Judge Rules Against Bank In Mortgage Modification Suit
A recent ruling by a California appeals court clears the way for fraud charges against a lender that promised a loan modification but then foreclosed on the borrower.
The ruling throws into question the legality of hundreds of thousands of foreclosures.
Not only was the ruling a frontal assault on the empty promises made
by servicers and banks, the case highlighted some despicable tactics
often employed to force foreclosures.
Claudia Aceves, who originally sued U.S. Bank, NA in the Los Angeles
County Superior Court, had taken out an $845,000 mortgage with Option
One Mortgage Corporation. Option One later assigned the loan over to
U.S. Bank.
The interest on Aceves’ adjustable rate note ratcheted up two years
after it was entered into. By January 2008 she was falling behind on her
payments. Shortly after March 26, 2008 when the loan’s servicer
recorded a “Notice of Default and Election to Sell Under Deed of Trust,”
Aceves filed for bankruptcy protection under chapter 7 of the Bankruptcy Code.
The bankruptcy filing imposed an automatic stay on the foreclosure proceedings.
After being offered financial help from her husband, Aceves converted
her bankruptcy case from a chapter 7 to a chapter 13 case. Chapter 7,
entitled “Liquidation,” would allow Aceves to discharge her debt on the
home but not allow her to keep it. Chapter 13, entitled “Adjustment of
Debts of an Individual with Regular Income,” has protections for
homeowners that allows them to reinstate loan payments, pay arrearages, avoid foreclosure and keep their home.
U.S. Bank, upon learning of the original bankruptcy filing, filed a
motion to lift the stay in order to execute a nonjudicial foreclosure
and take the house back.
What happens next is indicative of the underhandedness of many servicers and banks.
Aceves’ bankruptcy attorney
gets a letter from counsel to the loan’s servicer (American Home
Mortgage Servicing, Inc.) that asks for permission to talk directly to
Aceves to “explore Loss Mitigation possibilities.” Aceves calls the
servicer’s attorney because she wants a loan modification, which they
are promising. But they tell her they can’t do anything or talk to her
until their motion to lift the bankruptcy stay is granted.
So, Aceves doesn’t oppose the motion to lift the stay and further
decides not to file the chapter 13 bankruptcy. All in the hopes that a
modification would be negotiated.
On December 4, 2008 the stay is lifted. And, unbeknownst to Aceves,
on December 9, 2008 U.S. Bank schedules the home for public auction one
month later on January 9, 2009.
On December 10, 2008 Aceves sends in documents to American Home
aiming to modify and reinstate the loan. Then on December 23, 2008 the
servicer tells Aceves a “negotiator” will contact her on or before
January 13, 2009.
Too bad for Aceves January 13, 2009 is going to be four days after
her home is sold at auction. Which it is, with none other than U.S. Bank
as the buyer.
But just to cover its promise to modify the loan, one day before the
home is to be sold at auction the negotiator for American Home presents a
unilateral offer to raise the loan balance from the original $845,000
to $965,926.22 and make the new monthly payments $7,200 as opposed to
the original monthly payment amount of $4,857.09.
Aceves told them where to go.
She lost her home and sued. She lost when the Superior Court found
that the defendants had met their obligations. The three-judge panel
Appeals Court disagreed in its January 27, 2010 ruling.
The crux of the ruling, which in part relied on a decision in a
previous case (Garcia v. World Savings, FSB) determined that “To be
enforceable, a promise need only be ”’definite enough that a court can
determine the scope of the duty.”’
Further illuminating its stance the Court said the point is, “simply
whether U.S. Bank made and kept a promise to negotiate with Aceves, not
whether the bank promised to make a loan, or more precisely, to modify a
loan” is what matters.
As far as the servicer’s offer of a modification, the Appeals Court
found that the promise to negotiate is “not based on a promise to make a
unilateral offer but on a promise to negotiate in an attempt to reach a mutually agreeable loan modification.”
With all the unkept promises by banks and servicers to negotiate loan
modifications that were never entertained, new litigation on top of all
the foreclosure cases already being pursued is bound to cloud the
future of real estate for the foreseeable future.
Source: Timothy McCandless
Showing posts with label court system. Show all posts
Showing posts with label court system. Show all posts
Saturday, December 15, 2012
Saturday, November 17, 2012
LAWYERS & JUDGES IN COLLUSION
“The
once-honorable profession of law now fully functions as a bottom-line
business, driven by greed and the pursuit of power and wealth, even
shaping the laws of the United States outside the elected Congress and
state legislatures.”
The Fraternity: Lawyers and Judges in Collusion
JUSTICE JOHN F. MOLLOY
When I began practicing law in 1946,
justice was much simpler. I joined a small Tucson practice at a salary
of $250 a month, excellent compensation for a beginning lawyer. There
was no paralegal staff or expensive artwork on the walls.
In those days, the judicial system was straightforward and efficient. Decisions were handed down by judges who applied the law as outlined by the Constitution and state legislatures. Cases went to trial in a month or two, not years. In the courtroom, the focus was on uncovering and determining truth and fact.
I charged clients by what I was able to accomplish for them. The clock did not start ticking the minute they walked through the door.
The law changed dramatically during my years in the profession. For example, when I accepted my first appointment as a Pima County judge in 1957, I saw that lawyers expected me to act more as a referee than a judge. The county court I presided over resembled a gladiator arena, with dueling lawyers jockeying for points and one-upping each other with calculated and ingenuous briefs
That was just the beginning.
By the time I ended my 50-year career as a trial attorney, judge and president of southern Arizona's largest law firm, I no longer had confidence in the legal fraternity I had participated in and, yes, profited from.
I was the ultimate insider, but as I looked back, I felt I had to write a book about serious issues in the legal profession and the implications for clients and society as a whole. The Fraternity: Lawyers and Judges in Collusion was 10 years in the making and has become my call to action for legal reform.
Yet judges create their own law in the judicial system based on their own opinions and rulings. It's called case law, and it is churned out daily through the rulings of judges. When a judge hands down a ruling and that ruling survives appeal with the next tier of judges, it then becomes case law, or legal precedent. This now happens so consistently that we've become more subject to the case rulings of judges rather than to laws made by the lawmaking bodies outlined in our Constitution.
This case-law system is a constitutional nightmare because it continuously modifies constitutional intent. For lawyers, however, it creates endless business opportunities. That's because case law is technically complicated and requires a lawyer's expertise to guide and move you through the system. The judicial system may begin with enacted laws, but the variations that result from a judge's application of case law all too often change the ultimate meaning.
When a lawyer takes an oath as a judge, it merely enhances the ruling class of lawyers and judges. First of all, in Maricopa and Pima counties, judges are not elected but nominated by committees of lawyers, along with concerned citizens. How can they be expected not to be beholden to those who elevated them to the bench?
When they leave the bench, many return to large and successful law firms that leverage their names and relationships.
The once-honorable profession of law now fully functions as a bottom-line business, driven by greed and the pursuit of power and wealth, even shaping the laws of the United States outside the elected Congress and state legislatures.
The net effect has been to increase our need for lawyers, create more work for them, clog the courts and ensure that most cases never go to trial and are, instead, plea-bargained and compromised. All the while the clock is ticking, and the monster is being fed.
The sullying of American law has resulted in a fountain of money for law professionals while the common people, who are increasingly affected by lawyer-driven changes and an expensive, self-serving bureaucracy, are left confused and ill-served.
Today, it is estimated that 70 percent of low-to-middle-income citizens can no longer afford the cost of justice in America. What would our Founding Fathers think?
This devolution of lawmaking by the judiciary has been subtle, taking place incrementally over decades. But today, it's engrained in our legal system, and few even question it. But the result is clear. Individuals can no longer participate in the legal system.
It has become too complex and too expensive, all the while feeding our dependency on lawyers.
By complicating the law, lawyers have achieved the ultimate job security. Gone are the days when American courts functioned to serve justice simply and swiftly.
It is estimated that 95 million legal actions now pass through the courts annually, and the time and expense for a plaintiff or defendant in our legal system can be absolutely overwhelming.
Surely it's time to question what has happened to our justice system and to wonder if it is possible to return to a system that truly does protect us from wrongs.
From an Internet released preview of the book by John Fitzgerald Molloy, The Fraternity: Lawyers and Judges in Collusion, Paragon House, St. Paul, Minnesota, 2004. Reprinted in accordance with the "fair use" provision of Title 17 U.S.C.§ 107 for a non-profit educational purpose.
Source: Tulane Link
-- Justice John F. Molloy
The Fraternity: Lawyers and Judges in Collusion
When I began practicing law in 1946,
justice was much simpler. I joined a small Tucson practice at a salary
of $250 a month, excellent compensation for a beginning lawyer. There
was no paralegal staff or expensive artwork on the walls.In those days, the judicial system was straightforward and efficient. Decisions were handed down by judges who applied the law as outlined by the Constitution and state legislatures. Cases went to trial in a month or two, not years. In the courtroom, the focus was on uncovering and determining truth and fact.
I charged clients by what I was able to accomplish for them. The clock did not start ticking the minute they walked through the door.
Looking back
The legal profession has evolved dramatically during my 87 years. I
am a second-generation lawyer from an Irish immigrant family that
settled in Yuma. My father, who passed the Bar with a fifth-grade
education, ended up arguing a case before the U.S. Supreme Court during
his career.The law changed dramatically during my years in the profession. For example, when I accepted my first appointment as a Pima County judge in 1957, I saw that lawyers expected me to act more as a referee than a judge. The county court I presided over resembled a gladiator arena, with dueling lawyers jockeying for points and one-upping each other with calculated and ingenuous briefs
That was just the beginning.
By the time I ended my 50-year career as a trial attorney, judge and president of southern Arizona's largest law firm, I no longer had confidence in the legal fraternity I had participated in and, yes, profited from.
I was the ultimate insider, but as I looked back, I felt I had to write a book about serious issues in the legal profession and the implications for clients and society as a whole. The Fraternity: Lawyers and Judges in Collusion was 10 years in the making and has become my call to action for legal reform.
Disturbing evolution
Our Constitution intended that only elected lawmakers be permitted to create law.Yet judges create their own law in the judicial system based on their own opinions and rulings. It's called case law, and it is churned out daily through the rulings of judges. When a judge hands down a ruling and that ruling survives appeal with the next tier of judges, it then becomes case law, or legal precedent. This now happens so consistently that we've become more subject to the case rulings of judges rather than to laws made by the lawmaking bodies outlined in our Constitution.
This case-law system is a constitutional nightmare because it continuously modifies constitutional intent. For lawyers, however, it creates endless business opportunities. That's because case law is technically complicated and requires a lawyer's expertise to guide and move you through the system. The judicial system may begin with enacted laws, but the variations that result from a judge's application of case law all too often change the ultimate meaning.
Lawyer domination
When a lawyer puts on a robe and takes the bench, he or she is called
a judge. But in reality, when judges look down from the bench they are
lawyers looking upon fellow members of their fraternity. In any other
area of the free-enterprise system, this would be seen as a conflict of
interest.When a lawyer takes an oath as a judge, it merely enhances the ruling class of lawyers and judges. First of all, in Maricopa and Pima counties, judges are not elected but nominated by committees of lawyers, along with concerned citizens. How can they be expected not to be beholden to those who elevated them to the bench?
When they leave the bench, many return to large and successful law firms that leverage their names and relationships.
Business of law
The concept of "time" has been converted into enormous revenue for
lawyers. The profession has adopted elaborate systems where clients are
billed for a lawyer's time in six-minute increments. The paralegal
profession is another brainchild of the fraternity, created as an
additional tracking and revenue center. High powered firms have
departmentalized their services into separate profit centers for probate
and trusts, trial, commercial, and so forth.The once-honorable profession of law now fully functions as a bottom-line business, driven by greed and the pursuit of power and wealth, even shaping the laws of the United States outside the elected Congress and state legislatures.
Bureaucratic design
Today the skill and gamesmanship of lawyers, not the truth, often
determine the outcome of a case. And we lawyers love it. All the tools
are there to obscure and confound. The system's process of discovery and
the exclusionary rule often work to keep vital information off-limits
to jurors and make cases so convoluted and complex that only lawyers and
judges understand them.The net effect has been to increase our need for lawyers, create more work for them, clog the courts and ensure that most cases never go to trial and are, instead, plea-bargained and compromised. All the while the clock is ticking, and the monster is being fed.
The sullying of American law has resulted in a fountain of money for law professionals while the common people, who are increasingly affected by lawyer-driven changes and an expensive, self-serving bureaucracy, are left confused and ill-served.
Today, it is estimated that 70 percent of low-to-middle-income citizens can no longer afford the cost of justice in America. What would our Founding Fathers think?
This devolution of lawmaking by the judiciary has been subtle, taking place incrementally over decades. But today, it's engrained in our legal system, and few even question it. But the result is clear. Individuals can no longer participate in the legal system.
It has become too complex and too expensive, all the while feeding our dependency on lawyers.
By complicating the law, lawyers have achieved the ultimate job security. Gone are the days when American courts functioned to serve justice simply and swiftly.
It is estimated that 95 million legal actions now pass through the courts annually, and the time and expense for a plaintiff or defendant in our legal system can be absolutely overwhelming.
Surely it's time to question what has happened to our justice system and to wonder if it is possible to return to a system that truly does protect us from wrongs.
A lawyer from Tuscon, Arizona, John Fitzgerald Molloy (b. 1917) was
elected to the Superior Court bench where he served for seven years as
both a juvenile court and trial bench judge. He subsequently was
elected to the Court of Appeals where he authored over 300 appellate
opinions, including the final Miranda decision for the Arizona Supreme
Court. During that period, he also served as president of the Arizona
Judge's Association. After 12 years, Molloy returned to private
practice to become president of the largest law firm in southern
Arizona. His book has received widespread praise for its candor and
disquieting truths. (Photo courtesy of Paragon House)
|
Copyright 2004, Paragon House
From an Internet released preview of the book by John Fitzgerald Molloy, The Fraternity: Lawyers and Judges in Collusion, Paragon House, St. Paul, Minnesota, 2004. Reprinted in accordance with the "fair use" provision of Title 17 U.S.C.
Source: Tulane Link
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