October, 2016 | FORECLOSURE FRAUD | by DinSFLA

Archive | October, 2016

Homeowners Claim They Were Burglarized By Their Banks

Homeowners Claim They Were Burglarized By Their Banks

CBS-

Being burglarized is among a homeowner’s worst nightmares.

Now, imagine the intruder is actually sent there by your bank. Those break-ins happen more often than you might think.

“All the cabinets were open, everything was in disarray,” Davide Adier recalled.

[CBS]

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Securitization of Financial Assets: A Boon or Bane Under SARFAESI Act, 2002?

Securitization of Financial Assets: A Boon or Bane Under SARFAESI Act, 2002?

Securitization of Financial Assets: A Boon or Bane Under SARFAESI Act, 2002?

Salaka Ravi

Independent

October 24, 2016

The IUP Law Review, Vol. VI, No. 2, April 2016, pp. 43-53
Abstract:

In India, after Nationalization, the banks, most of them in the public sector, became an important tool for the socioeconomic revolution in the society, resulting in substantial changes to the commercial banking industry. As innovation supported by technology is constantly changing the face of the world of finance, it is today more a world of transactions than a world of relations. Most relations have been transactionalized. The overdue advances of banks in India were found to be mounting and in consequence the Non-Performing Assets (NPAs) in their portfolio are on the rise affecting badly on the banks viability. The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) has been enacted with an intention to strengthen the creditors’ rights through foreclosure and enforcement of securities by the banks and financial institutions without substantial involvement of the courts of law. This paper is an attempt to analyze the legal framework for securitization of financial assets and suggests some recommendations for improving the financial sector.
Down Load PDF of This Case

 

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TFH 10/30 | Ten New Specific Legislative Initiatives That Every State Legislature Urgently Needs To Enact To Protect Its Homeowners Against Mortgage Abuse Instead of Relying Further upon Institutionally Ineffective State and Federal Courts for Justice for Homeowners

TFH 10/30 | Ten New Specific Legislative Initiatives That Every State Legislature Urgently Needs To Enact To Protect Its Homeowners Against Mortgage Abuse Instead of Relying Further upon Institutionally Ineffective State and Federal Courts for Justice for Homeowners

COMING TO YOU LIVE DIRECTLY FROM THE DUBIN LAW OFFICES AT HARBOR COURT, DOWNTOWN HONOLULU, HAWAII

LISTEN TO KHVH-AM (830 ON THE AM RADIO DIAL)

ALSO AVAILABLE ON KHVH-AM ON THE iHEART APP ON THE INTERNET

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Sunday – October 30, 2016

Judicial remedies, as every homeowner facing foreclosure painfully knows, have proven to be too slow, too infrequent, too contradictory, too ineffective, too fragmented, and too costly, as well as in truth too burdensome for our relatively resourceless highly backlogged courts.

It is time to turn to and to target individual state legislatures for new remedies and for new forms of effective, practical relief.

Can your state legislature become a national model for new strategies of institutional reform?

On this Sunday’s Foreclosure Hour we will show you how that legislative goal can realistically be achieved, and almost immediately, by unveiling new model state legislation for the first time truly capable if adopted of finally protecting American Homeowners.

No one interested in reversing a near decade of unforgivable homeowner genocide can afford to miss this Sunday’s radio show.

This new legislative initiative can begin a new chapter in foreclosure defense, but to be successful will need your individual participation, your individual suggestions, and your individual support.

Those who miss this important live broadcast can listen to it on the Past Broadcast Section of our Website at www.foreclosurehour.com shortly after it airs live on KHVH-AM News Radio in Honolulu and simultaneously throughout the United States on the iHeart Internet App.

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Host: Gary Dubin Co-Host: John Waihee

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CALL IN AT (808) 521-8383 OR TOLL FREE (888) 565-8383

Have your questions answered on the air.

Submit questions to info@foreclosurehour.com

The Foreclosure Hour is a public service of the Dubin Law Offices

Past Broadcasts

EVERY SUNDAY 3:00 PM HAWAII 6:00 PM PACIFIC 9:00 PM EASTERN ON KHVH-AM (830 ON THE DIAL) AND ON iHEART RADIO

The Foreclosure Hour 12

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Ocwen facing CFPB investigation, potential fine for servicing practices

Ocwen facing CFPB investigation, potential fine for servicing practices

HousingWire-

It’s been nearly three years since Ocwen Financial agreed to offer $2 billion in consumer relief and pay up to $127.3 million to settle a Consumer Financial Protection Bureauinvestigation into its servicing practices.

That settlement, and others with the New York Department of Financial Services and the California Department of Business Oversight, are among the items that Ocwen’s executives call the “legacy issues” that Ocwen is working to move past as the nonbank charts a course forward.

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Backed by ‘Occupy’ activists, Loretta Sanchez criticizes Kamala Harris’ signature mortgage settlement

Backed by ‘Occupy’ activists, Loretta Sanchez criticizes Kamala Harris’ signature mortgage settlement

LA TIMES-

Orange County Rep. Loretta Sanchez’s campaign for the U.S. Senate lobbed a new attack at front-runner Kamala Harris on Wednesday, this time criticizing the landmark $25-billion national settlement Harris helped wrestle from the nation’s five largest mortgage firms.

The settlement is one of the California attorney general’s biggest victories: A recent ad from Harris’ campaign featured President Obama praising the settlement. Sen. Elizabeth Warren (D-Mass.) has too.

Sanchez, as she has done before, held a news conference outside a state building in downtown Los Angeles, joined by members of an activist group called Occupy Fights Foreclosures, a spinoff of the Occupy LA protest group.

[LA TIMES]

image: (Allen J. Schaben / Los Angeles Times)

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Fairholme Funds, Inc. v. United States | Feds Seek to Block Release of Fannie Mae and Freddie Mac Memos

Fairholme Funds, Inc. v. United States | Feds Seek to Block Release of Fannie Mae and Freddie Mac Memos

Fortune-

Justice Department appeals judge’s ruling on 56 documents.

Invoking an emergency procedure Wednesday evening, the Justice Department appealed a judge’s order that would force the government to turn over at least 56 documents that might shed light on why mortgage finance giants Fannie Mae and Freddie Mac were effectively nationalizedin August 2012.

The department argues that Court of Federal Claims judge Margaret Sweeney’s 80-page order on September 20, rejecting the government’s claims of executive privilege over those documents, engaged in “cursory” and “uncritical, rote analysis,” and rested “on a misunderstanding of the principles that govern the privileges.”

The action comes in a set of consolidated lawsuits filed by shareholders of the two Fortune 50 companies who say that the 2012 event—in which the Treasury Department and Federal Housing Finance Agency (FHFA) dramatically altered the terms of the two firms’ federal bailouts, all but wiping out the value of their stock—amounted to a “taking” of property without just compensation in violation of the Fifth Amendment to the U.S. Constitution. (The bailout began in early September 2008, on the eve of the financial crisis, when FHFA, with Treasury’s approval, placed the two government sponsored enterprises into conservatorship.)

[FORTUNE]

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U.S. Angered as Freddie Mac Auditor Settles Investor Suit

U.S. Angered as Freddie Mac Auditor Settles Investor Suit

Fortune-

Feds want deal undone.

It looks like some clever Freddie Mac shareholders may have actually got some of their money back, in compensation for the government’s effective nationalization of the mortgage finance giant in August 2012, which wiped out virtually all the value of their stock.

The money—or whatever the investors got in a confidential lawsuit settlement that was first announced to the judge on October 11 and then apparently completed by October 18, when the parties agreed to dismiss the case—didn’t come from the government itself, but rather from Freddie’s auditor from 2008 to 2013, PricewaterhouseCoopers, which was the sole defendant in the suit.

Nevertheless, Uncle Sam is mad about the deal. The government is trying to find out exactly what its terms were—and possibly to undo it. The Federal Housing Finance Agency, which has been Freddie Mac’s conservator since 2008, has asked a Miami federal judge to reopen the case in order to dismiss it again, but this time “without payment of any kind,” as it papers explain.

[FORTUNE]

 

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SIGTARP REPORT | A PROPOSAL TO BRING ACCOUNTABILITY TO THE “INSULATED CEO” aka BANKERS

SIGTARP REPORT | A PROPOSAL TO BRING ACCOUNTABILITY TO THE “INSULATED CEO” aka BANKERS

H/T FIB

LETTER FROM THE SPECIAL INSPECTOR GENERAL

In an exciting time of presidential transition, the American people can count on SIGTARP to remain the same, as an independent watchdog and law enforcement agency. No one – Republican or Democrat – wants taxpayer money lost to crime or waste. No one wants those who break the law to go without repercussion or prosecution. Fraud, waste, and abuse will continue to occur. SIGTARP is there to stop it, to bring accountability, and enforce the law.

The American people have called for stronger reforms on Wall Street, frustrated by the lack of senior executive accountability at the largest banks. I have called for Wall Street reform based on the difficulties SIGTARP has faced as a law enforcement agency in proving criminal intent of senior executives at large institutions given how isolated they are from knowledge of fraud in their company. This isolation is part of the culture at large institutions, and is something that is unlikely to change absent reform. That is why I am proposing a reform to bring accountability to the “Insulated CEO” and other high-level executives.

“I propose that Congress remove the insulation around Wall Street CEOs and other high-level officials by requiring the CEO, CFO and certain other senior executives to sign an annual certification that they have conducted due diligence within their organization and can certify that that there is no criminal conduct or civil fraud in their organization” – Christy Goldsmith Romero, Special Inspector General (SIGTARP)

No longer allowed to stay “in the dark”, a crime and fraud certification forces the CEO to be “in the know.” Crime and fraud cannot be allowed to go unchecked at our largest institutions. Modeled after the annual Sarbanes-Oxley certification, this crime and fraud certification would create an incentive for top executives to institute strong antifraud internal controls on lower level executives and managers. It will also motivate lower level executives and managers to have conversations with leaders of the organization if fraud or crime is occurring.i

SIGTARP, which investigates crime at companies that took TARP bailout funds, has had significant success in the prosecution of senior executives at medium sized banks and smaller banks. Knowledge of fraud often rises to top executives where the companies are not big enough to insulate senior leaders. SIGTARP has been able to meet the standards required by criminal law to prove criminal intent because of that knowledge. Our investigations have led to criminal charges against 85 bankers at medium and smaller banks, including more than 10 bank CEOs. To date, 37 bankers investigated by SIGTARP have already been sentenced to prison, with others awaiting trial or sentencing.

Bringing accountability to senior executives at the largest banks has been another matter. From a civil remedy standpoint, SIGTARP’s investigations with DOJ have led to recoveries of just under $9 billion to American taxpayers from Wall Street banks such as Goldman Sachs, Bank of America and Morgan Stanley, and led to changes designed to prevent future fraud. In addition, our investigation of Bank of America led to the New York Attorney General banning the former CEO and CFO from the industry

A company should know what is going on so if there are violations of the law happening at any level of the organization . . . it should rise up and be stopped. – Christy Goldsmith Romero, Special Inspector General (SIGTARP), as reported by American Banker, September 9, 2016

We have faced significant difficulties in proving criminal intent of senior officials in large organizations that are purposely designed to insulate top officials from knowing about crime or civil fraud. Orchestrated in boardrooms and law firms, this insulation often puts senior executives “in the dark” and therefore just out of reach of prosecution.

Currently, Wall Street CEOs and other high-level executives do not have an incentive to identify crime and civil fraud in their organization. They can hide behind the idea that because their firm is so big, they cannot be expected to know everything that happens within it. This insulation presents a serious challenge to law enforcement to prove criminal intent – a challenge that requires a permanent incentive for CEOs and other high-level executives to be “in the know.”

To bring accountability to the “Insulated CEO” and other senior executives on Wall Street, incentives are needed to raise knowledge of crime and civil fraud to the highest levels of financial institutions. We know that the financial crisis, TARP bailout, and subsequent fraud scandals have not provided enough incentive.

Crime or fraud in an organization’s business practices should be detected in the due diligence and rise to the CEO. And if executives cannot certify, they should call law enforcement, such as SIGTARP, immediately.

Law enforcement agencies would not be relieved of their burden to prove criminal intent. That’s a bedrock principle of our justice system. However, this due diligence would make knowledge of the crime or fraud more likely to rise up to top leaders – leaders who can no longer stay insulated from the crime or fraud.ii Criminal intent depends on what those leaders do with that knowledge. Stopping fraud and immediately reporting it to law enforcement is the right response. On the other hand, if after learning about the fraud, the CEO and senior officers knowingly file false statements with the FDIC or SEC, they would be more in the reach of law enforcement than in the past. In SIGTARP’s investigations, the annual Sarbanes-Oxley certifications can serve as evidence to prove that executives (CEO, CFO, or others who signed sub certifications) with knowledge of the fraud also knew that they were filing false financial statements, leading to charges such as bank fraud. A similar certification could do the same for crime and fraud at large banks.

This reform would be a significant step forward toward greater accountability. It would benefit large financial institutions by giving the CEO and other leaders the opportunity and accountability to stop fraud, fix it, and report it to law enforcement, such as SIGTARP. If leadership fails to act, it gives law enforcement a path to bring justice to the “Insulated CEO” and other senior executives. And it would give the public more confidence that the law applies to everyone, whether they sit in a cubicle or corner office.

If a CEO says that their institution is too big or too complex to be able to certify about crime or fraud, then they have a much bigger problem – one that should be unacceptable, particularly at banks deemed so systemic that taxpayers bailed them out. When Sarbanes-Oxley was passed, many said CEO and CFO certifications would be impossible. But, of course, even the biggest firms certify every year.

Examples of Wall Street culture driven by dollars without regard for consequences are too well known, and examples of wrongdoing have become too many to accept. But our nation also has a culture, one that rewards integrity, transparency, and accountability – not a CEO that insulates themselves from knowing about crime and fraud in their organization. The time is ripe to make a difference for the future. Otherwise, without reform, history will repeat itself. Our nation must have one system of justice that applies equally. To do that, we should stop allowing Wall Street leaders to insulate themselves from justice.

Respectfully,

CHRISTY GOLDSMITH ROMERO Special Inspector General

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Obscure government agency has a plan to put Wall Street CEOs in prison

Obscure government agency has a plan to put Wall Street CEOs in prison

The Charlotte Observer-

Since the 2008 financial crisis, one obscure federal agency has succeeded in doing what many thought was impossible: sending bankers to prison.

The agency has charged 85 bankers from across the country with a crime over the last few years and already sent 36 to prison. The former chief executive of Virginia’s Bank of the Commonwealth, who was accused of contributing to the 2008 financial crisis through the bank’s “brazen greed and dishonesty,” was sentenced to more than 20 years.

But eight years after it was established, the Office of the Special Inspector General for the Troubled Asset Relief Program or SIGTARP, has grown frustrated. While it has succeeded in prosecuting senior executives of mid- to small-sized banks for various misdeeds, it has failed to do the same to the CEOs of large Wall Street firms.

[THE CHARLOTTE OBSERVER]

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Nationstar Again!! Mortgage mistake nearly leads to foreclosure

Nationstar Again!! Mortgage mistake nearly leads to foreclosure

KMOV-

A mortgage mistake nearly cost a St. Charles County woman her condo.

Kathleen Rasmussen claims she paid Texas based Nationstar each month.

“I don’t want to lose the roof over my head, I should not be in foreclosure.”

Rasmussen provided News 4 with letters from Nationstar along with returned checks intended to pay her mortgage.

[KMOV]

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MORTGAGE MESS NEARLY COSTS LADY HER HOME

MORTGAGE MESS NEARLY COSTS LADY HER HOME

ABC7NY-

“I literally thought I was going to have a heart attack.” Paterson homeowner, Tana McPherson, couldn’t figure out why she was slapped with a tax lien on her condo, but there it was in black and white.

“It’s shocking to get something in the mail like that especially when you work every day and pay your bills everyday,” she said. McPherson is a public defender in Bergen County. She’s used to advocating for the poor and was even more horrified to be informed her tax lien would be publicly advertised twice.

[ABC7NY]

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Big U.S. Retail Bank Operations Under Scrutiny After Wells Scandal

Big U.S. Retail Bank Operations Under Scrutiny After Wells Scandal

The Office of the Comptroller of the Currency sent formal letters to banks earlier this month

WSJ-

The Office of the Comptroller of the Currency earlier this month sent formal letters to large and regional banks seeking information about sales practices and incentive-compensation structures following the Wells Fargo & Co. scandal, people familiar with the requests said.

The OCC sent letters to banks under its supervision including J.P. Morgan Chase & Co., Bank of America Corp. and Citigroup Inc., these people said. The requests followed earlier, informal questions about those practices.

Wells Fargo opened as many as 2 million accounts using unauthorized or fictitious customer information. That has sparked a slew of federal and state investigations, including by the Justice Department, and led to its CEO resigning earlier this month. It has also called into question what practices exist at other banks and whether Wells Fargo is isolated in its retail-banking problems.

[THE WALL STREET JOURNAL]

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Walton v. DEUTSCHE BANK NATIONAL TRUST COMPANY | FL 1dca – Because Deutsche Bank’s proof of its standing at the inception of the lawsuit was insufficient to support the final judgment of foreclosure, the final judgment is reversed.

Walton v. DEUTSCHE BANK NATIONAL TRUST COMPANY | FL 1dca – Because Deutsche Bank’s proof of its standing at the inception of the lawsuit was insufficient to support the final judgment of foreclosure, the final judgment is reversed.

 

ROBERT K. WALTON, Appellant,
v.
DEUTSCHE BANK NATIONAL TRUST COMPANY, as trustee for MORGAN STANLEY ABS CAPITAL I INC., MSAC 2007-NC1, Appellee.

Case No. 1D15-3761.
District Court of Appeal of Florida, First District.
Opinion filed October 19, 2016.
An appeal from the Circuit Court for Duval County, Tyrie W. Boyer, Judge.

Austin Tyler Brown of Parker & DuFresne, P.A., Jacksonville, for Appellant.

Glenn S. Banner of Hinshaw & Culbertson LLP, Jacksonville, for Appellee.

BILBREY, J.

Robert Walton appeals the final judgment of foreclosure in favor of Deutsche Bank National Trust Company, as trustee for Morgan Stanley ABS Capital I Inc., MSAC 2007-NC1 (Deutsche Bank), on grounds that Deutsche Bank’s evidence of its standing on the date the complaint was filed was insufficient to support the judgment. We agree and reverse.

On July 16, 2008, Deutsche Bank filed its complaint in two counts: Count I, to re-establish lost Note; and Count II for foreclosure on the mortgage securing that note. Attached to the complaint was a copy of the note, mortgage, undated and unsigned “Assignment of Note Without Recourse” in blank with no named recipient, and a signed but undated “Allonge to Note” also in blank.[1] The copies of the note and mortgage both reflected July 20, 2006, as the date of the loan and named Mr. Walton as the borrower and NFS Loans, Inc., as the lender. The allonge filed with the complaint included the signature of an officer of NFS Loans, Inc., thus qualifying the document as an indorsement of the note. § 673.2041, Fla. Stat. The absence of a named recipient rendered it an indorsement in blank, making the note payable to bearer and negotiable by possession alone. § 673.2051(2), Fla. Stat. Deutsche Bank alleged in Count I that it did not possess the original note at the time, but had possessed it in the past and lost such possession. § 673.3091, Fla. Stat.

Mr. Walton filed an answer and an amended answer, each denying Deutsche Bank’s allegations of ownership of the note and asserting the affirmative defense that Deutsche Bank lacked standing. Accordingly, standing was a contested issue of fact Deutsche Bank was required to prove. Ham v. Nationstar Mortg. LLC, 164 So. 3d 714, 718 (Fla. 1st DCA 2015) (denial in answer to plaintiff’s allegations of ownership of note and affirmative defense of lack of standing raised contested issue of fact for plaintiff to prove); Gee v. U.S. Bank N.A., 72 So. 3d 211, 214 (Fla. 5th DCA 2011).

At some point during the six years following the filing of the complaint, Deutsche Bank located the original documents. Its allegations of a lost note were abandoned on December 1, 2014, when it filed the original note and mortgage in the court file. Attached to the original note was an allonge similar to the allonge filed in July 2008 with the complaint. The allonge filed in 2014 was also undated and contained all the same information as the earlier indorsement, including the signature of the officer for NFS Loans, Inc. However, the allonge filed in 2014 was a special indorsement because immediately following the words “Pay to the order of,” the hand-written words “New Century Mortgage” appeared. § 673.2051(1), Fla. Stat. In addition, on the lower portion of this allonge was an undated stamped indorsement in blank, signed by an officer of New Century Mortgage Corporation.

“When a plaintiff asserts standing based on an undated endorsement of the note, it must show that the endorsement occurred before the filing of the complaint through additional evidence, such as the testimony of a litigation analyst.” Lloyd v. Bank of New York Mellon, 160 So. 3d 513, 515 (Fla. 4th DCA 2015); Kenney v. HSBC Bank USA, N.A., 175 So. 3d 377 (Fla. 4th DCA 2015). Deutsche Bank was required to offer proof “showing the note was transferred to the Bank prior to the inception of the lawsuit.” Perez v. Deutsche Bank Nat’l Trust Co., 174 So. 3d 489, 491 (Fla. 4th DCA 2015). “An undated indorsement introduced after the complaint was filed, is insufficient, without further evidence, to prove standing at the time the complaint was filed.” Braga v. Fannie Mae, 187 So. 3d 1272, 1273 (Fla. 4th DCA 2016).

Like the previously filed indorsement, the undated blank indorsement filed in 2014 “did not answer the question of `whether the indorsement in blank antedated the filing of the original complaint.'” Ham, 164 So. 3d at 718, quoting Kiefert v. Nationstar Mortg., LLC, 153 So. 3d 351, 353 (Fla. 1st DCA 2014). Accordingly, Deutsche Bank presented additional evidence at the final hearing to try to prove its case. At trial, Deutsche Bank again provided the note, mortgage, and allonge as exhibits, and in addition, submitted pages of a “loan payment history” and a power of attorney from Deutsche Bank to Ocwen Loan Servicing, executed in 2014. In addition, Deutsche Bank presented the testimony of Jay Vent, Senior Loan Analyst for Ocwen Loan Servicing, to authenticate the additional documents and support Deutsche Bank’s standing. Over defense counsel’s objections, the trial court admitted the documents and testimony into evidence.

Where the documentary evidence is insufficient to prove standing at the time of the filing of the complaint, a witness may provide sufficient testimony to prove standing.Stone v. BankUnited, 115 So. 3d 411 (Fla. 2d DCA 2013). However, the testimony offered in this case did not sufficiently add to the documentary evidence to prove Deutsche Bank’s standing.

Appellant’s “challenge to the sufficiency of the evidence to support the judgment is cognizable on appeal pursuant to rule 1.530(e) [Florida Rules of Civil Procedure] regardless of the specificity of defense counsel’s numerous objections during the bench trial.” Burdeshaw v. Bank of New York Mellon, 148 So. 3d 819, 822 (Fla. 1st DCA 2014); see also Wolkoff v. Am. Home Mortg. Servicing, Inc., 153 So. 3d 280, 283 (Fla. 2d DCA 2014). We review the sufficiency of the evidence to prove standing in a foreclosure action de novo. Perez, 174 So. 3d at 490.

Deutsche Bank, as the trustee, attempted to prove, via Mr. Vent’s testimony, that the note secured by the mortgage was acquired by the trust prior to the filing of Deutsche Bank’s foreclosure complaint in 2008. Accordingly, Mr. Vent testified about the pooling and servicing agreement (PSA) under which numerous “loans” were acquired by the trust in 2007. The PSA was not presented to the court or admitted into evidence, and would not necessarily establish Deutsche Bank’s standing to foreclose if it had been admitted.

Mr. Vent did not offer any testimony relating to the date the allonge filed in 2014 was created. Likewise, he offered no testimony regarding the location of the note as blankly indorsed on or before July 16, 2008. He never represented that he had been employed by any previous servicer of the mortgage, that he had any personal knowledge of any other company’s business practices or that he had any personal knowledge of events taking place on or before July 16, 2008. See § 90.604, Fla. Stat. (witness may not testify to a matter unless sufficient evidence is produced to show witness has personal knowledge of the matter). Mr. Vent’s testimony indicated that he had reviewed electronic records pertaining to the trust, and that his company’s “boarding procedures,” together with standard industry practices, ensured the accuracy of the electronic records supporting the trust’s ownership of the note in question.

This testimony was insufficient to prove that Deutsche Bank, as trustee, had the right to enforce the note on July 16, 2008, based on the undated blank indorsement filed on December 1, 2014. Kenney, 175 So. 3d at 379-80 (testimony of loan verification analyst employed by loan servicing company not sufficient to establish date blank indorsement was placed on note); Perez, 174 So. 3d at 491 (testimony of employee of loan servicing company not sufficient to prove date of undated, blank indorsement; PSA not sufficient proof that trustee held indorsed note on date complaint filed); see also § 673.3011, Fla. Stat. (defining persons entitled to enforce an instrument). Mr. Vent offered no explanation for the difference between the undated blank indorsement filed with the original complaint and the undated blank indorsement filed on December 1, 2014, and at trial. His testimony did nothing to establish any dates for either of these indorsements. While Deutsche Bank produced the note and blank indorsement in 2014, it failed to prove that it was entitled to enforce the note as of July 16, 2008, with any competent substantial evidence.

Because Deutsche Bank’s proof of its standing at the inception of the lawsuit was insufficient to support the final judgment of foreclosure, the final judgment is reversed. In addition, because “appellate courts do not generally provide parties with an opportunity to retry their case upon a failure of proof,” this case is remanded for the entry of an order of dismissal. Morton’s of Chicago, Inc. v. Lira, 48 So. 3d 76, 80 (Fla. 1st DCA 2010); see also Figueroa v. Fed. Nat’l Mortg. Ass’n, 180 So. 3d 1110, 1117 (Fla. 5th DCA 2015).[2]

REVERSED and REMANDED.

LEWIS, J., CONCURS, and WINOKUR, J., CONCURS WITH OPINION.

WINOKUR, J. concurring.

I concur with the majority opinion that reversal is required under a substantial body of case law regarding standing at the time a foreclosure proceeding is filed. In doing so, I agree with the observations of Judge Altenbernd in Focht v. Wells Fargo Bank, N.A., 124 So. 3d 308, 312 (Fla. 2d DCA 2013) (Altenbernd, J., concurring)(observing that “[t]he courts have erroneously transformed what should be a defendant’s affirmative defense, permitting the defendant to avoid a judgment of foreclosure by a plaintiff who is a stranger to the note, into a jurisdictional prerequisite that must be established by the plaintiff to avoid a dismissal of the action”); and Judge Lucas in Corrigan v. Bank of America, N.A., 189 So. 3d 187, 191 (Fla. 2d DCA 2016) (Lucas, J., concurring) (questioning “the rationale of applying the affirmative defense of standing as if it were a jurisdictional prerequisite” and noting that the “unwavering adherence to this standing-at-inception requirement imposes inequities in foreclosure cases and, in my opinion, has led the rule astray from whatever its underlying purpose may have been”).

The Focht court certified the following question of great public importance to the Florida Supreme Court: “Can a plaintiff in a foreclosure action cure the inability to prove standing at the inception of suit by proof that the plaintiff has since acquired standing?” Focht, 124 So. 3d at 312. I believe the answer to that question ought to be in the affirmative. But unless the Supreme Court agrees, I am constrained to concur in the majority opinion.

NOT FINAL UNTIL TIME EXPIRES TO FILE MOTION FOR REHEARING AND DISPOSITION THEREOF IF FILED.

[1] An “allonge” is a supplemental attachment to a note for the purpose of placing indorsements which will not fit on the pages of the note itself. See Purificato v. Nationstar Mortg., LLC, 182 So. 3d 821, 823 (Fla. 4th DCA 2016); Lacombe v. Deutsche Bank Nat’l Trust Co., 149 So. 3d 152, 153 n. 1 (Fla. 1st DCA 2014).

[2] Deutsche Bank must file a new complaint if it wishes to again pursue foreclosure. McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170 (Fla. 4th DCA 2012).

 

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Moody’s says DoJ preparing complaint alleging rating violations over its handling of the mortgage bonds before the global credit crisis of 2008

Moody’s says DoJ preparing complaint alleging rating violations over its handling of the mortgage bonds before the global credit crisis of 2008

Go here to see the connection between the Government and Wall Street including these so called rating agencies that are getting tipped off of a complaint being in the works!!

Reuters-

Moody’s Corp (MCO.N), parent of ratings agency Moody’s Investor Services, said on Friday the U.S. Justice Department was preparing a civil complaint against the company, alleging violations of federal law in the run-up to the financial crisis.

The complaint alleges Moody’s violated the Financial Institutions Reform, Recovery and Enforcement Act while rating residential mortgage-backed securities and collateralized debt obligations.

Moody’s has periodically received subpoenas and inquiries from government authorities, including the Department of Justice, over its handling of the mortgage bonds before the global credit crisis of 2008.

[REUTERS]

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Boyle v. VESUVIO HOLDINGS | Deutsche Bank, ONEWEST and the FDIC ….. WHACKED and REVERSED

Boyle v. VESUVIO HOLDINGS | Deutsche Bank, ONEWEST and the FDIC ….. WHACKED and REVERSED

 

JIMMY BOYLE, Plaintiff and Appellant,
v.
VESUVIO HOLDINGS, LLC, et al., Defendants and Respondents.

Nos. B256055, B259976.
Court of Appeals of California, Second District, Division Three.
Filed October 14, 2016.
CONSOLIDATED APPEALS from a judgment of the Superior Court of Los Angeles County, Superior Court No. BC503500. Holly E. Kendig, Judge. Reversed.

Law Offices of Bruce J. Guttman and Bruce J. Guttman for Plaintiff and Appellant.

No appearances for Defendants and Respondents Vesuvio Holdings, LLC and Luxury Portfolio, LLC.

Chuck & Tsoong, Stephen C. Chuck and Victoria J. Tsoong for Defendants and Respondents Deutsche Bank National Trust Company, as Trustee, etc. and CIT Bank, N.A.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

ALDRICH, J.

INTRODUCTION

After the nonjudicial foreclosure of his home, plaintiff Jimmy Boyle sued the trustee of his deed of trust, along with the trustee of the securitized trust holding his loan documents, its agent, the loan servicer, and the two purchasers of his property at the foreclosure sale.[1] The complaint alleges wrongful foreclosure and slander of title, and plaintiff seeks to clear the cloud on his title. All of plaintiff’s claims are premised on his allegations that the assignment of his loan documents to the securitized trust was void ab initio, with the result that the foreclosing defendants had no right to sell his property. The trial court sustained the demurrers of all defendants to the operative complaint on the ground that the proximate cause of plaintiff’s damages was his own default on the loan obligations. The court denied leave to amend and dismissed the action. On appeal, plaintiff contends that he has stated or could amend to state his causes of action. For the reasons set forth herein, we reverse the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

1. The general allegations in the operative complaint

a. Plaintiff’s Loan

Viewing the first amended and operative complaint according to the usual rules of appellate review (Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 924 (Yvanova)),[2] although not a model of clarity, it alleges that plaintiff executed a trust deed securing a $460,000 promissory note. The trust deed identified the lender and beneficiary as IndyMac Bank, F.S.B. (IndyMac), and the trustee as Charles A. Brown.

b. transfer of IndyMac to OneWest

IndyMac later ceased doing business and the Federal Deposit Insurance Corporation (FDIC) took it into receivership. On March 19, 2009, the FDIC completed a sale of IndyMac to defendant OneWest (the transfer). Plaintiff alleges that, as of that March 2009 date, OneWest assumed the operations of IndyMac, including all servicing rights concerning plaintiff’s loan, with the result that the FDIC ceased to act as IndyMac’s receiver and lost its authority to act on IndyMac’s behalf.

c. assignment of plaintiff’s loan and trust deed to the securitized trust

On March 23, 2012, the FDIC as receiver for IndyMac — despite the alleged transfer of IndyMac to OneWest three years earlier — purported to assign plaintiff’s trust deed and note to a mortgage-backed security (the assignment).[3] Executed under the signature of “JC San Pedro, Attorney in Fact,” the assignment was made by the FDIC to defendant Deutsche Bank, as trustee of the INDX Mortgage Trust 2007-AR21IP, Mortgage Pass-Through Certificates, Series 2007-AR21IP under the Pooling and Servicing Agreement dated October 1, 2007 (the INDX securitized trust).

The complaint alleges that the assignment of plaintiff’s trust deed to the INDX securitized trust was void ab initio for three reasons: (1) the purported assignment occurred in 2012, years after the INDX securitized trust’s November 2007 closing date (the date by which all loans and mortgages or deeds of trust had to be transferred to the investment pool); (2) the FDIC, having already transferred all of IndyMac’s assets to OneWest in 2009, no longer had authority to execute the assignment to the INDX securitized trust in 2012; and (3) the signature on the assignment was a forgery and JC San Pedro was not an employee or agent of the FDIC. For these three reasons, plaintiff alleges, the assignment was a nullity and so the INDX securitized trust was not the true owner or holder of plaintiff’s note and trust deed, was not owed any money under his loan documents, and thus had no power to authorize initiation of the foreclosure sale.

d. substitution of trustee under plaintiff’s trust deed

On March 23, 2012, the same day as the assignment, Deutsche Bank, as trustee of the INDX securitized trust, executed a document purporting to substitute defendant Meridian[4] in place of Charles A. Brown, as trustee under plaintiff’s trust deed (the substitution).

Plaintiff alleges that the substitution was void for three reasons: (1) the assignment being void ab initio, as alleged infra, Deutsche Bank, as trustee of the INDX securitized trust, lacked the power to execute the substitution; (2) the signature on the substitution was forged or was made by an individual who did not have authority to act on behalf of Deutsche Bank; and (3) the substitution violated paragraph 24 of plaintiff’s trust deed, which empowered lenders only to make trustee substitutions.

e. the foreclosure

On April 18, 2012, Meridian, on behalf of the INDX securitized trust, gave notice of default and election to sell plaintiff’s property under the power of sale provision in plaintiff’s trust deed. On July 21, 2012, Meridian recorded a notice of trustee’s sale to be held on August 13, 2012. Plaintiff alleges that the notices of default and of trustee’s sale were ineffective because, the assignment and substitution being void, Meridian never became the duly appointed trustee under the trust deed or the authorized agent of the true lender or beneficiary.

On December 10, 2012, IndyMac Mortgage Services, a division of OneWest, invited plaintiff to apply for a loan modification through the Home Affordable Modification Program (HAMP). Plaintiff’s loan modification application was denied by letter sent on February 11, 2013. Meridian sold the property at the foreclosure sale three days later on February 14, 2013, to defendants Vesuvio and Luxury.

2. The operative complaint

Plaintiff asserts causes of action for:

a. wrongful foreclosure against Deutsche Bank and OneWest

Plaintiff does not seek preemptively to forestall foreclosure; he alleges that the sale was wrongful on two grounds. First, plaintiff alleges that Deutsche Bank, as trustee of the INDX securitized trust, had no authority to foreclose because the assignment to it was void ab initio. Second, plaintiff alleges wrongful foreclosure in violation of the California Homeowner Bill of Rights (HBOR)[5] by (1) engaging in dual tracking, i.e., conducting a trustee’s sale while plaintiff’s loan modification application was pending (Civ. Code, § 2923.6);[6] (2) failing to provide plaintiff with a “single point of contact” (§ 2923.7); and (3) foreclosing without authority to do so (§ 2924). Plaintiff alleges he was damaged, among other reasons, because defendants deprived him of critical information about irregularities in the chain of title to prevent him from taking action to enjoin the sale of his home (§ 2923.5).

b. slander of title against all defendants

Plaintiff alleges, because the assignment was void ab initio, Deutsche Bank, as trustee of the INDX securitized trust, had no authority to execute the substitution of Meridian as trustee under plaintiff’s trust deed, or to authorize initiation of the foreclosure sale. Plaintiff alleges that Vesuvio and Luxury had “at least constructive knowledge” that the assignment was invalid because public records establish that (1) the FDIC, having already transferred IndyMac to OneWest in 2009, could not later transfer his note and trust deed in 2012 to the INDX securitized trust; and (2) JC San Pedro, who was not an employee of the FDIC, had no authority to act on the FDIC’s behalf. Plaintiff alleges that the recording of the trust deed upon sale slandered his title, caused him damage, and prejudiced him, by forcing him to expend time and money to investigate the questionable documents, and by depriving him of the right to deal with the parties holding actual interest in his loan documents in an effort to prevent foreclosure. Plaintiff further alleges that Deutsche Bank and OneWest acted maliciously and with reckless disregard of plaintiff’s rights because their handling of plaintiff’s loan was part of a large-scale operation of backdating, manufacturing, and falsifying loan documents to carry out mass foreclosures, and so they knew or had reason to know of the irregularities but failed to stop or correct the improprieties.

c. quieting title and removing the cloud on title against Luxury and Vesuvio[7]

These causes of action are dependent on the success of the first two. Plaintiff seeks a judicial determination that title to the property remains vested in him alone because the foreclosure sale and the trustee’s deed upon sale were inoperative based on the void assignment and ineffective substitution. And, he seeks an order declaring the deeds into Vesuvio and Luxury to be invalid.

3. The demurrer of Deutsche Bank and OneWest to the operative complaint

Deutsche Bank and OneWest together generally demurred to the complaint. They asserted that the HBOR does not apply retroactively to the foreclosure of plaintiff’s property and in any event, the HBOR allegations were preempted by the federal Home Owners’ Loan Act (12 U.S.C. § 1461 et seq.) (HOLA). Additionally, they argued that under California’s nonjudicial foreclosure statutes, plaintiff had no right to a judicial determination whether the party initiating the trustee sale was authorized. They also argued that the slander of title cause of action failed because the proximate cause of harm to plaintiff was his own default on the loan, and because the foreclosing defendants enjoyed a privilege for all documents recorded in a nonjudicial foreclosure. (§§ 2924 & 47.)

4. The demurrer of Vesuvio and Luxury to the operative complaint

Vesuvio and Luxury together generally demurred to the causes of action to quiet title, remove the cloud on title, and slander of title. They asked the trial court to take judicial notice of the notices of default and of trustee’s sale attached to the complaint. They relied on the rebuttable presumption of a valid sale which arises from the recording of a trustee’s deed that recites the satisfaction of all notice requirements and procedures required by law (§ 2924). Plaintiff failed to allege facts showing that Vesuvio and Luxury were not bona fide purchasers for value to overcome the presumption of validity of the foreclosure sale, they argued, as plaintiff failed to show that they had notice of the FDIC’s lack of authority to execute the assignment. Also, noting a properly conducted nonjudicial foreclosure sale constitutes a final adjudication of the rights of the borrower and lender, they argued that plaintiff had no standing to challenge the authority of the foreclosing parties to conduct the sale.

5. The ruling

The trial court sustained the demurrers without leave to amend. Relying on Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256 (Fontenot), disapproved on other grounds (standing) in the recent case of Yvanova, supra, 62 Cal.4th at page 939, the court ruled that plaintiff failed to establish he was damaged or prejudiced by the foreclosure. The court reasoned that plaintiff never claimed he was not in default or that the “true lender” would have refrained from foreclosing under the circumstances. Plaintiff’s claim is only that the wrong entity conducted the trustee’s sale, the trial court observed. Even assuming Deutsche Bank did not have the authority to foreclose, the court explained that the “true victim” of the wrongful sale was not plaintiff/borrower, but the original lender, i.e., OneWest as IndyMac’s successor. The court denied leave to amend. Plaintiff filed his timely appeals from the dismissal of his lawsuit.

CONTENTIONS

Plaintiff contends that he has stated, or could amend to state, a cause of action for damages from wrongful foreclosure. Assuming he has alleged wrongful foreclosure, plaintiff contends he can allege one or more of the remaining causes of action.

DISCUSSION

In determining whether plaintiff has stated a cause of action, “`our standard of review is clear: “`. . .’ When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action. [Citation.] And when it is sustained without leave to amend, 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. [Citations.] The burden of proving such reasonable possibility is squarely on the plaintiff.” [Citations.]’ [Citation.] Our review is de novo. [Citation.]” (Rosolowski v. Guthy-Renker LLC (2014) 230 Cal.App.4th 1403, 1410, quoting fromZelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126.)

1. wrongful foreclosure

The elements of a tort cause of action for wrongful foreclosure are: “`(1) the trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust; (2) the party attacking the sale (usually but not always the trustor or mortgagor) was prejudiced or harmed; and (3) in cases where the trustor or mortgagor challenges the sale, the trustor or mortgagor tendered the amount of the secured indebtedness or was excused from tendering.’ [Citation.]” (Miles v. Deutsche Bank National Trust Co. (2015) 236 Cal.App.4th 394, 408.) However, tender is not required when, as here, the challenge to the foreclosure sale is that it was void ab initio. (Glaski, supra, 218 Cal.App.4th at p. 1100.)

a. Plaintiff has successfully alleged wrongful foreclosure based on a void assignment that deprived defendants of authority to foreclose.

“A foreclosure initiated by one with no authority to do so is wrongful for purposes of . . . an action” for wrongful foreclosure. (Yvanova, supra, 62 Cal.4th at p. 929.) “[O]nly the entity currently entitled to enforce a debt may foreclose on the mortgage or deed of trust securing that debt. . . .” (Id. at p. 928.)

A borrower may premise a wrongful foreclosure cause of action on allegations that the foreclosing entity lacked authority because the assignment through which it purportedly became holder, trustee, or beneficiary under the trust deed, was void. (Glaski, supra, 218 Cal.App.4th at pp. 1094-1095.) “A void contract is without legal effect. [Citation.] `It binds no one and is a mere nullity.’ [Citation.]” (Yvanova, supra,62 Cal.4th at p. 929.) By comparison, if the transaction is merely voidable, a cause of action is not stated (see Glaski, at pp. 1094-1095), because a voidable transaction “`is one where one or more parties have the power, . . . by ratification of the contract to extinguish the power of avoidance.’ [Citation.]” (Yvanova, at p. 930.)

As noted, plaintiff’s operative complaint alleges that Deutsche Bank and OneWest had no authority to foreclose because the assignment of his promissory note and trust deed to the INDX securitized trust was void ab initio for three reasons: (1) the assignment was executed more than four years after the securitized trust’s 2007 closing date; (2) the FDIC, having already transferred IndyMac to OneWest, no longer had plaintiff’s loan documents to transfer to the securitized trust; and (3) the signature on the assignment was forged and was given by individuals without authority to sign.

Turning to the first basis for voidness, the court in Glaski, supra, 218 Cal.App.4th 1079, held that the homeowner stated a cause of action for wrongful foreclosure on the basis that the post-closing date transfer of his note and mortgage to the trustee of a New York securitized trust was void. (Id. at pp. 1083-1087, 1094-1095.) However, this portion of Glaski has been rejected as inconsistent with New York authority establishing that an assignment to a securitized trust made after the trust’s closing date was voidable under New York law. (Saterbak v. JPMorgan Chase Bank, N.A.(2016) 245 Cal.App.4th 808, 815 & fn. 5; Rajamin v. Deutsche Bank Nat. Trust Co.(2d Cir. 2014) 757 F.3d 79, 88-90 [under “weight of New York authority,” “an unauthorized act by the trustee is not void but merely voidable by the beneficiary”].) The record here shows that the INDX securitized trust was formed under the laws of New York and so the post-closing date assignment is not void but merely voidable. Therefore, plaintiff cannot state a cause of action for wrongful foreclosure based on the date of the assignment.

Plaintiff’s second alleged reason that the assignment was void does state a basis for wrongful foreclosure, namely that the FDIC had nothing to assign to Deutsche Bank, as trustee of the INDX securitized trust, having already transferred all of IndyMac to OneWest nearly four years earlier. Where the assignor holds no interest to assign, the assignment is void, not voidable. (Sciarratta v. U.S. Bank National Assn. (2016) 247 Cal.App.4th 552, 564 (Sciarratta).) The allegations in Sciarratta were that Chase assigned “all beneficial interest” in the plaintiff’s notes and trust deed to Deutsche Bank in April 2009, and then assigned the same interests to Bank of America in November 2009. (Id. at pp. 562-563.) These allegations stated a void assignment. (Id. at p. 564.) We accept as true the allegations that the FDIC transferred all of IndyMac to OneWest in 2009, including all beneficial interest in plaintiff’s loan documents and, notwithstanding that OneWest held plaintiff’s note and trust deed by then, the FDIC in 2012 assigned the same loan documents to the INDX securitized trust, the beneficiary who conducted the foreclosure sale. On that basis, plaintiff has stated a void assignment.

Plaintiff’s third alleged reason the assignment was void is that the signature thereon was a forgery. “It has been uniformly established that a forged document is void ab initio and constitutes a nullity; as such it cannot provide the basis for a superior title as against the original grantor.” (Wutzke v. Bill Reid Painting Service, Inc. (1984) 151 Cal.App.3d 36, 43, and cases cited therein [trust deed obtained by means of forgery is void].) Assuming this forgery allegation is true, as we must on review of a demurrer, plaintiff has alleged a void, not a merely voidable, assignment on this ground also. (See Halajian v. Deutsche Bank Nat. Trust Co. (E.D.Cal. Feb. 14, 2013, No. 1:12-CV-00814 AWI GSA) 2013 WL 593671, at p. *7 [dismissal for failure to state a claim improper in absence of judicially noticeable documents showing that signor was in fact authorized to sign on behalf of Mortgage Electronic Registration Systems, Inc.].)

Therefore, plaintiff has alleged a wrongful foreclosure cause of action based on the theories that Deutsche Bank, as trustee of the INDX securitized trust, lacked authority to foreclose on plaintiff’s property because the assignment through which it purportedly became beneficiary under the trust deed was void for two reasons: the FDIC had nothing to transfer to Deutsche Bank, as trustee of the INDX securitized trust, and the signature on the assignment was a forgery.

Deutsche Bank and OneWest argue, citing Gomes v. Countrywide Home Loans, Inc.(2011) 192 Cal.App.4th 1149, 1154, that plaintiff lacked standing to challenge Deutsche Bank’s authority to hold the trustee’s sale. Gomes held that the nonjudicial foreclosure scheme, is “`a comprehensive framework for the regulation of a nonjudicial foreclosure sale'” that did not allow for a lawsuit attacking the note holder’s authority to initiate the foreclosure process. (Ibid.) However, our Supreme Court recently concluded that “a wrongful foreclosure plaintiff has standing to claim the foreclosing entity’s purported authority to order a trustee’s sale was based on a void assignment of the note and deed of trust.” (Yvanova, supra, 62 Cal.4th at p. 939; accord, Sciarratta, supra, 247 Cal.App.4th at p. 555.)[8] Plaintiff has standing.

b. Plaintiff has stated, and should be afforded the opportunity to amend to state, a cause of action for wrongful foreclosure based on violations of the HBOR.

In addition to the void assignment, plaintiff alleges that the foreclosure was wrongful because the trustee’s sale was conducted in violation of various provisions of the HBOR. The HBOR is a series of statutes designed to “`address more pointedly the foreclosure crisis in our state'” and to place specific limitations on the nonjudicial foreclosures of owner-occupied residential real property. (Monterossa v. Superior Court, supra, 237 Cal.App.4th at pp. 749, 752.) Among other things, the HBOR requires servicers to provide borrowers with a “single point of contact” to enhance communication (§ 2923.7), and prohibits dual tracking, which occurs when a servicer continues with a foreclosure while the borrower’s application for a loan modification is under review, or within 30 days of the application’s denial. (§ 2923.6; Lueras v. BAC Home Loan Servicing, LP (2013) 221 Cal.App.4th 49, 86, fn. 14.)[9]

The complaint alleges that Deutsche Bank and Meridian engaged in unlawful dual tracking by holding the foreclosure sale just three days after OneWest denied plaintiff’s HAMP application, and that OneWest failed to provide him with a single point of contact. Deutsche Bank and OneWest demurred on the ground that plaintiff did not state a cause of action because his factual allegations concerning his HAMP efforts and OneWest’s conduct were insufficient. Although plaintiff has stated a violation of the single point of contact requirement, he omitted to allege that his HAMP application was “complete.” (See § 2923.6, subd. (c).) We agree with plaintiff that, to the extent he failed to include other sufficient information concerning his HAMP application, this represents a deficiency of facts over which he has control and so he should be given leave to amend. As he alleges the sale was void ab initio, plaintiff is not otherwise required to allege that he tendered the loan balance before filing suit, defendants’ contention to the contrary notwithstanding. (Valbuena v. Ocwen Loan Servicing, LLC (2015) 237 Cal.App.4th 1267, 1273-1274; Glaski, supra, 218 Cal.App.4th at p. 1100.)

Defendants contend that sections 2923.6 and 2923.7 became effective January 1, 2013 and do not apply retroactively. However, according to the complaint, the violations also occurred in February 2013, after the HBOR took effect. In sum, plaintiff should be allowed to amend to allege, if possible, facts concerning the completion of his HAMP application under section 2923.6. In all other respects, plaintiff has stated a cause of action for wrongful foreclosure in violation of these two provisions of the HBOR.

However, plaintiff alleges a third violation of the HBOR, namely that the sale was conducted by an entity that was neither the holder of the beneficial interest, the original or substituted trustee under the trust deed, nor the designated agent of the beneficiary, in violation of section 2924, subdivision (a)(6). Plaintiff cannot state a cause of action for money damages for violation of this provision of the HBOR. (Hernandez v. Select Portfolio, Inc. (C.D.Cal. June 25, 2015, No. CV15-01896 MMM (AJWx) 2015 WL 3914741, at p. *8 [“Section 2924.12 sets forth a statutory scheme for redressing violations of the HBOR; despite the fact that it references various other HBOR statutes, § 2924.12 does not mention § 2924(a)”].)

c. HOLA preemption does not apply.

Defendants argue that HOLA, which afforded federally chartered savings banks field preemption of all state laws governing real estate, preempts plaintiff’s claims based on the HBOR. The contention fails.

The supremacy clause of the United States Constitution requires courts to follow federal law when, in enacting a federal statute, Congress intended to set aside the state law. (Parks v. MBNA America Bank, N.A. (2012) 54 Cal.4th 376, 382-383.) One of the four types of federal preemption, field preemption or “`”Congress’ intent to preempt all state law in a particular area,” applies “where the scheme of federal regulation is sufficiently comprehensive to make reasonable the inference that Congress `left no room’ for supplementary state regulation.” [Citation.]’ [Citations.]” (Id. at p. 383.)

HOLA granted savings banks express statutory field preemption of state foreclosure laws. (12 U.S.C. §§ 1463(a) & 1464(a); 12 C.F.R. § 560.2(a); Lopez v. World Savings & Loan Assn. (2003) 105 Cal.App.4th 729, 738 [HOLA was “intended to preempt all state laws purporting to regulate any aspect of the lending operations of a federally chartered savings association.”].) HOLA was strictly limited to federal savings institutions, however, and was not intended to affect the operations of national banks, which are governed by different laws. (Penermon v. Wells Fargo Bank, N.A. (N.D.Cal. 2014) 47 F.Supp.3d 982, 993-994.) Deutsche Bank and OneWest argue that HOLA preempts plaintiff’s HBOR claims because his loan originated with IndyMac, a federal savings bank, and was transferred to OneWest, who at some indefinite point was also a thrift.

But HOLA’s “preemptive force does not hinge on genesis of the loan; rather, the nature of the bank at issue is the defining criterion.” (Avnieli v. Residential Credit Solutions, Inc. (C.D.Cal. Oct. 9, 2015, No. 2:15-CV-02877) 2015 WL 5923532, at p. *3, italics added [HOLA preemption does not apply where foreclosing party is a national bank as successor in interest to a savings bank lender].) Stated differently, when the party accused of violating the HBOR is a national bank, the field preemption of HOLA does not apply, notwithstanding the originator of the loan may have been a savings bank. (Ibid., see Saving HBOR, supra, 48 U.S.F. L.Rev. at pp. 206, 211-216; accord, Valtierra v. Wells Fargo Bank, N.A. (E.D.Cal. Feb. 10, 2011, No. CIV-F-10-0849 AWI GSA) 2011 WL 590596, at p. *4 [HOLA does not apply where the allegedly wrongful act committed by national bank]; Ramirez v. Wells Fargo Bank, N.A. (N.D.Cal. Apr. 27, 2011, No. C10-05874 WHA) 2011 WL 1585075,at p. *7 [same].)

We recognize federal cases, some cited by defendants, that have held that HOLA preemption protects a national bank if the loan originator was a federal thrift. None is persuasive. (See generally Saving HBOR, supra, 48 U.S.F. L.Rev. 189; Gerber v. Wells Fargo Bank, N.A. (D.Ariz. Feb. 9, 2012, No. CV 11-01083-PHX-NVW) 2012 WL 413997, at p. *3; but see Griffin v. Green Tree Servicing, LLC (2015) 166 F.Supp.3d 1030, and cases cited therein; Leghorn v. Wells Fargo Bank, N.A.(N.D.Cal. 2013) 950 F.Supp.2d 1093, 1108.) As one federal district court succinctly stated, “Wells Fargo argues that HOLA preemption `sticks’ to any loan originating with a federal savings bank. [¶] The plain language of [12 C.F.R.] § 560.2 demonstrates that this argument is without merit. . . . . [¶] . . . . [P]reemption is not some sort of asset that can be bargained, sold, or transferred. HOLA preemption was created . . . for the benefit of federal savings associations, and [12 C.F.R.] § 560.2 plainly seeks to avoid burdening the operations of federal savings associations. Wells Fargo is not a federal savings association. . . . HOLA preemption does not apply to Wells Fargo.” (Gerber, supra, 2012 WL 413997, at pp. *3-4.)[10]Thus, HOLA’s field preemption applies only if, at the time the cause of action arose,the defendant financial institution was a federal savings association.

Alternatively, defendants’ preemption argument fails because the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) (Pub.L. No. 111-203 (July 21, 2010) 124 Stat. 1376 (H.R. 4173)), which took effect on July 21, 2011, significantly diminished preemption for savings banks as of that date. (2 Dunaway, The Law of Distressed Real Estate (2016) § 17A:2; see Saving HBOR, supra, 48 U.S.F. L.Rev. at p. 200.) Thus, even if the holder of the note at the time the cause of action arose were a savings bank, after July 21, 2011, it is not entitled to field preemption under HOLA.[11]

For the foregoing reasons, HOLA field preemption is inapplicable here because Deutsche Bank is not a thrift but a national bank organized under different laws and subject to supervision by a different governmental entity than savings banks. (Griffin v. Green Tree Servicing, LLC, supra, 166 F.Supp.3d 1030.) As for OneWest, there is no allegation in the four corners of the complaint — and defendants provided no judicially noticeable documents showing — that OneWest was a federally chartered savings bank at the time the causes of action arose. And, assuming OneWest could invoke HOLA protection, the alleged unlawful conduct occurred after Dodd-Frank took effect and so field preemption would not apply, irrespective of the species of bank. Defendants’ demurrer has not demonstrated that HOLA prevented plaintiff from stating a cause of action for wrongful foreclosure.

d. Plaintiff has adequately alleged prejudice and damages.

As noted, the trial court relied on Fontenot, supra, 198 Cal.App.4th 256, to rule that plaintiff was not damaged or prejudiced by the foreclosure, even if the wrong entity foreclosed, because plaintiff does not deny he was in default on his loan. Thus, the court reasoned, plaintiff’s own default was the proximate cause of the foreclosure sale.

However, when issuing its ruling, the trial court did not have the benefit of Yvanova‘s conclusion that foreclosure by the wrong entity is the harm. “It is no mere `procedural nicety,’ from a contractual point of view, to insist that only those with authority to foreclose on a borrower be permitted to do so.” (Yvanova, supra, 62 Cal.4th at p. 938.) “The borrower owes money not to the world at large but to a particular person or institution, and only the person or institution entitled to payment may enforce the debt by foreclosing on the security.” (Ibid.)

Accordingly, a homeowner alleging wrongful foreclosure on the ground the foreclosing beneficiary’s interest was void need not allege prejudice or harm beyond the alleged wrongful foreclosure itself. (Sciarratta, supra, 247 Cal.App.4th at p. 565.) Following Yvanova‘s lead, Sciarratta explained “When a non-debtholder forecloses, a homeowner is harmed because he or she has lost her home to an entity with no legal right to take it. If not for the void assignment, the incorrect entity would not have pursued a wrongful foreclosure. Therefore, the void assignment is the cause in fact of the homeowner’s injury and all he or she is required to allege on the element of prejudice. The critical issue is not the plaintiff’s ability to pay, but rather whether the defendant’s conduct resulted in the plaintiff’s harm; i.e., a foreclosure that was wrongful because it was initiated by a person or entity having no legal right to do so; i.e. holding void title.” (Sciarratta, at pp. 565-566, italics added.) Sciarratta quoted from Yvanova that, “the bank or other entity that ordered the foreclosure would not have done so absent the allegedly void assignment. Thus, `[t]he identified harm—the foreclosure—can be traced directly to [the foreclosing entity’s] exercise of the authority purportedly delegated by the assignment.'” (Yvanova, supra, 62 Cal.4th at p. 937; Sciarratta, at p. 566.)

Sciarratta also distinguished Fontenot for incorrectly and exclusively focusing on the homeowner plaintiff’s ability to have avoided any foreclosure. (Sciarratta, supra, 247 Cal.App.4th at p. 566.) As Sciarratta explained, Fontenot‘s interpretation of prejudice narrowly, to mean that the wrongful foreclosure plaintiffs must demonstrate that they could have avoided foreclosure, contravened the policies underlying Yvanova‘s standing rule that only the entity “`entitled to payment may enforce the debt by foreclosing on the security.'” (Sciarratta, at p. 567, quoting from Yvanova, supra, 62 Cal.4th at p. 938.) Stated otherwise, the proximate cause of the homeowner’s damage in a cause of action alleging the foreclosing entity had no legal right to sell is the defendant’s wrongful foreclosure itself, not the borrower plaintiff’s default on the loan. Here, plaintiff has adequately alleged just the sort of wrongful foreclosure at issue in Sciarratta and thus has sufficiently alleged proximate harm and prejudice.

To summarize, the trial court abused its discretion in denying plaintiff leave to amend his wrongful foreclosure cause of action to add facts concerning the completion of his HAMP application. In all other respects, the trial court erred in sustaining the demurrer to the cause of action for wrongful foreclosure.

2. The complaint states a cause of action for damages for slander of title.

“The elements of a cause of action for slander of title are (1) a publication, which is (2) without privilege or justification, (3) false, and (4) causes pecuniary loss. [Citation.]” (La Jolla Group II v. Bruce (2012) 211 Cal.App.4th 461, 472.)

Plaintiff’s operative complaint states publications that are false (the first and third elements). It alleges, as the result of the void assignment and substitution, that neither Deutsche Bank nor its agent, Meridian, had authority to foreclose, and so the recorded notices of default and of trustee sale, along with the trustee deeds upon sale, were false.

Citing sections 2924 and 47, defendants argue that all of the recorded documents are privileged publications,[12] and raise the defense that the publications were true at the time they were recorded.

However, the privilege enjoyed by trustees and beneficiaries for statutory notices in connection with nonjudicial foreclosures is a qualified one. (Kachlon v. Markowitz(2008) 168 Cal.App.4th 316, 339-341, citing § 47, subd. (c)(1) [qualified common interests privilege].) A plaintiff may overcome the qualified privilege by alleging malice, not mere negligence. (Kachlon, at p. 344.) Malice in this context “is defined as actual malice, meaning `”that the publication was motivated by hatred or ill will towards the plaintiff or by a showing that the defendant lacked reasonable grounds for belief in the truth of the publication and therefore acted in reckless disregard of the plaintiff’s rights.”‘ [Citations.]” (Id. at p. 336.) “[P]leading that defendants published [the document] with knowledge of its falsity does adequately allege actual malice.” (Boyich v. Howell (1963) 221 Cal.App.2d 801, 803.) Plaintiff alleges that defendants falsified the signatures on the assignment and substitution and so they knew of the irregularities in the sale but failed to stop the sale or correct the problems. He also alleges that the acts were done willfully, deliberately, intentionally, maliciously, and in conscious disregard of plaintiff’s rights, with the design and intent wrongfully and unlawfully to slander plaintiff’s title and divest him of title and possession of his home. Thus, plaintiff sufficiently alleges malice to overcome the privilege.

As for damages, the trial court sustained the demurrers to plaintiff’s complaint on the same ground as in the wrongful foreclosure cause of action, namely that the proximate cause of plaintiff’s damage was his default on his loan obligation, not the recording of the foreclosure documents and trust deeds upon sale.

Slander of title requires proximately-caused pecuniary loss, such as impaired value or marketability, or expenses of legal proceedings to remove the cloud on the title caused by the recorded falsehoods. (M.F. Farming Co. v. Couch Distributing Co., Inc. (2012) 207 Cal.App.4th 180, 199-200, disapproved on another ground in Baral v. Schnitt (2016) 1 Cal.5th 376, 396, fn. 11.) “[N]o other pecuniary damages need be shown.” (Sumner Hill Homeowners Assn., Inc. v. Rio Mesa Holdings, LLC (2012) 205 Cal.App.4th 999, 1034-1035.) The complaint alleges that plaintiff’s title was slandered because an entity without the legal right to do so foreclosed on his property and recorded false notices and trustee’s deeds. The complaint alleges that plaintiff was forced to expend time and money to retain professionals to investigate the questionable foreclosure documents, and includes as damages the expenses incurred by plaintiff in the form of attorney fees and other costs to clear title and remove the doubt on his property rights cast by the recording of false documents. Plaintiff has sufficiently alleged proximately-caused damages. As plaintiff has stated a cause of action for slander of title, the trial court abused its discretion in sustaining the demurrers to this cause of action.

3. The complaint states causes of action to quiet title and to remove the cloud on title.

To plead a cause of action to quiet title, the complaint must include: (1) a legal description and street address of the property, (2) the title and the basis for title sought by plaintiff, (3) the adverse claims to plaintiff’s title, (4) the date as of which determination is sought, and (5) a prayer for the determination of plaintiff’s title as against the adverse claims. (Code Civ. Proc., § 761.020.) In his cause of action to quiet title, plaintiff alleges his ownership of the property. He alleges that the adverse claims of Vesuvio and Luxury were based on the invalid foreclosure, as evidenced by the recorded false documents, with the result that the foreclosure sale did not transfer title. That is, plaintiff alleges that the recorded trustee’s deeds upon sale into Vesuvio and Luxury are inconsistent with his rights. Plaintiff seeks a declaration that, as of March 6, 2013, title to the property was vested in him only. The complaint adequately states causes of action both to quiet title and to remove the cloud on his title.

In their demurrer, Vesuvio and Luxury urged the trial court to take judicial notice of the recorded notices of default and trustee’s sale, and the trust deeds upon sale. Those documents recite that all requirements and procedures required by law were satisfied, and hence give rise to the presumption that the sale was valid. They argued, citing section 2924, subdivision (c), that they are thus bona fide purchasers for value. The argument is unavailing.

The relevant provisions of section 2924 “establish presumptions about the adequacy of notices related to a foreclosure sale: `A recital in the deed executed pursuant to the power of sale of compliance with all requirements of law regarding the mailing of copies of notices or the publication of a copy of the notice of default or the personal delivery of the copy of the notice of default or the posting of copies of the notice of sale or the publication of a copy thereof shall constitute prima facie evidence of compliance with these requirements and conclusive evidence thereof in favor of bona fide purchasers and encumbrancers for value and without notice.'” (Bank of America v. La Jolla Group II (2005) 129 Cal.App.4th 706, 713-714, quoting from § 2924, subd. (c).) “`The statutory presumption [created by section 2924] only applies to the propriety of the required notices, [and] it does not apply to other requirements of the foreclosure process.’ (4 Miller & Starr, supra, § 10:211, p. 680.)” (Bank of America v. La Jolla Group II, supra, at p. 714, italics added.)

Plaintiff does not allege that the foreclosure sale was improperly noticed. He attacks the validity of the sale on the ground that the foreclosing defendants had no right to exercise the power of sale in the first place. Plaintiff also alleges that Vesuvio and Luxury had “at least constructive knowledge” that the assignment was void because public records establish that (a) the FDIC did not have his note to assign in 2012 to the INDX securitized trust, having already transferred all of IndyMac to One West in 2009; and (b) JC San Pedro had no authority to act on the FDIC’s behalf. Put otherwise, the gravamen of plaintiff’s entire action is that the recorded documents are void on their face and rendered the entire foreclosure sale invalid. “No statute creates a presumption—conclusive or otherwise—for any purchaser—bona fide or otherwise—that any recitals in a trustee’s deed render effective a sale that had no contractual basis.” (Bank of America v. La Jolla Group II, supra, 129 Cal.App.4th at p. 714 [holding trustee’s deed not protected by § 2924 presumption where borrower cured the default before the sale and deprived the beneficiary of right to sell].) The dismissal of the causes of action to quiet title and to remove the cloud on plaintiff’s title was error.

DISPOSITION

The judgment is reversed and the matter is remanded for further proceedings in accordance with the views expressed in this opinion. Plaintiff shall recover his costs on appeal.

EDMON, P. J. and LAVIN, J., concurs.

[1] Defendants and respondents are: (1) Deutsche Bank National Trust Company, as Trustee of the IndyMac INDX Mortgage Trust 2007-AR21IP, Mortgage Pass-Through Certificates, Series 2007-AR21IP under the Pooling and Servicing Agreement dated October 1, 2007 (Deutsche Bank); (2) CIT Bank, N.A., formerly known as OneWest Bank N.A., formerly known as OneWest Bank, FSB, through its division IndyMac Mortgage Services (OneWest); (3) Meridian Foreclosure Services, formerly known as MTDS Inc. (Meridian); (4) Vesuvio Holdings, LLC (Vesuvio); and (5) Luxury Portfolio LLC (Luxury).

Respondents Vesuvio and Luxury, the purchasers at the foreclosure sale, did not file briefs on appeal. Plaintiff has abandoned his appeal of the judgment in favor of the mortgage servicer, Meridian, and so it is not a party herein.

[2] “[W]e accept the truth of material facts properly pleaded in the operative complaint, but not contentions, deductions, or conclusions of fact or law. We may also consider matters subject to judicial notice. [Citation.]” (Yvanova, supra, 62 Cal.4th at p. 924.)

[3] “Mortgage-backed securities are created through a complex process known as `securitization.’ (See Levitin & Twomey, Mortgage Servicing (2011) 28 Yale J. on Reg. 1, 13 [`a mortgage securitization transaction is extremely complex . . .’].) In simplified terms, `securitization’ is the process where (1) many loans are bundled together and transferred to a passive entity, such as a trust, and (2) the trust holds the loans and issues investment securities that are repaid from the mortgage payments made on the loans. (Oppenheim & Trask-Rahn, Deconstructing the Black Magic of Securitized Trusts: How the Mortgage-backed Securitization Process Is Hurting the Banking Industry’s Ability to Foreclose and Proving the Best Offense for a Foreclosure Defense (2012) 41 Stetson L.Rev. 745, 753-754.) . . . Hence, the securities issued by the trust are `mortgage-backed.’ For purposes of this opinion, we will refer to such a trust as a `securitized trust.'” (Glaski v. Bank of America (2013) 218 Cal.App.4th 1079, 1082, fn. 1 (Glaski).)

[4] See footnote 1, ante.

[5] “Although the Legislature did not give the legislation a title, the Governor in his signing statement, and courts and commentators, have referred to the legislation as the `California Homeowner Bill of Rights.’ [Citations.]” (Monterossa v. Superior Court (2015) 237 Cal.App.4th 747, 749, fn. 1, citing Koo,Saving the California Homeowner Bill of Rights from Federal Banking Preemption (2013) 48 U.S.F. L.Rev. 189 (hereafter Saving HBOR).)

[6] All further statutory references are to the Civil Code, unless otherwise noted.

[7] Although the complaint also named Deutsche Bank as a defendant in the quiet title cause of action, plaintiff asserts in his appellate brief that “for purposes of this appeal, he is alleging [the quiet title cause of action] against Vesuvio and Luxury only.”

[8] The respondent’s brief of Deutsche Bank and OneWest was filed before Yvanova was filed and so these defendants did not discuss that case.

[9] Section 2923.7 reads in relevant part, “Upon request from a borrower who requests a foreclosure prevention alternative, the mortgage servicer shall promptly establish a single point of contact and provide to the borrower one or more direct means of communication with the single point of contact.” (Id., subd. (a).)

Section 2923.6 reads in relevant part, “A mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale or conduct a trustee’s sale until any of the following occurs: [¶] (1) The mortgage servicer makes a written determination that the borrower is not eligible for a first lien loan modification, and any appeal period pursuant to subdivision (d) has expired.” (Id., subd. (c)(1).) “If the borrower’s application for a first lien loan modification is denied, the borrower shall have at least 30 days from the date of the written denial to appeal the denial and to provide evidence that the mortgage servicer’s determination was in error.” (Id., subd. (d), italics added.) “If the borrower’s application for a first lien loan modification is denied, the mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or, if a notice of default has already been recorded, record a notice of sale or conduct a trustee’s sale until the later of: [¶] (1) Thirty-one days after the borrower is notified in writing of the denial.” (Id., subd. (e).)

[10] For the same reason cited by Gerber, we reject Haggarty v. Wells Fargo Bank, N.A. (N.D.Cal. Feb 2, 2011, No. C10-02416 CRB) 2011 WL 445183, at page *4, a case cited by defendants here.

[11] Implicitly acknowledging the field preemption in HOLA was eliminated by Dodd-Frank, defendants cite Silvas v. E*Trade Mortg. Corp. (9th Cir. 2008) 514 F.3d 1001, and Settle v. World Savings Bank, F.S.B. (C.D.Cal. Jan. 11, 2012, No. ED CV 11-00800 MMM) 2012 WL 1026103, to argue that “claims related to contracts formed prior to the enactment of Dodd-Frank are subject to the preemption analysis in effect at that time.” As explained, HOLA preemption does not “stick” to a loan originating with a savings bank. We look not at who originally held the contract, but who held the contract at the time of the alleged wrongful conduct. (Avnieli v. Residential Credit Solutions, Inc., supra, 2015 WL 5923532, at p. *3.) The cause of action in both Silvas and Settle arose before Dodd-Frank took effect. (Silvas, at p. 1003; Settle, at p. *1.) Plaintiff’s cause of action, by contrast, arose after.

[12] Section 2924 reads in part, “All of the following shall constitute privileged communications pursuant to Section 47: [¶] (1) The mailing, publication, and delivery of notices as required by this section. [¶] (2) Performance of the procedures set forth in this article. [¶] (3) Performance of the functions and procedures set forth in this article if those functions and procedures are necessary to carry out the duties described in Sections 729.040, 729.050, and 729.080 of the Code of Civil Procedure.” (Id., subd. (d).)

 

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TFH 10/23/2016 | What Every Homeowner Facing Foreclosure Needs To Know To Benefit From Changing Trends in American Foreclosure Case Law

TFH 10/23/2016 | What Every Homeowner Facing Foreclosure Needs To Know To Benefit From Changing Trends in American Foreclosure Case Law

COMING TO YOU LIVE DIRECTLY FROM THE DUBIN LAW OFFICES AT HARBOR COURT, DOWNTOWN HONOLULU, HAWAII

LISTEN TO KHVH-AM (830 ON THE AM RADIO DIAL)

ALSO AVAILABLE ON KHVH-AM ON THE iHEART APP ON THE INTERNET

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Sunday – October 23, 2016

What Every Homeowner Facing Foreclosure Needs To Know To Benefit From Changing Trends in American Foreclosure Case Law
——————–

Many more federal and state courts almost everywhere are beginning to understand the scope of foreclosure abuses and are beginning to reevaluate past case precedents.

It is especially important therefore for every homeowner and their counsel to understand where this new judicial activism is likely to lead in 2017 and as a result how homeowners can benefit from these new trends in their individual foreclosure cases.

Those who miss this important live broadcast can listen to it on the Past Broadcast Section of our Website at www.foreclosurehour.com shortly after it airs live on KHVH-AM News Radio in Honolulu and simultaneously throughout the United States on the iHeart Internet App.

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Host: Gary Dubin Co-Host: John Waihee

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CALL IN AT (808) 521-8383 OR TOLL FREE (888) 565-8383

Have your questions answered on the air.

Submit questions to info@foreclosurehour.com

The Foreclosure Hour is a public service of the Dubin Law Offices

Past Broadcasts

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The Foreclosure Hour 12

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FHA Paid Claims ($2.23 billion) for an Estimated 239,000 Properties That Servicers Did Not Foreclose Upon or Convey on Time

FHA Paid Claims ($2.23 billion) for an Estimated 239,000 Properties That Servicers Did Not Foreclose Upon or Convey on Time

DATE PUBLISHED: Friday, October 14, 2016
PUBLICATION/REPORT TYPE: Audit Reports
REPORT NUMBER: 2017-KC-0001
PROGRAM AREA(S): Federal Housing Administration (FHA), Single Family Housing
STATE: District of Columbia
SUMMARY:

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited HUD to determine whether it paid servicers’ claims for properties that did not foreclose or convey on time.  We initiated this audit due to concerns that HUD overpaid servicers’ claims for FHA insurance benefits.

HUD paid claims for an estimated 239,000 properties that servicers did not foreclose upon or convey on time.  HUD paid an estimated $141.9 million for servicers’ claims for unreasonable and unnecessary debenture interest that was incurred after the missed foreclosure or conveyance deadline and an estimated $2.09 billion for servicers’ claims for unreasonable and unnecessary holding costs that were incurred after the deadline to convey.

We recommend that HUD issue a change to 24 CFR (Code of Federal Regulations) Part 203, which corrects deficiencies that allowed an estimated $2.23 billion in unreasonable and unnecessary costs to the FHA insurance fund. These changes include a maximum period for filing insurance claims and disallowance of expenses incurred beyond established timeframes.  We recommend that HUD develop a strategic information technology plan to make significant operational changes to HUD’s monitoring of single-family conveyance claims to ensure that servicers comply with foreclosure and conveyance timeframes.  We also recommend that HUD develop and implement controls to identify noncompliance with current regulations at 24 CFR 203.402.

DOWNLOAD(S):
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Zucker, Goldberg & Ackerman v Wells Fargo | Bankrupt NJ foreclosure law firm has filed a lawsuit blaming part of its financial predicament on Wells Fargo’s delay in correcting “robosigning” problems

Zucker, Goldberg & Ackerman v Wells Fargo | Bankrupt NJ foreclosure law firm has filed a lawsuit blaming part of its financial predicament on Wells Fargo’s delay in correcting “robosigning” problems

Aba Journal-

A bankrupt New Jersey foreclosure law firm has filed a lawsuit blaming part of its financial predicament on Wells Fargo’s delay in correcting “robosigning” problems.

The Oct. 14 suit (PDF) filed by Zucker, Goldberg & Ackerman claims Wells Fargo was slow to correct foreclosure procedures involving robosigning of documents and foreclosure notices that were called into question by a New Jersey Supreme Court order to show cause in December 2010. The Wall Street Journal(sub. req.) has a story.

The court order required lenders to submit their foreclosure procedures to a special master for review. The order barred banks from proceeding with residential foreclosures until the special master found that the policies ensured robosigning would not occur.

[ABA JOURNAL]

UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW JERSEY

ZUCKER, GOLDBERG & ACKERMAN, LLC,

Plaintiff,

v.

WELLS FARGO BANK, N.A.,

Defendant

<snip>

18. The Supreme Court began an investigation of certain mortgage servicing practices, including the execution and submission to the Supreme Court of certain evidentiary pleadings. Ultimately, the Supreme Court came to suspect that there were serious problems with the submission of various pleadings. On or about December 20, 2010, the Supreme Court issued an Order to Show Cause against certain servicers, including Defendant, requiring each to show cause as to why pending uncontested residential foreclosures should not be suspended. These servicers, including Defendant, were also required to submit their policies and procedures for review by a Special Master. Those servicers were prohibited from proceeding with their residential foreclosures until such time as the Special Master reviewed and approved their policies and procedures so that “robosigning” would not occur.

19. Independent of the investigation into mortgage servicing practices, case law developed which called into question the validity of more than 80% of all Notices of Intention to Foreclose (“NOI”) used in New Jersey’s pending foreclosures actions. ZGA had previously warned Wells that its NOIs may not have been compliant with state law, but Wells continuously refused to address the deficient and non-compliant NOI issue. An NOI is the state-mandated demand letter that must precede the initiation of a residential foreclosure in New Jersey.

20. As a result, Defendant was forced to correct its NOI process and to issue corrective NOIs in those cases requiring such a correction. 21. It took Defendant several years to rectify its robosigning and NOI problems. 22. Defendant falsely represented and promised to ZGA that Defendant’s robosigning and NOI problems would be resolved imminently…

Down Load PDF of This Case

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California launches criminal probe into Wells Fargo account scandal

California launches criminal probe into Wells Fargo account scandal

Reuters-

The California Attorney General’s Office has launched a criminal investigation into Wells Fargo (WFC.N) over allegations it opened millions of unauthorized customer accounts and credit cards, according to a seizure warrant seen by Reuters.

Attorney General Kamala Harris authorized a seizure warrant against the bank that seeks customer records and other documents, saying there is probable cause to believe the bank committed felonies.

The probe marks the latest setback for the bank in a growing scandal that led to the abrupt retirement of its chief executive officer, monetary penalties, compensation clawbacks, lost business and damage to its reputation.

[REUTERS]

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Massachusetts Is the Latest State to Bar Wells Fargo From Bond Underwriting

Massachusetts Is the Latest State to Bar Wells Fargo From Bond Underwriting

Fortune-

The state of Massachusetts will stop using Wells Fargo as a bond underwriter for a year, joining a growing list of state and local governments to suspend business with the bank after revelations it opened millions of unauthorized accounts.

Massachusetts Treasurer Deborah Goldberg instructed her staff late on Monday to immediately remove Wells Fargo WFC 0.56% from the state’s approved list of underwriters for a term of one year, her spokeswoman said on Tuesday.

Compared with other states, Massachusetts’ exposure to the bank is “extremely limited,” but Goldberg “isn’t convinced that Wells Fargo has grasped the level of seriousness of their actions nor have they addressed systemic failures within their organization,” spokeswoman Chandra Allard said in an email.

[FORTUNE]

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Wells Fargo loses Better Business Bureau accreditation

Wells Fargo loses Better Business Bureau accreditation

The Charlotte Observer-

Wells Fargo has lost its accreditation with the Better Business Bureau, another setback for the San Francisco company as it grapples with fallout from a sales scandal.

The Arlington, Va.-based organization stripped the accreditation following Wells’ settlement last month with regulators who accused the bank of opening millions of accounts that customers may not have authorized. The government action pushed Wells Fargo below the “B” rating required for businesses to maintain accreditation.

In a statement, Wells Fargo said it will “continue to work hard to restore our customers’ trust” and is “focused on providing the best service to our customers.” The bank said its No. 1 priority is making things right with its customers and restoring public trust, pointing to steps it is taking to ensure its sales culture is “100 percent aligned with our customers’ interests.”

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Former Federal Investigator Says Government Didn’t Investigate Wells Fargo Whistleblower Cases

Former Federal Investigator Says Government Didn’t Investigate Wells Fargo Whistleblower Cases

NBC Bay Area-

Six years ago, two Wells Fargo employees filed whistleblower complaints with the federal government.

They sent their cases to the Department of Labor’s Whistleblower Protection Program, which is administered by the Occupational Health and Safety Administration.

But an investigator who reviewed cases for the agency says no one actually investigated the complaints.

Source: Former Federal Investigator Says Government Didn’t Investigate Wells Fargo Whistleblower Cases | NBC Bay Area http://www.nbcbayarea.com/news/local/Former-Federal-Investigator-Says-Government-Didnt-Investigate-Wells-Fargo-Whistleblower-Cases-397518261.html#ixzz4NXrD8cVa

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