From: Charles Cox [mailto:charles@bayliving.com]
Sent: Friday, March 29, 2013 11:41 AM
To: Charles Cox
Subject: Results of some legal research for an appellate case I’m working on – California case law Headnotes

Those of you getting hit with the standard BS about CCP 2924 being a “comprehensive statutory scheme” might find this quote interesting and useful in your litigations:

“The mere existence of a comprehensive statutory scheme does not necessarily eliminate all further remedies without the consideration of the relevant policy concerns. Indeed, California courts have repeatedly allowed parties to pursue additional remedies for misconduct arising out of a nonjudicial foreclosure sale when not inconsistent with the policies behind the statutes.” Pfeifer v. Countrywide Home Loans, Inc., 211 Cal. App. 4th 1250 (Cal. App. 1st Dist. 2012)

And

“The rights and powers of trustees in nonjudicial foreclosure proceedings have long been regarded as strictly limited and defined by the contract of the parties and the statutes. The fact that a borrower is in arrears does not allow the trustee to circumvent the conditions precedent to foreclosure. Indeed, the conditions precedent in the deed of trust that govern the accrual of the trustee’s latent power to foreclose do not become relevant until the borrower has first breached the deed of trust in some way. Therefore, prohibiting the borrower who has breached from bringing an action to enforce the conditions precedent in a deed of trust would nullify such conditions. The mere fact of the borrower’s breach alone would become, de facto, the only condition precedent to foreclosure. Lenders require deeds of trust precisely because they contemplate the possibility of non-payment, and the deed of trust is a contract in which the parties have agreed that material breach of the note by nonpayment will not deprive borrowers of their rights to enforce conditions precedent.” Pfeifer, Id.

And

“A full tender must be made to set aside a foreclosure sale, based on equitable principles. Courts, however, have not required tender when the lender has not yet foreclosed and has allegedly violated laws related to avoiding the necessity for a foreclosure.” Pfeifer, Id.

“Courts have recognized various exceptions to the tender rule, including an exception based on an allegation that a foreclosure sale is void.” Pfeifer, Id.

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Saturday, March 30, 2013 9:32 AM
To: Charles Cox
Subject: Cal.App.4th – Partial Loss to BAC

Judgment dismissing plaintiff’s complaint alleging defendants lacked authority to foreclose on her property is reversed as to the cause of action for wrongful foreclosure, where: 1) judicial notice could not be taken of defendants’ compliance with Civil Code section 2923.5; and 2) plaintiff’s allegations that defendants did not comply with the statute were sufficient to state a cause of action for wrongful foreclosure.

See case attached.

Charles
Charles Wayne Cox
Email: mailto:Charles
Websites: www.BayLiving.com; www.FdnPro.com and www.ForensicLoanAnalyst.com
1969 Camellia Ave.
Medford, OR 97504-5403
(541) 727-2240 direct
(541) 610-1931 eFax

Paralegal; Litigation Support and Expert Witness Services; Forensic Loan Analyst; CA Licensed Real Estate Broker.

Intenganv.BAC Home Loans Serving.docx

Bankruptcy Ruling Allows Homeowners to Keep their Home

In a recent earth-shattering decision by the United States Court of Appeals for the 11th Circuit, which includes Georgia and Florida, the Circuit Court ruled on May 11, 2012 that it is possible for a Chapter 7 Debtor to strip off a second mortgage on their home pursuant to the Bankruptcy Code. Prior to this decision, a Debtor was only allowed to strip off a second mortgage in a Chapter 13 filing.

To more fully explain the significance of this ruling, I must first give you some background on what it means to strip off a mortgage and the difference between a Chapter 7 and a Chapter 13 filing. Prior to this decision, a Debtor was only allowed to strip off a second mortgage in a Chapter 13 case. In order to strip off a second mortgage, the Debtor is required to show that the value of the house on her primary home is less than the value of the first mortgage. In the case where the first mortgage exceeds the value of the property, the second mortgage is thereby rendered totally unsecured. Traditionally, in a Chapter 13, if the Debtors desired to keep their home, they would be able to make payments of the first mortgage and stop making payments on the second as the second was totally unsecured and would be treated like other unsecured creditors such as a credit card. Upon completion of a Debtor’s Chapter 13 payments over a period from anywhere from 36 to 60 months, the Discharge would render the second mortgage removed as a lien of record, the Debtor would be relieved from that obligation, and the bank would be left to filing a Proof of Claim and receiving its pro rata share of distribution to unsecured creditors.

The reason Debtors were not allowed to strip down a second mortgage in a Chapter 7 case, was based upon the United States Supreme Court’s decision in Dewsnup v. Timm, 112 S.Ct. 773 (1992), in which the Supreme Court ruled that a Chapter 7 Debtor could not “strip down” a partially secured lien under the Bankruptcy Code. However, in a decision prior to the Supreme Court’s decision, the 11th Circuit ruled in Felendore v. United States Small Business Administration, 862 F 2d. 1537 (11th Cir. 1989), that the claim was wholly unsecured, it was avoidable under the Bankruptcy Code. In a very narrow and precise interpretation of the Supreme Court’s decision in Dewsnup, the 11th Circuit Court in its recent decision of In re: Lorraine McNeal, concluded that since the Supreme Court’s decision in Dewsnup did not specifically address the issue where a second mortgage was wholly unsecured, its ruling was not controlling on it and that its decision in Felendore was still the binding law in the 11th Circuit.

The 11th Circuit Court stated “that the reasoning of an intervening high court decision is at odds with that of our prior decision is no basis for a panel to depart from our prior decision. As we have stated, obedience to a Supreme Court decision is one thing, extrapolating from its implications a holding on an issue that was not before that Court in order to have upend settled circuit law is another thing.”

This is a great decision for potential Chapter 7 Debtors in the future, since it will allow them the opportunity to strip off a second mortgage without having to go through the repayment process of anywhere from 36 to 60 months in a Chapter 13. Under a Chapter 7, a Debtor may receive a Discharge in as quickly as four to six months from the date of filing. This will certainly open up additional opportunities for individual to keep their homes and force second mortgage holders to be more creative in attempting to be paid prior to a bankruptcy filing. This may allow more underwater homeowners to save their homes.

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Tuesday, March 12, 2013 7:53 AM
To: Charles Cox
Subject: Order Re Cross Motion for Summary Judgment – USDC WA

Posted on March 12, 2013 by Neil Garfield

McDonald v OneWest

This case should be read more than once

When I started writing about legal defenses to foreclosures that appeared patently fraudulent to me, I thought it might only take a few months for things to catch on. About the timing I have been consistently wrong. About the substance I have been consistently right.

Here again, the party seeking foreclosure not only failed in its current effort to do so, but was ordered to pay $25,000 within 7 days for forcing the homeowner’s attorney to fight tooth and nail for items that were or should have been at their fingertips, they had no reason to withhold, and should have been anxious to supply if the foreclosure was real.

The only potential error I see in the homeowner’s case is that there appears to be an admission that Indy Mac was indeed the party who was the source of the loan — a fact which is nearly universally presumed and virtually always wrong in today’s foreclosures. Not knowing the actual facts of the case I can only speculate that this was an oversight, but it is possible that it wasn’t an oversight and that Indy Mac did in fact make the loan, booked it as a loan receivable, and then sold it into the secondary market for securitization.

There are several very important issues discussed rationally and without bias in this very well-written decision:

1. Dates DO Matter: If the authorization to sign something is received after the signature is executed it isn’t any good. Lying about it and then fabricating documents to cover up the first lie are grounds for sanctions.
2. Allegations of holder status are no substitute for facts and evidence. The supposed right to request it is not the same as holding, possessing or owning the note. Execution and recording of substitution of trustee, notice of default, notice of sale are all void if the party stated as the holder is not the holder.
3. Ownership counts, which means that in order to submit a credit bid at a foreclosure action, the books and records of all the relevant parties must be open to inspection and review to determine what balance, if any, exists, on the records of the owner of the debt — i.e., the party who would actually lose money if the loan was not paid, and the amount of the principal and accrued interest due, if any, after deductions for all receipts.
4. Agency either exists or it doesn’t. And the paramount element of agency is control by the principal of the agent. There is, however, contractual obligations that come into play here. So if the investment bank received payments to mitigate damages on loans it either did so as agent for the investor or because they were contractually bound to do so as a vendor thus reducing the balance due on the bond. Either way, the balance due is reduced as to that creditor. It might be shifted to the party who paid who in turn might have a right of contribution unless they waived that right (which the insurance companies and CDS counterparts did in fact waive), but either way the new debt is no secured unless there was a purchase of the loan.
5. Rules of Civil Procedure do matter and are “not optional.” If discovery requests, qualified written requests, debt validation letters are sent, answers are expected and due. The fact that the QWR is long does not mean it is invalid.
6. Damages are possible, but you need to plead and prove them and that pretty much goes to whether these parties ever had any right to collect any money or enforce any note or any debt or enforce any mortgage against the homeowner. If the answer is yes, that if they get their act together, they can foreclose, there will likely be no damages. If the answer is no, which more likely than not is the case in current foreclosures, then damages properly pleaded and proven are easily sustained.
7. Discovery is not a toy. The answer or the production is due.
8. Hearsay is inadmissible and the business records exception, as stated by dozens of courts before this one, where the witness or declarant testified for “defendants chose to offer up what can only be described as a “Rule 30(b)(6) declarant” who regurgitated information provided by other sources” then we are taking hearsay and turning it into evidence without any personal knowledge or testing of the truth of the matter asserted.
9. Judges are not stupid. They know a lie when they hear it. But what happens after that depends upon the trial experience and knowledge of the lawyer. Don’t expect the Judge to go into orbit and give you everything just because he found that the other side lied. You still have a case to prove.

McDonald v Onewest Bank.pdf
McDonald ROA.pdf
McDonald v Onewest Bank MSJ.pdf
McDonald v Onewest Bank Cross-MSJ.pdf

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Friday, March 22, 2013 6:13 AM
To: Charles Cox
Subject: The Latest from The UCL Practitioner by Kimberly A. Kralowec

West v JPMorgan Chase Bank, N.A..doc

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Monday, February 25, 2013 5:21 AM
To: Charles Cox
Subject: Re Fraud Exception to Parol Evidence Rule

Lenders beware

Reed Smith LLP
Peter S. Clark, II and Marsha A. Houston
February 18 2013

A new troubling case from California allows borrowers to present evidence of prior oral statements of a lender which contradict the terms of the written agreement between the parties with a standard integration clause. Marsha Houston of our Los Angeles office writes more about the case below.

On January 14 2013, the California Supreme Court overturned a rule that lenders and parties to contracts have long relied upon to prohibit the admission of parol evidence of terms outside the four corners of the agreement. In Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Association, No. S190518, 2013 Cal. LEXIS 253 (Cal. Jan. 14, 2013), Riverisland Cold Storage (and related borrowers and guarantors) defaulted on a loan provided by Fresno-Madera PCA in 2007. On March 26 2007, the parties entered into a written forbearance agreement with a standard integration clause that provided that the lender would forbear from collection efforts until July 1 2007 in exchange for the borrowers’ pledge of eight parcels of additional real estate to secure the loan. Thereafter, the borrowers defaulted under the forbearance agreement and the lender began foreclosure proceedings. Although the borrowers repaid the loan in full and the foreclosure proceedings were dismissed, the borrowers and guarantors filed suit against the lender, seeking damages for fraud and negligent misrepresentation, and including causes of action for rescission and reformation of the forbearance agreement.

Plaintiffs alleged that they met with the lender’s senior vice-president, who represented to them that the lender would forbear from collection for two years and would require the pledge of only two parcels of real estate in connection with the forbearance agreement. Plaintiffs acknowledged that they signed the agreement (and presumably eight separate deeds of trust), and claimed that they did not read it, relying instead upon the representations of the lender’s representative.

The lender successfully moved for summary judgment, alleging that the plaintiffs’ claims were barred by the parol evidence rule from presenting evidence of prior oral agreements which contradicted the terms of the written agreement. Plaintiffs asserted that this was consistent with the 70-year-old decision of the California Supreme Court in Pendergrass, which held that a “fraud exception” to the parol evidence rule could not be asserted to prove a fraudulent oral promise that directly contradicted the written terms of the agreement. Plaintiffs won on appeal when the California Court of Appeals held that the fraud at issue was a misrepresentation of fact, not a fraudulent promise (a distinction recognized in Pendergrass and its progeny).

The California Supreme Court affirmed the Appellate Court and overturned its own decision in Pendergrass, finding that the decision was confusing, difficult to apply and did not account for the principle that fraud undermines the very validity of the parties’ agreement and that when fraud is proven, it cannot be held that the parties had a meeting of the minds.

For decades, lenders have relied upon Pendergrass and integration clauses in agreements to protect them against claims by borrowers of fraudulent misrepresentations by loan officers. Apparently, lenders and contracting parties will no longer be able to rely upon this defense in California. While one cannot prevent a party from asserting fraudulent misrepresentation, and it is not clear exactly what precautions might convince the courts to exclude parol evidence, we recommend: insisting that borrowers and guarantors have counsel review the documents; providing a separate document acknowledging that borrowers and guarantors were represented by counsel and that each of them and counsel have read and understood the terms of the loan documents which are named and providing at least the salient terms of any restructure in the separate document; insisting upon a pre-negotiation agreement; providing sufficient time for the borrowers and guarantors to review the documents; and, stating such in the documents.

Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Assn..docx

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Wednesday, February 27, 2013 4:51 AM
To: Charles Cox
Subject: The Honorable(?) Judge Carolyn Ellsworth has some EXPLAINING to do

The judicial corruption never ceases to amaze.

Judge tosses mortgage ‘robosigning’ case in Vegas

By KEN RITTER, Associated Press

Updated 3:28 pm, Tuesday, February 26, 2013

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Wednesday, February 27, 2013 4:51 AM
To: Charles Cox
Subject: MERS wins again

Sixth Circuit upholds dismissal of putative class action

Squire Sanders
Pierre H. Bergeron
February 20 2013

In Christian County Clerk v. Mortgage Electronic Registration Systems, Inc., the Sixth Circuit upheld dismissal of an action brought by various Kentucky county clerks against the MERS system and a variety of banks that utilized it. The clerks essentially alleged that the defendant banks established MERS to enable its members to avoid recording mortgage assignments and paying the associated recording fees to the country clerks. The district court dismissed the case on 12(b)(6) grounds, and the country clerks appealed.

The first issue addressed by the Court concerned the standing of the county clerks. The defendants insisted that the clerks lacked constitutional standing because the clerks purportedly only have an official, but not a personal, stake in the litigation. The Sixth Circuit, however, found that because the clerks alleged that the defendant’s actions deprived them of fees and interfered with their duties as custodians of property records, they had alleged sufficient injury to pass constitutional muster.

Turning to the merits of the claim, the Court assessed whether the Kentucky statutes upon which the clerks sued afforded them a private right of action. The statutes relied upon by the clerks did not provide any express cause of action, and therefore the clerks invoked a Kentucky negligence per se statute, which can create a private right of action for a violation of certain state statutes. The Sixth Circuit, however, rejected this argument, concluding that the clerks were not within the class of persons the Kentucky legislature intended to protect under the recording statutes. While the recording statutes served multiple purposes, the Sixth Circuit found “no indication that the legislature intended to protect the officers who administer those laws and collect fees.” This case is a blow to county officers who have sought to recoup fees that they claim are lost through the use of the MERS system, and it certainly begs the question of whether states will pursue other statutory efforts to prevent the loss of those revenues.

Kentucky MERS.pdf

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, February 28, 2013 8:09 AM
To: Charles Cox
Subject: OCC News Release: Amendments to Consent Orders Memorialize $9.3 Billion Foreclosure Agreement

Amendment to Consent Orders:

NR 2013-35 FOR IMMEDIATE RELEASE February 28, 2013 Board of Governors of the Federal Reserve System Office of the Comptroller of the Currency Amendments to Consent Orders Memorialize $9.3 Billion Foreclosure Agreement WASHINGTON — The Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board today released amendments to their enforcement actions against 13 mortgage servicers for deficient practices in mortgage loan servicing and foreclosure processing. The amendments require the servicers to provide $9.3 billion in payments and other assistance to borrowers. The amendments memorialize agreements in principle announced in January with Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo. The amount includes $3.6 billion in cash payments and $5.7 billion in other assistance to borrowers such as loan modifications and forgiveness of deficiency judgments. Borrowers covered by the amendments include 4.2 million people whose homes were in any stage of the foreclosure process in 2009 or 2010 and whose mortgages were serviced by one of the companies listed above. These borrowers are expected to be contacted by the Paying Agent—Rust Consulting, Inc.—by the end of March 2013 with payment details. The Paying Agent will send payments and correspondence. Borrowers covered by the amendments are expected to receive compensation ranging from hundreds of dollars up to $125,000. Borrowers are not required to take any additional steps to receive the payments. In addition, borrowers will not be required to execute a waiver of any legal claims they may have against their servicer as a condition for receiving payment. Borrowers can call the Paying Agent at 1-888-952-9105 to update their contact information or to verify that they are covered by the amendments. In providing the $5.7 billion in assistance, the 13 servicers are expected to undertake well-structured loss mitigation efforts focused on foreclosure prevention, with preference given to activities designed to keep borrowers in their homes through affordable, sustainable, and meaningful home preservation actions. Borrowers seeking assistance should work directly with their servicer or a counselor approved by the U.S. Department of Housing and Urban Development (HUD). Borrowers can reach HUD-approved counselors by calling 888-995-HOPE (4673). OCC and Federal Reserve examiners continue to monitor the servicers’ implementation of corrective actions required by the original enforcement actions to address unsafe and unsound mortgage servicing and foreclosure practices. For the 13 servicers, these amendments to the enforcement actions replace the requirements related to the Independent Foreclosure Review. For GMAC Mortgage, Everbank, and OneWest, which did not enter agreements in principle with federal regulators, the Independent Foreclosure Review process continues. Regulators expect the reviews for these servicers to be completed over the course of the coming year. These companies service 457,000 mortgages that were in some stage of foreclosure in 2009 or 2010. Media Contacts Federal Reserve Barbara Hagenbaugh 202-452-2955 OCC Bryan Hubbard 202-649-6870 Related Links Consent Order Amendment for Aurora Bank, FSB (PDF) Consent Order Amendment for Bank of America (PDF) Consent Order Amendment for Citibank (PDF) Consent Order Amendment for HSBC Bank (PDF) Consent Order Amendment for JPMorgan Chase Bank, N.A. (PDF) Consent Order Amendment for MetLife Bank, N.A. (PDF) Consent Order Amendment for PNC Bank, N.A. (PDF) Consent Order Amendment for Sovereign Bank (PDF) Consent Order Amendment for U.S. Bank National Association, U.S. Bank National Association ND (PDF) Consent Order Amendment for Wells Fargo Bank, N.A. (PDF) # # #

The Office of the Comptroller of the Currency (OCC) charters and oversees a nationwide system of national banks and federal savings associations and assures that these banking institutions are safe and sound, competitive, and capable of serving the banking needs of their customers in the best possible manner. OCC press releases and other information are available at http://www.occ.gov. To receive OCC press releases and issuances by e-mail,

No. A134019.

Court of Appeals of California, First District, Division Two.

Filed February 11, 2013.

Law Offices of Vernon Bradley, Vernon Bradley, Attorney for Plaintiff and Appellant.

Law Offices of Sohnen & Kelly, Harvey Sohnen, Patricia M. Kelly, Attorneys for Defendants and Respondents.

CERTIFIED FOR PUBLICATION

RICHMAN, J.

Plaintiff Scott Call Jolley and Washington Mutual Bank (WaMu) entered into a construction loan agreement in 2006, which eventually encountered problems due to alleged failures by WaMu to properly disburse construction funds. As Jolley was continuing to attempt to salvage the transaction, WaMu went into receivership with the Federal Deposit Insurance Corporation (FDIC), and in September 2008 JP Morgan Chase¹ (Chase) bought WaMu’s assets through a purchase and assumption agreement (Agreement or P&A Agreement). Jolley soon stopped making payments on the loan, and in late 2009 Chase took steps to foreclose.

Two days before the scheduled foreclosure sale, Jolley sued Chase and California Reconveyance Company (CRC), the trustee, alleging eight causes of action, including misrepresentation, breach of contract, and negligence. Defendants jointly moved for summary judgment or, in the alternative, summary adjudication, Chase’s position based in large part on the theory that under the P&A Agreement Chase had not assumed the liabilities of WaMu. The Agreement was put before the court only in a request for judicial notice, which Agreement, an expert witness for Jolley declared, was not complete. Without addressing the expert’s testimony, the trial court granted the request for judicial notice and, rejecting all of Jolley’s arguments, granted summary judgment for both defendants.

Jolley appeals, arguing that there are triable issues of material fact relating to the financing debacle, not just limited to the claimed inauthenticity of the Agreement but also as to misconduct by Chase itself. We agree, and we reverse the summary judgment for Chase, concluding that six causes of action must proceed against it, all but the causes of action for declaratory relief and accounting. We affirm the summary judgment for CRC.

BACKGROUND

The Underlying Facts

In January 2006 Jolley entered into a construction loan agreement with WaMu through which he borrowed $2,156,000 to renovate a house to be used as a rental property in Tiburon, a property he had earlier purchased with a loan from WaMu, having put down $330,000 on the $1,650,000 purchase price. After the construction loan agreement was signed, WaMu disbursed the money to pay off its own first mortgage, approximately $1.3 million. Jolley understood that approximately $1 million would be available to cover construction costs for the renovation.

Jolley claims WaMu lost the loan documents, which held up construction financing for approximately eight months. Construction went forward nonetheless, with Jolley incurring at least $100,000 in construction expense. Jolley testified that WaMu made false representations, including that amounts prepaid for construction ($328,308.79) would be reimbursed to him. He further claims there were significant irregularities in the loan disbursements, with the result that WaMu claimed it had disbursed more of the money than he had actually received, which errors caused delays in construction that resulted in financial losses.

Jolley retained an attorney to assist him, and by May 2006 the attorney had written to WaMu to try to straighten out these problems. In August 2006 Jolley retained Jeffrey Thorne, a former WaMu employee, to review implementation of the agreement and to facilitate its modification. Thorne went through the files and concluded that Jolley had not received approximately $350,000 due him under the loan agreement. Thorne wrote a detailed memorandum to WaMu explaining the problems, which memorandum recommended that the loan amount be increased to $2,485,000.

WaMu “eventually agreed to the modification . . .” and on October 5, 2006 WaMu and Jolley executed a loan modification based on an expansion of the original construction project from 2500 square feet to 5000. This was done at WaMu’s insistence, as Jolley was told that increasing the size and scope of the project would qualify him for a higher loan amount. Even at that time, Thorne warned that the loan amount needed to be increased by $400,000 to complete the enlarged project. The modification agreement itself does not specify a new maximum amount to be disbursed, but indicates the new principal amount would be “Variable: new principal amount.” And WaMu “promised that if [Jolley] increased the square footage and scope of the work that [WaMu] would supply the additional funds needed to complete the construction . . . .”

The modified agreement called for completion of construction by July 1, 2007, and required Jolley to make monthly interest and principal payments of $16,181.12 beginning August 1.² Exactly what transpired from October 2006 to September 2008 is somewhat hazy from the record, but construction apparently continued, with Jolley continuing to make interest payments. If we read Chase’s documents correctly, the last disbursement was in June 2008.

On September 25, 2008, WaMu was closed by the Office of Thrift Supervision, and the FDIC was appointed receiver. (U.S. Dept. of the Treasury, Office of Thrift Supervision Order No. 2008-36 (Sep. 25, 2008); 12 U.S.C. § 1821(c).) On the same date, Chase acquired certain assets of WaMu, including all loans and loan commitments. According to Chase, the acquisition was pursuant to the P&A Agreement, which agreement was between the FDIC as receiver and Chase.

Section 2.1 of the Agreement specified the liabilities Chase was assuming: “Subject to Sections 2.5 and 4.8, the Assuming Bank expressly assumes at Book Value (subject to adjustment pursuant to Article VIII) and agrees to pay, perform, and discharge, all of the liabilities of the Failed Bank which are reflected on the Books and Records of the Failed Bank as of Bank Closing, including the Assumed Deposits and all liabilities associated with any and all employee benefit plans, except as listed on the attached Schedule 2.1, and as otherwise provided in this Agreement (such liabilities referred to as `Liabilities Assumed’). Notwithstanding Section 4.8, the Assuming Bank specifically assumes all mortgage servicing rights and obligations of the Failed Bank.” Jolley contends Chase assumed liability for WaMu’s failures in servicing Jolley’s loan as part of its “mortgage servicing . . . obligations.”

Section 2.5 of the Agreement expressly provided, however, that Chase would assume no liabilities associated with borrower claims arising out of WaMu’s lending activities: “Notwithstanding anything to the contrary in this Agreement, any liability associated with borrower claims for payment of or liability associated with borrower claims for payments of or liability to any borrower for monetary relief, or that provide for any other form of relief to any borrower, whether or not such liability is reduced to judgment, liquidated or unliquidated, fixed or contingent, matured or unmatured, disputed or undisputed, legal or equitable, judicial or extra-judicial, secured or unsecured, whether asserted affirmatively or defensively, related in any way to any loan or commitment to lend made by the failed Bank prior to the failure, or to any loan made by a third party in connection with a loan which is or was held by the Failed Bank, or otherwise arising in connection with the Failed Bank’s lending and loan purchase activities are specifically not assumed by the assuming Bank.” As will be seen, this paragraph played a central role in the trial court’s decision granting summary judgment.

According to Jolley’s testimony, “Once Chase had taken over the operations of [WaMu], they continued in the construction loan department with the same people that I had been dealing with when [Wamu] still owned the loan. I had dealt with Mabette Del Rosario, Neil Lampert, and Jed Sonstrom in the legal department . . . . After the takeover by Chase, Mabette Del Rosario continued to run the construction disbursement department. I was led to believe that because Chase had taken over the loan from [Wamu], it was still going to honor the original agreement which said in the addendum Construction/Permanent Loan Part One: `When all conditions prior to rollover are met as described in the construction loan agreement, the loan will rollover to a fully amortized loan.'” Another Chase employee with whom Jolley would come to deal was Andrew North.

In November 2008, shortly after Chase had entered the picture, Jolley made his last monthly payment on the loan, claiming he was forced to default thereafter by WaMu’s breaches and negligence in the funding of the construction loan. The total amount owing on the loan by the time of Jolley’s default, according to Chase’s records, was $2,426,650.00. At the time of Jolley’s default, construction had not been completed, but was allegedly completed sometime between April 2009 and April 2010.

After Chase’s involvement Jolley tried to secure a loan modification, with Thorne continuing to advocate on Jolley’s behalf that he would need an additional $400,000 to complete construction. Thorne and Jolley both told Chase “in great detail” about the prior problems with the loan.

As indicated, the original construction loan contained a rollover provision. Chase claims it was not obligated to honor it because Jolley was in default and construction had not been completed when he went into default, and thus “all conditions prior to rollover” had not been met.

But, Jolley testified, he was encouraged on many occasions by North that, in light of the history of problems with WaMu, there was a “high probability” that Chase “would be able to modify the loan so as to avoid the foreclosure.” North said the “likelihood was good,” that it was “likely” when construction was complete he could roll the construction loan into a fully amortized conventional loan. Jolley further testified that as a result of these representations he was induced to complete construction at a cost of $100,000, borrowing from family and friends to do so. In addition to other damages, Jolley claims the construction delays and “inordinate delay” during the loan modification negotiations prevented him from selling the property before the housing market collapsed.

Ultimately, instead of agreeing to a loan modification, Chase demanded payment of the loan in full.³ On December 29, 2009, CRC, as trustee, recorded a notice of default, and on March 30, 2010, recorded and served a notice of sale.

On April 5, 2010 North sent Jolley an email saying he had requested the Chase foreclosure department to hold off on its planned foreclosure, “which means any future sale dates will be postpone [sic] to give us the opportunity to see if we can modify the collateral property.” Chase refused.

The Proceedings Below

The Complaint

On April 19, 2010, two days before the scheduled foreclosure sale, Jolley filed this lawsuit. It named Chase Home Finance LLC and CRC, and alleged eight causes of action: (1) fraud and deceit—intentional misrepresentation;⁴ (2) fraud and deceit—negligent misrepresentation; (3) breach of contract/promissory estoppel; (4) negligence; (5) violation of Business and Professions Code section 17200 et. seq.; (6) declaratory relief; (7) accounting; and (8) reformation. Though CRC was named as a defendant, no specific wrongdoing was alleged with respect to it.

On April 20, 2010, Jolley obtained a temporary restraining order prohibiting Chase from going forward with the trustee’s sale. And on August 20, 2010, a preliminary injunction was issued, with Jolley putting up a $50,000 bond.

Meanwhile, an answer was filed on behalf of Chase and CRC jointly.

Jolley’s lawsuit rested in part on the theory that Chase was the successor in interest to WaMu and therefore had “stepp[ed] into the shoes” of WaMu and was liable for any misrepresentation, negligence, or breach of contract on its part under California law and under the construction contract he had signed with WaMu. Jolley relied on language in paragraph 13 of his agreement with WaMu that made “the covenants and agreements” binding on “the successors and assigns of [WaMu].” Jolley also relied on Civil Code section 1589, which requires one who takes the benefit of a transaction to also assume its liabilities.⁵

The Motion and the Request for Judicial Notice

On August 25, 2011, Chase⁶ filed a motion for summary judgment or, in the alternative, summary adjudication, fundamentally claiming that it had no liability for borrower claims based on WaMu’s conduct prior to the FDIC receivership. It relied on federal law relating to the powers of the FDIC as receiver and on the terms of the P&A Agreement, specifically that it had acquired only the assets of WaMu in its purchase from the FDIC, not the liabilities. This contention was based on section 2.5 of the Agreement quoted above, which had also been asserted as an affirmative defense in Chase’s answer. The motion was set for hearing on November 15, 2011.

Simultaneously with filing its motion, Chase filed a request for judicial notice that requested “the Court to take judicial notice pursuant to California Evidence Code Sections 450-460” of five facts, the first of which was as follows:

“1. On September 25, 2008, Washington Mutual Bank, _.A. (“WaMu”) was closed by the Office of Thrift Supervision, and the Federal Deposit Insurance Corporation (FDIC) was named Receiver for WaMu pursuant to its authority under the Federal Deposit Insurance Act, 12 U.S.C. § 1821(d). Pursuant to the Purchase and Assumption Agreement between the FDIC as Receiver for WaMu, and Chase, dated September 25, 2008, Chase acquired certain of the assets of WaMu, including all loans and loan commitments of WaMu. A copy of that Purchase and Assumption Agreement is attached hereto as Exhibit A and can be found on the FDIC’s website at http://www.fdic.gov/about/freedom/Washington_Mutual_P_and _ A.pdf.”⁷ The attached copy was 39 pages, including exhibits. No separate points and authorities accompanied Chase’s request for judicial notice.

Jolley’s Opposition

Jolley filed opposition to the motion. He also objected to the request for judicial notice as to the P&A Agreement, and filed points and authorities supporting his position, most fundamentally disputing that the 39-page Agreement was the complete document governing Chase’s purchase of WaMu. Thorne, who at one time worked at the FDIC as an independent contractor, filed a declaration stating he had seen and read a 118-page P&A Agreement for the Chase purchase of WaMu. Thorne claimed the longer document had never been made public and its provision governing assumption of liability was different.

In November 2011, Jolley began trying to secure a copy of the 118-page agreement referred to in Thorne’s declaration. His counsel requested a copy from the FDIC, and also apparently served a subpoena duces tecum seeking production of it. According to Jolley’s counsel, the FDIC refused to produce the document unless all parties to the litigation signed a confidentiality agreement. On November 9, 2011, six days before the motion was to be heard, Jolley requested that counsel for Chase sign a confidentiality agreement. She refused to do so.⁸ On or about November 14, 2011, Jolley filed an ex parte application seeking to continue the motion, to keep discovery open, and to continue the trial date so that further efforts could be made to obtain the longer agreement.⁹

Meanwhile, Chase had filed a reply to Jolley’s opposition, which included 62 objections to Jolley’s evidence, 40 of which objected to particular testimony in Thorne’s declaration or his deposition.

The Ruling on the Motion

Argument on the motion was heard on November 15, most of which focused on Thorne’s declaration, at the conclusion of which the matter was taken under submission. On December 1, the court entered its order granting summary judgment, which order reads in pertinent part as follows:

“The Court affirms its tentative ruling which stated as follows:

“The undisputed evidence establishes that Defendant Chase Home Finance, LLC (Chase) is not liable for the alleged intentional and negligent misrepresentations (causes of action nos. 1 & 2), made to Plaintiff by employees of the Washington Mutual Bank in relation to the Construction Loan issued to Plaintiff, pursuant to the Purchase and Assumption Agreement through which Chase acquired Washington Mutual from the FDIC on September 25, 2008.

“Under that Agreement, Chase expressly did not assume liability for borrower’s claims `related in any way to any loan or commitment to lend made by the Failed Bank prior to failure, . . .’ or `otherwise arising in connection with [WaMu’s] lending or loan purchase activities . . . .’ (Request to Take Judicial Notice, Ex. 1, P&A Agreement ¶ 2.5) [¶] . . . [¶]

“The third cause of action for Breach of Contract/Promissory Estoppel also fails, as the undisputed evidence shows that Defendants never promised to modify the Washington Mutual Construction, or to issue Plaintiff any additional funds to complete the Project. No enforceable promise or loan modification agreement was created by Chase’s conduct.

“Chase’s employee Mr. North’s representations to Plaintiff that approval of his loan modification application was “likely”, “highly probable”, and “looks good”, are all opinions of Mr. North, which do not create a binding commitment to modify a loan, nor do they represent the fact that the loan has been approved.

“These hopes or expectations expressed by North do not constitute either: a clear and unambiguous promise to approve the application; nor do they evidence any terms to create an enforceable contract. (See Laks v. Coast Fed. Sav. & Loan Assn. (1976) 60 Cal.App.3d 885, 891, 893 [agreement to make construction loan was expressly conditional, and lacked essential terms of the loan, and could not support a cause of action for promissory estoppel].)

“Also, there is no evidence to suggest that Mr. North had authority to approve a loan modification either by himself, or with the consent of others.

“A borrower’s `understanding or expectation that the Bank would extend a loan is not sufficient to establish an agreement to make a loan. [Citation.]’ (Conrad v. Bank of America (1996) 48 Cal.App.4th 133, 156.) `To be enforceable, a promise must be definite enough that a court can determine the scope of the duty and the limits of performance must be sufficiently defined to provide a rational basis for the assessment of damages. [Citations.]’ (Ladas v. California State Auto. Assn. (1993) 19 Cal.App.4th 761, 770.) `When the evidence clearly shows that the only (and the complete) subject matter that is under consideration is left for further negotiation and agreement, there is no contract, not for vagueness or indefiniteness of terms but for lack of any terms. [Citation.]’ (Kruse v. Bank of America (1988) 202 Cal.App.3d 38, 59.)

“The motion is granted on the fourth cause of action for Negligence.”

`Under California law, a lender does not owe a borrower or third party any duties beyond those expressed in the loan agreement, except those imposed due to special circumstance.’ (Sipe v. Countrywide Bank (E.D.Cal. 2010) 690 F.Supp.2d 1141, 1153, citing Nymark v. Heart Fed. Savings & Loan Assn., (1991) 231 Cal.App.3d 1089, 1096.) . . . .

“The undisputed evidence shows that Chase and Plaintiff engaged in the typical lender/borrower relationship. Plaintiff has not presented evidence of special circumstances on which to impose a general duty of due care. (See Sipe v. Countrywide Bank (E.D.Cal. 2010) 690 F.Supp.2d 1141, 1153.)

“Moreover, the complaint does not allege, and there is no evidence to establish, that Chase committed a negligent act after acquiring Plaintiff’s loan.”

Then, after disposing of the other four causes of action, the order concludes with this: “Defendants’ Request to Take Judicial Notice is granted. (Evid. Code § 452(c)(d)).”

No ruling was made on any of the evidentiary objections.

Judgment was thereafter entered accordingly, from which Jolley filed a timely notice of appeal.

DISCUSSION

1. Summary Judgment Law and the Standard of Review

We collected and confirmed the applicable law in Nazir v. United Airlines, Inc. (2009)178 Cal.App.4th 243, 253-254:

“Code of Civil Procedure section 437c, subdivision (c) provides that summary judgment is properly granted when there is no triable issue of material fact and the moving party is entitled to judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).) As applicable here, moving defendants can meet their burden by demonstrating that `a cause of action has no merit,’ which they can do by showing that `[o]ne or more elements of the cause of action cannot be separately established.’ (§ 437c, subd. (o)(1); see also Romano v. Rockwell Internat., Inc. (1996) 14 Cal.4th 479, 486-487.) Once defendants meet this burden, the burden shifts to plaintiff to show the existence of a triable issue of material fact. (§ 437c, subd. (p)(2).)

“On appeal `[w]e review a grant of summary judgment de novo; we must decide independently whether the facts not subject to triable dispute warrant judgment for the moving party as a matter of law. [Citations.]’ (Intel Corp. v. Hamidi (2003) 30 Cal.4th 1342, 1348.) Put another way, we exercise our independent judgment, and decide whether undisputed facts have been established that negate plaintiff’s claims. (Romano v. Rockwell Internat., Inc., supra, 14 Cal.4th at p. 487.) As we put it in Fisherman’s Wharf Bay Cruise Corp. v. Superior Court (2003) 114 Cal.App.4th 309, 320: `[W]e exercise an independent review to determine if the defendant moving for summary judgment met its burden of establishing a complete defense or of negating each of the plaintiff’s theories and establishing that the action was without merit.’ (Accord, Certain Underwriters at Lloyd’s of London v. Superior Court (2001) 24 Cal.4th 945, 972.)

“But other principles guide us as well, including that `[w]e accept as true the facts . . . in the evidence of the party opposing summary judgment and the reasonable inferences that can be drawn from them.’ (Morgan v. Regents of University of California (2000) 88 Cal.App.4th 52, 67.) And we must `”view the evidence in the light most favorable to plaintiff[] as the losing part[y]” and “liberally construe plaintiff[‘s] evidentiary submissions and strictly scrutinize defendant[‘s] own evidence, in order to resolve any evidentiary doubts or ambiguities in plaintiff[‘s] favor.”‘ (McDonald v. Antelope Valley Community College Dist. (2008) 45 Cal.4th 88, 96-97.)”

2. The P&A Agreement: Judicial Notice, the Law, and Thorne’s Testimony

As noted, Chase requested judicial notice of the P&A Agreement attached to the declaration of its counsel who represented that it was a copy of the agreement found on the FDIC website. The declarant was not a custodian of records, was not a party to the Agreement, gave no indication she was involved in negotiating or drafting it, and provided no background as to how she acquired knowledge of the document. Indeed, she did not even aver it was a true and complete copy.

We also note that the request was for judicial notice of the fact that on September 25, 2008, “Chase acquired certain of the assets of WaMu, including all loans and loan commitments of WaMu.” The papers did not request judicial notice that Chase did notassume liabilities based on borrower claims. Unquestionably, the trial court below used the Agreement for a much broader purpose, namely to prove that Chase did not assume liability for WaMu’s alleged misdeeds with respect to Jolley’s loan.

We conclude this was error, and that the content and legal effect of the P & A Agreement could not properly be determined on judicial notice under California law. And certainly not here.

Judicial notice, of course, may be utilized on a motion for summary judgment. (Code Civ. Proc., § 437c, subd. (b)(1); Herrera v. Deutsche Bank National Trust Co. (2011) 196 Cal.App.4th 1366, 1374.) But only to the extent authorized by our state statutes. (Evid. Code, § 450.)

As noted above, Chase’s request for judicial notice requested it, however unhelpfully, “pursuant to . . . Evidence Code sections 450-460.” As also noted, the order granting summary judgment ended with the ruling that Chase’s request for judicial notice was also granted, citing Evidence Code section 452, subdivisions (c) & (d).

The Evidence Code section cited by the trial court allow for permissive judicial notice respectively of “(c) Official acts of the legislative, executive, and judicial departments of the United States and of any state of the United States” and “(d) Records of (1) any court of this state or (2) any court of record of the United States or of any state of the United States.” (Evid. Code, § 452, subds. (c) & (d).)

Certainly the P&A Agreement does not come within subdivision (d), as it is not a record of any court. And while it is true that subdivision (c) “enables courts in California to take notice of a wide variety of official acts. . . . [and] an expansive reading must be provided to certain of its phrases [and] included in `executive’ acts are those performed by administrative agencies. . . .” (Simons, California Evidence Manual (2012) Judicial Notice § 7:11, p. 544), we do not understand a contract with a private bank to come within that subdivision.

Apparently satisfied itself that the two subdivisions cited in the trial court’s order are unsupportive, Chase’s brief cites two different subdivisions, and asserts that “judicial notice may be taken of the following:

“(g) Facts and propositions that are of such common knowledge within the territorial jurisdiction of the court that they cannot reasonably be the subject of dispute.

“(h) Facts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.”

In claimed support, Chase first cites some cases clearly inapposite, such as cases dealing with State Bar records (In re White (2004) 121 Cal.App.4th 1453) and the “definition of `mass transportation.'” (Shaw v. People ex rel. Chiang (2009) 175 Cal.App.4th 577). Chase then goes on: “[s]imilarly, under federal law the information on government agency websites has often been treated as a proper subject for judicial notice by numerous circuits (See, e.g., Paralyzed Veterans of Am. v. McPherson, No. C 06-4670 SBA, 2008 WL 4183981, at p. *5 (N.D. Cal. Sept. 9, 2008) (and cases cited therein).) [¶] Here, the P&A Agreement is available on a public Web site maintained by the FDIC. It is not reasonably subject to dispute and is capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy. The taking of judicial notice of the terms of the P&A Agreement was not in error.”¹⁰ (Fn. omitted.) Chase then concludes as follows: “Chase and CRC sought the taking of judicial notice of a document which is not hearsay, but which itself contains admissible evidence.”

Maybe some federal cases might allow this. California law does not. (Searles Valley Minerals Operations, Inc. v. State Bd. Of Equalization (2008) 160 Cal.App.4th 514, 519 [taxpayers who produced and sold electricity to California requested judicial notice of materials contained on website pages of American Coal Foundation and United States Department of Energy under Evidence Code section 452, subdivision (h). Held: request was properly denied, as though “it might be appropriate to take judicial notice of the existence of the Web sites, the same is not true of their factual content”].)

Chase makes much of the fact that the P&A Agreement is posted on the FDIC Web site, which it calls an “official governmental agency,” apparently believing this fact alone makes the legal significance of the Agreement subject to judicial notice. While there may be federal cases that adopt this approach, frequently without analysis (see fn. 10, ante), we know of no “official Web site” provision for judicial notice in California. (See L.B. Research & Education Foundation v. UCLA Foundation (2005) 30 Cal.App.4th 171, 180, fn. 2.) “Simply because information is on the Internet does not mean that it is not reasonably subject to dispute.” (Huitt v. Southern California Gas Co. (2010) 188 Cal.App.4th 1586, 1605, fn. 10.)

In typically scholarly fashion, Witkin has an elaborate exposition of the law of judicial notice in 1 California Evidence (5th ed. 2012), Judicial Notice, ch. 2, beginning at page 109. Beginning at section 32, the author discusses “matters commonly known or readily determinable,” and goes on for several sections with descriptions of cases and “illustrations” of such facts. One looks in vain for any case remotely supporting Chase’s position here. In sum, we hold that judicial notice was not properly taken of the content of the P&A Agreement even if there was no dispute about its authenticity. A fortiori here, where the very authenticity of the Agreement was in dispute.

As described above, Jolley’s opposition included a declaration from Thorne, who had been a “senior construction loan consultant” with WaMu until July of 2006, having been in charge of construction lending in 38 states since May 2005. He was an “asset manager for the FDIC” at the time he signed the declaration (October 2011), and was “intimately familiar with the procedures for taking over a failed bank.” And he testified: “Pursuant to the public part of the agreement with the FDIC, of which were approximately 36 pages, the balance of the contract and the complete agreement with the FDIC and Chase bank is 118 pages long which has not been made public. I am familiar with this agreement, I read it.” Though somewhat ungrammatical, the declaration fairly clearly recites the existence of a nonpublic agreement (or portion of an agreement) that could affect the outcome of this case. In short, Thorne testified that the P&A Agreement submitted by Chase was not the full agreement entered between Chase and the FDIC, but rather a longer version exists, the terms of which are different from the version of which the court below took judicial notice.

Thorne also made certain representations about the content of the missing pages, claiming the FDIC guaranteed 80 percent of any failed WaMu loans, while Chase assumed only 20 percent of potential losses on the loans by receiving an 80 percent discount on WaMu’s assets. In his deposition Thorne not only referred to the P&A Agreement being 118 pages long, but also testified that it obligated Chase “to work directly with the customers to do as much as possible to modify any loans . . . so that no foreclosures are made and borrowers are kept in their homes.” The missing part of the document “spells out an agreement between the purchasing institution and the FDIC as to how they are to handle the customers upon the purchase of the bank; i.e., how the foreclosures are to be handled, work out agreements that they’re supposed to make. . . . They just can’t go in and just start foreclosing on everybody that’s not paying.”

Chase filed 62 objections to Jolley’s evidence, including 33 objections to particular aspects of Thorne’s declaration and seven objections to particular statements in his deposition. We are concerned primarily with Objections 5 and 60, objecting to Thorne’s statements that a 118-page purchase and assumption agreement exists, objections based on the best evidence rule, lack of foundation, and lack of competency.¹¹

As noted, the trial court did not rule on these, or any other, evidentiary objections, and Jolley preliminarily contends that the objections cannot be maintained here. He is wrong, as specifically held in Reid v. Google, Inc. (2010) 50 Cal.4th 512, 534, a case involving objections made in a summary judgment proceeding. The Supreme Court held that if the objections were not ruled upon in the trial court, the objections are presumed overruled and are preserved for appeal. We thus turn to the merits of Chase’s objections, and find there is none.

Chase questions the competency of Thorne’s declaration because he is not a lawyer, was not employed at WaMu at the time of the P&A Agreement, and was never employed by Chase. This, the argument runs, fails to establish personal knowledge or expertise sufficient to opine about the contents of the purported nonpublic agreement. Chase also points out that while his declaration says Thorne was an independent contractor at the FDIC at the time he signed the declaration, it fails to show he worked there at the time of the WaMu receivership.

But that is no basis for rejecting Thorne’s testimony on the narrow point that a 118-page agreement exists, one that he had personally read. We view his testimony on this point as that of a percipient witness, not an expert.

We may agree with Chase for purposes of argument that Thorne’s statements about the contents of the longer agreement were not admissible. But we need not credit those statements in order to conclude that a factual issue has been raised. The judgment in this case rests squarely on the terms of a much shorter, disputed version of the P&A Agreement submitted by Chase. This was wrong. Since Jolley has presented evidence that a longer agreement exists, the court below resolved a disputed issue of fact by resting its decision on the terms of the shorter agreement. Put otherwise, the court did not view the evidence favorably to Jolley. (See Gould v. Maryland Sound Industries, Inc. (1995) 31 Cal.App.4th 1137, 1145-1146 [existence of a written contract could not be judicially noticed where the opposing party claimed that an oral contract governed the relationship].)

It may be true that in some extreme circumstances “a trial court may weigh the credibility of a declaration submitted in opposition to a summary judgment motion and grant the motion `where the declaration is facially so incredible as a matter of law that the moving party otherwise would be entitled to summary judgment.'” (People v. Schlimbach (2011) 193 Cal.App.4th 1132, 1142, fn. 9, quoting Estate of Housley (1997) 56 Cal.App.4th 342, 359-360.) This is not such a case.

Thorne’s declaration certainly raises significant issues vis a vis Chase and the FDIC, with testimony that is hardly run of the mill. But that testimony is not so incredible that it could be ignored or rejected as untruthful on summary judgment, especially given the FDIC’s response here, which not only did not deny the existence of the longer agreement, but suggested there were documents to be produced if there were a confidentiality agreement.

3. Summary Adjudication Was Improperly Granted On The First, Second, Third, Fourth, Fifth, And Eighth Causes Of Action

A. The First And Second Causes Of Action, For Misrepresentation

The conclusion that Chase was not liable for WaMu’s conduct presupposes acceptance of the P&A Agreement submitted by Chase as the full and complete contract governing its assumption of liabilities. Since, as discussed above, the Agreement was not properly utilized here, on that basis alone the summary adjudication of first and second causes of action was improper. In addition to the alleged misrepresentations by WaMu, Jolley alleges misstatements by Chase after the receivership, which would render summary adjudication improper for an additional reason if there are triable issues of material fact with respect to such misrepresentations. We find such issues here.

The elements of fraud, which give rise to the tort action for deceit, are (a) misrepresentation; (b) knowledge of falsity; (c) intent to defraud, i.e., induce reliance; (d) justifiable reliance; and (e) damage. (Lovejoy v. AT&T Corp. (2001) 92 Cal.App.4th 85, 93; see also, Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) “The tort of negligent misrepresentation, a species of the tort of deceit [citation], does not require intent to defraud but only the assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing it to be true.” (Conroy v. Regents of University of California (2009) 45 Cal.4th 1244, 1255.)

Jolley testified that Chase representative North told him in various ways—that it was “highly probable,” and “likely,” and “look[ed] good”—that a modification of the loan agreement would be approved and the construction loan rolled over into a conventional loan. The trial court concluded there was no evidence of a misstatement of fact, but at most an overoptimistic opinion upon which Jolley could not reasonably have relied. We disagree.

To begin with, it is well settled that an opinion may be actionable when it is made by a party who “possess[es] superior knowledge.” (Pacesetter Homes v. Brodken (1970) 5 Cal.App.3d 206, 211.) As one Court of Appeal put it almost ninety years ago, “[W]hen one of the parties possesses, or assumes to possess, superior knowledge or special information regarding the subject matter of the representation, and the other party is so situated that he may reasonably rely upon such supposed superior knowledge or special information, a representation made by the party possessing or assuming to possess such knowledge or information, though it might be regarded as but the expression of an opinion if made by any other person, is not excused if it be false.” (Haserot v. Keller (1924) 67 Cal.App. 659, 670;Cohen v. S & S Construction Co. (1983) 151 Cal.App.3d 941, 946; see generally Rest.2d Torts § 542; CACI No. 1904.)

Equally well recognized is that there may be liability for an opinion where it is “expressed in a manner implying a factual basis which does not exist.” (Pacesetter Homes, Inc. v. Brodkin, supra, 5 Cal.App.3d at p. 211; see generally, Crandall v. Parks (1908) 152 Cal. 772, 776; Civ. Code, § 1572; Rest.2d Torts, § 525, com. f.) Witkin explains how this rule is often applied to statements about future events, describing it this way: “(3) Future Events.As pointed out above . . ., predictions or representations as to what will happen in the future are normally treated as opinion; but sometimes they may be interpreted as implying knowledge of facts that make the predictions probable. If the defendant does not know of these facts, the statement is an actionable misrepresentation. . . . The same is true where an agent states that his or her principal will advance money to harvest a crop, or where a corporation agent represents that the corporation will lease certain property or locate a plant in a certain city. (See Eade v. Reich (1932) 120 Cal.App. 32, 35 [discussing holdings to this effect].)” (5 Witkin, Summary of California Law (10th ed. 2005) Torts, § 776, p. 1126; also see Apollo Capital Fund LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226, 241 [broker-dealer’s oral representations concerning offering of company’s bridge notes, that preferred stock offering was “done deal” and that early prepayment of notes was “guaranteed,” were actionable statements of facts, rather than opinion or prediction].)

Jolley testified that North told him he was “from the executive offices of Chase,” causing Jolley to think he “was dealing with the decision makers at the highest level of Chase Bank.” Beyond that, the very assessment of probabilities of a loan modification may have implied that North had discussed the matter with those who actually would make the decision or that he possessed facts from which he could reasonably assess the probabilities. In any event, the matter should have been left to the trier of fact, not determined on summary judgment: “[W]here there is a reasonable doubt as to whether a particular statement is an expression of opinion or the affirmation of a fact, the determination rests with the trier of the facts.” (Willson v. Municipal Bond Co. (1936) 7 Cal.2d 144, 151.)

Jolley presented evidence that he in fact relied upon these statements, expending additional sums to complete the construction, that the promising statements by North induced him to borrow from other sources to finish the renovation. These consequences were entirely foreseeable in light of the history of the construction loan, the unfinished status of the underlying project, and the encouraging statements by North that the loan would likely be rolled over into a conventional loan once construction was completed. Whether Jolley’s reliance was justified in the circumstances is a factual question for a jury, not one for summary judgment.

Price v. Wells Fargo Bank (1989) 213 Cal.App.3d 465 (Price), overruled on other grounds in Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Association(2013) 55 Cal.4th 1169, 1182, relied on by Chase, is not to the contrary. There, the ranch owner plaintiffs took out three loans totaling $370,000 from Wells Fargo to pay off preexisting loans to other banks. (Id. at p. 471.) The notes for two of the loans called for repayment within approximately eight months; the third loan documents were less clear but appeared to call for payment at the same time. Testimony by bank officers, however, tended to support plaintiffs’ argument that the parties intended the loans to be paid off over a five-year period. (Ibid.) After seeing the early due date in the notes, plaintiffs discussed the matter with the same bank representative who had helped them with the original loans, who promised to “redo” the loans to reflect the five-year repayment period. (Price, supra, 213 Cal.App.3d at p. 472.) Plaintiffs let the eight-month maturity date pass without repaying any principal. When the bank began sending past due letters, plaintiffs did not insist that the loans be rewritten, but sought a restructuring of the repayments. For a period of time the bank negotiated with plaintiffs and established alternate repayment terms. However, when the repayment schedule was not kept, the bank initiated foreclosure proceedings. (Id. at pp. 472-473.)

Plaintiffs were able to pay off the loans before a foreclosure sale was conducted, and then sued the bank, claiming that in order to pay off the loans they were forced to sell other assets at distressed prices. (Id. at pp. 473-474.) They alleged several theories based fundamentally on the bank’s having taken a “hard line” during negotiations regarding repayment of the loans. (Id. at p. 479.) Summary judgment was granted for the bank, which was affirmed on appeal.

Chase points particularly to the statement in Price to the effect that the bank would “redo” the loans or “work with” the borrowers, and draws a parallel between those representations and the statements made by North here. We find the analogy unpersuasive. The Price plaintiffs admitted in discovery that they understood their obligations under the original notes and never disputed that the amounts claimed by the bank were in fact owed to it. (Price, supra, 213 Cal.App.3d at pp. 472, 480-481.) And the alleged promise to “redo” the contract was never asserted during loan renegotiation as a basis for loan modification. (Id.at pp. 480-481.) In short, the plaintiffs’ own actions undermined any claim of reliance on the misstatement. This is not the situation here.

Chase also cites Conrad v. Bank of America (1996) 45 Cal.App.4th 133, which held that a postbankruptcy fraud claim against a bank was precluded by failure of the borrowers to list that claim in the original bankruptcy filing. (Id. at pp. 145-155.) As a second ground for denying relief, the Court of Appeal held that no fraudulent statement had been shown. (Id. at pp. 155-156.) The borrower’s testimony showed only that he told the banker his company “might need some loans and that it intended to go forward utilizing liquid assets and that kind of thing before talking” further to the bank about loans. The banker reportedly said “No problem.” (Id. at p. 156.) The court observed “[t]hat exchange establishes nothing more than a willingness to consider future loan applications and does not establish a fraudulent promise to make a loan. [Citation.]” (Conrad, supra, 45 Cal.App.4th at p. 156.) The court went on that the borrower’s “understanding or expectation that the Bank would extend a loan is not sufficient to establish an agreement to make a loan. [Citation.] And his testimony is otherwise lacking in specificity.” (Conrad, supra, 45 Cal.App.4th at p. 156.)

Here we have more specificity as to a predicted outcome of the loan modification process and the likelihood of its occurrence, as Jolley continued discussions with North into the days immediately preceding the proposed trustee’s sale. Indeed, there is documentary evidence that North continued to represent that he would ask the “Foreclosure Department to hold [its] processes,” thus making the alleged promises more certain—and more central to the loan renegotiation efforts. And not only did Jolley not act inconsistently with a claim of reliance, he in fact relied, investing additional funds into completing the construction in anticipation that the loan would be rolled into a conventional loan.

While there may not be any direct showing of an intention to defraud, it is clear that Chase would benefit from Jolley’s further investment in the construction project. This is so because the bank could ultimately foreclose on a newly renovated property instead of a stalled construction project, making its ability to realize on the asset more fruitful. In addition, prolonging the loan modification process allowed Chase’s investment in the property to mount while Jolley’s equity, if any, was consumed in a declining real estate market. Drawing all inferences in favor of the nonmoving party, as we must (Nazir v. United Airlines, Inc., supra, 178 Cal.App.4th at p. 254), we conclude that prolonged communication—perhaps more accurately, miscommunication—about a possible loan modification raises a triable issue of fact of intent by Chase to profit by misleading Jolley about his loan modification prospects, a showing sufficient to withstand summary adjudication.

B. The Third Cause of Action, for Breach Of Contract/Promissory Estoppel

On the third cause of action, styled breach of contract/promissory estoppel, Chase claims there was no evidence of a breach by it of WaMu’s loan agreement, again claims the P&A Agreement relieves it of any liability for any breach by WaMu, and claims its own conduct toward Jolley in the form of North’s promising forecast of a loan modification did not create a contract or amount to an estoppel. We, of course, disagree as to the P&A Agreement. We also find a triable issue of material fact regarding Chase’s own conduct.

Jolley obviously complains that WaMu failed to timely disburse funds in accordance with the loan agreement, but he also appears to claim the failure to fully fund the loan continued through the Chase period. Jolley stated as a disputed fact, “Even with the Modification Agreement, further delays in disbursements as a result of WaMu made it effectively impossible for Jolley to complete the project and commence payments as of August 1, 2007.” He also asserted in his declaration, “Chase continued in WaMu’s refusal to disburse portions of the construction loan due and to modify the loan to provide necessary funding.” And he said, “Chase . . . had an obligation to carry out the terms of the Washington Mutual loan which was to provide adequate funds to complete the modified construction plans after which, Chase . . . [was] responsible for rolling the loan into a permanent financing loan.”

Thorne testified that after he got involved on Jolley’s behalf, Jolley “received disbursements on the work that had been completed based on the inspection that had been made.” The trial court construed that statement as follows: “Plaintiff’s expert, Jeffrey Thorne, . . . testified that Plaintiff ultimately received the disbursements for the work Plaintiff had completed.” And the court concluded, “[t]he undisputed evidence shows Chase fulfilled all of its obligations under the Construction Loan Agreement.” We read the record differently.

To begin with, this was not specified as an undisputed fact in Chase’s moving papers, and Jolley did not admit any such fact as undisputed. It cannot be said that the undisputed facts show no controversy on this point.

Jolley contends “Chase . . . had a direct continuing responsibility to provide necessary funding to see that the project was finished . . . .” We understand this to mean that Jolley believes Chase was obligated to disburse, but failed to disburse, additional funds under his preexisting agreement with WaMu. The fact that Thorne may have believed the loan had been fully funded by WaMu prior to the receivership (if his statement is properly so construed) does not bind Jolley to that same conclusion.

Turning to the paperwork, Thorne’s memorandum to WaMu in approximately September 2006 recommended a modified loan amount of $2,485,000. As far as we can tell, the amount actually disbursed as of September 25, 2008, was $2,426,650. This also suggests that further disbursements may have been due under the modified agreement. We are also not able to say with confidence that the dispute about the $350,000 that Thorne found to be “in limbo” was ever resolved. In sum, there appear to be disputed facts concerning whether WaMu, succeeded by Chase, ever fully funded the loan, factual disputes relating to whether the lender’s obligations under the modified loan agreement ever were fulfilled.

Chase also argues it was under no obligation to disburse further funds or to roll over the construction loan because Jolley was in default on the loan payments beginning in December 2008. True, the loan contract conditioned the loan rollover provision on the borrower’s compliance with the terms of the loan agreement. But there was a two-month period postreceivership—and prior to Jolley’s default—during which it seems possible that funds were due to be disbursed, at least under Jolley’s interpretation of the loan agreement.

Jolley also argues that the frequent reassurances by North that a modification was forthcoming induced him to rely, and as a result he “borrowed from friends and family to finish the construction.” The effect of this is a triable issue of fact whether Chase has potential liability for its own conduct under a theory of promissory estoppel.

“`A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.'” (C&K Engineering Contractors v. Amber Steel Co. (1978) 23 Cal.3d 1, 6.) The elements of promissory estoppel are: “`”(1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the promise is made; (3) [the] reliance must be both reasonable and foreseeable; and (4) the party asserting the estoppel must be injured by the party’s reliance.”‘” (Joffe v. City of Huntington Park (2011) 201 Cal.App.4th 492, 513.)

The Fourth Cause Of Action, For Negligence

The trial court granted summary adjudication on the fourth cause of action, for negligence, essentially finding no duty. The order read as follows: “`Under California law, a lender does not owe a borrower or third party any duties beyond those expressed in the loan agreement, except those imposed due to special circumstance.’ (Sipe v. Countrywide Bank(E.D.Cal. 2010) 690 F.Supp.2d 1141, 1153, citing Nymark v. Heart Fed. Savings & Loan Assn., (1991) 231 Cal.App.3d 1089, 1096.) . . .” We conclude there was a triable issue of material fact as to a duty of care to Jolley, which potentially makes Chase liable for its own negligence.

We acknowledge that we deal with an ordinary duty of reasonable care, not a fiduciary duty. We further acknowledge the frequent observation that lenders and borrowers operate at arm’s length. (Oaks Management Corp. v. Superior Court (2006) 145 Cal.App.4th 453, 466-467; Nymark v. Heart Fed. Savings & Loan Assn., supra, 231 Cal.App.3d at p. 1093 (Nymark).) And we finally acknowledge that “as a general rule, a financial institution owes no duty of care to a borrower when the institution’s involvement in the loan transaction does not exceed the scope of its conventional role as a mere lender of money.” (Nymark, supra, 231 Cal.App.3d at p. 1096; see also Fox & Carskadon Financial Corp. v. San Francisco Fed. Sav. & Loan Assn. (1975) 52 Cal.App.3d 484, 488, 489; Ragland v. U.S. Bank National Association (2012) 209 Cal.App.4th 182, 206.)

Such “general rule” has often been repeated, including in federal cases involving the takeover by Chase of WaMu’s loans¹² and cases decided in the context of loan modification applications.¹³ It was primarily on the basis of this general rule that the trial court below, without further analysis, granted summary adjudication of the negligence claim. And Chase relies upon such general rule here, contending it owed Jolley no duty of care. Such reliance is misplaced.

When considered in full context, the cases show the question is not subject to black-and-white analysis—and not easily decided on the “general rule.” We conclude here, where there was an ongoing dispute about WaMu’s performance of the construction loan contract, where that dispute appears to have bridged the FDIC’s receivership and Chase’s acquisition of the construction loan, and where specific representations were made by a Chase representative as to the likelihood of a loan modification, a cause of action for negligence has been stated that cannot be properly resolved based on lack of duty alone.

In Connor v. Great Western Sav. & Loan Assn. (1968) 69 Cal.2d 850, 856-858 (Connor), a lender was involved in developing tract housing which proved to be faulty because the builders poured slab foundations on adobe soil, and the foundations cracked in subsequent rainstorms. (Id. at pp. 856-857.) The lender provided the money for the purchase of the land and for construction loans, and ultimately offered homebuyers long-term loans on the homes. (Id. at p. 858.) The Supreme Court held the bank was not liable as a joint venturer (id. at pp. 862-863), but further held that its role as “an active participant in a home construction enterprise” imposed upon it a duty of ordinary care to the purchasers of the homes (id. at p. 864)—a holding reached by applying the six factors identified in Biakanja v. Irving (1958) 49 Cal.2d 647, 650 (the “Biakanja factors”).¹⁴ (Connor, supra, 69 Cal.2d at p. 865.)

Perhaps the Biakanja factors must be applied here too. (See Auto Equity Sales v. Superior Court (1962) 57 Cal.2d 450, 455.) But even if not, they are certainly appropriate for consideration, which consideration compels a conclusion for Jolley.

The Biakanja factors are six nonexhaustive factors: (1) the extent to which the transaction was intended to affect the plaintiff, (2) the foreseeability of harm to the plaintiff, (3) the degree of certainty that the plaintiff suffered injury, (4) the closeness of the connection between the defendant’s conduct and the injury suffered, (5) the moral blame attached to the defendant’s conduct, and (6) the policy of preventing future harm. (Biakanja v. Irving, supra, 49 Cal.2d at p. 650.)

We begin by identifying the specific conduct by Chase that Jolley claims was negligent so as to limit our analysis “to the specific action the plaintiff claims the particular [defendant] had a duty to undertake in the particular case.” (Vasquez v. Residential Investments, Inc.(2004) 118 Cal.App.4th 269, 280.) As we see it, Jolley claims Chase had an obligation to investigate the history of the loan and to make additional disbursements, to review his loan modification request in good faith, and to conform to standards of conduct in the industry to protect him against further losses associated with the loan. Chase allegedly acted unreasonably by failing to review Jolley’s request for a loan modification in good faith, having decided in advance it would extend no further monies in connection with WaMu’s loans.¹⁵Jolley also complains about specific misstatements, false assurances given by Chase personnel about the prospects for a loan modification, while different personnel at Chase—the actual decision makers—were bent on foreclosure.

The first factor, the extent to which the transaction was intended to affect the plaintiff, hardly needs discussion. Jolley was the person in direct negotiation, and contractual privity, with the loan originator (WaMu), from which Chase took over. Jolley specifically brought to Chase’s attention his dissatisfaction with WaMu’s funding of the loan. To the extent Chase undertook a reassessment of the propriety of past disbursements, it obviously did so for Jolley’s benefit. And North’s representations were made directly to Jolley, and were certainly likely to, if not intended to, affect his decisionmaking.

Likewise, it was certainly foreseeable that harm to Jolley could ensue in the event of Chase’s negligence. Jolley began missing payments shortly after Chase bought WaMu’s assets. That his credit rating would be adversely affected if Chase failed to negotiate with him in good faith was foreseeable, making it more difficult for him to secure alternative financing to cure the default. Given North’s encouragement, it was also foreseeable that Jolley would sink more of his own money into the project, thereby suffering further injury.

There is also no doubt that Jolley was in fact injured. He invested $100,000 in finishing construction on the property shortly before foreclosure proceedings were initiated. As to the closeness of the connection between Chase’s acts and Jolley’s injury, the upbeat prediction of the availability of a loan modification and the rollover of the loan into a conventional mortgage was almost certainly a primary factor in causing this particular injury. Had Jolley known that Chase would ultimately foreclose on the property, he would have had no incentive to invest an additional $100,000 in its completion.

While it is not possible to tell at this point how blameworthy Chase’s conduct may prove to be, this is not a case such as Nymark, where the borrower was in a better position to protect his own interests. To the contrary, Jolley’s ability to protect his own interests in the loan modification process was practically nil. Chase held all the cards. The fact that Chase benefited from prolonging the loan renegotiation period and encouraging Jolley to complete construction certainly lends itself to a blameworthy interpretation. And a fair reading of the evidence here includes that Jolley was subjected to “dual tracking,” which as discussed below has now been made illegal, illegality that tends to reinforce the view that Chase’s conduct was blameworthy.

The policy of preventing future harm also favors imposing a duty of care on an entity in Chase’s position. When a bank acquires from the FDIC loans from a failed bank part of what it acquires is the history of the loan. Even if acquiring banks are not liable for breaches, fraud, or negligence of the failed bank under their purchase and assumption agreements—an issue we do not decide—simple good business practices dictate that they take into account the position in which the borrower has been placed prior to their acquisition of the loan. Where there is a long running dispute whether the failed bank properly disbursed monies due under the loan, the acquiring bank owes a duty of care to investigate the history of the loan and take that into account in negotiating with the borrower for a loan modification. Particularly so here.

We note that we deal with a construction loan, not a residential home loan where, save for possible loan servicing issues, the relationship ends when the loan is funded. By contrast, in a construction loan the relationship between lender and borrower is ongoing, in the sense that the parties are working together over a period of time, with disbursements made throughout the construction period, depending upon the state of progress towards completion.¹⁶ We see no reason why a negligent failure to fund a construction loan, or negligent delays in doing so, would not be subject to the same standard of care.

Even when the lender is acting as a conventional lender, the no-duty rule is only a general rule. (Osei v. Countrywide Home Loans (E.D.Cal. 2010) 692 F.Supp.2d 1240, 1249.) As a recent federal case put it: “Nymark does not support the sweeping conclusion that a lender never owes a duty of care to a borrower. Rather, the Nymark court explained that the question of whether a lender owes such a duty requires `the balancing of the “Biakanja factors.”‘” (Newson v. Countrywide Home Loans, Inc. (N.D.Cal. Nov. 30, 2010 No. C 09-5288) 2010 U.S. Dist. Lexis 126383, at p. * 15.) Or, in the words of an even more recent case, in each case where the general rule was applied to shield a lender from liability, “the plaintiff sought to impose upon the lender liability for activities outside the scope of the lender’s conventional role in a loan transaction. It is against this attempt to expand lender liability (to that of, e.g., an investment advisor or construction manager) that the court inNymark found a financial institution owes no duty of care to a borrower when its involvement in the loan transaction `does not exceed the scope of its conventional role as a mere lender of money.’ Nymark, 231 Cal.App.3d at 1096. Nymark and the cases cited therein do not purport to state a legal principle that a lender can never be held liable for negligence in its handling of a loan transaction within its conventional role as a lender of money.” (Ottolini v. Bank of America (N.D.Cal. Aug. 19, 2011 No. C-11-0477) 2011 U.S. Dist. Lexis 92900, at p. *16.) We agree with these observations.

Chase relies upon the historical truism that a bank as lender is entitled to pursue its own economic interest in dealing with a borrower, citing Kruse v. Bank of America (1988) 202 Cal.App.3d 38, 67. We live, however, in a world dramatically rocked in the past few years by lending practices perhaps too much colored by short-sighted self-interest. We have experienced not only an alarming surge in the number of bank failures, but the collapse of the housing market, an avalanche of foreclosures,¹⁷ and related costs borne by all of society.¹⁸ There is, to be sure, blame enough to go around. And banks are hardly to be excluded.

Due to the ongoing financial crisis, the federal government has adopted a voluntary incentive-based program designed to encourage lenders and borrowers to work together in the event of the borrower’s default, by establishing a home loan modification program. (See U.S. Dept. of Treasury, Supplemental Directive No. 09-01 (Apr. 5, 2009). Similarly, the California Legislature has expressed a strong preference for fostering more cooperative relations between lenders and borrowers who are at risk of foreclosure, so that homes will not be lost.¹⁹ (Civ. Code, §§ 2923.5 & 2923.6.) These provisions, enacted in 2008, require lenders to negotiate with borrowers in default to seek loss mitigation solutions. As discussed hereafter, existing law will soon be supplemented by amendments enacted as part of the “California Homeowner Bill of Rights.” (Assem. Bill No. 278; Sen. Bill No. 900 (2011-2012 Reg. Sess.).)

Granted, these ameliorative efforts have been directed primarily at aiding resident homeowners at risk of losing their homes. (Civ. Code, §§ 2923.5, subd. (f); Assem. Bill No. 278, § 18, adding Civ. Code, § 2924.15.) We also understand there is no express duty on a lender’s part to grant a modification under state or federal loan modification statutes. And until the new legislation takes effect, no private right of action for damages is granted under the statutes. (See Hamilton v. Greenwich Investors XXVI, LLC (2011) 195 Cal.App.4th 1602, 1616; Mabry v. Superior Court (2010) 185 Cal.App.4th 208, 214; Pantoja v. Countrywide Home Loans, Inc. (N.D.Cal.2009) 640 F.Supp.2d 1177, 1188.) We do not cite any of these legislative measures in reliance upon their provisions, nor do we suggest their provisions were violated in the present case. Rather, we refer to the existence—and recent strengthening—of these legislative measures because they demonstrate a rising trend to require lenders to deal reasonably with borrowers in default to try to effectuate a workable loan modification. In short, these measures indicate that courts should not rely mechanically on the “general rule” that lenders owe no duty of care to their borrowers.

Existing state statutes relating to loan modifications will soon be supplemented by stiffer restrictions on the conduct of lenders and loan servicers during the loan modification process. Even as this case has been pending before us, on July 2, 2012, the California Legislature passed Assembly Bill No. 278 and Senate Bill No. 900, which have since been signed into law by the Governor. These provisions address more pointedly the foreclosure crisis in our state through even greater encouragement to lenders and loan servicers to engage in good faith loan modification efforts.

One of the targets of the legislation is a practice that has come to be known as “dual tracking.” Dual tracking refers to a common bank tactic. When a borrower in default seeks a loan modification, the institution often continues to pursue foreclosure at the same time.” (Alejandro Lazo, Banks Are Foreclosing While Homeowners Pursue Loan Modifications,Los Angeles Times, (Apr. 14, 2011); see also Sen. Floor Analysis of Assem. Bill No. 278 at p. 3.) The result is that the borrower does not know where he or she stands, and by the time foreclosure becomes the lender’s clear choice, it is too late for the borrower to find options to avoid it. “Mortgage lenders call it `dual tracking,’ but for homeowners struggling to avoid foreclosure, it might go by another name: the double-cross.”²⁰ (Lazo, Banks Are Foreclosing.) As we understand the pleadings and proof here, this is precisely one of Jolley’s claims.²¹

The recent California legislation attempts over time to eliminate the practice of dual tracking and to ameliorate its effects, by requiring lenders and loan servicers to designate a “single point of contact” for each borrower in default. (Assem. Bill No. 278, § 7, amending Civil Code § 2923.6, subd. (c) [prohibiting dual tracking by higher volume lenders and mortgage servicers], Assem. Bill No. 278, § 9, adding Civil Code, § 2923.7 [single point of contact], Assem. Bill No. 278, § 15, adding Civil Code, § 2924.11 [prohibiting dual tracking by all lenders and mortgage servicers effective January 1, 2018].) The single point of contact provision, like the dual-tracking provision, is intended to prevent borrowers from being given the run around, being told one thing by one bank employee while something entirely different is being pursued by another. Under the legislation, the single point of contact must be responsible for, among other things, “[h]aving access to current information and personnel sufficient to timely, accurately, and adequately inform the borrower of the current status of” his loan modification request and “[h]aving access to individuals with the ability and authority to stop foreclosure proceedings when necessary.” (Assem.Bill No. 278, § 9, adding Civ. Code, § 2923.7.)

The same legislation provides homeowners who are facing foreclosure or whose homes have actually been lost to foreclosure with a remedy if the lender or loan servicer materially violated the provisions of the Act intentionally, recklessly, or through “willful misconduct.” (Assem. Bill No. 278, §§ 16 & 17, adding Civil Code, § 2924.12): those facing foreclosure may seek an injunction, while those who have lost their homes may seek treble actual damages or statutory damages of $50,000, whichever is greater.

Of course, these provisions do not apply to our case. The question for our purposes is whether the new legislation sets forth policy considerations that should affect the assessment whether a duty of care was owed to Jolley at that time. We think it does.

We find support for our conclusion in recent federal district court cases that have found a duty of care in particular circumstances surrounding loan modification negotiations.Ansanelli v. JP Morgan Chase Bank, N.A. (N.D. Cal. Mar. 28, 2011 No. C 10-03892) 2011 U.S. Dist. Lexis 32350, p. *21, is illustrative. There, the court found a duty of care had properly been pleaded in a negligence action where the bank offered plaintiffs a trial loan modification plan, then reneged on a promise to modify the loan. The bank reported the loan as past due despite the fact that plaintiffs had made proper payments under the trial modification, thereby damaging their credit rating. (Id. at pp. *2-3.)

Similarly, Robinson v. Bank of America (N.D. Cal. May 29, 2012 No. 12-CV-00494-RMW) 2012 U.S. Dist. Lexis 74212, p. *21, decided on a motion to dismiss, held that a bank went beyond its role as a “silent” lender in its dealings with plaintiff during loan modification negotiations. There, the bank was “alleged to have executed and breached the modification agreement, then engaged in a series of contradictory and somewhat misleading communications with plaintiff—in person, in writing, and by phone—regarding the status of his loan. Under such circumstances, it was entirely foreseeable that [the bank’s] conduct could result in damage to plaintiff’s credit rating or a decrease in the value of his home.” (Ibid.; see also Crilley v. Bank of America, N.A. (D.Haw. Apr. 26, 2012 No. 12-00081) 2012 U.S. Dist. Lexis 58469 at pp. * 5-12, 26 [duty of care owed where plaintiff and bank engaged in substantial negotiations regarding loan modification, finding potential liability based in part on “delays in the loan modification process”]; Watkinson v. MortgageIT, Inc. (S.D.Cal. June 1, 2010 No. 10-CV-327) 2010 U.S. Dist. Lexis 53540, pp. * 23-24 [duty of care found where bank knowingly misstated borrower’s income and value of property on loan application, and where borrower sought but was denied a loan modification]; Garcia v. Ocwen Loan Servicing, LLC (N.D.Cal. May 6, 2010 No. C-10-0290) 2010 U.S. Dist. Lexis 45375 at pp. *7-11 [plaintiff’s allegations about loan modification application process sufficiently pled a duty under Biakanja factors]; but see, Ottolini v. Bank of America, supra, 2011 Dist. Lexis 92900 at pp. *18-19 [distinguishing Ansanelli, supra, 2011 U.S. Dist. Lexis 32350 where “the application for loan modification had not progressed to a concrete stage and . . . there is no indication of the likelihood that such an application would have been granted”].)

We conclude that the determination that Chase owed no duty to Jolley was error. Thus, the summary adjudication on the negligence cause of action must be reversed, as it was inLaabs v. Southern California Edison Co. (2009) 175 Cal.App.4th 1260, 1269 where the Court of Appeal held as follows: “We note, however, that we do not hold that SCE owed Laabs a duty of care as a matter of law; rather, we hold that triable issues of fact exist as to the relevant considerations underlying duty in this case, and that SCE failed to establish that it was entitled to judgment as a matter of law. While we recognize that the issue of duty is a matter for the trial court, it is nonetheless a factually oriented inquiry. As stated in Burger v. Pond (1990) 224 Cal.App.3d 597, 603, `”Foreseeability” and “policy considerations” are not determined in a vacuum, but rather depend . . . upon the particular circumstances in which the purported wrongful conduct occurred.'”

C. The Fifth Cause Of Action, Violation Of Business And Professions Code Section 17200

Jolley claims Chase violated the unfair competition law (UCL) (Bus. & Prof. Code, § 17200), but does not specify which acts violated that provision or the nature of the violation. Again, he bases his theory of liability on the premise that Chase “must stand squarely in the shoes of WaMu for all of its criminal, fraudulent, negligent and otherwise `unfair’ practices perpetrated against Appellant and the world economy . . . .” He further claims, without specificity, that Chase is equally liable for such wrongdoing on its own part.

The UCL is broad in scope, prohibiting any “unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising,” as well as any act specifically prohibited under Business and Professions Code section 17500 et seq. The statute is meant to forbid not only anti-competitive practices but also “`”`the right of thepublic to protections from fraud and deceit.'”‘” (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 209.) An “unlawful” activity is any business activity that is forbidden by law. (Saunders v. Superior Court (1994) 27 Cal.App.4th 832, 838-839.) A “fraudulent” activity includes any act or practice likely to deceive the public, even if no one is actually deceived. (Committee on Children’s Television, Inc. v. General Foods Corp., supra, 35 Cal.3d at p. 211.)

There is a split of authority on what constitutes an “unfair” practice. (Bardin v. DaimlerChrysler Corp. (2006) 136 Cal.App.4th 1255, 1260-1261.) Some cases hold an “unfair” practice is one that offends established public policy, that is immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers, or that has an impact on the victim that outweighs defendant’s reasons, justifications, and motives for the practice. (Pastoria v. Nationwide Ins. (2003) 112 Cal.App.4th 1490, 1498; Smith v. State Farm Mutual Automobile Ins. Co. (2001) 93 Cal.App.4th 700, 718-719; Podolsky v. First Healthcare Corp.(1996) 50 Cal.App.4th 632, 647.) Others, including at least one from our district (Gregory v. Albertson’s, Inc. (2002) 104 Cal.App.4th 845, 853-854), hold that the public policy which is a predicate to a claim under the “unfair” prong of the UCL must be tethered to specific constitutional, statutory, or regulatory provisions. (See also, Scripps Clinic v. Superior Court(2003) 108 Cal.App.4th 917, 938.) Either way, unfairness is independently sufficient to state a claim under the statute. (Allied Grape Growers v. Bronco Wine Co. (1988) 203 Cal.App.3d 432, 451; see Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co.(1999) 20 Cal.4th 163, 180 [indicating that conduct may be “unfair” without being “unlawful”].)

Granting summary adjudication on the fifth cause of action, the trial court concluded that “the undisputed evidence shows that Chase has not violated any law, or committed a deceptive or fraudulent act/misrepresentation to fall within § 17200.” There was no reference to “unfair” conduct.

With respect to Chase’s own conduct, we have already decided that North’s statements may be construed as misstatements of fact, with possible liability for such conduct left to the trier of fact. That raises a triable issue as to “fraudulent.” We have also concluded that dual tracking has been alleged and supported by Jolley’s declaration. And while dual tracking may not have been forbidden by statute at the time, the new legislation and its legislative history may still contribute to its being considered “unfair” for purposes of the UCL. Summary adjudication of Jolley’s fifth cause of action was improper.

E. The Eighth Cause Of Action, For Reformation

Civil Code section 3399 provides the authority upon which a contract may be reformed: “When, through fraud or a mutual mistake of the parties, or a mistake of one party, which the other at the time knew or suspected, a written contract does not truly express the intention of the parties, it may be revised, on the application of a party aggrieved, so as to express that intention, so far as it can be done without prejudice to rights acquired by third persons, in good faith and for value.” (See generally, 5 Witkin, Cal. Procedure (5th ed. 2008 Pleading, § 806, pp. 221-222.)

The “intention of the parties,” as stated in Civil Code section 3399, refers to “a single intention which is entertained by both parties.” (Shupe v. Nelson (1967) 254 Cal.App.2d 693, 700.) “The essential purpose of reformation is to reflect the intent of the parties.” (Jones v. First American Title Ins. Co. (2003) 107 Cal.App.4th 381, 389.) “`Although a court of equity may revise a written instrument to make it conform to the real agreement, it has no power to make a new contract for the parties . . . .'” (American Home Ins. Co. v. Travelers Indemnity Co. (1981) 122 Cal.App.3d 951, 963.)

The facts are undisputed that Chase and Jolley never signed a contract to modify the WaMu loan or reached agreement on any specific terms for a loan modification. However, Jolley pled, and testified, that the original loan agreement with WaMu was marred by either fraud or mutual mistake in that he was promised that prepaid construction costs would be reimbursed to him. Jolley’s basis for this claim is a written document entitled “Construction Items Prepaid at Closing” signed in December 2005, before the actual loan was finalized. Jolley evidently wishes to reform the written agreement to incorporate this reimbursement provision, and there is a triable issue of fact whether he can. Summary adjudication on this cause of action must be reversed. (See Jensen v. Quality Loan Services Corp (E.D.Cal. 2010) 702 F.Supp.2d 1183, 1197, fn. 5 [Chase may be subject to reformation of WaMu’s loan based on its acquisition of the loan].)

4. Summary Adjudication Was Properly Granted On The Sixth and Seventh Causes Of Action

A. The Sixth Cause Of Action, For Declaratory Relief

Code of Civil Procedure section 1060 authorizes actions for declaratory relief under a “written instrument” or “contract.” Declaratory relief generally operates prospectively to declare future rights, rather than to redress past wrongs. (Babb v. Superior Court (1971) 3 Cal.3d 841, 848; Gafcon, Inc. v. Ponsor & Associates (2002) 98 Cal.App.4th 1388, 1403 (Gafcon).) It serves to set controversies at rest before they lead to repudiation of obligations, invasion of rights or commission of wrongs. In short, the remedy is to be used in the interests of preventive justice, to declare rights rather than execute them. (Ibid.)

“To qualify for declaratory relief, [a party] would have to demonstrate its action presented two essential elements: `(1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to [the party’s] rights or obligations.'” (Wilson & Wilson v. City Council of Redwood City (2011) 191 Cal.App.4th 1559, 1582.)

The trial court did not state any reason for granting summary adjudication on the declaratory relief cause of action, but simply recited in conclusory fashion that Jolley was not entitled to such relief, citing Gafcon, supra, 98 Cal.App.4th at pages 1401-1402. Citation of that case suggests the ruling was premised on the notion that Jolley has, if anything, a fully matured cause of action against Chase, and not one appropriate for declaratory relief. With this we agree.

The undisputed facts show that loan modification negotiations did not result in a written instrument or contract under which the parties’ rights need to be declared. While there may be a controversy about past conduct, we see no reason why money damages would not be an adequate remedy. (See Gafcon, supra, 98 Cal.App.4th at pp. 1403-1404.) Moreover, this cause of action is redundant of Jolley’s other claims, and declaratory relief may be denied “where its declaration or determination is not necessary or proper at the time under all the circumstances.” (Code Civ. Proc., § 1061.) Where, as here, Jolley has a fully matured cause of action for money, he must seek damages, and not pursue a declaratory relief claim. (Gafcon, supra, 98 Cal.App.4th at pp. 1403-1404; Jackson v. Teachers Ins. Co.(1973) 30 Cal.App.3d 341, 344.) Summary adjudication of the sixth cause of action was proper.

F. The Seventh Cause Of Action, For Accounting

An action for an accounting may be brought to compel the defendant to account to the plaintiff for money or property (1) where a fiduciary relationship exists between the parties, or (2) where, even though no fiduciary relationship exists, the accounts are so complicated that an ordinary legal action demanding a fixed sum is impracticable. (5 Witkin, Cal. Procedure, supra, Pleadings, § 819, p. 236.) “A cause of action for an accounting requires a showing that a relationship exists between the plaintiff and defendant that requires an accounting, and that some balance is due the plaintiff that can only be ascertained by an accounting.” (Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179.)

Chase contends that Jolley’s cause of action for an accounting is subject to summary adjudication because Jolley makes no claim that money was due him under the contract with WaMu, and no independent contract was ever entered into with Chase. The trial court found “no evidence that Defendants owe [Jolley] any money under the Construction Loan Agreement that requires an accounting.” It further concluded, “[Jolley] makes no effort to identify where in the payment record he is owed any money” with the consequence that “no grounds for an accounting exist.” Jolley’s efforts aside, there are disputed facts with respect to whether the modified construction loan had been fully funded prior to Chase’s acquisition of the loan.

That said, we find an accounting remedy uncalled for in this case. There was no fiduciary relationship between the parties and we detect no proof of any other special relationship that would give rise to an accounting remedy, nor a specification of amounts due so complicated that it cannot be determined in a legal action for damages. Summary adjudication of the seventh cause of action was proper.

5. Summary Judgment for CRC Was Proper

CRC acted solely as trustee in the present case. None of Jolley’s allegations of wrongdoing pertains to CRC, and no factual support has been offered with respect to any claim against it. The summary judgment is therefore affirmed insofar as it is in favor of CRC. (See Moncrief v. Washington Mutual, supra, 2010 U.S. Dist. Lexis 64100, at p. *8.)

DISPOSITION

The summary judgment in favor of CRC is affirmed, as are the summary adjudications in favor of Chase of the sixth and seventh causes of action. The summary judgment for Chase is reversed. Both sides shall bear their respective costs on appeal.

Haerle, Acting P.J. and Lambden, J., concurs.

Request for Production No. 1:Footnotes

1. J.P. Morgan Chase is the successor corporation to both Chase Home Finance LLC and California Reconveyance Company (CRC). We refer to the Chase entities collectively as “Chase.”

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2. Payments on the construction loan were interest only during construction and varied in amount depending on the status of funding. Once construction had been completed, the balance of the loan was to be rolled over into a fully amortized mortgage on the home. A reserve was included to pay the interest payments during construction. Because the reserve was calculated based on the predicted length of construction, it proved to be insufficient to cover interest payments during the extended construction period.

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3. Documents submitted by Chase show the outstanding principal owing at default in December 2008 was $2,426,650, increased to $2,632,066.99 when the notice of default was recorded. By the time the motion was filed in August 2011, Chase calculated it was owed $3,019,693.29.

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4. Jolley’s complaint referred to both WaMu and Chase collectively as “the Bank,” making it difficult to ascertain which conduct was alleged with respect to which entity.

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5. That section reads: “A voluntary acceptance of the benefit of a transaction is equivalent to a consent to all the obligations arising from it, so far as the facts are known, or ought to be known, to the person accepting.” (Civ. Code, § 1589.)

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6. The motion was actually filed on behalf of both named defendants, Chase, and CRC. As noted, no charging allegations were made in Jolley’s complaint against CRC, and his opposition to the motion said essentially nothing about it. Thus, the focus of the proceedings below, and here, is on Chase, and for ease of discussion we refer to Chase as the moving party.

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7. The remaining “facts” were four paragraphs attaching what were claimed to be “certified” or “true and correct” copies of documents recorded in Marin County.

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8. We cast no aspersions on Chase’s counsel for her position, as the confidentiality agreement prepared by Jolley’s counsel did not specify the documents requested.

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9. We find no express ruling on Jolley’s ex parte application for a continuance, but it was effectively denied by the grant of summary judgment.

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10. The referenced footnote says that “Federal Courts have taken judicial notice of the P&A Agreement and similar agreements with the FDIC. (Allen v. United Fin. Mortgage Corp., 660 F.Supp.2d 1089, 1093 (N.D. Cal. 2009) (judicial notice taken of the P&A Agreement even though a few pages missing from that offered by defendant, because the Agreement is available online, from the FDIC’s web site; In re Sharp, Case No. 09-13980 A P. No. 10-1032 (N. D. Cal. Bk.); Jarvis v. JP Morgan Chase Bank, N.A., 2010 WL 2927276, at *1, (C.D. Cal. July 23, 2010); see also Yeomalakis v. F.D.I.C., 562 F.3d 56, 60 (1st Cir. 2009.) (Resp. App. 86-89.)”

Some federal courts have taken judicial notice of the same or similar purchase and assumption agreements, frequently without discussion or analysis, either because they were deemed “public records” or because their contents could be “accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” (Fed. Rules Evid., rule 201(b)(2); Rosenfeld v. JPMorgan Chase Bank, N.A. (N.D.Cal. 2010) 732 F.Supp.2d 952, 958-960 [dismissing claims against Chase despite claim that it engaged in loan modification negotiations with plaintiff]; McCann v. Quality Loan Service Corp. (W.D.Wash. 2010) 729 F.Supp.2d 1238, 1241-1242 [in context of claims relating to WaMu refinance transaction, collecting cases holding Chase not liable for WaMu’s conduct]; Cassese v. Washington Mutual et al. (E.D.N.Y. Dec. 22, 2008 No. 05 CV 2724) 2008 U.S. Dist. Lexis 111709, at pp. *6-7, 2009 [same, including claims of fraud and breach of contract]; Moncrief v. Washington Mutual(S.D.Cal. June 28, 2010 No. 10CV350) 2010 U.S. Dist. Lexis 64100 at pp.*6-7 [same for claims filed after Chase acquired WaMu’s assets].)

Some cases have found the language of section 2.1 of the P&A Agreement creates a degree of uncertainty about whether Chase assumed specific liabilities depending on whether it acted as lender, loan servicer, or both. (See Hayes-Boman v. J.P. Morgan Chase Bank (D.Minn. 2010) 724 F.Supp.2d 1003, 1015; Punzalan v. FDIC (W.D.Tex. 2009) 633 F.Supp.2d 406, 414 & fn. 5; In re Pena (Bankr. S.D.Tex. 2009) 409 B.R. 847, 859-862.)

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11. Chase also argues on appeal that Jolley’s testimony is barred by the parol evidence rule and as hearsay. These objections were not made in the trial court, and are thus inappropriate here.

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12. Rosenfeld., supra, 732 F.Supp.2d at p. 969 [claim for breach of fiduciary duty]; Argueta v. J.P. Morgan Chase (E.D.Cal. June 30, 2011 No. CIV. 2:11-441) 2011 U.S. Dist. Lexis 70756, at p. *12; Sullivan v. JP Morgan Chase Bank, NA (E.D.Cal. 2010) 725 F.Supp.2d 1087, 1094 [“Plaintiffs’ allegations that Defendant misrepresented to them that a permanent loan modification would be put into place are insufficient to form the basis of a negligence claim”].)

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13. Becker v. Wells Fargo Bank, N.A., Inc. (E.D.Cal. Mar. 22, 2011 No. 2:10-cv-02799) 2011 U.S. Dist. Lexis 29687, at pp.*67-71 [allegations about loan modification application process did not give rise to duty]; Dooms v. Fed. Home Loan Mortgage Corporation (E.D.Cal. Mar. 31, 2011 No. CV F 11-0352) 2011 Dist. Lexis 38550, at pp. *25-28; DeLeon v. Wells Fargo Bank, N.A. (N.D.Cal. Oct. 22, 2010 No. 10-CV-01390) 2010 U.S. Dist. Lexis 112941, at p. *12 [defendant did not have a duty “to complete the loan modification process”].)

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14. Connor held there was lender liability to the homeowners who bought into the housing tract. The Legislature subsequently enacted Civil Code section 3434 to restrict such liability, and to that extent Connorhas been superseded by statute. (Anthony v. Kelsey-Hayes Co. (1972) 25 Cal.App.3d 442, 454, fn. 5.)

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15. We agree with Chase that no admissible evidence was submitted to support the assertion that Chase had decided in advance not to further fund any WaMu loans. The only evidence on this point was Thorne’s declaration, which lacked foundation. However, regardless whether the decision was made in advance, if it were made without due care to avoid further injury to Jolley, then Chase is potentially liable for its own negligence.

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16. Such a loan more readily gives rise to a cause of action for negligence in that contractual disbursements must be made with due care. “A lender that enters into a loan agreement to disburse the loan funds according to the terms of the loan documents, assumes a duty of care to act reasonably to abstain from injuring the borrower by its disbursal of funds. A lender may be liable to the borrower who is damaged as a result of the lender’s negligent disbursal of the loan funds.” (12 Miller & Starr, California Real Estate (3d ed. 2011) § 36:6, fns. omitted.)

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17. We quote the California Legislature: “California is still reeling from the economic impacts of a wave of residential property foreclosures that began in 2007. From 2007 to 2011 alone, there were over 900,000 completed foreclosure sales. In 2011, 38 of the top 100 hardest hit ZIP Codes in the nation were in California, and the current wave of foreclosures continues apace. All of this foreclosure activity has adversely affected property values and resulted in less money for schools, public safety, and other public services. In addition, according to the Urban Institute, every foreclosure imposes significant costs on local governments, including an estimated nineteen thousand two hundred twenty-nine dollars ($19,229) in local government costs. And the foreclosure crisis is not over; there remain more than two million `underwater’ mortgages in California.

“It is essential to the economic health of this state to mitigate the negative effects on the state and local economies and the housing market that are the result of continued foreclosures by modifying the foreclosure process to ensure that borrowers who may qualify for a foreclosure alternative are considered for, and have a meaningful opportunity to obtain, available loss mitigation options. These changes to the state’s foreclosure process are essential to ensure that the current crisis is not worsened by unnecessarily adding foreclosed properties to the market when an alternative to foreclosure may be available. Avoiding foreclosure, where possible, will help stabilize the state’s housing market and avoid the substantial, corresponding negative effects of foreclosures on families, communities, and the state and local economy.” (Assem. Bill No. 278 (2011-2012 Reg. Sess.), § 1 (subdivisions designations omitted).)

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18. The legislative history of Assembly Bill No. 278 recognized extensive “`spillover’ costs” of “the foreclosure epidemic”: “By some estimates the foreclosure crisis will strip neighboring homeowners of $1.9 trillion in equity as foreclosures drain value from homes located near foreclosed properties by 2012. . . . Meanwhile, state and local governments continue to be hit hard by declining tax revenues coupled with increased demand for social services. In fact, the Urban Institute estimates that a single foreclosure costs $79,443 after aggregating the costs borne by financial institutions, investors, the homeowner, their neighbors, and local governments.” (Sen. Rules Com., Off. Of Sen. Floor Analyses, Conference Report on Assem. Bill No. 278 (2011-2012 Reg. Sess.) June 27, 2012, pp. 14-15.)

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19. “When a borrower is in danger of defaulting, a commonsense approach under a traditional mortgage would be for the lender and borrower to mutually agree to modify the terms of the loan . . . . [¶] Despite the apparent mutual interest of loan holders and borrowers, many distressed homeowners report obstacles when trying to obtain a loan modification or short-sale approval. (See e.g. `Loan Modifications Elude Local Homeowners,’ Sacramento Bee (January 17, 2011).) . . . . [¶] . . . [¶] Some analysts and leading economists have cited a failure by banks to provide loan modifications as a single reason that the foreclosure crisis continues to drag on.” (Sen. Floor Analysis of Assem. Bill No. 278 at pp. 15-16.)

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20. According to the legislative history, “borrowers can find their loss-mitigation options curtailed because of dual-track processes that result in foreclosures even when a borrower has been approved for a loan modification.” (Sen. Floor Analysis of Assem. Bill No. 278, pp. 20-21.)

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21. Jolley alleged, inter alia, that he was told a “workable loan modification was in the works” and “[f]oreclosure proceedings would be suspended pending the outcome of the loan modification process.” He further alleged the true facts were that “a loan modification was not in the works” and “foreclosure proceedings were ongoing.” Beyond the mere allegations, Jolley testified that because of “inordinate delay” by Chase in responding to his initial contact regarding a loan modification, he “borrowed heavily from friends and family” to complete construction. And further, that had the loan modification been granted and the construction loan converted to a conventional loan, the permanent financing would have been at a “favorable rate,” making the “payments substantially less” and he “could have afforded to pay them.”

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From: Charles Cox [mailto:charles@bayliving.com]
Sent: Friday, February 01, 2013 2:12 PM
To: Charles Cox
Subject: The latest from Reiss and Borden – Dirt Lawyers, Dirty REMICS

Dirty REMICs…

Charles
Charles Wayne Cox
Email: mailto:Charles
Websites: www.BayLiving.com; www.FdnPro.com and www.ForensicLoanAnalyst.com
1969 Camellia Ave.
Medford, OR 97504-5403
(541) 727-2240 direct
(541) 610-1931 eFax

Paralegal; Litigation Support and Expert Witness Services; Forensic Loan Analyst; CA Licensed Real Estate Broker.

article dirt lawyers dirty remics david reiss borden.pdf

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Monday, February 11, 2013 7:14 AM
To: Charles Cox
Subject: California Homeowners Bill of Rights White Paper

FYI

Charles
Charles Wayne Cox
Email: mailto:Charles
Websites: www.BayLiving.com; www.FdnPro.com and www.ForensicLoanAnalyst.com
1969 Camellia Ave.
Medford, OR 97504-5403
(541) 727-2240 direct
(541) 610-1931 eFax

Paralegal; Litigation Support and Expert Witness Services; Forensic Loan Analyst; CA Licensed Real Estate Broker.

Nationwide_Title_Clearing_White_Paper_Preparing_for_CA_Homeowner_Bill_of_Rights.pdf

The WordPress.com stats helper monkeys prepared a 2012 annual report for this blog.

Here’s an excerpt:

About 55,000 tourists visit Liechtenstein every year. This blog was viewed about 200,000 times in 2012. If it were Liechtenstein, it would take about 4 years for that many people to see it. Your blog had more visits than a small country in Europe!

Click here to see the complete report.

In standard FNMA deed of trust in paragraph 22 there exists a condition precedent of contact prior to Notice of Default that is routinely ignored by most lenders and or servicers and it is a defense to Foreclosure see attached ruling in Florida

Final Judgment Paragraph 22 Judge Tepper Brendan Riley.pdf

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Monday, January 28, 2013 5:27 AM
To: Charles Cox
Subject: Suarez case – set for jury trial

This is the first one I know of actually set for jury trial. Almost the same dirt bags as in our own case (they’ve got Bryan Cave, the S. California counter-part to our Severson & Werson group of scum bags.) Looks like Prosper is making some headway.

Good on them!

Charles
Charles Wayne Cox
Email: mailto:Charles
Websites: www.BayLiving.com; www.FdnPro.com and www.ForensicLoanAnalyst.com
1969 Camellia Ave.
Medford, OR 97504-5403
(541) 727-2240 direct
(541) 610-1931 eFax

Paralegal; Litigation Support and Expert Witness Services; Forensic Loan Analyst; CA Licensed Real Estate Broker.

PrintCase.pdf
121066708-Suarez-v-Bank-of-New-York-Mellon.pdf

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, January 31, 2013 5:19 AM
To: Charles Cox
Subject: Suarez Case – Complaint

Initial complaint attached.

Charles
Charles Wayne Cox
Email: mailto:Charles
Websites: www.BayLiving.com; www.FdnPro.com and www.ForensicLoanAnalyst.com
1969 Camellia Ave.
Medford, OR 97504-5403
(541) 727-2240 direct
(541) 610-1931 eFax

Paralegal; Litigation Support and Expert Witness Services; Forensic Loan Analyst; CA Licensed Real Estate Broker.

SuarezCase Complaint.pdf

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, January 31, 2013 6:21 AM
To: Charles Cox
Subject: Follow up-Williamson County Texas – Clerk Report and findings

Follow up to the Williamson County Clerk Audit Findings…link here to posting on my website due to file size: http://www.fdnpro.com/reference-material/documents/TexasRecorder-Audit.pdf (about 21mb…177 pages)

Remember Phil Ting and the similar report done in San Francisco? I think you’ll like this one even more.

Charles
Charles Wayne Cox
Email: mailto:Charles
Websites: www.BayLiving.com; www.FdnPro.com and www.ForensicLoanAnalyst.com
1969 Camellia Ave.
Medford, OR 97504-5403
(541) 727-2240 direct
(541) 610-1931 eFax

Paralegal; Litigation Support and Expert Witness Services; Forensic Loan Analyst; CA Licensed Real Estate Broker.

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, January 24, 2013 5:22 AM
To: Charles Cox
Subject: If her allegations are taken as true, she has satisfied the tender requirement

From Deontos (I’ve attached the Order):

Martin v. LITTON LOAN SERVICING LP, Dist. Court, ED California 2013

RENEE’L. MARTIN, Plaintiff,
v.
LITTON LOAN SERVICING LP, et al., Defendants.

No. 2:12-cv-00970-MCE-EFB PS.

United States District Court, E.D. California.

January 16, 2013.

ORDER AND FINDINGS AND RECOMMENDATIONS

EDMUND F. BRENNAN, Magistrate Judge.

I. BACKGROUND

Defendants have submitted a request for judicial notice which indicates that the deed of trust was assigned to defendant Deutsche Bank on March 19, 2004 and that Western Progressive is an agent for Deutsche Bank; the assignment was recorded on August 16, 2012. Defs.’ Req. for Jud. Notice, Dckt. No. 33, Exs. B, C. Although not specifically alleged in plaintiff’s first amended complaint, plaintiff contends that the assignment is fraudulent. Dckt. No. 42.

b. Failure to Respond to QWR

Here, plaintiff vaguely alleges that she sent Litton and Ocwen a QWR for an accounting and those defendants failed to respond, and defendants failed to disclose to plaintiff the true holders of the loan, after repeated attempts by plaintiff to ascertain that information. As an initial matter, those allegations lack specificity and are too speculative under Twombly andIqbal. Plaintiff does not allege, among other things, when the QWR or other requests were sent. Nonetheless, as discussed above, alleging a breach of RESPA duties alone does not state a claim under RESPA. Plaintiff must, at a minimum, also allege that the breach resulted in actual damages. See 12 U.S.C. § 2605(f)(1)(A) ("Whoever fails to comply with this section shall be liable to the borrower . . . [for] any actual damages to the borrower as a result of the failure."); Hutchinson v. Delaware Savings Bank FSB, 410 F. Supp. 2d 374, 383 (D.N.J. 2006)(citations omitted) (a claimant under 12 U.S.C. § 2605 must allege a pecuniary loss attributable to the alleged violation). Here, plaintiff does not specify any damages resulting from an alleged failure to respond to her QWR or requests regarding the true holder of the loan. Therefore, plaintiff’s RESPA claim against Litton and Ocwen based on a failure to respond to a QWR and/or requests for information about the true holders of the loan should be dismissed with leave to amend.

5. Quiet Title

Plaintiff seeks to quiet title as of March 8, 2004. Plaintiff seeks a judicial declaration that the title to the subject property is vested in plaintiff alone and that the defendants have no interest, right, or title to the property. First Am. Compl. ¶ 99. Defendants move to dismiss this claim, arguing that it fails because plaintiff has not alleged valid and/or viable tender of the indebtedness. Dckt. No. 32 at 17.

To establish a claim for quiet title, plaintiff must file a verified complaint that alleges: (a) a description of the property; (b) plaintiff’s title as to which a determination is sought; (c) the adverse claims to the title; (d) the date as to which the determination is sought; and (e) a prayer for the determination of title. Cal. Civ. Proc. Code § 761.020. Additionally, plaintiff must allege that she has tendered her indebtedness. See Kelley v. Mortg. Elec. Registration, 642 F. Supp. 2d 1048, 1057 (N.D. Cal. 2009) ("Plaintiffs have not alleged . . . that they have satisfied their obligation under the Deed of Trust. As such, they have not stated a claim to quiet title.");see also Distor v. U.S. Bank, NA, 2009 WL 3429700, at *6 (N.D. Cal. Oct. 22, 2009) ("plaintiff has no basis to quiet title without first discharging her debt, and . . . she has not alleged that she has done so and is therefore the rightful owner of the property").

Here, defendants contend that plaintiff fails to allege tender or the ability to tender. However, plaintiff’s first amended complaint specifically alleges that she does not owe anything to any of the defendants. The fundamental essence of her claim is that she sent the regular payment of her mortgage every month but defendants wrongfully refused to process those payments because of the dispute over the amount and, because defendants did not have the authority to pay taxes on her behalf, they lacked authority to alter the amount due on her payments. Therefore, according to plaintiff, she has submitted her payments as due and there is nothing further to tender.

At the hearing, plaintiff specifically stated that she did not agree to paragraphs 4 or 9 of the deed of trust, which required her to pay taxes and which authorized the lender to pay the taxes on her behalf, nor did she agree to paragraph 10 of the loan modification agreement, which also reaffirmed plaintiff’s obligation to pay her taxes. If her allegations are taken as true, she has satisfied the tender requirement.[2] In light of plaintiff’s allegations that she has timely submitted her payments, and her allegations that she did not agree to all of the terms in the deed of trust, plaintiff’s quiet title claim is sufficient to withstand defendants’ motion to dismiss.

Martin v. Litton Loan Servicing.docx

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, January 24, 2013 5:22 AM
To: Charles Cox
Subject: Well well well…what do we have here?

From PI Bill Paatalo in Portland.

Assignment of DOT – Manos.pdf

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, January 24, 2013 8:20 AM
To: Charles Cox
Subject: MERSCORP Shell Game Attacked by Kentucky Attorney General Jack Conway

One more try!

Posted by Neil Garfield:

EDITOR’S NOTES AND COMMENTS: My congratulations to Kentucky Attorney General Jack Conway and his staff. They nailed one of the key issues that cut revenues on transfers of interests in real property AND they nailed one of the key issues in perfecting the mortgage lien.

As we all know now MERSCORP has been playing a shell game with multiple corporate identities, the purpose of which, as explained in Conway’s complaint, was to add mud to the waters already polluted by predatory loan practices and outright fraud in the appraisal and identification of the lender. This of course is in addition to the very gnarly issue of using a nominee that explicitly disclaims any interest in the property or loan.

The use of MERS, just like the use of fabricated, forged, robo-signed documents doesn’t necessarily wipe out the debt. The debt is created when the borrower accepts the money, regardless of what the paperwork says — unless the state’s usury laws penalize the lender by eliminating the debt entirely and adding treble damages.

But the use of a nominee that has no interest in the loan or the property creates a problem in the perfection of the mortgage lien. The use of TWO nominees doubles the problem. It eliminates the most basic disclosure required by Federal and state lending laws — who is the creditor?

By intentionally naming the originator as the lender when it was merely a nominee and by using MERS, as nominee to have the rights under the security interest, the Banks created layers of bankruptcy remote protection as they intended, as well as the moral hazard of stealing or "borrowing" the loan to create fictitious transactions in which the bank kept part of the money intended for mortgage funding. Since the mortgage or deed of trust contains no stakeholders other than the homeowner and the note fails to name any actual creditor with a loan receivable account, the mortgage lien is fatally defective rendering the loan unsecured.

When you take into consideration that the funding of the loan came from a source unrelated (stranger tot he transaction) then the debt doesn’t exist either — as it relates to any of the parties named at the "closing" of the mortgage loan. So you end up with no debt, no note, and no mortgage. You also end up with a debt that is undocumented wherein the homeowner is the debtor and the source of funds is the creditor — in a transaction that neither of them knew took place and neither of them had agreed.

The lender/investors were expecting to participate in a REMIC trust which was routinely ignored as the money was diverted by the banks to their own pockets before they made increasingly toxic over-priced loans on over-valued property. The borrower ended up in limbo with no place to go to settle, modify or even litigate their loan, mortgage or foreclosure. This is not the statutory scheme in any state and Conway in Kentucky spotted it. Besides the usual "dark side" rhetoric, the plan as executed by the banks creates fatal uncertainty that cannot be cured as to who owns the loan or the lien or the debt, note or mortgage. The answer clearly does not lie in the documents presented to the borrower.

Now Conway has added the hidden issue of the MERS shell game. Confirming what we have been saying for years, the Banks, using the MERS model, have made it nearly impossible for ANY borrower to know the identity of the actual lender/creditor before during and even one day after the "closing" of the loan (which I have postulated may never have been completed because the money didn’t come from MERS nor the other nominee identified as the "lender").

The Banks are trying to run the clock on the statute of limitations with these settlements, like the the last one in which Bank of America would have owed tens of millions of dollars had the review process continued, and instead they cancelled the program with a minor settlement in which homeowners will get some pocket change while BofA walks off with the a mouthful of ill-gotten gains.

The plain truth is that in most cases BofA never paid a dime for the funding or purchase of the loan. That is called lack of consideration and in order for the rules of negotiable paper to apply, there must be transfer for value. There was no value, there was no cancelled check and there was no wire transfer receipt in which BofA was the lender or acquirer of the loan. Now add this ingredient: more than 50% of the REMIC trusts BofA says it "represents no longer exist, having been long since dissolved and settled.

The same holds true for US Bank, Mellon, Chase, Deutsch and others. Applying basic black letter law, the only possible conclusion here is that the mortgages cannot be foreclosed, the notes cannot be enforced, the debt can be collected ONLY upon proof of payment and proof of loss. This is how it always was, for obvious reasons, and this is what we should re turn to, providing a degree of certainty to the marketplace that does not and will never exist without the massive correction in title corruption and the wrongful foreclosures conducted by what the reviewers in the San Francisco audit called "strangers to the transaction."

See Louisville Morning Call here

See Bloomberg Article here

From: rene powers [mailto:gpanda26@yahoo.com]
Sent: Friday, January 25, 2013 6:23 AM
To: CJ Holmes
Subject: CALL TO ACTION CONTACT THE COUNSEL REPRESENTING INVESTORS!

CJ! I am on fire to get to the attorneys and the judge so we homeowners can be heard. Apparently it looks like we could have been by the deadlines noted BUT I don’t know about the rest of those affected but I never got notice to participate! The verbiage in the notice "mentions" anyone affected could be heard..They had ALL the addresses in the 530 trusts but I did not get a notice in the mail??? Anyhow, I have sent an email to Kenneth Warner through his AVVO account, will be calling his office and want this CALL TO ACTION to go out! THIS IS WHAT IT TAKES!! I know BJ will be on today and you are doing updates, this is HUGE for all homeowners to start making noise! It was like they threw a party and never invited the guest of honor!! THANK YOU!!!

Please cut and paste the message below

CALL TO ACTION! Are you affected by ANY of the Countrywide Trust Pools? If you are CONTACT ME! Doc Wood sent me the link to the case going on with BONY and investors I am linking here. I sent an email to one of the attorneys asking WHY ARE HOMEOWNERS LEFT OUT OF THIS SETTLEMENT??? The investors think THEY were duped? WHAT ABOUT THE HOMEOWNERS?? We MUST have a voice and I want to direct those affected to READ THE LINKS IN THIS CASE AND START MAKING NOISE!!! WE MUST STAND TOGETHER AND BE HEARD AS WE HAVE BEEN SILENCED TOO LONG!! FIND EMAIL ADDRESSES FOR THESE ATTORNEYS AND LET’s CALL THEIR OFFICES TOO! PLEASE CONTACT ME FOR ORGANIZATION OF OUR EFFORTS AND WE WILL MAKE OUR VOICES HEARD!!address for addressing the court is included as well! GET LETTERS WRITTEN AND TELL YOUR STORY! WE were victims ALONG WITH the investors! WITH 530 affected trusts that is A LOT of homeowners affected! DO IT! FAX EMAIL CALL SEND MAIL. Thank you! Rene gpanda26!! Put "affected by one of the "TRUSTS" " in the subject line please!

http://www.cwrmbssettlement.com/index.php

Rene’ Powers

Real Estate & Mortgage Consultant/Agent

949.648-3655 Cell

gpanda26
"Integrity & Service Coming To You"

license# 01797666

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Saturday, January 19, 2013 7:43 AM
To: Charles Cox
Subject: 6th USCCA Appeal Rules Foreclosures are Debt Collection under FDCPA and Attorneys Must Comply

The U.S. Court of Appeals for the Sixth Circuit Monday handed down an opinion that defined mortgage foreclosure actions as “debt collection” under the Fair Debt Collection Practices Act (FDCPA), reversing a lower court decision.

In Glazer v. Chase Home Finance, LLC, et. al., the appellate panel said that third parties initiating foreclosure actions must comply with the provisions of the FDCPA.

The case was brought by plaintiff Glazer after he inherited a home that still had an outstanding and active mortgage serviced by Chase. After six missed payments, Chase engaged with law firm Reimer, Arnovitz, Chernek & Jeffrey Co., LPA (RACJ) to begin foreclosure proceedings.

In a complicated twist indicative of the time, Chase did not own the mortgage in question. In fact, the bank had not even originated it. The loan was owned by Fannie Mae and Chase had been assigned as the servicer from the originator. When RACJ moved to foreclose, it represented as owner of the loan Chase.

When Glazer asked for verification that Chase was the owner, he claims RACJ did not comply, prompting a lawsuit seeking FDCPA damages. A district judge in Ohio sided with Chase and RACJ and dismissed the case, which Glazer appealed.

The Sixth Circuit panel said Monday that Chase was not a “debt collector” under the FDCPA:

…we hold that mortgage foreclosure is debt collection under the, Act. Lawyers who meet the general definition of a “debt collector” must comply with, the FDCPA when engaged in mortgage foreclosure. And a lawyer can satisfy that definition if his principal business purpose is mortgage foreclosure or if he “regularly” performs this function. In this case, the district court held that RACJ was not engaged in debt collection when it sought to foreclose on the property. That decision was erroneous, and the judgment must be reversed.

The case will now go back to the lower court for further consideration.

Glazer v. Chase.pdf

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Sunday, January 20, 2013 5:58 AM
To: Charles Cox
Subject: California – Oral promises can be used in fraud case – Parol Evidence Rule Issues

Oral promises can be used in fraud case

STATE SUPREME COURT Ruling favors couple facing foreclosure who maintain terms of loan differed from what they had been told

Bob Egelko

Published 9:18 pm, Monday, January 14, 2013

Borrowers facing default on a loan can try to prove that the lender orally promised them an extension that didn’t appear in the written contract, the state Supreme Court ruled Monday while overturning a 1935 decision that restricted evidence of fraud in contract disputes.

A lawyer for the borrowers, a Fresno County couple, called the unanimous ruling a victory for consumers. The lender’s lawyer said the court had eliminated important protections for written contracts.

The couple, Lance and Pamela Workman, fell behind on repaying a $776,000 loan from the Fresno-Madera Production Credit Association and signed an agreement in March 2007 pledging eight properties as security in return for a three-month extension.

The lender sought foreclosure after the Workmans failed to meet the three-month deadline. But the couple said the credit association’s vice president had told them two weeks before the agreement was signed, and repeated at the time of signing, that they would actually have two years to make the payments and would have to put up only two ranches as security.

The Workmans later repaid the loan – selling the eight properties at a loss, according to their lawyer, Steven Paganetti – and then sued the lender for fraud for allegedly misleading them about the terms of the loan.

The credit association argued that the vice president’s alleged promise to the couple was inadmissible because, under the law, a written contract overrides any previous oral statements between the signing parties.

The California Bankers Association and other lending organizations took the same position when the case reached the state’s high court. Arguing that contracts should be enforced as written, they asked the court to reaffirm the 1935 ruling that allowed oral evidence in such cases only to prove that a contract was procured by fraud and not to contradict any of its stated terms.

But the court, in an opinion by Justice Carol Corrigan, said the 1935 ruling was poorly reasoned, had been rejected by other states and "may actually provide a shield for fraudulent conduct."

Monday’s decision allows the Workmans to offer the lending officer’s promise as evidence that the credit association had deceived them into signing the agreement or misled them about its contents.

The ruling will "protect consumers from the old bait-and-switch" and should allow the Workmans to take their case to a jury, said Paganetti, their lawyer.

Scott Ivy, the credit association’s lawyer, said the ruling allows California courts to refuse to enforce written contracts "based upon alleged oral statements that directly conflict with the written terms." He said the lender will now try to get the suit dismissed on the grounds that the Workmans acted unreasonably by failing to review the contract before signing it.

Source: http://www.sfgate.com/news/article/Oral-promises-can-be-used-in-fraud-case-4194025.php

Workman.pdf

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Tuesday, January 01, 2013 1:47 PM
To: Charles Cox
Subject: "Mortgage Forgiveness Debt Relief Act of 2007" has been extended!

“American Taxpayer Relief Act of 2012’’

Extends

"Mortgage Forgiveness Debt Relief Act of 2007"

H. R. 8 passed at 2:07am Eastern time on January 1, 2013. Since this wasn’t passed before midnight it retroactively extends the "Mortgage Forgiveness Debt Relief Act of 2007." The extension is through midnight December 31, 2013. The vote was 89 – 8.

I have attached a copy of H.R. 8 for you.

Here is the pertinent language from H.R. 8:

"TITLE II—INDIVIDUAL TAX EXTENDERS

SEC. 202. EXTENSION OF EXCLUSION FROM GROSS INCOME OF DISCHARGE OF QUALIFIED PRINCIPAL RESIDENCE INDEBTEDNESS.

(a) IN GENERAL.—Subparagraph (E) of section 108(a)(1) is amended by striking ‘‘January 1, 2013’’ and inserting ‘‘January 1, 2014’’.

(b) EFFECTIVE DATE.—The amendment made by this section shall apply to indebtedness discharged after December 31, 2012."

2013-01-01, American Taxpayer Relief Act of 2012.pdf

From: Charles Cox [mailto:charles@ldapro.com]
Sent: Wednesday, January 02, 2013 5:44 AM
To: Charles Cox
Subject: Weekly legal newsletter has arrived

The topic of the newsletter this week is a brief discussion of some of the issues involved for a party filing a motion to dismiss an adversary complaint for fraud filed against them in United States Bankruptcy Court on the grounds that the adversary complaint fails to state a claim.

This type of motion is often called a 12(b)(6) motion as it is based on Federal Rule of Civil Procedure § 12(b)(6) (FRCP), or Federal Rule of Bankruptcy Procedure § 7012(b)(6) (FRBP. A party may also request in the alternative, that the party be required to provide a more definite statement under FRCP § 12(e) or FRBP § 7012(e).

FRCP and FRBP §§12 (e) states in pertinent part that, “A party may move for a more definite statement of a pleading to which a responsive pleading is allowed but which is so vague or ambiguous that the party cannot reasonably prepare a response. The motion must be made before filing a responsive pleading and must point out the defects complained of and the details desired”.

The motion for a more definite statement may be joined with the motion to dismiss pursuant to FRCP and FRBP §§ 12(g).

Many adversary complaints filed in bankruptcy courts are made under 11 U.S.C. § 523(a)(2) on the grounds of fraudulent representations. Note that FRCP 9(b) states in pertinent part that, “In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake”. This is a federally imposed requirement. although the Court will examine state law to determine if the elements of fraud have been sufficiently alleged.

“It is established law, in this circuit and elsewhere, that Rule 9(b)’s particularity requirement applies to state-law causes of action. "While a federal court will examine state law to determine whether the elements of fraud have been pled sufficiently to state a cause of action, the Rule 9(b) requirement that the circumstances of the fraud must be stated with particularity is a federally imposed rule." Vess v. Ciba-Geigy Corp. 317 F. 3d 1097, 1103 (9th Cir. 2003) (internal citations omitted).

The reason for the particularity requirement is due to the fact that fraud is a serious charge against another party.

As the author works on cases from Southern California, the great majority of the cases he works on are in the Central District of California and any fraud claims would most likely be a California cause of action.

California law requires that four (4) elements be specifically pleaded in any cause of action for fraud.

“A complaint for fraud must allege the following elements: (1) a knowingly false representation by the defendant; (2) an intent to deceive or induce reliance; (3) justifiable reliance by the plaintiff; and (4) resulting damages. Every element must be specifically pleaded.” Service by Medallion, Inc. v. Clorox Co. 44 Cal.App.4th 1807, 1816 (1996).

Whatever form it takes, injury or damage from fraud must not only be distinctly alleged but its causal connection with reliance on representations must be shown…. In order to recover for fraud, as in any other tort, the plaintiff must plead and prove the detriment proximately caused by the defendant’s tortious conduct. Deception without resulting loss is not actionable fraud. Whatever form it takes, the injury or damage must not only be distinctly alleged but its causal connection with the reliance on the representations must be shown. Service by Medallion, Inc.,

44 Cal.App.4th 1807, supra at 1818.

And in California, pursuant to Code of Civil Procedure § 338(d) there is a three-year statute of limitations for an action for relief on the ground of fraud or mistake. The cause of action is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.

An action based on fraud may be brought more than three years after the fraud occurred if the plaintiff shows not only that he did not discover the facts but he could not with reasonable diligence have discovered them within that time. The complaint must set forth specifically (1) the facts of the time and manner of discovery; and (2) the circumstances which excuse the failure to have made an earlier discovery. Olson v. County of Sacramento 274 Cal.App 2d 316, 327 (1969) (internal citations omitted).

While leave to amend is usually granted if a motion to dismiss is successful, the Ninth Circuit has ruled that leave to amend does not need to be granted where amending the complaint would be futile, and that any discretion to deny leave to amend is particularly broad where plaintiff has previously amended their complaint.

“Leave need not be granted where the amendment of the complaint . . . constitutes an exercise in futility," and "the district court’s discretion to deny leave to amend is particularly broad where plaintiff has previously amended the complaint." Ascon Properties v. Mobil Oil Co. 866 F.2d 1149, 1160 (9th Cir. 1989).

A motion to dismiss and/or a motion for a more definite statement are very useful when used in the right situation as many adversary complaints for fraud are filed but fail to allege the fraud with particularity, or they are so vague and ambiguous that the defendant cannot reasonably prepare a proper response.

In the author’s experience filing a motion to dismiss can be particularly useful when it is obvious that plaintiff has a weak case. This will force plaintiff to seek leave to amend. Once plaintiff has previously amended their adversary complaint some judges will deny leave to amend where the moving party can show that amendment would be futile as plaintiff cannot state a cause of action for fraud.

Copyright 2012 Stan Burman. All rights reserved.

DISCLAIMER:

Please note that the author of this newsletter, Stan Burman is NOT an attorney and as such is unable to provide any specific legal advice. The author is NOT engaged in providing any legal, financial, or other professional services, and any information contained in this newsletter is NOT intended to constitute legal advice.

These materials and information contained in this newsletter have been prepared by Stan Burman for informational purposes only and are not legal advice. Transmission of the information contained in this newsletter is not intended to create, and receipt does not constitute, any business relationship between the sender and receiver. Subscribers and any other readers should not act upon this information without seeking professional counsel.

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Saturday, January 05, 2013 5:55 AM
To: Charles Cox
Subject: MERS Assignments-AWL/BofA et al.

Do you know of authority (particularly if from MERS themselves) showing MERS cannot assign a Note or DOT for a non-MERS member? I’ve looked for something many times but never finish my research being interrupted by something else so I never remember where I was and what I found (or didn’t…maybe that’s the problem.)

America’s Wholesale Lender was never a MERS member. Countrywide Bank , FSB is/was as a purported “investor” (address in Alexandria, VA) but I see no listing of Countrywide Home Loans, Inc. nor Countrywide Home Loans, Inc. dba America’s Wholesale Lender as a member either. Neither is Bank of America Corporation by the way, the supposed assigned owner of the Service Mark America’s Wholesale Lender (assigned in 2008, Recorded January 2009). I also find it interesting that MERS has so many designations for Bank of America (when BofA mixes and matches names and typestyles to suit their needs and confuse courts all over the Country) (By the way, how is Bank of America, National Association different than Bank of America, N.A. and with different addresses I might add…only so far, distinguished differently on MERS site.):

Please Select A Company Below:

USPTO Assignments on the Web AWL Transfer from CWHL to BofA.pdf

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Saturday, January 05, 2013 6:32 AM
Cc: ‘AAli Mohammad’; ‘Alison Marlow’; ‘Andrew Cameron Bailey’; ‘Anita Carr’; ‘Ann Castro’; ‘Antonia Woghiren’; ‘Art Fleming’; ‘Barbara Gilbert’; ‘Barbara Griswold’; ‘Barbara Hart’; ‘Barbara Webb’; ‘Beth Findsen’; ‘Bill Paatalo’; ‘Bob Lund’; ‘Brent Hunsberger’; ‘Brian Davies’; ‘Brian Longley’; ‘Bruce Kamperman’; ‘Carl Cox’; ‘Carol Molloy’; ‘Carson Pay’; ‘Catherine King’; ‘CFOmkin’; ‘Charles Koppa’; ‘Chris Ebling’; ‘Chris Gardas’; ‘Chris McLaughlin’; ‘Christian Kluge’; ‘Christie Baca’; ‘Christopher Thompson’; ‘Claude bennett’; ‘Clayton’; ‘Clint Allen’; ‘Colin Davis’; ‘Colin Doyle’; ‘Constance Anne Dudley’; ‘Dan Hanecak’; Dan McCauley; ‘Daniel Edstrom’; ‘Darrell Blomberg’; ‘Dave Mowett’; ‘David Fahrny’; ‘David Silber’; ‘David Slayter’; ‘Deby Morrow’; ‘Denny Armstrong’; ‘Derrick Barnett’; ‘Don Klug’; ‘Don Loeb’; ‘Doug Gillies’; ‘Ed Peckham’; ‘Ellen Brown’; ‘Felix Trejo’; ‘Frank DeCarlo’; ‘Gail Williamson’; ‘Gary Silverman’; ‘George Bye’; ‘George Christian’; ‘George Daniel’; ‘Gerald Gandrup’; ‘Grace Adams’; ‘Harry Paez’; ‘Iris Lansdown’; ‘Jake Naumer’; ‘James Chappell’; ‘James Stout’; ‘Jean’; Jeffrey Cancilla; ‘Jeffrey Olson’; ‘Jim Curtis’; ‘Joanne Kopp’; ‘Joe Caracciolo’; ‘John Dunn’; ‘John St. Claire’; ‘Jon Lindeman’; ‘Joseph La Costa’; ‘Josiah Morgan’; ‘Judy Hoffman’; ‘Judy Moore’; ‘Kartika Ingram’; ‘Kathie Lustig’; Kaye DeVito; ‘Ken Johnson’; ‘Kerry Hurd’; ‘Kimberly Cromwell’; ‘Lee Ann Hildhal’; ‘Leon Miles’; ‘Linda Hamilton’; ‘Linda Howarth’; ‘Lizette Espinosa’; ‘Luis Reyes’; ‘Lynette Rhodes’; ‘Marc Findsen’; ‘Marilyn Yee’; ‘Mario Marsden’; ‘Mark Didak’; ‘Marla Buchwald’; ‘Marshall Foxworthy’; ‘Matt Cee’; ‘Matt Crehan’; mdgattorney@gmail.com; ‘Michael Moore’; Michelle Constantini; ‘Neil Garfield’; ‘Norm Redhead’; ‘Oktay Senvar’; ‘Patrick Hutchinson’; ‘Patti Lyles’; ‘Peter Coleman’; ‘Phil Johnson’; ‘Phyllis Harb’; ‘Precy Haw’; ‘Rami Nabi’; ‘Ramirez’; ‘Ramon Fuentes’; ‘Reinhold Sommerstedt’; ‘Rich Billin’; ‘Richard Hall’; ‘Richard Hubbard’; ‘Robert Bows’; ‘Robert Kincaid’; ‘Rod Ciferri’; ‘Ron Freshman’; ‘Ronda Edgar’; ‘Satish Shetty’; ‘Scottie Johnson’; ‘Shai Benmoshe’; ‘Sheri Deterling’; ‘Simona’; ‘Stan Thompson’; ‘Stephen Agar’; ‘Steve Campbell’; ‘Steve Foos’; ‘Steve Skidmore’; ‘Susan Lange’; ‘Suzanne Clements’; ‘Tim Fong’; ‘Tim McCandless’; ‘Valerie Lopez’; ‘Vermont Trotter’; ‘Vince Nguyen-NLG’; ‘Vinluan Manny’; ‘Will Doherty’; ‘William Ball’
Subject: Fraudulent "Independent" Foreclosure Reviews – It Didn’t Pass the Smell Test From The Start

From Naked Capitalism:

OCC Foreclosure Reviewer: “Independent” Reviews Were Controlled by Banks, Which Suppressed Any Findings of Harm to Foreclosed Homeowners

You simply must read this post if you care at all about the rule of law or can stand to see the gory mechanisms by which “regulation” has now become a fig leaf for criminal corporate conduct.

Reader Luxtexente submitted this comment yesterday, describing his experience as a Claim Reviewer for one of the 14 servicers, in theory working under the direction of Promontory Group and the OCC. He makes clear, contrary to other banks, which hired very junior people who had little understanding of real estate law and foreclosure procedures (see Adam Levitin and Abigail Field for examples) or foreclosure review firms who held themselves out as experts but have yawning gaps in their knowledge, that he and many of the other reviewers he worked with were very well qualified to screen servicer records. He describes how these reviews were systematically gutted.

Remember, the review firms were supposed to be independent, selected according to criteria set by the OCC and paid for by the banks, but supposedly not accountable to them. We had dismissed that idea early on as ridiculous. From a May 2011 post:

Let’s see…who chose these reviewers? The banks. Who is paying their bills? The banks. Who is a potential future client if all goes smoothly? The banks. And Walsh seriously expects us to believe the reviewers are independent, even before we get to the rampant conflicts?

But as Luxtexente tells us, it was much worse than that. It wasn’t simply that the consulting firms airbrushed out unflattering findings so as not to ruffle their current and hoped-for future meal tickets. The banks were actively involved in overseeing the project and the results were shameless rejection of any and every possible basis for borrowers getting recompense. He provides numerous examples of unquestionably abusive conduct, such as foreclosing on homeowners in non-judicial states without advertising the notice of sale as required by law, or failing to send a notice of acceleration. Enough of the reviewers understood state law requirements that they would find many, often over a dozen, violations on a single file. So how did the bank and the OCC conspire to solve this problem? They redefined the review process so as to omit matters of law. I am not making this up.

This is what corruption looks like at the operational level. I suggest you read this piece closely; it’s chock full of damning tidbits. For instance, Luxtexente gives us one reason why the cost of this process got to be so high: he and his colleagues were being paid early on to do nothing.

From Luxtexente:

It is a first time one of a kind project. In theory those of us who joined were actually going to make a major financial debacle right again. We were going to examine 1.8 million mortgage foreclosures for technical error, misrepresentations, fraud, and failure to comply with Federal and state foreclosure laws or procedures.

Many of us are older and have been in the mortgage business in one way or another for 20 plus years. We came from every walk of the industry including Foreclosure Law Firms. So we should all have been skeptical, but the way we were selected for the job set aside our skepticism, we were hopeful that we might fix, at least for some people, this horrendous mortgage debacle all of us saw unfold for almost a decade.

I often refused to sign off on loans because of the complete lack of sense they made. I constantly warned superiors of the tremendous risk we ran by accepting Appraisals on properties that accelerated at 25, 30, and 50% annually or even semi-annually.

My wife ran a small mortgage business and she refused to sell the option payment arms, and the interest only 1.25% teaser rates that produced negative amortization. She would not and did not sell the ever increasing products that lacked any of the traditional restraints on credit risk, ability to pay and property review. She only sold the standard fixed rate and term products and warned hundreds of clients and potential clients of the dangers of what they were trying to do. Most would not listen. Some did. We slept at night when the debacle came crashing down.

However, this 25 billion dollar settlement with the banks seemed like a way to help fix the mess the Government, Banks, Realtors, and Appraisers got us into. Yes, some of it was just plain ignorance and greed on the part of consumers, but it was also sold as the American Dream, the chance of a life time to get ahead, to make a better life for our children, to achieve financial freedom, educate our children at schools we couldn’t even consider before this. It was a sold as a chance to move up to better, bigger, safer neighborhoods. It was sold as the chance of a lifetime. Many of us in the industry knew better, we tried to warn clients, bosses, banks, lenders, but who listens to the peons in the chairs drawing a paycheck.

This 25 billion dollar settlement seemed like the chance to help make it right. The head hunters called us by the hundreds and thousands. It was going to be a program where people with our skills in underwriting, processing, title work, insurance, bankruptcy, foreclosure law, and credit counseling could help right this sinking Titanic. We were told we can make a difference and help make things right for millions of people, and it paid well.

I was with the second wave of “recruits”. I was impressed. In a training class of 70 people at the bank I was to work with most of us were underwriters and processors with a smattering of actual Bar registered lawyers. The amount of mortgage and foreclosure knowledge was tremendous. From what I could see and hear, it seemed we could fix this debacle pretty quick. Across the country and with the 14 major banks and lenders involved there would be thousands of us, all with years of experience and a determination to make this right. Our instructors were from the banks and lenders.

I didn’t like that idea. I had originally thought that I would be instructed on procedures and goals by a third party entity called Promontory and or the government agency OCC. That did not happen. However, the training was interesting, and seemed straight forward, review the file, find the problems, and report them so they could be fixed. The goal, make wronged borrowers whole again as nearly as possible or so we thought.

After the training we arrived on the “floor” to begin a more in-depth training. We learned at that point that there was nothing ready for us to work on, but this nothing paid well, we could wait. Things did progress though, and our review procedures began to develop. We began in January, by April there were 500 of us at the location I was in and it was projected to reach 750 by June. Forty of us were actually reviewing files.

This is where we began to see the sham of the project. By the time I began reviewing files there were on 57000 files to review. The trigger for a review was that a borrower had to file a written complaint with the OCC. The problem with getting people to write a complaint was that all the advertising was direct mail to their homes and only to people that had been foreclosed on between January 2009 and December 2010. At a meeting involving the entire staff across the country (by phone) the question was asked “why just direct mail”, the answer, “TV, Radio and Print Media would attract too many of the wrong people and the banks and lenders didn’t want that.” When it was mentioned that it was two to three years after the borrower had been evicted we were told that “they should have put in a forwarding address with us”. I was dumbfounded, how could they expect people who lost everything to the bank to keep updating their addresses with the bank? It made no sense. But we kept plugging away at our task knowing now the battle was going to be tougher than we thought.

There was another issue. We were supposedly independent contractors, but we worked directly under bank and lenders authority and supervision. Any findings we made were quality controlled by the bank. Any findings we made came directly under the scrutiny of the bank. Any arguments over our findings, and whether they should be changed or not could and often did result in termination from the program without cause or warning and we had no recourse because we were contractors.

Other issues began to come up. Many of the tests and procedures we used to test a particular loan for harm to the borrower were State Specific in regard to the foreclosure laws of that State. As we began to delve into the files we found sometimes a dozen or more violations of the foreclosure laws with a specific file. The situation was becoming heated as Claim Reviewers (as we were called) began finding more and more issues of law, not to mention, incompetence, and immorality and poor judgment. Often times it was just a lack of communications between departments within the bank that caused the problem. None the less, there were tensions building between Claim Reviewers and bank managers as the list of harm on borrowers grew. However, the bank and the OCC did find a solution. Take the questions out of the tests we were doing that asked about issues of law. So one test that had 2200 investigative questions (there are about a dozen tests for a file review) now became about 550 questions. Issues of law were removed. At another of our group meetings we were told that if a borrower did not specifically cite the law or statute that was violated in their complaint that we were not to address a violation of law found in the file as it was now irrelevant to the issues at hand. When the questions was asked “how is a borrower going to know if a specific law or statute was violated since they are not trained in the law” the answer was that we only address what the borrower specifically complained about. The problem was that usually a borrower only had a feeling they got shafted somehow, but did not specifically know how. The complaint form also didn’t mention to the borrower that they had to be specific about issues of law. The form only asked generic questions about what happened. Now it was very evident that we were there as window dressing and not the compassionate heroes we thought we were.

Those were only the general issues that were causing friction. The sham was becoming more and more evident in the details. Some of the details involve foreclosure timelines, missing documents, misapplied funds, multiple modifications and similar programs at one time, it was amazing.

For example, in one case I reviewed the borrower paid approximately 25K to reinstate his mortgage. Then he began to make his mortgage payments as agreed. Each time he made a payment the payment was sent back stating he had to be current for the bank to accept a payment. He made three payments and each time the response was the same. Each time he wrote and called stating he had sent in the $25K to reinstate the loan and had the canceled check to prove it. After several months the bank realized that they had put the 25K in the wrong account. At that time that notified him that they were crediting his account, but because of the delay in receiving the reinstatement funds into the proper account he owed them more interest on the monies, late fees for the payments that had been returned and not credited and he was again in default for failing to continue making his payment. The bank foreclosed when he refused to pay additional interest and late fees for the banks error. I was told that I shouldn’t show that as harm because he did quit making his payments. I refused to do that.

There was another instance when there was no evidence that the bank had properly published the notice of sale in the newspaper as required by law. The argument the bank made when it was listed as harm to the borrower was “here is the foreclosure sale deed, obviously we followed proper procedure, and you should change your answer as to harm.”

Often there is no evidence of a borrower being sent a proper notice of intent to accelerate the mortgage. When these issues are noted in a file we are told to ignore them and transfer those files to a “special team” set up to handle that kind of situation. You choose whatever meaning you like for that scenario.

As far as modifications and forbearance go, I saw multiple cases in which a borrower would be given a forbearance agreement. It would be signed and properly executed and before the borrower could make the first payment the borrower would be offered a trial modification. Before that payment was due the borrower would be offered a permanent modification, but because there was already a forbearance and a trial modification offered and in place the borrower would be told that he/she must cancel the other offers in writing. Once that was done the modification offered would be denied for lack of performance on the other programs offered and then further assistance would be denied because of the borrower turning down assistance on the other programs. Then the argument was that we shouldn’t say the borrower was harmed financially because he turned down the help offered.

Time after time scenarios would go something like this. The borrower would call in and ask for help with a modification. Usually they called or were referred to the collections department. The bank employee would tell the borrower that in order to receive help they must bring the mortgage current. The borrower would send the money in, usually to the bank collection agent who gave the information and then the modification department would deny the borrower assistance because the mortgage was current and they had to be behind to receive assistance. Of course the bank argued that there was no harm because the borrower obviously could make the payment.

More often than not a borrower would be foreclosed on even though the bank had said they could apply for a modification if they would send in the financial paperwork required. The borrower would do this, 2, 3,4,5,6 or more times and the bank would “loose” the paperwork time and time again, until the house was finally foreclosed on. The borrowers would call, write, and call immediately after faxing the paperwork, be told it was received only to be denied later because they failed to send in any paperwork. The banks argument was that there was no harm to the borrower because they didn’t send in the paperwork, even though more often than not with a little searching the paperwork would be found in the system somewhere.

Often the paperwork would be sent in and not reviewed for four, five or six months and then the borrower would be sent a letter requesting they send it again because everything the bank had was too old to use. Many times this was done even after the home was already sold at foreclosure. The argument by the bank was no harm was done because they did not send the paperwork again.

The bottom line, agree or be fired. When the independent contractors who are there to independently judge the situation are ruled and judged by the very people that are responsible for the debacle in the first place is ludicrous. So many times I was told to not argue because I could be let go without notice or cause, it was difficult to hold my tongue. Most people would change the results and simply make notes in the system about being ordered by management to make the changes. But the banks and lenders control the notes. Others left the position. I actually thought there was hope when the OCC took the decision about financial harm to the borrower away from the banks and lenders and gave it to Promontory. It was called the H test. But that was short lived when we were told the banks and lenders were being allowed to form review teams to determine if Promontory made the right decision about financial harm. That was decided by the OCC. The joke is on the American people. Actually, the American people are being made the punch line.

Source: http://www.nakedcapitalism.com/2013/01/occ-foreclosure-file-reviewer-independent-reviews-were-controlled-by-banks-which-suppressed-any-findings-of-harm-to-foreclosed-homeowner.html

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Monday, December 10, 2012 6:02 AM
To: Charles Cox
Subject: Tax Break for Mortgage Forgiveness Set to Expire on December 31, 2012

Tax Break for Mortgage Forgiveness Set to Expire on December 31, 2012

by Jonathan Ginsberg, Atlanta Bankruptcy Attorney

Unless Congress acts, the Mortgage Forgiveness Debt Relief Act of 2007 will expire on December 31, 2012.

What is this law, you may ask. Stated simply the Mortgage Forgiveness Debt Relief Act waives any tax due on debt forgiveness if you are able to negotiate a mortgage modification. Without this waiver, any amount of forgiven debt will be treated as ordinary income and taxed accordingly.

Here’s an example: let’s say that you owe $100,000 on your mortgage. Your property value has gone down and you are able to convince the bank to reduce your principal balance to $80,000, The $20,000 of debt forgiveness would be considered income by the IRS and you would be taxed on this. Currently, this tax is eliminated by the Mortgage Forgiveness law, but this waiver comes to an end on December 31, 2012.

Mortgage modification is already a time consuming, difficult process. Homeowners typically apply for modifications because they are struggling financially. If these homeowners discover that they will be facing a tax bill for debt forgiveness, many will conclude that there is no point in pursuing a modification and will decide to either walk away or file bankruptcy to deal with their upside down mortgages.

In November, 2012, forty-one state attorney’s general sent Congress a letter urging lawmakers to extend the Mortgage Forgiveness Debt Act. In this letter the attorney’s general note that the elimination of the Mortgage Forgiveness break will greatly undercut the $20 billion mortgage settlement negotiated earlier this year with the nation’s largest mortgage lenders.

Senate bill 3521 has been introduced by Senator Max Baucus of Montana but it currently has no co-sponsors. If you are contemplating a modification with your bank, I urge you to contact your Senator or Representative to urge him/her to support S.3521.

by Jonathan Ginsberg, Atlanta bankruptcy

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Monday, December 10, 2012 6:02 AM
To: Charles Cox
Subject: California court holds that omission of trustee does not preclude nonjudicial foreclosure

Yet one more lousy ruling putting more nails in the coffin of home ownership and perpetuating the bankster controlled judiciary. And of course they easily publish this case.

A case of first impression? Seems to me I sent out citations from California related to this issue some time back.

Note:

· No objection to RJN on at least two occasions (and finally making the objection on the same RJN after the SAC demurrer, which of course failed)

· An assumed “Beneficial Interest” in the Deed of Trust by MERS

· Post foreclosure action…no Tender or offer of Same and no arguing Tender Rule Exceptions

· No pleading additional material facts in the SAC

· No attempt to distinguish out of state citations

· No attempt to argue “commencing a non-judicial foreclosure sale” v. sustaining a foreclosure sale are very different!

· Failure to argue prejudice when no indorsed note was provided timely…apparently failing to claim forgery

· The court claiming Plaintiffs were :”in default;” “owned more than 90k in back payments;” “continue to occupy the Property “rent free,””

· Since when is forging a note indorsement; failure to name a trustee; substituting a trustee when there was none (what about the term “substitute” do you not understand!) merely “seek shelter in MINOR ministerial omissions” (emphasis added)…well, I guess certainly in California!

Sound familiar?

Also interesting is the court cites probate cases re failure of a trust does not occur for lack of a trustee but it appears, there was never addressed the fact that similar statutory authority exists that an unfunded trust DOES NOT EXIST. (while on the other hand stating the trustee serves as a common agent in the typical argument on these issues) The pick and choose your law out of context (from any jurisdiction they want, even if non-controlling) to argue your point still seems to succeed only for the banksters…

Yet more bad law made on what appears to be another poorly litigated case.

The theft of real property continues with the blessing of the judiciary.

Shuster v. BAC.docx

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Monday, December 10, 2012 7:50 AM
To: Charles Cox
Subject: Re: Shuster v. BAC Home Loans Servicing, LP

Thread posted by April Charney:

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Tuesday, December 11, 2012 9:51 AM
To: Charles Cox
Subject: Oce a Failed REMIC, Never a REMIC

See Paper attached.

Thanks Deontos!

Charles
Charles Wayne Cox
Email: mailto:Charles
Websites: www.BayLiving.com; www.FdnPro.com and www.ForensicLoanAnalyst.com
1969 Camellia Ave.
Medford, OR 97504-5403
(541) 727-2240 direct
(541) 610-1931 eFax

Paralegal; Litigation Support and Expert Witness Services; Forensic Loan Analyst; CA Licensed Real Estate Broker.

REMIC not a REMIC Brooklyn Law School Paper.pdf

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Tuesday, December 04, 2012 7:20 AM
To: Charles Cox
Subject: Foreclosure Defense Argument that Promissory Notes are not "negotiable instruments"

Here is Matt Weidner’s video of his oral argument on this issue.

And attached is the brief

He states we need one trial judge to be honest with the facts.

Initial Brief.docx

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Wednesday, November 21, 2012 5:57 AM
To: Charles Cox
Subject: National Mortgage Database – Promoting the MERS Infection and Model – The Evisceration of State’s Rights Continues

U.S. Federal Housing Finance Agency and Consumer Financial Protection Bureau announce plans for a new national mortgage database

· Dechert LLP

· Patrick D. Dolan , Robert H. Ledig, Ralph R. Mazzeo and Gordon Miller

· USA

·

· November 14 2012

The Federal Housing Finance Agency (FHFA) and the Consumer Financial Protection Bureau (CFPB) have agreed to collaborate to create a National Mortgage Database to chart housing market trends and support policymaking and research efforts. The database is also intended to fulfill a requirement under the Housing and Economic Recovery Act of 2008 for the FHFA to conduct a monthly mortgage market survey.

The mortgage database, which will date back to 1998, will be updated on a monthly basis and will include information such as the borrower’s financial and credit profile; the mortgage product and terms; the property purchased or refinanced; and the ongoing payment history of the loan. The database will create datasets on mortgages by matching informational files, such as property valuation models, to a nationwide sampling of credit bureau files on borrowers’ mortgages and payment histories.

Goals for the Creation of the Mortgage Database

While multiple state and federal databases and private databases currently exist, the FHFA and the CFPB intend to create one large, comprehensive database concerning the mortgage market to accomplish the following goals:

• Streamline data for research and policy purposes;
• Monitor the health of mortgage markets and consumers by providing detailed mortgage loan performance information regarding payments, modifications, foreclosures and bankruptcies;
• Better understand consumer decision making through the use of surveys;
• Monitor the volume and performance of new and emerging products in the mortgage market;
• Increase transparency regarding first and second mortgages outstanding to a particular borrower and how they are performing; and
• Better understand emerging borrower trends and overall consumer debt burdens by providing information regarding a borrower’s other debt obligations.

Concerns Regarding the Database

The FHFA stated that the database will not contain personally identifiable information and that appropriate precautions will be taken by the agencies to ensure that individual consumers cannot be identified through the database or any datasets that may be available to researchers or the public. However, observers have expressed concerns with regard to the level of detailed borrower information that the agencies intend to collect and include in the database, and how the information will be used. Market participants also worry that the database may increase burdens on lenders by requiring them to hire additional personnel to compile information for the government, and expose lenders to potential liability regarding the accuracy of such information.

Conclusion

The FHFA and the CFPB have signed an Inter-Agency Agreement regarding the terms for developing, maintaining and funding the database, and expect an early version of the full dataset to be complete in 2013.

http://www.fhfa.gov/webfiles/24621/NMDFHFACFPB110112F.pdf

National Mortgage Database.pdf

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Wednesday, November 28, 2012 6:23 AM
To: Charles Cox
Subject: Moynihan Depo

Matt Taibbi; Rolling Stone Politics:

Thank God for Bank of America CEO Brian Moynihan. If you’re a court junkie, or have the misfortune (as some of us poor reporters do) of being forced professionally to spend a lot of time reading legal documents, the just-released Moynihan deposition in MBIA v. Bank of America, Countrywide, and a Buttload of Other Shameless Mortgage Fraudsters will go down as one of the great Nixonian-stonewalling efforts ever, and one of the more entertaining reads of the year.

In this long-awaited interrogation – Bank of America has been fighting to keep Moynihan from being deposed in this case for some time – Moynihan does a full Star Trek special, boldly going where no deponent has ever gone before, breaking out the "I don’t recall" line more often and perhaps more ridiculously than was previously thought possible. Moynihan seems to remember his own name, and perhaps his current job title, but beyond that, he’ll have to get back to you.

The MBIA v. Bank of America case is one of the bigger and weightier lawsuits hovering over the financial world. Prior to the crash, MBIA was, along with a company called Ambac, one of the two largest and most reputable names in what’s called the "monoline" insurance business.

Bank of America: Too Crooked to Fail

The monolines sell a kind of investment insurance – if you invest in a municipal bond or in mortgage-backed securities backed or "wrapped" by a monoline, you have backing in case the investment goes south. If a municipality defaults on its bond payments, or homeowners in a mortgage-backed security default on their mortgage payments, the investors in those instruments can collect from the monoline insurer.

When companies like Countrywide issued their giant piles of crappy subprime mortgages and then chopped them up and turned them into AAA-rated securities to sell to suckers around the world, they often had these mortgage-backed securities insured by companies like MBIA or Ambac, to make their customers feel doubly safe about investing in their product.

The pitch firms like Countrywide made went like this: not only are these mortgages triple-A rated by reputable ratings agencies like Moody’s, they’re fully insured by similarly reputable insurance companies like MBIA. You can’t lose!

With protection like that, why shouldn’t your state pension fund or foreign trade union buy billions’ worth of these mortgage-backed products? It’s not like it would ever turn out that Countrywide made those products by trolling the cities of America stuffing mortgages in the pockets of anything with a pulse.

After 2007-8, when all of those mortgage-backed securities started blowing up, suddenly all of those insurance companies started having to pay out billions in claims. Ambac went bankrupt and MBIA was downgraded from AAA to near-junk status. The entire monoline industry was shattered.

The analogy one could make is that Countrywide sold a million flood-insured houses in New Orleans and Biloxi even though they could already see Katrina gathering in the Caribbean. Then, after the storm, the insurers decided to sue.

MBIA sued Bank of America (which acquired Countrywide in 2008), claiming that Countrywide lied to MBIA about its supposedly strict underwriting standards, when in fact the firm was cranking out mortgages hand over fist, without doing any real due diligence at all. (Whether the monolines should have known better, or its agents perhaps did know better and sold the mountains of insurance anyway, is another matter). In its suit, MBIA claimed that Countrywide turned itself into a veritable machine of mortgage approvals:

Countrywide Home Loans’ senior management imposed intense pressure on underwriters to approve mortgage loans, in some instances requiring underwriters to process 60 to 70 mortgage loan applications in a single day and to justify any rejections…

As a result of all of this, MBIA got stuck insuring a Himalayan mountain range of dicey mortgages. When the securities those mortgages backed started to fail, MBIA ended up paying out $2.2 billion in claims, helping crack the hull of the formerly staid, solid, AAA-rated firm.

Suits like this have the whole financial world on edge. The possibility that the banks might still have to pay gigantic claims to companies like MBIA (among a wide range of other claimants) has left Wall Street in a state of uncertainty about the future of some of the better-known, Too-Big-To-Fail companies, whose already-strained balance sheets might eventually be rocked by massive litigation payouts.

In the case of Bank of America, MBIA has long wanted to depose Moynihan because it was precisely Moynihan who went public with comments about how B of A was going to make good on the errors made by its bad-seed acquisition, Countrywide. "At the end of the day, we’ll pay for the things Countrywide did," was one such comment Moynihan made, in November of 2010.

As it turns out, Moynihan was deposed last May 2. But the deposition was only made public this week, when it was filed as an exhibit in a motion for summary judgment. In the deposition, attorney Peter Calamari of Quinn Emmanuel, representing MBIA, attempts to ask Moynihan a series of questions about what exactly Bank of America knew about Countrywide’s operations at various points in time.

Early on, he asks Moynihan if he remembers the B of A audit committee discussing Countrywide. Moynihan says he "doesn’t recall any specific discussion of it."

He’s asked again: In the broadest conceivable sense, do you recall ever attending an audit committee meeting where the word Countrywide or any aspect of the Countrywide transaction was ever discussed? Moynihan: I don’t recall.

Calamari counters: It’s a multi-billion dollar acquisition, was it not?
Moynihan: Yes, it was. Well, isn’t that the kind of thing you would talk about?
Moynihan: not necessarily . . .

This goes on and on for a while, with the Bank of America CEO continually insisting he doesn’t remember ever talking about Countrywide at these meetings, that you’d have to "get the minutes." Incredulous, Calamari, a little sarcastically, finally asks Moynihan if he would say he has a good memory.

"I would – I could remember things, yes," Moynihan deadpans. "I have a good memory."

Calamari presses on, eventually asking him about the state of Countrywide when Moynihan became the CEO, leading to the following remarkable exchange, in which the CEO of one of the biggest companies in the world claims not to know anything about the most significant acquisition in the bank’s history (emphasis mine):

Q: By January 1st, 2010, when you became the CEO of Bank Of America, CFC – and I’m using the initials CFC, Countrywide Financial Corporation – itself was no longer engaged in any revenue-producing activities; is that right?

Moynihan: I wouldn’t be the best person to ask about that because I don’t know.

There are no sound effects in the transcript, but you can almost hear an audible gasp at this response. Calamari presses Moynihan on his answer.

"Sir," he says, "you were CEO of Bank Of America in January, 2010, but you don’t know what Countrywide Financial Corporation was doing at that time?"

In an impressive display of balls, Moynihan essentially replies that Bank of America is a big company, and it’s unrealistic to ask the CEO to know about all of its parts, even the ones that are multi-billion-dollar suckholes about which the firm has been engaged in nearly constant litigation from the moment it acquired the company.

"We have several thousand legal entities," is how Moynihan puts it. "Exactly what subsidiary took place [sic] is not what you do as the CEO. That is [sic] other people’s jobs to make sure."

The exasperated MBIA lawyer tries again: If it’s true that Moynihan somehow managed to not know anything about the bank’s most important and most problematic subsidiary when he became CEO, well, did he ever make an effort to correct that ignorance? "Do you ever come to learn what CFC was doing?" is how the question is posed.

"I’m not sure that I recall exactly what CFC was doing versus other parts," Moynihan sagely concludes.

The deposition rolls on like this for 223 agonizing pages. The entire time, the Bank of America CEO presents himself as a Being There-esque cipher who was placed in charge of a Too-Big-To-Fail global banking giant by some kind of historical accident beyond his control, and appears to know little to nothing at all about the business he is running.

In the end, Moynihan even doubles back on his "we’ll pay for the things Countrywide did" quote. Asked if he said that to a Bloomberg reporter, Moynihan says he doesn’t remember that either, though he guesses the reporter got it right.

Well, he’s asked, assuming he did say it, does the quote accurately reflect Moynihan’s opinion?

"It is what it is," Moynihan says philosophically.

There’s nothing surprising about any of this – it’s natural that a Bank of America executive would do everything he could to deny responsibility for Countrywide’s messes. But that doesn’t mean it’s not funny. By about the thirtieth "I don’t recall," I was laughing out loud.

It’s also more than a little infuriating. In the pre-crash years, Countrywide was the biggest, loudest, most obvious fraud in a marketplace full of them, and the legion of complainants who’ve since sued (ranging from the U.S. government to Norway’s Sovereign Wealth Fund to state pension funds in Iowa and Oregon, among others) have found it painstaking work trying to get Bank of America to do the right thing and pay back the money its subsidiary took in its various ripoffs. And with executives boasting such poor memories, this story is going to drag on and on even longer.

Moynihan Depo BofA.pdf

Deutsche Bank Sues Foreclosure Fraud Expert’s Son With No Financial Interest In Her Case

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