Tag Archives: HOEPA

Pretender Lenders

2 Jul

— read and weep. Game Over. Over the next 6-12 months the entire foreclosure mess is going to be turned on its head as it becomes apparent to even the most skeptical that the mortgage mess is just that — a mess. From the time the deed was recorded to the time the assignments, powers of attorneys, notarization and other documents were fabricated and executed there is an 18 minute Nixonian gap in the record that cannot be cured. Just because you produce documents, however real they appear, does not mean you can shift the burden of proof onto the borrower. In California our legislator have attempted to slow this train wreck but the pretender lenders just go on with the foreclosure by declaring to the foreclosure trustee the borrower is in default and they have all the documents the trustee then records a false document. A notice of default filed pursuant to Section 2924 shall include a declaration from the mortgagee, beneficiary, or authorized agent that it has contacted the borrower, tried with due diligence to contact the borrower as required by this section, or the borrower has surrendered the property to the mortgagee, trustee, beneficiary, or authorized agent.
Invalid Declaration on Notice of Default and/or Notice of Trustee’s Sale.

The purpose of permitting a declaration under penalty of perjury, in lieu of a sworn statement, is to help ensure that declarations contain a truthful factual representation and are made in good faith. (In re Marriage of Reese & Guy, 73 Cal. App. 4th 1214, 87 Cal. Rptr. 2d 339 (4th Dist. 1999).
In addition to California Civil Code §2923.5, California Code of Civil Procedure §2015.5 states:
Whenever, under any law of this state or under any rule, regulation, order or requirement made pursuant to the law of this state, any matter is required or permitted to be supported, evidenced, established, or proved by the sworn statement, declaration, verification, certificate, oath, or affidavit, in writing of the person making the same, such matter may with like force and effect be supported, evidenced, established or proved by the unsworn statement, declaration, verification, or certificate, in writing of such person which recites that is certified or declared by him or her to be true under penalty of perjury, is subscribed by him or her, and (1), if executed within this state, states the date and place of execution; (2) if executed at any place, within or without this state, states the date of execution and that is so certified or declared under the laws of the State of California. The certification or declaration must be in substantially the following form:
(a) If executed within this state:
“I certify (or declare) under penalty of perjury that the foregoing is true and correct”:
_____________________ _______________________
(Date and Place) (Signature)

For our purposes we need not look any farther than the Notice of Default to find the declaration is not signed under penalty of perjury; as mandated by new Civil Code §2923.5(c). (Blum v. Superior Court (Copley Press Inc.) (2006) 141 Cal App 4th 418, 45 Cal. Reptr. 3d 902 ). The Declaration is merely a form declaration with a check box.

No Personal Knowledge of Declarant
According to Giles v. Friendly Finance Co. of Biloxi, Inc., 199 So. 2nd 265 (Miss. 1967), “an affidavit on behalf of a corporation must show that it was made by an authorized officer or agent, and the officer him or herself must swear to the facts.” Furthermore, in Giles v. County Dep’t of Public Welfare of Marion County (Ind.App. 1 Dist.1991) 579 N.E.2d 653, 654-655 states in pertinent part, “a person who verified a pleading to have personal knowledge or reasonable cause to believe the existence of the facts stated therein.” Here, the Declaration for the Notice of Default by the agent does not state if the agent has personal knowledge and how he obtained this knowledge.
The proper function of an affidavit is to state facts, not conclusions, ¹ and affidavits that merely state conclusions rather than facts are insufficient. ² An affidavit must set forth facts and show affirmatively how the affiant obtained personal knowledge of those facts. ³
Here, The Notice of Default does not have the required agent’s personal knowledge of facts and if the Plaintiff borrower was affirmatively contacted in person or by telephone
to assess the Plaintiff’s financial situation and explore options for the Plaintiff to avoid foreclosure. A simple check box next to the “facts” does not suffice.
Furthermore, “it has been said that personal knowledge of facts asserted in an affidavit is not presumed from the mere positive averment of facts, but rather, a court should be shown how the affiant knew or could have known such facts, and, if there is no evidence from which the inference of personal knowledge can be drawn, then it is
¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬____________________________________________________________________________
¹ Lindley v. Midwest Pulmonary Consultants, P.C., 55 S.W.3d 906 (Mo. Ct. App. W.D. 2001).
² Jaime v. St. Joseph Hosp. Foundation, 853 S.W.2d 604 (Tex. App. Houston 1st Dist. 1993).
³ M.G.M. Grand Hotel, Inc. v. Castro, 8 S.W.3d 403 (Tex. App. Corpus Chrisit 1999).

presumed that from which the inference of personal knowledge can be drawn, then it is presumed that such does not exist.” ¹ The declaration signed by agent does not state anywhere how he knew or could have known if Plaintiff was contacted in person or by telephone to explore different financial options. It is vague and ambiguous if he himself called plaintiff.
This defendant did not adhere to the mandates laid out by congress before a foreclosure can be considered duly perfected. The Notice of Default states,

“That by reason thereof, the present beneficiary under such deed of trust, has executed and delivered to said agent, a written Declaration of Default and Demand for same, and has deposited with said agent such Deed of Trust and all documents evidencing obligations secured thereby, and has declared and does hereby declare all sums secured thereby immediately due and payable and has elected and does hereby elect to cause the trust property to be sold to satisfy the obligations secured thereby.”

However, Defendants do not have and assignment of the deed of trust nor have they complied with 2923.5 or 2923.6 or 2924 the Deed of Trust, nor do they provide any documents evidencing obligations secured thereby. For the aforementioned reasons, the Notice of Default will be void as a matter of law. The pretender lenders a banking on the “tender defense” to save them ie. yes we did not follow the law so sue us and when you do we will claim “tender” Check Mate but that’s not the law.

Recording a False Document
Furthermore, according to California Penal Code § 115 in pertinent part:
(a) Every person who knowingly procures or offers any false or forged instrument to be filed, registered, or recorded in any public office within this state, which instrument, if genuine, might be filed, registered, or recorded under any law of this state or of the United States, is guilty of a felony.

If you say you have a claim, you must prove it. If you say you are the lender, you must prove it. Legislators take notice: Just because bankers give you money doesn’t mean they can change 1000 years of common law, statutory law and constitutional law. It just won’t fly. And if you are a legislator looking to get elected or re-elected, your failure to act on what is now an obvious need to clear title and restore the wealth of your citizens who were cheated and defrauded, will be punished by the votes of your constituents.

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The doan deal 3

30 Jun

California Civil Code 2923.6: California Courts’ Negative Rulings to Homeowners.

By Michael Doan on Apr 26, 2009 in Foreclosure Defense, Foreclosure News, Mortgage Servicer Abuses

In September, 2008, I wrote about the new effects of California Civil Code 2923.6 and how it would appear that home loans in California would require modifications to fair market value in certain situations.

Since then, many decisions have come down from local judges attempting to decipher exactly what it means. Unfortunately, most judges are of the opinion that newly enacted California Civil Code 2923.6 has no teeth, and is a meaningless statute.

Time and time again, California Courts are ruling that the new statute does not create any new duty for servicers of mortgages or that such duties do not apply to borrowers. These Courts then immediately dismiss the case, and usually do not even require the Defendant to file an Answer in Court, eliminating the Plaintiff’s right to any trial.

Notwithstanding some of these decisions, the statute was in fact specifically created to address the foreclosure crisis and help borrowers, as Noted in Section 1 of the Legislative Intent behind the Statute:

SECTION 1. The Legislature finds and declares all of the following:

(a) California is facing an unprecedented threat to its state economy and local economies because of skyrocketing residential property foreclosure rates in California. Residential property foreclosures increased sevenfold from 2006 to 2007. In 2007, more than 84,375 properties were lost to foreclosure in California, and 254,824 loans went into default, the first step in the foreclosure process.

(b) High foreclosure rates have adversely affected property values in California, and will have even greater adverse consequences as foreclosure rates continue to rise. According to statistics released by the HOPE NOW Alliance, the number of completed California foreclosure sales in 2007 increased almost threefold from 1,902 in the first quarter to 5,574 in the fourth quarter of that year. Those same statistics report that 10,556 foreclosure sales, almost double the number for the prior quarter, were completed just in the month of January 2008. More foreclosures means less money for schools, public safety, and other key services.

(c) Under specified circumstances, mortgage lenders and servicers are authorized under their pooling and servicing agreements to modify mortgage loans when the modification is in the best interest of investors. Generally, that modification may be deemed to be in the best interest of investors when the net present value of the income stream of the modified loan is greater than the amount that would be recovered through the disposition of the real property security through a foreclosure sale.

(d) It is essential to the economic health of California for the state to ameliorate the deleterious effects on the state economy and local economies and the California housing market that will result from the continued foreclosures of residential properties in unprecedented numbers by modifying the foreclosure process to require mortgagees, beneficiaries, or authorized agents to contact borrowers and explore options that could avoid foreclosure. These changes in accessing the state’s foreclosure process are essential to ensure that the process does not exacerbate the current crisis by adding more foreclosures to the glut of foreclosed properties already on the market when a foreclosure could have been avoided. Those additional foreclosures will further destabilize the housing market with significant, corresponding deleterious effects on the local and state economy.

(e) According to a survey released by the Federal Home Loan Mortgage Corporation (Freddie Mac) on January 31, 2008, 57 percent of the nation’s late-paying borrowers do not know their lenders may offer alternatives to help them avoid foreclosure.

(f) As reflected in recent government and industry-led efforts to help troubled borrowers, the mortgage foreclosure crisis impacts borrowers not only in nontraditional loans, but also many borrowers in conventional loans.

(g) This act is necessary to avoid unnecessary foreclosures of residential properties and thereby provide stability to California’s statewide and regional economies and housing market by requiring early contact and communications between mortgagees, beneficiaries, or authorized agents and specified borrowers to explore options that could avoid foreclosure and by facilitating the modification or restructuring of loans in appropriate circumstances.

SEC. 7. Nothing in this act is intended to affect any local just-cause eviction ordinance. This act does not, and shall not be construed to, affect the authority of a public entity that otherwise exists to regulate or monitor the basis for eviction.

SEC. 8. The provisions of this act are severable. If any provision of this act or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.

The forgoing clearly illustrates that the California Legislature was specifically looking to curb foreclosures and provide modifications to homeowners in their statement of intent. Moreover, Section (a) of 2923.6 specifically references a new DUTY OWED TO ALL PARTIES in the loan pool:

(a) The Legislature finds and declares that any duty servicers may have to maximize net present value under their pooling and servicing agreements is owed to all parties in a loan pool, not to any particular parties,…..

California Civil Code 2923.6(a) specifically creates to a NEW DUTY not previously addressed in pooling and servicing agreements. It then states that such a DUTY not only applies to the particular parties of the loan pool, but ALL PARTIES. So here we have the clear black and white text of the law stating that if a duty exists in the pooling and servicing agreement to maximize net present value between particular parties of that pool(and by the way, every pooling and servicing agreement I have ever read have such duties), then those same duties extend to all parties in the pool.

So how do these Courts still decide that NO DUTY EXISTS??? How do these Courts dismiss cases by finding that the thousands of borrowers of the loan pool that FUND the entire loan pool are not parties to that pool?

Hmm, if they are really not parties to the loan pool, then why are they even required to make payments on the loans to the loan pools? As you can see, the logic from these courts that there is no duty or that such a duty does not extend to the borrower is nothing short of absurd.

To date, there are no appellate decision on point, but many are in the works. Perhaps these courts skip the DUTY provisions in clause (a) and focus on the fact that no remedy section exists in the statute (notwithstanding the violation of any statute is “Tort in Se”). Perhaps their dockets are too full to fully read the legislative history of the statute (yes, when printed out is about 6 inches thick!) Whatever the reason, it seems a great injustice is occurring to defaulting homeowners, and the housing crisis is only worsening by these decisions.

Yet the reality is that much of the current housing crisis has a solution in 2923.6, and is precisely why the legislature created this EMERGENCY LEGISLATION. Its very simple: Modify mortgages, keep people in their homes, foreclosures and housing supplies goes down, and prices stabilize. More importantly, to the Servicers and Lenders, is the fact that they are now better off since THEY GENERALLY SAVE $50,000 OR MORE in foreclosure costs when modifying a loan(yes, go ahead and google the general costs of foreclosure and you will see that a minimum of $50,000.00 in losses is the average). Thus it is strange why most Courts are ruling that the California Legislature spent a lot of time and money writing a MEANINGLESS STATUTE with no application or remedy to those in need of loan modification.

Well, at least one Judge recently got it right. On April 6, 2009, in Ventura, California, in Superior Court case number 56-2008-00333790-CU-OR-VTA, Judge Fred Bysshe denied Metrocities Mortgage’ motion to dismiss a lawsuit brought under 2923.6. Judge Bysshe ruled that 2923.6 is not a matter of law that can be decided in the beginning of a lawsuit to dismiss it, but is instead a matter of fact that needs to be decided later:

THE COURT: Well, at this juncture in this case the Court holds that section 2923.6 was the legislature’s attempt to deal with a collapsing mortgage industry, and also to stabilize the market. And the Court’s ruling is to overrule the demurrer. Require the defendant to file an answer on or before April 27, 2009. And at this juncture with regard to the defendant’s request to set aside the Lis Pendens, that request is denied without prejudice.

Hopefully, more judges will now follow suit and appeals courts will have the same rulings. To read the actual transcript of the forgoing case, please click to my other blog here.

Written by Michael Doan

FORECLOSURE DEFENSE: CALIFORNIA SOMETIMES IT’S THE LITTLE THINGS THAT COUNT

25 Apr

As I continue through this journey through the maze created by lenders, investment bankers, title agents and closing/escrow agents I keep discovering things that end up being quite interesting.

For example: In California the requirements for posting Notice of sale are very clear and yet, I am told that they are routinely ignored. This would invalidate the notice of sale on the most basic of concepts “notice,” by definition and therefore could be attacked at any time as a defect of service and jurisdiction while at the same time bring your claims under TILA, usury, identity theft, fraud, etc. California requires public and private posting as do most other states. The public part is what they ordinarily ignore. see notice-of-the-sale-thereof-shall-be-given-by-posting-a-written-notice

With the new law changes Civil code 2923.5  that became effective Sept 6, 2008 it adds more procedures that are routinely not followed ie. a Declaration must be attached and recorded that recites that the lender has met and assessed the borrowers financial condition and made alternatives to forclosure ie. modification. First they don’t do it and second the declaration is not even under penalty of pujury. So on its face the sale could be set aside.

After the notice of default the lender routinely switches trustee’s and records a Substitution of trustee with an affidavit that is not under penalty of perjury. Again the sale could be set aside for this.

For example. MERS, whose legal status is dubious at best anyway inasmuch as it plainly violates the recording requirements of every state and which supposedly has not one but multiple corporate entities, one of which has been suspended from operation in California, is subject to specific instructions as to what to do with the “master Deed of Trust and what to do with the individual deed of trust, the procedures, language to be inserted etc. These too I am told are routinely ignored especially when it comes to (a) showing that you have provided a copy of the Master Deed of Trust and (b) having the proof as specifically required in the FNMA/Freddie instruction sheet.

As stated in my other posts, the entire MERS concept causes, in my opinion, a separation between the alleged security instrument and provisions, the Trustee’s authority and the note, all of which end up being different people who were all “real parties in interest” receiving fees and value not disclosed in the GFE or settlement statement. In all these closings the borrower is subjected to a series of documents that hide the true nature of the transaction, the true source of funds, the true lender, and the application of funds contrary to the terms of the note.

All of these new requirements create questions of fact, that if not correct, create a method to set aside the sale by way of court action. I guess that’s the point the lenders trustees and servicers are banking on the victims not fighting it.

Borrowers' Defenses to Forclosure

19 Apr

A great source of information you can use, and since the Guy is in Washington I can give him all the credit
defensestoforeclosure

United First Class Action

9 Mar

On Saturday March 7,2009 a meeting was held for 200 plus victims of the United First equity save your house scam. At that meeting it was determined that a class action should be filed to recover the funds lost by the victims of the unconscionable contract.

As a first step an involuntary Bankruptcy is being filed today March 9, 2009. To be considered as a creditor of said Bankruptcy please Fax the Joint Venture agreement and retainer agreement to 909-494-4214.
Additionally it is this attorneys opinion that said Bankruptcy will act as a “stay” for all averse actions being taken by lenders as against said victims. This opinion is based upon the fact that United First maintained an interest in the real property as a joint venture to 80% of the properties value(no matter how unconscionable this may be) this is an interest that can be protected by the Bankruptcy Stay 11 USC 362.

Lawyers that get it Niel Garfield list

14 Feb

Lawyers that get it Niel Garfield list
lawyers-that-get-it-02092

$8.4 Billion Countrywide Settlement… and why they only lower the interest!

31 Jan

I have gotten a number of calls asking if the home ownership retention program announced by Bank of America is likely to have an impact on foreclosures in CA. This program is a settlement with the CA Attorney General, Jerry Brown, and other state attorney generals that were suing Countrywide / Bank of America for predatory lending practices. It is expected to provide up to $8.4 Billion to 400,000 borrowers nationwide, with $3.5 Billion to 125,000 borrowers in CA.

While $8.4 Billion is a huge number – roughly 7.75% of BAC’s market cap today – it is literally a laughable amount. Problem is that it equals only $28,000 per loan in California. I compared that number to the average amount a California homeowner is upside down at the time of foreclosure – the average total debt is $26,200 more than they originally borrowed.(all that negative amortization) So in the best case scenario this puts borrowers back where they started, in loans they fundamentally can’t afford.So really it is nothing. The best thing is that it is admission of fault that could be used in individual cases against the lender in an individual action.

Note that they clearly state that principal balance reduction will only be available on a limited basis to restore negative equity from pay option ARMs – which makes sense given that they really don’t have enough money to do much more. Instead the primary goal is to ensure “modifications are affordable”. Given that they simply don’t have the money to lower principal balances to affordable levels, that means more artificially low payments… the exact thing that got us into this problem in the first place.

So back to the original question, will it likely impact foreclosures? Sort of, but only temporarily. It could impact your foreclosure if you were to copy the complaint and file your own case against countrywide at least you would not get a demur to the complaint. I posted the text of the complaint on Dec 31, 2008 California and everybody else V Countrywidecountrywide-complaint-form

They have graciously committed to not pursue foreclosure until they have contacted the owner and made a decision on program eligibility. So it appears to impact foreclosures, except that the recently passed SB1137 re codified as civil code 2923.5 and 2923.6 required them to do that anyway – so this claim is little more than spin.

Since this completely fails to address the underlying problem of the original loan amounts often exceeding current market value by $100k or more I’d also say the impact will only be temporary. Though that may still be a long time. In one case I recently reviewed Countrywide had a loan balance of over $900k on a home worth $550k – they modified the payment to 2% interest only for 5 years. The homeowner can afford it for now, but what happens in 5 years? Your’e kidding yourself if you think values are going back to those levels that quickly. Do we really still want to be cleaning this mess up 5 years from now?

Bottom line, Jerry Brown and the other state’s attorney generals have given Bank of America a gift. The opportunity to avoid litigation while getting the state’s endorsement for a plan that will never work and buying them precious time to find a way out of their dire predicament. Like the bailouts it’s possible it may help save this financial institution, but it will only delay our return to a stable and healthy real estate market.