Bank of America Gets Justice
Late last month the 2nd U.S. Circuit Court of Appeals in New York reversed a jury award of $1.27 billion previously obtained by the United States Department of Justice pursuant to a lawsuit filed under the Financial Institutions Reform, Recovery and Enforcement Act of 1989. The lawsuit accused Bank of America of mortgage fraud which led to the 2008 financial crisis.
The decision generated major setbacks for the U.S. Justice Department, as the case is one of America's largest government trial cases involving the U.S. housing meltdown and financial crisis. The Justice Department argued Countrywide, which was bought by Bank of America in 2008, sold thousands of fraudulent loans to Fannie Mae and Freddie Mac, and that its policies and procedures of rewarding employees for processing loans expeditiously, rather than effectively screening borrowers, led to selling bad loans through its 'Hustle' program.
The Court ruled 3-0 that there was a lack of proof under federal fraud statues to substantiate fraudulent intent by Bank of America; holding instead that the most that could be asserted was that that Bank of America violated contracts to sell investment-quality loans. Without proving the financial institution intentionally deceived, schemed, and defrauded, the appellate court said that the conviction under the FIRREA could not be upheld.
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Case of the Month
Almanor Lakeside Villas Owners Association v. Carson
Almanor Lakeside Villa Owners Association ("HOA") filed a lawsuit in Santa Clara County Superior Court against property owners, James and Kimberly Carson ("Carsons"), after they rented out their properties as short term vacation rentals. The subdivision in question was originally designed with several lots zoned as commercial property, due to the preexisting hunting and fishing lodge on the premises, so the Carsons believed it unlawful and unfair for the HOA to implement such restrictions on their commercially zoned properties, and sought to invalidate the Covenants, Conditions, and Restrictions ("CC&Rs") as enforced by the HOA by filing a cross-complaint arguing their properties were exempt.
At the time the Carsons purchased their properties, the CC&Rs stipulated that certain properties must conform to a minimum 30-day rental period, and prohibited transient or hotel usage. The rules were not usually upheld until 2009 when a new board began administering the HOA. The previous board had allowed the behavior and due to the zoning of the property, the Carsons believed they were exempt from this restriction in the CC&Rs. Based thereon the Carsons filed a cross-complaint against the HOA.
The trial court concluded that the 30-day minimum rental restriction clause imposed by the CC&Rs conflicted with the clause allowing the Carsons to use their lots for commercial purposes, lodging inclusive, but further noted the HOA maintained the right to impose reasonable use restrictions on the Carsons lots. In ruling for the HOA relative to the Carsons cross-complaint, the trial court reduced the $19,979.97 in damages claimed by the HOA to $6,620.00. But, the trial court held that the HOA was the prevailing party to the suit; thereby awarding HOA attorney's fees of $101,803.15 payable by the Carsons, as prevailing parties may win legal fees if a contract and law permits.
The Carsons appealed, and the Court of Appeals upheld the lower court's rulings in favor of the HOA . As such, the Carsons will now also be saddled with paying for the HOA's costs and attorney's fees for the appeal.
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Anyone who rented an apartment as a teenager remembers the excitement of moving in, especially when you get a discount for cleaning the apartment first. Well, these teens arrived ready to clean their newly rented apartment only to find a gruesome discovery. Not only did they experience an extremely foul smell, but a foot fell out of a blanket that had been covering a decomposed body. Even more peculiar, the teens uncovered a note stating, "Sorry for the smell."
Neighbors had complained about the smell, but figured it was due to a dead stray cat in the building. The body turned out to be 64-year-old Sidney Harris, a quiet ex con, who according to neighbors resided at the property for a number of years.
Harris was found wrapped in blankets having died from multiple skull fractures. The death is considered a homicide. It was unclear how long the body had been in the apartment.
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Upcoming Speaking Engagements
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June 12, 2016 - The Escrow Institute of California - Conference
June 14, 2016 - North San Diego County Escrow Association - Dinner Meeting
June 15, 2016 - Alameda County Escrow Association - Dinner Meeting
For inquiries or questions about any of these events, please email [email protected].
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STAY CONNECTED
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