California State Court Analysis of Real Property Claims and Title Actions Part I and 2
The proper defendants to typically sue in a lender litigation are the Originator, Servicer, Trustee of Securitized Trust and Foreclosure Trustee (if applicable).
California State Court Analysis of Real Property Claims and Title Actions Part IThe proper Origination documents are Uniform Residential Loan Application which includes information such as the type of mortgage and terms of loan, property information and purpose of loan,borrower information, employment information, monthly income and combined housing expense information and assets and liabilities. Another closing document is the Federal Truth-In-Lending Disclosure Statement which includes the amount of the payment, borrower's income versus payment. The buyer’s closing statement shows the new loan charges, loan processing fee, banking fee, appraisal fee, and processing fee. There is a settlement statement, a specific disclosure if it is an adjustable rate note, and a balloon rider if there is a balloon payment. These are all the necessary documents to analyze origination claims.
There can be claims for origination fraud if there is a breach of the lenders fiduciary duty or conspiracy to defraud such as a failure to disclose balloon payment. When you allege fraud the allegations need to meet the specificity requirements. Actual fraud is covered under California Civil Code § 1572(3)(5). Knowledge of borrower’s lack of ability to afford monthly payments due to income may be a claim for fraud.
Violations of Business & Professions Code §17200 Unfair and Deceptive Acts and Practices (UDAP) by fraudulently procured documents is another fraud claim. For instance Substitution of Trustees, Corporate Assignments, and Assignments are red flags for transfer problem.
Violation of UDAP the Fairness Doctrine include Intentional Misrepresentation which requires a party show there was a misrepresentation of a material fact; Knowledge of falsity (scienter); Intent to induce reliance; Actual and justifiable reliance on the misrepresentation; and resulting damages.
California State Court Analysis of Real Property Claims and Title Actions IIThere is negligent misrepresentation which requires the misrepresentation of a material fact; false statement is made without a reasonable ground for a belief in the truth of the misrepresented fact; intent to induce reliance; actual and justifiable reliance on the misrepresentation; and resulting damage.
Fraudulent Concealment exist when there is an affirmative duty to disclose all material facts; concealment of facts in order to induce plaintiff to enter into a transaction or relationship; and resulting damage. Cancellation of Contracts under California Civil Code §1670.5, §1689, §3412 requires existence of written instrument that is void or voidable.
Rescission is another claim and one grounds for rescission is when facts discovered make a reasonable apprehension if left outstanding may cause serious injury to Plaintiff. Violation of Finance Lender Law under California Finance Code §§ 4973, et seq., 22000, et seq. and 50000, et seq. Plaintiff must allege that their loan is covered under this provision. A consumer loan more than $417K is not covered. No exceptions to this rule have been identified. Conspiracy to Defraud requires Falsification of loan application and Set up borrower for certain default in collision with others to do the same.
Waiver/Promissory Estoppel is where the bank has told the borrower to default and then later tries to enforce the deed of trust. Contractual issue – bank has told homeowner to stop making payments to be considered for a modification; thus, the bank has waived any right to enforcement of the terms of the contract under the note; it gave that right up to enforce the contract by telling the home owner to stop making payments; homeowner relied on that waiver, stopped making payments for a modification, is denied modification, - bank cannot then come back and state it is entitled to enforce the payments
Intentional Infliction of Emotional Distress requires Outrageous Behavior, Injury, and Breach of Contract. Make sure to allege all elements. What is the breach? Find a provision in the Deed of Trust to support the breach of contract claim. Breach of Oral Contract includes an existence of a contract; terms that establish obligation. Specify whether contract is oral, written or implied by conduct. Plaintiff’s performance or excuse for non-performance; Defendant’s breach; and Resulting damages.
For all origination claims the Statute of Limitations is a very big issue and must be analyzed. The SOL has passed for most if not all of our claims. Therefore, we must allege that Equitable Tolling applies, otherwise, the court may dismiss without leave to amend.