90% Foreclosures Wrongful
A wrongful foreclosure action typically occurs when the lender starts a non judicial foreclosure action when it simply has no legal cause. This is even more evident now since California passed the Foreclosure prevention act of 2008 SB 1194 codified in Civil code 2923.5 and 2923.6. In 2009 it is this attorneys opinion that 90% of all foreclosures are wrongful in that the lender does not comply (just look at the declaration page on the notice of default). The lenders most notably Indymac, Countrywide, and Wells Fargo have taken a calculated risk. To comply would cost hundreds of millions in staff, paperwork, and workouts that they don’t deem to be in their best interest. The workout is not in there best interest because our tax dollars are guaranteeing the Banks that are To Big to Fail’s debt. If they don’t foreclose and if they work it out the loss is on them. There is no incentive to modify loan for the benefit of the consumer.
Sooooo they proceed to foreclosure without the mandated contacts with the borrower. Oh and yes contact is made by a computer or some outsourcing contact agent based in India. But compliance with 2923.5 is not done. The Borrower is never told that he or she have the right to a meeting within 14 days of the contact. They do not get offers to avoid foreclosure there are typically two offers short sale or a probationary mod that will be declined upon the 90th day.
Wrongful foreclosure actions are also brought when the service providers accept partial payments after initiation of the wrongful foreclosure process, and then continue on with the foreclosure process. These predatory lending strategies, as well as other forms of misleading homeowners, are illegal.
The borrower is the one that files a wrongful disclosure action with the court against the service provider, the holder of the note and if it is a non-judicial foreclosure, against the trustee complaining that there was an illegal, fraudulent or willfully oppressive sale of property under a power of sale contained in a mortgage or deed or court judicial proceeding. The borrower can also allege emotional distress and ask for punitive damages in a wrongful foreclosure action.
Causes of Action
Wrongful foreclosure actions may allege that the amount stated in the notice of default as due and owing is incorrect because of the following reasons:
* Incorrect interest rate adjustment
* Incorrect tax impound accounts
* Misapplied payments
* Forbearance agreement which was not adhered to by the servicer
* Unnecessary forced place insurance,
* Improper accounting for a confirmed chapter 11 or chapter 13 bankruptcy plan.
* Breach of contract
* Intentional infliction of emotional distress
* Negligent infliction of emotional distress
* Unfair Business Practices
* Quiet title
* Wrongful foreclosure
* Tortuous violation of 2924 2923.5 and 2923.5 and 2932.5
Injunction
* Incorrect tax impound accounts
* Misapplied payments
* Forbearance agreement which was not adhered to by the servicer
* Unnecessary forced place insurance,
* Improper accounting for a confirmed chapter 11 or chapter 13 bankruptcy plan.
* Breach of contract
* Intentional infliction of emotional distress
* Negligent infliction of emotional distress
* Unfair Business Practices
* Quiet title
* Wrongful foreclosure
* Tortuous violation of 2924 2923.5 and 2923.5 and 2932.5
Injunction
Any time prior to the foreclosure sale, a borrower can apply for an injunction with the intent of stopping the foreclosure sale until issues in the lawsuit are resolved. The wrongful foreclosure lawsuit can take anywhere from ten to twenty-four months. Generally, an injunction will only be issued by the court if the court determines that: (1) the borrower is entitled to the injunction; and (2) that if the injunction is not granted, the borrower will be subject to irreparable harm.
Damages Available to Borrower
Damages available to a borrower in a wrongful foreclosure action include: compensation for the detriment caused, which are measured by the value of the property, emotional distress and punitive damages if there is evidence that the servicer or trustee committed fraud, oppression or malice in its wrongful conduct. If the borrower’s allegations are true and correct and the borrower wins the lawsuit, the servicer will have to undue or cancel the foreclosure sale, and pay the borrower’s legal bills.
Why Do Wrongful Foreclosures Occur?
Wrongful foreclosure cases occur usually because of a miscommunication between the lender and the borrower. Most borrower don’t know who the real lender is. Servicing has changed on average three times. And with the advent of MERS Mortgage Electronic Registration Systems the “investor lender” hundreds of times since the origination. And now they then have to contact the borrower. The don’t even know who the lender truly is. The laws that are now in place never contemplated the virtualization of the lending market. The present laws are inadequate to the challenge.
Wrongful foreclosure cases occur usually because of a miscommunication between the lender and the borrower. Most borrower don’t know who the real lender is. Servicing has changed on average three times. And with the advent of MERS Mortgage Electronic Registration Systems the “investor lender” hundreds of times since the origination. And now they then have to contact the borrower. The don’t even know who the lender truly is. The laws that are now in place never contemplated the virtualization of the lending market. The present laws are inadequate to the challenge.
This is even more evident now since California passed the Foreclosure prevention act of 2008 SB 1194 codified in Civil code 2923.5 and 2923.6. In 2009 it is this attorneys opinion that 90% of all foreclosures are wrongful in that the lender does not comply (just look at the declaration page on the notice of default). The lenders most notably Indymac, Countrywide, and Wells Fargo have taken a calculated risk. To comply would cost hundreds of millions in staff, paperwork, and workouts that they don’t deem to be in their best interest. The workout is not in there best interest because our tax dollars are guaranteeing the Banks that are To Big to Fail’s debt. If they don’t foreclose and if they work it out the loss is on them. There is no incentive to modify loan for the benefit of the consumer.This could be as a result of an incorrectly applied payment, an error in interest charges and completely inaccurate information communicated between the lender and borrower. Some borrowers make the situation worse by ignoring their monthly statements and not promptly responding in writing to the lender’s communications. Many borrowers just assume that the lender will correct any inaccuracies or errors. Any one of these actions can quickly turn into a foreclosure action. Once an action is instituted, then the borrower will have to prove that it is wrongful or unwarranted. This is done by the borrower filing a wrongful foreclosure action. Costs are expensive and the action can take time to litigate.
Impact
The wrongful foreclosure will appear on the borrower’s credit report as a foreclosure, thereby ruining the borrower’s credit rating. Inaccurate delinquencies may also accompany the foreclosure on the credit report. After the foreclosure is found to be wrongful, the borrower must then petition to get the delinquencies and foreclosure off the credit report. This can take a long time and is emotionally distressing.
Impact
The wrongful foreclosure will appear on the borrower’s credit report as a foreclosure, thereby ruining the borrower’s credit rating. Inaccurate delinquencies may also accompany the foreclosure on the credit report. After the foreclosure is found to be wrongful, the borrower must then petition to get the delinquencies and foreclosure off the credit report. This can take a long time and is emotionally distressing.
Wrongful foreclosure may also lead to the borrower losing their home and other assets if the borrower does not act quickly. This can have a devastating affect on a family that has been displaced out of their home. However, once the borrower’s wrongful foreclosure action is successful in court, the borrower may be entitled to compensation for their attorney fees, court costs, pain, suffering and emotional distress caused by the action.
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* Date : January 1, 2010
* Tags: 2923.5, 2923.5 2923.6 2924 2932.5 Audit bankruptcy california California cram down Chapter 13 civil code 2923.5 civil code 2924 Countrywide Cram down Cramdown criminal acts eviction FCRA FDCPA Federal Jurisdi, 2923.6, 2924, 2932.5, civil code 2924, Countrywide, Foreclosure, Fraud, stop foreclosure
* Categories : 2923.5, 2923.6, 2924, Foreclosure, Lender Class action
* Tags: 2923.5, 2923.5 2923.6 2924 2932.5 Audit bankruptcy california California cram down Chapter 13 civil code 2923.5 civil code 2924 Countrywide Cram down Cramdown criminal acts eviction FCRA FDCPA Federal Jurisdi, 2923.6, 2924, 2932.5, civil code 2924, Countrywide, Foreclosure, Fraud, stop foreclosure
* Categories : 2923.5, 2923.6, 2924, Foreclosure, Lender Class action
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I am in a similar scenario and further down the road. I have a hearing coming up and need to describe my situation to someone for legal counsel. Can I talk to you some time this week?
The sale process must closely adhere to the procedure set forth in Civil Code §§ 2924 et sea.; “The statutory requirements must be strictly complied with, and a trustee’s sale based on a statutorily deficient notice of default is invalid.” (Miller v. Cote, supra. 127 Cal.App.3d 888, 894.) A trustee is liable to the trustor for damages sustained from an “illegal, fraudulent or willfully oppressive” foreclosure sale. Munaer v. Moore, supra, 11 Cal.App.3d 1, 7.] Normally, the trustor will attempt to stop or vacate a foreclosure sale based on an invalid notice of default. (See Chapter III B 5 a, “Defective Notice of Default”, infra.) However, an action for damages may be the only avenue of redress if the property has been sold to a bona fide purchaser.
a. Liability for Deficient Notice
Although no case has held a trustee liable for damages for a deficient notice of default, a variety of theories depending on the nature of the trustee’s failings would support causes of action for damages. In any event, the trustor will likely have to show prejudice or an impairment of rights as a result of the deficiency in the notice of default. (See U.S. Hertz. Inc. v. Niobrara Farms (1974) 41 Cal.App.3d 68, 86; 116 Cal.Rptr. 44.) If the appropriate nexus between the notice and the loss is established, the trustor may be able to show that (1) the trustee intentionally failed to perform, or was negligent in performing, its duties under the trust deed and statute; (2) the trustee engaged in negligent or intentional misrepresentation in setting forth the information contained in the notice of default; (3) the trustee breached the covenant of good faith and fair dealing which is implied in a trust deed (see Schoolcraft v. Ross (1978) 81 Cal.App.3d 75; 1146 Cal.Rptr. 57); and (4) the trustee may have the duty as agent of the trustor to inquire of the beneficiary to verify the accuracy of the information contained in the notice of default and the trustor’s entitlement to a Spanish translation (but see Civ. Code § 2924c(b)(1) providing that the trustee has no liability for failing to give a Spanish language explanation of the right of reinstatement unless Spanish is specified on a lien contract or unless the trustee has actual knowledge that the obligation was negotiated principally in Spanish).
b. Liability for Deficient Sale
If the property is sold without compliance with notice requirements the trustee may be liable for damages. The trustor must first establish that any damages were sustained. Since a sale held without proper notice may be void, the trustor may suffer no damages because no sale was actually effected. (Scott v. Security Title Ins. & Guar. Co.. supra. 9 Cal.2d 606, 613-14, 72 P.2d 143.) However, the trustor may be precluded from attacking the sale and recovering the property from the purchaser if the sale was made to a bona fide purchaser for value and without notice and the trustee’s deed recites that all notice requirements were met. (See Chapter III F, “The Status of Bona Fide Purchaser or Encumbrancer’1, section 4, at p. 111-32; F, at p. 111-40, infra.) As a result, the trustor will have incurred damage.
The trustee will be liable to the trustor for damages resulting from the trustee’s bad faith, fraud or deceit (Scott v. Security Title Ins. & Guar. Co., supra, 9 Cal.2d 606, 611.) In Scott, the trustee failed to post notice of the sale and then sold the property in satisfaction of the debt. The sale was set aside because of the improper notice, and the trustee thereafter properly sold the property but only for a nominal sum insufficient to pay the debt. The beneficiary obtained the deficiency from a former owner who had assumed the debt and who in turn sued the trustee for breach of contract and agency. The Supreme Court held that the only valid sale was regularly conducted, and that the trustee had no liability for breach of contract or agency for mistakenly performing the first sale which was declared a nullity. (9 Cal.2d at 612-14.) The court indicated that the only liability might be for negligence but that the plaintiff could not recover since that theory had not been alleged. (9 Cal.2d at 614.)
Munger indicates that a trustee can be held liable for its negligence in the conduct of an illegal sale. [See supra, 11 Cal.App.3d at 7 citing Civ. Code § 1708; Dillon v. Legg (1968) 68 Cal.2d 728; 69 Cal.Rptr. 72; Davenport v. Vaughn (1927) 137 S.E. 714, 716 (the trustee is "charged with the duty of fidelity, as well as impartiality; of good faith and every requisite degree of diligence; of making due advertisement; and giving due notice . . . . If, through haste, imprudence, or want of diligence, his conduct was such as to advance the interest of one person to the injury of another, he became personally liable to the injured party").]
c. Beneficiary’s Liability For Trusteefs Misconduct
The trustee is the common agent of the parties, and, as a result, a party to whom the trustee owes a duty to conduct a fair and open sale may impute a breach of that duty to the beneficiary. (Bank of Seoul & Trust Co. v. Marcione, supra, 198 Cal.App.3d 113, 120.)
We bought a house in Idaho July 2006. Both mortgages were owned by Aegis Wholesale Corp. who went bankrupt within a year. Our first mortgage then went to Auroral Loan Servicing (the investor is a Lehman Brothers trust) with in a month of purchasing the home. The second went to Homecomings, GMAC, Bank of America, then Greentree Servicing (a BAC servicer). According to our credit report ALL of these mortgage accounts were opened and active July 2006, even before the loans were transferred. My husband had to leave the state Jan 2008 to find work to support us and pay the mortgage. The children and I followed him in May 2008. We paid both mortgages and insurance for the entire year of 2008. We stopped paying Jan 09 because we couldn’t sell the house. We had a short sale for 72,000 less than the purchased price. They gave us the run around for 7 months, constantly calling my husband and asking him the same questions about why we aren’t paying, is the house empty, and so on. Then they denied the short sale because they said they had been trying to contact my husband and since he didn’t return their calls they denied the short sale. Now we have a short sale for 110,000 less than original price but are stuck battling with a quiet title issue because on the deed it lists our house in the wrong city and county. We hired a lawyer because the plaintiff was listed as Aegis, who is bankrupt and sold our primary mortgage to Aurora in 2006, and the wording on the paperwork for quiet title also claimed my husband owed Aegis, not Aurora, for the 1st mortgage as well as the second. Had we not responded and left the paperwork sit on the table for 20 days we would have got a default judgement to fix the error in the paperwork as well as a judgement stating we owed 250,000 to Aegis. Meanwhile I can only imagine the charges they are going to come after us for as far as late fees, insurance, attorney’s fee, and so on. We had also looked into a forbearance which raised the monthly payments and had a 8,000 balloon payment due the fifth month, only they could tell me what would happen if we couldn’t pay the balloon payment in full, they just said “oh, there are lots of options” followed by “I can’t tell you what options will be available until you send in the initial payment”. Needless to say we didn’t fall for that one.
Any advice?
I had explained my situation… – I was complying to a short sale. Had all documents signed – Authorization; R.E. contract, etc.; – working with a short sale person employed by Wells Fargo all within documents submitted by the deadline they gave me, October 29.2010.
Is there anything else I can do?