Foreclosure Offense and Defense: Lis Pendens, Usury and California Exemption for "Banks"

LIS PENDENS — see usury, Temporary Restraining Order, Lawsuit, Burden of Proof

(1) Latin for “a suit pending.” The term may refer to any pending lawsuit. (2) A written notice that a lawsuit has been filed concerning real estate, involving either the title to the property or a claimed ownership interest in it. The notice is usually filed in the county land records office. Recording a lis pendens against a piece of property alerts a potential purchaser or lender that the property’s title is in question, which makes the property less attractive to a buyer or lender. After the notice is filed, anyone who nevertheless purchases the land or property described in the notice takes subject to the ultimate decision of the lawsuit.

IN THE CONTEXT OF FORECLOSURE OFFENSE AND DEFENSE, the significance of this filing is profound and potentially complex.

• The filing of the Notice of Sale by the Trustee in non-judicial states is the equivalent of a lis pendens in is effect.
  
• All judicial states (states where the filing of a foreclosure lawsuit is required before the property can be scheduled for sale) require a lis pendens to be filed by the lender along with the suit.
  
• However, in ALL cases, non-judicial or judicial, where the defensive and offensive strategies promoted by this blog are involved, it probably would be a good idea for the borrower to file a lis pendens along with any suit or emergency petition for temporary restraining order (TRO).
  
• It is possible that the lis pendens, especially where a TRO is sought, will be met with a demand for bond. However, the bond requirement should be nominal since the property is already in existence and presumably will be maintained.
  
• No lis pendens can be filed unless there is a “suit pending” — but once there is a pleading from the borrower seeking affirmative relief from a court of competent jurisdiction, the filing of a lis pendens cannot be stopped.
  
• The foreclosing party must step forward and request that the lis pendens be removed. They will do that because any bid at the foreclosure sale will be subject to your claims in the suit you filed against the “lender” at al.
  
• This is another opportunity to “win at the beginning” since the “lender” is now required to justify the its authority to have given notice of delinquency, notice of acceleration, notice of default and notice of sale. In order to do that they must file a petition or motion with the court which will be gingerly and creatively written if they understand the stakes or taken from some form if they do not understand the issues.
  
• They will plead (make allegations) that can now be denied. You have effectively converted the non-judicial sale to a judicial proceeding and forced the burden of proof onto the alleged foreclosing party. Take nothing for granted, and assume nothing.
  
• The attorneys for the foreclosing party probably have very little information — less than you have — and if you hit hard enough right at the beginning, you might, like thousands of other cases across the United States, find yourself walking out with an order that cancels the sale, dismisses the claims of the “lender” and perhaps the Judge’s order will even be “with prejudice, which would be the equivalent of a quiet title action, which you might pursue immediately after receiving a favorable ruling with or without prejudice.
  

REMEMBER, AS IN USURY, CONTRARY TO THE IMPRESSION CREATED BY THE TRUSTEE OR THE ‘LENDER’ YOUR OBJECTIVE IS TO SMOKE OUT THE FACT THAT THE ORIGINAL LOAN TRANSACTION IN WHICH THE BORROWER SIGNED THE PAPERS WAS A SMOKE SCREEN FOR A REAL “LENDER” THAT WAS NOT REGISTERED TO DO BUSINESS IN THE STATE, THAT WAS NOT CHARTERED OR AUTHORIZED AS A BANK OR LENDING INSTITUTION AND THAT THEREFORE WAS A PRIVATE LENDER, THUS FORTIFYING YOUR CLAIM FOR USURY, VIOLATION OF THE DISCLOSURE REQUIREMENTS FOR TILA, FRAUD, BREACH OF FIDUCIARY DUTY ETC.

IT IS THIS STRATEGY THAT COULD ENABLE YOU TO CLAIM USURY BASED UPON INFLATED APPRAISAL OF THE PROPERTY — EVEN IN STATES LIKE CALIFORNIA WHERE THE CONVENTIONAL WISDOM IS THAT USURY DOES NOT APPLY BECAUSE BANKS ARE EXCLUDED.

• YOUR ARGUMENT IS THAT THE BANK WAS MERELY A STAND-IN, CONDUIT OR MORTGAGE BROKER, NONE OF WHICH BRINGS THEM WITHIN THE EXEMPTIONS FOR USURY. THE REAL LENDER WAS NOT A BANK AND WAS HIDING BEHIND A FINANCIAL INSTITUTION TO CREATE THE APPEARANCE OF BANK INVOLVEMENT.
  
• BY NOT RECORDING PROPER ASSIGNMENTS, STATE LAW REGARDING TRANSFER OF INTERESTS IN REAL PROPERTY WERE VIOLATED, STATE LAWS REQUIRING THE PAYMENT OF FEES AND TAXES FOR RECORDING INSTRUMENTS ON REAL PROPERTY WERE VIOLATED, AND STATE LAWS REQUIRING REGISTRATION AND CHARTERS TO DO BUSINESS WERE VIOLATED WITH THE WILLING COMPLICITY OF THE “LENDER”.
  
• THUS A COMPLAINT WITH THE STATE BANKING COMMISSION AGAINST THE “LENDER” WOULD BE APPROPRIATE FOR FRAUDULENTLY REPRESENTING ITSELF TO BE THE REAL LENDER AND BEING A CONSPIRATOR IN AN ILLEGAL SCHEME TO ISSUE UNREGULATED SECURITIES.

NOTE: Most of what is said here assumes that securitization was involved. In situations where the “lender” retained the loan, only some of these strategies apply.

Tags: BOND, foreclosure defense, foreclosure offense, lis pendens, usury
Posted in Eviction |