Steve's Blog

Challenging predatory lending in the context of securitized loans - holder in due course overview.....

Steve Vondran (Law Offices of Steven C. Vondran) — Mon, 23 Nov 2009 20:24:16 -0600

Trying to Leverage Loan Modifications against the Assignee of the loan (who will undoubtedly argue they are not liable for any predatory lending violations committed by the loan originator) as they are a “Holder in Due Course.”

By Steve Vondran, Esq. who is practicing Real Estate, Bankruptcy, and Foreclosure Defense in Arizona and California where he is licensed to practice law. He also holds a real estate broker's license in both states as well. Prior to becoming an attorney, Mr. Vondran also was a mortgage loan officer which has given him insight into the current financial crises. He can be reached at steve@vondranlaw.com or (877) 276-5084. The following is general legal information only, and is not to be construed as legal advice, or a substitute for legal advice. The following information may not be updated or accurate, and is simply provided as general information and things to think about if you are facing foreclosure in California or Arizona. For specific questions, please contact a foreclosure defense attorney on your area. Please do not post confidential information on my blogs and do not send us confidential information in emails as we cannot guarantee the confidentiality of such. No attorney-client relationship is formed until a retainer agreement is signed.

One of the key things we must figure out as foreclosure defense lawyers is whether or not your loan was “sold-off on the secondary market” and/or “securitized” and sold to investors on wall street (ex. hedge funds, pension funds, foreign investors, insurance companies, etc.).

Common Scenario: Your sub-prime ARM was originated by Countrywide. Countrywide then sells the loan to Wells Fargo and Wells Fargo works either holds the note, and/or sells it off to an investment banker to securitize the loan. Countrywide, as loan originator, knowing it was going to sell off your loan, may not have cared much about any predatory lending issues such as:

(1) Ability to afford the payment after the loan adjusts (ex. option ARM loans / pick-a-pay); See our website discussing Option ARMS / Pick-a-Pay Loans atwww.OptionArmLawyer.com

(2) Inflated appraisals that helped get the loan funded;

(3) Lack of full, fair, and conspicuous disclosures as required under RESPA, Truth in Lending law (TILA), required ARM disclosures (Ex. CHARMS booklet), and Credit score / FICO disclosures;

(4) Failure to provide two completed copies of a notice of right to cancel to each borrower with the dates for recsission accurate and filled in (note failure to provide proper copies of this critical disclosure document can create an EXTENDED THREE YEAR RIGHT TO RESCIND YOUR LOAN (you can learn more about loan rescission at www.RescindMyLoan.net);

(5) Stated income that may be false, trumped up, and/or not properly verified when the circumstances suggest it would be prudent to verify;

(6) Excessive (and perhaps hidden) fees, including yield spread premiums (YSP);

(7) Failure to provide contracts in the foreign language of the borrower (California Civil Code Section 1632)

(8) Reverse Redlining / Discriminatory Lending

(9) Steering borrowers into sub-prime loans (ex. 2/28 or 3/27 ARM loans).

(10) Violations of HOEPA

And the list goes on - check your facts with your lawyer.

Countrywide, and other “originating lenders” may not have cared much about the consequences of the loan they underwrote (i.e. whether or not the toxic and predatory loan would be affordable after the interest rate adjusted, and whether or not the loan would land you foreclosure in next few years) mainly because the originating lenders, in many cases, were committed to selling the loan literally before you signed the loan documents. They knew they were going to be paid by a third party to buy the loan, and either hold it for an investment, or securitize it sell it off on wall street.

Again, these originating “lenders” in many cases were not even “lending” their own money, and may have funded the loan out of a credit line provided by a third party, such as an investment bank. Whatever the case, loans were originated by the droves, and sold off and securitized loans, while the originating “lender” was simply “cashed-out” by being paid the balance of the loan plus a fee.

This creates the potential for an originating lender to care more about volume, than quality of loans. IN many cases, investment bankers set the standards for the types of loans they would purchase, and the originating lender literally mass-produced loans that would wind up securitized in loan pools and sold to Wall Street investors.

Once your loan is sold off, the third party buying the loan will claim they took the note in good faith with no notice of claims and defenses, and therefore, under the eyes of the law, they should be deemed a HOLDER IN DUE COURSE (which in most cases, immunizes the purchasing lender from facing a whole host of claims and defenses a borrower may want to raise, including predatory lending claims – the claims and defenses a holder in due course must answer to are discussed below).

The end result then, is that the originating, as we have seen, can merely file for bankruptcy if the ‘heat gets too hot in the kitchen’ (i.e. if they are the subject of potentially expensive class action lawsuits challenging their predatory loans).

What this creates is a situation where the originating lender manufactures and creates the “garbage in” loans (loans that are destined for a loan pool) and the purchasing lender who buys the loan from the originating lender winds up securitizing these loans into loan pools, having them rated, and eventually pitching this “garbage out” to Wall Street Investors who are lead to believe these loan pools represent sound investments in Americas strength in the housing market.

Meanwhile, the borrower, the victim of predatory lending, has literally nowhere to turn to seek redress for loan non-compliance and predatory lending (at least that is the lenders and loan servicer’s position). The broker and/or originating lender may be bankrupt, and the Trustee of the Loan Trust, Loan Servicer, and Wall Street Investors all claim they have no liability because they had nothing to do with the original predatory lending issues. This is the situation many people face when trying to get a loan modification. Although forensic audits are being done, many homeowners will run up against the “holder in due course” issue.

The loan servicer is, in many cases, servicing the loan on behalf of the Wall Street Investor (note that the loan is likely in a Special Purpose Vehicle (SPV) with a bunch of other notes, and the Trustee of a Trust, in most cases, is speaking on behalf of the Investors. The Investors do not want any part of coming forward and claiming ownership of the notes, and they do not want to get involved in the foreclosure process. They want their income stream, and NOT to fight predatory lending lawsuits that they know (at least they NOW know) are predatory in many cases.

As many of you realize, the loan servicer is often the entity you must contact to seek a loan modification. The loan servicer too, claims no liability or responsibility for any predatory lending that may have occurred during the origination of the loan. They will claim “we are just servicing the loan on behalf of the investor.”

Again, in securitized loans, the investor is the Wall Street Investor who is seeking a portion of the income stream from the loan pool of which your loan is a part of. Of course they didn’t tell you about this loan pool when your loan was originated, or that your note would comprise part of the loan pool. All you knew is that the loan “might” be sold off to a third party.

So the question becomes, when seeking a loan modification, and following a loan audit, which parties, if any, can be held liable for predatory lending detected at the loan origination stage?

Again, the lender who purchased your loan will usually assert that they have no liability, as will the investment banker (who in many cases set the guidelines for the loans to be purchased and often gave credit lines to originating sub-prime lenders), nor will the Wall Street Investor or Loan Servicer. Simply put, everyone will point fingers at the originating lender and will claim you have no lawsuit to leverage against them as they are “holders in due course” and not liable for any other parties mortgage lending loan violations.

What then do we try to accomplish as Foreclosure Attorneys trying to halt foreclosure of your property?

(1) We review your loan file and look for predatory lending violations against the broker and/or originating lender. The broker (assuming you used one in the transaction) owed you a fiduciary duty that requires, among other things, that they fairly disclose material loan terms to you and to look out for your best interest (instead of theirs) and basically put you into the best loan for you given your financial condition. The lender, who “backs” the broker, at least in our opinion, has a duty to properly underwrite your loan to ensure that you will be able to pay it back. To us, a lender arguably “aids and abets” the broker by providing products designed to fail (ex. the option arm loan), and by allowing other predatory lending practices listed above to be perpetrated against a borrower. Note however, that Courts have generally held that a lender, as opposed to broker, owes you NO FIDUCIARY DUTY in a loan transaction.

(2) We ascertain to whom the loan may have been sold-off to and ascertain whether or not the loan was securitized, as many loans were over the last several years. If the loan was sold off (as many were), we realize we will be dealing with a “holder in due course” argument that the lender will maintain, but normally won’t discuss during the loan modification stage. At this point, we must determine what claims, if any, can be made against the loan assignee.

The best claim is where the originating lender never sold off the loan, and rather, services its own loan in its portfolio (called a “portfolio loan”). In these cases, the originating lender is responsible for its own garbage and cannot point fingers at other entities, such as a loan broker. You should note, that this is the precise reason why loans get sold off in the first place (why not transfer the loan, and the liability to someone else and get “cashed out” for your efforts).

Another type of claim that we think may have some viability is the situation where, for example, Countrywide originates the loan (ex. option arm loan), then sells off the loan on the secondary market, yet RETAINS the right to Service the Loan. In these cases, it is our opinion that Countrywide continues to “enjoy the fruits” of what may be a predatory loan (ex. the option ARM loan - aka “pick-a-pay”). In these circumstances, should Countrywide be deemed a holder in due course (HDC) and be permitted to avoid liability by claiming it is no longer the owner of the loan and that they are just a loan servicer for the new investor of the loan? We do not see that as a fair outcome.

Another good scenario for applying the findings in a forensic loan audit, is the situation where you can make some type of connection between the secondary market and the predatory lender and/or where you have Truth in Lending (TILA) or HOEPA material violations that allow you to make some type of Claim against the loan assignee, whether a major lending institution or trustee claiming ownership of a loan under a trust. Potential causes of action such as civil conspiracy, joint venture liability, aiding and abetting tort violations, and TILA and HOEPA are discussed below.

NOTE: One way to find out whether or not your loan was sold off and securitized on the secondary market is to use some free online search tools. Here are some tools for you to look up your property to see if Freddie or Fannie (Government Sponsored Enterprises – Quasi Private Companies) own your loan:

Does Freddie Mac own your loan?

https://ww3.freddiemac.com/corporate/

Does Fannie Mae own your loan?

http://loanlookup.fanniemae.com/loanlookup/

Freddie and Fannie typically securitized conventional loans, and they claim to be the holder / owner of the certain loans they securitize. You can also try to call your lender and just ask them: "do you own the loan or are you just servicing it on behalf of an investor" (sometimes they will tell you, and sometimes, strangely enough, they will keep the owner of your loan a SECRET if you can believe that).

You may also want to send in a Qualified Written Request under RESPA and/or a request under 15 U.S.C. 1641(f) to demand that the loan servicer produce the name, address, and telephone number of the holder of the loan or master loan servicer. They are required to tell you this under Federal Law (that being said, do not be surprised if they blow you off – this is the response we get in many cases, again, if you can believe it). Why is that? Because they do not want you to know who owns your loan, in some cases, because they cannot “produce the note” and prove they have the right to collect loan payments and/or foreclosure on your property. In some cases they would prefer to simply keep you ignorant.

You can also send out “debt validation letters” following the lender / loan servicer / collection companies attempts to collect a debt (i.e. calling you to discuss your past-due mortgage payments).

(3) We send out legal demand letters highlighting the best case possible for liability against the lender and/or loan servicer and/or trustee of a trust acting on behalf of Wall Street Investors. This may be to assert a TILA rescission claim and discussing a potential tender strategy, to outlining a HOEPA violation triggering rescission, or arguing for “aiding and abetting” liability, etc. Again, keep in mind, if there is not some type of connection to the originating lender (ex. the original lender sold off the loan and is now profiting from it by acting as loan servicer) it may be tough to raise a strong legal claim against the loan assignee or trustee of a trust, aside from TILA extended rescission rights or other grounds for rescission or the filing of an injunction.

NOTE: Some possible grounds for filing for an injunction (which may get the attention of a loan servicer acting on behalf of the investors) that can result from a loan audit are:

(1) TILA right of rescission (for “material” TILA violations)

(2) HOEPA (hi cost loan) violations

(3) Failure to follow Arizona or California foreclosure laws (ex. 2923.5 declarations in CA)

(4) Wrongful Foreclosure (ex. failure to clarify amounts owed pursuant to a Qualified Written Request which disputes such; or where the breach was already cured through a loan modification agreement (see our website at www.TrialPlanFraud.com for more information on Trial Plan scams and bad faith dealing we are seeing in conjunction with loan modifications)

(5) Unconscionable Loans that should not be enforced (ex. predatory option arm pick-a-pay monthly adjustable loans)

(6) Fraud in the origination of the loan which can be tied to the lender (especially a portfolio loan)

(7) Violations of California Civil Code Section 1632 – Foreign language contracts)

(8) Other equitable grounds for enjoining your foreclosure sale (contact a foreclosure defense attorney to discuss).

These are just a few sample grounds that can be reviewed, and raised where applicable to seek an injunction. In other cases, the aggrieved borrower may be have nothing more than a claim against the originating broker/lender who may now be defunct following a BK during the mortgage meltdown.

Note: Some borrower’s want to assert fraud against “the whole system” (broker, originating lender, investment banker that securitizes loan, trustee of the trust, loan servicer, etc.). This approach should be thought through to make sure you actually have good-faith claims to assert against each party. A frivolous “sue everybody” approach is not without consequence.

(4) In addition to trying to “audit” (look-for) for predatory lending and foreclosure violations, we also try to “create” legal violations (that’s right, if the loan servicer cannot comply with simple legal requirements they too can become potential defendants). To do this we send out qualified written requests; demands to validate debts; and demands to identify the holder of the loan.

While we would concede that in many cases the loan servicers had nothing to do with the origination of the loan and the predatory lending practices that may have occurred, however, there are legal rights that California and Arizona homeowners facing foreclosure have, that the loan servicers (who can also be predatory themselves) must comply with upon making proper requests. Two of the main things they are required to do are:

(a) They must respond to Qualified Written Requests. They are fairly good at this in our opinion, but their responses are often late, or often lacking in detail. They must acknowledge the QWR within 20 days, and address any valid issues within 60 days. They must also cease reporting negative credit during this period. Failure to comply creates legal violations against the loan servicer, and,

(b) They must identify the holder of the loan or master loan servicer (name, address, and phone number) as set forth above. Note that they rarely comply with this request. Given that many loans were securitized and managed by a “trustee of the trust” they will rarely provide you any meaningful information in this regard. Again, they seem to prefer to keep this a secret.

(c) There are some other items that arguably must do including following foreclosure laws, rules, and regulations when they are working with other parties seeking to foreclose on behalf of the “investor” of the loan. For example, they may be required to give (or may voluntarily give) declarations in the Notice of Default (ex. the California Civil Code Section 2923.5 declaration that certifies that the “beneficiary” of the loan, or their “authorized” agent - for example, the loan servicer claiming to be the authorized agent of the beneficiary - has contacted the borrower to assess their financial situation, and discussed loan modification options). In securitized loans, this may raise issues involving who the true beneficiary is. If you do not know who the true and real beneficiary is (ex. the true lender who is entitled to loan payments) then how can you ascertain who the “authorized agent of the beneficiary” is? And if you do not know the answer to that questions, how can you confirm there was any compliance with 2923.5? If there is no compliance with 2923.5 (or it least if the loan servicer, trustee, and lender cannot prove who the true owner of the loan is) then why should the foreclosure be allowed to proceed where compliance with California Foreclosure laws cannot be proved where challenged? We discuss more about this issue at our www.ProduceTheNoteAttorney.com website.

The bottom line is, that despite the fact that your loan was sold off, and potentially securitized, and despite the fact that the lenders, loan, servicers, and/or trustees will claim they are “holders in due course” we nevertheless attempt to identify, assert, and stand up for our clients legal rights. This is not to say there are absolute rights to stop foreclosure in every case. Some loans may be simply too old, or may be non-predatory in nature, that finding and asserting legal leverage may be tough. Not all loans are predatory. But the point is to approach every foreclosure defense case as setting up a case for potential litigation.

Too many times people come to us after hiring loan modification companies, or even other attorneys who did nothing more than submit tax returns and pay stubs (i.e. they did nothing or very little to investigate whether a legal case can be made to stop foreclosure, if necessary, and to present their findings to a loan servicer). While the servicer may not care much about potential litigation (again, they see themselves as innocent parties to the transaction and to securitization in general) nevertheless we believe it makes sense to approach these cases as if preparing for a lawsuit, for no other reason than that it may actually be required.

We have seen people squander their TILA rescission rights because they thought they had hired a loan modification company or loan modification law firm to assist them. However, not protecting your TILA rescission rights (of course you have to find these rights first) especially where you had a legal right to rescind against the loan assignee, and where you had an ability to “tender” as required under TILA, is truly a shame to see, and in my opinion creates malpractice liability exposure for the attorney who did nothing but send in a hardship letter and patted himself on the back for helping a homeowner in distress. Both the real estate broker posing as a loan modification company, and the “foreclosure defense law firm” both assume legal liability for not investigating and protecting a homeowners TILA, and/or other rescission rights. If for no other reason, that is justification for having your loan file audited, especially where you have equity, or near-equity in the property or some other means to tender following rescission. For more information about tender and rescission see our website at www.RescindMyLoan.net

At any rate, this list goes on. The point is, as Foreclosure Defense Attorneys, we are looking to see if there is any way to leverage a loan modification (or at times a short sale) against the subsequent purchasers of the loan, and/or the loan servicers and final investors of the loan (which may be largely insulated from lawsuits under the holder in due course doctrine discussed below).

HOLDER IN DUE COURSE OVERVIEW

Generally speaking, a holder in due course (in the mortgage loan context) is a subsequent purchaser of a loan (ex. Wells Fargo who buys a loan from Countrywide or Fannie / Freddie who buys a loan from a direct lender) and who buys in good faith, without knowledge of any claims, defenses, or defects in the underlying instrument. This is merely a general statement of the law.

BENEFITS OF BEING A HOLDER IN DUE COURSE: In general terms, a holder in due course will only be liable for the “REAL” defenses of a potential plaintiff (ex. infancy, duress, lack of capacity, illegality of transaction, fraud in the inducement where no opportunity to discover essential contract terms was permitted). A holder in due course is generally NOT liable for any “PERSONAL” defenses (such as undue influence, less than total competence, fraud and misrepresentation that does not prevent discovery of material contract terms, etc.).

Obviously, this creates a powerful incentive to obtain holder in due course status under the holder in due course doctrine (HDC) as there are less legal claims that can be made against you.

GENERAL REQUIREMENTS TO OBTAIN HOLDER IN DUE COURSE STATUS FOR MORTGAGE LOANS:

Generally speaking, under U.C.C. 3-302 a holder in due course is a:

(1) “Holder” of an “instrument;”

(2) Who has no apparent evidence of forgery or alteration of the instrument;

(3) Who otherwise has no notice of any other irregularity that may call into question the authenticity of the instrument;

(4) Which Holder took the instrument for value (paid consideration);

(5) And in good faith (honesty in fact and in observation of commercially reasonable standards of good faith and fair dealing);

(6) Who took without notice that the instrument may be overdue or that it has been dishonored, or that there is an uncured default with respect to payment of another instrument in the same series;

(7) And which holder took the instrument without notice of any claims under UCC 3-305(a) (“real defense”) or 3-306

(8) And which holder took the instrument without notice that the instrument contains unauthorized signatures or has been altered.

Note: the “notice” requirement seems to be more of an “objective standard” in that the Courts may look to whether or not the holder of the instrument “should have realized” any of the above items which would preclude HDC status.

Also note: Article 3 of the UCC underwent a re-writing in 1990. It should come as little surprise that the drafting process was largely dominated by the banks, clearinghouses, and federal reserve board.

So, this section indicates that if a subsequent purchaser of a loan pays value for the loan, and takes it in good faith with no notice of claims or defects listed above, generally speaking then they may be considered a holder in due course subject to the limited claims and defenses of the potential plaintiff (i.e. an aggrieved homeowner) as stated above.

NOTE: The key then is to either defeat the subsequent parties claim of HDC status, and if that cannot be done, find some other type of claim that may make them liable even though they fancy themselves as holders in due course.

If the facts of a case allows you to claim that either: (1) there is no holder, (2) there is no instrument, (3) there was no good faith, (4) there was no value paid for the loan, and/or (5) there were other noticeable claims and/or defects that should have been detected, etc., then you may be able to argue the subsequent purchaser of the loan deserves no HDC status. These are some things to look into.

NOTE: We will be updating this section with caselaw in this area as time permits. I did not have time to add to this section.

WHAT LEGAL CLAIMS, IF ANY, CAN BE MADE AGAINST A “HOLDER IN DUE COURSE?”

Now, even where the loan is owned by a subsequent lender, and/or Wall Street investors - who invest in mortgage backed securities (and where these loans are being serviced by a designated loan servicer, who may or may not be a major lender themselves) and the holder in due course issue arises, there still MAY be some claims that you MAY be able to assert against these loan assignees.

Here are a few arguments that can be looked into when trying to see if there is any way to threaten a lawsuit against the loan assignee / innocent investor / trustee under a trust / loan servicer, etc where a reasonable and meaningful loan modification is not provided to the borrower.

Please keep in mind, these can be TOUGH theories to prevail on, but homeowners should at least consider some of these theories if the lender is literally forcing foreclosure on the homeowner, and where a predatory loan is present - (typically, the option ARM loan which most people agree is predatory, including the lenders themselves who are entering into various settlement agreements with state Attorney Generals, all but conceding the predatory nature of these types of loans and the 2/28 and 3/27 Sub-prime ARMS which may also be predatory, but possibly in more limited circumstances).

Here are the theories we will be looking at in very general terms: (1) Civil Conspiracy, (2) Joint Venture Liability, (3) Aiding and abetting tort violations, (4) TILA and HOEPA rescission rights. These claims, where applicable, can be raised against loan assignees, and should be presented to the loan servicer when attempting to leverage a loan modification.

(1) Civil Conspiracy

The following highlight some general principles in the State of California that highlight the elements required to show a civil conspiracy.

In the context of securitized loans, the question would be whether or not a borrower of an alleged predatory loan (ex. an option arm loan that was not fully explained, disclosed, or that has harsh, oppressive, and confusing and conflicting terms) can sue more than just the original broker and lender, but rather, can he sue the broker, lender, loan servicer, trustee of the trust, etc., by arguing they are involved in a system or process designed to defraud California borrowers or in disregard of whether or not the borrower would wind up in foreclosure given the underwriting and other predatory practices involved in the loan origination process.

A general review of the California case law highlights what might be legally required to assert a civil conspiracy claim against the players in the "structured predatory financing" system created by the major financial institutions (my comments are set forth in italics), the requirements are taken from actual cases involving civil conspiracy claims in California.

(1) Civil Conspiracy is not cause of action, but legal doctrine that imposes liability on persons who, although not actually committing tort themselves, share with immediate tort-feasors common plan or design in its perpetration. (One could argue that the common plan or design is to originate predatory loans that have high costs and fees, and which are likely to result in foreclosure, and to securitize these loans in a manner in which everyone would profit).

(2) Elements of action for civil conspiracy are formation and operation of conspiracy and damage resulting to plaintiff from act or acts done in furtherance of common design; the major significance of civil conspiracy lies in fact that it renders each participant in wrongful act responsible as joint tort (whether or not he was a direct actor and regardless of degree of activity). Formation of a conspiracy normally requires some type of agreement as set forth below. The damage would be the resulting foreclosure that is a foreseeable consequence of some types of option arm loans.

(3) Actual knowledge of planned tort, without more, is insufficient to serve as basis for conspiracy claim as the knowledge must be combined with intent to aid in tort's commission.Again, this seems to require some type of intent to aid the other parties. This may be a bit difficult to prove. For example, does a loan servicer have the intent to aid the original lender in originating an option arm loan?

(4) To prove claim for civil conspiracy, plaintiff must show: (1) formation and operation of conspiracy; (2) wrongful conduct in furtherance of conspiracy; and (3) damages arising from wrongful conduct. This is a general recitation of the rule.

(5) A civil conspiracy to commit tortious acts can only be formed by parties who are already under a statutory or common law duty to plaintiff, the breach of which will support a cause of action against them individually, rather than as conspirators. Stated another way, where plaintiff alleges existence of civil conspiracy he must allege allege the preexisting legal duty and its breach.

(7) Because civil conspiracy is so easy to allege, plaintiffs have a weighty burden to prove it. To prove the claim, Plaintiff’s must show that each member of conspiracy acted in concert and came to a mutual understanding to accomplish a common and unlawful plan, and that one or more of them committed an overt act to further it. Again, the cases indicate that Plaintiff must PROVE the mutual understanding……this may not be so easy to do, and must prove that each acted in concert to put Plaintiff into a predatory loan that was designed to result in foreclosure.

(8) There is no separate tort of civil conspiracy, but rather, conspirators must agree to do some act which is classified as “civil wrong. In the context of setting up a system to securitize loans, the “wrongful act” may be argued as setting up the chain of financing whereby the original broker and lender gets cashed out for their participation in essentially creating the security, while the other parties (the investment banker, loan aggregator and trustee) get immediately cashed out by the wall street investors who invest in the loan pools, and the servicer collects its fees for any and all loans that it gets to service. Note: If proper underwriting guidelines were followed, it would seem there would be a WHOLE LOT LESS LOANS TO SERVICE (meaning, less profits to the servicers). Again, proving the common plan and scheme may be the hurdle.

(9) Mere knowledge, acquiescence, or approval of an act, without cooperation or agreement to cooperate is insufficient to establish liability based on conspiracy.

NOTE: This is not an exhaustive analysis of the cases, and may be missing some recent cases involving securitized financing. These are just some general ideas to think about when determining whether there are proper grounds to assert against the parties to a securitized loan.

(2) Joint Venture liability

A joint venture is basically an agreement between two or more persons (which includes corporations) who agree to work together toward a common plan in the pursuit of profits. There must be an agreement to work together. The joint venture agreement may be oral or informal. Whether a joint venture agreement is created is a question of fact depending upon the intention of the parties.

The essential element of a joint venture is an undertaking by two or more persons to carry out a single business enterprise jointly for profit. The rights and liabilities of joint adventurers, as between themselves, are governed by the same rules which apply to partnerships. See Pellegrini v. Weiss, 165 Cal.App.4th 515, (2008).

In Smith v. Wells Fargo, 401 F.Supp.2d 549, (2005), a Plaintiff was challenging the actions of a loan originator. Countrywide and Wells Fargo claimed they were “holders in due course” and thus, could not be liable for the actions of the loan originator or its agents. The Court disagreed, and denied Defendant’s motion for summary judgment (Defendant’s claimed Plaintiffs could not prove that there was a joint venture agreement). In denying Defendants motion for Summary judgment on the joint venture issues, the Court held:

“As between the parties, a contract, written or verbal, is essential to create the relation of joint adventurers........to constitute a joint adventure the parties must combine their property, money, efforts, skill, or knowledge, in some common undertaking of a special or particular nature, but the contributions of the respective parties need not be equal or of the same character. There must, however, be some contribution by each party of something promotive of the enterprise.......an agreement, express or implied, for the sharing of profits is generally considered essential to the creation of a joint adventure, and it has been held that, at common law, in order to constitute a joint adventure, there must be an agreement to share in both the profits and the losses. It has also been held, however, that the sharing of losses is not essential, or at least that there need not be a specific agreement to share the losses, and that, if the nature of the undertaking is such that no losses, other than those of time and labor in carrying out the enterprise, are likely to occur, an agreement to divide the profits may suffice to make it a joint adventure, even in the absence of a provision to share the losses.”

In applying this, the Court held:

"In the case sub judice, after reviewing the PSA, it appears that there was an agreement to pool and service (PSA) mortgages between Delta Funding Corporation, as seller; Countrywide, as servicer; and Norwest Bank Minnesota, National Association or Wells Fargo, as trustee. It also appears that Delta Funding provided the mortgage loans, Countrywide provided servicing the loans and Wells Fargo provided the financing or money. Finally, it appears from sections 2.04(b), 2.05, 3.08, 7.01 and 9.05 of the PSA that there was an agreement on the fees each party could collect as well as their liability for losses.

Moreover, in section 4 of the expert report by Kevin P. Byers, Mr. Byers notes that Delta Funding's revenues result primarily from “the sale of mortgage loans (through securitization and on a whole loan basis and sale of its servicing right on newly originated or purchased pools of home-equity loans.”).....(quoting Delta Funding's 10-K annual report to the Security and Exchange Commission).) Therefore, taking the evidence in the light most favorable to the plaintiff, it would not be unreasonable for a jury to conclude that Delta Funding, Countrywide and Wells Fargo entered into a joint venture. As there is a genuine issue of material fact, the Court denies summary judgment."

Potential Argument for Joint Venture Liability in the Securitization of Loans:

The pooling and servicing agreement(used when loans are securitized) is an express written agreement that basically sets the stage for the participants in loan securitization to realize a profit:

(1) The Servicer is appointed to collect loan payments and receive a profit from the collection of such from the borrower. The Servicer therefore commits its time, talent, resources, and services in an attempt to profit from the securitized loan;

(2) The Trustee agrees to perform certain duties to manage and administer payment streams for the benefit of the investors of the securitized loan;

(3) MERS may be appointed to receive a fee to track ownership and servicing rights (which may be transferred at the Trustees discretion);

(4) The seller of the security and investment banker / underwriter cannot profit “but for” the pooling and servicing agreement. In essence, it could be argued they are third party beneficiaries under this agreement;

(5) As part of the agreement, some originating lenders may agree to “buy-back” non-performing loans, keeping them on the hook under the terms of the contract (sharing in the profits and losses of the joint venture).

Obviously this is just one example, you would want to review the pooling and servicing agreement and SEC filings to see what the exact set-up is in your situation.

(3) Aiding and Abetting Liability - Creating the Marketplace for Predatory Option Arm loans.

Under the common law of many states, it is against the law to aid and abet another in the commission of a tort (ex. fraud / misrepresentation are two types of torts). For example, where you have a broker that broker’s a loan through a “direct lender” and the direct lender is “pricing out” the loan and reviewing the guidelines of the “purchasing lender” (i.e. the loan assignee who will claim they are a holder in due course) the question arises who is liable, for example, for making false statements of fact to induce a borrower to enter into an option arm loan?

It would seem appropriate that the broker (who took the loan application and made false statements of fact - in breach of their fiduciary duty to the borrower - should be held liable. But what about the “direct lender” who is funding the loan only to turn around and sell it to the “purchasing lender”? Did the direct lender aid and abet the broker by not verifying certain disclosures are made? Do they aid and abet by underwriting the predatory loan product (usually these option arm loans are underwritten to wind up in foreclosure - the borrower can afford the “teaser rate” but not the payment that would result after the loan hits is principal balance cap and recasts into a fully amortized loan at the note rate?

Did the direct lender “aid and abet” the broker? It would seem an argument could be made since the direct lender knows, or should know the details of the loan, and was in a good position to ensure proper underwriting and to ensure proper disclosures (ex. a CHARMS adjustable rate disclosure and other truth in lending disclosures are clear, conspicuous and accurate).

Taking it to the next level, even assuming you can create a case for liability against a direct lender (using our scenario above) can you then extend liability to the entity that purchases the loan from the direct lender (i.e. a private investor, private bank, investment banker, fannie mae or freddie mac, etc.?). Can you impart this level of knowledge and wrongdoing against these parties that are even more remote in the chain of things?

These are the tough questions. Again, it seems even these “purchasing lenders” are complicit, and have knowledge about the types of loans they are purchasing (in this case the option arm loan) and know, or should know that these loans are predatory, toxic, and likely to wind up in foreclosure.

In a recent predatory lending lawsuit, in the case of Plascencia v. Lending 1st Mortgage, the Defendant, EMC, claimed it could not be held liable under California’s Unfair Competition Law, (2008 WL 4544357 (583 F.Supp.2d 1090, N.D. Cal. Sept. 30, 2008)), since it was not the party that originated the loan in question (EMC purchased, and securitized loans from Lending 1st Mortgage that often had truth in lending violations).

The Plaintiff sought to hold EMC liable since they were “engaged in the business of promoting, marketing, distributing, selling, servicing, owning, or are and were the assignees of the Option ARM loans that are the subject of this Complaint.” They argued EMC was engaged in a “fraudulent scheme” with Lending 1st.

The court denied Defendant EMC’s motion to dismiss on this ground holding that essentially it was possible that Defendant could be held liable for aiding and abetting. Specifically, the Court stated:

“By showing that EMC purchased Lending 1st's Option ARM loans with knowledge of Lending 1st's TILA violations, Plaintiffs may be able to establish that EMC gave Lending 1st a financial incentive to continue to commit those violations, and therefore may be subjected to liability for aiding and abetting violations of the UCL. Moreover, EMC's profiting from loans featuring oppressive terms that were not fully disclosed in compliance with TILA could itself be an unfair business practice under the UCL. EMC may therefore be liable for UCL violations in its own right. Accordingly, the UCL claim will not be dismissed.”

NOTE: This case may be limited to cases where the borrower was unaware they had a negative amortization option arm loan and/or where Plaintiff can prove that the Purchasing lender has knowledge of TILA defects in the loans they are purchasing. This is a good case that talks about fraud and the Unfair Competition Law in regard to Mortgage Loans and creates some “hope” for lender liability.

NOTE 2: The Plascencia Case also discussed / cited another case, the In re First Alliance Mortgage Co. case which citation can be found at 471 F.3d, 977, 994-995 (9th Cir.2006). In this case, a California Federal Court imposed aiding and abetting liability on Lehman Brothers for predatory loans made by First Alliance which targeted senior citizens with false and misleading loans representations. Lehman purchased the predatory loans and securitized them - while First Alliance remained as the loan servicer earning additional profits off what were found to be predatory and fraudulent loans. Again, the case indicated that Lehman had knowledge of Alliance’s lending practices and even provided a warehouse line of credit so that First Alliance could continue to originate these types of loans. Again, which indicates some level of knowledge of the predatory loan origination practices may have to be shown as a pre-requisite to filing suit.

This case is important because companies like Countrywide often originated predatory option arm loans (or “backed” brokers who pitched these loans) and often sold them off on the secondary market, and retained the servicing rights. We have been saying that in these cases, Countywide (now BofA) should not be able to claim they are an innocent party, or that they have some type of “holder in due course status” when they are continuing to profit from their dirty laundry.

A separate question to consider is whether a Plaintiff can attack what may appear to be a truly innocent “loan servicer” (without proof of predatory knowledge), with aiding and abetting liability where a loan servicer refuses to modify a loan that was a product of fraud at the loan origination stage. It seems that some level of knowledge of the predatory loan origination may be required (although some would argue all loan servicers are implicit as to the true nature and quality of loans securitized and pooled into trusts). Where a loan servicer is appointed / hired to collect loan payments on behalf of a trustee of a trust, it is not clear whether or not a predatory knowledge can be established, but should be investigated in each case.

NOTE 3: Another case that may help in analyzing and aiding and abetting liability claim against a loan purchaser / loan assignee who may have securitized your loan or a loan servicer with knowledge of predatory loan origination is Schulz v. Neovi Data Corp., 152 Cal.App.4th 86 (2007). This is the case where an online payment processing company allowed an illegal online lottery site accept payments for its business. The Plaintiff made a claim under the California Business and Professions Code Section 17200 (California’s unfair competition law) and argued that the payment processing company had “aided and abetted” the illegal lottery site. The Court held:

Liability may be imposed on one who aids and abets the commission of an intentional tort if the person knows the other's conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act........this is consistent with Restatement Second of Torts Section 876, which recognizes a cause of action for aiding and abetting in a civil action when the wrongdoer knows that the other's conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other so to conduct himself.

The rationale is that advice or encouragement to act operates as a moral support to a tortfeasor and if the act encouraged is known to be tortious it has the same effect upon the liability of the adviser as participation or physical assistance.

Under this theory, at least for California loans, it appears a borrower may be able to sue a purchasing lender of a predatory loan who securitizes and profits off the loan, and potentially a loan servicer who profits off a predatory loan (even though the Schulz case does not involve the holder in due course argument) where it appears the lender or servicer has knowledge that the originator of the loan was committing a tort by breaching a legal duty (ex. making fraudulent representations to induce a borrower into entering into an option arm loan) AND, where the lender or loan servicer gives substantial aid, assistance, and/or encouragement.

Under this theory, it would seem you would need to prove two tough things, (1) knowledge of the tortious breach of duty by the loan originator, and (2) active participation in encouraging the predatory practice. This may be an easier case to make against a purchasing lender who is looking to securitize loans, than it is a loan servicer seeking to profit off its servicing of virtually any loan (the servicer does not care what the loan is, they will service any loan).

At any rate, the facts of the case should be looked at to determine which, if any, parties may be proper parties to file a lawsuit against. Remember, filing false and frivolous claims can result in sanctions and other unfavorable responses by the Court. There needs to be good faith grounds to file a lawsuit against any party.

(4) HOEPA (high cost loans) and TILA Extended Right of Rescission Claims apply to assignees of loans even those claiming Holder in Due Course Status.

Note: MATERIAL TRUTH IN LENDING VIOLATIONS THAT CREATE AN EXTENDED THREE YEAR RIGHT TO RESCIND APPLY TO ALL LOAN ASSIGNEES EVEN TO ANY PARTY DEEMED A HOLDER IN DUE COURSE. THAT IS WHY A TILA LOAN AUDIT IS SO POWERFUL BECAUSE IF YOU HAVE AN ABILITY TO “TENDER” THIS CLAIM WILL SURVIVE EVEN TO A HOLDER IN DUE COURSE.

More about these types of rescission claims can be found at our website www.RescindMyLoan.net

CONCLUSION

Although the financial giants have created an elaborate system of securitizing loans - which arguably encouraged, facilitated, and assisted the originating lender to loosen up the underwriting standards and create as many loans as possible that were designed to be bought up, securitized, and ultimately sold-off to wall street investors – they also helped draft the UCC Holder in Due Course rules which they seek to hide behind whenever they are sued.

Although it can be difficult to make credible claims against a loan assignee, trustee of a trust, loan servicer or other entity that was intended to profit off securitized loans, there are some claims and defenses that should be explored.

Foreclosure defense is a difficult line of business because often times loan payments are not being made by the borrower, and at times the loan servicer may even offer some type of a loan modification that can be used to show good faith in a Court of Law in the event a lawsuit is filed. In addition, judges are literally inundated with foreclosure defense lawsuits, and where a judge is paying his or her mortgage, they may not look favorably on others who don’t pay their mortgage, and it is possible that only the worst of the worst predatory lending practices will ever see the light of a jury. Of course, judges are bound to follow the law, and it is our job as foreclosure defense lawyers to try to make a persuasive case for predatory lending, injunctions, damages, assignee liability, and rescission rights.

Sure the deck is stacked against you, but why take foreclosure lying down? If you are denied a loan modification, and believe you may be the victim of predatory lending, have your case reviewed to see if you have any proper grounds to challenge the assertion of HDC status, or to lay claim against the parties to loan securitization for aiding and abetting legal violations and engaging in civil conspiracy’s and joint ventures that seek profit at the expense of legal compliance and at the expense of the homeowner.

Where you have valid good-faith legal claims that you can assert material TILA violations raising extended rescission rights against ANY loan assignee (ex. civil conspiracy, joint venture liability, aiding and abetting, TILA rescission rights, HOEPA recsission rights, etc.), this might be the best time to raise the “produce the note” defense and make them prove that: (a) they have the legal right to foreclosure on you (i.e. that their is some entity/beneficiary holding the note that has a legal right to foreclosure on your property) and that (b) this beneficiary, or their authorized agent, has complied with all required aspects of foreclosure law in California)?

If the “wrong lender” or “pretender lender” (as this term is used by Neil Garfield) forecloses on you, how can you be certain the “real lender” (i.e. the entity/beneficiary that may be holding your original promissory note and all properly recorded assignments) won’t come knocking on your door - wherever that door may be – and calling its loan due.

Should a homeowner / mortgagor be required to risk “financial double jeopardy” where it is not clear who owns your loan given the nature of securitized loans and given the tendency of loan servicers to keep this fact a secret?

Again, no one is saying this is an easy battle. These are just some things to think about and issues to explore when your house is on the line. This article is not to imply success on any of the theories outlined above. For specific legal questions, please contact a foreclosure defense attorney in your area. We are only licensed to practice law in the states of California and Arizona, and only seek to solicit clients in these states. This is an advertisement and communication pursuant to state bar rules.

Arizona Investment Property facing foreclosure? Potential Grounds to Stop a Foreclosure Sale (Injunction) in Arizona...

Steve Vondran (Law Offices of Steven C. Vondran) — Sun, 22 Nov 2009 00:51:05 -0600

A few ways (ideas) to try to seek an injunction against foreclosure in Arizona

The following is general legal information only and is not to be construed as legal advice or a substitute for legal advice. These are a few things to look at when investigating whether or not you have a defense to foreclosure.

Steve Vondran, Esq. is an attorney practicing Real Estate, Bankruptcy and Foreclosure Defense in Phoenix, Arizona and California. He can be reached at (877) 276-5084 or emailed at Steve@VondranLaw.com

POTENTIAL STRATEGIES TO SEEK AN INJUNCTION AGAINST FORECLOSURE IN PHOENIX, SCOTTSDALE, AND SURROUNDING AREAS IN ARIZONA.

(1) Tort of Wrongful Foreclosure: For example, one way to try to seek an injunction to stop a foreclosure sale would be to argue that you received a loan modification or loan workout, and performed the agreement and thus, cured the breach. See the case of Herring v. Countrywide Home Loans, 2007 WL 2051394 (D. Ariz. 2007). This is a foreclosure defense grounds that definitely needs to be explored with the explosion of loan modifications in Phoenix, Arizona and elsewhere. Under the Obama Making Home Affordable program (HAMP), and under some FHA HAMP modification programs, the lenders and loan servicers are giving out “three month trial plan” offers.

These agreements typically state that the borrower does, or may, qualify for a loan modification. The borrower, induced into believing they qualify for a loan modification, typically makes the three payments, and may also submit financial documentation to be reviewed. In at least some of these trial plan modification agreements we have reviewed, the lender promises that if the three trial plan payments are made on time, and if the borrower’s financial condition (and some other “material representations” made by the borrower) do not change by the time the third payment is made, then the lender, in some of these agreements, agrees to provide the final and permanent loan modification which is supposed to be in line with the the trial plan payment was. What we are seeing is lenders and loan servicers not honoring what appears to be a valid agreement, and instead either denying the modification, and in some cases, selling the house from underneath the borrower. If you feel duped by a trial plan offer that was not honored, check out our website at www.TrialPlanFraud.com

The court may reach the conclusion that the lender / beneficiary is not exercising the power of sale in good faith in violation of its statutory duty.

(2) Failure to Comply with Arizona Foreclosure Statutes:

There can be no valid foreclosure in the State of Arizona without complying with the rules and regulations set forth in the Arizona foreclosure statutes.

For example, if there is a failure to follow the Notice of Sale Procedures this could provide proper grounds to enjoin the foreclosure sale in Phoenix, Scottsdale, and other surrounding Arizona cities. Here are the statutory requirements under Arizona Revised Statutes Section 33-808.

33-808. Notice of trustee's sale

A. The trustee shall give written notice of the time and place of sale legally describing the trust property to be sold by each of the following methods:
1. Recording a notice in the office of the recorder of each county where the trust property is situated.
2. Giving notice as provided in section 33-809 to the extent applicable.
3. Posting a copy of the notice of sale, at least twenty days before the date of sale in some conspicuous place on the trust property to be sold, if posting can be accomplished without a breach of the peace. If access to the trust property is denied because a common entrance to the property is restricted by a limited access gate or similar impediment, the property shall be posted by posting notice at that gate or impediment. Notice shall also be posted at one of the places provided for posting public notices at any building that serves as a location of the superior court in the county where the trust property is to be sold. Posting is deemed completed on the date the trust property is posted. The posting of notice at the superior court location is deemed a ministerial act.
4. Publication of the notice of sale in a newspaper of general circulation in each county in which the trust property to be sold is situated. The notice of sale shall be published at least once a week for four consecutive weeks. The last date of publication shall not be less than ten days prior to the date of sale. Publication is deemed completed on the date of the first of the four publications of the notice of sale pursuant to this paragraph.
B. The sale shall be held at the time and place designated in the notice of sale on a day other than a Saturday or legal holiday between 9:00 a.m. and 5:00 p.m. mountain standard time at a specified place on the trust property, at a specified place at any building that serves as a location of the superior court or at a specified place at a place of business of the trustee, in any county in which part of the trust property to be sold is situated.
C. The notice of sale shall contain:
1. The date, time and place of the sale. The date, time and place shall be set pursuant to section 33-807, subsection D. The date shall be no sooner than the ninety-first day after the date that the notice of sale was recorded.
2. The street address, if any, or identifiable location as well as the legal description of the trust property.
3. The county assessor's tax parcel number for the trust property or the tax parcel number of a larger parcel of which the trust property is a part.
4. The original principal balance as shown on the deed of trust. If the amount is not shown on the deed of trust, it shall be listed as "unspecified".
5. The names and addresses, as of the date the notice of sale is recorded, of the beneficiary and the trustee, the name and address of the original trustor as stated in the deed of trust, the signature of the trustee and the basis for the trustee's qualification pursuant to section 33-803, subsection A, including an express statement of the paragraph under subsection A on which the qualification is based. The address of the beneficiary shall not be in care of the trustee.

6. The telephone number of the trustee.
7. The name of the state or federal licensing or regulatory body or controlling agency of the trustee as prescribed by section 33-803, subsection A.
D. The notice of sale shall be sufficient if made in substantially the following form:

Notice of Trustee's Sale
The following legally described trust property will be sold, pursuant to the power of sale under that certain trust deed recorded in docket or book _______________________ at page __________ records of ______________ county, Arizona, at public auction to the highest bidder at (specific place of sale as permitted by law) _______________, in _______________ county, in or near _______________, Arizona, on ________, ____, at ___________ o'clock ___m. of said day:

(street address, if any, or identifiable

location of trust property)

(legal description of trust property)

Tax parcel number _______________

Original principal balance $________________________

Name and address of beneficiary ______________________________

______________________________

Name and address of original trustor _________________________

_________________________

Name, address and telephone number of trustee ________________

__________________________________

Signature of trustee _____________________________

Manner of trustee qualification ___________________________

Name of trustee's regulator _______________________________

Dated this _____________ day of ______________, ____.

(Acknowledgement)
E. Any error or omission in the information required by subsection C or D of this section, other than an error in the legal description of the trust property or an error in the date, time or place of sale, shall not invalidate a trustee's sale. Any error in the legal description of the trust property shall not invalidate a trustee's sale if considered as a whole the information provided is sufficient to identify the trust property being sold. If there is an error or omission in the legal description so that the trust property cannot be identified, or if there is an error in the date, time or place of sale, the trustee shall record a cancellation of notice of sale. The trustee or any person furnishing information to the trustee shall not be subject to liability for any error or omission in the information required by subsection C of this section except for the wilful and intentional failure to provide such information. This subsection does not apply to claims made by an insured under any policy of title insurance.
F. The notice of trustee sale may not be rerecorded for any reason. This subsection does not prohibit the recording of a new or subsequent notice of sale regarding the same property.

Also note, where the deed of trust or mortgage calls for a certain plan or procedure for foreclosure, that plan must be followed. Therefore, you need to check the procedures set forth in the deed of trust or mortgage instrument and see if they complied with the procedures that may be called for therein.

There are other sections relating to foreclosure that must also be reviewed. For example, substitution of Trustees is covered in this section:

33-804. Appointment of successor trustee by beneficiary

A. If a person appointed as trustee fails to qualify, is unwilling or unable to serve or resigns as trustee or if a trustee was not designated in the deed of trust, the beneficiary may appoint a successor trustee, and such appointment shall constitute a substitution of trustee.
B. The beneficiary may at any time remove a trustee for any reason or cause and appoint a successor trustee, and such appointment shall constitute a substitution of trustee.
C. A notice of substitution of trustee shall be recorded in the office of the county recorder of each county in which the trust property or some part of the trust property is situated at the time of the substitution. The beneficiary shall give written notice through registered or certified mail, with postage prepaid, to the trustor.
D. A notice of substitution of trustee shall contain a description of the basis for the successor trustee's qualification pursuant to section 33-803, subsection A. A notice of substitution of trustee shall be sufficient if acknowledged by all beneficiaries under the trust deed or their agents as authorized in writing and if prepared in substantially the following form:
Notice of Substitution of Trustee

The undersigned beneficiary hereby appoints ___________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ successor trustee under the trust deed executed by ____________________ as trustor, in which _____________ is named beneficiary and _____________ as trustee, and recorded ________________, _____, in _________________ county in book or docket _________________, page ______________, and legally describing the trust property as:

(legal description of trust property)

The successor trustee appointed herein qualifies as a trustee of the trust deed in the trustee's capacity as a ______________________ as required by Arizona Revised Statutes section 33-803, subsection A.

Dated this _______________ day of ________________, ____.

____________________

Signature

(Acknowledgement)
E. A notice of substitution of trustee is effective immediately on execution as prescribed by subsection D of this section.
F. A person appointed as a trustee under a deed of trust may resign as trustee at any time. Any such resignation shall be without liability, provided the person has not agreed in writing or by the person's conduct to act in such capacity. If the trustee has agreed in writing or by the person's conduct to act in such capacity, the person may only resign in accordance with the terms of the trust deed and this chapter. If a trustee fails to qualify or is unwilling or unable to serve or resigns, it does not affect the validity of the deed of trust, except that no action required to be performed by the trustee under this chapter or under the deed of trust may be taken until a successor trustee is appointed by the beneficiary or the beneficiary's agent as authorized in writing pursuant to this section. Resignation by a trustee is made by recordation of a notice of resignation in the office of the county recorder of each county in which the trust property or some part of the trust property is situated at the time of the resignation. Written notice shall be given through registered or certified mail, with postage prepaid, to the trustor and the beneficiary. A notice of resignation of trustee is sufficient if acknowledged by the trustee and prepared in substantially the following form:

Notice of Resignation of Trustee

The undersigned trustee hereby resigns as trustee under the deed of trust executed by ________________, as trustor, in which ________________ is named beneficiary, and recorded ________________, ____, in ________________ county, in book or docket __________, page __________, and legally describing the trust property as:

(legal description of trust property)

Dated this _______________ day of _______________, ____.

_________________

Signature

(Acknowledgement)

Other Sections to look at (that may allow an Arizona homeowner to enjoin and/or set aside a foreclosure sale in Arizona) might relate to irregularities in the foreclosure sale/bidding process.

33-810. Sale by public auction; postponement of sale

A. On the date and at the time and place designated in the notice of sale, the trustee shall offer to sell the trust property at public auction for cash to the highest bidder. The trustee may schedule more than one sale for the same date, time and place. The attorney or agent for the trustee may conduct the sale and act at such sale as the auctioneer for the trustee. Any person, including the trustee or beneficiary, may bid at the sale. Only the beneficiary may make a credit bid in lieu of cash at sale. The trustee shall require every bidder except the beneficiary to provide a ten thousand dollar deposit in any form that is satisfactory to the trustee as a condition of entering a bid. The trustee or auctioneer may control the means and manner of the auction. Every bid shall be deemed an irrevocable offer until the sale is completed, except that a subsequent bid by the same bidder for a higher amount shall cancel that bidder's lower bid. To determine the highest price bid, the trustor or beneficiary present at the sale may recommend the manner in which the known lots, parcels or divisions of the trust property described in the notice of sale be sold. The trustee shall conditionally sell the trust property under each recommendation, and, in addition, shall conditionally sell the trust property as a whole. The trustee shall determine which conditional sale or sales result in the highest total price bid for all of the trust property. The trustee shall return deposits to all but the bidder or bidders whose bid or bids result in the highest bid price. The sale shall be completed on payment by the purchaser of the price bid in a form satisfactory to the trustee. The subsequent execution, delivery and recordation of the trustee's deed as prescribed by section 33-811 are ministerial acts. If the trustee's deed is recorded in the county in which the trust property is located within fifteen business days after the date of the sale, the trustee's sale is deemed perfected at the appointed date and time of the trustee's sale. If the highest price bid at a completed sale is less than the amount of that bidder's deposit, the amount of the deposit in excess of the bid price shall be refunded by the trustee at the time of delivery of the trustee's deed.
B. The person conducting the sale may postpone or continue the sale from time to time or change the place of the sale to any other location authorized pursuant to this chapter by giving notice of the new date, time and place by public declaration at the time and place last appointed for the sale. Any new sale date shall be a fixed date within ninety calendar days of the date of the declaration. After a sale has been postponed or continued, the trustee, on request, shall make available the date and time of the next scheduled sale and, if the location of the sale has been changed, the new location of the sale until the sale has been conducted or canceled and providing this information shall be without obligation or liability for the accuracy or completeness of the information. No other notice of the postponed, continued or relocated sale is required except as provided in subsection C of this section.
C. A sale shall not be complete if the sale as held is contrary to or in violation of any federal statute in effect because of an unknown or undisclosed bankruptcy. A sale so held shall be deemed to be continued to a date, time and place announced by the trustee at the sale and shall comply with subsection B of this section or, if not announced, shall be continued to the same place and at the same time twenty-eight days later, unless the twenty-eighth day falls on a Saturday or legal holiday, in which event it shall be continued to the first business day thereafter. In the event a sale is continued because of an unknown or undisclosed bankruptcy, the trustee shall notify by registered or certified mail, with postage prepaid, all bidders who provide their names, addresses and telephone numbers in writing to the party conducting the sale of the continuation of the sale.
D. A sale is postponed by operation of law to the next business day at the same scheduled time and place if an act of force majeure prevents access to the sale location for the conduct of the sale.

NOTE: See also In re Kahn, 203 Ariz. 205 (2002) where a Court held that gross inadequacy of sale price may be grounds to set aside a foreclosure sale. In regard to the question of what constitutes “gross inadequacy” the court held:

Determining gross inadequacy

“Gross inadequacy” cannot be precisely defined in terms of a specific percentage of fair market value. Generally, however, a court is warranted in invalidating a sale where the price is less than 20 percent of fair market value and, absent other foreclosure defects, is usually not warranted in invalidating a sale that yields in excess of that amount. The Court also cited to the RESTATEMENT § 8.3 (emphasis added) and stated: In Fenton, our court of appeals noted, “even assuming that the price was inadequate, that fact standing alone would not justify setting aside the trustee's sale…………..there must be in addition proof of some element of fraud, unfairness, or oppression as accounts for and brings about the inadequacy of price.”

THESE ARE JUST A FEW OF THE FORECLOSURE LAW SECTIONS THAT NEED TO BE LOOKED AT IN DETERMINING WHETHER THE FORECLOSURE PROCESS IN ARIZONA IS VALID. CONTACT AN ARIZONA FORECLOSURE DEFENSE LAWYER TO REVIEW YOUR CASE.

(3) Oppressive and unconscionable conduct of beneficiary/mortgagee or their agents (ex. loan servicers) in regard to loan acceleration and/or foreclosure tactics:

For example, pursuing the power of sale on trivial breaches, accepting late payments yet still foreclosing, etc. Review the case of Vork v. Dunn, 161 Ariz. 24, 775 (1989) for more information on possible challenges in this regard.

(4) TILA (truth in lending) Violations that trigger an extended three year right to rescind. Some general principles illuminating portions of TILA can be found in the case of Smith v. Wells Fargo Credit Corp., 713 F. Supp. 354, D.Ariz. 1989. In this case the court outlined the following TILA principles:

“In the case of closed-end credit, the material disclosures required of the lender are as follows: annual percentage rate, the finance charge, the amount financed, total of payments, and the payment schedule. TILA Sec. 103(u), 15 U.S.C. Sec. 1602(u). “Payment schedule” is defined as the number, amounts, and timing of payments scheduled to repay the obligation. Reg. Z, 12 C.F.R. Sec. 226.18(g); TILA Sec. 128(a)(6). The payment amount (which was stated incorrectly) on the original disclosure form is considered a “material” disclosure.

The consumer may exercise the right to rescind until midnight of the third business day following the latest of the following events:

1) consummation of the transaction;

2) delivery of notice of the right to rescind, or

3) delivery of all material disclosures.

See TILA Sec. 125(a), 15 U.S.C. Sec. 1635(a)

The consumer has a continuing right to rescind until the creditor provides the rescission notice and also supplies a copy of the TIL disclosure statement with all material information correctly disclosed. National Consumer Law Center, Truth in Lending (1986), para. 6.3.2 at 137.

Technical or minor violations of TILA, or Regulation Z, as well as major violations impose liability on the creditor and entitle the borrower to rescind. Semar v. Platte Valley Fed. S & L Assoc., 791 F.2d 699, 704 (9th Cir.1986) (notice to rescind was in error because it did not list the actual day *356 of expiration, but said “three business days after July 16”).

Congress made it clear that rescission suits are allowed after disclosure suits, and explicitly provided a statutory damages penalty for rescission violations. Aquino v. Public Finance Consumer Discount Co. 606 F.Supp 504, 511 (E.D.Pa.1985), based on S.Rep. No. 96-368, reprinted in 1980 U.S.Code Cong. & Admin.News at 236, 267.

If a mathematical error occurs with regard to a material disclosure, the three day rescission period will not commence, and thus the right to rescind will not expire three days later. Indeed, it will not expire until three business days after the correct disclosure is finally provided or until the earlier of three years after consummation. Rohrer, The Law of Truth in Lending (1984) at 8-33.

The rescission form that Wells Fargo had the Smiths sign at closing was not sufficient because the correct date of rescission must be stated. Reg. Z Sec. 226.23(b); TILA Sec. 125(a, f). To comply with this regulation, Wells Fargo was required to provide new rescission forms with the correct expiration date when the corrected material disclosure was made. Rohrer at 8-43.

There is a continuing right to rescind the transaction when the creditor makes an error regarding a material disclosure on the disclosure statement. In re Underwood, 66 B.R. 656 (Bkrtcy.W.D.Va.1986). In the Underwood case, the plaintiffs never received rescission forms-not when they initially closed, nor when the new finance charge data arrived. The court said “they would have had a continuing right to rescind the transaction even if they had initially been given copies of the Notice of the Right to Cancel because the defendant failed to make what now appears an admittedly erroneous and material disclosure on the disclosure statement.” Id. at 662. The court further stated that the Underwoods were entitled to rescind the transaction at any time within three years of the consummation of the transaction unless provided a statement containing the correct finance charge along with rescission forms. Id.

It is apparent that the courts have interpreted the right to rescind as being a continuing one in situations such as this. Here, Wells Fargo stated an incorrect payment amount (a material disclosure), and when the corrected amount was disclosed, they should have provided new rescission forms in compliance with the Truth in Lending Act. Because the Smiths were not given the new forms, they have a continuing right to rescind, within the statute of limitations of three years. 15 U.S.C. Sec. 1635(f).

Several defenses against TILA actions are available to creditors. There are three types of defenses: the TILA itself, common law, and standard procedural and jurisdictional defenses. NCLC at 146. The interpretation of the TILA defenses lies exclusively with the courts; Regulation Z and the Commentary of the Federal Reserve Board do not interpret them. Id.

[2] As to the right to rescind, Wells Fargo raises the defense of good faith conformity with the FRB rules, regulations, or interpretations. TILA Sec. 130(f), 15 U.S.C. Sec. 1640(f). Under the New Act, the creditor's good-faith conformity is limited to the Regulations and the Commentary which supersede all previous formal and informal FRB staff interpretations, and the defense provides no protection for reliance on court decisions. Hamilton v. Southern Discount Co., 656 F.2d 150 (5th Cir.1981).

A creditor may not merely allege good faith conformity; it must point to the specific regulation, ruling, or interpretation with which it claims conformity. Valencia v. Anderson Bros. Ford, 617 F.2d 1278, 1287 (7th Cir.1980), rev'd on other grounds, 452 U.S. 205, 101 S.Ct. 2266, 68 L.Ed.2d 783 (1981). Wells Fargo relies on the lack of a requirement for a new rescission form in the regulations as its defense, but fails to cite any specific authority to support its position. In this situation, courts have concluded that if a creditor misreads or misconstrues the provision, it is not entitled to the defense, even if the mistake is a reasonable one. Id. at 1278 *357 (creditor's mistaken interpretation of Regulation Z, even if honest and reasonable, is not a defense under Sec. 1640(f); see also Kessler v. Associates Fin. Services Co., 573 F.2d 577, 579 (9th Cir.1977).

However, where the provision is ambiguous and the creditor reasonably construes the provision as applying to its act or omission, it may be entitled to the conformity defense. Charles v. Krauss Co., 572 F.2d 544 (5th Cir.1978) (creditor's good faith belief that its contract form complied with the literal language of Sec. 226.801 forms exception provided a good faith defense). A case by case interpretation is required. NCLC at 147.

TILA is not ambiguous with regard to the right to rescind in this instance, and courts have made clear the continuing right to rescind in situations such as these. A new rescission form should have been provided, and Wells Fargo's mistaken interpretation of Regulation Z is not a defense.

This may give you a general idea of TILA law and how the Courts may look at these issues. We have posted other Truth in Lending blogs that you can search for online. There is a radio show we did which also discussed Truth in Lending, in general terms on one show. You can visit that site at www.LoanModRadio.com

TILA extended rescission rights may prove a nice foreclosure defense strategy where the borrower can put together a “tender” plan.

(5) Certain second mortgages containing a “balloon” payment may not be foreclosed upon (generally junior mortgages less than $10,000). Here is an Arizona statutory section that deals with that topic.

6-114. Balloon payments prohibited; applicability; exemptions

A. A person engaged in the business of lending money or negotiating a loan between parties shall not make or arrange a loan in violation of this section.

B. On a loan in an amount of ten thousand dollars or less for a term up to three years which is secured by a lien on real property comprising an owner-occupied dwelling, an installment payment, whether providing for payment of principal, interest or principal and interest, shall not be greater than twice the amount of the smallest installment.

C. This section applies only to mortgages, trust deeds or other evidences of indebtedness secured by a lien other than a primary or first lien on real property.

D. This section does not apply to transactions involving the purchase or sale or the proposed purchase or sale of real property or to a financial institution licensed or chartered by this state or the federal government.

E. Pursuant to the provisions of 12 United States Code section 3804, this section shall not be superseded by the provisions of 12 United States Code section 3803.

(6) Failure of Consideration (question of fact for the jury)

See the case of Sepo v. First National Bank of Arizona, 21 Ariz. App. 606, (1974) where the Court held:

“Failure of consideration consists in failure to perform, or carry out, or make good a promise given as consideration for an instrument……whether or not a failure of consideration has occurred may be a question of fact for a jury to determine…..where several promises are made by one party the question whether breach of one such promise results in a complete or a partial failure of consideration, or no failure at all, is determined under the doctrine of substantial performance…..the parties raising the defense of failure of consideration with reference to a note have the burden of proving it.”

It is not entirely clear how far this holding can stretch. For example, in the case of securitized loans, where MERS or a Trustee of a Trust claims it is the owner of the loan / loan beneficiary, but yet they gave no consideration to the transaction, can this be a grounds to raise to prevent foreclosure? For more general information about issues raised by securitized loans, and the so-called “produce the note” foreclosure defense strategy that has been successful in some states see our website at www.ProduceTheNoteAttorney.com where we discuss some of these issues and potential legal challenges. Note, many of these produce-the-note strategies are in the "test-phase."

(7) Filing Bankruptcy (may temporarily stay a foreclosure, and in some cases may prevent a foreclosure). See our website at www.BKAttorneyS.net (BK Attorney Steve)

The preceding are some of the grounds that can be reviewed by a foreclosure defense attorney in Phoenix, Scottsdale, and surrounding cities in Arizona to see of you may have a right to seek an injunction against foreclosure. There maybe other grounds to review given the facts and circumstances of your case. For example where qualified written requests are not responded to and legitimate questions as to whether payments were properly paid and applied may raise a defense warranting at least a temporary restraining order stopping the foreclosure sale. Reverse Redlining – Financial Discrimination may also be another ground worth pursuing.

In addition, if you have an option arm loan it may be possible to argue that the loan is unconscionable and therefore unenforceable (see more discussion on our website www.OptionArmLawyer.com. Again, certain facts have to be ferreted out to see if you truly have a valid good faith defense to assert that might stop your foreclosure. The Courts will not likely treat you favorably where frivolous claims are filed (especially where loan payments are seriously delinquent), which tenuous claims are also prohibited from being filed by attorney ethics. Again, have your case reviewed by a real estate lawyer / foreclosure defense attorney.

ABOUT US:

The Law Offices of Steve Vondran in licensed to practice law in California and Arizona. Steve Vondran, Esq. is a licensed attorney and real estate broker in California and Arizona.

He can be reached by email at steve@vondranlaw.com or toll free (877) 276-5084

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NOTICE:

The foregoing information is general legal information only and shall not be relied upon as legal advice, or a substitution for legal advice. If you have specific legal questions about your foreclosure case, or loan modification case you should seek the advice of a real estate attorney. In addition, the information posted above may not be 100% complete, accurate or up-to-date. The Law Offices of Steve Vondran is licensed to practice law in the state of Arizona and California and only seeks to solicit and serve Clients in these two states. Steve Vondran, Esq. is a licensed attorney and real estate broker in California and Arizona. He can be reached by email at steve@vondranlaw.com or toll free (877) 276-5084. This is an advertisement and communication pursuant to State Bar Rules. Please do not send us private or confidential information through any of our above-listed websites. Sending us an email does not create an attorney-client relationship (only signing a legal retainer will do this).

New Federal Tenant's Rights Law MAY pave the road to more modifications for investment properties???

Steve Vondran (Law Offices of Steven C. Vondran) — Wed, 18 Nov 2009 13:34:28 -0600

FORECLOSURE TIPS: OVERVIEW OF TENANTS RIGHTS FOLLOWING EVICTION (NEW HOPE FOR MODIFYING INVESTMENT PROPERTIES?)

Hi again, we have posted information on previous blogs about tenants rights following eviction. Here is an overview of what we are looking at. The following is general legal information only and is not legal advice, or to be construed as legal advice. For specific questions please contact a real estate or foreclosure defense Attorney. Steve Vondran, Esq. practices law in the areas of Real Estate, Bankruptcy, and Foreclosure Defense. He assists homeowners in California and Arizona where he is licensed to practice law. He also holds a real estate broker's license in both states. He can be emailed at Steve@VondranLaw.com or called at (877) 276-5084.

•(1) IF YOU HAVE A FANNIE MAE LOAN THAT IS BEING THREATENED WITH FORECLOSED, FANNIE MAE, THROUGH THE LOAN SERVICER, MAY ACCEPT A DEED IN LIEU OF FORECLOSURE AND ALLOW A "DEED FOR LEASE" PROGRAM THAT ALLOWS UP TO A ONE YEAR LEASE AND POSSIBLE EXTENSIONS TO THE HOMEOWNER.

Here were some of the General Guidelines we discussed:

GENERAL GUIDELINES FOR FANNIE MAE DEED FOR LEASE RENT-BACK PROGRAM:

•(1) The loan must be owned by Fannie Mae (use their website here to see if your Loan is owned by Fannie): http://loanlookup.fanniemae.com/loanlookup/

•(2) Contact your loan servicer and see if you are eligible for the program and eligible to execute a "deed-in-lieu" of foreclosure (this means you sign over the deed to the loan holder in lieu of being foreclosed on). The owner of the loan, through the loan servicer, must agree to accept the deed-in-lieu of foreclosure. This is a requirement of the program. In some cases, you may only qualify for Deed in Lieu if you only have a first mortgage. In other instances, you may qualify if the second mortgagee releases your lien.

•(3) The property must be primary residence / owner occupied (landlord-owner may qualify if tenant uses property as primary residence).

•(4) Borrower must be able to pay market rent for the lease (which is a one year lease and option to extend by term or month-to -month). A property management company will determine market rate.

•(5) Rent payment cannot exceed 31% of Gross Monthly Income (yes, you will be required to submit financials).

•(6) Borrower cannot have had more than 12 late payment s on loan and cannot be in Bankruptcy.

•(7) FHA and VA loans do NOT qualify.

•(8) Borrower must have made at least three payments on loan.

•(9) House remains for sale and any new owner of the home would take "subject to" the lease.

A link to that blog post can be found here: http://activerain.com/blogsview/1340634/do-tenants-in-california-have-any-rights-if-the-house-they-live-in-is-foreclosed-

•(2) FREDDIE MAC HAS A SIMILAR LEASE-BACK PROGRAM (CALLED THE REO RENTAL INITIATIVE) BUT IT DOES NOT INVLOVE THE DEED IN LIEU OF FORECLOSURE. ONCE THE FREDDIE LOAN IS FORECLOSED ON, THE LOAN SERVER MAY GRANT THE HOMEOWNER, OR REMAINING TENANT OF A RESIDENTIAL INVESTMENT PROPERTY TO STAY OVER ON A MONTH TO MONTH BASIS.

The Property must be in habitable condition, and the tenant must be able to afford the rent. Here is a link to the Freddie Mac press release discussing the REO Rental Initiative Program: http://www.freddiemac.com/news/archives/servicing/2009/20090305_reo-rental-initiative.html

•(3) UNDER THE HELPING FAMILIES SAVE THEIR HOMES ACT OF 2009, PURSUANT TO THE PROTECTING TENANTS AT FORECLOSURE ACT OF 2009, ANY BONA FIDE LEASE HOLDER MUST BE GIVEN AT LEAST 90 DAYS NOTICE BEFORE THEY C AN BE EVICTED.

Here is a look at the text of the law (the bold, italics, caps and underlines are my own-doing). Note the law expires ("sunsets") on December 31, 2012.:

TITLE VII--PROTECTING TENANTS AT FORECLOSURE ACT
SEC. 701. SHORT TITLE. This title may be cited as the `Protecting Tenants at Foreclosure Act of 2009'.

SEC. 702. EFFECT OF FORECLOSURE ON PRE-EXISTING TENANCY.
(a) In General- In the case of any foreclosure on a federally-related mortgage loan or on any dwelling or residential real property after the date of enactment of this title, any immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to-

(1) the provision, by such successor in interest of a notice to vacate to any bona fide tenant at least 90 days before the effective date of such notice; and

(2) the rights of any bona fide tenant, as of the date of such notice of foreclosure-

(A) under any bona fide lease entered into before the notice of foreclosure to occupy the premises until the end of the remaining term of the lease, except that a successor in interest may terminate a lease effective on the date of sale of the unit to a purchaser who will occupy the unit as a primary residence, subject to the receipt by the tenant of the 90 day notice under paragraph (1); or

(B) without a lease or with a lease terminable at will under State law, subject to the receipt by the tenant of the 90 day notice under subsection (1),
except that nothing under this section shall affect the requirements for termination of any Federal or State subsidized tenancy or of any State or local law that provides longer time periods or other additional protections for tenants.

NON-LEGAL EASE TRANSLATION: (but this is not legal advice please check with your attorney): Where a residential property sold in foreclosure, the remaining tenant (who must be a BONA FIDE TENANT - See Below for definition) is entitled to receive notice of their rights: mainly, that they have the right to live out the term of their lease - ASSUMING THE LEASE WAS ENTERED INTO PRIOR TO THE FORECLOSURE SALE, HOWEVER, the Successor in interest to the property (i.e. the bank that could not dump the property at a foreclosure sale, or, a successful bidder at the foreclosure auction) MAY TRY TO SELL THE PROPERTY, AND MAY EVICT THE TENANT WITH 90 DAYS NOTICE, BUT ONLY IF THE PERSON BUYING THE HOUSE PLANS ON LIVING THERE (AS OPPPOSED TO USING IT AS AN INVESTMENT PROPERTY OR SIMPLY "FLIPPING" THE PROPERTY).

If there is no lease in effect at the time of foreclosure (let's say a tenant was living in the property under an oral lease, or month to month lease terminable at will) the tenant must be given the 90 day notice to vacate before they can be evicted. That is a mouthful, I know. The end result is adding the three months along with the time needed to evict a tenant (assuming they do not voluntarily vacate) adds more frustration to lenders and third-party purchasers of the property and creates rules they must comply with.

WHAT IS A BONA FIDE TENANT UNDER THE HELPING FAMILIES SAVE THEIR HOMES ACT OF 2009 / PROTECTING TENANTS AT FORECLOSURE ACT OF 2009?

Only a bona fide tenant is entitled to the 90 day notice and the possibility to exercise the full term of any existing lease. Here is how the law defines bona fide tenants:

(b) Bona Fide Lease or Tenancy - For purposes of this section, a lease or tenancy shall be considered bona fide only if:

(1) the mortgagor or the child, spouse, or parent of the mortgagor under the contract is not the tenant;

(2) the lease or tenancy was the result of an arms-length transaction; and

(3) the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property or the unit's rent is reduced or subsidized due to a Federal, State, or local subsidy.

(c) Definition- For purposes of this section, the term `federally-related mortgage loan' has the same meaning as in section 3 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2602).

TRANSLATION: DO NOT TRY TO ENTER INTO A SHAM LEASE PRIOR TO BEING FORECLOSED UPON IN ORDER TO TRY TO GET AN EXTRA 90 DAYS IN THE HOUSE. BUT THEN AGAIN, I SUPPOSE THE LENDER WOULD BE FORCED TO LITIGATE THIS ISSUE IN AN EVICTION PROCEEDING AND PROVE IT IS A SHAM.

_____________________________________________________________________________________________________

NOTE: There is also a section of the law that discuss tenants rights regarding Section 8 Housing. This Section states:

SEC. 703. EFFECT OF FORECLOSURE ON SECTION 8 TENANCIES. Section 8(o)(7) of the United States Housing Act of 1937 (42 U.S.C. 1437f(o)(7)) is amended--
(1) by inserting before the semicolon in subparagraph (C) the following: `and in the case of an owner who is an immediate successor in interest pursuant to foreclosure during the term of the lease vacating the property prior to sale shall not constitute other good cause, except that the owner may terminate the tenancy effective on the date of transfer of the unit to the owner if the owner-
(i) will occupy the unit as a primary residence; and

(ii) has provided the tenant a notice to vacate at least 90 days before the effective date of such notice, and

(2) by inserting at the end of subparagraph (F) the following: `In the case of any foreclosure on any federally-related mortgage loan (as that term is defined in section 3 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2602)) or on any residential real property in which a recipient of assistance under this subsection resides, the immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to the lease between the prior owner and the tenant and to the housing assistance payments contract between the prior owner and the public housing agency for the occupied unit, except that this provision and the provisions related to foreclosure in subparagraph (C) shall not shall not affect any State or local law that provides longer time periods or other additional protections for tenants.

______________________________________________________________________________________________________

BOTTOM LINE ON FEDERAL TENANTS RIGHTS FOLLOWING FORECLOSURE

What might this mean in practice? In one case, recently we tried to perform a loan workout a major lender on an investment property. They were not willing to work-out or modify the loan. I think they were confident the property will sell at a public auction, and the house (and compliance with the Tenants Rights Law set forth herein) would be somebody else's problem to deal with. After there were no bidders at the foreclosure sale, and the property reverted back to the lender, NOW THEY ARE MOTIVATED TO MODIFY THE LOAN AND WILL TAKE A BETTER LOOK AT A MODIFICATION. So the end result may be increased change of loan modification for investment properties. I do not believe lenders want to get into the "landlord business." Being a landlord carries its own inherent risks. Note: Although this is a federal law ("law of the land") individual states are free to provide even greater protections to tenants. Please consult with an attorney before making any decisions.

Can President Obama Help Tenants stay in foreclosed property?

Steve Vondran (Law Offices of Steven C. Vondran) — Mon, 16 Nov 2009 16:22:07 -0600

On May 20, President Obama signed into law "Helping Families Save Their Homes Act of 2009." This law is now the "law of the land" superseding any State laws that provide less protection to tenants of foreclosed loans.

The Law allows Tenants of foreclosed properties to stay in their homes for 90 days following eviction (for month to month leases), or for the entire term of the lease they are in (ex. a yearly lease). The protections go into effect immediately and expire at the end of 2012

It is estimated that in California, every one in three homes being foreclosed on has a tenant, so these are very important legal rights.

Tenants rights in the foreclosure process: Fannie Mae Deed for Lease Program may provide some help!

Steve Vondran (Law Offices of Steven C. Vondran) — Mon, 16 Nov 2009 16:19:33 -0600

Fannie Mae Launches "Deed for Lease" Program for Homeowners who do not qualify for loan modifications

The following is general legal information only and is not legal advice, or to be construed as legal advice. For specific questions please contact a real estate or foreclosure defense Attorney. Steve Vondran, Esq. practices law in the areas of Real Estate, Bankruptcy, and Foreclosure Defense. He assists homeowners in California and Arizona where he is licensed to practice law. He also holds a real estate broker's license in both states. He can be emailed at Steve@VondranLaw.com or called at (877) 276-5084.

Here is a basic outline of the Fannie Mae DEED FOR LEASE program. As you may know, Fannie Mae is a government sponsored entity (partially privately owned corporation) that buys loans from so-called "lenders" and Fannie Mae then securitizes these loans, and the loans are often serviced by a loan servicer on their behalf as "investor" of the loan.

Fannie Mae has launched a new Deed for Lease Program designed to (1) Minimize displacement of families being foreclosed upon, and (2) Prevent neighborhood blight caused by vacant foreclosed homes.

Some initial research indicates as few as 1,200 homeowners may have been assisted by this program, while Fannie Mae has (during the same general period) foreclosed on roughly 57,000 homes. This means, don't count on the program working, but it is worth investigating. Fannie Mae showcases some of its foreclosed properties on www.HomePath.com

GENERAL GUIDELINES FOR FANNIE MAE DEED FOR LEASE RENT-BACK PROGRAM:

•(1) The loan must be owned by Fannie Mae (use their website here to see if your Loan is owned by Fannie): http://loanlookup.fanniemae.com/loanlookup/

•(3) The property must be primary residence / owner occupied (landlord-owner may qualify if tenant uses property as primary residence).

•(4) Borrower must be able to pay market rent for the lease (which is a one year lease and option to extend by term or month-to -month). A property management company will determine market rate.

•(5) Rent payment cannot exceed 31% of Gross Monthly Income (yes, you will be required to submit financials).

•(6) Borrower cannot have had more than 12 late payment s on loan and cannot be in Bankruptcy.

•(7) FHA and VA loans do NOT qualify.

•(8) Borrower must have made at least three payments on loan.

•(9) House remains for sale and any new owner of the home would take "subject to" the lease.

Note: Freddie Mac has a similar program, although it only applies following foreclosure of the property (no deed-in-lieu) and leases are typically month to month rather than a yearly lease.

Note2: From what I am told, the deed-in-lieu of foreclosure will have a less impact on your credit, although your credit will still be damaged.

Note3: Also, you need to check with your tax attorney, accountant, or CPA to see if there are any tax implications to signing over the deed-in-lieu. We are not financial advisers.

More information about the Fannie Mae Deed for Lease Program can be found here: http://www.fanniemae.com/newsreleases/2009/4844.jhtml?p=Media&s=News+Releases

FORECLOSURE DEFENSE TOOLBOX: GUIDELINES FOR THE FHA LOAN MODIFICATION PROGRAM

Steve Vondran (Law Offices of Steven C. Vondran) — Fri, 13 Nov 2009 13:55:16 -0600

DO YOU HAVE AN FHA LOAN THAT NEEDS MODIFICATION? NEW PROGRAM ALLOWS PRINICPAL LOAN BALANCE REDUCTIONS AND FIXED INTEREST RATES.

The following is general information. Steve Vondran practices real estate, bankruptcy and foreclosure defense and can be reached at steve@vondranlaw.com or (877) 276-5084. He helps homeowners in California and Arizona where he is licensed to practice law.

Effective August 15, 2009 HUD announced a new loan modification program that would allow homeowners with an FHA loan, who could not qualify for any other loan modification, to apply for a FHA HAMP program (making home affordable), that may allow borrowers with FHA loans to keep their homes and avoid foreclosure. The general details of this FHA loan modification program are as follow (additional terms and conditions may apply, please contact an Attorney or a HUD Counselor at HUD.gov)

BASIC QUALIFICATION GUIDELINES:

•(1) You must be at least 30 days late on your mortgage, but no more than 12 months delinquent. However, you cannot force a delinquency merely by failing to make loan or mortgage payments

•(2) Seasoning requirement: the FHA loan must be at least 4 months old

•(3) The property must be the primary residence of the borrower, owner-occupied and a single family dwelling 104 units

•(4) The borrower must currently be paying more that 31% of their gross monthly income toward their mortgage payment (front-end DTI more than 31% of their gross monthly income)

•(5) The maximum back-end ratio (ratio of all expenses against gross monthly income) cannot exceed 55%. So if you make $10,000 gross monthly income, you cannot have more than $5,500 in total debt following the loan modification

•(6) Your loan servicer must be FHA approved and participating in the program (note: the fha loan servicer can be incentivized up to $1,250 to provide you with the modification

DETAILS OF THE FHA LOAN MODIFICATION:

•(1) The servicer may write down your mortgage to 31% of your gross monthly income (so if you make $10,000 per month, and your current mortgage payment is $4,000, the fha loan servicer can write you down to $3,100 monthly payment - which payment will include TAX, INSURANCE, PRINCIPAL AND INTEREST). What they call "PITI."

•(2) The amount of principal that gets written down is placed in a HUD partial Claim account. The amount placed into the HUD account would only be payable by the borrower if the house is sold or refinanced or at the end of the HAMP modification term.

•(3) If you have a second mortgage, the second mortgage holder will have to agree to subordinate their lien to the partial claim of HUD in order for the modification to work

•(4) The interest rate on the loan will be a fixed interest rate.

•(5) Impounding for tax and insurance is required.

•(6) OTHER IMPORTANT FEATURES: THERE ARE NO MAXIMUM LOAN LIMITS AND NO MAXIMUM MORTGAGE AMOUNTS AS THE OBAMA MAKING HOME AFFORDABLE PROGRAM HAS, AND IN ADDITION, YOU DO NOT HAVE TO HAVE A FANNIE OR FREDDIE LOAN AS THE CURRENT HAMP PROGRAM REQUIRES.

•(7) There are no credit application fees, no costs for the program, no mortgage insurance premiums, and no appraisal required.

•(8) You will be required to submit true and accurate financials, and an affidavit of hardship (yes, a true hardship is required (loss of job, loss of income, divorce, medial issues, etc.)

•(9) GROSS MONTHLY INCOME: In determining your gross monthly the lender or loan servicer may consider many different sources of income such as: wages/salaries, overtime, commissions, tips and bonuses, pension income, retirement income, unemployment income and rental income.

BOTTOM LINE: The FHA loan modification program is pretty darn cool if you qualify. Contact HUD for more details, or contact an attorney to discuss your foreclosure defense case. More information on the underwriting guidelines for the program can be found here: http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-23mlatach.doc

Tenants rights in California following a foreclosure of investment property.

Steve Vondran (Law Offices of Steven C. Vondran) — Tue, 03 Nov 2009 10:40:01 -0600

The following is general legal information only and not to be construed as legal advice.

California tenants have rights when residential property is being foreclosed upon. The following two sections apply where a lender, trustee, beneficiary or authorized agent is seeking to foreclose on residential real property in the State of California:

(1) Under California Civil Code Section 2924.8 the following must be posted where the lender knows a tenant is in possession of residential real property subject to eviction

(a) Upon posting a notice of sale pursuant to Section 2924f, a trustee or authorized agent shall also post the following notice, in the manner required for posting the notice of sale on the property to be sold, and a mortgagee, trustee, beneficiary, or authorized agent shall mail, at the same time in an envelope addressed to the "Resident of property subject to foreclosure sale" the following notice in English and the languages described in Section 1632: "Foreclosure process has begun on this property, which may affect your right to continue to live in this property. Twenty days or more after the date of this notice, this property may be sold at foreclosure. If you are renting this property, the new property owner may either give you a new lease or rental agreement or provide you with a 60-day eviction notice. However, other laws may prohibit an eviction in this circumstance or provide you with a longer notice before eviction. You may wish to contact a lawyer or your local legal aid or housing counseling agency to discuss any rights you may have."

The following provisions also apply:

(b) It shall be an infraction to tear down the notice described in subdivision:

within 72 hours of posting. Violators shall be subject to a fine of one hundred dollars ($100).
A state government entity shall make available translations of the notice described in subdivision
which may be used by a mortgagee, trustee, beneficiary, or authorized agent to satisfy the requirements of this section.
This section shall only apply to loans secured by residential real property, and if the billing address for the mortgage note is different than the property address.
This section shall remain in effect only until January 1, 2013, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2013, deletes or extends that date.

(2) Under California Code of Civil Procedure Section 1161(b) the following provisions apply in regard to foreclosed property wherein a tenant resides in the subject property:

1161b. (a) Notwithstanding Section 1161a, a tenant or subtenant in possession of a rental housing unit at the time the property is sold in foreclosure shall be given 60 days' written notice to quit pursuant to Section 1162 before the tenant or subtenant may be removed from the property as prescribed in this chapter. (b) This section shall not apply if any party to the note remains in the property as a tenant, subtenant, or occupant. (c) This section shall remain in effect only until January 1, 2013, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2013, deletes or extends that date.

ABOUT US:

The Law Offices of Steve Vondran in licensed to practice law in California and Arizona. Steve Vondran, Esq. is a licensed attorney and real estate broker in California and Arizona.

He can be reached by email at steve@vondranlaw.com or toll free (877) 276-5084

Offices:

Arizona Office (Esplanade): 2415 E. Camelback Road, Suite 700, Phoenix, AZ, 85020.California Office (Fashion Island): 620 Newport Center Drive, Suite 1100, Newport Beach, CA 92660

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Our Real Estate Law Services:

Loan Modifications / Loan Workouts (World Savings and Wachovia Loans
Commercial Lease Modifications
DRE audits, hearings and investigations
Real Estate Broker admissions cases
Foreclosure Defense
Mortgage Law & Predatory Law
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KEYWORDS: ARIZONA FORECLOSURE DEFENSE ATTORNEY / CALIFORNIA FORECLOSURE DEFENSE ATTORNEY / PHOENIX FORECLOSURE DEFENSE ATTORNEY / PHOENIX FORECLOSURE DEFENSE LAWYER / SCOTTSDALE FORECLOSURE DEFENSE ATTORNEY / SCOTTSDALE FORECLOSURE DEFENSE LAWYER / ORANGE COUNTY PREDATORY LENDING LAWYER / ORANGE COUNTY FORECLOSURE DEFENSE ATTORNEY / ORANGE COUNTY FORECLOSURE DEFENSE LAYWER / TRUTH IN LENDING LAWYER / TRUTH IN LENDING ATTORNEY / SOUTHER CALIFORNIA MORTGAGE LAW ATTORNEY / MORTGAGE LAWYER / RIVERSIDE FORECLOSURE ATTORNEY / RIVERSIDE FORECLOSURE LAWYER / RESPA LAWYER / RESPA ATTORNEY / FORECLOSURE DEFENSE LAW / PHOENIX LOAN MODIFICATION ATTORNEY / PHOENIX FORECLOSURE DEFENSE LAWYER / ORANGE COUNTY REAL ESTATE LAWYER / ORANGE COUNTY PREDATORY LENDING AND MORTGAGE LITIGATION ATTORNEY / NEWPORT BEACH FORECLOSURE DEFENSE LAWYER / NEWPORT BEACH FORECLOSURE DEFENSE ATTORNEY / CALIFORNIA FORECLOSURE DEFENSE LAWYER / PREDATORY LENDING LAWYER / LOAN RESCISSION ATTORNEY / TILA RESCISSION LAWYER / WACHOVIA OPTION ARM LOAN / WORLD SAVINGS OPTION ARM LOAN / RESCIND MY LOAN

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HELPFUL FORECLOSURE DEFENSE LINKS:

SUBMIT YOUR FORECLOSURE / LOAN SCENARIO: WWW.LOANMODSOLUTIONS.NET
SUBMIT YOUR LOAN MODIFICATION SCAM SCENARIO: WWW.LOANMODIFICATIONRIPOFF.NET
LITIGATING OPTION ARM LOANS WWW.OPTIONARMLAWYER.COM
CALIFORNIA FORECLOSURE DEFENSE ATTORNEY STEVE VONDRAN WEBSITE: WWW.VONDRANLEGAL.COM
ARIZONA FORECLOSURE DEFENSE ATTORNEY STEVE VONDRAN WEBSITE: WWW.VONDRANLEGAL.COM
STEVE VONDRAN REAL ESTATE WEBSITE WWW.VONDRANLAW.COM
INFORMATION ON TRIAL PLAN FRAUD: WWW.TRIALPLANFRAUD.COM
FORECLOSURE DEFENSE RADIO SHOW: WWW.LOANMODRADIO.COM
INFORMATION ON TRUTH IN LENDING LOAN RESCISSION: WWW.RESCINDMYLOAN.NET
INFORMATION ON PRODUCE THE NOTE: WWW.PRODUCETHENOTEATTRORNEY.COM

SOME OF THE ABOVE WEBSITES CAN BE VIEWED AT WWW.CUSTOMLAWNBLOGS.COM (CREATOR OF MY LEGAL BLOGS). THEY ARE OPERATED BY WWW.CONTINGENCYCASE.COM WEBSITE WHICH IS A WEBSITE DIRECTORY FOR CONTINGENCY CASE LAWYERS ACROSS THE UNITED STATES).

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NOTICE:

The foregoing information is general legal information only and shall not be relied upon as legal advice, or a substitution for legal advice. If you have specific legal questions about your foreclosure case, or loan modification case you should seek out the advice of a real estate attorney. In addition, the information posted above may not be 100% complete, accurate or up-to-date. The Law Offices of Steve Vondran is licensed to practice law in the state of Arizona and California and only seeks to solicit and serve Clients in these two states. Steve Vondran, Esq. is a licensed attorney and real estate broker in California and Arizona. He can be reached by email at steve@vondranlaw.com or toll free (877) 276-5084. This is an advertisement and communication pursuant to State Bar Rules. Please do not send us private or confidential information through any of our above-listed websites. Sending us an email does not create an attorney-client relationship (only signing a legal retainer will do this).

TILA Rescission Rights - Basic Overview - Can you foreclose on your lender?

Steve Vondran (Law Offices of Steven C. Vondran) — Fri, 30 Oct 2009 19:24:54 -0500

NOTICE: The foregoing information is general legal information only and shall not be relied upon as legal advice, or a substitution for legal advice. If you have specific legal questions about your foreclosure case, or loan modification case you should seek out the advice of a real estate attorney. In addition, the information posted above may not be 100% complete, accurate or up-to-date. The Law Offices of Steve Vondran is licensed to practice law in the state of Arizona and California and only seeks to solicit and serve Clients in these two states. Steve Vondran, Esq. is a licensed attorney and real estate broker in California and Arizona. He can be reached by email at steve@vondranlaw.com or toll free (877) 276-5084. This is an advertisement and communication pursuant to State Bar Rules. Please do not send us private or confidential information through any of our above-listed websites. Sending us an email does not create an attorney-client relationship (only signing a legal retainer will do this).

FEDERAL TRUTH IN LENDING LAW

The Truth in Lending Act (TILA) is a cornerstone of consumer credit legislation. The Statute is Congress's effort to guarantee the the accurate and meaningful disclosure of the costs of consumer credit and thereby to enable consumers to make informed choices in the marketplace. See 15 U.S.C. § 1601(a). The Act is designed to protect borrowers who are not on an equal footing with creditors either in bargaining power or with respect to the knowledge of credit terms. In other words, TILA was passed to aid the unsophisticated consumer. See Thomka v. A.Z. Chevrolet, Inc. 619 F.2d 246 (3d Cir. 1980). The Act is also remedial and must be liberally construed in favor of borrowers. See King v. California, 784 F.2d 910 (9^th Cir. 1986). Except where Congress has relieved lenders of liability for noncompliance, it is a strict liability statute. Courts should continue to assure that consumers are accorded the full remedies available under the Act for violations found, even if they might seem technical. See Rodash v. AIB Mortgage Co., 16 F.3d 1142, 1145, 1149 (11^th Cir. 1994). Although Congress permitted the Federal Reserve Board to issue regulations implementing TILA (Reg Z), and to issue interpretations and official staff commentary that the Courts consider to be persuasive authority, the FRB's authority is not without limits, and a regulation that conflicts with TILA cannot stand. See Fabricant v. Sears, Roebuck, Clearinghouse No. 54,563 (S.D. Fla. Mar. 5, 2002).

NOTICE OF RIGHT TO CANCEL - DISCLOSURE REQUIREMENTS

A common violation we find (and you can check your loan documents to see if you have such a violation) is that in a refinance transaction each borrower or person with ownership interest in the property did not receive two copies each of the federally required notice of right to cancel. If this is true, and your loan was originated within the statutory three year period (note that arguments for equitable tolling may exist) then this violation, although appearing technical in nature, can trigger an extended three year right to cancel your loan.

Under Federal Truth in Lending Law, each Borrower, or person with ownership interest in the property, (in a non-purchase loan or other exempt transaction) 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, shall be provided with TWO (2) COMPLETED copies EACH of a notice of right to rescind (cancel). It is the lender’s obligation to complete these forms and deliver TWO copies to each Borrower or person with Ownership interest in the Property. 15 U.S.C. § 1635(a), Reg. Z §§ 226.5(b), 226.23(b). If each borrower or person with ownership interest is not provided two adequate copies of this Notice, an extended three year right to rescind is permitted under the Federal Truth in Lending Law.

The notice shall identify the transaction or occurrence and clearly and conspicuously disclose the following:

The retention or acquisition of a security interest in the consumer's principal dwelling.
The consumer's right to rescind, as described in paragraph (a)(1) of this section.
How to exercise the right to rescind, with a form for that purpose, designating the address of the creditor's place of business.
The effects of rescission, as described in paragraph (d) of this section.
The date the rescission period expires. (See Reg. Z §§ 226.15(b)(5) and 226.23(b)(5))

See Meyer v. Argent Mortgage Co., (In re Meyer), 379 B.R. 529 (Bankr. E.D. Pa. 2007). If the notice is subject to more than one sensible reading, and different results ensue depending upon which of the readings is adopted, the creditor has not met the “clear and conspicuous standard.” SeeHandy v. Anchor Mortgage Corp., 464 F.32 760, 764 (7^th Cir. 2006).

TWO KEY POINTS WE WILL ARGUE (when the two copies each are received but the rescission dates are not filled in – a common TILA violation)

(1) The Lender must fill in the form and dates (not the borrower) – If the creditor uses the proper model form, properly completed…......and fulfills all other requirements, the borrower has no rescission right. This position is supported by the actual text of the law - See 15 U.S.C. §1635(h) - which states:

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 Board, 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.”

The plain-meaning implication of this statutory provision SEEMS TO BE clear (and therefore is controlling), the lender has the obligation to complete these forms, it is not the borrowers duty to determine what dates to insert into the forms, much less at the direction of a mobile notary. In fact, the escrow instructions and lender's instruction sheet for the notice of right to cancel form usually set forth the requirement that the dates be inserted before the borrower is asked to sign all copies. We will present credible testimony on this point as well. For now, please see attached Exhibit “A” which sets forth the evidence currently in our possession, of which we will rely on, and will build our discovery foundation upon.

This reading of the law (that it is the lender's obligation to insert the dates, and not the borrowers) is also consistent with the requirement #5 (set forth above) that “the lender shall clearly and conspicuously identify the date the rescission period expires.” In fact, at least two courts have held in the First and Second circuit: “the complexity of business transactions under TILA means that the average consumer cannot figure out when TILA rights expire.....” See Bonney v. Wash. Mutual Bank, No. 08-30087 (D. Mass. July 30, 2008). Placing this burden on the borrower strips the “truth” from the transaction.

Finally, adding yet more support that the lender, not the borrower, must fill in the dates of the TILA right to rescind notice is a holding from another court which held: “Under both TILA and Regulation Z, the test for disclosure of the rescission right is whether the form of notice that the lender provided constitutes a clear notice of that right. See Porter v. Mid-Penn Consumer Discount Co., 961 F.2d 1066, 1076 (3d Cir.1992) (“the law does not require an ideal notice of rescission rights, just a clear, accurate and conspicuous one.”).........the right to rescind can be clearly disclosed only ifthose two dates are filled in.” See Meyer v. Argent Mortgage Co., (In re Meyer), 379 B.R. 529 (Bankr. E.D. Pa. 2007).

(2) The Lender is required to provide TWO copies of the notice of right to cancel to EACH borrower along with a copy of all of the material TILA disclosures. Failure to meet these requirements also provides an extended three year right to rescind the loan transaction. See 15 U.S.C. § 1635(a); Reg. Z §§ 226.15(b), 226.23(b) and Webster v. Centex Home Equity Corp. (In re Webster), 300 B.R. 787 (Bankr. W.D. Okla. 2003).

HERE IS ANOTHER WAY TO GET THE EXTENDED THREE YEAR RESCISSION RIGHT (USUALLY A LOAN AUDIT IS REQUIRED) The material disclosures required in a closed-end transaction, (APR, including the existence of a variable rate feature, Finance Charge, Amount Financed, Total of Payments, and Payment schedule) the failure of which to disclose results in an extended three year right to rescind. See Gaono v. Town & Country Credit, 324 F.3d 1050, 1053, (8th Cir. 2003).

Where only one copy of the notice of right to cancel is received, or where each borrower does not receive two signed and completed copies of the required right to cancel an extended three year right to rescind will apply.

Note: the lender will argue “the borrower signed an acknowledgement that they received two copies each, and therefore there is no TILA violation, sorry case closed.” It seems these lenders and loan servicers forget to read the following section of the law which we will frequently have to raise.

REBUTTABLE PRESUMPTIONS UNDER TILA

Even assuming for the sake of argument that there are two signed, dated, and accurately completed notice of right to cancel documents in the lender's possession (or the consumer's acknowledgment of receipt of two completed copies), this merely raises a rebuttable presumption that the lender delivered two copies to the borrower. See 15 U.S.C. § 1635(c), and Johnson v, New Century Mortgage Corp., 320 F. Supp. 2D 606, 611 (E.D. Mich. 2004). Courts permit competent testimony to rebut this assertion of the lender.

The critical factor is not whether the creditor has two signed and completed copies of the notice, but whether the borrower has possession of two signed, dated, and completed copies of the notice of right to cancel. Whether borrowers were delivered a blank notice of right to cancel is a question of fact that will not be decided on a motion to dismiss. See Clay v. Johnson, 77 F.Supp. 2D 879 (N.D. Ill. 1999). The debtor's denial of receipt of the notices and disclosures creates a question of fact that will not be decided on summary judgment even where the borrower signed acknowledgement of having received two copies of the notice. See Moore v. Mortgagestar, Inc. 2002 U.S. Dist. LEXIS 27457, (W.D. W. Va. Dec. 18, 2002). Once the borrower rebuts the presumption of delivery (through competent testimony, affidavits, etc.) the burden shifts to the creditor to prove the delivery of the documents. See Bell v. Parkway Mortgage, Inc., 309 B.R. 139, 157 (Bankr. E.D. Pa 204).

In addition, where the debtors testify that they did not receive the disclosures (even if not “totally convincing”), the debtor's should prevail if the credit cannot produce from its own records any copy of the disclosures. See In re Pinder, 83 B.R. 905, 913.

In most cases, especially where the borrower has credibility and kept track of all their loan documents (and where a mobile notary was used to sign the loan docs) the borrower can normally make a fair argument to rebut any assertion that the lender complied with the clear and conspicuous notice requirements and can counter any such assertion with competent testimonial evidence.

THE FOLLOWING IS SOME GENERAL INFORMATION ON EXERCISING RESCISSION RIGHTS:

THREE YEAR EXTENDED RIGHT TO RESCIND

(a) Consumer's right to rescind. (1) “In a credit transaction in which a security interest is or will be retained or acquired in a consumer's principal dwelling, each consumer whose ownership interest is or will be subject to the security interest shall have the right to rescind the transaction….”

(b) Exercising the right of Rescission:

226.23(3) – “The consumer may exercise the right to rescind until midnight of the third business day following consummation, delivery of the notice required by paragraph (b) of this section, or delivery of all material disclosures, whichever occurs last.If the required notice or material disclosures are not delivered, the right to rescind shall expire 3 years after consummation, upon transfer of all of the consumer's interest in the property, or upon sale of the property, whichever occurs first. In the case of certain administrative proceedings, the rescission period shall be extended in accordance with section 125(f) of the Act.” There is also legal precedence for “tolling” the statute beyond three years where fraudulent concealment is shown. See Bank of New York v. Waldon, 751 N.Y.S.2d 341 (Sup. Ct. 2002).
226.23(2): (2) “To exercise the right to rescind, the consumer shall notify the creditor of the rescission by mail, telegram or other means of written communication. Notice is considered given when mailed, when filed for telegraphic transmission or, if sent by other means, when delivered to the creditor's designated place of business.” There is also legal precedence for the proposition that filing a lawsuit demanding to exercise rescission rights is also sufficient notice. See Garedakis v. Indymac Bank, 2004 WL 2254676 (N.D. Cal. Oct. 4, 2004) and Jones v. Saxon Mortgage, Inc. 161 F.2d 2 (table), 1988 WL 614150 (4^th Cir. Sept. 9, 1998).

EFFECTS OF RESCISSION UNDER TILA (IN GENERAL):

I. STEP ONE:

When a consumer rescinds a transaction, the security interest giving rise to the right of rescission becomes void and the consumer shall not be liable for any amount, including any finance charge.

THIS MEANS THE SECURITY INTEREST BECOMES VOID BY OPERATION OF LAW.

Following the 2003 Yamamoto decision (discussed below) the FRB added language to the commentary, (Section 226.23 of Regulation Z implements § 1635(b)). Which stated:

When a consumer rescinds a transaction, the security interest giving rise to the right of rescission becomes void and the consumer shall not be liable for any amount, including any finance charge.
Within 20 calendar days after receipt of a notice of rescission, the creditor shall return any money or property that has been given to anyone in connection with the transaction and shall take any action necessary to reflect the termination of the security interest.
If the creditor has delivered any money or property, the consumer may retain possession until the creditor has met its obligation under paragraph (d)(2) of this section. When the creditor has complied with that paragraph, the consumer shall tender the money or property to the creditor....
The procedures outlined in paragraphs (d)(2) and (3) of this section may be modified by court order.

Note: This suggests section (1) above is NOT altered, and so when a consumer rescinds, "the security interest becomes void." Unless the Court alters the procedure, the Courts have the discretion.

Where the TILA statute is clear it must be followed. Courts only have the power to alter whether the lender has to tender first, or the borrower has to tender first. See Yamamoto v. Bank of New York, 329 F.3d 1167 (9th Cir. 2003), but see Semar v. Platte Valley Federal Savings & Loan Association, 791 F.2d 699, 705-06 (9th Cir.1986) (which stands for the proposition that the Court can alter the “procedure” of TILA but not the “substance” of TILA). The substance of TILA, as described above, is that the security interest becomes void upon the exercise of rescission, (although the Court can alter this procedure by requiring the borrower to tender first).

In Yamamoto, the Court held:

“There is no reason why a court that may alter the sequence of procedures after deciding that rescission is warranted, may not do so before deciding that rescission is warranted when it finds that, assuming grounds for rescission exist, rescission still could not be enforced because the borrower cannot comply with the borrower's rescission obligations no matter what. Such a decision lies within the court's equitable discretion, taking into consideration all the circumstances including the nature of the violations and the borrower's ability to repay the proceeds. If ... it is clear from the evidence that the borrower lacks capacity to pay back what she has received (less interest, finance charges, etc.), the court does not lack discretion to do before trial what it could do after. Determinations regarding rescission procedures shall be made on a “case-by-case basis, in light of the record adduced.”

This case illustrates that the Courts hold the ultimate power to exercise their discretion in any TILA rescission case, and does not NECESSARILY require that the borrower prove its ability to tender as a pre-condition to exercising rescission rights.

In fact, a California Court, in Pelayo v. Home Capital Funding, Slip Copy, 2009 WL 1459419, S.D.Cal.,2009, recently denied a lenders motion to dismiss a TILA rescission claim where the Defendant argued that the borrower was required to tender before rescission could be allowed (the Defendant essentially arguing that the security instrument was not automatically void), and where the Defendant argued the Court could not hear the case until the lender made its decision within 20 days (essentially arguing the TILA claim was not ripe for review). The Court held that the case could be heard and denied Defendant’s motion to dismiss. This ruling suggests that although the Court is permitted to modify the rescission procedure and require proof of tender by the Borrower first, it was also free NOT to modify the procedure and essentially treat the security instrument as being void (as the TILA statute requires), thus making the rescission case ripe for review.

There is also legal precedent which suggests that a Court could exercise its “equitable discretion” under TILA and allow the borrower to make payments over time as part of meeting the borrower’s tender requirement (essentially reducing the monthly payment over time). See. In re Stuart, 367 B.R. 541, 552 (Bankr.E.D.Pa.2007); Shepeard v. Quality Sliding & Window Factory, Inc., 730 F.Supp. 1295 (D.Del.1990) (allowing borrower to satisfy tender obligation by making monthly payments); Mayfield v. Vanguard Sav. & Loan Ass'n, 710 F.Supp. 143, 149 (E.D.Pa.1989) (allowing borrower to satisfy tender obligation by making monthly payment).

Also note, SOMETIMES (THIS IS PULLED OFF ONE LOAN) the Notice of Right to Cancel Form given to the borrower states:

“If you cancel the transaction, the mortgage/lien/security interest is also canceled. Within 20 CALENDAR DAYS after we receive your notice, we must take the steps necessary to reflect the fact that the mortgage/lien/security interest on your home has been cancelled, and we must return to you any money or property you have given us or to anyone else in connection with this transaction.

You may keep any money or property we have given you until we have done the things mentioned above, but you must then offer to return the money or property. If it is impractical or unfair for you to return the property, you must offer its reasonable value. You may offer to return the property at your home or at the location of the property. Money must be returned to the address below. If we do not take possession of the money or property within 20 CALENDAR DAYS of your offer, you may keep it without further obligation.”

This SEEMS TO BE a legal assertion, in the form of an admission, that the security interest is automatically void upon the consumer’s exercise of rescission. Upon the consumers act of “cancelling the transaction” the “mortgage/lien/security interest is also cancelled.” A creditor should not be permitted to renege on this assertion (estoppels applies) and the lender is bound by law to honor it.

II. STEP TWO

Within 20 calendar days after receipt of a notice of rescission, the creditor shall return any money or property that has been given to anyone in connection with the transaction and shall take any action necessary to reflect the termination of the security interest.

Note: THE LENDER /SERVICER WILL NOT WANT TO DO THIS SO DON’T COUNT IT. In most cases, they would rather face a judge and see if you can prove your ability to tender.

III. STEP THREE

If the creditor has delivered any money or property, the consumer may retain possession until the creditor has met its obligation under paragraph (d)(2) of this section. When the creditor has complied with that paragraph, the consumer shall tender the money or property to the creditor or, where the latter would be impracticable or inequitable, tender its reasonable value. At the consumer's option, tender of property may be made at the location of the property or at the consumer's residence. Tender of money must be made at the creditor's designated place of business. If the creditor does not take possession of the money or property within 20 calendar days after the consumer's tender, the consumer may keep it without further obligation.

Again, the Court may alter only steps two and step three per the Federal Reserve Board’s commentary set forth above. Such FRB opinion should be seen as persuasive legal authority.

THE OTHER NICE THING ABOUT A TRUTH IN LENDING RESCISSION CLAIM IS THAT IT IS APPLICABLE AGAINST ANY AND ALL LOAN ASSIGNEES WITHOUT FEAR OF A HOLDER IN DUE COURSE ARGUMENT.

ASSIGNEE LIABILTY FOR RESCSSION

While assignees are only liable for TILA “statutory damages” that are “apparent on the face of the loan documents” assignees are subject to the rescission right to the same extent as the original creditor.

15 U.S.C. §1641(c) states:

Right of rescission by consumer unaffected

Any consumer who has the right to rescind a transaction under section 1635 of this title may rescind the transaction as against any assignee of the obligation.

See also the case of Ocwen Fed. Bank v. Russell, 53 P.3d 312 (Haw Ct. App. 2002) which rejected the assignees holder in due course argument as being no defense to rescission. As other courts have held: “without such protection for the consumer the right of rescission would provide little or no effective remedy.” See Stone v. Mehlberg, 728 F. Supp. 1341, 1348, (W.D. Mich 1989). A loan servicer is deemed an assignee if it “is or was the holder of the obligation.” See 15 U.S.C. §1641(f)(1). Please see our request to identify the holder of the loan obligation or master loan servicer below.

As a final note, in regard to reviewing whether any additional damages may be levied against an assignee of a loan, in the Meyer case cited above the Court held:

“TILA Section 1641 addresses the circumstances under which an assignee may be liable for violations committed by the prior holder. For loans-such as this one-which are secured by real estate, the statute provides as follows:

Liability of assignee for consumer credit transactions secured by real property

Except as otherwise specifically provided in this subchapter, any civil action against a creditor for a violation of this subchapter, and any proceeding under section 1607 of this title against a creditor, with respect to a consumer credit transaction secured by real property may be maintained against any assignee of such creditor only if -

(A) the violation for which such action or proceeding is brought is apparent on the face of the disclosure statement provided in connection with such transaction pursuant to this subchapter; and the assignment to the assignee was voluntary.

For the purpose of this section, a violation is apparent on the face of the disclosure statement if the disclosure can be determined to be incomplete or inaccurate by a comparison among the disclosure statement, any itemization of the amount financed, the note, or any other disclosure of disbursement....”

We hereby reserve our rights and will seek to hold any assignees liable for any other violations uncovered following discovery.

Also note there is case law that dictates an injunction against foreclosure is also permitted even in the absence of a tender ability at the outset of the litigation. “Rescission premised upon tender is not mandatory but an option within the equitable powers of the court.” Avila v. Stearns Lending, 2008 WL 1378231 (C.D. Cal April 7, 2008).

Also note, the Courts have recognized the right to seek an injunction against foreclosure where this right (rescission) is ignored by the lender or assignee. See Horton v. California Credit Corp., 2009 WL 700223 (S.D.Cal.) 2009. Note, that the 9^th Circuit Court did not require an initial “tender” obligation from the borrower in granting the injunction where missing dates on the TILA notice of right to cancel were found.

CONCLUSION

If you have a refinance loan within the last three years (meaning it has not been more than three years since your last refinance, you may want to look at your previous loan file and determine whether or not you have a right to rescind the loan. In some cases, you will need to perform a mortgage loan audit to detect under-disclosure of APR and finance charges and other material disclosure violations. In other cases, look at your notice of right to cancel documents and see if you got two completed copies of the notice of right to cancel document (for each borrower or person with ownership interest in the property) and see if the rescission dates are filled in and otherwise accurate. If not, you may have an extended three year right to rescind your loan, and if so, you need to send in a rescission letter to protect your rights. If the lender refuses to acknowledge your legal rights under Truth in Lending Law (TILA) you may have grounds to file for an injunction to halt any slated foreclosures. In many cases, you will need to show some ability to tender back to the lender, the amounts which you would owe them (your loan balance) minus the amounts they owe you pursuant to their TILA tender obligation.

This area of the law can be tricky, so you may want to meet with an Attorney to discuss your case. In California, no attorney or other persona may accept advance fees for loan modifications pursuant to SB 94.

TRIAL PLAN FRAUD: WHAT IS IT AND CAN ANYTHING BE DONE LEGALLY TO STOP IT?

Steve Vondran (Law Offices of Steven C. Vondran) — Fri, 30 Oct 2009 17:09:26 -0500

The following is general legal information only and should not be relied upon as legal advice or a substitute for legal advice. For specific advice, contact an attorney. Steve Vondran, Esq. is a Real Estate Attorney licensed to practice law in Arizona (serving greater Phoenix) and California (Serving most areas of California). He currently practices foreclosure defense and predatory lending law. He can be emailed with comments at steve@vondranlaw.com

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Introduction: Many of the major lenders have been implementing President Obama’s Making Home Affordable Loan Modification Program (HAMP). The details of the program provide that lenders who believe that California and Arizona homeowners (these are the two states I am licensed to practice law in but the program applies in other states as well) qualify for loan modification programs should provide the homeowner with a three month “trial plan” modification program.

The lenders have been rolling out HAMP and have been sending homeowners these three month trial plan agreements.

For the purposes of this article I will refer to these agreements as “contracts” for the simple reason that they look like contracts (they have terms and conditions like a contract and signature blocks for both parties). The homeowner typically performs as if they are adhering in good faith to the terms of the contract, and the lender is accepting payments on the stated understanding that of the homeowner makes the three required payments set forth in the “contract” that the “lender” (see our produce the note articles) will provide the homeowner the badly needed loan modification that the lender has agreed to give if all payments are made under the trial plan, and assuming no material representations of the homeowner have changed.

Everything sounds groovy so far. The lenders appear to be working out loan modifications and saving neighborhoods from financial disaster, and the bailout money appears to be put to a worthwhile use.

What might/could happen next is interesting, yet disturbing at the same time:

The borrower typically makes all of their three scheduled trial plan payments on time
The borrower also submits all of the requested financial documentation in complying with the terms of the contract
After the third and supposedly final payment is made, we are learning some homeowners are told that either (a) they do not qualify for the loan modification (b) there are missing documents and more must be submitted before a “final decision” can be reached, and or (c) they get a whole new trial plan offer as if the homeowner is supposed to start all over again.
Another variation is getting the final loan mod and being asked to submit all the final documentation on the very next day (which is literally impossible to do, but which raises a “mailbox rule” issue for contract lawyers).

Bottom line, the promised final mod seems to be getting stuck in the loan modification pipeline. Is this being intentionally done? Are the lenders simply overloaded? Are they playing games with homeowners so they can simply “suck” more payments out of California and Arizona homeowners who may not be making their mortgage payments in the hopes of a loan modification (some people are told you will not be considered for a loan modification unless you are late on your payments – there is some truth to that but “imminent threat of being late” on the mortgage is supposed to be considered as well).

So we are left with a bunch of homeowners scratching their heads as to what is happening with the federal bailout money and communities that seek rising foreclosure stripping away their equity asking the same questions. Are the lenders engaged in fraud? Is this a bad faith breach of contract? Are the lenders required to follow-through with the loan modification when the borrower complies with the terms of the modification trial plan agreement?

LET’S DISCUSS SOME BASIC LEGAL INFORMATION AND ATTACKS THAT MAY BE USED TO FORCE THE LENDER TO COMPLY WITH THE AGREEMENTS (SPECIFIC PERFORMANCE OF THE CONTRACT).

(1) Fraud / Negligent Misrepresentation

Generally speaking, the elements of fraud are: (1) misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity; (3) intent to defraud, i.e., to induce reliance; (4) justifiable reliance; and (5) resulting damages. Lazar v. Superior Court, 12 Cal. 4th 631, 638, 49 Cal. Rptr. 2d 377 (1996).

The elements of negligent misrepresentation are similar to intentional fraud except for knowledge that the representation is false. Charnay v. Cobert, 145 Cal. App. 4th 170, 184-85, 51 Cal. Rptr. 3d 471, 482 (2006). In a claim for negligent misrepresentation, the elements are: (1) the misrepresentation of a past or existing material fact; (2) without reasonable ground for believing it to be true; (3) with intent to induce another’s reliance on the fact misrepresented; (4) justifiable reliance on the misrepresentation; and (5) resulting damages. Id.; see also Alliance Mortgage Co. v. Rothwell, 10 Cal. 4th 1226, 1239, fn. 4, 44 Cal. Rptr. 2d 352 (1995) (negligent misrepresentation is a species of the tort of deceit and like fraud, requires a misrepresentation, justifiable reliance, and damages).

In the loan modification trial plan offer setting the lender purports (depending upon the language of the trial plan offer – each document must be reviewed to make an accurate determination), the lender is acting as if the borrower applies for a loan modification. If the lender / loan servicer have absolutely no intent to provide a loan modification at all, (legal discovery would be required in most cases to try to prove this) then it would appear the lender is doing nothing more than to try to obtain additional loan payments from the borrower, and to ultimately “time release” the foreclosure of the property onto the marketplace.

These are items that may be tough to prove, but as some of the article on our website indicate, lenders are aware that not all loan modification trial plans will result in a successful loan modification. Where the lender/servicer has absolutely no intent to provide a modification, the trial plan offer may be fraudulent, and as discussed below, violate the duty of good faith and fair dealing implied in every contract.

Again, however, the lenders/servicers will probably try to argue that the trial plan agreement is not really a contract at all, but rather an offer to negotiate or some type of preliminary negotiation. Again, you are well advised to have an attorney review your trial plan agreement.

(2) Fraudulent Inducement

This is a claim which is like a hybrid claim of breach of contract and tort. The essence of the claim is that the defendant fraudulently induced a party to enter into a contract.

This cause of action generally requires knowing and intentional false statements of material fact (a material factual omission may not be sufficient but should be explored) which reasonably induce a homeowner to rely on the statements, and which false statements were relied upon to their detriment.

Where this action lies, the Courts may allow specific performance of the contract as a remedy and where fraud is clearly shown, punitive damages may be available.

(3) Breach of Covenant of Good Faith and Fair Dealing

Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.” Carma Developers, Inc. v. Marathon Dev. Cal., Inc., 2 Cal.4th 342, 371, 6 Cal.Rptr.2d 467, 826 P.2d 710 (1992) (quoting Restatement (Second) of Contracts § 205). “The covenant of good faith finds particular application in situations where one party is invested with a discretionary power affecting the rights of another. Such power must be exercised in good faith. See Marsu, B.V. v. Walt Disney Co., 185 F.3d 932, C.A.9 (Cal.),1999.

The Cause of action for tortious breach of implied covenant of good faith and fair dealing exists if special relationship between parties is characterized by elements of public interest, adhesion, and fiduciary responsibility. Kittredge Sports Co. v. Superior Court, 213 Cal.App.3d 1045, 261 Cal.Rptr. 857

The duty of good faith and fair dealing arises from every contract as an implied covenant generating both a contractual obligation and a duty in tort. Hess v. Transamerica Occidental Life Ins. Co., 235 Cal.Rptr. 715. The Implied covenant of good faith and fair dealing is an equitable doctrine which may validate otherwise unenforceable agreements. It is a doctrine of equity that the courts may use to achieve a just result when a contract (ex. The loan modification trial plan agreement) is unclear regarding a party's obligations and the doctrine can then allow the court to enforce what might otherwise be deemed an unenforceable agreement.

The implied promise requires each contracting party to refrain from doing anything to injure the right of the other to receive the benefits of the agreement Egan v. Mutual of Omaha Ins. Co., supra, 24 Cal.3d at p. 818, 169 Cal.Rptr. 691, 620 P.2d 141.

A “breach of a specific provision of the contract is not a necessary prerequisite” to a breach of an implied covenant of good faith and fair dealing. Carma Developers, Inc. v. Marathon Dev. Cal., Inc., 2 Cal.4th 342, 371, 6 Cal.Rptr.2d 467, 826 P.2d 710 (1992) “[T]he covenant is implied to prevent a contracting party from engaging in conduct which (while not technically transgressing the express covenant) frustrates the other party's rights of the benefits of the contract.” See Los Angeles Equestrian Ctr., Inc. v. City of Lose Angeles, 17 Cal.App.4^th, 434, 447, 21 Cal.Rptr.2d 313 (1993).

As a general principle, there can be no breach of the implied promise or covenant of good faith and fair dealing where the contract expressly permits the actions being challenged, and the defendant acts in accordance with the express terms of the contract. See Clark v. America's Favorite Chicken Co., 110 F.3d 295 (5th Cir. 1997) (applying Louisiana law)

This is so even where the contractual provision at issue is one that purports to grant to the defendant absolute discretion to take certain actions or engage in certain conduct under the contract; such a provision, stated simply, permits the defendant substantial latitude, and as long as the discretion is exercised as permitted under the contract, and without evident bad faith motive or malice, its exercise cannot be a breach of the more general implied promise of good faith and fair dealing. See Clark v. America's Favorite Chicken Co., 110 F.3d 295 (5th Cir. 1997).

Yet, even where a defendant is given absolute discretion, it must exercise that discretion in good faith. See Travellers Intern., A.G. v. Trans World Airlines, Inc., 41 F.3d 1570 (2d Cir. 1994) . Thus, a party who "evades the spirit of the contract,” willfully renders imperfect performance, or interferes with performance by the other party, may be liable for breach of the implied covenant of good faith and fair dealing. See Paul v. Howard University, 754 A.2d 297, 145 Ed. Law Rep. 702 (D.C. 2000).

Some courts have focused on the reasonable expectations of the parties, (See Savers Federal Sav. and Loan Ass'n v. Home Federal Sav. and Loan Ass'n, 721 F. Supp. 940, 945 (W.D. Tenn. 1989) while others have focused on whether the action taken by the breaching party was arbitrary and capricious. See Coles Dept. Store v. First Bank (N.A.)--Billings, 240 Mont. 226, 783 P.2d 932, 936, 11 U.C.C. Rep. Serv. 2d 1074 (1989).

In determining whether a party has breached the obligation or covenant of good faith and fair dealing, a court must examine not only the express language of the parties' contract, but also any course of performance or course of dealing that may exist between the parties. See Sanpete Water Conservancy Dist. v. Carbon Water Conservancy Dist., 226 F.3d 1170 (10th Cir. 2000) (applying Utah law). Note: The court may be unwilling to imply any duty that the parties could not reasonably expect from the terms of their contract). Hejmadi v. Amfac, Inc., 202 Cal. App. 3d 525, 547-549, 249 Cal. Rptr. 5, (1st Dist. 1988).

Generally speaking, a Breach of the covenant is a breach of contract. Tort recovery for breach of the covenant of good faith and fair dealing is available only in limited circumstances, generally involving a special relationship between the contracting parties, such as the relationship between an insured and its insurer.

Potential Damages: In general, contract damages are available (not including pain and suffering or emotional damages) but the “benefit of the bargain” damages (consequential damages and perhaps specific performance of the contract – forcing the other party to provide the loan modification as agreed in the trial plan modification offer). See Pasadena Live, LLC v. City of Pasadena, 114 Cal. App. 4th 1089, 8 Cal. Rptr. 3d 233 (2d Dist. 2004), reh'g denied, (Feb. 4, 2004).

(4) Violation of California Civil Code Section 17200

California's unfair competition law (Business and Professions Code Section 17200 et seq.) defines “unfair competition” to mean and include “any unlawful, unfair or fraudulent business act or practice.” See Kasky v. Nike, Inc., 27 Cal. 4th 939, 949, 119 Cal. Rptr. 2d 296 (2002). By defining unfair competition to include any unlawful business act or practice, “the UCL permits violations of other laws to be treated as unfair competition that is independently actionable.” In essence, an action based on the UCL to redress an unlawful business practice “borrows” violations from other laws and treats these violations, when committed pursuant to business activity, as unlawful practices independently actionable under Section 17200 and subject to the distinct remedies provided there under. See Stop Youth Addiction, Inc. v. Lucky Stores, Inc., 17 Cal. 4th 553, 566-67, 71 Cal. Rptr. 2d 731 (1998).

There is no single definition for the phrase "unfair business practices." It is an evolving concept reflecting the ingenuity of unscrupulous business persons in concocting new schemes to gain advantage at someone else's expense. The existence of an unfair business practice is a question of fact determined in light of all the circumstances surrounding a case. See People ex rel. Bill Lockyer v. Fremont Life Ins. Co., 104 Cal.App.4th 508, 128 Cal.Rptr.2d 463, Cal.App. 2 Dist.,2002.

Sperry & Hutchinson, supra, 405 U.S. 233, 92 S.Ct. 898, 31 L.Ed.2d 170, describes the test for fairness as one developed by the Federal Trade Commission to determine “whether a practice that is neither in violation of the antitrust laws nor deceptive is nonetheless unfair.” The test as stated by the court is as follows: “ ‘(1) whether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise-whether, in other words, it is within at least the penumbra of some common-law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers (or competitors or other businessmen).’

It is not necessary that all three components of this standard be satisfied; a practice may be unfair because of the degree to which it meets one of these criteria, or because to a lesser extent it meets all three. Expert testimony may be used to prove that business conduct is unfair. The court must determine on a case-by-case basis whether the alleged conduct is unethical, oppressive, or unscrupulous, or whether it was an appropriate exercise of good business judgment. This is a balancing test, whereby the fact finder weighs the utility of the offending party's conduct against the gravity of harm to the injured party or the public at large.

(5) Violation of California Consumer Legal remedies Act (Cal Civ. Code Section 1770 et seq.)

California's Consumers Legal Remedies Act (CLRA) establishes a nonexclusive statutory remedy for unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or which results in the SALE OR LEASE OF GOODS OR SERVICES to any consumer. See Gonzalez v. Proctor and Gamble Co., S.D.Cal.2007, 247 F.R.D. 616.

Purpose of California Consumers Legal Remedies Act (CLRA) is to attempt to alleviate social and economic problems stemming from deceptive business practices. See America Online, Inc. v. Superior Court (App. 1 Dist. 2001) 108 Cal.Rptr.2d 699.

I. Loan transactions are “goods or services” under the Act.

California Civil Code section 1754 provides that the CLRA "shall not apply to any transaction which provides for the construction, sale, or construction and sale of an entire residence or ... for the sale of a lot or parcel of real property, including any site preparation incidental to such sale." However, this provision bars application of the CLRA only to transactions for the sale or construction of real property; it does not also exclude financial services related to such transactions.

Cases in support of this proposition include:

Jefferson v. Chase Home Finance LLC, No. C06-6510, 2007 WL 1302984 (N.D.Cal. May 3, 2007) (concluding that the loan transactions between a mortgage finance company and the plaintiff involved "more than the provision of a loan; they also include the financial services of managing the loan.")
Knox v. Ameriquest Mortgage Co., No. C05-00240, 2005 WL 1910927 (N.D.Cal. Aug. 10, 2005) (finding that, in the context of predatory lending allegations and after a review of the case law, "California courts generally find financial transactions to be subject to the CLRA.");
In re Ameriquest Mortgage Co., No 05-CV-7097, 2007 WL 1202544, (N.D.Ill. Apr. 23, 2007) (stating, in dicta, that "it is not inconceivable that Plaintiffs could prove the existence of tangential 'services' associated with their residential mortgages and establish that these transactions were covered by the CLRA.").
In an unreported decision (Jefferson v. Chase Home Finance, LLC - 2007 WL 1302984, N.D.Cal., 2007.) the Court stated:

"the arranging of the loan, including but not limited to its origination, processing, documentation, wire-transmittal and underwriting constitutes 'services' within the meaning of subsection(b) of § 1761 of the CLRA......Plaintiffs did not seek just a loan; they sought defendants' services in developing an acceptable refinancing plan by which they could remain in possession of their home. Thus, unlike the Berry case cited above......the present case involves more than the mere extension of a credit line. Instead, the circumstances here deal not just with the mortgage loan itself, but also with the services involved in developing, securing and maintaining plaintiffs' loan.....in fact, in an effort to create an appropriate refinancing package, plaintiffs met with defendants' agent three times before finally agreeing on a payment plan that plaintiffs and defendants found acceptable.”

II. Prohibited Acts

Section 1770 prohibits, (among other things), the following:

Knowingly misrepresenting the character, uses and benefits of its products and services; Knowingly misrepresenting the standard and quality of products and services; Advertising goods or services with intent not to sell them as advertised; Misrepresenting that the consumer will receive.....an economic benefit if the earning of the benefit is contingent on an event to occur subsequent to the consummation of the transaction and, inserting an unconscionable provision in the contract (the Court will look to California Civil Code section 1670.5 in making the unconscionability determination).

CASES ILLUMINATING THE UNCONSCIONABILITY PRINCIPLE INCLUDE THE FOLLOWING:

Civil Code section 1670.5 follows the law developed primarily in the sale of goods, governed by the Uniform Commercial Code, in enabling courts to grant relief from unconscionable contracts or clauses. “The principle is one of the prevention of oppression and unfair surprise.” Whether a contract is unconscionable or not is a question of law for the Court. Shadoan v. World Savings & Loan Assn., 219 Cal.App.3d 97, 268 Cal.Rptr. 207 (1990).

As stated by the court in the seminal case of Williams v. Walker-Thomas Furniture Company (D.C.Cir.1965) 350 F.2d 445, 449, “Unconscionability has generally been recognized to include an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.”

Absence of meaningful choice occurs when a party to a bargain has little choice but to accept the terms stated by the other party. Hidden Terms in an agreement may qualify to show absence of meaningful terms.” See A & M Produce Co. v. FMC Corp. 135 Cal.App.3d 473, 486 (1982).

A contract may be procedurally unconscionable under California law when the party with substantially greater bargaining power presents a take-it-or-leave it contract to a customer, even if the customer has a meaningful choice as to service providers. Shroyer v. New Cingular Wireless Services, Inc., C.A.9 (Cal.)2007, 498 F.3d 976.

Discussion: California and Arizona homeowners (greater phoenix area) who are lead to believe that they qualify for a loan modification given the representations made by and concerning the trial plan modification program, may have a claim to assert for damages. It is not certain you can prove that the lenders loan modification services are covered by the act, but it does appear to be a claim worth investigating at any rate.

III. DAMAGES AVAILABLE

(A) Any consumer who suffers any damage as a result of the use or employment by any person of a method, act, or practice declared to be unlawful by Section 1770 may bring an action against that person to recover or obtain any of the following:

Actual damages, but in no case shall the total award of damages in a class action be less than one thousand dollars ($1,000 minimum).
An order enjoining the methods, acts, or practices.
Restitution of property.
Punitive damages.
Any other relief that the court deems proper.

(B) Any consumer who is a senior citizen or a disabled person, as defined in subdivisions (f) and (g) of Section 1761, as part of an action under subdivision (a), may seek and be awarded, in addition to the remedies specified therein, up to five thousand dollars ($5,000) where the trier of fact does all of the following:

(C) Finds that the consumer has suffered substantial physical, emotional, or economic damage resulting from the defendant's conduct.

NOTE: GENERALLY, WHEN ASSERTING A CLAIM UNDER THE CALIFORNIA LEGAL REMEDIES ACT, A POTENTIAL PLAINTIFF MUST GIVE THE LENDER A 30 DAY RIGHT TO CURE NOTICE THAT GIVES THEM THE OPPORTUNITY TO REMEDY THEIR VIOLATION PRIOR TO FILING A LAWSUIT.

CONSLUSION:

If you were given a trial plan loan modification offer, agreement, or other documents, and you made payments under the trial plan as agreed in the loan mod document, and any material representations that you made pursuant to the agreement DID NOT CHANGE from the time you entered into the contract, to the time your final payment was made; and if the lender or loan servicer refused to follow through with the trial plan, said you don’t qualify for a loan modification, or sold you house from underneath you, you may need to see a real estate, predatory lending, and foreclosure attorney to review whether or not you have a valid legal case to assert for either specific performance of the contract, or potentially money damages, including potentially punitive damages.

There are causes of action that may be applied in the loan modification trial plan context such as fraud, deceit, fraudulent inducement to contract, breach of implied covenant of good faith and fair dealing, and/or violation of the California Legal Remedies Act. Lenders and loan servicers, who were well financed by the federal bailout, should not be preying in California and Arizona homeowners in the greater Phoenix area by trying to “trick” them into making additional loan payments were foreclosure is inevitable given the lender/loan servicer’s mindset as to whether or not you are truly a loan modification candidate.

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Attorney Steve Vondran can be reached at steve@vondranlaw.com or toll free at (877) 276-5084. Information about trial plan fraud can be found at www.TrialPlanFraud.com

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ABOUT US:

The Law Offices of Steve Vondran in licensed to practice law in California and Arizona. Steve Vondran, Esq. is a licensed attorney and real estate broker in California and Arizona.

He can be reached by email at steve@vondranlaw.com or toll free (877) 276-5084

Offices:

Arizona Office (Esplanade): 2415 E. Camelback Road, Suite 700, Phoenix, AZ, 85020.California Office (Fashion Island): 620 Newport Center Drive, Suite 1100, Newport Beach, CA 92660

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Our Real Estate Law Services:

Loan Modifications / Loan Workouts (World Savings and Wachovia Loans
Commercial Lease Modifications
DRE audits, hearings and investigations
Real Estate Broker admissions cases
Foreclosure Defense
Mortgage Law & Predatory Law
Phoenix Real Estate Zoning Attorney – Greater Phoenix (Scottsdale, Goodyear, Buckeye, Casa Grande etc.)
Phoenix Eminent Domain Attorney / Inverse Condemnation / Prop 207 (Greater Phoenix)
Real Estate Arbitration, Litigation and Mediation
Foreclosure Consultant Contracts / Loan Modification Contracts
Real Estate LLC’s & Incorporations
Real Estate Partnership Law
Quiet Title Actions
Forensic Loan Audits – Greater Phoenix (Truth in Lending (TILA), RESPA, HOEPA, Fraud, etc).

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KEYWORDS: ARIZONA FORECLOSURE DEFENSE ATTORNEY / CALIFORNIA FORECLOSURE DEFENSE ATTORNEY / PHOENIX FORECLOSURE DEFENSE ATTORNEY / PHOENIX FORECLOSURE DEFENSE LAWYER / SCOTTSDALE FORECLOSURE DEFENSE ATTORNEY / SCOTTSDALE FORECLOSURE DEFENSE LAWYER / ORANGE COUNTY PREDATORY LENDING LAWYER / ORANGE COUNTY FORECLOSURE DEFENSE ATTORNEY / ORANGE COUNTY FORECLOSURE DEFENSE LAYWER / TRUTH IN LENDING LAWYER / TRUTH IN LENDING ATTORNEY / SOUTHER CALIFORNIA MORTGAGE LAW ATTORNEY / MORTGAGE LAWYER / RIVERSIDE FORECLOSURE ATTORNEY / RIVERSIDE FORECLOSURE LAWYER / RESPA LAWYER / RESPA ATTORNEY / FORECLOSURE DEFENSE LAW / PHOENIX LOAN MODIFICATION ATTORNEY / PHOENIX FORECLOSURE DEFENSE LAWYER / ORANGE COUNTY REAL ESTATE LAWYER / ORANGE COUNTY PREDATORY LENDING AND MORTGAGE LITIGATION ATTORNEY / NEWPORT BEACH FORECLOSURE DEFENSE LAWYER / NEWPORT BEACH FORECLOSURE DEFENSE ATTORNEY / CALIFORNIA FORECLOSURE DEFENSE LAWYER / PREDATORY LENDING LAWYER / LOAN RESCISSION ATTORNEY / TILA RESCISSION LAWYER / WACHOVIA OPTION ARM LOAN / WORLD SAVINGS OPTION ARM LOAN / RESCIND MY LOAN

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HELPFUL FORECLOSURE DEFENSE LINKS:

SUBMIT YOUR FORECLOSURE / LOAN SCENARIO: WWW.LOANMODSOLUTIONS.NET
SUBMIT YOUR LOAN MODIFICATION SCAM SCENARIO: WWW.LOANMODIFICATIONRIPOFF.NET
LITIGATING OPTION ARM LOANS WWW.OPTIONARMLAWYER.COM
CALIFORNIA FORECLOSURE DEFENSE ATTORNEY STEVE VONDRAN WEBSITE: WWW.VONDRANLEGAL.COM
ARIZONA FORECLOSURE DEFENSE ATTORNEY STEVE VONDRAN WEBSITE: WWW.VONDRANLEGAL.COM
STEVE VONDRAN REAL ESTATE WEBSITE WWW.VONDRANLAW.COM
INFORMATION ON TRIAL PLAN FRAUD: WWW.TRIALPLANFRAUD.COM
FORECLOSURE DEFENSE RADIO SHOW: WWW.LOANMODRADIO.COM
INFORMATION ON TRUTH IN LENDING LOAN RESCISSION: WWW.RESCINDMYLOAN.NET
INFORMATION ON PRODUCE THE NOTE: WWW.PRODUCETHENOTEATTRORNEY.COM

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NOTICE:

The foregoing information is general legal information only and shall not be relied upon as legal advice, or a substitution for legal advice. If you have specific legal questions about your foreclosure case, or loan modification case you should seek out the advice of a real estate attorney. In addition, the information posted above may not be 100% complete, accurate or up-to-date. The Law Offices of Steve Vondran is licensed to practice law in the state of Arizona and California and only seeks to solicit and serve Clients in these two states. Steve Vondran, Esq. is a licensed attorney and real estate broker in California and Arizona. He can be reached by email at steve@vondranlaw.com or toll free (877) 276-5084. This is an advertisement and communication pursuant to State Bar Rules. Please do not send us private or confidential information through any of our above-listed websites. Sending us an email does not create an attorney-client relationship (only signing a legal retainer will do this).

SB 94 a "Huge Victory" for California Homeowners - NOT! Our "legal side of loan mods show" (KLAA 830) now called "legal side of foreclosure" show

Steve Vondran (Law Offices of Steven C. Vondran) — Tue, 20 Oct 2009 13:40:26 -0500

WELL FOLKS, WE HAVE BEEN TALKING ON OUR RADIO SHOW FOR SEVERAL WEEKS NOW ABOUT THE SB94 LOAN MODIFICATION LAW. THIS LAW WAS INTRODUCED BY SENATOR CALDERON (BANKING AND FINANCE COMMITTEE) AND WAS DESIGNED TO PREVENT ANYONE (INCLUDING ATTORNEYS AND REAL ESTATE BROKERS) FROM ACCEPTING ANY ADVANCE FEES FROM ANY CALIFORNIA HOMEOWNER FOR LOAN MODIFICATION SERVICES OR LOAN FORBEARANCE SERVICES. WHAT THIS TRANSLATES TO IS THAT ATTORNEYS AND BROKERS CANNOT ACCEPT ANY MONEY IN ADVANCE OF PERFORMING ALL SERVICES THEY CONTRACT FOR (I.E. THEY WILL HAVE A HARD TIME PAYING THEIR OVERHEAD) AND THEREFORE VERY FEW COMPANIES, INCLUDING ATTORNEYS, WILL CONTINUE TO HELP CALIFORNIA HOMEOWNERS WHEN IT COMES TO LOAN MODIFICATION SERVICES. SENATOR CALDERON CALLED THE SIGNING OF THE BILL ON OCTOBER 11, 2009 A "HUGE VICTORY." NOT SURE IF HE MEANT A HUGE VICTORY FOR THE BANKS AND LENDERS OR A VICTORY FOR CALIFORNIA HOMEOWNERS. KEEP IN MIND, A HOMEOWNERS "FREEDOM OF CONTRACT" WAS LITERALLY STRIPPED AWAY LEAVING MANY HOMEOWNERS ON THEIR OWN TO PERFORM THE FOLLOWING LOAN MODIFICATION SERVICES WHICH APPARENTLY THE BANKS WOULD RATHER HAVE YOU DO FOR YOURSELF: (1) Review your loan documents for instances of predatory lending, including finding truth in lending violations that may give you a right to rescind your loan. If you know how to do your own forensic loan analysis, great for you. Lenders and loan investors would prefer you do not raise any legal violations over the loans they either originated, or purchased on the secondary market. (2) Pull a chain of title and send debt validation letters to lenders, investors and loan servicers seeking to foreclose on you (i.e. make them validate that they are owed a debt). (3) Send a demand that the loan servicer identify the holder of the loan (so you can validate the debt and make sure the chain of title is accurate). The failure to comply raises a legal claim. (4) Ensure that California foreclosure laws are followed - 2923.5-2924 et seq. (the failure to comply raises a legal claim) (5) Send a qualified written request to challenge any billing, fee, or accounting disputes (the failure to comply raises a legal claim) (6) Package and submit your financial documents (7) Draft and submit a hardship letter (8) Introduce relevant comparison properties so that the lender can calculate the true loss that will ensue by pursuing foreclosure (net present value test). Also lends itself to 2923.6 arguments. (9) Contact the lender on a weekly or bi-weekly basis to ascertain status on your case (if you do not call with frequency and log your calls, we have found you tend to get lost in the shuffle etc.). Note, homeowners trying to save their homes normally have jobs, and trying to take a 1/2 hour to an hour a week to call your lender while at work may not be a smart move. Also, if you would rather pay someone to avoid this, you have no right to do so. (10) Review and advise on trial plan offers (having seen several different plans, professional advisors are better equipped to tell homeowners what the "contract" means) (11) Re-submit your loan modification package if you are denied These are just some of the steps legitimate and quality lawyers and brokers can provide. However, the state feels you should be well equipped to do this yourself. You do not need to pay anyone to help you. If you cannot do it, then you are advised to call HUD.gov free counselors. Those are your only choices (assuming of course that you cannot find a broker or attorney willing to work for free and hope that you pay them at the end - a risk most are not willing to take based on my conversations with fellow professionals). So there you have it folks, another lost freedom - the freedom to contract as you see fit. As Benjamin Franklin said, those who trade freedom for security will get neither and deserve neither. Since we cannot perform loan modifications and accept advance fees, our show will discuss the legal side of foreclosure. Our office is still accepting World Savings and Wachovia Loans on a 100% contingency fee basis (no advance fees). Other than that, our only other function appears to be limited to filing lawsuits to vindicate predatory lending loans and/or to file for injunctions (assuming these acts are still permitted which we are currently researching). Again people, if you do not stand up for your rights, you will lose them as we have seen. Loan modification fraud has always been illegal and subject to prosecution and we just wish the right to earn a living and provide a legitimate service to some California homeowners who required it would have been protected. Last I checked, the banks were not opening their doors and allowing you to bring in your loan file to your local bank and have them consider you for a loan modification on the spot (heck, the love fees they could even charge a fee which most people would be happy to pay if they could be quickly considered for a modification). Instead, they are put into a 3-12 month pipeline and essentially asked to fend for themselves. A "huge victory" senator Calderon? ____________________________________________________________________________________________________

What is the Produce the Note Defense to Foreclosure? Some basic information learned at Neil Garfield Seminar

Steve Vondran (Law Offices of Steven C. Vondran) — Tue, 20 Oct 2009 12:52:16 -0500

The following is general legal information only and should not be relied upon as legal advice. From the years 2001-2008 most loans originated by so called ìlendersî (who lent none of their own money as can usually be verified by looking at the ìlenderísî financials) were securitized and sold on WALL STREET to investors such as mutual funds, municipal funds, hedge funds, insurance companies and foreign investors.

When Wall Street stepped into the picture during these years, the underwriting standards for most, if not all originating ìlendersî dropped significantly as the originating ìlenderî was more incentivized to produced as many assignable loans (or better yet, Security instruments) as it could in order to feed the Wall Street money-making machine that financially craved as many as these loans as could be produced.
The original ìlendersî rarely lent their own money which can be proved by looking at the originating ìlenderísî balance sheet. In fact, the originating ìlenderî had already contracted to sell the loan to a loan aggregator, investment banker or other entity and was to be paid back for the full loan amount plus typically a 2.5% return on the loan originated (i.e. these ìmiddlemenî in the securities transaction were all paid in full and had no interest in the loan and could not be deemed a ìlenderî but rather a conduit in a single securities transaction). Thus, it is clear the ìoriginating lenderî was doing nothing more than using borrower to issue unregulated negotiable securities (certificates of asset backed securities) on behalf of the Wall Street investors who were the true ìlendersî who funded the loan and who are entitled to any payment that may be due on the loan.
To state it another way, the activities of the originating ìlenderî in creating the negotiable security, along with the coordinated and contracted participation of the middlemen loan aggregators, investment bankers and others, was a SINGLE TRANSACTION that was literally designed to encourage predatory loans to be originated by the ìstraw manî or ìstand-inî originating ìlenderî that resulted in providing and issuing negotiable securities for literally anyone that could fog a mirror. Moreover, the more predatory the loan/security (ex. deceptive teaser rates, obscured negative amortization products, balloon payments, YSP, onerous pre-payment penalties, failure to properly underwrite, bait and switch tactics at the signing table, false assertions of a right to refinance, appraisal fraud, unverified stated income loans, etc.) often the more that was paid - higher yields - to both the originating ìlender,î the securities middlemen, and the ultimate investor-beneficiary.
What this created was a system wherein literally anyone with a pulse and FICO score over 500, was able to obtain a mortgage loan in the form and issue the negotiable security that would be sold on Wall Street. For the originating ìlender,î knowing that Wall Street would fund the loan through its investors, incentivized the originating ìlenderî to cut corners on proper underwriting and instead produce as many assignable notes as possible without regard to the ramifications.
The Securitization system was further set up in such a way as to eliminate the risks caused by predatory lending, defaulting loans, and other risks by insuring and cross-collateralizing thousands of loans in a loan pool. In fact, if foreclosure is pursued, we will show that the above referenced loan has in fact been paid-off in full by insurance proceeds, money from various guarantors, by the investors, and/or by the federal government. If the loan has been paid, there is no right to foreclose or threaten foreclosure.
The promissory notes and deeds of trust were separated making the notes unenforceable. MERS was used to track ownership of loan servicing rights and ownership rights and even pretends, at times, to be the beneficiary of many loans even though they do not collect any loan payments, have no right to collect such, and have no other financial interest other than being paid its ordinary fees for the tracking and registration service. MERS typically fails to record any assignments of the loans in the property County Recorderís office. This was done to avoid the paying of fees, among other reasons.
At the end of the day, in many cases a predatory loan was originated by the ìoriginating lenderî who was financed by the Wall Street investor in an elaborate unregistered security scheme. The loans were sliced and diced into loan pools, and many different investors are known to be the so-called ìowners of the noteî although no one, (including MERS, the originating ìlenderî, the Mortgage Loan Aggregators, Investment Bankers and the final Wall Street Investors) can produce a copy of the original promissory note that proves ownership of the ìloanî obligation and right to collect payments and ultimately foreclose.
If there is no note, and/or no properly recorded assignments of such, there can be no enforceable debt obligations. This is not a new principle, but rather embodies age-old principles and requirements of commercial law such as the Uniform Commercial Coded (U.C.C.).
Failure to provide validation of the debt or proof of ownership of the note/recorded assignments SHOULD MAKE A LENDER, LOAN SERVICER, INVESTOR, AND/OR TRUSTEE THINK TWICE BEFORE attempting, or undertaking any of the following acts ñ WHICH MAY BE WORTH CHALLENGING IN THE PROPER CASE (Note: we believe a proper case normally requires other more firmly established legal rights, such as a federal truth in lending violation raising extended rescission rights, fraud, or some other historically recognized ground for filing a lawsuit, rather than merely asserting a bare ìproduce the noteî defense):

1. No foreclosure should be permitted where the California Foreclosure statutes are not followed. Under California Law (California Civil Code Section 2923-2924 et seq. ñ California Foreclosure Law) the ìbeneficiary or their authorized agentî is required to contact the borrower to assess their financial information and discuss modification options. This statutory section requires, it would seem, the TRUE AND ACTUAL BENEFICIARY (I.E. THE TRUE HOLDER OF THE NOTE) to make contact and certify such contacts with the homeowner/borrower prior to making the required declaration in the Notice of Default. Failure to have the TRUE AND ACTUAL BENEFICIARY, AND/OR THEIR AUTHORIZED AGENT (who shall be required to prove first that they are complying with California Foreclosure law on behalf of the TRUE AND ACTUAL BENEFICIARY) precludes and nullifies any attempted foreclosure, and makes any assertion of such, and filing of the Notice of Default with the California County Recorder, fraudulent.
2. No one other than the TRUE AND ACTUAL BENEFICIARY, OR THEIR DULY AUTHORIZED AGENT SHOULD BE ABLE TO ASSERT PROPER STANDING AND PROVE THAT IT IS A REAL PARTY IN INTEREST IN ANY LEGAL PROCEEDING, INCLUDING RESPONDING TO A TEMPORARY RESTRAINING ORDER (TRO); PRELIMINARY INJUNCTION; BANKRUPTCY; OR EVICTION ACTION. As discussed above, without proof of ownership of the note and all required recorded assignments, any attempt to show up and defend any of the above actions (by the ìpretender lendersî and/or their ìagentsî who cannot prove their right to engage in any of the herein referenced activities) will result in attempting to perpetrate a ìfraud on the courtî and might wind up the subject of a motion for sanctions and other proper judicial relief. Moreover, any attorney/trustee attempting to pursue any of the herein referenced actions on behalf of a beneficiary or their agent, who cannot satisfy and prove ownership, would be well advised to consider all of the legal ramifications.
3. No one other than the TRUE AND ACTUAL BENEFICIARY, OR THEIR DULY AUTHORIZED AGENT SHOULD BE ABLE TO ASSERT a right to collect Loan payments (including principal and interest), late fees, attorney fees, etc., and may not legally demand or collect such. All funds illegally collected from California Homeowners might be subject to the appointment of a receiver or the imposition of a constructive trust in a lawsuit demanding a full refund along with damages and attorney fees.

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NOTES: These are just a few basic ideas to consider in regard to debt validation and produce the note theories. Again, it would seem the case might be better if you have a traditional and historically recognized legal theory (aside from commercial code) to bring and to basically try to bend the judges ear on the PRODUCE THE NOTE STRATEGY, as a side issue, rather than the focal point of the lawsuit. Judges may be reluctant to having their courts used as a grounds for testing somewhat novel legal theories where some might see it as an attempt to ìget your home for free when you are in default of the loan documents.î If granted, this may also lead to ìfloodgate litigation.î

As referenced, above, many loan servicers try to keep it secret who the real ìlenderî or ìbeneficiaryî of a loan is. I suppose the securitization process demands secrecy in debt collection to make it work. Of course, this seems counter-intuitive that a person is not entitled to know who their debt is actually owed to. Steve Vondran can be reached at steve@vondranlaw.com or (877) 276-5084.

Are you being charged with a loan modification scam, under DRE investigation, or facing a criminal charge in regard to loan modification activities?

Steve Vondran (Law Offices of Steven C. Vondran) — Wed, 14 Oct 2009 12:27:02 -0500

This blog is to announce a joint venture between the Law Offices of Steven C. Vondran and the Law Office of Daryl Thompson. As many of you who have been reading my blogs probably realize, there was/is an epidemic of loan modification scam and ripoff cases affecting California Homeowners. The California State bar has been inundated by over 1,000 complaints of loan modifications scams and ripoffs per month. In addition, the California Department of Real Estate (DRE) has also experienced the same types of complaints against attorneys, brokers, "attorney-backed" and "attorney based" - law centers and law groups, foreclosure consultants, and others who are engaged in accepting advances fees for loan modifications. The same holds true for the Federal Trade Commission (FTC) and the California Attorney General. These regulators are now out in full force seeking to suspend and revoke real estate and law licenses and in some cases may be seeking to put violators in jail.

Now, our office has stood up for people that we believe were wrongly scammed and victimized by loan modification brokers and attorneys who were literally ripping people off. This will not change. However, one thing we have also noticed is that in this process, there are some people who simply did not qualify for a loan modification and did not therefore receive a loan modification who then complained to the above-mentioned regulatory agencies which in many cases will trigger a investigation and perhaps subsequent investigation, indictment, and/or licensing proceeding. In other words, there are many individuals coming under investigative scrutiny, and while some of these cases are undoubtedly valid, others are likely wrongful forcing the named defendants to justify their activities and otherwise defend themselves.

In some cases, we are hearing that individuals who work for companies deemed to be scam loan modification companies are also being indicted and coming under licensing and other scrutiny. At the end of the day, there is a major "round-up" of companies and individuals facing disciplinary and other legal action in regard to their loan modification activities.

These cases will test many different areas of the law and ethics including:

(1) California Foreclosure Consultant Law

(2) California Laws of Fraud and Deceit

(3) Issues of Breach of Fiduciary Duty

(4) Criminal Law and Criminal Procedure

(5) California Attorney Ethics including fee-splitting, partnership with non-attorneys, runners and cappers, etc.

(6) False Advertising

(7) DRE advance fee agreement rules

(8) Trust Fund Accounting

(9) Search and Seizure

(10) SB 94 (illegal collection of advance fees under the new law which prohibits such)

Thus, the interplay between criminal law and real estate law makes these types of cases challenging to analyze and defend. The join venture between our law firms is designed to help you analyze your case given these multiple legal and ethical issues that must be explored.

If you are being charged with a crime (district attorney of attorney general), or with administrative licensing or disciplinary proceeding (DRE or State Bar) you need legal counsel on your side that can determine what defenses, if any, are available to you. As is typical in any case of this nature, it is often in your best interest not to speak to anyone until you have spoken to your lawyer.

We have provided a website that provides resources involving the regulatory investigations, criminal proceedings, and other resources involving the loan modification fallout at www.ThompsonVondran.com.

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NOTICE:

The foregoing information is general legal information only and shall not be relied upon as legal advice, or a substitution for legal advice. If you have specific legal questions about your foreclosure case, or loan modification case you should seek out the advice of a real estate attorney. In addition, the information posted above may not be 100% complete, accurate or up-to-date. The Law Offices of Steve Vondran is licensed to practice law in the state of Arizona and California and only seeks to solicit and serve Clients in these two states. Steve Vondran, Esq. is a licensed attorney and real estate broker in California and Arizona. He can be reached by email at steve@vondranlaw.com or toll free (877) 276-5084. Daryl Thompson, Esq. is only licensed to practice law in California.

This is an advertisement and communication pursuant to State Bar Rules. Please do not send us private or confidential information through any of our above-listed websites. Sending us an email does not create an attorney-client relationship (only signing a legal retainer will do this). Past indications and references to success in other cases is not indicative of future results and cannot be relied upon as such. Every case, lender, investor, borrower, and property are different.

Offices:

Arizona Office (Esplanade): 2415 E. Camelback Road, Suite 700, Phoenix, AZ, 85020.

California Office (Fashion Island): 620 Newport Center Drive, Suite 1100, Newport Beach, CA 92660

KEYWORDS: DRE DEFENSE LAWYER / DRE DEFENSE ATTORNEY / LOAN MODIFICATION CRIMINAL DEFENSE / FORECLOSURE CONSULTANT DEFENSE LAWYER / STATE BAR INVESTIGATION HEARINGS / DRE LICENSING ISSUES / CALIFORNIA ATTORNEY GENERAL LOAN MODIFICATION / CRIMINAL DEFENSE AND DUE PROCESS / ADVANCE FEE AGREEMENT VIOLATIONS / SB 94 LEGAL VIOLATIONS / DISTRICT ATTORNEY LOAN MOD CHARGES

What is this three month trial plan loan modification? Is the lender or loan servicer required to honor the trial agreement?

Steve Vondran (Law Offices of Steven C. Vondran) — Thu, 08 Oct 2009 00:18:35 -0500

What is “Trial Plan Fraud” in the Context of Loan Modifications?

What we are seeing is that lenders such as Countrywide / Bank of America and Indymac (as well as other lenders) are placing Clients into three month “trial plan” loan modification agreements.

These agreements are designed to lead a borrower to believe that they qualify for a loan modification (normally involving interest rate reduction), at least on some type of preliminary basis, and that if they will just send in three or more payments, then the lender will provide them a loan modification.

While they borrower believes the lender/loan servicer is working in good faith to dole out a badly needed loan modification, the lender (at times anyway) has alternative motivations and/or simply cannot honor their trial plan offers calling into question whether the proposed modification and 3 month trial plan offer was ever intended to be honored at all.

See our website at www.TrialPlanFraud.com which aims:

To expose some of the potentially fraudulent, oppressive, false, and deceptive practices we are seeing and hearing as a California and Phoenix, Arizona loan modification law firm (ex. bait and switch tactics and fraudulent inducement to contract);
To alert California and Arizona homeowners to some of the pros and cons of signing trial plan agreement for a loan modification (ex. do you waive your predatory lending rights or truth in lending rescission rights that may exist in return for a trial plan agreement that has more wiggle room than a hula hoop dance floor);
To inform California and Arizona homeowners of some of the vague and ambiguous trail plan clauses to be on the lookout for when they are contemplating what they are signing;

To provide an outlet to foreclosure defense / predatory lending counsel where California and Phoenix borrowers can obtain legal help that may assist in any of the following areas: (a) properly advise clients before they sign these trial plan offers, (b) to demand that these contracts/trial plans be honored when breached by lender, and/or (c) to file “wrongful foreclosure” lawsuits where the lender refuses to play fair and/or honor its contractual or trial plan arrangements.
To keep California and Arizona owners apprised of any legal rights or recent legal developments that may arise in the context of loan modification three month trial period plans.

Here is an Arizona Case to Get you Started (note: all information provided herein is general legal information only and is not intended to be relied upon as legal advice or a substitute for legal advice - if you have specific legal questions please contact an attorney to discuss). Also, please do not file lawsuits relying on any of the following cases without first consulting legal counsel.

Herring v. Countrywide Home Loans, Inc., 2007 WL 2051394 (not reported):

Intro Note: This was an Arizona District Court Case (federal court):

In this case the borrower went into default on their home loan. The lender, Countrywide, offered a repayment plan if the borrower agreed to send in a payment by a certain date, along with the signed agreement. The borrower signed the agreement and faxed in the payment three days prior to the sale date. Deciding it would do as it pleased, Countrywide foreclosed on the Plaintiff’s property (which apparently was purchased by a bona fide purchaser for value - “BFP”).

The Plaintiff filed a lawsuit for breach of contract and for the tort of “wrongful foreclosure” here are a couple of things the court stated in reaching its decision:

BREACH OF CONTRACT CONTRACT CLAIM

In order to succeed on a claim for breach of contract, the Plaintiff must prove the existence of a contract, its breach by CHL, and resulting damages. Graham v. Asbury, 540 P.2d 656, 657 (Ariz. 1975). A contract is formed when there is manifestation of mutual assent to the exchange and a consideration. Hill-Shaefer partnership v. Chilson Family Trust, 799 P.2d 810, 815 (Ariz. 1990).
The Repayment Plan Agreement indeed states that if the Plaintiff signed and returned it within five days, and the stated sum of $2,978.25 was paid, the Trustee's Sale would be postponed. It is undisputed that the contract was accepted then ratified by the Plaintiff's signature and submitted via fax to CHL. The consideration for the agreement, $2,978.25, was submitted the same day via electronic funds. Despite Plaintiff's clear compliance with her commitment to CHL, the Defendant failed to adhere to its obligation to postpone the Trustee's Sale.

WRONGFUL FORECLOSURE CLAIM

Although this Court is aware that the state of Arizona has yet to recognize the tort of Wrongful Foreclosure, it is also clear that Arizona courts have not refused to recognize it either. Furthermore, other jurisdictions have recognized this tort, and based on the undisputed facts of this matter, the Court finds it appropriate to join those jurisdictions and hold the Defendant liable for wrongfully foreclosing on the Plaintiff's home. See Heritage Creek Development Corp v. Colonial Bank, 601 S.E. 2d 842 (Ga.App.Ct. 2004).
Wrongful Foreclosure is a tort that “exists as a statutory duty .... to exercise fairly and in good faith the power of sale in a deed to secure [a] debt.” A breach of this duty is a tort compensable at law. Boaz v. Latson, 580 S.E.2d 572, 577 (Ga. Ct. of App.2003)
Arizona Revised Statute Section 33-807(A) confers a duty upon the trustee of a trust deed to only sell the property at issue “after a breach or default.” The statutory provision states:

“By virtue of his position, a power of sale is conferred upon the trustee of a trust deed under which the trust property may be sold, in the manner provided in this chapter, after a breach or default in performance of the contract or contracts, for which the trust property is conveyed as security, or a breach or default of the trust deed. At the option of the beneficiary, a trust deed may be foreclosed in the manner provided by law for the foreclosure of mortgages on real property in which event chapter 6 of this title governs the proceedings. The beneficiary or trustee shall constitute the proper and complete party plaintiff in any action to foreclose a deed of trust. The power of sale may be exercised by the trustee without express provision therefor in the trust deed.”

The Plaintiff's well founded arguments focus on the fact that her default was cured when she executed the Repayment Plan Agreement and fully complied with its terms. The Court agrees. Furthermore, on April 15, 2005, the Plaintiff executed a Repayment Plan Agreement and submitted funds to cure her default and postpone the sale. Clearly, the Plaintiff was operating under the belief that the Defendant was also upholding its duty under the agreement.
Had the Defendant acted in compliance with the law, certainly injunctive relief would have been wholly unnecessary.

Bottom Line: In this case, the Defendant induced Plaintiff to send in her payment check and agreement in order to prevent foreclosure. Plaintiff did what a reasonable person would do who wanted to save her home (i.e. she complied with the terms of the repayment plan). This is a similar situation to what we are seeing with Trial Plans under President Obamas Making Home Affordable loan modification program. Plantiff’s are induced to believe that by making the required three payments under the trial plan, and sending in the signed agreement that incidentally has a signature space not only for the borrower, but also for the lender, that the default would be cured and the foreclosure sale date averted. In many cases, it appears the lenders and loan servicers are merely seeking to draw additional payments out of the homeowner while they decide when to “time-release” the property into the foreclosure marketplace. If there was no intent to provide a modification, wouldn’t this be false, deceptive, fraudulent and potentially a breach of contract?

To make a legal assessment of your case, the facts of the case, and the agreement must be reviewed. See also www.TrialPlanFraud.com

For more information or questions, contact Attorney Steve Vondran at (877) 276-5084 or email steve@vondranlaw.com

We are licensed to practice law in California and Arizona only and only seek to solicit clients in these states. This is an advertisement and communication pursuant to state bar rules. No attorney-Client relationship is formed by sending us an email or calling us. Only a signed retainer agreement will suffice for this purpose. Any legal citations provided above may be incomplete or inaccurate.

Our Offices:

Newport Beach: CA: 620 Newport Center Drive, Suite 1100, Newport Beach, CA 92660

(B) Phoenix, Arizona: 2415 E. Camelback Road, Suite 700, Phoenix, Arizona 85016

KEYWORDS: FORECLOSURE DEFENSE / THREE MONTH TRIAL PLAN / 3 MONTH TRIAL PLAN FOR LOAN MODIFICATION / LOAN MODIFICATION ATTORNEY / LOAN MODIFICATION LAWYER / ARIZONA FORECLOSURE DEFENSE / CALIFORNIA FORECLOSURE DEFENSE / PREDATORY LENDING LAWYER / PREDATORY LENDING ATTORNEY / BREACH OF CONTRACT TRIAL PLAN / TRIAL PLAN FRAUD / PHOENIX ARIZONA REAL ESTATE LAWYER / NEWPORT BEACH REAL ESTATE LAWYER / CONTRACT REVIEW FOR TRIAL PLAN / ORANGE COUNTY FORECLOSURE DEFENSE ATTORNEY / ORANGE COUNTY FORECLOSURE DEFENSE LAWYER / NOTICE OF SALE / NOTICE OF DEFAULT / TRUSTEE SALE

California state bar reveals loan mod attorneys / lawyers under investigation......

Steve Vondran (Law Offices of Steven C. Vondran) — Tue, 06 Oct 2009 11:30:06 -0500

While all persons and innocent until proven guilty, if you are using on the following loan modification attorneys in California, you need to contact your lender to make sure they are actually working for you. We are getting calls from people who are not sure if their file is being worked on. Call your lender and ask if your representative has been working on your case. Here is the list of lawyers under California State Bar Investigation:

David Arase, [#233705], Costa Mesa, Arase Law Firm and National Housing Assistance Stephen Burns, [#113371], Los Angeles, Legal Group Network Robert Buscho, [#122556], Fullerton, United Law Group Nicholas Chavarela, [#251632], Santa Ana, Rodis Law Group and America’s Law Group Steven Feldman,[#103676], Mission Viejo, Feldman Law Center Eric Johnson, [#224065], Culver City, Avantgarde Group Paul Lucas, [#163076], Aliso Viejo, Lucas Law Center Brandon Moreno, [#233750], Santa Ana, U.S. Foreclosure Relief Corp. Jeffrey Nemerofsky,[#213014], Laguna Niguel, U.S. Advocacy Law Group and U.S. Financial Products Gregory Paiva, [#207218], Ontario, Law Offices of Gregory Paiva Adrian Pomery, [#249664], Orange, U.S. Foreclosure Relief Corp. Ronald Rodis, [#181873], Newport Beach, Rodis Law Group and America’s Law Group Mark Shoemaker, [#134828], Long Beach, Advocates for Fair Lending Marc Tow, [#78429], Newport Beach, Marc Tow and Associates Michael Yellin, [#255050], Los Angeles, A Fresh Start Loan Modification Sean Rutledge, [#255938], Irvine, United Law Group.

Here is a direct link to the STATE BAR ARTICLE THAT DISCUSSES LOAN MODIFICATION LAWYERS UNDER INVESTIGATION.

http://calbar.ca.gov/state/calbar/calbar_cbj.jsp?sCategoryPath=/Home/Attorney%20Resources/California%20Bar%20Journal/October2009&sCatHtmlPath=cbj/2009-10_TH_03_foreclosure.html&sCatHtmlTitle=Top%20Headlines

IF YOU HAVE BEEN VICTIMIZED BY A LAWYER OR AN ATTORNEY-BACKED OR ATTORNEY-BASED SCHEME, FILE A "FEE ARBITRATION" WITH THE CALIFORNIA STATE BAR.

CALIFORNIA HOMEOWNER SEMINAR - NEWPORT BEACH 2009 - LEARN HOW TO MODIFY YOUR OWN LOANS

Steve Vondran (Law Offices of Steven C. Vondran) — Fri, 18 Sep 2009 13:28:27 -0500

SEMINAR DATE: OCTOBER 24, 2009 - NEWPORT BEACH (ADDRESS TO FOLLOW)

TIME: 8:30 A.M. TO 7:00 PM.

COST: $475 PER PERSON (CALL 877-276-5084 TODAY TO RESERVE YOUR SEATS)

LUNCH: THERE WILL BE A 1 HOUR LUNCH BREAK

INTRODUCTION: CALIFORNIA STATE LEGISLATURE IS TRYING TO PASS A LAW CALLED SB94 THAT, IF PASSED, WOULD PREVENT ATTORNEYS AND MORTGAGE BROKERS FROM ACCEPTING ADVANCE FEES FOR PERFORMING LOAN MODIFICATIONS. IF THAT HAPPENS, CALIFORNIA HOMEOWNERS WILL LARGELY BE RELEGATED TO USING FREE HOUSING COUNSELORS THAT THE LENDERS WOULD LOVE YOU TO USE INSTEAD OF TRAINED AND EXPERIENCED LOAN MODIFICATION ATTORNEYS AND BROKERS. THIS SEMINAR IS DESIGNED TO GIVE YOU THE TOOLS YOU NEED TO HANDLE YOUR OWN LOAN MODIFICATION IN THE EVENT THE LENDER LOBBY PREVAILS IN CALIFORNIA.

THIS IS YOUR CHANCE TO SPEAK WITH SEVERAL PROFESSIONALS IN THE PREDATORY LENDING / FORECLOSURE DEFENSE / LOAN MODIFICATION FIELDS TO DISCUSS YOUR OPTION ARM LOAN, INTEREST-ONLY LOANS, SUBPRIME ARM LOANS AND THE LIKE. CALL TODAY TO RESERVE YOUR SEAT (877) 276-5084. OR VISIT US ON WWW.LOANMODRADIO.COM

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SEMINAR AGENDA

I. THE MATHEMATICS OF MODIFICATION - Mark Heller, Principal - Imperial Home Mortgage (8:30 - 11:30 a.m.)

Bio: Mr. Heller is the owner of Imperial Home Mortgage a Northern California Real Estate Brokerage and licensed loan modification company. He is one of the early entrants into the loan modification field and has been helping hundreds of homeowners navigate the loan modifcation process in California. Mr. Heller also hosts a radio show that aims to educate California homeowners and he is a licensed DRE instructor.

Mr. Heller will be discussing the following topics (time permitting):

Understanding Obama’s Making Home Affordable Plan
Other Modification Programs
Packaging yourself up for loan modification success
The mental side of managing your loan modification
What to do if you are denied a loan modification
Question and Answer Session

LUNCH BREAK - 11:30-12:30 p.m. (NUMEROUS RESTAURANTS IN THE AREA)

II. THE LEGAL SIDE OF LOAN MODS - Steve Vondran, Attorney at Law (12:30-4:00 p.m.)

Bio: Mr. Vondran is an Attorney licensed to practice law in the states of Arizona and California. He also hold real estate broker licenses in both states. Prior to becoming an attorney, Mr. Vondran worked in the mortgage industry as a loan officer. He left the mortgage industry when pitching negative amortization option ARM loans became required practice. Mr. Vondran has helped over 50 companies get properly licensed to perform loan modifications in the state of California and has been performing loan modifications for California homeowners over the past 15 months since the literal inception of the loan modification business.

Mr. Vondran will be discussing the following topics (time permitting):

Understanding the difference between pre-litigation and litigation loan mods
The Qualified Written Request (QWR) - Understanding what they are and how to use them
Securitization of Loans - General Overview
Truth in Lending request to Identify the Holder of the Loan or Master Servicer
Exploring the “Produce the Note” foreclosure defense strategy
Creating leverage for a loan modification where often their is none
Attacking option ARM loans
Forensic Loan Audits (Truth in Lending and RESPA overview)
Requests for Loan Modifications under California Civil Code Section 2923.6
Foreign Language COntracts Act (California Civil Code Section 1623 update)
Exploring alternatives to loan modification (short sale /deed-in-lie / bankruptcy)
The Fair Debt Collection Practices Act (FDCPA)
SB 94, Advance Fees, and the Politics of Loan Modification
Loan Modification Scam Red Flags (Discussing the “Attorney-backed” phenomena)
Foreclosure Defense: Understanding the Temporary Restraining Order (TRO) and Preliminary Injunction process in California
Question and Answer Session

SHORT SALE OVERVIEW - Speaker TBD (4:30 - 5:00 p.m.)

BANKRUPTCY OVERVIEW - Speaker TBD (5:00-5:30 p.m.)

V. QUESTION AND ANSWER WITH PANEL GUESTS (5:30-7:00 p.m.)

Note: Short 15 Minute Breaks will also be provided during each section.

SIGN UP NOW TO RESERVE YOUR SEATS FOR THIS EXCITING INFORMATION SEMINAR. IF SB94 PASSES, MANY HOMEOWNERS WILL BE FORCED TO FIGHT FOR THEIR OWN LOAN MODIFICATIONS. GET THE TIPS, TRICKS, TACTICS, AND STRATEGIES YOU NEED NOW TO BEST PRESENT YOUR CASE FOR LOAN MODIFICATION AND/OR PREPARE FOR FORECLOSURE DEFENSE LITIGATION WHEN THE LENDER REFUSES TO MODIFY.

CALL TODAT TO RESERVE YOUR SEATS (877) 276-5084 OR VISIT US ON WWW.LOANMODRADIO.COM / SEMINAR.

NOTE: WE RESERVE THE RIGHT TO CANCEL THE SEMINAR IF A MINIMUM NUMBER OF ATTENDEES IS NOT REACHED. IN THIS EVENT, WE WILL NOTIFY YOU BY EMAIL AND WILL PROVIDE A REFUND TO YOUR CREDIT CARD WITHIN 3 DAYS. SEMINAR DATE AND TOPICS ARE SUBJECT TO CHANGE WITHOUT NOTICE.

THIS IS AN ADVERTISEMENT AND COMMUNICATION PURSUANT TO STATE BAR RULES.

Produce the Note - Should Foreclosing Parties be required to prove their status under CA foreclosure laws?

Steve Vondran (Law Offices of Steven C. Vondran) — Wed, 16 Sep 2009 20:16:15 -0500

The following is California Foreclosure Statute. I have made some comments of a general nature in italics below certain sections. These note are not to be relied on as legal advice, but merely provide food for thought on the "produce the note" strategy that we have been hearing about, and some possible ways to raise these claims in a Court of Law. I recently attended a California State Bar Approved course on the Securitization of Note and the Produce the Note Strategy. My comments present just my own personal opinions and thoughts on the matter. For specific legal advice, especially a pre-requisite before filing any lawsuit, consult a qualified foreclosure defense attorney or predatory lending lawyer to discuss. The comments below may not be accurate, valid, or complete.

CIVIL CODE
SECTION 2920-2944.5

2920. (a) A mortgage is a contract by which specific property,
including an estate for years in real property, is hypothecated for
the performance of an act, without the necessity of a change of
possession.
(b) For purposes of Sections 2924 to 2924h, inclusive, "mortgage"
also means any security device or instrument, other than a deed of
trust, that confers a power of sale affecting real property or an
estate for years therein, to be exercised after breach of the
obligation so secured, including a real property sales contract, as
defined in Section 2985, which contains such a provision.

Note: This Section indicates there must be a "breach of the obligation" before foreclosure is proper. Where a lender cannot prove there was a breach of the obligation OWED TO THEM, then a foreclosure by that party or its agents should not be permitted. Therefore, a foreclosing party should be forced to prove (a) that there was an obligation owed to them (i.e. show us the original promissory note) and (b) that there was a breach of the note (ex. non-payment of scheduled payments and proper accounting of all payments received). If we send a qualified written request under RESPA Section 6 to produce a copy of the note properly endorsed, assigned and recorded, and the lender fails to comply (i.e. they cannot show possession of the note), how are we to know for sure that the obligation is owed to them, and not some other entity that claims an interest in the note?

2921. A mortgage may be created upon property held adversely to the
mortgagor.

2922. A mortgage can be created, renewed, or extended, only by
writing, executed with the formalities required in the case of a
grant of real property.

2923. The lien of a mortgage is special, unless otherwise expressly
agreed, and is independent of possession.

2923.5. (a) (1) A mortgagee, trustee, beneficiary, or authorized
agent may not file a notice of default pursuant to Section 2924 until
30 days after contact is made as required by paragraph (2) or 30
days after satisfying the due diligence requirements as described in
subdivision (g).

Note: It seems that this section of the code would require that only the TRUE beneficiary of the Loan, and/or the TRUE Trustee of the loan (or other proper agent) be permitted to execute a file a notice of default and thus initiate the foreclosure action. In order to be able to file the NOD, and start the foreclosure clock running, the Beneficiary should be required, if requested, to prove that they hold the obligation and the note that entitles them to payment. In other words, they should be required to prove that they are in lawful possession of the promissory note (just like if you were suing someone in small claims court for not paying you on a IOU, you would certainly want to produce the IOU (show possession of) as proof of the debt owed. Unlike an IOU, in real property transactions, all interests in real estate (including the promissory note and deed of trust, are required to be in writing under the statute of frauds). 

(2) A mortgagee, beneficiary, or authorized agent shall contact
the borrower in person or by telephone in order to assess the
borrower's financial situation and explore options for the borrower
to avoid foreclosure. During the initial contact, the mortgagee,
beneficiary, or authorized agent shall advise the borrower that he or
she has the right to request a subsequent meeting and, if requested,
the mortgagee, beneficiary, or authorized agent shall schedule the
meeting to occur within 14 days. The assessment of the borrower's
financial situation and discussion of options may occur during the
first contact, or at the subsequent meeting scheduled for that
purpose. In either case, the borrower shall be provided the toll-free
telephone number made available by the United States Department of
Housing and Urban Development (HUD) to find a HUD-certified housing
counseling agency. Any meeting may occur telephonically.

Note: Again, this seems to require the REAL and TRUE "Mortgagee, Beneficiary, or Authorized Agent" to contact the borrower and discuss loan modification options. This begs the question,who is the TRUE beneficiary of the loan? First, what is a "beneficiary." According to caselaw, the beneficiary must be the person entitled to performance of the promised activity, usually repayment under a note. See Watkins v. Bryant (1891) 91 C 492, 27P.775. It seems you would only be entitled to repayment if you can show possession of the promissory note that entitles you to such. Otherwise, what's to say that your next door neighbor cannot make a claim for repayment of your note and call themselves the beneficiary of your note? Again, if someone is the beneficiary of the obligation, shouldn't there be a legal requirement to prove it? And if the "agent of the beneficiary" is contacting your (i.e. a loan servicer) shouldn't they be required to prove both their agency status, and the fact that they are working on behalf of the TRUE beneficiary entitled to repayment? If there is no promissory note in proper possession of a party seeking to enforce an obligation (i.e. to foreclose), and which TRUE beneficiary has the obligation to contact a defaulting lender under California law, but where this is not being properly performed by a TRUE beneficiary or their agent, doesn't there seem to be some defects in the threatened foreclosure?

(b) A notice of default filed pursuant to Section 2924 shall
include a declaration from the mortgagee, beneficiary, or authorized
agent that it has contacted the borrower, tried with due diligence to
contact the borrower as required by this section, or the borrower
has surrendered the property to the mortgagee, trustee, beneficiary,
or authorized agent.

NOTE: Again, if the TRUE and ACTUAL beneficiary (the one in lawful possession of the promissory note) is not the one contacting the defaulting borrower to assess their finances and discuss loan modification solutions) is not the party making the declaration in the Notice of Default, doesn't this also cast defects on the foreclosure process being sought against the borrower?

(c) If a mortgagee, trustee, beneficiary, or authorized agent had
already filed the notice of default prior to the enactment of this
section and did not subsequently file a notice of rescission, then
the mortgagee, trustee, beneficiary, or authorized agent shall, as
part of the notice of sale filed pursuant to Section 2924f, include a
declaration that either:

Note: I think you are getting the idea. We need proper parties doing taking the required action under the California Foreclosure Statutes. Why should the proper documentation not be available especially from sophisticated financial entities and investors who should know the need to comply with formal requirements that are needed to protect their investment? Should a homeowner not be permitted to challenge these sophisticated financial persons to ensure they are the proper parties to initiate the threatened foreclosure? Does a court exceed it powers if it requires such documentation, when a legal challenge is made to protect ones home from foreclosure in an action seeking an injunction? When something as serious as someones home is on the line is it too much to require proper documentation?

CONCLUSION: The point here is that it seems that the California State Legislature, in enacting the California Foreclosure sections set forth above, requires that the TRUE AND PROPER PARTIES (i.e. the mortgagee, beneficiary, or trustee, or their properly authorized agents), should be the parties that are required to engage in the required foreclosure process and procedures such as contacting the borrower, assessing their financial situations, discussing loan modification options, filing notice of defaults with the required declarations, filing the notice of sale, and ultimately conducting and carrying our foreclosure sales. If a California Homeowner wishes to challenge (through the filing of a temporary restraining order, or seeking a preliminary injunction to halt foreclosure) whether or not these entities are the proper entities and the TRUE parties permitted to actually foreclose - especially where the loan servicer ignores or fails to comply with a RESPA Qualified Written Request which sought to establish the identity of the true beneficiary - shouldn't the Courts entertain the Borrower's final stand to save their property from foreclosure and require that the foreclosing entity prove that they are the real beneficiary, real trustee, or agent of the real party? To fail to require this would be akin to allowing a neighbor to foreclose on his neighbors property by presenting false claims of default, false county recording filings, false attempts at modification, etc. As the financial entities were in the best position to safeguard their financial instruments and investments and to ensure their claims are enforceable, is it too much to make them prove, under the California Foreclosure laws, that they are the Real Party entitled to Act? Isn't that what our legislators contemplated when they passed the above referenced foreclosure sections?

Although there is sparse legal authority on "produce the note" in California and Arizona, is it such a novel concept that could not be considered in regard to proper application and enforcement of the Foreclosure laws? We believe that produce the note strategy should be permitted to be heard where other valid legal grounds exist to seek an injunction or TRO (such as a truth in lending rescission claim or wrongful foreclosure action, or 1632 foreign language law violation that seeks rescission), where other good faith grounds exist to file a lawsuit, it would seem natural and proper to raise the produce the note defense and force the lender, loan servicer, or whatever entity that is claiming the legal right to foreclose on your property, and your dreams, to prove it has the legal right to do so. Again, this is just our opinion and reasonable minds may differ on this issue.

ABOUT US:

The Law Offices of Steve Vondran in licensed to practice law in California and Arizona. Steve Vondran, Esq. is a licensed attorney and real estate broker in California and Arizona.

He can be reached by email at steve@vondranlaw.com or toll free (877) 276-5084

Offices:

Arizona Office (Esplanade): 2415 E. Camelback Road, Suite 700, Phoenix, AZ, 85020.

California Office (Fashion Island): 620 Newport Center Drive, Suite 1100, Newport Beach, CA 92660

Our Real Estate Law Services:

Loan Modifications / Loan Workouts
Commercial Lease Modifications
Broker Advance Fee Agreements (Residential and Commercial)
DRE audits, hearings and investigations
Real Estate Broker admissions cases
Foreclosure Defense
Predatory Lending
Mortgage Law
Phoenix Real Estate Zoning Attorney
Phoenix Eminent Domain Attorney / Inverse Condemnation / Prop 207
Real Estate Arbitration, Litigation and Mediation
Foreclosure Consultant Contracts
Real Estate LLC’s
Real Estate Partnership Law
Quiet Title Actions
Forensic Loan Audits (Truth in Lending (TILA), RESPA, HOEPA, Fraud, etc.)

______________________________________________________________________________

HELPFUL LOAN MODIFICATION LINKS:

SUBMIT YOUR LOAN MODIFICATION SCENARIO: WWW.LOANMODSOLUTIONS.NET
SUBMIT YOUR LOAN MODIFICATION SCAM SCENARIO: WWW.LOANMODIFICATIONRIPOFF.NET
RESIDENTIAL AND COMMERCIAL ADVANCE FEE AGREEMENTS: WWW.ADVANCEFEECONTRACT.COM
CALIFORNIA FORECLOSURE DEFENSE ATTORNEY STEVE VONDRAN WEBSITE: WWW.VONDRANLEGAL.COM
ARIZONA FORECLOSURE DEFENSE ATTORNEY STEVE VONDRAN WEBSITE: WWW.VONDRANLEGAL.COM
STEVE VONDRAN WEBSITE WWW.VONDRANLAW.COM
INFORMATION ON FORENSIC LOAN AUDITS: WWW.ATTORNEYMODS.COM
LOAN MODIFICATION RADIO SHOW: WWW.LOANMODRADIO.COM

______________________________________________________________________________

LOAN MOD FREQUENTLY ASKED QUESTIONS (FAQ):

Does everyone qualify for a loan modification? No. In general, there are requirements that must be met. In some cases you may have grounds to file a lawsuit which may create some leverage for a loan modification.
Am I able to sue my ender for predatory lending practices? In some cases (ex. truth in lending violation cases) you may have grounds to file a lawsuit. Other grounds such as wrongful foreclosure may also exist. Contact an attorney and ask about forensic loan audits.
What is a forensic loan audit? This is basically reconstructing the loan to see if you were a victim of predatory lending loan practices including truth in lending violations, RESPA violations fraud, and the like. Of particular importance is Option Arm Loans. The strength of the audit findings will often depend on whether the original lender is still profiting from the predatory loan or whether it is in the hands of a “holder in due course.” Call us to discuss.
What types of loan modifications are lenders providing? Sample modifications may include interest rate reductions, interest-only payments, loan forbearance, principle loan balance reduction (our firms has documentable evidence of principal loan balance reduction on Wachovia and World Savings Option Arm Loans. If you have a Wachovia or World Savings loan please contact us as soon as possible to submit your loss mitigation package, in many cases, we offer a 100% refund if you do not sign a loan modification agreement.
What is usually needed to get a loan modification? In most cases, you will need to have documentable income, an unaffordable monthly mortgage payment (high housing ratio), and a verifiable hardship (ex. loss of job, etc.). In lieu of these typical requirements, you need strong evidence of predatory lending violations such as Truth in Lending to support a case for modification. Typically in the form of an extended three year right to rescind your loan along with a reasonable plan for tender. Contact us to discuss TILA claims.
How long do I have to try to get a loan modification? In California, when you get a notice of default you have 90 days before you can expect to get a notice of sale. The Notice of Sale will provide notice that the house may be sold after 20 days. During these 110 days, you still have time to negotiate a loan modification. Contact us to discuss your case. Do not waste time.
Can I seek my own modification? Absolutely. However, you should prepare to spend alot of time dealing with lenders and loan servicers who, frankly, could care very little about your rights. In addition, a lawyer will be able to send out a qualified written request, demand to produce the holder of the loan, and ensure that your legal rights are protected and that the lender follows the foreclosure laws. A law firm can also perform a forensic loan audit that may reveal additional rights and remedies and potentially leverage for a loan modification.

_____________________________________________________________________________

NOTICE:

The foregoing information is general legal information only and shall not be relied upon as legal advice, or a substitution for legal advice. If you have specific legal questions about your foreclosure case, or loan modification case you should seek out the advice of a real estate attorney. In addition, the information posted above may not be 100% complete, accurate or up-to-date. The Law Offices of Steve Vondran is licensed to practice law in the state of Arizona and California and only seeks to solicit and serve Clients in these two states. Steve Vondran, Esq. is a licensed attorney and real estate broker in California and Arizona. He can be reached by email at steve@vondranlaw.com or toll free (877) 276-5084. This is an advertisement and communication pursuant to State Bar Rules. Please do not send us private or confidential information through any of our above-listed websites. Sending us an email does not create an attorney-client relationship (only signing a legal retainer will do this).

What is a Qualified Written Request (QWR) under the Real Estate Settlement Procedures Act (RESPA)oran

Steve Vondran (Law Offices of Steven C. Vondran) — Tue, 15 Sep 2009 11:08:04 -0500

Here is some basic information on RESPA qualified written requests as provided under the Real Estate Settlement Procedure Act (RESPA). RESPA COVERAGE: RESPA applies to a “federally related mortgage loan,” which is defined as:

The term “federally related mortgage loan” includes any loan (other than temporary financing such as a construction loan) which is secured by a first or subordinate lien on residential real property (including individual units of condominiums and cooperatives) designed principally for the occupancy of from one to four families, including any such secured loan, the proceeds of which are used to prepay or pay off an existing loan secured by the same property; and is made in whole or in part by any lender the deposits or accounts of which are insured by any agency of the Federal Government, or is made in whole or in part by any lender which is regulated by any agency of the Federal Government, or is made in whole or in part, or insured, guaranteed, supplemented, or assisted in any way, by the Secretary or any other officer or agency of the Federal Government or under or in connection with a housing or urban development program administered by the Secretary or a housing or related program administered by any other such officer or agency; or is intended to be sold by the originating lender to the Federal National Mortgage Association, the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation, or a financial institution from which it is to be purchased by the Federal Home Loan Mortgage Corporation; or is made in whole or in part by any “creditor”, as defined in 15 U.S.C.A. § 1602(f) who makes or invests in residential real estate loans aggregating more than $1,000,000 per year, except that for the purpose of this chapter, the term “creditor” does not include any agency or instrumentality of any State.

QUALIFIED WRITTEN REQUEST UNDER 12 U.S.C. 2605 et seq. (RESPA - QWR) A. THE LAW: 12 U.S.C. § 2605 STATES: (1) Qualified written request:

For purposes of this subsection, a qualified written request shall be a written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer, that includes, or otherwise enables the servicer to identify, the name and account of the borrower; and includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower. (RESPA therefore provides the explicit statutory right for a borrower to request "other information" as deemed necessary to the borrower).

NOTE: This Section makes clear that a Borrower may request "other information" (with no limits placed on what constitutes "other information"). Therefore, please do not state that this request "goes beyond that which is permitted by RESPA." RESPA places no statutory limitiations on the information which can be requested. A loan servicer is not therefore entitled to ignore this provision merely because of any perceived inconvenience in responding.

B. LEGALLY MANDATED LOAN SERVICER ACTIONS REQUIRED (LOAN SERVICER DUTY): (1) Action with respect to inquiry:

Not later than 60 days (excluding legal public holidays, Saturdays, and Sundays) after the receipt from any borrower of any qualified written request under paragraph (1) and, if applicable, before taking any action with respect to the inquiry of the borrower, the servicer shall make appropriate corrections in the account of the borrower, including the crediting of any late charges or penalties, and transmit to the borrower a written notification of such correction (which shall include the name and telephone number of a representative of the servicer who can provide assistance to the borrower);

After conducting an investigation, provide the borrower with a written explanation or clarification that includes to the extent applicable, a statement of the reasons for which the servicer believes the account of the borrower is correct as determined by the servicer; and the name and telephone number of an individual employed by, or the office or department of, the servicer who can provide assistance to the borrower; or after conducting an investigation, provide the borrower with a written explanation or clarification that includes information requested by the borrower or an explanation of why the information requested is unavailable or cannot be obtained by the servicer; and the name and telephone number of an individual employed by, or the office or department of, the servicer who can provide assistance to the borrower.

NOTE: This makes clear that 2605 requires the lender or loan servicer to take action includling providing information requested by the borrower, conducting an investigation of the borrower's concerns, providing an explanation or clarification of the reasons the servicer believes the account is correct and, if necessary, making appropriate corrections to the borrower's account. Once a borrower makes a “qualified written request" RESPA requires loan servicing companies to: (a) provide written notice to the borrower (within 20 days) acknowledging receipt of the request, (b) take appropriate action with respect to the inquiry either by making corrections or providing a written explanation or clarification; and (c) protect the borrower's credit rating by not reporting to credit bureaus the overdue payments relating to request for 60 days after receiving the request.

(3) Protection of credit rating:

During the 60-day period beginning on the date of the servicer's receipt from any borrower of a qualified written request relating to a dispute regarding the borrower's payments, a servicer may not provide information regarding any overdue payment, owed by such borrower and relating to such period or qualified written request, to any consumer reporting agency.

NOTE: This Section provides for damages for any negative credit which is reported to any credit bureau which causes damage to my Clients.

C. RECOVERABLE DAMAGES FOR NON-COMPLIANCE:

Whoever fails to comply with any provision of this section shall be liable to the borrower for each such failure in the following amounts:

(1) Individuals:

In the case of any action by an individual, an amount equal to the sum of any actual damages to the borrower as a result of the failure; and any additional damages, as the court may allow, in the case of a pattern or practice of noncompliance with the requirements of this section, in an amount not to exceed $1,000.

(2) Class actions:

In the case of a class action, an amount equal to the sum of any actual damages to each of the borrowers in the class as a result of the failure; and any additional damages, as the court may allow, in the case of a pattern or practice of noncompliance with the requirements of this section, in an amount not greater than $1,000 for each member of the class, except that the total amount of damages under this subparagraph in any class action may not exceed the lesser of $500,000; or 1 percent of the net worth of the servicer.

(3) Costs:

In addition to the amounts under paragraph (1) or (2), in the case of any successful action under this section, the costs of the action, together with any attorneys fees incurred in connection with such action as the court may determine to be reasonable under the circumstances.

D. "ACTUAL DAMAGES" MAY PERMIT RECOVERY OR EMOTIONAL DAMAGES SUFFERED DUE TO NON-COMPLIANCE:

NOTE: If a lender or loan servicer breaches this duty, a borrower may recover any “actual damages” proximately caused. "Actual damages" includes time spent on the case (and lost wages if required to be away from work), attorney fees, and there is legal precedent for the recovery of emotional distress damages for a loan servicer's failure to comply with RESPA. See Johnstone v. Bank of America, N.A., 173 F.Supp.2d 809, 814-16 (N.D.Ill.2001) (RESPA plaintiffs may recover for mental suffering); Ploog v. HomeSide Lending, Inc., 209 F.Supp.2d 863, 870 (N.D.Ill.2002); and Rawlings v. Dovenmuehle Mortgage, Inc., 64 F.Supp.2d 1156, 1166 (M.D.Ala.1999). See also Wanger v. EMC Mortgage Corp., 103 Cal.App.4th 1125, 127 Cal.Rptr.2d 685, Cal.App. 5 Dist.,(2002)

___________________________________________________________________________________________________ ABOUT US:

The Law Offices of Steve Vondran in licensed to practice law in California and Arizona. Steve Vondran, Esq. is a licensed attorney and real estate broker in California and Arizona.

He can be reached by email at steve@vondranlaw.com or toll free (877) 276-5084 Offices: Arizona Office (Esplanade): 2415 E. Camelback Road, Suite 700, Phoenix, AZ, 85020. California Office (Fashion Island): 620 Newport Center Drive, Suite 1100, Newport Beach, CA 92660 ___________________________________________________________________________________________________ Our Real Estate Law Services: Loan Modifications / Loan Workouts Commercial Lease Modifications Broker Advance Fee Agreements (Residential and Commercial) DRE audits, hearings and investigations Real Estate Broker admissions cases Foreclosure Defense Predatory Lending Mortgage Law Phoenix Real Estate Zoning Attorney Phoenix Eminent Domain Attorney / Inverse Condemnation / Prop 207 Real Estate Arbitration, Litigation and Mediation Foreclosure Consultant Contracts Real Estate LLC’s Real Estate Partnership Law Quiet Title Actions Forensic Loan Audits (Truth in Lending (TILA), RESPA, HOEPA, Fraud, etc.) __________________________________________________________________________________________________

KEYWORDS: ARIZONA FORECLOSURE DEFENSE ATTORNEY / CALIFORNIA FORECLOSURE DEFENSE ATTORNEY / PHOENIX FORECLOSURE DEFENSE ATTORNEY / PHOENIX FORECLOSURE DEFENSE LAWYER / SCOTTSDALE FORECLOSURE DEFENSE ATTORNEY / SCOTTSDALE FORECLOSURE DEFENSE LAWYER / ORANGE COUNTY PREDATORY LENDING LAWYER / ORANGE COUNTY FORECLOSURE DEFENSE ATTORNEY / ORANGE COUNTY FORECLOSURE DEFENSE LAYWER / TRUTH IN LENDING LAWYER / TRUTH IN LENDING ATTORNEY / SOUTHER CALIFORNIA MORTGAGE LAW ATTORNEY / MORTGAGE LAWYER / RIVERSIDE FORECLOSURE ATTORNEY / RIVERSIDE FORECLOSURE LAWYER / RESPA LAWYER / RESPA ATTORNEY / FORECLOSURE DEFENSE LAW / PHOENIX LOAN MODIFICATION ATTORNEY / PHOENIX LOAN MODIFICATION LAWYER / ORANGE COUNTY LOAN MODIFICATION LAWYER / ORANGE COUNTY LOAN MODIFICATION ATTORNEY / NEWPORT BEACH LOAN MODIFICATION LAWYER / NEWPORT BEACH LOAN MODIFICATION ATTORNEY / CALIFORNIA FORECLOSURE DEFENSE LAWYER / PREDATORY LENDING LAW SAN DIEGO.

___________________________________________________________________________________________________ HELPFUL LOAN MODIFICATION LINKS:

SUBMIT YOUR LOAN MODIFICATION SCENARIO: WWW.LOANMODSOLUTIONS.NET SUBMIT YOUR LOAN MODIFICATION SCAM SCENARIO: WWW.LOANMODIFICATIONRIPOFF.NET RESIDENTIAL AND COMMERCIAL ADVANCE FEE AGREEMENTS: WWW.ADVANCEFEECONTRACT.COM CALIFORNIA FORECLOSURE DEFENSE ATTORNEY STEVE VONDRAN WEBSITE: WWW.VONDRANLEGAL.COM ARIZONA FORECLOSURE DEFENSE ATTORNEY STEVE VONDRAN WEBSITE: WWW.VONDRANLEGAL.COM STEVE VONDRAN WEBSITE WWW.VONDRANLAW.COM INFORMATION ON FORENSIC LOAN AUDITS: WWW.ATTORNEYMODS.COM LOAN MODIFICATION RADIO SHOW: WWW.LOANMODRADIO.COM

___________________________________________________________________________________________________ LOAN MOD FREQUENTLY ASKED QUESTIONS (FAQ):

(1) Does everyone qualify for a loan modification? No. In general, there are requirements that must be met. In some cases you may have grounds to file a lawsuit which may create some leverage for a loan modification.

(2) Am I able to sue my ender for predatory lending practices? In some cases (ex. truth in lending violation cases) you may have grounds to file a lawsuit. Other grounds such as wrongful foreclosure may also exist. Contact an attorney and ask about forensic loan audits.

(3) What is a forensic loan audit? This is basically reconstructing the loan to see if you were a victim of predatory lending loan practices including truth in lending violations, RESPA violations fraud, and the like. Of particular importance is Option Arm Loans. The strength of the audit findings will often depend on whether the original lender is still profiting from the predatory loan or whether it is in the hands of a “holder in due course.” Call us to discuss.

(4) What types of loan modifications are lenders providing? Sample modifications may include interest rate reductions, interest-only payments, loan forbearance, principle loan balance reduction (our firms has documentable evidence of principal loan balance reduction on Wachovia and World Savings Option Arm Loans. If you have a Wachovia or World Savings loan please contact us as soon as possible to submit your loss mitigation package, in many cases, we offer a 100% refund if you do not sign a loan modification agreement.

(5) What is usually needed to get a loan modification? In most cases, you will need to have documentable income, an unaffordable monthly mortgage payment (high housing ratio), and a verifiable hardship (ex. loss of job, etc.). In lieu of these typical requirements, you need strong evidence of predatory lending violations such as Truth in Lending to support a case for modification. Typically in the form of an extended three year right to rescind your loan along with a reasonable plan for tender. Contact us to discuss TILA claims.

(6) How long do I have to try to get a loan modification? In California, when you get a notice of default you have 90 days before you can expect to get a notice of sale. The Notice of Sale will provide notice that the house may be sold after 20 days. During these 110 days, you still have time to negotiate a loan modification. Contact us to discuss your case. Do not waste time.

(7) Can I seek my own modification? Absolutely. However, you should prepare to spend alot of time dealing with lenders and loan servicers who, frankly, could care very little about your rights. In addition, a lawyer will be able to send out a qualified written request, demand to produce the holder of the loan, and ensure that your legal rights are protected and that the lender follows the foreclosure laws. A law firm can also perform a forensic loan audit that may reveal additional rights and remedies and potentially leverage for a loan modification.

___________________________________________________________________________________________________ NOTICE:

The foregoing information is general legal information only and shall not be relied upon as legal advice, or a substitution for legal advice. If you have specific legal questions about your foreclosure case, or loan modification case you should seek out the advice of a real estate attorney. In addition, the information posted above may not be 100% complete, accurate or up-to-date. The Law Offices of Steve Vondran is licensed to practice law in the state of Arizona and California and only seeks to solicit and serve Clients in these two states. Steve Vondran, Esq. is a licensed attorney and real estate broker in California and Arizona. He can be reached by email at steve@vondranlaw.com or toll free (877) 276-5084. This is an advertisement and communication pursuant to State Bar Rules. Please do not send us private or confidential information through any of our above-listed websites. Sending us an email does not create an attorney-client relationship (only signing a legal retainer will do this).

How to file for a TRO or Preliminary Injunction in an effort to Stop foreclosure in California

Steve Vondran (Law Offices of Steven C. Vondran) — Sat, 22 Aug 2009 19:25:30 -0500

Don't forget to hear our loan modification radio show on every Monday & Friday from 12:30 pm to 1:00 pm

The Process of Obtaining an Injunction Against Foreclosure in California

INTRODUCTION: The following information is being posted as a public service to all california homeowners. many of my clients cannot afford to hire an attorney to prevent the threatened sale of their property, yet they have valid LEGAL grounds for filing for an injunction to stop the foreclosure. the following article is not legal advice and is not intended to be a substitute for you obtaining the advice of an attorney, lawyer, or law-firm to assist you in evaluating the particular facts in your case and determining whether or not you have a valid case worth pursuing in a court of law. THERE ARE POTENTIAL DAMAGES TO YOU FOR FILING FALSE AND MERITLESS CLAIMS. if you have specific questions about your case you must contact a lawyer to discuss. the following is general legal information only and is not to be relied on without discussing YOUR case with legal counsel. certain portions of this article may be incomPlete or inaccurate as the law is constantly evolving AND EACH COURT IS DIFFERENT. it is my goal to TRY TO educate california homeowners of the basic process involved in trying to obtain an injunction against foreclosure in california. people have legal rights that they should be informed of. there are lenders and loan servicers that are simply seeking to take advantage of homeowners who may have been the victim of predatory lending and/or loan servicing. where you have legal rights, every homeowner should have the opportunity to assert these rights, not just the wealthy FEW individuals who may be in a better financial condition to pursue their legal rights. ___________________________________________________________________________________________________________________ ATTORNEY STEVE VONDRAN CAN BE REACHED AT (877) 276-5084 OR EMAILED AT STEVE@VONDRANLAW.COM. MR. VONDRAN IS LICENSED TO PRACTICE LAW IN CALIFORNIA AND ARIZONA AND HOLDS A REAL ESTATE BROKER LICENSE IN BOTH STATES. WE SEEK ONLY TO SOLICIT, SERVE AND REPRESENT CLIENTS IN THESE TWO STATES. ___________________________________________________________________________________________________________________

The Process of Obtaining an Injunction Against Foreclosure in California

First, a General Overview of one Injunction Provision of California Law: California Code of Civil Procedure: 525. An injunction is a writ or order requiring a person to refrain from a particular act. It may be granted by the court in which the action is brought, or by a judge thereof; and when granted by a judge, it may be enforced as an order of the court. (a) An injunction may be granted in the following cases:

When it appears by the complaint that the plaintiff is entitled to the relief demanded, and the relief, or any part thereof, consists in restraining the commission or continuance of the act complained of, either for a limited period or perpetually.
When it appears by the complaint or affidavits that the commission or continuance of some act during the litigation would produce waste, or great or irreparable injury, to a party to the action.
When it appears, during the litigation, that a party to the action is doing, or threatens, or is about to do, or is procuring or suffering to be done, some act in violation of the rights of another party to the action respecting the subject of the action, and tending to render the judgment ineffectual.
When pecuniary compensation would not afford adequate relief.
To prevent the breach of a contract the performance of which would not be specifically enforced.....(parts omitted)

NOTE: when filing for an injunction, you need to keep in mind the california rules of court. in particular sections 3.1200-3.1207 and 3.1150-3.1152. Here is a link to these and other provisions that you should be aware of. Here are some other rules to review: California Rules of COurt Injunctions ___________________________________________________________________________________________________________________

The Process of Obtaining an Injunction Against Foreclosure in California

Here is an overview of the steps

(1) There must be valid grounds for obtaining an injunction (as opposed to seeking money damages). In the context of foreclosure defense, the following are types of legal violations that may provide a valid and good faith right to seek an injunction against foreclosure of real property:

Truth in Lending Violation within the past three years, which violation provides an extended three year right to rescind the loan, and where the homeowner sought to exercising these rights (by sending in a rescission letter) that the lender or loan servicer ignored. If your right to rescind the loan was disregarded, you have a right to seek to file an injunction to stop the threatened foreclosure (Note: here is a list of some of the items we look for in our forensic loan audits in an attempt to find truth in lending and other violations that we may be able to use as leverage for a loan modification);
Wrongful Foreclosure – This arises where the homeowner can prove they are not actually in default of the loan (i.e. that payments are current, etc.). Normally this one reason we file for a Qualified Written Request under RESPA Section 6, to see how and when payments were made and applied (Click here to see my blog post on Qualified Written Requests under RESPA Section 6);
Lender has failed to properly follow California foreclosure statutes that mandate, among other things, contacting borrower to discuss financial situation and loan modification options, proper filing of notice of default and proper filing of notice of sale, etc; (See California Civil Code Section 2924 et seq.)
d. Lender failed “duty” to provide a loan modification under California Civil Code Section 2923.6 (See the law here) where loan modification presents a better “net present value” proposition to the holder of the loan than does pursuing foreclosure (these grounds are being reviewed in the Courts today as to whether or not this grounds for injunction against foreclosure will ultimately succeed). The thrust of the argument is really that a “loan modification should have been reached;”
Loan Modification Agreement “was” reached – This is another experimental area where I believe a good faith argument can be made that there is no right to foreclose where the borrower and lender/loan servicer has reached an agreement to modify the loan rather than pursue foreclosure. This situation arises where the homeowner was lead to believe (probably requires a written agreement) that a loan modification or trial payment plan was in effect and the lender is moving forward anyhow and attempting or threatening to foreclosure. The Courts should be asked to enjoin a foreclosure where this type of false, deceptive, and misleading behavior is perpetrated by a lender or loan servicer, and the Courts should require the lender to provide the modification it agreed to, proof of which being sufficient (a related topic is whether the lender has “waived” right to foreclose);
Enjoining the enforcement of false, deceptive, and unconscionable option arm loans and possibly subprime loans in California under the California Consumer Legal Remedies Act (Here is an article I wrote discussing the predatory and toxic option arm loans);
Where loan terms and conditions are negotiated in Spanish (or other protected foreign languages) but where the final loan documents are unfairly printed in English, a right of rescission applies which should prevent the foreclosure action of the lender, and even the loan assignee (See California Civil Code Section 1632); note; here is a blog post I wrote on this law: http://activerain.com/blogsview/727174/se-habla-espanol-california-civil-code-section-1632-and-the-loan-modification-can-you-rescind-your-mortgage-loan-

Other equitable grounds depending upon the facts of the case. (2) IF THE LENDER/LOAN SERVICER SEEMS INTENT ON FORECLOSING, RATHER THAN CONSIDERING YOU FOR A SHORT-SALE, DEED IN LIEU OF FORECLOSURE, OR PROVIDING A MEANINGFUL LOAN MODIFICATION, AND ASSUMING ONE OF THE ABOVE POTENTIAL GROUNDS TO FILE FOR AN INJUNCTION EXIST, YOU NEED TO FOLLOW THE FOLLOWING GENERAL STEPS (NOTE ADDITIONAL RULES AND RESTRICTIONS MAY APPLY SO YOU ARE ADVISED TO SEEK OUT THE ASSISTANCE OF A FORECLOSURE DEFENSE LAWYER TO ASSIST YOU):

Serve a certified letter on the party seeking to foreclose, including any of their agents, etc. who they are working in concert with them to foreclose, notifying them of your intent to file for a temporary restraining order (TRO) to prevent the threatened sale from occurring on the scheduled date. Also, state the time, date and address where you will be filing for relief, and ask whether they intend to appear. You may also want to fax and email them if you can, but the certified letter (which gives you legal proof they have notice of the TRO application) should be sent. You will need to submit a declaration that you did all of the above with your application.

Note: There are time frames to keep in mind in regard to notifying the opposing parties and/or their attorney (See here). Here are some other things to keep in mind regarding providing note – you must make a declaration to the Court that you gave or tried to provide notice to the opposing parties (See here)

File a Complaint (i.e. lawsuit) with the proper Court in your County (you may have to call the Court and ask them which court in your County is the proper one). In some cases, a case may be filed in Federal court, as opposed to State Court. This is a good question for an attorney practicing foreclosure defense and predatory lending law. Also, ensure proper venue. The complaint must set out your request for a temporary restraining order (TRO) and preliminary injunction halting foreclosure. You need to properly plead all the relevant facts of the case, including the legal violations which give rise to your right to halt the foreclosure proceeding or private trustee sale. In regard to verifying your proper grounds, legal “points and authorities” will need to be cited to the Court and attached to your application that seeks the ex parte TRO.
Compliance with California Rules of Court in regard to seeking an ex parte motion (this is where generally only you show up and the other party, although permitted to show, may not actually attend) for a TRO:

Rule 3.1201. Required documents A request for ex parte relief must be in writing and must include all of the following: (1) An application containing the case caption and stating the relief requested (note: the application must contain the (Click here for Contents of the application); (2) A declaration in support of the application making the factual showing required under rule 3.1202(c); (3) A declaration based on personal knowledge of the notice given under rule 3.1204 (basically proving you tried to contact the other party); (4) A memorandum (basically citation to legal points and authorities that support your request for an injunction); and (5) A proposed order (so that the judge can issue a TRO that the other party will be required to comply with). Note: Local Court Rules regarding obtaining injunctions are supposed to be pre-empted by these California Rules of Court. LIS PENDENS ALERT: It is probably also wise after filing the complaint and application for TRO / OSC to file what’s called a “lis pendens” (this gets filed in the County Recorder’s Office rather than the Court). A lis pendens is latin for “suit pending” and can only be filed where the lawsuit challenges an interest in the real property that is subject to litigation. There can be serious penalties for misusing the lis pendens process so consult with a real estate attorney prior to making this determination and filing. What the lis pendens does is to put any potential purchasers of the property on notice (called constructive notice) that the property is the subject of litigation (title is disputed), and if they buy the property, they take title subject to the claims involved. Filing the lis pendens then can have the effect of deterring bids to buy the property at a foreclosure sale, and can also provide grounds to counter the potential “bona fide purchaser for value” or ‘holder in due course” argument if the Court denies the preliminary injunction and the house is sold to a third party. Rather than being relegated to money damages against the purchaser of the property in this event, there could be a case for “quiet title” to the property and set-aside the sale. Contact a real estate foreclosure defense lawyer to discuss this somewhat complex topic. After you file for the lis pendens, the lender or trustee may request that a bond be filed and can seek to lift the lis pendens (they don’t want clouds on title at the foreclosure sale). You should argue for a nominal bond in this case as the property is not going anywhere and delaying foreclosure in a down market can hardly have a big effect on the lender.

Once you file all of these documents with the Court (the complaint, OSC, TRO Application with Client Declarations and Memorandum of Legal Points and Authorities, Declaration of Notice to Opposing Parties, and Proposed Order) you are on your way. The Court will set a hearing date and you need to find out what that date is, and provide notice to the opposing parties. You might also want to see if they use court reporters in these hearings, and if not, look into obtaining one (this may help if you need to appeal an order denying an injunction).
Again, after all the Court filings are complete, you now have a pending suit, and if advisable in your case, the filing of a lis pendens might be a good move.
At the OSC hearing, Defendant (if they decide to show up) must show good cause why the injunction should not issue. That being said however, the burden of proof on why the injunction should be granted are on the Plaintiff, who is known as the “moving party.” (If called this by the judge, one response to lighten up the situation might be “hopefully we are not moving your honor” said with a smile). At the hearing, if you are represented by an attorney he or she must show up. In ruling on the TRO, the Court will normally look to the declarations but also has discretion to hear oral testimony from the homeowner or others (advance written request to the Court to present oral evidence should be requested).
If the Court grants the TRO, it will normally be effective only for about 15-22 days until such time as a preliminary injunction hearing is undertaken where both sides are fully represented. If the TRO issues, the Court may required the posting of a bond to recover any damages the defendant may suffer if the TRO was wrongfully granted and the preliminary injunction is ultimately denied. Plaintiffs must be aware of this possibility and should speak with a bonding agent prior to the OSC hearing date for the TRO. If granted, the TRO will not normally be effective until the bond posts. Don’t get caught short-handed on this one. If the TRO issues, the Plaintiff should serve a copy of the Order on all parties which will then be bound by Court order not to foreclose on the property, at least until the preliminary injunction stage.
At the hearing for a preliminary injunction, both sides may appear and if the preliminary injunction issues, then the judge MUST require the posting of a bond. However, it is at this point that the Defendants may want to discuss providing a reasonable loan modification, accepting a short-sale, accepting Client’s rescission, or approving a deed in lieu / cash for keys type of deal or settling on some other relevant terms.

In order to obtain an injuction against foreclosure the Plaintiff (the homeowner) which is known as the "moving party" must prove the following:

Likelihood of success on the merits of the case (for example, likelihood of proving a TILA violation that allows for rescsission)
That money damages - the usual remedy at law - are inadequate and will not make the Plaintiff whole (for example, property is unique, and money damages will not make the Plaintiff whole since she cannot go and re-purcahse the exact same property, plus if the property is sold, the owner will not likely be able to get it back)
That Plaintiff will face imminent irreperable harm and injury if the threatened action (i.e. foreclosure of the property) is permitted to ensue.
That the balance of equities favors granting the injunction (Court will weigh the harm to the Plaintiff if the injunction is not granted, versus the injury to the Defendant if the injunction is granted). Generally, there will be limited harm to the Defendant by having to wait until the conclsusion of the litigation to sell the property. The Court can require a posting of a bond by Plaintiff to protect against any perceived harm caused by the TRO and/or injuction.

So that is a general and basic overview of the process of obtaining a temporary restraining order (TRO) / preliminary injunction in California and how it may help you obtain a loan modification, or else any money damages that you may be entitled to for RESPA violations, QWR violations, Truth in Lending Violations, Business and Professions Code Section 17220, 17500 violations, violations of the Fair Debt Collections Practices Act, California Consumer Legal Remedies Act, etc. Where the lender or loan servicer has violated your rights, and where a valid and good faith grounds exists for filing for filing a lawsuit and TRO to halt a foreclosure sale is present, you may have a strong defense in pursuing your legal claims. Plus, when you haul these lenders into Court with good faith and valid grounds, this is a good time to raise the “produce the note” strategy, which makes the trustee and loan servicer prove they have possession of the original promissory note, and all recorded assignments as required under California Commercial law of Negotiable Instruments. If they cannot prove their right to enforce the debt, the Court should (although there is not solid legal precedence on this claim in California) kick these “strangers” out of court. Otherwise, they might as well allow your neighbor to privately foreclose on your property. ___________________________________________________________________________________________________________________ A separate issue that can arise in the foreclosure context, is where the house has already been sold, and the borrower believes the sale is wrongful or in violation of law. In this situation, where the lender has purchased the property at the foreclosure sale, there may be a way to “quiet title” and use a “lis pendens” procedure. Claims that may be raised after a sale date are truth in lending rescission claims, failure to sell property per the deed of trust, sale improprieties such as not using an independent third party, chilled bidding, failure to properly advertise the sale etc. If the property was sold to a bona fide purchaser for value (see an attorney to discuss what this means and how it works) then your legal action would likely be limited to a claim for money damages. These issues can also be raised in a lender seeks to file for a default judgment following a private trustee sale. If all else fails, this could be a nice way of “getting the final word” with the lender or loan servicer. Contact a real estate attorney in your area to discuss your case. CONTACT US TO DISCUSS OUR LOAN MODIFICATION SERVICES. (877) 276-5084 Note: There are no guarantees that a loan modification will be obtained as services are offered on a "best efforts" basis. To have your situation reviewed please fill out our form at www.LoanModSolutions.net Loan mod scam victims are encouraged to visit www.LoanModificationRipoff.net The Law Offices of Steve Vondran has been processing loan modification files and has experience dealing with the following mortgage lenders and loan servicers:

Bank of America
Countrywide
Chase
Aurora Loan Services
Washington Mutual
Nationstar
World Savings (Call us if you have a World Savings Option Arm Loan - we have been getting principal reduction in select cases)*
Wachovia (Call us if you have a Wachovia Option Arm loan - we have been getting principal balance reductions in select cases)*
Wells Fargo

_________________________________________________________________________________________________________________________________ Other Legal Services we Provide: (877) 276-5084

Forensic Loan Audits - Truth in Lending Violations / RESPA violations / Predatory Lending
Loan Modification Company Setup / Broker Contracts
Predatory Lending Law (Predatory Option Arm Loans, Subprime Arm Loans, Elder Abuse, Loan Fraud)
Foreclosure Prevention / Loan Workout
Commercial Lease Modification (Time to re-negotiate your commercial lease?)
Real Estate Zoning in Greater Phoenix area (Variances, Special Use Permits, Zoning Disputes)
Eminent Domain, Inverse Condemnation, and Proposition 207 cases
Real Estate Arbitration
Real Estate Mediation
Real Estate Litigation
Loan Modification Scams and Fraud (Foreclosure rescue scams)

Find us on the web on www.VondranLegal.com / www.VondranLaw.com / www.LoanModRadio.com ___________________________________________________________________________________________________________________ Our Offices: (1) Phoenix, Arizona: 2415 E. Camelback Road (Esplanade) Suite 700, Phoenix, Arizona 85016 (877) 276-5084 (2) Newport Beach, California: 620 Newport Center Drive (Fashion Island), Suite 1100, Newport Beach, CA 92660 (877) 276-5084 Email: Steve@Vondranlaw.com This is an advertisement and communication pursuant to State bar Rules. Law Offices of Steven C. Vondran is licensed to practice law in California and Arizona and only seeks to serve Clients in these states. *We make no guarantees, warranties or representations of any particular outcome in any type of case including loan modification and loan workout cases and no guarantees of principal loan balance reduction in any case.

What does an attorney look for in a mortgage audit?

Steve Vondran (Law Offices of Steven C. Vondran) — Sat, 15 Aug 2009 14:35:55 -0500

We are often asked what we look for in a forensic loan audit.

Typical items we look for when conducting a forensic loan audit:

(1) Did each borrower or person with ownership interest in the property get two copies of the proper Notice of Right to cancel with the Rescission dates filled in? (Federal Truth in Lending requirement - TILA).

(2) Were the material TILA disclosures made, and were they accurate if made (APR, Finance Charge, Amount Financed, Total of Payments, Payment Schedule). If these disclosures were not or defective in nature, an extended three year right of rescission exists in non-exempt transactions.

(3) Were the good faith estimate and preliminary truth in lending statements given to the borrower within 3 days of giving the loan application?

(4) Were advance fees improperly collected?

(5) Was the broker/loan officer/lender properly licensed at all stages of the loan origination process?

(6) Was the ARM / Option ARM / Negative Amortization Loan accurately disclosed in the note and adjustable rate rider and any loan program disclosure? Were the disclosures consistent?

(7) After the broker/lender ran the credit, were the credit scores disclosed and factors affecting risk properly disclosed?

(8) Did the Client receive a copy of the appraisal?

(9) Can the lender or investor produce the promissory note and prove it has the legal right to collect the debt? This is not so much a forensic audit issue, but rather an issue that can be raised at a later date. Not finding a copy of the promissory note in the loan file also triggers the need to have them produce the note so we can verify the actual terms of the note.

(10) Is the note clear and comprehensible (or do we have grounds to argue that a contract was never formed - that there could be no meeting of the minds)?

(11) Unfair Competition - If we find a violation of RESPA, Truth in Lending or HOEPA, or other law, do we have grounds to assert that the lender has engaged in unfair, deceptive and/or fraudulent business acts and practices and seek the imposition of a constructive trust forcing the lender to disgorge any ill-gotten gains or to seek an injunction? Countrywide was sued under Business and Professions Code Section 17200 and 17500 for false advertising and deceptive business practices.

(12) Were the loan documents properly signed and notarized?

(13) Option Arms / Negam Loans: These loans are predatory in nature and potentially unconscionable. The terms of the note and adjustable rate rider and loan program disclosures may conflict making it virtually impossible to properly understand the terms of the loan and to disclose this properly per truth in lending requirements.

(14) Is the loan substantively unconscionable and thus unenforceable?

(15) Was there fraud, deceit, deception, coercion or undue influence used against the elderly (elder abuse issues)?

(16) If the lender targeted minority groups, where the contracts negotiated in the language of the borrower (lender would be required to sign documents in a certain protected language of the borrower or a right to rescind is created?

(17) Was there predatory underwriting on stated income loans (i.e. underwriter did not verify borrowers stated income via salary.com, 4506-T statements, or in another manner as required by their internal policies - turning a blind eye and not following their own underwriting policies to get a loan done)?

(18) Were there excessive fees that Violate HOEPA? Or a Lack of HOEPA disclosures? Or excessive YSP fees that are predatory in nature that feathered the nest of the broker at the expense of the borrower?

(19) Was the borrower asked to sign conflicting disclosures or documents such as two different ARM disclosures or two different truth in lending statements that reflect two different APR's or Interest rates (evidencing potential bait and switch or deceptive loan practices)?

(20) Were FICO scores and credit risk factors properly disclosed?

As you can see, we are closely scrutinizing the work of the lenders and holding their feet to the fire. They have rules they need to comply with, and they should be held accountable where their legal violations are uncovered.

Note: The strength of these violations depends upon whether or not your originating lender still holds the loan or whether a third party investor purchased the loan on the secondary market. In addition, there are no guarantees, promises or representations made that a loan audit will reveal any of these loan compliance or legal errors. Every file is different. We are never required to follow-up our audits or loan modification services with actual litigation. Attorney has the sole discretion whether or not to accept any litigation cases. This is an advertisement and communication pursuant to state bar rules. We only seek to represent Clients in Arizona and California where the attorney is licensed to practice law.

Don't forget to hear our loan modification radio show on KLAA radion or www.LoanModRadio.com

Loan Modification Frequently Asked Questions (FAQ)

Steve Vondran (Law Offices of Steven C. Vondran) — Thu, 13 Aug 2009 12:19:30 -0500

(1) What is the foreclosure process / timeline in California?

ANSWER: Many people hear the word foreclosure and think of it as an isolated event. It is actually a process that spans 4 or 5 months or so, sometimes longer. We have had Clients who have not made payments for as long as 20+ months or so.

The process is defined by California Civil Code Section 2924 and generally requires the following to be strictly adhered to:

(A) Breach of loan contract (default). Typically we have seen a lender will wait three or four months or more before formally declaring a default.

(B) Notice of Default (lender is formally claiming a default of the loan contract has occurred). Lender files a "NOD" with the County Recorder's Office and serves the homeowner with the notice and posts a notice on the property. Filing this notice normally "starts" the foreclosure process in California. Per 2924, the lender may not give notice of sale for at least 90 days once the NOD is filed.

Loan Mod Tip: The NOD is required to state certain things (such as a declaration that the lender has tried to contact the borrower, assess their financial situation and discuss loan modification options ) if they fail to make these attempts to modify your loan, and/or to make this declaration in the NOD, this can provide potential grounds to enjoin the foreclosure proceeding (SB 1137 Requirement). Only a law firm can insist your legal rights be honored in this regard.

(C) Notice of Trustee Sale (aka "Notice of Sale"). Following the 90 day period after the NOD is filed, the Lender may file and record a NOS with the County Recorder. This notice must specify the time and date of the sale which must be at least 20 days after the notice of sale is filed (typically the lender will schedule the sale date on the 21st day following filing of the NOD).

(D) Reinstatement Rights: Normally, the Borrower may reinstate the loan up to 5 days before the foreclosure sale date

So, as you can see, the process can take 110 days or more. You can seek to negotiate a loan modification during this process.

Loan Mod Tip: When Clients hire our law firm, we can typically get the lender to stop or postpone the sale date by us submitting financial documents and a letter of representation on your behalf. While this does not happen all the time, normally the lender is willing to work with the homeowner, especially where the property is really upside-down and the lender faces a huge loss by foreclosing.

LOAN MOD DEFINITIONS: THE LANGUAGE OF LOAN MODS: We should also get the terms on the table for those who have not taken real property law and are wondering what all the words are that they are seeing on the Notice of Default.

- Deed of Trust is a Three Part System: (Definitions)

- Trustor: This is the borrower

- Beneficiary: One to whom the obligation is owed (ex. the bank or investor)

- Trustee: Holds the Deed and is the one who is instructed to foreclose by the Beneficiary if you do not pay off the loan as agreed. If you pay off the loan, it is the trustee that re-conveys the deed to you.

Loan Mod Tip: When you get that foreclosure notice it is time to take action (it's never to late to start talking with the lenders about a loan modification)!! Calendar the dates and times of the scheduled notice of sale and notice of default. You can also contact the lender and see if they have any modification offers for you. Note: Don't take anything as true unless the lender puts it in writing. The major lenders have so many departments and so many employees, it is not uncommon to hear different things depending upon who you talk to. We have had loan modification companies tell us they haven't received the loan modification package, only to find that we have obtained a loan modification the very same week.

(2) Are California homeowners guaranteed a loan modification?

(a) No. It would be nice to think Congress would have provisioned a loan modification for every California homeowner, unfortunately they did not. The Banks obviously have no interest in helping all homeowners either. While the government is busy bailing out AIG, the Banks, and Big Auto companies, the homeowner on Main Street gets only a little bit of consideration.

We are dealing with tough economic times right now. Everyone is suffering and our financial institutions are getting the financial care they need, while the homeowner has to fight for everything they get.

(b) The other problem is that we need to keep in mind that the loan you took out was a legal contract between yourself and your lender where in you pledged your house as collateral (in the deed of trust) in the even at some point you were unable to pay back your loan (as referenced in the promissory note). So at the end of the day, we are fighting for a loan modification with tough-nosed bankers who put their financial interests in front of yours. As we tell our Clients, there is no constitutional right to a loan modification.

In fact, if anyone promises you or guarantees you a loan modification you should run for the hills. What we are finding with these loan modification scam companies is that they promise you the world and deliver very little. Don't be the next victim of false promises.

(3) What should a California Homeowner do when they get a foreclosure notice?

(1) Keep in mind you are not alone. Receiving a NOD can be an embarrassing and frustrating event. Thoughts of loading the moving truck and moving out of your house in the middle of the night with your family and kids, and saying good-bye to the American Dream and moving into uncertainty can be a daunting task for anyone. That being what it is, DO NOT IGNORE YOUR NOD.

No matter how dire the situation appears, you have to face it straight on. Ads my mother used to say, "tough times never last....but tough people do. You may be able to obtain a loan modification, or short sale of the property or seek Chapter 13 bankruptcy protection.

(2) Contact your lender see if they are willing to work with you. Ask them if they are implementing loan modifications. Most lenders have a loan modification (or "loss mitigation") department set up to handle defaulting borrowers. If you have the time to devote to the process of obtaining a loan modification, you may want to handle the case yourself.

•1. Find a reputable company to represent you: If you want to be represented by a loan modification company such as a law firm like ours, give them a call and ask them about their services and fees, etc.

Loan Mod Tip: Be careful with choosing a loan modification company. There are many loan modification and foreclosure rescue scam companies out there.

•a. Brokers without advance fee agreements / trust accounts

•b. "Attorney backed" or "Attorney Based" loan modification companies (false advertising)

•c. Law Firms that used to practice personal injury, family law, divorce law, etc. and moved into loan modifications purely for a profit motive, and who may or may not have solid real estate experience.

•d. As we discussed, I am an Attorney Licensed in Arizona and California and have a Broker's license in both states. I have sold mortgage products and understand the loan origination process.

•e. OTHER TIPS: Beware of offers of principal reduction. This is what everyone wants right now and the scammers will tell you what you want to hear. They will also tell you about having lender connections, and 2% interest rates, and having years of experience. BEWARE!!! Also beware of the 100% Money back Guarantee. While attractive, we find once a scammer has the money in the bank, good luck getting it back. Do your homework. Contact the state bar, goolge the company using the word "scam" at the end, check with the State Bar (is the attorney licensed?), check with the DRE advance fee agreement list.

FREE OFFER: Call our office at (877) 276-5084 and we will help you research the company you are considering using. We will not disparage other companies but we will point out some obvious things that you may not be aware of.

Baseball: Ted Williams was one of the greatest hitters of all time. In his instructional book "The Science of Hitting" Ted (Mr. Baseball) said that the most important thing in hitting is to get a good pitch to hit. Without getting a good pitch, even the best swing is of little help. The same is true in seeking a loan modification company - FIND A GOOD COMPANY THAT WILL WORK HARD FOR YOU!

(4) Discuss your options: (bankruptcy / short-sale / deed-in-lieu of foreclosure / loan modifications etc.). Knowledge is power - and by hiring a law firm that is prepared to discuss the full realm of options available to you.

•1. Submit Honest and Accurate Information on a Timely Basis and work with your Representative.

(6) Save as much money as you can: No matter what eventually happens you will want to save up as much money as possible. If you make the voluntary decision not to make your mortgage payments (we do not advise homeowners not to make their mortgage payments), do not go on a spending spree. Save your money. MONEY MATTERS: (a) If you decide to sell or walk away from your home, you will have to pay moving expenses, security deposits, etc. (b) If the lender is willing to modify, they may request the borrower bring money to the table to workout a deal. If you ultimately decide a chapter 13 bankruptcy is the best bet, you will need advance fees to pay a bankruptcy attorney as well.

Rather than taking the governments approach to problems (spend money) your best bet will be to preserve your capital to the extent possible.(4) Should a California Homeowner Stop Making Mortgage Payments when they are seeking a loan modification?

This is a question we cannot answer for you, and will not advise you on. While the conventional wisdom on the street is that you have to be late in order to obtain a loan modification, this is not always true. Under President Obama's Making Home Affordable Program (HAMP), a lender may still provide a loan modification and seek financial incentives where a borrower can demonstrate that they are in "imminent threat" of being late on the mortgage. This language suggests that a homeowner does not actually have be late on the loan to obtain a modification.

Loan Mod Tip: In fact, our office has obtained loan modifications where borrowers had not yet missed a mortgage payment. Keep this in mind as you seek to preserve your credit. While it will not hurt our case if you are late on your mortgage, whether or not to make your scheduled mortgage payment is a personal decision and should be based upon your overall financial situation and ability to pay.

(5) What are some of the options to a homeowner facing foreclosure?

1. Seek a loan modification

•1. Pursue a short sale (list house for sale with short-sales realtor). Submit purchase contract, estimated HUD-1 to both first and second mortgage. Second must also agree to the sale. The first may give some of the sales proceeds to the second to compensate the second. However, the second mortgage retains the right to charge-off their debt / seek a deficiency judgment.

Bank of America has a new program (in short sale agreement) asking sellers in a short sale to agree to repay the difference that the bank is compromising. I have seen Aurora try this also. The lenders claim this is simply to protect their investors and insurers.

Short Sale or BK? In chapter 7 bankruptcy, maybe the debtor will lose the house, but liability to both the first and the second mortgage lenders will be wiped out. Even in chapter 13, the debtor can often get rid of second mortgage by "lien stripping" and keep the house by making payments over a period of 3 to 5 years. Contact a Bankruptcy specialist for more information.

•1. Walk away and allow foreclosure to run its course

Have to consider deficiency judgments: First may not come after you following a trustees sale, but a junior lien-holder (2nd mortgage) may charge off your debt and seek to collect. Deficiency judgments and other debts may be able to be written off in BK if the lender persists in pursuing a judgment following a sale.

•1. File for bankruptcy

•2. Hand over the deed in lieu of foreclosure

(6) What is a deed in lieu of foreclosure?

This is where a homeowner basically wants to walk from the property and seeks to quitclaim the deed back to the lender. The lender must be willing to accept the deed and if they do this wipes out the loan via merger.

The lender may not want to accept the deed because basically it will still have to deal with any second mortgage, tax liens, judgment liens, etc. on the property that remain after the DIL. A foreclosure wipes out these other liens. Many lenders would therefore prefer to foreclose and get clean and marketable title.

Note: The DIL only transfers the property to the lender. It does not wipe out the debt unless the lender agrees to do so. The lender may retain the ability to come after you for a deficiency judgment if the ultimate sale of the property does not net the amount owed (which normally it doesn't these days).

Loan Mod Tip: I have been told that Deed in lieu can hurt your credit just as much as a foreclosure or bankruptcy. Apparently this can cost you about 200 points on your credit if your lender accepts. Also, many lenders will issue a 1099-C for any debt forgiven resulting from a DIL. Pursuing a short-sale may be provide a better solution and should be looked at.

(7) Should consumers be paying advance fees when they are seeking a loan modification? (Who ya gonna call?)

There are many organizations and regulators who take the position that homeowners do not need to pay an advance fee in order to obtain a loan modification. If you are talking about just submitting your financials (tax returns, pay stubs, bank statement etc.) and see what, if anything, the lenders are willing to provide you as far as a loan modification is concerned, I would say yes, you can do that yourself and no need to pay anyone an advance fee, UNLESS OF COURSE YOU JUST DON'T HAVE THE TIME TO CONTACT THE LENDERS AND YOU WANT TO HIRE SOMEONE TO DO THIS WHILE YOU AVOID THE HASSLES AND POTENTIAL EMBARASSMENT AND/OR ASSUMING YOU WANT TO SPEND TIME WITH YOUR KIDS AND FAMILY AND FIRNDS RATHER THAN DEALING WITH YOUR FINANCIAL CRISES.

Now, a fair number of our Clients tried to get their own loan modification and either were denied, or ultimately gave up for the inability to contact their lenders. This is what they tell us, this is not fabricated by us.

Still others see some of the benefits to hiring a lawyer of which I will lay out THE TOP REASONS TO HIRE A LAWYER, ATTORNEY OR LAW-FIRM TO ASSIST YOU IN SEEKING A LOAN MODIFICATION.

•1. Some people really truly do not want to deal with their financial crises and would rather hire someone to do this for them. Some people figure hiring a lawyer (since the lenders have lawyers on their side) is the best option for them. They voluntary enter into agreements with attorneys who agree to assist them in this endeavor. If the attorney does not lie, mislead, deceive the consumer, then there is no harm.

•1. Some people don't know anything about dealing with their mortgages, discussing interest rates, discussing workout programs, etc. Just as some people could do their own taxes, or write their own holographic wills, or file their own lawsuits people should be free to hire someone they trust, and someone who is licensed to do this for them.

•1. Some loan modification agreements (ex. Wachovia) specifically state "borrower acknowledges they have had the opportunity to have a lawyer review this agreement...." This suggests that a borrower should consult with an attorney before signing the loan modification agreements provided by a lender or servicer. I don't know how many attorneys would get involved in the limited task of reviewing loan modification agreements, especially where there is a larger role to play.

•1. Only an Attorney can assert and protect your legal rights and ensure the lenders and loan servicers follow the very limited rules of their business. For example, only an attorney can assure that the servicer complies with:

(a) Foreclosure rules that require beneficiaries and/or their agents to contact you to review your financial condition and discuss loan workout solutions before filing a NOD. Is a broker or non-profit agency able to protect your rights in this regard? An attorney can file for an injunction against foreclosure where the lender fails to honor this new legal requirement and insist that this right be honored. What good is this law if no one can enforce it? See California Civil Code Section 2923.5

(b) Submitting a qualified written request (QWR) under RESPA that seeks to ensure the lender is properly servicing your loan and applying payments. Only an attorney can seek to force the lenders to comply with these requests and to potentially file a lawsuit for a RESPA violation and/or seek an injunction against foreclosure (on grounds of wrongful foreclosure) where the servicer is found to be cheating or otherwise improperly servicing the loan. Only an attorney can fight to demand a full and fair accounting in this regard. Brokers and non-profits are not able to assert these demands and insist these rights be honored.

(c) Demanding the loan servicer identify the holder of the loan obligation (a right set forth under Federal Truth in Lending law - USC ). What good is this right if there is no one there to enforce it, or use the law? Is this just a law that is supposed to sit on the books and collect dust? Only a lawyer can make this legal demand and seek to hold the loan servicer accountable where it fails to comply. By identifying the holder of the loan obligation, two or three things become possible: (1) if the loan servicer refuses to modify the loan, a final demand can be sent to the holder of the loan, and (2) if there are proper grounds to file a lawsuit to rescind a loan (which is applicable to loan assignees) then the holder of the loan should be forced to show up in Court and explain why the right of rescission was not honored (assuming a client sends in a rescission notice). If there is no way to identify the holder of the loan, then there is no way to ensure TILA rights (you know, that pesky consumer law) will be protected. Finally, (3) if there are grounds to bring the holder of the loan into court, shouldn't it be proper to ask the judge to have the holder of the loan show that it is entitled to foreclose on you? To show that it holds the promissory note, proper assignments, and that they are entitled to enforce the loan? Brokers and non-profit organizations which do not practice law, and which are not permitted to do so, simply cannot protect these important rights, that may even play a role in seeking a loan modification

(8) What is this whole "produce the note" strategy we are hearing about?

This is a foreclosure defense strategy that basically says if a foreclosing beneficiary, or its agent, who is attempting to foreclose on your property, cannot produce the promissory note and any assignment of the note, then it has no legal right to foreclose on your property.

The strategy has mostly been successful in states that require judicial foreclosure (as opposed to states like California and Arizona which permit private trustee sales outside of court).

In those states where judicial foreclosure is mandated, the lender is already in Court, and it makes sense for a defendant (the homeowner who answers the complaint) to ask the the judge make the Plaintiff (lender) actually prove they have the legal right to foreclose on the loan as owner.

Now, the California foreclosure statute (California Civil Code Section 2924 et seq.) do not require that the note be produced as part of a private judicial foreclosure sale. However, that is not to say that there may not be a way to work this strategy into a foreclosure defense, or that there might not be a judge willing to require that the foreclosing entity prove it has the legal right to do so. The key however is probably having a legal right to go to Court on other grounds, and then raising the produce the note issue as a strategy.

In at least one California case a Bankruptcy judge required that the lender produce the note. So there is legal precedent in California for this proposition. In addition, more cases may be coming up on appeal.

So where I see this is playing a role in foreclosure defense is where you have a truth in lending three year right to rescind (for TILA violations) which is applicable against the loan assignee. If you send in a rescission letter and the lender refuses to honor the request, the borrower has a right to file a lawsuit seeking an injunction and TILA damages from the lender. If that is the case, why not also seek an injunction against foreclosure and demand that the foreclosing lender prove its right to foreclose at the same time.

Again, loan brokers and non-profit entities are not able to detect, assert or enforce your rights in this area.

When it comes to saving your home from foreclosure, you pull out all of the stops. You never know who is going to be waring the robe, or what the current state of the law will be once you get before that person. You have to literally turn over every rock.

(9) What is the Bankruptcy "cramdown" bill?

This is a bill that many homeowners were hoping would pass. While BK judges are already permitted to "lien strip" second mortgages that are not secured by any equity in a homeowners property (i.e. they get rid of your second mortgage), the cramdown law would have given the Bankruptcy judges the power to strip principal off the first mortgage as well with very little the lenders could have done about it. This would have been great because it probably would have compelled more lenders to seek meaningful loan modifications, rather than just modifications on their terms. The law failed to pass, but there is talk about a revised bill resurfacing.

(10) What is "cash for keys"?

After a lender forecloses on a property, and the homeowner stays in possession of the property, the homeowner essentially becomes a tenant. The new owner of the property who purchased the property at a foreclosure sale (usually the bank if they were the highest bidder) will want the owner out of the property, but also wants the property not to be ripped apart as often happens in foreclosed properties. To remedy the situation, the lender or owner may offer to give the tenant "cash for keys." In other words, if the tenant leaves the property within 2-4 weeks, the tenant will receive a cash incentive to hand over the keys and a well maintained property. Often the cash can amount to one or two months worth of rent.

(11) What are the effects on California homeowners when foreclosures proceed at such a high clip?

Communities all over the country continue to be devastated by foreclosure. Housing prices are decreasing (bad for owners locked into their properties, but good for first time homebuyers).

The Obama home affordability program was designed to help make communities stable, but plenty of lenders are not giving homeowners mortgage modifications. Instead, they are giving homeowners the finger - the middle one to be exact. Can we expect better solutions on the horizon other than just the banks and financial institutions getting bailed out? As Senator Durbin stated: "The Banks own the Senate." Don't expect much change here.

(12) What about stated income loans?

Also called liars loans. Allowed anyone that could fog a miror to get a loan. The brokers and lenders packed the loan applications, and did whatever they had to do to get the loan to pass though the underwriting department. 4506-T IRS tax return forms were not completed and borrower returns were not checked for accuracy. Even lenders did not verify salary.com figures to make sure stated incomes were at least in the realm of reasonableness.

Now, lying borrowers cannot expect a lot of sympathy. But if the Broker unilaterally placed income figures on the 1003 loan applications, this could raise a case of fraud against the original broker and lender. If the loan is held in a portfolio loan, this could provide some legal leverage against a lender especially where the borrower has credibility that they would not have trumped up the income level, and where the tax returns will verify a different picture than the 1003 reflects.

(13) What is this SB 94 Bill?

This is the California proposed bill that seeks to limit attorneys, brokers, and loan modification companies from accepting advance fees for performing loan modifications. The goal is to protect homeowners from scams. Our office is against this law for the following reasons:

•a. Borrowers and homeowners should be free to hire any properly licensed professional they want to perform services they themselves do not want to perform.

•b. The Lenders have paid lawyers on staff working these modifications. Homeowners should be able to be on a level playing field in seeking a loan modification.

•c. Out of state brokers and lawyers will undoubtedly continue to seek to assist California homeowners, which harms the local California economy which is badly in need of local revenues.

•d. The goal should be to outlaw "attorney backed" or "attorney based companies" that do little more than falsely advertise legal services that normally aren't involved.

•e. Lawyers will not likely work if advance fees cannot be collected (would BK attorneys work if they could not collect an advance fee)? This prevents California homeowners from being able to hire lawyers to adequately represent them.

•f. Lawyers are the only ones who can protect and assert consumer rights and file lawsuits if necessary to preserve these rights. Attorneys should not be forced out of this process.

(14) How Can you Leverage a Loan Modification where the Investor Claims they are a "Holder in Due Course?

Trying to Leverage Loan Modifications against the Assignee Holder in Due Course.

One of the Key things we try to figure out as loan modification attorneys is who holds your loan? Who is entitled to enforce the Note?

Who will be initiating foreclosure proceedings? Do they have all of the proper assignments and promissory note?

Who can we try to leverage (ex. Sue if we have to) to obtain a loan modification?

One way we try to find answers to these questions is by making a demand on the current loan servicer (the company collecting your mortgage payment each month) to tell us who the holder of the loan obligation is, their name, address and phone number. We make this request under Truth In lending law ( U.S.C. ).

One of the major problems with this law is that it does not state exactly when the loan servicer is required to supply this information. Now, some servicers are good about providing this information in a timely manner. Some comply but only identify the holder of the loan (ex. Wells Fargo as Investor on the loan). Other lenders just ignore their legal compliance obligations altogether in defiance of a homeowner's rights. Aurora Loan Servicing is one of the more pathetic companies that come to mind in this regard.

The key thing to think about is that if your originating lender is servicing the loan, a loan audit may reveal some potent violations against them and you may be able to threaten a lawsuit that seeks legal damages.

In many cases, the loan was sold off in the secondary market, securitized, and purchased by investors who claim there is no liability against them as they are "holders in due course" of the loan, and are free from legal claims and defenses. While this holds some degree of truth, we would still want to audit your loan file to find potential truth in lending violations that may provide an extended three year right to rescind. Rescission rights are applicable against any and all loan assignees, including these holders in due course.

One way to find out whether or not your loan was sold off and securitized on the secondary market is to use some free online search toools. Many fannie mae and freddie mac loans were securitized and sold off. Use the two tools below (check your address in both databases) and you will probably get a good idea whether or not you will be dealing with the "innocent investor" defense raised by "holders in due course."

Does Freddie Mac own your loan?

https://ww3.freddiemac.com/corporate/

Does Fannie Mae own your loan?

http://loanlookup.fanniemae.com/loanlookup/

Now, even where the loan is owned by investors and the holder in due course problem arises, there are still some claims that can be asserted against these loan assignees. The best assertion is rescission claims. However, here are a few arguments that can be looked at when trying to evaluate the strenght of a potential lawsuit against the "innocent investor" and trying to obtain some type of leverage for a favorable loan modification decision.

Note: we have not tested the strength of these legal theories but these and other theories might be worth exploring:

(1) Conspiracy

(2) Joint venture

(3) Creating the Marketplace for Predatory Option Arm loans

(4) Aiding and abetting 17200 violations

(5) Frauduent Schemes

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Notice of Sale? Notice of Default? There may still be time to obtain a loan modification. Loan Modification Attorney Service

Steve Vondran (Law Offices of Steven C. Vondran) — Mon, 03 Aug 2009 20:38:33 -0500

LOAN MODIFICATION ADVERTISEMENT:

HELLO EVERYONE MY NAME IS STEVE V0NDRAN - ATTORNEY/BROKER - CA/AZ / OFFICES IN BOTH STATES (PHOENIX AND NEWPORT BEACH).

TOPIC TODAY IS LOAN MODIFICATIONS - WHAT THEY ARE / HOW THE PROCESS WORKS ETC.

MY FIRM HAS BEEN HANDLING LOAN MODIFICATIONS FOR ABOUT A YEAR NOW (AS OF THIS POSTING), WHICH IS FAIRLY WELL EXPERIENCED AS FAR AS THE LOAN MODIFICATION INDUSTRY IS CONCERNED. SOME COMPANIES ARE NOW CLAIMING 20 OR THIRTY YEARS OF EXPERIENCE IN THIS BUSINESS. DO YOU RECALL ANYONE SAYING THEY WERE LOAN MODIFICATION LAWYERS OR COMPANIES 20 YEARS AGO? BE VERY SUSPICIOUS OF THESE TYPES OF CLAIMS AS WELL AS "ATTORNEY-BACKED" OR "ATTORNEY BASED" CLAIMS THAT OFTEN AMOUNT TO LITTLE MORE THAN FALSE ADVERTISING.

JUST TO PROVIDE A LITTLE BACKGROUND - PRIOR TO THE OBAMA MAKING HOME AFFORDABLE PROGRAM, THE BANKS WERE GIVING LOAN MODIFICATIONS BUT REALLY ONLY FOREBEARANCES OR REPAYMENT PLANS. (REMEMBER, A LEGAL CONTRACT BETWEEN YOU AND THE BANK WAS PREVIOUSLY SIGNED). NOW, THE BANKS ARE DOING MORE SIGNIFICANT MODIFICATIONS THAT INCLUDE INTEREST RATE REDUCTIONS AND IN SOME INSTANCES MAY PROVIDE PRINCIPAL REDUCTION.

I HAVE TO MAKE THE NOTE UP-FRONT, NO ONE AND NO COMPANY CAN GUARANTEE YOU A LOAN MODIFICATION OR PRINCIPAL REDUCTION. EVERY CASE, EVERY LENDER, EVERY BORROWER, EVERY PROPERTY IS DIFFERENT.

IN GENERAL, THERE ARE TWO TYPES OF LOAN MODIFICATIONS, (A) MODIFICATION BASED UPON A FINANCIAL HARDSHIP AND (B) A MODIFICATION THAT MAY BE MORE HEAVILY INFLUENCED BY LEGAL VIOLATIONS, SUCH AS TRUTH IN LENDING VIOLATIONS WHICH WE WILL DISCUSS LATER.

BEFORE WE GET STARTED, I WANT TO SAY A WORD OR TWO ABOUT LOAN MOD SCAMS: THERE ARE LOTS OF COMPANIES THAT GOT INTO THE LOAN MOD GAME (BROKER / NON-BROKERS / FORECLOSURE CONSULTANTS / ATTORNEYS ETC.) YOU NEED TO BE CAREFUL WHO YOU DECIDE TO WORK WITH. KEEP IN MIND THERE IS NOTHING PREVENTING YOU FROM SUBMITTING YOUR FINANCIAL INFORMATION FOR A FINANCIAL HARDSHIP

OUR FIRM IS HANDLING LOAN MOD SCAMS AND TRYING TO OBTIAN REFUNDS FOR OUR CLIENTS ON A CONTINGENCY FEE BASIS. IF YOU HAVE BEEN LIED TO, CHEATED, SCAMMED OR RIPPED OFF BY A LOAN MOD COMPANY CALL US AT (877) 276-5084.

BROKERS MUST BE ON DRE APPROVED LIST - ADVANCE FEE AGREEMENT (MY COMPANY HAS SET UP ABOUT 50 BROKERS TO LEGALLY DO THIS, AND THESE COMPANIES ARE VICTIMS OF UNFAIR COMPETITION WHEN UNLICENSED COMPANIES DO WHATEVER THEY WANT WITHOUT THE PROPER CREDENTIALS. CHECK DRE.GOV WEBSITE.

BEWARE OF SO-CALLED “ATTORNEY BACKED” (THERE EITHER IS NO ATTORNEY OR THEY DO VERY LITTLE WORK).

LAWYERS AND LAW FIRMS - CHECK THE STATE BAR WEBSITE (CALBAR.ORG) AND MAKE SURE NO DISCIPLINE

IF YOU ARE UNSURE WHETHER THE LOAN MODIFICATION COMPANY YOU ARE CONSIDERING DOING BUSINESS WITH CAL US AT (877) 276-5084 AND PERHAPS WE CAN SHED SOME LIGHT ON THE MOD COMPANY YOU ARE CONSIDERING. ANOTHER TRICK IS TO TYPE THE NAME OF THE COMPANY IN GOOGLE AND SEE WHAT YOU FIND. YOU MAY BE SURPRISED AS MANY CALLERS ARE WHO CONTACT US.

OKAY, LET’S TALK ABOUT LOAN MODIFICATIONS. FIRST THING I WANT TO DISCUSS IS WHAT THE DIFFERENCE BETWEEN WORKING WITH A REAL ESTATE BROKER AND REAL ESTATE ATTORNEY IS:

BROKER = SUBMIT FINANCIALS. THERE ARE SOME GOOD BROKERS OUT THERE PERFORMING LOAN MODS AS A SERVICE.

ATTORNEY = SERVICE SEEKS TO UNCOVER POTENTIAL LEVERAGE FOR NEGOTIATIONS, AND SEEKS TO PUT THE LENDER ON NOTICE OF THE CLIENTS POTENTIAL LEGAL CLAIMS AND SETS FORTH A LOAN MODIFICATION PROPOSAL. BASICALLY, WE TAKES A PRE-LITIGATION POSTURE AND SEEK TO OBTAIN OR UNCOVER EVIDENCE THAT MAY ASSIST IN TIPPING THE SCALES FOR A LOAN MODIFICATION.

TYPICAL SERVICES PROVIDED IN AN ATTORNEY LOAN MODIFICATION:

FORENSIC LOAN AUDITS
LEGAL DEMAND LETTERS
QUALIFIED WRITTEN REQUESTS
DEMAND TO PRODUCE THE HOLDER OF THE NOTE
REQUESTS TO DEAL ONLY WITH THE ATTORNEY UNDER FAIR DEBT COLLECTION PRACTICES ACT
ABILITY TO THREATEN AND FILE LAWSUITS
ABILITY TO ADVISE ON TOPICS SUCH AS DEED IN LIEU OF FORECLOSURE AND DEFICIENCY JUDGMENTS
ATTORNEYS CAN HANDLE NOTICE OF DEFAULT CASES IN CALIFORNIA, WHILE BROKERS CANNOT ACCEPT ADVANCE FEES FOR SUCH SERVICES.

OUR GOAL IS TO HELP YOU KEEP YOUR HOME, AND ON TERMS / PAYMENT THAT YOU CAN AFFORD. WE DO THIS SERVICE FOR A PRICE THAT IS COMPARABLE TO WHAT MOST BROKERS CHARGE FOR THEIR SERVICES.

IF YOU ARE LATE ON MAKING YOUR MONTHLY PAYMENTS, OR IN IMMINENT THREAT OF BEING LATE, CONTACT US TODAY TO DISCUSS YOUR SITUATION. THERE MAY BE HELP AVAILABLE. CALL US AT (877) 276-5084. A REPRESENTATIVE IS WAITING TO TAKE YOUR CALL.

JUST KNOW THIS, THE BANKS WERE BAILED OUT BY PRESIDENT OBAMA. THEY HAVE THE ABILITY TO MODIFY YOUR LOAN IN MANY CIRCUMSTANCES. CONTACT A LAW FIRM TO HELP YOU MAKE THE CASE FOR MORTGAGE MODIFICATION. LET ME SAY THAT AGAIN IN CASE YOU DIDN’T QUITE HEAR THAT - THE BANKS HAVE THE POWER TO MODIFY YOUR LOAN: DON’T TAKE A FORECLOSURE NOTICE LYING DOWN - YOU MAY HAVE LEGAL RIGHTS THAT YOU CAN ASSERT THAT MAY HELP YOU SAVE YOUR HOME FROM FORECLOSURE. CALL ATTORNEY STEVE VONDRAN TODAY AT (877) 276-5084. WHY BEG WHEN YOU MAY HAVE THE LEGAL RIGHT TO DEMAND?

EXAMPLES: LET’S TALK ABOUT A FEW EXAMPLES OF LOAN MODS MY OFFICE HAS BEEN ABLE TO OBTAIN. NOTE THAT PAST RESULTS CAN NOT BE USED TO SUGGEST ANY PARTICULAR OUTCOME IN YOUR CASE:

WE HAD ELDERLY CLIENTS STEERED INTO A PREDATORY OPTION ARM LOAN (IN CASE YOU DON’T KNOW, OPTION ARM ALLOWS YOU TO MAKE 4 DIFFERENT TYPES OF PAYMENTS). WE AUDITED OUR CLIENTS LOAN FILE AND FOUND TRUTH IN LENDING VIOLATIONS. WE ALSO MADE PREDATORY LENDING CLAIMS UNDER CALIFORNIA’S ELDER ABUSE STATUTE (IF YOU WERE OVER 65 AT THE TIME OF REFINANCING YOUR LAST LOAN, AND FEEL YOU WERE A VICTIM OF PREDATORY LENDING, CONTACT US FOR A NO-COST DISCUSSION - CALIFORNIA’S ELDER ABUSE LAW HAS SOME SERIOUS TEETH AGAINST PEOPLE WHO VIOLATE THE LAW). ANYWAY, WE SENT IN DEMAND AND WERE ORIGINALLY DENIED A LOAN MOD. WE PERSISTED MAKING OUR CASE TO THE LEGAL DEPARTMENT AND WERE EVENTUALLY ABLE TO OBTAIN A MOD BY THREATENING A LAWSUIT. WE HAVE A COPY OF THE TESTIMONIAL VIDEO WE DID FOR ANYONE WHO WOULD LIKE TO SEE IT. SIMPLY CONTACT US AT (877) 276-5084 AND WE WILL EMAIL YOU A LINK TO THE VIDEO. AGAIN, AS A LAW FIRM, WE SOUGHT OUT THE EVIDENCE THAT COULD BE USED TO HELP MAKE OUR CASE FOR A LOAN MOD. IF YOU WERE THE LENDER / INVESTOR, WHAT WOULD YOUR CHOICES BE? A MUTUALLY BENEFICIAL LOAN MODIFICATION IS IN EVERYBODY’S INTEREST.

TRUTH IN LENDING VIOLATIONS HELP CREATE LEGAL LEVERAGE FOR A LOAN MODIFICATION. IN CONDUCTING OUR FORENSIC LOAN AUDITS, WE LOOK FOR PREDATORY LENDING VIOLATIONS, IN PARTICULAR WE ARE LOOKING FOR TRUTH IN LENDING VIOLATIONS.

TRUTH IN LENDING VIOLATIONS CAN ARISE FROM THE LENDERS FAILURE TO PROVIDE MATERIALS DISCLOSURES TO THE CONSUMER (INCLUDING APR AND FINANCE CHARGE) OR THEY CAN ARISE FROM PROBLEMS IN RELATION TO THE NOTICE OF RIGHT TO CANCEL, WHICH IS A REQUIRED DISCLOSURE IN NON-PURCHASE MONEY TRANSACTIONS. WE DO NOT HAVE TIME TO GO INTO THE DETAILS OF WHAT THESE VIOLATIONS CONSIST OF, BUT SUFFICE IT TO SAY THAT THESE VIOLATIONS CREATE AN EXTENDED THREE YEAR RIGHT TO RESCIND YOUR LOAN. LET ME SAY THAT AGAIN, IF WE FIND A TRUTH IN LENDING VIOLATIONS IT MAY TRIGGER AN EXTENDED THREE YEAR RIGHT TO RESCIND, OR CANCEL YOUR LOAN.

AS A LAW FIRM WE CAN USE THE EXTENDED RIGHT TO RESCIND TO CREATE LEGAL LEVERAGE THAT CAN BE USED TO ASSIST YOU IN OBTAINING A MEANINGFUL LOAN MODIFICATION. WE HAD ONE CLIENT THAT WAS SEEKING A LOAN MODIFICATION, BUT WE WERE TOLD HE MADE TO MUCH MONEY. AFTER CONDUCTING A FORENSIC LOAN AUDIT AND UNCOVERING A MATERIAL TRUTH IN LENDING VIOLATION, WE PRESENTED A SCENARIO FOR RESCISSION TO THE LENDER. THE LENDER WAS VERY UPSET ABOUT OUR USE OF THE TRUTH IN LENDING LAW, BUT WE INFORMED THEM THAT THIS IS OUR CLIENTS LEGAL RIGHT AND THAT THE LAW MUST BE FOLLOWED. AFTER A FEW WEEKS OF WRANGLING BACK AND FORTH WE WERE ABLE TO SETTLE ON A 4% LOAN MODIFICATION.

NOTICE OF DEFAULT / NOTICE OF SALE DATE (ITS NOT TOO LATE TO NEGOTIATE DURING THE NOD/NOS PROCESS): WE RECENTLY HAD A CLIENT THAT WAS ON THE BRINK OF FORCECLOSURE. HE HAD BEEN ABUSED BY SEVERAL LOAN MODIFICATION COMPANIES AND DECIDED TO USE THE SERVICES OF A LAW FIRM TO SEEK A MEANINGFUL LOAN MODIFICATION. WE AUDITED HIS FILE, SUBMITTED OUR DEMAND LETTER AND WERE ABLE TO EXTEND THE SALE DATE ON THE PROPERTY. ULTIMATELY WE WERE SUCCESSFUL IN OBTAINING A LOAN MODIFICATION.

THESE ARE JUST A FEW EXAMPLES OF CALIFORNIA HOMEOWNERS WE WERE ABLE TO ASSIST WITH OUR ATTORNEY LOAN MODIFICATION SERVICES. AGAIN, OUR PRICING IS COMPETITIVE WITH THE PRICING OF REAL ESTATE BROKERS WHO PROVIDE THE SAME SERVICE (ALTHOUGH NORMALLY WITHOUT ALL OF THE SERVICES WE PROVIDE).

LOAN MOD TIP: DO NOT TAKE THE LENDER’S WORD FOR ANYTHING UNLESS IT IS IN WRITING!! HOMEOWNERS HAVE BEEN PROMISED THAT NO SALE OF THEIR PROPERTY WOULD OCCUR WHILE A LOAN MODIFICATION WAS BEING WORKED OUT, ONLY TO HAVE THE HOUSE SOLD FROM UNDERNEATH THEM. DO NOT TRUST LENDERS TO TREAT YOU FAILRY. YOU NEED A LAW FIRM TO PROTECT YOUR INTEREST.

IF YOU ARE A HOMEOWNER IN NEED OF A MEANINGFUL LOAN MODIFICATION, CONTACT OUR OFFICE TO DISCUSS. WE HAVE A REPRESENTATIVE STANDING BY TO DISCUSS YOUR LOAN. CALL US AT (877) 276-5084.

LET ME SAY THAT AGAIN IN CASE YOU DIDN’T QUITE HEAR THAT (BULLHORN) THE BANKS HAVE THE POWER TO MODIFY YOUR LOAN: DON’T TAKE A FORECLOSURE NOTICE LYING DOWN - YOU MAY HAVE LEGAL RIGHTS THAT YOU CAN ASSERT THAT MAY HELP YOU SAVE YOUR HOME FROM FORECLOSURE. CALL ATTORNEY STEVE VONDRAN TODAY AT (877) 276-5084. WHY BEG WHEN YOU MAY HAVE THE LEGAL RIGHT TO DEMAND?

WACHOVIA / WORLD SAVINGS SUBPRIME LOANS AND OPTION ARM LOANS: FOLKS, IF YOU HAVE A WORLD SAVINGS OPTION ARM LOAN OR A WACHOVIA OPTION ARM LOAN, CONTACT US TODAY TO DISCUSS YOUR LOAN. WE HAVE BEEN VERY SUCCESSFUL IN OBTAINING SWIFT RESULTS (NORMALLY IN 7-30 DAYS) WHICH IN SOME CASES HAVE RESULTED IN OBTAINING PRINCIPAL REDUCTION. AGAIN, WE DO NOT GUARANTEE ANY PARTICULAR RESULTS. WE TAKE THESE WACHOVIA AND WORLD SAVINGS LOAN ON A CONTINGENCY FEE BASIS, WHICH MEANS YOU PAY NOTHING UNLESS WE OBTAIN A LOAN MODIFICATION FOR YOU.

CALL US TODAY AT (877) 276-5084 TO DISCUSS YOUR WACHOVIA OR WORLD SAVINGS LOAN.

WRAP UP: AGAIN, THE BANKS AND LENDERS HAVE THE ABILITY TO MODIFY YOUR LOAN. IT IS NOT TOO LATE TO SAVE YOUR HOME FROM FORECLOSURE AND LOWER YOUR INTEREST RATE.

CONTACT OUR FIRM TO DISCUSS YOUR CASE.

OUR NUMBER AGAIN IS (877) 276-5084. WE ARE HERE AND STAND READY TO FIGHT FOR YOU TO SAVE YOUR HOME AND GET YOU THE MEANINGFUL LOAN MODIFICATION YOU ARE SEEKING AND WHICH IN MANY CASES THE LENDERS ARE INCENTIVIZED TO PROVIDE.

YOU CAN FIND MORE INFORMATION AT WWW.VONDRANLEGAL.COM . Submit your property information at www.LoanModSoultions.Net. If you are a victim of loan modification scams submit your information at www.LoanModificationRipoff.net.

ARIZONA OFFICE: 2415 E. Camelback Road, Suite 700, Phoenix, Arizona 85016

CALIFORNIA OFFICE: 620 Newport Center Drive, Suite 1100, Newport Beach, CA 92660

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Military Loan Modifications - Army, Navy, Air Force, Marines, Coast Guard, National Guard - Loan Mod Lawyer Service

Steve Vondran (Law Offices of Steven C. Vondran) — Mon, 27 Jul 2009 13:43:47 -0500

I have been getting calls lately from a few active military personnel asking if there are any special loan modification rules and laws that may help a soldier or person employed by the army, navy, air force, marines, national guard or coast guard stay in their home, avoid foreclosure and obtain a meaningful loan modification. This blog post will discuss in general terms only, the "Servicemembers Civil Relief Act" which can be found at 50 USC Section 501-596.

The following is general legal information only. If you have any specific questions about our attorney loan modification services in Greater Phoenix, Arizona or the State of California please email me at Steve@VondranLaw.com or call us at (877) 276-5084. We also have websites at www.VondranLaw.com and www.VondranLegal.com. Emails are not confidential and do not create an attorney-client relationship so please do not send confidential information.

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The Servicememebers Civil Relief Act (SCRA) was passed on Dec. 19, 2003. This law amends the Soldier's and Sailors Civil Relief Act of 1940.

In general, the law seeks to protect active duty service members and their families from facing foreclosure while in active duty, or within 90 days after discharge. In addition, financial provisions cap interest rates at 6% while the servicemember is on active duty. This may help you if you are facing foreclosure and seeking a meaningful loan modification to protect you, your family, and your real estate investment.

If you have more questions about this law, contact us at steve@vondranlaw.com or call (877) 276-5084.

Emails sent to us are not confidential and do not create an attorney-Client relationship. This is an advertisement and communication pursuant to state bar rules. The above information is not legal advice nor is it intended to serve as legal advice.

The Law Offices of Steve Vondran is licensed to practice law only in California and Arizona. We do not seek to solicit clients outside of these two states. Steve Vondran is licensed as a Broker and Attorney in both California and Arizona.

Arizona Office (Serving Greater Phoenix Homeowners) 2415 E. Camelback Road, Suite 700, Phoenix, AZ 85020.

California Office: (Servicing San Diego County, Riverside County, San Bernardino County, Orange County, and all other towns and cities in California). 620 Newport Center Drive, Suite 1100 Newport Beach, Ca. 92660.

www.VondranLaw.com / www.AttorneyMods.com / www.LoanModificationRipoff.net / www.AdvanceFeeContract.com

Loan Modification Lawyer takes Wachovia and World Savings Loans on Contingency Fee Basis!

Steve Vondran (Law Offices of Steven C. Vondran) — Sun, 26 Jul 2009 20:28:53 -0500

Attention California and Arizona homeowners - if you are facing foreclosure and cannot afford your loan in its current condition (i.e. you have an adjustable rate mortgage that is about to adjust or a negative amortization ARM that you cannot keep up with) give us a call to discuss our attorney loan modification service. Basically, we have been having very good success in obtaining loan modifications for Wold Savings Option Arm Loans and Wachovia Option Arm loans. Also for subprime loans for Wachovia and World Savings.

The best part about all of this is YOU PAY NO UP-FRONT FEES UNTIL AND UNLESS WE OBTAIN A LOAN MODIFICATION FOR YOU. YES, THAT MEANS WE WILL TAKE THE CASE ON A CONTINGENCY FEE BASIS. All we need from you is a payment coupon, income documentation, hardship letter and usually that will suffice. At times we may require other documents such as tax returns, rental agreements, bank statements, etc. But this is the exception rather than the rule.

Timeframes: Barring any issues with mortgage insurance, we are able in most cases to get an approved loan modification in 10-30 days. Compare that with the usual 30-120 days most other loan modifications company take and you have a pretty good deal there. Now, please note we can make no guarantees, warranties or promises that we will be successful in obtaining a loan modification. If you make too much money, or make too little, there may be obstacles to obtaining a meaningful modification. But when there is no advance fee, what do you have to lose?

Contact us to discuss your loan situation. What's more impressive about the World Savings Options Arm and Subprime Loans, and Wachovia Option Arm Loans and Subprime loans service is there is a realistic chance of obtaining principal loan balance reduction. This means, the lender may be willing to reduce your loan balance from $400,000 to $300,000 etc. (this principal loan balance reduction obviously will result in a reduced loan payment because you are paying you loan on a lesser amount than you are now).

Types of Loan modifications we are obtaining on a contingency fee basis for Wachovia and World Savings Option Arm and Subprime Arm Loans:

(1) Interest rate reductions

(2) Converting ARM loans into fixed loans

(3) Reducing principal loan balance ("principal reductions")

(4) Interest rates starting in the low 2% (again no guarantees)

(5) The lender (now owned by Wells Fargo) likes to give "step-up" interest rate programs (ex. the interest rate is 2.5% first year, 3.0% second year, 3.5% third year. etc.). Again this is just an example.

If you are facing foreclosure and have received a notice of default or notice of sale, you might want to consider hiring a California or Arizona loan modification law firm. There are lots of companies calling themselves "attorney-backed" or "attorney based" especially in Phoenix, Arizona, but no one has been able to really describe to me what that means or how it benefits you as a homeowner.

What we typically find in these scenarios is that there is either no attorney whatsoever (i.e. they lure you in with the "attorney badge") only to learn there is no attorney at all, or they will claim an attorney will do the loan audit and negotiation (only to find out they outsource this to a non-attorney processing company) or there is an attorney but the contract you sign indicates the attorney will not represent you and will not provide legal advice or legal services. I ask you, what is "attorney backed" or "attorney based" loan modification company? If you really want an attorney, why not just hire one?

Call us to discuss your loan modification. (877) 276-5084. We have offices in Phoenix, Arizona and Newport Beach California. Attorney Steve Vondran, Esq. is licensed to practice law in both states, and he also holds a real estate broker license in both states. Mr. Vondran has previously worked in the mortgage lending arena and essentially his last day of work was when the owner insisted that all salespersons sell the option arm negative amortization ("negam") loans. These products are an example of predatory loans that are deceptively marketed and rarely understood by the non-investor borrower. Mr. Vondran can be reached at steve@vondranlaw.com or www.vondranlaw.com.

Because most all of our work with you and the lenders is done by phone, fax, and email, we are able to serve California and Arizona homeowners in all of the following cities and towns:

Arizona

CALIFORNIA

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If you are a homeowner looking for an attorney or law firm to handle your loan modification request, please visit www.loanmodsolutions,net Fill out the form and a representative of our firm will contact you promptly to discuss your situation.

Homeowners who believe they may have been a victim of loan modification fraud should visit www.LoanModificationRipoff.net . Fill out the form and a representative of our firm will contact you promptly to discuss your situation.

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You can also reach Steve Vondran, Esq. at steve@vondranlaw.com OR visit www.VondranLegal.com

Commercial advance fee contract at www.commercialadvancefeeagreement.com

Residential advance fee agreement at www.advancefeecontract.com

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Other legal services we provide to our California and Arizona Clients:

Real Estate Zoning & Entitlements in Phoenix and Scottsdale area (and surrounding cities)
Greater Phoenix Eminent Domain and Prop. 207 law (inverse condemnation)
Real estate Arbitration
Real Estate Litigation
Quiet Title Actions
Real Estate Broker Law (contracts, partnerships, commission disputes, etc.)
Loan Modification / Loan Workout (Foreclosure Prevention)
Forensic Loan Audit
Predatory Lending Law
Arizona Restaurant Law (Purchase, Sale, Site Selection)

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OUR OFFICES:

ARIZONA OFFICE (Phoenix, Arizona)

2415 E. Camelback Road, Suite 700
Phoenix, Arizona
85016
Phone: (877) 276-5084
Email: Steve@VondranLaw.com

CALIFORNIA OFFICE (Newport Beach, California)

620 Newport Center Drive, Suite 1100
Newport Beach, California
92660
Phone: (877) 276-5084
Email: Steve@VondranLaw.com

THIS IS AN ADVERTISEMENT AND COMMUNICATION PURSUANT TO STATE BAR RULES.

Some thoughts by an Attorney on SB 94 Calderon Loan Modification Bill Preventing Advances Fees from Being Paid for Loan Modifications

Steve Vondran (Law Offices of Steven C. Vondran) — Tue, 14 Jul 2009 12:05:16 -0500

The California legislature has moved to pass a bill known as SB 94. The law seeks to prevent Brokers (and according to Governor Schwarzennegar) and Attorneys to prevent them from taking advance fees for performing loan modifications. My office has received many calls from Brokers and Attorneys inquiring into the practical effect of this law, if it in fact passes. Here are just a few of my comments to which I welcome rebuttal points:

First, here is the governor's point of view: http://www.prweb.com/releases/loan-modifications/california/prweb2618464.htm

And here is a text to the actual proposed bill: http://info.sen.ca.gov/pub/09-10/bill/sen/sb_0051-0100/sb_94_cfa_20090327_152419_sen_comm.html

(1) Submitting a loan modification package to a lender seeking a loan modification is not an easy task (it takes alot of time to package the file, submit, contact lender, follow-up etc.), and if someone wants to pay a licensed broker or a licensed attorney to handle this as a service, the California homeowner should be able to do that. What is this "nanny state" where the legislature tries to tell a California homeowner how they can spend their money? If someone wants to pay a loan modification attorney to perform a service, shouldn't they be entitled to do that? If they don't want to pay in advance they can shop around for those options too. As a consumer, they are free to shop around and do their homework.

(2) The loan modification is a unique business. For many California homeowners, they want a great modification (not just any ole modification) and if Brokers and Attorneys were forced to wait for payment until after services are performed, and if the homeowner were to either get no loan modification at all, or a modification they were not pleased with, in some cases the homeowner will not be willing to pay for the services provided. This hardly seems a fair result either and works to de-incentivize Brokers and attorneys from taking loan modification cases where advances fees cannot be charged. Also note, that many times (even for me as a lawyer) the bank sends the loan modification agreement directly to the homeowner. This also adds to the difficulty of getting paid, especially if the homeowner made a few calls to the banks and talked to the lender, and they feel they are the reason they got a loan modification.

(3) If attorneys are de-incentivized to take foreclosure assistance cases, and if California homeowners are directed toward non-profits and companies that will work without an advance fee, then there will be a serious void of legal advice available for California homeowners. Non-profit associations may not give legal advice, neither may brokers or other companies that will not take advance fees. This means, the lenders have a slew of lawyers advancing their causes, while the homeowner is virtually left with little or no opportunity for obtaining legal advice. Why doesn't the law also say bankruptcy attorneys cannot charge an advance fee in performance of services?

(4) Undoubtedly, many California homeowners will be solicited by out-of-state brokerages and non-broker "loan mod companies" who will seek to serve these Clients for a fee, despite the California requirements. This will take money out of California, and divert it to other states and their local economies (after all, loan modifications is currently a pretty good business for many California Brokers and Attorneys). This business will be gone along with a chance to keep the California economy healthy. Schwarzennegar does not seem to care about local and state-wide economics, at least at the attorney/broker level.

(5) There could be stringent licensing and education requirements imposed on California brokers and attorneys who want to engage in the loan modification business (ex. special licensing requirements) and fees could be charged for these services. This would help raise revenue and the level of services would it not? I never seem to hear about proposals of this nature. Rather, the focus is merely on protecting consumers by prohibiting advance fees.

(6) California homeowners need legal advice in many cases during the loan modification process. They ask questions about truth in lending, RESPA, the foreclosure process, legal rights and remedies, qualified written requests, deficiency judgments and asset protections, charge offs, etc. To require attorney to provide all of this information without collecting an advance fee does not seem rationale. If a person wants to pay for this advice so they know where they stand in relation to their lender, or want to know if they have rights against the lender, broker, loan servicer, etc., they should be permitted to exercise their free will, shop around for the best deal and best attorney they can find (or licensed loan modification broker) and freely contract for valuable services to be rendered. Isn't there a principal known as the "freedom to contract?"

Interstingly, the California State bar supports the bill. See http://docs.google.com/gview?a=v&q=cache:wFiRUorfdIAJ:bog.calbar.org/docs/agendaItem/Public/agendaitem1000004814.pdf+california+state+bar+sb94+july+22,+2009&hl=en&gl=us

The word I am hearing is that the Banking Lobby is behind this bill because they would rather have homeowners paying them, than paying loan modification brokers and attorneys.

These are just a few of my thoughts. I welcome any commentary or rebuttal.

Steve Vondran, Esq. can be reached at steve@vondranlaw.com or (877) 276-5084. Mr. Vondran is an attorney licensed in California and Arizona and is licensed as a real estate Broker in both states. He is helping homeowners with loan modifications (you can submit your information at www.LoanModSolutions.net) and loan modification scams (submit your scam at www.LoanModificationRipoff.net). Emails are not confidential and not subject to attorney client privilege and create no relationship with the attorney by submitting such. This is an advertisement and communication pursuant to state bar rules.

We have offices in Phoenix, Arizona and Newport Beach, Ca. (See links below for complete office address)

Also be sure to visit www.VondranLaw.com and www.VondranLegal.com.

Procuring Cause in California - A general overview of procuring case principles and guidelines to help you in your real estate commission dispute

Steve Vondran (Law Offices of Steven C. Vondran) — Sun, 12 Jul 2009 23:47:18 -0500

Procuring Cause and Real Estate Commission Disputes - Some Tips and Guidelines to Help Analyze your Commission Dispute (edit/delete)

ENFORCING REAL ESTATE COMMISSIONS IN CALIFORNIA - THE REQUIREMENT TO HAVE AN AGREEMENT AND BE THE PROCURING CAUSE OF THE SALE.

The following is general legal information only and may not be 100% accurate, complete or up-to date. Additional legal cases may need to be reviewed. In addition, this article is not designed to be, nor should it be construed as legal advice, or a substitute for legal advice. Rather, it is merely an overview of some of the legal issues and cases involving procuring cause. For specific questions about your case, please consult with a qualified attorney to discuss the unique facts of your case.

Attorney Steve Vondran is licensed to practice law in both California and Arizona and is a licensed real estate broker in both states. He can be reached at steve@vondranlaw.com or by calling (877) 276-5084.

Generally speaking, there are three requirements necessary to assert a right to enforce a real estate commission in California:

Proper licensing of the broker / salesperson

A valid and enforceable written commission agreement obligating either the buyer or seller, to pay a commission (this is a statute of frauds requirement Under California Civil Code Section 1624), or, an agreement (oral or written) with the Listing Broker to pay a commission.

The broker or salesperson seeking the commission must be able to prove, by a preponderance of the evidence, that he or she is the “procuring cause” of the sale.

Note: Agency Relationships do not determine whether or not a party is entitled to compensation. Agency is a separate issue. The issue is whether or not there is an enforceable agreement for compensation between either: (a) the cooperating broker and the listing broker that would entitle the cooperating broker to recover a portion of the commission from the listing broker (in this event there must be an express agreement between brokers to share the commission, but the agreement need not be in writing), or (b) whether the cooperating broker has an enforceable right to recover compensation from either the owner or buyer directly based on contract principles that require a written agreement in that event.

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Let’s look at each of these issues briefly.

I. Requirement of a Valid Real Estate License at the time of the real estate transaction: This pretty much goes without saying, but a brokerage is only entitled to a real estate commission if it is properly licensed at the time of the real estate transaction (basically meaning at the time the compensation agreement was signed with the Seller). If there is no valid license then the compensation and listing agreement would likely be deemed void and unenforceable thus quashing the broker’s claim for a commission.

A salesperson can only be paid through a broker who has a duty to supervise the activities of the salesperson. By contacting the DRE, it is possible to obtain a licensing history on any individual claiming to be properly licensed and working for a broker and this can be verified. You may also want to check for basic licensing information on the California Department of Real Estate website which can be searched here: http://www2.dre.ca.gov/PublicASP/pplinfo.asp

II. There must be a writing creating a commission obligation. This is a statute of frauds requirement in California (Civil Code Section 1624) and a pre-requisite to obtaining commissions claimed.

This section of the code states:

1622. All contracts may be oral, except such as are specially required by statute to be in writing.

1623. Where a contract, which is required by law to be in writing,is prevented from being put into writing by the fraud of a party thereto, any other party who is by such fraud led to believe that it is in writing, and acts upon such belief to his prejudice, may enforce it against the fraudulent party.

1624. (a) The following contracts are invalid, unless they, or some note or memorandum thereof, are in writing and subscribed by the party to be charged or by the party's agent:

(1) An agreement that by its terms is not to be performed within a year from the making thereof.

(2) A special promise to answer for the debt, default, or miscarriage of another, except in the cases provided for in Section 2794.

(3) An agreement for the leasing for a longer period than one year, or for the sale of real property, or of an interest therein; such an agreement, if made by an agent of the party sought to be charged, is invalid, unless the authority of the agent is in writing, subscribed by the party sought to be charged.

(4) An agreement authorizing or employing an agent, broker, or any other person to purchase or sell real estate, or to lease real estate for a longer period than one year, or to procure, introduce, or find a purchaser or seller of real estate or a lessee or lessor of real estate where the lease is for a longer period than one year,

for compensation or a commission.

Pursuant to this Section, a broker's real estate agency/commission agreement, with either the buyer or seller of the property must be in writing (as per California Civil Code Section 1624(d)), and the writing must unequivocally show on its face the fact of employment of the broker if the broker seeks to recover a real estate commission. It is for the court to determine whether letters, memos, and other documents passed between parties constitute an agreement between them.

In order for a memorandum to satisfy the statute of frauds, only the essential terms must be stated, while details or particulars need not be, and what is essential depends on the agreement and its context and also on the subsequent conduct of the parties. Restatement Second of Contracts Section 131. A memorandum of a contract for the sale of real property must identify the buyer, the seller, the price, and the property. See Sterling v. Taylor, 40 Cal.4th 757 (2007).

A licensed real estate broker's presumed knowledge of the statute of frauds precludes him from showing the reasonable reliance on an oral agreement that is necessary to assert equitable estoppel.

Likewise, an oral promise by a broker's principal to execute the required writing at a later date will not give rise to estoppel. Likewise, a broker's reliance on an oral promise to pay a commission or an oral promise to execute the required writing at a later date cannot be sufficiently reasonable to support an action for fraud. A broker's reliance, however, on a representation that the necessary contract has in fact been executed may be reasonable and thus support an action for fraud or the assertion of equitable estoppel. Phillippe v. Shapell Industries, 43 Cal.3d 1247 (1987).

To summarize the above material another way, If the agreement is to employ a real estate agent for the purpose of obtaining a commission, this agreement must be in writing per California Civil Code Section 1624. To enforce a right to commission against an owner or property (or against the Buyer who may employ you as an agent), a written agreement would be required. Many Buyer representation agreements provide that the Buyer agrees to pay the commission if the Seller does not. What this means is that at the end of the day if you are a Broker and you want to enforce a real estate commission against either the buyer or seller directly (where you have procured a ready, willing, and able buyer on terms and conditions of the listing), you are wise, and indeed usually required, to have a signed written agreement setting forth the fact of employment and other important details of the representation.

As an example, a Buyer’s agent may submit an offer directly to the seller. If the written offer contains a commission obligation, and the Seller agrees to the price and terms set forth in the offer this agreement will create an express contractual right of the Buyer’s agent to enforce the commission against the seller. Also Note, There may be limited grounds to enforce the commission against the seller - who signed a written contract with the listing agent, which contract expressly sought and authorized (appointed) the participation of the 3rd party co-operating buyer’s brokers (A third party beneficiary of the seller / listing agent contract). See Steve Schmidt & Co v. Berry, 183 Cal.App.3d 1299 (1986) and Smith v. Wright, 188 Cal.App2d 790 (1986).

If, however, a co-operating broker (ex. Buyer’s agent) is seeking to enforce a commitment to pay a commission against the other broker (ex. listing agent), an express writing / contract is NOT required. An oral/verbal or written agreement (ex. MLS Listing that seeks cooperation from other brokers and which assert/agrees to pay a commission if a seller ready, willing and able to complete the transaction on terms acceptable to the seller is procured) with the co-operating broker is a sufficient agreement to enforce a right to commission against the listing broker directly. When the listing broker receives their compensation, they are obligated, pursuant to the duty to execute contracts in good faith, to ensure your commission is paid as agreed.

Basically, a brokerage MLS listing is an offer of a unilateral contract, the act requested being the procuring by the broker of a purchaser ready, able and willing to buy upon the terms stated in the offer and is revocable at will of owner in good faith at any time before performance, regardless of broker's efforts. Baumgartner v. Meek, 126 Cal.App.2d 505, 508 (1954).

III. The Broker must be the “Procuring Cause”

Assuming the Broker/Salesperson is properly licensed, and assuming a right to enforce the commission exists, the Broker (whether listing agent or buyer’s agent) still needs to be able to show that they were the “procuring cause of the sale.” One or more licensees / entities may be claiming to be the procuring cause of a sale, thus initiating the commission dispute.

Although there is no easy way to answer the question as to what PROCURING CAUSE OF A SALE actually is, and therefore identify who is entitled to the commission, here are a few general guidelines. We also have a few “factors” and “considerations” that may provide some measure of guidance.

Procuring cause’ has been defined as the cause originating a series of events that, without break in their continuity, result in the accomplishment of the prime object of the employment.‘ (9 Cal.Jur.2d, Brokers, § 80, pp. 242-243).

Where several agencies have been active in bringing about a sale the crucial question is, which broker was the predominating efficient cause? The Sessions case case held that: “Predominating efficient cause may be defined as the broker who set in motion a chain of events, which, without their break in continuity, cause the buyer and seller to come to terms as the proximate cause if his peculiar activities, the mere fact that he contributes indirectly or incidentally to the sale by imparting information which tends to arouse interest being insufficient.” A Broker who is, in fact, the primary procuring cause, will not be deprived if his commission merely because negotiations were completed through someone else, even perhaps, without broker having personally met or communicated with the Buyer. See Sessions v. Pacific Imp. Co. 57 Cal.App 1, 18.

‘The word 'procure’ does not necessarily imply the formal consummation of an agreement. ... In its broadest sense, the word means to prevail upon, induce or persuade a person to do something. ... The originating cause, which ultimately led to the conclusion of the transaction, is held to be the procuring cause. Rose v. Hunter, 155 Cal.App.2d 319 (1957).

If the broker is, in fact, the procuring cause ‘it is unnecessary for the broker to prove that he was the first one to bring to the attention of the purchaser the fact that the property in question was for sale. ...‘ Webster v. Parra, 72 Cal.App 639.

FOR MY ARIZONA BROKER CLIENTS: A broker is the "procuring cause" of a sale, (entitled to commission), if her efforts are the foundation on which the negotiations resulting in a sale are begun. A cause originating a series of events which, without break in their continuity, result in accomplishment of the prime objective of the employment of the broker who is producing a purchaser ready, willing, and able to buy real estate on the owner's terms. Mohamed v. Robbins, 23 Ariz. App. 195.

According to the National Association of Realtors (NAR) - Professional Standards in regard to procuring cause:

A broker is the “procuring cause” if the broker’s efforts are the foundation on which negotiations resulting in a sale begin.

They go on to state: “it is the cause originating a series of events which, without break in their continuity, result in the accomplishment of the prime objective of the employment of the broker who produces a ready, willing and able purchaser to buy real estate on the owner’s terms.”

Whether a broker is deemed to be the procuring cause of a sale depends on looking at and analyzing a wide variety of factors. There is no simple solution in most cases, but a case-by-case, fact-by-fact analysis is normally required. Here are a few factors to think about in regard to who is the procuring broker of a sale (a hypothetical broker #1 and the subsequent, or perhaps simultaneous broker #2). No fact should be deemed conclusive, but rather, just tipping the scale in favor of one broker or the other. Procuring cause is complicated and not always predictable.

In addition, in an arbitration or commission dispute hearing the arbitrator or hearing panel will likely consider all available facts and evidence and seek to achieve a fair and just outcome. They may also find that two or more brokers are “partial procuring cases” thus requiring a split of the commission.

Factors Leading toward a Finding of Procuring Cause for Broker #1 (Intro Broker)

Broker #1 was the first to show or introduce the actual property to be purchased to the buyer (more than merely mentioning the property is listed for sale). Closing Broker never showed the Property. Note: merely being the first to show the property or present an offer will not automatically make a broker the procuring cause;
Buyer was ready, able and willing to buy and a written offer was communicated to the Seller even if not accepted;
Closing Broker submitted a similar offer within a short time frame of Broker #1’s offer;
The introduction by Broker was instrumental in creating the desire to purchase (broker motivated the buyer);
Broker gave proper agency disclosures when making an offer;
Broker makes continued efforts and continued contacts with buyer after showing the property (didn’t withdraw from the representation in the eyes of the buyer) and/or removed impediments to the sale;
Broker made a proposal upon which the final transaction was based;
Broker exerted more effort than any other broker (ex. provided significant information about the property, neighborhood, schools, financing, etc. (things that contribute to the Buyer’s interest);
Broker acted in good faith at all times during the transaction;
There was a continuous and uninterrupted closing of the sale (buyer did not come back and buy the property many months or years later);
Subsequent broker interferes in bad faith (ex. before representing Buyer, Closing Broker never asked if Buyer had dealt with any other brokers or signed any agreements with anyone);
Seller “locks out” or “freezes out” the Broker in an attempt to avoid paying a commission;

On this topic note: Normally, the price at which a broker is authorized to sell the property (i.e. the asking price listed in the MLS) is usually just a guide for the broker to consider in conducting her negotiations with co-operating brokers. Therefore, if the broker procures a purchaser willing to pay a lower price to purchase the property, the owner cannot deprive the broker of a commission simply by eliminating the broker and conducting the final negotiations himself, and, selling at a lower price to the purchaser who was actually procured by the broker. See Palmtag v. Danielson, 30 Cal. 2d 517, 521, Bail v. Glantz, 78 Cal. App. 49, and Rutherford v. Berick, 82 Cal. App. 2d 331.

13. The sale would not have occurred “but for” the efforts of the broker #1;

14. Intro Broker knows Client will be attending open houses and informs Buyer to tell any other broker that they are represented by Broker #1;

15. Closing Broker is not a member of the MLS wherein the property was listed; or a reciprocal MLS, and had no other commission agreement with the Listing broker for a commission;

16. Intro Broker has a written right to represent buyer (either exclusive or non-exclusive), signed and dated before Broker #2 enters the scene.

These are just some of the factors that will weigh into a finding that Broker#1 was the procuring cause of the sale and thus owed a real estate commission.

Factors that Mitigate against a finding of Procuring Cause for Broker #1 (Meaning, Broker #2 - Closing Broker - is more likely to be deemed the procuring cause)

   1. Buyer knew of Property before Intro broker introduced (buyer found property on his own) and Closing Broker also showed property;
   2. There were previous dealings between the buyer and the seller so that Intro Broker’s Claims of introduction are not as strong;

   3. Buyer Found property via an open house through no help of Broker #1;

   4. Broker #1 engaged in some type of mis-conduct (act or ommission, lack of knowledge, misrepresentations, lack of professionalism etc.) that made the buyer seek out a second broker. A buyer who has not signed a buyer’s agency agreement is free to choose a new broker to work with;

   5. Closing Broker set forth events that created the desire to purchase the subject property (broker #2 motivated buyer to purchase);

   6. Closing Broker made offer to purchase after significant passage of time from the previous offers and exerted greater effort in getting the deal done;

   7. Original negotiations broke down with Broker #1 (gap in continuity) and were revived in good faith and without intentional interference by Broker #2;

   8. Closing broker wrote and negotiated offer and performed all closing services while escrow was closing;

   9. Intro Broker failed to keep in touch with Buyer after first offer was rejected;

Again, these are all just factors that are weighed along with the facts of the case to make the factual determination of who the procuring broker was entitled to a commission. An arbitrator will hear and weigh all of the facts surrounding the case.

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Typical Defenses Raised by Sellers in an attempt to defeat a commission dispute:

The commission contract is not valid and enforceable;
The broker was not the procuring cause of the sale;
Breach of fiduciary duty by Broker (ex. broker breaches duty of reasonable care, skill, loyalty, etc.);
Broker had knowledge the Seller was not able to convey the property (ex. Broker knew Seller could not convey marketable title);
Broker did not fulfill the terms and conditions of the Broker agreement;
Buyer was not ready, willing and able to buy the property on Seller’s terms;
Brokers claims for commission are outside the statute of limitations period.

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Potential Damages a Seller / Broker May face who refuses to Pay the commission owed (this assumes for the most part that litigation of the dispute, rather than arbitration, is pursued):

Commission owed;
Interest on Commission;
Reasonable Attorney Fees;
Punitive damages where the property owner / Broker has committed bad faith acts (willful, wanton, and/or malicious) designed to interfere with the Listing Broker’s / Co-operating broker's entitlement to a commission.

IF YOU ARE IN NEED OF LEGAL REPRESENTATION TO ANALYZE YOUR COMMISSION DISPUTE, OR ASSERT A CLAIM FOR COMMISSIONS OR DEFEND A CLAIM OF PROCURING CAUSE, CONTACT US TO DISCUSS YOUR SITUATION. WE CAN OUTLINE YOUR LEGAL POSITION TO YOUR OPPONENT AND HOPEFULLY DETRACT THEM FROM PURSUING THE MATTER. IF FORCED TO ARBITRATE OR LITIGATE YOUR CLAIM, WE ARE HERE TO HELP FRAME YOUR CASE IN THE BEST POSSIBLE LIGHT.

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