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Mortgage Assignments: Assignment of a Mortgage Without the Underlying Note is A Nullity

Mortgage Assignments: Assignment of a Mortgage Without the Underlying Note is A Nullity

Bankruptcy-RealEstate-Insights -

In re Cornerstone Homes, Inc., 544 B.R. 492 (Bankr. W.D. N.Y. 2015)

A chapter 11 trustee sought a judgment that a series of mortgages were unenforceable as a matter of law because the written assignments transferring them to the current mortgagees were insufficient. If the trustee prevailed, the mortgage loans would be transformed from secured to unsecured claims.

The debtor bought, renovated and then sold or rented single-family homes. At the time of its bankruptcy filing it owned over 700 properties valued at more than $18 million. Originally the debtor financed its operations by soliciting money from hundreds of individual investors. Later it obtained financing through commercial lenders that involved consolidating individual investor notes in combination with new advances.

Each individual investor held a note that was secured by a mortgage. In connection with consolidation of some of these notes, the individual investor executed a written assignment of its mortgage to a commercial lender that included the following language: “[T]he assignor … hereby assigns unto [the assignee] … a certain mortgage made by [debtor] … together with the bond or obligation described in said mortgage ….” The commercial lender both acquired the existing notes and mortgages and advanced new money, as evidenced by a consolidated note secured by a consolidated mortgage. The individual investors did not indorse or physically deliver the underlying notes.

[https://bankruptcy-realestate-insights.com/2016/05/25/mortgage-assignments-assignment-of-a-mortgage-without-the-underlying-note-is-a-nullity/]

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HSBC v CLARK-MOORE | NY SC – As this action is time-barred, it cannot be commenced again and the controversy has therefore reached an ultimate outcome.

HSBC v CLARK-MOORE | NY SC – As this action is time-barred, it cannot be commenced again and the controversy has therefore reached an ultimate outcome.

H/T YOUNG LAW GROUP

Ronald & Felicia Moore- Mtd Sol- 20160517 Sfo Granting Mtd Sol

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Big banks lose as U.S. appeals court revives Libor lawsuits

Big banks lose as U.S. appeals court revives Libor lawsuits

Reuters-

A U.S. appeals court on Monday revived private antitrust litigation accusing major banks of conspiring to manipulate the Libor benchmark interest rate, in a big setback for their defense against investors’ claims of market-rigging.

The 2nd U.S. Circuit Court of Appeals in Manhattan reversed a lower court judge’s dismissal of investors’ antitrust claims against 16 banks, including Deutsche Bank AG, UBS AG, Bank of America Corp and JPMorgan Chase & Co because she found no showing of anticompetitive harm.

“Appellants sustained their burden of showing injury by alleging that they paid artificially fixed higher prices,” Circuit Judge Dennis Jacobs wrote for a three-judge appeals court panel.

[REUTERS]

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Foreclosure Delay and the U.S. Labor Market

Foreclosure Delay and the U.S. Labor Market

Foreclosure Delay and the U.S. Labor Market

Mortgage foreclosure delays during the Great Recession improved job match quality, homeownership retention and national income

Kyle Herkenhoff | Visiting Scholar
Lee E. Ohanian | Consultant

Published May 3, 2016

Economic Policy Papers are based on policy-oriented research produced by Minneapolis Fed staff and consultants. The papers are an occasional series for a general audience. The views expressed here are those of the authors, not necessarily those of others in the Federal Reserve System.

Executive Summary

The time required to complete a home foreclosure rose substantially during the Great Recession, due both to lender bottlenecks in processing foreclosures and to government policies intended to slow the foreclosure process. This paper shows that foreclosure delay had the unintentional benefit of giving unemployed homeowners additional time to search for  high-paying jobs.

Our economic model analyzes foreclosure delay as equivalent to extending additional credit to unemployed homeowners that is paid back if the homeowners find jobs and fulfill their delinquent mortgage obligations before foreclosure is completed. Model simulations estimate that foreclosure delay during the recession improved the quality of new employment matches, raised national income by about 0.3 percent and increased homeownership by about 800,000 units.


Introduction

The average time required to complete a home foreclosure in the United States increased from about nine months to about 15 months during the Great Recession. Our analysis shows that this increase had the unintended, positive consequence of helping unemployed homeowners increase their chances of finding high-paying jobs and keeping their homes, rather than losing them to foreclosure. The main quantitative finding is that foreclosure delay during the recession increased national income by about 0.3 percent and increased homeownership by about 800,000 units.

Background

The collapse of the U.S. housing market, massive financial crisis and subsequent Great Recession led to a record increase in home foreclosures between 2007 and 2011, as job loss and a tightening mortgage market pushed many households into default. By 2009, roughly 2.8 million homes were in the foreclosure process, compared with about 700,000 homes in foreclosure before the recession (RealtyTrac 2009). Roughly one of 45 homeowners received a foreclosure notice in 2009.

This large increase in mortgage default was accompanied by a large increase in time required to complete the foreclosure process. Before the recession, it took about nine months on average to complete a residential foreclosure. By 2010, the average time had increased to about 15 months, and to more than two years in states such as Michigan, New Jersey and Florida.

This increase primarily reflected two factors. First, the sheer volume of foreclosed properties created foreclosure processing bottlenecks for lenders and courts. Second, several government policy responses slowed the foreclosure process. Policies to keep defaulting homeowners in their homes included federal mortgage modification programs that required a halt to the foreclosure process until a lender evaluated a borrower’s modification request (see Mulligan 2010). Other policies also delayed foreclosure, such as the National Mortgage Settlement Act.

The positive effects of foreclosure delay

Foreclosure delay policies were considered an effort to help distressed homeowners by providing continuity for families and additional time to reorganize their affairs. But our analysis and new data reveal other positive effects. In a recent working paper for the National Bureau of Economic Research, we analyze how delays enhance the prospects of unemployed homeowners for finding better-paying jobs (Herkenhoff and Ohanian 2015).  The analysis is based on two premises: (1) that unemployed homeowners would like to remain in their homes, but may not be able to pay their mortgages while unemployed, and (2) that lenders prefer not to foreclose on a home, since foreclosure is a costly process that often results in sizable losses for the lender.

By contrast, lenders benefit considerably when a delinquent homeowner is able to pay back previously missed mortgage payments. In this event, the lender not does not incur the cost of foreclosure processing and potentially taking a loss on the property; the lender also receives late fees on delinquent payments. This process in which a delinquent mortgagor pays back previously missed mortgage payments is known as curing, and it occurs frequently. In fact, our research documents that roughly half of all mortgagors who are in foreclosure successfully exit foreclosure through curing.

We find that foreclosure delay was also important for other reasons, particularly for unemployed homeowners, because job creation remained far below normal during the Great Recession. The job creation rate—the number of hired workers in a month relative to the total number of individuals working in that month—fell by almost half during the recession. Low job creation lengthened average unemployment substantially, as a large pool of job seekers, many of whom lost their jobs during the recession, were competing over a relatively small number of job openings.

While low-paying jobs may be easy to find, it can take a long time for a job seeker to find a high-paying job well-suited to his or her specific skills and experience—even in a vigorous economy. This suggests that the time to find a high-paying job during the recession rose substantially relative to a normal economy. Foreclosure delay gives unemployed homeowners time to search for high-paying jobs that match their skills, rather than feeling forced into low-paying jobs to prevent impending foreclosure.
Our research views this foreclosure delay as an implicit credit line from lender to borrower. Specifically, missed mortgage payments are an implicit loan to the borrower, and late fees are the implicit interest payment to the lender. The credit line is closed if the homeowner cures, or runs out if the homeowner does not cure and foreclosure is completed.

Trade-offs for the unemployed

To study how foreclosure delay impacts the economy, we develop an economic model of the economic decisions made by unemployed homeowners. The model specifies two trade-offs for unemployed homeowners:

  • Job search intensity
    How hard should unemployed homeowners search for jobs? The harder the search, the more likely they’ll receive a good, high-paying job offer, but the less time they’ll have for other valuable activities such as home production (cooking, child care, house repair and the like) and job retraining.
  • To pay or not to pay?
    Should unemployed homeowners make mortgage payments on time? Missing a payment allows households to use their scarce resources to increase nonhousing consumption. But it also means that mortgagors either become delinquent (if they had not defaulted on their mortgage previously) or go further into delinquency, ultimately risking foreclosure.

Theoretically, foreclosure delay—by policy or process slowdown—provides unemployed homeowners the opportunity to search longer for high-paying jobs. To what degree might this potential opportunity actually help them find better jobs and keep their homes? To address this question, we simulate the model economy with differences in the amount of time it takes to complete a foreclosure. We simulate the model economy with foreclosure timelines of (1) nine months, the U.S. average prior to the Great Recession, (2) 15 months, the U.S. average between 2009 and 2011, and (3) 24 months, the average among the states with the longest foreclosure delays: New Jersey, Florida and New York.

Our model estimates that a six-month increase in foreclosure delay significantly reduces employment, as unemployed homeowners take more time to search for higher-paying jobs. Nonetheless, national labor earnings are predicted to be higher, as foreclosure delay ultimately results in better job matches and higher wages. More exactly, the employment rate of homeowners during the 2009-11 period was estimated by our model to be about 0.75 percentage points lower due to the increase in the time to foreclose from nine months to 15 months. However, the model also indicates that labor income of homeowners would be about 0.3 percentage points higher, as unemployed homeowners had more time to search. We also estimate that foreclosure delays comparable to those seen in the recession would increase homeownership by about 800,000 housing units.

Reasonable estimates?

To test the plausibility of these results, we use data from the Panel Study of Income Dynamics on employment, mortgage delinquency and foreclosure and from the Survey of Consumer Finance, which also provides data on employment and borrower delinquency.

We analyze the re-employment rates of unemployed homeowners at different stages of delinquency, as the model predicts that job acceptance rates for the unemployed should increase considerably around the time of foreclosure. We find evidence consistent with this prediction, as employment rates tend to be very low for households who are 60 days delinquent, or 90 or more days delinquent, but the employment rate rises considerably once the homeowner is in the foreclosure process.

In addition, the model predicts that job search effort should rise as homeowners get closer to foreclosure. We also find evidence consistent with this prediction, as unemployed homeowners self-report considerably higher search effort when they are in foreclosure compared with search effort prior to.

Policy discussion

This analysis suggests that the large increase in time required to complete mortgage foreclosure experienced during the Great Recession had the positive if unintended consequence of helping unemployed homeowners to search longer for better-paying jobs. Given the deep drop in job creation at the time, this was particularly beneficial. Our estimates indicate that foreclosure delay helped unemployed, mortgage-delinquent homeowners considerably.

From a policy perspective, these results suggest that providing additional credit to unemployed homeowners is valuable for both homeowners and society, particularly when job markets are such that it takes considerable time for the unemployed to find jobs that match their skills. Policymakers may wish to consider permanent policies to increase the likelihood that unemployed and delinquent homeowners can pay back missing mortgage payments and remain in their homes. However, it is important that such policies preserve incentives to search vigorously for good job matches. Policy design would benefit from current research on the incentive effects of unemployment insurance (Meyer 2002).


References

Herkenhoff, Kyle F., and Lee E. Ohanian. 2015. The Impact of Foreclosure Delay on U.S. Employment. Working Paper 21532. National Bureau of Economic Research.

Meyer, Bruce D. 2002. Unemployment and Workers’ Compensation Programmes: Rationale, Design, Labour Supply and Income Support. Fiscal Studies 23 (1): 1-49.

Mulligan, Casey B. 2010. Foreclosures, Enforcement, and Collections under the Federal Mortgage Modification Guidelines. Working Paper 15777. National Bureau of Economic Research.

RealtyTrac. 2009. 2009 Year-End Foreclosure Report. Online at realtytrac.com/landing/2009-year-end-foreclosure-report.html.

source: https://www.mpls.frb.org/research/economic-policy-papers/foreclosure-delay-and-the-us-labor-market?sc_camp=16C883BC3D314E2E899021FBD04A7AF9

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Bank of America $1.27 billion U.S. mortgage penalty is voided

Bank of America $1.27 billion U.S. mortgage penalty is voided

Reuters-

A U.S. appeals court on Monday threw out a jury’s finding that Bank of America Corp was liable for mortgage fraud leading up to the 2008 financial crisis, voiding a $1.27 billion penalty and dealing the U.S. Department of Justice a major setback.

The 2nd U.S. Circuit Court of Appeals in New York found insufficient proof under federal fraud statutes to establish Bank of America’s liability over a mortgage program called “Hustle” run by the former Countrywide Financial Corp.

The Justice Department claimed Countrywide, which Bank of America bought in July 2008, defrauded government-sponsored mortgage financiers Fannie Mae and Freddie Mac by selling them thousands of toxic loans.
[REUTERS]

 

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FDIC v FIRST HORIZON ASSET SECURITIES, INC.| Clock did not run out on FDIC lawsuit vs big banks – U.S. court

FDIC v FIRST HORIZON ASSET SECURITIES, INC.| Clock did not run out on FDIC lawsuit vs big banks – U.S. court

Reuters-

The U.S. government on Thursday won a victory in its effort to hold big banks liable for selling older toxic debt as a divided federal appeals court in New York revived a Federal Deposit Insurance Corp lawsuit over the 2009 collapse of Alabama’s Colonial BancGroup Inc.

In a 2-1 decision on Thursday, the 2nd U.S. Circuit Court of Appeals said the FDIC did not wait too long to sue Credit Suisse Group AG, First Horizon National Corp, Royal Bank of Scotland Group Plc, Wells Fargo & Co and seven other banks for selling or underwriting toxic mortgage securities that Colonial bought.

The 2-1 decision on Thursday confirmed the authority of federal agencies to pursue older claims, often predating the financial crisis, concerning the sale of shoddy debt to banks, finance companies and credit unions they oversee as receivers or conservators.

[REUTERS]

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Gretchen Morgenson: Fannie Mae and Freddie Mac being “held captive”

Gretchen Morgenson: Fannie Mae and Freddie Mac being “held captive”

New York Times-

When Washington took over the beleaguered mortgage giants Fannie Mae and Freddie Mac during the collapse of the housing market and the financial crisis of 2008, it was with the implicit promise that they would be returned to shareholders after being nursed back to health.

But now, with the unsealing of documents this week that were produced as part of a lawsuit filed against the government, new evidence is coming to light on how intimately the White House was involved in the Treasury’s decision in August 2012 to keep all the companies’ profits for the government. That move effectively maintained Fannie’s and Freddie’s status as wards of the state.

The newly released documents go beyond previous disclosures in the case and make clear that the Obama administration never had any intention of restoring Fannie and Freddie, which enjoyed implicit backing from the government before the takeover, to their status as stand-alone entities.

[NEW YORK TIMES]

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TFH 5/22/16 | An Exclusive Live Interview with Florida Trial and Appellate Attorney Jacqulyn Mack Revealing the Hidden Secrets of Securitized Trusts

TFH 5/22/16 | An Exclusive Live Interview with Florida Trial and Appellate Attorney Jacqulyn Mack Revealing the Hidden Secrets of Securitized Trusts

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 – May 22, 2016

An Exclusive Live Interview with Florida Trial and Appellate Attorney Jacqulyn Mack Revealing the Hidden Secrets of Securitized Trusts

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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

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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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Tampa Bay still sits near the top of the nation for ‘zombie homes’ in foreclosure

Tampa Bay still sits near the top of the nation for ‘zombie homes’ in foreclosure

Tampa Bay Times-

The Tampa Bay metro area continues to have one of the nation’s largest number of “zombie foreclosures” — vacant homes that banks are repossessing.

According to RealtyTrac, 627 bay area homes in some stage of foreclosure sat empty during the first three months of this year. Among metro areas with at least 100,000 residential properties, Tampa Bay ranked fourth in zombies after New York (3,526), Philadelphia (1,744) and Miami (651).

Compared to the same period last year, however, the number of bay area zombies dropped almost 15 percent. Nationwide, zombies are down 30 percent.

“Lenders have been taking advantage of the strong seller’s market to dispose of lingering foreclosure inventory over the past year,” Daren Blomquist, RealtyTrac’s senior vice president, said in a news release.

[TAMPA BAY TIMES]

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SCIARRATTA vs U.S. BANK | CA 4DCA – Accordingly, we conclude that a homeowner who has been foreclosed on by one with no right to do so—by those facts alone—sustains prejudice or harm sufficient to constitute a cause of action for wrongful foreclosure

SCIARRATTA vs U.S. BANK | CA 4DCA – Accordingly, we conclude that a homeowner who has been foreclosed on by one with no right to do so—by those facts alone—sustains prejudice or harm sufficient to constitute a cause of action for wrongful foreclosure

H/T Gary Dubin

Filed 5/18/16

CERTIFIED FOR PUBLICATION

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

MONICA SCIARRATTA,

Plaintiff and Appellant,

v.

U.S. BANK NATIONAL ASSOCIATION, as
trustee, etc., et al.,

Defendants and Respondents.

D069439

(Super. Ct. No. RIC1301485)

APPEAL from a judgment of the Superior Court of Riverside County, John
Vineyard, Judge. Reversed and remanded.

Stephen F. Lopez Esq. and Stephen F. Lopez for Plaintiff and Appellant.

Keesal, Young & Logan, David D. Piper, Michael T. West and Joshua B. Norton
for Defendants and Respondents.

This is an action for wrongful foreclosure. The homeowner, Monica Sciarratta,
alleges that as a result of a void assignment of her promissory note and deed of trust, the
entity that conducted a nonjudicial foreclosure sale on her home had no interest in either
the underlying debt or the subject property. In Yvanova v. New Century Mortgage Corp.
(2016) 62 Cal.4th 919 (Yvanova), the California Supreme Court held that in a case such

as this—where a homeowner alleges a nonjudicial foreclosure sale was wrongful because
of a void assignment—the homeowner has standing to sue for wrongful foreclosure. (Id.
at pp. 942–943.) However, Yvanova did not address “any of the substantive elements of
the wrongful foreclosure tort” (id. at p. 924), and in particular did not address “prejudice
. . . as an element of wrongful foreclosure.” (Id. at p. 929, fn. 4.)

This case presents the question of “prejudice” left open in Yvanova: Where a
homeowner alleges foreclosure by one with no right to do so, do such allegations alone
establish the requisite prejudice or harm necessary to state a cause of action for wrongful
foreclosure? Or instead, to adequately plead prejudice, does the plaintiff-homeowner
have to allege the wrongful foreclosure interfered with his or her ability to pay on the
debt, or lead to a foreclosure that would not have otherwise occurred?

Although Yvanova did not address this precise issue, the policy considerations that
drove the standing analysis in Yvanova compel a similar result here. As the Supreme
Court stated in Yvanova, it would be an “‘odd result’ indeed” were a court to conclude a
homeowner had no recourse where anyone, even a stranger to the debt, had declared a
default and ordered a trustee’s sale. (Yvanova, supra, 62 Cal.4th at p. 938.)
Accordingly, we conclude that a homeowner who has been foreclosed on by one
with no right to do so—by those facts alone—sustains prejudice or harm sufficient to
constitute a cause of action for wrongful foreclosure. When a non-debtholder forecloses,
a homeowner is harmed by losing her home to an entity with no legal right to take it.

Therefore under those circumstances, the void assignment is the proximate cause of
actual injury and all that is required to be alleged to satisfy the element of prejudice or
harm in a wrongful foreclosure cause of action.

The opposite rule, urged by defendants in this case, would allow an entity to
foreclose with impunity on homes that were worth less than the amount of the debt, even
if there were no legal justification whatsoever for the foreclosure. The potential
consequences of wrongfully evicting homeowners are too severe to allow such a result.
(See Miles v. Deutsche Bank National Trust Co. (2015) 236 Cal.App.4th 394, 410
(Miles).)

On the issue of standing, the Supreme Court stated, “‘Banks are neither private
attorneys general nor bounty hunters, armed with a roving commission to seek out
defaulting homeowners and take away their homes in satisfaction of some other bank’s
deed of trust.'” (Yvanova, supra, 62 Cal.4th at p. 938.) Yvanova’s holding on standing
would be undermined unless the same considerations applied in determining what
prejudice must be alleged to constitute a wrongful foreclosure cause of action. (Ibid.)
Therefore, we reverse the judgment of dismissal entered after the trial court erroneously
sustained a demurrer to Sciarratta’s first amended complaint without leave to amend, and
remand for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

In reciting the facts on review of a demurrer, “‘we accept as true the well-pleaded
facts in [Sciarratta’s first amended] complaint.'” (Beacon Residential Community Assn. v.
Skidmore, Owings & Merrill LLP (2014) 59 Cal.4th 568, 571.) “We may also consider

matters that have been judicially noticed.” (Committee for Green Foothills v. Santa
Clara County Bd. of Supervisors (2010) 48 Cal.4th 32, 42.)

Because the facts in this case are convoluted, it is helpful to know before one starts
where one will end. As explained in detail post, Deutsche Bank was the owner of
Sciarratta’s loan and beneficiary of the deed of trust according to the public record at the
time of this foreclosure. But Deutsche Bank did not foreclose. Bank of America did.1

1 The rules of court require litigants to “[s]upport any reference to a matter in the
record by a citation to the volume and page number of the record where the matter
appears.” (Cal. Rules of Court, rule 8.204(a)(1)(C).) “We may decline to consider
passages of a brief that do not comply with this rule.” (Lueras v. BAC Home Loans
Servicing, LP (2013) 221 Cal.App.4th 49, 60.) The statement of facts in Sciarratta’s
opening brief contains no record citations. Therefore, we base our understanding of the
parties’ dispute on the portions of the record cited by defendants’ brief.

2 Apparently as part of the same transaction, Sciarratta also borrowed an additional
$77,500, which was secured by a second deed of trust naming WaMu as beneficiary.

A. Washington Mutual Loan and Deed of Trust

In June 2005 Sciarratta obtained a $620,000 loan secured by real property in
Riverside County, California (the property). She executed a promissory note secured by
a deed of trust identifying the lender as Washington Mutual Bank, F.A. (WaMu) and the
trustee as California Reconveyance Company (CRC).2 In January 2008 WaMu
substituted Quality Loan Service Corporation as successor trustee.

B. The Assignment to Deutsche Bank

On April 24, 2009, JPMorgan Chase Bank, N.A. (Chase), as successor in interest
to WaMu, assigned the Sciarratta deed of trust and promissory notes to Deutsche Bank

National Trust Company, as trustee for Long Beach Mortgage Loan Trust 2006-6
(Deutsche Bank). This assignment was recorded on April 27, 2009, as document No.
2009-0205476.3 Chase, acting on behalf of Deutsche Bank, also substituted CRC as
trustee.

3 This date and document number become relevant in December 2009 when Chase
recorded a “[c]orrective [a]ssignment,” purporting to retroactively correct document
number 2009-0205476 to reflect an assignment of Sciarratta’s loan to Bank of America
rather than to Deutsche Bank.

C. Sciarratta’s Default and Notice of Sale

By April 24, 2009, Sciarratta’s loan was $15,362.99 in arrears. On April 27, 2009,
CRC recorded a “Notice of Default and Election to Sell Under Deed of Trust” (Notice of
Default). The Notice of Default stated in part: “To find out the amount you must pay, or
to arrange for payment to stop the foreclosure . . . contact: JPMorgan Chase Bank . . . at
[address], [telephone number].”

In July 2009 CRC recorded a “Notice of Trustee’s Sale,” stating the property
would be sold at auction on August 18, 2009 and that the estimated unpaid balance and
other charges was $729,234.93.

D. Purported Assignment to Bank of America

On November 9, 2009, Chase, as successor in interest to WaMu, recorded a
document entitled “Assignment of Deed of Trust,” purporting to assign the Sciarratta
deed of trust and promissory notes to Bank of America, National Association, as

successor by merger to LaSalle Bank NA as trustee for WaMu Mortgage Pass-Through
Certificates Series 2005-AR19 (Bank of America).4

4 Sciarratta alleges this purported assignment was void because Chase had
previously assigned the trust deed and promissory notes to Deutsche Bank.

E. Trustee’s Sale to Bank of America

On the same day, November 9, 2009, CRC recorded a “Trustee’s Deed upon Sale”
on behalf of Bank of America as “the foreclosing beneficiary” of the deed of trust. Bank
of America acquired the property in exchange for a credit bid.

F. “Corrective” Assignment to Bank of America

On December 28, 2009, Chase, as successor in interest to WaMu, recorded a
document entitled “Assignment of Deed of Trust” which states: “This assignment is
being recorded to correct the assignee reflected on the assignment recorded April 27,
2009 as instrument No. 2009-0205476. [¶] For value received, the undersigned hereby
grants, assigns, and transfers to Bank of America . . . all beneficial interest under that
certain Deed of Trust dated 06/17/2005, executed by Monica Sciarratta . . . .”

G. Sciarratta’s District Court Action

On November 2, 2009—the day before the scheduled trustee’s sale—Sciarratta
filed a 16-count complaint against Chase, Deutsche Bank, and CRC in United States
District Court. The complaint states in part, “This is an action to quiet title against parties
who have wrongfully foreclosed upon residential real property of the Plaintiff, but who in
reality have no standing whatsoever to exercise any rights under the subject deed of trust
that encumbers Plaintiff’s realty.”

The record provided by the parties does not inform us about any other aspects of
this litigation except that in May 2012 the district court entered a judgment of dismissal
with prejudice in favor of the defendants.

H. Sciarratta’s State Court Action

In February 2013 Sciarratta filed a state court complaint for (1) wrongful
foreclosure, (2) quiet title, and (3) cancellation of instruments against U.S. Bank National
Association as trustee successor in interest to Bank of America, Deutsche Bank, and CRC
(collectively, Defendants).

Sciarratta’s complaint alleges the foreclosure “is wrongful in that the trustee that
held the sale was not the proper trustee at the time of the sale and therefore the sale of the
Subject Property is void as a matter of law . . . or in the alternative the party that held the
sale and acquired the Subject Property by way of a supposed credit bid was not the holder
of the Subject Note and was not the beneficiary of the Subject Deed of Trust and could
not have submitted a credit bid.” Sciarratta’s original complaint did not allege
particularized prejudice from the fact that Bank of America rather than Deutsche Bank
foreclosed.
Defendants demurred to the complaint on the grounds (1) the action was barred by
the res judicata effect of the district court judgment of dismissal in Sciarratta’s previous
action, and (2) Sciarratta had not alleged the essential element of prejudice. The court
overruled this demurrer.

After certain defaults were set aside that are not relevant to any issues in this
appeal, Defendants answered the complaint, and later Sciarratta dismissed Deutsche Bank
without prejudice.

I. Motion for Judgment on the Pleadings

In May 2014 Defendants filed a motion for judgment on the pleadings, primarily
asserting that Sciarratta’s wrongful foreclosure claim fails as a matter of law because she
did not and cannot allege prejudice. Defendants asserted, “Plaintiff alleges that the
foreclosure sale was invalid because CRC foreclosed on behalf of Bank of America
instead of Deutsche Bank, who Plaintiff argues was the correct beneficiary. Prejudice is
an essential element of a wrongful foreclosure claim . . . .”

Sciarratta opposed the motion for judgment on the pleadings on both procedural
and substantive grounds. Procedurally, she argued the motion was barred by Code of
Civil Procedure section 438, subdivision (g)(1), which provides that a motion for
judgment on the pleadings may be made after a demurrer has previously been overruled,
“provided that there has been a material change in applicable case law or statute since the
ruling on the demurrer.” Sciarratta asserted there had been no such material change in
law, and therefore the judgment on the pleadings was improper because the court had
previously overruled a demurrer brought on the same grounds. Substantively, Sciarratta

argued prejudice is not an element of wrongful foreclosure where, as she had alleged, the
foreclosure sale is void.5

5 On appeal, Sciarratta again argues the motion for judgment on the pleadings was
barred by Code of Civil Procedure section 438, subdivision (g)(1). However, because we
reverse on the merits, it is unnecessary to consider this contention.

6 By amending her complaint to allege prejudice after the court sustained the motion
for judgment on the pleadings with leave to amend, Sciarratta in effect conceded the
complaint was inadequate and she waived any error in the trial court’s determination that
prejudice beyond the fact of foreclosure itself is an essential element of her wrongful
foreclosure cause of action. (See Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962,

The court granted the motion for judgment on the pleadings, with leave to amend,
on the grounds that “[p]laintiff must adequately allege the element of ‘prejudice.'”

J. First Amended Complaint

In August 2014 Sciarratta filed a first amended complaint for (1) wrongful
foreclosure, (2) quiet title, and (3) cancellation of instruments. In addition to facts
alleged in the original complaint, Sciarratta attempted to allege prejudice; i.e., that she
had suffered damages from the wrongful foreclosure, stating:

“Plaintiff need not allege prejudice in this case . . . because the
claims made by Plaintiff . . . show that the parties that held the sale,
[Bank of America] and CRC had no right to do so. Regardless, as a
result of the foreclosure sale of the Subject Property by [Bank of
America] and CRC, Plaintiff has suffered prejudice. . . . Plaintiff has
been prejudiced by the sale of the Subject Property by [Bank of
America], an entity that has no right to hold a sale, because she was
deprived of any right to prevent foreclosure, in that [Bank of
America] has no reason to work with Plaintiff as mandated by
California law before holding a foreclosure sale and no interest in
providing Plaintiff with information mandated by [the California
Homeowners Bill of Rights] before a foreclosure. As a result,
Plaintiff has been deprived of her substantial rights related to the
prevention of a foreclosure to her prejudice.”6

966, fn. 2; Sheehy v. Roman Catholic Archbishop of San Francisco (1942) 49 Cal.App.2d
537, 540-541 [“When he amended his complaint after the general demurrer was sustained
he in effect admitted that the demurrer was good and that his complaint was insufficient
to state a cause of action.”]; Leibert v. Transworld Systems, Inc. (1995) 32 Cal.App.4th
1693, 1698-1699, abrogated on other grounds by Miklosy v. Regents of University of
California (2008) 44 Cal.4th 876, as stated in Vasquez v. Franklin Management Real
Estate Fund, Inc. (2013) 222 Cal.App.4th 819, 832-833.)

However, defendants did not raise this waiver issue in their respondent’s brief, and
after considering the parties’ supplemental briefs on this issue, we conclude defendants
have forfeited the waiver issue by failing to assert it and no good cause to relieve
defendants of that forfeiture has been shown. (See American Drug Stores, Inc. v. Stroh
(1992) 10 Cal.App.4th 1446, 1453.)

7 Despite not raising res judicata in their demurrer to Sciarratta’s first amended
complaint, on appeal defendants contend we should affirm on res judicata grounds.
However, because the district court judgment became final before defendants demurred
to Sciarratta’s first amended complaint, we will not consider the res judicata issue for the
first time on appeal. (See First N.B.S. Corp. v. Gabrielsen (1986) 179 Cal.App.3d 1189,
1195 [res judicata effect of a prior judgment must be raised in the trial court, except when
the judgment becomes final during the pendency of an appeal in another action].)

K. Demurrer to the First Amended Complaint

Defendants demurred to the first amended complaint on the grounds, among
others, that Sciarratta had failed to adequately allege the essential element of prejudice.
Unlike their demurrer to Sciarratta’s original complaint, in this demurrer defendants did
not argue the action was barred by res judicata.7

At the hearing, Sciarratta’s counsel stated, “The facts are very clear and very
simple. Deutsche Bank was the owner of this loan according to the public record at the
time of this sale. And Deutsche Bank did not hold this sale. There was no dispute about
that. Bank of America did.” Citing Glaski v. Bank of America (2013) 218 Cal.App.4th
1079 (Glaski), Sciarratta’s lawyer stated, “Prejudice is not an element in this particular

circumstance. The reason that is the case is because we have a sale by someone, without
question, [sic] had no right to hold a sale.”

The court asked Sciarratta’s attorney, “[A]re there facts that can be pled that have
not been pled now that would make me reconsider the no leave to amend?” After
Sciarratta’s attorney stated, “I don’t think there are any new facts,” the court sustained the
demurrer without leave to amend and subsequently entered a judgment dismissing her
first amended complaint with prejudice.

DISCUSSION

I. THE STANDARD OF REVIEW

“On appeal from a judgment of dismissal entered after a demurrer has been
sustained, this court reviews the complaint de novo to determine whether it states a cause
of action. [Citation.] We assume the truth of all material facts properly pleaded, but not
contentions, deductions or conclusions of fact or law.” (Folgelstrom v. Lamps Plus, Inc.
(2011) 195 Cal.App.4th 986, 989.) “‘We may also consider matters that have been
judicially noticed. [Citations.]’ [Citation.] ‘[W]hen the allegations of the complaint
contradict or are inconsistent with such facts, we accept the latter and reject the former.'”
(Tucker v. Pacific Bell Mobile Services (2012) 208 Cal.App.4th 201, 210.)

II. A HOMEOWNER WHO HAS BEEN FORECLOSED ON BY ONE PURPORTING TO
EXERCISE RIGHTS UNDER A VOID ASSIGNMENT SUFFERS SUFFICIENT
PREJUDICE TO STATE A CAUSE OF ACTION FOR WRONGFUL FORECLOSURE

A. Wrongful Foreclosure

A wrongful foreclosure is a common law tort claim. It is an equitable action to set
aside a foreclosure sale, or an action for damages resulting from the sale, on the basis that

the foreclosure was improper. (See Miles, supra, 236 Cal.App.4th at pp. 408-409.) The
elements of a wrongful foreclosure cause of action are: “‘(1) [T]he 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.'” (Id. at p. 408.) “[M]ere
technical violations of the foreclosure process will not give rise to a tort claim; the
foreclosure must have been entirely unauthorized on the facts of the case.” (Id. at p.
409.) “[A]ll proximately caused damages may be recovered.” (Id. at p. 410.)

“[O]nly the entity currently entitled to enforce a debt may foreclose on the
mortgage or deed of trust securing that debt . . . .” (Yvanova, supra, 62 Cal.4th at p. 928.)
“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.” (Id. at p. 938.)

Here, implicitly invoking these principles, Sciarratta alleges that the entity entitled
to enforce the debt was Deutsche Bank, but the entity that foreclosed was Bank of
America. Specifically, she alleges that in April 2009 Deutsche Bank became the owner
of her promissory note and trust deed by assignment from Chase. Sciarratta alleges that
the subsequent purported assignments of the note and trust deed by Chase to Bank of
America in November 2009 and again in December 2009 were void because Chase had
previously assigned the note and trust deed to Deutsche Bank. Thus, Sciarratta alleges
Bank of America had no right to foreclose because it never became a beneficiary of her
deed of trust.

Based on these allegations, which are supported by the judicially noticeable
recorded documents, Sciarratta alleges the November 2009 nonjudicial foreclosure “was
held by an entity [other] than the owner of the Subject Note and holder of the Subject
Deed of [T]rust, [Bank of America], whom [sic] had no right to hold said sale or submit a
credit bid thereon and as a result the sale is void and of no effect.” In more colloquial
terms, Sciarratta’s appellate brief asserts, “There is no question that as of the date of the
sale Bank of America had no right to hold a foreclosure sale of the Subject Property as
the owner of the note and deed of trust was Deutsche [Bank] as of April 24, 2009.”8

8 As an alternative and inconsistent theory of liability, Sciarratta’s first amended
complaint also alleges that Deutsche Bank was not assigned the note and deed of trust,
and therefore its purported substitution of trustee (substituting CRC for Quality Loan
Service) was ineffective. On this alternative theory, foreclosure is alleged to be wrongful
because the trustee initiating the foreclosure, CRC, allegedly lacked authority to do so.

However, in her brief, Sciarratta has elected to not address this alternative theory
in any meaningful way, limiting her discussion of this point to a single paragraph
containing no citation to the record and scant analysis. Instead, she focuses on the theory,
discussed in the text ante, that WaMu assigned her promissory note and trust deed to
Deutsche Bank, but Bank of America foreclosed.

For example, Sciarratta’s briefs state: (1) “The public record leaves no doubt that
the entity that held the sale was not the holder of the note or beneficiary of the deed of
trust” (italics added); (2) “This is a case where the public record leaves no doubt that the
foreclosure sale was held by an entity that was not the holder of the note or beneficiary of
the deed of trust at issue” (italics added); (3) “There is no question that as of the date of
the sale Bank of America had no right to hold a foreclosure sale of the Subject Property
as the owner of the note and deed of trust was Deutsche [Bank] as of April 24, 2009″
(italics added); (4) “[T]here is no question that as of the date of the sale the true holder of
the note was Deutsche [Bank]” (italics added); (5) “[A]t the time of the sale the holder of
the note and beneficiary of the deed of trust was Deutsche [Bank].”

Similarly, in the trial court Sciarratta’s lawyer stated, “The facts are very clear and
very simple. Deutsche Bank was the owner of this loan according to the public record at
the time of this sale. And Deutsche Bank did not hold this sale. There was no dispute
about that. Bank of America did.”

Given these unequivocal assertions and Sciarratta’s failure to develop the
inconsistent alternative theory in her brief, we do not address whether the first amended
complaints states a viable cause of action on an alternative theory that the “wrong” trustee

initiated foreclosure. (See Sehulster Tunnels/Pre-Con v. Traylor Brothers, Inc./Obayashi
Corp. (2003) 111 Cal.App.4th 1328, 1345, fn. 16 [declining to address an alternative
theory not developed in the party’s appellate brief].)

B. Sciarratta Alleges a Void Assignment

“A void contract is without legal effect.” (Yvanova, supra, 62 Cal.4th at p. 929.)
“A voidable transaction, in contrast, ‘is one where one or more parties have the power, by
a manifestation of election to do so, to avoid the legal relations created by the contract, or
by ratification of the contract to extinguish the power of avoidance.'” (Id. at p. 930.)

Yvanova holds that a borrower has legal authority—standing—”to claim a
nonjudicial foreclosure was wrongful because an assignment by which the foreclosing
party purportedly took a beneficial interest in the deed of trust was not merely voidable
but void, depriving the foreclosing party of any legitimate authority to order a trustee’s
sale.” (Yvanova, supra, 62 Cal.4th at pp. 942-943.)

Here, Sciarratta’s first amended complaint alleges that in November 2009, when
Chase purported to assign Sciarratta’s promissory note and deed of trust to Bank of
America, Chase had nothing to assign, having previously (in April 2009) assigned the
promissory notes and deed of trust to Deutsche Bank. The documents properly subject to
judicial notice are consistent with these allegations. On April 27, 2009, Chase executed a
document entitled “Assignment of Deed of Trust” where it “hereby grants assigns and
transfers to Deutsche Bank . . . all beneficial interest under that certain Deed of
Trust . . . executed by Monica Sciarratta . . . [¶] [t]ogether with the note or notes therein
described . . . .” Approximately six months later, on November 3, 2009, Chase purported
to assign the same trust deed and promissory notes to Bank of America.

Chase, having assigned “all beneficial interest” in Sciarratta’s notes and deed of
trust to Deutsche Bank in April 2009, could not assign again the same interests to Bank
of America in November 2009. (See California Bank & Trust v. Piedmont Operating
Partnership (2013) 218 Cal.App.4th 1322, 1347 [once a claim has been assigned, unless
a contrary intention is shown, the assignment “‘”vests in the assignee the assigned
contract or chose and all rights and remedies incidental thereto”‘”].)

Thus, assuming Sciarratta’s allegations are true, as we must on review of the
demurrer, the assignment to Bank of America is void, and not merely voidable.
(Yvanova, supra, 62 Cal.4th at p. 935; Glaski, supra, 218 Cal.App.4th at p. 1097
[assignment void, not voidable, where entity invoking the power of sale was not the
holder of the deed of trust]; see Culhane v. Aurora Loan Services of Nebraska (1st Cir.
2013) 708 F.3d 282, 291 (Culhane) [a mortgage assignment is void, not merely voidable,
where the assignor “had nothing to assign” or “no interest to assign”]; Wilson v. HSBC
Mortgage Services, Inc. (1st Cir. 2014) 744 F.3d 1, 9 (Wilson).)9 As the Supreme Court
in Yvanova explained: “‘A homeowner . . . has standing to challenge that assignment as
void because success on the merits would prove the purported assignee is not, in fact, the
mortgagee and therefore lacks any right to foreclose on the mortgage.” (Yvanova, supra,
62 Cal.4th at pp. 935-936.)

9 In Yvanova, the Supreme Court cited Culhane and Wilson with approval.
(Yvanova, supra, 62 Cal.4th at pp. 935, 940.)

Defendants’ arguments to the contrary are not persuasive. Citing U.S. Hertz Inc. v.
Niobrara Farms (1974) 41 Cal.App.3d 68, defendants contend the recording of an
assignment to Deutsche Bank “does not actually transfer an interest in property; it merely

serves as notice that a transfer has occurred.” However, U.S. Hertz is materially
distinguishable because it involves a notice of substitution of trustee, not an assignment
of the deed of trust and promissory notes. It is in the context of a notice substituting a
trustee that the court states “such documents . . . grant no interest in real property. Their
main objective is notice . . . .” (Id. at p. 85.)

Defendants also contend the “[c]orrective [a]ssignment” recorded in December
2009 “demonstrated that beneficial interest had been assigned to Bank of America, not
Deutsche Bank.” However, defendants cite no authority suggesting that as a matter of
law, the “[c]orrective [a]ssignment” recorded in December 2009 has any relevant legal
effect on the nonjudicial foreclosure occurring one month prior, in November 2009.

Defendants also argue that the “[c]orrective [a]ssignment” shows that “[a]t most”
Chase “made procedural errors on the documents regarding the identity of the
beneficiary, and that Chase later corrected these errors.” However, this is an appeal from
a judgment of dismissal after a demurrer was sustained, where we are required to assume
the truth of the facts plaintiff has alleged. Defendants cannot hijack Sciarratta’s first
amended complaint, delete allegations not to their liking, insert other contrary allegations
such as this one about a mere “procedural error[]”, and contend the resulting pleading
they have cobbled together fails to state a cause of action. Sciarratta alleges that at the
time of the nonjudicial foreclosure sale, Deutsche Bank was the assignee and Bank of
America was not. The judicially noticeable documents do not contradict these
allegations.

Defendants also contend that Sciarratta’s complaint admits that Deutsche Bank
was not the assignee and never held a beneficial interest in the deed of trust. However,

the allegation defendants highlight is not contained in Sciarratta’s cause of action for
wrongful foreclosure, but rather in her cause of action to quiet title. In any event, an
allegation that Deutsche Bank never held a legal or equitable interest in the property is
not necessarily inconsistent with an allegation that Bank of America also did not.

In sum, we hold that Sciarratta has alleged the nonjudicial foreclosure was
wrongful because an assignment by which the foreclosing party, Bank of America,
purportedly took a beneficial interest in the deed of trust was void. Therefore, under
Yvanova, Sciarratta has standing to assert such a claim.10

10 Because Sciarratta alleges a void as distinguished from a voidable assignment, she
is excused from having to allege tender as an element of her wrongful foreclosure cause
of action. (Yvanova, supra, 62 Cal.4th at p. 929, fn. 4 [“Tender has been excused
when . . . the plaintiff alleges the foreclosure deed is facially void, as arguably is the case
when the entity that initiated the sale lacked authority to do so.”].)

C. Sciarratta Has Adequately Alleged Prejudice for Wrongful Foreclosure

Sciarratta contends prejudice or harm, beyond the allegedly wrongful foreclosure
itself, should not be required to be alleged in order to state a cause of action for wrongful
foreclosure where, as here, it is alleged the foreclosing beneficiary’s interest is void. We
agree.

A homeowner experiences prejudice or harm when an entity with no interest in the
debt forecloses. 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. As the Supreme Court
stated in Yvanova, “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.)

There are also strong policy reasons favoring this approach. A contrary rule
would lead to a legally untenable situation—i.e., that anyone can foreclose on a
homeowner because someone has the right to foreclose. “And since lenders can avoid the
court system entirely through nonjudicial foreclosures, there would be no court oversight
whatsoever.” (Miles, supra, 236 Cal.App.4th at p. 410.) Moreover, giving
homeowners—who have the most at stake and the most to lose—the ability to challenge
improper loan assignments as being absolutely void will provide a proper incentive to
lending institutions to employ due diligence to properly document assignments and
confirm who currently holds a loan. “The consequences of wrongfully evicting someone
from their home are too severe to be left unchecked.” (Ibid.)

Cases cited by defendants that reach a contrary result did not have the benefit of
the Supreme Court’s decision in Yvanova and as a result incorrectly and exclusively focus
on the plaintiff’s ability to have avoided any foreclosure. For example, in Fontenot v.
Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256 (Fontenot) disapproved on other
grounds (standing) in Yvanova, supra, 62 Cal.4th at page 939, footnote 13, the court
found that plaintiff had failed to demonstrate prejudice resulting from an allegedly

improper transfer of her debt because the plaintiff conceded she was in default, did not
allege the transfer interfered with her ability to pay her debt, and did not allege the
original lender would have refrained from foreclosure. (Fontenot, supra, at p. 272.)

Similarly, in Herrera v. Federal National Mortgage Assn. (2012) 205 Cal.App.4th
1495 (Herrera), disapproved on other grounds (standing) in Yvanova, supra, 62 Cal.4th
at page 939, footnote 13, the court found that the plaintiffs could not demonstrate
prejudice where they had defaulted on their loan and could not cure the default.
(Herrera, supra, 205 Cal.App.4th at p. 1508.)

Thus, Fontenot and Herrera interpret prejudice narrowly to mean the plaintiff
must demonstrate that she could have avoided foreclosure. These cases are inconsistent
with the policies underlying the standing rule in Yvanova: “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.”
(Yvanova, supra, 62 Cal.4th at p. 938.) Fontenot and Herrera also ignore the fact that the
wrongful nature of the foreclosure alleged here would require the sale to be unwound, at
least where there are no intervening third-parties. (See Miles, supra, 236 Cal.App.4th at
p. 408 [“The basic elements of a tort cause of action for wrongful foreclosure track the
elements of an equitable cause of action to set aside a foreclosure sale.”]) In her
wrongful foreclosure cause of action, Sciarratta seeks such a remedy, alleging an
entitlement not only to money damages, but also “a declaration that the sale of the
Subject Property by . . . [Bank of America] . . . was a void act of no legal effect.”

Fontenot and Herrera also fail to recognize that the measure of damages for
wrongful foreclosure is the familiar measure of tort damages: all proximately caused

damages. “Wrongfully foreclosing on someone’s home is likely to cause other sorts of
damages, such as moving expenses, lost rental income . . . and damage to credit. It may
also result in emotional distress . . . .” (Miles, supra, 236 Cal.App.4th at p. 409.) We are
not suggesting that any of these damages will be actually recoverable here. It may be that
Sciarratta has no such damages. It may be that any such damages are entirely offset by
the benefit of being free from a loan with unfavorable terms, the benefits of apparently
living rent-free during this litigation, or some other reason(s).11 These issues are not
before us and we express no opinion one way or the other. However, Sciarratta has
alleged she sustained compensatory damages in excess of $25,000 as a result of the
wrongful foreclosure. For purposes of overcoming a demurrer in this case on the issue of
prejudice, that allegation is sufficient. Therefore, the court erred in sustaining the
demurrer to Sciarratta’s first cause of action for wrongful foreclosure.

11 In response to a question at oral argument, Sciarratta’s lawyer stated Sciarratta still
resides in the home.

III. QUIET TITLE AND CANCELLATION OF INSTRUMENTS

The trial court sustained defendants’ demurrer to Sciarratta’s cause of action for
quiet title on the grounds that “payment of the debt owed (tender) is a necessary element
for a quiet title cause of action.” The court sustained the demurrer to Sciarratta’s cause of
action for cancellation of instruments on the grounds that action “is dependent on the
[first] and [second] causes of action.”

The court erred in sustaining the demurrer to Sciarratta’s causes of action for quiet
title and cancellation of instruments. Because Sciarratta properly alleged the foreclosure
was void and not merely voidable, tender was not required to state a cause of action for

quiet title or for cancellation of instruments. (Glaski, supra, 218 Cal.App.4th at p. 1100
[homeowner not required to allege tender in causes of action for wrongful foreclosure,
cancellation of instruments, and quiet title where the foreclosure sale is void rather than
voidable].)

In her opening brief, Sciarratta addresses the issues in this case only as they relate
to her cause of action for wrongful foreclosure, not quiet title or cancellation of
instruments. There is no separate heading in her brief asserting the court erred in
sustaining the demurrer to her causes of action for quiet title or cancellation of
instruments.

Ordinarily, therefore, any contentions regarding the correctness of the trial court’s
ruling sustaining the demurrer to these two other causes of action would be abandoned.
(Ram v. OneWest Bank FSB (2015) 234 Cal.App.4th 1, p. 21, fn. 2 [where demurrer
sustained without leave to amend, appellant’s failure to raise arguments in connection
with one of several causes of action is deemed abandonment of that cause of action].)

However, in addressing the tender issue in the context of wrongful foreclosure,
Sciarratta argued tender is not required because Bank of America’s purported assignment
is void and not merely voidable. In her opening brief, Sciarratta cited, among other
authorities, Glaski, supra, 218 Cal.App.4th at page 1100, which, as noted ante, also
applies the rule excusing tender in void transactions to causes of action for quiet title and
cancellation of instruments.

Therefore, Sciarratta addressed the determinative legal issue, and cited authority
for its application to quiet title and cancellation of instruments, albeit in the context of
wrongful foreclosure. As a result, Defendants were on notice that Sciarratta was arguing

she was excused from alleging tender, and that she was relying on Glaski, supra, 218
Cal.App.4th 1079 for that proposition. Indeed, Defendants argued the tender issue in
their respondents’ brief.

Because the issue of tender was fully examined by both Sciarratta and

Defendants, there is no sound reason to apply the ordinary rule of forfeiture for
Sciarratta’s failure to separately address the trial court’s rulings on these two causes of
action. Accordingly, the judgment of dismissal of those two causes of action must also
be reversed.

DISPOSITION

The judgment is reversed and the matter is remanded for further proceedings.
Monica Sciarratta shall recover her costs on appeal.

NARES, J.

WE CONCUR:

HUFFMAN, Acting P. J.

O’ROURKE, J.

Down Load PDF of This Case

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Posted in STOP FORECLOSURE FRAUD1 Comment

Home bidder believes investors are snapping up government foreclosure properties against the rules

Home bidder believes investors are snapping up government foreclosure properties against the rules

ABC Action News-

After the housing crash, the Federal National Mortgage Association, or Fannie Mae, set up the Homepath program, allowing people who planned to live in previously foreclosed homes an opportunity to buy them before investors.

But the I-Team has learned that the program doesn’t always work to put owner-occupants in homes, since rules are sometimes hard to understand and not everyone is abiding by them.

“I had my heart set on it,” said Clearwater cigar store owner Leglio Sotolongo of his dream home.

The property, located in rural Pasco County, came with a barn and stables on five acres.

[ABC ACTION NEWS]

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Posted in STOP FORECLOSURE FRAUD0 Comments

Florida Didn’t Even Bother Applying For $250 Million in Foreclosure Assistance Funds

Florida Didn’t Even Bother Applying For $250 Million in Foreclosure Assistance Funds

Miami New Times-

Florida is ground zero of the foreclosure crisis. No other state even touches Florida when it comes to the number of foreclosures over the past decade. So you would figure our state government would be first in line when it comes to taking advantage of federal assistance programs meant to help regular Floridians.

You would figure wrong.

Back in April, the U.S. Treasury Department announced $2 billion more in funding for the Obama administration’s Hardest Hit Fund program. That fund is designed to help homeowners in the states hit hardest by the economic crisis.

Florida automatically received almost $78 million in additional funding, but it could have received a lot more if only it had applied. It could have gotten as much as $250 million more in fact.

[MIAMI NEW TIMES]

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Posted in STOP FORECLOSURE FRAUD0 Comments

Former Wells Fargo Employee Claims Bank Defrauded Government Of $1.4B In Foreclosure Funding

Former Wells Fargo Employee Claims Bank Defrauded Government Of $1.4B In Foreclosure Funding

Consumerist-

There has been no shortage of lawsuits filed against Wells Fargo in recent years, from accusations the bank pushed mortgages on borrowers who couldn’t repay them to claims the company pressed employees to engage in fraudulent conduct with regard to customer accounts. Now, a recently unsealed whistleblower lawsuit melds together those issues, claiming the bank encouraged employees to withhold information from customers that could potentially lead to foreclosure proceedings. 

The former employee claims in the suit, originally filed in 2015, that he was terminated in 2014 after he learned the bank had repeatedly collected on mortgages that it didn’t have proper documentation for.

According to the lawsuit [PDF] — unsealed last week when the Department of Justice declined [PDF] to intervene in the case — the employee claims Wells Fargo defrauded the government by collecting $1.4 billion in federal foreclosure-prevention funding for loans the bank knew lacked proper documentation during the housing crisis.

[CONSUMERIST]

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Posted in STOP FORECLOSURE FRAUD6 Comments

TFH 5/15/16 | Foreclosure Workshop #13: Baker v. Northwest Trustee Services: A Case Study in How To Retroactively Reverse a Foreclosure Judgment Based on a Subsequent Change in Governing Case Law

TFH 5/15/16 | Foreclosure Workshop #13: Baker v. Northwest Trustee Services: A Case Study in How To Retroactively Reverse a Foreclosure Judgment Based on a Subsequent Change in Governing 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 – May 15, 2016

Foreclosure Workshop #13: Baker v. Northwest Trustee Services: A Case Study in How To Retroactively Reverse a Foreclosure Judgment Based on a Subsequent Change in Governing Case Law

As the case law in several states appears to becoming increasingly friendlier to homeowners in foreclosure proceedings, old case precedents will gradually be overturned or substantially revised.

That raises the question how borrowers who have already been foreclosed on can use such supervening court decisions to reopen their closed foreclosure cases.

The Opinion in Baker v. Northwest Trustee Services, decided May 10, 2016 by the Washington State Court of Appeals, provides, in the context of a TILA rescission claim post-Jesinoski, a good lesson for homeowners on often completely unknown or commonly misunderstood options how to and how not to use a change in the law to retroactively vacate an earlier foreclosure judgment.

(Please call in and share your experiences)

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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

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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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Posted in STOP FORECLOSURE FRAUD0 Comments

M&T BANK AGREES TO PAY $64 MILLION TO RESOLVE ALLEGED FALSE CLAIMS ACT LIABILITY ARISING FROM FHA-INSURED MORTGAGE LENDING

M&T BANK AGREES TO PAY $64 MILLION TO RESOLVE ALLEGED FALSE CLAIMS ACT LIABILITY ARISING FROM FHA-INSURED MORTGAGE LENDING

Department of Justice
Office of Public Affairs

FOR IMMEDIATE RELEASE
Friday, May 13, 2016

M&T Bank Agrees to Pay $64 Million to Resolve Alleged False Claims Act Liability Arising from FHA-Insured Mortgage Lending

M&T Bank Corp. (M&T Bank) has agreed to pay the United States $64 million to resolve allegations that it violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) that did not meet applicable requirements, the Justice Department announced today.  M&T Bank is headquartered in Buffalo, New York.

“Mortgage lenders that fail to follow FHA program rules put taxpayer funds at risk and increase the chances of borrowers losing their homes,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “We will continue to hold lenders accountable for knowingly submitting ineligible loans for FHA insurance.”

“M&T Bank bypassed its responsibility to originate and underwrite mortgages in accordance with the standards required by the FHA,” said First Assistant U.S. Attorney James P. Kennedy Jr. for the Western District of New York.  “This case demonstrates that when a financial institution takes such a detour, we will work to ensure that it does not bypass the consequences of that conduct.”

During the time period covered by the settlement, M&T Bank participated as a direct endorsement lender (DEL) in the FHA insurance program.  A DEL has the authority to originate, underwrite and endorse mortgages for FHA insurance.  If a DEL approves a mortgage loan for FHA insurance and the loan later defaults, the holder of the loan may submit an insurance claim to HUD, FHA’s parent agency, for the losses resulting from the defaulted loan.  Under the DEL program, the FHA does not review a loan for compliance with FHA requirements before it is endorsed for FHA insurance.  DELs are therefore required to follow program rules designed to ensure that they are properly underwriting and certifying mortgages for FHA insurance, to maintain a quality control program that can prevent and correct deficiencies in their underwriting practices, and to self-report any deficient loans identified by their quality control program.

The settlement announced today resolves allegations that M&T Bank failed to comply with certain FHA origination, underwriting and quality control requirements.  As part of the settlement, M&T Bank admitted to the following facts: Between Jan. 1, 2006, and Dec. 31, 2011, it certified for FHA insurance mortgage loans that did not meet HUD underwriting requirements and did not adhere to FHA’s quality control requirements.  Prior to 2010, M&T Bank failed to review all Early Payment Default (EPD) loans, which are loans that become 60 days past due within the first six months of repayment.  Between 2006 and 2011, M&T also failed to review an adequate sample of FHA loans, as required by HUD.

Additionally, M&T created a quality control process that allowed it to produce preliminary major error rates that were significantly lower (sometimes below one percent) than what the rate would have been if M&T had calculated its preliminary major error rate by dividing the number of loans with preliminary major errors by the number of loans reviewed to determine what percent of loans contained a preliminary major error.

M&T Bank also failed to adhere to HUD’s self-reporting requirements.  While M&T Bank identified numerous FHA insured loans with “major errors” between 2006 and 2011, M&T Bank did not report a single loan to HUD until 2008, and thereafter self-reported only seven loans to HUD.  As a result of M&T’s conduct and omissions, HUD insured hundreds of loans approved by M&T that were not eligible for FHA mortgage insurance under the Direct Endorsement program and that HUD would not otherwise have insured.  HUD subsequently incurred substantial losses when it paid insurance claims on those loans.

* * *

“This recovery on behalf of the Federal Housing Administration should serve as a reminder of the potential consequences of not following HUD program rules and the value of private citizen assistance, including whistleblowers, in pursuing lenders that violate the rules,” said Inspector General David A. Montoya of the Department of Housing and Urban Development.

“It is critically important that FHA-approved lenders comply with HUD’s underwriting standards and originate mortgages that borrowers can sustain,” said HUD General Counsel Helen Kanovsky.  “We are pleased M&T Bank worked with the Department of Justice and HUD to arrive at an agreeable settlement that protects FHA’s insurance fund.”

The allegations resolved by this settlement arose from a whistleblower lawsuit filed under the False Claims Act by a former employee of M&T Bank, Keisha Kelschenbach.  Under the False Claims Act, private citizens can sue on behalf of the government and share in any recovery.  The share to be awarded in this case has not yet been determined.

The settlement was the result of a joint investigation conducted by HUD, HUD’s Office of Inspector General, the Civil Division and the U.S. Attorney’s Office for the Western District of New York.

The lawsuit is captioned U.S. ex rel. Kelschenbach v. M&T Bank Corp, 13-CV-0280(S) (W.D.N.Y.).

16-569
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California Supreme Court’s decision on old foreclosure may cost future borrowers

California Supreme Court’s decision on old foreclosure may cost future borrowers

NorcalRecord-

The cost to obtain a home loan may go up due to a recent California Supreme Court decision that paves the way for homeowners in default to challenge the validity of their foreclosure, according to a financial industry attorney specializing in lending disputes and real estate.

The California Supreme Court ruled earlier this year in Yvanova v. New Century Mortgage Corporation that “a home loan borrower has standing to claim a non-judicial foreclosure was wrongful” if the foreclosing party does not have the authority to order a trustee‘s sale.

In 2006, New Century granted Tsvetana Yvanova a $483,000 mortgage. The lender went bankrupt the following year. New Century is said to have pooled, securitized and transferred Yvanova’s mortgage to trustee Western Progressive in 2011. Yvanova subsequently defaulted on her loan, and Western Progressive auctioned her home in 2012.

[NorcalRecord]

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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Vancouver Veteran Files Suit Over 2010 Home Foreclosure

Vancouver Veteran Files Suit Over 2010 Home Foreclosure

OPB-

A U.S. Marine Corps veteran who faced foreclosure on his Vancouver home while serving in Iraq has filed a lawsuit against the home’s lender, saying that the company violated a federal law that provides mortgage relief for active-duty military members.

In the federal lawsuit, Vancouver resident Jacob McGreevey is seeking $500,000 or an amount determined at trial from PHH Mortgage Corp. of New Jersey. That company, with HSBC Bank USA as trustee, foreclosed on McGreevey’s Hazel Dell home in September 2010, shortly after the Marine returned from active duty in Iraq.

According to the lawsuit, PHH Mortgage launched its foreclosure action against McGreevey in May 2010, after McGreevey had been called up from the Marines Reserve to active duty. The lender ignored McGreevey’s request upon his return to Vancouver two months later to attempt to refinance the home, instead posting a series of foreclosure notices on his garage door before foreclosing on the home.

[OPB]

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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Trump Names Foreclosure King as Finance Chairman, Is Not Actually a Populist

Trump Names Foreclosure King as Finance Chairman, Is Not Actually a Populist

Slate-

Donald Trump has successfully run for the Republican presidential nomination as a friend of the common man. His speeches are about standing up for people who’ve been victimized by the recession, free trade agreements, and marauding hordes of Mexican rapists. His voters—relative to other Republicans, though not to Americans as a whole—skew working-class. He sometimes suggests that he wants to raise taxes on rich people.

And yet. Trump’s fortune is derived from having inherited millions of dollars and a real-estate company from his father. His own recent business history is one of fraudulently preying on regular people. His actual tax plan involves massive, hugenormous breaks for people in his income bracket. And now, the New Republic reports, he’s named a national finance chairman who made a ton of money running a bank that, per TNR, repeatedly committed fraud in the course of foreclosing on struggling homeowners during the housing crisis. That individual is Steve Mnuchin, former chairman and primary owner of OneWest Bank. Here’s a fact about that institution’s business practices:

[SLATE]
image: Variety

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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Why more widowed homeowners are struggling to prevent a foreclosure

Why more widowed homeowners are struggling to prevent a foreclosure

LA TIMES-

When Jesus Sequeira’s wife, Yadira, died in 2008 from lung cancer, times soon grew tough.

Sequeira said his income plunged, leaving him unable to pay the mortgage on the couple’s Canyon Country home when payments more than doubled a year later.

Sequeira hoped a loan modification might save him, but there was a glitch: Even though he was listed on the title, only his wife was on the mortgage note — a setup Sequeira said a Countrywide Financial employee suggested given her superior credit.

[LA TIMES]

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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A veteran’s fight to keep his home from foreclosure

A veteran’s fight to keep his home from foreclosure

WTNH-

MIDDLETOWN, Conn. (WTNH)–For Brendan and Janette Cameron, home is truly where the heart is.

“We got married after we bought the house. In the backyard. We’d been together for a very long time but I didn’t want to get married until we had our own place,” said Brendan.

The couple says it was a perfect day. The ceremony was held under a big red oak at their Middletown home. No one could have guessed that two years later they’d be fighting the bank to keep the house. A Desert Storm veteran who served in the Air Force from 1991 to 1997, Brendan was medically discharged after having a seizure.

[WTNH 8]

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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Foreclosure Workshop #12: How And When You Can Use Either Rule 60(b) Or An Independent Action To Save Your Home Post-Judgment If Your Foreclosing Mortgagee Did Not Own Your Promissory Note And Mortgage When It Filed Its Foreclosure Complaint

Foreclosure Workshop #12: How And When You Can Use Either Rule 60(b) Or An Independent Action To Save Your Home Post-Judgment If Your Foreclosing Mortgagee Did Not Own Your Promissory Note And Mortgage When It Filed Its Foreclosure Complaint

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 – May 8, 2016

Foreclosure Workshop #12: How And When You Can Use Either Rule 60(b) Or An Independent Action To Save Your Home Post-Judgment If Your Foreclosing Mortgagee Did Not Own Your Promissory Note And Mortgage When It Filed Its Foreclosure Complaint
(Please call in and share your experiences)

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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

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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Less than 1 percent of seriously underwater properties qualify for principal reduction

Less than 1 percent of seriously underwater properties qualify for principal reduction

Reuters-

RealtyTrac®, a national source for comprehensive housing data, today released its Q1 2016 U.S. Home Equity and Underwater Report, which estimates that less than 1 percent of all seriously underwater properties nationwide potentially qualify for principal loan forgiveness under a new mortgage modification program introduced in April by the Federal Housing Finance Agency, which oversees government-backed loan agencies Fannie Mae and Freddie Mac.

To be considered eligible in the RealtyTrac analysis, the seriously underwater properties (loan-to-value ratio of at least 125 percent) needed to also be actively in foreclosure, owner-occupied, and have an estimated loan amount no more than $250,000 on a loan that is guaranteed by Fannie Mae or Freddie Mac.

Out of 6,703,857 million seriously underwater U.S. properties as of the end of Q1 2016, the RealtyTrac analysis estimated that 33,622 (0.50 percent) would potentially qualify for the FHFA principal reduction program.

[REUTERS]

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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