Daily Archives: August 2, 2013

BREAKTHROUGH: CALIFORNIA APPELLATE COURT PERMITS HOMEOWNER TO MAINTAIN CAUSE OF ACTION FOR WRONGFUL FORECLOSURE BASED ON FAILURE TO COMPLY WITH MORTGAGE LOAN CONVEYANCE PROVISIONS OF PSA

AUGUST 1, 2013

The California Court of Appeal for the Fifth Appellate District has issued a 29-page opinion which reversed the trial court’s grant of Bank of America’s demurrer (Motion to Dismiss) as to certain claims made by the homeowner, including his claims for Wrongful Foreclosure, Quiet Title, Declaratory Relief, Cancellation of Instruments, and Unfair Business Practices under CA’s Business and Professions Code sec. 17200. The decision was issued yesterday (July 31, 2013), and is styled Glaski v. Bank of America et al, No. F064556.

The decision has been stamped “Not to be Published”. However, we have been advised that papers are being filed to cause the Opinion to become a published decision, and the Opinion relies on numerous published decisions in reaching its result. The law office of Richard Antognini and the law office of Catarina M. Benitez represented the homeowner.

The Complaint alleged that the mortgage loan had not been properly transferred to the WaMu securitized trust, which closed in December of 2005. The alleged transfer (by assignment) was not until June 15, 2009. The homeowner alleged that the non-judicial foreclosure was wrongful because it was initiated by a nonholder of the DOT which failed to comply with the trust documents as to when the loan had to be transferred to the trust, and thus the purported transfer by JPMorgan Chase to the WaMu securitized trust in 2009 was void, resulting in the foreclosure being void as well. The Court rejected decisions from other states which do not permit a borrower to challenge an assignment because the borrower is not a party thereto or is not a third-party beneficiary thereof.

The Court noted that the Trust was governed by NY trust law, and joined courts that have read the NY statute as to conveyances to a trust “literally”. The Court cited the recent NY decision of Wells Fargo Bank, N.A. v. Erbobo, 39 Misc.3d 120A, 2013 WL 1831799, which held that acceptance of the note and mortgage by the (securitization) trustee after the date the trust closed would be void, as any transfer to the trust in contravention of the trust documents is void. The Court further noted that a Texas Bankruptcy Court, relying on Erbobo, held that assignment of the homeowner’s note after the “start up day” (of the trust) is void ab initio, and thus none of the homeowners’ claims were dismissed. (In Re Saldivar, Bankr.S.D.Tex. June 5, 2013, No. 11-10689).

This reasoning was adopted by the United States Congress back in November of 2010 in its Congressional Oversight Report on Foreclosures, which cited NY trust law and similarly found that any purported transfer of a mortgage loan into the trust after the trust closing date in violation of the trust documents was void, resulting in no such transfer ever having occurred.

The Court concluded that the homeowner’s “factual allegations regarding post-closing date attempts to transfer his deed of trust into the WaMu Securitized Trust are sufficient to state a basis for concluding the attempted transfers were void. As a result, Glaski has stated a cognizable claim for wrongful foreclosure under the theory that the entity invoking the power of sale (i.e. Bank of America in its capacity as trustee for the WaMu Securitized Trust) was not the holder of the Glaski deed of trust.”

The Court also distinguished the Gomes decision, which the trial court relied upon in sustaining BOA’s demurrer, distinguishing Gomes through its citation to Naranjo v. SBMC Mortgage (S.D. Cal. Jul. 24, 2012, No. 11-CV-2229-L(WVG) 2012 l 3030370). The Court further held that the “tender” requirement is not applicable where the foreclosure is void, which is what the homeowner alleged.

The Court thus held, in reversing the trial court, that the homeowner stated claims for wrongful foreclosure, quiet title, declaratory relief, cancellation of instruments, and unfair business practices.

This is a monumental decision which clarifies many of the misconceptions that courts in other states are under, in addition to setting the record straight, as NY case law already has, that noncompliance with the PSA results in a void foreclosure. As our readers know, we have been arguing this for years, and now the Courts are finally listening and are apparently no longer distracted by the otherwise incorrect and inapplicable arguments being made by foreclosing attorneys.

We thank one of our clients for bringing this decision to our attention. We will e-mail a copy of the full decision to anyone who requests it.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

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Principal Financial targets big banks in Libor lawsuit

Principal Financial targets big banks in Libor lawsuit

Aug 1 (Reuters) – Principal Financial Group Inc, a large asset management and insurance company, on Thursday filed a federal lawsuit accusing nearly 30 defendants, more than half of which are banks, of rigging global benchmark interest rates.

The lawsuit claims that the defendants conspired to depress the London Interbank Offered Rate (Libor), a rate at the heart of hundreds of trillions of dollars of financial products, from August 2007 to May 2010.

Principal said this caused it to earn less money from Libor-linked investments than if the price-fixing did not occur. The company sued in its hometown of Des Moines, Iowa.

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Bank Of America: Justice Department Intends To File Civil Charges Against Us

Bank Of America: Justice Department Intends To File Civil Charges Against Us

Bank of America may be facing civil charges over mortgage backed securities and other mortgage-related matters.

The bank said in a regulatory filing Thursday that the Department of Justice told the company that it intends to file civil charges related to one or two jumbo-prime securitizations. The SEC is also considering filing civil charges against Merrill Lynch tied to a collateralized debt obligation investigation.

Banks used to regularly package mortgages into bundles known as CDOs, or collateralized debt obligations, and then sell them off in pieces to investors. Many went sour when the housing market collapsed.

Additionally, the filing said that the New York Attorney General’s office intends to file action against Merrill Lynch, following an investigation of some of its residential mortgage backed securities.

 

From the 10-Q:

The Corporation has been advised by the staff of the DOJ that it intends to file civil charges against Bank of America entities arising from one or two jumbo prime securitizations. The staff of the SEC has advised that they intend to recommend civil charges concerning one of those securitizations. The staff of the NYAG has advised that they intend to recommend filing an action against Merrill Lynch arising from their RMBS investigationIn addition, the staff of the SEC has advised that it is considering recommending civil charges against Merrill Lynch arising from its CDO investigation. The Corporation has been in active discussions with senior staff of each government entity in connection with the respective investigations and to explain why the threatened civil charges are not appropriate.

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New York AG Investigates Disqualification of Customers by Banks

New York AG Investigates Disqualification of Customers by Banks

New York’s top prosecutor is investigating some of the nation’s largest banks in connection with their use of credit-reporting databases that disqualify people seeking to open checking or savings accounts — an inquiry that has gained urgency as the ranks of the unbanked has swelled in the aftermath of the financial crisis.

The New York attorney general, Eric T. Schneiderman, sent a batch of letters seeking information to six banks on Thursday, including Bank of AmericaCitibankand JPMorgan Chase, people briefed on the matter said.

The inquiry on Thursday is playing out as a growing number of banks and credit unions tap into the vast repositories of information — a record of banking transgressions including bounced checks, overdrawn accounts and fees — to guard against risky customers and protect against fraud.

COLORADO ATTORNEY TURNED WHISTLE-BLOWER ALLEGES FORECLOSURE ABUSES

An attorney turned whistle-blower at Colorado’s second-largest foreclosure law firm has detailed to state investigators a pattern of abuses that stretch beyond the scope of their investigation into alleged overbilling practices.

Susan Hendrick testified at a hearing Thursday that she told the state attorney general’s office about bill-padding she witnessed while a lawyer at Aronowitz & Mecklenburg in Denver, conduct that investigators say needlessly cost homeowners facing foreclosure millions of dollars. She then laid out a number of other alleged abuses she says happened.

The abuses ranged from the padding of attorney hours to allegations that the law firm destroyed evidence that prosecutors were seeking in their investigation into billing practices by foreclosure law firms, according to testimony in Denver District Court.

The hearing before District Judge R. Michael Mullins was to determine whether Hendrick, an associate at Aronowitz since 2007, was a special counsel to the firm in its efforts to clean up the problems she exposed.

Attorney Robert Aronowitz, 65, testified he was “absolutely shocked” by Hendrick’s revelations and that he had hired her as a special counsel to give advice on how to fix the issues she raised in several e-mails.

“I’d never seen anything like (the allegations Hendrick made) in my entire practicing career” that spans nearly 40 years, he testified.

Rest here…

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Ocwen Close to Servicing Settlement with Federal Regulators

Ocwen Close to Servicing Settlement with Federal Regulators

Ocwen Financial Corp. is close to reaching a settlement with federal regulators and it appears the giant servicer will agree to make cash payments to borrowers who were harmed during the foreclosure process.

“We are pleased to report that we have made significant progress toward an overall agreement,” Ocwen president and chief executive Ron Faris said Thursday.

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Lawmakers bury gold nugget for servicers in FHA reform bill

Lawmakers bury gold nugget for servicers in FHA reform bill

Specialty mortgage servicers may stumble upon a new stream of business if a proposed Federal Housing Administration reform bill takes effect in the future.

The Senate Banking Committee tweaked the proposed ‘FHA Reform’ bill this week to include a provision that would allow the FHA to transfer subservicing duties to specialty servicers. 

Granted the bill has yet to reach the floor for a full vote, but the change could prove beneficial to servicers if the legislation ever takes effect