Certified Forensic Loan Auditors, LLC (CFLA) 13101 West Washington Blvd. Suite 444 Los Angeles, CA 90066 310-579-7422 Andrew Lehman, CFLA President/Owne
Warning to Borrowers Facing Foreclosure:
Do not waste money buying a securitization or chain of title audit
from CFLA or anyone else. Numerous court opinions, cited below,
support this warning.
CFLA aggressively promotes its loan audit,
securitization audit, and chain of title audit services to home loan
borrowers (mortgagors) who have defaulted on their loans and feel
desperate to prevent foreclosure. CFLA gives such desperate
borrowers false hope that the borrowers can use their audits and
expert witness testimony to avert foreclosure, even though borrowers
breached the terms of their loan contracts and really ought to lose
their homes to foreclosure. Virtually no mortgagor in foreclosure
who purchases a loan-related audit from CFLA or any other company
successfully avoids foreclosure because of information contained in
the audit. The following statements by experts show why.
VIOLATIONS.””A person who violates any provision of
this section commits an unfair and deceptive trade practice as
defined in part II of this chapter. Violators are subject to the
penalties and remedies provided in part II of this chapter, including
a monetary penalty not to exceed $15,000 per violation.
Just this week I had another client in my office who
almost lost their home because they had given thousands of dollars to
a loan audit/securitization “expert” who told the to ignore the
lawsuit that was filed against them. They did not respond to the
lawsuit and the bank was prepared to set a sale. The judge did not
have to let my new client defend the case, but the judge recognized
that this old, immigrant family had indeed been the victim of a
widespread and rampant fraud so the judge allowed them to defend
their case and their home is safe…for now. Good call by the judge.
Fair. Balanced. So now, I’m going to bust my hump to make sure
this client fills out all their paperwork and gets the modification
done. Here’s the thing….with their income, they could have had
the modification done months ago….if only the scammer had not sold
them up the river.
I get variations of the loan audit scam in my office
nearly every single day. Hapless consumers are either directly
approached by companies or they respond directly to any one of the
hundreds of websites that have sprung up everywhere. Here’s the
rap: The company or expert will audit their loan, show them how the
bank committed fraud or their documents are bad or whatever and the
homeowner can use that information to get a free house….for a small
upfront fee of several thousand dollars…and maybe a small monthly
fee if the mark can swing it.
ANY REPRESENTATIONS LIKE THIS ARE A VIOLATION OF
STATE AND FEDERAL LAW!
“there is no evidence that forensic loan audits will
help you get a loan modification or any other foreclosure relief,
even if they’re conducted by a licensed, legitimate and trained
auditor, mortgage professional or lawyer.”
This alert and warning is issued to call to your
attention the often overblown and exaggerated “sales pitch(es)”
regarding the supposed value of questionable Forensic Loan Audits. It
is critical to note that a loan audit (audit report) has absolutely
no value as a stand-alone document.
Whether they call themselves Forensic Loan Auditors,
Certified Forensic Loan Auditors (there are no such certifications in
the State of California), Mortgage Loan Auditors, Forensic
Attorney-Backed Foreclosure Prevention Auditors, or some other
official, important or lofty sounding title(s), there are thousands
of individuals and companies that have popped up and appeared all
over the State of California. Most of these individuals and companies
are unlicensed, and some were previously engaged in illegal
foreclosure rescue and loan modification scams.
The DRE has seen a wide variety of claims and sales
pitches, where impressive sounding loan review services are offered
with the goal of taking your money. Quite simply, the bad players
market hope – and all too often, it is false hope.
A Georgia US District Court in Demilio
v US Bank issued a scathing indictment of Demilio’s effort to
subvert a foreclosure with a CFLA securitization audit.
Having reviewed the Complaint and all appropriate
exhibits, the Court finds that Plaintiff has failed to set forth
sufficient facts to show he is entitled to relief on any of his
asserted claims. In fact, rather than alleging any material facts in
his pleading, Plaintiff attempts to “lodge” “[t]he facts and
statements made in the securitization audit attached
herein.”13Frankly, the Court is astonished by
Plaintiff’s audacity. Instead of providing the “short and plain
statement” of facts required by the Federal Rules of Civil
Procedure,14 Plaintiff requires the Court to scour a
poorly‐copied, 45‐page “Certified Forensic Loan Audit” in an
attempt to discern the basic facts of his case. This alone would be
sufficient for dismissal.15 However, the Court is equally
concerned by Plaintiff’s attempt to incorporate such an “audit,”
which is more than likely the product of “charlatans who prey upon
people in economically dire situation,” rather than a
legitimate recitation of Plaintiff’s factual allegations.16As
one bankruptcy judge bluntly explained, “[the Court] is quite
confident there is no such thing as a ‘Certified Forensic Loan
Audit’ or a ‘certified forensic auditor.’”17In
fact, the Federal Trade Commission has issued a “Consumer Alert”
regarding such “Forensic Loan Audits.”18The Court
will not, in good conscience, consider any facts recited by such a
19 See, e.g., Fidel, 2011 WL 2436134, at *1 (disregarding
a “Securitization Audit and Forensic Audit” attached as exhibits
to plaintiff’s complaint); accord Hewett v. Shapiro & Ingle,
No. 1:11CV278, 2012 WL 1230740, at *4, n.4 (M.D.N.C. Apr. 12, 2012)
(discussing various “audits” and noting that such documents
“confirm the empty gimmickery of these types of claims.”).
State and federal courts across the land have
denounced securitization and chain of title audits, and have
uniformly ruled against the clients of CFLA who relied on CFLA audits
to save their homes from foreclosure. The end of this report lists
26 court opinions which borrowers should read BEFORE deciding to
spend money on a useless CFLA loan/securitization/chain-of-title
audit. None of the judges in those case ruled in favor of the
borrower. The Leadbeater
v JP Morgan opinion provides this comment in footnote 9:
Madeline Cox Arleo has previously cautioned that she has “concern
over the dubious nature of such reports [prepared by Certified
Forensic Loan Auditors, LLC.]”Hicks
v. The Bank of New York, et al.,
Action No. 15-1620, Letter Order, D.E. 22 (Feb. 22, 2016). The FTC
has recently warned consumers to be wary of “forensic mortgage
loan audits.” Federal Trade Commission, Forensic Loan Audits,
(last visited September 13, 2017) (“According to the Federal
Trade Commission (FTC), the nation’s consumer protection agency, the
latest foreclosure rescue scam to exploit financially strapped
homeowners pitches forensic mortgage loan audits.”).”
Rodriguez, Attorney at Law –Patricia
is another of CFLA’s instructors. She also has been very active
representing homeowners. Going back to June of 2012,Westlaw
shows her handling 20 cases,
(and you can find a list of her cases at that link).
were any sort of win for the homeowners… in one she was sanctioned
by the court and the 19 others were dismissed, many with prejudice or
without leave to amend… the three quiet title cases were all
dismissed.She also filed a mass joinder lawsuit that was also
v. Wells Fargo Bank,
2012 WL 6019108 (U.S. DC N.D. Ca. 12/3/12), that deserves to be
highlighted because in this case, Ms. Rodriguez ended up being
sanctioned by the court for violating Rule 11 of the Federal Rules of
Civil Procedure, and ordered to attend 20 hours of continuing legal
education. Here’s what the court said about Ms. Rodriguez…
The Court is disheartened
by counsel’s failure in this case, even in responding to the
present motion, to recognize that she has erred. If she had
approached her practice with a measure of common sense, Counsel might
have reconsidered her position…
And on a very basic
level, the Court wishes to remind counsel that if an ordinary person
cannot understand what she is saying in her pleadings—a neighbor,
friend, or family member—then it is very likely that the Court and
opposing counsel will not be able to either. The kind of garbled
pleading that counsel has three times submitted to this Court imposes
a burden that all involved would like to avoid in the future.
Accordingly, the Court
hereby orders counsel, Patricia Rodriguez, to attend a minimum of
twenty (20) hours of MCLE-accredited legal education courses, apart
from any compliance hours regularly required by the California Bar
Association. These hours shall include a minimum of eight hours in
complaint-drafting or other legal writing, eight hours addressing the
substantive law of foreclosure, if indeed it is an area in which Ms.
Rodriguez wishes to continue practicing, and two hours of legal
remember that Patricia
is a CFLA Instructor,
training lawyers and others around the country in how to represent
homeowners in quiet title cases and how to use CFLA’s
securitization audits in foreclosure defense.
I understand that foreclosure defense has been incredibly difficult
even for the most dedicated and experienced attorneys. So losing is
not necessarily a bad thing all by itself. But
the way CFLA markets the company’s instructors, experts and
seminars as leading the industry is at least misleading.
Mortgagors facing foreclosure might wonder why they cannot find
more consumer complaints against CFLA at sites like RipoffReport.com.
Upon visiting that site a search for CFLA under its full name will
reveal multiple pages of advertising showing CFLA to be a model
company, but no complaints at all. The reason: CFLA’s principal
has paid the equivalent of a bribe to the principal of RipoffReport
to remove all complaints against CFLA from the site and replace them
with advertisements making CFLA seem honorable. Clearly, CFLA has
earned so much money scamming troubled mortgagors that it now seems
evident that CFLA can afford to pay bribes or issue threats to get
webmasters to remove complaints and to get angry customers to retract
their complaints. The court opinions that follow prove that CFLA
cons troubled mortgagors into buying CFLA’s useless securitization,
chain-of-title, and loan audit services. Borrowers who rely on CFLA
audits lose in court.
Court Opinions Showing Borrowers
LOSE by Relying on CFLA Audits
I write in answer to your Jesinoski Revisited article (see below). I’ll post my comment and yours in my Mortgage Attack and LivingLiesTheTruth blogs because I know you lack the courage to post them at LivingLies blog.
To refresh everyone’s memory, SCOTUS wrote this holding in the Jesinoski opinion:
“The Jesinoskis mailed respondents written notice of their intention to rescind within three years of their loan’s consummation. Because this is all that a borrower must do in order to exercise his right to rescind under the Act, the court below erred in dismissing the complaint.”
Jesinoski v. Countrywide Home Loans, Inc., 135 S. Ct. 790 – Supreme Court 2015
Remember the nature of the dispute. Jesinoskis had mailed his notice of rescission exactly 3 years after loan consummation, but the district and circuit denied the rescission because Jesinoskis sued AFTER mailing the notice. So the only issue before the SCOTUS was the question of whether Jesinoskis had to sue within the three year period of repose. SCOTUS said no because TILA does not require that.
The sole principle that Jesinoski clarified was that the three year limitation on notice did not extend to the filing of a lawsuit. 135 S.Ct. at 793
The SCOTUS opinion did not question whether a TILA violation had occurred. SCOTUS granted certiorari merely to quell differences of opinion between the circuits as to when a borrower may sue to enforce rescission. The trial judge explained it this way:
Jesinoski v. Countrywide Home Loans, Inc., 196 F. Supp. 3d 956 – Dist. Court, Minnesota 2016
The Elephant in the Room – NO TILA VIOLATION OCCURRED.
You blindly fail to see this gargantuan elephant:
ONLY A TILA VIOLATION TRIGGERS THE RIGHT TO RESCIND… No violation, no rescission.
If no TILA violation occurred, then an effort to invoke TILA rescission should (and always does) fail. That explains why the trial court wholeheartedly ruled against Jesinoski.
Furthermore, if the borrower timely mails the notice of rescission and then waits till after the TILA statute of limitations has tolled (1 year and 20 days after mailing notice to rescind), the borrower’s lawsuit should and will fail. Then the borrower will have only a defensive remedy available, such as in foreclosure or bankruptcy.
In any case, the trial judge explained that Jesinoskis had signed an acknowledgement of receipt of the roper TILA notices of right to cancel. He believed that written acknowledgement rather than their contrary claim. Thus, the lack of a TILA violation made irrelevant their inability to tender.
A reading of the trial opinion makes it clear that the Jesinoskis were scammers trying to trick the system into giving them an undeserved windfall. They had used their house as an ATM, borrowing to pay other debts and live large. The trial court gave a well-deserved comeuppance to them and many others like them. The judge wrote:
“Here, it is undisputed that Plaintiffs left with copies of their closing documents. (L. Jesinoski Dep. at 94-95.) In addition, Plaintiffs did not testify unequivocally that they did not each receive two copies of the rescission notice. Instead, they have testified that they do not know what they received… Based on the evidence in the record, the Court determines that the facts of this case are more line with cases that have found that self-serving assertions of non-delivery do not defeat the presumption”
The Court rightly denied the Jesinoskis any and all damages:
“For the reasons discussed above, Plaintiffs’ TILA claim fails as a matter of law. Without a TILA violation, Plaintiffs cannot recover statutory damages based Defendants refusal to rescind the loan.”
Clearly Neil Garfield Does NOT Understand TILA Rescission
In spite of KNOWING how the courts have ruled in numerous post-Jesinoski cases, you keep insisting on a nonsensical interpretation of TILA rescission. You wrote the following in denial of reality:
“The ultimate decision in the Jesinoski case was against the rescission. This was wrong and in flagrant disregard of the Jesinoski decision rendered by the SCOTUS. The decision simply stated that the rescission WAS effective the moment it was dropped in the mail (or delivered.)”
Excuse me, Neil, but didn’t the Jesinoski trial court SHRED your legal theory? The judge and the creditor knew full well that Jesinoskis LIED about not receiving their TILA notices, and that no TILA violation occurred. What kind of bozo thinks a court should enforce a TILA rescission notice when no TILA violation occurred to justify it?
Recall again that the SCOTUS opinion presumed a VALID TILA rescission, one preceded by a TILA violation. It did not presume a rescission notice without a justifying TILA violation. The trial court made that crystal clear.
Now, Neil, you allege that ” It is uncontested that rescission caused the note and mortgage to immediately become void – not conditionally but actually.”
Well, that’s dead wrong too. Even a valid TILA rescission has certain procedural requirements. If the creditor does not sue to prevent rescission, and yet does not tender or release the lien, then the borrower must sue and ask the court to void the security instrument. And try not to forget that the creditor need not tender if he knows the borrower cannot or will not tender. Only a court can sort out those issues.
“The bankruptcy court did not err in finding that Brown never effectively rescinded the loan because she ignored her tender obligation to restore the lender to the same position it was in before the transaction. Brown, 538 B.R. at 720.”
To accomplish rescission, rather than merely initiating the process, “[e]ither the creditor must acknowledge[ ] that the right of rescission is available and the parties must unwind the transaction amongst themselves, or the borrower must file a lawsuit so that the court may enforce the right to rescind.”
Neil, you seemed to allege that Countrywide, not Jesinoski, bore the onus to sue for relief in the rescission question. The above rulings should disabuse you of that fallacious thinking. But just in case they didn’t, I’ll explain it to you.
Somehow this matter wound its way up and back through the Minnesota District Court to the 8th Circuit and the US Supreme Court, and NOBODY (not even Jesinoskis) exhibited the stupidity of suggesting that Countrywide should have sue Jesinoski in order to buck against Jesinoskis’ specious claim for rescission.
You see, Jesinoskis DID sue to enforce the rescission, and Jesinoskis LOST because of their flimsy and transparently FALSE evidence: their word that they didn’t remember receiving TILA notices just could not stack up against proof, in the form of their own written acknowledgement, that they had received them.
You seem to think that Jesinoskis had some better evidence at hand. They didn’t. AND even if they had better evidence, they couldn’t tender. That made it THEIR obligation to sue in order to work out some means of tendering, as courts across the land have allowed.
Why Does Neil Garfield Insist on Being Wrong?
Look, Neil, I have proven you wrong repeatedly, and as you pointed out, I AM NOT EVEN A LAWYER.
You definitely have a way with words. I don’t know of any practicing attorney who whiles away more hours at the keyboard than you do. And sometimes, even I, in spite of my ignorance, will admit that you raise some thought-provoking, if not worthy, points.
But I see you as a Pied Piper leading hapless, feckless, desperate foreclosure victims with the music of your words that “THE COURTS ARE ALL WRONG” and “BOB HURT IS A SHILL FOR THE BANKS”… you lead them inexorably right into the jaws of foreclosure with irrational POPPYCOCK about the meaning of fairly simple laws like TILA.
I think I recall a time (correct me if I’m wrong) when you pronounced that everybody with a mortgage loan should file a notice of rescission (or something similarly nonsensical), even though every other attorney seemed to know the law makes TILA rescission available ONLY to those with refinance or HELOC loans.
Eventually I concluded that, even though I am not an attorney, I am a good enough student to read court opinions that say unequivocally and repeatedly that some of the legal theories you most vehemently espouse are nothing more than COW PLOP.
And I decided that I would try just a little to break the mesmerizing spell you cast on desperate foreclosure victims, by telling them the truth, such as about the really simple meaning of Jesinoski.
Now I see you intend to deliver this oratorial offal to people (victims) in a seminar:
“Countrywide was not a lender or even an aggregator. It was a conduit for an aggregator and far removed from the actual transfer of funds attendant to the apparent loan.”
I recall your claim that table funded loans aren’t really loans because the borrower doesn’t know the lender, or that the borrower should demand a TILA rescission because the loan was never consummated.
“The Fannons theory that the loan was not consummated has been overwhelmingly rejected by other courts. See, e.g., Schiano v. MBNA, 2016 WL 4257761, at *9-*10 (D.N.J. Aug. 10, 2016); Johnson v. Bank of N.Y. Mellon, 2016 WL 4211529, at *4 (W.D. Wash. Aug. 10, 2016); Wilder v. Ogden Ragland Mortg., 2016 WL 4440487, at *4-*5 (N.D. Tex. July 29, 2016)(“Plaintiff’s claim that the three years period to rescind the loan remains open, because Defendants failed to identify the true lender and the loan was never consummated, is nonsensical.”); Almutarreb v. Nationstar Mortg. Holdings, 2016 WL 3384067, at *5 (N.D. Cal. June 20, 2016); Tyshkevich v. Wells Fargo Bank, N.A., 2016 WL 3077580, at *4 (E.D. Cal. May 31, 2016); Smith v. Wells Fargo Bank, N.A., ___ F. Supp. 3d ___, 2016 WL 370697, at *4 (D. Conn. Jan. 29, 2016).”
Don’t you, a lawyer, know that rescission is a contract remedy, and so if the loan was not consummated, NO CONTRACT EXISTS, and so the purported borrower is not a borrower and therefore cannot rescind anything?
Further, if, as the Fannons assert, the loan had never been consummated, then TILA would not apply because there would be no loan to rescind. See, e.g., Wilder, 2016 WL 4440487, at *4-*5; Samuelson v. Wells Fargo Bank, N.A., 2016 WL 1222222, at *2 (N.D. Ind. Mar. 29, 2016).
Here’s my fundamental trouble with your writings, Neil. For years you have propounded legal theories that courts have disdained with adverse rulings. And then you have used the puffery of false erudition to trick unsuspecting innocents into believing your theories will allow them to prevail in court, if only they attend your seminar or buy your “TILA Rescission Package,” or hire you as a consultant.
Of course you cannot show them where your legal theories won in court because those theories always LOSE. Or you trick them into believing that a dismissal without prejudice is a win and not a dilatory tactic forbidden by the Bar’s Rules of Professional Conduct. Neil Garfield’s Path to Righteousness
Neil I don’t like “crossing swords” with you because I’m no match for you. And I should go easy on you because statistically, a man who writes as much about the law and litigation as you do is BOUND to err from time to time.
And unfortunately, some of your errors, such as those in the Maslanka case, in which you tried to drown the court in balderdash, have become stuck in court archives, and you will never live them down, particularly if you never admit you were wrong. Let’s face it. You deserved the spanking the trial and appellate courts gave you in that case, and poor Maslanka had to pay his adversaries’ legal fees as well as yours.
And it’s hard to get over the spanking the Florida Supreme Court Justices gave you in its August 2016 public reprimand:
“Neil Franklin Garfield, Parkland, to be publicly reprimanded. (admitted to practice: 1977) In at least four instances, Garfield accepted money to represent clients and failed to follow through. In one case, Garfield did not perform the work and, when asked for a refund, denied knowing the client. in other cases, he failed to communicate, charged excessive fees, failed to return refunds upon request, and failed to timely respond to Bar inquiries.”
But if you put forth a wee bit of effort, you can stop propounding the dreck that courts have denounced repeatedly, and give your clients some honest service instead, such as by using some of your ridiculously high fees to purchase a comprehensive mortgage examination for them from Mortgage Fraud Examiners. You’ll actually have fun hammering the bank, broker, appraiser, and title company with cogent causes of action in which they really did injure the client. You’ll become a hero instead of a heel because you’ll actually start winning money and beneficial settlements for your clients instead of earning their scorn and bar complaints.
If you ever bothered to do your job right, Neil, you’d forsake the scams of the foreclosure defense business in favor of attacking the validity of the loan transaction. I quit the foreclosure defense racket in 2009. The time for you to make the switch to mortgage attack is long overdue.
*********** Neil Garfield’s Blog Article ************
it continues to be true that the statute is clear, the rules of procedure are clear, and the rules of evidence are clear — yet trial courts are adamantly opposed to allowing homeowners to use the power granted to them by Congress.
The second ultimate decision by the trial court that Jesinoski had to tender the money to Countrywide before the rescission could be effective is just as wrong as the same court’s prior decision that the rescission would not be effective — a decision that was unanimously overturned by SCOTUS. It put a condition on the effectiveness of rescission when SCOTUS clearly stated, and the statute clearly stated, that there were no conditions for the effectiveness of rescission other than the required notice.
Virtually everyone is ignoring the elephant in the living room, to wit: Countrywide was not a lender or even an aggregator. It was a conduit for an aggregator and far removed from the actual transfer of funds attendant to the apparent loan.
[Garfield’s service promo excised]
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
The ultimate decision in the Jesinoski case was against the rescission. This was wrong and in flagrant disregard of the Jesinoski decision rendered by the SCOTUS. The decision simply stated that the rescission WAS effective the moment it was dropped in the mail (or delivered.) You can read the attack on me in Bob Hurt’s blog in the above link.
Rescission was effective starting with the mailing and uncontested delivery of the notice of rescission, if someone wants to challenge it they must do so in a lawsuit to vacate the effective instrument. This is the most basic procedural law — you don’t get relief without asking for it and the way you ask for it is by filing an pleading in court and getting a decision vacating the rescission notice. This trial court never vacated the rescission probably because it knew it had no power to do so.
You can’t get relief unless you first establish legal standing. SCOTUS said that the rescission was effective in this case and all others like it. It is uncontested that rescission caused the note and mortgage to immediately become void – not conditionally but actually.
So in order to bring a claim you would need to file a claim stating that you are being injured by a wrongfully delivered notice of rescission. That is called standing. The only party who could do that is the owner of the debt, since the ownership of the note and mortgage (void instruments now) is irrelevant. And THAT is where the trial court got it wrong (again). In the absence of a pleading from the owner of the debt, the trial court was devoid of jurisdiction to render any decision in which there rescission was ignored.
Hurt, a non lawyer, is apparently attempting to discredit a Federal law. But he is voicing the party line of the banks. The trial court was twice in error when it entered judgment against Jesinoski and if Jesinoski had the resources to appeal again they MIGHT well have won. It does appear that the “issue” in the trial court was whether the rescission stands. Clearly the opposition did not follow the requirements of statute.
BUT it is possible for the appellate courts to see this as harmless error since the factual finding of the trial court was that proper disclosure was given to Jesinoski. While that finding is also appealable, appellate courts are not likely to intervene in a finding of fact unless there was absolutely nothing in the court record to justify that finding.
So in the end this is about evidence and the failure to present it.
Since rescission is all about proper disclosure and since Jesinoski failed to show that required disclosure was not given at the “closing” of the loan, it may be assumed that they would have lost in an action brought by Countrywide or its successor to vacate the rescission. But that is an advisory decision prohibited to any court.
The assumption is improper. That is why we have rules of procedure. If you want relief you must plead for it not simply argue about it.Countrywide never filed a pleading to vacate the rescission, as far as I know. And the rescission was never vacated even by this decision.
The trial court decided instead to accept the challenge from a party without standing (CW did not own the debt and their standing was entirely based upon the void note and mortgage). Inherent in the trial court’s erroneous decision was the presumption that was used to allow Countrywide to oppose the rescission — i.e., that because it supposedly had the original note and mortgage, it therefore owned the debt. The rest is history.
This decision assumes that Countrywide had standing apart from the note and mortgage, i.e., ownership of the debt. And it also assumes that there was an action filed by Countrywide to vacate the rescission. Neither of these was addressed, much less the 20 day requirement for filing such an action. Instead the trial court simply continued its error by ignoring the rescission because of its factual finding that disclosures had been properly given. But the disclosures were given by people who withheld basic information that is required under the statute, to wit: the identity the lender and the identity of the creditor (i..e., owner of the debt).
So this case went down because Jesinoski did not stick with the requirements of burden of proof, and the requirement that a party with standing make the challenge to the rescission within 20 days. Ignoring the 20 day limitation period results in placing a condition to the effectiveness of there rescission in contradiction to the express wording of Federal Statute and SCOTUS. There are no conditions. Jesinoski failed to press the rules of evidence, based upon the written opinion, which could have landed a victory.
Virtually everyone is ignoring the elephant in the living room, to wit: Countrywide was not a lender or even an aggregator. It was a conduit for an aggregator and far removed from the actual transfer of funds attendant to the apparent loan.
This is why I am offering a seminar on evidence [excised]. The devil is in the details. And too many foreclosure defense lawyers do not properly prepare to attack the details. The trial court decision is basically a political decision, not a legal one. So it continues to be true that the statute is clear, the rules of procedure are clear, and the rules of evidence are clear — yet trial courts are adamantly opposed to allowing homeowners to use the power granted to them by Congress.
Here's a twist on legal malpractice and foreclosure that NOBODY but I wants to report.
The Malpractice Scheme: Hundreds if not THOUSANDS of attorneys around the USA, including prominent lawyers in YOUR CITY, vigorously promote their foreclosure defense services. They get foreclosure victim clients by promising to "keep you in the house as long as possible." They charge $1500 to $3000 retainer (a downpayment gift) and $500+ a month till the foreclosure becomes final. Meanwhile they file cookie-cutter pleadings they copied from other attorneys complaining about "show me the note," bifurcation of note from mortgage, securitization, wrong track of ownership of note, lack of standing (wrong plaintiff), vapor money (lender deposited borrower's note and used that to fund the loan), and other nonsense. This delays the foreclosure, but the foreclosure inevitably goes through anyway and the client loses the house.
BUT, the lawyer seldom if ever bothers comprehensively examining the mortgage, note, and all related documents for evidence of torts, breaches, fraud, and legal errors. Some lawyers sell or promote useless services like securitization audits and loan audits. In the end, to avert the otherwise inevitable foreclosure, some lawyers con the client into a short sale, deed in lieu of foreclosure, keys for cash, or an onerous loan modification that leaves the client owing double to triple the value of the house, and facing a huge balloon the client cannot pay.
How does this constitute LEGAL MALPRACTICE? Well, the bank accused the foreclosure victim of breach of contract. So, the attorney should take these steps:
1. Say "give me the contracts and all related documents, letters, lawsuits, etc.," then
2. Search for the causes of action in them against the lender or lender's agents, then
3. Attack the lender and agents through settlement negotiation or lawsuit, then
4. WIN compensation for the mortgage victim's injuries.
You see, historically, lenders and their agents have cheated NINE OUT OF TEN mortgagors. Settling or suing on the basis of those causes of action can get financial compensation for the mortgagor.
Thus, the mortgagor can fight one of two battles:
1. The foreclosure, which the borrower statistically always loses.
2. The mortgage, which the borrower statistically always wins.
Which battle makes most sense to you?
Our problem lies in the fact that no MORTGAGE ATTACK legal industry exists. Foreclosure Defense Lawyers focus on the easy money of defense for $300 to $500 a month and the mortgagor loses the house after paying the lawyer upwards of $10,000 to $30,000 for doing virtually no work on the case. They do this KNOWING the mortgagor will lose the house. Those lawyers have not learned how to examine mortgages for causes of action, and I believe most have become too lazy and incompetent to serve the real interests of the client. Many such lawyers ballyhoo claims of winning when the court temporarily dismisses the foreclosure complaint for lack of standing because the wrong plaintiff sued. The plaintiffs nearly always correct their paperwork, get standing, refile or appeal the case, and win. Then the court sells the property and orders the mortgagor out of the house.
The net issues: mortgagors cannot find competent lawyers to examine their mortgages. And, the mortgagor with an examination report showing causes of action in hand cannot find a lawyer to attack the mortgagee over those causes of action.
Herein lies a huge opportunity for lawyers and mortgagors. Mortgagors do have a mechanism available for negotiating with the lender to obtain a reduced loan balance and payments they can afford, or financial remuneration for their injuries. They can simply contact the lender and demand a solution. If the lender balks, the mortgagor can contact Government regulators and report the lender for violating regulations. That usually brings a quick remedy. Severely injured borrowers might even get the house free and clear WITHOUT NEEDING the services of a lawyer.
The public needs to know about this technique and opportunity. I can connect people with a competent mortgage examiner, and I charge nothing for my service. You can read numerous articles I have written on related subjects at http://mortgageattack.com/articles. Many people come to me for help. Some go on to ignore my encouragements, and lose their home. Others get their mortgages examined, and I help them discover how to proceed from there to save the home or obtain financial compensation for their injuries..
If you want to learn more about this, and don't want to read my articles, contact me. I have retired from the computer industry and have the time to help people free as my way of giving back to the community. I have no business obligation to any company.
Before deciding NOT to contact me, ask yourself what YOU would do with a mortgage exam report that showed causes of action against YOUR lender.
It will connect you to Allied Van Lines after you LOSE YOUR HOUSE. They can help move all your stuff when you get evicted. You will lose the house, you know…
… UNLESS you heed the comments below.
NO defense exists against a foreclosure of a valid mortgage note that you breached.
None. Nada. Zero. Zilch. Niente. Niemals. Bupkis.
All foreclosure defenses eventually fail. Only a crooked foreclosure defender hides that ugly truth from you. The foreclosure eventually goes through to completion. The foreclosure victim loses the house. OR, if qualified, the victim accepts an onerous loan modification. You probably don’t qualify. Fewer than 20% do.
If you face foreclosure and don’t hire a competent professional to examine your mortgage comprehensively, YOU WILL LOSE YOUR HOUSE, one way or another, sooner or later. If you cannot prove that the lender or lender’s associates injured you at the inception of your loan, YOU WILL LOSE YOUR HOUSE. If you can prove it but fail aggressively to negotiate or litigate on the basis of those injuries, YOU WILL LOSE YOUR HOUSE.
And that means you will have to move out. So, I decided to do you a favor and give you the above number of Allied Van Lines. Call them and they will move everything you own to your new home.
Oh, right, I nearly forgot. If you complain that you cannot afford a mortgage examination, or the litigation or negotiation to use it effectively, then you will really whine about what Allied Van Lines charges to move you across town or to another state.
That’s IFF (if and only if) you have a home to which you can move.
And if you cannot afford the move, here’s what your house can looklike after you get evicted:
You KNOW Whom to Call
The worst part of disasters like those shown above: generally the mortgagor (that means YOU, the borrower in default on your loan) will end up owing money for all the necessary repairs, the eviction cost, the litigation cost, lawyer fees, accrued interest, etc.
Only the Mortgage Attack methodology will give you the opportunity to save your home from such a disaster AND win concessions or money from those who injured you.
That means you must get your mortgage examined comprehensively by a competent professional. Then you can use the causes of action from the examination report as leverage in a settlement negotiation or a lawsuit against the lender and lenders associates or agents.
See? You use the causes of action to attack the crooked mortgage instead of defending against an indefensible foreclosure.
“Causes of action” means “reasons to sue.” They can consist of a wide array tortious conduct, contract breaches, legal errors, and violations of state and federal regulations. Examples include appraisal fraud, loan application fraud, wrongful credit reputation damage, and many other terrible injuries that cost you a lot of money or put you in unnecessary jeopardy.
Some mortgage borrowers get injured badly, some get injured little, and some not at all. But any injuries can justify a set-off from the amount of your debt OR another settlement that benefits you, such as a favorable loan modification like a balloon-free reduction in your debt and interest rate, or a keys for cash deal.
You might even win a huge amount of compensatory and punitive damages (money) if you sue successfully for the injuries. In my experience, over 90% of those who get their mortgage examined have suffered injury by the lender or associates.
Yes, you can get a favorable loan modification if you negotiate from a position of power. That means you tell the lender to give you favorable terms (for example assumable 3% fixed rate for 30 years, loan balance reduced to the present value of your home, all accrued interest and costs forgiven, no 1099 to the IRS).
But you have no negotiating power without a mortgage examination report that shows how the lender or others injured you.
If YOU don’t want to lose your home to foreclosure, you know what to do. Call me today to get started on a mortgage examination by a competent professional.
Here’s another number to memorize while you make up your mind whether to lose your house or to take practical action that will give you some hope of redemption in your mortgage:
727 669 5511
It’s your choice:
Allied Van Lines (800 444 6787 FREE), or
Mortgage Attack (727 669 5511). Now.
Which makes most sense to you?
What? You still don’t feel “convinced” that you need to call me right now?
Okay, I have taken the time to write up a couple of examples of the benefits you can enjoy IF you act NOW to get your mortgage examined:
Regarding this one, Garfield obviously does not realize that a borrower no longer has an interest in a foreclosed property, and there has no legal entitlement to TILA-rescind the loan that the court has discharged through a foreclosure judgment and sale of the property.
Okay, let me give it to you this way. I recently ran across a desperate mortgage victim whom Neil Garfield had gouged for $2500 for this absolutely useless tom-foolery memorandum. Garfield speculates about numerous legal theories which the court shot down in the above cited Jones v Select Portfolio Servicing opinion. You can find more case opinions destroying the bogus legal theories for which he bilks his desperate clients.
If you get bored to death, go to the bottom for SALVATION. Meanwhile, note that I have replaced potentially sensitive information with Blah or Blah Blah in order to protect the identity of Garfield’s victim.
—————–Start of Garfield Cure for Insomni… z-z-z–z-z —————
This is a review and report and not a definitive statement of opinion on the entire case strategy. Since the property is located in Florida and Mr. Garfield is licensed in Florida, he is qualified to give both expert opinions and legal opinions.
DATE: whenever 201
RE: Blah Blah and his Wife
Phone No.: Blah
Email Address: Blah
JUDGMENT ENTERED years ago,
SALE DATE CANCELED MULTIPLE TIMES
FEDERAL ACTION TO ENJOIN USE OF NOTE AND MORTGAGE SUGGESTED
The address of the property in question is BlaB Street, Blahville, Florida, in Blah County.
The property is in foreclosure. As of last year Mr. BlahBlah reports that he hired an attorney, started modification and is not current on payments.
He has requested a review and commentary in connection with his property and his loan.
He has already filed a petition for relief in bankruptcy court under Chapter 7 and apparently converted to Chapter 13. Motion to lift stay was filed and presumably granted. The name of his attorney in the State Court action, Case No. yeah sure, wherever County.
Mr. BlahBlah reports that in years ago they were 3 months behind in their payments. Acting through a HUD counselor there was apparently an agreement that was reached in September Years ago where they would catch up on the three payments. According to Mr. BlahBlah Wells Fargo broke the agreement, refused to discuss the matter any further and Mr. BlahBlah and his wife apparently were served with a summons and compliant that years ago. If they have correspondence proving the existence of the deal, then this would be a point to raise in defense as a possible violation of either estoppel1 or dual tracking, which was not passed until after the agreement.
If the agreement can be proven (they will most likely deny it), then even without the Dodd-Frank prohibition against dual tracking, the homeowners reasonably relied upon the existence of the agreement and made payments that were accepted. Wells Fargo has a history of accepting payments under oral modifications and then abandoning the agreement without accounting for the payments — which often makes the default letter wrong as to the missing payments.
Disclosures as to the true funding of the origination of the loan, the acquisition of the debt (as opposed to the acquisition of the paper) and the true party in interest who could be plaintiff are all absent, which is the same thing that I have seen as an expert witness and as an attorney many times with Wells Fargo. Many entities, like World Savings and Wachovia boasted they were funding their own loans. This was nearly never true. The loan papers may have been originated back in years ago but the disclosure of the money trail has never been made.
Mr. BlahBlah answered the summons and complaint without the help of legal counsel and served interrogatories on the plaintiff that he says were never answered.
He has apparently been through several attorneys that were merely kicking the can down the road to buy more time without making mortgage payments but of course having Mr. BlahBlah make monthly payments to the attorney.
According to the registration statement submitted by Mr. BlahBlah the original loan was with World Savings Mortgage which merged into Wachovia and then Wells Fargo. I think what he meant was World Savings Bank which was acquired by Wachovia Bank which in turn was acquired by Wells Fargo Bank. The case was filed as Wells Fargo Bank as plaintiff. From prior experience we know that this is probably a ruse intended to cover up the fact that they don’t know who the creditor is and they are hoping that a judge will simply take their word for it.
Mr. BlahBlah has provided a docket from the Clerk of the Circuit Court which indicates that the property has been set for sale several times. This would indicate in turn that a final judgment of foreclosure was entered. However I do not see on the docket the description of an order granting summary judgment or a final judgment of foreclosure entered in favor of Wells Fargo. I presume that such a judgment exists or the sale would never have been scheduled.
As of December 30, 2015 Wells Fargo is showing a balance due of $93,979.25, with an unpaid principle balance of $200,338.10, an escrow balance of $31,855.05, carrying an interest rate of 6.5 percent with a maturity date in July 2049.
Based upon my knowledge of the parties involved, and specifically in this case Loan No. whatever2, I believe that the loan is in fact claimed by a trust which in fact does not own it. The loan was in my opinion most likely never funded by World Savings Bank, Wachovia or Wells Fargo. It is my opinion that none of those entities paid for either the origination or the acquisition of the loan and that any documents to the contrary are fabricated and most likely forged. The system at Wells Fargo if this case actually goes to trial at some point will show that probably Fanny Mae or Freddie Mac was the “investor” from the start. However, since the government sponsored entities generally function in only two areas3, it seems unlikely, to say the least, that the investor would be correctly identified in the Wells Fargo system that they would use at trial unless they have changed their method of fabricating business records.
Client advises that the loan number changed recently. The reasons for this change should be investigated.
The statutory authority of the GSE’s (Fannie and Freddie) allow for them to operate as guarantors and/or Master Trustees of REMIC Trusts who were intended to own the debt, note and mortgage. The “hidden” REMIC Trusts operate the same as private label and publicly registered REMIC Trusts. And they suffer from the same defects — the money from investors never made it into any account owned by the Trust or the Trustee, which means that the Trust could not possibly have paid for loans. The Trust would be an inactive trust devoid of any business, operations, assets, liabilities, income or expenses.
For reasons that I will discuss below, it is my opinion that the homeowners in this case should send a notice of rescission and we will discuss whether that notice should be recorded. In addition there should be consideration of a federal lawsuit seeking to enforce the rescission and seeking an injunction to prevent Wells Fargo from using the note and mortgage against the BlahBlahs. I would further add that in my opinion from my review of the documents that were provided by the client there is a strong likelihood of success using standard foreclosure defense strategies.
In the court file is a notice of action which states that Blah BlahBlah and Blaha BlahBlah both stated as avoiding service at the address of Blah Blah Street, Blahville, Florida, . This indicates to me that the service in years ago was a “drive by” service in which no real effort was made to find or serve Mr. or Mrs. BlahBlah.
This in turn leads me to believe that this was typical foreclosure mill actions and that Wells Fargo still has not fulfilled its obligation to review the business records to determine the ownership or balance of the loan. Or to put it differently, they probably did know about the problems with ownership and balance of the loan and wanted the foreclosure sale anyway. Based upon my preliminary review it would appear that Wells Fargo Bank made payments to the certificate holders of a trust under a category known mainly in the industry as “servicer advances.”
Based upon their statement I would say that their servicer advances totaled more than $90,000.00. The longer the case goes the higher is the value of their claim to recover their “servicer advances.” However, those advances, while made, came from a comingled account consisting entirely of investor money. Therefore there is no actual action for recovery of the servicer advances.
The case was apparently filed in years ago. Or if the case was not filed at that time then additional paperwork was added to the file at that point. Since the case number refers to the year years ago I am presuming that they filed a skeleton case in order to have the case filed before the end of the year.
The complaint is interesting in that, as usual, Wells Fargo does not allege that it is the owner of the debt. It alleges that it is the owner and holder of the note and mortgage. And of course it alleges that a default exists but it does not state the party to whom the money is owed nor the statement of ultimate facts upon which the court could arrive at the conclusion that the actual creditor has suffered a default or loss as a result of the payments being stopped.
The alleged loan, which in my opinion was never funded by World Savings Bank, was a reverse amortization (pick a payment) loan. This loan was probably sold in one form or another 20 or 30 times. The capital from the sale of the loans probably funded many other loans.
There is a request filed in years ago for the original promissory note, and the contact information for the current holder of the note, which was never answered. This might have some relevancy to a claim contesting jurisdiction of the court.
While the docket that was sent to me by Mr. BlahBlah did not appear to contain the final judgment for the plaintiff, the documents that he sent and which were uploaded contain a final judgment for plaintiff. The final judgment apparently was a summary judgment in favor of the plaintiff on years-ago at 1:30 p.m.
As expected, the documents in the possession of Mr. BlahBlah contain a mortgage servicing transfer disclosure. Hence we have evidence of the transfer of servicing rights but not transfer of ownership of the debt.4 In my opinion this corroborates my conclusion that the loan was subject to claims of securitization starting at a time before consummation could have ever occurred. In my opinion the loan was table funded, which means that the actual source of funds for the loan was another party to whom the documents would be “assigned” immediately after, or even before the apparent “closing.”
This is especially relevant to the issue of whether the alleged loan is subject to claims (probably false claims) of securitization. Each of the alleged entities in the “Chain” had robust servicing capacities. The transfers of servicing duties makes no sense and explains nothing except that the usual pattern of musical chairs was being employed to confuse the issues surrounding “holder” of the note etc. The presumptions that are ordinarily used for a holder of a note should not be allowed,in my opinion, because of the history of flagrant violations by Wells Fargo and its predecessors. Producing evidence of a pattern of conduct of fabrication, forgery, robo-signing etc should enable the attorney to argue that the presumptions should not apply, thus requiring Wells Fargo to prove the money trial and ownership of the debt, which they will never do.
In my opinion the mortgage document was improper in that it failed to disclose a hidden balloon payment. By having negative amortization or reverse amortization, the balance that is owed as principal continues to increase. Under the terms of the mortgage when it reaches 115 percent of the original loan principal, the loan automatically reverts to standard amortization which is what caused so many people, including the BlahBlahs, to default. Borrowers were seduced into taking these highly complex loan products under the supposition that they would later be able to refinance again, taking “equity” out of the home and providing them with the resources to make the payments. The effect of these loans is to cause a balloon payment at the end of a short period of time. Thus the balloon was not disclosed and the term of the loan was not disclosed because the full amortization of the loan was beyond the financial capacity of the “borrower.”
In my opinion the assertion by Wells Fargo that it is the investor, the creditor, the lender, or the successor lender is and always has been false. It appears that no sale of the property has taken place and that none is scheduled based upon information I received from Mr. BlahBlah recently in a telephone consultation. Even though a judgment has been entered, it is my opinion that the rights and obligations of the parties are still defined by the alleged note and the alleged mortgage. Hence the sending of a notice of rescission and the recording of a notice of interest in real property under Florida Statute 712.05 would be appropriate as a strategy. I also think that an action filed in federal court to enjoin Wells Fargo from the use of the note and mortgage would be appropriate. The basis for the action would be, after notice of rescission had been sent, and presumably after the 20 days from receipt of the notice of rescission had expired, the loan contract was cancelled, the note and mortgage became void as of the date of mailing of the notice of rescission.
There is also another strategy of alleging a fraud upon the court, but I don’t think that would get much traction.
What I think can get some traction is a lawsuit against Wells Fargo for having presented the false evidence to the court. The difference is that you are not accusing the court of wrongdoing, you are accusing Wells Fargo of wrongdoing and taking advantages. I believe that considering the history that the BlahBlahs report in their narrative that substantial compensatory damages might be awarded, but that punitive damages do not appear to be likely at this time. That is not to say that punitive damages will not be awarded. As time goes on, more and more courts are becoming aware of the fact that the type of foreclosure system has been a sham. Each time another judgment for settlement is reached it becomes apparent that the banks are continuing to engage in the same behavior and simply paying fines for it as a cost of doing business.
As Mr. BlahBlah knows, I do not accept many engagements to directly represent homeowners in these actions. I think that in this case I would be willing to accept the engagement, along with co-counsel, Patrick Giunta. I would have to review this file with him to confirm, but the likelihood is that the initial retainer would be in excess of $5,000.00 and that the monthly payment of our fee would be at least $2,000.00. There would also be court costs and other expenses amounting to over $1,000.00.
Another option is to seek out another attorney who is willing to take on the case and use my services as litigation support. The hourly rate I charge for all matters, whether as attorney or expert witness is $650.00. The hourly rate of most other attorneys is significantly below that. The actual amount of work required from me if I am in the position of litigation support would be vastly reduced and thus the expense of having me work on the BlahBlah file would be significantly reduced, enabling the BlahBlahs to hire counsel who is receptive to me providing litigation support.
In all engagements, in which I am the attorney, or providing litigation support, there is also a contingency fee that varies from 20 percent to 35 percent of any amount paid in hand to the homeowner. Specifically this means that if the case is settled or resolved in a manner in which title to the property becomes unencumbered, the contingency fee would not apply to the house itself, but only to other damages that were paid in connection with the settlement or collection of a judgment.
————— End of Garfield Blather ————–
Enough of Garfield’s nonsense – HERE is your Salvation
Go to the Mortgage Attack site and READ it. There you will find salvation for mortgage woes – absolutely the only reliably workable technology for putting money back in the pocket of borrowers with crooked mortgages.
The Myth Mongers will come out in force saying this opinion means assignment snafus can void an otherwise perfectly just non-judicial foreclosure.
In fact, it says that Yvanova may sue to undo a non-judicial foreclosure on the basis that the foreclosing party did not own beneficial interest in the note because of a flawed assignment of the note.
The court specifically denied suggesting the borrower may preemptively sue to prevent the foreclosure because of a questionable assignment.
Other courts in California have repeatedly held that the borrower has no standing to sue regarding the wrongful assignment of the note or a breach of the pooling and servicing agreement because the borrower did not suffer an injury from it, does not receive benefits from it, and never became a party to it.
The opinion cited numerous other opinions, including Glaski, showing that a VOID assignment deprives an alleged creditor of the “standing” (right) to order a foreclosure in a non-judicial foreclosure situation. The court made the point that a borrower needs such a protection in a non-judicial foreclosure. Otherwise, anybody could order a foreclosure and force a sale of the property for borrowers NOT in default.
This means the trial court might award damages to Yvanova for the wrongful foreclosure. It does appear that a non-existent entity made a void assignment to Deutschebank NTC as trustee for a Morgan Stanley securitization trust after the bankruptcy and asset transfer for New Century Mortgage Corporation.
Yvanova’s case will now go back to trial where she might decide to renew her effort to undo the foreclosure because of a faulty assignment, and to get the court to award her damages. The court might deny her as other courts have others who challenged an allegedly faulty assignment. But she will most likely collect damages for the wrongful foreclosure and loss of her house.
What’s the bottom line issue here?
Plain and simple – the assignment has NOTHING to do with whether the borrower owes the debt and must ultimately forfeit the property to foreclosure sale for breaching the note.
This is such a HARD CORE OBLIGATION that numerous states allow the non–judicial foreclosure process to become the equivalent of repossessing a car on which the borrower fails to make timely payments. The principle: creditors should not have to bear the expense of slogging through lengthy litigation in order to force a recalcitrant borrower to give up the collateral for the loan in default. Creditors do NOT owe borrowers a free house.
However, a VOID assignment makes proper foreclosure impossible, and a court should punish the trustee and creditor who execute a foreclosure, even for a borrower in default.
And in that case, the right creditor will straighten out ownership of the note (possibly by a blank indorsement), and order the foreclosure anew. This time the borrower in default will lose the house for good.
Is there another issue of importance here?
Yes. upwards of 95% of all home loan borrowers have suffered injuries in the form of appraisal fraud, mortgage fraud, legal errors, contract breaches, and/or regulatory law breaches. To discover these, the borrower must hire a competent professional to conduct a comprehensive examination of all documents related to the loan transaction. With an examination report in hand to prove the injuries, the borrower may negotiate a favorable settlement or sue for damages. Only such an examination, and artfully presenting the causes of action revealed in the exam report, can provide a reliable way for the borrower to end up with cash in hand or other financial compensation for the injuries.
If you need or want such a mortgage examination, or want to discuss your case, fill in the contact form at http://mortgageattack.com
IN THE SUPREME COURT OF CALIFORNIA
TSVETANA YVANOVA, )
Plaintiff and Appellant, )
) Ct.App. 2/1 B247188
NEW CENTURY MORTGAGE )
CORPORATION et al., )
) Los Angeles County
Defendants and Respondents. ) Super. Ct. No. LC097218
The collapse in 2008 of the housing bubble and its accompanying system of home loan securitization led, among other consequences, to a great national wave of loan defaults and foreclosures. One key legal issue arising out of the collapse was whether and how defaulting homeowners could challenge the validity of the chain of assignments involved in securitization of their loans. We granted review in this case to decide one aspect of that question: whether the borrower on a home loan secured by a deed of trust may base an action for wrongful foreclosure on allegations a purported assignment of the note and deed of trust to the foreclosing party bore defects rendering the assignment void.
The Court of Appeal held plaintiff Tsvetana Yvanova could not state a cause of action for wrongful foreclosure based on an allegedly void assignment because she lacked standing to assert defects in the assignment, to which she was not a party. We conclude, to the contrary, that because in a nonjudicial foreclosure only the original beneficiary of a deed of trust or its assignee or agent may direct the trustee to sell the property, an allegation that the assignment was void, and not merely voidable at the behest of the parties to the assignment, will support an action for wrongful foreclosure.
Our ruling in this case is a narrow one. We hold only that a borrower who has suffered a nonjudicial foreclosure does not lack standing to sue for wrongful foreclosure based on an allegedly void assignment merely because he or she was in default on the loan and was not a party to the challenged assignment. We do not hold or suggest that a borrower may attempt to preempt a threatened nonjudicial foreclosure by a suit questioning the foreclosing party’s right to proceed. Nor do we hold or suggest that plaintiff in this case has alleged facts showing the assignment is void or that, to the extent she has, she will be able to prove those facts. Nor, finally, in rejecting defendants’ arguments on standing do we address any of the substantive elements of the wrongful foreclosure tort or the factual showing necessary to meet those elements.
Factual and Procedural Background
This case comes to us on appeal from the trial court’s sustaining of a demurrer. For purposes of reviewing a demurrer, we accept the truth of material facts properly pleaded in the operative complaint, but not contentions, deductions, or conclusions of fact or law. We may also consider matters subject to judicial notice. (Evans v. City of Berkeley (2006) 38 Cal.4th 1, 6.) To determine whether the trial court should, in sustaining the demurrer, have granted the plaintiff leave to amend, we consider whether on the pleaded and noticeable facts there is a reasonable possibility of an amendment that would cure the complaint’s legal defect or defects. (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.)
In 2006, plaintiff executed a deed of trust securing a note for $483,000 on a residential property in Woodland Hills, Los Angeles County. The lender, and beneficiary of the trust deed, was defendant New Century Mortgage Corporation (New Century). New Century filed for bankruptcy on April 2, 2007, and on August 1, 2008, it was liquidated and its assets were transferred to a liquidation trust.
On December 19, 2011, according to the operative complaint, New Century (despite its earlier dissolution) executed a purported assignment of the deed of trust to Deutsche Bank National Trust, as trustee of an investment loan trust the complaint identifies as “Msac-2007 Trust‑He‑1 Pass Thru Certificates.” We take notice of the recorded assignment, which is in the appellate record. (See fn. 1, ante.) As assignor the recorded document lists New Century; as assignee it lists Deutsche Bank National Trust Company (Deutsche Bank) “as trustee for the registered holder of Morgan Stanley ABS Capital I Inc. Trust 2007‑HE1 Mortgage Pass-Through Certificates, Series 2007‑HE1” (the Morgan Stanley investment trust). The assignment states it was prepared by Ocwen Loan Servicing, LLC, which is also listed as the contact for both assignor and assignee and as the attorney in fact for New Century. The assignment is dated December 19, 2011, and bears a notation that it was recorded December 30, 2011.
According to the complaint, the Morgan Stanley investment trust to which the deed of trust on plaintiff’s property was purportedly assigned on December 19, 2011, had a closing date (the date by which all loans and mortgages or trust deeds must be transferred to the investment pool) of January 27, 2007.
On August 20, 2012, according to the complaint, Western Progressive, LLC, recorded two documents: one substituting itself
for Deutsche Bank as trustee, the other giving notice of a trustee’s sale. We take notice of a substitution of trustee, dated February 28, 2012, and recorded August 20, 2012, replacing Deutsche Bank with Western Progressive, LLC, as trustee on the deed of trust, and of a notice of trustee’s sale dated August 16, 2012, and recorded August 20, 2012.
A recorded trustee’s deed upon sale dated December 24, 2012, states that plaintiff’s Woodland Hills property was sold at public auction on September 14, 2012. The deed conveys the property from Western Progressive, LLC, as trustee, to the purchaser at auction, THR California LLC, a Delaware limited liability company.
Plaintiff’s second amended complaint, to which defendants demurred, pleaded a single count for quiet title against numerous defendants including New Century, Ocwen Loan Servicing, LLC, Western Progressive, LLC, Deutsche Bank, Morgan Stanley Mortgage Capital, Inc., and the Morgan Stanley investment trust. Plaintiff alleged the December 19, 2011, assignment of the deed of trust from New Century to the Morgan Stanley investment trust was void for two reasons: New Century’s assets had previously, in 2008, been transferred to a bankruptcy trustee; and the Morgan Stanley investment trust had closed to new loans in 2007. (The demurrer, of course, does not admit the truth of this legal conclusion; we recite it here only to help explain how the substantive issues in this case were framed.) The superior court sustained defendants’ demurrer without leave to amend, concluding on several grounds that plaintiff could not state a cause of action for quiet title.
The Court of Appeal affirmed the judgment for defendants on their demurrer. The pleaded cause of action for quiet title failed fatally, the court held, because plaintiff did not allege she had tendered payment of her debt. The court went on to discuss the question, on which it had sought and received briefing, of whether plaintiff could, on the facts alleged, amend her complaint to plead a cause of action for wrongful foreclosure.
On the wrongful foreclosure question, the Court of Appeal concluded leave to amend was not warranted. Relying on Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497 (Jenkins), the court held plaintiff’s allegations of improprieties in the assignment of her deed of trust to Deutsche Bank were of no avail because, as an unrelated third party to that assignment, she was unaffected by such deficiencies and had no standing to enforce the terms of the agreements allegedly violated. The court acknowledged that plaintiff’s authority, Glaski v. Bank of America, supra, 218 Cal.App.4th 1079 (Glaski), conflicted with Jenkins on the standing issue, but the court agreed with the reasoning of Jenkins and declined to follow Glaski.
We granted plaintiff’s petition for review, limiting the issue to be briefed and argued to the following: “In an action for wrongful foreclosure on a deed of trust securing a home loan, does the borrower have standing to challenge an assignment of the note and deed of trust on the basis of defects allegedly rendering the assignment void?”
I. Deeds of Trust and Nonjudicial Foreclosure
A deed of trust to real property acting as security for a loan typically has three parties: the trustor (borrower), the beneficiary (lender), and the trustee. “The trustee holds a power of sale. If the debtor defaults on the loan, the beneficiary may demand that the trustee conduct a nonjudicial foreclosure sale.” (Biancalana v. T.D. Service Co. (2013) 56 Cal.4th 807, 813.) The nonjudicial foreclosure system is designed to provide the lender-beneficiary with an inexpensive and efficient remedy against a defaulting borrower, while protecting the borrower from wrongful loss of the property and ensuring that a properly conducted sale is final between the parties and conclusive as to a bona fide purchaser. (Moeller v. Lien (1994) 25 Cal.App.4th 822, 830.)
The trustee starts the nonjudicial foreclosure process by recording a notice of default and election to sell. (Civ. Code, § 2924, subd. (a)(1).) After a three‑month waiting period, and at least 20 days before the scheduled sale, the trustee may publish, post, and record a notice of sale. (§§ 2924, subd. (a)(2), 2924f, subd. (b).) If the sale is not postponed and the borrower does not exercise his or her rights of reinstatement or redemption, the property is sold at auction to the highest bidder. (§ 2924g, subd. (a); Jenkins, supra, 216 Cal.App.4th at p. 509; Moeller v. Lien, supra, 25 Cal.App.4th at pp. 830–831.) Generally speaking, the foreclosure sale extinguishes the borrower’s debt; the lender may recover no deficiency. (Code Civ. Proc., § 580d; Dreyfuss v. Union Bank of California (2000) 24 Cal.4th 400, 411.)
The trustee of a deed of trust is not a true trustee with fiduciary obligations, but acts merely as an agent for the borrower-trustor and lender-beneficiary. (Biancalana v. T.D. Service Co., supra, 56 Cal.4th at p. 819; Vournas v. Fidelity Nat. Tit. Ins. Co. (1999) 73 Cal.App.4th 668, 677.) While it is the trustee who formally initiates the nonjudicial foreclosure, by recording first a notice of default and then a notice of sale, the trustee may take these steps only at the direction of the person or entity that currently holds the note and the beneficial interest under the deed of trust—the original beneficiary or its assignee—or that entity’s agent. (§ 2924, subd. (a)(1) [notice of default may be filed for record only by “[t]he trustee, mortgagee, or beneficiary”]; Kachlon v. Markowitz (2008) 168 Cal.App.4th 316, 334 [when borrower defaults on the debt, “the beneficiary may declare a default and make a demand on the trustee to commence foreclosure”]; Santens v. Los Angeles Finance Co. (1949) 91 Cal.App.2d 197, 202 [only a person entitled to enforce the note can foreclose on the deed of trust].)
Defendants emphasize, correctly, that a borrower can generally raise no objection to assignment of the note and deed of trust. A promissory note is a negotiable instrument the lender may sell without notice to the borrower. (Creative Ventures, LLC v. Jim Ward & Associates (2011) 195 Cal.App.4th 1430, 1445–1446.) The deed of trust, moreover, is inseparable from the note it secures, and follows it even without a separate assignment. (§ 2936; Cockerell v. Title Ins. & Trust Co. (1954) 42 Cal.2d 284, 291; U.S. v. Thornburg (9th Cir. 1996) 82 F.3d 886, 892.) In accordance with this general law, the note and deed of trust in this case provided for their possible assignment.
A deed of trust may thus be assigned one or multiple times over the life of the loan it secures. But if the borrower defaults on the loan, only the current beneficiary may direct the trustee to undertake the nonjudicial foreclosure process. “[O]nly the ‘true owner’ or ‘beneficial holder’ of a Deed of Trust can bring to completion a nonjudicial foreclosure under California law.” (Barrionuevo v. Chase Bank, N.A. (N.D.Cal. 2012) 885 F.Supp.2d 964, 972; see Herrera v. Deutsche Bank National Trust Co. (2011) 196 Cal.App.4th 1366, 1378 [bank and reconveyance company failed to establish they were current beneficiary and trustee, respectively, and therefore failed to show they “had authority to conduct the foreclosure sale”]; cf. U.S. Bank Nat. Assn. v. Ibanez (Mass. 2011) 941 N.E.2d 40, 51 [under Mass. law, only the original mortgagee or its assignee may conduct nonjudicial foreclosure sale].)
In itself, the principle that only the entity currently entitled to enforce a debt may foreclose on the mortgage or deed of trust securing that debt is not, or at least should not be, controversial. It is a “straightforward application of well-established commercial and real-property law: a party cannot foreclose on a mortgage unless it is the mortgagee (or its agent).” (Levitin, The Paper Chase: Securitization, Foreclosure, and the Uncertainty of Mortgage Title (2013) 63 Duke L.J. 637, 640.) Describing the copious litigation arising out of the recent foreclosure crisis, a pair of commentators explained: “While plenty of uncertainty existed, one concept clearly emerged from litigation during the 2008‑2012 period: in order to foreclose a mortgage by judicial action, one had to have the right to enforce the debt that the mortgage secured. It is hard to imagine how this notion could be controversial.” (Whitman & Milner, Foreclosing on Nothing: The Curious Problem of the Deed of Trust Foreclosure Without Entitlement to Enforce the Note (2013) 66 Ark. L.Rev. 21, 23, fn. omitted.)
More subject to dispute is the question presented here: under what circumstances, if any, may the borrower challenge a nonjudicial foreclosure on the ground that the foreclosing party is not a valid assignee of the original lender? Put another way, does the borrower have standing to challenge the validity of an assignment to which he or she was not a party? We proceed to that issue.
II. Borrower Standing to Challenge an Assignment as Void
A beneficiary or trustee under a deed of trust who conducts an illegal, fraudulent or willfully oppressive sale of property may be liable to the borrower for wrongful foreclosure. (Chavez v. Indymac Mortgage Services (2013) 219 Cal.App.4th 1052, 1062; Munger v. Moore (1970) 11 Cal.App.3d 1, 7.) A foreclosure initiated by one with no authority to do so is wrongful for purposes of such an action. (Barrionuevo v. Chase Bank, N.A., supra, 885 F.Supp.2d at pp. 973–974; Ohlendorf v. American Home Mortgage Servicing (E.D.Cal. 2010) 279 F.R.D. 575, 582–583.) As explained in part I, ante, only the original beneficiary, its assignee or an agent of one of these has the authority to instruct the trustee to initiate and complete a nonjudicial foreclosure sale. The question is whether and when a wrongful foreclosure plaintiff may challenge the authority of one who claims it by assignment.
In Glaski, supra, 218 Cal.App.4th 1079, 1094–1095, the court held a borrower may base a wrongful foreclosure claim on allegations that the foreclosing party acted without authority because the assignment by which it purportedly became beneficiary under the deed of trust was not merely voidable but void. Before discussing Glaski’s holdings and rationale, we review the distinction between void and voidable transactions.
A void contract is without legal effect. (Rest.2d Contracts, § 7, com. a.) “It binds no one and is a mere nullity.” (Little v. CFS Service Corp. (1987) 188 Cal.App.3d 1354, 1362.) “Such a contract has no existence whatever. It has no legal entity for any purpose and neither action nor inaction of a party to it can validate it . . . .” (Colby v. Title Ins. and Trust Co. (1911) 160 Cal. 632, 644.) As we said of a fraudulent real property transfer in First Nat. Bank of L. A. v. Maxwell (1899) 123 Cal. 360, 371, “ ‘A void thing is as no thing.’ ”
A voidable transaction, in contrast, “is one where one or more parties have the power, by a manifestation of election to do so, to avoid the legal relations created by the contract, or by ratification of the contract to extinguish the power of avoidance.” (Rest.2d Contracts, § 7.) It may be declared void but is not void in itself. (Little v. CFS Service Corp., supra, 188 Cal.App.3d at p. 1358.) Despite its defects, a voidable transaction, unlike a void one, is subject to ratification by the parties. (Rest.2d Contracts, § 7; Aronoff v. Albanese (N.Y.App.Div. 1982) 446 N.Y.S.2d 368, 370.)
In Glaski, the foreclosing entity purportedly acted for the current beneficiary, the trustee of a securitized mortgage investment trust. The plaintiff, seeking relief from the allegedly wrongful foreclosure, claimed his note and deed of trust had never been validly assigned to the securitized trust because the purported assignments were made after the trust’s closing date. (Glaski, supra, 218 Cal.App.4th at pp. 1082–1087.)
The Glaski court began its analysis of wrongful foreclosure by agreeing with a federal district court that such a cause of action could be made out “ ‘where a party alleged not to be the true beneficiary instructs the trustee to file a Notice of Default and initiate nonjudicial foreclosure.’ ” (Glaski, supra, 218 Cal.App.4th at p. 1094, quoting Barrionuevo v. Chase Bank, N.A., supra, 885 F.Supp.2d at p. 973.) But the wrongful foreclosure plaintiff, Glaski cautioned, must do more than assert a lack of authority to foreclose; the plaintiff must allege facts “show[ing] the defendant who invoked the power of sale was not the true beneficiary.” (Glaski, at p. 1094.)
Acknowledging that a borrower’s assertion that an assignment of the note and deed of trust is invalid raises the question of the borrower’s standing to challenge an assignment to which the borrower is not a party, the Glaski court cited several federal court decisions for the proposition that a borrower has standing to challenge such an assignment as void, though not as voidable. (Glaski, supra, 218 Cal.App.4th at pp. 1094–1095.) Two of these decisions, Culhane v. Aurora Loan Services of Nebraska (1st Cir. 2013) 708 F.3d 282 (Culhane) and Reinagel v. Deutsche Bank Nat. Trust Co. (5th Cir. 2013) 735 F.3d 220 (Reinagel), discussed standing at some length; we will examine them in detail in a moment.
Glaski adopted from the federal decisions and a California treatise the view that “a borrower can challenge an assignment of his or her note and deed of trust if the defect asserted would void the assignment” not merely render it voidable. (Glaski, supra, 218 Cal.App.4th at p. 1095.) Cases holding that a borrower may never challenge an assignment because the borrower was neither a party to nor a third party beneficiary of the assignment agreement “ ‘paint with too broad a brush’ ” by failing to distinguish between void and voidable agreements. (Ibid., quoting Culhane, supra, 708 F.3d at p. 290.)
The Glaski court went on to resolve the question of whether the plaintiff had pled a defect in the chain of assignments leading to the foreclosing party that would, if true, render one of the necessary assignments void rather than voidable. (Glaski, supra, 218 Cal.App.4th at p. 1095.) On this point, Glaski held allegations that the plaintiff’s note and deed of trust were purportedly transferred into the trust after the trust’s closing date were sufficient to plead a void assignment and hence to establish standing. (Glaski, at pp. 1096–1098.) This last holding of Glaski is not before us. On granting plaintiff’s petition for review, we limited the scope of our review to whether “the borrower [has] standing to challenge an assignment of the note and deed of trust on the basis of defects allegedly rendering the assignment void.” We did not include in our order the question of whether a postclosing date transfer into a New York securitized trust is void or merely voidable, and though the parties’ briefs address it, we express no opinion on the question here.
Returning to the question that is before us, we consider in more detail the authority Glaski relied on for its standing holding. In Culhane, a Massachusetts home loan borrower sought relief from her nonjudicial foreclosure on the ground that the assignment by which Aurora Loan Services of Nebraska (Aurora) claimed authority to foreclose—a transfer of the mortgage from Mortgage Electronic Registration Systems, Inc. (MERS), to Aurora—was void because MERS never properly held the mortgage. (Culhane, supra, 708 F.3d at pp. 286–288, 291.)
Before addressing the merits of the plaintiff’s allegations, the Culhane court considered Aurora’s contention the plaintiff lacked standing to challenge the assignment of her mortgage from MERS to Aurora. On this question, the court first concluded the plaintiff had a sufficient personal stake in the outcome, having shown a concrete and personalized injury resulting from the challenged assignment: “The action challenged here relates to Aurora’s right to foreclose by virtue of the assignment from MERS. The identified harm—the foreclosure—can be traced directly to Aurora’s exercise of the authority purportedly delegated by the assignment.” (Culhane, supra, 708 F.3d at pp. 289–290.)
Culhane next considered whether the prudential principle that a litigant should not be permitted to assert the rights and interest of another dictates that borrowers lack standing to challenge mortgage assignments as to which they are neither parties nor third party beneficiaries. (Culhane, supra, 708 F.3d at p. 290.) Two aspects of Massachusetts law on nonjudicial foreclosure persuaded the court such a broad rule is unwarranted. First, only the mortgagee (that is, the original lender or its assignee) may exercise the power of sale, and the borrower is entitled to relief from foreclosure by an unauthorized party. (Culhane, at p. 290.) Second, in a nonjudicial foreclosure the borrower has no direct opportunity to challenge the foreclosing entity’s authority in court. Without standing to sue for relief from a wrongful foreclosure, “a Massachusetts mortgagor would be deprived of a means to assert her legal protections . . . .” (Ibid.) These considerations led the Culhane court to conclude “a mortgagor has standing to challenge the assignment of a mortgage on her home to the extent that such a challenge is necessary to contest a foreclosing entity’s status qua mortgagee.” (Id. at p. 291.)
The court immediately cautioned that its holding was limited to allegations of a void transfer. If, for example, the assignor had no interest to assign or had no authority to make the particular assignment, “a challenge of this sort would be sufficient to refute an assignee’s status qua mortgagee.” (Culhane, supra, 708 F.3d at p. 291.) But where the alleged defect in an assignment would “render it merely voidable at the election of one party but otherwise effective to pass legal title,” the borrower has no standing to challenge the assignment on that basis. (Ibid.)
In Reinagel, upon which the Glaski court also relied, the federal court held that under Texas law borrowers defending against a judicial foreclosure have standing to “ ‘challenge the chain of assignments by which a party claims a right to foreclose.’ ” (Reinagel, supra, 735 F.3d at p. 224.) Though Texas law does not allow a nonparty to a contract to enforce the contract unless he or she is an intended third-party beneficiary, the borrowers in this situation “are not attempting to enforce the terms of the instruments of assignment; to the contrary, they urge that the assignments are void ab initio.” (Id. at p. 225.)
Like Culhane, Reinagel distinguished between defects that render a transaction void and those that merely make it voidable at a party’s behest. “Though ‘the law is settled’ in Texas that an obligor cannot defend against an assignee’s efforts to enforce the obligation on a ground that merely renders the assignment voidable at the election of the assignor, Texas courts follow the majority rule that the obligor may defend ‘on any ground which renders the assignment void.’ ” (Reinagel, supra, 735 F.3d at p. 225.) The contrary rule would allow an institution to foreclose on a borrower’s property “though it is not a valid party to the deed of trust or promissory note . . . .” (Ibid.)
Jenkins, on which the Court of Appeal below relied, was decided close in time to Glaski (neither decision discusses the other) but reaches the opposite conclusion on standing. In Jenkins, the plaintiff sued to prevent a foreclosure sale that had not yet occurred, alleging the purported beneficiary who sought the sale held no security interest because a purported transfer of the loan into a securitized trust was made in violation of the pooling and servicing agreement that governed the investment trust. (Jenkins, supra, 216 Cal.App.4th at pp. 504–505.)
The appellate court held a demurrer to the plaintiff’s cause of action for declaratory relief was properly sustained for two reasons. First, Jenkins held California law did not permit a “preemptive judicial action to challenge the right, power, and authority of a foreclosing ‘beneficiary’ or beneficiary’s ‘agent’ to initiate and pursue foreclosure.” (Jenkins, supra, 216 Cal.App.4th at p. 511.) Relying primarily on Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, Jenkins reasoned that such preemptive suits are inconsistent with California’s comprehensive statutory scheme for nonjudicial foreclosure; allowing such a lawsuit “ ‘would fundamentally undermine the nonjudicial nature of the process and introduce the possibility of lawsuits filed solely for the purpose of delaying valid foreclosures.’ ” (Jenkins, at p. 513, quoting Gomes at p. 1155.)
This aspect of Jenkins, disallowing the use of a lawsuit to preempt a nonjudicial foreclosure, is not within the scope of our review, which is limited to a borrower’s standing to challenge an assignment in an action seeking remedies for wrongful foreclosure. As framed by the proceedings below, the concrete question in the present case is whether plaintiff should be permitted to amend her complaint to seek redress, in a wrongful foreclosure count, for the trustee’s sale that has already taken place. We do not address the distinct question of whether, or under what circumstances, a borrower may bring an action for injunctive or declaratory relief to prevent a foreclosure sale from going forward.
Second, as an alternative ground, Jenkins held a demurrer to the declaratory relief claim was proper because the plaintiff had failed to allege an actual controversy as required by Code of Civil Procedure section 1060. (Jenkins, supra, 216 Cal.App.4th at p. 513.) The plaintiff did not dispute that her loan could be assigned or that she had defaulted on it and remained in arrears. (Id. at p. 514.) Even if one of the assignments of the note and deed of trust was improper in some respect, the appellate court reasoned, “Jenkins is not the victim of such invalid transfer because her obligations under the note remained unchanged. Instead, the true victim may be an individual or entity that believes it has a present beneficial interest in the promissory note and may suffer the unauthorized loss of its interest in the note.” (Id. at p. 515.) In particular, the plaintiff could not complain about violations of the securitized trust’s transfer rules: “As an unrelated third party to the alleged securitization, and any other subsequent transfers of the beneficial interest under the promissory note, Jenkins lacks standing to enforce any agreements, including the investment trust’s pooling and servicing agreement, relating to such transactions.” (Ibid.)
For its conclusion on standing, Jenkins cited In re Correia (Bankr. 1st Cir. 2011) 452 B.R. 319. The borrowers in that case challenged a foreclosure on the ground that the assignment of their mortgage into a securitized trust had not been made in accordance with the trust’s pooling and servicing agreement (PSA). (Id. at pp. 321–322.) The appellate court held the borrowers “lacked standing to challenge the mortgage’s chain of title under the PSA.” (Id. at p. 324.) Being neither parties nor third party beneficiaries of the pooling agreement, they could not complain of a failure to abide by its terms. (Ibid.)
Jenkins also cited Herrera v. Federal National Mortgage Assn. (2012) 205 Cal.App.4th 1495, which primarily addressed the merits of a foreclosure challenge, concluding the borrowers had adduced no facts on which they could allege an assignment from MERS to another beneficiary was invalid. (Id. at pp. 1502–1506.) In reaching the merits, the court did not explicitly discuss the plaintiffs’ standing to challenge the assignment. In a passage cited in Jenkins, however, the court observed that the plaintiffs, in order to state a wrongful foreclosure claim, needed to show prejudice, and they could not do so because the challenged assignment did not change their obligations under the note. (Herrera, at pp. 1507–1508.) Even if MERS lacked the authority to assign the deed of trust, “the true victims were not plaintiffs but the lender.” (Id. at p. 1508.)
On the narrow question before us—whether a wrongful foreclosure plaintiff may challenge an assignment to the foreclosing entity as void—we conclude Glaski provides a more logical answer than Jenkins. As explained in part I, ante, only the entity holding the beneficial interest under the deed of trust—the original lender, its assignee, or an agent of one of these—may instruct the trustee to commence and complete a nonjudicial foreclosure. (§ 2924, subd. (a)(1); Barrionuevo v. Chase Bank, N.A., supra, 885 F.Supp.2d at p. 972.) If a purported assignment necessary to the chain by which the foreclosing entity claims that power is absolutely void, meaning of no legal force or effect whatsoever (Colby v. Title Ins. and Trust Co., supra, 160 Cal. at p. 644; Rest.2d Contracts, § 7, com. a), the foreclosing entity has acted without legal authority by pursuing a trustee’s sale, and such an unauthorized sale constitutes a wrongful foreclosure. (Barrionuevo v. Chase Bank, N.A., at pp. 973–974.)
Like the Massachusetts borrowers considered in Culhane, whose mortgages contained a power of sale allowing for nonjudicial foreclosure, California borrowers whose loans are secured by a deed of trust with a power of sale may suffer foreclosure without judicial process and thus “would be deprived of a means to assert [their] legal protections” if not permitted to challenge the foreclosing entity’s authority through an action for wrongful foreclosure. (Culhane, supra, 708 F.3d at p. 290.) A borrower therefore “has standing to challenge the assignment of a mortgage on her home to the extent that such a challenge is necessary to contest a foreclosing entity’s status qua mortgagee” (id. at p. 291)—that is, as the current holder of the beneficial interest under the deed of trust. (Accord, Wilson v. HSBC Mortgage Servs., Inc. (1st Cir. 2014) 744 F.3d 1, 9 [“A homeowner in Massachusetts—even when not a party to or third party beneficiary of a mortgage assignment—has standing to challenge that assignment as void because success on the merits would prove the purported assignee is not, in fact, the mortgagee and therefore lacks any right to foreclose on the mortgage.”].)
Jenkins and other courts denying standing have done so partly out of concern with allowing a borrower to enforce terms of a transfer agreement to which the borrower was not a party. In general, California law does not give a party personal standing to assert rights or interests belonging solely to others. (See Code Civ. Proc., § 367 [action must be brought by or on behalf of the real party in interest]; Jasmine Networks, Inc. v. Superior Court (2009) 180 Cal.App.4th 980, 992.) When an assignment is merely voidable, the power to ratify or avoid the transaction lies solely with the parties to the assignment; the transaction is not void unless and until one of the parties takes steps to make it so. A borrower who challenges a foreclosure on the ground that an assignment to the foreclosing party bore defects rendering it voidable could thus be said to assert an interest belonging solely to the parties to the assignment rather than to herself.
When the plaintiff alleges a void assignment, however, the Jenkins court’s concern with enforcement of a third party’s interests is misplaced. Borrowers who challenge the foreclosing party’s authority on the grounds of a void assignment “are not attempting to enforce the terms of the instruments of assignment; to the contrary, they urge that the assignments are void ab initio.” (Reinagel, supra, 735 F.3d at p. 225; accord, Mruk v. Mortgage Elec. Registration Sys., Inc. (R.I. 2013) 82 A.3d 527, 536 [borrowers challenging an assignment as void “are not attempting to assert the rights of one of the contracting parties; instead, the homeowners are asserting their own rights not to have their homes unlawfully foreclosed upon”].)
Unlike a voidable transaction, a void one cannot be ratified or validated by the parties to it even if they so desire. (Colby v. Title Ins. and Trust Co., supra, 160 Cal. at p. 644; Aronoff v. Albanese, supra, 446 N.Y.S.2d at p. 370.) Parties to a securitization or other transfer agreement may well wish to ratify the transfer agreement despite any defects, but no ratification is possible if the assignment is void ab initio. In seeking a finding that an assignment agreement was void, therefore, a plaintiff in Yvanova’s position is not asserting the interests of parties to the assignment; she is asserting her own interest in limiting foreclosure on her property to those with legal authority to order a foreclosure sale. This, then, is not a situation in which standing to sue is lacking because its “sole object . . . is to settle rights of third persons who are not parties.” (Golden Gate Bridge etc. Dist. v. Felt (1931) 214 Cal. 308, 316.)
Defendants argue a borrower who is in default on his or her loan suffers no prejudice from foreclosure by an unauthorized party, since the actual holder of the beneficial interest on the deed of trust could equally well have foreclosed on the property. As the Jenkins court put it, when an invalid transfer of a note and deed of trust leads to foreclosure by an unauthorized party, the “victim” is not the borrower, whose obligations under the note are unaffected by the transfer, but “an individual or entity that believes it has a present beneficial interest in the promissory note and may suffer the unauthorized loss of its interest in the note.” (Jenkins, supra, 216 Cal.App.4th at p. 515; see also Siliga v. Mortgage Electronic Registration Systems, Inc. (2013) 219 Cal.App.4th 75, 85 [borrowers had no standing to challenge assignment by MERS where they do not dispute they are in default and “there is no reason to believe . . . the original lender would have refrained from foreclosure in these circumstances”]; Fontenot v. Wells Fargo Bank, N.A., supra, 198 Cal.App.4th at p. 272 [wrongful foreclosure plaintiff could not show prejudice from allegedly invalid assignment by MERS as the assignment “merely substituted one creditor for another, without changing her obligations under the note”].)
In deciding the limited question on review, we are concerned only with prejudice in the sense of an injury sufficiently concrete and personal to provide standing, not with prejudice as a possible element of the wrongful foreclosure tort. (See fn. 4, ante.) As it relates to standing, we disagree with defendants’ analysis of prejudice from an illegal foreclosure. A foreclosed-upon borrower clearly meets the general standard for standing to sue by showing an invasion of his or her legally protected interests (Angelucci v. Century Supper Club (2007) 41 Cal.4th 160, 175)—the borrower has lost ownership to the home in an allegedly illegal trustee’s sale. (See Culhane, supra, 708 F.3d at p. 289 [foreclosed-upon borrower has sufficient personal stake in action against foreclosing entity to meet federal standing requirement].) Moreover, the bank or other entity that ordered the foreclosure would not have done so absent the allegedly void assignment. Thus “[t]he identified harm—the foreclosure—can be traced directly to [the foreclosing entity’s] exercise of the authority purportedly delegated by the assignment.” (Culhane, at p. 290.)
Nor is it correct that the borrower has no cognizable interest in the identity of the party enforcing his or her debt. Though the borrower is not entitled to object to an assignment of the promissory note, he or she is obligated to pay the debt, or suffer loss of the security, only to a person or entity that has actually been assigned the debt. (See Cockerell v. Title Ins. & Trust Co., supra, 42 Cal.2d at p. 292 [party claiming under an assignment must prove fact of assignment].) The borrower owes money not to the world at large but to a particular person or institution, and only the person or institution entitled to payment may enforce the debt by foreclosing on the security.
It is no mere “procedural nicety,” from a contractual point of view, to insist that only those with authority to foreclose on a borrower be permitted to do so. (Levitin, The Paper Chase: Securitization, Foreclosure, and the Uncertainty of Mortgage Title, supra, 63 Duke L.J. at p. 650.) “Such a view fundamentally misunderstands the mortgage contract. The mortgage contract is not simply an agreement that the home may be sold upon a default on the loan. Instead, it is an agreement that if the homeowner defaults on the loan, the mortgagee may sell the property pursuant to the requisite legal procedure.” (Ibid., italics added and omitted.)
The logic of defendants’ no-prejudice argument implies that anyone, even a stranger to the debt, could declare a default and order a trustee’s sale—and the borrower would be left with no recourse because, after all, he or she owed the debt to someone, though not to the foreclosing entity. This would be an “odd result” indeed. (Reinagel, supra, 735 F.3d at p. 225.) As a district court observed in rejecting the no-prejudice argument, “[b]anks are neither private attorneys general nor bounty hunters, armed with a roving commission to seek out defaulting homeowners and take away their homes in satisfaction of some other bank’s deed of trust.” (Miller v. Homecomings Financial, LLC (S.D.Tex. 2012) 881 F.Supp.2d 825, 832.)
Defendants note correctly that a plaintiff in Yvanova’s position, having suffered an allegedly unauthorized nonjudicial foreclosure of her home, need not now fear another creditor coming forward to collect the debt. The home can only be foreclosed once, and the trustee’s sale extinguishes the debt. (Code Civ. Proc., § 580d; Dreyfuss v. Union Bank of California, supra, 24 Cal.4th at p. 411.) But as the Attorney General points out in her amicus curiae brief, a holding that anyone may foreclose on a defaulting home loan borrower would multiply the risk for homeowners that they might face a foreclosure at some point in the life of their loans. The possibility that multiple parties could each foreclose at some time, that is, increases the borrower’s overall risk of foreclosure.
Defendants suggest that to establish prejudice the plaintiff must allege and prove that the true beneficiary under the deed of trust would have refrained from foreclosing on the plaintiff’s property. Whatever merit this rule would have as to prejudice as an element of the wrongful foreclosure tort, it misstates the type of injury required for standing. A homeowner who has been foreclosed on by one with no right to do so has suffered an injurious invasion of his or her legal rights at the foreclosing entity’s hands. No more is required for standing to sue. (Angelucci v. Century Supper Club, supra, 41 Cal.4th at p. 175.)
Neither Caulfield v. Sanders (1861) 17 Cal. 569 nor Seidell v. Tuxedo Land Co. (1932) 216 Cal. 165, upon which defendants rely, holds or implies a home loan borrower may not challenge a foreclosure by alleging a void assignment. In the first of these cases, we held a debtor on a contract for printing and advertising could not defend against collection of the debt on the ground it had been assigned without proper consultation among the assigning partners and for nominal consideration: “It is of no consequence to the defendant, as it in no respect affects his liability, whether the transfer was made at one time or another, or with or without consideration, or by one or by all the members of the firm.” (Caulfield v. Sanders, at p. 572.) In the second, we held landowners seeking to enjoin a foreclosure on a deed of trust to their land could not do so by challenging the validity of an assignment of the promissory note the deed of trust secured. (Seidell v. Tuxedo Land Co., at pp. 166, 169–170.) We explained that the assignment was made by an agent of the beneficiary, and that despite the landowner’s claim the agent lacked authority for the assignment, the beneficiary “is not now complaining.” (Id. at p. 170.) Neither decision discusses the distinction between allegedly void and merely voidable, and neither negates a borrower’s ability to challenge an assignment of his or her debt as void.
For these reasons, we conclude Glaski, supra, 218 Cal.App.4th 1079, was correct to hold a wrongful foreclosure plaintiff has standing to claim the foreclosing entity’s purported authority to order a trustee’s sale was based on a void assignment of the note and deed of trust. Jenkins, supra, 216 Cal.App.4th 497, spoke too broadly in holding a borrower lacks standing to challenge an assignment of the note and deed of trust to which the borrower was neither a party nor a third party beneficiary. Jenkins’s rule may hold as to claimed defects that would make the assignment merely voidable, but not as to alleged defects rendering the assignment absolutely void.
In embracing Glaski’s rule that borrowers have standing to challenge assignments as void, but not as voidable, we join several courts around the nation. (Wilson v. HSBC Mortgage Servs., Inc., supra, 744 F.3d at p. 9; Reinagel, supra, 735 F.3d at pp. 224–225; Woods v. Wells Fargo Bank, N.A. (1st Cir. 2013) 733 F.3d 349, 354; Culhane, supra, 708 F.3d at pp. 289–291; Miller v. Homecomings Financial, LLC, supra, 881 F.Supp.2d at pp. 831–832; Bank of America Nat. Assn. v. Bassman FBT, LLC, supra, 981 N.E.2d at pp. 7–8; Pike v. Deutsche Bank Nat. Trust Co. (N.H. 2015) 121 A.3d 279, 281; Mruk v. Mortgage Elec. Registration Sys., Inc., supra, 82 A.3d at pp. 534–536; Dernier v. Mortgage Network, Inc. (Vt. 2013) 87 A.3d 465, 473.) Indeed, as commentators on the issue have stated: “[C]ourts generally permit challenges to assignments if such challenges would prove that the assignments were void as opposed to voidable.” (Zacks & Zacks, Not a Party: Challenging Mortgage Assignments (2014) 59 St. Louis U. L.J. 175, 180.)
That several federal courts applying California law have, largely in unreported decisions, agreed with Jenkins and declined to follow Glaski does not alter our conclusion. Neither Khan v. Recontrust Co. (N.D.Cal. 2015) 81 F.Supp.3d 867 nor Flores v. EMC Mort. Co. (E.D.Cal. 2014) 997 F.Supp.2d 1088 adds much to the discussion. In Khan, the district court found the borrower, as a nonparty to the pooling and servicing agreement, lacked standing to challenge a foreclosure on the basis of an unspecified flaw in the loan’s securitization; the court’s opinion does not discuss the distinction between a void assignment and a merely voidable one. (Khan v. Recontrust Co., supra, 81 F.Supp.3d at pp. 872–873.) In Flores, the district court, considering a wrongful foreclosure complaint that lacked sufficient clarity in its allegations including identification of the assignment or assignments challenged, the district court quoted and followed Jenkins’s reasoning on the borrower’s lack of standing to enforce an agreement to which he or she is not a party, without addressing the application of this reasoning to allegedly void assignments. (Flores v. EMC Mort. Co., supra, at pp. 1103–1105.)
Similarly, the unreported federal decisions applying California law largely fail to grapple with Glaski’s distinction between void and voidable assignments and tend merely to repeat Jenkins’s arguments that a borrower, as a nonparty to an assignment, may not enforce its terms and cannot show prejudice when in default on the loan, arguments we have found insufficient with regard to allegations of void assignments. While unreported federal court decisions may be cited in California as persuasive authority (Kan v. Guild Mortgage Co. (2014) 230 Cal.App.4th 736, 744, fn. 3), in this instance they lack persuasive value.
Defendants cite the decision in Rajamin v. Deutsche Bank Nat. Trust Co. (2nd Cir. 2014) 757 F.3d 79 (Rajamin), as a “rebuke” of Glaski. Rajamin’s expressed disagreement with Glaski, however, was on the question whether, under New York law, an assignment to a securitized trust made after the trust’s closing date is void or merely voidable. (Rajamin, at p. 90.) As explained earlier, that question is outside the scope of our review and we express no opinion as to Glaski’s correctness on the point.
The Rajamin court did, in an earlier discussion, state generally that borrowers lack standing to challenge an assignment as violative of the securitized trust’s pooling and servicing agreement (Rajamin, supra, 757 F.3d at pp. 85–86), but the court in that portion of its analysis did not distinguish between void and voidable assignments. In a later portion of its analysis, the court “assum[ed] that ‘standing exists for challenges that contend that the assigning party never possessed legal title,’ ” a defect the plaintiffs claimed made the assignments void (id. at p. 90), but concluded the plaintiffs had not properly alleged facts to support their voidness theory (id. at pp. 90–91).
Nor do Kan v. Guild Mortgage Co., supra, 230 Cal.App.4th 736, and Siliga v. Mortgage Electronic Registration Systems, Inc., supra, 219 Cal.App.4th 75 (Siliga), which defendants also cite, persuade us Glaski erred in finding borrower standing to challenge an assignment as void. The Kan court distinguished Glaski as involving a postsale wrongful foreclosure claim, as opposed to the preemptive suits involved in Jenkins and Kan itself. (Kan, at pp. 743–744.) On standing, the Kan court noted the federal criticism of Glaski and our grant of review in the present case, but found “no reason to wade into the issue of whether Glaski was correctly decided, because the opinion has no direct applicability to this preforeclosure action.” (Kan, at p. 745.)
Siliga, similarly, followed Jenkins in disapproving a preemptive lawsuit. (Siliga, supra, 219 Cal.App.4th at p. 82.) Without discussing Glaski, the Siliga court also held the borrower plaintiffs failed to show any prejudice from, and therefore lacked standing to challenge, the assignment of their deed of trust to the foreclosing entity. (Siliga, at p. 85.) As already explained, this prejudice analysis misses the mark in the wrongful foreclosure context. When a property has been sold at a trustee’s sale at the direction of an entity with no legal authority to do so, the borrower has suffered a cognizable injury.
In further support of a borrower’s standing to challenge the foreclosing party’s authority, plaintiff points to provisions of the recent legislation known as the California Homeowner Bill of Rights, enacted in 2012 and effective only after the trustee’s sale in this case. (See Leuras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 86, fn. 14.) Having concluded without reference to this legislation that borrowers do have standing to challenge an assignment as void, we need not decide whether the new provisions provide additional support for that holding.
Plaintiff has alleged that her deed of trust was assigned to the Morgan Stanley investment trust in December 2011, several years after both the securitized trust’s closing date and New Century’s liquidation in bankruptcy, a defect plaintiff claims renders the assignment void. Beyond their general claim a borrower has no standing to challenge an assignment of the deed of trust, defendants make several arguments against allowing plaintiff to plead a cause of action for wrongful foreclosure based on this allegedly void assignment.
Principally, defendants argue the December 2011 assignment of the deed of trust to Deutsche Bank, as trustee for the investment trust, was merely “confirmatory” of a 2007 assignment that had been executed in blank (i.e., without designation of assignee) when the loan was added to the trust’s investment pool. The purpose of the 2011 recorded assignment, defendants assert, was merely to comply with a requirement in the trust’s pooling and servicing agreement that documents be recorded before foreclosures are initiated. An amicus curiae supporting defendants’ position asserts that the general practice in home loan securitization is to initially execute assignments of loans and mortgages or deeds of trust to the trustee in blank and not to record them; the mortgage or deed of trust is subsequently endorsed by the trustee and recorded if and when state law requires. (See Rajamin, supra, 757 F.3d at p. 91.) This claim, which goes not to the legal issue of a borrower’s standing to sue for wrongful foreclosure based on a void assignment, but rather to the factual question of when the assignment in this case was actually made, is outside the limited scope of our review. The same is true of defendants’ remaining factual claims, including that the text of the investment trust’s pooling and servicing agreement demonstrates plaintiff’s deed of trust was assigned to the trust before it closed.
We conclude a home loan borrower has standing to claim a nonjudicial foreclosure was wrongful because an assignment by which the foreclosing party purportedly took a beneficial interest in the deed of trust was not merely voidable but void, depriving the foreclosing party of any legitimate authority to order a trustee’s sale. The Court of Appeal took the opposite view and, solely on that basis, concluded plaintiff could not amend her operative complaint to plead a cause of action for wrongful foreclosure. We must therefore reverse the Court of Appeal’s judgment and allow that court to reconsider the question of an amendment to plead wrongful foreclosure. We express no opinion on whether plaintiff has alleged facts showing a void assignment, or on any other issue relevant to her ability to state a claim for wrongful foreclosure.
The judgment of the Court of Appeal is reversed and the matter is remanded to that court for further proceedings consistent with our opinion.
Tsvetana Yvanova, in pro. per.; Law Offices of Richard L. Antognini and Richard L. Antognini for Plaintiff and Appellant.
Law Office of Mark F. Didak and Mark F. Didak as Amici Curiae on behalf of Plaintiff and Appellant.
Kamala D. Harris, Attorney General, Nicklas A. Akers, Assistant Attorney General, Michele Van Gelderen and Sanna R. Singer, Deputy Attorneys General, for Attorney General of California as Amicus Curiae on behalf of Plaintiff and Appellant.
Lisa R. Jaskol; Kent Qian; and Hunter Landerholm for Public Counsel, National Housing Law Project and Neighborhood Legal Services of Los Angeles County as Amici Curiae on behalf of Plaintiff and Appellant.
The Sturdevant Law Firm and James C. Sturdevant for National Association of Consumer Advocates and National Consumer Law Center as Amici Curiae on behalf of Plaintiff and Appellant.
The Arkin Law Firm, Sharon J. Arkin; Arbogast Law and David M. Arbogast for Consumer Attorneys of California as Amicus Curiae on behalf of Plaintiff and Appellant.
Houser & Allison, Eric D. Houser, Robert W. Norman, Jr., Patrick S. Ludeman; Bryan Cave, Kenneth Lee Marshall, Nafiz Cekirge, Andrea N. Winternitz and Sarah Samuelson for Defendants and Respondents.
Pfeifer & De La Mora and Michael R. Pfeifer for California Mortgage Bankers Association as Amicus Curiae on behalf of Defendants and Respondents.
Denton US and Sonia Martin for Structured Finance Industry Group, Inc., as Amicus Curiae on behalf of Defendants and Respondents.
Goodwin Proctor, Steven A. Ellis and Nicole S. Tate-Naghi for California Bankers Association as Amicus Curiae on behalf of Defendants and Respondents.
Wright, Finlay & Zak and Jonathan D. Fink for American Legal & Financial Network and United Trustees Association as Amici Curiae on behalf of Defendants and Respondents.
Counsel who argued in Supreme Court (not intended for publication with opinion):
Richard L. Antognini
Law Offices of Richard L. Antognini
2036 Nevada City Highway, Suite 636
Grass Valley, CA 95945-7700
Kenneth Lee Marshall
560 Mission Street, Suite 2500
San Francisco, CA 94105
 The superior court granted defendants’ request for judicial notice of the recorded deed of trust, assignment of the deed of trust, substitution of trustee, notices of default and of trustee’s sale, and trustee’s deed upon sale. The existence and facial contents of these recorded documents were properly noticed in the trial court under Evidence Code sections 452, subdivisions (c) and (h), and 453. (See Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264–266.) Under Evidence Code section 459, subdivision (a), notice by this court is therefore mandatory. We therefore take notice of their existence and contents, though not of disputed or disputable facts stated therein. (See Glaski v. Bank of America (2013) 218 Cal.App.4th 1079, 1102.)
 All further unspecified statutory references are to the Civil Code.
 Somewhat confusingly, both the purported assignee’s authority to foreclose and the borrower’s ability to challenge that authority have been framed as questions of “standing.” (See, e.g., Levitin, The Paper Chase: Securitization, Foreclosure, and the Uncertainty of Mortgage Title, supra, 63 Duke L.J. at p. 644 [discussing purported assignee’s “standing to foreclose”]; Jenkins, supra, 216 Cal.App.4th at p. 515 [borrower lacks “standing to enforce [assignment] agreements” to which he or she is not a party]; Bank of America Nat. Assn. v. Bassman FBT, LLC (Ill.App. Ct. 2012) 981 N.E.2d 1, 7 [“Each party contends that the other lacks standing.”].) We use the term here in the latter sense of a borrower’s legal authority to challenge the validity of an assignment.  It has been held that, at least when seeking to set aside the foreclosure sale, the plaintiff must also show prejudice and a tender of the amount of the secured indebtedness, or an excuse of tender. (Chavez v. Indymac Mortgage Services, supra, 219 Cal.App.4th at p. 1062.) Tender has been excused when, among other circumstances, the plaintiff alleges the foreclosure deed is facially void, as arguably is the case when the entity that initiated the sale lacked authority to do so. (Ibid.; In re Cedano (Bankr. 9th Cir. 2012) 470 B.R. 522, 529–530; Lester v. J.P. Morgan Chase Bank (N.D.Cal. 2013) 926 F.Supp.2d 1081, 1093; Barrionuevo v. Chase Bank, N.A., supra, 885 F.Supp.2d 964, 969–970.) Our review being limited to the standing question, we express no opinion as to whether plaintiff Yvanova must allege tender to state a cause of action for wrongful foreclosure under the circumstances of this case. Nor do we discuss potential remedies for a plaintiff in Yvanova’s circumstances; at oral argument, plaintiff’s counsel conceded she seeks only damages. As to prejudice, we do not address it as an element of wrongful foreclosure. We do, however, discuss whether plaintiff has suffered a cognizable injury for standing purposes.
 The mortgage securitization process has been concisely described as follows: “To raise funds for new mortgages, a mortgage lender sells pools of mortgages into trusts created to receive the stream of interest and principal payments from the mortgage borrowers. The right to receive trust income is parceled into certificates and sold to investors, called certificateholders. The trustee hires a mortgage servicer to administer the mortgages by enforcing the mortgage terms and administering the payments. The terms of the securitization trusts as well as the rights, duties, and obligations of the trustee, seller, and servicer are set forth in a Pooling and Servicing Agreement (‘PSA’).” (BlackRock Financial Mgmt. v. Ambac Assur. Corp. (2d Cir. 2012) 673 F.3d 169, 173.)
 The version of Reinagel cited in Glaski, published at 722 F.3d 700, was amended on rehearing and superseded by Reinagel, supra, 735 F.3d 220.
 As the Culhane court explained, MERS was formed by a consortium of residential mortgage lenders and investors to streamline the transfer of mortgage loans and thereby facilitate their securitization. A member lender may name MERS as mortgagee on a loan the member originates or owns; MERS acts solely as the lender’s “nominee,” having legal title but no beneficial interest in the loan. When a loan is assigned to another MERS member, MERS can execute the transfer by amending its electronic database. When the loan is assigned to a nonmember, MERS executes the assignment and ends its involvement. (Culhane, supra, 708 F.3d at p. 287.)
 Massachusetts General Laws chapter 183, section 21, similarly to our Civil Code section 2924, provides that the power of sale in a mortgage may be exercised by “the mortgagee or his executors, administrators, successors or assigns.”
 On the merits, the Culhane court rejected the plaintiff’s claim that MERS never properly held her mortgage, giving her standing to challenge the assignment from MERS to Aurora as void (Culhane, supra, 708 F.3d at p. 291); the court held MERS’s role as the lender’s nominee allowed it to hold and assign the mortgage under Massachusetts law. (Id. at pp. 291–293.)
 The Reinagel court nonetheless rejected the plaintiffs’ claim of an invalid assignment after the closing date of a securitized trust, observing they could not enforce the terms of trust because they were not intended third-party beneficiaries. The court’s holding appears, however, to rest at least in part on its conclusion that a violation of the closing date “would not render the assignments void” but merely allow them to be avoided at the behest of a party or third-party beneficiary. (Reinagel, supra, 735 F.3d at p. 228.) As discussed above in relation to Glaski, that question is not within the scope of our review.
 We cite decisions on federal court standing only for their persuasive value in determining what California standing law should be, without any assumption that standing in the two systems is identical. The California Constitution does not impose the same “ ‘case-or-controversy’ ” limit on state courts’ jurisdiction as article III of the United States Constitution does on federal courts. (Grosset v. Wenaas (2008) 42 Cal.4th 1100, 1117, fn. 13.)
 In speaking of personal standing to sue, we set aside such doctrines as taxpayer standing to seek injunctive relief (see Code Civ. Proc., § 526a) and “ ‘ “public right/public duty” ’ ” standing to seek a writ of mandate (see Save the Plastic Bag Coalition v. City of Manhattan Beach (2011) 52 Cal.4th 155, 166).
 We disapprove Jenkins v. JPMorgan Chase Bank, N.A., supra, 216 Cal.App.4th 497, Siliga v. Mortgage Electronic Registration Systems, Inc., supra, 219 Cal.App.4th 75, Fontenot v. Wells Fargo Bank, N.A., supra, 198 Cal.App.4th 256, and Herrera v. Federal National Mortgage Assn., supra, 205 Cal.App.4th 1495, to the extent they held borrowers lack standing to challenge an assignment of the deed of trust as void.
 Plaintiff cites newly added provisions that prohibit any entity from initiating a foreclosure process “unless it is the holder of the beneficial interest under the mortgage or deed of trust, the original trustee or the substituted trustee under the deed of trust, or the designated agent of the holder of the beneficial interest” (§ 2924, subd. (a)(6)); require the loan servicer to inform the borrower, before a notice of default is filed, of the borrower’s right to request copies of any assignments of the deed of trust “required to demonstrate the right of the mortgage servicer to foreclose” (§ 2923.55, subd. (b)(1)(B)(iii)); and require the servicer to ensure the documentation substantiates the right to foreclose (§ 2924.17, subd. (b)). The legislative history indicates the addition of these provisions was prompted in part by reports that nonjudicial foreclosure proceedings were being initiated on behalf of companies with no authority to foreclose. (See Sen. Rules Com., Conference Rep. on Sen. Bill No. 900 (2011–2012 Reg. Sess.) as amended June 27, 2012, p. 26.)
*Associate Justice of the Court of Appeal, Fourth Appellate District, Division One, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
The 2 November 2015 US Supreme Court denial of certiorari in Tran v Bank of New York settled once-and-for-all the spurious assertion that borrowers can challenge putative violations of the Pooling and Servicing Agreement (PSA) creating a securitization trust. Borrowers, encouraged by Glaski v BOA, a California appellate win for the borrower, have claimed that because New York Law voids assignment of a note into a trust after its closing date in the PSA, the assignee has no authority to enforce the note in a foreclosure effort.
This argument boils down to nothing more than a borrower’s effort to use quirks in the law to get a “free house” by preventing foreclosure because the borrower did not make timely payments. Bottom line the courts will not allow a borrower to get a free house unless the lender team injured the borrower sufficiently to justify it.
Numerous California courts have deprecated the Glaski opinion, as have other courts across the land. Now the US Supreme Court has flicked its chin at it, and in doing so has buried it for good.
The US 2nd Circuit supported the NY Southern District in its reliance upon the 2nd Circuit’s Rajamin v Deutsche Bank opinion that borrowers lack standing to challenge the PSA or any assignment of the note because they
Never became a party to the PSA or assignment
Did not get injured by the PSA violation or assignment, and
Receive no 3rd party benefits from the PSA or assignment.
Now, the SCOTUS has put the KIBOSH forever on the frivolous argument that the borrower can cite irregularities in obeying the PSA and assigning the note as a basis for stymieing a foreclosure. I have presented full opinions of the relevant cases. READ THEM.
If you want to know how to prove the lender team injured the borrower, and how the borrower can use that proof to win millions in compensatory and punitive damages, visit http://MortgageAttack.com.
NORMAN BRADFORD SHOWS THAT THE COURTS LIKE RESCISSION and OTHER FORMS OF MORTGAGE ATTACK, etc, IF THE BORROWER ARTFULLY MANAGES THE ATTACK.
If you want to see a case where the court denied rescission pre-Jesinoski, but the court awarded damages and attorney fees to the plaintiff, and where the MORTGAGE ATTACK lawsuit shows you how to set up a win, read up on Bradford v HSBC. Get the PACER docket report for this case:
1:09-cv-01226-TSE-JFA Bradford v. HSBC Mortgage Corporation et al
If you use the RECAP THE LAW extension in Firefox or Chrome browser, you can get an abbreviated docket report and some case docs FREE. Get the Docket Report I just ran HERE:
This case has not ended yet, partly because the creditor filed for bankruptcy and has not come out yet.
As the above opinions show, Bradford took out a refi loan in 2006, and paid on it for two years even thought the loan broker had lied, bait and switched him, then Bradford send the lender a justified notice of rescission in 2008. He sued for TILA rescission, for related damages including credit reputation damage for failure of the creditor to remove the lien and to tender after he offered to tender, for FDCPA violations for trying to collect a rescinded debt, for RESPA violations because the servicer refused to tell him the identity of the creditor (for which Bradford won costs, $4K damage, and over $25K legal fees), and for wrongful foreclosure. He filed the lawsuit 1 year and 16 days after sending notice of rescission.
Document 56 shows that a competent plaintiff like Bradford can craft a multi-count complaint so that it sails past a motion to dismiss with flying colors. The judge analyzes the complaint carefully and seems to love it.
The court ended up dismissing the rescission complaint because the 4th Circuit had opined that the borrower must sue within 3 years after closing, and Bradford sued a little over 4 years after closing. Thereafter, the 4th Circuit changed its view about the timing of rescission lawsuit, incidentally aligning with the Jesinoski opinion.
After the creditor comes out of bankruptcy, Bradford will have the ability to challenge the rescission dismissal in light of later Circuit position on suing for rescission, and in light of Jesinoski. The court would, of course, reverse the dismissal and order the unwinding of the loan. However, Bradford will have a considerable amount of setoffs, and the creditor knows it.
So, instead of challenging the dismissal right off, he can demand a settlement from the creditor (“Give me the house free and clear and call us even”). He will point out how badly he has beat up his adversaries already, and how much more he will beat them up with the rescission and setoffs and enormous legal fees, etc. They might make him a suitable counter offer. Or he might have to take them back to court. Time will tell.
Regardless, Bradford has not made a house payment since late 2008, he does not have to make payments because of the justified rescission, and interest stopped accruing on his debt in 2008, giving him free use of that money in the form of his house
In summary, Norman Bradford has, though his case, conducted a Mortgage Attack seminar for anyone wanting to know how to beat up the bank and its team members. The pleadings sit there on PACER for you to study.
Statute of Limitations Applies to Whole Payment Stream
By Bob Hurt, 18 September 2015
Florida’s 1st District Appellate Court gave Germaine and Andrea Brown a rude awakening by telling them the Florida foreclosure 5-year statute of limitations does not apply a 30-year stream of mortgage payments even after the creditor accelerates the loan, making the entire balance immediately due and payable. The panel cited the Florida Supreme Court opinion in Singleton v Greymar (2004) as the controlling authority (“the unique nature of the mortgage obligation and the continuing obligations of the parties in that relationship.”). The panel held that “the subsequent and separate alleged default created a new and independent right in the mortgagee to accelerate payment on the note in a subsequent foreclosure action.” In other words, every default of a scheduled payment provides a new right to sue, throughout the original term of the loan.
The panel admitted that Florida’s 3rd District had reached a contrary conclusion in Deutsche Bank v Beauvais (2014). But the panel harked to the USDC adverse opinion in Stern v BOA (2015) which claimed that Beauvis opinion went against ”overwhelming weight of authority.” Now the Beauvais court plans to review its decision.
This should make it abundantly clear that the foreclosure statute of limitations in Florida does not constitute a valid defense against foreclosure, except on payments more than 5 years overdue on which the creditor has failed to take action.
Why should this matter to mortgage victims facing foreclosure? Because you cannot depend on Foreclosure Defense to defeat foreclosure. The court/trustee will NOT give you a free house.
ONLY ONE methodology gives home loan borrowers a reliable chance beat the appraiser, mortgage broker, title company, servicer, and creditor in a mortgage dispute: MORTGAGE ATTACK. Borrowers must ATTACK THE VALIDITY OF THE LOAN, and to do that, they must get a comprehensive mortgage examination.
If you have a mortgage dispute, contact Mortgage Attack NOW for a full explanation of the ONLY WINNING METHODOLOGY.
NATIONSTAR MORTGAGE, LLC v. Brown, Fla: Dist. Court of Appeals, 1st Dist. 2015
District Court of Appeal of Florida, First District.
Opinion filed August 24, 2015.
Nancy M. Wallace of Akerman LLP, Tallahassee; William P. Heller of Akerman LLP, Fort Lauderdale; Celia C. Falzone of Akerman LLP, Jacksonville, for Appellant.
Jared D. Comstock of John F. Hayter, Attorney at Law, P.A., Gainesville, for Appellees.
Appellant challenges a final summary judgment holding that the statute of limitations bars appellant’s action to foreclose the subject mortgage. We agree with appellant that the statute of limitations did not bar the action. Thus, we reverse.
It is undisputed that appellees have failed to make any mortgage payments since February 2007, the first month in which they defaulted. In April 2007, appellant’s predecessor in interest gave notice of its intent to accelerate the note based on the February 2007 breach, and filed a foreclosure action. However, the trial court dismissed that action without prejudice in October 2007, after counsel for the lender failed to attend a case management conference.
The next relevant event occurred in November 2010, when appellant sent appellees a new notice of intent to accelerate, based on appellees’ breach in March 2007 and subsequent breaches. Appellees took no action to cure the default, and appellant filed a new foreclosure action in November 2012. Appellees asserted the statute of limitations as an affirmative defense, arguing that the new action and any future foreclosure actions were barred because they were not filed within five years after the original 2007 acceleration of the note. § 95.11(2)(c), Fla. Stat. (2012) (establishing five year statute of limitations on action to foreclose a mortgage).
The principles set forth in Singleton v. Greymar Associates, 882 So. 2d 1004 (Fla. 2004), apply in this case. In Singleton, the Florida Supreme Court recognized “the unique nature of the mortgage obligation and the continuing obligations of the parties in that relationship.” 882 So. 2d at 1007 (emphasis added). The court sought to avoidboth unjust enrichment of a defaulting mortgagor, and inequitable obstacles “prevent[ing] mortgagees from being able to challenge multiple defaults on a mortgage.” Id. at 1007-08. Giving effect to those principles in light of the continuing obligations of a mortgage, the court held that “the subsequent and separate alleged default created a new and independent right in the mortgagee to accelerate payment on the note in a subsequent foreclosure action.” Id. at 1008. The court found it irrelevant whether acceleration had been sought in earlier foreclosure actions. Id. The court’s analysis in Singleton recognizes that a note securing a mortgage creates liability for a total amount of principal and interest, and that the lender’s acceptance of payments in installments does not eliminate the borrower’s ongoing liability for the entire amount of the indebtedness.
The present case illustrates good grounds for the Singleton court’s concern with avoiding both unjust enrichment of borrowers and inequitable infringement on lenders’ remedies. Judgments such as that under review run afoul of Singleton because they release defaulting borrowers from their entire indebtedness and preclude mortgagees from collecting the total debt evidenced by the notes securing the mortgages they hold, even though the sum of the installment payments not made during the limitations period represents only a fraction of the total debt. See GMAC Mortg., LLC v. Whiddon, 164 So. 3d 97, 100 (Fla. 1st DCA 2015) (dismissal of earlier foreclosure action “did not absolve the Whiddons of their responsibility to make mortgage payments for the remaining twenty-five years of their mortgage agreement”). We further observe that both the note and the mortgage at issue here contain typical provisions reflecting the parties’ agreement that the mortgagee’s forbearance or inaction do not constitute waivers or release appellees from their obligation to pay the note in full. These binding contractual terms refute appellees’ arguments and are inconsistent with the judgment under review.
We have held previously that not even a dismissal with prejudice of a foreclosure action precludes a mortgagee “from instituting a new foreclosure action based on a different act or a new date of default not alleged in the dismissed action.” PNC Bank, N.A. v. Neal, 147 So. 3d 32, 32 (Fla. 1st DCA 2013); see also U.S. Bank Nat. Ass’n v. Bartram, 140 So. 3d 1007, 1014 (Fla. 5th DCA), review granted, 160 So. 3d 892 (Fla. 2014) (Case No. SC14-1305) (dismissal of earlier foreclosure action, whether with or without prejudice, did not bar subsequent foreclosure action based on a new default);Evergrene Partners, Inc. v. Citibank, N.A., 143 So. 3d 954, 955 (Fla. 4th DCA 2014)(foreclosure and acceleration based on an earlier default “does not bar subsequent actions and acceleration based upon different events of default”). The dismissal in this case was without prejudice, so much the more preserving appellant’s right to file a new foreclosure action based on appellees’ breaches subsequent to the February 2007 breach asserted as the procedural trigger of the earlier foreclosure action. We find that appellant’s assertion of the right to accelerate was not irrevocably “exercised” within the meaning of cases defining accrual for foreclosure actions, when the right was merely asserted and then dismissed without prejudice. See Olympia Mortg. Corp. v. Pugh, 774 So. 2d 863, 866-67 (Fla. 4th DCA 2000) (“By voluntarily dismissing the suit, [the mortgagee] in effect decided not to accelerate payment on the note and mortgage at that time.”); see also Slottow v. Hull Inv. Co., 129 So. 577, 582 (Fla. 1930) (a mortgagee could waive an acceleration election in certain circumstances). After the dismissal without prejudice, the parties returned to the status quo that existed prior to the filing of the dismissed complaint. As a matter of law, appellant’s 2012 foreclosure action, based on breaches that occurred after the breach that triggered the first complaint, was not barred by the statute of limitations. Evergrene, 143 So. 3d at 955 (“[T]he statute of limitations has not run on all of the payments due pursuant to the note, and the mortgage is still enforceable based upon subsequent acts of default.”).
We are aware that the Third District has reached a contrary conclusion in Deutsche Bank Trust Co. Americas v. Beauvais, 40 Fla. L. Weekly D1, 2014 WL 7156961 (Fla. 3d DCA Dec. 17, 2014) (Case No. 3D14-575). A federal district court has refused to follow Beauvais, noting that it is “contrary to the overwhelming weight of authority.” Stern v. Bank of America Corp., 2015 WL 3991058 at *2-3 (M.D. Fla. June 30, 2015) (No. 2:15-cv-153-FtM-29CM). The court in Beauvais acknowledges that its conclusion is contrary to the weight of authority on the questions presented. 2014 WL 7156961, at *8-9. That court’s docket shows that the court has set the case for rehearing en banc; it remains to be seen whether the merits disposition will change.
Accordingly, we reverse and remand for further proceedings on appellant’s foreclosure action.
THOMAS and MARSTILLER, JJ., CONCUR.
NOT FINAL UNTIL TIME EXPIRES TO FILE MOTION FOR REHEARING AND DISPOSITION THEREOF IF FILED.
In the Rajamin opinion, the US 2nd Circuit made it clear that a only a party to, a person injured by, or a third party beneficiary of the Pooling and Servicing Agreement (PSA) has standing to enforce or dispute it. Thus, the effort to challenge standing to sue because of a violation of the PSA will ultimately fail and waste a lot of resources, as Rajamin discovered the hard way.
—the Appellate Division of the New York Supreme Court (“Appellate Division”) ruled that mortgagors lack standing to assert such breaches, citing as authority the opinion of the district court in this very case: While holding that the plaintiff bank was not entitled to summary judgment in its action to foreclose the defendants’ mortgage, the Appellate Division affirmed the lower …
“The weight of caselaw throughout the country holds that a non-party to a PSA lacks standing to assert non-compliance with the PSA as a claim or defense unless the non-party is an intended (not merely incidental) third party beneficiary of the PSA.”
Plaintiffs have not alleged any facts that would support plausibly a claim that they are intended third-party beneficiaries of the PSAs. Thus, Plaintiffs lack standing to challenge Defendants’ alleged ownership of the Notes and [Deeds of Trust] or authority to foreclose based on non-compliance with the PSAs
In an opinion filed on March 28, 2013, the district court granted the motion to dismiss the Complaint for failure to state a claim on which relief can be granted, finding that plaintiffs lacked standing to challenge defendants’ ownership of the notes and mortgages based on alleged noncompliance with the terms of the PSAs.
However, Erobobo has been criticized and multiple federal courts, including in this District, have held that under New York law, an assignment of a mortgage into a trust in violation of the terms of the PSA is voidable, not void
The Second Circuit affirmed, holding “as unauthorized acts of the Trustee may be ratified by the trust’s beneficiaries such acts are not void but voidable; and that under New York Law such acts are voidable only at the insistence of a trust beneficiary or a person acting on his behalf.”
Thus, although a post-closing-date loan assignment violates the terms of the PSA, these courts conclude that such an assignment is not void, but is merely voidable, because the trustee has the option of accepting the loan assignment despite its untimeliness.
These courts have recognized that a PSA is a contract between the originating lender and the subsequent purchaser/trustee and that, under traditional principles of contract law, a contracting party is capable of ratifying conduct that is done in violation of the contract.
In fact, plaintiffs'”impl [ication] that the loans are owned by some other entity or entities  is highly implausible, for that would mean that since 200 , there was no billing or other collection effort by” the loan’s true owner.
TECHNICAL ALERT: I, the author, am not an attorney or practitioner, and I do not seek in this article to solve any specific problem for any specific person. I provide this information for academic and discussion purposes. Consultant a COMPETENT attorney on all questions of law. To ensure competence, demand and verify a winning record in similar cases before you trust his battle scheme.
Background: Why I Write this Article
Securitization audits have suffered a SHOCKING decline recently as foreclosure victims learned the hard way that the audits give no value to the foreclosure process, and foreclosure victims cannot use them to avert foreclosure.
Hundreds of people have called me personally or written to me about their mortgage problems since 2009. I would say thousands, but I have lost count. That year I started giving people FREE information about what works and what does not win mortgage disputes against creditors and their agents and associates.
The majority of those callers had already blown hundreds to thousands of dollars on a “Securitization Audit” or flimsy “Loan Audit” which did not have the worth of the powder to blow them to hell. Many mortgagors had also blown thousands to pay a foreclosure “pretense defense” attorney for the privilege of dragging out the foreclosure. Most of those foreclosure victims eventually lost their homes to foreclosure auction. Many who did loan mods went into foreclosure again and either lost the home or soon will.
Every one of those people bought a service from a clueless “Kool-Aid Drinker” or an out-and-out scammer (charlatan, cheat, con artist). Even those attorneys who promised “We’ll keep you in the house as long as we can” committed legal malpractice if they failed to examine the mortgage transaction comprehensively for evidence of fraud and other torts, contract breaches, regulation breaches, and legal errors, and as a result failed to lodge the causes of action and affirmative defenses that would have averted foreclosure.
I write this commentary not just to give all those snakes-in-the-grass the literary black eye that they deserve, but also to give the reader something FREE that bozo scammers charge hundreds or thousands for.
I shall tell you, in short order, how to find out who owns your note and why the chain of ownership of the note has no relevance to foreclosure courts.
Securitization audit scammers tell their desperate, clueless foreclosure victim prospects that they will research the “chain of title” and find out who owns the note and what shenanigans happened during transfers of note ownership. They will suggest that the chain of title to the note really matters in a foreclosure dispute.
In reality, as demonstrated by myriad foreclosure sales, it does not matter at all to the foreclosure judge or trustee. Those scammers will talk about their certification, credentials, and the crookedness of securitization, putting the note into the trust after the closing date specified in the pooling and servicing agreement (PSA), REMIC violations, Bloomberg terminals for researching Securities and Exchange Commission information, etc. And they will show you a wad of useless affidavits, and claim to have functioned as expert witnesses. They will not tell you their affidavits and testimony have no notable effect on foreclosure decisions.
Judges and Lawyers Declare the Securitization Audit CROOKED
I shall prove to you right now that those securitization audit scammers and the charlatan attorneys who con you into paying for such audits are liars and con artists for suggesting such audits have an iota of value.
See, Demilio v. Citizens Home Loans, Inc. (M.D. Ga., 2013) (“Frankly, the Court is astonished by…Plaintiff’s attempt to incorporate such an ‘audit,’ which is more than likely the product of “charlatans who prey upon people in economically dire situation.”)
In other words, after reading this, you show yourself a fool if you ever fall for their suggestions that you need the audit to terminate a foreclosure permanently.
You do not have to take my word for it. Look at what two attorneys say about securitization audits:
“… Most ‘securitization audits’ that I have reviewed are inadmissible in a court of law; they contain a mere opinion of a layman without personal knowledge (direct experience) as to what happened with a particular mortgage note after closing. Why pay a securitization auditor when you can have your grandmother provide an opinion as to what happened with the note and have her sign an ‘audit report’? In reality, in about 95% of all cases, the information supplied by a ‘securitization audit’ is either already publically available, or it is unavailable to either the homeowner or the auditor. Thus, where a homeowner genuinely lacks this information, an outsider’s opinion (in contrast to the bank’s admission) is unlikely to help.”
Gregory Bryl, Foreclosure Defense Attorney, Virginia and Florida.
“Mortgage Loan Securitization Audits ARE A CRIME! … THAT INFORMATION IS USELESS IF IT IS NOT ADMISSABLE IN COURT! … So I issue the challenge once again….WILL ANY SO CALLED SECURITIZATION EXPERT PLEASE STAND UP? PLEASE, SHARE WITH ME ADMISSABLE EVIDENCE OF SUCCESS IN ANY FORECLOSURE OR BANKRUPTCY CASE!”
Matthew Weidner, Foreclosure Defense Attorney, Florida.
Why A Borrower Defaulting a Valid Loan Cannot Beat Foreclosure
Before I tell you how to get the benefit of a securitization audit FREE, and how to get the name of the note owner, let us examine some essential facts. To get to those facts, please answer these questions, assuming you have become a mortgagor (borrower):
Did you borrow money to purchase, refinance, or get a line of credit on a home?
Did you sign a note in which you agreed that you had received a loan?
Did you sign a security instrument (Deed of Trust – DOT, or Mortgage) in which you asserted having seisin (possession) and having transferred the estate to the lender for purpose of a mortgage or deed of trust?
Did the lender assign a servicer to service your account (take payments manage, escrow, distribute proceeds, answer your questions regarding servicing the loan)?
Did you make any timely payments to the servicer?
Foreclosure Deals with Breach of Contract
If you answered yes to those questions, then you know you have a contractual relationship with the lender, in which various other entities played a role (realtor, appraiser, mortgage broker, Title Company, attorney, etc.).
Moreover, you know that if either you or the others breach the contract, then that entitles you or the lender to take legal action. You know that in a judicial foreclosure state the lender may sue you and take the house in a foreclosure sale if you breached the contract. You know that in non-judicial foreclosure state, the lender may get the trustee to foreclose.
The lender needs to fulfill certain conditions, listed in § 22 of your loan security instrument, prior to such action, such as notify you that you breached the note, accelerate the note to make the balance due and payable now, and then take the matter to the trustee or sue you to get that money or the house.
You Lose the House if You Breached the Note
You SHOULD know that if the lender or his agents or associates engaged in some crooked behavior that invalidated the note or the loan transaction, that will give you reason to sue.
If the lender sues you for a breach and wins, the lender gets your house, or money from its sale, because the lender has a security instrument.
Unlike the lender, you do not have a security instrument that lets you go to the court or trustee to order the lender or his agent or associate to give up his house in some kind of foreclosure sale. So how do you deal with injuries you suffered in the loan process? And how do you find out who owns the note?
Why Not Ask the Servicer and Complain to the CFPB?
You should know that if you want to learn who owns the note, you do not need a securitization audit because you can just ask the servicer. And that remains true if you want some error in your loan corrected.
You might know, though many do not, that the US Government has established the Consumer Financial Protection Bureau (CFPB) to resolve disputes between borrowers and lenders and their servicers. You can file a complaint at the following web site:
Why You Have No Standing in PSA or Note Assignment Disputes
But wait a minute. Surely you must wonder whether robo-signing, notary falsification of note assignments, assignment to a securitization trust after the closing date specified in the Pooling and Servicing Agreement (PSA), violations of Real Estate Mortgage Investment Conduit (REMIC) rules, and other securitization and assignment issues have any bearing on foreclosure, and whether you can use related arguments to beat foreclosure. You might actually believe a securitization audit can shine some light on these concerns.
Let us answer another set of questions to get to the truth:
Did you become a party to, become injured by, or become a third party beneficiary of:
The PSA for a trust that owns your note?
Any assignment of your note to another creditor (owner of beneficial interest in the note)?
If you answered NO to both a and b above, then you know that neither the assignment nor the PSA have any effect on you whatsoever. Surely you know they do not affect whether or not you have breached your note or owe a mortgage loan debt. So, therefore, you know (do you not?) that you have no standing to dispute or enforce the PSA or any assignment of the note in court. That means robo-signing of the note (one of those ridiculous things securitization auditors tell you they will find for you) has become irrelevant to you and to any court.
See, Javaheri v. JPMorgan Chase Bank N.A., 2012 WL 3426278 at *6 (C.D. Cal. Aug. 13, 2012). (“Plaintiffs here do not dispute that they defaulted on the loan payments, and the robo-signing allegations are without effect on the validity of the foreclosure process.”)
About Blank Indorsements of the Note
Furthermore, according to the Uniform Commercial Code (UCC), if a creditor indorses the note in blank instead of naming an assignee, the note becomes bearer paper. See, UCC §3-205https://www.law.cornell.edu/ucc/3/3-205.
3-205. SPECIAL INDORSEMENT; BLANK INDORSEMENT; ANOMALOUS INDORSEMENT.
(a) If an indorsement is made by the holder of an instrument, whether payable to an identified person or payable to bearer, and the indorsement identifies a person to whom it makes the instrument payable, it is a “special indorsement.” When specially indorsed, an instrument becomes payable to the identified person and may be negotiated only by the indorsement of that person. The principles stated in Section 3-110 apply to special indorsements.
(b) If an indorsement is made by the holder of an instrument and it is not a special indorsement, it is a “blank indorsement.” When indorsed in blank, an instrument becomes payable to bearer and may be negotiated by transfer of possession alone until specially indorsed.
(c) The holder may convert a blank indorsement that consists only of a signature into a special indorsement by writing, above the signature of the indorser, words identifying the person to whom the instrument is made payable.
(d) “Anomalous indorsement” means an indorsement made by a person who is not the holder of the instrument. An anomalous indorsement does not affect the manner in which the instrument may be negotiated.
An enormous number of notes bear blank indorsements. That makes it easy to hand them off without cumbersome paper trails. Thus, whoever holds the note can enforce it, whether or not the holder owns beneficial interest in it. So, try answering this question:
If the most recent indorser of your note indorsed your note in blank, why would you care who owns it?
I suppose you realize that you should not care because the note holder, regardless of identity, will foreclose and take the house if you breach the note.
Who May Enforce the Note, Even if Lost, Stolen, or Destroyed
“Person entitled to enforce” an instrument means (i) the holder of the instrument, (ii) a nonholder in possession of the instrument who has the rights of a holder, or (iii) a person not in possession of the instrument who is entitled to enforce the instrument pursuant to Section 3-309 or 3-418(d). A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument.
3-309. ENFORCEMENT OF LOST, DESTROYED, OR STOLEN INSTRUMENT.
(a) A person not in possession of an instrument is entitled to enforce the instrument if:
(1) the person seeking to enforce the instrument
(A) was entitled to enforce it the instrument when loss of possession occurred, or
(B) has directly or indirectly acquired ownership of the instrument from a person who was entitled to enforce the instrument when loss of possession occurred;
(2) the loss of possession was not the result of a transfer by the person or a lawful seizure; and
(3) the person cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process.
(b) A person seeking enforcement of an instrument under subsection (a) must prove the terms of the instrument and the person’s right to enforce the instrument. If that proof is made, Section 3-308applies to the case as if the person seeking enforcement had produced the instrument. The court may not enter judgment in favor of the person seeking enforcement unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument. Adequate protection may be provided by any reasonable means.
In view of these laws, the Trustees and Courts do not require the PETE to present the original note in order to foreclose. Some states, like Florida, which require the original and will not admit into evidence a copy of a negotiable instrument, provide a law allowing a creditor to reestablish a lost, stolen, or destroyed instrument, and thereby effectively to create a new, legal “original.” See Florida Statutes, Chapter 71, http://goo.gl/hrB9bY.
So, answer these questions:
Can a creditor foreclose a lost, stolen, or destroyed note on which you defaulted?
Can a PETE who does not have creditor status foreclose a note in default?
I hope you answered YES to those two questions. If so, you have by now begun to realize that only two questions have salient importance in your mortgage:
Did you breach the note?
Does the note lack validity?
If you answer yes to the first question, then you know that the PETE can enforce the note by foreclosing and forcing a sale of the collateral property – your house.
The ONLY Reliable Basis for Battling the Creditor and Associates
If you answered yes to the second question, then you might have an opportunity to undo the foreclosure and wind up with the house free and clear, or with a loan modified to your advantage, or setoffs from your debt, or compensatory and punitive damages awards. You may sue for injuries that made the note invalid, whether or not you face foreclosure.
You may NOT sue until you have complied with § 20 of your loan security instrument, which provides the following delightful text:
Neither Borrower nor Lender may commence, join, or be joined to any judicial action (as either an individual litigant or the member of a class) that arises from the other party’s actions pursuant to this Security Instrument or that alleges that the other party has breached any provision of, or any duty owed by reason of, this Security Instrument, until such Borrower or Lender has notified the other party (with such notice given in compliance with the requirements of Section 15) of such alleged breach and afforded the other party hereto a reasonable period after the giving of such notice to take corrective action. If Applicable Law provides a time period which must elapse before certain action can be taken, that time period will be deemed to be reasonable for purposes of this paragraph. The notice of acceleration and opportunity to cure given to Borrower pursuant to Section 22 and the notice of acceleration given to Borrower pursuant to Section 18 shall be deemed to satisfy the notice and opportunity to take corrective action provisions of this Section 20.
You can find applicable law (RESPA – Real Estate Settlement Procedures Act – 12 U.S.C. 2601 et seq.) and Regulations (Regulation X – 12 C.F.R. 1024 et seq.) at the below web sites, but take note that I have provided links to the latest at this point in time, and you might need to refer to earlier years based on your situation:
Take note of (carefully read) 12 U.S.C. 2605 and 12 C.F.R. 1024.35 at the above links, for these tell you the duties of the servicer to notify you of changes of the servicer, and explain what questions the servicer must answer for you, what questions the servicer may ignore, and what corrective actions the servicer must take.
So, you see, if you know the note lacks validity in some respect because the lender, servicer, title company, mortgage broker, appraiser, realtor, or some attorney or other third party injured you at the inception of the loan, you can ask for a settlement from, or sue the injurious party. You start by bringing the injuries to the attention of the servicer.
Now you face a gnawing question that you absolutely must answer:
How do you find out whether the note lacks validity?
Why Mortgage Borrowers Need a Professional Mortgage Examination
Obviously, YOU should examine all the documents related to your loan transaction for evidence of fraud, regulatory breaches, contract breaches, legal errors, and flim-flams. You might find all kinds of causes of action (reasons to sue) that entitle you to challenge the validity of the loan in court and get the court to compensate you for your injuries.
To examine your loan transaction and related issues comprehensively and comprehensively, you will need a good working knowledge of tort law, contract law, mortgage finance law, real estate law, criminal law, bankruptcy law, foreclosure law, consumer credit law, and federal and state regulations law dealing with mortgages, lending, disclosures, credit reporting, debt collection, equal opportunity, etc.
That brings us to the toughest question of all:
Do you have the requisite knowledge and skill to perform a comprehensive, professional examination of your loan transaction and any related court actions?
Frankly, I guess most home loan borrowers do not have a clue how to do that. So naturally, you will want an answer to this question:
Who has such competence and experience to perform a comprehensive mortgage loan transaction examination?
This article focuses on an entirely different issue. It deals with why you do not need a securitization audit and how to get the putative benefits of such an audit FREE. So, I shall address the answer to the above question briefly at the end of the article.
But, I do guarantee you right now that NO securitization auditor or so-called forensic loan auditor, and only the rarest of attorneys, has the remotest capability of doing such an examination correctly without wasting your money.
How to Discover Who Owns Your Mortgage Note: Ask the Servicer
So let us get on with this final question:
How do I find out who owns the note?
How to Avoid Paying the Wrong Party
Most people worry about who owns the note because they do not want to pay the wrong person and then face an accusation of breaching the note through non-payment. Some simply want to mount a challenge against foreclosure, thinking that if the wrong person forecloses, that will justify asking the court to dismiss the case or stop the foreclosure.
Suppose you do not know who owns the note and you fear that the wrong person will receive your mortgage payments. That could open you to an accusation by the real creditor that you breached the note through non-payment. The courts provide a means for ensuring that your payment goes to the right party: the Interpleader Action.
Your loan security instrument identifies whom to pay. If you ever doubt whom to pay, you can file the interpleader action to remove doubt and comply with the terms of your loan. The court will assign someone to take your money and pay it to the correct party.
Federal Law Helps You Find the Owner of the Note
As to how to find out who owns the note, federal law requires the creditor and servicer to notify you of any change in creditor or servicer timely so you do not pay the wrong party. Read the law for yourself, here:
A servicer of a consumer obligation arising from a consumer credit transaction shall not be treated as an assignee of such obligation for purposes of this section unless the servicer is or was the owner of the obligation.
(2) Servicer not treated as owner on basis of assignment for administrative convenience
A servicer of a consumer obligation arising from a consumer credit transaction shall not be treated as the owner of the obligation for purposes of this section on the basis of an assignment of the obligation from the creditor or another assignee to the servicer solely for the administrative convenience of the servicer in servicing the obligation. Upon written request by the obligor, the servicer shall provide the obligor, to the best knowledge of the servicer, with the name, address, and telephone number of the owner of the obligation or the master servicer of the obligation.
Federal law also requires the servicer and creditor to notify the borrower of any change in the servicer or creditor.
See, 15 U.S.C. 1641(g)
(g) Notice of new creditor
(1) In general
In addition to other disclosures required by this subchapter, not later than 30 days after the date on which a mortgage loan is sold or otherwise transferred or assigned to a third party, the creditor that is the new owner or assignee of the debt shall notify the borrower in writing of such transfer, including—
(A) the identity, address, telephone number of the new creditor;
(B) the date of transfer;
(C) how to reach an agent or party having authority to act on behalf of the new creditor;
(D) the location of the place where transfer of ownership of the debt is recorded; and
(E) any other relevant information regarding the new creditor.
As used in this subsection, the term “mortgage loan” means any consumer credit transaction that is secured by the principal dwelling of a consumer.
Thus, the borrower should always have timely notice in order to pay the right party and to know whether the right party has made any effort to foreclose a defaulted loan.
If in doubt the borrower need only call or write to ask the servicer. The servicer must give the borrower the identity and contact information for the creditor, and the details regarding escrow for insurance and property tax, and other information regarding servicing the loan.
Get Help from the Consumer Financial Protection Bureau
If the servicer plays dumb or either the servicer or creditor fail to inform the borrower, then the borrower may seek enforcement assistance from the CFPB. As I mentioned above, you can file a complaint via the web site:
As to punishing servicer recalcitrance, federal law provides borrowers with a private right of action against the creditor and/or servicer as appropriate. The court can order the defendants to pay the borrower up to $4000, plus any actual damage, plus legal fees and costs of the action. The court can force the defendants to give the proper information to the borrower.
See, 15 U.S.C. 1640(a)
§1640. Civil liability
(a) Individual or class action for damages; amount of award; factors determining amount of award
Except as otherwise provided in this section, any creditor who fails to comply with any requirement imposed under this part, including any requirement under section 1635 of this title, subsection (f) or (g) of section 1641 of this title, or part D or E of this subchapter with respect to any person is liable to such person in an amount equal to the sum of—
(1) any actual damage sustained by such person as a result of the failure;
(2)(A)(i) in the case of an individual action twice the amount of any finance charge in connection with the transaction, (ii) in the case of an individual action relating to a consumer lease under part E of this subchapter, 25 per centum of the total amount of monthly payments under the lease, except that the liability under this subparagraph shall not be less than $200 nor greater than $2,000, (iii) in the case of an individual action relating to an open end consumer credit plan that is not secured by real property or a dwelling, twice the amount of any finance charge in connection with the transaction, with a minimum of $500 and a maximum of $5,000, or such higher amount as may be appropriate in the case of an established pattern or practice of such failures; 1 or (iv) in the case of an individual action relating to a credit transaction not under an open end credit plan that is secured by real property or a dwelling, not less than $400 or greater than $4,000; or
(B) in the case of a class action, such amount as the court may allow, except that as to each member of the class no minimum recovery shall be applicable, and the total recovery under this subparagraph in any class action or series of class actions arising out of the same failure to comply by the same creditor shall not be more than the lesser of $1,000,000 or 1 per centum of the net worth of the creditor;
(3) in the case of any successful action to enforce the foregoing liability or in any action in which a person is determined to have a right of rescission under section 1635 or 1638(e)(7) of this title, the costs of the action, together with a reasonable attorney’s fee as determined by the court; and
(4) in the case of a failure to comply with any requirement under section 1639 of this title, paragraph (1) or (2) of section 1639b(c) of this title, or section 1639c(a) of this title, an amount equal to the sum of all finance charges and fees paid by the consumer, unless the creditor demonstrates that the failure to comply is not material…
Please read the full Civil Liability law at the below link. I have only provided the part important to this discussion.
You can satisfy your curiosity about the PSA and other documents related to your loan, such as the bank’s 424(b)(5) prospectus form filing. You need only dig around in Edgar at the Securities and Exchange Commission’s web site here:
Thus, You Need NO Securitization Audit to Receive its Alleged Benefits
As you can see, I have just saved you the cost of a securitization audit. I have given you the main benefit of it, knowledge of how to discover the identity of the creditor, the person who owns beneficial interest in the note, and I have shown your entitlement to get the court to award damages to you for a failure to give that information. And I gave you all that ABSOLUTELY FREE.
Now you know also that you do not need to pay some scalawag huckster of a securitization auditor to find out who owns your note. Most of the time the so-called auditor gives clients a bunch of useless information like a copy of the PSA, but fails to tell you who owns the note. Why? Because creditors indorsed most securitized notes in blank and most notes have become securitized.
If in doubt, check the Fannie Mae or Freddie Mac web site and enter your loan number, for they own many if not most of the mortgage notes.
If still in doubt, pick up the phone. Call the servicer, and ask, “Who owns my note?” If you get the bum’s rush, try it in writing, then contact the CFPB, and complain. If that does not work, SUE.
But under NO CIRCUMSTANCES should you bother with a securitization audit. It will only waste your money and your time, and give you zero benefit.
Yes, I know I titled the article to make it seem like securitization audits provide benefits you can get free. Well I gave you FREE those benefits that a securitization auditor fools victims into thinking they will get for a big fat fee, but which the victims do not get at all.
If you already made the ill-informed mistake of paying a securitization auditor for that useless audit, I suggest that you demand a full refund and report that scalawag to the State Attorney General. Why? Because those crooked “auditors” know they sell useless junk.
Save Your Money for a Professional Mortgage Examination
Besides, you will need all that money to pay a competent, professional mortgage transaction examiner to examine your transaction documents. That will reveal injuries you have suffered. And when you show the injuries to the servicer, the injurious parties, the CFPB, and the court, you thereby give yourself the ONLY opportunity of pressing your adversary into a settlement or of obtaining a damage award judgment from the court.
Yes, I know the ONLY such examination firm in the USA, the only one I can confidently recommend.
If you have a mortgage and you want help with it, familiarize yourself with the articles and concepts at the Mortgage Attack web site here:
Professor Dale A. Whitman, Dean Emeritus
University of Missouri-Columbia Law School
Dear Professor Whitman:
I saw your article “Learning from the Mortgage Crisis” in a friend’s magazine. I thought I’d write and ask you to send me a copy of the pdf file. Will you send it to me, please, by return email? Why haven’t you posted that article on your site?
In reading your UCC law journal article (April 2013) recommending a proper nationwide standard of electronic registration for mortgages and notes, I noted several issues which I believe warrant comment.
1. I fully agree with you. I don’t blame banks for creating MERS in order to reduce their costs related to recording loan security instruments with county clerks. But the problems related to the musical chairs game with notes, the robosigning, the securitization, the phony bond ratings, the questionable assignments, the foreclosure plaintiffs who lack standing, and the note assignment after suing all beg for a standardized solution. That system you recommend should also mandate notice from the court clerk of any lis pendens regarding a registered mortgage or deed of trust, and of any foreclosure complaint and of any related final judgment encumbering or freeing the mortgage.
2. I doubt seriously that anyone but an idiot would destroy the note, and I believe none of the banks did. I believe they stashed those notes in their warehouse file cabinets and did not want to risk their lost by giving handing them to the courts; furthermore, they wanted the freedom to use them commercially by assigning or handing them to others without the fetter of the court’s having possessions, SIMPLY BECAUSE of the UCC requirement that possession alone entitles enforcement.
3. I don’t believe the destroyed note allegation of the article because, in spite of Florida Statute 673.3091 permitting enforcement of the lost or destroyed note, we have the issue of admission of evidence in Florida courts. I hope you will address it in a future commentary.
From Florida’s Evidence Code in Florida Statute 90.953:
90.953 Admissibility of duplicates.—A duplicate is admissible to the same extent as an original, unless:
(1) The document or writing is a negotiable instrument as defined in s. 673.1041, a security as defined in s. 678.1021, or any other writing that evidences a right to the payment of money, is not itself a security agreement or lease, and is of a type that is transferred by delivery in the ordinary course of business with any necessary endorsement or assignment.
(2) A genuine question is raised about the authenticity of the original or any other document or writing.
(3) It is unfair, under the circumstance, to admit the duplicate in lieu of the original.
4. If the court cannot admit the copy of the lost note into evidence, how does the note become a fact before the court so that the court can enforce it? Well, how about this handy statute that allows re-establishment?
71.011 Reestablishment of papers, records, and files.—All papers, written or printed, of any kind whatsoever, and the records and files of any official, court or public office, may be reestablished in the manner hereinafter provided.
(1) WHO MAY REESTABLISH.—Any person interested in the paper, file or record to be reestablished may reestablish it.
(2) VENUE.—If reestablishment is sought of a record or file, venue is in the county where the record or file existed before its loss or destruction. If it is a private paper, venue is in the county where any person affected thereby lives or if such persons are nonresidents of the state, then in any county in which the person seeking the reestablishment desires.
(3) REMEDY CONCURRENT.—Nothing herein shall prevent the reestablishment of lost papers, records and files at common law or in equity in the usual manner.
(a) Any paper, record or file reestablished has the effect of the original. A private paper has such effect immediately on recording the judgment reestablishing it, but a reestablished record does not have that effect until recorded and a reestablished paper or file of any official, court or public officer does not have that effect until a certified copy is filed with the official or in the court or public office where the original belonged. A certified copy of any reestablished paper, the original of which is required or authorized by law to be recorded, may be recorded.
(b) When any deed forming a link in a chain of title to land in this state has been placed on the proper record without having been acknowledged or proven for record and has thereafter been lost or destroyed, certified copies of the record of the deed as so recorded may be received as evidence to reestablish the deed if the deed has been so recorded for 20 years.
(5) COMPLAINT.—A person desiring to establish any paper, record or file, except when otherwise provided, shall file a complaint in chancery setting forth that the paper, record or file has been lost or destroyed and is not in the custody or control of the petitioner, the time and manner of loss or destruction, that a copy attached is a substantial copy of that lost or destroyed, that the persons named in the complaint are the only persons known to plaintiff who are interested for or against such reestablishment.
Apparently, a Plaintiff can re-establish the lost note and then enforce it so long as he indemnifies the Defendant against some other party’s effort to enforce the original note. Unfortunately, not many plaintiffs claiming to have lost the note have reestablished it in order to admit it into evidence. In fact, I don’t know of any, but I have imperfect access to court records for conducting a research into the question.
FYI, I am not an attorney and have not attended law school. I’d love to attend, but it isn’t likely to produce any benefit at this stage of my life except to satisfy my curiosity. I study law issues as an avocation.
Since 2007 I have focused on Mortgage issues. I started by inquiring into the means to beat foreclosures. Eventually I abandoned that interest in favor of a principle I call “Mortgage Attack.” I have fleshed out the principle in my web site http://MortgageAttack.com. As I see it, a borrower who breached a valid note cannot defeat a mortgage foreclosure generally. However, a colossal foreclosure defense legal industry has arisen by which attorneys deceive foreclosure victims with a contrary suggestion. In actuality, they bilk their clients out of, for example, $2500 retainer plus $500 per month “for as long as we can keep you in the house.” In my opinion, all those attorneys belong in prison for fraud. To begin with, they KNOW the client will lose the house unless they con the client into a loan modification or short sale. And then they continue using the same tired and frivolous arguments in the foreclosure pretense defense which they know will fail – complaining about statute of limitation tolling, robosigning, vapor money, no original note, conditions precedent, etc. They use copy-machine pleadings and motions in a dilatory effort to make it seem that they earn their fees. And worst of all they NEVER bother examining the mortgage transaction documents for evidence of borrower injury by the lender and lender’s agents and associates.
If I came to you and said “Professor, I just got accused of breaching the note, and now they want to take my house. Will you help me please?” what would you suggest? Wouldn’t you say something like this:
Well did you take out a loan? Did you sign the papers? Did you breach the note by failing to pay timely? Let me see those papers, and tell me a little about the events surrounding that loan. Let me see the appraisal and original loan application, and HUD-1 report, and your TILA notices.?”
Wouldn’t you interview the supplicant to determine whether any shady activities happened? Wouldn’t you verify that the appraiser, mortgage broker, and lender had proper licenses and operated from offices registered with the Secretary of State? Wouldn’t you ascertain whether the broker promised one set of terms, but hoodwinked the borrower into signing papers with a different set of terms. Wouldn’t you look for broker lies on the loan application that made the borrower seem more than actually qualified? Wouldn’t you look at the interest rates and origination fees to determine whether they exceeded standards? Wouldn’t you look for patterns of misbehavior that might justify offsets even in the event the statute of limitations had tolled on the behaviors? Wouldn’t you look for evidence of violations of the FCRA, FDCPA, TILA, RESPA, HOEPA, ECOA, etc? Wouldn’t you look for contract breaches, fraud and other tortious conduct, legal errors, and regulatory violations that injured the borrower?
Normal foreclosure pretender defender attorneys might give those efforts lip service, but virtually never do them. They don’t do them because they don’t know how, a byproduct of lack of intimate familiarity with the regulations and tort/contract/mortgage law, and because of laziness and greed. A competent mortgage examination team might spend 40 to 60 hours on such a project. A typical. lawyer would want to charge a broke foreclosure victim $12,000 to $18,000 for the service. As a result, the lawyer would have to get out of the business of foreclosure defense.
But, that is exactly what it will take for lawyers actually to give their foreclosure victim clients any hope of convincing the lender to modify the loan to the borrower’s benefit, or of convincing the court to order set-offs from the debt or compensatory and punitive damages to salve the borrower’s injuries.
Such winning awards do happen, but they are exceedingly rare. And we shall never know how many such cases settle out of court because the borrower managed to convince the lender to avoid the related litigation.
In that small article, I provided a link to all of the case documents I could find on the web. You might find more using your WestLaw resources. I have expected a final resolution of the case for several days. The appraiser settled for $700K, and the trial court ordered Quicken Loans to pay nearly $5 million in damages, fees, and costs. Quicken appealed. Maybe you can find out when the West Virginia Supreme Court will issue its final opinion.
I consider Brown v Quicken Loans the “Poster Child” Mortgage Attack methodology case from which all pretender defender lawyers should learn. But I estimate that lenders and their agents and associates have injured or cheated at least 80%, and upwards of 95% of mortgage borrowers in the past 15 years. Precious few attorneys hold them accountable for that maleficent behavior. And let’s face reality. Brown’s lawyer took the case on contingency because he knew the judge and his sentiments well and knew his client had suffered extraordinary injuries, and he knew the client as decent person. Few lawyers will take any foreclosure case on contingency until after having made it ready for trial. That means the injured borrower must handle the case personally, if anyone handles it at all.
And this brings me to my final point.
You have wisely suggested a dramatic and electronic improvement to the loan registration problem. But we have two far worse problems:
Bad ethics in the foreclosure “Pretense Defense” attorney business model – it should be outlawed.
Lack of availability of online resources for pro se litigants who should not need a lawyer for “mortgage attack,” coupled with the exorbitant cost imposed by the legal services monopoly.
I know of no cure for the bad ethics other than widespread class actions against foreclosure pretender defenders and State Attorneys attacking them for fraud. Any attorney commits fraud by re-using frivolous legal arguments that he knows will lose. Obviously, judges will not punish them, or they already would have. And just as obviously, law school ethics professors have had little impact on the greed factor that drives attorneys to cheat their clients .
People would find it easier to prevail against crooked banks if they could afford an aggressive, competent attorney. But people cannot afford them generally because the attorneys enjoy a monopoly on legal services. Unauthorized Practice of Law statutes (UPL is a felony in Florida) have made possible that legal services monopoly. But the law does not protect people against incompetent, lazy, or crooked attorneys. Legal writers have recognized this as an outrage for decades:
And of course many people would fare well in court on their own if they only learned the basics of litigation, civil procedure, and evidence code in high school. Unfortunately, it has become exceedingly difficult to obtain a decent legal education in high school, college, or on one’s own because of the practice of hiding the law or making it inordinately expensive to discover. Yes, we have the laws. But government has posted them on a sign 20 feet in the air, and only attorneys have the ladder needed to read that sign. By this I mean the actual law has become out of reach, not because people cannot find it, but because of the skill they need to locate the relevant part – court rulings.
Good attorneys support their legal arguments in their court filings with case law. They generally find that case law using a legal search engine to which they subscribe for a monthly fee. But the filings that resulted in that case law sit in a clerk’s file cabinet in courts across America, or in law books in law libraries that most people simply cannot access.
And that law which people can access suffers from exiguity or poor organization. In Florida only parties to the case and their lawyers can access the electronic filings in the case. This seem more than a little strange in light of the reality that the constitution mandates that nearly all proceedings remain open to the public.
Thank God for Google Scholar and Google Books. Google has made many old law books available, and many if not most of the appellate opinions across America available to the public without requiring that people browse the court sites. Google has done the job that rightly belongs to government, particularly the courts, of making the law available and visible to, and through the search engine somewhat well-organized for, the masses.
I realize that you personally can do nothing about the terrible ethics in the mortgage foreclosure and foreclosure defense industry.
But perhaps you can propose an electronic means of solving the problem of relative unavailability of the law to non-attorneys. Some federally coordinated electronic repository should exist akin to PACER, but free, and fully searchable by topic, party, judge, attorney, clerk, and bailiff, nationwide, making all court dockets and filings, from traffic and all other administrative courts, county and other trial courts, and appellate courts, available to the public, particularly to Americans and students in public and private schools. And that access should cost the public nothing, for the law and the documents leading up to it, should become and remain free for all to read at home through internet access.
And need only one good reason for this. People can easily commit a vast array of “infractions” and crimes without ever leaving home, and become most susceptible to harassment and arrest for alleged infractions and criminal acts upon setting foot outside the home. It seems only fair that people should have the benefit of finding, reading, learning, and knowing the law before venturing out of the privacy of one’s home, if any such privacy remains.
These two opinions (excerpts from the list below) show why securitization and assignment arguments MUST fail in a foreclosure dispute. Borrower suffered no injury, has no interest in, and never became a party to the Pooling and Servicing Agreement (PSA) or any assignment of the note. So, the borrower has no standing to dispute or enforce the assignment or PSA.
Maynard v. Wells Fargo Bank, N.A. (S.D. Cal., 2013) (“Plaintiffs also allege that they conducted a Securitization Audit of Plaintiffs’ chain of title and Wachovia’s PSA, and as a result, determined that Plaintiffs’ Note and DOT were not properly conveyed into the Wells Fargo Trust on or before July 29, 2004, the closing date listed in the Trust Agreement. (Id. at ¶ 34.)… To the extent Plaintiffs challenge the validity of the securitization of the Loan because Wells Fargo and U.S. Bank failed to comply with the terms of the PSA or the Trust Agreement, Plaintiffs are not investors of the Loan, nor are Plaintiffs parties to the PSA or Trust Agreement. Therefore, as many courts have already held, Plaintiffs lack standing to challenge the validity of the securitization of the Loan…Furthermore, although Plaintiffs contend they have standing to challenge the validity of the Assignment because they were parties to the DOT with the original lender (Wells Fargo), this argument also fails. (Doc. No. 49 at 11-12.).
Jenkins v. JP Morgan Chase Bank, N.A., 216 Cal. App. 4th 497, 511-13, 156 Cal. Rptr. 3d 912 (Cal. Ct. App. 2013) (“[E]ven if any subsequent transfers of the promissory note were invalid, [the borrower] is not the victim of such invalid transfers because her obligations under the note remained unchanged.”). As stated above, these exact arguments have been dismissed by countless other courts in this circuit. Accordingly, Plaintiffs’ contentions that the Assignment is void due to a failure in the securitization process fails.”).
Cases Where Homeowners Lost by Arguing Securitization
Rodenhurst v. Bank of Am., 773 F. Supp. 2d 886, 899 (D. Haw. 2011) (“The overwhelming authority does not support a [claim] based upon improper securitization.”) “[S]ince the securitization merely creates a separate contract, distinct from plaintiffs’ debt obligations under the Note and does not change the relationship of the parties in any way, plaintiffs’ claims arising out of securitization fail.” Lamb V. Mers, Inc., 2011 WL 5827813, *6 (W.D. Wash. 2011) (citing cases);
Bhatti, 2011 WL 6300229, *5 (citing cases);
In re Veal, 450 B.R. at 912 (“[Plaintiffs] should not care who actually owns the Note-and it is thus irrelevant whether the Note has been fractionalized or securitized-so long as they do know who they should pay.”);
Horvath v. Bank of NY, N.A., 641 F.3d 617, 626 n.4 (4th Cir. 2011) (securitization irrelevant to debt);
Commonwealth Prop. Advocates, LLC v. MERS, 263 P.3d 397, 401-02 (Utah Ct. App. 2011) (securitization has no effect on debt);
Henkels v. J.P. Morgan Chase, 2011 WL 2357874, at *7 (D.Ariz. June 14, 2011) (denying the plaintiff’s claim for unauthorized securitization of his loan because he “cited no authority for the assertion that securitization has had any impact on [his] obligations under the loan, and district courts in Arizona have rejected similar arguments”);
Johnson v. Homecomings Financial, 2011 WL 4373975, at *7 (S.D.Cal. Sep.20, 2011) (refusing to recognize the “discredited theory” that a deed of trust ” ‘split’ from the note through securitization, render[s] the note unenforceable”);
Frame v. Cal-W. Reconveyance Corp., 2011 WL 3876012, *10 (D. Ariz. 2011) (granting motion to dismiss: “Plaintiff’s allegations of promissory note destruction and securitization are speculative and unsupported. Plaintiff has cited no authority for his assertions that securitization has any impact on his obligations under the loan”).”The Court also rejects Plaintiffs’ contention that securitization in general somehow gives rise to a cause of action – Plaintiffs point to no law or provision in the mortgage preventing this practice, and cite to no law indicating that securitization can be the basis of a cause of action. Indeed, courts have uniformly rejected the argument that securitization of a mortgage loan provides the mortgagor a cause of action.”
See Joyner V. Bank Of Am. Home Loans, No. 2:09-CV-2406-RCJ-RJJ, 2010 WL 2953969, at *2 (D. Nev. July 26, 2010) (rejecting breach of contract claim based on securitization of loan);
Haskins V. Moynihan, No. CV-10-1000-PHX-GMS, 2010 WL 2691562, at *2 (D. Ariz. July 6, 2010) (rejecting claims based on securitization because plaintiffs could point to no law indicating that securitization of a mortgage is unlawful, and “[p]laintiffs fail to set forth facts suggesting that Defendants ever indicated that they would not bundle or sell the note in conjunction with the sale of mortgage-backed securities”);
Lariviere V. Bank Of N.Y. As Tr., Civ. No. 9-515-P-S, 2010 WL 2399583, at *4 (D. Me. May 7, 2010) (“Many people in this country are dissatisfied and upset by [the securitization] process, but it does not mean that the [plaintiffs] have stated legally cognizable claims against these defendants in their amended complaint.”);
Upperman V. Deutsche Bank Nat’l Trust Co., No. 01:10-cv-149, 2010 WL 1610414, at *3 (E.D. Va. Apr. 16, 2010) (rejecting claims because they are based on an “erroneous legal theory that the securitization of a mortgage loan renders a note and corresponding security interest unenforceable and unsecured”);
Silvas V. Gmac Mortg., Llc, No. CV-09-265-PHX-GMS, 2009 WL 4573234, at *5 (D. Ariz. Dec. 1, 2009) (rejecting a claim that a lending institution breached a loan agreement by securitizing and cross-collateralizing a borrower’s loan). The overwhelming authority does not support a cause of action based upon improper securitization. Accordingly, the Court concludes that Plaintiffs cannot maintain a claim that “improper restrictions resulting from securitization leaves the note and mortgage unenforceable);
Summers V. Pennymac Corp. (N.D.Tex. 11-28-2012) (any securitization of Plaintiffs’ Note did not affect their obligations under the Note or PennyMac’s authority as mortgagee to enforce the Note and foreclose on the property if Plaintiffs defaulted).;
Nguyen V. Jp Morgan Chase Bank (N.D.Cal. 10-17-2012) (“Numerous courts have recognized that a defendant bank does not lose its ability to enforce the terms of its deed of trust simply because the loan is assigned to a trust pool. In fact, ‘securitization merely creates a separate contract, distinct from [p]laintiffs[‘] debt obligations under the note, and does not change the relationship of the parties in any way. Therefore, such an argument would fail as a matter of law”);
Flores v. Deutsche Bank Nat’l Trust Co., 2010 WL 2719848, at *4 (D. Md. July 7, 2010), the borrower argued that his lender “already recovered for [the borrower’s] default on her mortgage payments, because various ‘credit enhancement policies,’” such as “a credit default swap or default insurance,” “compensated the injured parties in full.” The court rejected the argument, explaining that the fact that a “mortgage may have been combined with many others into a securitized pool on which a credit default swap, or some other insuring-financial product, was purchased, does not absolve [the borrower] of responsibility for the Note.” Id. at *5;
see also Fourness v. Mortg. Elec. Registration Sys., 2010 WL 5071049, at *2 (D. Nev. Dec. 6, 2010) (dismissing claim that borrowers’ obligations were discharged where “the investors of the mortgage backed securities were paid as a result of . . . credit default swaps and/or federal bailout funds);
Warren v. Sierra Pac. Mortg. Servs., 2010 WL 4716760, at *3 (D. Ariz. Nov. 15, 2010) (“Plaintiffs’ claims regarding the impact of any possible credit default swap on their obligations under the loan . . . do not provide a basis for a claim for relief”).
Welk v. GMAC Mortg., LLC., 850 F. Supp. 2d 976 (D. Minn., 2012) (“At the end of the day, then, most of what Butler offers is smoke and mirrors. Butler’s fundamental claim that his clients’ mortgages are invalid and that the mortgagees cannot foreclose because they do not hold the notes is utterly frivolous.);
Vanderhoof v. Deutsche Bank Nat’l Trust (E.D. Mich., 2013) (internal citations omitted) (“s]ecuritization” does not impact the foreclosure. This Court has previously rejected an attempt to assert a claim based upon the securitization of a mortgage loan. Further, MERS acts as nominee for both the originating lender and its successors and assigns. Therefore, the mortgage and note are not split when the note is sold.”);
Chan Tang v. Bank of America, N.A. (C.D. Cal., 2012) (internal citations omitted) (“Plaintiffs’ contention that the securitization of their mortgage somehow affects Defendants’ rights to foreclose is likewise meritless. Plaintiffs have identified no authority supporting their position that securitization voids the power of sale contained in a deed of trust. Other courts have dismissed similar arguments. Thus, the claim that Defendants lack the authority to foreclose because the Tangs’ mortgage was pooled into a security instrument is Dismissed With Prejudice.);
Wells v. BAC Home Loans Servicing, L.P., 2011 WL 2163987, *2 (W.D. Tex. Apr. 26, 2011) (This claim—colloquially called the “show-me-the-note” theory— began circulating in courts across the country in 2009. Advocates of this theory believe that only the holder of the original wet-ink signature note has the lawful power to initiate a non-judicial foreclosure. The courts, however, have roundly rejected this theory and dismissed the claims, because foreclosure statutes simply do not require possession or production of the original note. The “show me the note” theory fares no better under Texas law.);
Maynard v. Wells Fargo Bank, N.A. (S.D. Cal., 2013) (“Plaintiffs also allege that they conducted a Securitization Audit of Plaintiffs’ chain of title and Wachovia’s PSA, and as a result, determined that Plaintiffs’ Note and DOT were not properly conveyed into the Wells Fargo Trust on or before July 29, 2004, the closing date listed in the Trust Agreement. (Id. at ¶ 34.)… To the extent Plaintiffs challenge the validity of the securitization of the Loan because Wells Fargo and U.S. Bank failed to comply with the terms of the PSA or the Trust Agreement, Plaintiffs are not investors of the Loan, nor are Plaintiffs parties to the PSA or Trust Agreement. Therefore, as many courts have already held, Plaintiffs lack standing to challenge the validity of the securitization of the Loan…Furthermore, although Plaintiffs contend they have standing to challenge the validity of the Assignment because they were parties to the DOT with the original lender (Wells Fargo), this argument also fails. (Doc. No. 49 at 11-12.);
Jenkins v. JP Morgan Chase Bank, N.A., 216 Cal. App. 4th 497, 511-13, 156 Cal. Rptr. 3d 912 (Cal. Ct. App. 2013) (“[E]ven if any subsequent transfers of the promissory note were invalid, [the borrower] is not the victim of such invalid transfers because her obligations under the note remained unchanged.”). As stated above, these exact arguments have been dismissed by countless other courts in this circuit. Accordingly, Plaintiffs’ contentions that the Assignment is void due to a failure in the securitization process fails.”);
Demilio v. Citizens Home Loans, Inc. (M.D. Ga., 2013) (“Frankly, the Court is astonished by Plaintiff’s audacity… Plaintiff requires the Court to scour a poorly-copied, 45-page “Certified Forensic Loan Audit” in an attempt to discern the basic facts of his case. This alone would be sufficient for dismissal. However, the Court is equally concerned by Plaintiff’s attempt to incorporate such an “audit,” which is more than likely the product of “charlatans who prey upon people in economically dire situation,”… As one bankruptcy judge bluntly explained, “[the Court] is quite confident there is no such thing as a ‘Certified Forensic Loan Audit’ or a ‘certified forensic auditor…. The Court will not, in good conscience, consider any facts recited by such a questionable authority.”);
Leong v. JPMorgan Chase (D. Nev., 2013) (“Plaintiff insists that Defendant failed to provide the original note. The only possibly relevant Nevada statute requiring the presentation of the original note or a certified copy is at a Foreclosure Mediation. Nev. Rev. Stat. § 107.086(4). Moreover, the Court treats copies the same as originals: “a duplicate is admissible to the same extent as an original.” Nev. Rev. Stat. § 52.245. Defendants correctly point out that Plaintiff fails to cite to any authority that requires Defendants to produce the original Note, and Defendants additionally provide non-binding legal authority to the contrary. As such, this cause of action is dismissed with prejudice.’);
Rivac v. NDEX W. LLC (N.D. Cal., 2013) (This court is persuaded by the “majority position” of courts within this district, which is that Glaski is unpersuasive, and that “plaintiffs lack standing to challenge noncompliance with a PSA in securitization unless they are parties to the PSA or third party beneficiaries of the PSA.” Shkolnikov v. JPMorgan Chase Bank, 2012 WL 6553988 at *13 (N.D. Cal. Dec. 14, 2012);
see also, e.g., Zapata v. Wells Fargo Bank, N.A., 2013 WL 6491377 at *2 (N.D. Cal. Dec. 10, 2013); Apostol v. CitiMortgage, Inc., 2013 WL 6328256 at *7 (N.D. Cal. Nov. 21, 2013); Dahnken v. Wells Fargo Bank, N.A., 2013 WL 5979356 at *2 (N.D. Cal. Nov. 8, 2013);
Almutarreb v. Bank of New York Trust Co., N.A., 2012 WL 4371410 at *2 (N.D. Cal. Sept. 24, 2012);
Rivac v. NDEX W. LLC (N.D. Cal., 2013) (District courts have consistently found that conclusory allegations of robo-signing are insufficient to state a claim, absent some factual support. See Baldoza v. Bank of America, N.A., 2013 WL 978268 at *13 (N.D. Cal. Mar. 12, 2013);
see also Chan Tang v. Bank of America, N.A., 2012 WL 960373 at *10-11 (C.D. Cal. March 19, 2012);
Sohal v. Fed. Home Loan Mortg. Corp., 2011 WL 3842195 at *5 (N.D. Cal. Aug. 30, 2011);
Chua v. IB Property Holdings, LLC, 2011 WL 3322884 at *2 (C.D. Cal. Aug. 1, 2011))…Further, where a plaintiff alleges that a document is void due to robo-signing, yet does not contest the validity of the underlying debt, and is not a party to the assignment, the plaintiff does not have standing to contest the alleged fraudulent transfer.
See Elliott v. Mortgage Electronic Registration Systems, Inc., 2013 WL 1820904 at *2 (N.D. Cal. Apr. 30, 2013);
Javaheri v. JPMorgan Chase Bank N.A., 2012 WL 3426278 at *6 (C.D. Cal. Aug. 13, 2012). (Plaintiffs here do not dispute that they defaulted on the loan payments, and the robo-signing allegations are without effect on the validity of the foreclosure process);
Deutsche Bank Nat’l Trust Co. v. Tibbs, 2014 WL 280365, at *5 (M.D. Tenn. Jan. 24, 2014) (“[a] Deed of Trust need not be separately assigned so that the holder may enforce the note; as goes the note, so goes the Deed of Trust.’”)
You Can Win Colossal Damage Awards in a Jury Trial by Proving the Lender Injured you at the Inception of the Loan
The Linza v PHH case shows the good
sense of MORTGAGE ATTACK (http://mortgageattack.com) as a methodology for dealing with foreclosure. It shows how to win $16 million if the mortgagee cheats you in the loan modification process.
In a nutshell, mortgage company PHH agreed to a loan modification to reduce Phillip Linza’s payments about $500, then jacked the payments higher than before, then demanded over $7000, and then refused to accept payments, and THEN foreclosed. Linza hired a lawyer, sued, and after 3-years of legal combat the jury awarded $16 million to Linza because of egregious lender behavior including credit rating damage.
If a lender/servicer has jilted YOU in a loan mod, you might see something familiar in this scenario. If so, you should do what Linza did: SUE.
This does not exactly constitute a Loan Mod Lottery, but it might as well because so few mortgagors sue the lender for cheating them in the loan mod. You can easily see why. In a lottery you pay a dollar for a ticket and have a slim chance of winning. In a loan mod lawsuit, you must find an attorney willing to take the case on contingency, or have enough money to pay for a 3-year litigation, but you have a HUGE chance of winning IF your lawyer has sufficient skill and perseverance.
I see a major problems with Loan Modifications. To begin with the interest rate goes sky high in 5 years and you have a balloon you can never pay off. Most loan mod agreements require the borrower to agree to an indemnity clause which waives the right to sue for prior injuries in the loan. I see THAT as INSANE because lenders and their agents have injured 90% of all single family home mortgagors in the past 12 to 15 years.
If you need help unraveling the weirdness of your mortgage and loan mod, and finding the causes of action underlying either, visit http://mortgageattack.com to learn the basics, and then call me for a discussion. I don’t practice law or give legal advice, but you might appreciate my business perspectives.
Yuba jury awards homeowner $16 million in mortgage case
It started out as a simple loan modification for a troubled homeowner. It turned into a $16.2 million jury verdict against a nationwide loan-servicing company.
A Yuba Superior Court jury this week awarded $16.2 million in damages to a homeowner who nearly lost his home to foreclosure after the loan servicer botched his mortgage modification, the homeowner’s lawyers said Friday.
Phillip Linza, a homeowner in Plumas Lake, was awarded the damages after a three-year battle against PHH Mortgage Services, a loan servicer based in Mount Laurel, N.J.
Linza’s attorneys, Andre Chernay and Jon Oldenburg of the United Law Center in Roseville, said the award included $514,000 in compensatory damages and $15.7 million in punitive damages.
Whether or not a person can afford an attorney, it makes good sense to know the law, rules, regulations related to the case, and to know how and where to find case law. OBVIOUSLY, you should go to a law library or consult an attorney if you can find a competent one willing to fight for you and with some kind of proven track record.
It also makes sense to have a subscription to prepaid legal service like Legal Shield so you can talk to a lawyer inexpensively about your rights and options.
Unfortunately I have learned better than to trust an attorney to develop a sound strategy or to manage a case efficiently or to advocate my cause aggressively. In the end YOU are responsible for winning or losing your case, and YOU suffer (the lawyer doesn’t) if you lose your case. So, you need to keep your “thumb on the pulse” of the case at all times, to keep the lawyer “honest” so to speak, particularly if you have had the sad misfortune of hiring a foreclosure pretender defender (don’t make me name names).
In order to remain aware and capable, you need to learn the law and become disposed to using it. And you should learn about litigation practice – rules of procedure and evidence. I have collected some links to federal and Florida laws, and legal research sites. Enjoy.
Equity skimming on HUD property or VA loan property a Federal Crime – 12 USC 1709-2
12 USC 1709-2
Whoever, with intent to defraud, willfully engages in a pattern or practice of—
(1)purchasing one- to four-family dwellings (including condominiums and cooperatives) which are subject to a loan in default at time of purchase or in default within one year subsequent to the purchase and the loan is secured by a mortgage or deed of trust insured or held by the Secretary of Housing and Urban Development or guaranteed by the Department of Veterans Affairs, or the loan is made by the Department of Veterans Affairs,
(2)failing to make payments under the mortgage or deed of trust as the payments become due, regardless of whether the purchaser is obligated on the loan, and
(3)applying or authorizing the application of rents from such dwellings for his own use,
shall be fined not more than $250,000 or imprisoned not more than 5 years, or both. This section shall apply to a purchaser of such a dwelling, or a beneficial owner under any business organization or trust purchasing such dwelling, or to an officer, director, or agent of any such purchaser. Nothing in this section shall apply to the purchaser of only one such dwelling.