Case No. S218973

IN THE SUPREME COURTOF THE STATE OF CALIFORNIA

TSVETANA YVANOVA,

Plaintiff and Appellant,

v.

NEW CENTURY MORTGAGE CORPORATION, OCWEN LOANSERVICING, LLC, WESTERN PROGRESSIVE, LLC, and DEUTSCHE

BANK NATIONAL TRUST COMPANY, et al.,

Defendants and Respondents.

After a Published Decision by the Court of AppealSecond Appellate District, Division One

Case No. B247188

BRIEF OF AMICI CURIAE NATIONAL ASSOCIATIONOF CONSUMER ADVOCATES AND NATIONAL CONSUMER

LAW CENTER IN SUPPORT OF PLAINTIFF AND APPELLANT

James C. Sturdevant (SBN 94551)(jsturdevant@sturdevantlaw.com)THE STURDEVANT LAW FIRM,A Professional Corporation354 Pine Street, Fourth FloorSan Francisco CA 94104(415) 477-2410

Attorneys for Amici Curiae National Association of Consumer Advocatesand National Consumer Law Center

i

TABLE OF CONTENTS

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

I. MORTGAGORS HAVE STANDING TO CHALLENGEASSIGNMENTS OF DEEDS OF TRUST MADE WITHOUTAUTHORITY IN A SECURITIZED TRUST . . . . . . . . . . . . . . . . . 1

INTEREST OF AMICI CURIAE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

I. THE SHORT- AND LONG-TERM EFFECTS ONHOMEOWNERS AND THE U.S. ECONOMY OF THEMORTGAGE FORECLOSURE CRISIS . . . . . . . . . . . . . . . . . . . . 4

A. The Mortgage Foreclosure Epidemic . . . . . . . . . . . . . . . . . . 4

B. The Housing Assistance Mortgage Plan (HAMP) . . . . . . . . 6

1. The HAMP Program . . . . . . . . . . . . . . . . . . . . . . . . . 6

2. The Failure of HAMP . . . . . . . . . . . . . . . . . . . . . . . . 8

a. Modifications Have Been AggressivelyMarketed by Mortgage Servicers withInsufficient Resources to ProcessApplications . . . . . . . . . . . . . . . . . . . . . . . . . 10

b. Fees Are a Profit Center for Servicers . . . . . 11

c. Incentives Are Skewed Toward DraggingOut Trial Modification Process . . . . . . . . . . 13

II. MORTGAGEES HAVE STANDING TO CHALLENGEASSIGNMENTS OF DEEDS OF TRUST MADE WITHOUTAUTHORITY IN A SECURITIZED TRUST . . . . . . . . . . . . . . . . 14

ii

A. Modifications Have Been Aggressively Marketed by Mortgage Servicers with Sufficient Resources to Process Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

B. Falsification of Foreclosure Documents . . . . . . . . . . . . . . 15

C. The Problem of Principal Reductions . . . . . . . . . . . . . . . . . 16

E. Business Decision Not To Follow Rules . . . . . . . . . . . . . . 17

E. Net Present Value Is Skewed . . . . . . . . . . . . . . . . . . . . . . . 17

F. Investors Don’t Control the Process, Even if It Makes Sense to Modify . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

G. There Is No Effective Oversight Whatsoever . . . . . . . . . . . 19

III. MORTGAGORS HAVE STANDING TO CHALLENGE UNAUTHORIZED ASSIGNMENTS, THE CONDITION PRECEDENT TO A FORECLOSURE AND THE LOSS OFTHE OWNER’S HOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

iii

TABLE OF AUTHORITIES

FEDERAL CASES

Betancourt et al. v. CitiMortgage, Inc. et al.USDC, N.D. Cal., Case No. 10-3168 . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Beverly King et al. v. CitiMortgage, Inc. et al.USDC, C.D. Cal, Case No. 10-3792 . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Corvello v. Wells Fargo Bank728 F.3d 878 (9th Cir. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Durmic et al v. JP Morgan Chase Bank, N.A.Case No. 10-DV 10380-RGS (D.Mass.) . . . . . . . . . . . . . . . . . . . . . . . . 5

Federal National Mortgage Association v. Bradbury2011 ME 120, 32 A.3d 1014 (Me. 2011) . . . . . . . . . . . . . . . . . . . . . . 16

In re Davies565 Fed. Appx. 630 (9th Cir. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Jones v. Wells Fargo Home Mortg. (In re Jones)366 B.R. 584 (Bankr. E.D. La. 2007)aff’d Wells Fargo v. Jones, 391 B.R. 577 (E.D. La. 2008) . . . . . . . . . 12

Morrow v. Bank of America324 P.3d 1167 (Mt. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Wigod v. Wells Fargo Bank, N.A.673 F.3d 547 (7th Cir. 2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

STATE CASES

Angelucci v. Century Supper Club41 Cal. 4th 160 (2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

California Golf, L.L.C. v. Cooper163 Cal. App. 4th 1053 (2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

iv

Glaski v. Bank of America218 Cal. App. 4th 1079 (2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 2

Gomes v. Countrywide Home Loans, Inc.192 Cal. App. 4th 1149 (2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . 21, 22

Jenkins v. JPMorgan Chase Bank, N.A.216 Cal. App. 4th 497 (2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 2, 21

Lona v. Citibank, N.A.202 Cal. App. 4th 89 (2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Moeller v. Lien25 Cal. App. 4th 822 (1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Ram v. OneWest Bank223 Cal. App. 4th 1 (2015) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Teal v. Superior Court60 Cal. 4th 595 (2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

FEDERAL STATUTES

12 U.S.C.Section 110 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Section 5201 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Section 5201-5253 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Section 5211-5241 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Section 5219(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Section 5220(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Section 5220(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

STATE STATUTES

Civ. CodeSections 2924-2924k . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20Section 2924(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

v

OTHER AUTHORITIES

Adam J. Levitin and Tara TwomeyMortgage Servicing, 28 Yale J. Reg. 1 (2011) . . . . . . . . . . . . . . . . . . 14

Airing Out HAMP’s Dirty Laundry93 N.C. L. Rev. Addendum 39 (2014) . . . . . . . . . . . . . . . . . . . . . 11, 20

Andrews & WittThe Test That Insures that Lenders Win on Loan Mods,September 15, 2009 at http://www.propublica.org/article/the- secret-test-that-ensures-lenders-win-on-loan-mods-915 (last visited April 20, 2015) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Ben S. Bernanke, Chairman, Speech at the Federal Reserve SystemConference on Housing and Mortgage Markets

Housing, Mortgage Markets, and Foreclosures (Dec. 4, 2008) . . . . . . 9

Center for Responsible LendingSoaring Spillover: Accelerating Foreclosures to Cost Neighbors$502 Billion in 2009 Alone; 69.5 Million Homes Lose 7,200 onAverage (2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

David C. WheelockThe Federal Response to Home Mortgage Distress: Lessons fromthe Great Depression, 90 Federal Reserve Bank of St. Louis Rev.133 (2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Diane E. Thompson“Why Servicers Foreclose When They Should Modify and Other Puzzles of Servicer Behavior”(http://www.macdc.org/research/Servicer-Report1009.pdf) . . . . . . . . 13

Diane E. ThompsonForeclosing Modifications: How Servicer Incentives Discourage Loan Modifications, 86 Washington L. Rev. 755 (2011) . . . . . . . . . . 13

vi

Excerpts from Superintendent Lawsky’s Remarks on Non-Bank MortgageServicing in New York City

NY Dept. of Financial Services (May 20, 2014) at http://www.dfs.ny.gov/about/press2014/pr1405201.htm (last visited April 20, 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Katherine PorterMisbehavior and Mistake in Bankruptcy Mortgage Claims,87 Tex. L. Rev. 121 (2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Lending Magnate Settles Case, New York Times (Oct. 15, 2010) . . . . . . . 5

Manuel Adelino, Kristopher Gerardi, and Paul S. Willen, Fed. Reserve Bank of Boston,Why Don’t Lenders Renegotiate More Home Mortgages?,Redefaults, Self-Cures, and Securitizations 6 (Public Pol’y PaperNo. 09-4, July 6, 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Mortgage Banker’s Ass’n, National Delinquency Survey Q2 2010 . . . . . . 8

Paul KielSecret Documents Show Weak Oversight of Key Foreclosue ProgramProPublica (Nov. 8, 2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Peter S. GoodmanLucrative Fees May Deter Efforts to Alter Loans(New York Times, July 30, 2009) . . . . . . . . . . . . . . . . . . . . . . . . . 12, 13

Prospectus Supplement, Chase Funding Loan Acquisition Trust,Mortgage Loan Asset-Backed Certificates, Series 2004-AQ1, at 34(June 24, 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11, 13

Who Can You Trust? The Failure of RMBS Trustees to Protect InvestorsThe Advocate for Institutional Investors (Summer 2014) athttp://www.blbglaw.com/news/publications/data/00173/_res/id=

File1/Adv_Summer2014_Galdston.pdf (last visited April 20, 2015) . . . . 19

Staff of the Joint Economic Comm., 110th Cong., 1st Sess.,The Subprime Lending Crisis: The Economic Impact onWealth, Property Values and Tax Revenues, and How We Got Here (2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

vii

Staff of the Joint Economic Comm., 110th Cong., 2d Sess.State by State Figures: Foreclosure and Housing WealthLosses (2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Statement of Neil Barofsky before House Committee on Financial Services, Subcommittee on Insurance, Housing and Community Opportunity (Mar. 2, 2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

The Inquiry Into Countrywide, New York Times (May 10, 2011) . . . . . . . 5

U.S Treasury Dept.The Effect of the Principal Reduction Alternative (PRA) on RedefaultRates in the Home Affordable Modification ProgramJuly 31, 2012, http://www.treasury.gov/resource-center/economic-policy /Documents/MHAPrincipalReductionResearchSummary_vFINALv2. pdf (last visited April 20, 2015) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

William Apgar & Mark DudaCollateral Damage: The Municipal Impact of Today’s MortgageForeclosure Boom (May 11, 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

http://www.coloradoattorneygeneral.gov/press/news/2011/03/18/attorney_general_announces_lawsuit_against_south_dakota_lender_making _unlicens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

http://financialservices.house.gov/media/pdf/030211barofsky.pdf (last visited April 18, 2015) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

http://www.hmpadmin.com/portal/programs/docs/hamp_servicer/mhahandbook_44.pdf (Last visited April 18, 2015) . . . . . . . . . . . . . . . . . . 7

http://www.housingwire.com/2010/10/13/fdics-bair-says-robo-signing-points-to-incentives-issue-in-mortgage-servicing . . . . . . . . . . . . . . . . . . . 13

http://www.mass.gov/?pageID=cagopressrelease&L=1&L0=Home&sid=Cago&b=press release&f=2008_06_03_option_one_suit&csid=Cago . . . 5

http://www.nytimes.com/2010/10/14/business/14mortgage.html?_r=2&scp=1&sq=burger%20king%20kids&st=cse . . . . . . . . . . . . . . . . . . 11

viii

http://projects.propublica.org/bailout/loan_mods/list . . . . . . . . . . . . . . . . 10

http://www.propublica.org/article/by-the-numbers-a-revealing-look-at-the-mortgage-mod-meltdown . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

http://www.propublica.org/article/homeowner-questionnaire-shows-banks-violating-govt-program-rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

http://www.realtytrac.com/content/press-releases/foreclosure-activity-at-40-month-low-6578 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

http://www.statisticbrain.com/home-foreclosure-statistics/ (last visited April 18, 2015) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

1

INTRODUCTION I. MORTGAGORS HAVE STANDING TO CHALLENGE ASSIGNMENTS OF DEEDS OF TRUST MADE WITHOUT AUTHORITY IN A SECURITIZED TRUST

The defendants concede that “in general terms, in order to have

standing, a plaintiff must be able to allege injury – that is, some ‘invasion

of the plaintiff’s legally protected interests.’” Angelucci v. Century Supper

Club, 41 Cal. 4th 160, 175 (2007). (Answer Brief at 16.) Further,

defendants recognize that “to have standing, a party must be beneficially

interested in the controversy; that is, he or she must have ‘some special

interest to be served or some particular right to be preserved or protected

over and above the interest held in common public at large.’” Teal v.

Superior Court, 60 Cal. 4th 595, 599 (2014). (Answer Brief at 16.)

Defendants have hit the nail on the head. There can be few

protected interests more valuable than an individual’s home. Protecting its

ownership and preserving its possession by the borrower as a residence is

“concrete and actual, not hypothetical or conjectural.” Teal at 599. The

issue of a mortgagor’s standing has divided not only the courts of appeal in

California, but federal courts in California and in other jurisdictions. The

tug of war has been between the reasoning and decision in Jenkins v.

JPMorgan Chase Bank, N.A., 216 Cal. App. 4th 497 (2013) and those in

Glaski v. Bank of America, 218 Cal. App. 4th 1079 (2013). The court

below, without reasoning or discussion, found Jenkins “persuasive” and

simply rejected the reasoning of Glaski. Other courts have done the same,

concluding, without analysis, that this Court would adopt the rule in

Jenkins, not the one in Glaski. See, e.g., In re Davies, 565 Fed. Appx. 630,

633 (9th Cir. 2014).

2

The issue presented to this Court in this case is not as simple as

choosing between Jenkins on the one hand, and Glaski on the other. The

Court should examine the relatively recent transformation of the ownership

of deeds of trust in California, coupled with the rules applicable to non-

judicial foreclosure claims for wrongful foreclosure in California. This

Court should examine the process of securitization and how that structure

of promissory note ownership has served to harm both the beneficiaries of

the securitized trust and the mortgagors. Amici submit that an analysis of

the structure itself compels the conclusion that mortgagors have standing to

challenge the legal validity of assignments of their deeds of trust, a

condition precedent to initiation of foreclosure proceedings.

INTEREST OF AMICI CURIAE

The National Association of Consumer Advocates (NACA) is a

leading nationwide organization of more than 1,500 private and public

sector attorneys, and law professors and students who represent and have

represented hundreds of thousands of consumers. Since its inception,

NACA has focused primarily on the prevention and redress of abusive and

fraudulent business practices, including predatory lending and mortgage

related issues. NACA has attorneys across the country who are dedicated

and willing to provide legal assistance concerning foreclosure issues. The

3

Institute for Foreclosure Legal Assistance (IFLA) is a not-for-profit

program managed by NACA that is focused on representing homeowners

facing foreclosure.

NACA frequently authors amicus briefs in cases involving unlawful

and unfair mortgage practices, including cases asserting the duty of due

care imposed on lenders and breach of the covenant of good faith and fair

dealing. See, e.g., Morrow v. Bank of America, 324 P.3d 1167 (Mt. 2014).

The National Consumer Law Center (NCLC) is a national research

and advocacy organization focusing on justice in consumer financial

transactions, especially for low income and elderly consumers. Since its

founding as a nonprofit corporation in 1969, NCLC has been a resource

center addressing numerous consumer finance issues affecting equal access

to fair credit in the marketplace. NCLC works with nonprofit and legal

services organizations, private attorneys, policymakers, and federal and

state government and courts across the nation to stop exploitative practices,

help financially stressed families build and retain wealth, and advance

economic fairness.

NCLC publishes a 20-volume Consumer Credit and Sales Legal

Practice Series, including the Cost of Credit (Fourth Ed. and 2011

Supplement) and Consumer Credit Regulation (2012 and 2013 Supp.)

4

(which extensively covers the topic of payday loans), and has served on the

Federal Reserve System Consumer-Industry Advisory Committee and

committees of the National Conference of Commissioners on Uniform

State Laws. NCLC has also acted as the Federal Trade Commission's

designated consumer representative in promulgating important consumer

protection regulations restricting unfair creditor remedies. Relevant to

mortgage lending and wrongful foreclosure, NCLC serves as co-counsel in

individual and class action litigation across the country in issues involving

violations of HAMP and HARP, as well as wrongful foreclosure and

fraudulent practices involving mortgages and foreclosures.

ARGUMENT

I. THE SHORT- AND LONG-TERM EFFECTS ON HOMEOWNERS AND THE U.S. ECONOMY OF THE MORTGAGE FORECLOSURE CRISIS

A. The Mortgage Foreclosure Epidemic.

Even before the economy turned downward in 2008, millions of

homeowners were at risk due to loans foisted upon them by unsrcupulous

and greedy mortgage brokers and non-bank lenders. At the same time, the

great recession began and millions of jobs were lost. Millions of these

homeowners were forced into default, foreclosure proceedings were

instituted and homes were lost. At the same time, the values of these newly

purchased homes started to drop precipitously. Those homeowners who

had been making payments, found the combination of unaffordable loan

terms and declining home values, combined with a crashing economy,

5

forcing them into default, Countrywide is the most notorious example of a

lender who put millions of homeowners into inappropriate and unaffordable

loans.1

In 2008, national banks applied for and received billions of bailout

dollars from TARP. While the Congressional authorization of the Troubled

Asset Relief Program (“TARP”) included provisions for homeowner relief,

the US Treasury Department failed to implement those provisions and

homeowners had no similar recourse. More than a million were in default

and their homes were being foreclosed upon. Cases challenging the

fraudulent lending practices of financial institutions were instituted across

the country.2 These cases would take a long time, as would those filed by

several attorneys general around the country targeting sample subprime

mortgage practices of less well-known lenders operating in their states.3

1 The Inquiry Into Countrywide, New York Times (May 10, 2011) (http://www.nytimes.com/2011/05/11/opinion/lweb11financial.html?scp=6&sq=countrywide%20financial%20mortgage%20crisis&st=cse ); Lending Magnate Settles Case, New York Times (Oct. 15, 2010) (http://www.nytimes.com/2010/10/16/business/16countrywide.html?ref=angelormozilo). 2 See, e.g., Durmic et al v. JP Morgan Chase Bank, N.A., Case No. 10-DV 10380-RGS (D.Mass.); Betancourt et al. v. CitiMortgage, Inc. et al., USDC Northern District of California, Case No. 10-3168; Beverly King et al. v. CitiMortgage, Inc. et al., USDC Central District of California, Case No. 10-3792. 3 (http://www.coloradoattorneygeneral.gov/press/news/2011/03/18/ attorney_general_announces_lawsuit_against_south_dakota_lender_making_unlicens; http://www.mass.gov/?pageID=cagopressrelease&L= 1&L0=Home&sid=Cago&b=pressrelease&f=2008_06_03_option_one_suit&csid=Cago.)

6

B. The Housing Assistance Mortgage Plan (HAMP).

1. The HAMP Program.

Congress enacted the Emergency Economic Stabilization Act in the

midst of the financial crisis of 2008.4 The centerpiece of the statute was the

TARP, through which the Secretary of the Department of Treasury was

delegated broad powers to mitigate the financial impact of the foreclosure

crisis and preserve homeownership. 12 U.S.C. §§ 5201, 5211-5241. One

component of TARP requires the Secretary to “implement a plan that seeks

to maximize assistance for homeowners and . . . encourage the servicers of

the underlying mortgages . . . to take advantage of. . . other available

programs to minimize foreclosures.” Id. § 5219(a).5 Congress also granted

the Secretary authority to “use loan guarantees and credit enhancements to

facilitate loan modifications to prevent avoidable foreclosures.” Id.

Acting under this authority, the Secretary of the Treasury announced

the “Making Home Affordable Program” in February 2009. One sub-part

of this program is the “Home Affordable Mortgage Program” (“HAMP”).6

The goal of HAMP is to provide relief to borrowers who have defaulted on

their mortgage payments or who are likely to default by reducing mortgage

4 See Pub. L. No. 110-343, 122 Stat. 3765 (codified as amended at 12 U.S.C. §§ 5201-5253). 5 Section 110 of the statute contains an identical directive for any federal property managers who own or control mortgages and mortgage backed securities. See 12 U.S.C. § 5220(b)(l). It further defines “modifications” to include “reduction in interest rates; . . . reduction of loan principal; and. . . other similar modifications.” Id. § 5220(b)(2). 6 The Department of the Treasury created the Making Home Affordable Program jointly with the Federal Housing Finance Agency, the Federal National Mortgage Association (“Fannie Mae”), and the Federal Home Loan Mortgage Corporation (“Freddie Mac”).

7

payments to sustainable levels, without discharging any of the underlying

debt. Under HAMP, loan servicers are provided with $1,000 incentive

payments for each permanent mortgage loan modification completed.7

These modifications proceed under a uniform process designed to identify

eligible borrowers and render their debt obligations more affordable and

sustainable.

The Department of the Treasury has issued Program Guidelines that

provides guidance to servicers implementing HAMP. Under these

guidelines, mortgage servicers are directed to identify and solicit borrowers

who are in default on their mortgage payments, or soon will be. Within this

group, borrowers may be eligible for a loan modification under HAMP if

the mortgage loan originated before January 1, 2009; if the mortgage is

secured by the borrower’s primary residence; and if the mortgage payments

amount to more than 31% of the borrower’s monthly income, among other

criteria. To participate in HAMP, borrowers must submit an affidavit

documenting financial hardship. The guidelines specify the manner in

which servicers are to alter loan terms to arrive at proposed modified

mortgages.8

If the homeowner qualifies under this analysis, the servicer is

required to offer the homeowner a Trial Period Plan (“TPP”) agreement.

7 A financial institution receives additional incentive payments under HAMP if the borrower stays less than 90 days delinquent on the modification loan. 8 The Making Homes Affordable program guidelines have gone through multiple iterations since 2009. The current guidelines are available in the Making Homes Affordable Handbook, v. 4.4, at: https://www.hmpadmin.com/portal/programs/docs/hamp_servicer/mhahandbook_44.pdf (Last visited April 18, 2015).

8

Under the TPP, the borrower pays modified mortgage payments calculated

based on the financial documentation submitted during the eligibility phase.

The homeowner is also required to open an escrow account and submit

additional financial documents, and may be required to undergo credit

counseling. The trial period lasts for three months. As long as the

borrower has complied with the terms of the TPP and the income

representations have been verified, the servicer is directed to offer the

borrower a permanent modification at the end of the three-month period.

Wigod v. Wells Fargo Bank, N.A. 673 F.3d 547, 557 (7th Cir. 2012);

Corvello v. Wells Fargo Bank, 728 F.3d 878, 884-85 (9th Cir. 2013).

2. The Failure of HAMP.

As Special Inspector General Neil Barofsky testified before the

House Committee on Financial Services, “HAMP has been beset by

problems from the outset and, despite frequent retooling, continues to fall

woefully short of meeting its original expectations,” and meeting “near

universal agreement that the program has failed to meet its goals.”

Statement of Neil Barofsky before House Committee on Financial Services,

Subcommittee on Insurance, Housing and Community Opportunity

[hereinafter Barofsky Statement] (Mar. 2, 2011), at p. 1 ¶ 3.9

The United States is experiencing historic levels of foreclosures.

The foreclosure rate in 2010 was more than three times what it was in 1933,

at the height of the Great Depression.10 The crisis has impacted every part

9 http://financialservices.house.gov/media/pdf/030211barofsky.pdf (last visited April 18, 2015). 10 The U.S. foreclosure rate (percentage of outstanding mortgage loans in foreclosure) at the end of the second quarter of 2010 was 4.57%. Mortgage Banker’s Ass’n, National Delinquency Survey Q2 2010, at 3. The foreclosure rate for non-farm mortgages peaked in 1933, below 1.4%.

9

of our country and most of the world.11 As the chairman of the Federal

Reserve Board noted, the crisis threatens our national economy.12 Losses to

individual families foreclosed on are projected to exceed $2.6 trillion,13

with dramatic spillover effects on neighbors and communities in the

trillions of dollars.14

David C. Wheelock, The Federal Response to Home Mortgage Distress: Lessons from the Great Depression, 90 Federal Reserve Bank of St. Louis Rev. 133, 138–39 (2008). 11 One in every 322 Utah housing units received a foreclosure filing in April 2011, the fourth highest state foreclosure rate, and one in every 325 Idaho housing units received a foreclosure filing in April, the fifth highest state foreclosure rate. Other states with foreclosure rates ranking among the top 10 in April were Michigan, Florida, Georgia, Colorado and Oregon. (http://www.realtytrac.com/content/press-releases/foreclosure-activity-at-40-month-low-6578) 12 See, e.g., Ben S. Bernanke, Chairman, Board of Governors of the Federal Reserve System, Speech at the Federal Reserve System Conference on Housing and Mortgage Markets: Housing, Mortgage Markets, and Foreclosures (Dec. 4, 2008) [hereinafter Bernanke Speech], available at http://www.federalreserve.gov/newsevents/speech/bernanke20081204a.htm (“Despite good-faith efforts by both the private and public sectors, the foreclosure rate remains too high, with adverse consequences for both those directly involved and for the broader economy.”). 13 Staff of the Joint Economic Comm., 110th Cong., 2d Sess., State by State Figures: Foreclosure and Housing Wealth Losses (2008), available at http://jec.senate.gov/index.cfm?FuseAction=Reports.Reports&ContentRecord_id=392cb915-9c45-fa0d-5a46-f61f6e619381&Region_id=&Issue_id= . 14 See, e.g., Ctr. for Responsible Lending, Soaring Spillover: Accelerating Foreclosures to Cost Neighbors $502 Billion in 2009 Alone; 69.5 Million Homes Lose $7,200 on Average (2009), available at http://www.responsiblelending.org/mortgage-lending/research-analysis/soaring-spillover-accelerating-foreclosuresto- cost-neighbors-436-billion-in-2009-alone-73-4-million-homes-lose-5-900-on-average.html (estimating losses to neighboring property values due to the foreclosure crisis at $1.86 trillion dollars); Staff of the Joint Economic Comm., 110th

10

HAMP has not altered the rate of foreclosures or foreclosure

modifications. Pro Publica’s analysis shows that the “average rate of

modifications in the past two years is not significantly different than the

rate before HAMP launched.”15 Although there was a dip in the monthly

modification rate when servicers first started HAMP, and a temporary rise

as they dealt with a backlog a few months later, the overall modification

rate has returned to the pre-HAMP level. Id. Non-HAMP modifications

tend to have worse terms, and initial data analysis shows they have higher

re-default rates.

a. Modifications Have Been Aggressively Marketed by Mortgage Servicers with Sufficient Resources to Process Applications.

Servicers have aggressively marketed their participation in HAMP.

But they failed to allocate sufficient resources to follow the HAMP rules

Cong., 1st Sess., The Subprime Lending Crisis: The Economic Impact on Wealth, Property Values and Tax Revenues, and How We Got Here (2007), available at http://jec.senate.gov/index.cfm?FuseAction=Reports.Reports&ContentRecord_id=c6627bb2-7e9c-9af9-7ac7- 32b94d398d27&Region_id=&Issue_id= (projecting foreclosed home owners will lose $71 billion due to foreclosure crisis, neighbors will lose $32 billion, and state and local governments will lose $917 million in property tax revenue); William Apgar & Mark Duda, Collateral Damage: The Municipal Impact of Today’s Mortgage Foreclosure Boom, at 4 (May 11, 2005), available at www.hpfonline.org/PDF/Apgar-Duda_Study_Final.pdf (estimating costs to the City of Chicago per foreclosure upwards of $30,000 for some vacant properties). 15 Pro Publica (http://www.propublica.org/article/by-the-numbers-a-revealing-look-at-the-mortgage-mod-meltdown); see generally http://projects.propublica.org/bailout/loan_mods/list for reporting through Jan. 2011 on status of modifications by servicer.

11

and process modifications in a consistent or timely fashion.16 Servicers

have admitted that their hiring was insufficient from the inception of the

program.17 “And even when banks did begin hiring to deal with the

avalanche of defaults, they often turned to workers with minimal

qualifications or work experience, employees a former JPMorgan executive

characterized as the “Burger King kids.” Id.

Clearly, servicers didn’t have the infrastructure to process

applications; whether by design or by mistake, servicers consistently lose or

fail to keep track of documents borrowers submit, and stories are legion of

borrowers being asked to submit the same documents over and over.18

b. Fees Are a Profit Center for Servicers.

Servicers can collect late fees post-foreclosure before the investors

receive any recovery.19 This guaranteed recovery of fees strongly favors

16 Airing Out HAMP’s Dirty Laundry, 93 N.C. L. Rev. Addendum 39, 62 (2014) (“…servicers were not prepared to handle the modification program from the outset, were not incentivized enough by Treasury to hire and train personnel to do so or both.” 17 “Even before the political outcry, many of the banks shifted employees into their mortgage servicing units and beefed up hiring. Wells Fargo, for instance, has nearly doubled the number of workers in its mortgage modification unit over the last year, to about 17,000, while Citigroup added some 2,000 employees since 2007, bringing the total to 5,000. (http://www.nytimes.com/2010/10/14/business/14mortgage.html?_r=2&scp=1&sq=burger%20king%20kids&st=cse) 18 See http://www.propublica.org/article/homeowner-questionnaire-shows-banks-violating-govt-program-rules. 19 See, e.g., Prospectus Supplement, Chase Funding Loan Acquisition Trust, Mortgage Loan Asset-Backed Certificates, Series 2004-AQ1, at 34, (June 24, 2004), available at http://www.sec.gov/Archives/edgar/data/825309/000095011604003012/four24b5.txt (“[T]he Servicer will be entitled to deduct from related liquidation proceeds all expenses reasonably incurred in attempting to recover amounts

12

foreclosures over modifications that waive fees, including HAMP,20 and

encourages servicers to delay foreclosures in order to maximize the number

of fees charged.21 In a self-perpetuating cycle, the imposition of fees makes

a foreclosure more likely, by pricing a modification out of a homeowner’s

reach.22 In addition to pre-foreclosure fees, servicers are usually entitled to

recover the costs of selling the home post-foreclosure, before investors are

due on defaulted loans and not yet repaid, including payments to senior lienholders, legal fees and costs of legal action, real estate taxes and maintenance and preservation expenses.”); Excerpts from Superintendent Lawsky’s Remarks on Non-Bank Mortgage Servicing in New York City, NY Dept. of Financial Services (May 20, 2014) at http://www.dfs.ny.gov/about/press2014/pr1405201.htm (last visited April 20, 2014) (“What’s more, our review of non-bank servicers has also turned up another enormous profit center associated with these MSRs that could put homeowners and mortgage investors at risk: the provision of what we call ancillary services.” 20 See Manuel Adelino, Kristopher Gerardi, and Paul S. Willen, Fed. Reserve Bank of Boston, Why Don’t Lenders Renegotiate More Home Mortgages?, Redefaults, Self-Cures, and Securitizations 6 (Public Pol’y Paper No. 09-4, July 6, 2009), available at http://www.bos.frb.org/economic/ppdp/2009/ppdp0904.pdf. 21 Peter S. Goodman, Lucrative Fees May Deter Efforts to Alter Loans (New York Times, July 30, 2009) (“So the longer borrowers remain delinquent, the greater the opportunities for these mortgage companies to extract revenue—fees for insurance, appraisals, title searches and legal services.”). 22 See Katherine Porter, Misbehavior and Mistake in Bankruptcy Mortgage Claims, 87 Tex. L. Rev. 121 (2008) ; Jones v. Wells Fargo Home Mortg. (In re Jones), 366 B.R. 584 (Bankr. E.D. La. 2007), aff’d Wells Fargo v. Jones, 391 B.R. 577, 595 (E.D. La. 2008) (diversion” of mortgage payments to cover inspection charges led to increased deficiency and imperiled bankruptcy plan).

13

paid.23 The sometimes substantial fees paid to servicers in foreclosure tend

to be invisible to investors.24

c. Incentives Are Skewed Toward Dragging Out Trial Modification Process. Sheila Bair, chairman of the FDIC, has testified that “servicers are

often required to advance principal and interest on nonperforming loans to

securitization trusts – but are quickly reimbursed for foreclosure costs” and

create an incentive structure that “can have the effect of encouraging

foreclosures, while discouraging modifications.”25

Although HAMP guidelines provide for payments to servicers of up to

$1500 for each permanent HAMP modification, SD 09-01 at 23, “the costs

attributable to performing one loan modification are between $750 and

$1000.” While the incentives provided by the program itself are a wash at

best, servicers will make money from dragging out the modification

process. Even a borrower in a trial period is considered “in default,” so the

servicer can assess foreclosure related fees, such as property inspections

every few weeks, late fees, and attorney’s fees. Simply put, “servicer

incentives discourage loan modifications.”26

23 See, e.g., Prospectus Supplement, IndyMac et al., supra note 26 at S-73 (noting that the servicer is entitled to retain the costs of managing the REO property, including the sale of the REO property). 24 Goodman, Lucrative Fees, supra. 25 (http://www.housingwire.com/2010/10/13/fdics-bair-says-robo-signing-points-to-incentives-issue-in-mortgage-servicing; also see Diane E. Thompson, Why Servicers Foreclose When They Should Modify and Other Puzzles of Servicer Behavior (http://www.macdc.org/research/Servicer-Report1009.pdf). 26 Thompson, Foreclosing Modifications: How Servicer Incentives Discourage Loan Modifications, 86 Washington L. Rev. 755 (2011); see

14

II. THE MORTGAGE FORECLOSURE CRISIS: ITS SHORT- AND LONG-TERM EFFECTS ON HOMEOWNERS AND THE U.S. ECONOMY Subprime mortgages, and the foreclosures which have followed,

have created a financial disaster in this country. There have been more than

13 million foreclosure cases have since the foreclosure crisis began in 2007

through 2013.27

The effects have been staggering. The 13 million plus foreclosures

have led to long-term housing displacement throughout the country, with

primary concentrations in some larger markets like California, Florida,

Nevada and Arizona. Subprime mortgage schemes have led to a collapse of

the construction industry and all the associated trades that go with it. The

failure of the federal government to tackle the problem with reasonable

means has contributed to the demise of the construction industry, and has

perpetuated long-term unemployment for millions of Americans whose jobs

depend on the housing market and the construction industry.

In addition to the reasons discussed above for the failure of HAMP,

amici discuss below additional factors which have contributed to the

foreclosure crisis and their negative impact on borrowers/homeowners.

A. Modifications Have Been Aggressively Marketed by Mortgage Servicers with Insufficient Resources to Process Applications. As discussed above, servicers have aggressively marketed their

participation in HAMP but failed to allocate sufficient resources to follow

also Adam J. Levitin & Tara Twomey, Mortgage Servicing, 26 Yale Journal on Regulation 1 (2011). 27 http://www.statisticbrain.com/home-foreclosure-statistics/ (last visited April 18, 2015).

15

the HAMP rules and process modifications in a consistent or timely

fashion. Moreover, servicers routinely made and continue to make

irrational or impossible document requests of homeowners – demands for

proof of disability benefits for borrowers who are not disabled and have

already submitted pay stubs showing they work full time, for example, or

requests for self-employment profit and loss statements for retirees whose

only income is social security. In one case, Bank of America repeatedly

demanded that the borrower submit a form with his wife’s signature on it,

even after he sent them her death certificate many times.

Finally, servicer software programs often don’t allow workers in

different departments access to complete or updated information. “One of

the biggest complaints by homeowners has been poor communication by

mortgage servicers on the status of their applications for loan

modifications.”

B. Falsification of Foreclosure Documents.

The falsification of judicial foreclosure documents is closely and

directly tied to widespread errors and maladministration of HAMP and non-

HAMP modification programs, and the forced-placed insurance and escrow

issues. Homeowners for decades have complained about servicer abuses

that pushed them into foreclosure without cause, stripped equity, and

resulted, all too often, in wrongful foreclosure. In recent months, investors

have come to realize that servicers’ abuses strip wealth from investors as

well. One state court had this to say about a servicer, who was the fifth

largest in the country at the time:

The affidavit in this case is a disturbing example of a reprehensible practice. That such fraudulent evidentiary filings are being submitted to courts is both violative of the rules of court and ethically indefensible. The conduct through

16

which this affidavit was created and submitted displays a serious and alarming lack of respect for the nation's judiciaries.

Federal National Mortgage Association v. Bradbury, 2011 ME 120, ¶ 7, 32

A.3d 1014 (Me. 2011). Unless and until servicers are held to account for

their behavior, fundamental flaws in mortgage servicing, with cascading

costs throughout our society, will continue unabated. The lack of restraint

on servicer abuses has created a moral hazard juggernaut that at best

prolongs and deepens the current foreclosure crisis and at worst threatens

our global economic security.

C. The Problem of Principal Reductions.

In an era when one in four homeowners has a home whose value is

less than the amount of the mortgage debt, principal reductions are key to

stabilizing the housing market. The twin hits of declining home values and

job losses helps drive the current foreclosure crisis. Homeowners who

traditionally could refinance their way out of a lost job or sell their home in

the face of foreclosure are denied both options when they owe more on

their home than it is worth. Without principal reductions, homeowners who

lose their jobs, have a death in the family, or otherwise experience a

reduction in income are more likely to experience redefault and foreclosure.

Existing data on loan modifications shows that loan modifications with

principal reductions tend to perform better.28 In order to bring down the

28 “ …data show that there is a measurable improvement in borrower performance when a HAMP modification includes principal reduction.” U.S Treasury Dept., The Effect of the Principal Reduction Alternative (PRA) on Redefault Rates in the Home Affordable Modification Program. July 31, 2012, http://www.treasury.gov/resource-center/economic-policy/Documents/MHAPrincipalReductionResearchSummary_vFINALv2.pdf (last visited April 20, 2015).

17

redefault rate and make loan modifications financially viable for investors,

principal reductions must be part of the package.

D. Business Decision Not To Follow Rules.

Early HAMP rules allowed servicers to offer trial modifications on

the basis of “unverified” income provided orally by the borrower, to be

confirmed with written documentation later in the process. Some servicers

used that rule as license to ignore requirements about how they should

screen and process applications. Although HAMP rules required servicers

to underwrite the proposed loan modifications using either oral or

documented income before offering a trial modification, servicers such as

Chase routinely skipped the underwriting altogether, merely offering trial

modifications with payments that were 31% of the borrower’s gross income

whether or not they might be eligible for a modification under the

“waterfall” and NPV processes set out in the HAMP rules.

Even more servicers failed to check investor restrictions on

modification before placing borrowers into trial periods. In our experience,

it is these omissions by the servicer, not borrower failure to make payments

or provide documents – that causes many modifications to be denied even

after borrowers have made “trial” payments for months on end.

Servicers have openly ignored the rules that require them to process

applications within 30 days of receiving them or timely evaluate trial

modifications for conversion to permanent modifications. Borrowers can

languish in the system for more than a year. During this time, borrowers

with jobs have lost them, thereby reducing their ability to make monthly

payments.

E. Net Present Value Is Skewed.

The net present value (NPV) test that is the core of the HAMP is

18

flawed and can lead to denials even if both the borrower and the investor

would, in reality, benefit from modification. The NPV test predicts what

the likely financial benefit to the investor is if the loan is modified, and

compares it to the likely financial benefit to the investor of not modifying.

The algorithm developed by Treasury as the base model uses values to

predict, among other things, what the likelihood is that the borrower will

“cure” default, and what the “loss severity” of a foreclosure will be. But

those values were determined on the basis of old data, at a time when

borrowers could readily cure deficiencies with refinances, and home

valuations were not nearly as likely to be below the purchase price. The

NPV test therefore overestimates the likelihood of profit from not

modifying the loan.29

F. Investors Don’t Control the Process, Even if It Makes Sense to Modify. HAMP only requires servicers to modify loans if the modification

will result in an economic benefit to the servicer. Investors, therefore,

should have an interest in determining what loans could be modified to

produce predicted income greater than what the investor would recoup in

foreclosure. But the entire modification process is in the hands of the

servicer. Investors may impose general restrictions on modification in

pooling and servicing agreements (such as a requirement that only loans

already in default can be modified, or prohibiting an extension of the loan

term), but most often they grant enormous discretion to the servicer.

Complaints filed in litigation allege that “even if an investor favors loan

29 See Andrews & Witt, The Test That Insures that Lenders Win on Loan Mods, September 15, 2009 at http://www.propublica.org/article/the-secret-test-that-ensures-lenders-win-on-loan-mods-915 (last visited April 20, 2015).

19

modification, investors do not have authority to directly control a loan

servicer’s actions. Investors generally can only take action through the

trustee and only if a majority of the investors agree. Trustees can fire a

servicer in rare cases, but this right is seldom invoked30 and then only when

the servicer is not paying the advances of monthly payments on the loans.

As a result of the lack of direct control over them, loan servicers have little

incentive to aggressively pursue loan modifications. First, maintaining

borrowers in default and delaying decisions on loan modifications can

generate profits for loan servicers through late fees, inspection fees, and the

like. Second, putting borrowers in a position of refinancing or foreclosure

can create additional float interest income and allow servicers to recoup

advanced principal and interest payments. Third, imposing junk fees and

capitalizing arrears can increase principal balances and increase servicing

compensation. These facts actually favor foreclosures and short-term

repayment plans” foisted on borrowers and foreclosures and weigh against

loan modifications.

G. There Is No Effective Oversight Whatsoever.

The Treasury Department and Freddie Mac technically have

oversight responsibility. But complaints about servicers’ implementation of

the program go to the HAMP Solutions Center, run by Fannie Mae.

Unfortunately, the HAMP Solutions Center has no authority whatsoever to

demand any action by the servicer; at best, HAMP Solutions can respond to

a complaint only by obtaining a report of the servicer’s position, parroting

30 See Who Can You Trust? The Failure of RMBS Trustees to Protect Investors. The Advocate for Institutional Investors (Summer 2014) at http://www.blbglaw.com/news/publications/data/00173/_res/id=File1/Adv_Summer2014_Galdston.pdf (last visited April 20, 2015).

20

it back to the borrower, and, in a new policy, if the servicer appears to be

violating HAMP rules, sending a “non-concurrence letter” to the servicer.

Appeals to the HAMP Solutions Center “have been largely ineffective”31

because nothing requires the servicer to comply with the letter or change its

behavior, however, so the servicers operate with near-total impunity.

Much of the blame lies with the Treasury Department. Rather than

presenting a complete and workable program, Treasury has essentially

failed to provide the necessary regulatory framework and oversight,32 at

first issuing Program Guidance through “supplemental directives” that

modified or added to procedural requirements every few months. The rules

were only made available in a compiled format in August, 2010.

III. MORTGAGORS HAVE STANDING TO CHALLENGE UNAUTHORIZED ASSIGNMENTS, THE CONDITION PRECEDENT TO A FORECLOSURE AND THE LOSS OF THE OWNER’S HOME With the above background in mind, it is appropriate to consider the

question of the mortgagor’s standing in the context of a wrongful

foreclosure to challenge the illegality of the assignment of the DOT. It is

appropriate in this context to address the three purposes of California’s non

judicial foreclosure statutes, Civ. Code §§ 2924-2924k: (1) to provide the

beneficiary-creditor with a “quick, inexpensive and efficient remedy”

against the defaulting trustor-debtor; (2) to protect the trustor-debtor from

wrongful loss of the property; and (3) “to ensure that a properly conducted

31 Airing Out HAMP’s Dirty Laundry, 93 N.C. L. Rev. Addendum 39, 62 (2014). 32 See Paul Kiel, Secret Documents Show Weak Oversight of Key Foreclosue Program, ProPublica (Nov. 8, 2012).

21

sale is final between the parties and conclusive as to a bona fide purchaser.

Jenkins v. JP Morgan Chase Bank, supra, 216 Cal. App. 4th, at 509-510,

citing Gomes v. Countrywide Home Loans, Inc., 192 Cal. App. 4th 1149,

1154 (2011).

Courts have also recognized that a borrower who is in default may

institute a lawsuit for “misconduct arising out of a nonjudicial foreclosure

sale when [that claim is] not inconsistent with the policies behind the

statutes.” California Golf, L.L.C. v. Cooper, 163 Cal. App. 4th 1053, 1070

(2008); Jenkins, at 511. One of those statutory purposes is to protect the

borrower from the wrongful loss of her property, her home. How then is it

inconsistent with that very purpose of the statutes to deny standing to the

borrower under the DOT claim that the assignment which triggered the

foreclosure and sale is illegal because it was not authorized? An

unauthorized assignment is illegal because it violates Civil Code

§ 2924(a)(1). An unauthorized assignment also conflicts directly with the

statutes’ purpose “to protect the [borrower] from a wrongful loss of

property.” Moeller v. Lien, 25 Cal. App. 4th 822, 830 (1994). “A sale is

rendered void when it is conducted by an entity that lacks authority to do

so.” Ram v. OneWest Bank, 223 Cal. App. 4th 1, 10 (2015); Lona v.

Citibank, N.A., 202 Cal. App. 4th 89, 103 (2011). The DOT at issue in this

case expressly grants the borrower the right to sue for any breach of duty

created by the deed. (RA, DOT, at 53)

In Jenkins, the Court held that because the borrower was not a

beneficiary of the securitized trust which held the note, the borrower did

not have standing to challenge the unauthorized assignment. 216 Cal. App.

4th at 515. The ultimate conclusion in Jenkins, then, is inconsistent with

one of the express purposes of California’s nonjudicial foreclosure statutes,

22

contravenes one of the express provisions of the DOT and results in the loss

of the borrowers home with no opportunity provided the borrower in

default to challenge the legality of the triggering assignment. Surely under

a securitized trust with the borrower’s property being one of many

properties, no certificate holder will likely ever know that the foreclosure

sale was based on an illegal or unauthorized assignment and the complicity

of the parties to the securitized trust in receiving fees throughout the

foreclosure process deters any of them from seeking to right the wrong. As

noted at the outset, the holding and reasoning of the Court in Glaski is

consistent with one of the three purposes of the nonjudicial foreclosure

statutes. And even the Court in Gomes agreed that “a specific factual

[allegation] that the foreclosure was not initiated by the correct party”

would be sufficient to trigger the jurisdiction of the courts. 192 Cal. App.

412 at 1154-56 and n.5.

From both a public policy standpoint and the language of the DOT, a

borrower like Yvanova must be held to have standing to protect her

legitimate and fundamental interest in her home.

CONCLUSION

For all the foregoing reasons, amici urge this Court to reverse the

decision of the Court of Appeal and hold that a borrower has legal standing

to challenge an unauthorized assignment of her note in a wrongful

foreclosure claim.

23

Dated: April 20, 2015 Respectfully submitted, THE STURDEVANT LAW FIRM, A Professional Corporation By: /c/ James C. Sturdevant James C. Sturdevant

Attorneys for Amici Curiae NATIONAL ASSOCIATION OF CONSUMER ADVOCATES and NATIONAL CONSUMER LAW CENTER

24

CERTIFICATE OF COMPLIANCE Pursuant to Rule 8.204(b)(3) and (4) of the California Rules of

Court, Applicant National Association of Consumer Advocates hereby

certify that the typeface in the attached amicus curiae brief is proportionally

spaced, the type style is Times New Roman, the type size is 13 points or

more and the word count for the portions subject to the restrictions of Rule

8.204(c)(1) is 5,669.

Dated: April 20, 2015 THE STURDEVANT LAW FIRM A Professional Corporation By: /c/ James C. Sturdevant James C. Sturdevant

Attorneys for Amici Curiae NATIONAL ASSOCIATION OF CONSUMER ADVOCATES and NATIONAL CONSUMER LAW CENTER

1

PROOF OF SERVICE BY MAIL(Code Civ. Proc. §§ 1013(a), 2015.5)

I, the undersigned, declare that I am not a party to the within actionand am over the age of eighteen (18) years. I am employed in the City andCounty of San Francisco, California, by The Sturdevant Law Firm, 354Pine Street, Fourth Floor, San Francisco, California 94104.

I am readily familiar with The Sturdevant Law Firm’s practice forthe collection and processing of documents by the United States PostalService, being that true and accurate copies of the documents are addressedto the indicated party and deposited with the United States Postal Servicewith prepaid postage for collection during business hours on the date statedbelow.

On April 20, 2015, I served the following documents on the partiesidentified below:

1. Application of Amici Curiae National Association ofConsumer Advocates and National Consumer Law Centerto File Brief of in Support of Plaintiff and Appellant; and

2. Brief of Amici Curiae National Association of ConsumerAdvocates and National Consumer Law Center inSupport of Plaintiff and Appellant

Robert W. NormanHouse & Allison, APC3780 Kilroy Airport Way, Suite 130Long Beach, CA 90806

K. Lee MarshallBryan Cave LLP560 Mission Street, Suite 2500San Francisco, CA 94105

Attorneys for all Respondents

Richard L. AntogniniLaw Offices of Richard L. Antognini819 I StreetLincoln, CA 95648-1742

Attorneys for Plaintiff and Appellant

Hon. Russell Steven KussmanLos Angeles County Superior Court6230 Sylmar Avenue, Dept. QVan Nuys, CA 91401

2

In addition, I sent copies of the aforementioned documents to thefollowing parties by email:

Charles Ward CoxCalifornia Contract Paralegal2705 Ravazza RoadReno, NV(emailed to Charles.cox@proacm.com)

Mark F. DidakLaw Office of Mark F. Didak6701 Center Drive West, 14th FloorLos Angeles, California(emailed to mdidak@didaklaw.com)

I declare under penalty of perjury under the laws of the State ofCalifornia that the foregoing is true and correct. Executed on the date firststated above in San Francisco, California.

/s/ Béla Nuss Béla Nuss