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Tina Backstrom 6755 S. Garth Avenue Los Angeles, CA 90056 Telephone No. (310) 256-8308

UNITED STATES BANKRUPTCY COURT IN THE CENTRAL DISTRICT FOR THE STATE OF CALIFORNIA

In Re

) Case No.: ) CHAPTER 13 TINA BACKSTROM ) ) ) Debtors. ) ) ) ) ) ADVERSARY CASE NO: TINA BACKSTROM ) ) Plaintiffs. ) ) VS. ) WORLD SAVINGS BANK, WACHOVIA ) ) MORTGAGE, WELLS FARGO HOME ) MORTGAGE, WELLS FARGO, N.A., ) MORTGAGE ELECTRONIC REGISTRATION SYSTEMS (MERS), and ) ) DOES 1 through 20 ) ) Defendants. ) PLAINTIFFS COMPLAINT NOW COMES, TINA BACKSTROM, Debtor and Plaintiff in the above-entitled and

1.

numbered cause (hereinafter referred to as Plaintiff) and files this Original Complaint
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pursuant to Sections 524 and 105 of Title 11 United States Code (Bankruptcy Code), hereby sues Defendants World Savings Bank, Wachovia Mortgage, Wells Fargo Home Mortgage, Wells Fargo, N.A., and Mortgage Electronic Registration System (MERS), to Determine Existence of Lien, violations of predatory lending, violations of Debt Collection Act, Good Faith and Fair Dealing; Violations of TILA (15U.S.C. section 1601); Violation of RESPA; Breach of Specific Performance; Anticipatory Breach; Intentional Misrepresentation; Negligent

Misrepresentation; Civil Conspiracy to Defraud; Fraudulent Concealment; Promissory Estoppel; Declaratory Relief, by bringing an adversary proceeding.

2.

II. JURISDICTION The Court has personal jurisdiction over the Defendants named herein because a

substantial portion of the wrongdoing alleged in this complaint took place in the Central District of California, and the Defendants are authorized to regularly do business in the Central District of California. 3. The jurisdiction is conferred upon this Court pursuant to 28 U.S.C. 1331, pursuant to 15

U.S.C. 1640(e); in that alleged herein arise under the laws of the United States. This Court has supplemental jurisdiction pursuant to 28 U.S.C. 1367 to hear and determine Plaintiffs state law claims because those claims are related to Plaintiffs federal claims, arise out of a common nucleus of related facts, and form part of the same case or controversy under Article III of the United States Constitution.

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4.

The jurisdiction of this Court for the Cause of Action is invoked pursuant to the Truth in

Lending Act and Real Estate Protection Act 15 U.S.C. 1640(e) and 28 U.S.C. 1331 AND 1337. 5. The Court has jurisdiction over Plaintiffs action for declaratory relief pursuant to 28

U.S.C. 2201 and Rule 57 of the Federal Rules of Civil Procedure. 6. Venue is proper in the Central District of California pursuant to 28 U.S.C. 1391(b)(2) in

that the unlawful conduct that gave rise to these claims occurred within the Central District of California. Further, Jurisdiction of this Court for the pendent claims is authorized by Rule 18(a) of the Federal Rules of Civil Procedure.

7.

III. INTRADISTRICT ASSIGNMENT Intradistrict assignment in Los Angeles, California, is proper because the unlawful The loan

conduct that gives rise to the alleged claims occurred in Los Angeles County.

contracts between Plaintiffs and Defendants were made and to be performed, and obligations arose in the Central District of California. The Court has jurisdiction pursuant to 28 U.S.C. section 1367 of the claims asserted by Plaintiffs under the laws of California.

8.

IV. PARTIES Plaintiff, TINA BACKSTROM, is a natural person currently residing at 6755 S. Garth

Avenue, Los Angeles, CA 90056 (Subject Property). 9. Plaintiff at all times has been the owner of the Subject Property and has maintained her

residence at the subject property.

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10.

Plaintiffs are informed and believe that, at all relevant times mentioned in this complaint,

Defendant World Savings Bank, is a federally-chartered savings and lending institution with headquarters located in Oakland, California. At all relevant times hereto, Defendant WORLD SAVINGS BANK, was and is engaged in the business of promoting, marketing, distributing and selling the Option ARM loans that are the subject of this Complaint. Defendant WORLD SAVINGS BANK transacts business in the United States and at all relevant times promoted, marketed, distributed, and sold Option ARM loans throughout the United States. Defendant WORLD SAVINGS BANK has significant contacts throughout the United States and the activities complained of herein occurred, in whole or in part, in the United States. 11. Plaintiffs are informed and believe that, at all relevant times mentioned in this complaint,

Defendant Wachovia Mortgage, Defendant WACHOVIA CORPORATION is a North Carolina corporation with headquarters located in Charlotte, North Carolina. Defendant WACHOVIA CORPORATION operates as a financial holding company. At all times alleged herein,

Defendants were engaged in the business of promoting, marketing, distributing, and selling the Option ARM loans that are the subject of this Complaint, throughout the United States. 12. Plaintiffs are informed and believe that, at all relevant times mentioned in this complaint,

Defendant Wells Fargo, N.A., were and are a corporation organized and existing under the laws of the State of California and regularly conducted business activity with Los Angeles County, California residents. Plaintiffs are informed and believe and at all time mentioned in this complaint, defendant Wells Fargo, N.A., was, and remains, licensed by the California Department of Real Estate as a wholesale mortgage brokerage firm. Plaintiffs are informed and

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believe that, at all times mentioned herein, defendants operated and did business in the State of California, County of Los Angeles. 13. Plaintiffs are informed and believe that, at all relevant times mentioned in this complaint,

Defendant Wells Fargo Home Mortgage is a Delaware Corporation duly licensed under the Consumer Loan Act, which regularly conducted business activity with Los Angeles County, California residents. 14. Defendant Mortgage Electronic Registration System (MERS) is a wholly-owned

subsidiary is incorporated in Delaware and has its principal place of business in Vienna, Virginia. The members of MERS include the shareholders of MERSCORP, INC., and any other mortgage lenders who make application and pay a membership fee, which regularly conducted business activity with Los Angeles County, California residents. MERS members may use the registration system to establish and maintain by MERS, as more fully described later in this complaint. 15. The causes of action alleged herein apply equally and jointly and severally to all of the

Defendants to the extent that they were agents, servants, and employees of each other and were acting within the scope of such agency or employment while engaged in the acts, omissions, and other conduct alleged in this Complaint, or the alleged acts, omissions, and other conduct of each Defendant were subsequently ratified or adopted by the other Defendants. 16. Plaintiffs are informed and believes, and thereon alleges, that each Defendant is an at all

times herein was, the agent, employee, alter-ego, principal, employer, servant, co-conspirator of each of the remaining co-defendants, and in committing the acts herein alleged, was acting in

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the scope of their authority as such agents, employee, alter-ego, principal, employer, servant, coconspirator, principals and with the permission and consent of the remaining co-defendants. 17. DOES 1-50, inclusively, are individuals and/or businesses whose forms are unknown and

were agents, principals, employees, employers, and co-conspirators of each and every other named or unnamed Defendants in this complaint. Plaintiffs are informed and believes, and thereon alleges, that each such defendant was acting in the scope of their authority as such agents, employee, alter-ego, principal, employer, servant, co-conspirator, principals and with the permission and consent of the remaining co-Defendants named and unnamed. 18. The true names and/or capacities of Defendants 1-20, inclusive, are unknown to Plaintiff,

and therefore they sue said Defendants by such fictitious names. Plaintiff is informed and believes and thereon alleges that each of the Defendants fictitiously named herein as DOE is responsible for the events and happenings hereinafter referred to and thereby proximately caused the injuries and damages to Plaintiffs as hereinafter alleged. Plaintiffs will seek leave of the Court to amend this complaint to allege the true names and/or capacities of said DOE Defendants. 19. Wherever in this Complaint an act or omission alleged herein apply equally and jointly

and severally to all of the Defendants to the extent that they were business entity or corporation, agents, servants, and employees of each other and were acting within the scope of such agency or employment while engaged in the acts, omissions, and other conduct alleged in this Complaint, or the alleged acts, omissions, and other conduct of each Defendant were subsequently ratified or adopted by the other Defendants.

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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 ARM loan agreement with Defendants. The Option ARM loan agreement was secured by Plaintiffs primary residence. Attached hereto as Exhibit 2 is a true and correct copy of her Note and Truth in Lending Disclosure Statement pertinent to this action. 22. At the time of signing, the loan documents failed to include the required initial 20. V. STATEMENT OF FACTS On March 7, 2007, the Debtor/Plaintff Tina Backstrom executed a promissory note in

favor of World Savings Bank. This Note was secured by a Deed of Trust. The original Deed of Trust purports to designate MERS as its nominee with respect to the mortgage. Although, Debtors would argue there is in fact no beneficial assignment of the mortgage to MERS1, and the lender remains the owner and holder of the promissory note and mortgage. 21. Plaintiff Tina Backstrom refinanced her existing home loan and entered into an Option

disclosures and final disclosures, which include RESPA, TILA, ECOA and FCRA disclosures. 23. Further, in the Notice of Right to Cancel, neither the transaction date nor the expiry of

recession period are completed, and were left blank and was never given to plaintiffs to sign at the time of closing or signing the Loan Documents. Plaintiffs were never explained the full terms of the loan, including but not limited to the rate of interest, how the interest rate would be calculated, what the payment schedule would be, the risks and disadvantages of the loan, the prepayment penalties, the maximum amount the loan payment could arise to. 24. No determination of whether Plaintiffs would be able to make the payments of the loan as

specified in the loan was verified. During the loan application process, Defendants listed
1

MERS has/had not legal right or standing as the registered mortgage note holder for the subject property; and thus, had no right or authority to transfer, assign, convey, deliver or grant the right of beneficiary or mortgagee rights. Moreover, MERS was and is not authorized to do business in the State of California at the time of any of the aforementioned transactions.

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Plaintiffs income well in excess of their stated income. Defendants reviewed the income taxes and were fully aware of the stated income, though chose to approve the loan as Stated Income, in order to use and inflated income on the application. 25. Plaintiffs are informed and belief Defendants and/or Defendants predecessors

established and implemented the policy of failing to disclose material facts about the Loan, failing to verify income, falsifying income, and causing Loan to include a penalty for early payment. 26. Plaintiffs are further informed and belief Defendants and/or Defendants predecessors

established and implemented such policy so as to profit, knowing that Plaintiffs would be unable to perform future terms of the loan. 27. Plaintiffs were victims of Fraud in Fact since the foregoing misrepresentations caused

them to obtain the home loan without accurately realizing the risks, duties, or obligations incurred. 28. The Promissory Note contains sufficient space on the note itself for endorsement

whereby any assignment by allonge is ineffective pursuant to Pribus v. Bush, 118 Cal. App. 3d 1003 (May 12, 1981). 29. Mrs. Backstrom was given a jumbo at an interest rate of 7.1% which is predatory, as at

the time the loan was originated, the LIBOR for jumbo loan index was 4.75% with a margin of 2.4%. Mrs. Backstroms loan appears to be way above industry standards for those situated in her same income and rating bracket. It appears to be predatory rate based on race. 30. The Truth in Lending Disclosure Statement Analysis reveals a clear miscalculation of the

finance charge. The Disclosed APR shows 7.1430% on a 7.1 interest rate making the finance
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charge $1,700,038.23. However, the actual APR should reflect 7.109% with the total finance charge of 1,280,511.24. WOW! That is a difference of $420,000.00. The total payments should be $2,182,715.24 instead of $2,602,243.05. Such TILA violations make the loan rescindable, void and voidable. There appear to be several other TILA, HOEPA, RESPA and UDAP regarding disclosures. The variable interest rate was not included on the disclosure statement. 31. Such actions by your predecessor World Savings Bank were ratified by Wachovia and

accepted by Wells Fargo and are clear violations of the Truth in Lending Act (TILA), 15 U.S.C., 45(a) and 53(b), and Section 108(c), 15 U.S.C. 1607(c), for injunctive relief, rescission, restitution, reformation, disgorgement, and other equitable relief against Defendants for engaging in acts or practices in violation of TILA, 15 U.S.C. 1601 - 1666j, Federal Reserve Board Regulation Z, 12 C.F.R. 226, as amended, and for unfair or deceptive acts of practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. 45, as amended, including, but not limited to, the Home Ownership and Equity Protection Act of 1994 (HOEPA) Section 8 of the Real Estate Settlement Procedures Act 1974 (RESPA), 12 U.S.C. 2607, and its implementing regulations at 24 C.F.R. Part 3500. 32. WACHOVIA CORPORATION (collectively Defendants), based on Defendants

failure to clearly and conspicuously disclose to Plaintiffs and the Class Members, in Defendants Option Adjustable Rate Mortgage (Option ARM) loan documents and in the required disclosure statements accompanying the loans, (i) the actual interest rate on which the payment amounts listed in the Truth in Lending Disclosure Statements are based (12 C.F.R. 226.17); (ii) that making the payments according to the payment schedule in the Truth in Lending Disclosure Statement provided by Defendants will result in negative amortization and that the
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principal balance will increase (12 C.F.R. 226.19); and (iii) that the payment amounts listed on the Truth in Lending Disclosure Statement are insufficient to pay both principal and interest. 33. In mid-2009 Plaintiff Tina Backstrom began experiencing financial difficulties and

contacted her servicer Wachovia Mortgage. On September 27 & 28, 2009, Mrs. Backstrom attended a NACA event in Los Angeles hosted and sponsored by various mortgage lenders and servicers, of which Wachovia was well represented by its loan officers, loan counselors and/or other employees, representatives and agents. All of whom were acting on behalf of Wachovia. 34. At this event, Mrs. Backstrom met with such agents and representatives of Wachovia to

discuss her mortgage loan and her current financial condition. After discussing such matters with loan officers, loan counselors, agents and representatives of Wachovia it was expressly told to Mrs. Backstrom, since she was current on her mortgage, she would be given a 2 month mortgage payment extension (forbearance) for the months of September & October 2009 and her next payment due date would be November 2009. The contractual between Wachovia and Mrs. Backstrom was ratified in NACAs computer database and later in correspondence from Wachovia dated October 8, 2009.2 Further proof of the contractual relationship and terms of Wachovias offer and Mrs. Backstroms accepts is demonstrated in the signed

Acknowledgement of Payment Deferral and capitalization signed by Mrs. Backstrom on October 18, 2009. In consideration, to her legal detriment, Mrs. Backstrom did not make her September and October 2009 monthly mortgage payments. The promises by Wachovia were

reasonable expectation in inducing Mrs. Backstroms actual reliance in forbearing from making her mortgage payments, which was reasonably foreseeable.
2

Attachments

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35.

On or about October 29, 2009 Mrs. Backstrom received notice that she was in arrears for

two mortgage payments and her third mortgage payment was coming due November 1, 2009. Mrs. Backstrom was now facing foreclosure. Mrs. Backstrom made repeated attempts at having this matter re with Wachovia. Nevertheless, after creating Mrs. Backstroms economic duress by its breach and bad faith business practices, Wachovia demanded Mrs. Backstrom pay more than $17,000 to bring her loan current or face loss of her home through foreclosure. Mrs.

Backstrom under duress and undue influence borrowed the money from her 401K to pay Wachovia, although Mrs. Backstroms situation was a direct result of Wachovias breach of contract. 36. Such promises, agreements made by Wachovia was done with intent to induce

detrimental reliance on the part of Mrs. Backstrom, which not only caused her to go into foreclosure but caused her credited rating to be negatively impacted, incur additional monetary loss in upwards of $60,000, and severe emotional trauma. 37. There are sufficient facts clearly demonstrate Wachovias misrepresentation, fraud,

concealment, breach of contract, breach of good faith and fair dealing, promissory estoppel and unfair business practices pertaining to the terms of the forbearance (See Stansfield v. Starkey, 220 Cal.App.3d 59, 72-73 (1990). Mirkin v. Wasserman, 5 Cal. 4th 1082, 1088-89 (1993)).

STATEMENT OF CLAIM 1. The Borrower Mrs. Backstrom and the Lender/Servicer Wachovia Mortgage entered into an agreement (express and written) on September 28, 2009 and again on October 18, 2009 to forbear Mrs. Tina Backstroms mortgage payments for the months of September 2009 and October 2009.

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2. Wachovia agreed to suspend Mrs. Tina Backstroms mortgage payments for September 2009 and October 2009 while she was being reviewed for a modification. In reliance on these representations, Mrs. Tina Backstrom did forego making her monthly mortgage payments for September 2009 and October 2009 at the instruction of Wachovia. PARTICULARS i. Wachovia Mortgage agreed to defer and capitalize the regularly scheduled mortgage payments due for September 15, 2009 and October 15, 2009; ii. For each payment deferral, Wachovia would add capitalization the interest and if applicable, the escrow or impound portion of the payment to the principal balance of the loan; The payment would be recomputed at the next scheduled payment change date (November 15, 2009); and At the time of the contract Wachovia Mortgage knew or should have known that their representations would induce reliance on the part of Mrs. Tina Backstrom upon these terms offered by Wachovia.

iii. iv.

Nevertheless, Plaintiff Backstrom attempted to work this matter out with Wachovia for

months, to no avail. 39. On December 7, 2010, Defendants caused the recording of the Notice of Default. On or

about March 3, 2007 MERS as nominee for World Savings Bank, assigned the underlying Deed of Trust to Washington Mutual Bank. On October 2, 2008 Washington Mutual assigned, sold or transferred the underlying Deed of Trust to Wachovia Mortgage, who states they are the servicing agent to U.S. Bank National Association, as Trustee for Master Asset Backed Securities.

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40.

Plaintiffs have repeatedly made attempts to rehabilitate their loan but for various breach

of agreements, anticipatory breach of agreement, conspiracy and various violations of California Civil and Commercial Codes, Federal and State Public Policy by Wachovia and Wells Fargo Home Mortgage, has prevented the impeded the rehabilitation efforts and demands by Debtor Tina Backstrom. 41. Defendants simply failed and refused to comply with the Section requirements of Civil

Code 2923.5 for a Notice of Sale declaration of contact or list of efforts made at contacting plaintiff and other homeowners in similar situations. Several new sections were added to the California Civil Code. One section, 2923.5, requires the mortgagee, trustee, beneficiary, or authorized agent to include a declaration in any notice of default. The declaration must state that the party has contacted the borrower in effort to workout a solution to the default. In addition, if a notice of default was recorded prior to the enactment of the new statute, the notice of sale must include a declaration that either: (1) states that the borrower was contacted to assess the borrowers financial situation and to explore options for the borrower to avoid foreclosure, or (2) lists the efforts made to contact the borrower in the event no contact was made. 42. The Notice of Default contained errors, inaccuracies and did not take into account the

overage paid by plaintiff. The default did not reflected a true and accurate accounting of plaintiffs mortgage payments made, owed or the true and actual principle owed on the mortgage loan. 43. Thereafter, Plaintiff contracted with a company to conduct a forensic, evaluation and

review of plaintiffs loan, it was discovered that defendant breached their duties as a lender in extending credit to plaintiff; defendant failed to provide the necessary disclosures and
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information concerning the cost of the credit, there were unauthorized fees and/or kickbacks on settlement proceeds, they failed to disclose the amount to be financed, the amount of the finance charge, the annual percentage rate, the method of calculating finance charges, the number and amount of payments, and the due dates or schedule of payments to pay the indebtedness. As

such, defendants failure to provide the required disclosures mandated by the Truth and Lending Act and RESPA violations, along with Wachovias bad faith tactics, mismanagement of accurate account of payments received, miscalculation of plaintiffs mortgage loan directly caused plaintiff to become delinquent on her loan obligations, which lead to commencement of foreclosure proceedings against plaintiffs property. As such, the notice of default is incorrect for the following reasons: misapplied payments; Modification agreement which was not adhered to by the Defendants; improper accounting and promissory estoppels 44. Accordingly, the Plaintiff without the benefit of an accurate accounting is not at all

certain she is in default under the terms of the mortgage loan agreement and deed of trust. As such, an actual dispute exists between Plaintiffs and Defendant concerning their rights and duties with respect the pending nonjudicial foreclosure. 45. Plaintiff desires a judicial determination and declaration of Plaintiffs and Defendants

respective rights and duties; specifically that Plaintiff did not breach the terms of the promissory note and deed of trust. 46. Defendants simply failed and refused to comply with the Section requirements of CC

2923.5 for a Notice of Sale declaration of contact or list of efforts made at contacting plaintiff and other homeowners in similar situations. Several new sections were added to the California
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Civil Code. One section, 2923.5, requires the mortgagee, trustee, beneficiary, or authorized agent to include a declaration in any notice of default. The declaration must state that the party has contacted the borrower in effort to workout a solution to the default. In addition, if a notice of default was recorded prior to the enactment of the new statute, the notice of sale must include a declaration that either: (1) states that the borrower was contacted to assess the borrowers financial situation and to explore options for the borrower to avoid foreclosure, or (2) lists the efforts made to contact the borrower in the event no contact was made. 47. Defendants unethical practices culminated with the scheduled sale of the Property on

June 17, 2011. See CAL. CIV. CODE 2924 (California law only permits foreclosure proceedings after the debtor enters default); Castillo v. Skoba, No. 10-CV-1838-BTM, 2010 WL 3986953, *2 (S.D. Cal. Oct. 8, 2010) (citing CAL. CIV. CODE 2924) (The power of sale in a nonjudicial foreclosure may only be exercised when a notice of default has first been recorded.); In Re Henry, 266 B.R. 457, 472 n.14 (C.D. Cal. 2001) (citing CAL. CIV. CODE 2924) (Under California law, a secured creditor has no right to commence foreclosure proceedings unless the debtor is in default.). 48. Taking these allegations as true, the conduct by Wachovia and Wells Fargo appears to be

immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers, and thus satisfies the UCLs unfair prong. See Casa Blanca, 159 Cal. App. 4th at 530; McDonald, 543 F.3d at 506. Moreover, a reasonable consumer is likely to rely on representations by a banks agent; thus, such conduct also violates the UCLs fraudulent practices prong. See Puentes, 72 Cal. Rptr. 3d at 909.

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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 52. 49.

I.

CAUSES OF ACTION COUNT I:

Defendants Do Not Have Standing To Enforce Secure Lien without Existence of Valid Security Instrument It is the belief and contention of Plaintiff Tina Backstrom that Defendants, and each of

them, do not in fact have a valid security interest in Debtors property that would entitle them to relief from stay. 50. Pursuant to (Uniform Commercial Code) UCC 3-309 A person entitled to enforce an

instrument must be a person entitled to enforce the instrument, and that person must prove the instruments terms and that persons right to enforce the instrument. UCC 3-309 (a)(1) & (b). 51. Enforcement of a note always requires that the person seeking to collect show that it is

the holder. A holder is an entity that has acquired the note either as the original payor or transfer by endorsement of order paper or physical possession of bearer paper. These requirements are set out in Article 3 of the Uniform Commercial Code, which has been adopted in every state, Even in bankruptcy proceedings, State substantive law controls the rights of note and lien holders, as the Supreme Court pointed out almost forty (40) years ago in United States v. Butner, 440 U.S. 48, 54-55 (1979). Recently, Judge Bufford has recently illustrated, in one of the cases discussed below, in

the Bankruptcy and other federal courts, procedure is governed by the Federal Rules of Bankruptcy and Civil Procedure. And, procedure may just have an impact on the issue of who, because, if the holder is unknown, pleading and standing issues arise.

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53.

As such, Debtors have filed the adversarial proceeding to determine the validity of

security interest of Chase, its successors, predecessors and agents. Therefore, pursuant to Fed. R. Bankr. P. 7001 validity and priority of Debtors mortgage should be decided in the context of an adversary proceeding. A proceeding to determine the validity, priority, or extent of a lien or other interest in property, other than a proceeding under Rule 4003(d) . . . . is an adversary proceeding which must be commenced by the filing of a complaint with the bankruptcy court. Fed. R. Bankr. P. 7001(2). 54. As such, it is well established that the security interest follows the debt. Id. If the debt is

not transferred, neither is the security interest. Id. The note and mortgage are inseparable; the former as essential, the latter as an incident. An assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity. (See Carpenter v. Longan, 83 U.S. 271 (1872). 55. It is also well established that a plaintiff must prove standing by showing: (1) injury in

fact; (2) a causal connection between the injury and the defendant's conduct; and (3) a likelihood that a favorable outcome will redress the injury. (See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). To proceed with this action, Chase must demonstrate that it is the holder of not only the deed of trust but also the promissory note. If not, it has no injury in fact. See In re Foreclosure Cases, 521 F. Supp. 2d 650, 653 (S.D. Oh. 2007) (stating that, "[t]o show standing in a foreclosure action, . . . the plaintiff must show that it is the holder of the note and the mortgage at the time the complaint was filed [and] . . . that the holder of the note and mortgage is harmed, usually by not having received payments on the note").

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56.

In the context of a relief from stay motion, a motion for relief from the automatic stay

must satisfy both substantive and procedural requirements. The substantive requirements are provided by 362(d). The procedural requirements are imposed by the United States Constitution (due- 3 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 process) and the Federal Rules of Bankruptcy Procedure (which mostly incorporate the Federal Rules of Civil Procedure). The applicable rules here are the "real party in interest" rule and the "required joinder" rule. See In re Kang Jin Hwang, 393 B.R. 701, 712 (C.D. Cal.2008).

COUNT II (Violation of California Civil Code 2923.5) 57. Plaintiffs hereby incorporate by reference the allegation of paragraphs 1 through 56

inclusive, as if fully set forth herein verbatim. 58. Plaintiffs are informed and believe, and thereon allege, that at no time during the course

of the foreclosures process, nor anytime leading up thereto, did Defendants make a good faith and bona fide attempt at a loan modification with Plaintiffs. 59. Defendants, as a servicer under a pooling and servicing agreement, were required to

implement a loan modification plan if said loan was in payment default or default was reasonably foreseeable and where anticipated recovery under the modification exceeds the anticipated recovery through foreclosure. 60. As described herein above, Plaintiffs were unable to make said loan payments as were

initially required, but were and could have made payments under a modified payment plan, thus

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allowing them to retain their home and providing the defendants with a higher recovery than through the foreclosure. 61. California Civil Code 2923.6(b) provides that a mortgagee, beneficiary, or authorized

agent offer the borrower a loan modification or workout plan is such modification or plan is consistent with its contractual or other authority.

COUNT III (Violation of the Truth in Lending Act, 15 U.S.C. 1601, et seq., and Regulation Z, 12 C.F.R. 226, et. seq.) 62. Plaintiffs hereby incorporate by reference the allegations of paragraphs 1 through 45

inclusive, as if fully set forth herein verbatim. 63. In the course and conduct of offering and making HOEPA mortgage loan to Plaintiffs,

Defendants and Does 11 through 20, through their agents, assignees and successors violated the requirements of HOEPA and Regulation Z in the following and other respects by: Charging, including but not limited to fees paid to others that were not bona fide and reasonable and were finance charges under TILA that required disclosure. (a) (b) (c) failing to disclose or accurately disclose; Failing to provide Plaintiffs with appropriate material the annual percentage rate was in violation of Section

disclosures required by TILA; 129(a)(2) of TILA; Plaintiffs were not given copies of a Notice of Right to Cancel a notice of the right to cancel the loan. Accordingly, Plaintiffs are entitled to rescind the loan that they obtained from Defendants;

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(d)

Plaintiffs were never counseled, explained to or even

mentioned that they had a right to cancel the loan. Accordingly, Plaintiffs are entitled to rescind the loan that they obtained from Defendants; (e) failing to provide the required disclosures prior to consummation of the transaction in violation of 15 U.S.C. 1638(b); (f) (g) Defendants used coercion of payment back to the buyer other acts and omissions by Defendants that may come from the seller to obtain a fraudulent loan; out during the discovery process. By failing to disclose, or accurately disclose, material information, as described above, all

Defendants have engaged in deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. 45(a). Moreover, Defendants are aware of the illegal nature of the loans and of Plaintiffs request for rescission.

COUNT IV. (Violation of Real Estate Settlement Procedures Act, 12 U.S.C. 2601, et seq., and Regulation X, 24 C.F.R. 3500, et seq.) Plaintiffs hereby incorporate by reference the allegations of paragraphs 1 through 64

inclusive, as if fully set forth herein verbatim. 66. The loan to Plaintiffs by Defendants is federally related mortgage loans as defined in the

Real Estate Settlement Procedures Act (RESPA) and implemented by Regulation X.

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67.

The fees paid to others were unlawful kickbacks, referral fee profits from sham

arrangements, and/or unearned fees under RESPA because they were not reasonably related to the performance of lawful services. 68. Undisclosed payments from the seller to the borrower violate RESPA. Such practice

violates RESPA and consequently rescinds and invalidates the loan. 69. By the actions described herein and as a proximate cause of Defendants conduct,

Plaintiffs were damaged, in an amount to be proven at trial but not yet ascertained.

COUNT V. (Predatory Lending) 70. 71. Plaintiff realleges paragraphs 1- 69 of the general allegation as if fully set forth herein. Plaintiffs are informed and believes, and thereupon alleges, assuming arguendo that

defendant Chase does have the right under the law of negotiable instruments in this State, by endorsement, assignment, agency or otherwise, to receive payment under a valid note, payment of which is secured by the security instrument that is identified in the loan agreement, and to initiate foreclosure under a power of sale contained therein, if any, then defendant Chase is subject to defenses that would have been available against others, the original lender identified in the security instrument that is referred to in the original loan agreement. 72. Plaintiffs are informed and believe that WMC Mortgage Corp., the initial lender, has

engaged in predatory lending practices with respect to plaintiffs in violation of Home Ownership and Equity Protection Act (HOEPA), 15 U.S.C. 1637, Truth in Lending Act 15 U.S.C. 1601, Regulation Z 12 C.F.R. 226, AND Federal Trade Commission Act (FTC Act) 15 U.S.C.

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41-58, the specifics of which are unknown, but amendment to this complaint when ascertained.

COUNT VI. Contractual Breach Of Covenant Of Good Faith and Fair Dealing 73. 74. Plaintiff realleges and incorporates by reference paragraphs 1 to 73 of this complaint. Every contract imposes upon each party a duty of good faith and fair dealing and its

performance and its enforcement. This implied covenant of good and fair dealing requires that no party will do anything that will have the effect of impairing, destroying, or injuring the rights of the other party to receive the benefits of their agreement. This covenant implies that in all contracts each party will do all things reasonably contemplated by the terms of the contract to accomplish its purpose. This covenant protects the benefits of the contract that the parties reasonably contemplated when they entered into the agreement. 75. The terms of the promissory note and trust deed imposed upon the Defendants a duty of

good faith and fair dealing in this matter. 76. Defendants enjoyed substantial discretionary power affecting the rights of plaintiff during

the events alleged in this complaint. Defendants were required to exercise such power in good faith. 77. California foreclosure law and procedure is based on the social policy. The goal of

California non-judicial foreclosure law under California Civil Code section 2923.6 and Civil Code 2924 et seq. is to provide fast, efficient and non-judicial remedies to beneficiaries while at

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the same time providing protection to trustors. California non-judicial foreclosure law also is intended to protect the trustor from the wrongful or unfair loss of his property. 78. California non-judicial foreclosure law requires strict compliance on the part of

beneficiaries and trustees. 79. Defendants willfully breached their implied covenant of good faith and fair dealing with

plaintiff. Defendants attempted to non-judicially foreclose on Plaintiffs home. 80. Defendants breached their covenants of good faith and fair dealing with Plaintiffs by

violating California Civil Code 2923.6 and by their actions as alleged in this complaint. 81. The 2007 World Savings Banks promissory note was incomprehensible, filled legalese

and filled with mumbo-jumbo. This incomprehensibility was intended to insure that the plaintiff did not comprehend its terms, which in turn permitted the Defendants and their successors to mislead the plaintiff and thereby financially profit from its terms. In this manner, Defendants breached their duty of good faith and fair dealing. 82. Defendants have willfully breached their implied covenant of good faith and fair dealing

for the reasons and actions which are outlined in the aforementioned Causes of Action.

COUNT VII. Anticipatory Breach of Agreement 83. Plaintiffs realleges and repleads paragraphs 1 through 82 herein and incorporates the

same by reference as though set forth in full at this time and place. 84. Representatives of Wachovia loan officers, loan counselors and agents expressly told to

Mrs. Backstrom, since she was current on her mortgage, she would be given a 2 month

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mortgage payment extension (forbearance) for the months of September & October 2009 and her next payment due date would be November 2009. The contractual agreement between Wachovia and Mrs. Backstrom was ratified in NACAs computer database and later in correspondence from Wachovia dated October 8, 2009.3 Further proof of the contractual

relationship and terms of Wachovias offer and Mrs. Backstroms accepts is demonstrated in the signed Acknowledgement of Payment Deferral and capitalization signed by Mrs. Backstrom on October 18, 2009. In consideration, to her legal detriment, Mrs. Backstrom did not make her September and October 2009 monthly mortgage payments. The promises by Wachovia were

reasonable expectation in inducing Mrs. Backstroms actual reliance in forbearing from making her mortgage payments, which was reasonably foreseeable. 85. On or about October 29, 2009 Mrs. Backstrom received notice that she was in arrears for

two mortgage payments and her third mortgage payment was coming due November 1, 2009. Mrs. Backstrom was now facing foreclosure. Mrs. Backstrom made repeated attempts at having this matter re with Wachovia. Nevertheless, after creating Mrs. Backstroms economic duress by its breach and bad faith business practices, Wachovia demanded Mrs. Backstrom pay more than $17,000 to bring her loan current or face loss of her home through foreclosure. Mrs.

Backstrom under duress and undue influence borrowed the money from her 401K to pay Wachovia, although Mrs. Backstroms situation was a direct result of Wachovias breach of contract. 86. Such promises, agreements made by Wachovia was done with intent to induce

detrimental reliance on the part of Mrs. Backstrom, which not only caused her to go into
3

Attachments

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foreclosure but caused her credited rating to be negatively impacted, incur additional monetary loss in upwards of $60,000, and severe emotional trauma.

COUNT VII. (Fraud)

(As Against Defendants)

88.

Plaintiffs re-allege and incorporate Paragraphs and General Allegations as though such

have been fully set forth herein. 89. Plaintiffs allege that Defendants, and each of them, were engaged in an illegal scheme the

purpose of which was to execute loans secured by real property in order to make commissions, kick-backs, illegal undisclosed yield spread premiums, and undisclosed profits by the sale of any instruments arising out of the transaction. Plaintiffs allege that Defendants, and each of them, have represented to plaintiff and to third parties that they were the owner of the Trust Deed and Note as either the Trustee or the Beneficiary regarding Plaintiffs real property. Based on this representation they caused a Notice of Default to be issued and recorded without disclosing their true role, and thereafter a notice of intent to foreclose and finally they executed a foreclosure, which was completed, permanently affecting Plaintiff right, title and interest in the Subject Property. In fact, Plaintiff alleges that the promissory note which was executed by Plaintiff and which initially formed a basis of a security interest in the subject property, was assigned in violation of Civil Code section 2932.5 et seq., and as such the promissory note was rendered as non-negotiable and no power of sale was conveyed with the note at the time of the assignment,

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and therefore, Defendants, and each of them, had no lawful security interest in the subject property. 90. Plaintiffs allege that based upon the foregoing representations of Defendants, and each of

them, Plaintiffs did in fact repose their trust in the representations of Defendants, and each of them, and that such trust was reasonable. 91. Plaintiffs allege that Defendant, and each of them, presented a loan to Plaintiffs whereby

their represented that they did qualify for underwriting, and that the loan was within Plaintiffs personal financial needs and limitations given the confidential financial information that Plaintiffs shared with Defendants. Defendant verbally promised a modification and subsequently Rejected said offer after Plaintiff fully complied with Defendants requests for financial information. 92. Plaintiffs allege that Defendants, and each of them, had a duty to disclose the true cost of

the loan which was made to Plaintiffs, and the fact that Plaintiffs could not afford the loan in the first instance. 93. Plaintiff acquired the foregoing property by virtue of the said funding based on the

representations of Defendants, and each of them, that the loan was the best they could obtain for him, and that the loan was well within Plaintiffs financial needs and limitations. 94. Plaintiffs are informed and believe and thereupon allege that Defendants, and each of

them, represented to Plaintiffs that Defendants, and each of them, were working for the benefit of Plaintiffs and in their particular best interest to obtain for them the best loan and at the best rates available.

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95.

That at the time Defendants, and each of them, made the foregoing false representations

to Plaintiffs they knew that they were untrue and that these representations were material representations. 96. That the foregoing representations were made in order to induce Plaintiffs to act on and

take the said loan(s) in order for both defendants to make a substantial amount of money thereby and there from. 97. 98. Plaintiffs were induced to and did take this loan based on the said representations. That Plaintiffs were induced to rely and did rely on the representations of these

Defendants through deception and their reliance was justified, as they believed that Defendants, and each of them, working for them and in their best interest. Defendant verbally promised a modification and subsequently Rejected said offer after Plaintiff fully complied with Defendant Bank1s requests for financial information. 99. That by virtue of Plaintiffs reliance and the increased interest they made to pay, they

have been damaged in the loss of their good credit and a higher payment and are now being involved in litigation that they did not bargain for, all to their damage and injury. 100. Plaintiffs have relied on the representations of this Defendant and because of this reliance

has made various moves to avoid the foreclosure all to no avail, while defendants knew all the time that they were deceiving Plaintiffs. 101. Plaintiffs reliance was justified based upon the false representations of Defendants, and

each of them, and had no reason to believe that a party representing a bank would go to such lengths to deceive and to convert Plaintiffs property.

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102.

Plaintiffs allege that Defendants, and each of them, knew at the time they made these

representations to Plaintiffs that they were untrue, and defendants knew at the time that they were attempting to foreclose on Plaintiffs Trust Deed and note that they had no right to do so. 103. Plaintiffs allege Defendants, and each of them, by said fraudulent scheme intentionally

and fraudulently intended to convert Plaintiffs right, title and interest to their property, and any equity therein. 104. Plaintiffs allege that due to their reliance on Defendants representations they have been

damaged in an amount that currently exceeds $100,000 and will suffer additionally costs of moving out of Plaintiffs property and the costs to relocate back to the subject Property. 105. Additionally, Plaintiffs have been made to suffer deep and severe emotional distress

mortification, anxiety and humiliation all to their damage and injury in an amount the totality of which has not yet been fully ascertained, but in no event less than the jurisdiction limitations of this court. COUNT VII. (Intentional Misrepresentation) 106. Plaintiffs repeat and reallege each and every allegation of paragraphs 1 through 105,

inclusive, as though fully set forth herein. 107. Defendant, by and through its authorized representatives, as identified above, falsely,

fraudulently and repeatedly represented to Plaintiff that Wachovia would be granting Plaintiff a loan modification with deferment of some of their principle balance and that Plaintiffs payments

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would be suspended for two months. These representations were made on numerous occasions by Wachovia representatives in several conversations 108. The representations made by defendants were in fact false and concealed to string

Plaintiffs along while they foreclosed on their property. 109. When defendants, by and through its authorized representatives, made the representations

to Plaintiffs, they knew them to be false and/or made them recklessly and without regard for their truth. Moreover, defendants made these representations with the intent to induce Plaintiffs into not acting to redeem their home from foreclosure proceedings, and in reliance thereon Plaintiffs foregone obtaining third party financing. 110. As a further direct and proximate result of the negligent conduct of Wachovia and Wells

Fargo, Plaintiff was damaged as is described above in an amount according to proof. 111. Moreover. Defendants acts were committed fraudulently, maliciously and/or

oppressively with the intent of injuring Plaintiffs, and/or with a willful and conscious disregard of Plaintiffs rights. Because these acts were carried out by Defendant in a despicable,

deliberate and intentional manner, Plaintiffs are entitled to recover punitive damages in a sum sufficient to punish and deter future such conduct.

COUNT VIII. (Negligent Misrepresentation) 112. Plaintiffs repeat and reallege each and every allegation of paragraphs 1 through 111,

inclusive, as though fully set forth herein.

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113.

Defendants by and through its authorized representatives, as identified above, falsely,

fraudulently and repeatedly represented to Plaintiff that Wachovia would be granting Plaintiff a loan modification, suspend her payment for two months and grant her a deferment of some of their principle balance. These representations were made on numerous occasions by Wachovia and Wells Fargo representatives in several conversations 114. The representations made by Wachovia and Wells Fargo were in fact false and concealed

to string Plaintiffs along while they foreclosed on their property. 115. When Wachovia and Wells Fargo, by and through its authorized representatives, made

the representations to Plaintiffs, they knew them to be false and/or made them recklessly and without regard for their truth. Moreover, Wachovia made these representations with the intent to induce Plaintiffs into not acting to redeem their home from foreclosure proceedings, and in reliance thereon Plaintiffs foregone obtaining third party financing. 116. Plaintiffs reliance on Defendants representations were justified because a loan

modification would be decided solely by Wachovia and because the representations were repeated several times by Wachovia representatives. 117. As a further direct and proximate result of the negligent conduct of Wachovia, Plaintiffs

were damaged as is described above in an amount according to proof. 118. Moreover. Defendants acts were committed fraudulently, maliciously and/or

oppressively with the intent of injuring Plaintiffs, and/or with a willful and conscious disregard of Plaintiffs rights. Because these acts were carried out by Defendant in a despicable,

deliberate and intentional manner, Plaintiffs are entitled to recover punitive damages in a sum sufficient to punish and deter future such conduct.
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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 28 120. 119.

COUNT IX. VIOLATION OF UNRUH CIVIL RIGHTS ACT CAL. CIVIL CODE 51 Plaintiff repeats and realleges each and every allegation contained in the above

paragraphs and incorporates the same as though fully set forth at length. On information and belief, the conduct of Defendants violated California Civil Code 51

in that Defendants discriminated against, boycotted, or blacklisted, refused to lend to, contract with, or refinance, or offered significantly less worthy credit to the Plaintiff based on his race, color, religion, ancestry, and national origin. 121. As a direct and legal result of Defendants' violation of Civil Code 51 and other state

constitutional rights, Plaintiff suffered violations of her civil rights. 122. As a direct, foreseeable, and proximate result of said wrongful acts by Defendants,

Plaintiff suffered incidental and consequential damages and losses, all in an amount to be proven at time of trial. Plaintiff claims such amount as damages together with prejudgment interest pursuant to Civil Code 3287 and any other provision of law providing for prejudgment interest. 123. As a further direct, foreseeable, and proximate result of said wrongful acts by

Defendants, Plaintiff suffered and will continue to suffer humiliation, shame, despair, embarrassment, depression, and mental pain and anguish, all to Plaintiff's damage in an amount to be proven at time of trial.

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124.

As a further direct, foreseeable, and proximate result of said wrongful acts by

Defendants, Plaintiff has incurred attorneys' fees in an amount to be determined, for which Plaintiff claims a sum to be established according to proof. 125. The conduct of Defendants and their agents and employees as described herein was

oppressive, fraudulent and malicious, done in conscious disregard of Plaintiffs rights, and done by managerial employees of Defendants, and each of them. Plaintiff is thereby entitled to an award of punitive damages against Defendants, in an amount appropriate to punish and make an example of Defendants, and in an amount to conform to proof. 126. By virtue of the provisions of Civil Code 52.1, Plaintiff is entitled to an award of

reasonable attorneys' fees and costs.

COUNT X. QUIET TITLE (Cal. Civ. P. 760.010-764.080) 127. The allegations contained in all previously numbered paragraphs are realleged and

incorporated herein by reference. 128. The Plaintiffs are the owners of the PROPERTY, are currently in possession of the

PROPERTY and are entitled to possession of the PROPERTY. 129. The Defendant claims an adverse interest in the PROPERTY owned by the Plaintiffs, but

such claims are without right, the Defendant has no right, title, stake, lien, or interest in the PROPERTY.

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130.

Because the plaintiffs have properly exercised their rescission rights under the Foreign

Language Contract Act, any debt owed by the plaintiffs to the Defendant is an unsecured debt and does not impair title. There is no debt that impairs title to the PROPERTY. 131. Plaintiff seeks a determination of its fee simple title in this action as against the

Defendant as of the date that this complaint is filed.

COUNT XI. CANCELLATION OF INSTRUMENT 132. 133. Plaintiff incorporates all preceding paragraphs as though fully set forth herein. As a result of the wrongful and/or illegal acts of Defendants BEARS STEARN and

DOES 1-10, the instrument purported to be a valid Trustees Deed, or other such instrument of transfer are invalid. The alleged Trustee Sale is invalid. 134. This Notice of Default, Notice of Trustee Sale and potentially any Trustees Deed or

other such instrument purporting to transfer title of the Subject Property from Plaintiff to Defendants is invalid as an instrument of transfer. 135. Plaintiffs will suffer further serious injury in that Defendants or their representatives,

agents, or assignees will eject Plaintiffs and their family from their home, and/or transfer title of the Subject Property to a third party if the invalid instrument is allowed to stand. 136. Wherefore, Plaintiffs pray for judgment and relief as more fully set forth below.

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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 28 144. 139. 137. herein. 138.

COUNT XI. RECESSION IN EQUITY Plaintiff realleges and incorporates by reference the preceding allegations contained

Based on the above-referenced facts, the subject loan transactions are void and voidable. The subject loan transactions are unlawful for causes which do not appear in its terms

and conditions, and the parties are not equally at fault, pursuant to California Civil Code sections 1689(b)(5), 2924 and 1632. 140. The public interest will be prejudiced by permitting the subject transactions to stand

pursuant to California Civil Code 1689(b)( 6). 141. Plaintiff has offered a loan modification proposal to Defendants as substitute tender and

offer to do equity. 142. 143. Due to the current economic recession, restoration or offer to restore is not essential. Plaintiff would have been above to rescind this loan under the Truth in Lending Act, but

for the statutory limitations. Therefore, Plaintiff prays for rescission in equity.

COUNT XII.

VIOLATION OF EQUAL CREDIT OPPORTUNITY ACT [15 U.S.C. 1691] Plaintiff repeats and realleges each and every allegation contained in the above

paragraphs and incorporates the same as though fully set forth at length.

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145.

This cause of action is brought pursuant to 15 U.S.C. 1691, which makes it unlawful for

any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction, on the basis of race, color, religion, national origin, sex, marital status, or age. 146. Plaintiff is informed and believes and based thereon alleges that at all times herein

mentioned Defendants have engaged in practices that are unlawful under the Act, including but not limited to providing an exorbitant loan amount to Plaintiff, with a limited and/or inconsistent income, from a minority background, with no prior home buying experience, and/or offering a loan to Plaintiff that is significantly more costly than those offered to others of a different race, ethnicity or national origin. 147. The Defendants preyed upon this minority, and with reckless disregard to how Plaintiff

could make payments without default, provided Plaintiff with a higher cost loan that he/she should have never qualified for, therefore getting him/her into a deep financial mess which he/she may not have ever been in had the Defendants done ample due diligence and concluded that he/she should not qualify for such financing on such loan amount. 148. Plaintiff seeks full compensation for the discriminatory acts he/she has suffered.

As a direct, foreseeable, and proximate result of said wrongful acts by Defendants, Plaintiff suffered and will continue to suffer humiliation, shame, despair, embarrassment, depression, and mental pain and anguish, all to Plaintiffs in an amount to be proven at time of trial. 149. As a further direct, foreseeable, and proximate result of said wrongful acts by

Defendants, Plaintiff has incurred attorneys' fees in an amount to be determined, for which Plaintiff claims a sum to be established according to proof.

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150.

The conduct of Defendants and their agents and employees as described herein was

oppressive, fraudulent and malicious, done in conscious disregard of Plaintiffs rights, and done by managerial employees of Defendants. Plaintiff is thereby entitled to an award of punitive damages against Defendants, in an amount appropriate to punish and make an example of Defendants, and in an amount to conform to proof. WHEREFORE, premises considered, Plaintiffs pray for all relief in law and in equity to which they may show themselves entitled, for compensatory damages, including all reasonable fees, costs and for all relief the Court may deem just. Date: June , 2011 _________________________________ TINA BACKSTROM

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Superior Court Central Los Angeles