This was interesting and informative and a topic probably about to be on your mind or the mind of someone you know soon....if it's true, read it, save it and/or pass it on....Thank You!!Todd
A lender's agreement to forbear or refrain from foreclosing on a home must be in writing and signed by the lender, even if the borrower has performed on the agreement by making a payment. This was the ruling of the recent appellate court case of Secrest v. Security National Mortgage Loan Trust (2008 WL 4516413).
This case serves as a good reminder for REALTORS® and their clients to get loan forbearances, loan modifications, and other agreements with mortgage lenders in writing and signed.In this case, the borrowers of a home loan defaulted in 2002. In a phone conversation, the bank's loan resolution consultant agreed to enter into a forbearance agreement to refrain from foreclosing if the borrowers paid the arrearage by making an initial payment of $13,422 followed by monthly installments.
The loan officer then faxed an unsigned written forbearance agreement to the borrowers. The borrowers noticed errors on the proposed agreement, and at the loan consultant's instructions, they corrected those errors on the document itself, signed it, and returned it to the loan officer along with the $13,422 initial payment.
The lender, however, never signed the forbearance agreement. Instead, the lender sold the note and deed of trust, and two years later, the new lender filed a notice of default.The borrowers in this case filed a lawsuit to stop the foreclosure claiming that, because of the forbearance agreement, the notice of default overstated the amount of the default. The court disagreed.
The court noted that, under the statute of frauds, a mortgage loan must be in writing and signed by the party against whom enforcement is sought. Similarly, if an agreement is subject to the statute of frauds, an amendment to that agreement is also subject to the statute of frauds. The court held that, in this case, the forbearance agreement at issue was not enforceable because it was not signed by the lender.
The borrower nevertheless argued that a signed agreement was not required because they partly performed by making the $13,422 initial payment. Again, the court disagreed. The court ruled that the payment of money is not "sufficient part performance to take an oral agreement out of the statute of frauds," because the borrowers paying money under an invalid contract "have legal means to recover that money if they are entitled to its return or have not received credit for it."
Obtained from the California Association of Realtors ~ Realegal® is published by the CALIFORNIA ASSOCIATION OF REALTORS®, a trade association representing nearly 200,000 REALTORS® statewide.
1 comment:
Perhaps an interesting note, not disclosed in this well written piece, is the irony of the Court's decision that the 2002 agreement was unenforceable because it was unsigned. This decision mandated that the 2001 (also unsigned) agreement was enforceable. Arguably, this was in direct contradiction with their simultaneous decision that to be enforceable an agreement must be signed.
What stands in the shadows is the much larger issue, I only want an accounting of my loan payments and charges to my account. I have demanded an accounting of my home loan since 1999 when a $40,000.00 error was made one of the four times it was sold.
Unfortunately, California foreclosure laws are simple, file a Notice of Default, wait 90 days, post a Notice of Trustee Sale and sell the property in 21 days. If a mistake is made in your loan, as was in my case, your choices are, pay the $40,000.00, lose your home or sign a forbearance agreement(s). A forbearance agreement is nothing more than a "ransom note"; you do not have to agree with it, you only have to pay the the first installment of what will never end and wait for the promised release of your "loved one" or, in our situation "the accounting that will straighten out everything".
Don't even think about any "protection" under 12 USC Section 2605 or a Qualified Written Requests under RESPA Section 6, or the Cranston-Gonzolas Act in California, they do not have to produce anything. The maximum fine, if convicted, is $1,000.00.
When all of the above failed, I filed a lawsuit for the accounting and the loan servicer, under penalty of perjury stated, "All records prior to 2001 were lost". Interestingly, six months prior, they had sent me those "lost records" from the same company logo/phone number stamped, fax machine that they now send the declaration from the "Person Most Knowledgeable" the "lost" declaration.
I never wanted to challenge the veracity of a 1677 English law, I only wanted to correct a 10 year old accounting error. My loan with GE Capital was fine, when it was sold to Wilshire and then OCWEN and later to SN my troubles were endless. Run a Google search on law suits against Wilshire or OCWEN and see what comes up. I am only a small part of what is really happening and will increase dramatically in the next few years.
The facts are simple, both the Superior Court and the Appellate Court should have said, if the Statute of Frauds did apply, Neither Agreement was enforceable. Do a loan audit based upon the Note. Amazingly, when I first filed the action in 2005, I had hired Loantech from the Washington DC area to audit my loan, their findings were crystal clear, I was right. The judge over ruled all objections to the findings of Loantech and then the case turned down the long road of the Statute of Frauds. You may also ask yourself, "Why would a loan servicer spend hundreds of thousands of dollars trying to avoid the audit of one of their loans? Do you think they have something to hide?
This case is now if front of The California Supreme Court, hopefully they will set the record straight and put some teeth into the rights of the borrowers in demanding that mistakes in their loans be corrected or appropriate fines be levied. If not we will remain with the same, the loan servicer "may" get fined $1,000.00 or the borrower will lose their home. Where is the fairness in the law?
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