Articles Posted in real estate law

A California mortgage lender does not owe fiduciary duty to a borrower; a mortgage broker does. The difference is substantial, and a loan officer in Ventura County learned the hard way. A fiduciary duty is a duty of both loyalty and good faith.

Borrower Tonya contacted loan officer Anthony in response to an advertisement. She had existing first & second loans, and wanted a home equity loan (HELOC). Anthony told her could shop the loan. However, he later said she did not qualify for a HELOC because her credit scores were too low. He said he had ‘shopped’ it with more then one lender, and that they looked at every lender that offered a HELOC that they were able to process. (Here’s a key to the story- this was to be a NO DOCS loan). He recommended refinancing into a new $700,000 first, with an interest margin of 3.85 over the indexed rate, which she did. It was agreed that there would not be a prepayment penalty, but one got slipped in on a rider, a surprise every experienced Sacramento Real Estate Attorney has seen in their practice before.

Eventually Tonya got wise and sued. Her expert testified that the interest she paid was astronomical, and she could have obtained a loan with a much lower rate, the present value of the difference being $72,187.17. Plus there would be no repayment penalty. Now she cannot refinance because she cannot provide documentation of income- she needs a no docs loan, but no one does that anymore!

A spite fence is any fence or barrier intended to annoy the neighbor, and serves no purpose to the builder. In California they are governed by Civil Code Section 841.4. The most famous spite fence on California real estate was Charles Crocker’s 40 footer on Nob Hill in 1879.

The statute includes any “fence or structure…;” does that include trees or vegetation? In the California case of Wilson v. Handley the court looked at the purpose of the law ,which was to prevent what would otherwise be a lawful practice of building or maintaining an unnecessarily high barrier on their property line. It concluded that a row of trees planted on or near the boundary line between adjoining parcels of land can be a “fence or other structure in the nature of a fence.” Other decisions have found sheds or other building to fit the requirements.

In the recent California decision of Vanderpol v. Starr the jury intended to rule for the plaintiffs, but there was a problem with the special verdict forms. The Carlsbad, California defendants had tall trees that blocked the neighbors’ view of the ocean. The jury found that:

A Preliminary Title Report (“Prelim”), issued by a title company before issuing title insurance, has long been held by the courts as only an offer to provide insurance. The Prelim is not a contract itself, nor is it something which can be relied on.

The Buyers were purchasing property in Solano County. The Prelim identified it by two tax assessor parcel numbers, as well as a legal description. However, the final title insurance policy identified the property by the legal description, but did not reference the parcel numbers. A map was attached to the final policy which depicted the two parcels.

The grant deed which was recorded described only one of the parcels. After the sale, the County tax Assessor assessed the new owners for both parcels. Years later, a neighbor built on one of the parcels, and the Buyers brought an action for trespass. They ultimately figured out that the Buyer did not own the 2nd parcel, so the Buyer made a claim on his title policy, which was denied. The Title Company pointed to the final Policy, which was for only one parcel.

Fannie & Freddy were given a blank check by the US Treasury at the end of the financial crisis. As reported here, they are using that money to buy mortgages from Wall Street. These are bad loans sheets, probably at inflated prices. This is what “Tarp” was supposed to do, but now it is out of the public eye. The taxpayers are funding this program , out of the public eye.

Meanwhile, Treasury is set to announce a plan to deal with Fannie & Freddie, possibly reducing their role in the housing finance system. The purpose of these organizations was to make money available for homeowners, not holding loans for their own account; but that’s what made money for the management. Now that the government owns them, they are money launderers. Their current role is very cozy for Treasury.