Source: https://timothymccandless.wordpress.com/2012/12/
Timestamp: 2019-04-25 19:53:16+00:00

Document:
A recent ruling by a California appeals court clears the way for fraud charges against a lender that promised a loan modification but then foreclosed on the borrower.
The ruling throws into question the legality of hundreds of thousands of foreclosures.
Not only was the ruling a frontal assault on the empty promises made by servicers and banks, the case highlighted some despicable tactics often employed to force foreclosures.
Claudia Aceves, who originally sued U.S. Bank, NA in the Los Angeles County Superior Court, had taken out an $845,000 mortgage with Option One Mortgage Corporation. Option One later assigned the loan over to U.S. Bank.
The interest on Aceves’ adjustable rate note ratcheted up two years after it was entered into. By January 2008 she was falling behind on her payments. Shortly after March 26, 2008 when the loan’s servicer recorded a “Notice of Default and Election to Sell Under Deed of Trust,” Aceves filed for bankruptcy protection under chapter 7 of the Bankruptcy Code.
The bankruptcy filing imposed an automatic stay on the foreclosure proceedings.
After being offered financial help from her husband, Aceves converted her bankruptcy case from a chapter 7 to a chapter 13 case. Chapter 7, entitled “Liquidation,” would allow Aceves to discharge her debt on the home but not allow her to keep it. Chapter 13, entitled “Adjustment of Debts of an Individual with Regular Income,” has protections for homeowners that allows them to reinstate loan payments, pay arrearages, avoid foreclosure and keep their home.
U.S. Bank, upon learning of the original bankruptcy filing, filed a motion to lift the stay in order to execute a nonjudicial foreclosure and take the house back.
What happens next is indicative of the underhandedness of many servicers and banks.
Aceves’ bankruptcy attorney gets a letter from counsel to the loan’s servicer (American Home Mortgage Servicing, Inc.) that asks for permission to talk directly to Aceves to “explore Loss Mitigation possibilities.” Aceves calls the servicer’s attorney because she wants a loan modification, which they are promising. But they tell her they can’t do anything or talk to her until their motion to lift the bankruptcy stay is granted.
So, Aceves doesn’t oppose the motion to lift the stay and further decides not to file the chapter 13 bankruptcy. All in the hopes that a modification would be negotiated.
On December 4, 2008 the stay is lifted. And, unbeknownst to Aceves, on December 9, 2008 U.S. Bank schedules the home for public auction one month later on January 9, 2009.
On December 10, 2008 Aceves sends in documents to American Home aiming to modify and reinstate the loan. Then on December 23, 2008 the servicer tells Aceves a “negotiator” will contact her on or before January 13, 2009.
Too bad for Aceves January 13, 2009 is going to be four days after her home is sold at auction. Which it is, with none other than U.S. Bank as the buyer.
But just to cover its promise to modify the loan, one day before the home is to be sold at auction the negotiator for American Home presents a unilateral offer to raise the loan balance from the original $845,000 to $965,926.22 and make the new monthly payments $7,200 as opposed to the original monthly payment amount of $4,857.09.
Aceves told them where to go.
She lost her home and sued. She lost when the Superior Court found that the defendants had met their obligations. The three-judge panel Appeals Court disagreed in its January 27, 2010 ruling.
Further illuminating its stance the Court said the point is, “simply whether U.S. Bank made and kept a promise to negotiate with Aceves, not whether the bank promised to make a loan, or more precisely, to modify a loan” is what matters.
With all the unkept promises by banks and servicers to negotiate loan modifications that were never entertained, new litigation on top of all the foreclosure cases already being pursued is bound to cloud the future of real estate for the foreseeable future.
Unless Congress acts, the Mortgage Forgiveness Debt Relief Act of 2007 will expire on December 31, 2012.
What is this law, you may ask. Stated simply the Mortgage Forgiveness Debt Relief Act waives any tax due on debt forgiveness if you are able to negotiate a mortgage modification. Without this waiver, any amount of forgiven debt will be treated as ordinary income and taxed accordingly.
Here’s an example: let’s say that you owe $100,000 on your mortgage. Your property value has gone down and you are able to convince the bank to reduce your principal balance to $80,000, The $20,000 of debt forgiveness would be considered income by the IRS and you would be taxed on this. Currently, this tax is eliminated by the Mortgage Forgiveness law, but this waiver comes to an end on December 31, 2012.
Mortgage modification is already a time consuming, difficult process. Homeowners typically apply for modifications because they are struggling financially. If these homeowners discover that they will be facing a tax bill for debt forgiveness, many will conclude that there is no point in pursuing a modification and will decide to either walk away or file bankruptcy to deal with their upside down mortgages.
In November, 2012, forty-one state attorney’s general sent Congress a letter urging lawmakers to extend the Mortgage Forgiveness Debt Act. In this letter the attorney’s general note that the elimination of the Mortgage Forgiveness break will greatly undercut the $20 billion mortgage settlement negotiated earlier this year with the nation’s largest mortgage lenders.
Senate bill 3521 has been introduced by Senator Max Baucus of Montana but it currently has no co-sponsors. If you are contemplating a modification with your bank, I urge you to contact your Senator or Representative to urge him/her to support S.3521.
Yet one more lousy ruling putting more nails in the coffin of home ownership and perpetuating the bankster controlled judiciary. And of course they easily publish this case.
A case of first impression? Seems to me I sent out citations from California related to this issue some time back.
· No attempt to argue “commencing a non-judicial foreclosure sale” v. sustaining a foreclosure sale are very different!
· Since when is forging a note indorsement; failure to name a trustee; substituting a trustee when there was none (what about the term “substitute” do you not understand!) merely “seek shelter in MINOR ministerial omissions” (emphasis added)…well, I guess certainly in California!
Yet more bad law made on what appears to be another poorly litigated case.
The theft of real property continues with the blessing of the judiciary.
Paralegal; Litigation Support and Expert Witness Services; Forensic Loan Analyst; CA Licensed Real Estate Broker.
Predatory Lending are abusive practices used in the mortgage industry that strip borrowers of home equity and threaten families with bankruptcy and foreclosure.
Predatory Lending can be broken down into three categories: Mortgage Origination, Mortgage Servicing; and Mortgage Collection and Foreclosure.
Mortgage Origination is the process by which you obtain your home loan from a mortgage broker or a bank.
# Loans with prepayment penalties or balloon payments.
Mortgage Servicing is the process of collecting loan payments and credit your loan.
# Refusing to return your calls or letters.
# Refusing to adequately communicate with you.
Abusive servicing occurs when a servicer, either through action or inaction, obtains or attempts to obtain unwarranted fees or other costs from borrowers, engages in unfair collection practices, or through its own improper behavior or inaction causes borrowers to be more likely to go into default or have their homes foreclosed. Abusive practices should be distinguished from appropriate actions that may harm borrowers, such as a servicer merely collecting appropriate late fees or foreclosing on borrowers who do not make their payments despite proper loss mitigation efforts. Servicing can be abusive either intentionally, when there is intent to obtain unwarranted fees, or negligently, when, for example, a servicer’s records are so disorganized that borrowers are regularly charged late fees even when mortgage payments were made on time.
Abusive servicing often happens to debtors who have filed a Chapter 13 Bankruptcy Plan and are in the process of making payments under the Plan. If you suspect that your mortgage servicer is abusing your relationship by charging unnecessary fees while you are paying off your Chapter 13 Plan, call us. We can help.
There is significant evidence that some Mortgage servicers have engaged in abusive behavior and that borrowers have frequently been the victims. Some servicers have engaged in practices that are not only detrimental to borrowers but also illegal Such abuse has been documented in court opinions and decisions, in the decisions and findings of ratings agencies, in litigation and settlements obtained by government agencies against prominent servicers, in congressional testimony, and in newspaper accounts of borrowers who claim to have been mistreated by servicers. The abusive servicing practices documented in these sources include improper foreclosure or attempted foreclosure, improper fees, improper forced-placed insurance, and improper use or oversight of escrow funds .
One of the most important provisions of the Act from a lender’s perspective is that it provides borrowers with the right to sue mortgage servicers for injunctive relief before the trustee’s deed upon sale has recorded, or if it has already recorded, to sue for actual economic damages, if the mortgage servicer has not corrected any “material” violation of certain enumerated portions of the Act before the trustee’s deed upon sale recorded. (Civil Code §2924.12(a).) In an area that will certainly open up a Pandora’s Box of litigation, the Act does not define what constitutes a “material” violation of the Act. If a court finds that the violation was intentional, reckless or willful, the court can award the borrower the greater of treble (triple) damages or $50,000. (Civil Code §2924.12(b).) Furthermore, a violation of the enumerated provisions of the Act is also deemed to be a violation of the licensing laws if committed by a person licensed as a consumer or commercial finance lender or broker, a residential mortgage lender or servicer, or a licensed real estate broker or salesman. (Civil Code §2924.12(d).) Lastly, in a one-sided attorney’s fee provision that only benefits borrowers, the court may award a borrower who obtains an injunction or receives an award of economic damages as a result of the violation of the Act their reasonable attorney’s fees and costs as the prevailing party. (Civil Code §2924.12(i).) This provides all the more reason for lenders and mortgage servicers to comply with the terms of the Act. This provision for the recovery by only the borrower of their reasonable attorney’s fees makes it more likely that borrowers will file litigation against mortgage lenders or servicers than they otherwise would. Compliance is the lender’s or mortgage servicer’s best defense to litigation under the Act.
Significantly for lenders, as long as the mortgage servicer remedies the material violation of the Act before the trustee’s deed upon sale has recorded, the Act specifically provides that the mortgage servicer shall not be liable under the Act for any violation or damages. (Civil Code §2924.12(b) & (c).) The Act also clarifies that signatories to the National Mortgage Settlement who are in compliance with the terms of that settlement, as they relate to the terms of the Act, will not face liability under the Act. (Civil Code §2924.12(g).
Because servicers can exact fees associated with foreclosures, such as attorneys’ fees, some servicers have attempted to foreclose on property even when borrowers are current on their payments or without giving borrowers enough time to repay or otherwise working with them on a repayment plan Furthermore, a speedy foreclosure may save servicers the cost of attempting other techniques that might have prevented the foreclosure.
Some servicers have been so brazen that they have regularly claimed to the courts that borrowers were in default so as to justify foreclosure, even though the borrowers were current on their payments. Other courts have also decried the frequent use of false statements to obtain relief from stay in order to foreclose on borrowers’ homes. For example, in Hart v. GMAC Mortgage Corporation, et al., 246 B.R. 709 (2000), even though the borrower had made the payments required of him by a forbearance agreement he had entered into with the servicer (GMAC Mortgage Corporation), it created a “negative suspense account” for moneys it had paid out, improperly charged the borrower an additional monthly sum to repay the negative suspense account, charged him late fees for failing to make the entire payment demanded, and began foreclosure proceedings.
Claiming that borrowers are in default when they are actually current allows servicers to charge unwarranted fees, either late fees or fees related to default and foreclosure. Servicers receive as a conventional fee a percentage of the total value of the loans they service, typically 25 basis points for prime loans and 50 basis points for subprime loans In addition, contracts typically provide that the servicer, not the trustee or investors, has the right to keep any and all late fees or fees associated with defaults. Servicers charge late fees not only because they act as a prod to coax borrowers into making payments on time, but also because borrowers who fail to make payments impose additional costs on servicers, which must then engage in loss mitigation to induce payment.
Because borrowers typically cannot prove the exact date a payment was received, servicers can charge late fees even when they receive the payment on time Improper late fees may also be based on the loss of borrowers’ payments by servicers, their inability to track those payments accurately, or their failure to post payments in a timely fashion. In Ronemus v. FTB Mortgage Services, 201 B.R. 458 (1996), under a Chapter 13 bankruptcy plan, the borrowers had made all of their payments on time except for two; they received permission to pay these two late and paid late fees for the privilege. However, the servicer, FTB Mortgage Services, misapplied their payments, then began placing their payments into a suspense account and collecting unauthorized late fees. The servicer ignored several letters from the borrowers’ attorney attempting to clear up the matter, sent regular demands for late fees, and began harassing the borrowers with collection efforts. When the borrowers sued, the servicer submitted to the court an artificially inflated accounting of how much the borrowers owed.
The complexity of the terms of many loans makes it difficult for borrowers to discover whether they are being overcharged Moreover, servicers can frustrate any attempts to sort out which fees are genuine.
Mortgage holders are entitled under the terms of the loan to require borrowers to carry homeowners’ insurance naming the holder as the payee in case of loss and to force-place insurance by buying policies for borrowers who fail to do so and charging them for the premiums However, some servicers have force-placed insurance even in cases where the borrower already had it and even provided evidence of it to the servicer Worse yet, servicers have charged for force-placed insurance without even purchasing it. Premiums for force-placed insurance are often inflated in that they provide protection in excess of what the loan.
You can make a claim for mortgage service abuse, and often the court will award actual and punitive damages. If you think you have been a victim of mortgage service abuse, contact us. We can help you make a claim.
INTRODUCED BY   Assembly Members Eng, Feuer, Mitchell, and John A.
AB 278, Eng. Mortgages and deeds of trust: foreclosure.
was required for a specified reason.
default and a notice of sale.
to advise the borrower of any new sale date and time, as specified.
holder of the beneficial interest, as specified.
awarding of attorneys' fees for prevailing borrowers, as specified.
per year or annual reporting period, except as specified.
define single point of contact for these purposes.
foreclose, including the borrower's loan status and loan information.
regulations would be enforceable only by the regulating agency.
would state the purposes of the bill.
meaningful opportunity to obtain, available loss mitigation options.
families, communities, and the state and local economy.
opportunities for borrowers to pursue loss mitigation options.
power of sale pursuant to a deed of trust.
modification or another available loss mitigation option.
offered by, or through, his or her mortgage servicer.
avoid their contractual obligations to mortgagees or beneficiaries.
or granting relief from a stay of foreclosure.
District of Columbia, case number 1:12-cv-00361 RMC.
requirements as described in subdivision (e).
Development (HUD) to find a HUD-certified housing counseling agency.
Any meeting may occur telephonically.
subdivision (c) of Section 2920.5.
participate by telephone during any contact required by this section.
the mortgage servicer is subject to approval by the borrower.
be made to the primary telephone number on file.
if any, have been disconnected.
options for avoiding foreclosure with their mortgage servicer.
subdivision (b) of Section 2924.18.
defined in subdivision (f) of Section 2924.11.
(g) This section shall become operative on January 1, 2018.
paragraph (1) of subdivision (b).
diligence requirements as described in subdivision (f).
defined in subdivision (h) of Section 2923.6.
OneSource and Armed Forces Legal Assistance.
(ii) A copy of the borrower's deed of trust or mortgage.
was last less than 60 days past due.
mortgage servicer. For purposes of this section, "due diligence"
available by HUD to find a HUD-certified housing counseling agency.
appeal period pursuant to subdivision (d) has expired.
modification within 14 days of the offer.
under, the first lien loan modification.
evidence that the mortgage servicer's determination was in error.
reasons for the investor disallowance.
upon written request to the mortgage servicer.
make payments under the terms of the modified loan.
necessary to complete the foreclosure prevention alternative.
borrower and submitted to the mortgage servicer.
timeframes specified by the mortgage servicer.
entities described in subdivision (b) of Section 2924.18.
(c) This section shall become operative on January 1, 2018.
any required submissions to be considered for these options.
current status of the foreclosure prevention alternative.
stop foreclosure proceedings when necessary.
have been exhausted or the borrower's account becomes current.
and current status in the alternatives to foreclosure process.
that entity exceeded the threshold.
mortgage or transfer in trust is security has occurred.
less than that set forth in Section 2924f.
recording of the notice of default.
inoperative on January 1, 2018.
of authority designated by the holder of the beneficial interest.
1.6c (commencing with Section 1788) of Part 4.
bona fide purchasers and encumbrancers for value and without notice.
(2) Performance of the procedures set forth in this article.
omitted default or defaults in a separate notice of default.
of Chapter 180 of the Statutes of 2010, is repealed.
application for a foreclosure prevention alternative.
loan modification or other foreclosure prevention alternative.
(3) Any expiration dates for submitted documents.
specified by the mortgage servicer.
trial or permanent loan modification, forbearance, or repayment plan.
proof of funds or financing has been provided to the servicer.
prevention alternative is being evaluated or exercised.
accordance with the provisions of the act that added this section.
2924.9, 2924.10, 2924.11, or 2924.17.
has been corrected and remedied.
to the bona fide purchaser.
damages pursuant to this section.
violation of Section 2923.5, 2923.7, 2924.11, or 2924.17.
damages or statutory damages of fifty thousand dollars ($50,000).
to be a violation of that person's licensing law.
prior to the sale of the subject property to the bona fide purchaser.
(i) This section shall become operative on January 1, 2018.
for a loan made for personal, family, or household purposes.
and supported by competent and reliable evidence.
enjoin a material violation of Section 2923.5, 2924.17, or 2924.18.
its behalf prior to the recordation of the trustee's deed upon sale.
deemed to be a violation of that person's licensing law.
the sale of the subject property to the bona fide purchaser.
section shall only be enforceable by the regulatory agency.
be given effect without the invalid provision or application.

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