FORECLOSURE LITIGATION LA LAW LIBRARY AUGUST 6, 2014 SPEAKER: - - PowerPoint PPT Presentation

FORECLOSURE LITIGATION

LA LAW LIBRARY – AUGUST 6, 2014 SPEAKER: LAUREN RODE, ESQ. CONSUMER ACTION LAW GROUP OF PANZARELLA, GUREVICH & RODE, PC 3700 EAGLE ROCK BLVD., LOS ANGELES CA 90065 (818) 254-8413

TODAY’S DISCUSSION POINTS

 PRACTICAL PRACTICE TIPS FOR REPRESENTING HOMEOWNERS IN FORECLOSURE

WHEN SEEKING LOAN MODIFICATION

 ASSESSING A POTENTIAL CASE:

 RESPONDING TO MODIFICATION DENIALS BY LENDERS  DEALING WITH LONG DELAYS IN MODIFICATION REVIEW  RESPONDING TO LOAN MODIFICATION AND FORECLOSURE “DUAL TRACKING” BY

LENDERS

 TEMPER CLIENT EXPECATIONS FROM DAY 1  CASE SCENARIOS: CAUSES OF ACTION BROUGHT BEHALF OF HOMEOWNERS

PRACTICAL PRACTICE TIPS

 WHAT JUDGES’ DON’T LIKE:

 “SHOW ME THE NOTE” ARGUMENT

 NO “PROPER LENDER” THEREFORE THE BORROWER DOESN’T OWE PAYMENTS TO ANYONE

 “LENDER HAS A DUTY TO MODIFY” ARGUMENT – NO SUCH LAW EXISTS

 THE BETTER ARGUMENT: BORROWER WAS IN MODIFICATION REVIEW FOR TWO YEARS WITH

NO RESOLUTION  GET PAST DEMURRER AND MAKE THE LENDER SPEND SOME MONEY

 PRESENT A SYMPATHETIC LEGAL STORY - LENDER WILL DEMURRER (A COUPLE TIMES)  SEND LOTS OF DISCOVERY  TALK TO OPPOSING COUNSEL

RESPONDING TO MODIFICATION DENIALS DEALING WITH DELAYS

 LENDERS ARE WITHIN THEIR LEGAL RIGHTS TO DENY MODIFICATIONS

 COMMON WRONGFUL DENIALS  IF DENIAL IS GENUINE, MAY NEED TO DISCUSS ALTERNATIVES WITH BORROWER

 NO LAW FORCES A LENDER TO RUSH A REVIEW

 FILING A LAWSUIT MAY SPEED UP PROCESS, BUT THERE MUST BE A LEGAL CLAIM;

REMEMBER, THIS IS NOT A MODIFICATION, THIS IS LITIGATION!

 LENDER TOOK SO LONG TO REVIEW, KICKED BORROWER OUT OF PROGRAMS  LENDER TOOK SO LONG TO REVIEW, BORROWER’S EQUITY EATEN UP

DUAL TRACKING

 CALIFORNIA LAW – SB 900 – ENACTED JANUARY 1, 2013

 PRIMARY RESIDENCE  IF BORROWER IS IN MODIFICATION REVIEW, LENDER MUST HALT FORECLOSURE

PROCESS UNTIL THEY RENDER A DENIAL IN WRITING:

 NOD  NTS  FORECLOSUE SALE

 EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER – VERY

SUCCESSFUL WITH CA JUDGES

TEMPER CLIENT EXPECTATIONS FROM DAY 1

 CLIENT MUST UNDERSTAND:

 JUDGE CANNOT AND WILL NOT ORDER THE LENDER TO MODIFY

 EXCEPTION: BREACH OF PERMANENT MOD CONTRACT – SPECIFIC PERFORMANCE

 JUDGE WILL NOT PUSH THE LENDER TO APPROVE A MODIFICATION, NO MATTER HOW

HARD THE HARDSHIP

 LAWSUIT ITSELF WILL NOT STOP FORECLOSURE

 TRO -> PRELIMINARY INJUNCTION  INFORMAL AGREEMENT WITH OPPOSING COUNSEL

 LITIGATION PROCESS:

 LONG  PROPOUNDING AND RESPONDING TO DISCOVERY IS NECESSARY  CONSEQUENCES OF REFUSING TO SUBMIT DOCUMENTS  MAY NOT RECEIVE ANYTHING AT THE END

CASE SCENARIOS – CAUSES OF ACTION BROUGHT ON BEHALF OF HOMEOWNERS

 FIVE MAIN CATEGORIES:

 ACCOUNTING ERRORS AND MISHAPS BY LENDER  DELAY IN MODIFICATION PROCESS CAUSED MODIFICATION DISQUALIFICATION OR ATE

UP EQUITY

 LENDER FAILED TO IMPLEMENT PERMANENT MODIFICATION  CA SENATE BILL 900 – HOMEOWNER’S BILL OF RIGHTS  LENDER TOLD BORROWER TO FALL BEHIND ON MORTGAGE PAYMENTS  OUTLIERS

ACCOUNTING

 LENDER WENT AHEAD AND PAID SOMETHING (INSURANCE, PROPERTY TAXES)

THEN MISAPPLIED BORROWER’S PAYMENTS, CAUSING BORROWER TO BE IN “DEFAULT”

 BREACH OF CONTRACT  NEGLIGENCE  BUSINESS AND PROFESSIONS CODE 17200  FRAUD AND DECEIT  ELDER ABUSE  ACCOUNTING  CA CIVIL CODE SECTION 1785.25 – CALIFORNIA CONSUMER CREDIT REPORTING

AGENCIES ACT (REPORTING IN DEFAULT WHEN REALLY NOT)

 BORROWERS FIND IT IMPOSSIBLE TO GET THE LENDER TO CORRECT MISTAKE ON

WITHOUT LEGAL INTERVENTION

DELAY IN MODIFICATION REVIEW CAUSED DAMAGE



START OF MOD REVIEW BELOW HAMP LIMIT; TOOK SO LONG LOAN BALANCE WENT ABOVE HAMP LIMIT

 NEGLIGENCE 

FDCPA (FAIR DEBT COLLECTION PRACTICES ACT)



ROSENTHAL FAIR DEBT COLLECTION PRACTICES ACT



DELAY CAUSED LOAN MODIFICATION DENIAL (DENIED BASED ON NPV, I.E. TOO FAR BEHIND)



NEGLIGENCE



PROMISSORY ESTOPPEL



BUSINESS AND PROFESSIONS CODE 17200



INTENTIONAL MISREPRESENTATION / NEGLIGENT MISREPRESENTATION



FDCPA



ROSENTHAL



DELAY KILLED EQUITY



NEGLIGENCE, 17200, FRAUD

FAILURE TO IMPLEMENT PERMANENT H.A.M.P . MODIFICATION OR PERMANENT MODIFICATION

 BORROWER APPROVED FOR A TRIAL MODIFICATION, ASKED TO REMIT PAYMENT

UNDER THAT T .P .P ., MADE PAYMENTS, NEVER PROVIDED PERMANENT MODIFICATION (USUALLY ACCOUNT TRANSFER TO NEW SERVICER)

 BREACH OF CONTRACT  PROMISSORY ESTOPPEL  NEGLIGENCE  BUSINESS AND PROFESSIONS CODE 17200  FRAUD AND DECEIT

 H.A.M.P

. CONTAINS GUIDELINES THAT SAY IF A BORROWER COMPLETES T .P .P ., THEN MUST BE PROVIDED WITH PERMANENT MODIFICATION

 IF NOT A SIGNED, CONTRACT

, MAY HAVE TOUGHER TIME, STRONG CASE IF BORROWER MADE PAYMENTS AND LENDER CASHED/ACCEPTED

SB 900 – Homeowner’s Bill of Rights

 Notice of Trustee Sale was issued while borrower was in loan modification

review; no written denial = dual tracking

 SB 900

 In review, NTS issued, lender sold

 SB 900  PROMISSORY ESTOPPEL  NEGLIGENT MISREP / INTENTIONAL MISREP  17200  ROSENTHAL; CCRA  NEGLIGENCE

TOLD TO FALL BEHIND IN ORDER TO QUALIFY FOR ASSISTANCE



TOLD TO FALL BEHIND



FRAUD



NEGLIGENT MISREP / INTENTIONAL MISREP



PROMISSORY ESTOPPEL



17200



ROSENTHAL; CCRA



PLACED IN FOREBEARANCE AGREEMENT – PAY US A LOWER AMOUNT WHILE WE FIGURE OUT IF YOU QUALIFY FOR FURTHER ASSISTANCE + PENALTIES + FEES = ARREARS ACCRUE

 NEGLIGENCE 

17200



BREACH OF CONTRACT



BREACH OF THE CONVENANT OF GOOD FAITH AND FAIR DEALING

OUTLIERS

 BORROWER DIES; SURVIVING CHILDREN WANT TO SAVE HOME, LOAN USUALLY

IN DEFAULT

 ASSUME LOAN? CAN’T MODIFY WITHOUT ASSUMING, CAN’T ASSUME WITHOUT

MODIFYING (NEED TO BE CURRENT) – DELAY = DAMAGES

 LOAN STEMMED FROM AN ILLEGAL TRANSACTION – SCAM TO GET ELDERLY TO

“REFINANCE” THEIR LOAN WHEN THEY REALLY QUIT CLAIMED TITLE TO THEIR HOME; MORTGAGE TAKEN OUT; FORECLOSURE COMMENCING

 VOIDABLE DEED LAW – MORTGAGE STEMING FROM A VOIDABLE DEED CAN BE

CANCELLED

 CHASE FORECLOSED ON HOME IN 2008; BORROWER NOT TOLD UNTIL 2013 – 5

YEARS LATER!

 WRONGFUL EVICTION, TRESPASSING, FRAUD, WRONGFUL FORECLOSURE, 17200

 WHO OWNS THE LOAN?

 TRANSFERS FROM ORIGINAL LENDERS TO SUBSEQUENT SERVICES WERE DONE

INCORRECTLY

 CHARTING NEW TERRITORY – QUIET TITLE, VOID OR CANCEL DEED OF TRUST

THANK YOU! Questions?