phoenix bankruptcy lawyer discusses Weisband case and who has standing to file a motion to lift the automatic stay in a bk court in an attempt to sell your house while in bk

In Re Barry Weisband, 427 B.R. Chapter 13 (Dist. Ariz. 2010). Case No. 4:09-bk-05175-EWH.

The following is general legal information only, and just my interpretation of the Weisband case.  Other interpretations may be possible.  In addition, law often changes, please check to make sure this is good and valid case law at the time if reading.  Steve Vondran is a Phoenix Foreclosure and Bankruptcy Lawyer and also serves Clients in California where he is also licensed to practice law.  He can be reached at  (877) 276-5084.

Facts:

Barry Weisband filed for Chapter 13 Bankruptcy in March of 2009.  One of his listed assets was his real property located at 5424 E. Placita Apan in Tucson, AZ.  Weisband obtained the property when he executed a promissory note for $540,000 to GreenPoint Mortgage Funding secured by a deed of trust on October 6, 2006.  The deed of trust was signed by Weisband on October 9 and recorded October 13 of the same year (2006).  Importantly, the deed of trust named GreenPoint as the lender and MERS as the beneficiary “solely as nominee for GreenPoint, its successors and assigns.”  On an undated and separate piece of paper, GreenPoint endorsed the note to GMAC. GMAC therefore had physical possession of the original note in late 2006.

LOAN SECURITIZATION – THE FIVE CONTRACTS AT ISSUE IN THIS CASE:

(1) 4/10/06 FLOW INTERIM SERVICING AGREEMENT (between Green Point and Lehman) – The “FISA” AGREEMENT.

According to GMAC, GreenPoint entered into an agreement with Lehman to sell loans it originated to Lehman Brothers Holdings under a “Flow Interim Servicing Agreement” (FISA) executed on an earlier date of 4/10/06.  Under this Flow Agreement, GreenPoint agreed to sell certain loans to Lehman, and Green Point was to remain as servicer of these loans.  As the Court later discussed, there was never any proof that Lehman got any transfer of notes from Green Point (recall the endorsement above was to GMAC, not to Lehman), and no assignment of the Deed of Trust from MERS.

(2) 11/1/06 MORTGAGE LOAN SALE AND ASSIGNMENT AGREEMENT (between Lehman and SASC Corporation) – The “MLSAA” AGREEMENT.

Under this agreement Lehman would sell/transfer the loans it received from Green Point to Structured Asset Securities Corporation (SASC).  SASC Corporation would then create a securitized loan trust (called the “Green Point Funding Trust”) under a separate Trust Agreement (discussed below) and SASC would be entitled to receive the principle and interest payments.  As discussed below, there was again no proof that SASC ever got any transfer of any note or deed of trust in regard to the debtors loan as GMAC had argued.

(3) 11/1/06 SECURITIZED LOAN TRUST AGREEMENT (between SASC, Aurora Loan Services, and US National Bank).  Under this agreement, the following parties assumed the following roles:

(1) SASC, was Trustor

(2) U.S. Bank, was Trustee

(3) Aurora, was “Master Loan Servicer”

(4) 11/1/06 – RECONSTITUTED SERVICING CONTRACT (which essentially claimed Green Point would be the servicer of the loans in the trust.  However, Green Point went out of business in 2007).

(5) 11/1/06 SECURITIZED SERVICING AGREEMENT – (“SSA”) (between GMAC, Lehman, and Aurora Loan Services)

Under this agreement, GMAC was to service the loans in the securitized loan trust (essentially leaving Aurora Loan Services as the “master servicer” and GMAC as the “sub-servicer”).

IF YOU ARE STILL FOLLOWING THE STORY YOU ARE TO BE COMMENDED.  AT THIS POINT, TO RECAP, GREEN POINT ORIGINATES THE LOANS, MERS IS THE BENEFICIARY UNDER THE DEED OF TRUST IN A NOMINEE CAPACITY FOR GREEN POINT AND ITS SUCCESSORS AND ASSIGNS, AND THE ORIGINAL NOTE WAS TRANSFERRED AND ENDORSED TO GMAC, BUT THE LOANS ARE SOLD TO LEHMAN, AND THEN ASSIGNED TO SASC WHO CREATES A LOAN TRUST WHERE THE LOANS ARE ALLEGEDLY HELD AND SASC HAS THE RIGHT TO PRINCIPLE AND INTEREST PAYMENTS EVEN THOUGH GMAC HAS THE ORIGINAL NOTE.  WELCOME TO SECURITZED LOANS.

At some point, the debtor became delinquent on the loan, and filed for Chapter 13 bankruptcy protection.  While the automatic stay was in effect, MERS assigned the Deed of Trust to GMAC (apparently trying to convey standing on GMAC to file the motion to lift the automatic stay).  There was never any proof of any transfer of the loan or deed of trust to Lehman, or to SASC, and no proof the note or deed of trust wound up in the securitized trust, or that the debtors loan was subject to the SSA (servicing agreement purporting to confer sub-servicer status on GMAC).

GMAC then filed a motion to lift the automatic stay (to try to sell the property) and the Debtor objected to GMAC’s proof of claim.  In filing its proof of claim in support of its motion to lift the automatic stay, GMAC attached a copy of the note and the MERS assignment of the Deed of Trust, and an endorsement on a separate piece of paper (the endorsement was on an allonge and not attached to the note).

This dispute set the stage for an evidentiary hearing to determine whether or not GMAC had the legal right to lift the automatic stay in bankruptcy.

As discussed in the case: “GMAC advances three different arguments in support of its claim to be a “party in interest” with standing to seek relief from stay:

(1) First, GMAC asserts it has standing because the Note was endorsed to GMAC and GMAC has physical possession of the Note (although recall the loans were supposedly sold to Lehman and then to SASC who would theoritcally own the debtors loan).   In essence GMAC seemed to be claiming it owned the loan as evidenced by its attachment to the proof of claim.  This simply was not true.  This was GMAC’s so called “custodian assignee” argument (i.e. we hold the note as a custodial guardian for the true owner of the loan).

(2) Second, GMAC asserts that by virtue of the MERS Assignment of the Deed of Trust, it is a beneficiary of the DOT and entitled to enforce and foreclose the DOT under Arizona law. (again, how could GMAC have a security interest in the debtors property if the loans were sold to Lehman, and then to SASC who had the right to receive principle and interest payments – a traditional concept of “beneficiary”)?  There is also legal authority that MERS assignment of the Deed of Trust, without the note, is null and void and conveys nothing.  See our blog posting on In re Walker case in California Bankruptcy Court.

(3) Third, GMAC asserts it has standing because it is the servicer of the Note. The court addresses each of GMAC’s claims in turn.”

As a last resort, GMAC argued it was the authorized loan servicer (sub-servicer under the 11/1/06 SSA agreement).   The Court would eventually hold there was no proof the trust ever got the note and deed of trust so there was no way to know for sure that GMAC was the authorized servicer of a loan that did not appear to be covered or included in the SSA.

Legal Issue:

Did GMAC have constitutional / prudential standing to bring the Motion to Lift the Automatic Stay in Bankruptcy Court and was it the real party interest to bring such claim?

Holding:

No.  GMAC was not the holder of the note under entitled to enforce such under Arizona law and did not have constitutional standing as a “custodian’s assignee,” and was not the real party in interest entitled to seek relief from the automatic bankruptcy stay.  Their motion to lift the automatic stay was therefore denied.

The Court’s Rationale:

The Court first discussed the two relevant concepts of (a) CONSTITUTIONAL STANDING and (b) PRUDENTIAL STANDING - Real Party in Interest (both are required to bring the lift-stay motion:

CONSTITUTIONAL STANDING / PRUDENTIAL STANDING (REAL PARTY IN INTEREST)

To this point the Court held:

“Nevertheless, in order to establish a colorable claim, a movant for relief from stay bears the burden of proof that it has standing to bring the motion. In re Wilhelm, 407 B.R. 392, 400 (Bankr. D. Idaho 2009). The issue of standing involves both “constitutional limitations on federal court jurisdiction and prudential limitations on its exercise.” Warth v. Seldin, 422 U.S. 490, 498 (1975). Constitutional standing concerns whether the plaintiff’s personal stake in the lawsuit is sufficient to have a “case or controversy” to which the federal judicial power may extend under Article III. Id.; see also Lujan v. Defenders of Wildlife, 504 U.S. 555, 559-60 (1992); Pershing Park Villas Homeowners Ass’n v. United Pac. Ins. Co., 219 F.3d 895, 899 (9th Cir. 2000).

Additionally, the “prudential doctrine of standing has come to encompass several judicially self-imposed limits on the exercise of federal jurisdiction.’” Pershing Park Villas, 219 F.3d at 899. Such limits are the prohibition on third-party standing and the requirement that suits be maintained by the real party in interest. See Warth v. Seldin, 422 U.S. at 498-99; Gilmartin v. City of Tucson, 2006 WL 5917165, at *4 (D. Ariz. 2006). Thus, prudential standing requires the plaintiff to assert its own claims rather than the claims of another. The requirements of Fed. R. Civ. P. 17, made applicable in stay relief motions by Rule 9014, “generally falls within the prudential standing doctrine.” In re Wilhelm, 407 B.R. at 398.

NEXT, THE COURT APPLIED THE LAW TO THE FACTS OF THE CASE TO DETERMINED WHETHER GMAC HAD STANDING TO BRING THE LIFT-STAY MOTION.

As to GMAC’s first argument, GMAC did not demonstrate it was the holder of the note under Arizona law (A.R.S. 47-3301 says only the “holder” of the note can enforce it).  The court cited A.R.S. Section 47-1201(B)(21)(a) defining a holder as “the person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession.”  Because GMAC’s endorsement was on a separate piece of paper (allonge) rather than fixed to the note, it could not be considered the holder of the loan.  The allonge must be affixed to the note to effectuate a legal transfer of the note.  Therefore, the possession of the original note (one GMAC produced in court) meant nothing as GMAC “didn’t prove the note was properly payable to GMAC.”  In addition, the allonge endorsement was not included with GMAC’s proof of claim, further indicating that it had not been affixed to the note at the time of transfer.

NOTE: the Court noted an exception to the allonge rule (the allonge endorsement need not be attached to the note) if 4 elements are shown: (1) if the assignment of the note was signed and notarized on the same day as the trust deed, (2) if the assignment specifically referenced the escrow number, (3) if the assignment identified the original note holder, and (4) if the assignment recited that the note was to be attached.See in re Nash, 49 B.R. 254, 261 (Bankr. D. Ariz. 1985) where “holder” in due course status was established.

Nevertheless, the court concluded that GMAC did not qualify under this exception because there was no proof that that the allonge containing the special endorsement from GreenPoint to GMAC was executed at or near the time the note was executed.  SPECIFICALLY, THE COURT STATED:

“GMAC cannot overcome the problems with the unaffixed Endorsement by its physical possession of the Note because the Note was not endorsed in blank and, even if it was, the problem of the unaffixed endorsement would remain. As a result, because GMAC failed to meet its burden of demonstrating that the Endorsement was proper, it has failed to demonstrate that it is the holder of the Note.”

As to their second argument, the MERS assignment of the deed of trust DID NOT provide GMAC with Standing.  The Court noted that an assignee of a deed of trust “stands in the shoes” of the assignor, taking only those “rights and remedies the assignor held.  SINCE MERS HAD NO FINANCIAL INTEREST IN THE NOTE, THERE WAS NONE TO TRANSFER TO GMAC, AND NO STANDING CONFERRED TO GMAC BY ASSIGNING THE DEED OF TRUST.

HERE IS WHAT THE COURT SAID AS TO THE MERS ASSIGNMENT OF THE DEED OF TRUST TO GMAC:

“GMAC argues that it has standing to bring the Motion as the assignee of MERS. In this case, MERS is named in the DOT as a beneficiary, solely as the “nominee” of GreenPoint, holding only “legal title” to the interests granted to GreenPoint under the DOT. A number of cases have held that such language confers no economic benefit on MERS. See, e.g., In re Sheridan, 2009 WL 631355, *4 (Bankr. D. Idaho 2009); In re Mitchell, 2009 WL 1044368, *3-4 (Bankr. D. Nev. 2009); In re Jacobson, 402 B.R. 359, 367 (Bankr. W.D. Wash. 2009). As noted by the Sheridan court, MERS “collect[s] no money from [d]ebtors under the [n]ote, nor will it realize the value of the [p]roperty through foreclosure of the [d]eed of [t]rust in the event the [n]ote is not paid.” 2009 WL 631355 at *4.

Because MERS has no financial interest in the Note, it will suffer no injury if the Note is not paid and will realize no benefit if the DOT is foreclosed. Accordingly, MERS cannot satisfy the requirements of constitutional standing. GMAC, as MERS’ assignee of the DOT, “stands in the shoes” of the assignor, taking only those rights and remedies the assignor would have had. Hunnicutt Constr., Inc. v. Stewart Title & Trust of Tucson, Trust No. 3496, 187 Ariz. 301, 304 (Ct. App. 1996) citing Van Waters & Rogers v. Interchange Res., Inc., 14 Ariz. App. 414, 417 (1971); In re Boyajian, 367 B.R. 138, 145 (9th Cir. BAP 2007). Because GMAC is MERS’ assignee, it cannot satisfy the requirements of constitutional standing either.”

Third, the Court rejected GMAC’s argument that they had standing to pursue the lift stay motion as the servicer of the note.  The court reasoned that because there was insufficient evidence that the note and the deed of trust were transferred to the final Trust (ex. from Green Point to Lehman, to SASC to the Trust), GMAC could not claim that it was the servicer of the note as claimed – there was no proof the NOTE AND DEED OF TRUST were part of the Trust.  To this point the Court discussed the nature of securitized loans:

Securitization of residential mortgages is “the process of aggregating a large number of notes secured by deeds of trust in what is called a mortgage pool, and then selling security interests in that pool of mortgages.” Kurt Eggert, Held Up In Due Course: Predatory Lending, Securitization, and the Holder in Due Course Doctrine, 35 CREIGHTON L. REV. 503, 536 (2002). The process begins with a borrower negotiating with a mortgage broker for the terms of the loan. Then, the mortgage broker either originates the loan in its own name or in the name of another entity, which presumably provides the money for the loan. Almost immediately, the broker transfers the loan to the funding entity. “This lender quickly sells the loan to a different financial entity, which pools the loan together with a host of other loans in a mortgage pool.” Id. at 538.

The assignee then transfers the mortgages in the pool to another entity, which in turn transfers the loans to a special purpose vehicle (“SPV”,) whose sole role is to hold the pool of mortgages. Id. at 539. “The transfer to the special purpose trust must constitute a true sale, so that the party transferring the assets reduces its potential liability on the loans and exchanges the fairly illiquid loans for much more liquid cash.” Id. at 542. Next, the SPV issues securities which the assignee sells to investors. Id. at 539.

Once the securities have been sold, the SPV is not actively involved. It “does not directly collect payments from the homeowners whose notes and deeds of trust are held by the SPV.” Id. at 544. Rather, servicers collect the principal and interest payments on behalf of the SPV. Id. Fees are associated with the servicing of loans in the pool. Therefore, GMAC WOULD HAVE  constitutional standing if it is the servicer for the Note and DOT because it would suffer concrete injury by not being able to collect its servicing fees. In re O’Kelley, 420 B.R. 18, 23 (D. Haw. 2009). In this case, however, the evidence does not demonstrate that the Note and DOT were transferred to the Trust, and, without that evidence, there is no demonstration that GMAC is the servicer of the Note.

NOTE:  AFTER DETERMING THERE WAS NO STANDING FOR GMAC TO PURSUE THE MOTION TO LIFT THE BANKRUPTCY STAY, THE COURT ADDRESSED THE DEBTORS ARGUMENT THAT “ONLY THE SECURITIZED LOAN INVESTORS HAVE STANDING TO LIFT THE STAY.” The court, in rejecting this argument stated:

The Debtor argues that, in an asset securitization scheme, only the securities investors have standing to seek stay relief because they are the only parties with a financial interest in the securitized notes. However, because the Debtor executed the Note and received consideration (which he used to purchase the house), the contract is enforceable regardless of who provided the funding. In other words, the fact that the funds for a borrower’s loan are supplied by someone other than the loan originator, does not invalidate the loan or restrict enforcement of the loan contract to the parties who funded the loan. A number of cases and treatises recognize that consideration for a contract, including a promissory note, can be provided by a third party. See, e.g., DCM Ltd. P’ship v. Wang, 555 F. Supp. 2d 808, 817 (E.D. Mich. 2008); Buffalo County v. Richards, 212 Neb. 826, 828-29 (Neb. 1982); 3 WILLISTON ON CONTRACTS  7:20 (Richard A. Lord, 4th ed. 2009); RESTATEMENT (SECOND) OF CONTRACTS  71(4) (2009).

Notes are regularly assigned and the assignment does not change the nature of the contract. The assignee merely steps into the shoes of the assignor. In re Boyajian, 367 B.R. 138, 145 (9th Cir. BAP 2007); In re Trejos, 374 B.R. 210, 215 (9th Cir. BAP 2007). No additional consideration is required, as opposed to a novation which creates a new obligation. Id. at 216-17 citing RESTATEMENT (SECOND) OF CONTRACTS 280, cmt. e. Therefore, the Debtor’s argument that the Note is unenforceable because the funder of the Note was not the payee fails. The Note is still valid and can be enforced by the party who has the right to enforce it under applicable Arizona law.

THE COURT ALSO ADDRESSED WHAT TYPE OF PROOF OF NOTE ASSIGNMENT IS REQUIRED TO LIFT THE AUTOMATIC STAY:

A movant for stay relief need only present evidence sufficient to present a colorable claim not every piece of evidence that would be required to prove the right to foreclose under a state law judicial foreclosure proceeding is necessary. In re Emrich, 2009 WL 3816174, at *1 (Bankr. N.D. Cal. 2009). Accordingly, not every movant for relief from stay has to provide a complete chain of a note’s assignment to obtain relief.

Arizona’s deed of trust statute does not require a beneficiary of a deed of trust to produce the underlying note (or its chain of assignment) in order to conduct a Trustee’s Sale. Blau v. Am.’s Serv. Co., 2009 WL 3174823, at *6 (D. Ariz. 2009); Mansour v. Cal-W. Reconveyance Corp., 618 F. Supp. 2d 1178, 1181 (D. Ariz. 2009); Diessner v. Mortg. Elec. Registration Sys., 618 F. Supp. 2d 1184, 1187 (D. Ariz. 2009). It would make no sense to require a creditor to demonstrate more to obtain stay relief than it needs to demonstrate under state law to conduct a judicial or non-judicial foreclosure. Moreover, if a note is endorsed in blank, it is enforceable as a bearer instrument. See In re Hill, 2009 WL 1956174, at *2 (Bankr. D. Ariz. 2009). Therefore, this Court declines to impose a blanket requirement that all movants must offer proof of a note’s entire chain of assignments to have standing to seek relief although there may be circumstances where, in order to establish standing, the movant will have to do so.

Conclusion:

The Weisband Court held that GMAC lacked standing to move for relief of stay (both constitutional and prudential standing – real party in interest).  GMAC’s possession of the original note did not entitle it to enforce the note because the allonge was not properly affixed to the note meaning there was no right to seek payment on the note.  MERS has no financial interest in a deed of trust (because is collects no loan payments and is not injured in the event of foreclosure) so it has no real interest to transfer to the assignee (who stands in the shoes of the assignor) and so the assignment of the deed of trust (security for payment of the loan) is essentially a transfer of no legal interests.  The in re Walker blog we wrote and cited above also lends credence to this position.  Finally, without proof that a note and deed of trust was transferred to the underlying securitized loan trust (at least evidence sufficient to raise a colorable claim of transfer of ownership of the trust), GMAC could not claim standing as a loan servicer (although it is injured in the sense that it loses the right to collect loan payments when a borrower is in default).  The Court did not make exactly clear what kind of proof was required, and indicated a full chain of transfer may not be required, but there may be some cases where it is.  As such, GMAC’s motion was denied, and they could not lift the stay.  What the consequences of that are is anybody’s guess.  Perhaps it is time for the debtor to file an adversary proceeding to challenge the validity of the lien?  Perhaps there is some type of settlement?

I know this is completely random, but I have received several calls lately regarding the question: SHOULD I GO TO LAW SCHOOL?

Sometimes people actually like what I am doing, how I treat people, and the fact that I fight for the rights of homeowners against big banks. I frequently hear that someone was thinking of going to law school and becoming a lawyer. Here are my thoughts on the topic. I don’t think everyone should go to law school, but some people MUST go. Here are my thoughts on the topic. Here are the characteristics of what I think makes a good lawyer. If you can HONESTLY answer “that’s me” to 7 or more of these, then maybe pursuing a career in law is a wise choice for you:

(1) You have to love to argue with anybody about anything at anytime. Not “I don’t back down or I love to argue when pushed” but truly day in and day out, you want to argue about everything, from what to movie is the best to watch, to how ths country should be run, etc.

(2) You have love to research and write. This business is all about pushing paper and pushing it fast and often. If you love to write and are good at it then maybe this is the job for you. Lawyers draft briefs, contracts, motions, pleadings, and hundreds of other documents each and every year. Writing is a huge part of practicing law. If you love to write, that is a good sign that you MIGHT make a good lawyer.

(3) You have to be willing to work 15/7 – TYPE A. Some of the best attorneys work seventy or eighty hours PER WEEK. I know that may sound crazy to people who like to take it easy and enjoy a rock concert three times a week, and watch reality TV, and basically just philosophize about life. If you are a workaholic, and enjoy burning the midnight oil, you may want to consider jumping into the legal profession.

(4) You have to be a good listener and strong negotiator. Lawyers negotiate on a daily basis. Whether you are a real estate lawyer helping to negotiate a commercial loan workout, or a personal injury attorney trying to negotiate a settlement, you have to be good at listening, and negotiating both with clients and opposing counsel. That is the game, and you have to be good at it. Too many lawyer like to be research guys that “like to figure things out” and basically sit in the backroom and do nothing but think about things all day long. Real lawyers want to be in the pit negotiating deals that solve problems.

(5) You have to be persuasive when you are argue. This is most essential if you plan to be a litigation attorney. When you litigate, there are motions being filed left and right, especially when big fortune 500 companies are involved. When this happens, you have to be prepared to out-reserch, out-write, and out-argue your opponents. If you are weak in the knees in any of these areas, don’t waste your time or money going to law school to be a litigator.

(6) You have thick skin and not get bent out of shape about everything that does not go your way. Again, opposing counsel are there to disparage your case, eat your lunch, and tell the judge you are basically a moron. Yes, that is the way it goes. Every time you file something some person on the other end, equally trained in the law, is going to tell you, and the judge, that your claim lack merit, makes no sense, etc. This is the nature of litigation. If your feelings get hurt easily, give this profession no more consideration, because you will be eaten alive. Litigation is nasty, litigants are nasty, and even the judge may be nasty toward your position. If water rolls off your back, law may be a good choice for you.

(7) You have to be extremely organized and excel at managing your time. As a lawyer, you will need to balance your time between legal research, marketing, drafting documents, appearing in court, and dealing with demanding clients (yes they pay good money and expect you to communicate constantly). If you cant make it happen, and cant handle the pressure cooker, then don’t waste your time.

(8) You have to be persistent in trying to achieve the desired result. Rome wasn’t built in a day, and settlements normally aren’t achieved overnight. You have to convince the other party that they have more to lose than you do. Or should I say, that their client has more to lose than yours does. This is not always a simple task, and normally requires several hearings and rulings before your opposition may be inclined to see things your way, see the law your way, and eventually talk their clients into giving ground and settling on terms favorable to your client. If you want quick solutions and quick resolutions to problems, don’t waste your time with practicing law, it will be disappointing to you.

(9) You have to be innovative and find innovative solutions to potential complex problems. Sometimes you have to “think out of the box.”

(10) You have to be assertive, not aggressive, but assertive. Law requires advocacy. People are paying you good money to advocate on their behalf. You have to do your legal research, prepare, and then advocate for each client as if it were your own brother, sister, mom or dad. This may sound easy in concept, but requires a lot of effort in reality. Again, if you are the kind of person that just hopes “common sense” prevails, or hopes that other people can read your mind, or read your body language and figure out where you are coming from, you will probably be disappointed in the practice of law.

Anyway, I hope this answers some of the tougher questions as to whether going for a law degree is right for you or not. It is a lot of time, money, and effort to make it all happen, but if law fits like a glove, then this may well be the perfect profession for you. If not, there are other noble causes you can do with your life, and you would be wise to explore those options as well.

Does Truth in Lending Act (TILA) apply to commercial loans? No. But what is a commercial loan?

Here is some general information on the TILA law. Commercial loans are not covered by TILA. But that is always not a easy question to figure out (is the loan commercial or is it a loan on the primary residence of the borrower). Here are a few ideas:

TIL is a remedial statute to be broadly construed to further the Congressional purpose of meaningful disclosure of credit terms. Rachbach v. Cogswell, 547 F.2d 502, 505 (10th Cir. 1976). Whether a transaction is primarily consumer or commercial in nature so as to be subject to this subchapter is a factual issue to be resolved by trier of fact by looking to transaction as a whole and purpose for which credit was extended. Gallegos v. Stokes, C.A.10 (N.M.) 1979, 593 F.2d 37. In a loan transaction in which the borrower uses his principal dwelling to secure the loan from the creditor, the Truth in Lending Act (TILA) provides the borrower with a right to rescind the transaction. Truth inLending Act, § 125(a), as amended, 15 U.S.C.A. § 1635(a). In re Webster, 300 B.R. 787 (Bankr. W.D. Okla. 2003).

15 U.S.C. § 1635(a) (emphasis added). The plain statutory text of § 1635 provides that a debtor’s right to rescind arises only when the loan transaction is secured by the debtor’s “principal dwelling.” Although TILA itself does not define a “principal dwelling,” Title 12 of the Code of Federal Regulations implementing TILA, known as Regulation Z, provides some guidance. *471 First, Regulation Z defines a “dwelling” as “a residential structure that contains 1 to 4 units, whether or not that structure is attached to real property.” 12 C.F.R. § 226.2(a)(19) (2007). Second, it provides that “[a] consumer can only have one principal dwelling at a time. Thus, a vacation or other second home would not be a principal dwelling.” 12 C.F.R. § 226 Supp. I, Section 226.2(a)(24)(3) (2007) (emphasis in original); see also Scott v. Wells Fargo Home Mortgage, Inc., 326 F.Supp.2d 709, 715 (quoting Scott v. Long Island Sav. Bank, 937 F.2d 738, 741 (2d Cir.1991)).

Law Offices of Steven C. Vondran launches Foreclosure College!

Foreclosure College Launches! First Seminar for Foreclosure and Bankruptcy Lawyers begins in September 2010 (edit/delete)

FORECLOSURECOLLEGE.NET “BOOTCAMP” – Helping Lawyers Fight and Win the War on Foreclosure!

TWO DAY SEMINAR – NEWPORT BEACH, CALIFORNIA – SEPTEMBER 2010 (Date to be announced)

For Information on Foreclosure College Dates please visit http://www.ForeclosureCollege.net

__________________________________________________________________________________________

Introduction: Foreclosures and bankruptcies do not appear to be ending anytime soon. The lenders, loan servicers and investors of securitzed loans are making things more difficult than ever on desparate homeowners. SB94 passed in October 11, 2009 literally forcing brokers and attorneys out of the loss mitigation business and left California homeowners grasping for information about how to best take on these 5000 pound gorrillas. Is there anything a conscientious lawyer can do to legally and ethically help these homeowners in financial distress and trying to save their homes from foreclosure? YES THERE IS! There are still a certain class of lawsuits that can and should be filed against financial institutions that willingly violate the state and federal rights of homeowners. It is literally shocking to see the amount of abuses that go on, and if not identified, go unnoticed and unchallenged. For example, foreclosure laws that are not followed, invalid substitution of trustees, selling homes while a modification was in effect, TILA rescission letters ignored, RESPA QWR’s ignored, demands to identify the holder of the loan ignored, demands to agree to unwarranted deficiency judgments as part of the loss mitigation process, etc. These are but a few of the things that are becoming somewhat typical in the foreclosure marketplace. This foreclosure seminar will help the legal practitioner identify, assert, and stand up for the legal rights of their clients through civil lawsuits and bankruptcy actions.

IF YOU ARE A CALIFORNIA LAWYER LOOKING TO GET INTO THE FORECLOSURE DEFENSE BUSINESS, (OR A PRACTICING REAL ESTATE OR BANKRUPTCY LAWYER ALREADY HANDLING CASES IN THIS AREA), THIS SEMINAR SHOULD BE OF SIGNIFICANT VALUE TO YOU. LEARN THE INSIGHTS ATTORNEY STEVE VONDRAN HAS LEARNED IN HIS TWO YEARS FIGHTING THE FORECLOSURE BATTLE. LEARN THE TIPS, TRICKS, AND INSIGHTS STEVE VONDRAN HAS LEARNED, AND OBTAIN COPIES OF THE FORECLOSURE MATERIALS HE USES IN HIS DAILY BATTLE AGAINST THE LENDERS AND LOAN SERVICERS.
THE GOAL OF FORECLOSURE COLLEGE IS TO HELP YOU BETTER UNDERSTAND THE LEGAL ISSUES FACING YOUR CLIENTS, AND HELP YOU MORE EFFECTIVELY ADVOCATE ON THEIR BEHALF BY LEARNING TO SEPARATE THE FACT FROM THE FICTION, AND GOOD CASES FROM BAD.

ABOUT STEVE VONDRAN, ATTORNEY

Attorney Steve Vondran will be giving the seminar. He has been a real estate attorney for about 6 years and prior to becoming an attorney was a mortgage loan officer at American Home Equity in Irvine, California. He has also sold residential and commercial real estate, the later with DAUM commercial real estate. When the loss mitigation business blossomed over two years ago, Mr. Vondran was one of the first attorneys that starting focusing his practice on helping homeowners with their foreclosure issues. He was responsible for helping over 50 California Real Estate Brokers legally operate in the loan modification business by having them set-up to do business through the California Department of Real Estate (DRE) with approved advance fee agreements and verified accountings. He has also represented California clients in loan modification process – pre-SB94, and has filed predatory lending lawsuits seeking TRO’s, injunctions, and money damages against major lenders such as Wachovia, Wells Fargo, Indymac, Bank of America, SPS, Cal-Western Reconveyance, Executive Trustee Services, and more. He has also represented Clients in Chapter 7 bankruptcy actions, including filing oppositions to motions to lift the automatic stay in bankruptcy and filing adversary proceedings in bankrupty Court. Mr. Vondran is a member of the State Bar for both Arizona and California, and is a licensed real estate broker in both jurisdictions. He is admitted to practice law in most state and federal courts in California and Arizona and is a member of the Orange County Trial Lawyers Association.

DOES FORECLOSURE COLLEGE QUALIFY FOR DRE MCLE CONTINUING EDUCATION UNITS?

We plan to file an application with the California State Bar to provide continuing education (MCLE) units for this Foreclosure Seminar. AT THIS TIME THERE IS NO MCLE UNITS.

WHO SHOULD ATTEND FORECLOSURE COLLEGE?

(1) California Attorneys looking to make a lateral move into foreclosure defense/bankruptcy
(2) Current California Attorneys looking for tips, tricks, strategies, and insights that may help in providing more effective advocacy and representation
(3) Other Interested Professionals

WHAT TOPICS WILL BE ADDRESSED AT FORECLOSURE COLLEGE?

(1) The Battlefield: understanding the loss mitigation landscape / MERS & securitized loans (who owns my loan?) / Chain of Title
(2) Know thy enemy: understanding the nature of the beast (the lenders and loan servicers and their attorneys)
(3) Overview of available Loss Mitigation Options (short sale / deed in lieu / bankruptcy / modification) / SB94
(4) The law of short sales / short sale considerations / deficiency judgments
(5) Loss mitigation without Litigation (mortgage mediation) / HAMP & other loss mitigation programs / mathematics of modification / Trial Plan Fraud
(6) Understanding Forensic Loan Audits / Predatory Lending / Holder in Due Course
(7) Truth in Lending Rescission / Recoupment – Your Most Powerful Weapon?
(8) Setting a case up for litigation (QWR’s / Debt Validation / Beneficiary statements / Chain of title)
(9) Suing your broker: option arm loans and fiduciary duties / RESPA & YSP
(10) Foreclosure process: foreclosure laws and common violations / California one action “security first” rule
(11) What to expect when litigating your loan / causes of action / removal / TRO & Injunction / Fee Models
(12) What is lis pendens in California and how to use it?
(13) What is quiet title in California and when to use it?
(14) What is produce the note theory?
(15) The Indymac / FDIC / OneWest bank phenomena
(16) All roads lead to bankruptcy: “prove you are my creditor” strategy
(17) Bankruptcy adversary proceedings & challenging proof of claim
(18) Bankruptcy fighting lender / servicer lift-stay motions
(19) Understanding Foreclosure Scams / Law Centers / Homeowner recourse
(20) Attorney Ethics issues that may arise in Foreclosure Defense

WHAT MATERIALS YOU WILL RECEIVE AT FORECLOSURE COLLEGE?

FORECLOSURE COLLEGE ATTENDEES WILL RECEIVE A THREE THREE RING BINDER INCLUDING THE FOLLOWING VALUABLE MATERIALS:

(Some Documents will be provided on a Removable disc)

(1) COPY OF QUALIFIED WRITTEN REQUEST LETTER
(2) COPY OF DEMAND TO IDENTIFY HOLDER OF THE LOAN LETTER UNDER 15 USC 1641
(3) COPY OF TRIAL PLAN FRAUD / BREACH OF CONTRACT LETTER
(4) COPY OF LOAN MOD SCAM LETTER
(5) COPY OF TILA RESCISSION LETTER
(6) SAMPLE OF ATTORNEY LOAN AUDIT / PREDATORY LENDING CHECKLIST
(7) TRO / PRELIMINARY INJUNCTION CHECKLIST

WHAT IS THE COST OF FORECLOSURE COLLEGE?

$2,500 (INCLUDES REFRESHMENTS DURING SEMINAR / THERE WILL BE SPECIAL PRICING ON HOTEL ROOMS)

WHERE WILL THE FORECLOSURE SEMINAR COLLEGE TAKE PLACE?

The Seminar will be held in September (TBA) in Newport Beach, California. Starting time is 8:30 am – 5:00 pm. Exact location will be announced as soon as ascertained. A minimum of 7 attendees is required in order for the event to take place. If the event does not take place, a full refund will be immediately provided. TO BOOK YOUR SEAT CALL (877) 276-5084

Predatory Lending Litigation: The lenders love federal court – dont forget the motion for REMAND to STATE COURT!

Here is the scenario……you file a predatory lending lawsuit alleging all sorts of causes of action.  Here are a few of the typical causes of action you might raise in a predatory lending lawsuit:

• Fraud
• Misrepresentation
• Deceit
• Elder Abuse
• Truth in Lending Violation (Rescission, etc.)
• RESPA
• Civil Conspiracy
• Breach of contract
• Unjust enrichment
• etc.

You are all reved up because you just filed a lawsuit against the lender, and maybe even te loan servicer (sometimes people sue the loan servicer by accident because they are think, or are lead to believe the servicer owns the loan).  Anyway, that is another story.  So you file the lawsuit, and then a few weeks later you get notice that the DEFENDANTS ARESEEKING TO REMOVE THE CaSE FROM STATE COURT TO FEDERAL COURT.

I recently had this happen in a trial plan fraud / breach of contract case.  Now, there are two ways to get to federal court:

(1) One of your causes of action raises a “federal question” (ex. the TILA and RESPA claim in the above example wouldraise federal questions) and;

(2) There is “diversity of citizenship” among the defendants (meaning essentially you and each of the defendants are from different states), AND the lawsuit must be seeking more than $75,000 in damages.

Now there are alot of little nuances to these two requirements, but suffice to say meeting either test will allow them to remove your case to federal courts.  Federal courts, at least in my opinion, are harder to win in for homeowners based on the research I have done in other cases.  To me, federal court is where “predatory lending claims go to die.”  Now this is just one mans opinion, based on alot fo the cases I have read.

Anyway, in this case I informed the other attorney that there were no grounds to take the case to federal court, but that did not stop them.  I immediately filed a motion for remand and cited extensively the cases supporting my position.  At the end of the day, we won, and the case was remanded back to federal court where it should have been in the first place.  There are some things you can do to make it less likely that they lender will remove the case, but that is why you might want to hire a lawyer rather than go in pro per.

At any rate, the lesson here is to be careful what claims you are bringing in your predatory lending lawsuit.  Federal claims will probably land you in federal court where the costs might be higher, the procedural rules may trip you, etc.  Do not let the lenders have thier way.