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Thursday, April 4, 2013

West v JP Morgan Chase Appeal Quotes of Law

West v Chase, some quotes from the Appellate Court:

“We hold that West stated causes of action for fraud, negligent misrepresentation, breach of written contract, promissory estoppel, and unfair competition, and therefore reverse the judgment on those causes of action.”

In holding that West stated a cause of action for breach of written contract, we agree with the analysis and interpretation of HAMP presented in the recent opinion of the United States Court of Appeals for the Seventh Circuit in Wigod v. Wells Fargo Bank, N.A. (7th Cir. 2012) 673 F.3d 547, 556‑557 (Wigod).  Core to our decision is the court’s conclusion in Wigod, supra, 673 F.3d at page 557, that when a borrower complies with all the terms of a TPP, and the borrower’s representations remain true and correct, the loan servicer must offer the borrower a permanent loan modification.  As a party to a TPP, a borrower may sue the lender or loan servicer for its breach.  (Id. at p. 559, fn. 4.)  Because West complied with all the terms of the TPP, Chase Bank had to offer her a permanent loan modification.” (Emphasis Added)

“The SPAs stated that servicers ‘shall perform the loan modification . . . described in . . . the Program guidelines and procedures issued by the Treasury . . . and . . . any supplemental documentation, instructions, bulletins, letters, directives, or other communications . . . issued by the Treasury.’”

““Where a borrower qualified for a HAMP loan modification, the modification process itself consisted of two stages.  After determining a borrower was eligible, the servicer implemented a Trial Period Plan (TPP) under the new loan repayment terms it formulated using the waterfall method.  The trial period under the TPP lasted three or more months, during which time the lender ‘must service the mortgage loan . . . in the same manner as it would service a loan in forbearance.’  Supplemental Directive 09‑01.  After the trial period, if the borrower complied with all terms of the TPP Agreement—including making all required payments and providing all required documentation—and if the borrower’s representations remained true and correct, the servicer had to offer a permanent modification.  See Supplemental Directive 09‑01 (‘If the borrower complies with the terms and conditions of the [TPP], the loan modification will become effective on the first day of the month following the trial period. . . .’).”  (Fourth ellipsis & italics added, fn. omitted.)”

“Also on May 24, West made her 10th reduced payment of $1,931.86, which Chase Bank rejected and returned to her.

“Although Chase Bank had told West no foreclosure sale had been scheduled, her home was sold at a trustee’s sale conducted on May 26, 2010.  “In violation of its promises and said letter, and HAMP rules (and Supplemental Directives), two (2) days later, CHASE BANK secretly, sold [West]’s home, on May 26,[]2010 during the re‑evaluation period.  CHASE BANK issued letters dated May[]20, 2010, received May 24, 2010, rejecting [West]’s 10th payment . . . , made pursuant to the continuing forbearance agreement.”

“West alleged that in reliance on the representations and Chase Bank’s alleged concealment of the foreclosure sale, she suffered damages “including loss of mortgage payments made under false pretenses, attorney fees, legal costs, personal injuries, pain and suffering, anxiety, humiliation, fear, extreme emotional distress, and physical injuries.””

“Under the allegations of the third amended complaint, West likely would have been successful in taking legal action to stop the sale.

In January 2010 and again in March 2010, Chase Bank advised West to “continue to make your trial period payments on time.”  She made all of her payments.”

[Chase argument fails] “This argument ignores Chase Bank’s obligations under HAMP and the express and implied obligations under the Trial Plan Agreement.  When Chase Bank received public tax dollars under the Troubled Asset Relief Program,[1] it agreed to offer TPP’s and loan modifications under HAMP according to guidelines, procedures, instructions, and directives issued by the Department of the Treasury.  (Wigod, supra, 673 F.3d at p. 556.)  Under the United States Department of the Treasury, HAMP Supplemental Directive 09‑01 (Apr. 6, 2009) (Directive 09‑01), if the lender approves a TPP, and the borrower complies with all the terms of the TPP and all of the borrower’s representations remain true and correct, the lender must offer a permanent loan modification.  (Wigod, supra, at p. 557.)  Directive 09‑01, supra, at page 18, states:  “If the borrower complies with the terms and conditions of the [TPP], the loan modification will become effective on the first day of the month following the trial period . . . .”[2] 

Nonetheless, the defendant bank was required to offer “some sort of good‑faith modification to [the plaintiff] consistent with HAMP guidelines.” “ (Ibid.) (Page 17 West)

“But such a proviso is imposed by the United States Department of the Treasury through Directive 09‑01, supra, page 18 (see Wigod, supra, 673 F.3d at p. 557), and a contract must be interpreted in a way to make it lawful (Civ. Code, § 1643).  To make the Trial Plan Agreement lawful, it must be interpreted to include the proviso imposed by Directive 09‑01.  In addition, HAMP guidelines “informed the reasonable expectations of the parties to [the Trial Plan Agreement].”  (Wigod, supra, at p. 565.) “  (West pg 18)

“Thus, as alleged in the third amended complaint, the Trial Plan Agreement required Chase Bank to offer West a permanent loan modification because she had complied with the terms of that agreement.

Quiet Title: “Nothing we say precludes West from seeking leave to amend to allege quiet title based on other facts or theories. “ (West pg. 24)

Promissory Estoppel: “West’s third amended complaint adequately alleges promissory estoppel under these authorities.”

UCL: “We conclude the third amended complaint stated a cause of action under the UCL based on unfair or fraudulent practices.  Liberally construed, the third amended complaint alleged Chase Bank engaged in a practice of making TPP’s that did not comply with HAMP guidelines and the United States Department of the Treasury directives; made misrepresentations regarding a borrower’s right and ability to challenge the bank’s calculation of the NPV; made misrepresentations about pending foreclosure sales; and wrongfully had trustee’s sales conducted when the borrower was in compliance with a TPP.  Under such allegations, Chase Bank engaged in unfair business practices under any of the three definitions.”

  [1]  The Emergency Economic Stabilization Act of 2008, title 12 United States Code section 5201 et seq., gave the Secretary of the Treasury the power to establish the Troubled Asset Relief Program to purchase, make, and fund commitments to purchase troubled assets from any financial institution, on such terms and conditions as set by the Secretary.  (12 U.S.C. § 5211(a)(1).)  The Emergency Economic Stabilization Act of 2008 defines a “troubled asset” as a financial instrument the purchase of which is necessary to promote financial stability.  (12 U.S.C. § 5202(9)(B).)
  [2]  Construction of the United States Department of the Treasury directives is a question of law for the court to decide.  (Wigod, supra, 673 F.3d at p. 580.)

Monday, March 25, 2013

CA HAMP Rights

West v JP Morgan Chase, West Appeal wins CA HAMP right to sue for breach of contract, misrepresentation, unfair practice, etc.; trial mod becomes permanent mod; Trial/Appeal work by Richard Rydstrom, Esq. 1877Win4You

Saturday, March 16, 2013

HAMP violations Support State Causes of Action

9-2012 Rich Rydstrom, Esq. upholds Complaint for Los Angeles Entertainment Photographer in OC Superior Court for Violations of HAMP, Fraud-Mod, Unfair Business Practices, HAMP NEGLIGENCE (Biakanja and Ansanelli), RFDCPA, Promissory Estoppel, etc. Click Here

CA New Homeowner's Bill of Rights 2013

2013 New California Homeowner’s Bill of Rights May Trigger New Borrower Rights & Lawsuits with Damages!

2013. In California, we may have finally reached a turning point and entered into a (short) period of enhanced borrower rights. With the advent of the recent legislative and regulatory enactments, case law, standards, compliance duties, and best practices, mortgage servicers, foreclosure trustees, lender’s and its agents are now duty bound to conduct its businesses according to uniform and objective standards.

Recent impetus to change came from or include: HAMP (Supplemental Directives), National Mortgage Settlement (NMS), The California Commitment (and the new Homeowner Bill of Rights), California Foreclosure Reduction Act, Consumer Financial Protection Bureau, Dodd-Frank Wall Street Reform, Consumer Protection Act, FHFA, OCC and the GSE national servicing guidelines including FannieMae Announcement SVC-2011-08R (9/2/2011).

Note that California Trustees will start to use different Due Diligence forms for trustees who have foreclosures with less than 175 pursuant to California Civil Code 2923.55 (b), 2923.5(a)(2), 2923.5(e), 2924.15(a) or more than 175 foreclosures pursuant to California Civil Code 2923.55 (c), 2923.55 (b)(2), 2923.55 (f), 2924.15(a).

Dual tracking is banned for all mortgage servicers; and can no longer record a NOD while borrower has an application for a modification pending. First the servicer must make a written determination that the borrower is ineligible.

New Violations / New Private Right of Action / New Damages:

Any servicer who “engages in multiple and repeated uncorrected violations” of this provision is liable for a civil penalty of up to $7,500 per mortgage or deed of trust in an action by the government. If the borrower requests a foreclosure prevention alternative, the servicer “shall promptly establish a single point of contact and provide to the borrower one or more direct means of communication with the single point of contact.”

If Trustee’s Deed Upon Sale is Not Recorded, then a borrower may sue to enjoin material violations of the law.

If Trustee’s Deed Upon Sale is Recorded, then a borrower may sue for “actual economic damages” caused by the violation – if not corrected or remedied before the trustee’s deed was recorded. If the court finds the material violation was intentional, reckless, or resulted from willful misconduct, the court may award the borrower treble the actual damages or statutory damages of $50,000. A prevailing BORROWER may also be awarded reasonable attorney fees and costs.

Provisions of HOBR sunset on January 1, 2018, and other provisions then become effective.

It is clear from our view of these examples, that numerous and onerous requirements are being imposed upon the industry regarding mortgage servicing, modifications and foreclosure procedures. New best practices must be developed in harmony with the various new requirements, and create compliance evidence in the ordinary course of business. New best practices can be an operational, compliance and risk mitigation tool, if the industry embraces it.

Richard Rydstrom, Esq.          
Southern California Attorney 
Copyright Richard Rydstrom

All Rights Reserved

Articles by Attorney Rydstrom

2013 News Article: New California Bill of Rights may Trigger Homeowner Lawsuits with Statutory Damages of $50,000 or Treble Actual Damages!