaged in short sale activities exempt from the real estate licensing requirements?

A It depends. An attorney rendering legal services to a client is exempt from licensing requirements if the attorney is not using or attempting to use the exemption for the purpose of evading the licensing laws (Cal. Bus. & Prof. Code § 10133(a)(3)). Furthermore, when negotiating loans, the attorney exception only applies if all of the following conditions are met:

• The attorney is licensed to practice law in California;

• The attorney renders services in the course of his or her practice as an attorney;

• The attorney is not actively and principally engaged in the business of negotiating loans secured by real property;

• The attorney’s disbursements are not charges or costs and expenses regulated by or subject to the limitations for Article 7 loans (commencing with Cal. Bus. & Prof. Code § 10240); and

• The attorney’s fees and disbursements are not shared, directly or indirectly, with the person negotiating the loan or the lender.

(Cal. Bus. & Prof. Code § 10133.1(a)(5).) As an example, a law firm called Short Sale Legal Services could be a group of attorneys properly licensed by the State Bar of California, but if the firm principally engages in short sale negotiations, a DRE license may also be required.

Q 35. Can someone circumvent the licensing requirements by affiliating or associating with an attorney?

A No, in most cases. REALTORS® and their clients should be wary of people who claim that their affiliation or association with an attorney enables them to practice real estate without a license.

One common scenario is someone working for a short sale business enterprise who claims that neither the individual nor the company need to be real estate licensees because they have an in-house attorney or an affiliation with an attorney or law firm for negotiating short sales with the sellers’ lenders. In truth, however, an individual person or short sale business is not exempt from the real estate licensing requirements merely because that person or business is affiliated or associated with an attorney or law firm. Furthermore, attorneys and law firms are not exempt from the real estate licensing requirements unless certain parameters are met (see Question 34). Another common problem with these types of arrangements is, among other things, attorneys and law firms are generally prohibited from “fee splitting” or sharing legal fees with non-attorneys (Cal. Rules of Prof. Conduct Rule 1 320(A)).

C. FORECLOSURE CONSULTANTS

Q 37. What is a foreclosure consultant?

A A foreclosure consultant is an individual who provides, or offer to provide, foreclosure-related consultation services, such as helping certain homeowners stop or postpone a foreclosure sale, or obtain any forbearance from a lender (Cal. Civil Code § 2945.1(a)). The foreclosure consultant law generally pertains to properties that are owner-occupied with one-to-four residential units and an outstanding notice of default recorded (Cal. Civil Code § 2945.1(f)).

Foreclosure consultants are strictly regulated under California law. They must be bonded and registered with the California Department of Justice (Cal. Civil Code § 2945.45). They must have written service contracts (Cal. Civil Code § 2945.3). They cannot, among other things, collect an upfront fee, take a power of attorney, or take a lien on real property (Cal. Civil Code § 2945.4).

Real estate agents are generally exempt from the foreclosure consultant law (Cal. Civil Code § 2945.1(b)(3)).

For more information about Foreclosure Consultants, C.A.R. has a legal article entitled Foreclosure Scams and the Foreclosure Consultant Law, available for members at http://www.car.org/legal/2008articles/foreclosure-scams/.

Q 38. How do I determine whether a foreclosure consultant is properly registered with the California Department of Justice?

A To check whether a foreclosure consultant is properly registered with the California Department of Justice, look up the person’s name at http://ag.ca.gov/loanmod/index.php.

IV. ADDITIONAL INFORMATION

Q 39. To whom should a short sale scam be reported?

A The following is a list of government enforcement agencies and other organizations for reporting fraud activities. Some of these agencies and organizations are also excellent resources for obtaining more information about short sale fraud.

Office of the Attorney General
California Department of Justice
Attn. Public Inquiry Unit
P. O. Box 944255
Sacramento, California 94244-2550
(916) 322-3360
(800) 952-5225 (in California only)
http://ag.ca.gov/consumers/general.php (For filing consumer complaints)

California Department of Real Estate
P. O. Box 187000
Sacramento, California 95818-7000
(916) 227-0864
http://www.dre.ca.gov/cons_complaint.html (For filing consumer complaints)
http://www.dre.ca.gov/cons_alerts.html (Consumer alerts)

State Bar of California
180 Howard Street
San Francisco, California 94105
(800) 843-9053 (Attorney Complaint Hotline)
http://www.calbar.ca.gov/Attorneys/LawyerRegulation.aspx (For filing complaint)

Federal Bureau of Investigation (FBI) Headquarters
J. Edgar Hoover Building
935 Pennsylvania Avenue, NW
Washington, D.C. 20535-0001
(202) 324-3000
Or contact your local FBI field office
https://tips.fbi.gov/ (FBI tips and public leads)

Department of Housing and Urban Development (HUD) Headquarters
HUD Office of Inspector General Hotline (GFI)
451 7th Street, SW
Washington, D.C. 20410
(800) 347-3735
Or contact your local HUD field office
http://www.hud.gov/offices/oig/hotline/ (Office of Inspector General hotline)

Federal Trade Commission
Consumer Response Center
600 Pennsylvania Avenue, NW
Washington, D.C. 20580
(877) 382-4357
http://www.ftc.gov/ftc/contact.shtm

Better Business Bureau
The Council of Better Business Bureaus
4200 Wilson Boulevard, Suite 800
Arlington, Virginia 22203-1838
Contact your local bureau
http://www.bbb.org/

Q 40. Where can I obtain more information about short sale scams?

A Some of the agencies and organizations listed in Question 39 are good resources of short sale scams. Additional resources are available as follows:

• DRE’s Consumer Alert: Warning Regarding Residential Short Sales, available athttp://www.dre.ca.gov/pdf_docs/ca/ConsumerAlert_ShortSales.pdf.

• DRE’s Short Sales – An Overview and Warning to Real Estate Licensees Re: Fraud, and Legal and Ethical Minefields, available at http://www.dre.ca.gov/pdf_docs/Article_ShortSales03_2010.pdf.

• DRE’s Update to DRE Issued Consumer and Industry Alert(s) Regarding Short Sales Fraud, and Related Issues (September 2010), available at http://www.dre.ca.gov/pdf_docs/Article_ShortSales03_2010.pdf.

• Fannie Mae’s Mortgage Fraud Program, available at https://www.efanniemae.com/utility/legal/antifraud.jsp.

• Freddie Mac’s Mortgage Fraud Prevention is at http://www.freddiemac.com/singlefamily/preventfraud/

• Freddie Mac’s Emerging Fraud Trends: Short Payoff Fraud available athttp://www.freddiemac.com/singlefamily/news/2010/0412_payoff_fraud.html

Comptroller of the Currency - Insight into how our Government is TRYING to help us?

2011-09-20T20:54:00.000-07:00

Remarks By
John Walsh
Acting Comptroller of the Currency
Before
The American Banker Regulatory Symposium
Washington, D.C.
September 19, 2011

Good afternoon. Thank you, Rob, for that kind introduction, and thank you for inviting
me to participate in this important symposium. Many months ago, when I agreed that the OCC
would participate in this program, I did so with confidence that a new Comptroller of the
Currency would be nominated and confirmed, and I would never have to write a single word to
say to this audience. But the process did not work quite as I anticipated and here I am.
I expected the role of acting Comptroller to be measured in months, but I have now
started my second year – and a challenging and surprisingly controversial year it has been. It is
an interesting experience to pass from anonymity to notoriety overnight.
For all the challenges of my now extended tenure, I do expect to turn over the OCC in
good condition to the next Comptroller. The pending nominee, Tom Curry, is someone with
whom I have had the pleasure of working on the board of the FDIC for the last year, and he
brings long experience in bank supervision to the job. I wish I could assure him that the road
ahead will be smooth and free of bumps, but of course that wouldn’t be true. As an FDIC board
member, he knows full well that we are continuing to work our way through the worst financial
crisis of our lifetime, and a very stubborn economic downturn. And as Comptroller, he will be
1 dealing with these broad challenges as well as the unique set of issues as the chief prudential
regulator of the nation’s largest banks.
Among the issues that will be front and center for the new Comptroller are mortgage
foreclosures and mortgage servicing. Although the OCC is not the only agency addressing these
issues, we do have substantial responsibilities for them. Federally chartered servicers handle
two-thirds of the nation’s mortgage loans, and as you know, we are in the midst of implementing
a set of enforcement actions that are among the most complex and most significant of any that
the OCC has ever initiated. So, I’d like to spend my time today talking about foreclosures and
servicing. I’ll provide an update on where we are with respect to our enforcement actions, and
I’ll offer a glimpse of the future for the servicing business.
It’s hard to overstate the importance of the foreclosure and servicing issues. They are a
major drag on the struggling housing industry, and a well-functioning housing sector is vital to
the health of local communities and our national economy. Recovery in the housing sector
would move us a long way toward achieving a sustained economic recovery, but it’s hard to
imagine the housing sector recovering until we work through the mortgage modification process,
address the large back-log of foreclosures, and restore a fair and functional foreclosure process in
the housing market.
These are matters of particular concern to me as Comptroller because the mortgage
business has always been a big part of the OCC’s portfolio, and it has assumed even greater
importance with the integration of the OTS’s responsibilities for federal thrift supervision into
the OCC. The thrift industry came into being to support home ownership, and while thrifts have
gotten involved in many areas of consumer lending over time, mortgage lending remains their
major focus.
2 The improper practices in foreclosure processing and mortgage servicing that have come
to light have major safety and soundness implications for banks, in addition to their financial
consequences for troubled homeowners and the economy. They have had a very damaging
effect on the reputation of the institutions involved; in fact, on the reputation of the industry as a
whole. Loss of a home through foreclosure is a financial and personal tragedy for a family; and,
the widespread foreclosures taking place can create economic blight for a community. It is
unfortunately true that significant numbers will face the loss of their homes in the current
economic environment, but it must also be true that troubled borrowers can expect to be treated
fairly and afforded every protection provided under the law. I am confident that our enforcement
actions will do just that: ensure that at-risk borrowers get a fair chance to stay in their homes,
while assuring that those who do find themselves in foreclosure receive appropriate protection
and due process under the law.
I am proud of the excellent work done by our staff in these enforcement actions, but if
confidence in the system is to be restored, it is also important that the full extent of the actions
we are taking is well understood by the public. That has not been the case, in part, because this
is a large and complex undertaking that can’t all be completed at once.
When we announced the actions, I said they were intended to fix what was broken,
compensate those who were harmed, and, where appropriate, assess penalties for abuses. We are
doing just that. We have directed servicers to undertake major systems and processing
improvements that will be quite expensive to implement. And servicers must provide restitution
or other forms of remediation to borrowers who have suffered financial harm, with no limit on
total cost.
3 All of this takes time, and the full effect, full cost, and full benefit of remediation will be
known only at the end. Not knowing what all of this will ultimately cost means we haven’t been
able to announce a big dollar figure to capture the severity of our enforcement actions.
Engagement letters and action plans are the critical steps in resolving the foreclosure processing
mess, but they lack the sex appeal of a big dollar settlement or the sound bite that summarizes
the process in a word or two. Since it is not a story that lends itself to easy synopsis, I’d like to
spend a few minutes highlighting its key elements.
First, the scope of the enforcement actions that we took in April is very broad and
comprehensive, and I think that’s been poorly understood. Looking at the details of the
foreclosure review, the enforcement orders tackle a large number of problems that need to be
fixed. While “robo-signing” has become a shorthand for the broken process, these orders go far
beyond just fixing “robo-signing” of documents. They address the entire system of controls that
must be in place to ensure that those practices don’t occur in the first place.
The orders ensure accountability. They were signed by each member of the board of
directors at each of the banks, and each servicer was directed to establish a compliance
committee including at least three of its directors, each of whom is accountable to the OCC and
the Fed for the oversight and implementation of the corrective actions required by our orders.
The scope of compliance responsibilities that this committee is accountable for is extensive, and
failure to deliver effective compliance can carry personal consequence for directors, as well as
for the servicers.
The orders also raise the bar for the oversight and management of third-party service
providers who process loss mitigation applications and foreclosures, and manage acquired
properties, including law firms that provide services and counsel for all of these processes. You
4 can delegate and outsource the work, but you can’t outsource the responsibility for ensuring the
work is carried out in a safe and sound manner.
Because of the complexity of these processes and the amount of detail involved in every
mortgage serviced by these large companies, our orders also require significant enhancement to
the management information systems used by these companies. Of course, reliable MIS is a
basic requirement for doing the business of banking. But the reality is that the rapid
consolidation of the industry meant that very large firms often had multiple systems performing
servicing and loss mitigation functions, and the integration and functionality of these systems did
not always keep pace. That is a criticism, not an excuse, but it is a fair description of how things
evolved that must now be fixed under our enforcement actions.
Improving accountability, third-party oversight, and information systems won’t fix the
problem unless the basic standard of mortgage servicing is reformed. Consequently, we targeted
several aspects of these standards and practices that posed the greatest risk to the process. For
example, we are requiring servicers to establish a single point of contact for borrowers and to
establish procedures to end dual tracking: that is, to ensure foreclosure actions stop when a
borrower is approved for a trial or permanent modification.
All of the steps I’ve described thus far are aimed at ensuring the process works going
forward – the “fixing what’s broken” piece. But for homeowners who ended up in foreclosure,
the critical issue is whether they were financially harmed due to servicer deficiencies, errors or
misrepresentation and, if they were, what kind of restitution should be provided. That is the
most ambitious and complex aspect of our enforcement actions – the independent foreclosure
review.
5 This independent review sets out to identify borrowers who suffered financial injury as a
result of errors, misrepresentations, or other deficiencies in the foreclosure process. The scope of
this review includes any mortgage serviced by these companies on a borrower’s primary
residence that was in any stage of foreclosure between January 1, 2009 and December 31, 2010.
So we are looking not just at those foreclosures that resulted in foreclosures sales, but at
foreclosures that were pending at any point in that period. They could have been cancelled or
still pending, given how long foreclosures take today: nearly four and a half million mortgages
are in that total pool, each with its own special facts and circumstances.
In our initial examination of this problem, we looked at a sample of 200 loans at each of
the 14 institutions – enough to make a judgment about whether enforcement actions were
justified, but not nearly enough to answer all questions. Foreclosure file reviews conducted by
examiners were very labor intensive, and this phase of the process took about three months to
complete. The banking agencies certainly don’t have the examiner and legal resources to expand
our file reviews to identify financial injury or harm in this huge potential population of
foreclosures. So a basic requirement we placed on the servicers at the outset was to devise a
comprehensive process that could provide an independent review of a large number of
foreclosure cases, determine if there was any harm to the borrower, and provide restitution
where appropriate.
We had begun defining an acceptable process even before we issued the enforcement
orders in April: independent consultants and law firms to advise them would have to be hired to
administer the review under our direction; a comprehensive complaint process for borrowers to
submit claims was deemed a critical and necessary component of the foreclosure review; and
sampling was greatly expanded to help catch foreclosure cases with potential for financial injury.
6 These elements are reflected in the engagement letters developed by the independent consultants
and submitted by the servicers.
We have coordinated with the Department of Justice throughout this process, and as you
know, we agreed to delay submission of the action plans by 30 days to allow time for additional
coordination with the states. We continue to work with the Department of Justice and other
federal and state regulators to harmonize new mortgage servicing standards. I continue to
believe that we will be able to harmonize the mortgage servicing requirements in our orders with
those of other regulators if and when they are reached. In fact, I think it is absolutely essential
that we do so.
Since the submission of plans in July, we have been working with the servicers and
independent consultants to refine the plans so that the reviews meet our high expectations. The
independent foreclosure review was the most public and highly anticipated aspect of our orders,
so it was especially important to get it right. For example, we set detailed expectations for the
sampling process. The foreclosure population is being divided into targeted segments to identify
foreclosure cases that have the highest potential for financial injury. In some cases, independent
consultants will be reviewing hundreds of thousands of case files for just one servicer. Sampling
can be an extremely useful tool for identifying errors in a large population, but it is only a
starting point that may require more thorough investigation if issues are identified.
As we explored the best means of ensuring that injured homeowners had the opportunity
to seek relief, it became clear that what was needed was a robust, transparent, and accessible
complaint process that will give borrowers the opportunity to request an independent foreclosure
review. I’m happy to say in the next several weeks you’ll see the roll out of just such a process.
7 Homeowners who faced foreclosure of their primary residence will be able to request a
review of their case if they believe they suffered financial injury as a result of errors,
misrepresentations, or other deficiencies in the foreclosure process between January 1, 2009 and
December 31, 2010. Affected borrowers in this timeframe will be contacted through direct
mailings and other tracing techniques. The independent consultants will also launch a
coordinated advertising campaign to help contact borrowers who cannot be reached through
direct mailings or other means.
Rather than instituting 14 different servicer processes, which would surely be a source of
confusion for homeowners, we insisted that all of the independent consultants use a single claims
processing vendor that will provide common intake forms, a single Web site, and a common
phone number for eligible individuals who want a review of their case. We expect this process
to kick off in the next few weeks. Individuals seeking a review will be able to go to a Web site
and either file a request for review online or ask for a form that can be filled out and submitted
by mail. There will be a toll-free number for individuals who need assistance filing their request
or who want to ask questions about the review.
I know that many who went through foreclosure in recent years emerged pretty jaded by
the confusion and inefficiency of the experience, so I’d like to explain just what they can expect
if they request review of a foreclosure on their primary residence during the review period. First,
their case will be reviewed by an independent consultant to identify financial injury or harm
under the terms of the OCC’s enforcement orders. If the consultant identifies cases of financial
harm, servicers will be required to develop a remediation plan and make appropriate restitution.
Remediation plans are subject to OCC and Federal Reserve approval.
8 Everyone who asks for a review of their case will receive confirmation that the request
has been received, and they may be asked for additional detail and information. While the
reviews are independent, the servicer will provide relevant documentation related to the case and
may be asked to clarify or confirm facts and disclose reasons for decisions made or actions taken
during the process. At the conclusion of the review, which will take several months, a letter will
be provided explaining the outcome, and providing information about restitution where
appropriate.
The nature and severity of any financial injury will be case specific, so remedies could
vary substantially. Remediation and restitution will not be approached as a one-size-fits-all
proposition. It will depend on the facts of the individual case and that requires thorough and
careful consideration, as well as a strong quality control process to ensure each institution is
treating cases of financial harm in a consistent way.
The OCC expects independent consultants to employ a robust quality assurance process,
and our examiners will review and assess this process on a continuing basis. If we find material
issues, we will require prompt corrective action. To ensure consistency, we issued guidance on
financial injury, and instructed the independent consultants to use it.
Our enforcement actions require independent consultants to develop a Foreclosure
Review Report identifying financial injuries with recommendations for remediation. We will
review these reports individually, and we also plan to conduct a horizontal review of the reports
to ensure there are no material inconsistencies. These reports will be used by servicers to
develop and submit the remediation plans required by our orders.
While I wish that there was a faster way to address the problems, provide relief, and
restore the smooth functioning of the housing market, the fact is that this process will take some
9 time to complete. Then there are the other federal enforcement actions and negotiations with
state AGs, private lawsuits over foreclosures and securitizations, and an extensive agenda of
rulemaking in the mortgage area that will further cloud the industry’s outlook for some time to
come.
While it may seem hard to be optimistic in the near term, we are focused on putting the
process right for the long term by establishing uniform national mortgage servicing standards
that apply to all mortgages and protect all borrowers. We have already begun this effort, and are
working with the Fed, the FDIC, the FHFA, and the CFPB on new and comprehensive standards.
In fact, our enforcement actions have already set some of the standards that will be part of an
eventual package, including the ban on dual tracking and the requirement for a single point of
contact. So we are well on the way.
The challenges before us are substantial, but we have taken substantial steps to resolve
them. The path to recovery will be longer than anyone would like, but we are clearing the path
forward and finding ways to settle outstanding issues as quickly as possible so as to restore
confidence in the system and respect the needs of all who have suffered in the process.
Thank you.
10

Chapter 7 or Chapter 13 Bankruptcy.... What's the Difference?

2011-09-08T11:15:00.000-07:00

Dear Readers:

As you know there are two types of bankruptcy which are relevant to most consumer debtors. Those are Chapter 7 which is considered a financial mulligan, start over, start fresh (Yes David you can still keep your House, your Car, your Boat and the Helicopter!). A Chapter 13 is a reorganization.... essentially, you need some time due to get caught up without being penalized. This information is not intended to constitute legal advice, it is purely for entertainment purposes. Always consult with a lawyer who is in your community to know how much of this applies to you!

With that being said, there are advantages and disadvantages of both Chapter 7 and Chapter 13. Under Chapter 13 the Debtor will make regular payments on a plan to pay all or part of the debts. Under Chapter 7 there is no plan to repay creditors and all debts that are “dischargeable” are simply liquidated. The absence of regular payments is a powerful inducement for many Debtors, which may explain why there are more Chapter 7 cases than Chapter 13 cases. Under Chapter 7 a Debtor will generally lose “non-exempt” property, while under Chapter 13 Debtors are normally able to keep both “exempt” and “non-exempt” property. Of course, this is of no concern if a Debtor has little or no property or only property which is “exempt” - moreover, the exemptions have been liberalized over the years and many Debtors keep property of significant value.

A Chapter 13 discharge is also broader than a Chapter 7 discharge in that it covers certain types of debts not “dischargeable” under a Chapter 7. However, the 2005 Bankruptcy Law did add several categories of debts that are no longer dischargeable in a Chapter 13. The debts dischargeable in a Chapter 7 are discussed below. All Debts dischargeable under Chapter 7 are also dischargeable under Chapter 13, but several categories of debts can be discharged in a Chapter 13 but not under a Chapter 7 such as debts for willful and malicious injury to property, debts incurred to pay non-dischargeable tax bills and certain debts arising from property settlements in divorce of marital separation cases.

Secured debts, even when the Debtor is behind on payments, can be handled in a Chapter 13, giving the Debtor additional time to come up with money to save the secured property. Chapter 13 can also be used to protect co-signers, who cannot be protected through a Chapter 7.

Is it more difficult for someone to file bankruptcy? Under the new law Chapter 7 or Chapter 13 will make it easier for some people to file and harder for others. We discuss many of the advantages and disadvantages below. The new law was a major revision and space does not permit a discussion of all the changes. However, there are some new requirements for credit counseling and debtor education which
will affect almost everybody. The Debtor must file a certificate of completion of credit counseling. Average pre filing counseling typically requires about 90 minutes (actual time may vary). This requirement may be waived in only a limited number of circumstances. A list of the agencies offering such briefing can be found in the Appendix at the end of this document. The Debtor must also prove completion of a financial management course before a discharge is granted. It may be possible to take this course over the telephone and will last at least 2 hours. The new law also requires the filing of the Debtor’s tax return or transcript and some of the Debtor’s pay stubs may have to be filed as well. The Debtor will have to provide proof of identity and certain financial records, if requested.

CHAPTER 7 - DO NOT USE THIS CHAPTER TO STOP A FORECLOSURE SALE!

What is Chapter 7? Chapter 7 is the most popular type of bankruptcy. It is a legal proceeding in a special federal court, the United States Bankruptcy Court. At the end of this proceeding, certain debts are said to be discharged. [11 U.S.C. §727]. “Discharged” means, among other things, that the Debtor no longer has to pay the debt. However, not all debts are dischargeable under Chapter 7. Most Chapter 7 cases are “no assets” cases. In a no assets case, none of the assets of the Debtor are used to pay creditors. Assets are unavailable to pay creditors if they are already encumbered by liens at least equal to the value of the asset. An asset is unavailable if it does not become part of the bankruptcy case — many, but not all, pensions may
fall into this category. Also, an asset is unavailable if the Debtor is able to claim it is “exempt”.

How does Chapter 7 protect Debtors? As soon as a bankruptcy is filed a Debtor is protected by a part of the Bankruptcy Code called the “Automatic Stay”. [11 U.S.C. §362]. YES David, this means that the foreclosure sale cannot go forward provided that you file your bankruptcy BEFORE the sale with enough time to GIVE CREDITOR NOTICE that you have filed. In California this means well before 8:00 a.m. the day of a sale. If you want to make sure your house doesn't go to sale PLEASE FILE THE DAY BEFORE!!!! However, if you use this Chapter 7 to stop the sale, you put yourself at risk of losing your home if you cannot pay back everything you are behind immediately or if you do not get a loan modification!

This stay functions as an Order or injunction from the Bankruptcy Court and can be enforced by proceedings in the Bankruptcy Court. The stay stops most legal proceedings against the Debtor. The Automatic Stay prohibits almost all attempts to collect debts owed by the Debtor while the bankruptcy is pending. Most Chapter 7 cases will remain pending for three to four months.

The 2005 Bankruptcy law created some new exceptions to the Automatic Stay, for the most part dealing with serial filers of repeat bankruptcies, and some actions against tenants involved in eviction actions. The law also changed to permit certain actions such as setoffs of tax refunds and withholding of wages to repay loans from retirement funds. Therefore you MUST CONSULT an Attorney, if you are filing another bankruptcy there may be no automatic stay in place. So protect yourself by knowing your rights.

The Automatic Stay provision is a very important part of the Bankruptcy Code. It can be even more important than the discharge of debts. It will stop harassment by creditors over the phone or by letter. And it can be used to stop, at least temporarily, a foreclosure and give a Debtor more time to come up with a mortgage arrearage. However, this protection is not absolute. For instance, a secured creditor who is found to by the Bankruptcy Court to be inadequately protected can be granted permission to repossess or foreclose on secured property. In most cases the Automatic Stay expires when the debts of the Debtor are discharged. The discharge provisions of the Bankruptcy Code will then generally prohibit almost all attempts to collect debts which have been discharged. However, after the discharge, creditors will be free to pursue debts which have not been discharged and debts which have been reaffirmed.

Who qualifies for Chapter 7? Any person who resides in the United States, or is domiciled here or who has business or property in the United States can be a Debtor under Chapter 7. [11 U.S.C. §109]. NOTE you DO NOT NEED TO BE A US CITIZEN! A special exception to this rule prohibits some people whose bankruptcy case was involuntarily dismissed in the previous 180 days from refiling. A person who has received a discharge in another Chapter 7 (or Chapter 11) case filed within the preceding 8 years cannot be granted a Chapter 7 discharge. [11 U.S.C. §727(a)(8)]. Also, a Chapter 7 discharge cannot be granted to someone until 6 years after a Chapter 13 discharge.
The 2005 Bankruptcy Law created an additional barrier for some who seek Chapter 7 protection. A presumption of abuse is created unless a Debtor can meet a new means test. This change will not affect most people who wish to file a Chapter 7 case. A “safe harbor” is created if a Debtor’s income is below the statewide median income for the Debtor’s family size. Please check with an attorney to see what your limits may be.

However, do not despair, even a Debtor with income over the median may still qualify by demonstrating an
inability to repay creditors. In this case, IRS standards for various normal expenses such as food, clothing, personal care, etc. are compared to the Debtor’s income. Deductions of standard amounts from IRS tables are permitted for transportation. Other necessary expenses from the IRS list of necessary expenses may also be deducted. These expenses include costs as child care, alimony, medical/dental care, expenses to avoid being a victim of domestic violence, taxes, or support of elderly and disable family members and various other expenses. Obviously, if your income is over the statewide median, your attorney may have to help you determine if a Chapter 7 filing is feasible.

Being able to file does not mean it is advisable to file under Chapter 7. A person who has substantial bills that are not dischargeable often will not benefit from Chapter 7. A person who owns substantial assets that would not be exempt may not benefit unless the debt that could be discharged would be substantially in excess of the assets that would be lost. Also, the Court may dismiss the case of someone who could repay a substantial portion of his or her debt within a reasonable time it found the case amounted to an abuse of Chapter 7. There are other instances in which the filing of a Chapter 7 case would not benefit a Debtor. It is important for people to seek competent legal advice before filing a bankruptcy petition.

How much does it cost to file a Chapter 7 Bankruptcy? The filing fee for a Chapter 7 case is $299. While it is possible for a Debtor to file without the help of an attorney or professional preparer, unassisted “pro se” filings are unusual. Since added requirements of the new Bankruptcy Law mean much more work and responsibility for the lawyer, attorney fees have gone up recently. The amount charged for attorney fees normally reflects the difficulty of the case. Such factors as a large number of creditors, a debtor engaged in business or a unique legal situation requiring additional legal research will normally increase the attorney fee.

What property will a Debtor lose in a Chapter 7 case? In most Chapter 7 cases, the Debtor does not lose any property. The Debtor is allowed to keep all property that does not become part of the bankruptcy estate or that is exempt. The Debtor’s attorney first divides the property into various classifications such as the Debtor’s homestead, household goods or tools of the Debtor’s trade. The value of property in each classification is then determined. It is sometimes difficult to figure the exemptions a Debtor is entitled to.

In California there are two sets of exemption codes which basically break down to whether the Debtor has a home with equity or without equity. There are many factors which go into determining which set of California exemptions will apply. Additionally, in some instances California Debtors qualify for using some Federal exemptions. You practically need an attorney to really figure out what can be exempted. If you don't own much, more than likely you won't need an attorney to do a Chapter 7 bankruptcy. If you are contemplating a Chapter 13, I strongly suggest you hire a bankruptcy attorney. All these exemptions all have various limitations and are broad categories often requiring more exact definitions. Ask your lawyer about any property you are concerned about.

Finally, valuation of property is sometimes a problem. The current value of the property is used, not the value of the time of purchase or at some future date when the Debtor might sell. Also, only the Debtor’s interest in property is valued. If the Debtor owns property along with someone else, only the Debtor’s part is valued. Also, if there is a lien on property the Debtor’s interest in the property is reduced by the amount of the lien. For instance, the Debtor’s interest in a home with a market value of $100,000 and a mortgage of $90,000 is $10,000. If the amount of the lien is greater than the property the Debtor may elect to keep the property but it may be in the Debtor’s interest to give up the property (see the next section).

Liens and Secured Debts. Secured creditors are those protected by a lien or mortgage against the Debtor’s property (often referred to as the “collateral”). Secured creditors have an interest in a specified item of property in the amount of their lien. A secured creditor will generally be permitted to repossess or foreclose on the secured property unless the Debtor elects to retain the property and reaffirm the debt. If the Debtor reaffirms the debt, the secured creditor will be allowed to retain its rights to the collateral but the Debtor will be permitted to retain the property subject to the terms and conditions of the security agreement. In some cases the amount of the lien will exceed the value of the collateral. In many of these cases the Debtor will want to return the property to the secured creditor and discharge the debt. In some cases a Debtor may
wish to retain collateral even though the amount of the lien exceeds its value. This situation may be somewhat more complicated and Debtors are advised to seek their lawyer’s advice.

What debts can be discharged in a Chapter 7 case? All debts are discharged unless they are excepted from discharge by a section of the Bankruptcy Code. [11 U.S.C. §523] The major EXCEPTIONS TO DISCHARGE are these:
1. Some Income Taxes. See your attorney to figure out which ones. Old Income taxes may be dischargeable!
2. Debts for money, property or related to the extension, renewal or refinancing if procured through false pretenses, false representations or fraudulent financial statement; included are certain debts for luxury goods or services within 90 days before the bankruptcy was filed or certain cash advances within 70 days before filing; Note that some lenders will go back up to one year asking for you to pay them.
3. Unlisted debts, if the failure to notify the creditor prevented the creditor from filing a claim or objecting to the discharge of the debt.
4. Debts for fraud or embezzlement by a Debtor in a position of trust;
5. Most domestic support obligations (including alimony, spousal maintenance or child support);
6. Debts for willful and malicious injury by the Debtor;
7. Fines, penalties or forfeitures owed to a government;
8. Student loans and educational benefits, unless the debt poses an undue hardship on the Debtor and Debtor’s dependents; This requires a lawsuit to get ride of this debt. IT CAN BE DONE.
9. Debts for death or personal injury caused by the Debtor’s use of a motor vehicle while intoxicated by alcohol, a drug or other intoxicant;
10. Debts which were or could have been listed in a previous bankruptcy and which were not discharged;
11. Certain debts owed to a spouse or ex-spouse arising in a divorce or separation - in these cases the Bankruptcy Court weighs various equities to determine whether the benefits of discharge to the Debtor outweigh the detrimental consequences to the spouse or ex-spouse;
12. Certain fees or assessment connected to membership associations related to the Debtor’s interest in his or her dwelling;
13. Debts incurred to pay non-dischargeable state or local taxes;
14. Federal election law fines and penalties;
15. Property settlements owed to a former spouse or to a child;16. Condo or homeowner’s association fees;
17. Certain fees imposed on prisoners by a court.
18. Loans on pensions; and
19. Certain debts arising from securities violations or wrongful acts of a fiduciary.

Objections to discharge. In addition to objecting to discharge of a given debt, a creditor may also object to the grant of a discharge to the Debtor. These cases are fairly rare. The most common grounds for objecting to discharge are [11 U.S.C. §727]:

1. Intentional concealment, transfer or destruction of property by the Debtor;
2. Failure to keep books or financial records;
3. Dishonesty in connection with the bankruptcy;
4. Unexplained loss of assets of the Debtor;
5. Refusal to cooperate, obey court orders or to testify in a bankruptcy proceeding;
6. The Debtor has been involved in prohibited transactions with insiders (persons closely related to the Debtor);
7. A prior discharge was granted to the Debtor in another Chapter 7 case within eight years; and
8. A prior discharge was granted to the Debtor in a Chapter 13 case within six years - but a discharge may be granted if more than 70% of the unsecured claims were paid and the Debtor made a good faith best effort to pay creditors in the Chapter 13 case.

Moreover, once granted a discharge may be revoked if the Debtor obtained his or her
discharge through fraud and the party requesting revocation was unaware of the fraud prior to the
discharge or if the Debtor fraudulently failed to report the acquisition of property that may have
been part of the bankruptcy estate.

In Part II of this series of articles, I will tell you more about Chapter 13. Stay tuned!!!

THERE IS NO MISSING NOTE THEORY IN CALIFORNIA!

2011-08-04T15:04:00.001-07:00

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)

City of Los Angeles Foreclosure Registry

2011-08-01T15:13:00.001-07:00

ARTICLE 4
FORECLOSURE REGISTRY PROGRAM

(Article Added by Ord. No. 181,185, Eff. 7/8/10.)
Section

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.

SEC. 164.00. TITLE.

This article shall be known as the City of Los Angeles Foreclosure Registry Program.

SEC. 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.

SEC. 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.

SEC. 164.03. RECORDATION OF TRANSFER OF LOAN AND/OR DEED OF TRUST AND/OR ASSIGNMENT OF RENTS.

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.

SEC. 164.04. REGISTRATION OF PROPERTIES IN FORECLOSURE.

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.

SEC. 164.05. MAINTENANCE AND ENFORCEMENT OF MAINTENANCE REQUIREMENTS.

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.

SEC. 164.06. MAINTENANCE OF VACANT PROPERTIES AND ENFORCEMENT OF VACANT PROPERTY MAINTENANCE REQUIREMENTS.

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.

SEC. 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.

SEC. 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.

SEC. 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.

Its really hard to tell a good lie... A lesson for Loan modification professionals and bankruptcy attorneys alike....

2011-07-26T16:26:00.000-07:00

Dear Readers:

The following case is quite instructional. I tell people all of the time, if you file a bankruptcy you better make sure that the figures closely match what you submitted in your loan modification package. Because it does not, you could get caught committing loan fraud or bankruptcy fraud. In the case below, a borrower asked for a loan modification and was required to submit tax returns (or easily could have been that they signed a 4506T). When the Tax Returns did not reflect the amounts stated in the original loan application, the borrower was BUSTED!!!! As I say it is very hard to tell a good lie. The consequences can be devastating. If you are going to apply for loan modification, bankruptcy, shortsale or any other foreclosure relief defense, make sure you hire an attorney who can coordinate all of the facts and figures so that you are not brushing up against potential civil and or criminal liability for mortgage fraud. ITS WORTH to hire an attorney. Many attorneys offer reasonable rates and easy payment plans. Don't short change yourself because you think you can't afford an attorney. You can afford to go to jail even less!!!

Call us, we are here to help!

Best regards
R. Grace

Not Officially Published

(Cal. Rules of Court, Rules 8.1105 and 8.1110, 8.1115)

2011 WL 591339

Only the Westlaw citation is currently available.

California Rules of Court, rule 8.1115, restricts citation of unpublished opinions in California courts.

Court of Appeal, Second District, Division 7, California.

YOUNG AMERICA MORTGAGE CORP., Defendant and Appellant,

SUPERIOR COURT of the County of Los Angeles, Respondent,

ING Bank, FSB, a Delaware corporation, Plaintiff, Respondent and Real Party in Interest.

No. B219955.(Los Angeles County Super. Ct. No. BC398236).

Feb. 22, 2011.

APPEAL from a judgment of the Superior Court of Los Angeles County. Elizabeth A. White, Judge. Reversed and remanded.

Attorneys and Law Firms

Russell J. Thomulka, for Defendant and Appellant.

Hicks Park, James B. Hicks and Gary W. Park, for Plaintiff and Respondent ING Bank, FSB.

Opinion

ZELON, J.

INTRODUCTION

*1 Appellant Young America Mortgage (YAM), a mortgage broker, submitted a loan application to Respondent ING Bank on behalf of its client, Jorge Ramon. Several months after the loan was approved, ING discovered that the application misstated Ramon's monthly salary. Ramon later defaulted on the loan and ING sued Ramon and YAM for breach of contract, fraud and negligence. ING filed a motion for summary judgment arguing that, by failing to verify Ramon's salary information, YAM had breached the parties' Broker Origination Agreement and committed fraud. The trial court granted the motion and entered judgment against YAM.

YAM appeals, arguing that: (1) the parties' contract did not require YAM to verify Ramon's income information; (2) ING failed to introduce evidence establishing that it was damaged by YAM's alleged breach of contract, and; (3) there is a triable issue of fact regarding whether YAM knew or should have known that Ramon misstated his salary information in the loan application. We reverse the trial court's grant of summary judgment, concluding that ING has failed to introduce evidence demonstrating that there is no triable issue of fact regarding any of its claims.

FACTUAL AND PROCEDURAL BACKGROUND

A. Events Proceeding ING's Complaint

In 2005, Appellant Young America Mortgage (YAM) and Respondent ING Bank entered into a “Broker Origination Agreement” under which YAM “solicit[ed] prospective Borrowers for residential mortgage loans” and ING, “upon approval of the application, fund[ed] such Loans.” The Agreement included a provision stating that YAM would not “submit a Loan Application Package where the information contained in the application ... is not true, correct and undisputed and does not reflect full, correct and accurate information as the matter represented ...” The Agreement further provided that if any representation regarding a loan failed to be true, YAM would “immediately repurchase, on demand, any Loan which may be affected by such failure.”

In 2007, YAM submitted a loan application to ING on behalf of Jorge Ramon, who was seeking to refinance a residential mortgage initially provided by Chase Manhattan Mortgage. The application, which was signed by Ramon, stated that his monthly salary was $5,761. Ramon later provided YAM an earnings statement that verified the amount of his salary, which YAM then gave to ING.

After reviewing Ramon's loan application and supporting documentation, ING approved a loan for $328,500 and paid YAM a broker fee of approximately $8,000. On June 19, 2007, Ramon executed a promissory note agreeing to repay the loan, along with a deed of trust that gave ING a first priority security interest in Ramon's property.

In February of 2008, Ramon stopped making his required monthly loan payments. Several months later, Ramon requested that ING modify the terms of the loan. As part of its loan modification process, ING obtained copies of Ramon's 2006 and 2007 federal and state tax returns and discovered that his income for that time period was approximately one third the amount stated in his loan application.

*2 After discovering the income discrepancy, ING sent a letter to YAM stating that it had breached the parties' Broker Origination Agreement by submitting a loan application which contained false salary information. ING's letter further stated that, under the parties' Agreement, YAM was required to repurchase the loan from ING. YAM did not respond to the letter.

B. ING's Complaint and Trial Court Proceedings

In September of 2008, ING filed an action against Ramon and YAM alleging breach of contract (both defendants), fraud (both defendants), judicial foreclosure (Ramon only), negligence (YAM only) and unfair business practices (YAM only). All of the claims were predicated on Ramon's misrepresentation of his monthly salary.

During discovery, YAM's president and manager, Fariborz Nouri, testified that YAM did not know Ramon's loan application and earning statement misstated his salary until ING notified it of the misrepresentation. Nouri also stated that while processing the loan application, YAM never asked Ramon if his application and earning statement accurately reflected his current income or take any other actions to verify Ramon's salary.

On May 8, 2009, ING filed a motion for summary judgment or, alternatively, summary adjudication, arguing that because Ramon and YAM had admitted that the loan application included inaccurate salary information, there was no triable issue of material fact regarding any claim asserted in its complaint. First, ING argued that, by submitting a loan application that falsely stated the borrower's salary information, YAM had breached the Broker Origination Agreement and Ramon had breached his loan agreement. Second, ING argued that both parties committed fraud because the undisputed evidence showed Ramon knowingly misrepresented his salary information and that YAM acted recklessly by submitting “a false loan application ... without regard for the truth of the [salary] information.” ING further contended that YAM's submission of a false loan application violated various federal and state statutes, and therefore constituted negligence as well as an unfair business practice within the meaning of Business and Professions Code section 17200. Finally, ING contended that it was entitled to foreclose on Ramon's property.

After the motion was filed, Ramon settled with ING and was dismissed from the case. The record does not state the terms of the settlement nor does it indicate whether ING permitted Ramon to retain possession of the property that was used to secure the loan.

YAM filed an opposition to ING's motion for summary judgment, arguing that although Ramon had misstated his monthly salary, triable issues of fact remained on each of ING's claims. First, YAM contended that the Broker Origination Agreement did not require it to verify the accuracy of Ramon's salary and therefore ING had not established any breach of the contract. YAM also argued that ING had failed to show that it was damaged by any breach because it had provided no evidence regarding the value or status of the property that had been used to secure Ramon's loan. YAM asserted that, without such evidence, it was impossible to determine whether ING could recoup the full benefit of its loan agreement by foreclosing on the property. In regards to ING's fraud, negligence and unfair business practice claims, YAM asserted that ING was required to prove that YAM knew or should have known that Ramon misstated his salary, which involved a triable issue of fact.

*3 The trial court granted ING's motion for summary judgment, concluding that it had introduced sufficient evidence to prove YAM knowingly submitted a false loan application. On the contract claim, the court ruled the parties' Agreement imposed on YAM an absolute duty to submit accurate loan application materials, which it had failed to do. It further concluded that ING had demonstrated contract damages “in the amount of the loan plus fees paid in connection with the loan.” The court did not address whether or how ING's deed of trust to Ramon's property affected its damages.

The court also ruled ING was entitled to summary judgment on its fraud claim because YAM had admitted it failed to “take any steps to review the information contained in the loan application.” In the court's view, this admission demonstrated “recklessness giving rise to the elements of knowledge and intent.” Finally, the court concluded ING had established that YAM committed negligence and engaged in an unfair business practice by submitting a false loan application in violation of federal and state law.

The court entered judgment in favor of ING and awarded the outstanding amount of the loan principal ($326,176.23), in addition to outstanding interest and late charges. It also awarded ING all the fees it had paid to YAM for originating the loan, along with prejudgment interest. YAM timely appealed the judgment.

DISCUSSION

A. Legal Standards Governing Motions for Summary Judgment

“The standard for deciding a summary judgment motion is well-established, as is the standard of review on appeal.” (Richard B. LeVine, Inc. v. Higashi (2005) 131 Cal.App.4th 566, 572 (LeVine ).) A party is entitled to summary judgment if there is no triable issue of material fact and the party is entitled to judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).) “[T]he party moving for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850 (Aguilar ).) Where plaintiff is the moving party, this initial burden requires it to produce evidence showing that each element of each cause of action has been established. (§ 437c, subd. (p)(1).) If a moving plaintiff satisfies this initial burden, the burden shifts to the defendant to set forth “specific facts” showing that a triable issue of material fact exists as to the cause of action or a defense. (Ibid.; see also Aguilar, supra, 25 Cal.4th at p. 850.) “Despite the shifting burdens of production, the ... moving party[ ] always bears the ultimate burden of persuasion as to whether summary judgment is warranted. [Citations.]” (Garcia v. W & W Community Development, Inc. (2010) 186 Cal.App.4th 1038, 1041.) “In making this determination, courts view the evidence, including all reasonable inferences supported by that evidence, in the light most favorable to the nonmoving party.” (Ibid.)

*4 “ ‘We review the trial court's decision de novo, considering all of the evidence the parties offered in connection with the motion (except that which the court properly excluded) and the uncontradicted inferences the evidence reasonably supports.” (LeVine, supra, 131 Cal.App.4th at p. 572.)¹

B. ING Failed to Establish There is No Material Issue of Fact Regarding its Claim for Breach of Contract

YAM argues that ING failed to demonstrate two elements that are necessary to establish a claim for breach of contract. (See generally CDF Firefighters v. Maldonado (2008) 158 Cal.App.4th 1226, 1239 [breach of contract requires following elements “(1) existence of the contract; (2) plaintiff's performance or excuse for nonperformance; (3) defendant's breach; and (4) damages to plaintiff as a result of the breach”].) First, YAM contends that the Broker Origination Agreement did not require it to verify Ramon's salary information and therefore ING failed to demonstrate that YAM breached the contract. Second, YAM argues that ING did not meet its initial burden to produce evidence showing that it was damaged as a result of YAM's purported breach.

1. ING established that YAM breached the Broker Origination Agreement

YAM argues that the trial court erred in concluding that the submission of a loan application which misstates the borrower's income constitutes a breach of the Broker Origination Agreement. Although YAM concedes that Ramon's application contained false salary information, it contends that, under the parties' Agreement, it had no duty to independently verify Ramon's salary information.

The plain language of a contract governs its interpretation. (Civ.Code, § 1638; Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 18.) Section 10, subdivision (bb) of the Broker Origination Agreement states that YAM “shall not submit a Loan Application Package where the information contained in the application or other document submitted in connection with the loan application is not true, correct and undisputed and does not reflect full, correct and accurate information as to the matter represented.” This clause does not contain any qualifying language indicative of a scienter element, such as “knowingly” or “intentionally.” (See generally Margarito v. State Athletic Com . (2010) 189 Cal.App.4th 159, 168.) We therefore agree that the Agreement imposed an unambiguous, absolute duty on YAM to submit truthful salary information in any loan application, which it admittedly failed to do.

YAM, however, argues that other documentation in the record demonstrates that YAM was not required to verify the borrower's salary information. Specifically, YAM points to language in ING's “Lending Guidelines,” which were incorporated into the Broker Origination Agreement. The Guidelines describe various terms and conditions applicable to two different types of ING financial products: “stated income loans” and “verified income loans.” A “stated income loan” is “a loan where the borrower states their monthly income, and the lender will ... accept that as the income upon which to make the loan decision” without requiring any further documentation. A “verified income loan,” on the other hand, requires the applicant to submit verification of salary, including W2s or the borrower's most recent pay stub. YAM argues that ING's Lending Guidelines explain the specific acts that are necessary to verify a borrower's income: for a stated income loan, a broker need only ask the borrower his or her income, and for a verified income loan, it must obtain a wage earning statement. In this case, YAM contends it did both things: it asked Ramon his salary, which he then verified through a wage statement. In YAM's view, compliance with the Guidelines was sufficient to discharge any duty it had to substantiate Ramon's income.

*5 The ING Guidelines do not alter or amend the Broker Origination Agreement's requirement that YAM submit accurate and truthful loan application information. Instead, the Guidelines describe the type of documentation that ING requires a borrower to submit in support of specific types of loans. Although it appears YAM did collect sufficient information and documentation to satisfy the Guidelines' requirements, the Broker Origination Agreement imposed an independent obligation on YAM to ensure the accuracy of any loan application that it submitted to ING.

Because YAM admits the loan application misstated Ramon's salary, ING established breach.

2. ING failed to introduce sufficient evidence to establish contract damages

YAM next contends that, even if ING established a breach of the Broker Origination Agreement, it failed to satisfy its initial burden to introduce evidence demonstrating that it was damaged as a result of the breach. Contract damages are generally intended to “ ‘compensate[ ] the [plaintiff] for the loss of his “expectational interest”-the benefit of his bargain which full performance would have brought.’ [Citation.]” (Sharabianlou v. Karp (2010) 181 Cal.App.4th 1133, 1144-1145.) “The ‘benefit of the bargain’ measure of damages is the difference between the actual value of what the plaintiff has received and that which he expected to receive.” (Salahutdin v. Valley of California, Inc. (1994) 24 Cal.App.4th 555, 564.) Thus, to satisfy its initial burden under summary judgment procedures, ING was required to introduce evidence establishing that YAM's breach caused ING to receive less than what it would have otherwise received under its lending agreement with Ramon. Moreover, it had to show there was no dispute about the total amount of its damages. (See Department of Industrial Relations v. UI Video Stores, Inc. (1997) 55 Cal.App.4th 1084, 1097 [summary judgment or adjudication improper where amount of damages raises factual issue].)

In the trial court, ING introduced evidence demonstrating that Ramon stopped making his monthly loan payments, along with an account statement indicating the unpaid balance of the loan. It also introduced evidence that YAM had refused to repurchase the loan from ING, as required under the parties' broker agreement.² ING alleges that this evidence demonstrates that it has been damaged as a result of YAM's breach because it is now “stuck with a non-performing loan.” The trial court agreed, concluding that “ING has been damaged in the amount of the loan plus fees paid in connection with the loan, which it would not have made but for the income representation in the loan application.”

YAM, however, contends that ING has not established that it suffered damages (or the amount of any such damages) because it failed to introduce any evidence showing that Ramon's property, which was used to secure the loan, is insufficient to provide ING the full amount it would have received under its loan agreement.

*6 It is undisputed that Ramon provided ING a deed of trust to his property to secure the loan. ING failed to come forward with any evidence indicating the current value of Ramon's property or the current status of the deed of trust. Without doing so, ING has failed to establish whether it has been damaged by YAM's breach of the Broker Origination Agreement, and if so, by how much. If ING still owns the deed of trust and is entitled to foreclose on the property, it is possible that the value of the property is equal to or greater than what ING would have received under the loan agreement. If, on the other hand, ING has foreclosed and sold the property, it has not demonstrated that the amount it received did not offset all or part of its damages.³

Because ING has failed to introduce sufficient evidence proving it suffered any damages, and also failed to demonstrate the total amount of its damages, we reverse the trial court's grant of summary judgment on ING's contract claim.

C. There is a Material Issue of Fact Regarding ING's Fraud Claim

YAM argues the trial court erred in concluding that there is no triable issue of fact in regards to ING's fraud claim. “ ‘Fraud is an intentional tort, the elements of which are (1) misrepresentation; (2) knowledge of falsity; (3) intent to defraud, i.e., to induce reliance; (4) justifiable reliance; and (5) resulting damage. [Citation.]’ [Citation.]” (Intrieri v. Superior Court. (2004) 117 Cal.App.4th 72, 85-86 (Intrieri ).) YAM contends that there is a factual dispute whether YAM knew the loan application misstated Ramon's salary. The trial court concluded the knowledge element was satisfied by YAM's “admitted ... failure” to take any steps to verify Ramon's salary. In the court's view, such conduct constituted “recklessness giving rise to the elements of knowledge and intent.”

It is well-established that “[f]alse representations made recklessly and without regard for their truth in order to induce action by another are the equivalent of misrepresentations knowingly and intentionally uttered.” (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 974.) Whether a party acted with actual knowledge of falsity or reckless disregard for the truth is generally a question of fact to be determined by the jury. (See Buist v. C. Dudley De Velbiss Corp. (1960) 182 Cal.App.2d 325, 332 [for purposes of fraud, “knowledge of party” is “question of fact”]; Radinsky v. T.W. Thomas, Inc. (1968) 264 Cal.App.2d 75, 80 [“Whether there has been fraud by misrepresentation is question of fact for determination by the trial court”]; Initieri, supra, 117 Cal.App.4th at p. 87 [triable question of fact existed as to whether defendant “knew the statements were false” where it is “questionable whether a reasonable person would believe” his testimony]; cf. Cooper v. Los Angeles Terminal Railway Co. (1902) 137 Cal. 229, 232 [whether defendant acts were “reckless ... was for the jury to determine from all the evidence”].) Thus, a plaintiff may only obtain summary judgment on a fraud claim where he has introduced evidence “that would require a reasonable trier of fact to find [more likely than not]” that YAM had actual knowledge of falsity or acted with reckless disregard for the truth. (Aguilar, supra, 25 Cal.4th at p, 845.) Stated differently, summary judgment may only be granted if “undisputed facts leave no room for a reasonable difference of opinion” as to whether YAM had actual knowledge that Ramon misstated his salary or acted with reckless disregard as to the truth of his stated income. (Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1239 [discussing reliance element of fraud claim]; Guido v. Koopman (1991) 1 Cal.App.4th 837, 843 [“existence of fraud ... is a question of fact” unless reasonable people can come to only one conclusion based on the facts].)

*7 YAM contends that the following evidence establishes a triable issue of fact as to whether it acted with actual knowledge and/or recklessness: (1) YAM introduced evidence that, at the time it submitted the loan application to ING, it was unaware that Ramon misstated his salary; (2) Ramon's loan application stated that he was providing “true and correct” information; (3) the loan application contained language notifying Ramon that any intentional misrepresentation might subject him to civil and criminal penalties; (4) Ramon provided YAM an earnings statement that appeared to confirm the level of income stated in the application; (5) according to ING's Lending Guidelines, an earnings statement is generally sufficient to verify a borrowers' income, and; (6) Ramon was seeking refinance of a Chase Manhattan Mortgage loan, meaning that another lending institution had already determined he was qualified for a $300,000 loan.

In light of this evidence, which we must interpret in the light most favorable to YAM, a reasonable trier of fact could find that YAM did not know that Ramon misstated his salary and did not act recklessly by failing to take any further actions to verify Ramon's salary. First, there is no evidence that YAM knew Ramon misstated his salary or had any reason to doubt the information in Ramon's loan application. Second, Ramon attested to the truth of his current income and provided documentation that appeared to verify his income. Third, ING's Lending Guidelines suggest that, if ING had originated the loan itself, it would not have required any more salary verification or documentation than what YAM gathered. Fourth, a bank had already given Ramon a sizeable loan, which he was trying to refinance. Given all of this evidence, there is a disputed issue of fact as to whether YAM had any reason to question the veracity of Ramon's application and, as a result, whether YAM acted recklessly.

D. ING Failed to Establish YAM Committed Negligence

YAM argues that ING failed to introduce evidence establishing its negligence claim. In the trial court, ING argued that federal and state statutes imposed a legal duty on YAM “to refrain from making any substantial misrepresentation” in a loan application. It further argued that because YAM submitted an application that misstated Ramon's salary, it had violated its statutory duties and therefore was negligent as a matter of law. The trial court agreed, concluding that “the undisputed facts show that YAM submitted a loan application which contained materially false information ... in violation of several statutes.” The court further ruled that these statutory duties “were specifically enacted to prevent fraud on banks such as ING, and supplement Broker's general duties of care not to submit a loan application which contains material factual misstatements.”

ING cites three statutes in support of its contention that YAM had a duty of care to ensure that any information in Ramon's loan application was truthful: 18 U.S.C. section 1014, 18 U.S.C. section 1344 and California Business and Professions Code section 10176. The federal statutes cited by ING only apply where the actor knowingly makes a false statement. (See 18 U.S.C., § 1014 [“Whoever knowingly makes any false statement ...”]; 18 U.S.C., § 1344 [“whoever knowingly executes .... scheme ... [ ] to defraud a financial institution ...”].) Business and Professions Code section 10176, on the other hand, permits the State to suspend or revoke a real estate license if the licensee commits various enumerated acts of dishonesty, including making “any substantial misrepresentation” or engaging in “any other conduct ... which constitutes fraud or dishonest dealing.” (Bus. & Prof.Code, § 10176, subds. (a), (j).) Section 10176 only applies to misrepresentations that are known to be false or are made with reckless disregard for their truth. (See generally Nichandros v. Real Estate Division of Dept. of Inv. (1960) 181 Cal.App.2d 179, 183.) As we have explained, the evidence raises a triable issue of fact regarding whether YAM acted with knowledge or recklessness. Therefore, the evidence does not establish, as a matter of law, that YAM breached its statutory duties nor does it establish that YAM committed negligence by violating the statutes.⁴

DISPOSITION

*8 The trial court's judgment in favor of ING is reversed and the case is remanded for further proceedings. YAM to recover its costs on appeal.

We concur: PERLUSS, P.J., and JACKSON, J.

Footnotes

The same standards apply to motions for summary adjudication. (See Haney v. Aramark Uniform Services, Inc. (2004) 121 Cal.App .4th 623, 631.)

Paragraph 11 of the Broker Origination Agreement includes a provision requiring that, in the event the broker (YAM) “fails to abide by any term ... of this Agreement with respect to any Loan or Loan Application Package ... or if any representation ... made by Broker fails to be true, then Broker agrees to immediately repurchase, on demand, any Loan which may be affected by such failure.”

YAM raised this damages argument in both the trial court and its opening appellate brief. ING has never responded to the argument nor has it ever explained the status of its deed of trust.

The trial court also concluded that because ING established YAM violated federal and state law, there was no triable issue of fact on ING's unfair business practice under Section 17200:

The Court finds that it is undisputed that YAM submitted a loan application to ING which contained materially false representations as to the borrower's income. YAM's submission of that loan application was both an unlawful act and a fraudulent act. The misrepresentations as to the borrower's income for the purpose of securing a loan violates 18 U.S.C §§ 1344 (bank fraud) and 1014 (false statement in a loan application) and therefore violates the unlawful and fraudulent prongs of a breach of the California Unlawful Business Practices Act.

Because we reverse the trial court's finding that ING's evidence demonstrates YAM violated a statutory duty, we also reverse the court's decision that YAM violated Section 17200.

End of Document

HERITAGE PACIFIC FINANCIAL, LLC

2011-07-26T14:19:00.000-07:00

If you have been sued by them for loans originating on property located in CALIFORNIA..... AND you live in CALIFORNIA PLEASE CALL US ASAP we can help you whether you are in bankruptcy or not.

Renay

JUST BECAUSE YOU CAN'T CITE TO A CASE.... Doesn't mean you can't learn from it....

2011-07-24T14:38:00.000-07:00

Congratulations goes out to Michael D. Finley, Esq. (661) 964-0444

Mr. Finely had a victory against WELLS FARGO BANK in the non-citable case of DeMucha v. Wells Fargo Home Mortg. Inc., F059476, 2011 WL 2612835 (Cal. Ct. App. July 5, 2011) While you cannot cite to it to support your own case, you can look at the meat and potatoes of it to help you find a way to make legal challenges to foreclosure.

Mr. Finley pleads that the Original NOTE and Deed of Trust were given in favor of BANK A. There were no assignments of both the NOTE AND THE DEED OF TRUST to BANK B. BANK B started foreclosure proceedings. HOMEOWNER files suit saying that BANK B cannot foreclose because BANK B is not the beneficiary under the note & Deed of Trust. How very clever Mr. Finley. Instead of stating that BANK B doesn't have the original Note, you subtlety state something similar but legalistically very different. You state that BANK B is not the beneficiary.

There is another case that says that MERS while it can act as the AGENT for a beneficiary under a note and Deed of trust, it HAS NO AUTHORITY to execute an assignment. How many of you out there have had your loan assigned by MERS. Possible place to challenge any foreclosure when MERS is the purported Agent. Don't leave your case to chance. Hire competent counsel to represent you with these matters.

If you are losing your home in the Santa Clarita Area Mr. Finley just may be the attorney your are looking for who can help you keep your home.

READ BELOW FOR THE WHOLE DECISION

2011 WL 2612835

Only the Westlaw citation is currently available.

California Rules of Court, rule 8.1115, restricts citation of unpublished opinions in California courts.

Court of Appeal, Fifth District, California.

Mark DEMUCHA et al., Plaintiffs and Appellants,

WELLS FARGO HOME MORTGAGE INC., Defendant and Respondent.

No. F059476.(Super.Ct.No. CV–267074).

July 5, 2011.

APPEAL from a judgment of the Superior Court of Kern County. Sidney P. Chapin, Judge.

Attorneys and Law Firms

Law Offices of Michael D. Finley and Michael D. Finley for Plaintiffs and Appellants.

Kutak Rock, Jeffrey S. Gerardo and Steven M. Dailey for Defendant and Respondent.

Opinion

OPINION

FRANSON, J.

*1 This case presents a classic example of the longstanding rule that “in passing upon the question of the sufficiency or insufficiency of a complaint to state a cause of action, it is wholly beyond the scope of the inquiry to ascertain whether the facts stated are true or untrue” as “[t]hat is always the ultimate question to be determined by the evidence upon a trial of the questions of fact.” (Colm v. Francis (1916) 30 Cal.App. 742, 752.)

The trial court dismissed this civil action after sustaining the demurrer of respondent Wells Fargo Home Mortgage, a division of Wells Fargo Bank, N.A. (Wells Fargo), to the first amended complaint of appellants Mark and Cheryl DeMucha. Appellants contended in the trial court, as they do on this appeal, that the allegations of their pleading were sufficient to survive demurrer. As we explain, we agree with appellants on all of their causes of action except the second (their attempt to state a cause of action for removal of a cloud on title) and the fourth (their attempt to state a cause of action for intentional infliction of emotional distress). We reverse the judgment, remand the matter to the trial court, and direct that court to overrule respondent's demurrer as to all causes of action except the second and fourth.

FACTUAL AND PROCEDURAL BACKGROUND

In their first amended complaint, appellants allege as follows. They are the owners of a home located on Fernside Court in Bakersfield. They “executed a Deed of Trust in favor of CTX MORTGAGE COMPANY, LLC, which is the company that held the mortgage on this home, which Deed of Trust was recorded” on or about November 28, 2007. In January of 2008, Wells Fargo “claimed that the mortgage on 5813 Fernside had been transferred to it from CTX MORTGAGE COMPANY, LLC,” (CTX) but Wells Fargo and other unnamed Doe defendants “have all failed and refused to produce the original note or otherwise provide proof that any of the Defendants is or at any time was the holder of the original note that the Defendants, and each of them, are trying to enforce....” The defendants “have repeatedly, beginning on or about 1/4/2008 and continuing in documents issued by the Defendants ... up to and including the month of April 2009, alleged that the mortgage on 5813 Fernside had been transferred to them and/or the entity on whose behalf they were acting, and that the Defendants ... had the right to enforce the note against 5813 Fernside, which claims were false....”

Appellants incorporate the above-described allegations into purported causes of action entitled “Quiet Title” (first), “Action to Remove Cloud” (second), “Fraud & Misrepresentation” (third), “Intentional Infliction of Emotional Distress” (fourth), and “Slander of Credit” (fifth).

Wells Fargo demurred to appellants' first amended complaint and to each purported cause of action contained in it, and asked the court to take judicial notice of the deed of trust recorded on November 28, 2007, and of a Notice of Default recorded on January 9, 2009. The court took judicial notice of these documents, sustained the demurrer without granting leave to amend, and ordered the action dismissed. The court's order stated in pertinent part:

*2 “On September 28, 2009, the Court sustained Defendant WELLS FARGO HOME MORTGAGE, A DIVISION OF WELLS FARGO BANK, N.A.'S [“WELLS FARGO's”] Demurrer to Plaintiffs' First Amended Complaint without leave to amend.

“WELLS FARGO's Requests for Judicial Notice are granted. The Court based its ruling the Court's finding that Plaintiffs cannot allege and establish that they tendered all amounts due under the loan and based on its finding that, under established case and statutory authority, that a lender has no obligation to ‘possess the note’ pursuant to the non-judicial foreclosure process. The Court sustained the Demurrer to the entire First Amended Complaint without leave to amend.”

STANDARD OF REVIEW

Our standard of review of an order sustaining a demurrer on the ground that the complaint fails to state facts sufficient to constitute a cause of action is well settled. We review the sufficiency of the complaint de novo. (Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126.) Although we are aware that a carefully worded complaint, as alleged here, can avoid disclosure of a demurrable defect known by the parties (see Willson v. Security–First Nat. Bk. (1943) 21 Cal.2d 705, 710), “[w]e give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] Further, we treat the demurrer as admitting all material facts properly pleaded, but do not assume the truth of contentions, deductions or conclusions of law. [Citations.] When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action. [Citation.]” (City of Dinuba v. County of Tulare (2007) 41 Cal.4th 859, 865.) “We also consider matters that may be judicially noticed.” (Reynolds v. Bement (2005) 36 Cal.4th 1075, 1083, disapproved on another ground in Martinez v. Combs (2010) 49 Cal.4th 35, 50, fn. 12.)

When a demurrer is properly sustained on the ground that the complaint fails to state facts sufficient to constitute a cause of action, and leave to amend the pleading is denied and judgment is entered in favor of the demurring defendant, “we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discretion and we affirm.” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “The burden of proving such reasonable possibility is squarely on the plaintiff.” (Ibid.)

DISCUSSION

“A real property loan generally involves two documents, a promissory note and a security instrument. The security instrument secures the promissory note. This instrument ‘entitles the lender to reach some asset of the debtor if the note is not paid. In California, the security instrument is most commonly a deed of trust (with the debtor and creditor known as the trustor and beneficiary and a neutral third party known as trustee).... [T]he creditor is said to have a lien on the property given as security, which is also referred to as collateral.’ [Citation.]” (Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1235; see also Nguyen v. Calhoun (2003) 105 Cal.App.4th 428, 438.)

*3 The parties have a great deal to say about whether Wells Fargo must “possess the note” or “produce the note” in order to enforce the note. We see nothing in the statutes governing nonjudicial foreclosure (see Civ.Code, §§ 2924 through 2924k; and Moeller v. Lien (1994) 25 Cal.App.4th 822, 830–832) expressly mentioning possession of or production of a note as a prerequisite for initiating foreclosure.¹ At the beginning of the nonjudicial foreclosure process, “[t]he trustee, mortgagee, or beneficiary, or any of their authorized agents shall first file for record, in the office of the recorder of each county wherein the mortgaged or trust property or some part of parcel thereof is situated, a notice of default.” (Civ.Code, § 2924, subd. (a)(1).) According to the first amended complaint, however, Wells Fargo is not a trustee, mortgagee or beneficiary. Wells Fargo is, according to the pleading, an entity which “falsely and fraudulently claim[s] to hold title to and/or the right to enforce the note.”

A. QUIET TITLE

Appellants seek to quiet title against any adverse claims of Well Fargo. “Quiet title claims are governed by California Code of Civil Procedure § 761.020, which requires that five elements be set out in a ‘verified complaint’: (1) a description of the property, both legal description and street address; (2) the title of the plaintiff, and the basis for that title; (3) the adverse claims to the plaintiff's title; (4) the date as of which the determination is sought; and (5) a prayer for the determination of the plaintiff's title against the adverse claims. Cal.Civ.Proc.Code § 761.020(a)-(e).” (Briosos v. Wells Fargo Bank (2010) 737 F.Supp.2d 1018, 1031; see also 5 Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 663, p. 90.) Those elements all appear in the first amended complaint. Wells Fargo argues that the pleading does not allege facts showing the basis for the plaintiff's title. But it does. It alleges that the plaintiffs “are and were rightful owners of a home located at 5813 Fernside Court, Bakersfield, CA ... pursuant to a Grant Deed that was recorded on 11/28/2007.” Wells Fargo then argues that the pleading does not allege the adverse claims to plaintiff's title. But it does. It alleges that Wells Fargo “claimed that the mortgage on 5813 Fernside had been transferred to it from CTX Mortgage Company, LLC.” It further alleges that Wells Fargo is “trying to enforce” the note signed by the plaintiffs, that Wells Fargo has “repeatedly ... alleged” that it “had the right to enforce the note against 5813 Fernside” and that these “claims were false.”

The court took judicial notice of the deed of trust. The document identifies the “Borrower” as the DeMuchas, and “CTX MORTGAGE COMPANY, LLC,” as the “Lender” and “Trustee.” The “beneficiary under this Security Instrument” is “Mortgage Electronic Registration Systems, Inc.” or “MERS,” as nominee for Lender CTX.² Thus, Wells Fargo was not a party to the original transaction and was not mentioned in the deed of trust. There are no allegations that Wells Fargo was a nominee, successor, assignee, or agent of CTX or MERS under the deed of trust. Appellants allege in essence that Wells Fargo is an interloper with no interest in the property. What the actual facts are we do not know. Evidence, when it is received, might perhaps ultimately show that Wells Fargo does indeed have some interest in the note and/or deed of trust that it is now trying to enforce. But that interest does not appear on the face of the first amended complaint or in any matter of which the court took judicial notice.

*4 Wells Fargo argues that the demurrer was properly sustained because appellants did not allege tender of all amounts due on the note appellants allege they signed. This might be correct if appellants were attempting to quiet title as against the lender, CTX, or MERS, as its nominee. “[A] mortgagor cannot quiet his title against the mortgagee without paying the debt secured.” (Shimpones v. Stickney (1934) 219 Cal. 637, 649; see also Aguilar v. Bocci (1974) 39 Cal.App.3d 475; and Briosos v. Wells Fargo Bank, supra, 737 F.Supp.2d at p. 1032.) The first amended complaint does not allege, however, that Wells Fargo is a mortgagee or a lender or a trustee on the deed of trust, or that it has any connection whatsoever to the November 2007 loan and deed of trust. Wells Fargo cites a number of cases holding that a plaintiff attempting to attack a trustee's sale must allege tender of payment of amounts due on the loan, but appellants are not attempting to attack any trustee's sale and there is no allegation that any trustee's sale has taken place.

A deed of trust is not valid without a note. Transfer the note, and the deed of trust follows, not vice versa. “[A] deed of trust is a mere incident of the debt it secures and ... an assignment of the debt ‘carries with it the security.’ [Citations.]” (Domarad v. Fisher & Burke, Inc. (1969) 270 Cal.App.2d 543, 553; see also Lewis v. Booth (1935) 3 Cal.2d 345, 349 [“A lien is but an incident of the debt secured, and cannot be transferred apart therefrom. A transfer of the debt carries with it the lien”] .) We think a fair reading of appellants' complaint is that the note they signed was never transferred or assigned to Wells Fargo from CTX, that the deed of trust securing the debt therefore does not secure any debt owed to Wells Fargo, and that Wells Fargo therefore has no right to initiate nonjudicial foreclosure proceedings against appellants. Wells Fargo points to nothing in the first amended complaint alleging that Wells Fargo holds any interest in the note secured by the deed of trust. Wells Fargo argues that it is a “creditor,” but points to nothing in the first amended complaint so alleging.

B. ACTION TO REMOVE CLOUD

An action to remove a cloud on title is authorized by Civil Code section 3412, which states: “A written instrument, in respect to which there is a reasonable apprehension that if left outstanding it may cause serious injury to a person against whom it is void or voidable, may, upon his application, be so adjudged, and ordered to be delivered up or canceled.” (See also Smith v. Williams (1961) 55 Cal.2d 617; and 5 Witkin, Cal. Procedure (5th ed. 2008) Pleading, §§ 671–674.) “A suit to quiet title must be distinguished from an action to remove a cloud on the title alleged to have been created by a designated instrument. In a suit to remove a cloud the complaint must state facts, not mere conclusions, showing the apparent validity of the instrument designated, and point out the reason for asserting that it is actually invalid. [Citations.]” (Ephraim v. Metropolitan Trust Company of California (1946) 28 Cal.2d 824, 833–834 (Ephraim ).)

*5 Respondent correctly points out that appellants' first amended complaint does not identify any instrument claimed by appellants to be invalid. The pleading alleges that Wells Fargo and Doe defendants “are attempting to claim title based upon a false and fraudulent claim that they are entitled to enforce the note against the property.” Appellants do not contend or allege that the note and deed of trust they executed are invalid, but rather only that the debt on the note is not owed to Wells Fargo. The first amended complaint does contain an allegation stating “Plaintiff ... respectfully requests an order that the instrument through which the Defendants claim title to and/or the right to enforce the note against 5813 Fernside be declared invalid and void, and that it be destroyed,” but the pleading nowhere alleges what that instrument is. No cause of action to a remove a cloud on title is therefore stated. (Ephraim, supra, 28 Cal.2d 824.)

C. FRAUD

“The essential allegations of an action for fraud are a misrepresentation, knowledge of its falsity, intent to defraud, justifiable reliance, and resulting damage.” (Roberts v. Ball, Hunt, Hart, Brown & Baerwitz (1976) 57 Cal.App.3d 104, 109; see also Civ.Code, §§ 1709, 1710.) Appellants' first amended complaint alleges that on January 4, 2008, Wells Fargo “falsely and fraudulently stated, ‘... your loan was recently transferred from CTX Mortgage Company, LLC.... Your first payment to Wells Fargo Bank, N.A. is due 02/01/08.” It further alleges: “The Defendants knew that the statements were false and fraudulent and the truth was that none of the defendants ever legally obtained the transfer of the loan that Plaintiffs legally owed to CTX Mortgage Company, LLC. While acting in reliance upon the false and fraudulent claims of Defendants, ... plaintiff has made mortgage payments to the Defendants to his damage.”

Wells Fargo argues that the pleading contains no allegation that any representation Wells Fargo made was false. It does. It alleges that Wells Fargo falsely told appellants their loan had been transferred from CTX to Wells Fargo. Wells Fargo argues that the pleading fails to allege that any misrepresentation was made with knowledge of its falsity. It does. It alleges “[t]he Defendants knew that the statements were false.” Wells Fargo argues that the pleading alleges no facts showing reliance on a misrepresentation. It does. It alleges that “plaintiff has made mortgage payments to the Defendants to his damage.” A cause of action for fraud has been properly stated.

D. INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS

“The elements of a prima facie case for the tort of intentional infliction of emotional distress are: (1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff's suffering severe or extreme emotional distress; and (3) the actual and proximate causation of the emotional distress by the defendant's outrageous conduct.” (Cervantez v. J.C. Penney Company, Inc. (1979) 24 Cal.3d 579, 593 (Cervantez ).) An attempt to collect an alleged debt by means of a false document has been held to be sufficiently outrageous to constitute an outrageous act for purposes of this tort. (Kachig v. Boothe (1971) 22 Cal.App.3d 626, 641, fn. 1.) Appellants incorporate their prior allegations that Wells Fargo sent them a document falsely stating that they owed mortgage payments to Wells Fargo. Appellants further allege:

*6 “From approximately November 2, 2008 through April 2009, the Defendants and each of them, have falsely asserted that Plaintiffs are in default in paying the loan on 5813 Fernside to the Defendants and have threatened to commence and have commenced non-judicial foreclosure proceedings against the Plaintiffs based upon false and fraudulent pretenses and without compliance with the laws necessary to commence foreclosure proceedings.

“The Defendants' acts were intentional, unreasonable, and so outrageous that they exceed all bounds usually tolerated by a decent society and Defendants knew or should have known that the commission of these wrongful acts against the Plaintiffs would be likely to cause illness, injury, and emotional distress. As a direct result of the Defendants' conduct, Plaintiffs suffered illness, injury, and emotional distress.”

Wells Fargo argues that the pleading does not allege an outrageous act because “a debt collector is entitled to a qualified privilege.” There is no allegation, however, that appellants owe any debt to Wells Fargo. Appellants allege that they owe nothing to Wells Fargo. Wells Fargo further contends, however, and correctly in our view, that the first amended complaint fails to allege that Wells Fargo acted with the intention of causing, or reckless disregard of the probability of causing, emotional distress. (Cervantez, supra, 24 Cal.3d 579.) Also, there is no allegation that Appellants' suffered serious or extreme emotional distress. While these omissions would appear to be capable of correction by amendment, they are omissions of essential elements of the cause of action, and thus the demurrer was properly sustained as to appellant's attempt to state a cause of action for intentional infliction of emotional distress.

E. SLANDER

The tort of defamation is effected by either “libel” or “slander.” (Civ.Code, § 44.) These two terms are statutorily defined (see Civ.Code, §§ 45 and 46), but it may be said, generally speaking, that libel is defamation effected through “writing” (Civ .Code, § 45) while slander is “orally uttered.” (Civ.Code, § 46.) Slander is defined to include “a false and unprivileged publication, orally uttered ... [¶] ... [¶][w]hich, by natural consequence, causes actual damage.” (Civ.Code, § 46.) The essential elements of a cause of action for defamation are simply that the specified false and defamatory matter was published to third persons. (5 Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 735, p. 156.)

Appellants' first amended complaint alleges: “Defendants, and each of them, from November 2008 to and including April 2009, have maliciously published statements to third parties that Plaintiffs are in default in paying the loan on 5813 Fernside to the Defendants, which statements are and were false and the Defendants knew or should have known that the statements were false at the time they published the statements. The third parties to whom the false statements were maliciously published included, but were not limited to, credit reporting agencies, which have reduced Plaintiffs' credit ratings as a result of the publication of the false statements, to Plaintiffs' damage.”

*7 Appellants contend the required elements have been pled. We agree. Wells Fargo argues that appellants “failed to identify the allegedly defamatory statement.” But they did. They alleged that Wells Fargo told third parties that appellants were in default in paying the loan to Wells Fargo. Wells Fargo argues that appellants “failed to allege that any statement about their credit was false.” But they did. Appellants alleged that the statements made by Wells Fargo “are and were false.” Wells Fargo then argues that “[t]ruth of the statements made is a complete defense against civil liability for defamation.” This principle may or may not ultimately help Wells Fargo to defend the action on its merits, but this argument ignores the procedural reality that on a demurrer a court is “passing upon the question of the sufficiency or insufficiency of a complaint to state a cause of action” and is not determining “whether the facts stated are true or untrue.” (Colm v. Francis, supra, 30 Cal.App. at p. 752.) Appellants' pleading alleges that the statements made by Wells Fargo “are and were false.” Whether the statements made by Wells Fargo were in fact false, or instead were true, will be determined by the trier of fact upon the evidence ultimately offered and received in the case.

Wells Fargo then cites Pavlovsky v. Board of Trade (1959) 171 Cal.App.2d 110, which states: “Ordinarily, privilege must be pleaded as an affirmative defense. [Citation.] But where the existence of the privilege is shown on the face of the complaint, it may be raised by general demurrer.” (Id. at p. 113.) Wells Fargo fails to identify, however, anything at all in the first amended complaint that would show the applicability of any privilege. Wells Fargo appears to just assume that it is a creditor, and that it therefore has a Civil Code section 47 privilege to make a false statement to a credit agency if the statement is made without malice. Civil Code section 47, subdivision (3), provides a privilege for “a communication without malice to persons interested therein by one who is also interested.” (Pavlovsky, supra, 171 Cal.App.2d at p. 113.) Nothing in appellants' first amended complaint alleges, however, that Wells Fargo is appellants' creditor or that Wells Fargo has any interest in the subject loan what would enable Wells Fargo to invoke the privilege.

DISPOSITION

The judgment is reversed and the matter is remanded to the trial court for that court to overrule respondents' demurrer to all causes of action except the second (“action to remove cloud”) and the fourth (“intentional infliction of emotional distress”). Costs on appeal awarded to appellants.

WE CONCUR: KANE, Acting P.J., and DETJEN, J.

Footnotes

Numerous federal district courts have held in recent years that possession of the original is not a requirement for initiating non-judicial foreclosure. (Nool v. HomeQ Servicing (E.D.Cal.2009) 653 F.Supp.2d 1047, 1053; Castaneda v. Saxon Mortgage Services, Inc. (E.D.Cal.2009) 687 F.Supp.2d 1191, 1201; and Jensen v. Quality Loan Service Corp. (E.D.Cal.2010) 702 F.Supp.2d 1183, 1189.) Because appellant's first amended complaint can survive a demurrer without that allegation, we need not address or resolve this issue in our decision.

MERS is a national electronic registry that tracks the transfer of ownership interests and servicing rights in mortgage loans and is a key player in the secondary mortgage market. (See Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1151.) However, because MERS is not a party to this action or mentioned in the first amended complaint, we need not discuss its involvement here.

This case presents a classic example of the longstanding rule that “in passing upon the question of the sufficiency or insufficiency of a complaint to state a cause of action, it is wholly beyond the scope of the inquiry to ascertain whether the facts stated are true or untrue” as “[t]hat is always the ultimate question to be determined by the evidence upon a trial of the questions of fact.” (Colm v. Francis (1916) 30 Cal.App. 742, 752.)

This is a very interesting

FORECLOSURE ASSISTANCE OFFERED THROUGH STATE OF CALIFORNIA

2011-06-27T14:09:00.000-07:00

Greetings Readers:

I found some more information on the programs now offered by the State of California. You can click on the links to take you to the State's programs. Here is a description of what they offer. If you need help applying please contact us and we might be able to help.

Unemployment Mortgage Assistance Program (UMA) – Intended to assist homeowners who have experienced involuntary job loss. UMA will provide temporary financial assistance in the form of a mortgage payment subsidy of varying size and term to unemployed homeowners who wish to remain in their homes but are in imminent danger of foreclosure due to short-term financial problems. These funds can provide up to six months of benefits with a monthly benefit of up to $3,000 or 100% of the existing total monthly mortgage, whichever is less.

Mortgage Reinstatement Assistance Program (MRAP) – Intended to assist homeowners who have fallen behind on their mortgage payments due to a temporary change in a household circumstance. MRAP will provide limited financial assistance in the form of funds to reinstate mortgage loans that are in arrears in order to prevent potential foreclosures. These funds can provide benefits of up to $15,000 per household.

Principal Reduction Program (PRP) – Intended to assist homeowners at risk of default because of an economic hardship coupled with a severe decline in the home’s value. PRP will provide capital to reduce outstanding principal balances of qualifying borrowers with negative equity. Principal balances will be reduced in an effort to prevent avoidable foreclosures and promote sustainable homeownership. The principal reduction program will most likely be a prelude to loan modification. (Servicers that contribute through matching funds increase the benefit for homeowners).

Transition Assistance Program (TAP) – Intended to promote community stabilization by providing homeowners with relocation assistance when it is determined that they can no longer afford their home. TAP will be used in conjunction with a servicer-approved short sale or deed-in-lieu of foreclosure program in order to help homeowners transition into stable and affordable housing. Homeowners will be responsible to occupy and maintain the property until the home is sold or returned to the servicer as negotiated. Funds will be available on a one-time only basis.

You can file for Bankruptcy but it won't stop......

2011-06-18T09:55:00.000-07:00

Dear Readers:

Many of you know that under 11 USC, Section 362, which is commonly referred to as the "Automatic Stay" filing a bankruptcy can stop a foreclosure sale. However, it may not work in some instances. If you have previously filed a bankruptcy and/or the court issued an order lifting the stay its possible that the stay will only apply for 30 days or not apply at all.

Your home is far too valuable to you to make a mistake. Don't trust your residence with a real estate broker. While there are many good ones out there, far too many of them make the mistake of filing a bankruptcy on your behalf unbeknownst to you so they can have more time to complete a short sale. This often times is a huge mistake and will impact you negatively.

Make sure the professionals you are using to help you save your home know this information. I strongly recommend that you retain the services of a licensed Bankruptcy Attorney to make sure of what will apply to your situation.

But what you might not know is that filing a bankruptcy won't stop any of the following (NOTE: This is not an all inclusive list):

1. Family law issues such as paternity lawsuits, requests for orders for domestic support and visitation and the dissolution of marriage (but only to extent it is not seeking to divide assets); domestic support orders.

2. Driver's license restrictions & Wage garnishments for domestic support obligations. However, once you file a chapter 13, it is possible to negotiate with these agencies for a payment plan in bankruptcy to get the driver's license reinstated and stop the wage garnishments.

3. The interception of a tax refund. So note that if you are going to file for bankruptcy, make sure you already got your refund!

4. IRS or Franchise Tax Board Audit, issuance of a notice of tax deficiency or a demand for tax returns;

5. COMMERCIAL LEASES: If your lease is expired, a bankruptcy won't stop eviction proceedings.

6. As I said above, a FORECLOSURE if there is an order entered in Prior Two Years giving relief from stay.

7. EVICTION JUDGMENT. Note this is an important one. If you have lost your house in foreclosure, you can stay the case if there has not been entered a judgment. But if Judgment has been entered, the Bankruptcy will not stay the Sheriff's lock out. There are some exceptions where some local Sheriff's departments won't do a lock out in the face of a bankruptcy.

Call me if you need me! Have a great weekend!

NACA.COM - SAVE THE DREAM TOUR JUNE 2 - 6 2011

2011-05-25T14:30:00.000-07:00

Dear Readers:

Last January I reported that NACA was having a tour date in Los Angeles in January. I sent one of my clients that had been denied at least 5 times for a loan modification. I sent him down to the Tour fully equipped with every document I could think of he would need in order to get loan modification approval. He was a Bank of America customer. GUESS WHAT!!!! He got a loan modification at 2%!!!!!!!!!!!!!!! SOOOOOOO

I think the banks don't want lawyers being successful getting loan modifications so you won't use us. I don't have a problem with that per se, but you need guidance on how to get your loan modification. Banks seem to have a good relationship with NACA.COM. So if you want to get a loan modification, please go to HTTP://WWW.NACA.COM and sign up for their help and register for a TOUR DATE!!!!! Also register with NACA.com and attend the next TOUR DATE.

JUNE 2 - 6 LA SHRINE EXPO CENTER. BE THERE EARLY AND PREPARE TO CAMP OUT!

BEING HARASSED FOR DEBTS MORE THAN 4 YEARS OLD..... DEBT IS UNCOLLECTABLE UNLESS YOU ENTER FOOLISHLY INTO A PAYMENT PLAN AND MAKE A PAYMENT.

2011-03-29T13:37:00.000-07:00

Dear Readers:

Not long ago I had a collector calling me regarding an old AT&T bill. Wanted to make a deal with me to settle for HALF of what I owed. I asked him home much I owed and he said like $400.00 but would settle for $200.00...... Then as I got to thinking..... I asked him how old is that bill? He balked at telling me but finally admitted it was from 1998!!!!! That was like 13 years ago!!!! I recognized as an attorney the statute of limitations had run. I realized that that they had no more right to report this on my credit report. I realized that they couldn't touch me. I informed him that this bill was charged off when I was a broke person and couldn't pay. Its well over the FOUR YEAR STATUTE of limitations he has to sue me for an account. He tried to say that I made a payment within the last four years..... this was a lie!!! I told him show me proof of that..... again he hemmed and hawed..... I told him I wasn't going to pay it and that he should just sue me if he thought he had a chance to win. I haven't heard nothing from him since! He knew statute was blown....

BUT I GOT TO THINKING ABOUT THE NON-ATTORNEYS who don't know their rights and who could be bullied into paying a bill that was uncollectable.... Then I ran across this story..... These collectors and their attorneys could be in for a LOT OF TROUBLE! Read on....

McCollough v. Johnson, Rodenburg & Lauinger, LLC, 2011 Westlaw 746892 (9th Cir. 2011)

Facts: A consumer failed to pay his credit card debt, and the issuer subsequently charged off the account. A few years later, the issuer sold his account to a collection agency in the business of purchasing bad debt portfolios. The collection agency brought suit against the consumer, who raised the defense of limitations; undeterred, the collection agency then referred the account to a law firm.

According to the firm's records, the account was not barred by limitations, because the consumer had supposedly made a recent payment. In fact, the records were incorrect. Without seeking to verify those records, the firm then brought suit against the consumer, who filed a pro se answer, again raising the bar of limitations and informing the firm that he was severely disabled. The firm nevertheless pressed ahead with the prosecution, serving requests for admission on the consumer. Those requests for admission failed to contain an explanation required by state law that the requests would be deemed admitted if there was no response within 30 days. After the consumer retained counsel, the firm dismissed the second collection action.

The consumer then filed suit in federal court, alleging violations of the Fair Debt Collection Practices Act ("FDCPA"), along with state law claims for malicious prosecution and abuse of process. The trial court granted partial summary judgment to the consumer on his FDCPA claims. His tort claims were then tried to a jury, which awarded him $250,000 in emotional distress damages and $60,000 in punitive damages. The Ninth Circuit affirmed.

Reasoning: The law firm first argued that it could not be held liable under the FDCPA because its conduct was the result of a "bona fide error." But the appellate court affirmed the trial court's summary judgment in favor of the consumer, holding that the firm "erred by relying without verification" on the collection agency's representation that the account was not time-barred. Further, the firm's reliance on the collection agency's data was unreasonable as a matter of law, since the collection agency had itself expressly disclaimed "the accuracy or validity" of its data.

The Ninth Circuit also affirmed the trial court's ruling that the firm's requests for admission violated the FDCPA as a matter of law because they asked the consumer "to admit facts that were not true." The court also noted that the firm's failure to include a statutorily-required explanation that the requests would be deemed admitted if not contradicted within 30 days was misleading as a matter of law, from the standpoint of "the least sophisticated debtor." The firm argued that discovery procedures should be excluded from coverage under the FDCPA, since the applicable court rules already provide sufficient protection. But the court held that the "clear statutory language" of the FDCPA sufficiently encompassed discovery abuses.

Turning to the malicious prosecution claim, the court held that there was substantial evidence that the firm did not reasonably believe that the second suit against the consumer was not time-barred, since the firm failed to check with the collection agency to verify that the statute of limitations was inapplicable. Finally, the court also upheld the jury verdict on the abuse of process claim:

[The firm] filed suit to extract money . . . that it could not legally obtain in a collection action and . . . filed a baseless action with knowledge that it had no legal claim . . . . [The firm] filed and pursued a time-barred lawsuit . . . , even though [the firm's] own electronic file indicated that the suit was time-barred . . . . [The firm] sought attorney's fees without confirming that [the consumer] had a contractual fee obligation. The jury could have inferred from this evidence that [the firm's] purpose in filing the lawsuit was to coerce [the consumer] to pay awards and fees to which it and [the collection agency] were not entitled.

So for you people out there that are being harassed about an old debt TAKE HEED.

1. DO NOT ENTER INTO A PAYMENT PLAN FIRST

2. ASK TO SEE AN ACCOUNTING OF THE DEBT YOU OWE.

3. DO NOT REFUSE TO PAY SIMPLY STATE THAT YOU ARE UNSURE OF WHETHER YOU OWE THE DEBT AND WOULD LIKE TO SEE THE ACCOUNTING.

4. IF YOU FIND THE LAST ENTRY FOR A PAYMENT YOU MADE OR A CHARGE ON THE ACCOUNT WAS MADE OVER FOUR YEARS AGO, CONSULT WITH AN ATTORNEY. THERE MAY BE NO WAY FOR THEM TO COLLECT FROM YOU. BUT YOU MUST CONSULT AN ATTORNEY TO KNOW FOR SURE.

Good Luck out there!

FREE LOAN MODIFICATION ADVICE AND HOW NOT TO HAVE YOUR HOUSE SOLD IN FORECLOSURE

2011-03-24T09:35:00.000-07:00

IF YOU ARE TRYING TO GET A LOAN MODIFICATION:

1. SIGN UP WITH NACA AND LET THEM MAKE THE INTRODUCTION TO YOUR LENDER. SEE WHAT THEY ADVISE FIRST. THEN FILL OUT ALL OF THE INFORMATION REQUESTED BY YOUR LENDER.

2. SEND ALL OF THE INFORMATION IN A MANNER THAT WILL RESULT IN WRITTEN CONFIRMATION THAT IT WAS RECEIVED. PREFERABLY BY FAX, OR E-MAIL OR BY CERTIFIED MAIL, OR OVERNIGHT MAIL, OR DIRECT DELIVERY WITH A SIGNATURE RECEIPT BY THE LENDER IF THEY HAVE A FORECLOSURE CENTER.

3. VERY IMPORTANT: CALL ONCE A WEEK TO REQUEST STATUS. IF THEY TELL YOU DON’T CALL BACK FOR A MONTH, DON’T LISTEN TO THEM, CALL EVERY WEEK. ASK THEM “ARE YOU MISSING ANY DOCUMENTS?” ARE THERE ANY OTHER DOCUMENTS NEEDED?

4. WHATEVER RESPONSE YOU GET, SEND THE MISSING DOCUMENTS, EVEN IF YOU HAVE SENT IT 64 TIMES BEFORE AND THEY KEEP CLAIMING THEY DON’T HAVE, SEND IT AGAIN.

5. IF THEY SAY THAT THEY HAVE EVERYTHING, THEN FAX A LETTER TO THEM SAYING THAT “I SPOKE WITH _________ AT THIS PHONE NUMBER _____________ AND HE/SHE TOLD ME THAT YOU HAVE ALL MY PAPERWORK AND THAT I AM PRESENT BEING REVIEWED. IF THIS STATUS SHOULD CHANGE, PLEASE CONTACT ME IMMEDIATELY.”

6. IF THEY SAY THEY ARE MISSING SOMETHING SEND LETTER TO THEM BY FAX SAYING " I SPOKE WITH ______ WHO TOLD ME THAT YOU STILL DON'T HAVE __________. I SENT THAT DOCUMENT TO YOU ON ____________(List all the dates you sent). BUT FOR YOUR CONVENIENCE I AM SENDING IT TO YOU AGAIN WITH THIS LETTER. I WILL CHECK BACK WITH YOU IN ONE WEEK TO CHECK THE STATUS."

7. EVERY WEEK FAX A LETTER TO THEM SENDING THEM ANY BANK STATEMENTS THAT YOU HAVE RECEIVED IN THAT WEEK OR COPIES OF ANY PAYSTUBS YOU HAVE RECEIVED IN THAT WEEK. THIS WAY WHEN THE REVIEWER GETS TO YOUR PAPERWORK, THEY CAN’T MAKE EXCUSES ABOUT HOW THEY DON’T HAVE UP TO DATE INFORMATION.

8. NO MATTER WHAT, DON'T GIVE UP. IT SEEMS TO ME THAT THE GOAL OF ALL OF THESE LENDERS IS TO FRUSTRATE YOU TO DEATH, EITHER YOUR OWN OR SOMEONE ELSES (JUST KIDDING) I BELIEVE THEY HOPE YOU GIVE UP SO THAT THEY CAN JUST TAKE YOUR HOUSE AND ADD IT TO THEIR PORTFOLIO OF REOs. THE BANK LOOKS LIKE A STRONGER INVESTMENT TO PEOPLE IN DUBAI AND IN CHINA WHEN THE PORTFOLIO IS FILLED WITH REOs AND NOT A BUNCH OF LOANS WHICH HAVE SHOWN POOR PERFORMANCE IN THE PAST. HOPEFULLY MY SAVVY READERS GET THIS POINT BY NOW!

9. IF THEY WON'T CONTINUE A SALE DATE AT LEAST 3 DAYS BEFORE IT IS SCHEDULED TO GO TO SALE, FIND A BANKRUPTCY ATTORNEY TO FILE A BANKRUPTCY IN CHAPTER 13 TO STOP THE SALE. IF THE BK ATTORNEY YOU CONSULT SAYS YOU CAN'T DO IT, CALL ME AND I WILL DOUBLE CHECK IT FREE OF CHARGE. I HAVE BEEN ABLE TO HELP A LOT OF PEOPLE EVEN WHEN OTHERS DIDN'T HAVE THE FAITH OR KNOWLEDGE TO MAKE IT HAPPEN

MY CLIENTS WHO FOLLOW THIS PROCESS SEEM TO DO BETTER THAN THE ONES WHO DO NOT. THERE ARE NO GUARANTEES THAT YOU WILL GET A LOAN MODIFICATION AND THANKS TO THE COWARDICE OF CONGRESS AND OUR PRESIDENT IN NOT STANDING UP TO THE BANKS, AND TAKING THEIR CAMPAIGN CONTRIBUTIONS, THEY WON'T EVER STAND UP TO THEM, THERE IS NOTHING REQUIRING OR MANDATING THAT YOU BE GIVEN A LOAN MODIFICATION.

GOOD LUCK OUT THERE!!!!!

CONTACT YOUR REPRESENTATIVE AND DEMAND HYBRID CRAM-DOWN NOW

2011-03-11T07:29:00.000-08:00

I am a Bankruptcy Attorney here in the Valley. I wanted to see if anyone would listen to a proposal I have about mortgage-cram down that could work in Chapter 13 Bankruptcy. Let people pay their mortgages at fair interest rate based on what the property is worth during the five years in which the homeowner is in bankruptcy. Then when they get ready to complete the 5 year repayment plan, then the principal will be reduced to 110% of market or fair market whichever is greater. Any money that the debtor's are behind would be wrapped up into the principal. If the homeowner falls behind then the bankruptcy would cancel and the loan goes back to old status.

This would help homeowners start paying on their mortgages. The banks would start getting liquidity back into the markets, and they wouldn't take as big a hit as a full cram-down would give and it would give the banks incentive to fix this mortgage mess and get our economy going again so that real estate values could come up again in five years enough to a much higher recovery on those loans. The banks would get more money in five years than what they would get doing a foreclosure now. It gives struggling homeowners a chance to get ready to move or earn more money to pay the house. By allowing this in bankruptcy only, the banks would be protected by the courts from fraud. It is a win win for everyone. Who can I share this with, in the hopes that this idea might catch some steam?

Word to the wise about LAM STIPULATIONS..... CDCBAA X Reply | R Grace Rodriguez to cdcbaa show details 8:39 AM (0 minutes ago) Dear Friends: Okay I really goofed and now I have to go back to court and clean up the mess. But let me share an experience I had with Virtual Bank so that the rest of you don't make my mistake. I filed a Lien Avoidance Motion before Judge Ahart. Two weeks before the hearing, the lender contact me to do a Stipulation. I said sure send it over and let me look at it. They sent it over and it looked pretty standard and I had intended to sign it. Things got busy.. . . 3 days before the hearing, Virtual Bank calls. I apologize that I hadn't gotten to it yet but I would do it in that moment. I open up the document and it doesn't look right to me. Something is wrong with this Stipulation and I just couldn't put my finger on it. But I called Virtual Bank and told them that the Tentative ruling had already come out and that I wasn't going to sign the stipulation. They said they would come to the hearing to oppose the motion. We ended the call. At the hearing, my appearance counsel shows up. The matter is called, she sits back to see if there is any opposition. BUT NO ONE SHOWED UP TO OPPOSE. The court granted the motion. Apparently appearance counsel shows up sometime later and I absolutely don't have any idea how it is that the appearance counsel was able to do this, but he had the motion recalled, the case was continued so a stipulation could be filed. I'm assuming that appearance counsel made some representations about the Stipulation to cause this to happen. However, I can't imagine what representations other than perhaps that I was amenable to a Stipulation, which was false. In any case the hearing was continued. I imagine the principal fed the appearance counsel untruths. Appearance counsel called my office, and my trusted assistant said appearance counsel made an actual threat against me and my practice if I don't call him to fix the stipulation. Now out of respect (a respect which is now lost) I talked to appearance counsel about the stipulation, and how it was pretty standard not to worry, and to facilitate matters, I finally agreed to stupidly sign the stipulation. It got filed. THREE MONTHS LATER....... Now the client is getting letters from the lender that the Stipulation says nothing about them trying to collect money on the loan even though the lien was avoided. DOH!!!! Now I will have to go back to court and bring the motion again to clarify this point. I spoke with the lender. and they say they are even going to sue the clients in violation of the terms of the Chapter 13 Plan to try to get money back. So if any of you have some ideas for me how to rectify this so Virtual Bank will leave the client alone. SO LESSON TO ALL: Read your stipulations carefully to make sure they include this valuable term. I ALSO: YOU WILL PAY FOR YOUR LACK OF EXPERIENCE..... but maybe my experience can lessen the burden for some of you newer attorneys. Have fun out there y'all. -- R. Grace Rodriguez, Esq. OFF: (818) 734-7223 CEL: (818) 554-9922 NO EX-PARTE NOTICE VIA VOICE MAIL OR EMAIL: I do not accept e-mail notice for ex parte Applications via voicemail or by email. You must comply with California Law and give notice to a person in my office during regular business hours. CONFIDENTIALITY STATEMENT: This message contains privileged and confidential information and is intended only for the individual named. If you are not the intended recipient you should not disseminate, distribute, store, print, copy or deliver this message. Please notify the sender immediately by e-mail if you have received this e-mail by mistake and delete this e-mail from your system. Reply Forward Your message has been sent. Reply | R Grace Rodriguez to Peggi show details 8:39 AM (0 minutes ago) - Show quoted text - ---------- Forwarded message ---------- From: R Grace Rodriguez Date: Wed, Mar 9, 2011 at 8:39 AM Subject: Word to the wise about LAM STIPULATIONS..... To: cdcbaa@yahoogroups.com Dear Friends: Okay I really goofed and now I have to go back to court and clean up the mess. But let me share an experience I had with Virtual Bank so that the rest of you don't make my mistake. I filed a Lien Avoidance Motion before Judge Ahart. Two weeks before the hearing, the lender contact me to do a Stipulation. I said sure send it over and let me look at it. They sent it over and it looked pretty standard and I had intended to sign it. Things got busy.. . . 3 days before the hearing, Virtual Bank calls. I apologize that I hadn't gotten to it yet but I would do it in that moment. I open up the document and it doesn't look right to me. Something is wrong with this Stipulation and I just couldn't put my finger on it. But I called Virtual Bank and told them that the Tentative ruling had already come out and that I wasn't going to sign the stipulation. They said they would come to the hearing to oppose the motion. We ended the call. At the hearing, my appearance counsel shows up. The matter is called, she sits back to see if there is any opposition. BUT NO ONE SHOWED UP TO OPPOSE. The court granted the motion. Apparently appearance counsel shows up sometime later and I absolutely don't have any idea how it is that the appearance counsel was able to do this, but he had the motion recalled, the case was continued so a stipulation could be filed. I'm assuming that appearance counsel made some representations about the Stipulation to cause this to happen. However, I can't imagine what representations other than perhaps that I was amenable to a Stipulation, which was false. In any case the hearing was continued. I imagine the principal fed the appearance counsel untruths. Appearance counsel called my office, and my trusted assistant said appearance counsel made an actual threat against me and my practice if I don't call him to fix the stipulation. Now out of respect (a respect which is now lost) I talked to appearance counsel about the stipulation, and how it was pretty standard not to worry, and to facilitate matters, I finally agreed to stupidly sign the stipulation. It got filed. THREE MONTHS LATER....... Now the client is getting letters from the lender that the Stipulation says nothing about them trying to collect money on the loan even though the lien was avoided. DOH!!!! Now I will have to go back to court and bring the motion again to clarify this point. I spoke with the lender. and they say they are even going to sue the clients in violation of the terms of the Chapter 13 Plan to try to get money back. So if any of you have some ideas for me how to rectify this so Virtual Bank will leave the client alone. SO LESSON TO ALL: Read your stipulations carefully to make sure they include this valuable term. I ALSO: YOU WILL PAY FOR YOUR LACK OF EXPERIENCE..... but maybe my experience can lessen the burden for some of you newer attorneys. Have fun out there y'all. -- R. Grace Rodriguez, Esq. OFF: (818) 734-7223 CEL: (818) 554-9922 NO EX-PARTE NOTICE VIA VOICE MAIL OR EMAIL: I do not accept e-mail notice for ex parte Applications via voicemail or by email. You must comply with California Law and give notice to a person in my office during regular business hours. CONFIDENTIALITY STATEMENT: This message contains privileged and confidential information and is intended only for the individual named. If you are not the intended recipient you should not disseminate, distribute, store, print, copy or deliver this message. Please notify the sender immediately by e-mail if you have received this e-mail by mistake and delete this e-mail from your system. -- R. Grace Rodriguez, Esq. OFF: (818) 734-7223 CEL: (818) 554-9922 NO EX-PARTE NOTICE VIA VOICE MAIL OR EMAIL: I do not accept e-mail notice for ex parte Applications via voicemail or by email. You must comply with California Law and give notice to a person in my office during regular business hours. CONFIDENTIALITY STATEMENT: This message contains privileged and confidential information and is intended only for the individual named. If you are not the intended recipient you should not disseminate, distribute, store, print, copy or deliver this message. Please notify the sender immediately by e-mail if you have received this e-mail by mistake and delete this e-mail from your system. Reply Forward We collect your judgment - Experienced judgment collectors Ad $0 upfront, free consultation! www.Enforcementsetc.com

2011-03-09T08:42:00.000-08:00

Dear Friends:

Okay I really goofed and now I have to go back to court and clean up the mess. But let me share an experience I had with Virtual Bank so that the rest of you don't make my mistake.

I filed a Lien Avoidance Motion before Judge Ahart. Two weeks before the hearing, the lender contact me to do a Stipulation. I said sure send it over and let me look at it. They sent it over and it looked pretty standard and I had intended to sign it. Things got busy.. . . 3 days before the hearing, Virtual Bank calls. I apologize that I hadn't gotten to it yet but I would do it in that moment.

I open up the document and it doesn't look right to me. Something is wrong with this Stipulation and I just couldn't put my finger on it. But I called Virtual Bank and told them that the Tentative ruling had already come out and that I wasn't going to sign the stipulation.

They said they would come to the hearing to oppose the motion. We ended the call.

At the hearing, my appearance counsel shows up. The matter is called, she sits back to see if there is any opposition. BUT NO ONE SHOWED UP TO OPPOSE. The court granted the motion.

Apparently appearance counsel shows up sometime later and I absolutely don't have any idea how it is that the appearance counsel was able to do this, but he had the motion recalled, the case was continued so a stipulation could be filed. I'm assuming that appearance counsel made some representations about the Stipulation to cause this to happen. However, I can't imagine what representations other than perhaps that I was amenable to a Stipulation, which was false. In any case the hearing was continued. I imagine the principal fed the appearance counsel untruths.

Appearance counsel called my office, and my trusted assistant said appearance counsel made an actual threat against me and my practice if I don't call him to fix the stipulation. Now out of respect (a respect which is now lost) I talked to appearance counsel about the stipulation, and how it was pretty standard not to worry, and to facilitate matters, I finally agreed to stupidly sign the stipulation. It got filed.

THREE MONTHS LATER....... Now the client is getting letters from the lender that the Stipulation says nothing about them trying to collect money on the loan even though the lien was avoided. DOH!!!! Now I will have to go back to court and bring the motion again to clarify this point.

I spoke with the lender. and they say they are even going to sue the clients in violation of the terms of the Chapter 13 Plan to try to get money back.

So if any of you have some ideas for me how to rectify this so Virtual Bank will leave the client alone.

SO LESSON TO ALL: Read your stipulations carefully to make sure they include this valuable term. I

ALSO: YOU WILL PAY FOR YOUR LACK OF EXPERIENCE..... but maybe my experience can lessen the burden for some of you newer attorneys.

Have fun out there y'all.

--
R. Grace Rodriguez, Esq.
OFF: (818) 734-7223
CEL: (818) 554-9922

NO EX-PARTE NOTICE VIA VOICE MAIL OR EMAIL: I do not accept e-mail notice for ex parte Applications via voicemail or by email. You must comply with California Law and give notice to a person in my office during regular business hours.

CONFIDENTIALITY STATEMENT: This message contains privileged and confidential information and is intended only for the individual named. If you are not the intended recipient you should not disseminate, distribute, store, print, copy or deliver this message. Please notify the sender immediately by e-mail if you have received this e-mail by mistake and delete this e-mail from your system.

Forward

Your message has been sent.

R Grace Rodriguez

to Peggi

show details 8:39 AM (0 minutes ago)

- Show quoted text -

---------- Forwarded message ----------
From: R Grace Rodriguez <rgracelaw@gmail.com>
Date: Wed, Mar 9, 2011 at 8:39 AM
Subject: Word to the wise about LAM STIPULATIONS.....
To: cdcbaa@yahoogroups.com

Dear Friends:

Okay I really goofed and now I have to go back to court and clean up the mess. But let me share an experience I had with Virtual Bank so that the rest of you don't make my mistake.

I filed a Lien Avoidance Motion before Judge Ahart. Two weeks before the hearing, the lender contact me to do a Stipulation. I said sure send it over and let me look at it. They sent it over and it looked pretty standard and I had intended to sign it. Things got busy.. . . 3 days before the hearing, Virtual Bank calls. I apologize that I hadn't gotten to it yet but I would do it in that moment.

I open up the document and it doesn't look right to me. Something is wrong with this Stipulation and I just couldn't put my finger on it. But I called Virtual Bank and told them that the Tentative ruling had already come out and that I wasn't going to sign the stipulation.

They said they would come to the hearing to oppose the motion. We ended the call.

At the hearing, my appearance counsel shows up. The matter is called, she sits back to see if there is any opposition. BUT NO ONE SHOWED UP TO OPPOSE. The court granted the motion.

Apparently appearance counsel shows up sometime later and I absolutely don't have any idea how it is that the appearance counsel was able to do this, but he had the motion recalled, the case was continued so a stipulation could be filed. I'm assuming that appearance counsel made some representations about the Stipulation to cause this to happen. However, I can't imagine what representations other than perhaps that I was amenable to a Stipulation, which was false. In any case the hearing was continued. I imagine the principal fed the appearance counsel untruths.

Appearance counsel called my office, and my trusted assistant said appearance counsel made an actual threat against me and my practice if I don't call him to fix the stipulation. Now out of respect (a respect which is now lost) I talked to appearance counsel about the stipulation, and how it was pretty standard not to worry, and to facilitate matters, I finally agreed to stupidly sign the stipulation. It got filed.

THREE MONTHS LATER....... Now the client is getting letters from the lender that the Stipulation says nothing about them trying to collect money on the loan even though the lien was avoided. DOH!!!! Now I will have to go back to court and bring the motion again to clarify this point.

I spoke with the lender. and they say they are even going to sue the clients in violation of the terms of the Chapter 13 Plan to try to get money back.

So if any of you have some ideas for me how to rectify this so Virtual Bank will leave the client alone.

SO LESSON TO ALL: Read your stipulations carefully to make sure they include this valuable term. I

ALSO: YOU WILL PAY FOR YOUR LACK OF EXPERIENCE..... but maybe my experience can lessen the burden for some of you newer attorneys.

Have fun out there y'all.

--
R. Grace Rodriguez, Esq.
OFF: (818) 734-7223
CEL: (818) 554-9922

NO EX-PARTE NOTICE VIA VOICE MAIL OR EMAIL: I do not accept e-mail notice for ex parte Applications via voicemail or by email. You must comply with California Law and give notice to a person in my office during regular business hours.

CONFIDENTIALITY STATEMENT: This message contains privileged and confidential information and is intended only for the individual named. If you are not the intended recipient you should not disseminate, distribute, store, print, copy or deliver this message. Please notify the sender immediately by e-mail if you have received this e-mail by mistake and delete this e-mail from your system.

--
R. Grace Rodriguez, Esq.
OFF: (818) 734-7223
CEL: (818) 554-9922

NO EX-PARTE NOTICE VIA VOICE MAIL OR EMAIL: I do not accept e-mail notice for ex parte Applications via voicemail or by email. You must comply with California Law and give notice to a person in my office during regular business hours.

CONFIDENTIALITY STATEMENT: This message contains privileged and confidential information and is intended only for the individual named. If you are not the intended recipient you should not disseminate, distribute, store, print, copy or deliver this message. Please notify the sender immediately by e-mail if you have received this e-mail by mistake and delete this e-mail from your system.

Forward

We collect your judgment - Experienced judgment collectors

$0 upfront, free consultation!

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Stop Creditor Harassment. . . . at least for a little while. . .

2011-03-07T21:17:00.000-08:00

Dear Readers: It has been a very busy time for my office. But I ran across this tid-bit i wanted to share with all of you. Credit card companies are notorious about auto-dialers. They will call you until they finally get to talk to someone. But you have a shot at putting an end to it by requesting written communication only. Here is a sample letter for you readers to send to your credit card companies.

Via Certified Return Receipt Mail
Dated: ____________________

Name of Creditor or Collection Agency
Address
City, State & Zip

   Re: My Name
                     Account Number
   Name of Creditor

Dear Sir or Madam:

Please be advised that I am unable to continue making even minimum payments towards the account referenced above.

Pursuant to 15 USC, Section 1692C9c) and California Civil Code, Section 1788.17, I am hereby requesting that you stop all oral communication with me immediately. If you fail to honor this request please be aware that you will be in violation of federal and state law. Moreover, your continued harassment may force me to take appropriate legal action against your company.

I have retained the Law offices of R. Grace Rodriguez, (818) 734-7223 to explore potential bankruptcy options and/or debt settlement negotiations. I will contact you once I know what option I will be electing. Thank you for your anticipated cooperation during this very stressful time for myself and my family.

Sincerely,

Another Struggling American!

Debt Limits for Filing Chapter 13 Bankruptcy

2011-01-17T11:59:00.001-08:00

28, USC, 109(e) Only an individual with regular income that owes, on the date of the filing of the petition, noncontingent, liquidated, unsecured debts of less than $360,475² and noncontingent, liquidated, secured debts of less than $1,081,400², or an individual with regular income and such individual's spouse, except a stockbroker or a commodity broker, that owe, on the date of the filing of the petition, noncontingent, liquidated, unsecured debts that aggregate less than $360,475² and noncontingent, liquidated, secured debts of less than $1,081,400² may be a debtor under chapter 13 of this title.

What to do if you seriously want a loan modification.

2011-01-14T10:00:00.000-08:00

IF YOU ARE TRYING TO GET A LOAN MODIFICATION:

1. FILL OUT ALL OF THE INFORMATION REQUESTED BY YOUR LENDER.

2. SEND ALL OF THE INFORMATION IN A MANNER THAT WILL RESULT IN WRITTEN CONFIRMATION THAT IT WAS RECEIVED. PREFERRABLY BY FAX, OR E-MAIL OR BY CERTIFIED MAIL, OR OVERNIGHT MAIL, OR DIRECT DELIVERY WITH A SIGNATURE RECEIPT BY THE LENDER IF THEY HAVE A FORECLOSURE CENTER.

3. CALL ONCE A WEEK TO REQUEST STATUS. IF THEY TELL YOU DON’T CALL BACK FOR A MONTH, DON’T LISTEN TO THEM, CALL EVERY WEEK. ASK THEM “ARE YOU MISSING ANY DOCUMENTS?” ARE THERE ANY OTHER DOCUMENTS NEEDED?

4. WHATEVER RESPONSE YOU GET, SEND THE MISSING DOCUMENTS, EVEN IF YOU HAVE SENT IT 64 TIMES BEFORE AND THEY KEEP CLAIMING THEY DON’T HAVE, SEND IT AGAIN. IF THEY SAY THAT THEY HAVE EVERYTHING, THEN FAX A LETTER TO THEM SAYING THAT “I SPOKE WITH _________ AT THIS PHONE NUMBER _____________ AND HE/SHE TOLD ME THAT YOU HAVE ALL MY PAPERWORK AND THAT I AM PRESENT BEING REVIEWED. IF THIS STATUS SHOULD CHANGE, PLEASE CONTACT ME IMMEDIATELY.”

5. EVERY WEEK FAX A LETTER TO THEM SENDING THEM ANY BANK STATEMENTS THAT YOU HAVE RECEIVED IN THAT WEEK OR COPIES OF ANY PAYSTUBS YOU HAVE RECEIVED IN THAT WEEK. THIS WAY WHEN THE REVIEWER GETS TO YOUR PAPERWORK, THEY CAN’T MAKE EXCUSES ABOUT HOW THEY DON’T HAVE UP TO DATE INFORMATION.

6. NO MATTER WHAT, DON'T GIVE UP. IT SEEMS TO ME THAT THE GOAL OF ALL OF THESE LENDERS IS TO FRUSTRATE YOU TO DEATH, EITHER YOUR OWN OR SOMEONE ELSES (JUST KIDDING) I BELIEVE THEY HOPE YOU GIVE UP SO THAT THEY CAN JUST TAKE YOUR HOUSE AND ADD IT TO THEIR PORTFOLIO OF REOs. THE BANK LOOKS LIKE A STRONGER INVESTMENT TO PEOPLE IN DUBAI AND IN CHINA WHEN THE PORTFOLIO IS FILLED WITH REOs AND NOT A BUNCH OF LOANS WHICH HAVE SHOWN POOR PERFORMANCE IN THE PAST. HOPEFULLY MY SAVVY READERS GET THIS POINT BY NOW!

GOOD LUCK OUT THERE!!!!!

AND MORE NEWS FROM CALIFORNIA LOAN MODS

2011-01-11T20:39:00.000-08:00

State plan to help homeowners facing foreclosure kicks off

By Pete Carey

pcarey@mercurynews.com

Posted: 01/11/2011 05:50:26 PM PST

Updated: 01/11/2011 08:08:41 PM PST

Special Section

News, resources about the California budget

A state plan to help homeowners facing the threat of foreclosure kicked off this week, with the California Housing Finance Agency taking applications on a toll-free phone line.

Designed to help homeowners receiving unemployment benefits keep current on their mortgage payments, the program that kicked off Monday will give as many as 60,000 eligible homeowners a mortgage payment subsidy of up to $3,000 for a maximum of six months.
In February, the agency, which has $2 billion in federal funds, will launch three more programs tailored for low- and moderate income homeowners.
"The phone line's up, it's available, the calls are coming in and people are getting some assistance," said Diane Richardson, president of Keep Your Home California.
The toll-free number is 888-954-KEEP (5337). The agency received more than 1,200 calls in its first two days.
Not everyone will meet the requirements. Tony Salem of San Jose, an unemployed high-tech manager who is at risk of foreclosure, called Tuesday to apply for help and was given the disappointing news that his loan servicer hadn't signed up to participate. ''They said to contact your mortgage company and see if they are going to become involved," Salem said.
Participating lenders, loan servicers and agencies include Wells Fargo, Chase, Bank of America, GMAC, CalHFA, and the Department of Veterans Affairs, as well as the government-sponsored Fannie Mae and Freddie Mac.

Richardson said. "We have a lot of them that are just very close to being there."
The other three programs will start Feb. 7, Richardson said. They are:

Prevention of foreclosures with up to $15,000 per household to help homeowners who have fallen behind on their mortgage payments.

Money to reduce the principal on mortgages that are underwater and at risk of default.

Relocation assistance for homeowners who have decided they can no longer keep their home.

The program's web site is www.keepyourhomecalifornia.com/. Click on the "Eligibility" tab to find out if you meet the eligibility requirements before calling the toll-free number.

Contact Pete Carey at 408-920-5419.

BANK OF AMERICA - SAVE THE DREAM TOUR

2011-01-11T19:23:00.000-08:00

ATTENTION BANK OF AMERICA HOMEOWNERS!!!!!!!!

On January 20, 2011 through the 30th, Bank of America's "Save The Dream Tour" will be at the Los Angeles Sports Arena from 9:00 a.m. to 8:00 p.m., located at 3909 South Figueroa Street, Los Angeles, CA.

I have recommended to my clients to go there the day before and get in line the night before and CAMP OUT. You will need to bring the following documents.

What to Bring—Proof of Income and Residency
In order to provide proof of residency and income, you’ll need to collect a set of the following documents for everyone listed on your home loan. Please be sure to bring photocopies of your documents—not the originals. These documents include the following:

2 most recent pay stubs, or, if self-employed, quarterly or year-to-date profit/loss statement
2 most recent bank statements for all checking and savings accounts
Most recent utility bill showing your name and property address

All of the following that may apply:

Other income (such as social security, disability, death benefits, pension, adoption assistance, public assistance, or unemployment) along with a benefits statement or letter from the provider that states the amount, frequency and duration of the benefit
Income from alimony, child support or separation* along with the divorce decree, separation agreement or other written agreement filed with the court
Rental income along with copies of the most recently filed signed federal tax return with all schedules, including the Schedule E (Supplemental Income and Loss) or a current lease agreement
Non-wage income (part-time employment, bonuses, tips and investment income), if more than 20% of total income, requires copy of documentation describing the nature of the income (for example, an employment contract or printouts documenting tip income)
Proof of homeowners/condominium association fees

*You are not required to disclose child support, alimony or separation maintenance income, unless you choose to have it considered.

If you don't get your loan modification at the Sports Arena, then please contact us and we can show you alternatives to saving your home!

http://www.knowyouroptions.com/

2011-01-06T16:03:00.001-08:00

http://www.knowyouroptions.com/

Bank of America loses to homeowner in small claims court

2011-01-06T12:33:00.000-08:00

Bank of America loses to homeowner in small claims court

MORE BAD FAITH AND CRAP FROM AURORA LOAN SERVICING

2011-01-03T09:53:00.000-08:00

Dear Readers:

Today, my client got a letter that her loan payment on her home was going to double. Her rate is 8% for the first five years, which then drops to 2.25% over the H.15 Constant maturity 1-Year Rate established by the US Treasury which is currently .2733 so technically her rate at the five year rate will be 2.675 more or less. With insurance and taxes her payment should be only about $3,700.00 per month to keep her house. But Aurora wants $4,883.00 until July 12, 2012, then they will drop it to $3,700.00 per month or whatever index is at that time.

But here is the kicker. She filed a chapter 13 Bankruptcy. I sent in an authorization for her to speak directly with the lender regarding loan modification. She asked for one, and was told she doesn't qualify. After calling repeatedly, they finally agreed to interview her for a loan modification. But here is what we learned. . . . UNLESS BOTH the LAWYER AND THE BORROWER send a letter in WRITING requesting loan modification, it WILL NOT BE OFFERED. How is that for complying with the spirit of HAMP. What a dismal failure that program turned out to be.

Anywyer Readers, the squeaky wheel gets the grease. At this point I would recommend that each of you call your lender WEEKLY and SEND FAXES weekly of your attempts to get loan modification from your lenders. When finally the Government wakes up and decides its going to help you, IF and ONLY IF that day ever comes, then you will have adequate documentation of your legitimate attempts at loan modification.

Additionally, I cannot impress upon you enough that if you have stopped making payments on your mortgage to at the least use a mortgage calculator online. Figure out what you owe to your lender. Calculate a mortgage payment based on 4% and at least mail in that amount to your lender. Show them you can succeed with a reasonable loan modification. Furthermore, if your lender won't take your money then open a savings account and deposit that amount into your bank account each month. You will have documented proof for your lender that you can make a reasonable mortgage payment. At the end of the day, if you cannot save your house, you will likely have saved up quite a bit of money if you have to move, or cure your default.

I can tell you that it is painful to go from not making payments for 2 years to paying rent or a mortgage again. We as humans get use to having that money around and we spend it. Please don't make that mistake!

Good luck out there, until the next time I have more news to report.

God bless each of you for the coming year!

VERY BAD NEWS for Homeowners with BANK OF AMERICA (BAC) LOANS facing FORECLOSURE

2010-12-10T08:28:00.000-08:00

Dear Readers:

Today, Barbara Desoer, president of Bank of America announced that the moratorium on foreclosures by Bank of America is at an end. She stated that in the month of December Bank of America intends to foreclose on 16,000 homes within the next ten days. However, they will observe a "holiday suspension" of sales and evictions from Dec. 20 to Jan. 2.

My friends if your are scheduled for a foreclosure sale within the next 10 days or in the early part of January, I URGE you to meet with a BANKRUPTCY attorney, who can help you come up with a plan in which to either save your home from foreclosure, or alternatively recommend short-sale or eviction defense proceedings to help you maximize the amount of time you have left in your home.

If you know that there is no way to save your house from foreclosure, then the economic goal should be to stay in your home as long as legally possible. The longer you can stay in your home without making a mortgage payment is the more money you save to move out.

Many people with whom I have consulted tell me that their children are able to buy new family homes using the money they save. Then they are able to file for bankruptcy under Chapter 7 and eliminate the balance of their debt and achieve a fresh start.

I cannot tell you how important it is to PLEASE CONSULT AN ATTORNEY IN YOUR COMMUNITY immediately so that you can develop a strategy that will improve your financial future. For many of my clients that strategy does not include a bankruptcy. So if you are afraid or embarrassed about bankruptcy, you owe it to yourself and to your family to consult with an attorney. THE CONSULTATION at the Law Offices of R. Grace Rodriguez are always free!

Remember if you have a Bank of America loan and you are facing foreclosure, the MORATORIUM IS OVER!!! Get HELP NOW while you can!

ATTENTION: All Wells Fargo and Wachovia borrowers!!!! Dec. 8 & 9, Ontario Convention Center LOAN MODIFICATION WORKSHOP

2010-12-02T06:03:00.000-08:00

Dear Readers:

If you have a Wells Fargo or Wachovia Loan, your lender will be hosting a free workshop for Wells Fargo Home Mortgage, Wells Fargo Financial, Wachovia Mortgage and Wells Fargo Home Equity customers facing financial hardships. The two-day workshop -- to which Wells Fargo has invited thousands of Southern California homeowners -- will take place Dec. 8 and 9, from 9 a.m. -- 7 p.m. at the Ontario Convention Center Exhibit Hall located at 2000 E. Convention Center Way in Ontario, Calif. To help guarantee your ability to meet with a representative. Sign up by Tuesday, Dec. 6, at www.wfhmevents.com/leadingthewayhome. For more information call 1-800-405-8067.

HOWEVER...... Do not go to this event unprepared. Make sure you have six months of bank statements. Make sure you have three months of paystubs FOR EVERYONE IN YOUR HOUSE who is contributing to the mortgage payment. If you have renters helping you pay for the home MAKE SURE YOU HAVE RENTAL AGREEMENTS WITH RECEIPTS OF THE MONEY YOU HAVE BEEN PAID. Bring with you a list of all of your expenses. You are going to have to show this bank that you can make a reasonable payment on the balance of your loan. SOOOOOOOO.... google search mortgage calculator. Add up how much you are behind, add up the taxes the bank has paid on your behalf, add up the balance of your loan. Put that into the Principle and make that the "new loan." Give an interest rate of at least 4% for the next 30 years and be prepared to show you make at least 2.5 times that amount if you expect to have any chance at getting a loan modification. However, this system DOES NOT GUARANTEE that you will get a loan modification. It will depend on other factors likely to be out of your control including but not limited to what your home is worth, where its located and whether your loan was insured or not.

People don't realize this, but if your lender had insurance on the loan, they just as soon foreclose, cash in on the insurance policy to limit their losses and then reinvest in the cheap real estate left on the market. DON'T BE FOOLED, I bet the banks are making a killing, while crying broke to Congress.

If you can't get modified, don't wait too long and get too far behind that you can't save your home in a Chapter 13 Bankruptcy. Make sure before you go to this meeting with Wells Fargo, or any other lender that you go for a free consultation to a LOCAL bankruptcy attorney in your community so they can go over your situation and help you decide whether it is worth it under your circumstances to stay in this home.

Thanks for reading!

Bank of America headed for Trouble ... or are they???

2010-11-18T06:03:00.000-08:00

Dear Readers:

I have a client who works at Bank of America who saw a memo posted around the loan modification department that while loan modifications continue to be processed, they will no longer be continuing foreclosure sales in California. Now it is uncertain if that applies to all of Bank of America or not but take a look at this downward spiral that Bank of America is facing:

Oct. 19, 2010 - Because of the Credit Card and Debit Card rules sponsored by Senator Durbin, Bank of America Corp. reported today a loss of $7.6 billion in the third quarter, as it took a writedown of more than $10 billion to prepare for new legislation that it says could virtually wipe out its debit card revenue.
Bank of America currently makes about $2.9 billion annually in debit-card revenue, and says it expects to have to shed up to 80 percent, or about $2.3 billion. The $10.4 billion writedown is an accounting charge that reduces the goodwill value of the card services unit. BUT keep in mind, the Merchant's Payments Coalition pointed the finger at BofA stating that it was only trying to divert attention away from its foreclosure problems. Interestingly, the mortgage unit lost $344 million this year, as opposed to the $1.6 BILLION that it lost last year.

But what's putting some pressure here at home to not provide loan modifications in my opinion is the new capital requirements that banks are having to meet wherein they must maintain higher liquidity and capital levels under the Basel III international regulations. So in order to meet those requirements. . . FORECLOSURE FORECLOSURE FORECOSURE! Makes more capital available and increased liquidity!

But tell me something readers. . . . Bloomberg Business Week writers Dawn Kopecki and Michael J. Moore writing on October 28, 2010 that it's going to be the worst decade for banks since the Great Depression....

YET: On November 5, 2010, David Frank from Forex said that Bank of America's stocks are UP almost 2 percentage points since the Federal Reserve Board announced that the banks could increase dividend payments.

HOW is it possible that Bank of America on one hand is posting devastating losses and on the brink of needing bail out funds from the federal government. . . yet there is a plan to pay dividends to its investors. Someone had to lobby for that change with the Federal Reserve Board.

If I were a betting lawyer, I would say that with the foreclosures that Bank of America have been snatching up in a race to beat congress from taking action to stop their foreclosure frenzy. The properties they seize for themselves end up building a portfolio that when sold create liquidity for the bank. But if you ever have attended a foreclosure auction, there are plenty of cash rich investors coming in and creating bidding wars. They are not getting "DEALS" on these homes as much as you would expect.

My advice, if you have money, hold on to it. The roller coaster ride is not over yet, we have not hit bottom. From an investment point of view, Bank of America attracts more investors as it gets troubled assets off the books. The losses posted in the mortgage department that I referenced in this article, reflect, that Bank of America took its losses up front. Took it's tax deductions for the losses up front. Now that they show fewer losses this year, sadly wealthy investors will flock to Bank of America seeing the dramatic drop in losses.

Like my good friend Melody always says. . . I'm just saying. . . .

HELP from FANNIE MAE coming to LOS ANGELES - Even if you have already been turned down!

2010-11-12T10:32:00.000-08:00

Dear Readers:

If you are struggling to get your loan modified and your loan is owned by Fannie Mae help for you may have arrived if you live in the Los Angeles Area. Go to this link to find out if Fannie Mae has your loan: www.fanniemae.com/loanlookup The Greater Los Angeles Mortgage Help Center will be offering foreclosure avoidance assistance in both English and Spanish. The counseling is free! Call (866) 442-8576 or email la_mhc@fanniemae.com to schedule your appointment.

Even if you have already been turned down for a loan modification it is worth it to keep applying. Because the economy is not recovering as quickly as investors were wanting, they are reconsidering their previous decision not to modify loans, and re-thinking their strategy. So please don't give up! However, if you have already received a Notice of Sale, don't wait to until the last minute. Consult a bankruptcy attorney for free explore options to save your home in bankruptcy, or review your case to fully understand and know your rights. We are here to help.

AUTO DIALER and HARASSING PHONE CALLS FROM CREDITORS - When is it Harassment

2010-09-16T08:27:00.000-07:00

Feeling powerless when it comes to your creditors calling you on the phone at home at work or on your cell phone? Have they called your friends or family members and embarrassed you? The only way they are going to stop is if we all band together, know our rights, and fight back!

Under the Telephone Consumer Protection Act it is illegal to use an autodialer in certain instances. The fines against the collection agency can range go as high as $1,500 a phone call! You should know that it is illegal for them to call you on your cell phone, unless that is the only number you have provided. To be sure. . . the next time you get a call on your cell phone, give them your new "MAGICJACK" phone number or home number where calls can be screened and demand that they not call you on your cell phone any more. Get their name and fax number if you can and fax them a note to that effect as well. Once you have that documentation, if they do it again, document the phone call and head to the nearest small claims court. The filing fee is small but the satisfaction of stopping a collection agency from engaging in this unlawful behavior is HUGE!

I say its time to stop cowering to the banks, lenders, collection agencies and their ilk. Time to stand up and know and enforce our rights. We shouldn't have to live in fear of answering our telephone, fear that our employers, friends and family members will be told of our indebtedness and embarrassed by the collectors' remarks.

It is time to educate your family members. Ask your family members to let you know when a collector has called them to ask about information regarding you and your debt. Let them know that if an autodialer calls them regarding your debt that is an IMMEDIATE VIOLATION of the act! If the collector knows (because you have written to them previously providing them with the only phone number they may contact) this can be a fine of $1,500.00. Perhaps enough to pay off the debt you owe!

You can find out if a collection agency has been calling family members and friends simply by subpoenaing the records. At $1,500.00 a fine our office is willing to partner with you to put a stop to the harassing phone calls until you can get back on your feet or file your bankruptcy and get your financial fresh start. My office can help you with both.

George Nicoletti Intends to Capitalize on Mabry v. Aurora Loan Services

2010-07-07T11:58:00.000-07:00

Dear Readers:

My good friend and brother in Christ George Nicoletti a well-respected Real Estate Attorney, Litigator and Counselor at Law had some interesting commentary regarding the Mabry v. Aurora Loan Services case which he included in a demurrer in a case which involved a failure by a lender to contact client regarding loan modification prior to proceeding with a notice of default. Mr. Nicoletti has been quite successful in his pursuit of ruthless lenders and their foreclosure practices. Please read below for his comments. Additionally, if you need help, feel free to call him at 805 719-2750.

"AN EXAMINATION OF MABRY VINDICATES POINTS MADE IN PLAINTIFFS ORIGINAL COMPLAINT SUCH THAT ALLEGATIONS NEED NOT BE CHANGED.

There is a temptation to read Mabry v Superior Court (Aurora) loosely (that it permits contact subsequent to the NOD which would somehow cure the requirements of the contact to take place within the statutory 30 days or more before the NOD is recorded). Mabry defers to a finding of fact by the trial court that the exploration called out in CC 2923.5 was intended to be simple and explanatory in nature. That would not change the timing of the “assessment and exploration”, however. The decision didn’t indicate that the duty giving rise to Plaintiff’s private right of action could be accomplished later in time than the statute designates. It would be a gross misreading of the case to minimize the timing when the duty to convey these alternatives was to take place. For the Defendant to simply state that it explained alternatives to foreclosure in casual conversation sometime after the NOD does not embrace the guidance in Mabry nor California’s legislative intent.

The Court in Mabry construed that the statute was carefully drafted to avoid federal preemption of servicing functions such as new loan application process mandated. The notion that the lender has only a cursory duty to explain the alternatives could lead one to opine that the Court simply views 2923.5 as a 30 day delay, where once a bank adapts a suitable form letter procedure, it satisfies the legislative intent. Not so. The emergency nature of the statute suggests “personal” contact, not anonymity. This “personal” quality of the contact is affirmed by the language of .5 following the contact requirement itself where it mandates that “during the initial contact, the mortgagee..shall advise the borrower that he or she has the right to request a subsequent meeting, and if requested the mortgagee..shall schedule the meeting to occur in 14 days.

The “shalls” should not go unnoticed by this Court although the Federal trial Courts seemed to have had no trouble ignoring them (except for Ortiz-also attached herein with highlight). Neither should the spirit of the statute to encourage personal rather than anonymous contact, be ignored. The intimacy of the contact is tempered by the last sentence in the section that “any meeting may occur telephonically” but still the statute encourages someone from the bank to take ownership of the account and be personally involved, and not generate anonymous form letters and cosmetic messages.

The Cardenas amendment to the Perata Mortgage Relief Act also inserted the word “initial” in front of the word contact for a reason. This obviously suggests that the duty to assess and explore alternatives does not meander through the various conversations taking place after the “initial contact”, unless of course it is at the mandated meeting within 14 days. Should this Court credit post NOD facts declared herein finding that various conversations at various times after the NOD was recorded or during subsequent meetings, letters or other communication between the borrower and various bank agents constitute a fulfillment of these duties mandated at that “initial contact”, it would defy the Mabry definition of this Plaintiff’s right of action. To rule that the duty of contact in .5 is somehow satisfied if an agent mentioned an alternative to foreclosure during one of those later communications, it would be flying in the face of the specificity of the statute (“initial contact”), California’s legislative intent and the Mabry decision itself.

The proper determination of “who is telling the truth” is to engage in a trial or take evidence or through Summary Judgment, and certainly not find that factual determination based on Demurrer exhibits, whatever their impressive length and pomp. This would deprive this Plaintiff of his right to due process through cross examination, hearsay objection and other evidentiary controls, to establish what the Mabry Court gave back to the trial court with the following language “This case will obviously have to be remanded for an evidentiary hearing”.

It is important for this Court’s application of the Mabry decision to note that the writ was granted and the guidance to the trial Court was that if it found that .5 was not complied with, the “sale shall be postponed until Aurora files a new Notice of Default in the wake of substantive compliance with .5”

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ARTICLE 4FORECLOSURE REGISTRY PROGRAM

SEC. 164.00. TITLE.

SEC. 164.01. INTENT.

SEC. 164.02. DEFINITIONS.

SEC. 164.03. RECORDATION OF TRANSFER OF LOAN AND/OR DEED OF TRUST AND/OR ASSIGNMENT OF RENTS.

SEC. 164.04. REGISTRATION OF PROPERTIES IN FORECLOSURE.

SEC. 164.05. MAINTENANCE AND ENFORCEMENT OF MAINTENANCE REQUIREMENTS.

SEC. 164.06. MAINTENANCE OF VACANT PROPERTIES AND ENFORCEMENT OF VACANT PROPERTY MAINTENANCE REQUIREMENTS.

SEC. 164.07. UTILITIES.

SEC. 164.08. VIOLATION/PENALTY.

SEC. 164.09. SEVERABILITY.

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Footnotes

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ARTICLE 4
FORECLOSURE REGISTRY PROGRAM