NOTE: This is the 2nd Class Action this month alleging “Photo-Shopped” docs.

See the 1st: AURORA Class Action: Photoshopped Assignments and systemic 131g TILA violations

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

ERNEST MICHAEL BAKENIE, on behalf of
themselves and all others similarily situated,

Plaintiffs,

vs.

JPMORGAN CHASE, N.A.; and
DOES 1 through 10, inclusive,

Defendants

Bakenie v JPMC w[1] by DinSFLA

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION

WILLIAM C. SQUIRES, et al.,

Plaintiffs,

v.

BAC HOME LOANS SERVICING, LP,

Defendant.

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

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

DARYOUSH M. JAHROMI,
FERNANDO A. MILLER, on behalf of
themselves and all others similarily situated,

Plaintiffs,

vs.

AURORA LOAN SERVICES, LLC; and
DOES 1 through 10, inclusive,

Defendants

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

VICTOR BALDERAS and BELEN
BALDERAS,
Plaintiffs-Appellants,

v.

COUNTRYWIDE BANK, N.A., a
National Banking Association;
AAA FUNDING, INC., DBA
USA Funding, a California corporation;
COUNTRYWIDE HOME MMA-JMA
LOANS, INC., DBA America’s
Wholesale Lender, a New York
corporation; MOR CAZAKOV, an
individual; GALENA KOROL, an
individual; DOES 1 through 10,
inclusive,
Defendants-Appellees. þ

Appeal from the United States District Court
for the Southern District of California

Michael M. Anello, District Judge, Presiding
Argued and Submitted

June 9, 2011—Pasadena, California

Filed December 29, 2011

EXCERPT:

KOZINSKI, Chief Judge:

The Balderases allege that they are immigrants who were
rooked by a bank that signed them up for loans it knew they
couldn’t afford, on terms they didn’t agree to. These are the
facts as recited in the complaint: Mor Cazakov, a mortgage
broker, cold-called the Balderases, representing that he could
refinance their home, switch them to a fixed rate mortgage
and let them cash out $50,000, all without a penalty. Subsequently,
Soraya Qassim, a “duly authorized agent” of Countrywide
Bank (Countrywide), filled out a uniform residential
loan application (URLA) for them and showed up unannounced
at their home, urging the Balderases to sign it. But
the form was in English, which they can’t read, and it overestimated
their income by over $40,000 per year. Qassim told
them it was an informal document the bank needed, so the
Balderases signed.

Three days later, on the evening of Monday, September 25,
2006, Cazakov showed up at their home with a notary public
and loan documents also written in English. He told them that
Countrywide “demanded” their signatures “that night” and he
couldn’t and wouldn’t leave without getting them. The
Balderases protested and asked to arrange the loan signing
when their English-literate daughter could attend. But Cazakov
said that Countrywide had instructed him to stay until he
got the signatures, and he “engaged in a series of actions
designed to intimidate, harass, and pressure [the Balderases]
into signing the loan documents.” After six hours of unrelenting
pressure by Cazakov and several unsuccessful attempts to
read the paperwork, the Balderases capitulated and signed the
documents just after midnight. On Wednesday, they called
Cazakov and asked him to rescind the loans. He refused. They
then called Countrywide a day later seeking the same relief.
Countrywide also refused, falsely representing it was too late.
In fact, the three-day statutory rescission period extended
through the next day, Friday, September 29.

The Balderases filed a complaint alleging, among other
things, a violation of the Truth In Lending Act (TILA). See
15 U.S.C. §§ 1601 et seq. Countrywide filed a 12(b)(6)
motion, which the district court granted. This timely appeal
followed.

* * *

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

Mortgage/ Securitization forensic auditors especially, may want to pay close attention to this case.

WSJ-

The U.S. Supreme Court agreed Tuesday to clarify the circumstances in which home buyers can sue mortgage lenders for allegedly charging them unearned fees during the closing process.

The case centers on a group of lawsuits from Louisiana in which borrowers alleged Detroit-based Quicken Loans Inc. charged them loan-discount fees but did not provide reduced interest rates in return.

Quicken Loans said the fees were legal and denied allegations that the fees were unearned.

[WALL STREET JOURNAL]

[ipaper docId=68427648 access_key=key-1r7xd2v6zu1h9ly4emyn height=600 width=600 /]

UNITED STATES BANKRUPTCY COURT
DISTRICT OF MASSACHUSETTS
EASTERN DIVISION

IN RE:
DOUGLAS CROMWELL, JR. AND
MARY CROMWELL,
DEBTORS.
___________________________________
DOUGLAS CROMWELL JR. AND
MARY CROMWELL,
PLAINTIFFS,

v.

COUNTRYWIDE HOME LOANS, INC.
AND MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC.,
DEFENDANTS.
__________________________

MEMORANDUM OF DECISION

I. INTRODUCTION
The matters before the Court are the Second Amended Complaint (the “Complaint”) filed
by Douglas Cromwell, Jr., and Mary Cromwell (collectively, the “Debtors”) against
Countrywide Home Loans, Inc. (“Countrywide”) and Mortgage Electronic Registration Systems,
Inc. (“MERS”) (jointly, the “Defendants”) alleging violations of the Massachusetts Consumer
Credit Cost Disclosure Act1 (the “CCCDA”), as well as the Debtors’ Objection to Proof of Claim
filed by Countrywide Home Loans, Inc. (the “Objection to Claim”) and the Objection to
Confirmation of Second Amended Chapter 13 Plan (the “Objection to Confirmation”) filed by
Countrywide. Through their Complaint, the Debtors seek, inter alia, rescission of a refinancing
transaction and a declaration that the mortgage granted by them to MERS, as nominee for
Countrywide, is void and that they have no tender obligation as a condition to effectuate the
rescission.2 In the Objection to Claim, they, in turn, contend that Countrywide’s claim is now
unsecured in light of the Debtors’ purported rescission. The Defendants dispute the Debtors’
allegations in the Complaint and object to the Debtors’ Chapter 13 plan on the basis that they
propose to treat Countrywide’s claim as unsecured. For the reasons set forth below, I will enter
judgment in favor of the Debtors and order them to file a fee application within thirty days,
sustain the Objection to Claim, and overrule the Objection to Confirmation.3

[…]

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

Via: LIVING LIES

DISTINCTION BETWEEN LENDER AND BENEFICIARY ROOT OF MESS

DARREL BLOMBERG points out that the 9th Circuit might be just as confused as trial judges about MERS. The Court acknowledges in the opinion that MERS owns nothing and in fact is intended to own nothing, acting merely as a placeholder for whatever entity is eventually “designated” by unknown players in the securitization game. Yet at page 16985, the court’s opinion contains the following paragraph:

“At the origination of the loan, MERS is designated in the deed of trust as a nominee for the lender and the lender’s “successors and assigns,” and as the deed’s “beneficiary” which holds legal title to the security interest conveyed. If the lender sells or assigns the beneficial interest in the loan to another MERS member, the change is recorded only in the MERS database, not in county records, because MERS con- tinues to hold the deed on the new lender’s behalf. If the ben- eficial interest in the loan is sold to a non-MERS member, the transfer of the deed from MERS to the new lender is recorded in county records and the loan is no longer tracked in the MERS system.”

Darrel’s point is that the court is confused, if it is reporting that MERS or any actual beneficiary is the holder of any title. The Deed of Trust is signed by the homeowner and vests title in a Trustee for the benefit of the beneficiary. If the beneficiary were the actual recipient of title, the non-judicial power of sale would be inapplicable. In order for non-judicial sale to occur, there MUST be an intervening “objective” party that provides some assurance of due diligence to protect the interests of the homeowner and the beneficiary.

It is possible that the Court was merely reporting the scheme of the “lenders” rather than the actuality, but if that is the case, the opinion is unclear. As it stands,  the opinion appears to be saying that the actual title is vested in the named beneficiary. If so, besides the point raised above, the deed on foreclosure would need to be issued and executed by MERS or whatever party was named as beneficiary. Thus the chain of title would be further corrupted by  having an on-record transfer from homeowner to trustee followed by an on-record transfer of title from beneficiary to whomever submitted the “credit bid.”

Darrel is right, I think. And I don’t think it is merely some scrivener’s error. It demonstrates the confusion of even the higher courts of appeal with the entire process of non-judicial sale, a CHOICE that is selected by “lenders” which was intended to be a very narrow window but has now become the greatest escape hatch of all time. Through that window pretender lenders are throwing millions of homes that otherwise could not have been foreclosed because the pretenders were just that — pretenders, who had no interest in the loan, and who had no right to submit a credit bid because they were not the creditor. How could US Bank or BOA et al submit a credit bid on a loan where they were neither the holder nor the owner of the debt, much less both the holder and the owner?

These parties are using non-judicial foreclosure to side-step the due process requirements of Arizona law and the law of other states that allow non-judicial foreclosure. If they truly could prevail in a well-pleaded complaint and prove their case according to established rules of evidence, they undoubtedly would have done so, just to prove that the borrowers’ cries of “foul” were mere technicalities and not based upon the reality that they took out a loan and now don’t want to pay for it. A few cases in each state and the argument would be over. The pretenders are avoiding reality — the one in which THEY are seeking to get a free house.

The 9th Circuit was mistaken in its language quoted above. MERS, or for that matter ANY beneficiary holds an equitable interest, not legal title. They are the beneficiaries of a trust enabled by statute in which the home is the asset, the trustor is the homeowner and the trustee is a party who will hold title until the loan obligation is satisfied. The beneficiary does not hold legal title. It holds no title at all. It is the beneficiary of the trust and is entitled to receive the proceeds of sale should the house be sold to satisfy the loan.

The error quoted here is an example of how the courts are attempting to accommodate the banks and in so doing trying to put their left foot in their right pocket. Adding the name “MERS” adds nothing to the rights of a beneficiary, because to even entertain any other construction would be to violate the enabling non-judicial statute, and violate the due process clauses in the U.S. and State constitutions. Where MERS is named as beneficiary, it has the right to receive the proceeds of sale if the home is sold in foreclosure. The problem is that MERS was intentionally named only as a placeholder (nominee, straw-man) and the deed of trust says so, because it distinguishes between the “lender” and the “beneficiary.”

Nothing in legislative notes in any state that I have researched indicates that this dichotomy between “lender” and “beneficiary” was considered, nor is there anything to suggest it would have been permitted by any of the legislatures if it had been considered. Quite the reverse is true.

The legislative presumption was that the lender and beneficiary were one and the same. The presumption was that non-judicial sale applied in non-adversarial  situations in which it was necessary to conduct a foreclosure sale, the lender was the beneficiary and therefore was also the creditor, and therefore capable of submitting a credit bid and worthy of receiving, without objection from the homeowner, the deed from the foreclosure sale. It is only in this context that enabling statutes for non-judicial sales are constitutional in their construction and application.

Here we have a different situation. MERS specifically disclaims any rights to such proceeds even though it is named as beneficiary. It does so consistent with the new distinction, created outside the enabling statutes for the power of sale, in which there is a  difference between “lender” and beneficiary.” So the “lender” is actually the beneficiary even though MERS is named as beneficiary. Although awkward, this might fly if the lender actually made the loan and was the creditor. But in most cases, the “lender” is also a placeholder. See any of the bankruptcy schedules and orders entered for mortgage originators that were designated as “lenders.”

Thus Cervantes stands on a loose foundation: we have a beneficiary that admits it is not entitled to anything and a lender who in fact is not entitled to anything because it was also just a placeholder for an undisclosed principal. Neither one of them can submit a credit bid and neither one of them has ever possessed the power to instruct the Trustee on the deed of trust to issue the notice of default and notice of sale. The original trustee would obviously have no part of a foreclosure sale in which it was receiving instructions from parties that never appeared on the deed of trust or the chain of title. And that, my friends, is the reason why we have yet another new entry of new terms without meaning: the substitute trustee.

When you think about it, the securitizers were obviously making it up as they went along, which is why there were lawyers who refused to draft any of these documents, because in their own words, they thought it was not just illegal it was probably criminal. By inserting a nominee lender and nominee beneficiary into the transaction without disclosing the principal from whom the loan was obtained and by substituting their own people as trustees, they were assured of grabbing millions of properties while appearing to comply with statutes. They neither complied with statutes nor with the standards of good faith and fairness required under those statutes.

But here is the rub for them which the banks are desperately trying to avoid: in the vast majority of transactions in which a securitized debt was involved, the use of a placeholder, in lieu of a real party in interest, was not just part of the transaction — it was the whole transaction. At the time of execution of the mortgage, there was no real party in interest named or described in the mortgage — the very thing that the legislature of each state meant to avoid when they passed recording statutes.

Thus at the time of execution, the homeowner borrower was being intentionally kept in the dark about the identity of the creditor. In fact, when the mortgage was recorded, the general public was being intentionally kept in the dark about the identity of the creditor. There is no state in which that kind of document gives rise to a valid lien against the property, nor could it. Recording is intended to provide notice to the world that someone has a lien. In the case of nearly all transactions involving securitized debt, the “someone” that had a lien was a fictitious character, like Donald Duck. In all such instances, state law provides that the mortgage  does not attach as a lien.

The promissory note is another story entirely subject to its own problems. Suffice it to say, that if you check with an attorney who is competent and licensed in the jurisdiction in which your property is located, you will find that your mortgage, while it exists, is not a lien against your property. That might sound like a contradiction in terms, but it is nevertheless true. Thus the obligation you owe, if any, is unsecured. Do not act on this until you consult with counsel.

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In re: CIRILO E. CRUZ JUANA CRUZ, Chapter 13, Debtors,

CIRILO E. CRUZ, Plaintiff,

v.

AURORA LOAN SERVICES LLC; SCME MORTGAGE BANKERS, INC.; ING BANK, F.S.B.; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; and DOES 1 to 100, Defendants,

Bankruptcy No. 11-01133-MM13, AP: 11-90116-MM.

United States Bankruptcy Court, S.D. California.

August 11, 2011.

MEMORANDUM DECISION ON MOTIONS TO DISMISS SECOND AMENDED COMPLAINT

MARGARET M. MANN, Bankruptcy Judge.

I. INTRODUCTION

The Court has considered the Motions (“Motions”) to Dismiss the Second Amended Complaint (“SAC”) of debtor and plaintiff Cirilo E. Cruz^[1] (“Cruz”) brought pursuant to Fed. R. Bankr. P. 7012, incorporating by reference Fed. R. Civ. P. 12(b)(6), by Defendants Aurora Loan Services (“Aurora”), Mortgage Electronic Registration Systems, Inc. (“MERS”), and ING Bank, F.S.B. (“ING”).^[2] The Court grants the Motions in part and denies them in part for the reasons set forth in this Memorandum Decision.

All Truth-In-Lending-Act (“TILA”) related causes of action are dismissed with prejudice. The Court concludes that Cruz cannot state a cause of action under any theory challenging the TILA disclosure because his claims are either unripe or barred by the statute of limitations. The TILA allegations cannot be stated as state law claims because of federal preemption as an alternative ground for dismissal. The Motions are granted to the additional extent they assert the foreclosure of the Property was wrongful due to MERS’ unauthorized substitution of trustee.

The Court denies the Motions to the extent that they assert ING was not required to record its assignment of beneficial interest before it foreclosed. The Motions request the Court reconsider its holding in U.S. Bank N.A. v. Skelton (In re Salazar), 448 B.R. 814, 822-24 (Bankr. S.D. Cal. 2011), that California Civil Code § 2932.5^[3] pertains to both mortgages and deeds of trust. For the additional reasons set forth in this Memorandum Decision, the Court reaffirms its analysis in Salazar and concludes that ING’s failure to record its beneficial interest rendered its foreclosure sale void.

II. FACTUAL ANALYSIS

A. Standard of Review

The Court assumes the allegations of the SAC are true for purposes of the Motions and construes them liberally in favor of Cruz. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 (2007); Gilligan v. Jamco Development Corp., 108 F.3d 246, 249 (9th Cir. 1997). However, the Court must also find that the SAC pleads sufficient facts to state a claim of relief that is “plausible on its face.” Twombly, 550 U.S. at 570; Ashcroft v. Iqbal, ___ U.S. ___, 129 S. Ct. 1937, 1949 (2009) (citing Twombly). The SAC allegations must “raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555; see also Iqbal, 129 S. Ct. at 1950 (citing Fed. R. Civ. P. 8(a)(2)).

B. Factual Summary

The SAC allegations relate to the 2004 financing of Cruz’s residence located at 3148 Toopal Drive, Oceanside, CA 92054 (” Property”), by a loan provided by SCME (“Loan”) documented by a variable interest rate note (“Note”) and deed of trust (” DOT”). Aurora was the servicer of the Loan and MERS was the initial nominal beneficiary of the Loan. Cruz claims the TILA disclosure provided to him when the Loan was made was misleading by understating its total cost through maturity, which caused him to forego less expensive financing alternatives.

After Cruz defaulted on the Loan, Defendants commenced the foreclosure process. ING had become the successor beneficiary under the DOT at some time before, but never recorded an assignment of beneficial interest. Cruz then entered into a forbearance agreement with Aurora. ING foreclosed on the Property on June 2, 2010 during the extended forbearance period agreed to by Aurora, even though Cruz was current on his payments at the time. ING’s interest, as assignee beneficiary, first appeared of record in the Trustee’s Deed Upon Sale (“Trustee’s Deed”), recorded a few weeks after the foreclosure. The Trustee’s Deed identified ING as the foreclosing beneficiary.

C. Procedural History

Cruz and his wife filed their joint Chapter 13 bankruptcy petition on January 25, 2011, and Cruz filed his First Amended Complaint (“FAC”) about a month thereafter. Defendants responded to the FAC with motions to dismiss brought pursuant to Fed. R. Bankr. P. 7012, incorporating by reference Fed. R. Civ. P. 12(b)(6) (“First Motions”). These were denied in part and granted in part in this Court’s order entered May 24, 2011 (” FAC Order”). The First Motions were denied to the extent they related to Aurora’s forbearance agreement. The Court also denied the First Motions pertaining to whether causes of action were stated under TULA and under California Business and Professions Code § 17200 (“Section 17200”). The Court granted the First Motions with leave to amend as to whether the TILA causes of action were barred by the statute of limitations; whether MERS had authority to substitute the trustee under the DOT; whether ING’s interest was required to be of record; and whether Cruz could allege facts to tender the Loan amount to set aside the foreclosure under TILA or to claim damages. The Court also granted leave to amend for Cruz to clarify which Defendants were named in the different causes of action.

In response to the FAC Order, Cruz filed his SAC,^[4] to which Defendants responded with these Motions.

III. LEGAL ANALYSIS

A. The First Third and Tenth Causes of Action of the SAC are Preempted.

Cruz attempts in the first, third and tenth causes of action to allege his TILA claims indirectly under Section 17200, and as state law fraud and negligent misrepresentation claims. Since these causes of action rely upon the TILA disclosures made to Cruz when the Loan was made, they must be dismissed with prejudice due to federal preemption. In Silvas v. E*Trade Mortg. Corp., 514 F.3d 1001, 1003 (9th Cir. 2008), the Section 17200 claims were alleged based upon TILA disclosures. The Ninth Circuit dismissed these claims, finding Congress intended for TILA to preempt the field. Id. at 1004-06. Here as well, although the deceit and Section 17200 claims do not reference TILA, they are based solely upon the representations mandated by TILA. As in E*Trade Mortg. Corp., id., attempts to camouflage these claims from TILA scrutiny cannot save them from dismissal.

B. The First. Third and Tenth Causes of Action Relating to TILA Disclosures are Not Timely.

Even if the preemption bar did not apply, the Court concludes the first, third and tenth causes of action should still be dismissed. The FAC Order at ¶¶ 12-14 granted leave to amend the TILA causes of action to specify when Cruz discovered, or should have discovered, the harm of the alleged TILA inaccuracy. Gutierrez v. Mofid, 39 Cal. 3d 892, 897-98 (1985) (relevant discovery time is of the nature of the harm, not the existence of legal remedies). This is the date of discovery under state law for statute of limitations tolling purposes. See Grisham v. Philip Morris USA, Inc., 40 Cal. 4th 623, 646 (2007) (personal injury claim for a tobacco company’s misrepresentation accrued at the time that “the physical ailments themselves were, or reasonably should have been, discovered”).

Rather than providing more detail on when the harm was discovered, as required by the FAC Order, the SAC hedges the issue. It alleges that Cruz could not have discovered the understatement of the cost of the 2004 Loan until the TILA disclosure was reviewed by an expert in 2010. Alternatively, the SAC alleges that the harm could not be discovered until 2015, when the interest rate will become variable. SAC ¶ 23. But under either discovery date, Cruz cannot state a cause of action.

If the alleged harm occurred when the Loan was made in 2004 by misleading Cruz into a bad financing choice, then the cause of action is barred by the three year statute of limitations for state law deceit claims. Cal. Code Civ. Pro. § 338(d). Even though a complicated analysis is required, it is possible to discern from the Loan documents attached to the SAC that the total cost of financing on the TILA disclosure differed from the stated interest rate. Although Cruz only alleges state law deceit claims, the Court finds persuasive Ninth Circuit authority that addressed when the harm of TILA misrepresentations should be discovered. Although these claims are alleged under state law, both federal and state courts have applied TILA to assess related state law claims. See e.g. Pacific Shore Funding v. Lozo, 138 Cal. App. 4th 1342, 1347 (2006); Rubio v. Capital OneBank, 613 F.3d 1195, 1203 (9th Cir. 2010). Under Meyer v. Ameriquest Mortgage Co., 342 F.3d 899, 902 (9th Cir. 2003), because the plaintiffs “were in full possession of all information relevant to the discovery of a TTLA violation and a § 1640(a) damages claim on the day the loan papers were signed,” they could not toll the statute of limitations.

Cruz was in full possession of the Loan documentation in 2004. Because there are no allegations of fraudulent concealment, or any other action on the part of any Defendant to cover up the misrepresentations, the deceit causes of action accrued when the Loan was made. Id. This was the date the harm to Cruz could have been determined from the face of the Loan documents.

The alternative explanation of the discovery of the harm is that it has not yet occurred and will not occur, if at all, until the interest rate on the Loan becomes variable in 2015. SAC ¶ 23-33. Whether the Loan will be more or less expensive than either the stated 5.85% initial contract rate, or the projected variable index rate of 4.85% starting in 2015, cannot be known until 2015. It is beyond the capabilities of this Court, or any expert or jury, to speculate about future interest rates. If interest rates drop below the index assumption used when the Loan was made, Cruz will receive a windfall. If they rise, Cruz will suffer loss assuming he is still paying on the Loan. This lack of a concrete impact on the parties renders these claims unripe for resolution. See Thomas v. Union Carbide Agricultural Prod. Co., 413 U.S. 568, 580 (1985) (ripeness doctrine prevents premature adjudication where the impact of a claim against the parties cannot be known); see also Exxon Corp. v. Heinze, 32 F.3d 1399, 1404 (9th Cir. 1994).

The first, third and tenth causes of action, to the extent they are related to the TTLA disclosures,^[5] are accordingly dismissed with prejudice because they are either barred by the statute of limitations or are unripe.

C. The Eighth and Ninth Causes of Action for Wrongful Foreclosure and Quiet Title Cannot Be Based upon a Wrongful Substitution of Trustee. But Only upon Section 2932.5.

There are two separate factual scenarios alleged in the wrongful foreclosure causes of action: 1) that MERS lacked authority to substitute Quality as trustee of the DOT; and 2) that ING had no recorded beneficial interest at the time it foreclosed. The second scenario, but not the first, alleges a viable cause of action.

1. The Substitution of Trustee by MERS was Valid.

In the FAC Order, Cruz was directed to specifically allege why MERS, as the nominee of the Lender under the DOT and the beneficiary of record, lacked authority under § 2934a(a)(1)(A) to substitute the trustee. The Court earlier ruled in the FAC Order that if MERS was authorized by the Lender under the DOT to substitute the trustee, this substitution would be valid.

Instead of alleging specific facts that MERS was not authorized by the Lender to substitute the trustee, Cruz relies upon general allegations that two parties cannot both be the beneficiary. SAC ¶ 101. These allegations seem to leave the resolution of whether MERS was authorized to substitute the trustee to the outcome of the litigation. But California law does not provide a cause of action to determine whether or not a party has authority to institute foreclosure proceedings. Gomes v. Countrywide Home Loans, 192 Cal. App. 4th 1149, 1154-56 (2011).

Cruz separately alleges that ING was the beneficiary throughout the foreclosure process.^[6] He argues in his opposition that the DOT follows the Note, and MERS could not have been the beneficiary once ING was assigned the Note. This argument ignores that once ING was entitled to enforce the Note, it became the Lender under the DOT, even if its interest was not yet of record. As such, ING could direct MERS, as the beneficiary of record and as the Lender’s nominee, to substitute Quality as the trustee of the DOT. Ferguson v. Avelo Mortgage LLC, 195 Cal. App. 4th 1618, 1628 (2011) (authorized beneficiary may substitute the trustee). Avelo relied upon § 2934a which specifically authorizes substitutions of trustees to be recorded after the substituted trustee takes action. Id.

Leave to amend the substitution of trustee claim will not be granted because Cruz’ allegations that ING was the beneficiary throughout the foreclosure process disprove this claim. Abagninin v. AMVAC Chem. Corp., 545 F.3d 733, 742 (9th Or. 2008) (leave to amend may be denied if the allegation of other facts, consistent with those plead, cannot cure the deficiency).

2. Section 2932.5 Applies to Deeds of Trust.

Although Cruz’s other causes of action are fatally defective, Cruz has properly stated claims for wrongful foreclosure and quiet title based upon ING’s non-judicial foreclosure of the DOT.^[7] Section 2932.5 required that ING’s interest be of record at the time of the foreclosure sale, and it was not. MERS was the beneficiary of record when ING foreclosed, but ING was the actual foreclosing beneficiary.^[8] The Trustee’s Deed identified ING as the foreclosing beneficiary, and that recital is a binding statement of fact. Bank of America v. La Jolla Group II, 129 Cal. App. 4th 706, 731-32 (2005). Because ING lacked an interest of record, it was not authorized to proceed with the foreclosure sale under § 2932.5, rendering the sale void. Dimock v. Emerald Properties, 81 Cal. App. 4th 868, 874 (2000) (sale under deed of trust by former trustee void, and tender of the amount due is unnecessary); Bank of America, 129 Cal. App. 4th at 712.^[9]

To reevaluate whether § 2932.5 concerns both mortgages and deeds of trust, the Court has carefully considered the” intermediate appellate court decisions, decisions from other jurisdictions, statutes, treatises, and restatements as guidance . . .” to attempt to determine how the California Supreme Court would rule. Lewis v. Tel. Employees Credit Union, 87 F.3d 1537, 1545 (9th Cir. 1996). The Court remains convinced that the highest court in this state would hold that § 2932.5 requires an assignee trust deed beneficiary to record its interest before it non-judicially forecloses.

a. The Plain Language of § 2932.5 Can Be Applied to Deeds of Trust.

Defendants first contend the plain language of § 2932.5^[10] cannot accommodate deeds of trust within its ambit. Starting with a review of the statutory language, and considering its legislative history, see Conservatorship of Whitley, 50 Cal. 4th 1206, 1214 (2010), the Court finds the plain language of § 2932.5 easily pertains to deeds of trust:

Where a power to sell real property is given to a mortgagee, or other encumbrancer, in an instrument intended to secure the payment of money, the power is part of the security and vests in any person who by assignment becomes entitled to payment of the money secured by the instrument. The power of sale may be exercised by the assignee if the assignment is duly acknowledged and recorded.

(Emphasis added). The statute does not only apply to mortgagees but also to other encumbrancers. That a beneficiary under a deed of trust is an encumbrancer is confirmed by the California Supreme Court. “(M)ortgagees and trust deed beneficiaries alike hold security interests in property encumbered by mortgages and deeds of trust.” Monterey S. P. P’ship v. W. L. Bangham, 49 Cal. 3d 454, 461 (1989) (rejecting that a deed of trust conveyed true title to the trustee). Section 2932.5 further provides that the “power [of sale] is part of the security and vests in any person who by assignment becomes entitled to payment of the money secured by the instrument.” As the assignee of the Note, ING was the party entitled to the payment of money. It took title to the Property in satisfaction of the secured debt at the time of the foreclosure sale. Each of the clauses of § 2932.5 applies comfortably to deeds of trust.

The legislative history of § 2932.5 also supports its application to deeds of trust as well as mortgages. Section 2932.5 succeeded to § 858 verbatim as part of the 1986 technical revisions to California trust law. See Recommendation Proposing the Trust Law (Dec. 1985) 18 Cal. Law Revision Rep. (1985) p. 764; Selected 1986 Trust and Probate Legislation, (Sept. 1986) 18 Cal. Law Revision Com. Rep. (1986) p. 1483, available at http://www.clrc.ca.gov/Mreports-publications.html#V18. These technical revisions included two changes to California foreclosure law pertaining to deeds of trust-to renumber § 2932.5 as part of the non-judicial foreclosure statute, and to add § 2934b to apply Probate Code §§ 15643 (vacancy in the office of trustee) and 18102 (protections for third persons dealing with former trustee.) Had § 2932.5 been limited to mortgages, there would have been no need to revise it at the time of the other revisions to California trust law.

Strike v. Trans-West Discount Corp., 92 Cal. App. 3d 735, 742 (1979) cited the predecessor to § 2932.5; i.e., § 858 to validate the exercise of the power of sale by a trust deed beneficiary of record. Tamburri v. Suntrust Mortg., Inc., 2011 U.S. Dist. LEXIS 72202 * 12-13 (N.D. Cal. July 6, 2011) recognized that whether § 2932.5 applies to deeds of trust raises a serious question sufficient to grant a preliminary injunction against the sale of foreclosed property. The two authoritative treatises that discuss § 2932.5 also agree that deeds of trust fall within its purview. 4 Harry D. Miller & Marvin B. Starr, California Real Estate, §§ 10.2, 10:38, 10:39^[11] (3d ed. 2010); and Cal Jur 3d (Rev) Deeds of Trust § 112.^[12]

Defendants do not discuss the interpretation of § 2932.5 by these persuasive treatises and other authorities. They point instead to the conveyance language of the DOT, which conveys title to the Property, “with power of sale,” to the trustee, to claim the beneficiary cannot be the “encumbrancer” in whom a power of sale is vested. Not only does this contention ignore that the power of sale in the DOT is controlled and must be invoked by the beneficiary, it seeks to revive the outdated title distinction between mortgages and deeds of trust rejected by the California Supreme Court.

b. Defendants’ Primary Authority is Out-Dated.

Defendants primarily^[13] rely on Stockwell v. Barnum, 7 Cal. App. 413, 416-17 (1908), and the District Court cases^[14] that follow it, to assert the power of sale in a deed of trust is held by the trustee, not the beneficiary. Stockwell is not a sound basis to determine how the California Supreme Court would apply § 2932.5 because it relies upon the archaic title theory of deeds of trust rather than the modern lien theory. 4 Witkin Sum. Cal. Law STRP § 6(2) (10th ed.) (“In most situations, the title theory has been disregarded, and the deed of trust has been deemed to create a mere lien on the property.”).

In Stockwell, id. at 415, an assignee of a note and deed of trust failed to record her interest before the property was sold at a foreclosure sale. Before the foreclosure sale, the borrower had conveyed the property to someone else. Stockwell held that the purchaser at the foreclosure sale had superior title over the successor owner because the predecessor statute to § 2932.5 only applied to mortgages. Id. Its reason for the distinction was that a deed of trust “instead of creating a lien only, as in the case of a mortgage, passes the legal title to the trustee, thus enabling him in executing the trust to transfer to the purchaser a marketable record title.” Id. at 417.^[15]

This reasoning of Stockwell is now inapposite. Under Monterey, 49 Cal. 3d at 461, a deed of trust is no longer a conveyance of actual title to the Property, but merely a lien. The borrower now retains actual title to the property. Bank of Italy Nat. Trust & Sav. Assn. v. Bentley, 217 Cal. 644, 656 (1933). That this title theory is discredited by the Supreme Court is recognized by the Ninth Circuit. Olympic Federal Sav. & LoanAsso. v. Regan, 648 F.2d 1218, 1221 (9th Cir. 1981) (mortgages and deeds of trust are “legally identical,” so that the borrower retains actual title to the property that the Internal Revenue Service can redeem despite the presence of a junior deed of trust). See also Aviel v. Ng, 161 Cal. App. 4th 809, 816 (2008) (to interpret a subordination clause in a lease, the terms mortgages and deeds of trust were treated as synonymous based upon Bank of Italy, 217 Cal. at 656).

This Court finds the California Supreme Court is likely to overrule Stockwell’s holding that the trustee of a deed of trust holds actual legal title, rather than a lien. It has done so before. Monterey, 49 Cal. 3d at 463 (overruling Johnson v. Curley 83 Cal. App. 627 (1927), which held that beneficiaries under a deed of trust were not necessary parties to an action to have that deed declared void for fraud).

c. The Beneficiary, Not the Trustee. Holds the Power of Sale.

A better predictor than Stockwell, 7 Cal. App. at 416-17, of whether the California Supreme Court would apply § 2932.5 to deeds of trust, is that Court’s analysis of the respective roles of trust deed trustees and beneficiaries found in Monterey, 49 Cal. 3d at 463. The trustee merely holds bare legal title to the extent necessary to reconvey the lien if the debt is paid, or to foreclose the security interest if it is not. Id. at 460. The trustee is bound by no fiduciary duties, and has no duty to defend the rights of the beneficiary, or authority to appear in the suit in its behalf. Id. at 462. The trustee of a deed of trust serves merely as a common agent of both parties. Vournas v. Fidelity Nat. Tit. Ins. Co. 73 Cal. App. 4th 668, 677 (1999). Because the beneficiary’s economic interests are threatened when the existence or priority of the deed of trust is challenged, it is the real party in interest under a deed of trust. Monterey, 49 Cal. 3d at 461 (trust deed beneficiary must be named in a mechanics lien foreclosure suit since trustee does not protect its interests). See also Diamond Heights Village Assn., Inc. v. Financial Freedom Senior Funding Corp., 196 Cal. App. 4th 290, 304 (2011) (beneficiary is the real party in interest in a fraudulent conveyance action to void the security).

To claim the trustee, rather than the beneficiary, is the party who holds the power of sale under the deed of trust, elevates form over substance. The beneficiary is the real party in interest and should comply with § 2932.5.

d. Section 2932.5 Protects Borrowers’ Rights.

The California Supreme Court is clear that the distinction between mortgages and deeds of trust is inapplicable where necessary to protect a borrower’s rights. Bank of Italy, 217 Cal. at 658. Even though other statutes address the notices required to be sent to the borrower,^[16] who no longer has a right to redeem the property after any foreclosure,^[17] the borrower still has a right to strict construction of all of the non-judicial foreclosure statutes, including § 2932.5, to prevent an improper sale of its property. See System Inv. Corp. v. Union Bank, 21 Cal. App. 3d 137, 153 (1971) (harshness of non-judicial foreclosure justifies strict compliance with statutes); Bank of America, 129 Cal. App. 4th at 712 (“Statutory provisions regarding the exercise of the power of sale provide substantive rights to the trustor and limit the power of sale for the protection of the trustor,” citing Miller & Starr, § 10:123 (3d ed. 2003)). Deeds of trust are “far more widely used in this state” than mortgages. 4 Witkin Sum. Cal. Law STRP § 4 (10th ed.) (Citations omitted). Application of § 2932.5 to deeds of trust advances California’s broader statutory scheme to protect borrowers, consumer and otherwise, from a wrongful foreclosure.

MERS argues that the assignee beneficiary need not record its interest to prevent a gap in title. It again confuses the title to the lien of the deed of trust with title to the Property. That MERS was the beneficiary of record even though ING was the foreclosing beneficiary created a gap in title to the lien. ING was a stranger to the record before the foreclosure giving rise to suspicion that the sale was not authorized. This is the very risk that § 2932.5 was intended to safeguard. Stockwell, 7 Cal. App. at 416-17 (“the record should correctly show the authority of a mortgagee or his assigns to sell” to ensure that the title so conveyed be free from suspicion).

D. MERS Remains a Party to the Eighth and Tenth Causes of Action.

MERS seeks to dismiss the only two causes of action against it in the SAC, the eighth (wrongful foreclosure) and the tenth (Section 17200). MERS remains a party to the wrongful foreclosure cause of action due to this Court’s ruling on § 2932.5, even though the substitution of trustee claims found in that cause of action are dismissed. Because MERS may be liable for wrongful foreclosure on that basis, Cruz has also stated a viable 17200 claim as well.

Section 17200 establishes a disjunctive three part definition prohibiting any “unlawful, unfair, or fraudulent business practice.” “Each of these three adjectives captures a `separate and distinct theory of liability.'” Rubio, 613 F.3d at 1203, citing Kearns v. Ford Motor Co., 567 F.3d 1120, 1127 (9th Cir. 2009). As amended by Proposition 64, Section 17200 is applicable to protect consumers who have suffered an injury in fact as well as business competitors. Californians for Disability Rights v. Mervyns’LLC, 39 Cal. 4th 223, 228 (2006).

Since MERS is not alleged to have participated in any fraudulent activity, the last prong is not at issue. Under its “unlawful” prong, Section 17200 borrows violations of other laws and makes them independently actionable. Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal. 4th 163, 180 (1999). Although not a criminal statute, violation of other civil statutes can satisfy Section 17200. State Farm Fire & Casualty Co. v. Superior Court, 45 Cal. App. 4th 1093, 1103 (1996) (unlawful prong includes “anything that can properly be called a business practice and that at the same time is forbidden by law,” including antidiscrimination laws, antitrust laws, environmental protection laws, fish and game laws, housing laws, labor laws, vehicle laws, and criminal laws (citations omitted)); Rubio, 613 F.3d at 1204 (TILA violation). The “unfair” prong is measured by the alternative public policy test adopted by Rubio, 613 F.3d at 1205, citing Gregory v. Albertson’s, Inc., 104 Cal. App. 4th 845, 854 (2002). This test looks to whether the practice violates public policy as declared by “specific constitutional, statutory or regulatory provisions.” Rubio, 613 F.3d at 1205. In Rubio, the Ninth Circuit simply noted that the statutory policy behind TILA would satisfy the “unfair” prong of the test. It in effect collapsed the two prongs where statutory violations are alleged. Id.

The allegations of the SAC support MERS’ involvement in the violation of § 2932.5. MERS was the beneficiary of record, even though ING was the foreclosing beneficiary. The “unlawful” prong is met; as is the “unfair prong” under these allegations, and MERS will not be dismissed from either the eighth or tenth causes of action.

IV. CONCLUSION

The distinction between mortgages and deeds of trust is more one of terminology than substance as Monterey, 49 Cal. 3d at 464 stated: “Regrettably, it appears to be too late in the development of our vocabulary to rename deeds of trust and the `trustees’ who act under those instruments.” Weighing the dubious continuing viability of the Stockwell case against the other authority cited in this Memorandum Decision, the Court concludes that ING as the foreclosing beneficiary under the DOT is as subject to the mandates of § 2932.5 as if it held a mortgage. The DOT gives the authority to exercise the power of sale to ING, who is the real party in interest by law for foreclosure matters. For the same reasons as a mortgagee must record its interest before it forecloses, so must a beneficiary of a deed of trust under § 2923.5. The ministerial role of the trustee does not justify any distinction between the two instruments for purposes of § 2932.5 because the trustee as agent simply acts at the direction of the beneficiary.

This Memorandum Decision will constitute the Court’s findings of fact and conclusions of law pursuant to Fed. R. Bankr. P. 7052. Counsel for Cruz is directed to prepare an order in accordance with this Memorandum Decision within ten days of the date of entry.

IT IS SO ORDERED.

[1] The Court rules on the Motions despite the recent death of plaintiff Cruz. His demise does not abate this adversary proceeding, which pursues claims which now either belong to his estate or successor. Fed. R. Civ. P. 25 applies to allow the substitution of the successor of the deceased party in this case. Hawkins v. Eads, 135 B.R. 380, 384 (Bankr. E.D. Cal. 1991); see Fed. R. Bankr. P. 7025. The Court will decide any motion of substitution by any party or by the successors of Cruz at a later time. Hawkins, 135 B.R. at 384. The Chapter 13 case remains pending as Cruz’s wife is a co-debtor, and its status will be addressed in the bankruptcy case in chief pursuant to Fed. R. Bankr. P. 1016.

[2] Defendant SCME Mortgage Bankers, Inc. (“SCME”) has been defunct since 2007 and has not responded in any way to the complaints filed by Cruz. Quality Loan Service Corporation (“Quality”) has been deleted as a Defendant in the SAC, likely due to its filing of a Declaration of Nonmonetary Status pursuant to Cal. Civ. Code § 29241 (“Status Declaration”) to which Cruz did not timely object. In the Status Declaration, Quality stated it did not hold title to the Property and only served as the parties’ agent. Quality also agreed to be bound by any nonmonetary order or judgment of this Court. The Court will thus address the SAC only as it pertains to the moving parties Aurora, ING and MERS (collectively “Defendants”).

[3] All references to a statutory section are references to the California Civil Code unless otherwise specified.

[4] The SAC alleges ten causes of action: 1) intentional misrepresentation as to SCME and ING; 2) intentional misrepresentation as to Aurora and ING; 3) negligent misrepresentation as to SCME and ING; 4) negligent misrepresentation as to Aurora and ING; 5) breach of contract as to Aurora and ING; 6) breach of implied covenant of good faith and fair dealing as to ING and Aurora; 7) promissory estoppel as to ING and Aurora; 8) wrongful foreclosure as to ING, Aurora and MERS; 9) quiet title as to ING; and 10) violation of Section 17200 as to all Defendants.

[5] Cruz argued that since the Court denied the First Motions to dismiss the Section 17200 cause of action, MERS is precluded from challenging it again. But the Court’s analysis of the ripeness of this dispute is based upon new allegations of the SAC found in paragraph 23-that Cruz “would have discovered the interest rate discrepancy in the year 2015 when his payments would have deviated significantly from what the TILA disclosure statement reflected.”

[6] In SAC ¶ 100, Cruz alleges that “ING claims that they are and were the beneficiary of the Deed of Trust throughout the foreclosure process.” Cruz also alleges in SAC ¶ 61 that “Aurora was acting as agent for ING,” including when Aurora entered into the “Forbearance Contract” in October 2009. SAC ¶ 83.

[7] Although not the focus of his SAC, which is instead on the substitution of trustee under the DOT, Cruz alleges sufficient facts to assert this claim in SAC ¶ 106.

[8] Defendants do not contest that § 2932.5, if applicable, was not complied with by ING’s foreclosure without its interest being of record. They merely contest whether the statute applies to deeds of trust, or only to mortgages.

[9] Avelo, 195 Cal. App. 4th at 1628, on which Aurora relies for the broad statement that tender is required in any case seeking to set aside a completed sale, is not to the contrary. Avelo recognized that an unauthorized foreclose sale was void, but did not find the sale at issue was unauthorized. There, the substitution of trustee was signed by a lender before it was assigned any interest in the deed of trust. Because § 2934a retroactively validates a substitution of trustee by an unauthorized beneficiary, the substitution of trustee was deemed valid as of the time the deed of trust was assigned. Id., citing Dimock, 81 Cal. App. 4th at 876-78.

[10] Aurora and ING also direct the Court to a portion of § 2920(b) asserting that mortgages and deeds of trust are mutually exclusive under the foreclosure statute. This assertion ignores that § 2920(b) by its express terms only applies “(f)or purposes of Sections 2924 to 2924h, inclusive . . .” This limited exclusion of a deed of trust from the definition of a mortgage is patently inapplicable to § 2932.5.

[11] MERS incorrectly cites 4 Harry D. Miller & Marvin B. Starr, California Real Estate, §§ 10:2, 10:38, 10:39 (3d ed. 2010) (“Miller & Starr”) despite it being cited by MERS as an authoritative source on real estate. MERS quotes Miller & Starr to state that (“An assignment of the note and deed of trust need not be recorded to be effective. . . .”). The text quoted by MERS pertains only to the effectiveness of assignments between the assignee and assignor, but not to § 2932.5. Miller & Starr in the same section, § 10:39, proceed to specifically apply § 2932.5 to deeds of trust as well as mortgages: “In the case of a deed of trust or mortgage with a power of sale, an assignee can only enforce the power of sale if the assignment is recorded, because the assignee’s authority to conduct the sale must appear in the public records.”

[12] Cal Jur 3d (Rev) Deeds of Trust § 112 cites § 2932.5 and other authority for the following:

The assignment of a note and trust deed ordinarily vests in the assignee all the rights and interest of the beneficiary. The assignee becomes the equitable owner of the security and is entitled, as successor to the beneficiary, to all that is equitably due on the trust deed including interest on the amount secured to the date of payment or tender. The assignee has a right to bring a foreclosure action and may exercise the power of sale in a security instrument if the assignment is duly acknowledged and recorded.

[13] Defendants also cite two cases, neither of which supports that a deed of trust grants the power of sale to the trustee, rather than the beneficiary. Garretson v. Post, 156 Cal. App. 4th 1508, 1516 (2007) was actually a SLAPP case against the beneficiary arising from a claim of wrongful foreclosure, which summarily described the non-judicial foreclosure process. Py v. Pleitner, 70 Cal. App. 2d 576, 579 (1945) involved an obsolete difference between the right of redemption between mortgages and deeds of trust, rather than whether the trustee or beneficiary held the power of sale. Since Code of Civil Procedure § 729.010 now provides for a right of redemption following a judicial sale under either a mortgage or a deed of trust, Civ. Proc. § 729.010 (Deering 2011), it is particularly inapposite here.

[14] This Court respectfully is not bound by these District Court decisions. See State Compensation Ins. Fund v. Zamora (In re Silverman), 616 F.3d 1001, 1005 (9th Cir. 2010) (reserving whether bankruptcy courts are bound by district court decisions within the district where the bankruptcy court sits, but recognizing problems with a non-uniform body of law might result).

[15] Stockwell, 7 Cal. App. at 417, secondarily based its holding on its conclusion that “[i]t is immaterial who holds the note,” a conclusion recognized by Defendants as erroneous. In fact, they assert who holds the Note is dispositive, rather than “immaterial.” Defendants claim that because ING was the holder of the Note at the time of the foreclosure, it was unnecessary for it to record the assignment, because when the Note was transferred to ING, the beneficial interest in the DOT automatically transferred with it. Polhemus v. Trainer, 30 Cal. 686, 688 (1866) (interest in the collateral subject to the mortgage “does not pass unless the debt itself [is] assigned”). That ING is entitled to enforce the Note does not alone obviate compliance with § 2932.5, which also requires the assignment be recorded before the power of sale is exercised by the beneficiary.

[16] MERS correctly points out that notice requirement for borrowers are also addressed by other statutes. See §§ 2924b(b)(1) (trustor and mortgagee must receive copy of recorded notice of default via mail), 2924b(b)(2) (trustor and mortgagee must receive copy of recorded notice of sale via mail) and 2937 (trustor and mortgagee of residential property must receive notice of assignment of servicing of mortgage of trust deed via mail). This does not change the Court’s view addressed in Salazar, 448 B.R. at 821, that § 2932.5 helps ensure borrowers know who actually owns the loan and is the real party in interest during the foreclosure process. Id. at 818.

[17] See footnote 13, infra.

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MAINE SUPREME JUDICIAL COURT

DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE, IN
TRUST FOR THE REGISTERED HOLDERS OF AMERIQUEST MORTGAGE
SECURITIES INC., ASSET-BACKED PASS-THROUGH CERTIFICATES,
SERIES 2006-R2

v.

DONALD P. PELLETIER et al.

EXCERPT:

[¶13] Although the Pelletiers have not yet tendered to the bank the proceeds
of the loan that they received from Ameriquest, the statute specifies that tender is
not required until the creditor has performed its obligations under the law.
15 U.S.C.S. § 1635(b). The facts established in this summary judgment record
indicate that the creditor—the bank—has not yet performed its obligation to
“return to the obligor any money or property given as earnest money,
downpayment, or otherwise.” Id. Thus, the Pelletiers were not yet required to
tender the proceeds to the bank, and the court did not err in imposing the remedy of
rescission on summary judgment. Further proceedings are necessary, however, to
define the scope of that remedy. Because the parties have not followed the process
specified by statute with precision and clarity, the court may “otherwise order[]”
appropriate procedures to give effect to the remedy of rescission. Id. Accordingly,
although we affirm the court’s judgment granting the Pelletiers’ request for
rescission, we remand the matter for the court to determine how this rescission
should be effectuated.

The entry is:

Summary judgment for the Pelletiers on the
foreclosure complaint affirmed. Remanded for
further proceedings to effectuate the rescission of
the January 18, 2006, agreements.

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

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Excerpt:

In his motion for a TRO, Plaintiff argues he has shown a likelihood of success on the merits
of his claims for violation of California Business and Professions Code § 17200 and promissory
estoppel. The Court interprets Plaintiff’s argument regarding his claim for promissory estoppel as
applying to his claim for fraud. The elements of a fraud claim are false representation, knowledge of
falsity, intent to defraud, justifiable reliance, and damages. Vess v. Ciba-Geigy Corp. USA, 317 F.3d
1097, 1106 (9th Cir. 2003). Plaintiff alleges in a verified Complaint and in his motion for a TRO that
a WAMU representative made a knowingly false statement to him with the intent to defraud, upon
which he justifiably relied, causing damages. Accordingly, Plaintiff has at least raised serious
questions going to the merits with respect to his fraud claim.

<SNIP>

CONCLUSION

For the foregoing reasons, Plaintiff’s application for a TRO is granted. Defendants and their
agents, employees, representatives, successors, partners, assigns, attorneys, and any and all acting in
concert or participation with them are enjoined from engaging in or performing any act to deprive
Plaintiff of ownership or possession of Plaintiff’s real property located at 919 Brass Way, Encinitas,
California 92024, including, but not limited to, proceeding with the non-judicial foreclosure sale
scheduled for March 18, 2011 and recording any deeds relating to the property. Defendants are
ordered to show cause, on or before March 22, 2011, why a preliminary injunction should not be
issued enjoining Defendants from taking such actions until termination of this case. A hearing shall
be held on Plaintiff’s motion for a preliminary injunction on March 24, 2011 at 2:30 p.m. in
Courtroom 10. This temporary restraining order shall remain in place for 14 days or until this Court
issues an Order on Plaintiff’s motion for a preliminary injunction, whichever shall first occur. The
Court notes, pursuant to Federal Rule of Civil Procedure 65(a)(1), the Court “may issue a preliminary
injunction only on notice to the adverse party.” Furthermore, the Court points out a TRO is binding
only upon parties and their officers, agents, and employees or those acting in concert with them “who
receive actual notice of [the TRO] by personal service or otherwise.” Fed. R. Civ. P. 65(d)(2).
Accordingly, Plaintiff shall forthwith serve a copy of this Order upon all Defendants.

IT IS SO ORDERED.
DATED: March 14, 2011

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Excerpt:

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

Ann LaBelle and Daniel LaBelle,
Plaintiffs,
v.
American Brokers Conduit; BAC
Home Loans Servicing, LP, a Texas
Limited Partnership as Successor in
Interest to Countrywide Home Loans
Servicing, LP; Mortgage Electronic
Registration Systems, Inc., a Delaware corporation; John and Jane Does 1-10,
Defendants.

Excerpts:

Thus, the authenticity of BAC’s and MERS’ submitted documents is questioned by Plaintiffs. Consequently, at this motion to dismiss stage, the Court will not consider the signed documents which BAC and MERS have submitted. Therefore, holding the Plaintiffs’ allegations as true, the Court finds that Plaintiffs have alleged a violation of TILA which would extend Plaintiffs’ right to rescind to three years. Plaintiffs’ notice of rescission was sent June 13, 2009, within three years of the transaction.

<SNIP>

BAC contends that it is simply a servicer of the loan and has never owned a pecuniary interest, and that the true owner of the obligation is Freddie Mac. Once again however, Defendants rely on documents outside of the pleadings to prove their point. Defendants have submitted an affidavit stating that Freddie Mac is the true owner of the mortgage. This Court will not consider this affidavit for the purposes of this motion to dismiss. Plaintiffs Amended Complaint alleges that BAC maintains a pecuniary interest in the loan. Furthermore, Plaintiffs’ Amended Complaint references a letter from BAC’s counsel which states that BAC is the true owner of mortgage obligation. Taking Plaintiffs’ allegations as true, Plaintiffs have pled facts sufficient to establish that BAC is an assignee, against whom Plaintiffs may seek rescission.

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via: Brian Davies

ELIZABETH ANN KENTON, an Individual.
Plaintiff,

-vs.-

BANK OF AMERICA, N.A.; WELLS FARGO
BANK N.A. F/K/A WELLS FARGO BANK
MINNESOTA, N. A., as Trustee of BANK OF
AMERICAN SECURITIES INC.
ALTERNATIVE LOAN TRUST 2003-2;
FLORIDA DEFAULT LAW GROUP, P.I
Defendants.

COMPLAINT TO DETERMINE THE
NATURE, EXTENT AND VALIDITY
OF LIEN AND TO DISALLOW
SECURED CLAIM, TILA VIOLATION,
FRAUD, LIBEL, QUIET TILE, AND
INJUNCTIVE RELIEF.

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EXCERPT:

TILA is designed to protect consumers who are not on an equal footing with lenders,
either in bargaining for credit terms or in knowledge of credit provisions. The proposed
amendments to Reg. Z, conditioning the voiding of the creditor’s security interest upon
the consumer’s tender, would be a large step backward from this purpose. In a time of
unprecedented numbers of foreclosures, it is unthinkable that the Federal Reserve would
weaken a critical provision of TILA and thus harm consumers.

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Fed wants to strip a key protection for homeowners

Posted on Wednesday, December 1, 2010

By Tony Pugh | McClatchy Newspapers

WASHINGTON — As Americans continue to lose their homes in record numbers, the Federal Reserve is considering making it much harder for homeowners to stop foreclosures and escape predatory home loans with onerous terms.

The Fed’s proposal to amend a 42-year-old provision of the federal Truth in Lending Act has angered labor, civil rights and consumer advocacy groups along with a slew of foreclosure defense attorneys.

They’re not only asking the Fed to withdraw the proposal, they also want any future changes to the law to be handled by the new Consumer Financial Protection Bureau, which begins its work next year.

In a letter to the Fed’s Board of Governors, dozens of groups that oppose the measure, including the National Consumer Law Center, the NAACP and the Service Employees International Union, say the proposal is bad medicine at the wrong time.

“At the depths of the worst foreclosure crisis since the Great Depression, we are surprised that the Fed has proposed rules that would eviscerate the primary protection homeowners currently have to escape abusive loans and avoid foreclosure: the extended right of rescission.”

Because the public comment period on the Fed’s proposal is still open until Dec. 23, a spokesman declined comment on the matter.

But in a September passage in the Federal Register, the Fed said the proposal was designed to “ensure a clearer and more equitable process for resolving rescission claims raised in court proceedings” and reflects what most courts already require.

Make sure to catch the exhibits in the deposition towards the very end.

Will do excerpts when I have a chance.

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Dig deep enough you might find something old or something new 🙂

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Conclusion

Based on the foregoing analysis, the Court denies Plaintiff’s motion for summary judgment [103] as to AMC and grants Plaintiff’s motion for summary judgment [103] as to Ameriquest and Deutsche Bank, finding both Ameriquest and Deutsche Bank liable for rescission, statutory damages, and costs and attorneys’ fees. Plaintiff is given until October 14, 2008, in which to submit supplemental briefing, consistent with this decision, on the appropriate damage calculations and how to properly unwind the transaction for rescission purposes.

Ameriquest and Deutsche Bank will have until October 25, 2008, in which to respond to 12 In Payton, the court concluded that statutory damages could not be imposed on the assignee because the violation was not apparent on its face, but that an award of attorney’s fees against the assignee was appropriate because the plaintiff had brought a successful action for rescission. 2003 WL 22349118, at *7-*8.

Case 1:05-cv-00389 Document 143 Filed 09/30/2008

Plaintiff’s calculation of damages and briefing on rescission. Finally, the Court denies
Defendants’ motion to strike portions of Plaintiff’s renewed motion for summary judgment [113]
as moot in light of the discussion above.

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TILA Rescission, BK Court questions validity of “Creditor’s” claims, BAP Affirms denial of relief from stay.

source:PhilUp

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non edited version: CASE FILE California BANKRUPTCY In Re HUBBEL and PEREZ RELIEF FROM STAY DENIED TILA QUESTION2