William Black is an associate professor of economics and law at UMKC. He has held many prestigious positions, including executive director for Fraud Prevention. He recently helped the World Bank develop anti-corruption initiatives and served as an expert for OFHEO in its enforcement action against Fannie Mae’s former senior management. He is a criminologist and former financial regulator.

image: NYT

LOS ANGELES, March 14, 2014 /PRNewswire-USNewswire/ — At 8:30 a.m. on Friday, March 14^th, major Black, Latino and Asian American organizations filed a Petition in Sacramento Superior Court demanding that Governor Brown return up to $350 million out of California’s share of the 2012 National Mortgage Settlement that was secured by California Attorney General Kamala Harris, so that it can be used as intended – to aid the state’s millions of homeowners in distress via direct relief and through grants to the organizations that support them.

As alleged in the Petition, shortly after the National Mortgage Settlement was announced, the Governor unlawfully diverted these funds to meet other obligations of the State, leaving the settlement fund almost fully depleted and the State’s homeowners holding an empty bag of promises. Although the State of California at that time faced a budget deficit, that was then. Now, due in part to the Governor’s successful efforts, the State projects a multi-billion-dollar surplus. In light of this imminent surplus, the National Asian American Coalition (NAAC) twice urged Governor Brown to return the unlawfully taken funds so they can be used for their originally intended purpose. The Governor failed to respond.

Leaders of the groups represented in the suit include the Chair of the Orange County Interdenominational Ministerial Alliance and the Senior Pastor for Christ Our Redeemer African Methodist Episcopal (COR AME) church, the largest Black church in Orange County; the National Hispanic Christian Leadership Conference (NHCLC), representing 40,000 Latino evangelical churches across the nation; and the NAAC, a HUD-approved Asian American homeownership advocacy group, the largest of its kind in the nation.

Representing the Petitioners in this lawsuit is Jenner & Block LLP, including Neil Barofsky (California pro hac vice application to be submitted), the former Special Inspector General at the US Department of the Treasury. Robert Gnaizda, former general counsel for the Greenlining Institute, is general counsel for the NAAC and represents the COR AME church in its advocacy efforts. 

Faith Bautista, CEO and president of the NAAC, joined by Reverend Mark Whitlock, the director of corporate partnerships for the 5,000 Black AME churches and senior pastor at COR AME Church of Irvine, and Reverend Samuel Rodriguez, President of the NHCLC, together say:

“We commend the Governor for his efforts in resolving our state’s fiscal crisis. However, we now pray that the Governor will turn his attention and distinguished skills to help solve the homeowner crisis by replenishing the settlement fund by Palm Sunday, so that we can offer sermons of hope from our pulpits and spread the word to California’s millions of homeowners in distress.”

Neil Barofsky and Rick Richmond of Jenner & Block state: “It is an honor for us to represent such an impressive and courageous group of petitioners as they seek through this action to bring some measure of relief and justice to the struggling homeowners who continue to suffer as the frontline victims of the financial crisis.”

A telephonic press conference on the lawsuit will be held today at 11:30 a.m. from the offices of counsel Jenner & Block LLP, in downtown Los Angeles. Please join by logging into https://jenner.conferencinghub.com/Web/NAACvBrown, or by dialing (866) 319-3661, passcode 3129232608. Please visit http://lawsuit.naac.org for the full text of the Petition, as well as letters of support from two other national HUD-approved home counseling agencies focusing on minority communities.

SOURCE National Asian American Coalition

This is the law firm that represented Foreclosure King David J. Stern

Law360-

Several attorneys from Miami law firm Tew Cardenas LLP in the fields of white collar, real estate, local government law, environmental and financial litigation have decided on their new homes as the firm will cease operations on April 1, multiple partners confirmed Thursday.

Partners Joseph L. Rebak, Brian Tague, Bryan West and Maria Priovolos Gonzalez and associate Lorayne Perez will be joining Akerman LLP, the firm said Thursday, while partner Santiago D. Echemendia is taking his skills to Shutts & Bowen LLP, and partner Matias R. Dorta plans to join forces with his brother Gonzalo R. Dorta at his Coral Gables, Fla.-based trial practice.

Tew Cardenas will close its operations just over two months after founding partner Thomas Tew died Jan. 28 from pancreatic cancer, but several partners stressed that while his passing had an effect on the firm’s decisions, its members had already been engaged in the process of charting a new course, including considering the possibility of a merger, for the past year.

[LAW 360]

We all are part of this PONZI if we like it or not…not up to us to decide but the crooked politicians that kiss the ass of the mighty corporate dollars for brown bags full of a share!

Bloomberg-

On television, in interviews and in meetings with investors, executives of the biggest U.S. banks — notably JPMorgan Chase & Co. Chief Executive Jamie Dimon — make the case that size is a competitive advantage. It helps them lower costs and vie for customers on an international scale. Limiting it, they warn, would impair profitability and weaken the country’s position in global finance.

So what if we told you that, by our calculations, the largest U.S. banks aren’t really profitable at all? What if the billions of dollars they allegedly earn for their shareholders were almost entirely a gift from U.S. taxpayers?

Granted, it’s a hard concept to swallow. It’s also crucial to understanding why the big banks present such a threat to the global economy.

[BLOOMBERG]

Note: Herman “John” Kennerty was fired by Wells Fargo in the fall of 2010.

IN THE UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
WHITE PLAINS DIVISION

In Re:
CYNTHIA CARRSOW-FRANKLIN
DEBTOR
————————————-

CYNTHIA CARRSOW-FRANKLIN
MOVANT,

V.

WELLS FARGO BANK, N.A.
RESPONDANT

SUPPLEMENT TO EMERGENCY MOTION TO REOPEN AND FOR LEAVE TO
PROPOUND SUPPLEMENTAL DISCOVERY TO DEFENDANT
FOR ADDITIONAL EVIDENCE WITHHELD PRIOR TO TRIAL

RELATED ARTICLE: Wells Fargo Home Mortgage Foreclosure Attorney Procedure Manual, Version 1 Status: Revision 3 Origination Date: 11/09/2011 Date Last Published: 02/24/2012

Funny, because ever since this website started… there is/was a ton of hits coming from the US Gov, only to watch it do ABSOLUTELY nothing. The more I think about it, I wouldn’t stray far enough to say they were giving the banktars the heads up!

As US Rep. Marcy Kaptur said: “LOOK AT THOSE OVER AT THE JUSTICE DEPARTMENT AND WHERE THEY WORKED BEFORE THEY GOT THERE”

NYT-

Four years after President Obama promised to crack down on mortgage fraud, his administration has quietly made the crime its lowest priority and has closed hundreds of cases after little or no investigation, the Justice Department’s internal watchdog said on Thursday.

The report by the department’s inspector general undercuts the president’s contentions that the government is holding people responsible for the collapse of the financial and housing markets. The administration has been criticized, in particular, for not pursuing large banks and their executives.

“In cities across the country, mortgage fraud crimes have reached crisis proportions,” Attorney General Eric H. Holder Jr. said at a mortgage fraud summit in Phoenix in 2010. “But we are fighting back.”

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.

MELVIN L. STEVENS, JR., Appellant,
v.
NATIONSTAR MORTGAGE, LLC, Appellee.

No Appearance for Appellee.

ORFINGER, J.

Melvin L. Stevens, Jr. appeals the trial court’s order denying his motions for relief from judgment.^[1] Stevens contends that the final judgment of foreclosure should be set aside because he was never served with the notice of issue or the order setting the trial. We agree and reverse.

Nationstar Mortgage, LLC, filed a foreclosure complaint against Stevens. For a time, Stevens was represented by counsel. However, upon motion, the court authorized Stevens’s counsel to withdraw. The court then directed all papers and pleadings to be served on Stevens at two designated addresses. In time, Nationstar’s counsel filed a notice that the action was at issue and ready for trial. That notice was not served on Stevens as previously ordered. Instead, it was mailed to his former counsel. The trial court’s order setting the case for trial was served only on Nationstar’s counsel. Not surprisingly, Stevens did not appear for the trial and a final judgment of foreclosure was entered against him. He timely filed his various motions for relief from judgment. Without elaboration, the trial court denied the motions.

Every pleading and paper filed in any court proceeding must be served on each party or their counsel. See Fla. R. Jud. Admin. 2.516. This requirement is to satisfy the constitutional requirement of due process. Here, neither the notice of issue nor the order setting trial was served on Stevens. This violated Stevens’s due process rights and requires reversal. See Vosilla v. Rosado, 944 So. 2d 289, 294 (Fla. 2006) (holding that to satisfy due process, any notice given must be reasonably calculated, under all circumstances, to apprise interested parties of pendency of action and afford them opportunity to present objections); Heritage Casket & Vault Ind., Inc. v. Sunshine Bank, 428 So. 2d 341, 343 (Fla. 1st DCA 1983). For these reasons, we reverse the final judgment and remand this matter for further proceedings.

REVERSED and REMANDED.

PALMER and LAWSON, JJ., concur.

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

[1] Stevens filed several motions in the trial court, delineating them as a Motion to Set Aside the Final Judgment, a supplement thereto, and an Amended and Verified Motion to Set Aside the Final Judgment. Like the trial court, we consider them in the context of Florida Rule of Civil Procedure 1.540, which authorizes motions for relief from judgment.

Here is the 150-page Wells Fargo Foreclosure Attorney Procedures Manual created November 9, 2011 and updated February 24, 2012.

NY POST-

Wells Fargo, the nation’s biggest mortgage servicer, appears to have set up detailed internal procedures to fabricate foreclosure papers on demand, according to allegations in papers filed Tuesday in a New York federal court.

In a filing in New York’s Southern District in White Plains for a local homeowner in bankruptcy, attorney Linda Tirelli described a 150-page Wells Fargo Foreclosure Attorney Procedures Manual created November 9, 2011 and updated February 24, 2012. According to court papers, the Manual details “a procedure for processing [mortgage] notes without endorsements and obtaining endorsements and allonges.”

Those are the technical terms for the paperwork proving that the company that’s foreclosing owns the loan, and therefore has the right to kick a family out of its home. Wells Fargo services roughly 9 million home loans, according to Inside Mortgage Finance.

[NEW YORK POST]

Anyone surprised?

NBC MIAMI-

Christine Rickard and Francisco Reyes saw a home they thought would be perfect for them and their young daughter.

“We found our dream home. We got a contract on our dream home and now it’s over two years later and we still don’t own the house,” Rickard said.

The South Florida couple thought they were getting the perfect home at a bargain thanks to the continuing foreclosure crisis. Instead they claim they walked into a real estate nightmare. Experts say the foreclosure crisis in South Florida far from over. They say there are still some good prices, but there are also plenty of land mines that can turn a good deal bad.

[NBC MIAMI]

Wells Fargo Home Mortgage
Foreclosure Attorney Procedure Manual, Version 1
Status: Revision 3

Origination Date: 11/09/2011
Date Last Published: 02/24/2012

Purpose

Pre-Introduction
We ask that you share this manual within your office, including those who may not be directly involved, to educate your staff on the Foreclosure program

High Level Description of Process
Delinquent loans will be referred to the attorney once set up in the Foreclosure Workstation after the expiration of the demand. The attorney will be handling these loans from Referral to Sale/Confirmation/Redemption. The assigned Wells Fargo liaison will assist the attorney with any issues that arise outside of the normal process and review audit results.

Upon completion of the required documentation, the attorney will be authorized to file the Foreclosure Notice, keep Wells Fargo up to date, and address objections to the Foreclosure without loan level approval under established timeframes/guidelines. Any over-allowable or hourly fee requests not listed in the pre-approval form will require loan level approval from Wells Fargo.

If the attorney receives notice of an adversary, litigation issue, motion for sanctions, or any issue the attorney cannot complete in a time manner timely or any issue that will cause a delay in the timely execution of the sale, refer to the Litigation section of this manual. Wells Fargo will provide further instruction upon receipt of the communication from the attorney. The attorney will also be required to receive authorization for all over-allowable fees and costs as well as hourly billing requests for items not covered by the pre-approval form.

If the mortgagor contacts the attorney, and the attorney is unable to answer, the customer should be directed to the appropriate customer service number listed below. At no time should the Wells Fargo Liaison’s direct phone line be provided to outside parties.

Wells Fargo Home Mortgage Foreclosure Customer Service – 1-800-868-0043
America’s Servicing Company Customer Service – 1-888-828-2377

For the 150 Page manual click on pdf image below:

Lets see what the gov. does about problem number 1,250,000 that the bankstas seem to have violated and as always walk away with a pat in their arses because of the corruption within the gov.!

sigh.

Center for Public Integrity

Debt collectors are targeting members of the Armed Services by calling their superior officers, threatening reduction in rank and even courts-martial, despite stepped-up efforts to protect them from abuse, according to a government report issued last week.

“I have heard in my many visits to military installations across the country about aggressive and deceptive tactics by debt collectors specifically targeting members of the military,” said Holly Petraeus, assistant director for service member affairs at the Consumer Financial Protection Bureau.

Petraeus, in a letter accompanying the report, said the “sheer volume of debt collection complaints alone” makes the issue important to her office.

[CENTER FOR INTEGRITY]

NEW YORK, Nov. 12, 2013 /PRNewswire/ — Levi & Korsinsky, LLP is investigating Ocwen Financial Corp. (NYSE: OCN) in connection with possible claims of breaches of fiduciary duty.

(Logo: http://photos.prnewswire.com/prnh/20120409/MM84375LOGO )

To get more information, click here: http://zlk.9nl.com/ocwen-financial-ocn/. There is no cost or obligation to you.

If you own common stock in Ocwen Financial Corp. and wish to obtain additional information, please contact Eduard Korsinsky, Esq. either via email at ek@zlk.com or by telephone at (212) 363-7500, toll-free: (877) 363-5972, or visit http://zlk.9nl.com/ocwen-financial-ocn/.

Levi & Korsinsky is a national firm with offices in New York, New Jersey, Stamford,  Connecticut and Washington D.C. The firm’s 26 attorneys have extensive expertise in prosecuting securities litigation involving financial fraud, representing investors throughout the nation in securities and shareholder lawsuits. For more information, please feel free to contact any of the attorneys listed below. Attorney advertising. Prior results do not guarantee similar outcomes.

CONTACT:    
Levi & Korsinsky, LLP
Eduard Korsinsky, Esq.
30 Broad Street – 24th Floor
New York, NY 10004
Tel: (212) 363-7500
Toll Free:  (877) 363-5972
Fax: (866) 367-6510
www.zlk.com

SOURCE Levi & Korsinsky, LLP

RELATED LINKS
http://www.zlk.com

Sheila C. Bair
March 10, 2014

Chairman Sherrod Brown
Senate Committee on Banking, Housing and Urban Affairs
Subcommittee on Financial Institutions and Consumer Protection
534 Dirksen Senate Office Building
Washington, DC 20510

Re: Subcommittee Hearing: “Finding the Right Capital Regulation for Insurers”

Dear Chairman Brown and Members of the Subcommittee:

Thank you for the opportunity to present my views on the appropriate capital framework for insurance companies under the Dodd-Frank Act. I understand the insurance industry has expressed concerns about the potential treatment of insurance companies by the Federal Reserve in its establishment of consolidated capital standards for bank holding companies and nonbank financial institutions designated for heightened supervision. I agree that the Federal Reserve can and should craft a capital framework appropriate to insurance products, and should have the discretion to defer to state insurance regulators in establishing capital standards for the insurance activities which they regulate. However, I also believe that the Federal Reserve already has ample authority to do so without undermining important safeguards.

I am concerned however, that S. 1369 may unintentionally go beyond legitimate concerns about protecting the integrity of state regulation of insurance. As drafted, S. 1369 would provide a wholesale carve-out from common sense protections contained in the Section 171 of Dodd-Frank, also known as the Collins’ amendment, for insurance conglomerates, including their banking and derivatives activities. This would give insurance giants a significant competitive advantage over banking organizations engaged in the same activities, and leave the door open to the kinds of highly leveraged risk-taking which contributed to the 2008 crisis. We should not forget that in 2008 AIG was also an insurance company, which took excessive risks in its non-state regulated affiliates.

A better approach would afford the Federal Reserve the opportunity to use the public notice and comment process to issue a proposal and then assess the extent to which the Federal Reserve has appropriately addressed the risks posed by these companies. To the extent Congress acts, it should only do so in a way that retains the essential protections of Section 171 of the Dodd-Frank Act: namely by clarifying the Federal Reserve’s discretion to credit effective and applicable insurance capital regimes established by state insurance regulators over regulated insurance companies. Congress should not establish a wholesale carve out from Section 171’s common sense capital floors.

The Collins Amendment (Section 171 of the Dodd-Frank Act) is a vital safeguard against capital arbitrage and excessive leverage. It helps protect markets, ensure a level playing field and avoid many of the regulatory mistakes that contributed to the recent financial crisis.

In the years leading up to the financial crisis, federal (and international regulators) established a series of complex, model-driven capital rules for the world’s largest, most complex firms. Not only did these complex capital regimes create a host of perverse incentives that encouraged institutions to use risky-synthetic products (like synthetic CDOs) over “real” traditional alternatives (like whole mortgages), they created regulatory advantages for large firms relative to small firm competitors, fueling size, complexity and ultimately too big to fail. Section 171 helps address that risk by requiring that the largest, most complex bank holding companies and systemic institutions meet the same basic “generally applicable” capital standards that apply to other bank holding companies.

This “generally applicable” standard is not set in stone. If, at any point, regulators want to change how they create and measure that standard, they can, but they must make sure that the largest and most systemic firms can meet the same basic capital floor that applies to the smaller, less systemic ones and they must make sure that any new standards are not weaker than those standards in effect when Dodd-Frank was enacted. As discussed below, this is not a high hurdle. This floor is a common sense protection so that regulators do not again create affirmative incentives for firms to become big, levered and risky or to escape leverage constraints by moving risky activities into more lightly regulated venues.

Section 171 only applies to (1) institutions that own banks or thrifts (so called bank (or thrift) holding companies); and (2) potentially systemic institutions whose failure could pose a threat to financial stability.

To the extent insurance companies are subject to this safeguard, it is only because they are also bank/thrift holding companies or so large that they pose a potentially systemic threat. Any company can avoid complying with these basic leverage constraints by not engaging in the business of banking (i.e., not owning a bank) or not being large and potentially systemic (like AIG).

Fairness (and effective regulation) would treat all institutions engaging in the same activity the same way. If an insurance company chooses to become a bank/thrift holding company, it is reasonable that, as a bank/thrift holding company, it follow the same rules. Carving out “insurance bank holding companies” from “bank holding company” requirements would create a competitive advantage for these firms (1) when they engage in the business of banking; and (2) when traditional bank holding companies engage in the business of insurance. This dynamic also facilitates a race to the bottom that ultimately hurts their customers (who should be protected by the holding company capital buffer), the markets, and potentially taxpayers (who could suffer from the failure and cleanup).

Section 171 standards are basic, minimum, capital floors. They are not onerous and they continue to permit high leverage.

As interpreted by the Federal Reserve, Section 171 establishes the generally applicable “adequately capitalized” standards for banks as the floor. These standards are far from onerous. A 4% leverage limit for on balance sheet assets still permits debt to equity ratios of 25 to 1. Though banks are also subject to a “risk-based” capital floor, the federal banking regulators are free to craft risk weights to appropriately address insurance products, so long as the same minimum rules apply to institutions large and small. Though minimal, these Section 171 floors are still quite robust compared to the excessive levels of leverage used prior to the crisis, where large investment banks and others took on debt to equity ratios of 40 and even 50 to 1. Moreover, aggregate capital levels reported by industry trade associations such as the ACLI suggest capital ratios significantly in excess of these minimums. Thus it is hard to understand why these constraints are raising such alarm.

Capital is important for any financial institution. It protects an institution’s customers – be they depositors or policy holders – by absorbing unexpected losses from bad investment or lending decisions. It protects the public by reducing the risk of destabilizing failures. And it protects government safety net programs like deposit insurance and state guarantee funds which must step in to protect the public when institutions fail. The relevant standard applicable under Section 171 is the basic standard that applies to even small community banks. This floor exists so that regulators do not again provide artificial capital advantages to large and complex bank holding companies or systemic firms, unintentionally fueling risk that create market asymmetries and imbalances. Though, the existing risk-based standards might be considered “bank-centric,” they could be tailored for state regulated insurance subsidiaries under the Federal Reserve’s existing authority.

Section 171 does not change state insurance capital requirements.

Banks and insurance companies are different and they continue to be treated differently under the law. Nothing in Section 171 changes the state regulation or state capital requirements of regulated insurance companies. States continue to set capital for regulated insurance company subsidiaries, just as bank agencies set capital requirements for individual bank subsidiaries. If a company lacks sufficient capital at the individual insurance company level, state rules apply. The key issue here is meeting the minimum consolidated (group) capital requirement when there is a bank/thrift holding company or a systemic institution that also has an insurance business.

The Federal Reserve has not yet even published its specific rules on this topic, making legislation premature, at best.

To its credit, the Federal Reserve understands the concerns and has stated, that in crafting specific rules, it does not believe a “one size fits all approach” is appropriate. As Federal Reserve Chairman Janet Yellen stated on Feb. 27, before the full Committee:

“We are looking very carefully to design an appropriate set of rules for companies with important involvement in insurance to recognize that there are very significant differences between the business models of insurance companies and the banks that supervise and we are taking the time that is necessary to understand those differences and to attempt to craft a set of capital and liquidity requirements that will be appropriate to the business models of insurance companies.”

Given this ongoing regulatory process, Congress should wait to review and assess the Federal Reserve’s rules. Though I understand the Federal Reserve has stated that it is also constrained by Section 171, absent a rule, the nature and potential impact of any constraint remains theoretical.1 Though it is true that Section 171 applies to a bank/thrift holding company and a systemically important institution, even if it is predominantly engaged in insurance, the Federal banking agencies have broad authority to establish risk weights that credit the state-regulated insurance activities while still capturing the other, banking and potentially risky unregulated activities as they would with a bank holding company.

If Congress ultimately decides to legislate, I strongly urge it to do so only in the most-narrow way: providing Federal Reserve with discretion to give credit for the effective and applicable capital standards of state insurance regulators.

This narrow approach would provide the clarity and flexibility needed without undermining the essential safeguard for holding companies and unregulated affiliates. It would also help ensure that there is a “cop on the beat” (i.e., the relevant state insurance regulator) who is accountable for his/her capital regime and for the protection of state insurance policyholders. To the extent a firm is also engaged in non-insurance activities, or other AIG like synthetic risk-taking, it should not be carved out from this common sense capital floor just because it also has a large insurance business. It should apply equally to all firms engaging in the same activity.

Unfortunately S. 1369 is too broad and would undermine the protections afforded by Section 171 and create a host of artificial advantages for these firms that could reduce their safety and soundness and set the stage for more AIG-type failures.

S. 1369 goes well beyond clarifying the Federal Reserve’s authority and would instead provide a wholesale carve out, not just for state regulated insurance subsidiaries, but for all activities if the consolidated entity is “primarily engaged in the business of insurance.” Given the broad definitions, I fear that even AIG, in 2008, might have been carved out under this broad approach because it had a large insurance business.

Moreover, even today – with AIG being designated by the FSOC for heightened prudential standards – they might be carved out from Section 171 if they meet the broad “primarily engaged” test. Though Section 165 of the Dodd-Frank Act could be used to recapture the systemic firms, eliminating the capital floor leaves open the possibility that regulators could again impose lower/weaker standards at large, systemic firms as they did before the financial crisis. If stronger protections and higher capital are needed for large, potentially systemic financial institutions (and I believe they are), why remove the floor that helps provide basic protections and a level playing field?
While I understand there maybe disagreements about whether individual insurance companies are potentially systemic, once a firm is designated, there is no reason why they should have lower capital standards than bank holding companies – or even community banks – under the basic “generally applicable” standards simply because they are “primarily” insurance. Permitting the Federal Reserve to credit effective capital standards established for state regulated insurance subsidiaries is one thing: a wholesale carve out from these minimum standards for all activities, is another, particularly in light of the lessons learned from AIG in 2008.

Insurance companies are not risk-free

Though insurance companies are different than banks, it is important to remember that they put their money in many of the same assets: government and corporate bonds, mortgage-backed securities, and real estate loans. Indeed, according to the American Council of Life Insurers’ data, life insurers have over a trillion dollars in real estate exposure, including $600 trillion in mortgage-backed securities and $354 billion in commercial and residential mortgages. Though their run-risk may be different from banks, it is real. While banks hold short-term deposits, most are backed by the FDIC, and are quite stable, as we saw during the crisis. Even if we concede these differences, insurance policy holders can “run,” just differently. A life insurance policy is not indentured servitude. Policyholders can cash out whole life and annuity products, and halt premium payments on term products. Indeed, one of the biggest life insurance failures – $15 billion Executive Life – suffered debilitating policy surrenders contributing to its failure in 1991.

I question the argument that insurance organizations should have weaker bank/thrift holding company protections because their insurance policy holders can’t easily cash out if they make bad investments. This holding company capital is there to absorb unexpected losses, capture risks in their unregulated entities, and protect customers and the markets from their potential failure. All these risks exist in a bank/thrift holding company or a systemically important financial institution, even if that firm also happens to have a large insurance business. Moreover, given the long-term nature of life insurers’ obligations to their policy holders, they are exposed to substantial risk based on market fluctuations and turns in the economic cycle. Thus, it could be easily argued that they need more, not less, capital than banks based on the long tail of their liability structure.

A more valid argument is that state regulated insurance companies are already subject to oversight by state regulators who are experts in the risk of insurance. Therefore, these institutions do not need another layer of federal standards. This argument would be more compelling if the Federal Reserve had already written rules and if they needed a narrow clarification of authority.

To go beyond a narrow clarification would undermine federal capital standards for all their businesses, including their unregulated U.S. affiliates, their overseas activities and their banking business. We should remember it was not AIG’s state-regulated insurance business that got it into trouble; it was its derivatives business in London.

Conclusion

During the years leading up to the crisis, there was a substantial amount of regulatory arbitrage between bank holding companies and nonbank institutions (investment banks, GSEs, AIG), as well as between large and small banking institutions, with complex, mega institutions being able to operate with thinner capital cushions than the average community bank. The Collins Amendment/Section 171 was designed to strengthen the integrity of capital standards by imposing a generally applicable floor that would constrain destabilizing leverage for all systemic institutions, regardless of business model, so that they would have to hold at least as much capital as that generally required of smaller banks.

Though I understand the desire to proactively address an issue that could become a problem, there are substantial downside risks for consumers and the markets. As it moves forward, I hope the Committee will go slow and consider the risks and tradeoffs before changing this important safeguard. To its credit, Congress has thus far chosen not to reopen Dodd-Frank, and instead has afforded regulators the opportunity to implement its provisions through an open rulemaking process before considering changes. I believe that legislation is unnecessary and that the Federal Reserve has ample discretion under current law to craft appropriate capital rules for insurance companies that are systemic or that are bank/thrift holding companies. If the Congress ultimately decides to legislate, I strongly urge it to do so only in the most-narrow way: providing Federal Reserve with discretion to give credit for the effective and applicable capital standards of state insurance regulators.

In considering legislation in this area, the key question for Congress to consider is whether systemic institutions, as well as those with access to the federal safety net through their ownership of a federally insured bank, are sufficiently capitalized. If a company lacks sufficient capital to meet the Fed’s basic (and still undefined) standards – Congress should then examine whether requiring additional capital of that institution is an undesirable policy result. Millions of Americans rely on these companies to safeguard their assets, and fulfill their legal obligations to them. It would be a terrible mistake to eliminate an important safeguard only to later learn that firms are, or became, more risky than had been previously assumed.

Respectfully,

Sheila C. Bair

image: New York Times

In cities like Atlanta, Phoenix and Las Vegas, Wall Street is moving into the rental market for single family homes, a new trend that is raising concerns among housing advocates. Josh Barro, David Cay Johnston, Laura Gottesdiener, Dorian Warren and Rep. Mark Takano, D-Calif., join to discuss.

The subprime mortgage crisis was not only an economic disaster but posed challenges to traditional rules of property law. Banks helped create the crisis by marketing mortgages through unfair and deceptive practices. They induced many consumers to take out high-priced loans they could not afford and then passed the risk to investors who were fooled into thinking these were safe investments. These practices violate traditional norms underlying both consumer protection and securities regulation statutes. In addition, U.S. banks greased the wheels of the mortgage securitization process by creating a privatized mortgage registration system that has undermined the clarity and publicity of property titles. Because of securitization procedures and the lax record-keeping practices, the banks have undermined the property recording system; we no longer have clear public titles to real property in the United States. To fix the mess they left us, we must adopt norms to govern the mortgage market that will protect both homeowners and investors from predatory loans while promoting legitimate property transactions. We also need to fix the mortgage registration system so we have a legal infrastructure for property that both works well and reflects the norms of a free and democratic society.

Reuters-

A whistleblower will be paid $63.9 million for providing tips that led to JPMorgan Chase & Co’s agreement to pay $614 million and tighten oversight to resolve charges that it defrauded the government into insuring flawed home loans.

The payment to the whistleblower, Keith Edwards, was disclosed on Friday in a filing with the U.S. district court in Manhattan that formally ended the case.

In the February 4 settlement, JPMorgan admitted that for more than a decade it submitted thousands of mortgages for insurance by the Federal Housing Administration or the Department of Veterans Affairs that did not qualify for government guarantees.

[REUTERS]

Bergman & Gutierrez –

On March 4, 2014, Bergman & Gutierrez argued an important foreclosure case before the 9th Circuit Court of Appeals. Deborah Gutierrez argued Junod v. MERS et al., before a 3 judge panel of the Ninth Circuit Court of Appeals. The case involves issues similar to those in Glaski v. Bank America– whether a homeowner can challenge a foreclosure by claiming that a post-closing date transfer into a securitized trust governed by New York Trust law was void. While this issue involves a complex analysis of California law, New York trust law, and IRS codes, the issue is relatively simple. The theory advanced by the Plaintiffs in this case was that as U.S. Bank as Trustee for the CSMC Trust Mortgage Backed 2006-6 did not actually own the mortgage loan on which it foreclosed. More specifically, the Plaintiffs claimed that the Assignment of Deed of Trust, dated April 16, 2010, purporting to assign their mortgage loan to a securitized trust with a “closing date” of June 29, 2006, was void since the trust had closed years before in 2006. Thus, U.S. Bank as the trustee, could not have validly accepted the untimely transfer of the mortgage.

The plaintiffs in this case lost their home to a foreclosure in May 2011. Although plaintiffs tried to avoid foreclosure by negotiating with Wells Fargo’s servicing company, America’s Servicing Company, U.S. Bank nevertheless foreclosed and sold their home at auction. Despite seeking information from U.S. Bank and ASC concerning why ASC refused to provide them with a modification after entering into several trial loan modification plans, plaintiffs lost their home of over 25 years in March 2011.

continue to listen to B&G argue this foreclosure case [BERGMAN & GUTIERREZ]

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION TO DISMISS PLAINTIFFS’ SECOND AMENDED COMPLAINT

[Re: ECF No. 11]

LAUREL BEELER, Magistrate Judge.

INTRODUCTION

Plaintiffs Manoj Rijhwani and Lisa Rijhwani (“Plaintiffs”) sued Wells Fargo Bank, N.A. (“Wells Fargo”)^[1] for its alleged misconduct in relation to Plaintiffs’ attempt to get a loan modification and the concurrent foreclosure proceedings on Plaintiffs’ property. See Second Amended Complaint (“SAC”), ECF No. 1-1 at 1-24.^[2] Wells Fargo moves to dismiss Plaintiffs’ Second Amended Complaint. See Motion, ECF No. 11. Pursuant to Civil Local Rule 7-1(b), the court found this matter suitable for determination without oral argument and vacated the February 20, 2014 hearing. 2/19/2014 Clerk’s Notice, ECF No. 16. Upon consideration of the Second Amended Complaint, the briefs submitted, and the applicable legal authority, the court GRANTS IN PART and DENIES IN PART Wells Fargo’s motion to dismiss.

STATEMENT^[3]

I. PLAINTIFFS’ LOANS

In or about July 5, 2007, Plaintiffs took out an equity line of credit with World Savings Bank, FSB (“World Savings”), a federal savings bank, on their home at 1044 Rudder Lane, Foster City, California (the “Property”). SAC, ECF 1-1 ¶ 11. As part of this transaction, Plaintiffs executed a promissory note that gave World Savings a security interest in the Property in the form of a deed of trust. See SAC, ECF No. 1-1 ¶ 11; RJN, Ex. A, ECF No. 12 at 5. For purposes of this order, this loan will be referred to as the “Second Loan.”

Plaintiffs’ prior loan history is a bit unclear from the pleadings and documents submitted. Although they do not explicitly describe it, Plaintiffs allege that at some point prior to 2007 they had entered into a mortgage loan transaction with World Savings and executed a promissory note that gave World Savings a security interest also in the Property in the form of a deed of trust. See SAC, ECF No. 1-1 ¶ 11 (“Plaintiffs entered into a consumer loan transaction with World Savings to refinance [the Property]”) (emphasis added); id. ¶ 12 & n.3 (alleging that the beneficial interest in the promissory notes underlying both Plaintiff’s first mortgage and second mortgage with World Savings had been sold to Wells Fargo in late January 2012); id. ¶ 13 (“Plaintiffs were in default under their first loan in 2011″) (emphasis added); id. ¶ 20 (“Plaintiffs [were] instructed not to make payments on either of their loans”) (emphasis added). For purposes of this order, this loan will be referred to as the “First Loan.”

On December 31, 2007, World Savings changed its name to Wachovia Mortgage, FSB (“Wachovia”), and remained a federal savings bank. In November 2009, Wachovia changed its name to Wells Fargo Bank Southwest, N.A., became a national association (and ceased being a federal savings bank), and immediately merged into Wells Fargo, which was and is a national association. See RJN, Exs. B-E, ECF No. 12 at 28-37. Plaintiffs allege that both of Plaintiffs’ “loans,” and/or the “beneficial interests in the [p]romissory [n]otes underlying” those loans, were “sold and/or transferred” to Wells Fargo in late January 2012. SAC, ECF No. 1-1 ¶ 12 & n.3.

II. PLAINTIFFS’ ATTEMPT TO MODIFY THE FIRST LOAN AND THE PURPORTED POSTPONEMENT OF FORECLOSURE PROCEEDINGS

In 2011, Plaintiffs defaulted on their First Loan, and, “in an earnest attempt to stave off an impending foreclosure” of the Property, Plaintiffs “decided to avail themselves of Wells Fargo’s available foreclosure avoidance programs.” Id. ¶ 13. In September of that year, Plaintiffs began a series of discussions with bank representatives about obtaining a loan modification on the first loan. Id. According to Plaintiffs, “Sean Martin, a Wachovia representative who apprised them of the upcoming transfer of their loans to Wells Fargo,” advised Plaintiffs that a new loan modification program was being instituted and that Plaintiffs should “refrain from paying toward their [S]econd [L]oan” and await enrollment information for the new program. Id. “No such enrollment information was forthcoming,” however, and after this “both Wachovia and Wells Fargo ceased sending Plaintiffs monthly statements with respect to either of their loans.” Id.

At some point, Plaintiffs defaulted on their Second Loan. Id. ¶ 14 (“Because their second loan’s regular monthly payment was between $200.00 and $300.00, Plaintiffs would have had no difficulty making it . . . Plaintiffs had already made numerous attempts with various Wells Fargo representatives to cure the [S]econd [L]oan’s arrearages, but because they were no longer receiving monthly statements, the exact amount in default was unknown”). Plaintiffs attempted to bring the Second Loan current, but bank representatives failed to provide Plaintiffs with “a straight answer” about the amount owed. Id.

On February 27, 2012, a Wells Fargo representative named “Armando” provided Plaintiffs with information regarding Wells Fargo’s pre-qualification process for a Home Affordable Modification Program (“HAMP”) loan modification. Id. Nevertheless, on the following day, February 28, 2012, Wells Fargo recorded and issued a Notice of Default with respect to Plaintiffs’ Second Loan, stating that the amount owed was $4,023.90. Id. ¶ 15; see RJN Ex. G, ECF No. 12 at 41.

On March 3, 2012, another Wells Fargo representative stated that Plaintiffs would need to pay $2,000.00 to bring the Second Loan current, but advised Plaintiffs to wait for the “specialist” who would ultimately be assigned to their case because he or she would be making the decisions as to the “next steps” in the process, including any issues regarding payment. SAC, ECF No. 1-1 ¶ 16.

On April 18, 2012, Plaintiffs were assigned a “Home Preservation Specialist” named Juan Teran. Id. ¶ 19. Despite Plaintiffs’ financial ability and willingness to continue paying toward the Second Loan and to bring it current, Mr. Teran instructed Plaintiffs not to make payments on either of their loans until he had a clear picture of Plaintiffs’ situation. Id. ¶ 20. On April 24, 2012, Mr. Teran reiterated his advice to not make payments because the principal amount on both loans would be reduced and that the two loans might ultimately be combined. Id. ¶ 21. He further told Plaintiffs that he would provide them with the necessary forms to submit their HAMP loan modification application. Id.

Plaintiffs, however, did not receive any forms, and they were not able to get a hold of any Wells Fargo representative until May 8, 2012. Id. ¶ 22. At that time, Mr. Teran assured Plaintiffs that no foreclosure sale would be conducted during the evaluation of Plaintiffs’ HAMP loan modification application. Id. A letter from Mr. Teran, dated May 15, 2012, reiterated this assurance. Id. Plaintiffs were informed in a later conversation on May 17, 2012 that they were indeed eligible for a HAMP loan modification and that the necessary forms to apply for it were forthcoming. Id.

To the contrary, on June 15, 2012, Plaintiffs discovered a Notice of Trustee’s Sale (based on their defaulting on the Second Loan) posted on their door; the sale was scheduled for June 20, 2012. Id. ¶ 23; see RJN Ex. H, ECF No. 12 at 45. On June 18, 2012, Plaintiffs contacted Mr. Teran to express their concern. SAC, ECF No. 1-1 ¶ 23. Mr. Teran told Plaintiffs not to worry because the sale would be postponed to August 7, 2012, and he instructed Plaintiffs not to make any payments because Wells Fargo could not decide how much these payments would be, in part because Plaintiffs’ modified interest rate had not yet been established. Id.

On June 20, 2012, Mr. Teran told Plaintiffs to ignore any further notices from Regional Trustee Services Corporation (“RTSC”), as this company was “just a formality from Wells Fargo,” that he, not the Trustee, was the “primary decision maker,” and that as long as they continued to work with him, “nothing [would] happen to [their] home.” Id. ¶ 24.

At Mr. Teran’s request, Plaintiffs faxed their most recent pay stubs, along with their 2011 federal tax statements on June 22, 2012; receipt of the documents was confirmed on June 25, 2012. Id. ¶ 25. The following week, Plaintiffs filled out and submitted electronic copies of the Request for Modification Affidavit (“RMA”) and IRS Form 4506-T (Request for Transcript of Tax Return); receipt of those documents was confirmed on July 15, 2012. Id.

On August 7, 2012, Mr. Teran stated that he was still reviewing Plaintiffs’ documents and that the previously rescheduled Trustee’s Sale had been postponed, a second time, to October 2012. Id. The next day, at Mr. Teran’s request, Plaintiffs again completed and submitted Wells Fargo’s previously-mailed versions of the RMA and Form 4506-T. Id. ¶ 26. In a subsequent phone conversation, Mr. Teran once again asked for Plaintiffs’ most recent pay stubs in order to “submit [their] application”; receipt of the documents was confirmed on August 27, 2012. Id.

In mid-September, Mr. Teran informed Plaintiffs that he “ha[d] all the information to submit [their] application,” that he would do so “in the next couple of weeks,” and that, based upon the underwriter’s results, he would follow up within four to six weeks with Wells Fargo’s determination. Id. ¶ 26. Plaintiffs were also informed that the Trustee’s Sale had been postponed, a third time, to December 2012. Id.

In December, Mr. Teran told Plaintiffs that he needed a Homeowners’ Association Statement in order to submit the application, and that the Trustee’s Sale had been postponed, a fourth time, to January 2013. Id. ¶ 28. Plaintiffs inquired as to why, despite their apparent eligibility for a loan modification, their home continued to be scheduled and rescheduled for sale. Id. Mr. Teran responded that this was “just part of [the Wells Fargo] process to put pressure on homeowners to work with the Home Preservation Specialist and move the application process forward.” Id.

Concerned about the status of their application and the upcoming Trustee’s Sale, Plaintiffs attempted to contact Mr. Teran, leaving detailed voicemail messages at his extension on January 10, 14, and 18, 2013. Id. ¶ 29. Mr. Teran eventually responded on January 18, 2013. Id. Yet again, Mr. Teran requested more documents—a resubmission of the RMA and Form 4506-T with January 2013 dates along with their most recent pay stubs—and stated that once these items were received, he would submit their application and postpone the Trustee’s Sale, a fifth time, to April 2013. Id. Mr. Teran also reminded Plaintiffs to ignore any notices from RTSC. Id.

Plaintiffs contacted Mr. Teran again on February 4, 2013 to confirm receipt of the requested documents and the rescheduled Trustee’s Sale date in April, 2013. Id. ¶ 30. Plaintiffs were told to expect a final determination on their application before the rescheduled sale date. Id. In order to confirm that their application had actually been submitted, Plaintiffs attempted to contact Mr. Teran on February 15, 19, and 21. Id. However, Plaintiffs were unable to leave any voicemail messages because Mr. Teran’s mailbox was full and could not accept new messages. Id.

Plaintiffs were finally able to speak to Mr. Teran again on March 1, 2013, when he informed Plaintiffs that there were “new versions” of the RMA and Form 4506-T that needed to be completed and submitted by fax, along with their most recent pay stubs and yet another Homeowners’ Association Statement. Id. ¶ 31. This same day, Plaintiffs discovered a Three Day Notice to Quit posted on their front door. Id. ¶ 32.

Plaintiff were not able to get a hold of Mr. Teran until March 5, 2013. Id. ¶ 33. When Plaintiffs informed him of the Three Day Notice to Quit, Mr. Teran expressed surprise, and assured them that he would follow up with Wells Fargo’s Foreclosure Department to “reverse the sale” of their home. Id. Upon Plaintiffs’ insistence, Mr. Teran transferred them to the Foreclosure Department, where Plaintiffs explained their plight to a Wells Fargo representative named “Maria Santiago.” Id. Ms. Santiago expressed her sympathy and asked Plaintiffs to send a letter to the Foreclosure Department, which would “open an inquiry into [this] wrongful foreclosure.” Id. Ms. Santiago then tried to contact Mr. Teran but was unable to do so. Id. Receipt of Plaintiffs’ letter was confirmed by another Wells Fargo representative on March 11, 2013. Id. ¶ 34. Plaintiffs have since had no contact with Mr. Teran or any other Wells Fargo representative to date. Id.

III. FORECLOSURE

Plaintiffs’ residence was sold for $231,600 to a third party buyer following a Trustee’s Sale conducted on March 1, 2013. Id. ¶ 34; see RJN Ex. I, ECF No. 12 at 49-51. As it turned out, the Trustee’s Sale had not, as Mr. Teran represented, been rescheduled for April 2013. SAC, ECF No. 1-1 ¶ 35. Had Plaintiffs known of the sale on March 1, 2013, they would have attended it, and because they were in a financial position to “place a competitive bid,” they might have been able to repurchase the property that day. Id.

It appears that Mr. Teran never submitted Plaintiffs’ HAMP loan modification application. Id. ¶ 36. Plaintiffs were never provided with a written denial, nor were they afforded any opportunity to appeal any decision on it, if a decision was ever made. Id. ¶ 38.

IV. PROCEDURAL HISTORY

Plaintiffs initiated this civil action on April 11, 2013 in San Mateo County Superior Court. See Notice of Removal Ex. A, ECF No. 1. On November 25, 2013, Plaintiffs filed the operative Second Amended Complaint in state court. SAC, ECF No. 1-1. It contains the following claims: (1) violation of the California Homeowners’ Bill of Rights (“HBOR”) for “dual tracking” the foreclosure process, failing to provide a written denial for a loan modification before recording a Notice of Default or conduct a Trustee’s Sale, and failing to provide a single point of contact throughout the foreclosure proceedings; (2) promissory estoppel; and (3) negligence. See id. ¶¶ 39-69.

Wells Fargo did not answer the Second Amended Complaint. Instead, on December 19, 2013, Wells Fargo removed the action to this court on diversity of citizenship grounds. Notice of Removal, ECF No. 1 at 2. On January 9, 2014, Wells Fargo moved to dismiss Plaintiffs’ Second Amended Complaint under Federal Rule of Civil Procedure 12(b)(6). Motion, ECF No. 11. Plaintiffs opposed the motion on January 23, 2014. Opposition, ECF No. 13. Wells Fargo filed a reply on January 29, 2014. Reply, ECF No. 14.

ANALYSIS

I. LEGAL STANDARD

A court may dismiss a complaint under Federal Rule of Civil Procedure 12(b)(6) when it does not contain enough facts to state a claim to relief that is plausible on its face. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). “The plausibility standard is not akin to a `probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 557.). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff’s obligation to provide the `grounds’ of his `entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555 (internal citations and parentheticals omitted).

In considering a motion to dismiss, a court must accept all of the plaintiff’s allegations as true and construe them in the light most favorable to the plaintiff. See id. at 550; Erickson v. Pardus, 551 U.S. 89, 93-94 (2007); Vasquez v. Los Angeles County, 487 F.3d 1246, 1249 (9th Cir. 2007).

If the court dismisses the complaint, it should grant leave to amend even if no request to amend is made “unless it determines that the pleading could not possibly be cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (quoting Cook, Perkiss and Liehe, Inc. v. Northern California Collection Serv. Inc., 911 F.2d 242, 247 (9th Cir. 1990)). But when a party repeatedly fails to cure deficiencies, the court may order dismissal without leave to amend. See Ferdik v. Bonzelet, 963 F.2d 1258, 1261 (9th Cir. 1992) (affirming dismissal with prejudice where district court had instructed pro se plaintiff regarding deficiencies in prior order dismissing claim with leave to amend).

II. DISCUSSION

A. Plaintiffs’ Claims Are Not Preempted by the Home Owners’ Loan Act

Wells Fargo first argues that all of Plaintiffs’ claims are preempted by the Home Owners’ Loan Act (“HOLA”), 12 U.S.C. § 1461 et seq. See Motion, ECF No. 11 at 10-17. HOLA regulates federal savings associations (and federal savings banks) and imposes rules on such associations according to nationwide “best practices.”^[4] See Silvas v. E*Trade Mortg. Corp., 514 F.3d 1001, 1004 (9th Cir. 2008); see also 12 U.S.C. §§ 1462, 1464. Congress enacted HOLA to centrally regulate federal savings associations “at a time when record numbers of homes were in default and a staggering number of state-chartered savings associations were insolvent.” Id. Congress also created the Office of Thrift Supervision (“OTS”) to administer the statute, and “it provided the OTS with `plenary authority’ to promulgate regulations involving the operation of federal savings associations.” State Farm Bank v. Reardon, 539 F.3d 336, 342 (6th Cir. 2008). Under one of those regulations, 12 C.F.R. § 560.2, OTS makes clear that it “occupies the entire field of lending regulation for federal savings associations,” leaving no room for conflicting state laws.

The initial question, then, is whether HOLA even applies to Wells Fargo, given that Wells Fargo is not a federal savings association. Wells Fargo addresses this issue in a single footnote in its motion, which states simply that “HOLA still applies even though [Wells Fargo] is no longer chartered as a federal savings bank.” Motion, ECF No. 11 at 10 n.1. Wells Fargo then string cites seven^[5] opinions, most of which are unhelpful for the reasons explained below. Id. (citing In re Ocwen Loan Servicing, LLC Mortgage Servicing Litig., 491 F.3d 638, 642 (7th Cir. 2007); Terrazas v. Wells Fargo Bank, N.A., No. 13-cv-00133-BEN-MDD, 2013 WL 5774120, at *3 (S.D. Cal. Oct. 24, 2013); Pratap v. Wells Fargo Bank, N.A., No. C 12-06378 MEJ, 2013 WL 5487474, at *3-5 (N.D. Cal. Oct. 1, 2013); Marquez v. Wells Fargo Bank, N.A., No. C 13-2819 PJH, 2013 WL 5141689, at *4 (N.D. Cal. Sept. 13, 2013); Taguinod v. World Savings Bank, FSB, 755 F. Supp. 2d 1064, 1068-69 (C.D. Cal. 2010); Guerrero v. Wells Fargo Bank, N.A., No. CV 10-5095-VBF(AJWx), 2010 WL 8971769, at *3 (C.D. Cal. Sept. 14, 2010); DeLeon v. Wells Fargo Bank, N.A., 729 F. Supp. 2d 1119, 1126 (N.D. Cal. 2010)).

The Ninth Circuit Court of Appeals has not addressed this issue. The district court opinions that Wells Fargo cites generally support the proposition that a successor to a federal savings association or bank (even if the successor itself is not a federal savings association or bank) may assert HOLA preemption if the loan at issue was originated by a federal savings association or bank. And it is true that a number of courts in this district (including this one), have held that the status of the originator of the loan determines the applicability of HOLA to a particular loan, but in nearly all of those cases, the plaintiffs either failed to argue otherwise or conceded the issue, the upshot being that the courts never had to grapple with it; instead, the courts simply concluded, without much analysis, that HOLA preemption applied. See, e.g., Pratap, 2013 WL 5487474, at *3-5; Graybill v. Wells Fargo Bank, N.A., 953 F. Supp. 2d 1091, 1109 (N.D. Cal. 2013); Preciado v. Wells Fargo Home Mortgage, No. 13-00382 LB, 2013 WL 1899929, at *3-4 (N.D. Cal. May 7, 2013); Plastino v. Wells Fargo Bank, 873 F. Supp. 2d 1179, 1184 n.3 (N.D. Cal. 2012); Appling v. Wachovia Mortg., FSB, 745 F. Supp. 2d 961, 971 (N.D. Cal. 2010); DeLeon, 729 F. Supp. 2d at 1126. Indeed, one court has observed that courts so holding generally “cite either (a) nothing, (b) each other, or (c) generic statements of law about corporations succeeding to the rights of the entities they acquire.” Gerber v. Wells Fargo Bank, N.A., Civ. No. 11-01083-PHX-NVW, 2012 WL 413997, at *4 (D. Ariz. Feb. 9, 2012).

Other district courts have more recently questioned the logic of allowing a successor party such as Wells Fargo to assert HOLA preemption, especially when the wrongful conduct alleged was done after the federal savings association or bank ceased to exist. See, e.g., Cerezo v. Wells Fargo Bank, No. 13-1540 PSG, 2013 WL 4029274, at *2-4 (N.D. Cal. Aug. 6, 2013); Leghorn v. Wells Fargo Bank, N.A., 950 F. Supp. 2d 1093, 1107-08 (N.D. Cal. 2013); Hopkins v. Wells Fargo Bank, N.A., CIV. 2:13-00444 WBS, 2013 WL 2253837, at *3 (E.D. Cal. May 22, 2013); Rhue v. Wells Fargo Home Mortgage, Inc., No. CV 12-05394 DMG (VBKx), 2012 WL 8303189, at *2-3 (C.D. Cal. Nov. 27, 2012); Rodriguez v. U.S. Bank Nat. Ass’n, Civ. No. 12-00989 WHA, 2012 WL 1996929, at *7 (N.D. Cal. June 4, 2012); Albizo v. Wachovia Mortgage, No. 2:11-cv-02991 KJN, 2012 WL 1413996, at *15-16 (E.D. Cal. Apr. 20, 2012); Scott v. Wells Fargo Bank, N.A., No. 10-3368 (MJD/SER), 2011 WL 3837077, at *4-5 (D. Minn. Aug. 29, 2011); Gerber, 2012 WL 413997, at *4; Valtierra v. Wells Fargo Bank, N.A., Civ. No. 1:10-0849, 2011 WL 590596, *4 (E.D. Cal. Feb. 10, 2011). Those courts usually have applied HOLA preemption only to conduct occurring before the loan changed hands from the federal savings association or bank to the entity not governed by HOLA. See, e.g., Leghorn, 950 F. Supp. 2d at 1107-08 (N.D. Cal. 2013); Hopkins, 2013 WL 2253837, at *3; Rhue, 2012 WL 8303189, at *2-3; Rodriguez, 2012 WL 1996929, at *7; Scott, 2011 WL 3837077, at *4-5; Gerber, 2012 WL 413997, at *4; Valtierra, 2011 WL 590596, *4. This is because “preemption is not some sort of asset that can be bargained, sold, or transferred. . . .” Gerber, 2012 WL 413997, at *4. Rather, as the court in Rhea explained:

The important consideration is the nature of the alleged claims that are the subject of the suit. The governing laws would be those applicable to [World Savings Bank] at the time the alleged misconduct occurred. Wells Fargo, being the successor corporation to Wachovia Mortgage and thus [World Savings Bank], succeeds to those liabilities, whatever the governing law at that time may be. Therefore, [World Savings Bank’s] conduct before its merger with Wells Fargo on November 1, 2009 would be governed by HOLA where appropriate, while Wells Fargo’s own conduct after that date would not.

2012 WL 8303189, at *3.

The court finds this reasoning persuasive, and in light of there being no binding Ninth Circuit authority, the court applies it to this action. Here, all of the wrongful conduct alleged by Plaintiffs was done by Wells Fargo and occurred from 2011 to 2013, well after Wachovia merged into Wells Fargo. This means that Wells Fargo, which is not a federal savings association or bank, may not assert HOLA preemption in this particular action.^[6]

B. The Merits of Plaintiffs’ Claims

With the preemption issue out of the way, the court now addresses Wells Fargo’s arguments regarding the merits of Plaintiffs’ claims.

1. Plaintiffs’ HBOR Claim

In their first claim, Plaintiffs allege that Wells Fargo violated several requirements of HBOR.^[7] See SAC, ECF No. 1-1 ¶¶ 39-50. Generally speaking, HBOR is a California state law that provides protections for homeowners facing foreclosure and reforms some aspects of the foreclosure process. Its purpose is to ensure that homeowners are considered for, and have a meaningful opportunity to obtain, available loss mitigation options such as loan modifications or other alternatives to foreclosure. HBOR provides a private right of action against loan servicers and trustees for their conduct during foreclosure, as well as during the loan modification application submission and review processes.

Plaintiffs allege that Wells Fargo violated HBOR in three ways. First, Plaintiffs allege that Wells Fargo violated HBOR’s prohibition of “dual track foreclosure,” see California Civil Code § 2923.6(c), which provides in relevant part that “[i]f 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.” See SAC, ECF No. 1-1 ¶¶ 39-50. Plaintiffs assert that Wells Fargo advanced the foreclosure process while Mr. Teran was concurrently preparing Plaintiffs’ HAMP loan modification application. From September 2011 through March 2013 Plaintiffs were repeatedly advised to refrain from paying toward either their First Loan or Second Loan and to submit numerous documents so that Mr. Teran could submit a HAMP loan modification application with respect to their First Loan, yet they received a Notice of Default on February 28, 2012, a Notice of Trustee’s Sale on June 15, 2012, and a three-day Notice to Quit on March 1, 2013, and they ultimately lost the Property in a Trustee’s Sale.

Second, Plaintiffs allege that Wells Fargo violated California Civil Code § 2923.6(c)(1) and (d), which together prevent a lender from initiating foreclosure proceedings before it has made a written determination that the borrower is not eligible for a first-lien loan modification and the 30-day appeal period has expired.^[8] See SAC, ECF No. 1-1 ¶¶ 39-50. Plaintiffs allege that they never received a written decision denying their loan modification application before Wells Fargo recorded a Notice of Default on February 28, 2012 and a Notice of Trustee’s Sale on June 15, 2012, and subsequently conducted a Trustee’s Sale of the Property on March 1, 2013.

Third, Plaintiffs allege that Wells Fargo violated California Civil Code § 2923.7(a), which provides that “[u]pon request from a borrower who requests a foreclosure prevention alternative, the mortgage servicer shall promptly establish a single point of contact and provide to the borrower one or more direct means of communication with the single point of contact.” See SAC, ECF No. 1-1 ¶¶ 39-50. On April 18, 2012, Wells Fargo assigned Mr. Teran to serve as Plaintiffs’ “Home Preservation Specialist” and single point of contact in their case. Plaintiffs allege that Mr. Teran’s consistent unavailability at critical times throughout the process falls short of this requirement. They allege that he was routinely unavailable when Plaintiffs attempted to contact him to inquire about the status of their application on multiple occasions in the months leading up to the Trustee’s Sale.

Wells Fargo makes three arguments in favor of dismissal of Plaintiffs’ HBOR claims. First, it argues that because it is a signatory to the National Mortgage Settlement (“NMS”) and in compliance with the NMS’s terms, it is insulated from liability for alleged HBOR violations. Motion, ECF No. 11 at 18. The NMS is a consent judgment reached in United States v. Bank of America Corp., No. 1:12-cv00361 RMC (D.D.C. Apr. 4, 2012) and to which Wells Fargo indeed is a signatory. See RJN, Ex. J, ECF No. 12 at 53-59; see also Winterbower v. Wells Fargo Bank, N.A., SA CV 13-0360-DOC, 2013 WL 1232997, at *3 (C.D. Cal. Mar. 27, 2013) (describing the NMS). Under California Civil Code § 2924.12, a signatory to the NMS “shall have no liability for a violation of §§ 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11 or 2924.17” as long as the signatory is in compliance with the relevant terms from the Settlement Term Sheet. See also Winterbower, 2013 WL 1232997, at *3. Wells Fargo’s argument fails at the motion to dismiss stage, however, because this safe harbor, so to speak, appears to be an affirmative defense to be raised on summary judgment and for which Wells Fargo has the burden of proof. The court found no authority to support its argument that the safe harbor’s lack of applicability is an element of Plaintiffs’ HBOR claim that they must allege to survive a motion to dismiss, and the opinion that Wells Fargo cites does not say that it is, either. See id. That opinion discusses this defense in the context of a court’s decision whether to grant a plaintiff’s request for a temporary restraining order, but that decision is based on an entirely different legal standard (i.e., the likelihood of success on the merits versus the sufficiency of allegations). See id. This does not mean that this argument—if supported by evidence—ultimately is not a winner for Wells Fargo; it just means that now is not the appropriate time to try to make it.

Second, Wells Fargo argues that Plaintiffs’ HBOR claims are based on conduct taken in relation to the Second Loan only and points out that HBOR does not apply to a foreclosure based on a junior lien. Motion, ECF No. 11 at 18-19. California Civil Code § 2924.15(a) does, in fact, state that Sections 2923.6 (the basis for Plaintiffs’ “dual tracking” and no-written-loan-modification-determination claims) and 2923.7 (the basis for Plaintiffs’ “single point of contact” claim) of HBOR “shall only apply to first lien mortgages or deeds of trust.” And it is true that the Notice of Default and Notice of Trustee’s Sale recorded, and the Trustee’s Sale itself, all related to Plaintiff’s Second Loan, and not their First Loan. But this dooms only Plaintiffs’ claim that Wells Fargo recorded these notices and conducted the Trustee’s Sale before providing a written denial of their HAMP loan modification application, because that claim is based on Wells Fargo’s foreclosure under the Second Loan. Plaintiffs’ other claims, however, are based on Wells Fargo’s conduct with respect to their First Loan as well as their Second Loan. Their allegations clearly show that they were in contact with Wells Fargo employees, including Mr. Teran, about both of their loans, yet Wells Fargo foreclosed under the second deed of trust while their application to modify their First Loan was still pending (or at least they had not been told that it either had not been submitted or been denied). Wells Fargo’s view of the situation fails to account for how Plaintiffs’ two loans were intertwined during the loan modification process and Plaintiffs’ conversations with Wells Fargo’s employees.

Third, Wells Fargo argues that Plaintiffs’ HBOR claims fail because the Notice of Default and Notice of Trustee’s Sale were recorded in 2012, but HBOR did not take effect until January 1, 2013 and is not retroactive. Motion, ECF No. 11 at 19. It is true that those documents were recorded in 2012 and that HBOR did not take effect until 2013. See RJN, Exs. G, H, ECF No. 12 at 41-47; Rockridge Trust v. Wells Fargo, N.A., C-13-01457 JCS, 2013 WL 5428722, at *28 (N.D. Cal. Sept. 25, 2013) (HBOR took effect on January 1, 2013 and is not retroactive) (citations omitted); Michael J. Weber Living Trust v. Wells Fargo Bank, N.A., No. 13-cv-00542-JST, 2013 WL 1196959, at *4 (N.D. Cal. Mar. 25, 2013) (same). The problem with Wells Fargo’s argument, however, is that not all of the conduct alleged occurred prior to January 1, 2013. Plaintiffs clearly allege that they were still attempting to contact Mr. Teran during January and February 2013, and, when he actually called them back, he still told them to continue submitting documents in support of their HAMP loan modification application and that they need not worry about the impending foreclosure. In addition, the foreclosure sale did not even occur until March 1, 2013. See RJN Ex. I, ECF No. 12 at 49-51. Wells Fargo addresses none of these allegations and events when making its argument.

In sum, the court finds that Plaintiffs’ HBOR claim fails and must be dismissed with prejudice to the extent that it is based on Wells Fargo’s institution of foreclosure proceedings before making a written determination that Plaintiffs were not eligible for a first lien loan modification, but that their HBOR claim survives to the extent that it is based on Wells Fargo’s “dual tracking” and failure to provide a “single point of contact.”

2. Plaintiffs’ Promissory Estoppel Claim

Plaintiffs also allege a claim for promissory estoppel. SAC, ECF No. 1-1 ¶¶ 51-56. They allege that they reasonably relied on Mr. Teran’s “numerous assurances that he would submit their [loan modification] application for review, that[,] in light of their clear eligibility, a loan modification would be forthcoming[,] and that no foreclosure sale would take place during their evaluation.” Id. ¶ 52. Assurances to this effect were made on 10 separate occasions from April 2012 through March 2013. See id. ¶¶ 19-31, 52. “Taken together, these assurances constituted continuing promises to submit and consider [their] application” and “to refrain from pursuing foreclosure while their application was under review and pending approval.” Id. ¶ 53. Plaintiffs additionally allege that they reasonably relied on these representations “by completing countless forms and timely submitting all requested documentation” and did not instead avail themselves of “viable” “alternative courses of action” to prevent foreclosure, such as refinancing again, filing a petition under Chapter 13 of the United States Bankruptcy Code, independently enlisting the assistance of a loan modification company, or retaining counsel. Id. ¶ 55. Further, Plaintiffs assert that if they were aware of the March 1, 2013 Trustee’s Sale, they would have attended and placed a “competitive bid” to repurchase the Property. Id. ¶ 35.

Under California law, “[a] promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.” See Kajima/Ray Wilson v. Los Angeles Cnty. Metro. Transp. Auth., 23 Cal. 4th 305, 310 (2000). Promissory estoppel is an equitable doctrine whose remedy may be limited “as justice so requires.” See id. The elements of promissory estoppel are: “(1) a clear promise; (2) reasonable and foreseeable reliance by the party to whom the promise is made; (3) injury (meaning, substantial detriment); and (4) damages `measured by the extent of the obligation assumed and not performed.'” See Errico v. Pacific Capital Bank, N.A., 753 F. Supp. 2d 1034, 1048 (N.D. Cal. 2010) (citing and quoting Poway Royal Mobilehome Owners Ass’n. v. City of Poway, 149 Cal. App. 4th 1460, 1470 (2007)).

Wells Fargo first argues that Plaintiffs’ claim fails because they do not sufficiently allege a clear promise, reasonable and foreseeable reliance, or injury. See Motion, ECF No. 11 at 19-22. As for the “clear promise” element, Wells Fargo points out that “Plaintiffs do not allege that they were ever promised that the [Second Loan] would be modified, nor do they allege that they were ever told what the terms of a modified loan might look like, if they did qualify.” Id. at 19. True enough, but Plaintiffs’ claim is not entirely based on a promise to give them a loan modification. Rather, their claim is based on a promise “to submit and consider [their] application” and “to refrain from pursuing foreclosure while their application was under review and pending approval.” SAC, ECF No. 1-1 ¶ 53. In other words, Plaintiffs appear to be alleging that (1) Mr. Teran promised to submit their loan modification application, (2) Wells Fargo promised to consider their loan modification application, (3) Wells Fargo promised not to foreclose on their Property while it was considering their loan modification application, and (4) Wells Fargo promised to give them a loan modification. Wells Fargo’s argument that Plaintiffs failed to allege the terms of a loan modification relates only to the fourth promise listed in the previous sentence, although the argument is well-taken; to the extent that Plaintiffs allege that Wells Fargo promised to give them a loan modification, the promise is not clear and defined.

The other promises that Plaintiffs allege, however, are sufficiently clear. In its reply, Wells Fargo cites Brennan v. Wells Fargo & Co., to argue that Plaintiffs have not sufficiently alleged a promise by Wells Fargo “to postpone the trustee’s sale,” but that opinion does not help Wells Fargo. See Reply, ECF No. 14 at 10 (citing Brennan v. Wells Fargo & Co., No. 5:11-cv-00921 JF (PSG), 2011 WL 2550839 (N.D. Cal. June 27, 2011). In that case, the plaintiff applied for a loan modification. Id. at *1. The plaintiff alleged that during the application process Wells Fargo representatives told him orally that he had “pre-qualified” for a loan modification and that foreclosure proceedings would be postponed. Id. The court found this allegation to be insufficient to support the plaintiff’s promissory estoppel claim. Id. at *2. It found that “Wells Fargo’s alleged oral representation that [the plaintiff] had `pre-qualified’ for a loan modification cannot reasonably be viewed as a promise that [the plaintiff] in fact would receive a loan modification.” Id. This was because “pre-qualification indicates only that an applicant has met certain prerequisites for the application process.” Id. This holding, however, has nothing to do with an alleged promise to postpone a trustee’s sale; it relates only to an alleged promise to modify a loan (and as the court explained above, Plaintiffs do not allege a clear and defined promise to do that). In fact, the Brennan court goes on to make statements that actually support Plaintiff. The court stated: “More facts also are needed with respect to Wells Fargo’s alleged promise to postpone foreclosure proceedings. If in fact such a promise was made, it appears to have been limited to postponement of proceedings during the period in which [the plaintiff’] application was under review.” Id. This statement suggests that, had the facts supported it, a promise by Wells Fargo to postpone foreclosure proceedings while the plaintiff’s loan modification application was being considered could have supported a promissory estoppel claim. See id.; see also Edwards v. Fed. Home Loan Mortgage Corp., No. 12-cv-04868-JST, 2013 WL 2355445, at *3 (N.D. Cal. May 29, 2013) (“A promise not to foreclose while a loan modification is pending satisfies the requirement of a clear promise.”) (citation omitted).

As for the “reasonable and foreseeable reliance” element, Wells Fargo first argues that Plaintiffs “do not allege that Wells Fargo ever offered any particular terms.” Motion, ECF No. 11 ¶ 20. “Therefore,” Wells Fargo argues, “[P]laintiffs could not have known what, if any, difference a modification would have made to them,” “nor is that there any indication that [P]laintiffs would have accepted the terms of a loan modification, had one been offered.” Id. This is true, but this argument (and the opinion^[9] cited to support it, see Nong v. Wells Fargo Bank, N.A., No. SACV 10-1538 JVS (MLGx), 2010 U.S. Dist. LEXIS 136464, at *8-9 (C.D. Cal. Dec. 6, 2010) (plaintiff’s reliance on Wells Fargo’s statement that “she met the qualifications for a HAMP modification” was not reasonable because qualification for HAMP does not entitle a borrower to a loan modification)) bears upon the analysis only with respect to Wells Fargo’s alleged promise to modify Plaintiffs’ loan; it says nothing about the reasonableness of Plaintiffs’ reliance on Mr. Teran’s promise to submit their HAMP loan modification application or Wells Fargo’s alleged promises to consider their loan modification application and to not foreclose on their Property while it was considering it. Citing Nong, 2010 U.S. Dist. LEXIS 136464, at *8-9, and Guerrero v. Wells Fargo Bank, N.A., No. CV 10-5095-VBF(AJWx), 2010 WL 8971769, at *5 (C.D. Cal. Sept. 14, 2010), Wells Fargo also argues that Plaintiffs’ allegation that they relied on its representations “by completing countless forms and timely submitting all requested documentation” and did not instead avail themselves of “viable” “alternative courses of action” to prevent foreclosure is “conclusory” and “meaningless.” Motion, ECF No. 11 at 21; Reply, ECF No. 14 at 10-11. The court disagrees. In Nong, the court dismissed the plaintiff’s promissory estoppel claim because her allegation of reliance was insufficient. Id. at *8. The court stated:

[The plaintiff] alleges that she relied on Wachnovia’s statements “by not pursuing other strategies” to avoid foreclosure. However, where a plaintiff does not “allege facts that could establish that [she] would have been successful in delaying the foreclosure sale, renegotiating her loan, and retaining possession of her home,” dismissal is proper because the Complaint lacks “a connection between her reliance on the alleged promise and losing her home to sustain her claim for estoppel.”

Id. at *8-9 (quoting Newgent v. Wells Fargo Bank, N.A., No. 09cv1525WQH(WMC), 2010 WL 761236, at *7 (S.D. Cal. Mar. 2, 2010)). Simialrly, in Guerrero, the plaintiffs alleged in support of their promissory estoppel claim only that they would have reinstated their loan prior to expiration of the reinstatement period had they been informed by the defendant that a trustee’s sale would proceed. The court rejected the plaintiffs’ claim, stating in full:

The Court GRANTS the Motion to Dismiss Plaintiffs’ Fifth Cause of Action for Estoppel. Detrimental reliance is an essential feature of promissory estoppel. Plaintiffs allege that they detrimentally relied on Defendant’s promise to postpone the foreclosure sale. However, as Defendant asserts, these allegations are conclusory and even if interpreted in Plaintiffs’ favor, do not sufficiently state detrimental reliance. For example, Plaintiffs fail to allege facts that could establish that Plaintiffs would have been successful in renegotiating their loan and retaining possession of the Property.

Id. These rulings, however, do not go very far. They merely stand for the uncontroversial proposition that a plaintiff must allege some facts to support an allegation that the plaintiff would have done something. Here, Plaintiffs did just that. As the court recounted above, not only do Plaintiffs allege that they completed “countless forms,” timely submitted all requested documentation, and did not instead avail themselves of “viable” “alternative courses of action” to prevent foreclosure, they also allege that had they been aware of the March 1, 2013 Trustee’s Sale, they would have attended and placed a “competitive” bid to repurchase the Property. It is the court’s view that Plaintiffs have alleged more facts in support of their reliance than did the plaintiffs in Nong and Guerrero, and their allegations more strongly suggest a connection between the promises to consider their loan modification application and to not foreclose while doing so and their losing their home. Indeed, were it not for Wells Fargo’s alleged promises, at the very least they would have gone to the Trustee’s Sale and made a “competitive” bid on their home. See Meadows v. First Am. Tr. Servicing Solutions, LLC, No. 11-CV-5754 YGR, 2012 WL 3945491, at *4 (N.D. Cal. Sept. 10, 2012) (“allegations that the plaintiff undertook new obligations or forewent other options can establish reliance for purposes of a promissory estoppel claim”); see also West v. JPMorgan Chase Bank, N.A., 214 Cal. App. 4th 780, 805 (Cal. Ct. App. 2013) (allowing a promissory estoppel claim to survive where the plaintiff specified what “other options” she would have pursued, such as “possibly selling her home, retaining counsel earlier, and/or finding a cosigner to save her home”).

As for the “injury” element, Wells Fargo argues in its motion that Plaintiffs do not allege any harm stemming from Wells Fargo’s alleged promise to modify their loan, but as explained above, Plaintiffs also allege that Mr. Teran promised to submit their loan modification application and that Wells Fargo promised to consider their loan modification application and to not foreclose on their Property while it was considering it. Wells Fargo ignores those alleged promises.

Wells Fargo also challenges Plaintiffs’ claim by arguing simply that “[a]ny oral agreement to modify the [Second Loan] is barred by the statute of frauds.” Motion, ECF No. 11 at 22. The statute of frauds, which renders a contract invalid if it is not written and signed, applies to an agreement to pay a debt secured by a mortgage or deed of trust on real property and extends to agreements modifying the loan. California Civil Code § 1624(a)(7); Secrest v. Sec. Nat. Mortgage Loan Trust 2002-2, 167 Cal. App. 4th 544, 553 (2008) (“An agreement to modify a contract that is subject to the statute of frauds is also subject to the statute of frauds.”). Wells Fargo relies primarily on Secrest. In that case, the court held that “an agreement by which a lender agreed to forbear from exercising the right of foreclosure under a deed of trust securing an interest in real property comes within the statute of frauds.” Id. at 547. The plaintiffs in the Secrest case challenged a judgment that declared a notice of default, and the election to sell under the deed of trust, to be valid by relying on a forbearance agreement. The court concluded the forbearance agreement modified the note and deed of trust by, among other things, altering the lender’s ability to exercise its right of foreclosure and, thus, concluded it fell within the statute of frauds.

Secrest is distinguishable, however, in the context of an adequately alleged promissory estoppel claim. As one district court has explained:

In Secrest, the Court of Appeals expressly found that the plaintiffs “do not assert they changed their position in reliance on the January 2002 Forbearance Agreement in any way other than by making the downpayment.” 167 Cal. App. 4th at 556, 84 Cal. Rptr. 3d 275. According to the court, this was insufficient for purposes of promissory estoppel. Id. at 555-56, 84 Cal. Rptr. 3d 275. In contrast, Vissuet asserts that she changed her position in reliance on OneWest’s promise by completing and submitting the application, as well as by foregoing an opportunity to pursue alternate measures for avoiding the foreclosure. (See FAC ¶¶ 10, 22-25.) This alleged reliance is based on more than a mere payment of money and is sufficient to take the contract out of the Statute of Frauds. See Sutherland v. Barclays Am. / Mortgage Corp., 53 Cal. App. 4th 299, 312, 61 Cal. Rptr. 2d 614 (1997) (concluding that Plaintiff could proceed with her cause of action for breach of contract where she detrimentally relied on the defendant’s statement that she could postpone three mortgage payments). Sutherland v. Barclays Am. / Mortgage Corp., 53 Cal. App. 4th 299, 312, 61 Cal. Rptr. 2d 614 (1997) (concluding that Plaintiff could proceed with her cause of action for breach of contract where she detrimentally relied on the defendant’s statement that she could postpone three mortgage payments).

Vissuet v. Indymac Mortgage Servs., No. 09-CV-2321-IEG (CAB), 2010 WL 1031013, at *4 n.7 (S.D. Cal. Mar. 19, 2010); see also Caceres v. Bank of America, N.A., No. SACV 13-542-JLS (RNBx), 2013 WL 7098635, at *7 (C.D. Cal. Oct. 28, 2013) (declining to dismiss the promissory estoppel claim on statute of frauds grounds); Edwards v. Fed. Home Loan Mortgage Corp., No. C 12-04868 JSW, 2012 WL 5503532, at *4 (N.D. Cal. Nov. 13, 2012) (noting that the doctrine of promissory estoppel operates as an exception to the statute of frauds under California law and finding that to the extent that a plaintiff is able to allege sufficient facts to state a claim for promissory estoppel, such a claim would not be barred by the statute of frauds); Solomon v. Aurora Loan Servs., No. CIV. 2:12-209 WBS KJN, 2012 WL 2577559, at *6 (E.D. Cal. July 3, 2012) (finding the statute of frauds not to bar the plaintiff’s promissory estoppel claim because “[a] party is estopped to assert the statute of frauds as a defense where the party, by words or conduct, represents that he will stand by his oral agreement, and the other party, in reliance upon that representation, changes his position, to his detriment.”) (quoting Garcia v. World Savings, FSB, 183 Cal. App. 4th 1031, 1041 (Cal. Ct. App. 2010)). In other words, “the principle of estoppel—including promissory estoppel—operates as an exception to the statute of frauds under California law.” Peterson v. Bank of America, No. 09cv2570-WQH-CAB, 2010 WL 1881070, at *6 (S.D. Cal. May 10, 2010) (citing Cal. Civ. Code § 1698(d) and Garcia, 183 Cal. App. 4th at 1040 n.10). Wells Fargo’s statute of frauds argument fails.

In sum, the court agrees with Wells Fargo that Plaintiffs’ promissory estoppel claim fails to the extent it is based on a promise to modify their loan. Because Plaintiffs do not allege what the modified terms were to be, Plaintiffs do not allege a clear promise. Plaintiffs’ claim survives, however, to the extent that it is based on Mr. Teran’s promise to submit their loan modification application and Wells Fargo’s promises to consider their loan modification application and to not foreclose on their Property while it was considering it. Plaintiffs have sufficiently alleged that they reasonably and foreseeably relied on these promises and were harmed by them.

3. Plaintiff’s Negligence Claim

Plaintiffs’ final claim is for negligence. See SAC, ECF No. 1-1 ¶¶ 57-69. The elements of a negligence cause of action are (1) the existence of a duty to exercise due care, (2) breach of that duty, (3) causation, and (4) damages. See Merrill v. Navegar, Inc., 26 Cal. 4th 465, 500 (2001). Under California law, as Wells Fargo points out, lenders generally do not owe borrowers a duty of care unless their involvement in the loan transaction exceeds the scope of their “conventional role as a mere lender of money.” See Nymark v. Heart Fed. Savings & Loan Ass’n, 231 Cal. App. 3d 1089, 1095-96 (1991) (citations omitted). To determine “whether a financial institution owes a duty of care to a borrower-client,” courts must balance the following non-exhaustive factors:

[1] the extent to which the transaction was intended to affect the plaintiff, [2] the foreseeability of harm to him, [3] the degree of certainty that the plaintiff suffered injury, [4] the closeness of the connection between the defendant’s conduct and the injury suffered, [5] the moral blame attached to the defendant’s conduct, and [6] the policy of preventing future harm. Id. at 1098 (quotation marks and citations omitted).

Wells Fargo argues that Plaintiffs’ allegations do not support the conclusion that it exceeded this “conventional role as a lender of money.” Motion, ECF No. 11 at 23-25. It argues that it was under no duty to provide a loan modification or even to accept their application for one. Id. at 24. In support^[10], it cites California appellate court opinions that stand for the propositions that a lender “owes no duty of care to [plaintiffs] in approving their loan[s],” Wagner v. Benson, 101 Cal. App. 3d 27, 35 (Cal. Ct. App. 1980) (court rejected the plaintiffs’ negligence claim that was based on their allegation that the lender was negligent “in loaning money to them, as inexperienced investors, for a risky venture over which the [lender] exercised influence and control”), that “[a] lender is under no duty `to determine the borrower’s ability to repay the loan,'” Perlas v. GMAC Mortgage, LLC, 187 Cal. App. 4th 429, 436 (Cal. Ct. App. 2010) (court rejected the plaintiffs’ attempt to allege a fraudulent misrepresentation claim where they essentially contended that “they were entitled to rely upon [the lender’s] determination that they qualified for the loans in order to decide if they could afford the loans”), and that a lender owes “no duty of care to [a] plaintiff in the preparation of [a] property appraisal,” Nymark, 231 Cal. App. 3d at 1096-97 (court found that a lender owed the plaintiff no duty because the lender performed an appraisal of the plaintiff’s property “in the usual course and scope of its loan processing procedures to protect [the lender’s] interest by satisfying [itself] that the property provided adequate security for the loan”).^[11]

In their opposition, the only California appellate court opinion cited by Plaintiffs is Jolley v. Chase Home Finance, LLC, 213 Cal. App. 4th 872 (Cal. Ct. App. 2013), which they urge the court not to ignore.^[12] Opposition, ECF No. 13 at 22-23. That case, however, involved a construction loan with ongoing distributions of the proceeds over time and is distinguishable on this basis. See Sterling Sav. Bank v. Poulsen, No. C-12-01454 EDL, 2013 WL 3945989, at *21-22 (N.D. Cal. July 29, 2013); Makreas v. First Nat’l Bank of N. Cal., No. 11-cv-02234-JST, 2013 WL 2436589, at *14 (N.D. Cal. June 4, 2013).

With the California authority exhausted, Wells Fargo cites several federal district court opinions going its way, and Plaintiffs cite others going theirs. Compare Motion, ECF No. 11 at 24-25 (citing Argueta v. J.P. Morgan Chase, No. CIV. 2:11-441 WBS GGH, 2011 WL 2619060, at *4-5 (E.D. Cal. June 30, 2011); Coppes v. Wachovia Mortgage Corp., No. 2:10-cv-01689, 2011 WL 1402878, at *7 (E.D. Cal. Apr. 13, 2011); Dooms v. Fed. Home Loan Mortgage Corp., No. CV F 11-0352 LJO DLB, 2011 WL 1232989, at *11-12 (E.D. Cal. Mar. 31, 2011); DeLeon v. Wells Fargo Bank, N.A., No. 10-CV-01390-LHK, 2010 WL 4285006, at *4 (N.D. Cal. Oct. 22, 2010)), and Reply, ECF No. 14 at 13-15 (citing Deschaine v. Indymac Mortgage Servs., No. CIV. 2:13-1991 WBS CKD, 2013 WL 6054456, at *6-7 (E.D. Cal. Nov. 15, 2013); Rosenfeld v. Nationstar Mortgage, LLC, No. CV 13-4830 CAS (CWx), 2013 WL 4479008, at *6 (C.D. Cal. Aug. 19, 2013); Dinh v. Citibank, N.A., No. SA CV 12-1502-DOC (RNBx), 2013 WL 80150, at *5 (C.D. Cal. Jan. 7, 2013); Armstrong v. Chevy Chase Bank, FSB, No. 5:11-cv-05664, 2012 WL 4747165, at *4 (N.D. Cal. Oct. 3, 2012)) with Opposition, ECF No. 13 at 22-24 (citing Susilo v. Wells Fargo Bank, N.A., 796 F. Supp. 2d 1177, 1187-88 (C.D. Cal. 2011); Ansanelli v. J.P. Morgan Chase Bank, N.A., No. C 10-03892, 2011 WL 1134451, at *7 (N.D. Cal. Mar. 28, 2011); Garcia v. Ocwen Loan Servicing, LLC, No. C 10-0290 PVT, 2010 WL 1881098, at *2-3 (N.D. Cal. May 10, 2010); Osei v. Countrywide Home Loans, 692 F. Supp. 2d 1240, 1249-50 (E.D. Cal. 2010); Gardner v. American Home Mortgage Servicing, Inc., 691 F. Supp. 2d 1192, 1199 (E.D. Cal. 2010)).

Indeed, the federal district courts sitting in California are divided on the question of when lenders owe a duty of care to borrowers in the context of the submission of and negotiations related to loan modification applications and foreclosure proceedings. One court in this District has recently summarized the situation:

In the absence of controlling authority, several courts have concluded that, upon accepting an application for a loan modification, a financial institution has exceeded its role as a money lender and is subject to a standard of reasonable care in handling the application. See Garcia, 2010 WL 1881098, at *3; Trant v. Wells Fargo Bank, N.A., No. 12-cv-164-JM-WMC, 2012 WL 2871642, at *6*7 (S.D. Cal. July 12, 2012); Ansanelli, 2011 WL 1134451, at *7; Avila v. Wells Fargo Bank, No. C 12-01237 WHA, 2012 WL 2953117, at *12-*14 (N.D. Cal. July 19, 2012); Chancellor v. One West Bank, No. C 12-01068 LB, 2012 WL 1868750, at *13-*14 (N.D. Cal. May 22, 2012). But see Roussel v. Wells Fargo Bank, No. C 12-04057 CRB, 2013 WL 146370, at *6 (N.D. Cal. Jan. 14, 2013) (Plaintiff did not state a claim for negligence where the underlying claim was not that Defendant was sloppy in routing his application materials, but that Defendant would have granted his application had it undertaken a legitimate review).

The rationale underlying these decisions is: (1) the loan modification review is intended to affect the plaintiff’s ability to stay in her home; (2) the result of mishandling the application is foreseeable, the plaintiff will be denied the opportunity to keep her home regardless of whether the modification would actually be granted; (3) the plaintiff will certainly be denied the opportunity to keep her home; (4) the defendant’s failure to process the application is closely connected to the plaintiff’s lost opportunity; and (5) recent statutory enactments demonstrate the public policy of preventing future harm to loan borrowers. See Garcia, 2010 WL 1881098, at *3 (citing Cal. Civ. Code § 2923.6 for California policy in favor of providing loan modifications); see also Trant, 2012 WL 2871642 at *7 (relying only on the first four considerations).

On the other hand, a number of decisions have decided, relying on Nymark, that a financial institution does not owe a borrower a duty of care because the loan modification process is a traditional money lending activity. See Settle v. World Sav. Bank, F.S.B., No. ED CV 11-00800 MMM (DTBx), 2012 WL 1026103, at *8 (C.D. Cal. Jan. 11, 2012) (compiling cases); DeLeon v. Wells Fargo Bank N.A., No. 10-CV-01390-LHK, 2011 WL 311376 (N.D. Cal. Jan. 28, 2011); Ottolini v. Bank of America, No. C-11-0477 EMC, 2011 WL 3652501, at *7 (N.D. Cal. Aug. 19, 2011) (finding that the six factors in Nymark weighed against finding a duty where (1) the extent to which the transaction was intended to affect Plaintiff was remote as the loan modification application, provided by Defendants and submitted by Plaintiff, was never acted on; (2) any harm to Plaintiff was not particularly foreseeable because there was no indication that loan modification would actually be approved; (3) the degree of certainty that Plaintiff suffered injury was likewise minimal for the same reason; (4) the closeness of the connection between Defendants’ conduct and the injury suffered was remote absent a likelihood that the modification would have been approved; (5) there was no allegation that Defendants willfully mishandled Plaintiff’s application or engaged in any other conduct to which moral blame would attach; and (6) as a matter of policy, imposing negligence liability may dissuade lenders from ever offering modification); Coppes v. Wachovia Mortg. Corp., No. 2:10-cv-01689-GEB-DAD, 2011 WL 1402878, at *7 (E.D. Cal. Apr. 13, 2011) (Plaintiff’s contradictory allegations that Defendant denied a loan modification application and that Defendant granted a loan modification that caused Plaintiff injury did not establish a duty because they did not plausibly suggest that Defendant actively participated in the financed enterprise beyond the domain of the usual money lender).

Reiydelle v. J.P. Morgan Chase Bank, N.A., No. 12-cv-06543-JCS, 2014 WL 312348, at *18 (N.D. Cal. Jan. 28, 2014).

Upon review and consideration of these opinions, the court finds Garcia—an opinion cited by Plaintiffs—to be persuasive and instructive. In that case, the borrower plaintiff applied to the lender defendant for loan modification. Garcia, 2010 WL 1881098 at *1. On at least two occasions prior to the sale of the home, the defendant had cancelled the trustee’s sale to allow time for processing the plaintiff’s application. Id. The defendant asked the plaintiff to submit various documents in connection with the loan modification request. Id. The plaintiff did so, but upon receiving the documents, the defendant routed them to the wrong department. Id. Later, the plaintiff’s agent received a recorded message indicating documents were missing, but the message did not identify which ones were missing. Id. at *2. For the next several weeks, the plaintiff’s agent repeatedly tried to contact the defendant to determine which documents were missing, but he was unable to speak with any of the defendant’s employees. Id. The plaintiff’s agent was finally able to actually speak with one of the defendant’s employees, but it was too late. Id. The employee informed the plaintiff’s agent that the home had been sold at a trustee’s sale the day before. Id.

The court concluded that at least five of the six factors cited above weighed in favor of finding that the defendant owed the plaintiff a duty of care in processing the plaintiff’s loan modification application. Id. at *3-4. It explained that:

The transaction was unquestionably intended to affect Plaintiff. The decision on Plaintiff’s loan modification application would determine whether or not he could keep his home.

The potential harm to Plaintiff from mishandling the application processing was readily foreseeable: the loss of an opportunity to keep his home was the inevitable outcome. Although there was no guarantee the modification would be granted had the loan been properly processed, the mishandling of the documents deprived Plaintiff of the possibility of obtaining the requested relief.

The injury to Plaintiff is certain, in that he lost the opportunity of obtaining a loan modification and application his home was sold.

There is a close connection between Defendant’s conduct and any injury actually suffered, because, to the extent Plaintiff otherwise qualified and would have been granted a modification, Defendant’s conduct in misdirecting the papers submitted by Plaintiff directly precluded the loan modification application from being timely processed.

The existence of a public policy of preventing future harm to home loan borrowers is shown by recent actions taken by both the state and federal government to help homeowners caught in the home foreclosure crisis. See, e.g., CAL.CIV.CODE § 2923.6 (encouraging lenders to offer loan modifications to borrowers in appropriate circumstances); see also Press Release at http:// gov.ca.gov/press-release/14871 (“Gov. Schwarzenegger Signs Legislation to Provide Greater Assistance to California Homeowners”), and MakingHomeAffordable.gov (describing the federal “Making Home Affordable Program”).

Whether or not moral blame attaches to this Defendant’s specific conduct is not clear at this stage of the proceedings. [Footnote omitted.] However, in light of the other factors weighing in favor of finding a duty of care, the uncertainty regarding this factor is insufficient to tip the balance away from the finding of a duty of care.

Id. at *3.

The facts alleged in this case are nearly as egregious as those alleged in Garcia, and the court finds that Plaintiffs have sufficiently alleged this claim. The loan modification was intended to affect them (e.g., the loan modification would have reduced their monthly mortgage payments), the harm from mishandling their application was foreseeable (e.g., Plaintiffs applied for a loan modification (or at least tried to apply for one) to avoid foreclosure), their injury was certain to occur (e.g., Plaintiffs’ application allegedly was never even submitted by the so-called “single point of contact,” and obviously this means that it would not be granted), the connection between Wells Fargo’s conduct and Plaintiffs’ loss of their home is close (e.g., Plaintiffs relied on Wells Fargo’s representation that the foreclosure would not occur while their application was pending, so their failure to appear at the trustee’s sale was not surprising), Wells Fargo’s alleged role in this debacle would subject them to moral blame (e.g., Plaintiffs allege that Wells Fargo tricked them into defaulting on the Second Loan so that Wells Fargo could string them along with respect to the loan modification on the First Loan so it could foreclose under the Second Loan), and the same public policy considerations cited in Garcia apply here as well. While a lender may not have a duty to modify the loan of any borrower who applies for a loan modification, a lender surely has a duty to submit a borrower’s loan modification application once the lender has told the borrower that it will submit it, as well as a duty to not foreclose upon a borrower’s home while the borrower’s loan modification is being considered once the lender has told the borrower that it won’t foreclose during this time and to ignore all foreclosure-related notices. In short, taking Plaintiffs’ allegations as true at this stage, the court fails to see, even in a cynical world, how Wells Fargo’s role could possibly be described as a “conventional” one that relates to the “mere” lending of money. Its role went beyond that. The court rejects Wells Fargo’s argument that it had no duty to Plaintiffs in this situation.

CONCLUSION

For the foregoing reasons, the court GRANTS IN PART and DENIES IN PART Wells Fargo’s motion to dismiss. Plaintiff’s HBOR claim is DISMISSED WITH PREJUDICE to the extent that it is based on Wells Fargo’s institution of foreclosure proceedings before making a written determination that Plaintiffs were not eligible for a first lien loan modification. Plaintiffs’ promissory estoppel claim is DISMISSED WITH PREJUDICE to the extent that it is based on Wells Fargo’s promise to modify their loan. Their remaining claims—namely, their HBOR claim to the extent it is based on Wells Fargo’s “dual tracking” and failure to provide a “single point of contact; their promissory estoppel claim to it is based on Mr. Teran’s promise to submit their loan modification application and Wells Fargo’s promises to consider their loan modification application and to not foreclose on their Property while it was considering it; and their negligence claim—SURVIVE.

Wells Fargo shall answer Plaintiffs’ Second Amended Complaint within 14 days from the date of this order. See Fed. R. Civ. P. 12(a)(4)(A).

This disposes of ECF No. 11.

IT IS SO ORDERED.

[1] Plaintiffs erroneously sued Wells Fargo as “Wells Fargo Home Mortgage, Inc.”

[2] Citations are to the Electronic Case File (“ECF”) with pin cites to the electronically-generated page number at the top of the document.

[3] The facts are taken from the Second Amended Complaint, its attachments, and the documents submitted by Wells Fargo that are subject to judicial notice. Wells Fargo asks the court to take judicial notice of the following documents: (1) an Open End Deed of Trust, dated July 2, 2007, that was recorded in the Official Records of the San Mateo County Recorder’s Office as document number XXXX-XXXXXX on July 11, 2007; (2) a Certificate of Corporate Existence, dated April 21, 2006, that was issued by the Office of Thrift Supervision, Department of the Treasury (“OTS”), certifying that World Savings Bank, FSB (“World Savings”), was a federal savings bank; (3) a letter from OTS, dated November 19, 2007, authorizing a name change from World Savings Bank, FSB, to Wachovia Mortgage, FSB (“Wachovia”); (4) the Charter for Wachovia, effective December 31, 2007, which is signed by the Director of OTS and reflects that Wachovia was subject to the Home Owner’s Loan Act, (“HOLA”) 12 U.S.C. § 1461 et seq. and OTS; (5) an Official Certification of the Comptroller of the Currency (“OCC”) stating that effective November 1, 2009, Wachovia converted to Wells Fargo Bank Southwest, N.A., a national association, which then merged with and into Wells Fargo Bank, N.A., also a national association; (6) a printout from the website of the Federal Deposit Insurance Corporation, dated October 23, 2012, documenting the name changes and corporate entity status changes mentioned above; (7) a Notice of Default, dated February 24, 2012 and which relates to Plaintiffs’ 2007 loan, that was recorded in the Official Records of the San Mateo County Recorder’s Office as document number XXXX-XXXXXX on February 28, 2012; (8) a Notice of Trustee’s Sale, dated May 17, 2012 and which relates to Plaintiffs’ 2007 loan, that was recorded in the Official Records of the San Mateo County Recorder’s Office as document number XXXX-XXXXXX on May 30, 2012; (9) a Trustee’s Deed Upon Sale, dated March 4, 2013, that was recorded in the Official Records of the San Mateo County Recorder’s Office as document number XXXX-XXXXXX on March 15, 2013; and (10) the National Mortgage Settlement Consent Judgment, filed on April 4, 2012 in United States v. Bank of America Corp., No. 1:12-cv00361 RMC (D.D.C. Apr. 4, 2012). See Defendants’ Request for Judicial Notice (“RJN”), Exs. A-J, ECF No. 12.

The court may take judicial notice of matters of public record. Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001). Because the documents listed above are public records, the court may take judicial notice of the undisputed facts contained in them. See Fed. R. Evid. 201(b); Hotel Employees & Rest. Employees Local 2 v. Vista Inn Mgmt. Co., 393 F. Supp. 2d 972, 978 (N.D. Cal. 2005); see also Fontenot v. Wells Fargo Bank, N.A., 198 Cal. App. 4th 256, 264-67 (2011). Plaintiffs have not objected to the court’s consideration of these documents or challenged any of the facts in them. See generally Opposition, ECF No. 13. Accordingly, the court takes judicial notice of Exhibits A though J (numbered 1-10 above) attached to Defendants’ request.

[4] The term “federal savings association” means a federal savings association or a federal savings bank chartered under 12 U.S.C. § 1464. See 12 U.S.C. § 1462.

[5] The string citation actually lists nine opinions, but two of the opinions (Pratap v. Wells Fargo Bank, N.A., No. C 12-06378 MEJ, 2013 WL 5487474 (N.D. Cal. Oct. 1, 2013), and Marquez v. Wells Fargo Bank, N.A., No. C 13-2819 PJH, 2013 WL 5141689 (N.D. Cal. Sept. 13, 2013)) are listed twice.

[6] Even if HOLA did apply, none of the cases Wells Fargo cited address the new preemption analysis for it. Following the recent mortgage crisis, Congress significantly altered the preemption landscape. As one court in this District recently has explained, “[t]he Dodd-Frank Wall Street Reform Act and Consumer Protection Act of 2010 (“Dodd-Frank”), 12 U.S.C. § 5412, provides that HOLA no longer occupies the field in any area of state law and that preemption under HOLA is governed by the conflict preemption standards applicable to national banks.” Quintero v. Wells Fargo Bank, N.A., C-13-04937 JSC, 2014 WL 202755, at *3 (N.D. Cal. Jan. 17, 2014); see also Haggarty v. Wells Fargo Bank, N.A., C 10-02416 CRB, 2012 WL 4742815, at *3 n.2 (N.D. Cal. Oct. 3, 2012). As in Quintero, “the parties do not discuss Dodd-Frank and the impact, if any, it may have on the preemption analysis in this case.” Quintero, 2014 WL 202755, at *6. The court also notes that the majority of the wrongful conduct alleged in the Second Amended Complaint occurred after July 2011—the when Dodd-Frank fully took effect.

[7] HBOR is codified generally in Civil Code §§ 2923.5, 2923.55, 2923.6, 2923.7, 2924.11.

[8] California Civil Code § 2923.6(c) does allow a lender to initiate foreclosure proceedings if the borrower does not accept an offered first-lien loan modification within 14 days of the offer or accepts a written first-lien loan modification, but defaults on, or otherwise breaches the borrower’s obligations under, the first-lien loan modification, see Cal. Civ. Code § 2923.6(c)(2) & (3), but neither situation is present here.

[9] Wells Fargo also cites Escobedo vs. Countrywide Home Loans, Inc., No. 09cv1557 BTM(BLM), 2009 WL 4981618, at *2 (S.D. Cal. Dec. 15, 2009), for the point that Plaintiffs cannot show reasonable reliance in these circumstances, see Motion, ECF No. 11 at 20, but the portion of the opinion cited discusses when a party may be a third-party beneficiary to a contract; in fact, the case does not even involve a promissory estoppel claim.

[10] In its reply brief, Wells Fargo also cites Aspiras v. Wells Fargo Bank, N.A., 162 Cal. Rptr.3d 230 (Cal. Ct. App. 2013). While that opinion previously had been published in the Official Appellate Reports, see 219 Cal. App. 4th 948, the California Supreme Court ordered the opinion depublished on January 15, 2014, see 2014 Cal. LEXIS 399, which means the opinion is not to be cited after that date (except under limited circumstances not present here), see Cal. Rules of Ct. 8.1115(a) & (b). See also Cal. Rules of Ct. 8.1105, 8.1110, 8.1115, 8.1120 & 8.1125 (providing the rules for the publication and depublication of opinions and when those opinions may be cited). The court notes that Wells Fargo filed its reply on January 29, 2014—two weeks after Aspiras was depublished—meaning that Wells Fargo never should have cited it. There is a red “flag” attached to the opinion on Westlaw and a red “stop sign” attached to it on Lexis, and there are clear notations in both databases that the opinion had been depublished. Because the opinion has been depublished and should not have been cited at all, the court ignores both it and the cited authority that relies exclusively on it, see Robinson v. Bank of America, N.A., No. 12-cv-00494-JST, 2014 WL 60969, at *4-5 (N.D. Cal. Jan. 7, 2014) (citing and relying upon Aspiras before it was depublished).)

[11] Wells Fargo also cites Hellbaum v. Lytton Sav. & Loan Ass’n of N. Cal., 274 Cal. App. 2d 456, 459-60 (Cal. Ct. App. 1969), disapproved and overruled on other grounds by 21 Cal. 3d 943 (1978)—even though Wells Fargo erroneously cited it as being reported in “Cal. App. 3d”—and provides a block quotation that purports to come from that opinion. Motion, ECF No. 11 at 23. The court provides the actual quotation below:

[W]e find no support for appellants’ contention that the lender is subject to tort liability for negligence in the processing of the application for assumption by the proposed buyers. Respondent was under no duty to permit any assumption at all, and was not liable in tort for failure to act upon the application in any particular way.

Hellbaum, 274 Cal. App. 2d at 459-60 (emphasis added). The underlined words of the quotation are the words that Wells Fargo omitted from its block quotation without using ellipses to indicate that they were omitted. Rather, Wells Fargo joined the two sentences with a comma that was not in brackets. And this is just one of several errors in Wells Fargo’s papers. See also, e.g., Motion, ECF No. 11 at 20 (citing incorrect paragraph numbers from the Second Amended Complaint; failing to include a Westlaw or Lexis unique identifier in the citation for Cabanilla v. Wachovia Mortgage; mispelling the Cabanilla case as “Cabanillas”), 22 (misspelling the plaintiff’s name in the Blatt opinion as “Vlat”). The court asks Wells Fargo to ensure that all quotations and citations are accurate going forward.

[12] Plaintiffs also cite Nymark, but only for its statement of the general rule mentioned above. See Opposition, ECF No. 13 at 22.

MAINE SUPREME JUDICIAL COURT

Decision: 2014 ME 37
Docket: Yor-13-298
Argued: January 14, 2014
Decided: March 4, 2014
Panel: ALEXANDER, LEVY, SILVER, MEAD, GORMAN, and JABAR, JJ.

BAYVIEW LOAN SERVICING, LLC

v.

JOHN H. BARTLETT et al.

SILVER, J.

[¶1] Bayview Loan Servicing, LLC,1 appeals from a judgment entered in
the District Court (York, Cantara, J.) dismissing with prejudice Bayview’s
complaint seeking a judgment of foreclosure against John H. Bartlett and Cheryl J.
Bartlett. Bayview argues that the District Court erred or abused its discretion in
dismissing the action based on Bayview’s failure to appear at three mediation
sessions. We affirm the judgment.

[…]

[¶7] After a hearing, the court (Douglas, J.) entered an order on
October 4, 2012, concluding that the ultimate sanction of dismissal with prejudice
was not warranted “yet.” The court warned Bayview, however, that it had “come
very close to that point,” and that “if there is a future breach by [Bayview] there is
a risk that the court could, upon motion and after proper process, dismiss this case
with prejudice.” The court ordered that the parties attend a fourth mediation
session and sanctioned Bayview, ordering (1) that all interest and fees be tolled
from the date of the first mediation until the date of any loan modification, or, if
none, the date of the order; (2) that Bayview pay the Bartletts’ reasonable
expenses, “including lost income and transportation costs for (i) the second and
third mediation sessions, (ii) any and all court events they have attended related to
this motion, and (iii) lost income and transportation expenses, if any, incurred in
connection with a fourth mediation session”; (3) that Bayview pay the Barletts’
reasonable attorney fees in connection with the Bartletts’ motion; and (4) that
Bayview pay a $1000 fine to the Foreclosure Diversion Program.

[…]

[¶9] On April 2, 2013, after a hearing, the court (Cantara, J.) dismissed
Bayview’s complaint with prejudice. The court stated that it was “aware of the
gravity of the sanction it is imposing,” but concluded that dismissal with prejudice
was “the only appropriate sanction” in light of Bayview’s “pattern of disruptive
behavior,” its failure to respond to lesser sanctions, and the court’s “strong
warning” that future noncompliance could result in dismissal with prejudice.
The court rejected Bayview’s argument that its failure to appear at the fourth
mediation session was excusable because it was the result of an inadvertent error of
counsel, reasoning that “[a]fter failing to appear on two previous occasions,”
Bayview “should have been [hypervigilant] about ensuring that it appeared at all
future mediation sessions.” The court also noted that the case had been pending
since 2009 and that Bayview’s conduct deprived the Bartletts of three opportunities
to mediate. Bayview filed a motion for reconsideration, which the court denied.
Bayview timely appealed.

[…]

Clouded Titles-

Most of the readers of Clouded Titles want to know why I don’t hold webinars to educate people about real estate and chain of title. My simple answer here is that without two-way interaction, I can’t tell if you’re getting your money’s worth!

We conducted a survey in our last workshop and every attendee there stated unequivocally that being at the workshop:

(1) Gave the attendee a chance to meet and interact with like-minded people;

(2) Gave the attendee a chance to get many of their issues and concerns worked out with a clearer head being away from their home in a relaxed setting; and

(3) The amount of information disseminated at the workshop was worth thousands of dollars to them (all attendees get a COTA Preparers Workbook and a flash drive that holds four years of research files on it)!

I hold COTA Workshops across the country for the purposes of training not only potential preparers and researchers to pursue a career in COTA writing, but also to teach investors how NOT to make mistakes by researching title before they put their hard-earned money into something that may prove to be a disaster down the road. Imagine being able to save tens of thousands of dollars in legal fees merely based on what you know!

[CLOUDED TITLES]

US BANK, NATIONAL ASSOCIATION, PLAINTIFF-RESPONDENT,
v.
ROBERT R. NELSON AND HIROKO NELSON, DEFENDANTS-APPELLANTS, JOHN/JANE DOE, DEFENDANT.

PER CURIAM.

¶1 Robert Nelson and Hiroko Nelson appeal an order of the circuit court granting summary judgment in favor of U.S. Bank, National Association in this mortgage foreclosure case. On appeal, the Nelsons argue that the affidavits submitted by U.S. Bank in support of its summary judgment motion fail to aver that the affiants have personal knowledge of the procedure by which the records attached to the affidavit were created. For the reasons set forth below, we reverse the order of the circuit court.

BACKGROUND

¶2 U.S. Bank filed this foreclosure action against the Nelsons with respect to a mortgage on real property located at 2 Woodridge Court in the City of Madison, Dane County, Wisconsin. U.S. Bank filed a motion for summary judgment and, in support of the motion, submitted the affidavits of Andrew Zbaracki, U.S. Bank’s attorney, and Marcia Allen, an employee of Wells Fargo Bank, N.A. We need not detail the Zbaracki affidavit because, as explained below, we reverse on the basis that the Allen affidavit is insufficient under Palisades Collection LLC v. Kalal, 2010 WI App 38, ¶21, 324 Wis. 2d 180, 781 N.W.2d 503, and the Zbaracki affidavit does not supply the missing averments.

¶3 The Allen affidavit states, in relevant part:

In the regular performance of my job functions, I am familiar with business records created and maintained by [U.S. Bank] for the purpose of servicing mortgage loans. These records (which include data compilations, electronically imaged documents, and others) are made at or near the time by, or from information provided by, persons with knowledge of the activity and transactions reflected in such records, and are kept in the course of business activity conducted regularly by [U.S. Bank]. It is the regular practice of [U.S. Bank]’s mortgage servicing business to make these records. In connection with making this affidavit, I have acquired personal knowledge of the matters stated herein by personally examining these business records.

¶4 The Nelsons objected to reliance on the affidavit on the ground that Allen does not allege that she has personal knowledge of how the records were created, thus failing to satisfy the hearsay exception for business records and failing to authenticate the computer records from which the figures came. The circuit court granted summary judgment in favor of U.S. Bank after a hearing. The Nelsons now appeal.

DISCUSSION

¶5 On appeal, the Nelsons maintain that the Allen affidavit is inadmissible because it fails to establish that Allen has personal knowledge of how the attached records were created.^[1] U.S. Bank argues that the Allen affidavit is admissible under the business records exception to the hearsay rule and that summary judgment was appropriate. See WIS. STAT. § 908.03(6). We review the circuit court’s grant of summary judgment de novo, employing the same methodology as the circuit court. Palisades, 324 Wis. 2d 180, ¶9. Employing that methodology, we agree with the Nelsons that the Allen affidavit fails to meet the requirement, under Palisades, 324 Wis. 2d 180, ¶20-21, that a records custodian who is testifying to establish admissibility of business records must be qualified to testify that the records (1) were made at or near the time by, or from information transmitted by, a person with knowledge; and (2) that this was done in the course of a regularly conducted activity. See WIS. STAT. § 908.03(6). See also Bank of America NA v. Neis, 2013 WI App 89, ¶22, 349 Wis. 2d 461, 835 N.W.2d 527. We reverse the order of the circuit court on that basis.

¶6 We note, as an initial matter, that the Allen affidavit avers that Allen is an employee of Wells Fargo, whereas this foreclosure action was initiated by U.S. Bank. However, the substance of the Allen affidavit is more important than the specific details of who employs Allen and what her title is. We stated in Palisades that a custodian or other qualified witness does not need to be the author of records or have personal knowledge of the events recorded in order to be qualified to testify to the requirements of WIS. STAT. § 908.03(6) as to those records. Palisades, 324 Wis. 2d 180, ¶¶22-23. Rather, we concluded that the witness must have personal knowledge of how the records were made so that the witness is qualified to testify that they were made “at or near the time [of the event] by, or from information transmitted by, a person with knowledge” and “in the course of a regularly conducted activity.” Id., ¶20; see WIS. STAT. § 908.03(6). The Allen affidavit lacks an averment of such personal knowledge about how the records were made.

¶7 In her affidavit, Allen provides enough information to support a fair inference that her position with Wells Fargo allows her to be familiar with the attached records and how they are maintained. What the affidavit is missing, however, is a clear averment stating that Allen knows how the records were created. Allen avers only that she is “familiar with business records created and maintained” by U.S. Bank, without even suggesting that she is familiar, from any source or by any method, how they were created. The inference that, when one is familiar with records, one automatically has knowledge of how those records were made is too much of a stretch. See Palisades, 324 Wis. 2d 180, ¶22.

¶8 We now address a separate argument by the Nelsons and explain why we reject it. The Nelsons also argue on appeal that a certified copy of the assignment of mortgage that was submitted by U.S. Bank to the circuit court is inadmissible because it was not properly authenticated. Specifically, the Nelsons assert that U.S. Bank did not present sufficient evidence that Michael Snively, the person who executed the assignment of mortgage on behalf of Mortgage Electronic Registration Systems, Inc. (MERS), did so in the presence of Taehooney Chin, the notary who attested to Snively’s signature.^[2]

¶9 When the Nelsons raised a related argument in the circuit court, they submitted the affidavit of Robert Nelson, which had attached to it a copy of Chin’s signature card on file with the Office of Vital Statistics of Anoka County, Minnesota. The Nelsons argued that Chin’s signature on the assignment of mortgage did not match his signature on the signature card on file with the county. The circuit court concluded that the Nelsons had raised an “infinitesimally” small question of fact regarding Chin’s signature. The court allowed U.S. Bank to submit an affidavit from Chin. U.S. Bank did so, and the Chin affidavit stated that Chin’s signature appears on the assignment and that Snively was known to him to be the person who signed the assignment on behalf of MERS. The Nelsons argued that a genuine issue of material fact remained because Chin’s affidavit did not contain an averment that Chin was in Snively’s presence when Snively executed the assignment, as required by Minnesota law.

¶10 However, the Nelsons do not support their argument with any specific facts that would show the presence of a genuine material dispute. See Physicians Plus Ins. Corp. v. Midwest Mut. Ins. Co., 2002 WI 80, ¶35, 254 Wis. 2d 77, 646 N.W.2d 777 (“mere conjecture” is insufficient to satisfy nonmoving party’s obligation to oppose summary judgment by advancing specific facts showing the presence of a genuine material dispute). There is a reasonable inference raised in the averments of Chin’s affidavit that Chin was present when Snively signed the assignment of mortgage. The inference proposed by the Nelsons—that Chin must not have been present when Snively signed the assignment simply because the affidavit does not state that fact expressly—is not a reasonable one and, thus, we reject the Nelsons’ argument that the assignment was inadmissible.

¶11 In sum, we reverse the circuit court’s order granting summary judgment in favor of U.S. Bank on the basis that the Allen affidavit does not satisfy the requirement under Palisades, 324 Wis. 2d 180, ¶21, that a records custodian testifying to establish admissibility of business records must be qualified to testify from personal knowledge both that the records (1) were made at or near the time by, or from information transmitted by, a person with knowledge; and (2) that this was done in the course of a regularly conducted activity.

By the Court.—Order reversed.

This opinion will not be published. See WIS. STAT. RULE 809.23(1)(b)5.

[1] The parties both cite unpublished decisions to support the arguments in their briefs. The unpublished decisions are not precedent and, therefore, we do not consider them. See WIS. STAT. § 752.41(2) and RULE 809.23(3) (2011-12). All references to the Wisconsin Statutes are to the 2011-12 version unless otherwise noted.

[2] The Nelsons did not raise the question of whether Snively signed the assignment of mortgage in Chin’s presence at the time they raised the argument that Chin’s signature did not match the signature card he had on file with the county. Thus, the issue that U.S. Bank was asked to clarify by submitting the Chin affidavit did not involve the issue of whether Snively signed the assignment in Chin’s presence. There is an argument, then, that the “presence” issue was forfeited because the Nelsons did not raise it earlier. However, the forfeiture argument is not raised in the respondent’s brief.