Homeowner rights during foreclosure in California

Homeowner rights during foreclosure in California are the topic of this blog post.   

Even though the great majority of foreclosures in California are non-judicial, California homeowner’s do have certain rights which were greatly strengthened when the California legislature passed and the Governor signed the legislation that is commonly known as The Homeowner’s Bill of Rights.

The California statutes that comprise the HBOR are based at least to some extent on the National Mortgage Servicing Settlement that was entered into between the attorney’s generals of the various states and the five largest mortgage servicers in February of 2012. The HBOR became effective on January 1, 2013 and includes sunset provisions for certain statute that will expire on  January 1, 2018 although many of the obligations imposed on mortgage servicers will continue beyond that date.

The HBOR has resulted in some major changes in the non-judicial process in California in that it provides important protections to California homeowners by imposing new requirements on mortgage servicers. The changes in the foreclosure process in California required by the HBOR statutes are listed below.

The first and most important change is that the HBOR requires new notices to borrowers under Civil Code section 2923.55, which both expands the existing pre-foreclosure notice requirements and prohibits a servicer from recording a notice of default until it has informed the borrower of their right to request copies of documents proving the mortgage servicer’s right to foreclose and that the borrower may be entitled to protections under the Servicemembers’ Civil Relief Act.  In addition Civil Code § 2924(a)(5) requires a written notice to the borrower after the postponement of a foreclosure sale for more than 10 business days although a failure to comply is not grounds to invalidate an otherwise valid sale. 

The HBOR also imposes a ban on the widely despised practice known as “dual tracking” as mortgage servicers in California must now place a pending foreclosure on hold and not proceed any further while a “complete” first lien loan modification application is pending, on appeal, or while the borrower is in compliance with an approved loan modification agreement.  A loan modification application is “complete” when the borrower has submitted all required documents “within the reasonable timeframes” set by the servicer.  See Civil Code §§ 2923.6, 2924.11, 2924.18.

Any servicer that services mortgages in California that conduct more than 175 foreclosures per year in California are required to provide a single point of contact by assigning a single individual or team of individuals with knowledge of the loan and status of the possible loan modification and must be available to the borrower as to such things as the loan status, foreclosure prevention options available and the coordination of documentation. A decision maker must also be available to a borrower.   These provisions are found in Civil Code § 2923.7.

Another important change is the provision in the HBOR that allows a homeowner to require any mortgage servicer to document their right to foreclose.  The Act also clearly states that an entity cannot record a notice of default or otherwise initiate the foreclosure process unless it the holder of the beneficial interest under the deed of trust, the original or substituted trustee, or the designated agent of the holder of the beneficial interest.  See Civil Code § 2924(a)(6).

The widespread practice known as “robo-signing” is now banned as representatives of a financial institution or servicer may not process foreclosure documents without verifying them for accuracy.  See Civil Code § 2925.17.

Mortgage servicers are now required to have loss mitigation procedures under the HBOR as it states that unless a borrower has previously exhausted the first lien loan modification process, within five business days of recording a notice of default, servicers that conduct more than 175 foreclosures per year in California must send a written notice advising the borrower regarding foreclosure prevention alternatives pursuant to Civil Code § 2924.9.  Receipt of an application for loan modification or any other documents must be acknowledged within five business days pursuant to Civil Code § 2924.10.  If a loan modification is denied, the servicer must provide information regarding the time to in which to appeal the denial and any reason(s) for the denial pursuant to Civil Code § 2923.6.

California homeowner’s that may be in foreclosure proceedings or are seriously delinquent on their mortgage payments will find the HBOR provides some very welcome relief from an otherwise confusing and frustrating non-judicial foreclosure process.

The author of this blog post, Stan Burman, is an entrepreneur and freelance paralegal that has worked in California and Federal litigation since 1995 and has created over 300 sample legal documents for California and Federal litigation.

If you are in need of assistance with any California or Federal litigation matters including foreclosure defense, Mr. Burman is available on a freelance basis. Mr. Burman may be contacted by e-mail at DivParalgl@yahoo.com for more information. He accepts payments through PayPal which means that you can pay using most credit or debit cards.

 


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DISCLAIMER:

Please note that the author of this blog post, Stan Burman is NOT an attorney and as such is unable to provide any specific legal advice. The author is NOT engaged in providing any legal, financial, or other professional services, and any information contained in this blog post is NOT intended to constitute legal advice.

The materials and information contained in this blog post have been prepared by Stan Burman for informational purposes only and are not legal advice. Transmission of the information contained in this blog post is not intended to create, and receipt does not constitute, any business relationship between the author and any readers. Readers should not act upon this information without seeking professional counsel.

Fleet v. Bank of America case by California Court of Appeal

The Fleet v. Bank of America case recently decided by a California Court of Appeal is the topic of this blog post. This case was decided by Division Three of the Fourth District Court of Appeal on August 25, 2014, on September 23, 2014 the Court granted the request of several parties for publication.

In my opinion I truly feel that this case is very good news and may represent a turning point as it is the only published case from California that I am aware of in which an appeals Court appears to be at least considering the possibility that the banks may be engaging in a pattern of fraud and deceit. 

The slip opinion begins on page 2 with the wording, “This appeal represents another example of what is becoming a well established and predictable pattern.” The opinion then goes on to state on page 3 that “[T]his case falls into line with a number of cases in which a homeowner has been promised a mortgage modification under a program designed to forestall foreclosure only to find the notice thereof posted on the door. The kindest interpretation to place on this scenario is lender incompetence…This is the most likely explanation, given the size of the institutions involved, but it is not the only one, and as the numbers of such cases grow, other less benign explanations are coming to more and more minds.” The opinion then goes on to cite the Ninth Circuit Court of Appeals case of Corvello v. Wells Fargo Bank (9^th Cir. 2013) 728 F.3d 878, 885 (conc. opn. of Noonan, J.). (Emphasis added.)

On page 8 of the slip opinion in discussing the promissory fraud cause of action the opinion states that, “They were damaged both by the loss of their home and by the loss of the money they expended jumping through hoops, running around in circles, and talking to walls in an effort to obtain the loan modification BofA had promised them, all the while unaware that BofA had no intention of modifying their loan.” (Emphasis added.)

The Court of Appeal reversed the Judgment entered in the case and reversed the order sustaining the demurrer to the cause of action for fraud as to BofA and several other individual defendants, as well as reversing the order sustaining demurrers to the breach of contract and promissory estoppel causes of action against BofA although the Court did affirm the order sustaining the demurrers without leave to amend against several other defendants including Recon Trust. The Court also affirmed the order sustaining the demurrer to the cause of action for accounting without leave to amend.

Interestingly enough on page 13 of the slip opinion the Court of Appeal also urged the Fleets to engage counsel to, “[G]ive them a chance to litigate on equal terms with BofA.”

I read a lot of published and unpublished cases in my work and this has to be the first case I have read from California that even hints that the Courts may be finally waking up to what the big banks are actually doing.  And that is good news indeed.

Attorneys or parties in California who would like to view over 300 sample legal documents for California and Federal litigation created by the author of this blog post can use the link shown below.

View over 300 sample legal documents for sale

The author of this blog post, Stan Burman, is an entrepreneur and freelance paralegal who has worked in California and Federal litigation since 1995 and has created over 300 sample legal documents for California and Federal litigation.

*Do you want to use this article on your website, blog or e-zine? You can, as long as you include this blurb with it: “Stan Burman is the author of over 300 sample legal documents for California and Federal litigation and is the author of a free weekly legal newsletter. You can receive 10 free gifts just for subscribing. Just visit http://freeweeklylegalnewsletter.gr8.com/ for more information.

Follow the author on Twitter at: https://twitter.com/LegalDocsPro

View sample legal document packages for sale by going to: http://www.legaldocspro.com/downloads.aspx

DISCLAIMER:

Please note that the author of this blog post, Stan Burman is NOT an attorney and as such is unable to provide any specific legal advice. The author is NOT engaged in providing any legal, financial, or other professional services, and any information contained in this blog post is NOT intended to constitute legal advice.

The materials and information contained in this blog post have been prepared by Stan Burman for informational purposes only and are not legal advice. Transmission of the information contained in this blog post is not intended to create, and receipt does not constitute, any business relationship between the author and any readers. Readers should not act upon this information without seeking professional counsel.

 

 

The Real Estate Settlement Procedures Act and a Qualified Written Request Letter

The Real Estate Settlement Procedures Act (RESPA) and a Qualified Written Request Letter (QWR) pursuant to RESPA are the topic of this blog post.  The relevant statutes for RESPA are found in Title 12, Chapter 27, Sections 2601 through 2617 of the United States Code.

RESPA authorizes the use of a Qualified Written Request in which a homeowner may dispute information contained in an account, request information from the servicer or lender, and have their issues answered by the company in a reasonable amount of time. Many times, servicers or lenders may not enjoy disclosing certain information to the homeowners as they may have significant problems answering the questions.

Some servicers or lenders do not keep adequate records, make material mistakes, and also engage in a practice of fraudulent servicing such as excessive or “junk” mortgage fees. In the right situations the use of a QWR can be very helpful in shedding light on these activities that can jeopardize the foreclosure case and may allow the homeowners to obtain a loan modification or other concessions from the servicer or lender.

Section 2614 of RESPA states that for a violation of Section 2605 relating to a failure to respond or to correct erroneous information outlined in a QWR, the statute of limitations is 3 years from the date of the occurrence of the violation.

The servicer or lender must acknowledge the receipt of the QWR in writing within five (5) business days from receipt unless the actions requested in the QWR are taken within that time period.

 
Although not specifically required by law, the QWR should be in the form of a letter sent by Certified Mail, Return Receipt Requested and should include the name and account number of the borrower, and should include 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.

Within thirty (30) business days from receipt of the QWR, the servicer or lender must make any appropriate corrections in the account of the borrower, including 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 as well as other specified information.

The thirty (30) business day period to respond may be extended for not more than 15 business  days if, before the end of the 30-day period, the servicer notifies the borrower of the extension and the reasons for the delay in responding.

If the servicer or lender fails to comply with any provision of RESPA they can be liable to the borrower for 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 $2,000. They may also be liable for the costs of any successful action, together with any attorneys fees incurred in connection with such action as the court determines to be reasonable under the circumstances of that particular case.

Attorneys or parties who wish to view or download a FREE sample Qualified Written Request letter created by the author can visit the link shown below:

View a FREE sample Qualified Written Request Letter

 

The author of this blog post, Stan Burman, is a freelance paralegal who has worked in California and Federal litigation since 1995.

If you enjoy this blog post, tell others about it. They can subscribe to the author's weekly California and Federal legal newsletter by visiting the following link: Subscribe to my FREE newsletter

 

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Copyright 2013 Stan Burman. All rights reserved.

DISCLAIMER:

Please note that the author of this blog post, Stan Burman is NOT an attorney and as such is unable to provide any specific legal advice. The author is NOT engaged in providing any legal, financial, or other professional services, and any information contained in this blog post is NOT intended to constitute legal advice.

These materials and information contained in this blog post have been prepared by Stan Burman for informational purposes only and are not legal advice. Transmission of the information contained in this blog post is not intended to create, and receipt does not constitute, any business relationship between the author and any readers. Readers should not act upon this information without seeking professional counsel.

 

California Civil Code section 2943 beneficiary statement request

A California Civil Code section 2943 beneficiary statement request to a lender is the topic of this blog post.   Section 2943 of the Civil Code states in pertinent part that the request may be sent any time before, or within two months after, the recording of a notice of default under a mortgage or deed of trust. The request MUST be sent before any notice of sale has been recorded. 

The request may be sent to the address listed on the latest billing statement.  Although not actually required under the law, sending the notice by Certified Mail, Return Receipt requested with another copy to the Trustee is a good idea.

Homeowners in California who are presently in default, or may be close to defaulting on the loan securing their home should seriously consider requesting a beneficiary statement request to their lender to request that all of the information listed in, and documents described in, this blog post be provided to them.  Certain lenders keep sloppy records and the homeowner may find discrepancies or errors in the documents or information received from the lender that may support a defense to any foreclosure.

Section 2943 of the Civil Code states in pertinent part that the lender must provide certain information within 21 calendar days from the date of receipt of the request for a beneficiary statement including the amount of the unpaid balance of the obligation secured by the mortgage or deed of trust, the interest rate, together with the total amounts, if any, of all overdue installments of either principal or interest, or both,  a true, correct, and complete copy of the note or other evidence of indebtedness with any modification thereto as well as other specified information.

A copy of the deed of trust or mortgage may also be requested at the same time as the beneficiary statement.

If a lender willfully fails to prepare and deliver the beneficiary statement they are liable to the person requesting the statement for all damages which they may sustain by reason of the refusal or the sum of $300.00 if no actual damages are sustained.

Attorneys or parties in California who would like to view a sample request for a beneficiary statement created by the author can visit the link shown below.

View a FREE sample beneficiary statement request

The author of this blog post, Stan Burman, is a freelance paralegal who has worked in California and Federal litigation since 1995 and has created over 300 sample legal documents for sale.

If you enjoy this blog post, tell others about it. They can subscribe to the author's weekly California and Federal legal newsletter by visiting the following link: Subscribe to my FREE newsletter!

To view all of the sample legal documents for use in California and Federal Courts sold by the author of this blog post visit View over 300 sample legal documents for sale

Copyright 2013 Stan Burman. All rights reserved.

DISCLAIMER:

Please note that the author of this blog post, Stan Burman is NOT an attorney and as such is unable to provide any specific legal advice. The author is NOT engaged in providing any legal, financial, or other professional services, and any information contained in this blog post is NOT intended to constitute legal advice.

These materials and information contained in this blog post have been prepared by Stan Burman for informational purposes only and are not legal advice. Transmission of the information contained in this blog post is not intended to create, and receipt does not constitute, any business relationship between the author and any readers. Readers should not act upon this information without seeking professional counsel.

Why a mortgage and a deed of trust are different

Why a mortgage and a deed of trust are different is the topic of this blog post.  Some people are under the impression that the only difference is in the name.  The confusion likely stems from the fact that loans securing real property are often referred to as mortgages by many people, but in reality only loans backed by mortgage notes are truly mortgage loans. Home loans backed by a deed of trust are trusts.

California is one of more than 12 states, in addition to the District of Columbia in which most, if not all, home loans are secured with a deed of trust also known as a trust deed.  California law allows the use of either a trust deed or a mortgage, but because lenders have more power under a trust deed as compared to a mortgage virtually all lenders use a trust deed in California, rather than a mortgage.

When a borrower takes out a home loan, they must sign a promissory note which is a document pledging to repay the loan. Depending on the particular state the transaction takes place in will determine whether the document is a mortgage note or a deed of trust. The main difference between them is in who holds the title to the house while the borrower is paying off the loan.

In a real estate transaction involving a mortgage note, the note serves as a lien on the property. This means the borrower cannot sell the house until the debt is repaid and the lien is satisfied. With a mortgage note, either the lender or the borrower can hold the actual title to the house, depending on which state the house is located in. In states known as "title theory" states the lender keeps the title and owns the house until the borrower pays off the loan.  In other states known as “lien theory" states the borrower holds the title and owns the house, but the mortgage note gives the lender the right to seize and sell the house for non-payment.

For home loans backed by a deed of trust, neither the borrower nor the lender holds the title to the property. The deed of trust brings in a third party to hold the title. This party is the trustee. The trustee might be a bank, a lawyer or some other entity, but the law requires that it must be a neutral party. When the borrower has repaid the loan, the lender will instruct the trustee to release the title to the borrower, who now owns the house free and clear.

The difference between a mortgage and a deed of trust will become crystal clear if the borrower defaults on the loan and the lender then forecloses on the house. With a mortgage, regardless of who is holding the title, the lender usually has to get a court order allowing it to seize the home and sell it. This is called "judicial foreclosure." With a deed of trust, the trustee already has the power to sell the home. All the lender has to do is furnish proof to the trustee that the borrower has defaulted. This is called "non-judicial foreclosure," and because it doesn't need to go through the court system, it's usually quicker and easier for the lender. California is a non-judicial foreclosure state which means that in most cases no court order is required.

Attorneys or parties in California who would like to view a portion of a 22 page sample complaint to stop a trustee foreclosure sale that includes a verified complaint, ex-parte application for temporary restraining order with points and authorities, sample declarations, and a proposed order sold by the author can see below.

http://www.scribd.com/doc/146074976/Sample-California-Complaint-to-Stop-Foreclosure-Sale-by-Trustee

The author of this blog post, Stan Burman, is a freelance paralegal who has worked in California and Federal litigation since 1995 and has created over 225 sample legal documents for California and Federal litigation.

If you enjoy this blog post, tell others about it. They can subscribe to the author's weekly California and Federal legal newsletter by visiting the following link: Subscribe to my FREE newsletter

To view all of the sample legal documents for use in California and Federal Courts sold by the author of this blog post visit View over 200 sample legal documents

 

Copyright 2013 Stan Burman. All rights reserved.

DISCLAIMER:

Please note that the author of this blog post, Stan Burman is NOT an attorney and as such is unable to provide any specific legal advice. The author is NOT engaged in providing any legal, financial, or other professional services, and any information contained in this blog post is NOT intended to constitute legal advice.

These materials and information contained in this blog post have been prepared by Stan Burman for informational purposes only and are not legal advice. Transmission of the information contained in this blog post is not intended to create, and receipt does not constitute, any business relationship between the author and any readers. Readers should not act upon this information without seeking professional counsel.

California foreclosure defense strategy using the MERS defense

California foreclosure defense strategy using the defense that Mortgage Electronic Registration Systems, Inc. (MERS) does not have standing to commence a foreclosure in California is the topic of this blog post. As a foreclosure defense strategy in California the so called “MERS defense” is not very effective as will be shown by this blog post.

Some loan documents will state right in the document that the borrower consents to MERS having authority to initiate foreclosure.  Anyone considering using the MERS defense in California needs to read this blog post and then read their Deed of Trust.

In at least one case decided by a California Court of Appeal, the plaintiff actually attached a copy of the Deed of Trust to the complaint in which they argued that MERS had no standing to initiate the foreclosure.  The big problem was that the Deed of Trust mentioned MERS by name! Keep reading to find out what happened.

The trial Court sustained a demurrer to the complaint and all causes of action therein without leave to amend, a California Court of Appeal affirmed that order in Gomes v. Countrywide (2011) 192 Cal. App. 4th 1149, 1157 where the Court stated that, “As an independent ground for affirming the order sustaining the demurrer, we conclude that even if there was a legal basis for an action to determine whether MERS has authority to initiate a foreclosure proceeding, the deed of trust -- which Gomes has attached to his complaint -- establishes as a factual matter that his claims lack merit. As stated in the deed of trust, Gomes agreed by executing that document that MERS has the authority to initiate a foreclosure. Specifically, Gomes agreed that "MERS (as nominee for Lender and Lender's successors and assigns) has . . . the right to foreclose and sell the Property." (Emphasis added.)

It is true that in other parts of the country, and in some bankruptcy courts, borrowers have had some success with the argument that since MERS is a "nominee" and "nominee" is not defined in the loan documents, that it does not have standing to initiate foreclosure.

That argument has not been particularly successful in California, mainly because of these reasons:

1.         Non-judicial foreclosures only require that the trustee on the deed of trust conduct the foreclosure.

2.         The deed of trust is recorded and so are any substitutions and assignments. In other states   MERS had tried to circumvent the recording statutes by not recording these transfers with the County recorder.

 
3.         The borrower  also known as the Trustor has signed the Deed of Trust and voluntarily consented to a 3rd party conducting the Trustee's sale, regardless of who the beneficiary is.

Despite several recent Court decisions rejecting the MERS defense many people are still under the mistaken impression that the defense is valid. The fact is that the MERS defense has been rejected by the California Courts.  

Note that the author has NO sympathy for major lenders or loan servicers who like most large corporations want to privatize their profits, but socialize their losses.

 
Attorneys or parties in California who would like to view a portion of a 22 page sample complaint to stop a trustee foreclosure sale that includes a verified complaint, ex-parte application for temporary restraining order with points and authorities, sample declarations, and a proposed order sold by the author can see below.

http://www.scribd.com/doc/146074976/Sample-California-Complaint-to-Stop-Foreclosure-Sale-by-Trustee

The author of this blog post, Stan Burman, is a freelance paralegal who has worked in California and Federal litigation since 1995 and has created over 225 sample legal documents for California and Federal litigation.

If you enjoy this blog post, tell others about it. They can subscribe to the author's weekly California and Federal legal newsletter by visiting the following link: Subscribe to my FREE weekly legal newsletter

To view all of the sample legal documents for use in California and Federal Courts sold by the author of this blog post visit View over 200 sample legal documents for California and Federal litigation

Copyright 2013 Stan Burman. All rights reserved.

DISCLAIMER:

Please note that the author of this blog post, Stan Burman is NOT an attorney and as such is unable to provide any specific legal advice. The author is NOT engaged in providing any legal, financial, or other professional services, and any information contained in this blog post is NOT intended to constitute legal advice.

These materials and information contained in this blog post have been prepared by Stan Burman for informational purposes only and are not legal advice. Transmission of the information contained in this blog post is not intended to create, and receipt does not constitute, any business relationship between the author and any readers. Readers should not act upon this information without seeking professional counsel.