Note that in 30 states there is no judicial review of the foreclosure documentation and no opportunity to raise the issue of standing unless the homeowner sues the foreclosing entity. Few people have the resources to wage a lengthy battle against the best attorneys tax payer’s money can buy.

And, in that handful of cases in California, one of the nonjudicial states, where the homeowners have fought back, courts have been dismissing those lawsuits ruling that the nonjudicial foreclosure statutes, the infamous 2924, occupy the field and are exclusive as long as they are complied with.

But, because there is no review, foreclosing entities routinely violate those requirements without any fear of being challenged. Time and time again, we find that the foreclosing entities do not even bother to notify the homeowner until the foreclosure has already taken place.

And then, it is almost too late. As a last-ditch effort, the homeowner litigates to stop the issuance of an unlawful detainer and ultimate eviction.

At this point, the court will not entertain any objections as to standing or predatory lending or other issues. Judges simply cite 2924 and order the eviction.

These courts view the statutes that regulate nonjudicial foreclosures as all inclusive of all the requirements and remedies in foreclosure proceedings.

Indeed, California Civil Code sections 2924 through 2924k provide a comprehensive framework for the regulation of a nonjudicial foreclosure sale pursuant to a power of sale contained in a deed of trust.

Thus, in the case where a notice of default is recorded and a lawsuit then filed in response to stop the foreclosure, based upon the objection that the foreclosing party does not possess the underlying note, all too often the Court will simply dismiss the case and claim “2924 has no requirement to produce the note.”

The lynchpin of that legal theory is that the borrower agreed to an obligation, defaulted, the remedy is foreclosure, and that is the law. The note isn’t needed.

That is a dead end. The note is not the end game. They may even have the note with all the proper endorsements and a clear and demonstrable chain of title, they may not. If they have it, they may not produce it, even under penalty of sanctions.

Even if they produce it, they still have to deal with your predatory lending claims, and for that, a full accounting of all moneys paid in connection with the loan, including any insurance or TARP funds should be produced in discovery. The full accounting would reveal evidence of predatory lending or servicing for which penalties can be substantial.

We aren’t looking for the note; we are looking for the creditor. The person to whom the obligation, if there is one, is actually owed and the only party who would have standing to bring the foreclosure or to appear in court to answer questions regarding TILA, RESPA, HOEPA, and or a host of other provable allegations that show either origination fraud, servicing fraud, or both.

Your suit needs to lead off with something more substantial than a confusing paper trail attempting to show that they don’t have the right to foreclose. It’s true, but right now, at least, that isn’t working in many courts. That will all come out in the discovery process if the suit survives 2924 and there is no settlement between the parties.

The meat and the muscle of your case are predatory lending or predatory loan servicing, an increasingly prevalent form of unlawful foreclosure.

Why? Because your loan, by its very terms, may have been designed to fail and you were either steered into the loan, given no other options, promised a refinance, or just blindsided at the signing table. If you had a 750 FICO, for example, and you didn’t get a great thirty year fixed rate loan, you may have been the victim of predatory lending. If you got a 2-28 adjustable or a 3-36 or a pick a pay, or an option arm, you may have been the victim of predatory lending.

If you got your loan in the last few years, there is a strong possibility that it was pledged as part of a pool of loans with a large percentage of loan instruments with terms that the underwriters knew would contribute to a high probability of default.

This would make it a virtual certainty that the entire pool would surpass the default threshold established in the Pooling and Servicing Agreement, and the Credit Default Swaps would reap big rewards for the banks.

But, it would also mean that losses were covered and that these were the very pools that would be eligible for TARP funds to also offset the loss.

You may have been the victim of high-tech identity theft if your Social Security Number and credit report were used to legitimize and to showcase the quality of the pool…which was probably loaded with loans designed to fail.

You may be the victim of servicing fraud wherein the servicer falsely states that you haven’t insurance, didn’t pay your property taxes, or missed your payment, and then uses this to extract fees and penalties, and default the loan.

You may be the victim of servicing fraud if you were told that to be eligible for a modification you had to be behind in your payments and your credit was damaged as a result. Or, your home was foreclosed with no notice while you were supposedly awaiting approval of your modification.

It is these matters that you wish to address and the pretender lender will quickly tell you that it isn’t them. Particularly, if it is MERS. MERS abets predatory lending and is thus one of the main pillars of loan securitization. It removes the transparency as to the identities of those who would have liability for these claims.

MERS was created so that more predatory loans could be placed in pools without increasing the liability of predatory lending claims for its members.

So, if the foreclosing entity isn’t the creditor, who is? Possibly, no one. But, if anyone knows, it should be MERS. That is what they do. They should not be able to object to this discovery as being vague, overly burdensome, beyond the scope of the matter, etc.

Lawyers are pulling a fast one on the court, and with a wink and a nod, the judges play along with the 2924 and its supposed total exclusivity.

But, just because the lawyers say so, doesn’t make it so. Lawyers are kind of like magicians, they want you to look in one direction so you won’t see the deception. They pound the laws and facts that help them to distract the opposition from the laws and facts that would hurt them.

As the courts are currently allowing the application of the law, the consequences are a complete denial of due process. Surely, no one can argue that 2924 was intended to sanction fraud or to abet a crime in progress.

Just the opposite. The law’s very purposes include protection for both the debtor and the creditor.

The three stated purposes of 2924 are: “(1) to provide the creditor/beneficiary with a quick, inexpensive and efficient remedy against a defaulting debtor/trustor; (2) to protect the debtor/trustor from wrongful loss of the property; and (3) to ensure that a properly conducted sale is final between the parties and conclusive as to a bona fide purchaser.”

Let’s break it down: purpose one relates to the creditor/beneficiary. If that isn’t the foreclosing entity, then purpose two and three would be frustrated.

Isn’t it fair enough to require the foreclosing entity to properly identify itself to the court and prove that they are, in fact, the legal creditor for an obligation they can prove exists?

Without a review of the legitimacy of the foreclosing entity, what is there to stop anyone from foreclosing on anyone without ever proving standing or an obligation? One way to cure this would be if an organization like the Tea Party, for example, undertook filing notices of default in the thirty nonjudicial states against all politicians, judges, news media, etc.

Then there would be a focus on purpose two, protect the homeowner against a wrongful foreclosure. Isn’t it wrongful if the person foreclosing has no stake whatsoever in the property? And, without a complete accounting, how does one establish that there is an obligation due, rising to a default? How can there be a default if the obligation were already satisfied?

In order to fulfill purposes two and three, the identity of the creditor/beneficiary must be firmly established.

Contained within 2924 is adequate protection for both the borrower and the true creditor if the courts will simply demand the fundamental evidence to prove the status of the foreclosing entity, and to determine that an obligation even exists.

But, I am unprepared to concede the underlying notion that 2924 is the only applicable law. If other crimes are committed that ultimately prove to be the proximate cause of any default, they cannot be excluded. Simply, 2924 doesn’t supersede all other law. And now, I’m not alone. We have an appeal right on point.

Recently, in the case of California Golf, L.L.C. v. Cooper, the Appellate Court held that the remedies of 2924h were not exclusive. They reversed the lower court and specifically held that provisions of the Uniform Commercial Code, UCC, Article 3 were allowed in the foreclosure context.

And, that is huge. Under California Commercial Code 3301, a note may only be enforced if one has actual possession of the note as a holder, or has possession of the note, not as a non-holder, but with holder rights.

From a defensive standpoint, this opens the door to showing that the note and mortgage were split and the foreclosing entity has nothing.

From an offensive standpoint, having identified who you may owe an obligation to, may also reveal that the obligation no longer exists and that the trust holding your note was dissolved. Once you get a foot in the door, who knows what wonders you may find?

And what does this new and improved product have to offer? Here’s the highlights:

1.  First time homebuyers (defined as those who have NOT owned a primary residence in the previous 3 years), may be eligible for the $8,000 tax credit. (As before, there is a 10% cap, so if the home sales for $70,000, then you would only qualify for $7,000).

      New and Improved:  Not just for first time homebuyers anymore!!!  Current homeowners who have been living in their primary residence consecutively for 5 out of the last 8 years, and are repeat buyers (and buying another primary residence), may be eligible for up to a $6,500 tax credit.  

2.  This new credit becomes effective on homes purchased after November 6, 2009 and before May 1, 2010. Buyers must have binding contracts in place by April 30, 2010 and you must CLOSE on the transaction by June 30, 2010. 

3.  Qualified homebuyers can take the tax credit on their 2009 or 2010 income tax return.

4.  Now as before, there are income limits. Homebuyers who file as single or head-of-household can claim the full credit ($8,000 for first-time buyers and $6,500 for repeat buyers), if their modified adjusted gross income is less than $125,000. For married couples filing a joint return, the combined income limit is $225,000. If you file as single or head-of-household, and earn between $125,000 and $145,000, or are married and jointly earn between $225,000 and $245,000, you are eligible to receive a partial credit. The credit is not available for single taxpayers whose modified adjusted gross income is greater than $145,000 or married couples with a modified gross adjusted income greater than $245,000.

5.  And how much can you buy? All homes under $800,000 qualify. This not only includes resale homes, but also new construction, townhomes and condominiums, as long as they will be purchased as your primary residence. You CANNOT use the credit on vacation homes or rental property.

6. And the final do’s and don’ts: 

a.     You must live in the home for 3 years or you will have to pay the credit back.

b.    You cannot obtain the home by means of a gift or inheritance.

c.     You cannot obtain the home from a child, spouse, your mother or father.

d.    You must be 18 years of age or older. (This had to be clarified since a 4-year-old recently tried to claim the tax credit – not good!)

e.     To get your credit, fill out IRS Form 5405 and submit your HUD-1 (Settlement Statement) with your tax return.

• The borrower must meet standard FHA credit qualifications (there's no set credit score barometer, but a borrower's debt-to-income ratio is heavily considered). 
  
• The borrower is able to finance the upfront mortgage insurance premium into the loan. The borrower will be responsible for paying an annual premium.
  
• The FHA mortgage requires a low 3.5-percent down payment, and that money can come from a variety of sources, including parent gifts and HUD downpayment assistance grants.
  
• Closing costs are also low - typically 3 percent of the total purchase price - and are usually covered by the seller in today's market. They can also be incorporated into monthly payments.
  
• Eligible properties are one-to-four unit structures, and each state has a purchase price limit ($346,250 in Arizona) for FHA loans.
  
• If a buyer finds a fixer-upper, the FHA 203(k) program can help the person purchase or refinance the property, with the cost of repairs and improvements included in the loan.
• FHA home mortgages aren't just for first-time homebuyers. FHA refinance loans can help people get out of toxic debt situations caused by subprime mortgages with high interest rates.

As stated above, FHA home mortgages aren’t just for first-time home buyers. FHA refinance loans can help people get out of debt situations caused by the sub-prime market with interest rates that have spiraled out of control. Are you facing default or foreclosure on a conventional loan? FHA home mortgage refinancing is a godsend for those who want to keep their homes and prevent damage to their credit ratings. There are several ways to get into an FHA home loan for refinancing. The advantages include a low fixed rate mortgage guaranteed by the FHA, predictable FHA mortgage payments and lower interest rates for those who qualify.

FHA mortgage loans should take up no more than 29% of your monthly income, and your loan officer will ask for verification of your income to make the calculation. While some people are able to get conventional loans using “stated income”, requirements for FHA mortgage products such as FHA refinancing loans require copies of your income tax returns to verify the actual amount of money you report to the government. If your job situation has changed since your last tax filing, you may be able to furnish proof of income through your new employer.

FHA home loans have requirements for income, debt-to-income ratios, maximum loan amounts and other details; each type of FHA loan is unique and must be applied for individually. Ask your lender for assistance in learning which FHA mortgage is right for you. If you aren’t satisfied with your current lender, consider getting applying for an FHA home mortgage at a new bank. Even if you have an existing home loan, you can explore your options with FHA refinancing someplace else. 

Home prices are one factor in determining your cost of ownership, but so are interest rates and financing availability. Even though interest rates have gone up in the last six months, they are still near historic lows. Since your monthly mortgage payment is a combination of paying down your principal and paying the interest owed, if home prices come down a little further but interest rates go up, it could cost you even more to service a mortgage on an identical home!

While a home is a major investment, it is also the center of your personal life. It's important to live in a home that reflects your taste and values, yet is within your financial "comfort zone." To that end, it may be more important to lock in today's relatively low interest rates and low home prices, rather than to hope for a further break in prices in the future.

Please give me a call if I can be of any assistance in determining how much home you can afford in today's market.

If you haven't owned a home in 3 years — or never at all — this can guarantee you $8,000 off your taxes.

Here are the highlights of this historic move:

Limited Time Offer With Few Limitations
You must close on a new home no later than November 30, 2009, and make $150,000 or less if filing as a couple ($75,000 or less if filing single). Income over these limits may qualify for partial credit. The credit has to be repaid over time if you sell the home within 3 years of closing. Other than that, qualify for a loan and the full $8,000 credit is yours.

$8,000 Guaranteed No Matter What You Owe
A tax credit directly reduces the taxes you owe for the entire year, including what you’ve paid in. Under the new law you're guaranteed $8,000 off your taxes. If, for example, you’ve paid $6,000 and owe nothing else, you’d get an $8,000 tax refund. If you owe more, you're still guaranteed $8,000 credited against that.

You Could Claim The Credit For 2008
The tax credit applies in the year it's claimed. Close on a new home before you file your 2008 taxes, and you can claim it on your 2008 return. Already filed your 2008 tax return, you can file an amendment or wait to claim the credit on your 2009 return.

If you'd like to learn more about this program, please call me!