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Litigation Techniques, Critiques and Strategies

Under SB 900, Federal Regulations,

Securitization, and Rescission!

A Foreclosure Defense Seminar

Date: April 23rd, 2016

Time: 9:00am ­ 4:00pm

Location:

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Co­Hosted By:

Rodriguez Law Group, Inc. &

CFLA Certified Forensic Loan Auditors, LLC

Sponsored by:

The Nation’s Leading Resource for Mortgage Securitization

Auditing, Chain of Title Analysis, Quiet Title and Training

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Instructors:

Patricia Rodriguez, Esq. & George M. Hill, Esq.

Patricia Rodriguez, Esq.

Founder of The Rodriguez Law Group, Inc.

Court Ordered Expert Witness In the Area of Foreclosure Defense and Writs of Possession

Ms. Rodriguez has over 15 years of experience in the legal profession. She is the lead attorney at

Rodriguez Law Group, Inc. Ms. Rodriguez is regularly invited to lecture on topics involved in foreclosure

defense such as the Homeowner’s Bill of Rights, Federal Regulations, and Securitization. During her legal

tenure she has represented thousands of homeowners, borrowers, and tenants in their disputes amongst

themselves and with the banks. She advocates on behalf of commercial and residential homeowners in

disputes against all major banks such as Chase, Wells Fargo, Bank of America, Bank of New York

Mellon, etc. She provides extensive assistance and litigation support to other law firms in both State and

Federal actions regarding foreclosure laws, loan modification policies, and foreclosure recovery­related

legislation. You can learn more about her legal practice online at www.attorneyprod.com.

George M. Hill, Esq.

Managing Attorney of the Rodriguez Law Group, Inc.

Founder/Owner of Law Offices of George M. Hill, A Transactions & Litigation Practice

Mr. Hill has been an entrepreneur for over 20 years and has been in the legal field and a general legal practitioner for 10 years.

Mr. Hill has extensive knowledge in best business practices, securities regulation, business formations, and mergers and

acquisitions. Mr. Hill is experienced in various forms of civil litigation cases, including those related to real estate, foreclosures,

and other home­borrower issues. Mr. Hill has defended and prosecuted cases in the California Courts of Appeal, Superior

Courts of California, the United States District Courts, and the Ninth Circuit Court of Appeals, on a myriad of issues

concerning borrowers and the foreclosure industry, including current foreclosure law, loan modification regulations,

post­foreclosure regulations, and unlawful detainers. With his business and legal experience, he has gained a complex and

reasoned view to the foreclosure field from which all can benefit.

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“Ensuring Justice One Case At A Time!”

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1. Introduction - Outline of Todays Lecture & Lecture Topics

a. Introduction (9:00 – 9:05) (PROD & George)

b. Pre Litigation Analysis (9:05 – 9:20) (PROD)

c. The Process of Non Judicial Foreclosure In California (9:20 – 9:35) (George)

d. Litigation of Real Property Ownership/Title in California (9:35 – 10:30) (PROD)

e. 15 MINUTE BREAK (10:30 -10:45)

f. Litigation of Possession of Real Property & Unlawful Detainer (10:45 – 11:30) (George)

g. CA State Court Analysis of Real Property Claims and Title Actions (11:30 – 12:30) (PROD)

h. LUNCH (12:30 – 1:30)

i. Analysis of California Homeowner Bill of Rights - SB 900 (1:30 – 2:15) (George)

i. California SB 900 – The Application of the Law

ii. California SB 900 – Understanding The Relevant Provisions

j. 15 MINUTE BREAK (2:15 – 2:30)

k. Federal Court Analysis of Real Property Claims & Title Actions (2:30 - 3:30) (George)

l. Forum Analysis; Filing of Both Federal & State Cases Simultaneously (3:30 – 3:50) (PROD)

m. Closing Remarks & Comments (3:50-4pm) (George & PROD)

2. Pre-Litigation Analysis – PROD

a. Understanding Loan Originators

b. Understanding Securitization Audit Experts

i. See Redacted Hybrid Audit

3. The Process of Non-Judicial Foreclosure In California - George

a. The Notice of Default: The Bank is giving the Homeowner notice that according to the Bank

Homeowner owes the bank and hasn’t paid.

b. The Notice of Trustee Sale: This is notice to the Homeowner that the bank is electing to sale

the property under the allege authority of the Deed of Trust

c. The Trustee Sale Date: The date the bank sales the house

d. Delaying Trustee Sale Dates

e. Advertisements of Trustee Sale Delays

4. Litigation of Real Property Ownership/Title in California – PROD

a. Complaint

i. When to File?

ii. What to Write? Upon belief - Plaintiffs allege

iii. What to File? Summons; Civil Case Cover Sheet; Attachments; Complaint; Complaint

Signature Page; Exhibits

iv. How to File? Filing/Serving Defendants – Jurisdiction Specific

b. Temporary Restraining Orders/Preliminary Injunctions: Note Use of Bonds

c. Lis Pendens: A two page document which attaches the lawsuit over title to the property; thus

when it’s sold at a trustee sale date no one but the bank will buy the lawsuit – bank must buy it

back

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d. Answer: Defendant has 30 days to Answer – unless Trustee files objection to non-monetary

status – if Plaintiff objects – Defendant is given 30 days from proof of service of objection to

non-monetary status

i. Three choices: Admit, Deny, Demur (motion to dismiss in federal court)

e. Demur Hearing

f. Case Management Conference – CMC - Case Management Conference Statement

g. Trial Set – 6 months out from initial filing of Complaint

h. Discovery

i. Request for Form & Special Interrogatories, Documents, Admissions; Depositions

i. Trial – 4 to 5 Days

5. Litigation of Possession of Real Property & Unlawful Detainer In California – George

a. KEY = The Plaintiff must prove three issues

i. Defendant in possession

ii. Defendant properly served with three day notice to quit

iii. Plaintiff has a duly perfected security interest

b. Temporary Restraining Order – temporary stop to the sell of the house

c. Preliminary Injunction – permanent restraint from selling the house the entire duration of the

litigation

d. Unlawful Detainer Action

i. Complaint: Three elements: proper notice; still in possession; plaintiff has right to

possess

ii. Answer – 5 days for homeowner; 10 days for renter

iii. Motion to consolidate with matter involving Title

iv. If judgment entered – motion to stay judgment until after Title matter decided –

irreparable harm (for actually homeowner residing on premises)

v. Not granted – must appeal BC by law MUST be granted

vi. Wedgewood v. Brown-Wilson: Court reversed a trial court because Plaintiff failed to

provde duly perfected title as mandated by CCP Section 1161 and a trustee’s deed upon

sale is not prima facie evidence of a duly perfected title contrary to previous holdings in

the appellate division. Riverside – not published so persuasive case law.

6. California State Court Analysis of Real Property Claims and Title Actions – PROD

a. Proper Defendants – Originator, Servicer, Trustee of Securitized Trust; Foreclosure Trustee

(if applicable) and MERS (if applicable)

b. Proper Origination Documents

i. Uniform Residential Loan Application

1. Type of mortgage and terms of loan

2. Property information and purpose of loan

3. Borrower information

4. Employment information

5. Monthly income and combined housing expense information

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6. Assets and liabilities

ii. Federal Truth-In-Lending Disclosure Statement

1. Amount of payment

2. Income v. payment

iii. Buyer’s Closing Statement

1. New loan charges

a. Loan processing fee

b. Banking fee

c. Appraisal fee

d. Processing fee

2. Breach of fiduciary duty

3. Conspiracy to defraud

iv. Settlement Statement

v. Adjustable Rate Note

vi. Balloon Rider

1. Failure to disclose balloon payment Uniform Residential Loan Application

2. Type of mortgage and terms of loan

3. Property information and purpose of loan

4. Borrower information

5. Employment information

6. Monthly income and combined housing expense information

7. Assets and liabilities

8. Federal Truth-In-Lending Disclosure Statement

9. Amount of payment

10. Income v. payment

11. Buyer’s Closing Statement

12. New loan charges

13. Loan processing fee

14. Banking fee

15. Appraisal fee

16. Settlement Statement

17. Processing fee

c. Claims of Origination / Fraud

i. Fraud – Allegations need to meet specificity requirements

1. Actual Fraud - California Civil Code § 1572(3)(5)

a. Knowledge of borrower’s lack of ability to afford monthly payments due

to income

ii. Violations of Business & Professions Code §17200 Unfair and Deceptive Acts and

Practices (UDAP) [Fraudulently Procured Documents];

1. Substitution of Trustees, Corporate Assignments, and Assignments are red flags

for transfer problem

2. Violation of UDAP [Fairness Doctrine]

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iii. Intentional Misrepresentation

1. The misrepresentation of a material fact;

2. Knowledge of falsity (scienter);

3. Intent to induce reliance

4. Actual and justifiable reliance on the misrepresentation; and resulting damages

iv. Negligent Misrepresentation

1. the misrepresentation of a material fact;

2. false statement is made without a reasonable ground for a belief in the truth of

the misrepresented fact

3. intent to induce reliance;

4. actual and justifiable reliance on the misrepresentation; and

5. resulting damage

v. Fraudulent Concealment

1. affirmative duty to disclose all material facts;

2. concealment of facts in order to induce plaintiff to enter into a transaction or

relationship;

3. resulting damage

vi. Cancellation of Contract

1. California Civil Code §1670.5, §1689, §3412

2. Existence of written instrument

3. That is void or voidable

4. Grounds for rescission / when facts discovered

5. Reasonable apprehension if left outstanding may cause serious injury to

Plaintiff

vii. Violation of Finance Lender Law

1. California Finance Code §§ 4973, et seq., 22000, et seq. and 50000, et seq.

2. Plaintiff must allege that their loan is covered under this provision. A consumer

loan more than $417K is not covered. No exceptions to this rule have been

identified.

viii. Conspiracy to Defraud

1. Falsification of loan application

2. Set up borrower for certain default

ix. Waiver/Promissory Estoppel

1. Contractual issue – bank has told HO to stop making payments to be considered

for a modification; thus, the bank has waived any right to enforcement of the

terms of the contract under the note; it gave that right up to enforce the contract

by telling the home owner to stop making payments; homeowner relied on that

waiver, stopped making payments for a modification, is denied modification, -

bank cannot then come back and state it is entitled to enforce the payments

x. Intentional Infliction of Emotional Distress

1. Outrageous Behavior

2. Injury Breach of Contract

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3. Make sure to allege all elements

4. What is the breach? Find a provision in the Deed of Trust to support the breach

of contract claim

xi. Breach of Oral Contract

1. Existence of a contract

2. Terms that establish obligation

3. Specify whether contract is oral, written or implied by conduct

4. Plaintiff’s performance or excuse for non-performance

5. Defendant’s breach

6. Resulting damage

xii. Breach of fiduciary duty

xiii. Conspiracy to defraud

1. Falsification of loan application

2. Set up borrower for certain default

xiv. Statute of Limitations – The SOL has passed for most if not all of our claims.

Therefore, we must allege that Equitable Tolling applies, otherwise, the court may

dismiss without leave to amend.

d. Servicing Fraud (aka Fraud By The Loan Servicer)

i. Unjust Enrichment

1. Unwarranted fees/overcharging

ii. Violation of Buss. & Prof. Code Section 17200 (Overcharging of Fees – Unfair,

Business Practices)

1. Unlawful, Unfair, or Fraudulent business practice

a. Instituting improper or premature foreclosure to generate unwarranted

fees

b. NOD inflates default amount

2. NTS shows balance owed which is too high

e. Other Statutory Violations

i. Violation of 2934(a) (Substitution of Trustee)

1. Occurs when trustee named in the recorded substitution acted as trustee prior to

the date of executon of substitution = unlawfully initiated foreclosure;

2. Substitution is executed but not recorded prior to or concurrently with notice of

default;

3. Notice of substitution NOT mailed to all interested parties;

a. Affidavit NOT attached to substitution confirming that such notice was

given;

4. Substitution is effected AFTER notice of default recorded but prior to notice of

sale.

5. Notice of sale must be re-sent with substituted trustee information, otherwise

the sale is void.

6. Effective date drastically different from recordation date.

f. Violation of 2932.5 (ONLY APPLICABLE IN CERTAIN DISTRICTS)

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i. Occurs where a notice of default or notice of sale is recorded prior to a valid

assignment. The entity recording the NOD and/or NTS does not have authority to

record the document as they have not received any beneficial interest.

ii. This statutory violation has SERIOUS LIMITATIONS. Several courts have found this

section inapplicable to deeds of trust and only apply it to mortgages.

1. California district where Calvo v. HSBC Bank was upheld:

a. 1st District: Hayes v. EMC Mortgage: April 9, 2012;

b. 2nd

District: Calvo was in this district: September 11, 2011;

c. 4th

District: Herrera v. Federal Nation Mortgage: May 17, 2012;

d. 6th

District: Derbrunner v. Duetsche Bank: March 16, 2012.

2. There are no cases published or unpublished in the 3rd

or 5th

districts that have

mentioned or upheld 2932.5 in regards to the above. Excerpt from Herrera v.

Federal National Mortgage: “we conclude the trial court appropriately

sustained the demurrer to the first cause of action without leave to amend since

section 2932.5 is inapplicable to deeds of trust.”

3. Below is a map of California and how it is districted as reference:

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1&attbid=ANGjdJ9UDDq98lXX-

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USk1RHYoR_UJQ5wFaTXuhpGMyG4kkQU&ats=1416627127830&rm=1478

88ae7c63b623&zw&sz=w1349-h576

g. Analysis of Selling & Fraud For California Complaints i. Understanding Securitization

1. Mortgage Backed Bonds – bonds are not created equal

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2. Table Funding – illegal for a bank to NOT use its own money

3. Originator – bank that originated the loan

4. Sponsor/Seller – middle bank bought note from originator and sold it to

depositor to package in the trust – most missed the closing date

5. Depositor – bank that sold the Note to the investor

6. Lack of Standing

a. Cause of Action – yes

i. Title doesn’t matter – only substance

ii. Each court will determine differently whether or not it is a named

cause of action

iii. Injury – each time the note was illegal sold the equity in the

home significantly decreased

b. MERS – Mortgage Electronic Registry

i. Every mortgage is supposed to registered on this system

ii. Intended during the 1990s to cut recording costs/fees for the

banking industry; also helped hide chain of title from the public

iii. Approximately 65 million mortgages MERS is beneficiary or

nominee

iv. Each time the NOTE was transferred by law there was supposed

to be a duly signed assignment (from Originator to

Sponsor/Seller to Depositor); this did not occur in most cases.

v. Viable Causes of Actions Against MERS

1. Violation of CCP 2932.5 – not valid

2. Violation of B&P Code 17200

3. Wrongful Foreclosure (Lack of Standing) – for failing to

transfer the loan to the trust by the closing date – See

Glaski v. Bank of America

4. Agent/Principal Issue

c. NOTE: Current Case Law and the Importance to Distinguish Cases

i. It is imperative to distinguish these new cases from prior

precedential cases already decided on similar issues: Gomes;

Jenkins

ii. Role of Glaski v. BOA

1. In a 2013 United States Court of Appeals Case, in the Fifth District of

California, the Appellate Court held that a borrower may challenge the

securitized trust’s chain of ownership by alleging the attempts to transfer the

deed of trust to the securitized trust (which was formed under New York law)

occurred after the trust’s closing date. This case is the highly analyzed Glaski v.

Bank of America, N.A., et al, Court of Appeal, Fifth District of California, Case

No. F064556.

2. Glaski held as follows: That transfers that violate the terms of the trust

instrument are void under New York trust law, and borrowers have standing to

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challenge void assignments of their loans even though they are not a party to, or

a third party beneficiary of, the assignment agreement. Glaski v. Bank of

America, N.A., et al, Court of Appeal, Fifth District of California, Case No.

F064556.

3. The Glaski Court specifically noted “We reject the view that a borrower's

challenge to an assignment must fail once it is determined that the borrower

was not a party to, or third party beneficiary of, the assignment agreement.

Cases adopting that position “paint with too broad a brush.” Culhane v. Aurora

Loan Services of Nebraska, supra, 708 F.3d at p. 290. Instead, courts should

proceed to the question whether the assignment was void. Glaski v. Bank of

America, N.A., et al, , supra.

4. Note through a current application of Glaski be aware of the following

5. State courts do not fully understand the implications of Glaski and are reluctant

to follow its legal conclusion

6. Federal Courts are not favorable to Glaski.

7. Alternate theories when applying Glaski must be used as part of your analysis.

8. NOTE: Opposing Parties will argue that Glaski should be analyzed as a

minority view held by citing the decision of Jenkins v. J.P. Morgan Chase Bank,

N.A. (2013) 216 Cal.App.4th 497.

9. Therefore, it is imperative that arguments be raised to distinguish your claims

from the Jenkins case, specifically; that and wrongful actions, inter alia, the

absence of proper assignments of the Note and Deed of Trust to the securitized

Trust, preceded any alleged default on Plaintiff's behalf whereby triggering the

purported election to sell under the Deed of Trust. (Further analysis can be

found be looking to Lueras v. BAC Home Loans Servicing, LP (2013) 221

Cal.App.4th 49, 163 Cal.Rptr.3d 804.)

h. Yvanova V. New Century Mortgage Corporation (B247188; 226 Cal.App.4th 495; Los

Angeles County Superior Court; LC097218.)

i. In the matter of Yvanova v. New Century Mortgage, the California Court of Appeal

affirmed the trial court’s dismissal of the action brought by Yvanova against New

Century Mortgage Corporation as well as numerous other financial institutions alleging

the mortgage and deed of trust on the plaintiff’s residence were improperly securitized

and assigned from the original lender to several successive mortgagees and trustees,

and ultimately improperly sold at foreclosure.

ii. On August 27, 2014, the California Supreme Court granted petition for review as to the

issue of whether a borrower indeed has standing to challenge an invalid assignment

after the California Court of Appeal affirmed the judgment in a civil action. The

California Supreme Court held: “The petition for review is granted. Briefing and

argument is limited to the following issues: In an action for wrongful foreclosure on a

deed of trust securing a home loan, does the borrower have standing to challenge an

assignment of the note and deed of trust on the basis of defects allegedly rendering the

assignment void?”

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i. Keshtgar v. U.S. Bank, N.A. (B246193; 226 Cal.App.4th 1201, mod. 227 Cal.App.4th 321c;

San Luis Obispo County Superior Court; CV120282.)

i. In the matter of Keshtgar v. U.S. Bank, N.A., the California Court of Appeal affirmed

the trial court’s dismissal of the action brought by Keshtgar against U.S. Bank, N.A.

and various other financial institutions alleging that after plaintiff executed a note

secured by a deed of trust on the real property, the deed was allegedly assigned to U.S.

Bank, N.A. as trustee for the certificate holders of the Harborview Mortgage Loan

Trust. Plaintiff alleged that U.S. Bank did not receive an assignment of the note, was

never in possession of the note, never acquired the rights of nor is it a successor to the

original lender or any other entity, and as such, U.S. Bank did not have the legal ability

to exercise any rights under the deed of trust, including the power of sale.

ii. On October 1, 2014, the California Supreme Court granted a petition for review after

the Court of Appeal affirmed the judgment in the civil action. The Supreme Court has

ordered briefing be deferred pending the decision in Yvanova v. New Century Mortgage

Corp., which presents the following issue: In an action for wrongful foreclosure o a

deed of trust securing a home loan, does the borrower have standing to challenge an

assignment of the note and deed of trust on the basis of defects allegedly rendering the

assignment void?

j. Mendoza v. JP Morgan Chase Bank, N.A. (C071882; 228 Cal.App.4th 1020; San Joaquin

County Superior Court; 39201100267960CUORSTK.)

i. In the matter of Mendoza v. JP Morgan Chase Bank, N.A. the Californa Court of

Appeal affirmed the trial court’s dismissal of the action brought by Mendoza against JP

Morgan Chase Bank and various other financial institutions alleging, similar to

Yvanova and Keshtgar, improper securitization and invalid assignments and that

Mendoza has standing to challenge the improper securitization of the loan.

ii. On November 12, 2014, the California Supreme Court granted a petition for review

after the Court of Appeal affirmed the judgment in the civil action. Similar to the

Keshtgar matter, the Supreme Court ordered briefing deferred pending the decision in

the Yvanova matter.

k. Further Legal Analysis:

i. Ibanez – Massachusetts (View Oral Arguments)

ii. Phyllis – AL – Summary Judgment – Breach of Contract 3rd

Party Beneficiary

iii. In re Doble (2011) WL 1465559 (Bkrtcy.S.D.Cal.)

iv. Bank of New York v. Silverberg, 2011 NY Slip Op 5002, 6.

v. In Re Jessie M. Arizmendi, 09-19263-PB13, United States Bankruptcy Court, Southern

District of California, 2011

vi. Aguilar v, III v. Bear Sterans Resid. MTG., et. al.,

vii. Kanno v. First Liberty Mortgage, Superior Court of California, County of Riverside,

Case Number 539556, 2010

viii. O’Dell v. Washington Mutual Bank FA et. al., United States Central District Court of

California, CV 10-09195 GAF (PLAx), 2011

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ix. Javaheri v. JP Morgan Chase Bank, N.A., et. al. , United States Central District Court

of California, CV 10-09195 GAF (PLAx), 2011

x. Robinson v. Countrywide; Herrera v. Deutsche Bank

l. Bloomberg Level Three Audit

i. Shows exactly how many times the note has been sold and into which trust (classes); in

some instances the note has been sold multiple times as if it was the first time the Note

was sold – CLEAR SECURITIES FRAUD

ii. Shows the note has been paid off – answer to tender rule

iii. Lona v. Citibank: Tender exceptions - should be alleging that there is a tender

exception in addition to the allegations that tender has already occurred

m. Unjust Enrichment - Payments made to entity who is NOT the lawful note-holder

n. Violations of Business & Professions Code §17200 Unfair and Deceptive Acts and

Practices (UDAP) [Fraudulently Procured Documents]

i. “Agency/Principal Relationship & Power of Attorney – violations of additional statutes

to be used as underlying violations of Buss. & Prof. Code Section 17200

ii. Express or implied agreement

iii. Granting authority for one party to act on behalf of another

iv. Actions of agent bind the principal

v. Substitution of Trustees, Corporate Assignments, and Assignments are red flags for

transfer problems

o. Security First Rule

i. Lender must foreclose before looking to borrower’s other assets

ii. Either judicial foreclosure and seek deficiency judgment OR nonjudicial foreclosure

iii. Violation of CCP 726 if lender accepts payments from Plaintiff WHILE foreclosing

p. HAMP Guidelines – Breach of Contract

i. Qualification under HAMP guidelines

ii. Trial Period Modification Plan

iii. Borrower complies with all requirements under trial mod

iv. Lender nevertheless fails to provide permanent modification or fails to suspend

foreclosure proceedings

q. Slander of Title - Publication of disparaging statement about title to real estate; statement is

false; made with malice; pecuniary damages

r. Quiet Title - Seeking court order to establish ownership of property; plausible claim to title

s. Declaratory Relief -Validity and enforceability of subject loan agreement (contract law)

i. Illegality

ii. Public Policy

iii. Unconscionability

t. Damages (Injury-in-fact)

i. Down Payment

ii. Payments

iii. Improvements

iv. Difference between modified amount and non-modified amount paid

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u. Equitabel Estoppel - Post Foreclosure

v. Negligence – no duty, causation

w. Governing Rules

i. Individual clerk/judge rules

ii. Local County/Court Rules

iii. Civil Code of Procedure

x. Analysis

i. Facts of the case

ii. Precedent – Stare Decisis

iii. Elements – Many of the causes of actions do not allege ALL of the elements (e.g. duty,

excuse form performance, provision in contract that was breached, etc.)

7. Analysis of California Homeowner Bill of Rights - SB 900 - George

a. Procedural History i. Refer to CA Senate Rules Committee Conference Report for SB 900

ii. Enacted by CA Senate and Assembly on July 2, 2012

iii. Signed into law by Governor on July 12, 2012

iv. Effective Date: January 1, 2013

v. Expires: January 1, 2018

b. Goals of the California Homeowner Bill of Rights

i. Stabilize CA housing economy

ii. Stop foreclosure abuse by lenders and servicers

iii. Ensure meaningful foreclosure alternatives for borrowers

c. Meeting the Goals

i. Expand existing foreclosure protections and add new protections to apply to broadly

defined “mortgage servicers”

ii. Prevent mortgage servicers from proceeding with a foreclosure until certain contact

with or notice to the borrower

iii. Prevent the recordation of a notice of default or notice of sale while a foreclosure

prevention alternative is in process

iv. Require a single point of contact for the borrower once they have requested a

foreclosure prevention alternative; and

v. Give borrowers the right to sue the mortgage servicer for injunctive relief, actual

damages and treble damages, for violation of the Act and the right to recover their

attorney’s fees and costs if they prevail

d. California SB 900 – The Application of the Law

i. Eligibility

1. First lien Mortgages and Deeds of Trust

2. Secured by owner-occupied residential property

3. Containing no more than four dwelling units

ii. Large Lenders 1. Most of the provisions of the Act only apply to lenders that foreclose on more

than 175 residential properties per year.

2. Some provisions, including dual tracking, apply to smaller lenders, as well

iii. Exclusions 1. Entity Borrowers

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2. Investment Property

3. Borrowers in default who are already in bankruptcy

4. Borrowers who have already surrendered their property to lender

5. Borrowers who have contracted with someone or an entity whose primary

business is advising people on how to extend their foreclosure and avoid their

contractual obligations under the loan

e. California SB 900 – Understanding The Relevant Provisions

i. Mortgage Servicer Defined 1. A person or entity who directly services a loan, or who is responsible for

interacting with the borrower, managing the loan account on a daily basis either

as the current owner of the promissory note or as the current owner’s authorized

agent, or subservicing agent to a master servicer by contract.

2. “Mortgage Servicer” does not include the trustee or the trustee’s authorized

agent acting under a power of sale in a deed of trust

3. Prevent lenders from contracting with separate entities to manage and service

the loans to avoid application of the current laws

ii. Dual Tracking 1. The Act seeks to prevent a lender from proceeding with a foreclosure, while at

the same time negotiating with a delinquent residential borrower on a loan

modification

2. If Borrower submits a complete application for modification, the Mortgage

Servicer may not record Notice of Default or Notice of Sale until loan

modification process has been completed and the time for an appeal of any

adverse decision has passed

a. NOD can be recorded:

i. If borrower doesn’t accept offer within 14 days

ii. If borrower doesn’t appeal denial within 30 days

iii. If borrower accepts the offer but defaults

iii. Changes to Loan Modification Process 1. Mortgage servicer must provide a written acknowledgement of receipt within

five days of the receipt of the document(s) or completed application

2. Written acknowledgment of receipt to the borrower must include a description

of the loan modification process, its timeframes and any deadlines, any

expiration dates for documents submitted, and specify any deficiencies in the

application

3. Written response if the lender denies the application. This written notice must

include the specific reasons for the denial and the deadline for the borrower to

appeal the denial (30 days).

4. Mortgage servicer is not obligated to evaluate applications from borrowers who

have already been evaluated or afforded a fair opportunity to be evaluated for a

first lien loan modification prior to January 1, 2013, unless there has been a

material change in the borrower’s financial circumstances

iv. Single Point of Contact Established 1. Single point of contact throughout the loan modification process and with at

least one direct method to reach the point of contact.

2. The mortgage servicer must ensure that the single point of contact has the

knowledge, responsibility and authority to:

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3. Communicate to the borrower the process by which the borrower may apply for

available foreclosure prevention alternatives;

4. Coordinate receipt of all necessary documents and notifying the borrower of any

missing documents;

5. Timely, adequately and accurately inform the borrower of the current status of

the foreclosure prevention alternative;

6. Ensure the borrower is considered for all of the foreclosure prevention options

offered by the mortgage servicer; and

7. Have access to persons with the power to stop foreclosure proceedings

8. Single point of contact can be a team of personnel, each of whom is

knowledgeable about borrower’s current situation

9. Does not apply to small lenders

v. New Notice Requirements

1. After Notice of Default Recorded a. Within 5 days of the recording of a notice of default, the mortgage

servicer that offers foreclosure prevention alternatives must send a

written notice to the borrower informing the borrower of foreclosure

prevention alternative

b. Does not apply to any borrowers who have already exhausted the loan

modification process described above in Civil Code section 2924.6.

2. Postponed Trustee Sale Date a. Postponement of at least 10 business days require written notice to the

borrower of the new sale date and time within five business days of the

date of the postponement.

b. Failure to comply does not invalidate an otherwise valid trustee’s sale

vi. No Application Fees or Late Fees 1. Prohibits mortgage servicers from charging borrowers application fees for a first

lien loan modification or other foreclosure prevention alternative.

2. Forbids a mortgage servicer from charging borrowers late fees under the loan

for the period during which the loan modification is under consideration, while

a borrower has filed an appeal of the denial of a loan modification, or the

borrower is making timely modification payments.

f. Right to Sue Mortgage Servicers i. Borrowers can sue mortgage servicers for injunctive relief before the trustee’s deed

upon sale has recorded, or if it has already recorded, to sue for actual economic

damages, if the mortgage servicer has not corrected any “material” violation before the

trustee’s deed upon sale recorded.

ii. If a court finds that the violation was intentional, reckless or willful, the court can

award the borrower the greater of treble (triple) damages or $50,000.

iii. A violation of the Act is also deemed to be a violation of the licensing laws if

committed by a person licensed as a consumer or commercial finance lender or broker,

a residential mortgage lender or servicer, or a licensed real estate broker or salesman.

iv. Court may award reasonable attorney’s fees and costs to borrower as the prevailing

party.

v. Lenders defense: Compliance

g. Violation of California Civil Code of Procedure 2923.3 – Requirements of an Notice of

Default and Notice of Trustee sale be sent to borrower

i. Did you receive a notice of trustee sale?

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ii. Did you receive a notice of default?

h. Violation of California Civil Code of Procedure 2923.4 – Requires meaningful review of

borrower for loss mitigation

i. Were you reviewed for a loan modification and/or other loss mitigation efforts?

i. Violation of California Civil Code of Procedure 2923.5 – Cannot record a NOD until contact

is made with borrower re loss mitigation options

i. Were you contacted regarding any loss mitigation options?

ii. NOD filed without due diligence to contact borrower and assess financial situation and

explore options to avoid foreclosure

iii. Certificate of compliance by agent

iv. Only applies to owner-occupied principal residence

v. Only remedy is postponement of sale (Mabry v Superior Court)

j. Violation of California Civil Code of Procedure 2923.55 – Further requirements for a bank

to legally record a NOD – specifically can not record a NOD while a borrower is under loan

modification review

i. Was a NOD recorded while you were under review?

ii. Was a NTS recorded while you were under review?

iii. Was there a sale while you were under review?

k. Violation of California Civil Code of Procedure 2923.6 – Bank can not record a notice of

default, notice of trustee sale, or conduct a trustees sale while a complete loan modification is

under review

i. Did you submit a loan modification?

ii. Was the application complete?

iii. When did you submit the loan modification?

iv. Has a notice of default/notice of trustee sale been recorded? When?

v. Has there been a trustee’s sale? When?

l. Violation of California Civil Code of Procedure 2923.7 – Bank must provide a single point

of contact for all borrowers who request and are being reviewed for a loan modification (or

other loss mitigation alternatives)

i. Did you request a single point of contact?

ii. Were you given a single point of contact?

m. Violation of California Civil Code of Procedure 2924 (a) (6) i. No entity shall record or cause a notice of default to be recorded or otherwise initiate

the foreclosure process unless it is the holder of the beneficial interest under the

mortgage or deed of trust, the original trustee or the substituted trustee under the deed

of trust, or the designated agent of the holder of the beneficial intrest. No agent of the

holder of the beneficial interest under the mortgage or deed of trust, original trustee or

substituted trustee under the deed of trust may record a notice of default or otherwise

commence the foreclosure process except when acting within the scope of authority

designated by the holder of the beneficial interest.

ii. The entity foreclosing must be the original lender, assigned beneficiary, original trustee

or valid substituted trustee. If this does not exist, there there is a violation.

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iii. It is also imperative to analyze the recorded documents, any securitization analysis

report, etc.

n. Violation of California Civil Code of Procedure 2924.8

i. Upon posting a Notice of Sale, a trustee or authorized agent shall also post a specific

notice, concurrently with the Notice of Sale, by first-class mail in an envelope

addressed to the “Resident of property subject to foreclosure sale.”

o. Violation of California Civil Code of Procedure 2924.85

i. All borrowers must notify any potential tenants of the recorded Notice of Default prior

to signing lease agreements.

ii. Do you have any tenants?

iii. Did you notify them of the NOD prior to signing the lease?

p. Violation of California Civil Code of Procedure 2924.9

i. Within five business days of recording a notice of default, a mortgage servicer that

offers one or more foreclosure prevention alternatives shall send a written

communication to the borrower advising the borrower of loss mitigation options.

ii. Did you receive a Notice of Default?

iii. Did you receive a notice of loss mitigation options?

iv. Was the notice received within five (5) business days of recording the NOD?

q. Violation of California Civil Code of Procedure 2924.10

i. When a borrower submits a complete loan modification application or any other lien

modification application, the bank/servicer shall provide written acknowledgment of

receipt of the documentation within five (5) business days of receipt.

ii. Have you submitted a loan modification?

iii. Did you receive a notice each time acknowledging receipt of the documents?

iv. Were all notices received within five (5) business days of the documents arriving at the

bank/servicer?

r. Violation of California Civil Code of Procedure 2924.11

i. If the bank/servicer approves a loan modification in writing prior to the recordation of a

notice of default, the bank/servicer cannot subsequently record a Notice of Default.

ii. Were you approved in writing for a foreclosure prevention?

iii. Was there a notice of default recorded after this approval?

iv. Did you decline the written foreclosure prevention?

s. Violation of California Civil Code of Procedure 2924.12

i. Prior to the recording of a trustee’s deed upon sale a borrower can seek injunctive relief

to stop the sale of the property.

ii. Have you received a notice of trustee’s sale?

iii. Was the notice of trustee’s sale recorded?

t. Violation of California Civil Code of Procedure 2924.15

i. Sections 2923.5, 2923.7 and 2924.11 applies only to first lien mortgages or deeds of

trust that are secured by owner-occupied residential real property.

ii. May be able to bring a claim for a non-owner occupied property under a violation of

B&P Code 17200.

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u. Violation of California Civil Code of Procedure 2924.17

i. A declaration recorded pursuant to a notice of default, notice of sale, assignment of a

deed of trust, or a substitution of trustee shall be accurate and complete and supported

by competent and reliable evidence.

ii. Recorded documents must be reviewed to determine if there is a violation.

v. Violation of California Civil Code of Procedure 2924.18

i. If a complete application for a loan modification is submitted by the borrower, the

bank/servicer cannot record a notice of default, a notice of sale or conduct a trustee’s

sale while the complete loan modification application is pending AND until the

borrower has been provided with a written determination by the mortgage servicer

regarding the borrower’s eligibility for the requested loan modification.

ii. Were you under review for a loan modification?

iii. Did you submit a COMPLETE application?

iv. Was a notice of default recorded while under review?

v. Was a notice of sale recorded while under review?

vi. Was there a sale while under review?

vii. Were you denied a loan modification while under review?

viii. Were you provided a written denial?

ix. Were you given thirty (30) days to appeal before a notice of default, or notice of sale

was recorded?

x. Were you given thirty (30) days to appeal before a sale actually occurred?

8. Federal Court Analysis of Real Property Claims & Title Actions – (George)

a. Rescission (15 U.S.C. s. 1635)

i. (a) Disclosure of obligor’s right to rescind: Except as otherwise provided in this

section, in the case of any consumer credit transaction (including opening or increasing

the credit limit for an open end credit plan) in which a security interest, including any

such interest arising by operation of law, is or will be retained or acquired in any

property which is used as the principal dwelling of the person to whom credit is

extended, the obligor shall have the right to rescind the transaction until midnight of the

third business day following the consummation of the transaction or the delivery of the

information and rescission forms required under this section together with a statement

containing the material disclosures required under this subchapter, whichever is later,

by notifying the creditor, in accordance with regulations of the Bureau, of his intention

to do so. The creditor shall clearly and conspicuously disclose, in accordance with

regulations of the Bureau, to any obligor in a transaction subject to this section the

rights of the obligor under this section. The creditor shall also provide, in accordance

with regulations of the Bureau, appropriate forms for the obligor to exercise his right to

rescind any transaction subject to this section.

ii. (b) Return of money or property following rescission: When an obligor exercises his

right to rescind under subsection (a) of this section, he is not liable for any finance or

other charge, and any security interest given by the obligor, including any such interest

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arising by operation of law, becomes void upon such a rescission. Within 20 days after

receipt of a notice of rescission, the creditor shall return to the obligor any money or

property given as earnest money, downpayment, or otherwise, and shall take any action

necessary or appropriate to reflect the termination of any security interest created under

the transaction. If the creditor has delivered any property to the obligor, the obligor may

retain possession of it. Upon the performance of the creditor’s obligations under this

section, the obligor shall tender the property to the creditor, except that if return of the

property in kind would be impracticable or inequitable, the obligor shall tender its

reasonable value. Tender shall be made at the location of the property or at the

residence of the obligor, at the option of the obligor. If the creditor does not take

possession of the property within 20 days after tender by the obligor, ownership of the

property vests in the obligor without obligation on his part to pay for it. The procedures

prescribed by this subsection shall apply except when otherwise ordered by a court.

iii. (c) Rebuttable presumption of delivery of required disclosures: Notwithstanding

any rule of evidence, written acknowledgment of receipt of any disclosures required

under this subchapter by a person to whom information, forms, and a statement is

required to be given pursuant to this section does no more than create a rebuttable

presumption of delivery thereof.

iv. (d) Modification and waiver of rights: The Bureau may, if it finds that such action is

necessary in order to permit homeowners to meet bona fide personal financial

emergencies, prescribe regulations authorizing the modification or waiver of any rights

created under this section to the extent and under the circumstances set forth in those

regulations.

v. (e) Exempted transactions; reapplication of provisions

1. This section does not apply to— (1) a residential mortgage transaction as

defined in section 1602 (w) [1]

of this title; (2) a transaction which constitutes a

refinancing or consolidation (with no new advances) of the principal balance

then due and any accrued and unpaid finance charges of an existing extension of

credit by the same creditor secured by an interest in the same property; (3) a

transaction in which an agency of a State is the creditor; or (4) advances under a

preexisting open end credit plan if a security interest has already been retained

or acquired and such advances are in accordance with a previously established

credit limit for such plan.

vi. (f) Time limit for exercise of right: An obligor’s right of rescission shall expire three

years after the date of consummation of the transaction or upon the sale of the property,

whichever occurs first, notwithstanding the fact that the information and forms required

under this section or any other disclosures required under this part have not been

delivered to the obligor, except that if

1. (1) any agency empowered to enforce the provisions of this subchapter institutes

a proceeding to enforce the provisions of this section within three years after the

date of consummation of the transaction, (2) such agency finds a violation of

this section, and (3) the obligor’s right to rescind is based in whole or in part on

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any matter involved in such proceeding, then the obligor’s right of rescission

shall expire three years after the date of consummation of the transaction or

upon the earlier sale of the property, or upon the expiration of one year

following the conclusion of the proceeding, or any judicial review or period for

judicial review thereof, whichever is later.

vii. (g) Additional relief: In any action in which it is determined that a creditor has

violated this section, in addition to rescission the court may award relief under

section 1640 of this title for violations of this subchapter not relating to the right to

rescind.

viii. (h) Limitation on rescission: An obligor shall have no rescission rights arising solely

from the form of written notice used by the creditor to inform the obligor of the rights

of the obligor under this section, if the creditor provided the obligor the appropriate

form of written notice published and adopted by the Bureau, or a comparable written

notice of the rights of the obligor, that was properly completed by the creditor, and

otherwise complied with all other requirements of this section regarding notice.

ix. (i) Rescission rights in foreclosure

1. In general: Notwithstanding section 1649 of this title, and subject to the time

period provided in subsection (f) of this section, in addition to any other right of

rescission available under this section for a transaction, after the initiation of

any judicial or nonjudicial foreclosure process on the primary dwelling of an

obligor securing an extension of credit, the obligor shall have a right to rescind

the transaction equivalent to other rescission rights provided by this section,

if—

a. (A) a mortgage broker fee is not included in the finance charge in

accordance with the laws and regulations in effect at the time the

consumer credit transaction was consummated; or

b. (B) the form of notice of rescission for the transaction is not the

appropriate form of written notice published and adopted by the Bureau

or a comparable written notice, and otherwise complied with all the

requirements of this section regarding notice.

2. Tolerance for disclosures: Notwithstanding section 1605 (f) of this title, and

subject to the time period provided in subsection (f) of this section, for the

purposes of exercising any rescission rights after the initiation of any judicial or

nonjudicial foreclosure process on the principal dwelling of the obligor securing

an extension of credit, the disclosure of the finance charge and other disclosures

affected by any finance charge shall be treated as being accurate for purposes of

this section if the amount disclosed as the finance charge does not vary from the

actual finance charge by more than $35 or is greater than the amount required to

be disclosed under this subchapter.

3. Right of recoupment under State law: Nothing in this subsection affects a

consumer’s right of rescission in recoupment under State law.

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4. Applicability: This subsection shall apply to all consumer credit transactions in

existence or consummated on or after September 30, 1995.

b. Truth In Lender Act Section 1641(g)

i. (g) Notice of new creditor

1. In general - In addition to other disclosures required by this subchapter, not

later than 30 days after the date on which a mortgage loan is sold or otherwise

transferred or assigned to a third party, the creditor that is the new owner or

assignee of the debt shall notify the borrower in writing of such transfer,

including—

a. (A) the identity, address, telephone number of the new creditor; (B) the

date of transfer; (C) how to reach an agent or party having authority to

act on behalf of the new creditor; (D) the location of the place where

transfer of ownership of the debt is recorded; and (E) any other relevant

information regarding the new creditor.

2. (2) Definition: As used in this subsection, the term “mortgage loan” means any

consumer credit transaction that is secured by the principal dwelling of a

consumer.

3. Review the recorded documents and the file to determine if there have been any

transfers. If the original lender is not the foreclosing party – which is

determined by looking at the notice of default and notice of trustee sale – then

there must have been a transfer which may be evidenced by a recorded

assignment.

c. 12 C.F.R. § 1024.41(b)(1) - If the servicer deems the loss mitigation application to be

incomplete, the servicer must act affirmatively to complete the application. The servicer must

exercise “reasonable diligence” to obtain any documents and information it claims to require to

complete the application. “A complete loss mitigation application means an application in

connection with which a servicer has received all the information that the servicer requires

from a borrower in evaluating applications for the loss mitigation options available to the

borrower. A servicer shall exercise reasonable diligence in obtaining documents and

information to complete a loss mitigation application” Reg. X, 12 C.F.R. § 1024.41(b)(1).

d. 12 C.F.R. § 1024.41(b)(2)(i)(A) - When initially made aware of a communication that can

reasonably be deemed to be an application for loss mitigation, the servicer must promptly

conduct a review to determine whether the communication represents a complete or an

incomplete application. “If a servicer receives a loss mitigation application 45 days or more

before a foreclosure sale, a servicer shall: (A) Promptly upon receipt of a loss mitigation

application, review the loss mitigation application to determine if the loss mitigation

application is complete” Reg. X, 12 C.F.R. § 1024.41(b)(2)(i)(A)

e. 12 C.F.R. § 1024.41(b)(2)(i)(B)

i. If the servicer determines that the application for loss mitigation is complete, it must

send the borrower a notice acknowledging that the application is complete within five

business days of receipt of the application. “Notify the borrower in writing within 5

days (excluding legal public holidays, Saturdays, and Sundays) after receiving the loss

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mitigation application that the servicer acknowledges receipt of the loss mitigation

application and that the servicer has determined that the loss mitigation application is

either complete or incomplete. If a loss mitigation application is incomplete, the notice

shall state the additional documents and information the borrower must submit to make

the loss mitigation application complete and the applicable date pursuant to paragraph

(2)(ii) of this section” Reg. X, 12 C.F.R. § 1024.41(b)(2)(i)(B)

ii. The servicer must provide a written notice to the borrower describing the documents

and information needed to complete the application “Notify the borrower in writing

within 5 days (excluding legal public holidays, Saturdays, and Sundays) after receiving

the loss mitigation application that the servicer acknowledges receipt of the loss

mitigation application and that the servicer has determined that the loss mitigation

application is either complete or incomplete. If a loss mitigation application is

incomplete, the notice shall state the additional documents and information the

borrower must submit to make the loss mitigation application complete and the

applicable date pursuant to paragraph (2)(ii) of this section” Reg. X, 12 C.F.R. §

1024.41(b)(2)(i)(B)

f. 12 C.F.R. § 1024.41(b)(2)(ii) - The “written notice” notice must include a “reasonable date”

by which the borrower should submit the missing documents and information. “The notice

required pursuant to paragraph (b)(2)(i)(B) of this section must include a reasonable date by

which the borrower should submit the documents and information necessary to make the loss

mitigation application complete” Reg. X, 12 C.F.R. § 1024.41(b)(2)(ii)

i. Equal Credit Opportunity Act (ECOA) requires a notice of incompleteness within 30

days. SD 09-08 specifically incorporates ECOA’s notice provisions. SD 10-01

expressly states the notice provisions, which precisely mirror ECOA’s notice

requirements: Within 30 calendar days from the date an Initial Package is received, the

servicer must review the documentation provided by the borrower for completeness. If

the documentation is incomplete, the servicer must send the borrower an Incomplete

Information Notice …. If the borrower’s documentation is complete, the servicer must

either: Send the borrower a Trial Period Plan Notice; or make a determination that the

borrower is not eligible for HAMP and [send a Non Approval Notice]. See SD 10-01

g. 2014 Consumer Financial Protection Bureau Mortgage Rules Overview

h. Governing Rules

i. Judges Standing Order

ii. District (Northern, Central, Eastern or Southern) Local Rules

iii. Federal Rules of Civil Procedure

i. Analysis

i. Facts of the case

ii. Precedent – Stare Decisis

iii. Use of Glaski (see above)

9. Forum Analysis & Filing of Both Federal & State Cases Simultaneously – (PROD)

a. Case Law: Due to Glaski overall analysis of claims and causes of action(s) have changed

24

b. Pros of Filing Both Federal & State Actions Simultaneously

i. “two bites at the apple” and an opportunity to settle multiple cases

ii. State Complaint can focus your claims of 2924(a)(6) (see above), wrongful foreclosure,

quiet title

iii. Federal Complaint can focus on Truth In Lender Act Section 1641(g) which will flow

naturally into a cause of action for Violations of Business & Professions Code §17200

Unfair and Deceptive Acts and Practices (UDAP)

iv. Overall Cost Analysis; Strategic Decision; Final Decisions Regarding Filing

10. Closing Remarks & Comments – (George/PROD)

a. Avoiding A Conflict of Interest – Representation of Homeowner/Renter

b. Long Term Clients – multiple law suits – consider each new lawsuit filed that there may be

claims that are precluded under res judicata if prior suit was dismissed with prejudice or two

previously filed complaints dismissed without prejudice (as that equals a dismissal with

prejudice).

i. Although some causes of actions may be precluded if you have new facts (new

recorded documents, new review, new rescission) you will want to cross reference

those new facts to the checklist of causes of action. Just deduct (minus) any claims

precluded by res judicata.

c. CA Protecting Tenants At Foreclosure Act – Honor lease, 90 day notices required

d. Servicemen Act – was loan taken out while on active duty, etc. review for applicability

e. Number one way borrower can assist in prosecution of their case/litigation complete the loan

application in its entirety, fill in all information requested, sign all applicable spaces and be

timely with submitting additional documents requested. Application will become stale. Place

not applicable versus leaving blank and provide letter of explanations where necessary