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Citi’s attempts to act ethically are a smoke-screen to hide Fraud

by the Lending Lies Team

CitiGroup’s attempts to act Ethically are a Smoke-Screen for its Fraud Spree.

In last Saturday’s edition of the Wall Street Journal an article entitled, “The Banker-Turned-Seminarian Trying to Save Citigroup’s Soul”.  I didn’t projectile vomit but my gag reflex was activated.

Citigroup’s latest attempt to schmooze regulators and the general public by addressing past and ongoing legal and ethical violations is by hiring theologian and Princeton University professor Dr. David Miller to ‘white wash’ its crime spree.  Hiring an ethicist at Citigroup is akin to the Vatican consulting on evil prevention with mass-murderer Charles Manson.

Dr. David Miller has been retained as Citi’s “on call ethicist.”  Dr.  Miller heads Princeton’s Faith & Work Initiative and has worked with Citi over the last three years. He says, “You need banking, just like you need pharmaceuticals.”  Interesting analogy considering that both banking and big pharma are more interested in profits than improving your financial, physical or mental health.

Miller will provide “advice and input to senior management.” Is it even possible to instill a sense of ethics in Citi CEO Michael Corbat who endorses Citi’s fraudulent foreclosures by way of fabrication, forgery and deception?   Mr. Corbat parroted Miller when he said when faced with an uncertain situation, “ask the four M’s: What would your mother, your mentor, the media and—if you’re inclined—your maker think?” While Corbat was saying all the right things to appease shareholders, his mind was saying, “ask the four M’s: What is your profit motive, your mode of deception, media manipulation and how much money can be made?”

Corbat claims he isn’t worried about the bad employees, but is concerned when good employees justify bad decisions when they face gray-zone questions.  When an employee is financially rewarded for denying or revoking a loan modification and for quickly foreclosing on a homeowner- there are going to be a lot of employees caught in that “gray zone”.  Has Citi changed the incentives that drive the behavior?  Not hardly.

Citi operates in an area of gray-zones and black-zones.  Citigroup has had numerous issues and has earned a reputation for ethical problems before and after the financial crisis. Mr. Corbat actually feigned shock when the company’s employee surveys showed some workers weren’t comfortable escalating concerns about possible wrongdoing.  What could be ethically wrong with sabotaging modifications and work outs or fabricating notes and assignments in order to foreclose?  Past Whistleblowers like ex-Citi employee Richard Bowen know all about the consequences of exposing wrong doing at Citi- it is a career ender.

Corbat claims he was shocked by the banking industry’s image problem overall. “If you look today at what the poll numbers say, what the general population says, there is distrust of banks,” Mr. Corbat said in an interview.  Is Corbat living under a rock?

The Wall Street Journal reports, “Citigroup is embracing Dr. Miller’s idea (influenced by Plato and Aristotle) of three lenses to apply in ethical decision-making, an approach: Is it right, good and fitting?” In other words, in Citispeak-is it right to gain an advantage, profitable and easy to implement?

Citigroup executives also pose these questions:  Is it in our clients’ interest, does it create economic value, and is it systemically responsible?”  Who is the client?  Fannie Mae or Freddie Mac?  It isn’t the homeowner or consumer.  These questions actually promote unethical behavior instead of prevent it when posed by upper management who are rewarded for improving Citi’s bottom line.

At Lendinglies we have a client who has been in litigation since 2003 with CitiMortgage.  To date, Citi has revoked a completed modification, prevented a sale of the home, stripped all of the equity and most recently in mid-appeal altered an Appellee brief by slipping an endorsement onto a note, altering an affidavit, and thus committed fraud and fraud on the court.  Citi won the appeal by resorting to fraud and then directed its attorneys to break into the client’s occupied home.  The case is ongoing.   Citi is probably the most corrupt servicer in America and yet they hide behind the pathetic and obvious ruse of hiring an “ethicist”.

Citi claims they are sharing these ideas with employees worldwide, working these concepts into its ethics and training manuals and mission statement, and posting on the wall of its Manhattan headquarters lobby.  This strategy is akin to inviting PETA for a strategy lunch at the Chicago cattle feedlots while trading cattle futures.

Every Citi operation has been cited for fraud and ethical transgressions while fined billions of dollars.  Forex issues, currency rigging, bribery, forgery, fraud, racketeering and employee violations are among the violations Citi has faced and yet nothing changes until the next controversy emerges.  Just because the devil slips on a halo for the night doesn’t cancel out the horns below.  Citi’s culture is ingrained in predatory and fraudulent practices that create an unfair competitive advantage.  Discussions about transparency, trust and developing an ethical culture is a smoke screen.  Citi is rotten from top to bottom.

Citi has recently started unloading its servicing rights after a decade of fabricating documents, forging signatures, breaking into homes, revoking completed modifications, ignoring bankruptcy automatic stays and grossly destroying the lives of those homeowners who were unfortunate enough to have their servicing rights sold to Citi.  Mortgage servicing is a highly profitable activity- especially when you never paid a dime for a loan.  Likely the only reason Citi is offloading servicing rights is to create some distance from its fraudulent practices.

Citi is built on a foundation of unfair competition, operating above the law, and by the theft of other’s resources.  It is what Citi knows and it is entrenched in Citi’s DNA.  The American Bank is free to racketeer, laundry money, rig currencies and break federal law with impunity.  If anyone, especially Dr. David Miller thinks an ethics class and a few posters are going to change the Citi corporate culture- your Ph.D. isn’t worth jack.

Evidence shows Citi will not change its culture and has never followed an ethics plan despite implementing others in the past. Citi may have killed many trees to publish its 60-page ethics policy; but only harsh financial penalties coupled with prison time is going to change Citi’s organized crime operation.

Dr. Miller naively believes banks can change and likely knows very little about how a bank like Citi operates. “To make the assumption that an organization cannot be more ethical than it was is to give up before you start… It is not naive. It is a realistic and necessary goal.”    Okay Dr. Miller, let’s see how your Ivy League theories play out in the real world.  Most of us on this blog know that your ethical ideologies will never gain traction in an organization built on greed, deception and profits at any cost.

The Feds Bag another Small Fish: Georgia Real Estate Investor Pleads Guilty to Bid Rigging and Bank Fraud at Public Foreclosure Auctions

While the Big Banks continue to fabricate notes, robosign documents and create fake assignments in order to illegally foreclose, the Federal government continues to focus on the small fish.

A Georgia real estate investor pleaded guilty today for his role in a bid-rigging conspiracy and fraud scheme related to public real estate foreclosure auctions in Gwinnett County, Georgia, the Department of Justice announced today.

Clifford Wayne Hill pleaded guilty to bid rigging and fraud in the U.S. District Court for the Northern District of Georgia.  On Feb. 3, 2016, a federal grand jury in the Northern District of Georgia returned an indictment against the defendant.

According to the indictment, from December 2007 to March 2012, Hill and his co-conspirators agreed not to compete for the purchase of selected foreclosed homes so that they could win the auctions for those homes with artificially low bids. Hill made and received payoffs for the agreement not to bid; taking money that otherwise would have gone to mortgage holders and in some cases, to the owners of foreclosed homes.

Including Hill, twenty-three defendants have been charged in connection with the Justice Department’s ongoing investigation into bid rigging and fraudulent schemes involving real estate foreclosure auctions in the Atlanta area. Twenty-two real estate investors have pleaded guilty.

Today’s guilty plea is a result of the ongoing investigation being conducted by the Antitrust Division’s Washington Criminal II Section, the FBI’s Atlanta Division and the U.S. Attorney’s Office of the Northern District of Georgia.  Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Washington Criminal II Section of the Antitrust Division at 202-598-4000, call the Antitrust Division’s Citizen Complaint Center at 888-647-3258, or visit


Bloomberg: Renters Now Rule Half of U.S. Cities

Detroit was once known as a city where a working-class family could afford to own a home. Now it’s a city of renters.

Just 49 percent of Motor City households were homeowners in 2015, down from 55 percent in 2009 and the lowest percentage in more than 50 years. Detroit isn’t alone, of course: The rate of U.S. home ownership fell steadily for a decade as the foreclosure crisis turned millions of owners into renters and tight housing markets made it hard for renters to buy homes. Demographic shifts—millennials (finally) moving out of their parents basements, for instance, or a rising Hispanic population—further fed the renter pool.

Fifty-two of the 100 largest U.S. cities were majority-renter in 2015, according to U.S. Census Bureau data compiled for Bloomberg by real estate brokerage Redfin. Twenty-one of those cities have shifted to renter-domination since 2009. These include such hot housing markets as Denver and San Diego and lukewarm locales, such as Detroit and Baltimore, better known for vacant homes than residential development.

While U.S. home ownership ticked up in the second half of 2016, there are reasons to think the trend toward renting will continue. A 2015 report from the Urban Institute predicted that rentership would keep rising through 2030, thanks to demographic trends that include aging baby boomers who downsize into rentals.

In the shorter term, housing market dynamics will also play a role. Fewer than 1 million homes were on the market in the first quarter of 2017, the lowest number since Trulia began recording inventory data in 2012. The shortage makes it harder for renters to buy. Meanwhile, rental landlords, including large Wall Street players and mom-and-pop investors, continue to plow cash into single-family homes.

Those shifts are likely to present new challenges for cities unequipped to handle high rental populations. Detroit Future City, a nonprofit that highlighted Detroit’s shift in a report earlier this month, argues that the city needs an intentional strategy for dealing with the rising population of such households.

That could include providing new protections for renters or creating resources to help landlords keep properties in good repair. On a grander scale, the Center for Budget Policy & Priorities, a Washington-based research institute, published a proposal this month calling for a new tax credit for low-wage workers, seniors, and people for disabilities.

Most low-income families don’t rent by choice, said Nela Richardson, chief economist at Redfin. And plenty of higher-income households rent because they can’t afford to buy. “We don’t have enough affordable supply in either rental or for-sale markets,” said Richardson, adding that cities interested in promoting renter-friendly policies can rethink their zoning policies to encourage more construction.

At an even more basic level, city leaders should check old assumptions about the role renter households play in their communities, said Andrew Jakabovics, vice president for policy development at Enterprise Community Partners, an affordable housing nonprofit.

Homeowners have traditionally been regarded as more engaged, with more at stake in the long-term prospects of their neighborhood, Jakabovics said. That view can unfairly shortchange renters.

“It goes a long way just to make sure you’re valuing renters and making sure voices are heard when it’s time to allocate resources to schools or parks or transit lines,” he said.

Learn from the Foreclosure Mills Themselves: Dealing with Defects in Non-Judicial Foreclosure States

Dealing with Defects in Non-Judicial Foreclosure States

On Thursday, the Legal League 100 held a webinar with a focus on title defects and how they can disrupt the foreclosure process, titled “How to Lose Your Case Before It Starts-Title Defects.”

The webinar was provided free of charge the mortgage servicing industry and hosted by Jim Deloach, Senior Counsel at McCalla Raymer Liebert Pierce, LLC and Chairman of the Legal League 100 Education Subcommittee. The speakers, in addition to Deloach, were Caren Jacobs Castle of the Wolf Firm, Shaun Ramer of Sirote and Permutt, and Morgan Weinstein of Van Ness Law Firm.

For approximately 45 minutes, the experts covered multiple scenarios title defects could rear their ugly head. Topics covered included wrongful release of a lien, servicing transfers, correcting recording issues, and statute of limitation concerns.

A portion of the webinar cited case studies on hot topics specific to individual states, with the understanding that any of these issues could easily spread to neighboring states.

“We are pleased to be able to provide these type of educational opportunities for the industry,” said Legal League 100 Executive Director Derek Templeton. “Whether it be by conducting webinars, producing reports, or simply providing a forum for legal professionals to collaborate with their mortgage servicing partners at the Legal League 100 Servicer Summits, we look forward to further showcasing the expertise represented by our member firms.”

To view the webinar click here.

The Legal League 100 is a professional association of default servicing law firms and service providers created in collaboration with the Five Star Institute. The League plans on hosting future webinars in order to bring the leading experts of the mortgage servicing industry to your desktop. On May 10, the

Legal League 100 will host its annual Spring Summit on May 10,2017 in Dallas Texas. This event is open exclusively to lenders, servicers, GSEs, regulators, and members of the Legal League 100.

MERS Ownership Intentionally Obfuscated

By The LendingLies Team

In an ongoing California Appeal (that will go unnamed at this time), a homeowner’s attorney obtained a routine MERS corporate disclosure statement in response to an opening appellate brief he had filed.  The attorney shared the disclosure statement with a colleague in Hawaii who noticed that MERS claimed it was owned by its holding company who was owned by Maroon Holding, an LLC.  Further research revealed that Maroon was more than 10% owned by “Intercontinental Exchange, Inc.” (“ICE”).  Additional digging revealed that ICE was listed as the parent corporation for the New York Stock Exchange.  At that point red flags were raised.

The attorney, flabbergasted, after years of trying to peel the layers off of the proverbial MERS onion, discovered that ICE purchased the New York Stock Exchange (“NYSE”) for around 8 billion dollars, and it is now worth over 11 billion dollars (huge profits fueled by trillions of dollars of foreclosures and the unrecognized devaluation of the dollar) ( The attorney discovered that ICE also claims to have purchased MERS (so Maroon could not own MERS if ICE does) and when looking into ICE, it is traded (oddly being the NYSE) on NASDAQ.

NASDAQ lists 51 pages of stock ownership in ICE which includes virtually everyone and anyone involved in the financial fraud and corruption scheme.  The pirates include Black Rock who fabricates the forged documents, to Bank of America, N.A., Bank of New York Mellon Corporation; as well as Rothchilds, Rockefellers, Goldman Sachs, T Rowe Price (largest investor), Wells Fargo, Citi, etc…  The list of participants goes on and on with billions of dollars and half a billion shares outstanding.  Not to mention that the government sponsored GSEs Fannie Mae and Freddie Mac are owners as well.

The risk is evenly distributed among the Too Big To Fail institutions with no party owning more than 10% ownership in shares requiring disclosure (of course).  ICE’s ownership, like MERS, is buried in Delaware corporations with 3 different entities claiming the exact same name.  This shell game of mergers and name changes makes it nearly impossible to identify who actually owns anything since no court in the country will enforce discovery or any subpoena on them since each county/pension is invested themselves.

For additional information check out these links:

The bank’s attorneys are also playing the obfuscation game by failing to identify who retained them.

This same attorney reports that he has attempted to sanction opposing counsel for claiming to represent parties that (1) do not exist and/or; (2) were not sued.  In this instance, the lead defendant bounced between two firms, and claimed to represent a party that does not exist.  Nine months into litigation the lender finally admitted they represented the wrong party and then claimed to represent the lender the homeowner first sued instead of who they claimed to currently represent.  The lenders use a game of changing entities, names, servicers and trusts to detract from the real issues while creating such a convoluted mess that plausible deniability can be implied at all junctions.  Outside of foreclosure, no Plaintiff in any other type of litigation would be permitted to act in this manner without being sanctioned.

In this particular case, three different law firms have now made misleading statements and the court takes any lie they spin as fact.  False representations of legal representations for trustees who don’t know or don’t care whether their name is used as Plaintiff or beneficiary are now the norm. Yet, there is no clear procedural method of challenging whether the law firm represents the servicer v REMIC trustee. In a  Florida US bank case,  the Plaintiff’s lawyer admitted to having zero contact with US bank and the attorney could not state that US bank retained him.  It is all but impossible to identify who is truly pulling the strings and violates a consumer’s right to know who their creditor is.

The attorney who brought this situation to our attention writes, “Defendants and their counsel are attempting to obfuscate any ability to identify any actual owner, holder or holder-in-due-course of the purported debt, if such ever existed, its extinguishment notwithstanding.”    When the homeowner, their attorney, the bank, opposing counsel and the judge can’t identify who the true creditor and imposters are, this leads to issues of:

  1. Slander and Disparagement of the Title to Plaintiff’s Property
  2. Lender’s Acts are not Privileged and are without Justification
  3. False Claims
  4. Pecuniary Losses
  5. Fraud
  6. Fraud on the Court
  7. Racketeering
  8. FDCPA and FDCPA violations
  9. Claims are barred for Making False, Deceptive and Misleading Representations
  10. Unconscionable Allegations by Plaintiff
  11. Plaintiff had no Standing to bring Lawsuit

These are issues causing real damages and yet, the Judge in this case will likely ignore the blatant fraud, the use of pseudo-parties and the unconscionable consequences caused by a party with no standing to be in the courtroom.  If you’re a bank you are not required to be honest or have any credible evidence of ownership.  The presentation of fabricated and forged documents, shell companies, and a false affidavit is usually sufficient to foreclose.

Neil Garfield will provide more information on the MERS ownership issue in the next several weeks. Stay up to date at LivingLies.

Housing Bubble 2017: Existing Home Sales Tumble As NAR Warns Prices Becoming Increasingly Unaffordable

After starting the year at the fastest pace in almost a decade, existing-home sales slid in February some 3.7%, below the 2.0% drop expected, as 5.48 million existing houses were sold last month which was marked by a paradoxe: on one hand, NAR reported that the median existing-home price in February was $228,400, up 7.7% from February 2016 and was the fastest increase since last January (8.1 percent). On the other hand, as the NAR itself admits, affordability has collapsed which together with too little inventory of homes for sale, meant that buyers and sellers were unable to meet in the middle, leading to the 3rd worst month in the past 6 years, the lowest since September 2016.

As Lawrence Yun, NAR chief economist, said, closings retreated in February as too few properties for sale and weakening affordability conditions stifled buyers in most of the country. “Realtors are reporting stronger foot traffic from a year ago, but low supply in the affordable price range continues to be the pest that’s pushing up price growth and pressuring the budgets of prospective buyers,” he said. “Newly listed properties are being snatched up quickly so far this year and leaving behind minimal choices for buyers trying to reach the market.”

Added Yun, “A growing share of homeowners in NAR’s first quarter HOME survey said now is a good time to sell, but until an increase in listings actually occurs, home prices will continue to move hastily.”

Some other observations:

  • The median existing-home price 2 for all housing types in February was $228,400, up 7.7% from February 2016 ($212,100). February’s price increase was the fastest since last January (8.1 percent) and marks the 60th consecutive month of year-over-year gains.
  • Total housing inventory 3 at the end of February increased 4.2 percent to 1.75 million existing homes available for sale, but is still 6.4 percent lower than a year ago (1.87 million) and has fallen year-over-year for 21 straight months. Unsold inventory is at a 3.8-month supply at the current sales pace (3.5 months in January).
  • All-cash sales were 27 percent of transactions in February (matching the highest since November 2015), up from 23 percent in January and 25 percent a year ago. Individual investors, who account for many cash sales, purchased 17 percent of homes in February, up from 15 percent in January but down from 18 percent a year ago. Seventy-one percent of investors paid in cash in February (matching highest since April 2015).
  • First-time buyers were 32 percent of sales in February, which is down from 33 percent in January but up from 30 percent a year ago. NAR’s 2016 Profile of Home Buyers and Sellers — released in late 2016 4 — revealed that the annual share of first-time buyers was 35 percent.
  • Properties typically stayed on the market for 45 days in February, down from 50 days in January and considerably more than a year ago (59 days). Short sales were on the market the longest at a median of 214 days in February, while foreclosures sold in 49 days and non-distressed homes took 45 days. Forty-two percent of homes sold in February were on the market for less than a month.
  • annual rate of 4.89 million in February from 5.04 million in January, and are now 5.8 percent above the 4.62 million pace a year ago. The median existing single-family home price was $229,900 in February, up 7.6 percent from February 2016.
  • Existing condominium and co-op sales descended 9.2 percent to a seasonally adjusted annual rate of 590,000 units in February, but are still 1.7 percent higher than a year ago. The median existing condo price was $216,100 in February, which is 8.2 percent above a year ago.
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Some additional thoughts on the collapsing affordability as a result of rising rates, and – of course- nearly double-digit increases in home prices.

The affordability constraints holding back renters from buying is a signal to many investors that rental demand will remain solid for the foreseeable future,” said Yun. “Investors are still making up an above average share of the market right now despite steadily rising home prices and few distressed properties on the market, and their financial wherewithal to pay in cash gives them a leg-up on the competition against first-time buyers.”

Finally, judging by the collapse in mortgage apps and rising mortgage rates, unless all cash buyers – mostly foreign money laundering oligarchs and members of the US 1% – continue to buy up existing homes without resorting to mortgages, expect a sharp drop off in existing homes in the near future.

9th Circuit Opens Door to Modification Fraud and RESCISSION: Oskoui v Chase

The 9th Circuit has laid bare its frustration — and that of thousands of other judges — with the inability to get a straight answer on modification, the collection of trial payments, and the damage caused by misleading statements or outright misrepresentation, whether negligent or intentional. This explicitly opens the door for homeowner actions in negligent misrepresentation, fraud, breach of implied contract, breach of implied covenant of good faith and estoppel. Hundreds of thousands of cases are affected — at least as to claims for money damages. Whether this will bleed over into courts of equity who are hearing foreclosure cases remains to be seen.

Modification Fraud or breach of Contract — even when the “offer” of modification is illusory. This is typical bait and switch practice in the industry. the homeowner thinks they are in a modification when Chase was merely dragging “trial payments” out of her.

Rescission counts, although the court states that the homeowner must raise it in her pleadings against Chase.

Get a consult! 202-838-6345 to schedule CONSULT, leave message or make payments.

see Mahin-Oskoui-v.-J.P.-Morgan-Chase-Bank

I have had many judges express their concerns privately and publicly. They all point to two main things that disturbs them. One is the apparent randomness of modifications and the other is the pattern of musical servicers that change regularly. They worry that this indicates something deeper is going on but that homeowners and their lawyers are not concentrating on these factors.

Modifications are random. Although this case reveals some of the intrinsic objective factors in granting a modifications, the hidden ones still predominate.

The plain fact is that “servicers” are NOT acting in the interest of the investors, the borrowers, or even the loan. Their plan, well executed thus far, is to bring as many cases to foreclosure as possible. Period.

They have been and still are trashing the alleged collateral for the alleged loan. Nobody wins, nobody mitigates their losses under this plan except the Master Servicers/Underwriters who seek two goals: (a) collection of non-existent servicer advances and (b) getting a judge to enter an order allowing foreclosure — thus producing the FIRST LEGAL DOCUMENT in the illusory chain.

The reason why the actual trustee never appears in court is that they are paid to stay away, thus insuring the investors will be screwed.

The following are quotes from this remarkable case:

  • It boils down to this. With its March 1, 2010 letter, Chase deceptively enticed and invited Oskoui into a process with the demonstrably false promise that a loan modification was within her reach if she were to make three monthly payments of $2,988.49 each. The next day – and for the first time – Chase eliminated a HAMP modification from its menu, but neither advised Oskoui what the CHAMP Guidelines required nor suspended additional payments until it could determine her CHAMP eligibility. Chase now says in its brief that the CHAMP Guidelines did not have the HAMP loan balance limitation, but conspicuous by its absence in Chase’s representation is any reference to the NPV test. Chase’s counsel suggested during oral argument that Chase had a valid reason for continuing the process as it did, i.e., that Oskoui’s income situation might have improved. On this record, any such expectation would have been patently unreasonable.
  • The facts in this record would amply support a verdict on this claim in Oskoui’s favor on the ground that she was the victim of an unconscionable process. Chase knew that she was a 68 year old nurse in serious economic and personal distress, yet it strung her along for two years, kept moving the finish line, accepted her money, and then brushed her aside. During this process, Oskoui made numerous frustrating attempts in person and by other means to seek guidance from Chase, only to be turned away.
  • The district court erred in failing to acknowledge Oskoui’s claim for breach of contract in her pro se complaint. She explicitly styled her complaint on its first page as one for “BREACH OF CONTRACT AND BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALINGS
  • The Seventh Circuit’s opinion in Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547 (7th Cir. 2012), which we identified in Corvello v. Wells Fargo Bank, NA, 728 F.3d 878, 880 (9th Cir. 2013) (per curiam) as “the leading federal appellate decision” on this issue of contract, illuminates the viability of Oskoui’s claim. As in the case now before us, Wells Fargo argued in Wigod that its TPP language was not an enforceable offer because it was conditioned on Wells Fargo’s further review of Wigod’s financial information to ensure that she qualified under HAMP. Wigod, 673 F.3d at 561. The Seventh Circuit dismissed this contention as an unreasonable reading of the TPP. The court pointed out that the TPP spelled out two conditions precedent to Wells Fargo’s obligation to offer a permanent modification, and that Wigod alleged that she fulfilled both conditions. Id. at 560–61.

    Once Oskoui made her three payments, Chase was obligated by the explicit language of its offer to send her an Agreement for her signature “which will modify the loan as necessary to reflect this new payment amount.” Chase did not call it either a HAMP agreement or a CHAMP agreement, just an “Agreement.” What program the Agreement was part of is irrelevant. Chase must abide by its own language. It did not live up to its promise. If Oskoui did not consider the offered modification to be acceptable, at that point she could have extracted herself from this aspect of her difficult situation instead of soldiering on towards a beckoning mirage.

On October 1, 2010, Oskoui sent a $2,988.49 payment to Chase. Nevertheless, on October 25, 2010, a foreclosure notice appeared on her front door, listing a foreclosure sale date of November 18, 2010. Remarkably, Chase allegedly sent her another letter dated November 1, 2010 encouraging her to continue to seek a modification. Chase even told her she might “qualify for monetary incentives that will be used to pay down the principal balance of your loan if you make your modified payments on time.” At this point, Oskoui withdrew from the process. She was now $33,738.00 poorer with nothing to show for her efforts to comply with Chase’s requests.

Notwithstanding Oskoui’s explanation of her understandable withdrawal from the exhausting two-year process, the district court granted Chase’s motion for summary judgment on the ground that she had failed in late 2010 to provide Chase with the “requested documentation to support her loan modification request.” The court declined to entertain her contractual claim because she had only “conclusorily” asserted that the “modification back-and-forth ripened into a contract with Chase” and remarked that she “sensibly” had not included a breach of contract claim in her first amended complaint.

The published HAMP Guidelines disqualified Oskoui from HAMP relief. In an age of computerized records, Chase no doubt had this disqualifying information at its fingertips and could have made this simple determination within a matter of minutes. But instead of determining eligibility before asking for money – a logical protocol called for by HAMP as of January 28, 2010 – Chase asked Oskoui for more payments. See Bushell v. JPMorgan Chase Bank, N.A., 220 Cal. App. 4th 915, 924 n.4 (Cal. Ct. App. 2013) (citing U.S. Dep’t of Treasury, HAMP Supplemental Directive No. 10-01 (Jan. 28, 2010)). And even when Chase told Oskoui the next day that she did not qualify for HAMP, it did not inform her of her precarious situation concerning unexplained “other alternatives,” preferring instead to accept payments for seven additional months.

Quotes and Comments:

Loan Modification

The panel reversed the district court’s summary judgment in favor of J.P. Morgan Chase Bank, N.A. in Mahin Oskoui’s action seeking damages she allegedly suffered when she unsuccessfully attempted to modify the loan on her home.

The panel held that the facts plainly demonstrated a viable claim under California’s Unfair Competition Law on the ground that Oskoui was a victim of an unconscionable process.

The panel also held that the district court erred in failing to acknowledge Oskoui’s claim for breach of contract in her pro se complaint. The panel remanded with instructions to permit Oskoui to amend if necessary and to proceed with her complaint for a breach of contract.

The panel also remanded with instructions to permit Oskoui to amend her complaint to allege a right to rescind pursuant to Jesinoski v. Countrywide Home Loans, Inc., 135 S. Ct. 790 (2015)

The most interesting part of this opinion is that the 9th Circuit Panel decided that Chase was creating a contract when it didn’t mean to do so. And so, not realizing they had created a contract, cumulatively, they breached it.

Mahin Oskoui sued defendant J.P. Morgan Chase Bank, N.A. (“Chase”) for damages allegedly suffered when she unsuccessfully attempted over a two-year period to modify the loan on her home. Acting as her own attorney, she asserted inter alia claims for a breach of contract, “breach of implied covenant of good faith and fair dealings,” and a violation of California’s Unfair Competition Law (“UCL”), CAL. BUS. & PROF. CODE § 17200, the latter based on an assertion that she had been victimized by Chase’s unfair or fraudulent business acts or practices. She also attempted to sue Chase for a violation of 15 U.S.C. § 1601, the Truth in Lending Act (“TILA”). Without argument, the district court declined to consider Oskoui’s breach of contract claim and granted summary judgment to defendant Chase.

On May 21, 2009, Chase sent her a letter offering her a “Trial Plan Agreement.” The letter did not advise her of what was required of a borrower or of a loan


for approval under the applicable modification rules, regulations, and guidelines. The letter did advise her that “[i]f you comply with all the terms of this Agreement, we’ll consider a permanent workout solution for your loan once the Trial Plan has been completed.” The only specified term of the Agreement was that Oskoui remit three equal payments of $3,280.05 to Chase between July and September 2009. Oskoui signed the Agreement on June 1, 2009.

Oskoui fully complied with the Agreement’s payment term by timely sending $9,840.15 to Chase, only to be informed on November 10, 2009, that she did not qualify “at this time” for a modification under either the federal Making Home Affordable Program (“HAMP”), 12 U.S.C. § 5219(a), or the Chase Modification Program (“CHAMP”) because “[y]our income is insufficient for the amount of credit you have requested.” Her monthly income during that period was $10,575.00. Chase gave Oskoui no additional reasons for its denial even though its internal paperwork reveals two others, each apparently fatal to her attempt to modify her loan. One barrier was the unpaid principal balance on the loan – $833,000 – which was higher than the amount allowed under the HAMP Guidelines. This factor rendered her ineligible for a HAMP modification. The other barrier, which made her ineligible for CHAMP relief, was the loan’s failure to satisfy Chase’s net present value test (“NPV”).

Not only did Chase fail to advise Oskoui that she was not eligible for these modifications, it told her instead that “we may be able to offer other alternatives to help avoid the negative impact” of foreclosure and a deficiency judgment. Chase failed to explain what its “other alternatives” were or what Oskoui would be required to demonstrate to qualify for them.

Given this enticing invitation, Oskoui tried again, by submitting in January 2010 another application for a loan modification. She had no inkling that Chase had already determined that she was not eligible because of the amount of the unpaid balance of the loan and the NPV problems with it.

On March 1, 2010, Chase responded by letter to Oskoui’s new application. This letter said Chase “wants to help you stay in your home” and confirmed receipt and review of “your verification of income documentation.” Included with the letter were three payment coupons and three return envelopes, each coupon in the amount of $2,988.49, and due on April 1, May 1, and June 1, 2010. The March 1, 2010 letter also stated on the first page: “After successful completion of the Trial Period Plan, CHASE will send you a Modification Agreement for your signature which will modify the Loan as necessary to reflect this new payment amount.” (emphasis added). Chase said not a word about any concerns about her income and did not specify anything in that regard as a condition precedent to a modification. The March 1, 2010 letter says on page 2, however, that “[i]f all payments are made as scheduled, we will consider a permanent workout solution for your Loan.” This language on page 2, which is followed by bold type detailing the manner in which she should remit her payments, when read in the light of Chase’s promise on page 1 creates at best a misleading ambiguity. Page 2 attempts to temper what Chase offered and promised on page 1: a Modification Agreement for her signature. Once again, as with Chase’s November 10, 2009 letter, its March 1, 2010 letter, which Oskoui appended to her complaint as “Exhibit A,” failed to alert her to her apparent ineligibility for a modification.

The next event in this drawn-out process came as quickly as night extinguishes the day. On March 2, 2010, one day after Chase’s letter welcoming Oskoui for a second time to its Trial Period Plan (“TPP”) and acknowledging receipt of her income verification documents, Chase sent her another letter telling her for the first time that she was not eligible for a federal HAMP modification “because the current unpaid principal balance on your Loan is higher than the program limit . . . .” Not only did the letter omit any reference to the fatal NPV test, it said that Chase was “happy” to tell Oskoui that she “may be eligible for other modification programs” and that Chase may be able to offer “other alternatives” to stave off “the negative impact a possible foreclosure may have on [her] credit rating, the risk of a deficiency judgment . . . and the possible adverse tax effects of a foreclosure . . . .” Oskoui took these consequences as menacing threats, not friendly legal advice

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