California State Court Analysis of Real Property Claims and Title Actions III
Servicing Fraud (aka Fraud By The Loan Servicer) includes unjust enrichment, unwarranted fees/overcharging. Violation of Buss. & Prof. Code Section 17200 (Overcharging of Fees – Unfair, Business Practices), Unlawful, Unfair, or Fraudulent business practice, instituting improper or premature foreclosure to generate unwarranted fees, notice of default inflates default amount, notice of trustee sales shows balance owed which is too high.
Other Statutory Violations: Violation of 2934(a) (Substitution of Trustee) – cccurs when trustee named in the recorded substitution acted as trustee prior to the date of execution of substitution = unlawfully initiated foreclosure; Substitution is executed but not recorded prior to or concurrently with notice of default; Notice of substitution NOT mailed to all interested parties; Affidavit NOT attached to substitution confirming that such notice was given; Substitution is effected AFTER notice of default recorded but prior to notice of sale. Notice of sale must be re-sent with substituted trustee information, otherwise the sale is void. Effective date drastically different from recordation date.
Violation of 2932.5 (ONLY APPLICABLE IN CERTAIN DISTRICTS): Occurs where a notice of default or notice of sale is recorded prior to a valid assignment. The entity recording the notice of default and/or notice of trustee sale does not have authority to record the document as they have not received any beneficial interest. This statutory violation has SERIOUS LIMITATIONS. Several courts have found this section inapplicable to deeds of trust and only apply it to mortgages. California district where Calvo v. HSBC Bank was upheld: 1st District: Hayes v. EMC Mortgage: April 9, 2012; 2nd District: Calvo was in this district: September 11, 2011; 4th District: Herrera v. Federal Nation Mortgage: May 17, 2012; 6th District: Derbrunner v. Duetsche Bank: March 16, 2012.
There are no cases published or unpublished in the 3rd or 5th districts that have mentioned or upheld 2932.5 in regards to the above. Excerpt from Herrera v. Federal National Mortgage: “we conclude the trial court appropriately sustained the demurrer to the first cause of action without leave to amend since section 2932.5 is inapplicable to deeds of trust.”