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In 2011, Wells Fargo foreclosed on the plaintiffs’ residential mortgage loan and purchased their home at a trustee sale conducted by First American. Plaintiffs sued, alleging, that defendants violated their deed of trust’s incorporation of a pre-foreclosure meeting requirement contained in National Housing Act (NHA) regulations and the Federal Debt Collection Practices Act (FDCPA). The trial court sustained demurrers and denied a preliminary injunction.
The court of appeal reversed, finding that plaintiffs pled viable causes of action for equitable cancellation of the trustee’s deed obtained by Wells Fargo based on their allegation that Wells Fargo did not comply with the NHA requirements incorporated into the deed of trust. Because compliance was a condition precedent to the accrual of Wells Fargo’s contractual authority to foreclose on the property, if, as plaintiffs allege, the sale was conducted without such authority, it is either void or voidable by a court sitting in equity. Whether void or voidable, plaintiffs were not required to allege tender of the delinquent amount owed.
Editor’s Comment: Just as so many lawyers and homeowners are losing heart, especially in California, the Courts are starting to flux their muscles and giving life to their doubts about the notes, debts, mortgages, deeds of trusts, and foreclosures. As more lawyers fight harder and better, the courts are listening.
There has been a sharp increase in the number of cases in which these alleged loans are challenged at their core. It sounds “counter-intuitive” as Reynaldo Reyes said as VP Asst management for Deutsch. But the fact remains that these are foreclosures on loans without an underlying debt. The debt exists, but it does not underlie the documents used in foreclosure because those documents recited terms and conditions and named lenders and creditors who never loaned the borrower one dime and never paid for one single transfer of a loan.
The debt arises only by operation of law, no thanks to the banks who diverted the money, title and debt from the true lenders (investors) and the true borrowers (homeowners). The investors thought they were loaning money to the REMIC Trust; instead their money was used to fund loans to individual borrowers on terms that were unacceptable to the investors. The lender thus had a different borrower than the bargain and the borrower had a different lender than the bargain. Get it? That is how the intermediary banks made so much money while everyone else lost their wealth, their jobs, their tax base, their income, and their dignity.
And they told a bigger lie to get even more money from TARP and the Federal Reserve under the wrong assumption that this was necessary to save our economic system. We negotiated with terrorists based upon information from the terrorists. And because nobody wants to admit how wrong we got it when dealing with the banks, nobody except here and a few other places is saying what the rest of the population already knows. We got screwed by the banks. Even if we didn’t have a mortgage, we lost things because of the foreclosure crisis.
So then the truth starts to come out first in trickles and then in a flood. The flood is coming. This case stands out because it analyzes each component of the alleged loan documents instead of justifying a predetermined result. The Courts are expressing their frustration and their understanding that there is something very very wrong with these foreclosures.
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