The foreclosure crisis has cost California government and homeowners $625 billion since 2008. Since 2008,Â United Law Center, PLC (â€śULCâ€ť), the law firm leading the charge against wrongful foreclosure and title fraud litigation in California, has been fighting for homeowners forced into bad modifications or wrongfully foreclosed upon by their lender. Thanks to a new groundbreaking case, Glaski v. Bank of America (5th Dist. Ct. App. No. F064556), ULC is able to use this powerful case law to help thousands of Calif. homeowners fight back against their mortgage lender, and win. Since Glaski was published in August 2013, ULC has seen the rate and value of case settlements increase dramatically. Cases wherein â€śGlaskiâ€ť is alleged may include principal reductions between 30-70%, interest rates fixed at 2-3% for 30 years and a cash award upwards of six figures. The total value of such a settlement is well into the millions over the life of the loan.
According to theÂ Obama Administration January Housing Scorecard, â€śPayment reduction is a strong driver of permanent modification sustainability,â€ť so getting a principal reduction is critical. Yet most homeowners are finding lenders rarely provide legitimate modifications, offering no principal reductions or even terms designed for long term ownership. California homeowners who suspect that they may have been wrongfully foreclosed upon or are currently facing foreclosure are urged to review their original loan papers to determine if they might have a case against their lender and/or servicer.
“This is one of the most significant cases in California real estate law in the last fifty years,â€ť explains Stephen J. Foondos, managing partner of United Law Center. â€śUnlike the myriad weak modification programs that gave little or nothing to a relatively small number of homeowners, the Glaski decision offers the potential for real financial relief through litigation to all who were wrongfully foreclosed upon or stuck in a perpetual black hole of modification madness.”
The Glaski decision stands for the simple proposition that if an entity wants to collect on a debt in California (or foreclose on a mortgage), that entity must own the debt. Further, if such an entity is claiming ownership by way of an assignment, that assignment must be valid. A bankâ€™s assignment of a promissory note to a Mortgage-Backed Security Trust (a â€śSecuritized Trustâ€ť) is generally referred to as â€śsecuritization.â€ť Pursuant to the New York law under which the Securitized Trust was created and Federal Securities Law, the transfer of Mr. Glaskiâ€™s note was required to occur within 90 days of the closing date of the Securitized Trust commonly referred to as the â€ś90 day Rule.â€ť If this securitization occurs beyond the 90-days, it is considered void at its inception.
Therefore, because the Securitized Trust did not own Mr. Glaskiâ€™s note, it could not legally foreclose, and hence, the foreclosure was wrongful. The California Court of Appeals agreed. And while Glaski is viewed as an outlier in Federal Courts, â€śIt is the law in California, and we have been granted the right to sue in California Superior Court,â€ť says Foondos. â€śMoreover, if the trust never owned the note, then it never had the right to collect any of his mortgage payments,â€ť explains Attorney Foondos, â€śand we have also been granted the right to recover those past payments under a claim for conversion. Now is the time for the real victims of the Mortgage Scandal of the 2000s — homeowners — to be made whole,â€ť says Foondos.
It is estimated that 70-80% of all California homeowners who financed a home between 2003 and 2008 had their note securitized. â€śAccordingly, in light of the Glaski decision, approximately 1.3 million homes may have been wrongfully foreclosed upon and have grounds to sue their original lender for damages,â€ť explained Foondos.
Itâ€™s clear these wrongful foreclosures have had an impact on California’s economy. In a 2013 joint report by The Alliance of Californians for Community Empowerment, The Center for Popular Democracy and The Home Defenders League, upwards of 1.7 million homes were foreclosed upon since 2008. TheseÂ foreclosures are estimated to have cost the State about $27 billionÂ between lost tax revenue and services necessary to foreclose upon or maintain these properties. Including loss of wealth, the figure is estimated in total at $625 billion. According to a January 14th Harvard research report entitled â€śThe Effect of Mortgage Securitization on Foreclosure and Modificationâ€ť, â€śâ€¦over 500,000 of the 4.4 million foreclosures experienced since the start of the financial crisis were caused by securitization.â€ť