CAl. S. Ct: You can’t Fool All the People All the Time

“The Pendergrass limitation finds no support in the language of the statute codifying the parol evidence rule and the exception for evidence of fraud. It is difficult to apply. It conflicts with the doctrine of the Restatements, most treatises, and the majority of our sister-state jurisdictions. Furthermore, while intended to prevent fraud, the rule established in Pendergrass may actually provide a shield for fraudulent conduct. Finally, Pendergrass departed from established California law at the time it was decided, and neither acknowledged nor justified the abrogation. We now conclude that Pendergrass was ill- considered, and should be overruled.”

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Editor’s Analysis and Practice Tips: In the decision Riverside Cold v Fresno-Madera the California Supreme Court stopped the banks dead in their tracks. Whereas they were able to prevent the borrower from introducing parole evidence (events outside the four corners of a document) the banks are now to be confronted in California and other states that will follow with the probability that their lies and illegal steering people into foreclosure are going to haunt them and defeat them.

We have heard for years how servicers and banks told homeowners to stop making their mortgage payments in order to qualify for mortgage modification. Then comes the lost papers 4-5 times and then comes the inevitable denial of a the mortgage modification — as though anyone had ever considered it and as though the investors were contacted for feedback. The fact is, as the future litigation will point out and reveal in all its splendor, the foreclosers were out to foreclose — not to settle, modify or otherwise resolve the situation.

They would string the borrower along until so many months of non-payment had  piled up that between principal interest, taxes and insurance all but the most frugal borrower would be short on money and unable to reinstate. The result has been far lower proceeds from foreclosure than any other means of mitigating damages, and far more foreclosures than there needed to be. And it all started with misrepresentation, lies, deceit and fraud at closing, during he foreclosure process, during the so-called modification process and during the sale at auction, which prevented the homeowner from redeeming the property because the true balance was never disclosed.

All that changes with this very well-reasoned opinion. The Court clearly is beginning to see that the the without strict adherence to all the rules and all considerations of due process, the court system is being used as a vehicle for theft, fraud, forgery, fabrication and the destruction of people’s lives and livelihood.

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