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California court exposes mistreatment of foreclosure victims (and it’s only the beginning)

Earlier this week, the California Supreme Court unanimously ruled all in favor of a fraudulently foreclosed-upon homeowner. The ruling will hopefully serve as a wake-up call to state and federal prosecutors that mortgage companies continue using false documents to evict home owners every day.

The California Supreme Court has unanimously ruled in favor of a fraudulently foreclosed-upon homeowner. The ruling will hopefully serve as a wake-up call to state and federal prosecutors that mortgage companies continue using false documents to evict home owners every day.

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Into the mortgage pool

In this case, Yvanova v. New Century Mortgage Corporation, Tsvetana Yvanova bought a $483,000 mortgage in 2006 from New Century.

Unfortunately, the business went bankrupt in 2007. Approximately four years later, in December 2011, the now-bankrupt New Century managed to transfer the mortgage to a trust, owned by Western Progressive. Yvanova’s was just one of thousands of pooled mortgages that had created mortgage-backed securities. The only catch is that, by law, any mortgages placed in that pool had to be put there before January 27, 2007.

“Injurious invasion of legal rights”

What’s more is that Western Progressive, the trustee, foreclosed on Yvanova and sold her house at auction in September 2012. Yvanova later argued the foreclosure was illegal because a bankrupt company (New Century) couldn’t transfer the deed of trust.

Furthermore, because the trust had closed to new loans in 2007, four years before the transfer was executed, the assignment document was false and the foreclosure void.

The case went all the way to California’s Supreme Court and they supported action for wrongful foreclosure. While the court didn’t rule on the validity of the assignment itself in the case, it did establish that if a wrongful foreclosure was executed with false documents, borrowers have a chance to receive compensation.

The justices wrote, “A homeowner who has been foreclosed on by one with no right to do so has suffered an injurious invasion of his or her legal rights at the foreclosing entity’s hands.”

False document scandal only just begun

The case sends a powerful signal from the nation’s biggest state that the massive false document scandal, first discovered nearly a decade ago, is not over. The case further highlights the problem that few foreclosure cases are ever challenged because homeowners just don’t have the resources to go up against these large financial institutions in court.

What it comes down to is that only attorneys general have the ability to protect the public from false foreclosure documents on a wide scale.

#WrongfulForeclosure

Written By

Nichole earned a Master's in Sociology from Texas State University and has publications in peer-reviewed journals. She has spent her career in tech and advertising. Her writing interests include the intersection of tech and society. She is currently pursuing her PhD in Communication and Media Studies at Murdoch University.

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