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Committee Dems Request Information from Deutsche Bank on Russia Money Laundering Scheme and Trump Accounts

Committee Dems Request Information from Deutsche Bank on Russia Money Laundering Scheme and Trump Accounts

Today, Congresswoman Maxine Waters (D-CA), Ranking Member of the Committee on Financial Services, Congressman Daniel Kildee (D-MI), Vice Ranking Member of the Committee on Financial Services, Congresswoman Gwen Moore (D-WI), Ranking Member of the Subcommittee on Monetary Policy and Trade, Congressman Al Green (D-TX), Ranking Member of the Subcommittee on Oversight & Investigations, and Congressman Ed Perlmutter (D-CO), Ranking Member of the Subcommittee on Terrorism and Illicit Finance, sent a letter to Deutsche Bank’s Chief Executive Officer requesting information on two internal reviews the Bank reportedly conducted, the first on its 2011 Russian mirror trading scandal, and the second on whether the accounts of President Donald Trump and his family members held at the Bank had any ties to Russia.

“Deutsche Bank’s pattern of involvement in money laundering schemes with primarily Russian participation, its unconventional relationship with the President, and its repeated violations of U.S. banking laws over the past several years, all raise serious questions about whether the Bank’s reported reviews of the mirror trading scheme and Trump’s financial ties to Russia were sufficiently robust,” the lawmakers wrote in the letter.

In March, Ranking Member Waters and Committee Democrats wrote to Chairman Hensarling calling for the Committee to use the full range of its investigative powersto examine Deutsche Bank’s Russian money-laundering operation, and assess the integrity of the U.S. Department of Justice’s ongoing investigation into the scheme, given the Trump Administration’s conflicts of interest in the matter and the revelations of Attorney General Sessions’ communications with the Russian Ambassador. Chairman Hensarling has not responded to this letter to date.

The full text of the letter is below.

May 23, 2017

Mr. John Cryan
Chief Executive Officer
Deutsche Bank, AG
60 Wall Street
New York, NY 10005

Dear Mr. Cryan:

We write seeking information relating to two internal reviews reportedly conducted by Deutsche Bank (“Bank”): one regarding its 2011 Russian mirror trading scandal and the other regarding its review of the personal accounts of President Donald Trump and his family members held at the Bank. What is troubling is that the Bank to our knowledge has thus far refused to disclose or publicly comment on the results of either of its internal reviews. As a result, there is no transparency regarding who participated in, or benefited from, the Russian mirror trading scheme that allowed $10 billion to flow out of Russia. Likewise, Congress remains in the dark on whether loans Deutsche Bank made to President Trump were guaranteed by the Russian Government, or were in any way connected to Russia. It is critical that you provide this Committee with the information necessary to assess the scope, findings and conclusions of your internal reviews.

Deutsche Bank’s failure to put adequate anti-money laundering controls in place to prevent a group of traders from improperly and secretly transferring more than $10 billion out of Russia is concerning.[1] According to press reports, this scheme was carried out by traders in Russia who converted rubles into dollars through security trades that lacked any legitimate economic rationale.[2] The settlement agreements reached between the Bank and the New York Department of Financial Services as well as the U.K. Financial Conduct Authority raise questions about the particular Russian individuals involved in the scheme, where their money went, and who may have benefited from the vast sums transferred out of Russia. Moreover, around the same time, Deutsche Bank was involved in an elaborate scheme known as “The Russian Laundromat,”[3] “The Global Laundromat,” or “The Moldovan Scheme,” in which $20 billion in funds of criminal origin from Russia were processed through dozens of financial institutions.

Press reports indicate that these two schemes, in fact, may have been linked, confirming the need for enhanced scrutiny and transparency to determine who was involved and benefited from such schemes.[4]

Further supporting the need for a public accounting of the Bank’s internal reviews, Deutsche Bank has demonstrated a pattern of regulatory compliance failures and disregard for U.S. law. For example, in April 2015 the Bank pled guilty to criminal charges and was fined $2.5 billion for manipulating the London Interbank Offered Rate (LIBOR), the index rate underlying trillions of dollars of transactions around the globe. Later that year, in November 2015, Deutsche Bank was fined $258 million for processing payments valued at more than $10 billion on behalf of Iranian, Libyan, Syrian, Burmese, and Sudanese entities to evade U.S. sanctions. In December 2016, the Bank was fined $37 million in penalties for misleading clients about their stock orders for certain trades. And in January of this year, Deutsche Bank was fined $7.2 billion by the Department of Justice for deliberately misleading investors in its sale of toxic mortgage backed securities.

In addition to the internal review conducted on the mirror trading scheme, Deutsche Bank also reportedly conducted an internal review of the personal accounts of President Trump and his family members, several of whom serve as official advisors to the President. Press reports citing unnamed sources indicate that this review was done to determine if loans made to him were backed by guarantees from the Russian Government, or were in any way connected to Russia, as they were made in “highly unusual circumstances.”[5] At a time when nearly all other financial institutions refused to lend to Trump after his businesses repeatedly declared bankruptcy, Deutsche Bank continued to do so–even after the President sued the Bank and defaulted on a prior loan from the Bank —to the point where his companies now owe your institution an estimated $340 million.[6] Press reports indicate that Deutsche Bank is reluctant to share any information related to its investigation including what prompted the internal review, who had undertaken it, or what its findings had been. Only with full disclosure can the American public determine the extent of the President’s financial ties to Russia and any impact such ties may have on his policy decisions.

Deutsche Bank’s pattern of involvement in money laundering schemes with primarily Russian participation, its unconventional relationship with the President, and its repeated violations of U.S. banking laws, all raise serious questions about whether the Bank’s reported reviews of the trading scheme and Trump’s financial ties to Russia were completely thorough.

In furtherance of this Committee’s oversight responsibilities and in the interest of the public’s right to understand the extent of the President’s financial entanglements with Russia, please:

  1. Publicly affirm that the Bank has completed a thorough and rigorous review of both the 2011 Russian mirror trading scheme as well as of President Trump’s accounts and those of his family members;
  2. Provide the Committee with copies of any document, record, memo, correspondence, or other communication related to the 2011 Russian mirror trading scheme, including:
    a. The scope, purpose, findings, and conclusions of the Bank’s internal review;
    b. The names of all individuals and entities who participated in and benefited from the 2011 scheme, including but not limited to, individuals who are either subject to U.S. sanctions or are politically exposed persons as defined by guidance issued by the Federal Financial Institutions Examination Council;
    c. The origin, ultimate destination, and any beneficiaries of the funds transferred from Russia;
    d. The extent to which any party who participated in, or benefited from, the 2011 scheme continue to maintain accounts or a relationship with Deutsche Bank;
    e. The procedures your firm has in place, at account opening and on an ongoing basis, to manage the risks associated with customers connected to individuals known to be at high-risk for engaging in bribery, corruption, and money laundering;
    f. A list of employees within Deutsche Bank found to be involved in facilitating the 2011 scheme and the actions taken by Deutsche Bank to hold such individuals accountable; and
    g. The Bank’s analysis of any connections between the 2011 scheme and the broader scheme known as “The Global Laundromat,” “The Russian Laundromat,” or “The Moldovan Scheme,” including the involvement of Deutsche Bank employees and customers.
  3. Provide the Committee with copies of any document, record, memo, correspondence, or other communication related to the internal review of the personal accounts of the President and his family, including:
    a. A discussion of the scope, purpose, findings and conclusions of the review;
    b. All communications and documentation relating to the underwriting of each loan made to President Trump and his immediate family members, including all assets and guarantees used to collateralize such loans;
    c. The timeframe when Deutsche Bank determined that Trump was a politically exposed person; and
    d. All due diligence conducted by the Bank required by the Bank Secrecy Act regarding Trump’s potential ties to senior Russian political leaders, oligarchs, and organized crime leaders, as well as potential violations of U.S. sanctions and anti-bribery statutes.
  4. Appoint an independent auditor to verify the results of the review of the personal accounts of the President and his family and disclose the results of the auditor’s findings to the Committee as soon as reasonably practicable.
If you have any questions regarding the scope of this request or the format of your response, please contact Jennifer Read or Kirk Schwarzbach of Committee staff at 202-225-4247. Please respond to this letter and provide the requested documentation no later than June 2, 2017.

Sincerely,

Honorable Maxine Waters
Honorable Daniel Kildee
Honorable Gwen Moore
Honorable Al Green
Honorable Ed Perlmutter

_________________
Footnotes:

1: New York Department of Financial Services, Consent Order Under New York Banking Law §§ 39, 44 and 44-a, (January 30, 2017), available athttp://www.dfs.ny.gov/about/ea/ea170130.pdf
2: Suzi Ring, Deutsche Bank’s Bill for Russia Trades Reaches $629 million, Bloomberg, available at https://www.bloomberg.com/news/articles/2017-01-31/deutsche-bank-fined-204-million-over-money-laundering-failings
3: Luke Harding and Nick Hopkins, Bank that lent $300m to Trump linked to Russian money laundering scam, The Guardian (March 21, 2017), available athttps://www.theguardian.com/world/2017/mar/21/deutsche-bank-that-lent-300m-to-trump-linked-to-russian-money-laundering-scam
4: Ed Cesar, Deutsche Bank, Mirror Trades, and More Russian Threads, The New Yorker (March 29, 2017), available at:http://www.newyorker.com/business/currency/deutsche-bank-mirror-trades-and-more-russian-threads
5: Luke Harding, et.al., Deutsche Bank examined Donald Trump’s account for Russia links, The Guardian (February 16, 2017), available athttps://www.theguardian.com/us-news/2017/feb/16/deutsche-bank-examined-trump-account-for-russia-links
6: Jean Eaglesham and Lisa Schwartz, Trump’s Debts Are Widely Held on Wall Street, Creating New Potential Conflicts, The Wall Street Journal (January 5, 2017), available at https://www.wsj.com/articles/trump-debts-are-widely-held-on-wall-street-creating-new-potential-conflicts-1483637414

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Wells Fargo must guarantee class-action settlement will fully repay customers, judge says

Wells Fargo must guarantee class-action settlement will fully repay customers, judge says

LA TIMES-

Wells Fargo & Co. may have to cough up more than $142 million to settle a bevvy of class-action lawsuits in connection with its unauthorized-accounts scandal.

A federal judge in San Francisco said late Wednesday that he would approve a settlement deal reached by the bank and plaintiffs’ attorneys, but only if they agree to several conditions — including a guarantee that all customers will be fully compensated for their losses.

The two sides had previously agreed that the bank would pay $142 million to compensate customers for fees and other damages related to millions of unauthorized checking, savings and credit card accounts.

[LA TIMES]

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DWORK v EXECUTIVE ESTATES OF BOYNTON BEACH HOMEOWNERS ASSOC., INC. |  4DCA- 720.305(2)(b), Florida Statutes (2013) – strict compliance with the notice provision of the statute was a necessary prerequisite for HOA to impose fines

DWORK v EXECUTIVE ESTATES OF BOYNTON BEACH HOMEOWNERS ASSOC., INC. | 4DCA- 720.305(2)(b), Florida Statutes (2013) – strict compliance with the notice provision of the statute was a necessary prerequisite for HOA to impose fines

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

JONATHAN MITCHELL DWORK a/k/a JONATHAN M. DWORK,
Appellant,

v.

EXECUTIVE ESTATES OF BOYNTON BEACH HOMEOWNERS
ASSOCIATION, INC.,
Appellee.

No. 4D16-1698

[May 24, 2017]

Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm
Beach County; Peter D. Blanc, Judge; L.T. Case No. 2014CA006070
XXXXMB.

Jonah M. Wolfson of Wolfson Law Firm, LLP, Miami, for appellant.

Peter J. Sosin of Sosin Law, PLLC, Boca Raton, for appellee.
KLINGENSMITH, J.

Jonathan M. Dwork (“appellant”) asks this court to decide whether
Executive Estates of Boynton Beach Homeowners Association (“HOA”)
was obligated under section 720.305(2)(b), Florida Statutes (2013), to
provide him with fourteen days’ notice of a hearing on alleged violations
of maintenance requirements before imposing fines, or whether HOA
could be entitled to money damages for unpaid fines so long as it
substantially complied with the statute’s notice provision. We find that
strict compliance with the notice provision of the statute was a necessary
prerequisite for HOA to impose fines. Accordingly, because HOA
provided appellant with only thirteen days’ notice of the hearing, we
reverse the money damages awarded to HOA for the unpaid fines.

Appellant owns and resides in a single family house within HOA’s
development. HOA’s governing documents require all homeowners to
keep their roofs and driveways clean and their fences in good condition.
HOA notified appellant of his violations of these requirements multiple
times over the preceding years, but he neither fixed them nor responded
to any of the notices. In 2013, after an inspection confirmed the
continued existence of these maintenance violations, HOA informed
appellant of the violations by certified letter and provided a thirty-day
cure period to bring the property into compliance. Not receiving an
answer, HOA sent another certified letter providing for an additional
fifteen days to comply. Appellant was completely unresponsive to HOA’s
repeated attempts to contact and notify him.

On May 23, 2013, HOA sent appellant another notice by both regular
and certified mail informing him that thirteen days later on June 5 a
hearing would take place before the fine committee to consider his
maintenance violations. In compliance with its bylaws, HOA also posted
the notice on a bulletin board at the development’s clubhouse. Again,
the copy of the notice sent by certified mail was returned unclaimed. The
fine committee meeting commenced as scheduled on June 5, with the
committee voting to impose fines on appellant for three violations. HOA’s
board ratified the committee’s decision on June 25. Two days later, HOA
sent appellant another letter, informing him of the committee’s decision
and that starting on July 2, he would be fined $25 per day for each of the
three violations if they were not remedied. As was the practice, appellant
neither responded to the letter nor remedied the violations.

On September 5, 2013, HOA’s attorneys mailed appellant a letter
demanding payment of the fines and informing him that a lien would be
recorded on his property if the fines remained unpaid. Appellant neither
responded nor remedied the violations. On January 27, 2014, HOA’s
attorneys mailed appellant another letter informing him that they were
recording a lien on his property for $7,500.00 as the full amount of the
accrued fines, which was the maximum allowed ($2,500.00 fine for each
violation), plus fees and costs incurred, totaling $8,135.00. This certified
letter also went unclaimed. On January 29, 2014, the clerk recorded the
lien on appellant’s property in the public records. Appellant never
contacted HOA regarding the lien.

HOA then filed a two-count complaint against appellant for
foreclosure and damages, as well as attorney’s fees and costs. The first
count sought to foreclose on the claim of lien for fines imposed as
assessments for violations of HOA’s declaration of covenants, articles of
incorporation, and rules. The second count sought a judgment for
money damages in the amount of $7,500 for failure to pay those same
fines. The cause went to a non-jury trial in April 2016, whereupon the
court entered final judgment. On the first count, the court denied
foreclosure since the thirteen-day notice provided to appellant by HOA
did not comply with the fourteen-day notice provision of section
720.305(2)(b) or HOA’s declarations and bylaws, thereby rendering the
HOA unable to enforce its claim of lien against appellant’s property.
However, despite HOA’s failure to strictly comply with the statutory
notice provision, the court awarded money damages to HOA on its
second count, reasoning that the “equities of this cause [were] with [HOA]
and against [appellant].” The court also granted HOA entitlement to
reasonable fees and costs. This appeal followed.
As this is a matter of statutory interpretation, we review the
application of section 720.305 de novo. Miles v. Parrish, 199 So. 3d
1046, 1047 (Fla. 4th DCA 2016).

At the time when HOA sent appellant the hearing notice, section
720.305(2)(b) provided that “[a] fine or suspension may not be imposed
without at least 14 days’ notice to the person sought to be fined or
suspended and an opportunity for a hearing before a committee.”1
As to the first count for foreclosure on the claim of lien, the court
properly denied relief. Pursuant to section 720.305(2)(b), HOA was
required to provide appellant with at least fourteen days’ notice of the
fine committee hearing.

Section 720.305(2)(b) is protective, and the notice requirement
functions as a condition precedent to the attachment of a lien. This time
requirement for the notice is no mere technicality. Failure to provide
sufficient time to prepare a defense to a claim of violation deprives the
homeowner of due process, thus negating the validity of any resulting
lien obtained from such noncompliance.

Nothing in the wording of the statute implies that compliance with the
time requirement is discretionary. Since section 720.305(2)(b) is clear
and unambiguous, the statute must be strictly construed. See Miles,
199 So. 3d at 1048 (“As with the interpretation of any statute, the
starting point of analysis is the actual language of the statute. If the
language is clear and unambiguous, there is no need to resort to the
rules of statutory construction; the statute must be given its plain and
obvious meaning.” (quoting Conservation All. of St. Lucie Cty., Inc. v. Fla.
Dep’t of Envtl. Prot., 144 So. 3d 622, 624 (Fla. 4th DCA 2014)) (internal
quotation marks omitted)).

The Florida Supreme Court has held that liens which are “purely
creatures of statute” can only be acquired, created, or attached to
property if the statutes from which they derive are strictly followed. See
Aetna Cas. & Sur. Co. v. Buck, 594 So. 2d 280, 281 (Fla. 1992); Stresscon
v. Madiedo, 581 So. 2d 158, 160 (Fla. 1991) (“Because the acquisition of
a mechanic’s lien is purely statutory, there must be strict compliance
with the mechanics’ lien law in order to acquire such a lien.”); see also
Stock Bldg. Supply of Fla., Inc. v. Soares Da Costa Constr. Servs., 76 So.
3d 313, 316 (Fla. 3d DCA 2011); Delta Fire Sprinklers, Inc. v. OneBeacon
Ins. Co., 937 So. 2d 695, 698 (Fla. 5th DCA 2006) (“A construction lien is
‘purely a creature of the statute,’ and because it is of this nature,
persons seeking its benefits must strictly comply with the requirements
of the construction lien law.”).

HOA argues that substantial compliance with section 720.305(2)(b)
was sufficient, especially since appellant was not prejudiced by the lack
of an extra day’s notice. Here, however, the substantial compliance
argument fails because the statute specifically requires without exception
at least fourteen days’ written notice of a scheduled hearing. As the
Stresscon court observed in holding that nothing in the language of
section 713.16(2), Florida Statutes, permitted “either substantial
compliance or lack of prejudice to be considered in determining the
validity of a [mechanics’] lien”:

The fact that no prejudice has been nor can be shown is
not the determining factor in this case; nor is it significant
that Stresscon substantially complied with the mechanics’
lien law. The courts have permitted substantial compliance
or adverse effect to be considered in determining the validity
of a lien when there are specific statutory exceptions which
permit their consideration.
581 So. 2d at 160 (emphasis added).

Section 720.305 does not contain any “specific statutory exceptions
which permit” the trial court to consider substantial compliance with the
notice requirement or lack of prejudice to the person sought to be fined.
Where a statute’s language is clear and unambiguous, the power to
construe it does not exist. Cimino v. Am. Airlines, Inc., 183 So. 3d 1242,
1244 (Fla. 4th DCA 2016). Because section 720.305(2)(b) is
unambiguous as to its fourteen-day written notice requirement and does
not contain any exceptions permitting considerations of substantial
compliance or lack of prejudice, we must reject HOA’s contention that its
thirteen days’ written notice to appellant sufficed to satisfy the statute’s
straightforward notice requirement.

Where notice does not meet that requirement, a lien under this
statute cannot attach to property. The trial court was therefore correct
in ruling that proper notice had to be given by HOA in strict compliance
with the statutory requirements to perfect its entitlement to a lien. Yet,
for these same reasons, the trial court erred in awarding money damages
to HOA for unpaid fines based on what it perceived to be the “equities” of
the case. Section 720.305(2)(b) explicitly provides that no fine may be
imposed without at least fourteen days’ notice to the person sought to be
fined. The statute does not provide a basis for the court to fashion an
equitable remedy. Here, the court based its $7,500.00 award to HOA on
the maximum amount of accrued fines that HOA could impose; but
without strict compliance with the notice provision of the statute, HOA’s
imposition of those fines were null.

Additionally, the substantial compliance argument is inapplicable
because as the party seeking affirmative relief under the lien statute,
HOA had to strictly comply with the statute’s provisions. See Hiller v.
Phoenix Assocs. of S. Fla., Inc., 189 So. 3d 272, 274 (Fla. 2d DCA 2016);
Sasso Air Conditioning, Inc. v. United Cos. Lending Corp., 742 So. 2d 468,
470 (Fla. 4th DCA 1999).

In other contexts, a procedural irregularity regarding notice that does
not injure or harm the complaining party might not result in setting
aside a claim. Generally, notice provisions of a statute should be applied
in a way to further the main purpose of those requirements; that is, to
apprise interested parties of the pendency of the action and afford them
an opportunity to present their objections and defenses at a hearing.
The evidence in this case was clear that appellant had actual notice of
the hearing, yet continued with his longstanding practice of ignoring it in
the same way he did with all the prior notices. While the trial court was
correct in its view that the equities in this case certainly favored HOA,
case law nonetheless compels us to hold that HOA was required to
strictly comply with the dictates of section 720.305(2)(b) to perfect its
ability to impose and collect the fines. Accordingly, we reverse the final
judgment and remand for entry of final judgment in favor of appellant.

Reversed and Remanded.

MAY and KUNTZ, JJ., concur.

* * *

Not final until disposition of timely filed motion for rehearing.

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The Case That Could Doom Elizabeth Warren’s Wall Street Watchdog

The Case That Could Doom Elizabeth Warren’s Wall Street Watchdog

Bloomberg-

Since the day it was created, Democrats loved it, Republicans hated it and Wall Street, at best, tolerated it.

The fate of the Consumer Financial Protection Bureau and its chief, Richard Cordray, is in the hands of a Washington appeals court that will hear arguments Wednesday. The CFPB asked the court to reconsider its 2016 decision involving the agency’s punishment of New Jersey mortgage company PHH Corp. The outcome could take months. It’s expected to provide ammunition for one side or the other in the years-long tug of war over the agency’s existence.

Democrats defend the CFPB, the brainchild of Massachusetts Senator Elizabeth Warren, as a Wall Street watchdog necessary to advocate for ordinary Americans in the aftermath of the worst economic downturn in 75 years. They say it’s returned nearly $12 billion to customers who’ve been shortchanged.

[BLOOMBERG]

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More Bond Traders Sued By The SEC For Alleged Fraudulent Misrepresentations Relating To MBS Prices

More Bond Traders Sued By The SEC For Alleged Fraudulent Misrepresentations Relating To MBS Prices

Lexology-

On May 15, 2017, the Securities and Exchange Commission sued two commercial mortgage backed securities (“CMBS”) traders for securities fraud allegedly committed while buying and selling CMBS on behalf of a large broker-dealer during the course of their employment at the firm. SEC v. Chan, S.D.N.Y, 1:17-cv-3605; SEC v Im, S.D.N.Y, 1:17-cv-3613. These are the latest in a slew of recent lawsuits that have been brought by the SEC and DOJ as part of a federal crackdown on allegedly deceptive bond trading practices, but the DOJ is notably absent from this latest case.

The SEC’s complaints against the two traders, Kee Chan and James Im, allege that in the course of acting as an intermediary on trades with customers who sought to buy and sell CMBS on the secondary market, the traders deliberately misled and lied to customers about (1) the prices at which their firm bought or sold securities involved in trades, (2) the bids and offers the firm made or received on such securities, (3) the compensation the firm would receive for intermediating the trades, and/or (4) who owned the securities at issue, often pretending that they were still negotiating over a security with third-party sellers when the firm had, in fact, already acquired the security. SEC v. Chan, S.D.N.Y, 1:17-cv-3605, Compl. at 2 [ECF No. 1] (May 15, 2017); SEC v Im, S.D.N.Y, 1:17-cv-3613, Compl. at 2 [ECF No. 1] (May 15, 2017). The Complaints also allege that Chan sent an altered email to a customer in order to “corroborate” a lie about what he bid for a security, and that Im bragged to a seller about his purposeful deception of the buyer. Id. The SEC alleges these improper practices generated hundreds of thousands of dollars in ill-gotten trading profits for the traders’ CMBS desk—profit that the SEC claims was passed on to Im and Chan in the form of bonuses and compensation. Id. at 2-3. The Complaints seek judgments ordering permanent injunctive relief, disgorgement with prejudgment interest, and civil monetary penalties.

On May 16, 2017, Chan settled the claims against him without admitting or denying the allegations in the SEC’s Complaint by agreeing to disgorge $51,965, pay prejudgment interest in the amount of $11,758, and pay a civil penalty of $150,000. SEC v. Chan, S.D.N.Y, 1:17-cv-3605, Consent Judgment at 1, 3 [ECF No. 7] (May 16, 2017). Im is contesting the claims against him, and will likely argue (among other things) that any misstatements he made were immaterial to investors.

[LEXOLOGY]

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TFH 5/21 | Foreclosure Workshop #33: Nationstar Mortgage LLC v. Akepa Properties LLC — When Is a Foreclosing Plaintiff’s Lack of Standing Jurisdictional, resulting in Dismissal?

TFH 5/21 | Foreclosure Workshop #33: Nationstar Mortgage LLC v. Akepa Properties LLC — When Is a Foreclosing Plaintiff’s Lack of Standing Jurisdictional, resulting in Dismissal?

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

.

.

Sunday –  May 21

TFH 5/21 | Foreclosure Workshop #33: Nationstar Mortgage LLC v. Akepa Properties LLC — When Is a Foreclosing Plaintiff’s Lack of Standing Jurisdictional, resulting in Dismissal?
———————

For nearly a decade following the mortgage crisis of 2008, both federal and state courts with few exceptions until very recently have completely ignored defects in a foreclosing plaintiff’s “standing,” that is, its actual ownership of defendant borrower’s promissory note.

Even to this day, in California nonjudicial and judicial foreclosure enforcement litigation, lack of such standing is no defense.

Despite borrowers’ early pleas to “show me the note,” courts generally have similarly blocked borrowers from using any lack of standing defense, especially for example in securitized trust foreclosures, ruling that borrowers are not third-party beneficiaries of pooling and servicing trust agreements and therefore “lack standing to attack standing.”

It continues to remain puzzling how courts can enter foreclosure decrees and throw borrowers and their families out of their homes in summary judgment proceedings and later in effect forfeit equity in their homes through forced auction sales where foreclosing plaintiffs have not shown that they even own the mortgage loan or especially where there are genuine issues of material fact in dispute whether they in fact do.

Only recently have a dozen or so state appellate courts held that borrowers do have standing to challenge a foreclosing plaintiff’s standing, specifically its ownership of the borrower’s promissory note at the time that a foreclosure complaint is filed, but those States are still in the minority.

But even in those states where borrowers now have that right, it is still unclear when that defense can be raised, and when it is considered jurisdictional, and what controlling evidentiary standards are applicable.

Can that defense be raised and how, for instance, during a foreclosure case, after a summary judgment is granted, prior to an action sale, on appeal, and/or as a collateral attack on a past foreclosure judgment?

And what effect does the doctrine of res judicata have on the defense of lack of standing? And the defense of lack of indispensable party? And the defense of lack of real party in interest? And the federal Fair Debt Collection Practices Act?

Moreover, who has the burden of proof regarding such lack of standing and how is that proven or disproved?

In this Sunday’s show, we will explore such related issues and explain what is actually happening in those States whose appellate courts have allowed such standing objections and how that doctrine still is being artificially limited if not completely ignored by trial courts even in those States.

We will also explain how once again the American legal system is handicapped in this area as well by The Rule Ritual and the penchant to look for problems for our solutions rather than solutions for our problems as discussed on prior shows.

We will also explore, time permitting, ways in which the defense of lack of standing might alternatively be more effectively presented to courts in other defense formats.

~

.
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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The Foreclosure Hour 12

 

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Lima v. DEUTSCHE BANK NATIONAL TRUST COMPANY, Court of Appeals, 9th Circuit |   violated Hawaii Revised Statutes (HRS) § 480-2, which prohibits “unfair or deceptive acts or practices in the conduct of any trade or commerce.”

Lima v. DEUTSCHE BANK NATIONAL TRUST COMPANY, Court of Appeals, 9th Circuit | violated Hawaii Revised Statutes (HRS) § 480-2, which prohibits “unfair or deceptive acts or practices in the conduct of any trade or commerce.”

 

LIONEL LIMA, Jr.; BARBARA-ANN DELIZO-LIMA; CALVIN JON KIRBY III, individually and on behalf if all those similarly situated, Plaintiffs-Appellants,
v.
DEUTSCHE BANK NATIONAL TRUST COMPANY; THE LAW OFFICE OF DAVID B. ROSEN; DAVID B. ROSEN, Defendants-Appellees.
EVELYN JANE GIBO, individually and on behalf of all others similarly situated, Plaintiff-Appellant,
v.
U.S. BANK N.A.; THE LAW OFFICE OF DAVID B. ROSEN; DAVID B. ROSEN, Defendants-Appellees.

Nos. 13-16091, 13-16092.
United States Court of Appeals, Ninth Circuit.
Argued Submitted October 16, 2015 Honolulu, Hawaii.
Filed May 11, 2017.
Appeal from the United States District Court for the District of Hawaii; D.C. Nos. 1:12-cv-00509-SOM-RLP, 1:12-cv-00514-SOM-RLP, Susan Oki Mollway, District Judge, Presiding

Before: O’SCANNLAIN, TALLMAN, and M. SMITH, Circuit Judges.

NOT FOR PUBLICATION

MEMORANDUM[*]

In these consolidated appeals, plaintiffs Lionel Lima, Jr., Barbara-Ann Delizo-Lima, Calvin Jon Kirby II, and Evelyn Jane Gibo (collectively, Plaintiffs) contend that defendants Deutsche Bank National Trust Company (Deutsche), U.S. Bank N.A. (U.S. Bank), and David B. Rosen and The Law Office of David B. Rosen (collectively, Rosen) violated Hawaii Revised Statutes (HRS) § 480-2, which prohibits “unfair or deceptive acts or practices in the conduct of any trade or commerce.” The allegedly offending practices were undertaken in connection with nonjudicial foreclosure sales of Plaintiffs’ homes wherein Deutsche and U.S. Bank were the mortgagees. Plaintiffs allege that the defendants engaged in the practice of (1) delivering limited warranty deeds to third-party auction purchasers, despite advertising that all auction purchasers would receive title through less valuable quitclaim deeds; and (2) postponing foreclosure sales, and thereafter holding such sales on unpublished dates, particularly when Rosen was involved in executing the sales.

Three issues raised in these appeals are identical to those raised in Bald v. Wells Fargo Bank, N.A., No. 13-16622, a memorandum concerning which was filed April 24, 2017: (1) whether Plaintiffs have standing as “consumers” pursuant to HRS § 480-2; (2) whether defendants’ practices of advertising sale by quitclaim deeds, and orally postponing auction sales, were unfair or deceptive within the meaning of HRS § 480-2; and (3) whether Plaintiffs sufficiently alleged injury and causation. For the reasons stated in the Bald memorandum disposition, we hold that (1) Plaintiffs have standing as consumers vis-à-vis Deutsche and U.S. Bank; and (2) Plaintiffs adequately pleaded that Deutsche’s and U.S. Bank’s advertising and postponement practices were unfair within the meaning of HRS § 480-2.

Two additional issues are raised in the appeals in this case: (1) whether Plaintiffs adequately alleged Deutsche’s and U.S. Bank’s liability; and (2) whether Plaintiffs stated a claim against Rosen. We hold that Plaintiffs adequately alleged Deutsche’s and U.S. Bank’s liability, but did not state a claim against Rosen.

I.

Deutsche argues that the Lima First Amended Complaint (FAC) fails to adequately plead that Deutsche was responsible for the acts allegedly constituting HRS § 480-2 violations, or the existence of an agency relationship between Deutsche and anyone else with regard to the alleged conduct. However, Plaintiffs adequately alleged direct involvement by Deutsche, including that it (1) was the mortgagee and the sole holder of the power of sale for the Lima property, (2) exercised the rights of a mortgagee through a nominee for the Kirby Property, (3) caused the notice of sale to be published for the Kirby and Lima properties, (4) postponed the sale for the Kirby property, (5) advertised the Lima sale by quitclaim deed, and (6) provided a limited warranty deed to the successful bidder in the Lima property sale. To the extent Deutsche utilized the services of others to perform these acts, it is plausible that Deutsche is liable for those acts under an agency theory. See Courbat v. Dahana Ranch, Inc., 141 P.3d 427, 436 n.10 (Haw. 2006) (noting, in an HRS § 480-2 case, “that an owner is responsible for the representations of his agent made within the scope of his agent’s selling authority”).

Similarly, U.S. Bank argues that Plaintiffs failed to allege that U.S. Bank itself carried out the complained-of acts. U.S. Bank argues that the foreclosure-related acts described in Gibo’s FAC were performed by loan servicers, not trustees for mortgage-backed securities trusts, such as U.S. Bank. U.S. Bank notes that the Gibo Mortgage stated that the “loan servicer” performs “mortgage loan servicing obligations under the Note,” and cites a treatise and cases observing that loan servicers handle foreclosures. U.S. Bank further argues that Mortgage Electronic Registration Systems, Inc. was the mortgagee and that lawyers performed some of the foreclosure-related acts.

However, the recorded Notice of Mortgagee’s Intention to Foreclose Under Power of Sale states that U.S. Bank is the mortgagee, and the Notice is signed by an officer of U.S. Bank. Similarly, the Mortgagee’s Affidavit of Foreclosure Sale Under Power of Sale lists U.S. Bank as the mortgagee, swears that the signatory is “duly authorized to represent or act on behalf of US BANK NATIONAL ASSOCIATION AS TRUSTEE hereinafter `foreclosing mortgagee,'” and details the acts taken in connection with the foreclosure, including the postponement of the auction and the eventual sale. Accordingly, U.S. Bank’s argument that it was not responsible for the alleged acts is without merit. To the extent that others performed the acts, the FAC adequately alleges U.S. Bank’s liability under an agency theory. See Courbat, 141 P.3d at 436 n.10.

II.

Plaintiffs ague that they adequately stated an HRS § 480-2 claim against Rosen due to his involvement in the foreclosure sales. Recently, the Hawaii Supreme Court in Hungate v. Law Office of David B. Rosen, 391 P.3d 1, 20 (Haw. 2017), held that the state circuit court properly dismissed the plaintiff’s § 480-2 claim against Rosen, who acted as Deutsche’s attorney in a nonjudicial foreclosure sale of the plaintiff’s home where Deutsche was mortgagee. The Court concluded that allowing the plaintiff to sue Rosen, the attorney for the plaintiff’s opponent, for alleged § 480-2 violations carried the potential that an attorney’s representation of his client would be compromised by fear of suit from a party opponent. Id. at 19-20; see also Buscher v. Boning, 159 P.3d 814, 832 (Haw. 2007) (noting that an attorney generally owes no duty to his clients’ adversaries). The same logic applies here, where the claims brought against Rosen were in connection with Rosen’s work as an attorney for Plaintiffs’ opponents in conducting nonjudicial foreclosures of Plaintiffs’ homes. Accordingly, we affirm the dismissal of all claims against Rosen.

For the foregoing reasons, we REVERSE the district court’s order granting the motion to dismiss with respect to claims against Deutsche and U.S. Bank, and AFFIRM dismissal with respect to claims against Rosen. We REMAND for proceedings consistent with this memorandum. Each party shall bear its own costs on appeal.

[*] This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3.

Down Load PDF of This Case

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UNGA v JPMORGAN CHASE | HAWAII ICA – Vacate the Order Granting Plaintiff’s Motion for Summary Judgment … Dismiss for Lack of Jurisdiction

UNGA v JPMORGAN CHASE | HAWAII ICA – Vacate the Order Granting Plaintiff’s Motion for Summary Judgment … Dismiss for Lack of Jurisdiction

Congratulations to gdubin@dubinlaw.net

 

028550503 (1) by DinSFLA on Scribd

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Steve Mnuchin’s Former Financial Freedom Settles Alleged Liability for Servicing of Federally Insured Reverse Mortgage Loans for $89 Million

Steve Mnuchin’s Former Financial Freedom Settles Alleged Liability for Servicing of Federally Insured Reverse Mortgage Loans for $89 Million

FOR IMMEDIATE RELEASE
Tuesday, May 16, 2017

Financial Freedom Settles Alleged Liability for Servicing of Federally Insured Reverse Mortgage Loans for $89 Million

Financial Freedom has agreed to a settlement with the United States of more than $89 million to resolve allegations that it violated the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) in connection with its participation in a federally insured Home Equity Conversion Mortgages (HECM) or ‘reverse mortgage’ program, the Justice Department announced today. Financial Freedom is headquartered in Austin, Texas.

“The Department of Justice is committed to ensuring that those who participate in federal mortgage insurance programs comply with requirements essential to the success of its programs,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Among these requirements are the deadlines imposed by the Federal Housing Administration (FHA) on those who service government insured mortgages. Those deadlines are designed to protect the government’s collateral and stop the unnecessary loss of government funds and resources.”

Through ‘reverse mortgage’ loans, older people are able to access the equity in their homes by borrowing money against the equity they have built in their home. To encourage reverse mortgage loans, the FHA protects lenders from loss by providing mortgage insurance. Under FHA’s program, a loan becomes due and payable when the home is sold or vacant for more than 12 months or upon the death of the homeowner, whichever comes first. The lender is repaid the amount of the loan, including the costs of servicing the loan and any interest that accrues on lender expenses after a loan becomes due and payable. FHA will reimburse a lender that is unable to recoup the full amount of the loan. In order to claim recoupment, the servicer is required to meet a number of regulatory requirements and deadlines.

The United States alleged that Financial Freedom sought to obtain insurance payments for interest from FHA despite failing to properly disclose on the insurance claim forms it filed with the agency that the mortgagee was not eligible for such interest payments because it had failed to meet various deadlines relating to appraisal of the property, submission of claims to HUD, and pursuit of foreclosure proceedings. As a result, from March 31, 2011 to August 31, 2016, the mortgagees on the relevant reverse mortgage loans serviced by Financial Freedom allegedly obtained additional interest that they were not entitled to receive.

The United States’ investigation arose from a declaration filed pursuant to FIRREA by Sandra Jolley, a consultant for the estates of borrowers who took out HECM loans. Under FIRREA, whistleblowers may file declarations concerning alleged violations of the statute and may obtain a share of the recovery. Ms. Jolley will receive $1.6 million from the settlement.

“This settlement represents our office’s continued commitment to protecting the financial solvency of vital financial programs designed to benefit America’s seniors,” said Acting U.S. Attorney Stephen Muldrow of the Middle District of Florida. “HECM servicers must be held accountable for failing to adhere to FHA requirements that are designed to ensure the continued viability of the HECM program. We are pleased that Financial Freedom agreed to accept financial responsibility for these failures.”

“Today’s settlement agreement resolves allegations that this lender failed to comply with FHA servicing requirements and sought to receive financial gains that it was not legally entitled to,” said HUD Inspector General David A. Montoya. “These actions today demonstrate our continued commitment to address and halt business practices that pose a serious risk to the FHA program and the public’s trust in HUD administered programs.”

The settlement was the result of the coordinated efforts of the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Middle District of Florida, and the Department of Housing and Urban Development’s Office of Inspector General and Office of General Counsel. The case was handled by Assistant U.S. Attorney Kyle Cohen, along with Trial Attorneys Sean O’Donnell and Christopher Reimer of the Department of Justice Civil Frauds Section.

The claims resolved by the settlement are allegations only, and there has been no determination of liability.

Topic(s):
False Claims Act
Financial Fraud
image: Scott-Applewhite-AP
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Philadelphia sues Wells Fargo, alleges predatory lending

Philadelphia sues Wells Fargo, alleges predatory lending

Reuters-

The City of Philadelphia sued Wells Fargo & Co on Monday, accusing the largest U.S. mortgage lender of predatory lending, which violates the federal Fair Housing Act.

The lawsuit came two weeks after the U.S. Supreme Court, in a case also involving Wells Fargo, said cities can sue lenders for alleged discrimination that causes many defaults by minority borrowers, and harms cities through lower property tax revenue and increased costs to combat crime and blight.

Philadelphia’s complaint adds to legal woes afflicting San Francisco-based Wells Fargo, which has since September been beset by a scandal over its employees’ creation of unauthorized customer accounts to meet sales goals.

[REUTERS]

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Posted in STOP FORECLOSURE FRAUD2 Comments

RBS CEO sees potential to settle major U.S. mortgage probe

RBS CEO sees potential to settle major U.S. mortgage probe

Reuters-

Royal Bank of Scotland (RBS.L) Chief Executive Ross McEwan said the bank is in talks to settle one of the two major U.S. investigations into allegations it mis-sold mortgage-backed securities that it needs to overcome before the British government can sell its shares in the bailed-out bank.

McEwan has been trying to clean up RBS’s balance sheet and end a string legal cases against the bank. This would open the way for the government to sell its more than 70 percent stake in RBS held since it had to step in with a more than 45 billion pound ($57.83 billion) bailout during the financial crisis.

The CEO said the bank could settle a multibillion-dollar lawsuit by the U.S. Federal Housing Finance Agency separately from an investigation by the Department of Justice (DOJ), which has stalled because of changes in the U.S. government since the election of President Donald Trump.

“They are quite separate … and we are in discussions with them and we are not in discussions with the DOJ other than them still seeking information,” McEwan told reporters at bank’s annual shareholder meeting in Edinburgh.

[REUTERS]

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TFH 5/14 | Rebroadcast of “Ten Hidden Secrets of Securitized Trusts They Desperately Do Not Want You or Your Judge To Know.”

TFH 5/14 | Rebroadcast of “Ten Hidden Secrets of Securitized Trusts They Desperately Do Not Want You or Your Judge To Know.”

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

.

.

Sunday –  May 14

Rebroadcast of “Ten Hidden Secrets of Securitized Trusts They Desperately Do Not Want You or Your Judge To Know.”

———————

The principal instrument for the carrying out of the incredibly large scale mortgage fraud in the United States in recent decades has been the appearance of virtually invisible “Securitized Trusts” parading mysteriously as plaintiffs in foreclosure cases.

More than any other weakness in the judicial handling of foreclosure cases throughout the United States has been the complete ignorance among foreclose judges as to what these relatively new entities coming before them really are.

They have no real office locations or office signs, existing only in cyberspace and court docket sheets.

It is virtually impossible to even find anyone claiming to be their Trustees or their managers. They moreover have no employees.

You cannot even locate any real telephone numbers or email addresses for any of them.

Instead, they operate through others variously called loan servicers, MERS signing officers, foreclosure attorneys, and declarants — shielding from view intentionally what in all fairness can be called organized crime on steroids.

Several state and less frequently some federal judges — finally — are asking who or what these Securitized Trusts really are.

Are they actually in court cases the real parties in interest?

Do they have any legal capacity to sue for foreclosure?

Do they actually own the notes and mortgages as they claim?

What do they really do with the foreclosure monies and/or properties awarded to them?

For this reason, it seems worthwhile to rebroadcast at this critical time our June 19, 2016 show, first exposing the ten secrets of securitized trusts, especially for all of our new listeners.

Please join us this Sunday and help us educate the American Judiciary as it begins inevitably to awaken, however slowly, to the corrupt realities and elaborate pretense of Securitized Trusts.

One could be coming to your home shortly.

~

.
Host: Gary Dubin Co-Host: John Waihee

.

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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Wall Street’s obscene spending confessions: From a $150K backyard golf course to a $100K ‘sin tax’

Wall Street’s obscene spending confessions: From a $150K backyard golf course to a $100K ‘sin tax’

CNBC-

“What’s the point of having f— you money if you never say f— you?” – Bobby Axelrod (Damien Lewis) in the Showtime series “Billions”

F— you money is a common expression on Wall Street. You work hard to earn that obscene paycheck so f— you, I’m going to spend hard, too. Bobby Axelrod’s No. 2 at Axe Capital, “Wags,” is famous for one-liners about indulgence like “Yo, b—-es! Saddle up. Body shots and sushi at the strip joint, on me.”

Real-life hedgies like Wags know f— you money is offensive and they don’t care. Spend it if you got it.

“Why not?” a portfolio manager responded when asked why he spends so extravagantly. “It’s simple math, I make a lot so I spend a lot. If the AmEx bill comes in under $20K, I wonder what I did wrong that month.”

[CNBC]

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Regulator warns Fannie, Freddie may need to draw on Treasury funds next year

Regulator warns Fannie, Freddie may need to draw on Treasury funds next year

Washington Examiner-

Fannie Mae and Freddie Mac’s government overseer warned Congress Thursday that the two bailed-out mortgage giants face the possibility of having to draw billions of dollars from the Treasury Department by next year, a risk that could roil markets if that borrowing is seen as another bailout.

Mel Watt, the director of the Federal Housing Finance Agency, told a panel of senators Thursday that the government-sponsored enterprises will see their capital buffer reduced to zero under law by the start of next year, leaving the companies at the mercy of markets. Any losses would force them to draw on their line of credit at the Treasury that was created when they were bailed out nearly a decade ago, creating the perception of a taxpayer bailout even if not the reality.

“We reasonably foresee that this could erode investor confidence” in the $5 trillion market of mortgage securities backed by the two companies, Watt warned the Senate Banking Committee. “This could stifle liquidity in the mortgage-backed securities market and could increase the cost of mortgage credit for borrowers.”

Watt told the senators not to be surprised by any steps he might take to prevent that outcome, such as suspending dividend payments from Fannie and Freddie to the Treasury.

[WASHINGTON EXAMINER]

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ALERT | Brooklyn Court Quietly Moves to Toss Out Hundreds of Foreclosure Cases

ALERT | Brooklyn Court Quietly Moves to Toss Out Hundreds of Foreclosure Cases

DNAinfo NY-

Kings County Supreme Court is about to quietly dismiss thousands of foreclosure cases on Tuesday — in what lawyers say will deal a severe blow to homeowners with pending cases.

The court said it planned to dismiss all cases filed before Jan. 1, 2016 that have seen no court activity after Sept. 30, 2016.  It quietly published a notice of the administrative dismissal in the New York Law Journal on Thursday, April 27, giving parties until Monday, May 1 to contact the court to keep their cases alive.

Foreclosure defense lawyers say that while it might seem like a good thing for foreclosure cases to be dismissed, it would in fact be extremely negative for homeowners battling lenders. For one, all of the motions a homeowner had filed taking issue with the lenders’ claims would be lost. In addition, many of the delays could be due to the lenders dragging their feet, lawyers say, but dismissing the case without fault to either side would allow the lenders to relaunch their case with a blank slate.

[DNAinfo NY]

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What’s really going on between Goldman Sachs and the federal government?

What’s really going on between Goldman Sachs and the federal government?

NY Post-

Just for laughs, let’s start out with this idea — that Goldman Sachs acts as an agent of the federal government. Let’s see if I can persuade you.

For starters, it wasn’t too long ago that then-President-elect Donald Trump vowed to drain the swamp — before he went ahead and hired six Goldman executives to clog up the drains.

Last week, The Post’s Kevin Dugan broke the fascinating story that the Justice Department’s investigation into possible rigging of US Treasury Department securities offerings was focusing on Goldman — which, sources told Dugan, had won an astonishing percentage of government bond auctions from 2007 to 2011.

[NY POST]

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Reverse Mortgage Solutions, Inc. v. Estate of Ruby Hayes | Florida Supreme Court gift to Banksters … BACKFIRES. Statute of Limitations ruled VALID with REVERSE MORTGAGES. Death do you proud.

Reverse Mortgage Solutions, Inc. v. Estate of Ruby Hayes | Florida Supreme Court gift to Banksters … BACKFIRES. Statute of Limitations ruled VALID with REVERSE MORTGAGES. Death do you proud.

Lexology & HOME EQUITY THEFT REPORTER

The Circuit Court of the Eleventh Judicial Circuit in and for Miami-Dade County, Florida recently dismissed a second foreclosure complaint, filed more than five years after the initial complaint and alleging the same incident of default, as barred by the statute of limitations.

In so ruling, the Court also held that the borrower’s daughter and sole beneficiary to the property encumbered by a reverse mortgage had standing to assert the statute of limitations defense.

A copy of the opinion in Reverse Mortgage Solutions, Inc. v. Estate of Ruby Hayes is available at: Link to Opinion.

In October 2007, a borrower entered into a “home equity conversion mortgage,” commonly known as a “reverse mortgage.” After the borrower died in May 2008, 100 percent of her homestead property was devised to her daughter. The then-mortgagee sued to foreclose in July 2009, alleging that the borrower’s 2008 death triggered the acceleration clause in the mortgage. The 2009 foreclosure complaint was dismissed in 2013.

[LEXOLOGY]

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Nunez v. JP Morgan Chase Bank, NA, Dist. Court, MD Florida – Court finds that Nunez has presented sufficient evidence on which a reasonable jury could find that Chase violated RESPA and that she was damaged as a result

Nunez v. JP Morgan Chase Bank, NA, Dist. Court, MD Florida – Court finds that Nunez has presented sufficient evidence on which a reasonable jury could find that Chase violated RESPA and that she was damaged as a result

 

ARELIS NUNEZ, Plaintiff,
v.
J.P. MORGAN CHASE BANK, N.A., Defendant.

Case No. 6:14-cv-1485-Orl-31GJK.
United States District Court, M.D. Florida, Orlando Division.
May 1, 2017.
Arelis Nunez, Plaintiff, represented by Jeffrey Neil Golant, The Law Offices of Jeffrey N. Golant, P.A..

Arelis Nunez, Plaintiff, represented by Sean Xavier Foo, Law Offices of Jeffrey N. Golant, P.A., Ashley Renee Eagle, The Law Offices of Jeffrey N. Golant, P.A. & Kimberly Laura Sanchez, Community Legal Services of Mid-Florida, Inc..

J.P. Morgan Chase Bank, N.A., Defendant, represented by John Charles Matthews, Wargo & French, LLP, Rebecca A. Rodriguez, GrayRobinson, PA, Roland E. Schwartz, GrayRobinson, PA & Thomas H. Loffredo, GrayRobinson, PA.

ORDER

GREGORY A. PRESNELL, District Judge.

This matter comes before the Court, without hearing, on the Motion for Partial Summary Judgment (Doc. 86) filed by the Plaintiff, Arelis Nunez; the Response in Opposition (Doc. 92) filed by the Defendant, J.P. Morgan Chase Bank, N.A. (“Chase”); Nunez’s Reply thereto (Doc. 97); Chase’s Motion for Summary Judgment (Doc. 87); Nunez’s Response in Opposition (Doc. 93); and Chase’s Reply thereto (Doc. 98).

I. Background

A. Summary of the Facts

On June 29, 2006, Nunez financed the purchase of her home in Palm Bay, Florida with a mortgage in the amount of $156,000. (Doc. 24 ¶ 6.) Chase serviced Nunez’s mortgage up until September 16, 2014. (Id. ¶ 10.) Sometime in 2010, Nunez fell behind on her mortgage payments, and Chase began foreclosure proceedings. (Id. ¶ 12.) The state court entered a Final Summary Judgment of Mortgage Foreclosure on October 17, 2012, and set the property for auction on December 19, 2012. (Doc. 75-1.) In the meantime, Nunez applied for a mortgage modification. (Doc. 75-2 at 9.) While Chase reviewed Nunez’s application, it filed a motion to cancel the foreclosure sale. (Id.) The state court granted Chase’s motion on December 18, 2012, and postponed the foreclosure sale until March 20, 2013. (Doc. 75-3.)

In January 2013, Nunez and Chase entered into a trial modification agreement that required Nunez to make three trial payments. (Doc. 86-1 at 18:7-14.) Nunez made her first payment on February 18, 2013. (Doc. 86-1 at 19:21-20:3.) Despite the agreement and its receipt of Nunez’s first payment, Chase did not timely move to cancel the foreclosure sale and, instead, moved only after the sale had already been completed. (Doc. 75-4.) Predictably, the state court denied Chase’s motion. (Doc. 24-2 at 2.) Even so, Nunez submitted her next two trial payments on time, and on May 29, 2013, she executed the “permanent mortgage modification agreement” sent to her by Chase. (Doc. 86-1 at 19:21-20:3; Doc. 24-5 at 19; 24-1 at 5.)

On November 26, 2013, Chase filed its first motion to vacate the foreclosure sale. (Doc. 75-5.) The state court denied the motion on December 9, 2013, and Chase received a certificate of title to the property the following month. (Doc. 75-6.)

1. Nunez’s First Notice of Error Letter

On March 3, 2014, Nunez sent her first notice of error to Chase (“First NOE”). (Doc. 24-1.) The First NOE asserted that Chase made two errors: (1) that it failed to timely and properly advise the state court of the trial modification agreement, potentially avoiding foreclosure, and (2) that it erroneously returned payments that Nunez submitted under the modified loan agreement. (Doc. 24-1 at 2.) Nunez concluded her letter demanding that Chase investigate the alleged errors and take corrective action in accordance with the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601-17 (“RESPA”), and its implementing regulation, 12 C.F.R. § 1024 (“Regulation X”).

Chase responded to the First NOE on March 13, 2014. (Doc. 24-2.) Chase began its response with the conclusion that there was no error. Despite its conclusion, Chase all but admitted that it failed to timely move to cancel or postpone the foreclosure sale. Specifically, Chase said:

On January 20, 2013, we again asked our foreclosure attorneys to request a postponement of the March 20, 2013, sale. We received confirmation on February 21, 2013, that the sale was still on hold.

On March 15, 2013, our foreclosure attorneys advised us that Brevard County required that a hearing to cancel the foreclosure sale must be scheduled 10 days prior to the scheduled sale. As that date had passed, we would have to proceed with the sale.

(Id. at 1-2.)

As to the alleged payments rejected in error, Chase explained that, when it received Nunez’s payments, “they could not be applied to her loan because the foreclosure sale had taken place.” (Id. at 2.) Thus, any received funds “were placed in a suspense fund” pending the outcome of Chase’s attempt to vacate the sale. (Id.) Once the state court denied Chase’s motion to vacate, Chase cancelled Nunez’s modification and applied her payments “to outstanding attorney’s fees and costs.” (Id.) And any payments Chase received after its rescission action failed were simply returned as insufficient. Chase concluded its response by notifying Nunez that it had begun another rescission effort and, if successful, it would review Nunez’s mortgage for modification a second time. (Id.)

Following Chase’s response, Nunez joined Chase in its April 4, 2014, motion to vacate the foreclosure sale and dismiss the action.[1] (Doc. 75-9.) The state court granted the motion on April 21, 2014, and reversed the sale. (Doc. 75-10.) Meanwhile, Nunez had been sending the payments required under the purportedly-cancelled loan modification to her attorney to be held in escrow. (Doc. 94 ¶ 13.)[2]

On June 4, 2014, Chase contacted Nunez’s attorney and informed her that the modification agreement could be reinstated, but it needed $3,450 to bring the loan current. Nunez’s attorney requested a letter stating the exact amount required by Chase, which she received on June 25, 2014.

Nunez’s attorney sent the required payment from the funds held for Nunez in escrow, and Chase received the payment on July 3, 2014. (Doc. 24-6 at 2.) But two weeks later, Chase sent two letters to Nunez stating its intent to accelerate the mortgage and begin foreclosure proceedings yet again. (Doc. 24-4 at 1, 5.) The letters also stated that Chase was holding over $5,000 of Nunez’s payments in a suspense account. (Id.) Chase’s stated reason for the acceleration, threatened foreclosure, and suspension of funds was its non-receipt of Nunez’s payments since July 2009. (Id.) Following these letters, Nunez, again, began sending her mortgage payments to her attorney to be held in escrow. (Doc. 94 ¶ 17.)

On August 15, 2014, Chase sent another letter that threatened acceleration and foreclosure and stated that the total payments held in suspense was now nearly $7,000. (Doc. 24-5 at 4.) In spite of these letters, Chase countersigned the loan modification agreement on August 18, 2014— more than one year after Nunez affixed her signature. (Doc. 24-5 at 11; Doc. 86-1 at 42:7-19.)

2. Nunez’s Second Notice of Error Letter

On September 8, 2014, Nunez sent her second notice of error letter (“Second NOE”) to Chase. Like the First NOE, the Second NOE identified two purported errors: (1) the confinement of Nunez’s payments to a suspense account, and (2) the continued failure to honor the loan modification agreement, as evidenced by Chase’s collection efforts. (Doc. 24-5 at 2.) Two days later, on September 10, 2014, Nunez filed the current action, and on September 16, 2014, Chase transferred the servicing of the loan to Bayview Loan Servicing, LLC (“Bayview”), who serviced the loan in conjunction with Manufacturers and Traders Trust Company (“M&T”). (Doc. 24-6 at 3.)

Chase sent its response to the Second NOE on October 27, 2014. (Id. at 1.) Chase, again, stated that it found no error in the servicing of Nunez’s loan and began with a summary of its findings:

• We responded timely to your previous Notice of Error.

• We applied the modification terms of the loan appropriately.

• Funds on the account listed on our August 15, 2014, letter were momentarily held in suspense during the process of correctly applying the terms of the modification to [Nunez’s] account.

• Corporate advances listing in our August 15, 2014, letter were listed on the account until they were resolved through the application of the terms of the loan modification.

(Id.) Following this list, Chase explained that the mortgage modification process was delayed due to the need to rescind the foreclosure sale. Specifically, Chase stated that, while rescission of the foreclosure sale was completed on May 15, 2014, Chase did not reverse the cancellation of the mortgage modification plan until August 18, 2014. Further, the loan updates were not completed until August 22, 2014. (Id.) Thus, Chase explained that Nunez’s payments—including the $3,450 sent by her attorney—were held in suspense until it completed loan updates and reinstated the mortgage modification. (Id. at 2.) Lacking, however, is any mention of Chase’s collection efforts.

3. Bayview and M&T

Not even a month after the servicing of her mortgage was transferred, Nunez began receiving debt collection letters from both Bayview and M&T. (Doc. 24-7 at 4, 18.) And, on October 8, 2014, Nunez sent a notice of error to Bayview detailing the correspondence that Nunez had with Chase and providing that, given Chase’s alleged, repeated misapplication of her funds, she was reluctant to remit payment until she could get assurances that her loan modification was in place and would be honored. (Id. at 2.) Neither Bayview nor M&T ever responded, and on February 18, 2016, while the current case was still pending, Bayview filed a foreclosure action against Nunez (Doc. 93-1).

B. Procedural History

Nunez filed her original Complaint (Doc. 1) with Chase as the only Defendant on September 10, 2014. Her claims were two-fold: that Chase failed to comply with RESPA when it responded to two notices of error sent by Nunez, and that Chase’s failure to execute its duties under RESPA was negligence per se. On December 29, 2014, Nunez filed her Amended Complaint (Doc. 24) adding a third count and additional RESPA claim against Bayview and M&T.

Chase filed a Motion to Dismiss (Doc. 31) on January 12, 2015, and Bayview filed a Motion to Dismiss (Doc. 34) on January 26, 2015. Both were granted by the Court on April 13, 2015. (Doc. 44.)

In granting said motions, the Court reasoned that Chase had complied with the letter and spirit of RESPA despite the apparent contradiction between Chase’s conclusions that no error occurred and the details of Nunez’s loan history. Essentially, the Court determined that, under the circumstances, Chase did the best it could to choose between RESPA’s binary response options: either state that it had erred and that the error was fixed, or state that there had been no error and explain why. Specifically, the Court found that a fair “assessment of the situation was that Chase reviewed the account, concluded that there was a problem (namely that the foreclosure proceeded when it should not have) and it was working to fix the problem.” (Doc. 44 at 7.) The Eleventh Circuit disagreed.

Upon review, the Eleventh Circuit concluded that the Court failed to recognize another set of Nunez’s allegations and construed facts favorably to Chase, rather than Nunez. Specifically, the Eleventh Circuit found that, “Throughout this case, Nunez has clearly alleged that Chase failed to properly implement and honor the loan-modification agreement, and has attached documents that support this claim.” Nunez v. J.P. Morgan Chase Bank, N.A., 648 F. App’x 905, 909 (11th Cir. 2016). The Eleventh Circuit continued:

Viewed in the light most favorable to her, Nunez has alleged that her home was wrongly foreclosed on despite a valid loan-modification agreement, simply because Chase failed to timely request postponement of the foreclosure. Chase later purported to cancel its loan-modification agreement with her because it could not rescind the wrongful foreclosure. Even though it eventually did rescind the foreclosure and accept payment from Nunez to renew the loan-modification agreement, Chase continued to shower Nunez with letters claiming she was in default and threatening another foreclosure. When she repeatedly notified Chase that these errors had occurred, Chase flatly denied any error. Nunez’s allegations—each supported by attachments—are not reflected in the district court’s conclusions. Her claim that Chase failed to conduct a reasonable investigation into or correct its errors as required by RESPA rises above the level of speculation.

Id. at 910 (citation omitted). Thus, on April 22, 2016, the Eleventh Circuit reversed the Court’s decision to grant Chase and Bayview’s motions, and remanded for further proceedings. Id.

Shortly thereafter, both M&T and Bayview settled with Nunez (Doc. 73), and Bayview voluntarily dismissed its foreclosure action on July 29, 2016. (Doc. 93-2.)

II. Standard of Review

A party is entitled to summary judgment when it can show that there is no genuine issue as to any material fact. Fed. R. Civ. P. 56(c); Beal v. Paramount Pictures Corp., 20 F.3d 454, 458 (11th Cir. 1994). Which facts are material depends on the substantive law applicable to the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The moving party bears the burden of showing that no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991); Watson v. Adecco Employment Servs., Inc., 252 F. Supp. 2d 1347, 1351-52 (M.D. Fla. 2003). In determining whether the moving party has satisfied its burden, the court considers all inferences drawn from the underlying facts in a light most favorable to the party opposing the motion, and resolves all reasonable doubts against the moving party. Anderson, 477 U.S. at 255.

When a party moving for summary judgment points out an absence of evidence on a dispositive issue for which the non-moving party bears the burden of proof at trial, the non-moving party must “go beyond the pleadings and by [its] own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial.” Celotex Corp., 477 U.S. at 324-25 (internal quotations and citations omitted). Thereafter, summary judgment is mandated against the non-moving party who fails to make a showing sufficient to establish a genuine issue of fact for trial. Id. at 322, 324-25; Watson, 252 F. Supp. 2d at 1352. The party opposing a motion for summary judgment must rely on more than conclusory statements or allegations unsupported by facts. Evers v. Gen. Motors Corp., 770 F.2d 984, 986 (11th Cir. 1985) (“conclusory allegations without specific supporting facts have no probative value”) (citations omitted); Broadway v. City of Montgomery, Ala., 530 F.2d 657, 660 (5th Cir. 1976).

III. RESPA and Regulation X

A. Legal Standard

“RESPA is a consumer protection statute that regulates the real estate settlement process.” Hardy v. Regions Mortg., Inc., 449 F.3d 1357, 1359 (11th Cir. 2006). “RESPA prescribes certain actions to be followed by entities or persons responsible for servicing federally related loans, including responding to borrower inquiries.” McLean v. GMAC Morg., Corp., 398 Fed. App’x 467, 471 (11th Cir. 2010). One such inquiry is a qualified written request.[3] Upon receipt of a qualified written request, a servicer must “respond by fixing the error, crediting the borrower’s account, and notifying the borrower; or by concluding that there is no error based on an investigation and then explaining that conclusion in writing to the borrower.” Renfroe v. Nationstar Mortg., LLC, 822 F.3d 1241, 1244 (11th Cir. 2016) (citing 12 U.S.C. § 2605(e)(2); 12 C.F.R. § 1024.35(e)(1)(i)).

On January 10, 2014, new regulations implementing RESPA were promulgated by the Consumer Financial Protection Bureau pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”). PL 111-203, July 21, 2010, 124 Stat. 1376 (2010); 12 C.F.R. § 1024. This new regulation, Regulation X, clarified the duties owed by servicers of federally-related mortgages to borrowers after receiving a qualified written request or notice of error. Pertinent to the current action,

a servicer must respond to a notice of error by either:

(A) Correcting the error or errors identified by the borrower and providing the borrower with a written notification of the correction, the effective date of the correction, and contact information, including a telephone number, for further assistance; or

(B) Conducting a reasonable investigation and providing the borrower with a written notification that includes a statement that the servicer has determined that no error occurred, a statement of the reason or reasons for this determination, a statement of the borrower’s right to request documents relied upon by the servicer in reaching its determination, information regarding how the borrower can request such documents, and contact information, including a telephone number, for further assistance.

12 C.F.R. § 1024.35(e)(1)(i).

Thus, a servicer responding to a notice of error under 12 C.F.R. § 1024.35(e)(1)(i)(B) must fulfill two requirements. It must (1) conduct a reasonable investigation, and (2) provide a written response stating that it found no error, the reasons for its conclusion, the documentation it relied upon to reach that conclusion, and other specific disclosures. Id.

B. Analysis

As an initial matter, much of the evidence before the Court is the same as that which was before the Court when it granted Chase’s Motion to Dismiss and the Eleventh Circuit’s reversal thereof. Namely, Nunez’s First and Second NOEs, Chase’s responses, the loan modification agreement, collection letters sent from Chase to Nunez, and the notice of error letter Nunez sent to Bayview. (Doc. 24-1, 24-2, 24-3, 24-4, 24-5, 24-6, 24-7.) Thus, the Court reviews this evidence in light of the Eleventh Circuit’s decision.

Chase presents two arguments in its motion (Doc. 87). First, Chase argues that the undisputed facts show that it fully complied with RESPA and Regulation X—specifically, 12 C.F.R. § 1024.35(e)(1)(i)(B). (Id. at 16.) Second, Chase argues that Nunez has failed to provide sufficient evidence of damages. In her motion (Doc. 86), Nunez argues that Chase did not provide the “reason or reasons” that it found no error in its second RESPA response, and, therefore, violated RESPA as a matter of law.

1. Were Chase’s Investigations Reasonable?

As detailed above, Nunez sent two notices of error to Chase; one on March 3, 2014, and another on September 8, 2014. It is undisputed that both of these notices triggered Chase’s obligations under RESPA and Regulation X. Chase argues that the deposition testimony of its corporate representative and the detail of its responses show that Chase satisfied all of its obligations. However, it is clear that there remains a genuine question of fact as to whether Chase’s investigation was reasonable—especially in light of the Eleventh Circuit’s decision. Nunez v. J.P. Morgan Chase Bank, N.A., 648 F. App’x 905 (11th Cir. 2016).

Chase’s corporate representative testified that Chase “would have” investigated these notices of error by reviewing the pay history and notes in its servicing system, as well as court filings in the foreclosure proceeding. (Doc. 86-2 at 40-41.) She also testified that she knew that Chase followed its typical investigatory procedure in this case “[b]ecause of the detail in the responses date by date . . . responding to each of the specific complaints or questions.” (Id. at 41.) The Court agrees that the detail of Chase’s responses shows that it conducted an investigation into the alleged errors, but it does not necessarily follow that the investigation was reasonable.

Nunez’s First NOE raised two errors: (1) Chase’s alleged failure to notify the state court of the trial modification agreement, thus, failing to postpone the foreclosure sale, and (2) its rejection of payments that Nunez made under the trial modification agreement. Chase responded, concluding that there was no error and explained that it “requested that the foreclosure sale be postponed, but the judge did not approve [its] request.” (Doc. 24-2.) What Chase left out was that it only moved to postpone or cancel the sale after it had already taken place. (Doc. 75-4.)

Indeed, the record shows that Chase received Nunez’s first trial payment on February 18, 2013—over a month before the sale was to take place. Yet Chase waited until after the sale was completed to file its motion to postpone the sale.[4]Thus, Chase’s conclusion that no error occurred is contradicted by very court filings that Chase’s corporate representative testified would be relied upon to investigate Nunez’s claims. And such an incongruous conclusion is contrary to “transparency and facilitation of communication” which RESPA was enacted to promote. Bates v. JPMorgan Chase Bank, NA, 768 F.3d 1126, 1135 (11th Cir. 2014).

The Second NOE raised two errors: (1) the improper suspension of Nunez’s payments, and (2) the continued failure to honor the loan modification agreement, as indicated by Chase’s collection efforts. Chase again responded that no error occurred and then provided the timeline of mortgage modification and how it related to the foreclosure rescission action. Chase also explained why the funds were held in suspense. Apparently, the cancellation of the mortgage modification had to be reversed before Nunez’s payments could be applied. Therefore, the payments received were held in suspense until Chase completed the necessary entries on August 22, 2014.

But Chase never directly addressed how it was honoring the loan modification agreement despite its acceleration and warning letters. Instead, Chase explained that it received Nunez’s July 3, 2014, payment, but the modification process “was delayed while [Chase] reversed the plan cancellation.” (Doc. 24-6 at 2.) Presumably, Chase meant that the acceleration and foreclosure warnings were only sent because account entries had not yet been performed.[5] But such a presumption leads to a conclusion that the collection efforts were, in fact, erroneous—not to the conclusion that no error occurred.

Certainly, it is possible that Chase’s investigations were reasonable despite its contradictory conclusions. But a rational trier of fact might expect a reasonable conclusion from a reasonable investigation.

2. Did Chase’s Second Written Response Comply with RESPA?

Besides a reasonable investigation, 12 C.F.R. § 1024.35(e)(1)(i)(B) requires that servicers issue a written notification containing “a statement of the reason or reasons” for its determination that no error occurred.[6] Nunez argues that Chase’s second response violated RESPA as a matter of law because Chase did not provide the “reason or reasons” that it found no error. 12 C.F.R. § 1024.35(e)(1)(i)(B).

Nunez relies on the deposition testimony of Chase’s corporate representative for support. The particular portion is related to an acceleration and foreclosure letter dated September 11, 2014. (Doc. 86-2 at 23:20-24:8.) Namely,

Q. Was the September 11th, 2014 letter sent in error?

. . .

A. No, because the August 1st and September 1st payments were still due.

Q. How is threatening foreclosure in September consistent with honoring the loan modification that you contend became effective in late August? Can you explain that to me?

. . .

A. The loan modification was put in place in August, August 18th. However, the payment for August 1st and September 1st were still not paid. So the loan was delinquent again.

(Id. at 25:5-20.) In other words, Chase’s representative testified that the September 11, 2014, acceleration and foreclosure letter was not erroneous, but, rather, consistent with honoring the loan modification agreement because the loan was delinquent. Nunez argues that this must mean that the “reason” Chase found no error was the delinquent status of the loan—a reason that was absent from Chase’s second RESPA response. Therefore, Nunez posits, Chase violated RESPA as a matter of law.

Nunez’s argument is compelling. Chase likely should have mentioned the loan’s delinquency, and a reasonable investigation would have uncovered that problem. But Nunez sent her Second NOE on September 8, 2014, two days before the September 11 letter referenced above, and therefore, the September 11 letter could not be included among the errors Nunez complained of in her Second NOE. Further, the remainder of the Chase representative’s testimony is consistent with the “reasons” supporting the conclusion it reached in its second RESPA response. Namely, Chase’s representative testified that, due to the need to reverse the cancellation of the mortgage modification, account “adjustments were not made until August 18th.” (Doc. 49 at 47:4-8.) The collections letter attached to Nunez’s Second NOE reflected “amounts due that were based on the pre-loan modification adjustment numbers that were in the system.” Thus, Chase’s representative relies on the timing of entries for her support that no error occurred, just as Chase said in its second RESPA response.

Therefore, taking all inferences in a light supporting Chase, a reasonable jury could find that Chase provided the reason or reasons that it found no error. And, thus, Nunez’s motion will be denied.

3. Has Nunez Provided Sufficient Evidence of Damages?

“Damages are `an essential element’ of a RESPA claim.” Lage v. Ocwen Loan Serv. LLC, 839 F.3d 1003, 1011 (11th Cir. 2016) (quoting Renfroe, 822 F.3d 1241, 1246 (11th Cir. 2016)).

There are two types of available damages under RESPA: (1) actual damages sustained as a result of the RESPA violation and (2) “any additional damages, as the court may allow, in the case of a pattern or practice of noncompliance with the requirements of this section, in an amount not to exceed $2,000.” 12 U.S.C. § 2605(f)(1). Nunez has alleged that she is entitled to both actual and statutory damages.

(a) Actual Damages

Chase argues that it is entitled to summary judgment because Nunez has failed to provide sufficient evidence of damages. Nunez alleges that she suffered actual damages in the form of (1) emotional distress, and (2) attorneys’ fees and related expenses. (Doc. 93 at 11.) To recover actual damages, a plaintiff must “present specific evidence to establish a causal link between the financing institution’s violation and [her] injuries.” McLean, 398 F. App’x at 471.

First, Nunez’s deposition testimony shows that she started suffering from depression after losing her job during the 2009 recession. (Doc. 95-1 at 74.) Nunez began feeling better after she was prescribed medication in 2010, but relapsed when Chase cancelled her modification. (Id. at 76.) She also testified that her emotional distress continued after Chase transferred service to M&T and Bayview because “nothing ha[d] been resolved.” (Id. at 80.) Thus, a reasonable jury could find that if Chase had fully complied with RESPA, Nunez would have had the information to solve any remaining problems with her loan and would have avoided foreclosure and collection notices from Chase, Bayview, and M&T; and any continued emotional distress. (Doc. 24-4 at 1, 5, 6; Doc. 24-7 at 4, 18.)

Second, Nunez claims she was damaged in the form of attorneys’ fees, costs, and related expenses flowing from both her continued effort to resolve the errors brought to Chase’s attention in her Second NOE, and the subsequent foreclosure action brought by Bayview. Nunez was represented by both pro bono and for-profit counsel throughout her interactions with Bayview and M&T. A reasonable jury could find that if Chase had complied with RESPA, Nunez would not have required further advice of counsel. Therefore, Nunez has presented sufficient evidence of actual damages to withstand a motion for summary judgment.

(b) Statutory Damages

Nunez also claims that she is entitled to statutory damages because “Chase’s repeated failures to properly respond to both of [her notices] are part of Chase’s pattern and practice of noncompliance with the RESPA/Regulation X error resolution procedures.” (Doc. 24 ¶ 33.) “In order to recover statutory damages [under RESPA], the plaintiff must show `a pattern or practice of noncompliance.'” McLean, 595 F. Supp. 2d at 1365. The term “pattern or practice of noncompliance” is interpreted within the usual meaning of the words and “suggests a standard or routine way of operating.” Id. (citations and quotation omitted). To establish the above, “a plaintiff must allege some RESPA violations `with respect to other borrowers.'” Renfroe, 822 F.3d at 1247 (quoting Toone v. Wells Fargo Bank, N.A., 716 F.3d 516, 523 (10th Cir. 2013)). “Though there is no magic number of violations that create a `pattern or practice of noncompliance,’ courts have held that two violations of RESPA are insufficient to support a claim for statutory damages.” Id. (quoting Kapsis v. Am. Home Mortg. Serv. Inc., 923 F. Supp. 2d 430, 445 (E.D.N.Y. 2013)). But, “allegations of five RESPA violations have been deemed adequate to plead statutory damages.” Id. (citing Ploog v. HomeSide Lending, Inc., 209 F. Supp. 2d 863, 868-69 (N.D. Ill. 2002)).

The entirety of the evidence that Nunez relies on to establish statutory damages are three unrelated cases where Chase defended against RESPA claims. Two were pending adjudication when Nunez filed her Amended Complaint (Doc. 24), but have since been dismissed with no finding that Chase violated RESPA. (Doc. 93-4; Doc. 93-5.)[7] In the third, Marias v. Chase Home Financing, LLC, the court did, indeed, find that Chase violated RESPA. 24 F. Supp. 3d 712, 731 (S.D. Ohio).

Thus, outside of her own allegations, Nunez relies on only a single RESPA violation to support her claim for statutory damages. A single RESPA violation is inadequate to show a pattern or practice of noncompliance with RESPA. Renfroe, 822 F.3d at 1247. Therefore, Chase is entitled to summary judgment with respect to Plaintiff’s pattern or practice of noncompliance claim.

IV. Negligence Per Se

“A negligence per se claim [is] appropriate under Florida law when there is a violation of a `statute which establishes a duty to take precautions to protect a particular class of persons from a particular injury or type of injury.'” Liese v. Indian River Cty. Hosp. Dist., 701 F.3d 334, 353 (11th Cir. 2012) (quoting deJesus v. Seaboard Coast Line R, Co., 281 So. 2d 198, 201 (Fla. 1973)). Nunez’s negligence per se claim is dependent on a finding that Chase breached the duties imposed on it by RESPA. As described above, a reasonable jury could find that Chase violated RESPA and that Nunez suffered damages as a result. Therefore, Nunez’s negligence per se claim stands.

V. Conclusion

In summary, the Court finds that Nunez has presented sufficient evidence on which a reasonable jury could find that Chase violated RESPA and that she was damaged as a result. Thus, Nunez’s RESPA and negligence per se claims survive Chase’s motion. Additionally, a reasonable jury could find that Chase provided the reason or reasons supporting its conclusion of no error in its second RESPA response. Therefore, Nunez’s motion for summary judgment as to Chase’s second RESPA response will be denied.

It is, therefore, ORDERED that

(1) Chase’s Motion for Summary Judgment (Doc. 87) is GRANTED as to Nunez’s claim for statutory damages under RESPA, but DENIED otherwise; and

(2) Nunez’s Motion for Partial Summary Judgment (Doc. 86) is DENIED.

DONE and ORDERED.

[1] Curiously, the motion and resulting order cite the “Permanent Loan Modification” as the reason for dismissal, thus, contradicting the purported reason for the return of Nunez’s payments—i.e., cancellation of the loan modification. (Doc. 75-9; Doc. 75-10.)

[2] In her Response to Chase’s Motion for Summary Judgment (Doc. 93), Nunez relies on the affidavit of Alicia Magazu (Doc. 94), the pro bono attorney that represented Nunez at various times relevant to this case. Chase has moved to strike the affidavit raising two objections: (1) that the Affidavit contains and attaches as exhibits inadmissible hearsay and (2) that the affidavit covers information not within the affiant’s personal knowledge. (Doc. 99.) The Court has not relied on any portions of the affidavit that Chase complains of, and therefore, the motion has been denied. (See Doc. 101.)

[3] 12 U.S.C. § 2605(e)(1)(b)(“a qualified written request shall be a written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer, that— (i) includes, or otherwise enables the servicer to identify, the name and account of the borrower; and (ii) includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower”).

[4] The timestamp on Chase’s Motion to Cancel Foreclosure sale in the underlying foreclosure action clearly shows that it was filed on March 21, 2013. (Doc. 75-4.) The foreclosure sale took play on March 20, 2013. (Doc. 24-2 at 2; Doc. 75-3.)

[5] Indeed, even Chase’s corporate representative seemed to be confused as to why the acceleration and foreclosure warning letters were sent, stating, “I don’t know why those letters went out.” (Doc. 86-1 at 44:24.) But soon after her admission of ignorance, she came to a similar conclusion as the Court, stating, “Well, at the time that this letter went out on August 15th, the adjustments weren’t made until they started being made on August 18th through the 22nd.” (Id. at 45:7-11.)

[6] A servicer’s written notification must also contain “a statement of the borrower’s right to request documents relied upon by the servicer in reaching its determination, information regarding how the borrower can request such documents, and contact information, including a telephone number, for further assistance.” 12 C.F.R. § 1024.35(e)(1)(i). But these requirements are not at issue in the current case.

[7] JPMorgan Chase Bank, N.A., v. Lewis, No. 013-CA-0118, (Fla. 20th Cir. Ct. Dec. 28, 2015) (dismissed); Hernandez v. JP Morgan Chase Bank N.A., 1:14-cv-24254, (S.D. Fla. Sept. 9, 2016) (dismissed).

 

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Posted in STOP FORECLOSURE FRAUD0 Comments

TFH 5/7 | Foreclosure Workshop #32: U.S. Bank v. Kim — Lessons Learned from 35 Years of Foreclosure Defense in Hawaii, Identifying Five Common Major System Deficiencies Urgently Needing Reform in Every State.

TFH 5/7 | Foreclosure Workshop #32: U.S. Bank v. Kim — Lessons Learned from 35 Years of Foreclosure Defense in Hawaii, Identifying Five Common Major System Deficiencies Urgently Needing Reform in Every State.

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 7

Foreclosure Workshop #32: U.S. Bank v. Kim — Lessons Learned from 35 Years of Foreclosure Defense in Hawaii, Identifying Five Common Major System Deficiencies Urgently Needing Reform in Every State.
———————

It should be obvious that no one designed the present American foreclosure system.

Far from any intelligent planning, the States merely adopted European foreclosure, eviction, and deficiency judgment models created at a time when both the King and Lenders “could do no wrong.”

English history, particularly in its beginnings, afforded mortgagors little protections, and most American States, voting to join the Union, matter-of-factly adopted English common law with little thought given to borrowers’ rights.

Gradually, however, the increasing abuses generated by the English foreclosure common law became evident and efforts were made in virtually every State to remedy those abuses.

The efforts at reform nevertheless have proven especially complex and elusive due largely to the interaction of federal and state laws, resulting in what can fairly be called the present federal-state jurisdictional decision making quagmire.

To better understand the history of foreclosure defense in the United States and how we got here, it is instructive to review the last 35 years of foreclosure defense in Hawaii legal history, a microcosm of the disastrous situation found today in all States.

The Foreclosure Hour for the first time anywhere on today’s show will examine the five lessons learned from the struggle to secure fair treatment for mortgage borrowers in Hawaii, highlighting, it is submitted, what needs to be urgently done not only in Hawaii but similarly in all States unless the present slaughter of American Homeowners is allowed to indefinitely continue, meanwhile subverting all attempts at fair reform.

It makes little sense to assume that even the best sounding reforms on paper at least will ever succeed and American Homeowners ever avoid the brutality in which they are still being evicted from their homes until the five system deficiencies identified on today’s show are confronted and remedied.

~

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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
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ON KHVH-AM
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The Foreclosure Hour 12

 

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Flint sends foreclosure notices to 8,000 residents who refused to pay for contaminated water

Flint sends foreclosure notices to 8,000 residents who refused to pay for contaminated water

The Raw Story-

The ongoing saga of lead-contaminated water in Flint, Michigan, got yet another layer on May 4, when 8,002 residents received foreclosure notices for failure to pay their water bills, according to the Washington Post.

The notices came a few weeks after the city ended a program that assisted residents in paying bills for their contaminated water.

According to letters like this one sent to a local news station, residents will have until February 2018 to pay their past due water bills, but many refuse to pay for water that they believe remains contaminated. There have been a dozen deaths in Flint from Legionnaire’s disease believed to be caused by the contaminated water, in addition to dozens more linked to pneumonia outbreaks that experts believe was cause by the contamination, as well.

[RAW STORY]

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Posted in STOP FORECLOSURE FRAUD0 Comments

Goldman Sachs win streak is focus of Treasury-rigging probe

Goldman Sachs win streak is focus of Treasury-rigging probe

NY POST-

The Justice Department’s investigation into Wall Street’s rigging of the $14 trillion Treasury market is zeroing in on Goldman Sachs — just as the bank’s former employees have taken over the agency that’s at the center of the probe, The Post has learned.

Goldman Sachs won almost all auctions for US Treasury bonds from 2007 to about 2011, a remarkable winning streak that came despite safeguards established by the Treasury to keep bidding competitive, sources familiar with the investigation said.

At the center of the case are chats and emails believed to show Goldman traders sharing sensitive price information with traders at other banks — a sign of possible price fixing and collusion, according to sources familiar with the investigation.

[NY POST]

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Berman v. HSBC BANK USA, NA, Cal: Court of Appeal, 3rd Appellate Dist. | we conclude the trial court erred: the denial letter constituted a material violation of section 2923.6

Berman v. HSBC BANK USA, NA, Cal: Court of Appeal, 3rd Appellate Dist. | we conclude the trial court erred: the denial letter constituted a material violation of section 2923.6

 

STANLEY P. BERMAN, Plaintiff and Appellant,
v.
HSBC BANK USA, N.A., Defendant and Respondent.

No. C081487.
Court of Appeals of California, Third District, Nevada.
Filed April 11, 2017.
Appeal from the Superior Court No. CU14080886.

NOT TO BE PUBLISHED

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

ROBIE, Acting P. J.

When defendant HSBC Bank USA, N.A. (HSBC) notified plaintiff Stanley P. Berman in writing that HSBC was denying his application for a loan modification, HSBC told him he had 15 days to appeal the denial. Under the law, however, Berman actually had 30 days to appeal. (See Civ. Code,[1] § 2923.6, subd. (d) [“[i]f 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”].)

Berman brought this action for injunctive relief under section 2924.12 on the theory that “the denial letter . . . [wa]s a material violation of sub[division] (d) [of section 2923.6] in that [the letter] only provide[d] fifteen days for appeal.” The trial court sustained HSBC’s demurrer to Berman’s complaint without leave to amend based on the conclusion that Berman had not alleged a violation of section 2923.6. On Berman’s appeal, we conclude the trial court erred: the denial letter constituted a material violation of section 2923.6 because it substantially misstated the time Berman was allowed by the law to appeal HSBC’s denial of his application for a loan modification. Moreover, we find no merit in any of HSBC’s alternate arguments for affirming the trial court. Accordingly, we will reverse.

FACTUAL AND PROCEDURAL BACKGROUND

Because this appeal arises from the sustaining of a demurrer, we summarize the facts alleged in the complaint, accepting as true the properly pleaded factual allegations. (See Debrunner v. Deutsche Bank National Trust Co. (2012) 204 Cal.App.4th 433, 435.)

Berman is the record owner of the property located at 15342 Carrie Drive, Grass Valley, California, where he resides. Berman defaulted on his home mortgage and a notice of default was recorded. Sometime prior to September 16, 2014, Berman submitted a complete application for a loan modification to HSBC, asserting a significant change in financial condition. By letter dated September 18, 2014, HSBC denied Berman’s request for a loan modification. HSBC’s denial letter stated that Berman had until October 2, 2014, (i.e., 15 days) to file an appeal of the decision.[2]

On December 2, 2014, Berman commenced this action against HSBC by filing a complaint seeking injunctive relief. In his complaint, he asserted that because HSBC’s denial letter gave him only 15 days to appeal the denial, when section 2923.6, subdivision (d) provides for an appeal period of at least 30 days, the denial letter was “in violation of sub[division] (d) in that it only provides fifteen days for appeal [and] thus the requirements of sub[division] (f) describing the matter mandated to be included in the denial letter have not be[en] followed and the trustee sale can not [sic] legally proceed.”[3] He further asserted that “[n]o significant injury to Defendants will occur through the granting of the injunction as all they would need to do is issue an amended denial letter which complies with the 30 day appeal requirement and then they would be legally entitled to conduct a trustee’s sale once that period had expired.” Thus, it was apparent that Berman was seeking injunctive relief that would require HSBC to issue a new denial letter before HSBC could proceed to notice and conduct a trustee’s sale.

The day after he filed his initial complaint, Berman filed a first amended verified complaint. The only difference between the two complaints was that the amended complaint was verified.

In July 2015, HSBC demurred to the first amended complaint, arguing (among other things) that “[s]ection 2923.6 only prohibits the recording of a notice of default or notice of sale, or conducting a sale, unless certain requirements are met,” and HSBC “did[] not actually conduct[] the sale within [the appeal] period. In fact, to date, the sale has not occurred in the six months after the September 18, 2014 Denial Letter.” The trial court sustained the demurrer with leave to amend, reasoning that “no violation of [subdivision (e) of section 2923.6 wa]s alleged” because Berman did not allege that HSBC “recorded a Notice of Sale or conducted a trustee’s sale prior to 31 days after [he] was notified in writing of the denial of the modification.”[4]

On August 31, 2015, Berman filed a second amended complaint. The factual allegations in this complaint are similar in all relevant respects to the allegations in the first amended complaint (and the original complaint). In the second amended complaint, however, Berman asserted for the first time that “the denial letter . . . is a material violation of subdivision (d) in that it only provides fifteen days for appeal.” Berman further asserted that he was entitled to an injunction under section 2924.12 enjoining HSBC from conducting a trustee’s sale until the court determined that the violation was corrected.[5]

HSBC demurred to the second amended complaint, again asserting that it had not violated section 2923.6 because it had not conducted a trustee’s sale within the statutory appeal period. The trial court agreed and sustained the demurrer without leave to amend because again Berman did not allege that HSBC “recorded a Notice of Sale or conducted a trustee’s sale prior to 31 days after [he] was notified in writing of the denial of the modification.” With respect to Berman’s reference to section 2924.12, the court noted that “that provision allows for injunctive relief if there is a material violation of another provision” and “[h]ere, Plaintiff has not demonstrated a violation of another provision.” The trial court subsequently entered judgment in favor of HSBC.

Berman timely appealed.

DISCUSSION

A demurrer tests the legal sufficiency of the complaint. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) We review the complaint to determine whether it alleges facts sufficient to state a cause of action. (Ibid.) For purposes of review, we accept as true all material facts alleged in the complaint, but not the contentions, deductions or conclusions of fact or law. (Ibid.)

Oddly enough — given that he acknowledges the issue for us to decide is whether the complaint alleges facts sufficient to state a cause of action — in the page and one-half he devotes to argument in his opening brief, Berman does not address that issue at all. Instead, he argues that HSBC “never raised the issue of materiality in its demurrer, materiality was never briefed by the parties, yet the Court’s ruling was based on its sua sponte consideration of the issue of materiality.” He contends this was “clear error and grounds for reversal.” He further asserts that he alleged materiality in his complaint when he alleged that the denial letter was a material violation of subsection (d) of section 2923.6.

Not only does Berman’s argument fail to address the only issue that really matters — whether his complaint alleges facts sufficient to state a cause of action — his argument is based on an entirely erroneous premise — namely, that the trial court’s sustaining of HSBC’s demurrer “was based on its sua sponte consideration of the issue of materiality.” That is simply not the case. It is true the trial court noted that in his second amended complaint, Berman sought injunctive relief under section 2924.12, which allows for injunctive relief if there is a “material violation” of any of various statutes, including section 2923.6, but the conclusion the trial court drew relative to section 2924.12 was only that Berman had “not demonstrated a violation” of any of the statutes referenced in section 2924.12. Thus, the trial court was not concerned with and did not consider “materiality” and the trial court’s ruling sustaining HSBC’s demurrer was in no way “based” on any “consideration of the issue of materiality,” sua sponte or otherwise. Rather, the trial court’s ruling was based on its conclusion that Berman had not alleged any violation of section 2923.6.

As to that issue — whether Berman’s second amended complaint alleged facts constituting a violation of section 2923.6 and thus facts sufficient to state a cause of action for injunctive relief under section 2924.12 — Berman’s opening brief offers no argument. This omission would be sufficient for us to affirm the judgment against Berman because “[i]t is the appellant’s burden to demonstrate the existence of reversible error” (Del Real v. City of Riverside (2002) 95 Cal.App.4th 761, 766), and “`”[w]hen an appellant fails to raise a point, . . . we treat the point as waived.”‘ [Citation.] `We are not bound to develop [an] appellant[‘s] argument for [him]. [Citation.] The absence of cogent legal argument or citation to authority allows this court to treat the contention as waived'” (Cahill v. San Diego Gas & Electrical Co. (2011) 194 Cal.App.4th 939, 956). Nevertheless, despite Berman’s failure to address in his opening brief the dispositive issue of whether his second amended complaint alleges facts sufficient to state a cause of action, we will not treat that issue as waived because, between the parties’ arguments in the trial court, and the arguments exchanged between HSBC’s respondent’s brief and Berman’s reply brief, the dispositive issue here has been adequately addressed by both sides and is sufficiently framed and developed for us to decide.

Essentially, the competing positions are as follows:

Berman claims that by sending a denial letter that purported to give him only 15 days to file an appeal, HSBC committed a material violation of section 2923.6 because subdivision (f) of that section provides that such a denial letter must include “[t]he amount of time from the date of the denial letter in which the borrower may request an appeal” and subdivision (d) of that section specifies that “the borrower shall have at least 30 days from the date of the written denial to appeal the denial.” Berman essentially reasons that if a denial letter identifies as “[t]he amount of time from the date of the denial letter in which the borrower may request an appeal” a period of time that is less than the 30-day minimum the law requires, the denial letter violates section 2923.6 and is “ineffective,” and an injunction can issue under section 2924.12 to enjoin any trustee’s sale until that violation is corrected by the issuance of a new denial letter that sets forth a legally adequate period for appeal. Berman further contends that he “is under no obligation to file his Notice of Appeal to the denial of the loan modification until [HSBC] has provided a denial letter that fully complies in all material aspects with the mandates of” section 2923.6, because (due to the fact that the initial denial letter was “ineffective”) “[t]he mandated thirty day appeal period has not yet begun running and [HSBC] remains in control as to when that thirty day period will begin running.”

For its part, HSBC takes the position that it did not violate subdivision (f) of section 2923.6 because that subdivision requires only that the denial letter include “[t]he amount of time from the date of the denial letter in which the borrower may request an appeal,” and the denial letter here did so — even if the amount of time specified in the letter was less than the minimum amount of time allowed by subdivision (d) of section 2923.6. HSBC further argues that it did not violate section 2923.6 because it did not conduct a trustee’s sale within the 30-day appeal period provided by subdivision (d), which is prohibited by both subdivision (c) of the statute — which applies while a “complete first lien loan modification application is pending”[6] — and subdivision (e) of the statute — which applies once “the borrower’s application for a first lien loan modification is denied.”[7] And as for the minimum 30-day appeal period provided by subdivision (d) of section 2923.6, HSBC asserts only that: (1) the 15-day period included in its denial letter was “within the statutory appeal period”; and (2) Berman did not appeal in the 30-day statutory period in any event, or even within all of the time that has passed since the September 2014 denial letter (now more than two and one-half years).

We conclude Berman has the better argument. It is without dispute that section 2923.6 does two things that are relevant here: (1) it requires a lender like HSBC to advise the borrower in the denial letter how much time the borrower has to appeal; and (2) it requires the lender to give the borrower at least 30 days to appeal. Thus, to comply with the law, the denial letter must inform the borrower of an appeal period that is at least 30 days in length. HSBC’s denial letter did not do that. Instead, HSBC’s letter advised Berman he had only 15 days to appeal — merely half of the period allowed by law. Because the denial letter did not give Berman the full amount of time to appeal provided by the Legislature, his right to do so was effectively diminished as a result. We conclude this was a material violation of section 2923.6.

To the extent HSBC argues that Berman did not allege a violation of section 2923.6 because Berman did not allege that HSBC conducted a trustee’s sale within the 30-day appeal period provided by subdivision (d), that argument establishes only that Berman did not allege a violation of subdivisions (c) or (e) of section 2923.6. But there is more to the statute than those two subdivisions, and when subdivisions (d) and (f) are considered, it is apparent (as we have concluded) that Berman did allege a violation of section 2923.6.

To the extent HSBC asserts the 15-day appeal period included in its denial letter was “within the statutory appeal period,” that assertion is nonsensical. Subdivision (d) of section 2923.6 requires an appeal period of “at least” 30 days. That means 30 days or more. Thus, an appeal period of only 15 days is not within the statutory appeal period.

To the extent HSBC contends Berman did not appeal within the 30-day statutory period in any event, or even in all of the time that has passed since the September 2014 denial letter (now more than two and one-half years), and thus “has not been prejudiced in any manner,” that contention does not carry the day either. We have concluded already that a denial letter that purports to give a borrower only 15 days to appeal the denial is a material violation of section 2923.6. Subdivision (a) of section 2924.12 provides that “[i]f a trustee’s deed upon sale has not been recorded, a borrower may bring an action for injunctive relief to enjoin a material violation of Section . . . 2923.6” and “[a]ny injunction shall remain in place and any trustee’s sale shall be enjoined until the court determines that the mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent has corrected and remedied the violation or violations giving rise to the action for injunctive relief.” Thus, it does not matter, for purposes of Berman’s request for injunctive relief under section 2924.12, that he has not yet filed an appeal from the September 2014 denial of his application for a loan modification. If Berman proves up the allegations in his second amended complaint, then the denial letter was a material violation of section 2923.6, and section 2924.12 will give Berman the right to an injunction against a trustee’s sale that will remain in place until the court determines that HSBC has corrected and remedied the violation — which HSBC can do by issuing an amended denial letter that properly notifies Berman that he has a period of no less than 30 days to appeal the denial.[8] Nothing in the statutory scheme denies Berman the right to this relief because he did not file an appeal sooner, before the issuance of the amended denial letter. Thus, his failure to file an appeal is, at least for now, of no moment.

Turning to HSBC’s remaining arguments in support of affirming the trial court’s judgment, we find no merit in any of them. HSBC first contends that because Berman’s order to show cause for a preliminary injunction was denied and the previously issued temporary restraining order was dissolved in May 2015, Berman “was already formally denied the only relief he even could have obtained in this matter.” This argument lacks merit for several reasons. First, HSBC fails to point out that the denial of the order to show cause for a preliminary injunction was without prejudice. Second, HSBC fails to point out that the denial was without prejudice because there was no proof of service of the temporary restraining order or the order to show cause as required by the temporary restraining order itself. Third, HSBC fails to provide any authority for the suggestion that the denial of a preliminary injunction on whatever grounds precludes Berman from seeking a permanent injunction. Thus, HSBC has altogether failed to show that the denial of preliminary injunctive relief has any bearing on the merits of Berman’s complaint.

HSBC next contends that Berman’s complaint “fails as it is based on a purportedly defective denial letter in regards to a loan modification.” In HSBC’s view, because the statutory scheme did not guarantee Berman a modification of his loan (see § 2923.4, subd. (a) [“Nothing in the act that added this section . . . shall be interpreted to require a particular result of [the loan modification] process”]), he “cannot allege any harm, or subsequent violation of statute, for having his modification application denied.” This argument also lacks merit. Berman’s complaint does not allege harm from the denial of his application for a loan modification, nor is there any reason for it to. All he is seeking is the injunctive relief section 2924.12 allows to correct a material violation of section 2923.6. His right to such relief is not dependent on whether he is ultimately entitled to a loan modification. While he has no right to a modification, he does have a right to appeal the denial and the 15-day letter effectively cut off that right prematurely. Thus, the fact that he has no statutory right to a modification is entirely irrelevant here.

HSBC next contends Berman’s complaint lacks merit because “by his own concession . . . he was previously offered a . . . loan modification, which he failed to complete.” According to HSBC, the third page of the denial letter, which Berman attached as an exhibit to his first amended complaint, “states on its face . . . that he was denied for a . . . modification because [he] `did not successfully complete a previous Home Affordable Modification Program (HAMP) offer.'” HSBC argues that under subdivision (g) of section 2923.6, it was not obligated to evaluate Berman’s loan modification application because of his failure to complete the previous HAMP offer. HSBC also contends that subdivision (c) of section 2923.6 precludes the recording of a notice of default or notice of sale or conduct of a trustee’s sale only until the borrower defaults on or otherwise breaches his or her obligations under a loan modification.

Again, HSBC’s arguments are without merit. Subdivision (c) of section 2923.6 is not at issue here. Even assuming that Berman failed to complete a previous modification offer, that has no bearing on whether he is entitled to injunctive relief because HSBC’s failure to provide the full 30-day period to appeal the denial of a subsequent offer was a material violation of subdivisions (d) and (f) of that statute. As for HSBC’s reliance on subdivision (g) of section 2923.6, there are two problems. First, HSBC fails to explain how the fact that it may not have been obligated to evaluate Berman for a second loan modification excuses its material violation of the statute when it nonetheless decided to evaluate him for a second modification. Second, and more important, HSBC fails to explain why, on review of HSBC’s demurrer, we must accept as true a statement of purported fact contained in the denial letter that Berman attached to his complaint. Berman did not attach the letter to his complaint as proof of that purported fact (i.e., that he failed to complete a previous modification offer); he attached it to evidence HSBC’s unlawful provision of only a 15-day appeal period. In the absence of any authority from HSBC that we are bound to treat as true an assertion of fact that Berman did not allege in his complaint, just because that assertion was made in an exhibit Berman appended to his complaint for another reason altogether, we must reject HSBC’s argument based on that factual assertion.

Finally, HSBC contends that Berman has “concede[d] that this meritless action is nothing more than a delay tactic.” By this, HSBC appears to be referring to the fact that Berman is pursuing this action to force HSBC to issue an amended denial letter, and the suggestion that Berman may not even intend to take an appeal from the denial letter after all. Be that as it may, it has no bearing on Berman’s right to relief. As we have explained, section 2924.12 provides for an injunction to stop a trustee’s sale until the court has determined that a material violation of section 2923.6 has been corrected. Any delay in HSBC’s ability to sell Berman’s property at such a sale is the result of the relief the statute provides, HSBC’s failure to acknowledge its error in purporting to give Berman only 15 days to appeal the denial of his application for a loan modification, and HSBC’s stubborn refusal to correct that error in the intervening two and one-half years. In the end, what matters for our purposes is that Berman’s second amended complaint alleged facts sufficient to state a cause of action for injunctive relief. Thus, we must conclude that the trial court erred in sustaining HSBC’s demurrer.

DISPOSITION

The judgment is reversed, and the case is remanded to the trial court with instructions to vacate its order sustaining HSBC’s demurrer and to enter a new and different order denying the demurrer. Berman shall recover his costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1).)

Murray, J. and Hoch, J., concurs.

[1] All further section references are to the Civil Code.

[2] The letter stated in pertinent part as follows: “You have the right to appeal our decline decision regarding the Homeowners Assistance Program. If you would like to appeal, you must contact us in writing at the address provided below by 10/02/2014 and state that you are requesting an appeal of our decision. . . . You may also specify the reasons for your appeal, and provide any supporting documentation. Your right to appeal expires 10/02/2014. Any appeal requests or documentation received after 10/02/2014 may not be considered.”

[3] As relevant here, subdivision (f)(1) of section 2923.6 provides that “[f]ollowing the denial of a first lien loan modification application, the mortgage servicer shall send a written notice to the borrower identifying the reasons for denial, including the following: [¶] (1) The amount of time from the date of the denial letter in which the borrower may request an appeal of the denial of the first lien loan modification and instructions regarding how to appeal the denial.”

[4] Subdivision (e) of section 2923.6 provides as follows: “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. [¶] (2) If the borrower appeals the denial pursuant to subdivision (d), the later of 15 days after the denial of the appeal or 14 days after a first lien loan modification is offered after appeal but declined by the borrower, or, if a first lien loan modification is offered and accepted after appeal, the date on which the borrower fails to timely submit the first payment or otherwise breaches the terms of the offer.”

[5] As relevant here, subdivision (a) of section 2924.12 provides as follows: “(a)(1) If a trustee’s deed upon sale has not been recorded, a borrower may bring an action for injunctive relief to enjoin a material violation of Section . . . 2923.6. [¶] (2) Any injunction shall remain in place and any trustee’s sale shall be enjoined until the court determines that the mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent has corrected and remedied the violation or violations giving rise to the action for injunctive relief. An enjoined entity may move to dissolve an injunction based on a showing that the material violation has been corrected and remedied.”

[6] As relevant here, subdivision (c) of section 2923.6 provides as follows: “If a borrower submits a complete application for a first lien loan modification offered by, or through, the borrower’s mortgage servicer, 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, while the complete first lien loan modification application is pending. 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.”

[7] See footnote 4, ante, for the text of subdivision (e) of section 2923.6.

[8] Indeed, we note, there appears to be no reason why HSBC could not have issued such an amended letter at any time in the last two and one-half years and thus brought an end to the present action.

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