California Bankruptcy Attorney Blog

Our Chino foreclosure defense attorneys were interested to see a rare state Supreme Court case involving a bankruptcy. In the Arizona Supreme Court's Vazquez v. Saxon Mortgage Inc., the Arizona bankruptcy court certified the following question to the high court: Does Arizona law require an assignee of a mortgage to record the assignment before filing a notice of trustee's sale, when the assignee holds a promissory note payable to the bearer? In a decision with a long list of amici curiae, the high court ultimately said no. That situation arose when Julia Vazquez challenged a foreclosure against her by Tiffany and Bosco, an assignee of an assignee of her original lender. The assignment was not recorded in at least one step in the chain of title, but the high court declined to stop the sale because [WHO] owned a promissory note payable to "bearer."

Vasquez refinanced in 2005, executing a promissory note in favor of Saxon Mortgage and a deed of trust with Saxon as beneficiary and title company Ticor Title as trustee. About two weeks later, Saxon assigned the note to Deutsche Bank as a trustee for a Saxon "asset securities trust," endorsing the note in blank. This assignment was not recorded. After Vasquez defaulted in 2008, Deutsche Bank removed Ticor Title as trustee under the deed of trust and substituted Tiffany and Bosco. This was duly recorded on the same date that Tiffany and Bosco filed a notice of trustee's sale on behalf of Deutsche Bank as trustee for Saxon. Two months later, Saxon assigned the deed of trust to Deutsche Bank, retroactively to about three months earlier. When Vasquez later challenged her foreclosure, she argued that the deed of trust should have been assigned before the notice was filed.

In the very first paragraph of its analysis, the Arizona Supreme Court disagreed. The court emphasized that its job was to construe statutes as they currently exist, not to determine whether a law to protect people like Vasquez should exist. However sympathetic the court might have been, it found nothing in Arizona law to support her case. The statute on recording a notice of trustee's sale is silent on any requirement to first assign the deed of trust. While failing to record an assignment could make the assignee vulnerable to challengers from others with interest in the property, the court said, Arizona law expressly says unrecorded instruments are binding. Furthermore, state law also says that transferring a contract secured by a deed of trust should operate as a transfer of the security for the contract as well. The Supreme Court then declined to answer a second certified question, finding that it was not determinative of the outcome.

As Fullerton foreclosure defense lawyers, we're disappointed by this ruling. Arizona is one of the states hit hardest by the foreclosure crisis, and just like with other states, this has led to sloppy paperwork and incomplete chains of title between lenders who securitize and trade mortgages back and forth. We found it telling that the high court took time early in its opinion to emphasize that it was finding what the law says, not what might be best for Arizonans, because it suggests that the court would rather have seen a different outcome as well. In other cases around the country, courts have had to work chains of ownership out for themselves, sometimes with judge-angering results. Arizona's set of laws is unique to Arizona, of course, but many of these cases have stopped or restarted foreclosures. As Downey foreclosure defense attorneys, we wouldn't mind seeing these standards applied nationwide.

Continue reading "Arizona Supreme Court Rules Promissory Note Sufficient for Notice of Trustee's Sale - Vasquez v. Saxon Mortgage" »

As Fontana personal bankruptcy lawyers, we were pleased to see a recent bankruptcy appeals panel ruling that declined to hold bankrupt small businesspeople responsible for a loan guarantee made by their franchisor. In In re Unterreiner, bankruptcy filers Jeffrey and Lisa Unterreiner were once part of a business that co-owned three Dairy Queen restaurants in Missouri. When the business ran into financial difficulties, it took out a loan that, unbeknownst to them, was guaranteed by the franchisor, Dairy Queen of Greater St. Louis, Missouri Inc. (DQSTL). When they could not pay back the loan and the Unterreiners filed for bankruptcy, DQSTL's owner, the Samuel J. Temperato Trust, successfully sued to have the loan declared not dischargeable. The Eighth Circuit's BAP reversed in this decision.

Jeffrey Underreiner and a business partner, Edward Radetic, owned the three Dairy Queens through King William Management Inc., which franchised from and paid part of its earnings to DQSTL. In 2005, because of King William's difficulties, an employee of the Temperato Trust arranged for a loan to King William. This was a no-document loan from a bank King William had never before done business with. The Unterreiners, Radetic and his wife all personally guaranteed the loan, and they also gave a security interest in the business assets of two of the Dairy Queens. Without the Unterreiners' knowledge, the loan also fell under a preexisting blanket loan guarantee issued by the Trust. It was revealed that a separate business entity owned the majority of the business assets in the restaurants at issue, making the security interest problematic at best.

Unfortunately, King William was unable to repay the loan. The Unterreiners paid the bank $20,000 in exchange for a release of any claims related to the loan, and the bank went to the Trust, which ultimately paid $185,000. After the Unterreiners filed for bankruptcy, the Trust brought an adversary proceeding against them to collect that money, alleging they knowingly misrepresented the ownership of the assets, thus causing the loss to the Trust. The Unterreiners argued that they had no knowledge of the Trust's blanket guarantee to the bank, and that their release of liability from the bank should release them from this debt. The bankruptcy court ultimately found the debt nondischargeable, and they appealed.

The bankruptcy court had found that Jeffrey Unterreiner knowingly made a false statement by pledging the collateral King William did not own, and that the Trust reasonably relied on it when it agreed to guarantee the loan. The Eighth Circuit BAP disagreed. To exempt the debt from discharge, it said, the Trust would have to show that it paid the money directly to Unterreiner at the time of the misrepresentation, which is not true. The Trust could argue that Underreiner did get the guarantee from DQSTL, a thing of value, at the time of the misrepresentation -- but DQSTL is not the plaintiff in this case, the court noted; the Trust is. Furthermore, loan guarantee between the Trust and the bank preexisted the loan to King William, the court said. Thus, the Trust could not have relied on the security agreement by Unterreiner when it made the original guarantee. Thus, the Eighth sent back the case with instructions to reverse the determination of non-dischargeability.

Our Tustin consumer bankruptcy attorneys are pleased to see this decision go for the debtors, who undoubtedly cannot muster the high-priced legal representation of their former franchisor. In a sense, the decision breaks no new ground at all because it simply reiterates the rules for nondischargeability: the deception must have been made knowing that the party seeking nondischargeability would lose money. While it's possible that Unterreiner did indeed intend to deceive, it does not appear to be disputed that he didn't know about the preexisting blanket loan guarantee. Our Rancho Santa Margarita individual bankruptcy lawyers may be able to apply the ruling for other bankruptcy filers fighting a claim for nondischargeability, whether the dispute arises from business or another matter.

Continue reading "Bankruptcy Panel Rules Debtors Not Responsible for Guarantee Made by Franchisor to Bank - In re Unterreiner" »

As Redlands foreclosure defense attorneys, we were interested to see a case involving foreclosure after a criminal tax matter rather than a civil foreclosure. In United States v. Springer, Lindsey Springer's Oklahoma home went into foreclosure after his unpaid tax assessment was reduced to judgment. Springer refused to pay income taxes between 1990 and 1995, and is known in the community of people who believe the income tax is illegal. He has a long history of wrangling with the federal courts. (A footnote to this case notes that he is subject to limitations on pro se filings; his attorney was suspended from the Tenth Circuit.) Parties who held a mortgage on the home filed cross-claims for an award of attorney's fees from Springer, and this award was granted in part. In this decision, the Tenth Circuit reversed.

In the underlying criminal action, the Tenth Circuit had separately upheld a foreclosure on Springer's real property by the IRS. The debts leading to this are complicated but include the unpaid taxes from 1990 to 1995. The real estate actually belongs to the SLCA Family Trust, but the courts found the foreclosure valid with Springer as nominee. In addition to the co-trustee for that trust, other cross claimants are two other family trusts, four individuals and the clerk of Creek County, Okla. They participated in the underlying cases, and filed in court for an award of attorney fees and expenses from Springer. The magistrate judge in that case recommended a partial award of $10,576.56 out of an request for $35,411.16, and the district court upheld it after a de novo review. Springer appealed.

Of the five arguments Springer made on appeal, the Tenth Circuit was able to dismiss three right away because they were arguments against the merits of the cross-claimants' case. That decision had already been made by the Tenth Circuit, the court said, and it declined to revisit the issue. However, the court found the fourth issue dispositive. Springer argued that the cross-claimants waited too long to seek their fee award -- nearly six months after the relevant judgment. He made this issue before the magistrate judge, but the lower courts and the cross-claimants never addressed it. Furthermore, the cross-claimants declined to file a brief in this appeal, the court noted. Thus, the court found that there was nothing at all in the record to show why they waited to file their appeal. Under the circumstances, it said, it must conclude that the district court abused its discretion. Thus, it reversed the fee award and remanded with directions to deny the request as untimely.

Our Anaheim foreclosure defense lawyers are happy to say that we're not in the position of defending people who decline to pay their taxes for political reasons. However, we routinely defend people who are facing foreclosure for more prosaic reasons -- most often because their financial difficulties were compounded by a mortgage servicer that broke the law in its haste to foreclose. California homeowners enjoy several rights that are often ignored in foreclosures. Lenders must at least offer an opportunity to discuss alternatives before foreclosing, which may not happen if the foreclosure is fast-tracked. If the homeowner applies for a HAMP loan modification and meets all the qualifications, the lender may not deny it arbitrarily or for trumped-up reasons. And California homeowners have the right to sue lenders who make predatory loans, which includes loans where terms were not disclosed and those negotiated in a language different from the language of the contract. As Long Beach foreclosure defense attorneys, we help these clients protect themselves in a court of law.

Continue reading "Claimants in Foreclosure Case Missed Deadline to Claim Attorney Fees, Tenth Circuit Rules - U.S. v. Springer" »

Even people who have been through a bankruptcy may not realize that they should count a potential legal judgment among their assets. This is one of the questions we ask as Rancho Cucamonga personal bankruptcy attorneys, since we don't expect most bankruptcy filers to know it's important. But even though a favorable legal judgment can be helpful for people in tough financial situations, not every bankruptcy trustee will pursue one. In Stanton v. Hart, however, the bankruptcy trustee pursued a medical negligence case unsuccessfully. Stanton was the trustee for bankruptcy debtors Anthony and Sandra King, who had filed a medical negligence suit against James Hart, D.O., before filing for bankruptcy. Stanton reopened the case, but the jury decided against her. Her appeal to the Missouri Court of Appeals was likewise rebuffed.

The Kings originally sued Hart and others, alleging failure to diagnose Anthony King's stroke. Four months after filing, they voluntarily dismissed their suit and filed for bankruptcy. Stanton became their trustee and opted to file a new suit. All defendants but Hart had settled or been dismissed by trial. As a result of the failure to diagnose, the suit said, King had suffered a permanent disability that created financial hardship by leaving him unable to work but with large medical bills. Hart successfully moved to prohibit discussion of the Kings' financial situation at trial, saying it was irrelevant and potentially prejudicial. Stanton argued that the financial information was not only relevant, but unavoidable given that a bankruptcy trustee was the plaintiff. Nonetheless, the court granted the motion and barred reference to Stanton as trustee in front of the jury. Over her objections, this is how the trial proceeded. The jury decided in favor of Hart and Stanton appealed.

On appeal, Stanton first argued that because the Kings were not parties to the suit and indeed had no standing to sue, the forms submitted with their names could not have created a valid judgment against her. The Missouri Court of Appeals disagreed. Suits are often brought under names other than the beneficiary, including subrogation cases and John or Jane Doe cases, it said. In none of these cases does the court lose jurisdiction. Indeed, it said, the underlying issues and defenses are the same regardless of the names on the forms. It then turned to Stanton's contention that the exclusionary order was incorrect because it infringed on her right to testify and present evidence about the Kings' financial status. Again, the appeals court disagreed, noting that it's well established that pleas of poverty are immaterial in litigation. Stanton argued that Hart's negligence contributed to the Kings' bankruptcy, but she recognized on appeal that this is only an argument on damages, not liability Thus, it upheld the trial court on this issue as well.

As Buena Park individual bankruptcy lawyers, we were interested in this case because it exposes the divide between bankruptcy filers and their trustees. A trustee does not necessarily represent the interests of the debtor; his or her job is to secure the maximum amount of money available for creditors. This may or may not serve the interests of the people who filed for bankruptcy in the first place. In this case, any recovery from the medical malpractice lawsuit would have gone to the bankruptcy estate, and the Kings would have benefited from this only indirectly by being able to pay more to creditors. As Torrance consumer bankruptcy attorneys, we look forward to seeing whether the case is appealed, since its issues are novel.

Continue reading "Bankruptcy Trustee May Not Present Evidence of Debtors' Financial Condition in Injury Claim - Stanton v. Hart" »

Our Claremont consumer bankruptcy lawyers tell our clients to be as sure as they can be before accepting a legal settlement, because it's difficult to change your mind after the fact. In the absence of a special circumstance, such as a finding that one party had no authority to make the agreement, courts may hold parties to their agreements even if they later reconsider. This was the case in In re Burrage, a recent decision of the Bankruptcy Appellate Panel of the Sixth U.S. Circuit Court of Appeals. Linda Burrage of Ohio filed an adversary proceeding in her bankruptcy against Bank One, a creditor. The parties agreed orally to settle two months later, but Burrage, who was not represented by an attorney, changed her mind the next day. After the court entered the settlement, she moved unsuccessfully to reopen her adversary proceeding. The BAP agreed with the bankruptcy court that there was no evidence showing a good reason to reopen it.

Burrage and Bank One settled on Oct. 4, 2010 and Bank One notified the court, which canceled the trial in her adversary proceeding. On Oct. 5, Burrage called the court to say she changed her mind and preferred to go to trial. After the parties failed to submit a written settlement agreement, the court held a hearing and determined that the settlement was valid and enforceable. Burrage did not appeal the resulting order, but instead moved to reopen the proceeding, saying there was new evidence. She submitted a phone bill showing an Oct. 4 phone call from Bank One that lasted 54 seconds. She said this was too little time for Bank One to leave a voice mail agreeing to her settlement terms. Her other new evidence was an affidavit from a friend, Mrs. Brown, who accompanied Burrage to a meeting with Bank One's attorney and testified that she had witnessed an argument between them about phone calls to Burrage. The court ultimately found that this was not new evidence, nor was it persuasive, and denied the motion with reference only to the Oct. 4 phone call.

Burrage appealed, again representing herself. Her brief focused on the merits of reopening the adversary proceeding, again focusing on the purportedly new evidence. Under federal rules, the court said, Burrage must show that the new evidence is controlling and would have led to a different outcome in the original judgment, and that she exercised due diligence in obtaining it. Furthermore, new evidence must have been unavailable before. Unfortunately for Burrage, the BAP found that the phone records were not new evidence because they were available before the evidentiary hearing. Furthermore, the court found, the bankruptcy court's failure to consider a January phone call was not important because courts need not address every contention made by parties. The BAP's opinion did not address the affidavit by Mrs. Brown. Nonetheless, it affirmed the bankruptcy court's order declining to reopen the adversary proceeding.

As Santa Ana individual bankruptcy attorneys, we would be interested to know what Burrage was hoping to show the court when she brought up these pieces of purportedly new evidence. It's notoriously difficult for people to represent themselves in court, for reasons related to both legal expertise and emotional distance. It's possible that she could have had a strong case, but didn't know how to best articulate it. It's also possible that the court lost patience with Burrage's inexperience. This doesn't mean she had no case, however. Sometimes, professional attorneys take advantage of the inexperience of pro se plaintiffs and extract an agreement the plaintiffs don't understand until they've already agreed to it. This is why we strongly recommend that people seeking a bankruptcy at least speak to an experienced Los Angeles County personal bankruptcy lawyer first.

Continue reading "Debtor May Not Reopen Adversary Proceeding to Reconsider Agreement to Settle - In re Burrage" »

As Chino Hills consumer bankruptcy attorneys, we were interested to read about an unusual reversal of a court decision protecting a bankruptcy debtor from creditors. In Bauer v. Gilmartin, the Bankruptcy Appellate Panel of the Eighth U.S. Circuit Court of Appeals found that James Gilmartin's debt to Larry and Cheryl Bauer should be nondischargeable because of Gilmartin's fraud in a real estate matter. The two couples had formed a real estate company together and agreed to share payments and profits equally, but the Bauers said Gilmartin began taking money from the company without authorization. The bankruptcy court had held a partial hearing on the issues, but found that the Bauers had not proven they were damaged by the fraud. On appeal, the BAP reversed this, finding the bankruptcy court hadn't considered all arguments.

The Gilmartins and Bauers had no formal written agreements for their business, but agreed orally that they would contribute equal money and share profits equally. They agreed that Gilmartin, as day-to-day manager of the company, would get monthly compensation, but disagreed at the hearing about the terms. The Bauers contend that Gilmartin was taking money out of the company to deal with his personal financial troubles. The Bauers loaned them $30,000, and Gilmartin also repeatedly asked them for additional capital for the real estate company for cost overruns. The Bauers took out a second mortgage to achieve this. Eventually, one project was sold at a loss and the other was foreclosed. After the Gilmartins' bankruptcy, the Bauers filed an adversary complaint arguing that the debt to them should be nondischargeable because of fraud. The bankruptcy court ultimately made partial findings for the Gilmartins.

The bankruptcy appellate panel reversed. In order to prove nondischargeability, it said, the Bauers must prove that Gilmartin knowingly made false representations in order to deceive them, and that they suffered losses and damages because they relied on those representations. The bankruptcy court found that the Bauers could demonstrate no loss as a proximate cause of the misrepresentations, although it did not dispute that they suffered losses. In essence, the court found no evidence that the company would have been profitable if it weren't for James Gilmartin's alleged misuse of the money. The Bauers argued on appeal that the court failed to consider their alternative argument -- that they wouldn't have put money into it in the first place if they had known about the alleged fraud. The BAP noted that the bankruptcy court applied the "benefit of the bargain" as the measure of damages, but in cases like this, it may also consider "out of pocket" damages. Ultimately, it reversed the lower court and remanded for consideration of those damages.

As Seal Beach personal bankruptcy lawyers, we'd like to remind clients and potential clients that this is one area where a normally dischargeable bankruptcy debt becomes nondischargeable. The goal of bankruptcy is to allow filers to settle their debts without becoming enslaved to those debts, which is why most debts are dischargeable (with specific exceptions for tax debt, child support and others). However, the bankruptcy code does not allow filers to escape responsibility for debts when they arise from their own bad actions, and fraud is one such exception. This reversal does not necessarily mean Gilmartin's debt to the Bauers will be declared nondischargeable, but it does mean there's still a chance. Our Los Angeles County individual bankruptcy attorneys work carefully with clients to identify this kind of potential challenge and neutralize it when possible so there are no complications on the way to a new financial start.

Continue reading "Eighth Circuit Resurrects Action to Find Debt Nondischargeable Due to Fraud - Bauer v. Gilmartin" »

Our Corona foreclosure defense lawyers were interested to read a decision involving divorced former spouses who both filed for bankruptcy and both sought to avoid the same lien from their lender. In the consolidated appeals of Jeffrey White v. Commercial Bank & Trust and Jennifer White v. Commercial Bank & Trust, the former spouses had both filed Chapter 7 bankruptcies, after which Commercial objected to their homestead exemption claims and moved for relief from the automatic stay so it could foreclose. Both Whites responded with motions to avoid Commercial's judicial liens. The bankruptcy court consolidated the cases and ultimately allowed both the exemption and the foreclosures. On appeal, however, the Bankruptcy Appellate Panel of the Eighth Circuit reversed, finding the liens avoidable.

The Whites bought 220 acres in Wilmar, Arkansas in 1991, while they were still married, and paid off their loan in full by selling off 60 acres. However, they took out a total of eight loans from Commercial between 2004 and 2007, using other property as collateral. They defaulted, the bank foreclosed, and they ended up with a deficiency judgment of $161,000. That debt became a judicial lien against their Wilmar property, and the bank started foreclosure on that property in December of 2009. In June of 2010, the Whites divorced and split the property in half. In August of 2010, a court ordered a foreclosure sale of the Wilmar property, but both Whites filed for Chapter 7 bankruptcy before the sale could take place. Each claimed a homestead exemption for 80 acres, to which the bank objected. It moved for relief from the stay so it could foreclose, and both Whites moved to avoid the lien. In the consolidated cases, the bankruptcy court denied the motions to avoid the lien, denied Commercial's objection to the homestead exemptions and granted relief from the stay. This appeal followed.

The BAP found that the "crux of this appeal" was the avoidance motion, since Commercial's argument for relief from the stay relied on the argument that the lien was unavoidable. The bankruptcy code says debtors may avoid judicial liens if they impair exemptions to which the debtors would otherwise be entitled. There's no question that the Whites' properties are entitled to a homestead exemption under Arkansas law, the court said. The bankruptcy court had found that the lien was not avoidable because it had fixed in December of 2009, when the foreclosure judgment was entered, and the parties' ownership interests were fixed during their June 2010 divorce. However, the BAP found that the property did not change hands at that time; the manner in which the two Whites held the property merely changed. Thus, it allowed both Whites to avoid the lien. Finally, the BAP ruled that the relief from stay part of the appeal was moot, since the Chapter 7 cases had both been discharged.

As Yorba Linda foreclosure defense attorneys, we're pleased with this ruling. Divorce and bankruptcy often go hand in hand, unfortunately, because financial problems can trouble a marriage and because splitting a household into two is expensive. As a result, while this situation doesn't come along every day, courts absolutely do get asked to decide on complicated property-splitting issues for divorcing couples in a bankruptcy -- in fact, this case cited two that made it to the U.S. Supreme Court. By deciding that the divorce didn't change the fact that the Whites both had a property interest in the land, the court gave people in their position another tool to avoid liens. As Fallbrook foreclosure defense lawyers, we appreciate having many tools in our arsenal when we fight to keep our clients' homes out of foreclosure.

Continue reading "Bankruptcy Panel Permits Divorced Debtors to Avoid Judicial Liens on Home - White and White v. Commercial Bank & Trust" »

As Chino foreclosure defense attorneys, we're always interested in foreclosure lawsuits seeking to invalidate the use of the Mortgage Electronic Registration System, or MERS. MERS is a corporate entity created in the 1990s to allow banks to buy and sell mortgages as often as they like without complying with the requirement to register sales with the county land office (or pay the attached fees). As the foreclosure crisis has progressed, many homeowners have found that when their mortgages go into MERS, they often emerge with a broken or unclear chain of ownership. So I was interested to read that the Michigan Supreme Court will soon consider an appeal in Residential Funding Co. v. Saurman, in which the Michigan Court of Appeals ruled that MERS does not meet Michigan's legal requirements to foreclose by advertisement.

The case was consolidated from two cases brought by Gerald Saurman and Corey Messner. Both took out mortgages from Homecoming Financial. Homecoming was listed as the holder of the notes, but the mortgagee named in their paperwork was MERS as a nominee for Homecoming. Both defaulted, and MERS began non-judicial foreclosures. Both defended their foreclosures by arguing that MERS may not foreclose by advertisement under Michigan law. That law says, in relevant part, that a party may foreclose by advertisement if it owns either the debt or an interest in the debt, or is the loan servicer. Thus, the question was whether MERS owned an interest in the debt --whether it had an interest in the notes. It did not. The court drew a distinction between Michigan law and laws of other states that had been found to support MERS foreclosures.

This is the case that's the subject of the Michigan Supreme Court appeal. The case is expected to affect a large number of Michigan foreclosures, since the majority of home loans are processed by MERS. The majority in the Court of Appeals decision noted that MERS may still initiate a judicial foreclosure. However, the case also created a dissent, from which MERS and other appellants may draw. The dissent argued that MERS did own an interest in the debt, through the security interests of both mortgages. Judge Wilder wrote that under those contracts, Homecoming gave MERS the right to take any action required of Homecoming, including canceling the debt upon full payment. Thus, he said, MERS had an interest in the note through its obligations to Homecoming.

Our Fullerton foreclosure defense lawyers look forward to seeing what the Michigan Supreme Court decides from these arguments. The issue is local to Michigan -- and presumably any other state that requires ownership interest for foreclosures -- but there, it's very important to the ability of MERS to quickly foreclose on the no doubt large number of homeowners who are behind on their payments. This doesn't take away the ability of MERS to start a judicial foreclosure, or for the true lender to foreclose by advertisement, but the lenders no doubt prefer a quicker and more convenient process. However, as Escondido foreclosure defense attorneys, we're not sure foreclosure should be so convenient that borrowers' rights fall by the wayside. The judicial process may take more time, but it ensures that a live human judge can exercise his or her judgment in any case where the foreclosure is disputed.

Continue reading "Michigan Supreme Court to Hear Appeal of Case Invalidating MERS Foreclosures - Residential Funding Co v. Saurman" »

As our Rubidoux foreclosure defense lawyers well know, the financial crisis that triggered so many foreclosures and related problems also brought out some serious problems at major banks. Among these was Washington Mutual, which went into receivership with the FDIC and eventually was purchased by Chase. The crisis also exposed a lot of bad practices at major banks, as their systems for handling foreclosures got far more use than expected or intended. Those two circumstances came together in Youkelsone v. FDIC, a lawsuit by a New York borrower alleging wrongful conduct by Washington Mutual in the aftermath of her foreclosure. Nadia Youkelsone argued pro se that the district court erred in dismissing her case for lack of standing. In its decision, the Court of Appeals for the District of Columbia agreed, remanding her case for further proceedings.

Washington Mutual acquired the note and mortgage to Youkelsone's home in 2001, and later assigned it to Fannie Mae. Some time after -- the opinion does not specify when or in what order -- Youkelsone's loan went into foreclosure and WaMu failed. The FDIC took over as receiver for WaMu, and is the bank's successor in interest for this case. Youkelsone alleges that WaMu engaged in wrongful conduct including delaying providing the closing documents and making active misrepresentations to the bankruptcy court. The FDIC moved to dismiss her 2009 lawsuit for failure to state a claim, but the trial court never reached that issue. Instead, it decided sua sponte to dismiss for lack of standing. Youkelsone appealed.

The DC Circuit started by dismissing the FDIC's claim that the appeal was untimely. Youkelsone requested and was granted a 30-day extension to appeal, which said her last day to appeal was June 10, 2010. Unfortunately for Youkelsone, who was representing herself, the district court was mistaken -- federal rules would have made the last day June 9. After briefing, the DC Circuit found that the federal rule in question is a claim-processing rule, not a jurisdictional bar, and that the FDIC had also forfeited its timeliness objection by not raising it on appeal. Turning to an issue of more substance, the appeals court next found that Youkelsone did not lack standing. The district court said she failed to allege causation and redressability of her claims by WaMu because her claims were affected in part by actions of Fannie Mae. The DC Circuit disagreed. Though other parties were involved in the foreclosure, it said, Youkelsone's claims were based on actions by WaMu. Finally, it declined to reach the FDIC's failure to state a claim argument, saying this issue is better left to the trial court. It reversed and remanded.

Our Westminster foreclosure defense attorneys are particularly interested to see this case because Youkelsone was representing herself. It's unusual for such a plaintiff to succeed against a large, well-funded company or government agency. Even though the courts often extend extra patience and courtesy to such people, they often don't have the legal expertise to navigate confusing federal rules -- never mind defend themselves against professional lawyers. The fact that Youkelsone survived this appeal suggests not only that her case has merit, but that she understands how to present it. As professional Carson foreclosure defense attorneys, we believe most clients are better off with professional representation -- but we applaud people who succeed on their own.

Continue reading "DC Circuit Resurrects Lawsuit Alleging Washington Mutual Mishandled Foreclosure - Youkelsone v. FDIC" »

Our San Bernardino foreclosure defense attorneys were interested to see a recent state appeals court case out of Los Angeles County on a fine point of foreclosure law. In Calvo v. HSBC Bank, Eugenia Calvo took out a loan that was transferred to HSBC. However, no assignment of the loan to HSBC was recorded until after the property was sold at a foreclosure sale. Calvo alleged that this violates a California law that requires the assignee of a mortgagee to record the assignment before selling the property. However, the Second District Court of Appeal found that this does not apply in Calvo's situation because the power of sale in her case was conveyed in a deed of trust, not a mortgage.

Calvo took out a home loan in 2006 from CBSK Financial Group. The loan was secured by a deed of trust identifying her as the trustor, Lawyers Title Company as the trustee, CBSK as the lender and MERS as the beneficiary. The trustee had title to the property with the power of sale, and MERS, as the lender's nominee, was given the right to foreclose, sell and take other actions on behalf of the lender. There was no assignment of the deed of trust from CBSK to HSBC, although HSBC was mentioned when Aztec Foreclosure Corporation was substituted as trustee around June 2, 2008. The substitution of trustee was also not recorded until October 14, 2008, the same day Aztec recorded a notice of trustee's sale. Calvo alleged that the foreclosure sale was not valid under California law because there was no assignment to the deed of trust from CBSK to HSBC. Defendants HSBC and MERS demurred and the trial court sustained without leave to amend. Calvo appealed.

She had no better luck with the Second District Court of Appeal. That court found that Calvo was mis-applying a law that does not apply when the right of sale is conferred by trust rather than by a mortgage. The relevant text of the law says the power to sell property of a mortgagee or "other encumbrancer" vests with the security and may be transferred when an assignment is acknowledged and recorded. However, the court said, caselaw from 1908 acknowledges that this requirement applies only to a mortgage, not a deed of trust. Every court to consider the issue since then has been federal and followed the 1908 case. Calvo argued that the case is outdated because mortgages and deeds of trust are no longer distinguishable, but the appeals court disagrees. Furthermore, it noted, MERS has the right to initiate foreclosures under California law as beneficiary, and that was true regardless of the assignment. Thus, it upheld the trial court.

As Huntington Beach foreclosure defense lawyers, we're disappointed that the appeals court saw nothing wrong with the apparent sloppy behavior of the lenders. It has become commonplace for lenders to buy and sell mortgages. When they don't do the paperwork at the time of the assignment or other transfer, this leads to a lot of missing, backdated or otherwise flawed paperwork that can sometimes derail a foreclosure. In this case, the law may have been on the lender's side, but that doesn't mean the courts should smile on these practices in general. In other situations and other states, a mortgage assignment recorded on the day of a sale can be enough to cast doubt on the right to foreclose. As Norwalk foreclosure defense attorneys, we believe every borrower, no matter how irresponsible, has a right to know that his or her foreclosure is valid.

Continue reading "California Appeals Court Finds Foreclosure Valid Under Homeowner's Deed of Trust - Calvo v. HSBC Bank" »

As Moreno Valley foreclosure defense lawyers, we've seen many, many cases against Countrywide, the now-disgraced home loan company that was later purchased by Bank of America. Countrywide was especially active in the Inland Empire here in southern California, and today, many of those neighborhoods show the ill effects of overly broad or even predatory loans. So we were interested to see a state appeals court decision in favor of Countrywide coming out of Riverside Superior Court. In Robinson et al. v. Countrywide Home Loans, the plaintiffs alleged wrongful foreclosure, unfair business practices and other wrongdoing by Countrywide and MERS. The court sustained demurrers on most counts and found for the defendants on the fifth, and the Fourth District upheld that decision.

The Robinsons took out a $380,000 home loan from SMBC. MERS was beneficiary to the deed of trust, and Countrywide was later made the servicer. It notified the Robinsons in December 2008 and January 2009 that the loan was delinquent, and their attorney wrote to Countrywide requesting a beneficiary statement, a payoff demand and any documents involving a transfer. On February 11, ReconTrust, as agent for MERS, recorded a notice of default and election to sell the property. On February 27, Countrywide notified the Robinsons that it had referred the case to its foreclosure management team. It never identified the current beneficiary of the deed of trust, despite further requests. The Robinsons alleged that SMBC never assigned the note to MERS or authorized MERS to assign it elsewhere. Therefore, they said, the foreclosing entity did not have the right to foreclose, and because the loan had been sold so many times, it was impossible to identify the correct entity.

The trial court sustained demurrers to counts for wrongful foreclosure, declaratory relief, quiet title and unfair business practices. The plaintiffs then asked to voluntarily dismiss without prejudice a final count for violations of California's civil code, but the trial court instead entered judgment for the defendants. The plaintiffs appealed.

The Fourth District started by noting that the wrongful foreclosure and declaratory relief counts hinged on the argument that MERS had no legal authority to start the foreclosure proceeding. The court found that this issue was raised too early. Under a recent California appellate decision, Gomes v. Countrywide, the court concluded that there is no preemptive right to challenge standing to foreclose. Thus, it said, the trial court was correct to sustain demurrers on those counts. Furthermore, the court said, even if there were such a claim, the Robinsons' complaint is based on foreclosure proceedings initiated by ReconTrust, not MERS or Countrywide, on behalf of an entity other than MERS. Thus, no facts support an action against MERS or Countrywide. Thus, the court upheld the trial court's decisions.

Our Mission Viejo foreclosure defense attorneys hope a higher court takes up the issue of preemptive challenges to standing to foreclose. A footnote to the opinion notes that a plaintiff wishing to challenge standing may ask to set a sale aside or enjoin the sale. Unfortunately, those take place after a sale, which means the buyer would already have the right to go to court to evict the family foreclosed on. Most likely, the damage to the borrowers' credit created by foreclosure, which is considerable, would not be repaired easily. As Temecula foreclosure defense lawyers, we believe borrowers challenging standing should be able to do it before all of this takes place, while they are still in possession of the home, rather than waiting for a court to wrongly take it away and hoping for relief.

Continue reading "Fourth District Affirms Demurrers in Proposed Class Action Against Countrywide - Robinson et al. v. Countrywide Home Loans" »

Our Claremont consumer bankruptcy attorneys were interested to read a passionate dissent in a bankruptcy case that splits the Ninth Circuit from some of its sister circuits. In In re Marlene Penrod, the Ninth U.S. Circuit Court of Appeals voted against a full en banc rehearing of its previous three-judge decision on the way debtor Marlene Penrod's auto-loan debt should be treated in bankruptcy. Penrod traded in a car on which she was "underwater," or owed more than it was worth, to buy a new car in 2005. Penrod argued that the negative equity portion should be treated as unsecured debt in her subsequent bankruptcy, and the Ninth Circuit agreed. In their en banc vote dissent, four Ninth Circuit justices argued that this splits their court with eight others.

When Penrod traded in her old car for a brand-new one in 2005, the dealer paid off the loan and added that cost to the amount she owed. Thus, she was underwater on her car from the start. She was still underwater about a year and a half later when she filed for Chapter 13 bankruptcy. Her bankruptcy plan proposed to split off the portion of the debt that came from the negative equity and treat it as unsecured debt, while the rest of the auto loan would be secured debt. The bankruptcy court agreed over the objections of creditor AmeriFinance, and the Ninth Circuit's Bankruptcy Appellate Panel agreed. AmeriFinance appealed again.

In the original Ninth Circuit ruling, the court acknowledged that it was splitting from its sister circuits, which it said it was not doing lightly. However, it said, it was unable to interpret the relevant statute in the same way those circuits did -- which it pointed out was "over some strong dissents." The relevant section is from the 2005 amendments to the bankruptcy law; it prevents claims from being split into secured and unsecured debts if the creditor has a "purchase money security interest" securing the debt. If it is auto loan debt, the rule applies to cars purchased within 910 days of the bankruptcy filing, a test Penrod met. The Ninth decided that under California law, Penrod's debt did not meet part of the definition of a "purchase money security interest" because the "price" of the car must be an "expense incurred in acquiring rights" to the collateral -- in this case the new car. Paying off the debt on the old car does not qualify as such an expense, the Ninth found, because it was not incurred in buying the new car; just paying off the old one.

The judges dissenting from the en banc vote sharply disagreed with this. They argued that because the dealer that sold Penrod the new car incurred actual costs by paying off her old loan, that payment was part of the dealer's costs. Thus, part of the "price" she paid for the new car included the expense of paying off the old loan. Splitting the loan into secured and unsecured portions takes away the potential consequence of repossession, the dissenters said. It also noted that the decision as it stands exposes lenders and auto dealers to risks they would never agree to if not forced to by a bankruptcy court. While Penrod would have had a case before the 2005 bankruptcy law changes, the dissenters said, eight other circuits have already found that this is no longer true. Failing to take the case en banc puts the court "on the wrong end of an eight to one circuit split."

As Irvine personal bankruptcy lawyers, we would be interested in seeing a resolution of this split, so we can properly advise our clients. As things currently stand, it appears that we are free to tell California bankruptcy filers that they can split their secured and unsecured debts -- but if the Supreme Court takes up AmeriCredit's appeal, that could change. And because so many of the circuit courts have ruled the other way, the Supreme Court may very well decide that the Ninth Circuit was wrong, throwing any pending cases into potential jeopardy. As with so many other kinks in the bankruptcy code, this one stems from the 2005 bankruptcy changes, which have been criticized for being poorly written (including in the Ninth Circuit's original ruling). As Oceanside individual bankruptcy attorneys, we regret that so many of our clients' futures depend on vaguely and poorly worded statutes.

Continue reading "Ninth Circuit Declines to Rehear Case That Creates Circuit Split on Car Loans in Bankruptcy - In re Penrod" »

Our Moreno Valley foreclosure defense lawyers have written many, many posts recently about the negative consequences of the poor communications and sloppy work at major lenders. Occasionally, these mistakes come back to haunt the banks, as in one case that resulted in court sanctions -- but usually, they hurt the borrower the most. That was the case in Johnson v. Wells Fargo Home Mortgage, a Ninth U.S. Circuit Court of Appeals decision in which Wes Johnson claims Wells Fargo's mistake ruined his business of buying, upgrading and re-selling homes. Johnson's on-time payment was misapplied, and the bank failed to correct the problem before his credit was destroyed and left Johnson unable to get more home loans. As a result, Johnson sued and the case eventually went to arbitration, and a dispute arose over the disposition of that award.

Johnson had purchased 200 to 300 homes across the United States since the 1970s, and was in the business of refurbishing, renting and selling them. The homes were purchased with risky subprime mortgages, which means the quality of his credit mattered. In 2004, Johnson's wife sent payments on two mortgages, both for homes located in Oregon, but made a mistake that led Wells Fargo to apply both payments to the same mortgage. This led it to report a delinquency on the other mortgage, and this kicked off a long series of phone calls and letters from Johnson attempting to straighten the problem out. The arbitrator noted that Wells Fargo has multiple teams to deal with these issues, none of whom communicate well with one another. In the end, Wells Fargo admitted its mistake, but only after reporting the late payment and starting foreclosure proceedings on both homes. Johnson sold both homes ahead of the foreclosure, but was unable to get any new loans as a result of the negative reports. This, he said, effectively put him out of business.

Johnson sued for negligence and violations of the Fair Credit Reporting Act, the Fair Debt Collection Practices Act and the Real Estate Settlement Procedures Act. The district court eventually dismissed all claims by the FCRA claims and sent the case to arbitration, in an order giving the parties "appeal rights." The arbitrator found for Johnson on about half of his FCRA claims. Wells Fargo tried twice to move to vacate, modify or amend the award, but the district court rebuked it, explaining that the appeal rights meant Wells Fargo had the right to appeal to the Ninth Circuit. Wells Fargo appealed the procedure behind this ruling; Johnson appealed the dismissal of his negligence and RESPA claims.

On appeal, the Ninth Circuit found that the issue was not properly before it. The appeals courts have the power to review only adoption or vacation of arbitration awards, it said -- there's no jurisdiction over the underlying arbitration awards. The parties' agreement to arbitrate defaults to the Federal Arbitration Act, which gives only federal district courts the authority to review awards. The bank's arguments to the contrary were dismissed as "inventive." For similar reasons, the Ninth did not take up Wells Fargo's argument that the standard of review should go beyond the FAA; nothing in the record suggests this, it said. However, the court was no kinder to Johnson in his cross-appeals of the dismissal of his RESPA and negligence claims. RESPA does not apply to loans taken out for business purposes, it noted; Johnson's arguments to the contrary were not persuasive. Finally, it affirmed the district court's ruling that Oregon tort law bars some of Johnson's negligence claim -- but reversed the district court's decision that the FCRA barred another part, finding that the court misread FDCPA claims as FCRA claims.

This case is long, but it could have important effects on our work as Newport Beach foreclosure defense attorneys. The Ninth Circuit has made it clear in this ruling that it won't directly review arbitration awards, which should clarify things for lower courts that either order arbitration or are asked to affirm privately ordered arbitration. Unfortunately, Johnson was not able to collect on all of his claims, although the opinion does note that he collected on the FCRA claims, which pertain to the egregious credit reporting violations. However, it's pleasing to our Whittier foreclosure defense lawyers that some of Johnson's claims were only unavailable because he was a real estate investor. An ordinary homeowner in the same position would likely be able to prevail on RESPA and FDCPA claims. Given the poor records of major lenders, this right may be needed.

Continue reading "Home Refurbisher Claims Wells Fargo Ruined His Business by Misstating His Credit - Johnson v. Wells Fargo Mortgage" »

Our Riverside personal bankruptcy attorneys handle many, many cases of Chapter 13 bankruptcies. These are "reorganization" bankruptcies that settle debts by helping the filer form a payment plan and repay them slowly over time, rather than the quicker, but often more painful, liquidation offered by a Chapter 7 bankruptcy. The payment plan lasts three to five years, so it's not uncommon for the filer's income or needs to change during the repayment period. When they do, the filer may petition for a change in payments to reflect the changed circumstances. That rule was behind Johnson v. Fink, a recent decision of the Bankruptcy Appellate Panel of the Eighth U.S. Circuit Court of Appeals. Ultimately, the court decided that while a change was warranted, it should not be greater than that warranted by the change in income.

Norman and Paulette Johnson of Missouri filed for Chapter 13 bankruptcy in December of 2009. The plan confirmed in late February of 2010 called on them to pay $1,890 a month to their trustee, which included income from two jobs, Social Security and a pension. In December of 2010, Norman Johnson lost his second job, a loss of $1,240 in income a month. The Johnsons filed an amended statement of income, but did not include their Social Security income, which they argued should be excluded. Their new plan called for payments to the trustee of $100 a month. The trustee successfully moved to deny confirmation of this plan; the court agreed it was not proposed in good faith. The Johnsons then proposed a new plan and immediately objected to it, as did the trustee. The court eventually confirmed that plan, which called for a payment of $500 a month. The Johnsons appealed.

On appeal, the Johnsons argued that the admissibility of Social Security payments was the issue; the BAP said the issue was actually how much the Johnsons may amend their bankruptcy plan. The Johnsons and their trustee agree that a 2010 Eighth Circuit BAP decision, In re Thompson, would not permit the Social Security income to be included if the plan were confirmed today. They also agree that the loss of the second job qualifies as a substantial enough change in circumstances to warrant a change in the plan. However, the Johnsons argue that this should leave the door open for any changes, including to parts of the plan not affected by the change in circumstances, and the trustee disagrees. The BAP ultimately sided with the trustee, finding that changes to a bankruptcy plan must conform to the change in circumstances that required them. The Johnsons voluntarily added their Social Security payments to the original plan, it said, and did not object or appeal at confirmation. Thus, the BAP upheld the bankruptcy court.

We believe this shows the importance of having experienced Orange County consumer bankruptcy lawyers by your side from the beginning of your bankruptcy case. A bankruptcy plan is binding once it's confirmed by the court, so the confirmation stage is where bankruptcy filers need to air their objections. This is somewhat unfair to filers who could not have known that an appeals court was going to change the rules in the near future; the Johnsons may yet appeal the issue to the Eighth Circuit. However, an experienced Carson individual bankruptcy attorney can help clients identify which areas of the plan may be vulnerable to challenge; some may even be current with the appeals courts. Never hesitate to ask your attorney if you're not sure about the rules.

Continue reading "Debtors May Not Modify Payment Plans More Than Change of Circumstances Warrants - Johnson v. Fink" »

As San Bernardino foreclosure defense lawyers, we were saddened to read a case in which a federal appeals court declined to resurrect a couple's foreclosure lawsuit. In Crawford v. Countrywide Home Loans, L.V. and Yvette Crawford sued their mortgage servicer and, originally, a wealth of other people over their foreclosure and eviction from their Indiana home. The Crawfords took out a mortgage in 2001, but fell behind in payments due to job problems and medical bills. They were ultimately foreclosed on in 2006 and evicted by the local sheriff's department in 2009. They sued the servicer, the sheriff's department and an apparently fraudulent foreclosure prevention lawyer. Ultimately, however, the Seventh Circuit agreed with the district court that they had failed to state a claim.

The Crawfords paid $995 to a foreclosure defense company to negotiate a loan modification with Countrywide. No modification was negotiated or granted, so the firm hired an attorney, Gary Dilk, to represent them in the foreclosure case filed by Countrywide. Dilk never contacted them or did anything on their behalf, and the home was foreclosed in August of 2006. The home was sold that December, and the Crawfords unsuccessfully moved for relief from the foreclosure. They were permitted to stay in the home during an appeal but ultimately were unable to make a payment to an escrow account and lost that right. After eviction, the couple sued in state and federal court, with the cases eventually consolidated in federal court. The opinion doesn't specify their claims, but said they named Dilk, Countrywide, the county sheriff, the county board of commissioners and a John Doe. All defendants but Countrywide were dismissed, and the federal court denied their motion to add Dilk's employer and Bank of America. Countrywide then successfully moved for summary judgment.

The Crawfords appealed. The Seventh Circuit started by establishing that it had subject matter jurisdiction over the claims. Two of these are claims that relitigate issues from the Crawfords' state-court cases; dismissal of these was appropriate. The others were not appropriate for dismissal under the same doctrine, the Seventh said. However, it upheld summary judgment on the other claims over the Crawfords' arguments. They argued that Countrywide did not present enough evidence that there was no genuine issue of material fact in the case. This was incorrect, the appeals court said; the burden of proving such issues exist is up to the Crawfords, and they failed to meet it. Other arguments the couple made against summary judgment were meritless or failed to address important issues. Likewise, the couple's arguments for retaining the county sheriff and Dilk as defendants failed to connect allegations of wrongdoing to any particular claim. Thus, the Seventh upheld the district court's decision on all counts, though it remanded the case to request that the district court send jurisdictional issues back to state court.

The most disappointing thing about this case, in our experience as Costa Mesa foreclosure defense attorneys, is that the Crawfords may very well have had a case. In a footnote, the Seventh Circuit noted that the facts the Crawfords pleaded indicate a possible malpractice claim against Dilk and his employer, but they did not cite those causes of action. There are also plenty of viable actions against foreclosing lenders that fail to honor their legal obligations, although it's not clear whether this case would qualify. Unfortunately, it seems as if the legal representation the couple chose, and the choices that attorney (if any) made, foreclosed their claims. Thus, Countrywide, Dilk and other defendants were able to escape liability without ever addressing the meat of the dispute. As Los Angeles foreclosure defense lawyers, we're proud to promise our clients that while no legal outcome is guaranteed, we will do our very best to ensure that the outcome is not determined by procedural errors.

Continue reading "Seventh Circuit Upholds Dismissal of Foreclosure Lawsuit for Failure to State a Claim - Crawford v. Countrywide Home Loans" »

Our Rubidoux foreclosure defense attorneys were interested to see a case in which a bankrupt couple were legally obligated to add attorney fees for Countrywide Home Loans to their bankruptcy debt. In Velazquez v. Countrywide Home Loans Servicing, Lawrence and Tracy Velazquez of Texas filed for Chapter 13 bankruptcy about two years after buying their home. Countrywide filed a proof of claim that included a $200 fee for "post-judgment attorney fees" and another $150 fee for preparing the bankruptcy documents, citing language in its Deed of Trust for support. The bankruptcy court denied the fees and the federal district court affirmed. However, the Fifth Circuit reversed, agreeing that the Deed of Trust supported the fee request.

The deed had two relevant sections. Section 9 permits Countrywide to "Lender may... do whatever is reasonable... to protect Lender's interest in the Property and rights under this Security Instrument," including in bankruptcy. Section 14 permits Countrywide to charge the Velazquezes attorneys' fees for "services performed in connection with Borrower's default." Countrywide argued that this permitted it to collect the fees, and also that it should not be subject to Bankruptcy Rule 2016, which governs how creditors may collect fees from the estate. The bankruptcy court declined to reach the Rule 2016 argument, but ruled that the deed language did not apply because Countrywide's interest in the property could not be affected by a Chapter 13 filing, which is forbidden by law to modify a home lender's rights. Countrywide appealed to the federal district court, which incorporated that ruling in full when it affirmed.

It had better luck in the Fifth Circuit. The lower courts interpreted the relevant part of Section 9 as saying Countrywide may take actions that simultaneously protect both its interest in the property and its rights under the deed. Thus, they found that the action of charging attorneys' fees to the Velazquezes didn't meet that burden, since Countrywide's interest could not be affected by the bankruptcy filing. Countrywide interpreted the "and" in the sentence as meaning "either or both," thus lowering the standard for when it may act. The Fifth Circuit acknowledged that caselaw prefers that "and" be interpreted according to its semantic meaning, unless that would frustrate the document's intent. Nonetheless, it took up Countrywide's interpretation, finding that the document as a whole required this. The next sentence refers to Countrywide's right to pay attorney fees to protect its property interest "and/or" rights, which the Fifth said shows that the deed expressly contemplates situations where only one or the other right must be enforced. For this reason, it found the Rule 2016 issue moot and declined to rule. It noted in a footnote that this contradicted an earlier panel's ruling in Wells Fargo Bank v. Collins, but it disagreed as to the meaning of the contract language.

As Costa Mesa foreclosure defense lawyers, we wonder whether this issue might not end up in the full Fifth Circuit, given the split. In fact, these attorney fee provision arguments are common enough that the issue may end up in the U.S. Supreme Court. We are not aware of a split in the circuits on this issue, but here in California, the Central District has taken action in the past few years to avoid hidden fees. Because lenders were piling on fees at the end of the bankruptcy, surprising debtors who thought they were paid off, the district introduced an optional form to promote communications, which survived a Ninth Circuit appeal recently. Similar issues may be solved on a case-by-case basis, but as Temecula foreclosure defense attorneys, we'd be interested to see a court ruling giving regional or national clarity to the issue.

Continue reading "Fifth Circuit Rules Countrywide May Recover Attorney Fees for Couples Bankruptcy - Velazquez et al. v Countrywide Home Loans" »