Upload
nancy-duffy-mccarron
View
28
Download
0
Tags:
Embed Size (px)
DESCRIPTION
Motion to Join FHFA Director as conservator for Freddie Mac and Fannie Mae in foreclosure by Wells Fargo Bank, NA as servicer and Cal Western Reconveyance Corporation as trustee;FHFA is real party in interest as conservator and will make a decision in the best interest of the public and taxpayers
Citation preview
1Motion to Join Real Party in Interest FHFA as Conservator for Freddie Mac, Alleged Beneficiary
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Nancy Duffy McCarron, CBN 164780Law Office of Nancy Duffy McCarron950 Roble LaneSanta Barbara, CA 93103805-450-0450 fax [email protected]
Real Estate Broker Lic. 853086
Attorney for Plaintiff Carole S. Alles
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIAEASTERN DIVISION
CAROLE S. ALLES Plaintiff,
v.WELLS FARGO BANK, NA;WELLS FARGO HOME MORTGAGE, INC;CAL-WESTERN RECONVEYANCE CORPORATION; DOES 1-10 Defendants
No. 5:12-cv-02095-MWF-DTB filed 11/29/12
MOTION TO JOIN REAL PARTY IN INTEREST FHFA, CONSERVATOR FOR FREDDIE MAC, ALLEGED BENEFICIARY OF ALLES LOANand supporting affidavit of Nancy D. McCarron filed with REQUEST FOR JUDICIAL NOTICE
Fed R Civ P 17, 19, 21 F.R.E. 201Date: April 29, 2013 Time: 10:00 a.m.Ctrm: 1600 Hon. Michael W. Fitzgerald
NOTICE OF MOTION
Please note at the above time and place plaintiff ALLES will move the court for an
order to join Real Party in Interest Federal Housing Financing Agency, [“FHFA”] as the
conservator for Federal Home Loan Mortgage Corporation[FHLMC] aka Freddie Mac,
the alleged beneficiary of the ALLES loan. The motion is based on FRCP 17,19, 21 and
FRE 201 [Judicial Notice], Points & Authorities, affidavit of Nancy McCarron, the court
files, and documents included in plaintiff’s Request for Judicial Notice. Substitution of
Trustee, Notice of Default, and Notice of Sale were recorded by the originating lender
Wells Fargo Bank, NA who concealed identity of the alleged beneficiary [Freddie Mac]
and that the enterprise was under the conservatorship of FHFA, the real party in interest.
2Motion to Join Real Party in Interest FHFA as Conservator for Freddie Mac, Alleged Beneficiary
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Nancy Duffy McCarron 4-1-13
INTRODUCTION & GROUNDS FOR MOTION
The motion is made on the grounds that under Fed.R.Civ.P 17, 19(a), 21 FHFA is a
required party for the just adjudication of this action. The action is based on the wrongful
foreclosure of real property and wrongful denial of a loan modification to a borrower who
qualified for a loan modification. This is an issue of fact to be determined by a jury trial.
Wells Fargo Bank, NA was originating lender when the loan closed on 8/1/2006, as
well as the loan servicer. Wells never disclosed in escrow that it had pre-sold Alles’ loan
to Freddie Mac, which closed on 9/13/2006, retaining servicing rights. [Alles Decl. ¶ 2]
Wells was required to notify plaintiff of that change in beneficiary. 15 USC §1640.
Instead of complying Wells and Freddie Mac concealed this material fact from plaintiff.
Wells Fargo continued this charade for 7 years until plaintiff’s counsel discovered it.
Wells Fargo caused fraudulent documents to be recorded, through its conspiring self-
nominated trustee Cal-Western Reconveyance Corporation [CWRC] as Wells Fargo’s
purported attorney in fact when no such authorization was in effect/recorded in Riverside
As shown in documents in a Request for Judicial Notice, Wells has a long history of
prosecuting fraudulent foreclosures, having settled with federal and state prosecutors to
avoid criminal liability. Despite being party to a $26 billion and 8.9 billion settlement,
and signing consent judgments with prosecutors and regulators, promising not to continue
prosecuting fraudulent foreclosures, Wells continues to prosecute fraudulent foreclosures.
Wells and CWRC never disclosed that Freddie Mac was under a conservatorship,
and its assets are under the control of FHFA who should have been named as real party.
Wells & CWRC never disclosed Freddie Mac or FHFA in Certificate of Related Parties,
and intentionally concealed both names (by omission) in a Joint Rule 26(f) Wells filed.
The court ordered all corporate parties to disclose related entities in a Joint Rule 26 order.
3Motion to Join Real Party in Interest FHFA as Conservator for Freddie Mac, Alleged Beneficiary
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Plaintiff included it in her draft but Wells insisted on submitting it on his firm’s template.
Counsel then deleted that section in his submission. Plaintiff’s counsel asked counsel to
stipulate to joinder in a meet & confer on this motion on March 13, 2013 but he refused.
1. AS CONSERVATOR FHA IS REAL PARTY IN INTEREST TO BE JOINED
As conservator of Freddie Mac, FHFA is the real party who must sue or be sued.
[see RJN, Exh A] It is a news release issued September 9, 2011 announcing FHFA was
suing 17 banks, as conservator for Freddie Mac and Fannie Mae, for securities fraud.
Whether a “general guardian, committee, conservator, or other like person” actually has
this capacity is determined by reference to state law. Sam M. v. Carcieri, 608 F.3d 77,
86–87 (1stCir.2010) [“State law generally governs an individual’s capacity to represent a
minor or incompetent in federal court… Rule 17(c) should not be used to circumvent
the mandate in Rule 17(b) to observe state law.”] Development Disabilities Advocacy
Ctr. v. Melton, 689 F.2d 281, 285 (1st Cir. 1982) [“capacity to sue as representative of
another is usually determined by state law”]. CA Codes of Civil Procedure govern:
CCP § 372. Minors and incompetent persons as parties; Manner of appearing; Appointment of guardian ad litem; Handling of moneys recovered(a) When a minor, an incompetent person, or a person for whom a conservator has been appointed is a party, that person shall appear either by a guardian or conservator of the estate
CCP § 389. Indispensable or conditionally necessary parties; Order to bring in party, and dismissal on failure to comply; Separate trials(a) A person who is subject to service of process and whose joinder will not deprive the court of jurisdiction over the subject matter of the action shall be joined as a party in the action if (1) in his absence complete relief cannot be accorded among those already parties or (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise
4Motion to Join Real Party in Interest FHFA as Conservator for Freddie Mac, Alleged Beneficiary
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
inconsistent obligations by reason of his claimed interest. If he has not been so joined, the court shall order that he be made a party.
2. ANALYSIS IS SAME UNDER FEDERAL RULES OF CIVIL PROCEDURE, RULE 17(A) AND
19
Rule 17. Plaintiff and Defendant; Capacity; Public Officers. (a) Real Party in Interest.(1) Designation in General. An action must be prosecuted in the name of the real party in interest. …(c) Minor or Incompetent Person. (1) With a Representative. The following representatives
may sue or defend on behalf of a minor or an incompetent person: (A) a general guardian; (B) a committee; (C) a conservator…
An entity’s status as a required party is not judged by any prescribed formula, but
instead can only be determined in the context of particular litigation. CP Natl Corp. v.
Bonneville Power Admin., 928 F.2d 905, 912 (9th Cir. 1991). In general, required parties
have been described as those persons having an interest in the controversy, and who
ought to be made parties, in order that the court may act on the rule which requires it to
decide on, and finally determine the entire controversy, and do complete justice, by
adjusting all the rights involved in it. Id FHFA as conservator has an interest in the loan.
In Scott Paper Co. v. National Casualty. Co., 151 F.R.D. 577, 579 (E.D. Pa. 1993)
the court held that where a defendant will not advocate for the interests of others, the
party whose interest is at stake must be made a part to do complete justice in the action.
Fed. R. Civ. P. 19(a)(B)(i) [nonjoinder may harm absentees ability to protect the interest].
see Cortez v. City of LA, 96 F.R.D. 427, 428 (C.D. Cal. 1983) [quoting Moores Manual]
5Motion to Join Real Party in Interest FHFA as Conservator for Freddie Mac, Alleged Beneficiary
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
If a party’s right to protect its interest may be impaired the party should be joined
Lopez v. Martin Luther King, Jr. Hosp., 97 F.R.D. 24, 29 (C.D. Cal. 1983) There is a
strong policy permitting amendment to join a required party. Texaco, Inc. v. Ponsoldt
939 F.2d 794, 798 (9th Cir.19910. Wells will not advocate for the best interest of FHFA
3. HISTORICAL BACKGROUND
[Fannie Mae, Freddie Mac, GSE’s, FHFA, OIG, 2008 Financial Crises]
In 1938, as part of the Great Depression New Deal, Congress created the Federal
National Mortgage Agency [FNMA], commonly called Fannie Mae, as a secondary
market for lenders to sell mortgages. In 1968 Congress spun off Fannie Mae as a hybrid
for-profit and government enterprise---meaning it had a government policy mission---to
support affordable homeownership in America---and a profit motive.
In 1970 Congress created the Federal Home Loan Mortgage Association [FHLMC],
commonly called Freddie Mac, to compete with Fannie Mae to avoid a monopoly.
Congress created several Federal Home Loan Banks for even more competition.
These Government Sponsored Entities (GSE's) expanded the secondary mortgage
market, created thousands of home construction jobs, and stimulated the economy.
Prior to 1986 a bank lent depositor funds to home buyers holding the borrower’s
tangible note [promise to repay] in its loan portfolio. The home buyer executed a
tangible mortgage or trust deed to secure the promise to repay. An electronic copy of the
tangible mortgage or trust deed was recorded against the real property to secure the debt
obligation. If a home owner defaulted the bank foreclosed to recover its losses. If the
debt obligation created by the tangible note was repaid the bank cancelled the tangible
note and mortgage or recorded a reconveyance of the trust deed to clear title.
In 1986, to stimulate the economy, Congress passed the Tax Reform Act of 1986.
Congress created Real Estate Mortgage Investment Conduits [REMIC’s] to encourage
more loan originations in a process called securitization. Lenders could originate more
6Motion to Join Real Party in Interest FHFA as Conservator for Freddie Mac, Alleged Beneficiary
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
loans by pre-selling them in escrows and conveying the debt obligations into securitized
loan pools called REMIC trusts. Thousands of intangible electronic copies of those debt
obligations were split off from their corresponding tangible notes and mortgages/trust
deeds and conveyed into REMIC trusts for special investor tax credits.
Investors were offered minute portions of conglomerated intangible debt obligations
marketed by Wall Street brokers as Collateralized Debt Obligation certificates [CDO]
selling for $25 or more. These Mortgage Backed Securities [MBS] were given special
REMIC tax credits to stimulate housing and construction markets. Billions in profits and
commissions were generated for lenders, REMIC trustees and Wall Street brokers as they
transmuted intangible debt obligations into CDO certificates which were traded and
resold in a worldwide market.
Because originating lenders incurred no risk of default as pre-sold loans were paid
off when escrows closed they failed to abide by traditional underwriting standards in
approving borrowers for home loans. Predatory lending evolved as hungry lenders and
brokers approved loans to buyers who could not repay. Loans were originated at low-
interest teaser rates with conversion clauses to shock rates within 3-5 years. Thousands
of homeowners defaulted resulting in an avalanche of foreclosures and a tsunami of
litigation. As depositors converged on banks to withdraw deposits banks began collapsing
during the 2008 tax year. Freddie and Fannie were nearly insolvent because they owned
a majority of the securitized loans in the secondary market. Congress created the Federal
Housing Finance Agency (FHFA) on July 30, 2008 to rescue Fannie and Freddie from
insolvency as explained on the FHFA’s website recited below:
The Federal Housing Finance Agency (FHFA) was created on July 30, 2008, when the President signed into law the Housing and Economic Recovery Act of 2008. The Act gave FHFA the authorities necessary to oversee vital components of our country’s secondary mortgage markets – Fannie Mae, Freddie Mac, and the Federal Home Loan Banks…FHFA's mission is to provide effective supervision, regulation and housing
7Motion to Join Real Party in Interest FHFA as Conservator for Freddie Mac, Alleged Beneficiary
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
mission oversight of Fannie Mae, Freddie Mac and the Federal Home Loan Banks to promote their safety and soundness, support housing finance and affordable housing, and support a stable and liquid mortgage market. As of September 2010, the combined debt and obligations of these GSEs totaled $6.7 trillion, which is $2.7 trillion below the total publicly held debt of the USA. Freddie Mac and Fannie Mae also purchased or guaranteed 65% of new mortgage originations. Considering the impact of these GSEs on the U.S. economy and mortgage market, it is critical that we intensify our focus on oversight of Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. see www.fhfa.gov [about us]
The combined GSE losses of US $14.9 billion and market concerns about their
ability to raise capital and debt threatened to disrupt the U.S. housing financial market.
The Treasury committed to invest as much as US $200 billion in preferred stock and
extend credit through 2009 to keep the GSEs solvent and operating. The two GSEs
have outstanding more than US $5 trillion in mortgage backed securities [MBS] and debt;
the debt portion alone is $1.6 trillion. Kopecki, Dawn [2008-09-11]. "U.S. Considers
Bringing Fannie, Freddie on to Budget" Bloomberg
US Treasury Secretary Henry Paulson stated that placing the two GSEs [Freddie &
Fannie] into conservatorship was a decision he fully supported, and he advised "that
conservatorship was the only form in which I would commit taxpayer money to the GSE"
He further said that "I attribute the need for today's action primarily to the inherent
conflict and flawed business model embedded in the GSE structure, and to the
ongoing housing correction. Paulson, Henry [Press release] 2008-09-07].
On September 7, 2008, FHFA director James B. Lockhart III announced he had put
Fannie Mae and Freddie Mac under the conservatorship of the FHFA. The action has
been described as "one of the most sweeping government interventions in private
financial markets in decades." Lockhart III, James B. (2008-09-07); Wikipedia
Under the plan engineered by Treasury Secretary Henry M. Paulson Jr., the
government would place the two companies under conservatorship a legal status
8Motion to Join Real Party in Interest FHFA as Conservator for Freddie Mac, Alleged Beneficiary
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
akin to Chapter 11 bankruptcy. Their boards and chief executives would be fired and a
government agency, the Federal Housing Finance Agency, would appoint new chief
executives. Washington Post "Treasury to Rescue Fannie and Freddie" 9-7-2008;
quotes from Pat Paulson; Wikipedia
The US Treasury has infused $190 billion to Fannie Mae and Freddie Mac under the
conservatorship of the FHFA. www. fhfa/oig.gov "Welcome Video" Steve A. Linick, IG
4. OFFICE OF INSPECTOR GENERAL [OIG]
The Housing and Economic Recovery Act of 2008 established an Office of Inspector
General (OIG) within the Federal Housing Finance Agency (FHFA). The Inspector
General Act of 1978, as amended, sets forth the functions and authorities of FHFA/OIG.
Mission
The FHFA OIG is established by law to provide independent and objective reporting to the FHFA Director, Congress, and the American people through its audit and investigative activities. FHFA OIG’s mission is to promote the economy, efficiency, and effectiveness of FHFA’s programs; to prevent and detect fraud, waste, and abuse in FHFA’s programs; and to seek sanctions and prosecutions against those who are responsible for such fraud, waste, and abuse. www.fhfaoig.gov
Since 1938 Congress has strived to maintain a stable housing market to encourage
home ownership. After an avalanche of foreclosures Congress created HAMP [Home
Affordable Modification Program] and HARP [Home Affordable Refinance Program].
Loan Servicers are required to offer alternatives to help homeowners avoid foreclosure.
Freddie Mac replaced its classic mortgage modification plan with a new Freddie Mac
Standard Modification for borrowers ineligible for HAMP or HARP programs. Lenders
who service Freddie Mac loans are required to comply with its Seller/Servicers Guide,
HAMP Guidelines and Freddie Mac Standard Modification Guidelines.
Unfortunately, there is an inherent conflict in authorizing servicers to administer
modification programs. Servicers generate between $6,000-$10,000 in foreclosure fees
9Motion to Join Real Party in Interest FHFA as Conservator for Freddie Mac, Alleged Beneficiary
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
as compared to receiving a minimal stipend of $1,000 for a loan modification, with two
additional stipends after a few years into the loan. Because servicers are profit-driven
there is no incentive to modify a loan and lose foreclosure fee profits. Servicers only
modify loans under threat of litigation or when mandated by federal or state regulations.
On March 21, 2013 Steve A. Linick, Inspector General, issued an audit reciting:
Freddie Mac and its eight largest servicers together received over 34,000 escalated cases between October 2011 and November 2012…. Mortgage servicers, Freddie Mac, and FHFA have not adequately fulfilled their respective responsibilities to address and resolve escalated cases… Freddie Mac’s oversight of servicer compliance has been inadequate... In a 2011 audit, we found that FHFA did not adequately process consumer complaints. Specifically, the agency did not sufficiently define its role in processing complaints; it lacked related policies, procedures, and a consolidated system for tracking complaints; and it failed to perform various oversight functions to ensure compliance with its records management policy and safeguards for personally identifiable information. Because FHFA lacked a sound internal control environment for handling complaints, we concluded that the agency could not provide reasonable assurance that alleged fraud and improper foreclosures were addressed efficiently and effectively….
Among Freddie Mac’s eight largest servicers which serviced nearly 70% of Freddie Mac’s 10.6 million mortgages---four (Bank of America, CitiMortgage, Provident, and Wells Fargo Bank) did not report any escalated cases to Freddie Mac despite handling more than 20,000 such cases during the 14-month period between October 2011 and November 2012. These large servicers also did not submit escalated case reports in December 2012. Moreover, CitiMortgage and Wells Fargo did not submit reports in January 2013.
CONCLUSION:
10Motion to Join Real Party in Interest FHFA as Conservator for Freddie Mac, Alleged Beneficiary
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
FHFA developed the SAI (Servicers Alliance Initiative) as part of an effort to keep homeowners in their homes. Servicers, Freddie Mac, and FHFA have not adequately fulfilled their respective rolls relative to an important goal of SAI addressing and resolving escalated consumers complaints in a timely and consistent manner.
On March 26, 2013 Inspector General, Steve A. Linick, issued an audit reciting:
OIG found that FHFA does not thoroughly oversee how the Enterprises monitor counterparties’ contractual compliance. Specifically, FHFA does not examine how the Enterprises monitor compliance with consumer protection laws, and, indeed, OIG determined that the Enterprises do not ensure that their counterparties’ business practices follow all federal and state laws and regulations designed to protect consumers from unlawful activities such as discrimination.
FHFA has a statutory responsibility—under the Housing and Economic Recovery Act of 2008 (HERA)—to protect the public interest, which in this instance is at least partially defined by federal and state consumer protection laws. HERA established FHFA as the Enterprises’ regulator to ensure their safety and soundness. In September 2008, the federal government began investing taxpayer dollars—a total of $187.5 billion through September 2012—in the Enterprises to prevent their insolvency. At the same time, FHFA became the Enterprises’ conservator to oversee their activities and preserve their assets.
The agency is also required to ensure their activities are consistent with the public interest: “[t]he principal duties of the Director shall be ... to ensure that ... the activities of each regulated entity and the manner in which such regulated entity is operated are consistent with the public interest. see 12 U.S.C. § 4513(a)(1)(B)(v). Both Enterprises have written selling and servicing guides that their counterparties contractually commit (i.e., represent and warrant) to follow. Among other things, the contractual agreements and the guides require
11Motion to Join Real Party in Interest FHFA as Conservator for Freddie Mac, Alleged Beneficiary
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
counterparties to comply with all federal and state laws and regulations—including consumer protection statutes—applicable to originating, selling, and servicing mortgage loans. If the Enterprises discover that a counterparty has not complied, then they can require the original lender to repurchase noncompliant loans.
The agency, however, has not actively supervised the Enterprises’ oversight of counterparties’ contractual compliance with federal consumer protection laws, except where the Enterprises face legal liability from a counterparty’s failure to comply (e.g., predatory lending).
The Enterprises’ counterparties commit to comply with federal, state, and local laws, such as fair lending, equal credit opportunity, anti-discrimination, and borrower privacy laws. Also, the Dodd-Frank Act forbids consumer financial product providers and servicers from acting unfairly, deceptively, or abusively.
FHFA has begun to put together a plan to address its role in overseeing the Enterprises’ oversight of their counterparties’ compliance with federal consumer protection laws. Recently, FHFA has begun to take steps to work with federal regulators responsible for supervising and regulating counterparties that sell mortgages to the Enterprises. For example, the agency has developed an information-sharing agreement with regulators in the consumer financial market, such as the Federal Reserve Board and the Office of the Comptroller of the Currency.
In addition, agency officials have met with specific regulators, such as the Federal Deposit Insurance Corporation. FHFA is determining how best to coordinate with these agencies to further its mission, but has not specifically addressed its role in monitoring the Enterprises’ oversight of their counterparties’ compliance with contractual provisions requiring adherence to consumer protection laws.
12Motion to Join Real Party in Interest FHFA as Conservator for Freddie Mac, Alleged Beneficiary
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Going forward, such interagency coordination may be helpful in formulating a risk-based plan to assess how the Enterprises monitor their counterparties’ contractual compliance with federal and state laws generally and with consumer protection laws in particular.
OIG is planning targeted work related to two of the Enterprises’ largest seller/servicers to assess these counterparties’ compliance with federal consumer protection laws. The results of this work will help the agency refine its plan and focus on significant risks.
Appendix A of the March 26, 2013 audit contains a letter from Jon Greenlee, Deputy
Director for Enterprise Regulation, to Russell Rau, Inspector General for Audit, in which
Mr. Greenlee recites:
FHFA is strongly committed to the fair treatment of consumers in a manner that fully complies with all laws and regulations.
WELLS FARGO’s CONSENT JUDGMENT
USA et al v. Bank of America Corp, et al Case No. 120361 entered April 4, 2012
On April 4, 2012 the US District Court for the District of Columbia entered a consent
Judgment to settle the above case for $26 billion to be paid by consenting banks,
including Wells Fargo Bank, NA. [ www.justice.gov/opa/documents/wellsfargo-consent-
judgement.pdf]. Pages from the Consent Judgment related to this complaint, showing
Wells Fargo Bank violations, are included as Exhibit E in RJN
In the consent judgment Wells Fargo Bank impliedly admitted violating the Unfair
and Deceptive Practices laws, the False Claims Act, FIRREA, the Servicemembers Civil
Relief Act, the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure. [E-1]
Wells Fargo shall comply with Servicing Standards attached as Exhibit A. [E-3]
The consent judgment is effective for 3 years from entry; i.e. until April 3, 2015. [E-6].
13Motion to Join Real Party in Interest FHFA as Conservator for Freddie Mac, Alleged Beneficiary
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Michael J. Held, Executive for Wells Fargo & Company and Wells Fargo Bank, NA
signed the consent judgment. [E-91]. Relevant parts of Exhibit A are attached. [RJN-E]
Servicing Standards Wells Fargo agreed to comply with are now codified in California;
i.e. “The Homeowners’ Bill of Rights” effective 1/1/2013.
Although The Homeowners’ Bill of Rights did not become effective until 1/1/2013
Wells Fargo’s was required to comply with the consent judgment since entered on 4/4/12.
Wells Fargo’s violations of the Servicing Standards in Exhibit A of the consent judgment
as well as unfair treatment and discrimination are the subject of this consumer complaint.
See Complaint to Federal and State Agencies emailed on March 30, 2013. The consent
judgment Wells Fargo executed on 4/4/2012 and exhibits attached to the complaint show
at least 22 provable violations of the consent agreement just in Alles foreclosure alone.
Request for Judicial Notice Exhibit List
A. FHFA sues 17 banks as conservator for Fannie Mae and Freddie Mac 9/2/2011
B CONSENT ORDER USDT Office of Comptroller v. Wells Fargo Bank, NA 4/13/2011
C CONSENT ORDER USA v. Bank of America, et al (Wells Fargo Bank, NA) 4/4/2012
D Independent Foreclosure Review (Federal Reserve Board and OCC) 4/13/2013
E COMPLAINT to FHFA Wells Fargo Failure to Comply with Consent Orders 4/30/2013
A is FHFA’s press release announcing its lawsuits as conservator for Freddie Mac.
B is a consent judgment OCC entered on 4/13/11 to remedy Wells Fargo’s history of
foreclosure fraud. C is a consent judgment USA and 50 state attorneys general entered
on 4/4/12 against Wells for foreclosure fraud. Banks, including Wells Fargo paid $26
billion to avoid criminal prosecution for foreclosure frauds. D is Federal Reserve Bank
and OCC’s $8.9 billion settlement for Wells Fargo’s continued foreclosure frauds.
This 2-year history of consent judgments with various federal and state prosecutors, and
bank regulators, demonstrates that Wells Fargo will not stop foreclosure frauds unless
and until Judges in state and federal courts stop blessing these fraudulent foreclosures.
14Motion to Join Real Party in Interest FHFA as Conservator for Freddie Mac, Alleged Beneficiary
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Appendix A of the March 26, 2013 audit contains a letter from Jon Greenlee,
Deputy Director for Enterprise Regulation, to Russell Rau, Inspector General for Audit,
in which Mr. Greenlee recites:
FHFA is strongly committed to the fair treatment of consumers in a manner that fully complies with all laws and regulations.
5 WHY FHFA SHOULD BE JOINED
Because FHFA is strongly committed to the fair treatment of consumers in a manner
that fully complies with all laws and regulations, and has a statutory duty under the
Housing and Economic Recovery Act of 2008 (HERA)—to protect the public interest,
which in this instance is at least partially defined by federal and state consumer protection
laws, the FHFA is a necessary party to these proceedings.
FHFA developed the SAI (Servicers Alliance Initiative) as part of an effort to keep
homeowners in their homes. OIG audit found that Servicers, Freddie Mac, and FHFA
have not adequately fulfilled their respective rolls relative to an important goal of SAI
and resolving escalated consumer complaints in a timely and consistent manner.
OIG determined that the Enterprises do not ensure that their counterparties’ business
practices follow all federal and state laws and regulations designed to protect consumers
from unlawful activities such as discrimination, the FHFA is a necessary party herein.
The agency is also required to ensure their activities are consistent with the
public interest: “[t]he principal duties of the Director shall be ... to ensure that ... the
activities of each regulated entity and the manner in which such regulated entity is
operated are consistent with the public interest. see 12 U.S.C. § 4513(a)(1)(B)(v).
RJN Exh. E, sub-exhibit B, is a Riverside County tax assessor’s valuation of the
Alles home at $105,000. The deed of trust was for $230,000 at 7% interest for 30 years.
Accordingly, if the home were sold at a trustee’s sale it would sell for around $105,000.
Freddie Mac ($190 billion infused by taxpayers) could lose $100,000 on the forced sale.
This is not in the public interest and would result in a substantial loss to Freddie Mac, i.e.
the taxpayers who has infused $190 billion to keep it solvent under the conservatorship.
15Motion to Join Real Party in Interest FHFA as Conservator for Freddie Mac, Alleged Beneficiary
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Of course, Wells maximizes its profit by generating $6,000-$10,000 in foreclosure fees,
kickbacks for forced placed insurance (they pick the carrier), penalty fees, kickbacks
from Cal-Western for its foreclosure fee gravy train, and various other tacked on fees.
Wells and CWRC could care less about the best interest of taxpayers, not discriminating,
or complying with 3 consent agreements thrust upon Wells to avoid criminal prosecution.
This case has no chance to settle unless FHFA is enjoined as a party, who has the
authority to settle this case as conservator for Freddie Mac the purported beneficiary.
Wells attorney has made it clear there is no chance that Wells will settle. [McCarron
Decl. ¶]. In a Joint Rule 26(f) report submitted to the court by Adam Hamburg, counsel
for Wells Fargo, under SETTLEMENT, he recites, “ Wells Fargo has determined that
Plaintiff is not entitled to a loan modification. As such, it is unlikely that a settlement
conference would be useful in this matter. See excerpt from Rule 26(f) filed. Doc. 29:
As the court recalls plaintiff asked the court to required Wells to attend mediation as a
condition of setting aside a clerk’s entry of default. Wells refused to mediate anything.
Wells has only one agenda---to foreclose and steal Alles home because Wells Fargo will
generate $6,000 in foreclosure fees, forced insurance kickbacks, and other hidden fees.
Wells will get $1,000 stipend from the government to approve Alles’ modification.
This is exactly why FHFA put Freddie Mac under conservatorship on 9/7/2008 as
discussed above. FHFA knew that Freddie Mac was doing nothing to prevent the banks
from processing fraudulent foreclosures and stealing homes with no standing to do so.
16Motion to Join Real Party in Interest FHFA as Conservator for Freddie Mac, Alleged Beneficiary
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
As explained above the OIC was created to conduct audits and to prosecute banks who
continued to foreclose when it was not in the public’s best interest to foreclose.
This case is a prime example. Alles loan is $230,000. Assessed value is $105,000.
[Alles Decl. ¶7]. Freddie Mac (infused by 190 billion taxpayer funds) will lose $100,000
With modification they will continue to collect interest without a loss of $100,000.
Obviously it is in the public interest to avoid a $100,000 loss. It is exactly why the
government put the enterprises into conservatorship (akin to bankruptcy) to avoid losses.
Foreclosing flies in the face of Congressional intent in passing emergency Housing and
Economic Recovery Act of 2008, and all subsequent legislation enacted to save homes
from foreclosure which has a negative effect on the nationwide housing market.
This also flies in the face of California Legislators who enacted the Homeowners
Bill of Rights, effective 1/1/13, and other laws to prevent fraudulent foreclosures, ensure
transparency in foreclosure proceedings, and to compel servicers to modify loans to keep
owners in their homes to avoid neighborhood blight with thousands of vacant homes.
Plaintiff does not plan to assert any causes of action against FHFA and does not
believe they are liable for intentional torts of Wells Fargo and Freddie Mac acquiescence.
Plaintiff believes neither Wells Fargo, CWRC, or Freddie Mac ever notified FHFA about
Alles’ application for modification, her appeal, or her escalation request to Freddie Mac.
Indeed the OIC recited in the above audit that Wells Fargo fails in its duty to report them.
Among Freddie Mac’s eight largest servicers which serviced nearly 70% of Freddie Mac’s 10.6 million mortgages---four (Bank of America, CitiMortgage, Provident, and Wells Fargo Bank) did not report any escalated cases to Freddie Mac despite handling more than 20,000 such cases during the 14-month period between October 2011 and November 2012. These large servicers also did not submit escalated case reports in December 2012. Moreover, CitiMortgage and Wells Fargo did not submit reports in January 2013. March 21, 2013 OIG audit
17Motion to Join Real Party in Interest FHFA as Conservator for Freddie Mac, Alleged Beneficiary
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
This proves Wells Fargo concealed Alles escalation complaint, Freddie Mac
acquiesced in the fraud, and FHFA was not notified about Carole Alles modification.
This is exactly why FHFA should be joined. The conservator will make a reasoned
decision and possibly settle the case immediately by approving Alles for Freddie Mac’s
Streamlined Modification Initiative (SMI) effective 7/1/13. [McCarron Decl. ¶10 Exh.A]
If Alles is approved for the SMI the case can be settled and dismissed.
Alles is not asking for a free house. All she is asking for is a reduction in interest
from 7% fixed down to 2% fixed to reduce a payment from $1491/mo to $800 per month.
The current rents are $1300 per month and her social security is $800 per month. The
combined income is $2,100 per month making the loan affordable. The payment would
be 38% of monthly income well within standards set forth in the modification guidelines.
Alles can also rent out another bedroom to supplemental her income if necessary.
Alles has history of renting rooms for 7 years and rarely has a vacancy in her rentals
because her home is on Hole 1 of a fairway to the Palm Desert Country Club golf course.
FREDDIE MAC NEED NOT BE JOINED
Alles was required to make this motion to avoid waiver of her right to enjoin FHFA.
Failure to raise a timely objection to a real-party-in-interest violation constitutes a
waiver of the objection. United States v. Callahan (9th Cir 1989) 884 F2d 1180, 1183
n4, cert. denied sub nom. Esto, Inc. v. Callahan, 493 US 1094 (1990). Representative
parties, such as conservators, need not join beneficiaries as parties, even though they
might ultimately benefit from or be bound by a judgment. Fed R Civ P 17(a); see, e.g.,
Board of Natural Resources v. Brown (9th Cir 1993) 992 F2d 937, 942. The function
of a representative (conservator) is to make appropriate decisions for the incompetent.
United States v. 30.64 Acres of Land, 795 F.2d 796, 805 (9th Cir. 1986). An officer is
described by title rather than by name. Fed. R. Civ. P. 17(d); [ Rule 17 advisory
committee note of 2007]. Plaintiff seeks leave to add “The Acting Director of FHFA.”
18Motion to Join Real Party in Interest FHFA as Conservator for Freddie Mac, Alleged Beneficiary
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
The acting Director of the FHFA is Edward J De Marco. The president is in the process
of selecting a Director. Plaintiff intends to identify the new party as Director (or Acting
Director) in compliance with the 2007 revisions to Fed R Civ P 17(d) which authorizes
naming the officer by title rather than by name. Because the FHFA is conservator with
full powers to make decisions for both enterprises [ Fannie Mae and Freddie Mac] under
the conservatorship, Freddie Mac need not be joined in the action.
CONCLUSION
The court may order the addition of a party on a motion of any party or on its own
initiative at any stage of the action. Fed R Civ P 21. A person who is subject to service
and whose joinder will not deprive a court of jurisdiction over the subject matter of the
action, must be joined as a party if in his or her absence, complete relief cannot be
accorded among those already parties; or he or she claims an interest relative to the
subject of the action and is so situated that the disposition of the action in his or her
absence may, as a practical matter impair or impede his or her ability to protect that
interest, or leave any of the persons already parties subject to a substantial risk of
incurring double, multiple, or otherwise inconsistent obligations because of his or her
claimed interest. Fed R Civ P 19(a)(1).It is apparent that Wells Fargo will not make a decision based upon what is in the
best interest of either Alles, Freddie Mac, or the FHFA. Wells Fargo is only interested in
maximizing its profits and generating $6,000 - $10,000 in foreclosure fees, forced
insurance, penalties, fines, and other related gingerbread to jack up its ultimate profits.
By its own admission Wells Fargo has no intention to mediate or settle this case.
It is in the best interest of Freddie Mac not to incur a substantial loss of at least $100,000
by selling the home in foreclosure, which loss will be borne by American taxpayers.
The only way Freddie Mac can avoid this loss is for the conservator to be joined into the
case and make a reasonable decision to avoid a substantial loss in a pending foreclosure.
19Motion to Join Real Party in Interest FHFA as Conservator for Freddie Mac, Alleged Beneficiary
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
For the above reasons, and to obtain a speed settlement to avoid countless hours of
court time in the next year, plaintiff asks the court to grant an order for leave to amend
the complaint to add the FHFA Director. Plaintiff believes the FHFA Director will be
inclined to settle and dismiss the action. Wells will NEVER settle and have made that
clear in its Rule 20(f) statement.
dated: 4/01/2013
DECLARATION OF COUNSEL NANCY DUFFY MCCARRON
I, NANCY DUFFY MCCARON, declare:
1. I am over 18 and not a party to the action. I represent plaintiff in this action and
make these statements based personal knowledge and am prepared to testify to them.
2. At no time did any person or counsel representing Wells Fargo or Cal-Western
Reconveyance Corporation ever disclose that Freddie Mac was under a conservatorship.
If I had known this fact when I filed the case on November 29, 2012 I would have named
the Director of FHFA as the conservator for Freddie Mac.
3. I did not even discover that Freddie Mac owned, or purported to own, the Alles loan
until I filed the litigation. We were dealing with Wells Fargo, purported loan servicer, in
applying for a loan modification in 2012.
4. I believe that Wells Fargo and/or Freddie Mac securitized the Alles loan back on
September 13, 2012 into a securitized REMIC trust. Counsel for Wells Fargo refused to
disclose the name of the trust or its trustee despite a duty to voluntarily disclose facts and
documents under Fed. R. Civ. P 26(f). The investors in the REMIC trust certificates
would be the actual beneficiaries (noteholders) owning fractional beneficial interests in
the intangible note and intangible security (the trust deed securing the debt obligation).
5. After Wells Fargo denied Alles’ loan modification, I immediately appealed and filed
an escalation complaint with Freddie Mac. I believe within a day after the appeal was
20Motion to Join Real Party in Interest FHFA as Conservator for Freddie Mac, Alleged Beneficiary
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
received at Freddie Mac the loam modification was denied based on a telecom with John,
the agent handling the appeal. Despite a written promise not to Notice a Sale during the
appeal window CWR recorded a Notice of Sale on 12/7/2012 the same days as a denial.
6. After the court issued a Joint Rule 26 order I prepared draft, with notations in RED
for items CWRC & Wells Fargo needed to fill in, including identifying related entities.
Adam Hamburg notified me that he would not sign my draft and insisted on preparing the
report on his firm’s template. I reminded him to disclose related entities as both parties
failed to identify any related entities except Promiss Solutions (identified by CWRC).
7. My proposed draft was identical to the court’s order shown below except that I
highlighted line 6 in RED and reminded both counsel identify any related entity.
The final Joint Rule 26 Report Adam Hamburg filed with the court is shown below:
21Motion to Join Real Party in Interest FHFA as Conservator for Freddie Mac, Alleged Beneficiary
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
8. Adam Hamburg not only intentionally ignored the line from the court order, which I
had highlighted in RED and reminded counsel to disclose, he actually DELETED the
entire line from the end of subsection D before subsection E. DAMAGES. Wells also did
not disclose Freddie Mac of FHFA in its mandatory Certificate of Interested Parties
shown in an excerpt below:
22Motion to Join Real Party in Interest FHFA as Conservator for Freddie Mac, Alleged Beneficiary
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
9. This demonstrates a concerted effort on the part of Wells Fargo’s counsel to conceal
the fact that Freddie Mac was an interested party and that FHFA was an interested party.
This shows that Wells Fargo continues its long history of not being transparent or ethical.
10. After Alles’ application for a loan modification was denied, and her appeal was
denied within a day after being received by the escalation department of Freddie Mac,
Wells Fargo barreled forward with foreclosure. No one ever told me or Alles that the
FHFA was conservator, and that it had imposed a Servicer Alliance Initiative (SAI) to
promote foreclosure alternatives, or that HFA had revised its classic modification
program with a new program designed to afford modifications to borrowers who did not
qualify under HAMP or HARP. No one told me that FHFA had expanded a suite of
loan modification tools, including a “Streamlined Modification Initiative” (SMI) option
to give delinquent borrowers another path to avoid foreclosure. The borrower is offered a
chance to make 3 payments on time, and if made, the borrower is given a permanent
modification. This is exactly what Alles had requested which was willfully concealed.
[Exh. A herein]. I believe the FHFA Director in joined would offer it to settle the case.
11. Plaintiff’s counsel asked Wells Fargo’s counsel to stipulate to joinder in a meet &
confer on this motion on March 13, 2013 but Mr. Hamburg refused.
12. I filed a Complaint with the FHFA, the US Attorney General, the California
Attorney General, and various federal and state agencies on March 30, 2013 by email.
Complaint is attached in a Request for Judicial Notice filed with this motion. [as Exh. E]
I found 22 violations of a Consent Agreement Wells Fargo executed on 4/4/2012 in
which it agreed to abide by Servicing Guidelines prohibiting certain illegal and unfair
practices Wells Fargo had been engaging in during foreclosures in the past several years.
Many of these violations are now codified as “California Homeowners Bill of Rights”
effective 1/1/2013. Although laws were not statutorily mandated until 1/1/13 and Alles
foreclosure began August 2/2013 with the Notice of Default recording, Wells Fargo was
still required to comply by the consent agreement executed and signed on 4/4/2012.
23Motion to Join Real Party in Interest FHFA as Conservator for Freddie Mac, Alleged Beneficiary
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
It is effective for 3 years until April 2, 2015.
13. The 5 exhibits included in RJN filed herewith contain copies of actual documents.
I declare the above true under penalty of perjury and US law. Executed in Santa Barbara
dated: 4/01/2013
24Motion to Join Real Party in Interest FHFA as Conservator for Freddie Mac, Alleged Beneficiary
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PROOF OF SERVICE
STATE OF CALIFORNIA, COUNTY OF SANTA BARBARA
At the time of service I was over 18 years of age and not a party to this action. I am attorney for plaintiff. My address is: 950 Roble Lane, Santa Barbara, CA 93103.
On April 1, 2013 I served true copies of the following document(s)
MOTION TO JOIN DIRECTOR OF FHFA AS CONSERVATOR FOR FREDDIE MAC with Declarations of Nancy McCarron & Carole S. Alles, RJN, Notice of Lodging Order, with pdf copy of proposed order [ Doc & pdf format proposed order sent to Judge by email to: [email protected]]. The documents were served to:
Adam S. Hamburg, Atty for Wells Fargo Helen Cayton, Atty for CWRCPrenovost, Normandin, Bergh & Dawe Wright, Finlay & Zak LLP2122 No. Broadway, Suite 200 4664 MacArthur Court, Suite 200 Santa Ana, CA 92706-2614 Newport Beach, CA 92660 714-547-2444 fax 714-835-2889 949-477-5050 ext.1024 fax 949-608-9142 “[email protected]” [email protected]
Courtesy copy sent by email to: [email protected]; [email protected];
[email protected]; [email protected]
BY CM/ECF NOTICE OF ELECTRONIC FILING: I electronically filed the
document(s) with the Clerk of the Court by using the CM/ECF system. Participants in
the case who are registered CM/ECF users will be served by the CM/ECF system.
Participants in the case who are not registered with CM/ECF users will be served by
mail or by any other means permitted by the court rules, and/or agreed by the parties.
I declare under penalty of perjury under the laws of the United States of America
that the foregoing is true and correct and that I am a member of the bar of the Court at
whose direction the service was made. Executed on April 1, 2013 at Santa Barbara, CA.
Dated: 4-1-2013