Country Wide BofA Feb 2011 Complaint

Philip A.
Kramer SB# 113969

1 Kramer & Kaslow
23901 Calabasas Rd # 2010
2 Calabasas, CA 91302-3307
(818) 224-3900
3
Attorney for Plaintiffs
4
5 SUPERIOR COURT OF THE STATE OF CALIFORNIA
6 FOR THE COUNTY OF ORANGE
7
8 DANIEL MAXAM, an individual; CARA Case No.:
9 MCVEY, an individual; DANIEL
MELENDEZ, an individual; GERALDINE COMPLAINT FOR:
10 MOECKEL, an individual; EDGAR
MORALES, an individual; DINAH 1. FRAUDULENT CONCEALMENT
11 MOREAU, an individual; KEN MORRIS, an [VIOLATION OF CAL. CIVIL CODE
individual; ALAN MOSLEY, an individual; §§ 1572, 1709 AND 1710];
12
Summons Issued
SOSTENES MURGA, an individual; LEE E. 2. INTENTIONAL

13 NOBLE, an individual; JOSE NUNEZ, an MISREPRESENTATION
individual; DONALD OKADA, an individual; [VIOLATION OF CAL. CIVIL CODE
14 JESSE OSBORNE, an individual; LUIS §§ 1572, 1709 AND 1710];
15 PAGES, an individual; MARCELINO 3. NEGLIGENT
PALISOC, an individual; CLAYTON MISREPRESENTATION
16 PELLETIER, an individual; MITCH [VIOLATION OF CAL. CIVIL CODE
PERERIA, an individual; RICHARD §§ 1572, 1709 AND 1710];
17 PILLSBURY, an individual; HAYDEN
4. INJUNCTIVE RELIEF FOR
18 POGNI, an individual; ROGER PREBLE, an VIOLATION OF CIVIL CODE
individual; CARLOS QUINO, an individual; SECTION 2923.5;
19 LORETTA RAYA, an individual; RHONDA
CHISHOLM, an individual; DANIEL 5. UNFAIR COMPETITION
20 RICHARD, an individual; ROBERT [VIOLATIONS OF CAL. BUS. &
PROF. CODE §17200 ET SEQ.]
21 GILBERT, an individual; AUDRA
RODRIGUEZ, an individual; CESAR
22 RODRIGUEZ, an individual; FRANK [JURY TRIAL DEMANDED]
ROPER, an individual; HOWARD
23
ROSENTHAL, an individual; ROGER
24 ROTTLER, an individual; ANGELA
SANCHEZ, an individual; SELINA WILDER, DEPT CX101
25 an individual; SHARON KING, an individual;
26 JEREMY SHEAFFER, an individual; DEBRA
SIMPSON, an individual; NATHAN
27 SKIVER, an individual; GUILLERMO
TABARES, an individual; STEPHEN
28 TEICHMAN, an individual; FATIMA
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COMPLAINT
TENDERRO, an individual; TISHARRA
1 SHREIBER, an individual; TODD GAGNON,
2 an individual; JORGE TORRES, an
individual; HWANG TRAN, an individual;
3 RONALD TURNER, an individual;
ROSEMARY TURNER, an individual; JOHN
4
URTIAGA, an individual; THOMAS VAN
5 DUSEN, an individual; NELDA VARGAS, an
individual; LINDA VULAJ, an individual;
6 RIK WAHLRAB, an individual; PHILIP
7 WARMANEN, an individual; CHRISTIAN
WELLMAN, an individual; MARK
8 WHITEHEAD, an individual; DARNELL
WYRICK, an individual; ALEJANDRO
9 ALARCON, an individual; JULIE
10 ANDERSON, an individual; LYNETTE
ASTORS, an individual; BRUCE BARRETT,
11 an individual; BRANSTON BAUDER, an
individual; BRETT BORBA, an individual;
12 BUNNY BOWERS, an individual; EDDIE
13 BRANDES, an individual; ROY BREWER,
an individual; BRAD J. BRITTON, an
14 individual; HENRY BURGESS, an individual;
JOSE CABANAS, an individual; ELVIRA
15 CADENAS, an individual; MARIA
16 CAMARILLO, an individual; CHRISTINE
CARPENTER, an individual; ROBERT
17 CASTORE, an individual; JAMES CHAFFIN,
an individual; LISA DAGGS-CHARETTE, an
18 individual; CHRIS CLARK, an individual;
19 CHRISTINE JI, an individual; MICHAEL
COLLIGAN, an individual; SEANNA
20 COLLIGAN, an individual; K.C.
CRANDALL, an individual; ANTONIO
21 CRUZ, an individual; COSME CRUZ, an
22 individual; TUAN HAI DANG, an individual;
STEPHANIE DIAMOND, an individual;
23 DANG DIEP, an individual; DOLORES
SABLAN, an individual; ROBERT DUBOIS,
24
an individual; TERRI EADENS, an individual;
25 EDITHA RESTAURO, an individual; KIRA
EDWARDS, an individual; EVELYN
26 SISTRUNK, an individual; ROSIBEL
27 FADUL, an individual; ENIO FONTANELLI,
an individual; DOUGLAS FORE, an
28 individual; WILLIAM FOSTER, an
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COMPLAINT
individual; TRINA FRAZIER, an individual;
1 GENARO MENJIVAR, an individual;
2 GEORGE OLSEN, an individual; PAULETTE
OLSEN, an individual; GLEN LEMMON, an
3 individual; RICARDO GONZALEZ
TAFOLLA, an individual; LEOPOLDO
4
GONZALEZ, an individual; STEPHANIE
5 GOTTERO, an individual; KARLA
GOULART, an individual; SALVADOR
6 GUTIERREZ, an individual; JACINTO
7 GUZMAN, an individual; OFELIA
HERNANDEZ, an individual; TIMOTHY
8 INFANGER, an individual; BENJAMIN
INGRAM, an individual; TAMMY
9 JACKSON, an individual; LYNETTE
10 JAMORA, an individual; MARIA JIMENEZ,
an individual; JOE BARELA, an individual;
11 JOHN ALLEN, an individual; JOHN
MORENO, an individual; LAVANCE
12 JOHNSON, an individual; JOSEPH
13 ELONGE-FOBIA, an individual; NARINDER
KAUR, an individual; KEITH COTANT, an
14 individual; KEVIN MCVEY, an individual;
CHRISTINA KIM, an individual; JANE
15 KOPECKY, an individual; JOSHUA
16 KREITZER, an individual; JONATHAN
LANDES, an individual; ASHLEY LARSON,
17 an individual; LEVON LATCHINIAN; an
individual; OLIVER LAZARO, an individual;
18 DANIEL LERTIQUE, an individual; KERRIE
19 LLOYD, an individual; CYNTHIA LUNA, an
individual; LYN HENLEY, an individual;
20 MADONA OANDASAN, an individual;
JANA MALONE, an individual; PIERRE
21 MARCOTTE, an individual; MARLENE
22 GONZALEZ, an individual; NAOMI
MARTINSEN, an individual; MARVIN
23 MENDONCA, an individual; MAZIAR
ABRISHAMIAN, an individual; JULIE
24
BLACKLEY, an individual; DUANE
25 BLEDSOE, an individual; MARK CAIRA, an
individual; DAVID DELGADO, an
26 individual; CLYDE DODSON, an individual;
27 EVELYN HERRERA, an individual;
BACHHONG KHONG, an individual; LOUIE
28 LEWIS, an individual; JOEL LIEBKE, an
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COMPLAINT
individual; LARRY LUNSFORD, an
1 individual; DARYL MCCANCE, an
2 individual; EDWARD SANCHEZ, an
individual; CONNIE SCHULENBERG, an
3 individual; RICHARD VAN DER WORP, an
individual; FRED WHITE, an individual;
4
PETRE MILE, an individual; FRANZ BELL,
5 an individual; TIMOTHY SMITH, an
individual; GILBERT SIGALA, an individual;
6 ELENO DE LA CRUZ, an individual;
7 NAOMI TROWER, an individual;
SALVACION AQUINO, an individual;
8 MANUEL ARECHIGA, an individual;
AMRIK BAJWA, an individual; ROSARIO
9 BARA, an individual; OLGA BARDALES, an
10 individual; GIL BECKENSTEIN, an
individual; RHONDA BOGGAN, an
11 individual; RANDY BROOKS, an individual;
HAROLD BYRD, an individual; VITO
12 CALABRESE, an individual; EVERADO
13 CASTRO, an individual; FRANCISCO
CEBALLOS, an individual; CYNTHIA
14 CHANG, an individual; ANJA CHRISTIE-
JOHNSON, an individual; GRACIELA
15 CONTRERAS, an individual; ANIBAL
16 CORDERO, an individual; OTTO RENE DE
LEON, an individual; JOSE DELGADO, an
17 individual; ALICIA DIAZ, an individual;
DAVID DILLON, an individual; JOHN
18 DONAHUE, an individual; JULIO DORADO,
19 an individual; TUONG DU, an individual;
ELLA FERNANDEZ, an individual; DAWN
20 LENTZ FLOWERS, an individual; CHRISTIE
FRANZ, an individual; SUSAN
21 GALLAGHER, an individual; RUDY
22 GARCIA, an individual; ADELA GARCIA,
an individual; CINDY GEORGE, an
23 individual; JOERIN GEORGE, an individual;
VLADIMIR GURLOR, an individual;
24
RICHARD HALLEY, an individual;
25 CYNTIHIA HALLEY, an individual;
CARMELA HERBERT, an individual;
26 CHONTIA HOLMES, an individual;
27 DARRELL HOOVER, an individual;
DONALD JENKS, an individual; SHELDON
28 KAMEN, an individual; SHAWN
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COMPLAINT
KEEBAUGH, an individual; TAMMY
1 KEMMERER, an individual; JANE KIM, an
2 individual; LOUIS KLEIN, an individual;
GERALD KRAMER, an individual; JERRY
3 LEE, an individual; BRIAN LOGAN, an
individual; RONNIE LYLES, an individual;
4
PAUL MAILE, an individual; POLINA
5 MANYIKA, an individual; HASMIK
MEKHITARIA, an individual; DONYANN
6 MORGAN, an individual; ROBERT MORSE,
7 an individual; JOSEPH NUGENT, an
individual; DOUGLAS POWERS, an
8 individual; BETTE LOU PRENTICE, an
individual; DIONICIO QUINONEZ, an
9 individual; THERESA REAL, an individual;
10 YEVETTE REEVES, an individual; DENISE
REGISTER, an individual; JOEY RIEDEL, an
11 individual; ENRIQUE ROMERO, an
individual; CONNIE ROOKER, an individual;
12 RODNEY SADLER, an individual; HUGO
13 SALAZAR, an individual; RUBEN
SANTIAGO, an individual; YADIRA
14 SANTILLAN, an individual; NAGINDER
SINGH, an individual; JAMES SPELLER, an
15 individual; ANN TERRILL, an individual;
16 WILLIAM THOMAS, an individual; HAI V.
TRAN, an individual; SANDRA VALDEZ, an
17 individual; TANYA VEGA, an individual;
GLENN WARNE, an individual; CHERYL
18 WELCH, an individual; SCOTT WETZEL, an
19 individual; MICHAEL WIEDERHOLD, an
individual; BERNARDO ZAVALA, an
20 individual; JAMES PATE, an individual;
ANGEL ARIAS, an individual; NEIL
21 WHITE, an individual; ACHINI WHITE, an
22 individual; and others similarly situated named
herein as ROES 1-1000, inclusive,
23
Plaintiffs,
24
25
vs.
26
27
28
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COMPLAINT
BANK OF AMERICA, N.A., a Delaware
1 corporation; COUNTRWIDE FINANCIAL
2 CORPORATION, a Delaware corporation,
dba BAC HOME LOANS SERVICING;
3 COUNTRYWIDE HOME LOANS, INC., a
New York corporation; RECONTRUST
4
COMPANY, N.A., a California entity form
5 unknown; CTC REAL ESTATE SERVICES,
a California corporation; and DOES 1 through
6 1000, inclusive.
7
Defendants.
8
9
10
11
Plaintiffs, and each of them, hereby demand a jury trial and allege as follows.
12
13
INTRODUCTION AND BACKGROUND
14
OF THE MASTER SCHEME OF DECEPTION AND FRAUD
15
1. This lawsuit arises from: (1) Defendants‟ deception in inducing Plaintiffs to enter
16
into mortgages from 2003 through 2008 with the Countrywide Defendants (defined below in
17
Paragraph 8); (2) Defendants‟ breach of Plaintiffs‟ Constitutionally and statutorily protected
18
rights of privacy; and (3) Defendants‟ continuing tortious conduct intended to deprive Plaintiffs
19
of their rights and remedies for the foregoing acts, described below.
20
2. This action seeks remedies for the foregoing improper activities, including a
21
massive fraud perpetrated upon Plaintiffs and other borrowers by the Countrywide Defendants
22
that devastated the values of their residences, in most cases resulting in Plaintiffs‟ loss of all or
23
substantially all of their net worth.
24
3. Defendant Countrywide Financial Corporation (“Countrywide”) was among the
25
leading providers of mortgages in California during all times relevant to this Complaint. By
26
2005, Countrywide was the largest U.S. mortgage lender in the United States, originating over
27
$490 billion in mortgage loans in 2005, over $450 billion in 2006, and over $408 billion in 2007.
28
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COMPLAINT
1 4. In 2007, Defendant Bank of America (“BofA”) commenced negotiations to
2 acquire Countrywide. By late 2007, BofA began merging its operations with Countrywide and
3 adopting some of Countrywide‟s practices. From and after its acquisition of Countrywide in July
4 2008 and continuing to the present, both as a successor in interest to Countrywide and as a
5 principal, BofA has engaged in and continued the wrongful conduct complained of herein.
6 5. The fraud perpetrated by the Countrywide Defendants from 2003 through 2007,
7 including by BofA starting no later than 2007, was willful and pervasive. It begin with simple
8 greed and then accelerated when Countrywide founder and CEO Angelo Mozilo (“Mozilo”)
9 discovered that Countrywide could not sustain its business, unless it used its size and large
10 market share in California to systematically create false and inflated property appraisals
11 throughout California. Countrywide then used these false property valuations to induce
12 Plaintiffs and other borrowers into ever-larger loans on increasingly risky terms. As Mozilo
13 knew from no later than 2004, these loans were unsustainable for Countrywide and the
14 borrowers and to a certainty would result in a crash that would destroy the equity invested by
15 Plaintiffs and other Countrywide borrowers.
16 6. Hand-in-hand with its fraudulently-obtained mortgages, Mozilo and others at
17 Countrywide hatched a plan to “pool” the foregoing mortgages and sell the pools for inflated
18 value. Rapidly, these two intertwined schemes grew into a brazen plan to disregard underwriting
19 standards and fraudulently inflate property values – county-by-county, city-by-city, person-by-
20 person – in order to take business from legitimate mortgage-providers, and moved on to massive
21 securities fraud hand-in-hand with concealment from, and deception of, Plaintiffs and other
22 mortgagees on an unprecedented scale.
23 7. From as early as 2004, Countrywide‟s senior management led by Mozilo knew
24 the scheme would cause a liquidity crisis that would devastate Plaintiffs‟ home values and net
25 worth‟s. But, they did not care, because their plan was based on insider trading – pumping for as
26 long as they could and then dumping before the truth came out and Plaintiffs‟ losses were locked
27 in.
28 ///
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COMPLAINT
1 8. At the very least, at the time of entering into the notes and deeds of trust
2 referenced herein with respect to each Plaintiff, Countrywide, each Defendant originating a
3 mortgage, each Defendant in the chain of title of the foregoing mortgages and each Defendant
4 servicing the foregoing mortgages and the successors to each of the foregoing (collectively, the
5 “Countrywide Defendants”) was bound and obligated to fully and accurately disclose to each
6 borrower, including each Plaintiff herein, that the mortgage being offered to the Plaintiff was, in
7 fact, part of a massive fraud that Countrywide knew would result in the loss of the equity
8 invested by Plaintiff in his home and in severe impairment to Plaintiff‟s credit rating.1
9 9. It is now all too clear that this was the ultimate high-stakes fraudulent investment
10 scheme of the last decade. Couched in banking and securities jargon, the deceptive gamble with
11 consumers‟ primary assets – their homes – was nothing more than a financial fraud perpetrated
12 by Defendants and others on a scale never before seen. This scheme led directly to a mortgage
13 meltdown in California that was substantially worse than any economic problems facing the rest
14 of the United States. From 2008 to the present, Californians‟ home values decreased by
15 considerably more than most other areas in the United States as a direct and proximate result of
16 the Defendants‟ scheme set forth herein. The Countrywide Defendants‟ business premise was to
17 leave the borrowers, including Plaintiffs, holding the bag once Countrywide and its executives
18 had cashed in reaping huge salaries and bonuses and selling Countrywide‟s shares based on their
19 inside information, while investors were still buying the increasingly overpriced mortgage pools
20 and before the inevitable dénouement. This massive fraudulent scheme was a disaster both
21 foreseen by Countrywide and waiting to happen. Defendants knew it, and yet Defendants still
22 induced the Plaintiffs into their scheme without telling them.
23 10. As a result, Plaintiffs lost their equity in their homes, their credit ratings and
24 histories were damaged or destroyed, and Plaintiffs incurred material other costs and expenses,
25 described herein. At the same time, Defendants took from Plaintiffs and other borrowers billions
26 ///
27
1
This Complaint uses "mortgage" and "deed of trust" interchangeably. Depending upon the state and other factors,
28 a loan may be secured by either form of security instrument, the deed of trust being the customary instrument in
California.
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COMPLAINT
1 of dollars in interest payments and fees and generated billions of dollars in profits by selling their
2 loans at inflated values.
3 11. Like a drug that requires ever-higher doses to yield the same high, the fraud
4 reached its zenith – or its nadir – when Countrywide systematically destroyed California home
5 values county-by-county and then State-wide.
6 12. Then, Defendants began to use their customers‟ most private information for an
7 extra “edge.” This use of private information violated the inalienable Constitutional rights
8 accorded to all California citizens. Defendants‟ violations ranged from the disclosure of the
9 most private and confidential information of more than 2.4 million customers, to the outsourcing
10 and sale of hundreds of thousands of records to bolster their fraudulent scheme, disenfranchising
11 Californians of their Article I, § 1 inalienable rights of privacy, that went far beyond the sale of
12 Private Information disclosed in the settlement of the Kentucky class action.
13 13. When Countrywide pooled the loans it originated and sold them in secondary
14 mortgage market transactions, Countrywide recorded gains on the sales. In 2005, Countrywide
15 reported $451.6 million in pre-tax earnings from capital market sales; in 2006, it recognized
16 $553.5 million in pre-tax earnings from that activity. But, after the liquidity crisis hit, in 2007 it
17 recognized a mere $14.9 million in pre-tax earnings from that activity and reported an overall
18 pre-tax loss.
19 14. The foregoing events even to this day benefit the very people who were behind
20 the Countrywide fraud. For example, Stanford Kerlund, former president of Countrywide, left
21 Countrywide as the scheme was accelerating in late 2006. He then formed PennyMac, his
22 current business. PennyMac buys up the mortgages on which Plaintiffs and other Countrywide
23 borrowers defaulted at pennies on the dollar, repackages the mortgages and sells them for a
24 profit, thereby adding continued injury and profit to the original scheme. PennyMac‟s business
25 is supported and sanctioned by the Defendants herein.
26 15. The Defendants include some of our leading financial institutions – institutions on
27 which Plaintiffs thought they could rely, and did rely. But, they were wrong. As is clear from
28 the mounting number of federal and state enforcement actions against Defendants, it is now
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COMPLAINT
1 widely recognized that they engaged in reprehensible conduct with regard to their mortgage
2 business. Without limitation, the United States Securities and Exchange Commission (“SEC”)
3 charged Mozilo and other former senior officers of Countrywide with fraud for the securitization
4 counterpart of the fraud perpetrated on Plaintiffs; the SEC obtained a $150 million settlement
5 from BofA for fraud involving its acquisition of Merrill Lynch; the United States Federal Trade
6 Commission (“FTC”) obtained $108 million from two Countrywide mortgage servicing
7 companies to settle FTC charges that they collected excessive fees from cash-strapped borrowers
8 who were struggling to keep their homes; and New York commenced fraud proceedings against
9 the recently departed BofA CEO.
10 16. These acts continue to this day with hardball tactics and deception that continue to
11 threaten Plaintiffs‟ Constitutional rights and financial security, as well as the economic future of
12 the State of California.
13
14 THE PARTIES
15 NAMED PLAINTIFFS
16 17. Plaintiff, DANIEL MAXAM, is an individual residing in the State of California,
17 who borrowed money from Countrywide or its subsidiaries or affiliates between January 1, 2003,
18 and December 31, 2008, secured by a deed of trust on his California real estate. At all material
19 times hereto, Countrywide has acted as Servicer or some other control capacity over processing
20 the loan.
21 18. Plaintiff ALEJANDRO ALARCON, is an individual residing in the State of
22 Arizona, who borrowed money from Countrywide or its subsidiaries or affiliates between
23 January 1, 2003, and December 31, 2008, secured by a deed of trust on his Arizona real estate.
24 At all material times hereto, Countrywide has acted as Servicer or some other control capacity
25 over processing the loan.
26 19. Plaintiff JULIE ANDERSON is an individual residing in the State of Oregon,
28 and December 31, 2008, secured by a deed of trust on her Oregon real estate. At all material
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COMPLAINT
2 the loan.
3 20. Plaintiff LYNETTE ASTORS is an individual residing in the State of California,
5 and December 31, 2008, secured by a deed of trust on her California real estate. At all material
7 the loan.
8 21. Plaintiff BRUCE BARRETT is an individual residing in the State of California,
12 the loan.
13 22. Plaintiff BRANSTON BAUDER is an individual residing in the State of Nevada,
15 and December 31, 2008, secured by a deed of trust on his Nevada real estate. At all material
17 the loan.
18 23. Plaintiff BRETT BORBA is an individual residing in the State of California, who
19 borrowed money from Countrywide or its subsidiaries or affiliates between January 1, 2003, and
20 December 31, 2008, secured by a deed of trust on his California real estate. At all material times
21 hereto, Countrywide has acted as Servicer or some other control capacity over processing the
22 loan.
23 24. Plaintiff BUNNY BOWERS is an individual residing in the State of California,
26 times hereto, Countrywide acted as Servicer or some other control capacity over processing the
27 loan.
28 ///
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COMPLAINT
1 25. Plaintiff EDDIE BRANDES is an individual residing in the State of California,
4 times hereto, Countrywide acted as Servicer or some other control capacity over processing the
5 loan.
6 26. Plaintiff ROY BREWER is an individual residing in the State of Florida, who
8 December 31, 2008, secured by a deed of trust on his Florida real estate. At all material times
10 loan.
11 27. Plaintiff BRAD J. BRITTON is an individual residing in the State of California,
15 the loan.
16 28. Plaintiff HENRY BURGESS is an individual residing in the State of California,
20 the loan.
21 29. Plaintiff JOSE CABANAS is an individual residing in the State of California,
25 the loan.
26 30. Plaintiff ELVIRA CADENAS is an individual residing in the State of California,
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COMPLAINT
2 the loan.
3 31. Plaintiff MARIA CAMARILLO is an individual residing in the State of Arizona,
7 the loan.
8 32. Plaintiff CHRISTINE CARPENTER is an individual residing in the State of
9 Washington, who borrowed money from Countrywide or its subsidiaries or affiliates between
10 January 1, 2003, and December 31, 2008, secured by a deed of trust on her Washington real
11 estate. At all material times hereto, Countrywide has acted as Servicer or some other control
12 capacity over processing the loan.
13 33. Plaintiff ROBERT CASTORE is an individual residing in the State of Rhode
14 Island, who borrowed money from Countrywide or its subsidiaries or affiliates between January
15 1, 2003, and December 31, 2008, secured by a deed of trust on his Rhode Island real estate. At
16 all material times hereto, Countrywide has acted as Servicer or some other control capacity over
17 processing the loan.
18 34. Plaintiff JAMES CHAFFIN is an individual residing in the State of Ohio, who
20 December 31, 2008, secured by a deed of trust on his Ohio real estate. At all material times
22 loan.
23 35. Plaintiff LISA DAGGS-CHARETTE is an individual residing in the State of
24 California, who borrowed money from Countrywide or its subsidiaries or affiliates between
25 January 1, 2003, and December 31, 2008, secured by a deed of trust on her California real estate.
28 ///
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COMPLAINT
1 36. Plaintiff CHRIS CLARK is an individual residing in the State of California, who
5 loan.
6 37. Plaintiff CHRISTINE JI is an individual residing in the State of California, who
8 December 31, 2008, secured by a deed of trust on her California real estate. At all material times
10 loan.
11 38. Plaintiffs SEANNA COLLIGAN and MICHAEL COLLIGAN, are individuals,
12 wife and husband, residing in the State of Colorado, who borrowed money from Countrywide or
13 its subsidiaries or affiliates between January 1, 2003, and December 31, 2008, secured by a deed
14 of trust on their Colorado real estate. At all material times hereto, Countrywide has acted as
15 Servicer or some other control capacity over processing the loan.
16 39. Plaintiff K.C. CRANDALL is an individual residing in the State of California,
20 the loan.
21 40. Plaintiff ANTONIO CRUZ is an individual residing in the State of California,
25 the loan.
26 41. Plaintiff COSME CRUZ is an individual residing in the State of Illinois, who
28 December 31, 2008, secured by a deed of trust on his Illinois real estate. At all material times
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COMPLAINT
2 loan.
3 42. Plaintiff TUAN HAI DANG is an individual residing in the State of California,
7 the loan.
8 43. Plaintiff STEPHANIE DIAMOND is an individual residing in the State of Utah,
10 and December 31, 2008, secured by a deed of trust on her Utah real estate. At all material times
12 loan.
13 44. Plaintiff DIEP DANG is an individual residing in the State of California, who
17 loan.
18 45. Plaintiff DOLORES SABLAN is an individual residing in the State of California,
22 the loan.
23 46. Plaintiff ROBERT DUBOIS is an individual residing in the State of Colorado,
25 and December 31, 2008, secured by a deed of trust on his Colorado real estate. At all material
27 the loan.
28 ///
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COMPLAINT
1 47. Plaintiff TERRI EADENS is an individual residing in the State of California, who
5 loan.
6 48. Plaintiff EDITHA RESTAURO is an individual residing in the State of
11 49. Plaintiff KIRA EDWARDS is an individual residing in the State of Idaho, who
13 December 31, 2008, secured by a deed of trust on her Idaho real estate. At all material times
15 loan.
16 50. Plaintiff EVELYN SISTRUNK is an individual residing in the State of
17 Pennsylvania, who borrowed money from Countrywide or its subsidiaries or affiliates between
18 January 1, 2003, and December 31, 2008, secured by a deed of trust on her Pennsylvania real
21 51. Plaintiff ROSIBEL FADUL is an individual residing in the State of Florida, who
23 December 31, 2008, secured by a deed of trust on hER Florida real estate. At all material times
25 loan.
26 52. Plaintiff ENIO FONTANELLI is an individual residing in the State of Florida,
28 and December 31, 2008, secured by a deed of trust on his Florida real estate. At all material
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COMPLAINT
2 the loan.
3 53. Plaintiff DOUGLAS FORE is an individual residing in the State of California,
7 the loan.
8 54. Plaintiff WILLIAM FOSTER is an individual residing in the State of California,
12 the loan.
13 55. Plaintiff TRINA FRAZIER is an individual residing in the State of California,
17 the loan.
18 56. Plaintiff GENARO MENJIVAR is an individual residing in the State of Utah,
20 and December 31, 2008, secured by a deed of trust on his Utah real estate. At all material times
22 loan.
23 57. Plaintiffs GEORGE OLSEN and PAULETTE OLSEN are individuals, husband
24 and wife, residing in the State of Arizona, who borrowed money from Countrywide or its
25 subsidiaries or affiliates between January 1, 2003, and December 31, 2008, secured by a deed of
26 trust on their Arizona real estate. At all material times hereto, Countrywide has acted as Servicer
27 or some other control capacity over processing the loan.
28 ///
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COMPLAINT
1 58. Plaintiff GLEN LEMMON is an individual residing in the State of Utah, who
3 December 31, 2008, secured by a deed of trust on his Utah real estate. At all material times
5 loan.
6 59. Plaintiff RICARDO GONZALES TAFOLLA is an individual residing in the State
7 of California, who borrowed money from Countrywide or its subsidiaries or affiliates between
8 January 1, 2003, and December 31, 2008, secured by a deed of trust on his California real estate.
11 60. Plaintiff LEOPOLDO GONZALEZ is an individual residing in the State of
16 61. Plaintiff STEPHANIE GOTTERO is an individual residing in the State of
21 62. Plaintiff KARLA GOULART is an individual residing in the State of California,
25 the loan.
26 63. Plaintiff SALVADOR GUTIERREZ is an individual residing in the State of
- 18 -
COMPLAINT
3 64. Plaintiff JACINTO GUZMAN is an individual residing in the State of California,
7 the loan.
8 65. Plaintiff OFELIA HERNANDEZ is an individual residing in the State of
13 66. Plaintiff TIMOTHY INFANGER is an individual residing in the State of
18 67. Plaintiff BENJAMIN INGRAM is an individual residing in the State of
19 Washington, who borrowed money from Countrywide or its subsidiaries or affiliates between
20 January 1, 2003, and December 31, 2008, secured by a deed of trust on his Washington real
23 68. Plaintiff TAMMY JACKSON is an individual residing in the State of Florida,
25 and December 31, 2008, secured by a deed of trust on her Florida real estate. At all material
27 the loan.
28 ///
- 19 -
COMPLAINT
1 69. Plaintiff LYNETTE JAMORA is an individual residing in the State of California,
5 the loan.
6 70. Plaintiff MARIA JIMENEZ is an individual residing in the State of California,
10 the loan.
11 71. Plaintiff JOE BARELA is an individual residing in the State of New Mexico, who
13 December 31, 2008, secured by a deed of trust on his New Mexico real estate. At all material
15 the loan.
16 72. Plaintiff JOHN ALLEN is an individual residing in the State of Arizona, who
18 December 31, 2008, secured by a deed of trust on his Arizona real estate. At all material times
20 loan.
21 73. Plaintiff JOHN MORENO is an individual residing in the State of California, who
25 loan.
26 74. Plaintiff LAVANCE JOHNSON is an individual residing in the State of Virginia,
28 and December 31, 2008, secured by a deed of trust on his Virginia real estate. At all material
- 20 -
COMPLAINT
2 the loan.
3 75. Plaintiff JOSEPH ELONGE-FOBIA is an individual residing in the State of
5 January 1, 2003, and December 31, 2008, secured by a deed of trust on his Arizona real estate.
8 76. Plaintiff NARINDER KAUR is an individual residing in the State of Washington,
10 and December 31, 2008, secured by a deed of trust on her Washington real estate. At all material
12 the loan.
13 77. Plaintiff KEITH COTANT is an individual residing in the State of California,
17 the loan.
18 78. Plaintiff KEVIN MCVEY is an individual residing in the State of California, who
22 loan.
23 79. Plaintiff CHRISTINA KIM is an individual residing in the State of Nevada, who
25 December 31, 2008, secured by a deed of trust on her Nevada real estate. At all material times
27 loan.
28 ///
- 21 -
COMPLAINT
1 80. Plaintiff JANE KOPECKY is an individual residing in the State of Illinois, who
3 December 31, 2008, secured by a deed of trust on her Illinois real estate. At all material times
5 loan.
6 81. Plaintiff JOSHUA KREITZER is an individual residing in the State of California,
10 the loan.
11 82. Plaintiff JONATHAN LANDES is an individual residing in the State of Oregon,
13 and December 31, 2008, secured by a deed of trust on his Oregon real estate. At all material
15 the loan.
16 83. Plaintiff ASHLEY LARSEN is an individual residing in the State of California,
20 the loan.
21 84. Plaintiff LEVON LATCHINIAN is an individual residing in the State of
26 85. Plaintiff OLIVER LAZARO is an individual residing in the State of California,
- 22 -
COMPLAINT
2 the loan.
3 86. Plaintiff DANIEL LERTIQUE is an individual residing in the State of Arizona,
5 and December 31, 2008, secured by a deed of trust on his Arizona real estate. At all material
7 the loan.
8 87. Plaintiff KERRIE LLOYD is an individual residing in the State of California,
12 the loan.
13 88. Plaintiff CYNTHIA LUNA is an individual residing in the State of New Mexico,
15 and December 31, 2008, secured by a deed of trust on her New Mexico real estate. At all
16 material times hereto, Countrywide has acted as Servicer or some other control capacity over
18 89. Plaintiff LYN HENLEY is an individual residing in the State of California, who
22 loan.
23 90. Plaintiff MADONA OANDASAN is an individual residing in the State of Hawaii,
25 and December 31, 2008, secured by a deed of trust on her Hawaii real estate. At all material
27 the loan.
28 ///
- 23 -
COMPLAINT
1 91. Plaintiff JANA MALONE is an individual residing in the State of Arizona, who
3 December 31, 2008, secured by a deed of trust on her Arizona real estate. At all material times
5 loan.
6 92. Plaintiff PIERRE MARCOTTE is an individual residing in the State of Michigan,
8 and December 31, 2008, secured by a deed of trust on his Michigan real estate. At all material
10 the loan.
11 93. Plaintiff MARLENE GONZALEZ is an individual residing in the State of
13 January 1, 2003, and December 31, 2008, secured by deeds of trust on her California real estate.
15 over processing these loans.
16 94. Plaintiff NAOMI MARTINSEN is an individual residing in the State of Utah,
18 and December 31, 2008, secured by a deed of trust on her Utah real estate. At all material times
20 loan.
21 95. Plaintiff MARVIN MENDONCA is an individual residing in the State of Nevada,
25 the loan.
26 96. Plaintiff CARA MCVEY is an individual residing in the State of California, who
- 24 -
COMPLAINT
2 loan.
3 97. Plaintiff DANIEL MELENDEZ is an individual residing in the State of Oregon,
7 the loan.
8 98. Plaintiff GERALDINE MOECKEL is an individual residing in the State of
10 January 1, 2003, and December 31, 2008, secured by a deed of trust on her Arizona real estate.
13 99. Plaintiff EDGAR MORALES is an individual residing in the State of California,
17 the loan.
18 100. Plaintiff DINA MOREAU is an individual residing in the State of Arizona, who
19 borrowed money from Countrywide or its subsidiaries or affiliates between January 1, 2003 and
20 December 31, 2008, secured by a deed of trust on her Arizona real estate. At all material times
22 loan.
23 101. Plaintiff KEN MORRIS is an individual residing in the State of Kansas, who
25 December 31, 2008, secured by a deed of trust on his Kansas real estate. At all material times
27 loan.
28 ///
- 25 -
COMPLAINT
1 102. Plaintiff ALAN MOSLEY is an individual residing in the State of California, who
3 December 31, 2008, secured by deeds of trust on his California real estate. At all material times
4 hereto, Countrywide has acted as Servicer or some other control capacity over processing these
5 loans.
6 103. Plaintiff SOSTENES MURGA is an individual residing in the State of California,
10 the loan.
11 104. Plaintiff NOBLE E. LEE is an individual residing in the State of Washington,
13 and December 31, 2008, secured by deeds of trust on his Washington real estate. At all material
15 these loans.
16 105. Plaintiff JOSE NUNEZ is an individual residing in the State of California, who
20 loan.
21 106. Plaintiff DONALD OKADA is an individual residing in the State of California,
25 the loan.
26 107. Plaintiff JESSE OSBORNE is an individual residing in the State of Arizona, who
- 26 -
COMPLAINT
2 loan.
3 108. Plaintiff LUIS PAGES is an individual residing in the State of California, who
7 loan.
8 109. Plaintiff MARCELINO PALISOC is an individual residing in the State of
13 110. Plaintiff CLAYTON PELLETIER is an individual residing in the State of
18 111. Plaintiff MITCH PERERIA is an individual residing in the State of Nevada, who
20 December 31, 2008, secured by a deed of trust on his Nevada real estate. At all material times
22 loan.
23 112. Plaintiff RICHARD PILLSBURY is an individual residing in the State of Oregon,
27 the loan.
28 ///
- 27 -
COMPLAINT
1 113. Plaintiff HAYDEN POGNI is an individual residing in the State of Hawaii, who
3 December 31, 2008, secured by a deed of trust on his Hawaii real estate. At all material times
5 loan.
6 114. Plaintiff ROGER PREBLE is an individual residing in the State of Utah, who
10 loan.
11 115. Plaintiff CARLOS QUINO is an individual residing in the State of California,
15 the loan.
16 116. Plaintiff LORETTA RAYA is an individual residing in the State of California,
20 the loan.
21 117. Plaintiff RHONDA CHISHOLM is an individual residing in the State of Nevada,
23 and December 31, 2008, secured by a deed of trust on her Nevada real estate. At all material
25 the loan.
26 118. Plaintiff DANIEL RICHARD is an individual residing in the State of Nevada,
- 28 -
COMPLAINT
2 the loan.
3 119. Plaintiff ROBERT GILBERT is an individual residing in the State of Montana,
5 and December 31, 2008, secured by a deed of trust on his Montana real estate. At all material
7 the loan.
8 120. Plaintiff AUDRA RODRIGUEZ is an individual residing in the State of Virginia,
10 and December 31, 2008, secured by a deed of trust on her Virginia real estate. At all material
12 the loan.
13 121. Plaintiff CESAR RODRIGUEZ is an individual residing in the State of
18 122. Plaintiff FRANK ROPER is an individual residing in the State of Massachusetts,
20 and December 31, 2008, secured by a deed of trust on his Massachusetts real estate. At all
21 material times hereto, Countrywide has acted as Servicer or some other control capacity over
23 123. Plaintiff HOWARD ROSENTHAL is an individual residing in the State of
24 Maryland, who borrowed money from Countrywide or its subsidiaries or affiliates between
25 January 1, 2003, and December 31, 2008, secured by a deed of trust on his Maryland real estate.
28 ///
- 29 -
COMPLAINT
1 124. Plaintiff ROGER ROTTLER is an individual residing in the State of California,
5 the loan.
6 125. Plaintiff ANGELA SANCHEZ is an individual residing in the State of California,
10 the loan.
11 126. Plaintiff SELINA WILDER is an individual residing in the State of California,
15 the loan.
16 127. Plaintiff SHARON KING is an individual residing in the State of Washington,
18 and December 31, 2008, secured by a deed of trust on her Washington real estate. At all material
20 the loan.
21 128. Plaintiff JEREMY SHEAFFER is an individual residing in the State of Virginia,
23 and December 31, 2008, secured by a deed of trust on his Virginia real estate. At all material
25 the loan.
26 129. Plaintiff DEBRA SIMPSON is an individual residing in the State of Nevada, who
28 December 31, 2008, secured by a deed of trust on her Nevada real estate. At all material times
- 30 -
COMPLAINT
2 loan.
3 130. Plaintiff NATHAN SKIVER is an individual residing in the State of California,
7 the loan.
8 131. Plaintiff GUILLERMO TABARES is an individual residing in the State of
13 132. Plaintiff STEPHEN TEICHMAN is an individual residing in the State of
18 133. Plaintiff FATIMA TENDERRO is an individual residing in the State of
23 134. Plaintiff TISHARRA SHREIBER is an individual residing in the State of
28 ///
- 31 -
COMPLAINT
1 135. Plaintiff TODD GAGNON is an individual residing in the State of California,
5 the loan.
6 136. Plaintiff JORGE TORRES is an individual residing in the State of California, who
10 loan.
11 137. Plaintiff HWANG TRAN is an individual residing in the State of California, who
15 loan.
16 138. Plaintiff RONALD TURNER is an individual residing in the State of Illinois, who
18 December 31, 2008, secured by a deed of trust on his Illinois real estate. At all material times
20 loan.
21 139. Plaintiff ROSEMARY TURNER is an individual residing in the State of
26 140. Plaintiff JOHN URTIAGA is an individual residing in the State of California,
- 32 -
COMPLAINT
2 the loan.
3 141. Plaintiff THOMAS VAN DUSEN is an individual residing in the State of
8 142. Plaintiff NELDA VARGAS is an individual residing in the State of California,
12 the loan.
13 143. Plaintiff LINDA VULAJ is an individual residing in the State of California, who
17 loan.
18 144. Plaintiff RIK WAHLRAB is an individual residing in the State of California, who
22 loan.
23 145. Plaintiff PHILIP WARMANEN is an individual residing in the State of Florida,
25 and December 31, 2008, secured by a deed of trust on his Florida real estate. At all material
27 the loan.
28 ///
- 33 -
COMPLAINT
1 146. Plaintiff CHRISTIAN WELLMAN is an individual residing in the State of
6 147. Plaintiff MARK WHITEHEAD is an individual residing in the State of
11 148. Plaintiff DARNELL WYRICK is an individual residing in the State of California,
13 and December 31, 2008, secured by deeds of trust on his California real estate. At all material
15 these loans.
16 149. Plaintiff MAZIAR ABRISHAMIAN is an individual residing in the State of
21 150. Plaintiff JULIE BLACKLEY is an individual residing in the State of Utah, who
25 loan.
26 151. Plaintiff DUANE BLEDSOE is an individual residing in the State of Nevada,
- 34 -
COMPLAINT
2 the loan.
3 152. Plaintiff MARK CAIRA is an individual residing in the State of Massachusetts,
7 the loan.
8 153. Plaintiff DAVID DELGADO is an individual residing in the State of California,
12 the loan.
13 154. Plaintiff CLYDE DODSON is an individual residing in the State of California,
17 the loan.
18 155. Plaintiff EVELYN HERRERA is an individual residing in the State of California,
22 the loan.
23 156. Plaintiff BACHHONG KHONG is an individual residing in the State of Nevada,
27 the loan.
28 ///
- 35 -
COMPLAINT
1 157. Plaintiff LOUIE LEWIS is an individual residing in the State of California, who
5 loan.
6 158. Plaintiff JOEL LIEBKE is an individual residing in the State of California, who
8 December 31, 2008, secured by deeds of trust on his California real estate. At all material times
9 hereto, Countrywide has acted as Servicer or some other control capacity over processing these
10 loans.
11 159. Plaintiff LARRY LUNSFORD is an individual residing in the State of California,
15 the loan.
16 160. Plaintiff DARYL MCCANCE is an individual residing in the State of California,
20 the loan.
21 161. Plaintiff EDWARD SANCHEZ is an individual residing in the State of
26 162. Plaintiff CONNIE SCHULENBERG is an individual residing in the State of
27 Wisconsin, who borrowed money from Countrywide or its subsidiaries or affiliates between
28 January 1, 2003, and December 31, 2008, secured by a deed of trust on her Wisconsin real estate.
- 36 -
COMPLAINT
3 163. Plaintiff RICHARD VAN DER WORP is an individual residing in the State of
8 164. Plaintiff FRED WHITE is an individual residing in the State of Colorado, who
10 December 31, 2008, secured by a deed of trust on his Colorado real estate. At all material times
12 loan.
13 165. Plaintiff PETRE MILE is an individual residing in the State of California, who
17 loan.
18 166. Plaintiff FRANZ BELL is an individual residing in the State of Utah, who
22 loan.
23 167. Plaintiff TIMOTHY SMITH is an individual residing in the State of California,
27 the loan.
28 ///
- 37 -
COMPLAINT
1 168. Plaintiff GILBERT SIGALA is an individual residing in the State of California,
5 the loan.
6 169. Plaintiff ELENO DE LA CRUZ is an individual residing in the State of
11 170. Plaintiff SALVACION AQUINO is an individual residing in the State of
16 171. Plaintiff MANUEL ARECHIGA is an individual residing in the State of Texas,
18 and December 31, 2008, secured by a deed of trust on his Texas real estate. At all material times
20 loan.
21 172. Plaintiff AMRIK BAJWA is an individual residing in the State of New Jersey,
23 and December 31, 2008, secured by a deed of trust on his New Jersey real estate. At all material
25 the loan.
26 173. Plaintiff ROSARIO BARA is an individual residing in the State of California,
- 38 -
COMPLAINT
2 the loan.
3 174. Plaintiff OLGA BARDALES is an individual residing in the State of California,
7 the loan.
8 175. Plaintiff GIL BECKENSTEIN is an individual residing in the State of California,
12 the loan.
13 176. Plaintiff RHONDA BOGGAN is an individual residing in the State of California,
17 the loan.
18 177. Plaintiff RANDY BROOKS is an individual residing in the State of Alabama,
20 and December 31, 2008, secured by a deed of trust on his Alabama real estate. At all material
22 the loan.
23 178. Plaintiff HAROLD BYRD is an individual residing in the State of Iowa, who
25 December 31, 2008, secured by a deed of trust on his Iowa real estate. At all material times
27 loan.
28 ///
- 39 -
COMPLAINT
1 179. Plaintiff VITO CALABRESE is an individual residing in the State of Illinois,
3 and December 31, 2008, secured by a deed of trust on his Illinois real estate. At all material
5 the loan.
6 180. Plaintiff EVERARDO CASTRO is an individual residing in the State of
11 181. Plaintiff FRANCISCO CEBALLOS is an individual residing in the State of
16 182. Plaintiff CYNTHIA CHANG is an individual residing in the State of California,
20 the loan.
21 183. Plaintiff ANJA CHRISTIE-JOHNSON is an individual residing in the State of
26 184. Plaintiff GRACIELA CONTRERAS is an individual residing in the State of
- 40 -
COMPLAINT
3 185. Plaintiff ANIBAL CORDERO is an individual residing in the State of New York,
5 and December 31, 2008, secured by a deed of trust on her New York real estate. At all material
7 the loan.
8 186. Plaintiff OTTO RENE DE LEON is an individual residing in the State of
13 187. Plaintiff JOSE DELGADO is an individual residing in the State of California,
17 the loan.
18 188. Plaintiff ALICIA DIAZ is an individual residing in the State of California, who
22 loan.
23 189. Plaintiff DAVID DILLON is an individual residing in the State of California, who
27 loan.
28 ///
- 41 -
COMPLAINT
1 190. Plaintiff JOHN DONAHUE is an individual residing in the State of Florida, who
5 loan.
6 191. Plaintiff JULIO DORADO is an individual residing in the State of Florida, who
10 loan.
11 192. Plaintiff TUONG DU is an individual residing in the State of California, who
15 loan.
16 193. Plaintiff ELLA FERNANDEZ is an individual residing in the State of California,
20 the loan.
21 194. Plaintiff DAWN LENTZ FLOWERS is an individual residing in the State of
22 Michigan, who borrowed money from Countrywide or its subsidiaries or affiliates between
23 January 1, 2003, and December 31, 2008, secured by a deed of trust on her Michigan real estate.
26 195. Plaintiff CHRISTINE FRANZ is an individual residing in the State of California,
- 42 -
COMPLAINT
2 the loan.
3 196. Plaintiff SUSAN GALLAGHER is an individual residing in the State of
4 Colorado, who borrowed money from Countrywide or its subsidiaries or affiliates between
5 January 1, 2003, and December 31, 2008, secured by a deed of trust on her Colorado real estate.
8 197. Plaintiff RUDY GARCIA is an individual residing in the State of Oregon, who
10 December 31, 2008, secured by a deed of trust on his Oregon real estate. At all material times
12 loan.
13 198. Plaintiff ADELA GARCIA is an individual residing in the State of California,
17 the loan.
18 199. Plaintiff CINDY GEORGE is an individual residing in the State of California,
22 the loan.
23 200. Plaintiff JOERIN GEORGE is an individual residing in the State of California,
27 the loan.
28 ///
- 43 -
COMPLAINT
1 201. Plaintiff VLADIMIR GURLOR is an individual residing in the State of Utah,
3 and December 31, 2008, secured by a deed of trust on his Utah real estate. At all material times
5 loan.
6 202. Plaintiff RICHARD HALLEY is an individual residing in the State of Oregon,
10 the loan.
11 203. Plaintiff CYNTHIA HALLEY is an individual residing in the State of California,
15 the loan.
16 204. Plaintiff CARMELA HERBERT is an individual residing in the State of
21 205. Plaintiff CHONTIA HOLMES is an individual residing in the State of California,
25 the loan.
26 206. Plaintiff DARRELL HOOVER is an individual residing in the State of California,
- 44 -
COMPLAINT
2 the loan.
3 207. Plaintiff DONALD JENKS is an individual residing in the State of Michigan,
5 and December 31, 2008, secured by a deed of trust on his Michigan real estate. At all material
7 the loan.
8 208. Plaintiff SHELDON KAMEN is an individual residing in the State of Ohio, who
10 December 31, 2008, secured by a deed of trust on his Ohio real estate. At all material times
12 loan.
13 209. Plaintiff SHAWN KEEBAUGH is an individual residing in the State of
18 210. Plaintiff TAMMY KEMMERER is an individual residing in the State of
19 Pennsylvania, who borrowed money from Countrywide or its subsidiaries or affiliates between
20 January 1, 2003, and December 31, 2008, secured by a deed of trust on her Pennsylvania real
23 211. Plaintiff JANE KIM is an individual residing in the State of California, who
27 loan.
28 ///
- 45 -
COMPLAINT
1 212. Plaintiff LOUIS KLEIN is an individual residing in the State of California, who
5 loan.
6 213. Plaintiff GERALD KRAMER is an individual residing in the State of Utah, who
10 loan.
11 214. Plaintiff JERRY LEE is an individual residing in the State of California, who
15 loan.
16 215. Plaintiff BRIAN LOGAN is an individual residing in the State of Connecticut,
18 and December 31, 2008, secured by a deed of trust on his Connecticut real estate. At all material
20 the loan.
21 216. Plaintiff RONNIE LYLES is an individual residing in the State of California, who
25 loan.
26 217. Plaintiff PAUL MAILE is an individual residing in the State of New Jersey, who
28 December 31, 2008, secured by a deed of trust on his New Jersey real estate. At all material
- 46 -
COMPLAINT
2 the loan.
3 218. Plaintiff POLINA MANYIKA is an individual residing in the State of California,
7 the loan.
8 219. Plaintiff HASMIK MEKHITARIA is an individual residing in the State of
13 220. Plaintiff DONYANN MORGAN is an individual residing in the State of
18 221. Plaintiff ROBERT MORSE is an individual residing in the State of Arizona, who
22 loan.
23 222. Plaintiff JOSEPH NUGENT is an individual residing in the State of Nevada, who
27 loan.
28 ///
- 47 -
COMPLAINT
1 223. Plaintiff DOUGLAS POWERS is an individual residing in the State of California,
5 the loan.
6 224. Plaintiff BETE LOU PRENTICE is an individual residing in the State of Arizona,
8 and December 31, 2008, secured by a deed of trust on her Arizona real estate. At all material
10 the loan.
11 225. Plaintiff DIONICIO QUINONEZ is an individual residing in the State of
12 Maryland, who borrowed money from Countrywide or its subsidiaries or affiliates between
13 January 1, 2003, and December 31, 2008, secured by a deed of trust on his Maryland real estate.
16 226. Plaintiff THERESA REAL is an individual residing in the State of California,
20 the loan.
21 227. Plaintiff YEVETTE REEVES is an individual residing in the State of New York,
23 and December 31, 2008, secured by a deed of trust on her New York real estate. At all material
25 the loan.
26 228. Plaintiff DENISE REGISTER is an individual residing in the State of
27 Massachusetts, who borrowed money from Countrywide or its subsidiaries or affiliates between
28 January 1, 2003, and December 31, 2008, secured by a deed of trust on her Massachusetts real
- 48 -
COMPLAINT
3 229. Plaintiff JOEY RIEDEL is an individual residing in the State of Nevada, who
7 loan.
8 230. Plaintiff ENRIQUE ROMERO is an individual residing in the State of Nevada,
12 the loan.
13 231. Plaintiff CONNIE ROOKER is an individual residing in the State of California,
17 the loan.
18 232. Plaintiff RODNEY SADLER is an individual residing in the State of Arizona,
20 and December 31, 2008, secured by a deed of trust on his Arizona real estate. At all material
22 the loan.
23 233. Plaintiff HUGO SALAZAR is an individual residing in the State of California,
27 the loan.
28 ///
- 49 -
COMPLAINT
1 234. Plaintiff RUBEN SANTIAGO is an individual residing in the State of California,
5 the loan.
6 235. Plaintiff YADIRA SANTILLAN is an individual residing in the State of
11 236. Plaintiff NAGINDER SINGH is an individual residing in the State of Utah, who
15 loan.
16 237. Plaintiff JAMES SPELLER is an individual residing in the State of Florida, who
20 loan.
21 238. Plaintiff ANN TERRILL is an individual residing in the State of California, who
25 loan.
26 239. Plaintiff WILLIAM THOMAS is an individual residing in the State of California,
- 50 -
COMPLAINT
2 the loan.
3 240. Plaintiff HAI V. TRAN is an individual residing in the State of California, who
7 loan.
8 241. Plaintiff SANDRA VALDEZ is an individual residing in the State of California,
12 the loan.
13 242. Plaintiff TANYA VEGA is an individual residing in the State of California, who
17 loan.
18 243. Plaintiff GLENN WARNE is an individual residing in the State of California,
22 the loan.
23 244. Plaintiff CHERYL WELCH is an individual residing in the State of California,
27 the loan.
28 ///
- 51 -
COMPLAINT
1 245. Plaintiff SCOTT WETZEL is an individual residing in the State of Wisconsin,
3 and December 31, 2008, secured by a deed of trust on his Wisconsin real estate. At all material
5 the loan.
6 246. Plaintiff MICHAEL WIEDERHOLD is an individual residing in the State of
11 247. Plaintiff BERNARDO ZAVALA is an individual residing in the State of
16 248. Plaintiff JAMES PATE is an individual residing in the State of California, who
20 loan.
21 249. Plaintiff ANGEL ARIAS is an individual residing in the State of California, who
25 loan.
26 250. Plaintiffs NEIL WHITE and ACHINI WHITE are individuals, husband and wife,
27 residing in the State of California, who borrowed money from Countrywide or its subsidiaries or
28 affiliates between January 1, 2003, and December 31, 2008, secured by a deed of trust on their
- 52 -
COMPLAINT
1 California real estate. At all material times hereto, Countrywide has acted as Servicer or some
2 other control capacity over processing their loan.
3 251. Plaintiff NAOMI TROWER is an individual residing in the State of California,
7 the loan.
8
9 THE ROE PLAINTIFFS
10 252. Plaintiffs John Roe and Jane Roe are individuals residing in the State of
12 January 1, 2003 and December 31, 2008, secured by a deed of trust on their California real
13 estate. At all times material hereto, Countrywide has acted as Servicer or some other control
15 253. Plaintiff Jane Roe will be added herewith as Plaintiff ROE 1, pursuant to a court
16 order that will be requested, authorizing ROE plaintiffs in this action. She is an individual
17 residing in the State of California, who borrowed money from Countrywide or its subsidiaries or
18 affiliates between January 1, 2003 and December 31, 2008, secured by a deed of trust on her
19 California real estate. At all times material hereto, Countrywide has acted as Servicer or some
20 other control capacity over processing the loan.
21 254. The other Plaintiffs, named as ROES 1 through 1000, are similarly situated to
22 Plaintiffs identified above in that they too borrowed money from the Countrywide Defendants
23 (as defined below) between the dates beginning on January 1, 2003 and ending on December 31,
24 2008, secured by deeds of trust on their California realty. Further, at all times material hereto,
25 Countrywide Defendants have acted as Servicer or in another capacity with respect to loan
26 processing. All of the foregoing secured real estate loans made to Plaintiffs were wrongfully and
27 handled and processed by Defendants, resulting in damages.
28 ///
- 53 -
COMPLAINT
1 255. Plaintiffs‟ counsel is aware of and has provided services to the remaining
2 unnamed ROE plaintiffs, each of whom has sustained actual injury. The remaining ROES sue
3 under their names fictitiously because they either wish to maintain their privacy or because
4 Plaintiffs‟ counsel have not completed the due diligence necessary to properly plead their claims
5 as of the filing of this Complaint. From time-to-time, upon conducting the due diligence and
6 learning the information sufficient to add remaining ROE Plaintiffs to this action, Plaintiffs shall
7 seek leave of Court to amend this Complaint to name these additional ROE Plaintiffs, or will
8 follow such other process as is prescribed by the Court.
9 256. Numerous additional persons have contacted counsel or their staffs pertaining to
10 the matters complained of herein, and it is anticipated that hundreds or thousands more will be
11 doing so. In the event Plaintiffs believe it is in furtherance of judicial economy and justice to
12 add all or any of these additional persons to this Complaint, Plaintiffs shall bring a noticed
13 motion to add such parties to this action or follow such procedure as the Court in this case may
14 specify. In the event Plaintiffs file a separate lawsuit appertaining to all or any of these persons,
15 or such further number as may exist in view of future developments, Plaintiffs shall file all
16 appropriate Notices of Related Cases in accordance with California law, or as otherwise directed
17 by the Court.
18
19 THE DEFENDANTS
20 257. Prior to 1983, Defendant BANK OF AMERICA CORPORATION (“BofA”)
21 exclusively did business in California and has deep roots in California business and culture.
22 Now a Delaware corporation, BofA is currently a national bank with its principal place of
23 business in Charlotte, North Carolina and doing business in the State of California and County of
24 Los Angeles.
25 258. At all times material hereto, Defendant COUNTRYWIDE FINANCIAL
26 CORPORATION (“Countrywide”) was a Delaware corporation, or a division or subsidiary of
27 BofA, doing business in the State of California and County of Los Angeles. COUNTRYWIDE
28 FINANCIAL CORPORATION now does business as BAC HOME LOANS SERVICING.
- 54 -
COMPLAINT
1 259. At all material times hereto, Defendant COUNTRYWIDE HOME LOANS, INC.
2 was a New York corporation, or a division or subsidiary of BofA, doing business in the State of
3 California and County of Los Angeles.
4 260. Defendant RECONTRUST COMPANY, N.A. (“ReconTrust”) is a wholly owned
5 subsidiary of BofA that has intentionally and maliciously concealed the true names of entities to
6 which Plaintiffs‟ home loans were transferred by other Countrywide Defendants. ReconTrust is
7 one of BofA‟s agents which acts as trustee under the deeds of trust securing real estate loans so
8 as to foreclose on property securing the real estate loans held or serviced by BofA. The
9 foregoing is part of a scheme by which the Countrywide Defendants concealed the transferees of
10 loans and deeds of trust, inter alia in violation of California Civil Code § 2923.5 and 15 U.S.C. §
11 1641, as more fully described herein.
12 261. At all material times hereto, defendant ReconTrust was and is a National Banking
13 Association organized under the laws of the State of Texas, doing business in the State of
14 California and County of Los Angeles. Upon information and belief, Defendant Bank of
15 America, and the other lender defendants, have regularly employed defendant ReconTrust, a
16 national banking association whose powers are limited to performing as a trust company only,
17 and regularly employ ReconTrust, to foreclose, as trustee with power of sale, trust deeds on
18 California realty and realty in other states. Such foreclosures are commonly conducted
19 nonjudicially, and include use of the mails, wire, and other filing of notices of default and sale as
20 legal process, as well as the issuance of trustee‟s deeds. Such foreclosures result in the
21 dispossession of debtors, and sometimes the assertion against them of debts for the deficiency
22 between amounts assertedly owed and sale prices. Such foreclosures are without authority and
23 illegal in some states, such as Utah, because the laws of some states, such as Utah, limit the
24 power of sale to certain kinds of parties only, such as lawyers and title companies, denying it to
25 trust companies.
26 262. Defendant CTC REAL ESTATE SERVICES, INC. (“CTC”) is a California
27 corporation – corporation number C0570795 – and is a resident of Ventura County, California.
28 Defendant CTC acted alongside and in concert with BofA in carrying out the concealment
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COMPLAINT
1 described herein, and in continuing to conceal from Plaintiffs, from the California general public,
2 and from regulators, the details of the securitization and sale of deeds of trust and mortgages
3 (including those of Plaintiffs herein) that would expose all Defendants herein to liability for sale
4 of mortgages of California citizens – including all Plaintiffs herein – for more than the actual
5 value of the mortgage loans. The sale and particularly the undisclosed sale of mortgage loans in
6 excess of actual value violates California Civil Code, §§ 1709 and 1710, and California Business
7 and Professions Code § 17200 et seq., 15 U.S.C. §§ 1641 et seq. and other applicable laws.
8 263. All Defendants are sometimes herein referred to as the “Bank Defendants.”
9 264. At all times material hereto, all Defendants operated through a common plan and
10 scheme designed to conceal the material facts set forth below from Plaintiffs, from the California
11 public and from regulators, either directly or as successors-in-interest for others of the
12 Defendants. The concealment was completed, ratified and/or confirmed by each Defendant
13 herein directly or as a successor-in-interest for another Defendant, and each Defendant
14 performed the tortious acts set forth herein for its own monetary gain and as a part of a common
15 plan developed and carried out with the other Defendants, or as a successor-in-interest to a
16 Defendant that did the foregoing.
17 265. The true names and capacities of the Defendants listed herein as DOES 1 through
18 1,000 are unknown to Plaintiffs who therefore sue these Defendants by such fictitious names.
19 Each of the DOE Defendants was the agent of each of the other Defendants herein, named or
20 unnamed, and thereby participated in all of the wrongdoing set forth herein. On information and
21 belief, each such Defendant is responsible for the acts, events and concealment set forth herein
22 and is sued for that reason. Upon learning the true names and capacities of the DOE Defendants,
23 Plaintiffs shall amend this Complaint accordingly.
24
25 RELATIONSHIP OF BANK OF AMERICA TO COUNTRYWIDE
26 266. BofA‟s public disclosures, as reflected in its filings with the SEC, make clear that
27 BofA considers itself both a common enterprise operating as a greater whole and without
28 meaningful distinctions as to its operating units, and the successor to Countrywide and its
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COMPLAINT
1 subsidiaries. As stated in BofA‟s Annual Report on Form 10-K for the fiscal year ended
2 December 31, 2007 (“BofA 2007 10-K”), “[i]n August of 2007, we made a $2.0 billion
3 investment in Countrywide Financial Corporation (Countrywide), the largest mortgage lender in
4 the U.S. In January 2008, we announced a definitive agreement to purchase all outstanding
5 shares of Countrywide. The acquisition would make us the nation‟s leading mortgage lender and
6 loan servicer.” BofA 2007 10-K, at 108 (emphasis supplied).
7 267. Thereafter, as stated in BofA‟s Quarterly Report on Form 10-Q for the quarterly
8 period ended June 30, 2008 (“BofA June 30, 2008 10-Q”), “On July 1, 2008, the Corporation
9 acquired Countrywide through its merger with a subsidiary of the Corporation.” BofA June 30,
10 2008 10-Q at 11. BofA boasts in the June 30, 2008 10-Q that “[t]he acquisition of Countrywide
11 significantly improved our mortgage originating and servicing capabilities, while making us the
12 nation‟s leading mortgage originator and servicer.” BofA June 30, 2008 10-Q at 49.
13 268. BofA further makes clear the commonality of its business enterprise with that of
14 Countrywide, and the greater whole of its various subsidiaries and operating units, by stating
15 again that “[o]n July 1, 2008, the Corporation acquired Countrywide . . . the nation‟s largest
16 mortgage originator and servicer.” BofA June 30, 2008 10-Q at 108.
17 269. Countrywide‟s remaining operations and employees have been transferred to
18 Bank of America, and Bank of America ceased using the Countrywide name in April 2009. On
19 July 1, 2008, a New York Stock Exchange Form 25 was utilized to deregister and delist
20 Countrywide‟s common stock, and on July 22, 2008 Countrywide filed Securities and Exchange
21 Commission Form 15 deregistering its common stock under Section 12(b) of the Securities
22 Exchange Act of 1934, as amended.
23 270. Plaintiffs are informed and believe, and thereon allege, that:
24 (1) BofA and its wholly-owned and controlled subsidiaries are liable for all
25 wrongful acts of Countrywide prior to the date thereof as the successor-in-interest
26 to Countrywide; and
27 (2) BofA directly and through its subsidiaries and other agents sued herein as
28 Does have continued the unlawful practices of Countrywide since October 31,
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1 2007, including, without limitation thereof, writing fraudulent mortgages as set
2 forth above and concealing wrongful acts that occurred in whole or in part prior
3 thereto; and
4 (3) BofA and its subsidiaries are jointly and severally liable as alter egos and as a
5 single, greater unified whole.
6
7 THE FRAUD, DECEPTION, AND CONCEALMENT BY DEFENDANTS
8 271. The common facts herein include those facts set forth above in the prior sections
9 of this Complaint.
10 272. Under California Civil Code § 1709 it is unlawful to willfully deceive another
11 “with intent to induce him to alter his position to his injury or risk.”
12 273. Under California Civil Code § 1710, it a “deceit” to do any one or more of the
13 following: (1) the suggestion, as a fact, of that which is not true, by one who does not believe it
14 to be true; (2) the assertion, as a fact, of that which is not true, by one who has no reasonable
15 ground for believing it to be true; (3) the suppression of a fact, by one who is bound to disclose
16 it, or who gives information of other facts which are likely to mislead for want of communication
17 of that fact; or (4) a promise, made without any intention of performing it.
18 274. Under California Civil Code § 1572, the party to a contract further engages in
19 fraud by committing “any other act fitted to deceive.”
20 275. At the time of entering into the notes and deeds of trust referenced herein with
21 respect to each Plaintiff, the Countrywide Defendants were bound and obligated to fully and
22 accurately disclose:
23 a. The identity of the true lender and mortgagee.
24 b. That to induce a Plaintiff to enter into the mortgage, the Countrywide
25 Defendants caused the appraised value of Plaintiff‟s home to be overstated.
26 c. That to disguise the inflated value of Plaintiff‟s home, Countrywide
27 orchestrated the over-valuation of homes throughout Plaintiff‟s community.
28 d. That to induce a Plaintiff to enter into a mortgage, the Countrywide
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COMPLAINT
1 Defendants disregarded their underwriting requirements, thereby causing
2 Plaintiff to falsely believe that Plaintiff was financially capable of performing
3 Plaintiff‟s obligations under the mortgage, when the Countrywide Defendants
4 knew that was untrue.
5 e. That Countrywide not only had the right to securitize and sell Plaintiff‟s
6 mortgage to third-party investors, but that it specifically planned and intended
7 to do so as to virtually all mortgages at highly-inflated and unsustainable
8 values.
9 f. That as to the intended sales:
10 i. Sales would include sales to nominees who were not authorized under
11 law at the time to own a mortgage, including, among others, Mortgage
12 Electronic Registration Systems Inc., a/k/a MERSCORP, Inc.
13 (“MERS”), which according to its website was created by mortgage
14 banking industry participants to be only a front or nominee to
15 “streamline” the mortgage re-sale and securitization process;
16 ii. Plaintiff‟s true financial condition and the true value of Plaintiff‟s
17 home and mortgage would not be disclosed to investors to whom the
18 mortgage would be sold;
19 iii. Countrywide intended to sell the mortgage together with other
20 mortgages as to which it also intended not to disclose the true financial
21 condition of the borrowers or the true value of their homes or
22 mortgages;
23 iv. The consideration to be sought from investors would be greater than
24 the actual value of the said notes and deeds of trust; and
25 v. The consideration to be sought from investors would be greater than
26 the income stream that could be generated from the instruments even
27 assuming a 0% default rate thereon.
28 ///
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COMPLAINT
1 g. That the mortgage would thereby be used as part of a scheme by which the
2 Countrywide Defendants would bilk investors by selling collateralized
3 mortgage pools at an inflated value.
4 h. That, at the time they did the foregoing, the Countrywide Defendants knew
5 the foregoing would lead to a liquidity crisis and the likely collapse of
6 Countrywide;
7 i. That the Countrywide Defendants also knew the foregoing would lead to
8 grave damage to each Plaintiff‟s property value and thereby result in
9 Plaintiff‟s loss of the equity Plaintiff invested in his house, as well as
10 damaging Plaintiff‟s credit rating, thereby causing Plaintiff additional severe
11 financial damage; and
12 j. That the Countrywide Defendants knew at the time of making each loan, but
13 did not disclose to Plaintiffs, that entire communities would become “ghost-
14 town-foreclosure-communities” after a domino effect of foreclosures hit them.
15 276. When property values started falling – just as Countrywide knew would occur –
16 Countrywide could no longer continue the pretense, concealment, and affirmative
17 misrepresentations. Plaintiffs, through their losses, and the ultimate banker, the U.S. taxpayer,
18 footed the bill for these misdeeds through financing TARP and other programs. Still, Defendants
19 continue to ratify the scheme, hide and destroy documents, and travel outside the United States
20 to countries with treaties that do not allow for open discovery, including, among others, India
21 and Italy, in order to secrete witnesses and documents to make their scheme more difficult to
22 prove.
23 277. Defendants cannot aver that the market would have worked its way out of their
24 fraud, because from 2004 they knew their fraud would result in a liquidity crisis and in or before
25 2005, Defendants embarked on a massive campaign to artificially inflate the appraised values of
26 homes on a county-by-county basis to mask their fraud. While the first counties in 2004 were
27 benign and low profile (e.g., Placer), the effort reached state-wide, and out-of-state-wide,
28 proportions by the middle of 2007.
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COMPLAINT
1 278. Further, in violation of their own underwriting guidelines, Defendants covertly
2 offered Plaintiffs and others loans at a loan-to-value ratio that was unsustainable and without
3 income verification. The Countrywide Defendants knew, but concealed from Plaintiffs that they
4 knew, Plaintiffs would soon be unable to afford the loans once introductory discount interest
5 rates ended, and variable interest and balloon payments kicked in.
6 279. The Countrywide Defendants knew that when interest payments increased and
7 balloon payments became due, if not before, Plaintiffs and others would begin defaulting on their
8 mortgages and would suffer grievous losses from mortgages for which they were not qualified.
9 Given the inflated appraised values of their residences, even without a decline in property values,
10 few Plaintiffs would be able to refinance or sell their homes without suffering a significant loss.
11 280. The Countrywide Defendants knew that the scale of the lending – based on
12 inflated property values, without income verification and in violation of numerous other
13 Countrywide underwriting guidelines – would lead to widespread declines in property values,
14 thereby putting Plaintiffs and others into extremis through which they would lose the equity
15 invested in their homes and have no means of refinancing or selling, other than at a complete
16 loss. That is precisely what happened to Plaintiffs herein.
17
18 ACTION BY THE SEC
19 281. In light of the foregoing, on June 4, 2009, the SEC charged former Countrywide
20 CEO Angelo Mozilo and two other former Countrywide executives with fraud regarding
21 “disturbing trends in Countrywide business practices,” as announced by Robert Khuzami,
22 Director of the SEC‟s Division of Enforcement at a news conference on June 4, 2009. Khuzami
23 explained the deception and the scheme, and confirmed it was never disclosed to Plaintiffs. On
24 the one hand, Mozilo and Countrywide portrayed Countrywide as a prudent, quality lender. “But
25 the real Countrywide was very different. We allege it was a company: [t]hat underwrote loans in
26 a manner that layered risk factor upon risk factor, such as reduced documentation . . . . Also
27 concealed from investors were concerns voiced by Countrywide‟s own Chief Credit Risk
28 Officer, who warned that this “supermarket” strategy reduced Countrywide‟s underwriting
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COMPLAINT
1 guidelines to a „composite of the riskiest products being offered by all of their competitors
2 combined.‟ ”
3 282. The SEC‟s Complaint in Securities and Exchange Commission v. Mozilo et al.,
4 Case No. CV09-83994 VBF AJWx (“SEC Complaint”), in the Central District of California,
5 alleges that from 2005 through 2007, Mozilo, along with David Sambol, chief operating officer
6 and president, and Eric Sieracki, chief financial officer, held Countrywide out as primarily a
7 maker of prime quality mortgage loans and to support this false characterization, they hid that
8 Countrywide, in an effort to increase market share, engaged in an “unprecedented expansion of
9 its underwriting guidelines from 2005 and into 2007. Specifically, Countrywide developed what
10 was referred to as a “supermarket” strategy, where it attempted to offer any product that was
11 offered by any competitor. By the end of 2006, Countrywide‟s underwriting guidelines were as
12 wide as ever, and Countrywide wrote riskier and riskier loans. Even these expansive
13 underwriting guidelines were not sufficient to support Countrywide‟s desired growth, so
14 Countrywide wrote an increasing number of loans as “exceptions” that failed to meet its already
15 wide underwriting guidelines even though exception loans had a higher rate of default. SEC
16 Complaint, ¶ 4.
17 283. As the SEC Complaint further makes clear, Countrywide was more dependent
18 than many of its competitors on selling loans it originated into the secondary mortgage market.
19 As the SEC Complaint explains: “In fact, the credit risk that Countrywide was taking was so
20 alarming to Mozilo that he internally issued a series of increasingly dire assessments of various
21 Countrywide loan products and the risks to Countrywide in continuing to offer or hold those
22 loans, while at the same time he, Sambol, and Sieracki continued to make public statements
23 obscuring Countrywide‟s risk profile and attempting to differentiate it from other lenders. In one
24 internal email, Mozilo referred to a particularly profitable subprime product as “toxic,” and in
25 another he stated that the company was “flying blind,” and had “no way” to predict the
26 performance of its heralded product, the Pay-Option ARM loan. SEC Complaint ¶ 7.
27 ///
28 ///
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COMPLAINT
1 284. The covert Countrywide scheme was, like all such schemes based on deception,
2 ultimately unsustainable. As the SEC Complaint further explains:
3
4 Countrywide depended on its sales of mortgages into the secondary
5 market as an important source of revenue and liquidity. As a result,
6 Countrywide was not only directly exposed to credit risk through the
7 mortgage-related assets on its balance sheet, but also indirectly exposed to
8 the risk that the increasingly poor quality of its loans would prevent their
9 continued profitable sale into the secondary mortgage market and impair
10 Countrywide‟s liquidity. Rather than disclosing this increasing risk,
11 Mozilo, Sambol, and Sieracki gave false comfort, again touting
12 Countrywide‟s loan quality. [¶ 31].
13
14 Countrywide‟s increasingly wide underwriting guidelines materially
15 increased the company‟s credit risk from 2004 through 2007, but this
16 increased risk was not disclosed to investors. In 2007, as housing prices
17 declined, Countrywide began to suffer extensive credit problems as the
18 inherent credit risks manifested themselves. [¶ 32].
19 The credit losses experienced by Countrywide in 2007 not only were
20 foreseeable by the proposed defendants, they were in fact foreseen at
21 least as early as September 2004. [¶ 33].
22
23 The credit risk described in the September 2004 warning worsened from
24 September 2004 to August 2007. [¶ 35].
25 By no later than 2006, Mozilo and Sambol were on notice that
26 Countrywide‟s exotic loan products might not continue to be saleable into
27 the secondary market, yet this material risk was not disclosed in
28 Countrywide‟s periodic filings. [¶ 45].
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COMPLAINT
1 Mozilo and Sambol made affirmative misleading public statements in
2 addition to those in the periodic filings that were designed to falsely
3 reassure investors about the nature and quality of Countrywide‟s
4 underwriting. [¶ 91].
5
6 Concurrent with its rising credit losses, Countrywide experienced a
7 liquidity crisis in August 2007. [¶ 104].
8
9 285. Based upon the allegations of the SEC set forth in this Complaint, the Plaintiffs
10 believe and thereon allege the same allegations herein.
11 286. The Defendants did not merely make misrepresentations and conceal material
12 facts from investors. First, the Defendants made each of the foregoing misrepresentations in
13 public documents or forums given wide communication to the public, including Plaintiffs.
14 Second, the identical affirmative misrepresentations and concealment pertained to the Plaintiffs,
15 and other borrowers. Defendants had to perpetuate their lies by affirmative misrepresentations
16 and by concealing the truth from Plaintiffs and other borrowers because to do otherwise would
17 mean: (1) immediate wash-back into their investor fraud since Plaintiffs and other borrowers are
18 part of the investor public receiving all other investor communications, and (2) decapitation of
19 the source of the supply of mortgages needed for the scheme. Finally, the concealment from
20 borrowers was absolutely essential because the Defendants knew they would soon be delivering
21 Plaintiffs‟ notes and deeds of trust to investors and their representatives at intentionally inflated
22 values as collateral for Defendants‟ fraudulent securitized pools.
23 287. By not disclosing the truth of their inflated appraisals, lax lending standards,
24 deficient loan portfolio, shaky secondary market collateralized securities, and overall scheme to
25 defraud its borrowers, as set forth above, Countrywide not only made the same borrowers
26 unwitting accomplices, but put them into a no-win situation in which the price of taking a
27 mortgage from Countrywide would be – and has been – cascading defaults and foreclosures that
28 wiped out billions of dollars in equity value, including the equity invested in their homes by
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COMPLAINT
1 Plaintiffs. Cascading foreclosures in entire cities and counties in California leads to
2 unemployment and economic turmoil. All Plaintiffs have been damaged by the foregoing.
3 Despite billions of dollars of taxpayer-funded relief programs, property values continue to fall
4 and unemployment and underemployment remain terribly high.
5
6 ACTION BY THE FTC
7 288. As defaults increased, the Countrywide Defendants used this fact as an
8 opportunity to increase their fees and to punish Plaintiffs and other borrowers. That is why on
9 June 7, 2010, the FTC announced that two Countrywide mortgage servicing companies will pay
10 $108 million to settle FTC charges that they collected excessive fees from cash-strapped
11 borrowers who were struggling to keep their homes. The $108 million represents one of the
12 largest judgments imposed in an FTC case, and the largest ever in a mortgage servicing case.
13 289. As FTC Chairman Jon Leibowitz explained in the FTCs press release announcing
14 the settlement: “Life is hard enough for homeowners who are having trouble paying their
15 mortgage. To have a major loan servicer like Countrywide piling on illegal and excessive fees is
16 indefensible.”
17 290. The FTC press release further explained:
18
19 According to the complaint filed by the FTC, Countrywide‟s loan-
20 servicing operation deceived homeowners who were behind on their
21 mortgage payments into paying inflated fees – fees that could add up to
22 hundreds or even thousands of dollars. Many of the homeowners had
23 taken out loans originated or funded by Countrywide‟s lending arm,
24 including subprime or “nontraditional” mortgages such as payment option
25 adjustable rate mortgages, interest-only mortgages, and loans made with
26 little or no income or asset documentation, the complaint states.
27
28 Mortgage servicers are responsible for the day-to-day management of
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COMPLAINT
1 homeowners‟ mortgage loans, including collecting and crediting monthly
2 loan payments. Homeowners cannot choose their mortgage servicer
3
4 When homeowners fell behind on their payments and were in default on
5 their loans, Countrywide ordered property inspections, lawn mowing, and
6 other services meant to protect the lender‟s interest in the property,
7 according to the FTC complaint. But rather than simply hire third-party
8 vendors to perform the services, Countrywide created subsidiaries to hire
9 the vendors. The subsidiaries marked up the price of the services charged
10 by the vendors – often by 100% or more – and Countrywide then charged
11 the homeowners the marked-up fees. The complaint alleges that the
12 company‟s strategy was to increase profits from default-related service
13 fees in bad economic times. As a result, even as the mortgage market
14 collapsed and more homeowners fell into delinquency, Countrywide
15 earned substantial profits by funneling default-related services through
16 subsidiaries that it created solely to generate revenue.
17 In addition, in servicing loans for borrowers trying to save their homes in
18 Chapter 13 bankruptcy proceedings, the complaint charges that
19 Countrywide made false or unsupported claims to borrowers about
20 amounts owed or the status of their loans. Countrywide also failed to tell
21 borrowers in bankruptcy when new fees and escrow charges were being
22 added to their loan accounts. The FTC alleges that after the bankruptcy
23 case closed and borrowers no longer had bankruptcy court protection,
24 Countrywide unfairly tried to collect those amounts, including in some
25 cases via foreclosure. [Emphasis supplied].
26
27 291. Based upon the allegations of the FTC set forth in this Complaint, the Plaintiffs
28 believe and thereon allege the same allegations herein.
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COMPLAINT
1 292. The Countrywide Defendants concealed and did not accurately or fully disclose to
2 any Plaintiff herein any of the foregoing facts. Further, Defendants did not disclose or explain
3 their scheme to Plaintiffs at any time. They did the foregoing with the intent to deceive
4 Plaintiffs and the investing public. Plaintiffs did not know the massive scheme Countrywide had
5 devised.
6 293. To the contrary, Countrywide affirmatively misrepresented its underwriting
7 processes, the value of its mortgages and the fundamental nature of its business model in its
8 press releases, annual report and securities filings, all of which were widely distributed to the
9 public, including Plaintiffs. Countrywide intended the public, including Plaintiffs, to rely upon
10 its misrepresentations and made those misrepresentations to create false confidence in
11 Countrywide and to further its fraud on borrowers and investors.
12 294. Plaintiffs would never have done business with the Countrywide Defendants if
13 Defendants had disclosed their scheme. Had the Plaintiffs known the facts concealed from them
14 by Defendants, Plaintiffs would have never entered into bogus and predatory transactions with
15 the Countrywide Defendants designed only to line the pockets of Defendants and their
16 executives and not to actually and justifiably create value and generate capital from the
17 Plaintiffs‟ equity investments in their primary residences.
18 295. If the Plaintiffs had later learned the truth, each Plaintiff would have either (1)
19 rescinded the loan transaction under applicable law and/or (2) refinanced the loan transaction
20 with a reputable institution prior to the decline in mortgage values in late 2008. Instead, each
21 Plaintiff reasonably relied on the deceptions of the Countrywide Defendants in originating their
22 loans and forbearing from exercising their rights to rescind or refinance their loans.
23 296. After entering into the transactions with each Plaintiff herein as alleged herein,
24 the Countrywide Defendants, with the assistance of the other Defendants herein, sold in
25 securities transactions the notes and deeds of trust pertaining to Plaintiffs‟ properties. The sales:
26 a. Included sales to nominees who were not authorized under law at the time to
27 own a mortgage, including, among others, MERS, which entitity is discussed
28 below in more detail;
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COMPLAINT
1 b. Involved misrepresentations by Countrywide Defendants to investors and
2 concealment from investors of Plaintiff‟s true financial condition and the true
3 value of Plaintiff‟s home and mortgage;
4 c. Involved misrepresentations by Countrywide Defendants to investors and
5 concealment from investors of the true financial condition of other borrowers
6 and the true value of their homes and mortgages also included in the pools;
7 d. Were for consideration greater than the actual value of the said notes and
8 deeds of trust;
9 e. Were for consideration greater than the income stream that could be generated
10 from the instruments even assuming a 0% default rate thereon; and
11 f. Were part of a scheme by which the Countrywide Defendants bilked investors
12 by selling collateralized mortgage pools at an inflated value.
13 297. Countrywide hid from Plaintiffs that Countrywide was engaged in an effort to
14 increase market share and sustain revenue generation through unprecedented expansions of its
15 underwriting guidelines, taking on ever-increasing credit risk.
16 298. At the time the Countrywide Defendants induced Plaintiffs to enter into
17 mortgages, they knew their scheme would lead to a liquidity crisis and grave damage to each
18 Plaintiff‟s property value, and thereby result in each Plaintiff‟s loss of the equity such Plaintiff
19 invested in his house, as well as damaging the Plaintiff‟s credit rating, thereby causing the
20 Plaintiff additional severe financial damage consisting of the foregoing damages and damages
21 described elsewhere in this Complaint. The Defendants concealed the foregoing from Plaintiffs,
22 California consumers and regulators, initially at Countrywide‟s direction and thereafter at
23 BofA‟s direction.
24 299. Based upon the Countrywide Defendants‟ position as a leading financial
25 institution and thereafter BofA‟s position as a leading financial institution and the public
26 statements made by the Countrywide Defendants and otherwise by BofA, including in their
27 securities filings, the Plaintiffs reasonably relied upon the statements made by the foregoing and
28 reasonably relied that no material information necessary to their decisions would be withheld or
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COMPLAINT
1 incompletely, inaccurately or otherwise improperly disclosed. In so relying, the Plaintiffs were
2 gravely damaged as described herein. The Countrywide Defendants acted willfully with the
3 intention to conceal and deceive in order to benefit at the expense of the Plaintiffs.
4 300. The other Defendants followed BofA‟s direction because they are either
5 subsidiaries of BofA, directly or indirectly owned, controlled and dominated by BofA, or
6 because they are in an unequal economic and/or legal relationship with BofA by which they are
7 beholden to BofA and are thereby controlled and dominated by BofA.
8 301. As a proximate and foreseeable result of the Countrywide Defendants‟ sale of the
9 notes and deeds of trust regarding Plaintiffs‟ properties and others similarly situated for more
10 than the actual value of such instruments, securitization pools lacked the cash flow necessary to
11 maintain the securitization pools in accordance with their indentures. The unraveling of the
12 Defendants‟ fraudulent scheme materially depressed the price of real estate throughout
13 California, including the real estate owned by Plaintiffs, resulting in the losses to Plaintiffs
14 described herein.
15 302. Further, Defendants, under direction of BofA, covertly embarked a supplemental
16 scheme to browbeat Plaintiffs into foregoing and waiving rights. That scheme included, among
17 other things, advising Plaintiffs that Defendants would consider loan modifications, while at the
18 same time covertly referring Plaintiffs‟ files to servicing companies in India instructed to
19 obfuscate, badger, delay and divert the Plaintiffs from enforcing their rights.
20 303. These Indian service centers did not provide the information sought by Plaintiffs,
21 did not facilitate the process of loan modifications and did not comply, in any material respect,
22 with the spirit and intent of loan modifications requirements embodied in Cal. Civil Code §
23 2923.5 et seq., or the federal Helping Families Save Their Homes Act of 2009.
24 304. At the same time, Defendants continue to issue notices of default in violation of
25 Cal. Civil Code § 2923.5 and despite assurances that the failures will be remedied, corrective
26 action is dilatory, at best.
27 305. The foregoing is part of the ratification of the Countrywide Defendants‟ bad acts
28 by BofA. Since acquiring Countrywide in 2008, BofA has accepted the benefits of
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COMPLAINT
1 Countrywide‟s bad acts and ratified and adopted those acts with a concerted campaign to
2 suppress Plaintiffs and others who seek to enforce their rights. That campaign includes, among
3 other components to be established through discovery:
4 a. The intentional use of Indian service centers and others to frustrate Plaintiffs
5 and other borrowers seeking information about their mortgages and loan
6 modifications.
7 b. Intentional violation of Cal. Civil Code § 2923.5 and dilatory steps to remedy
8 those failures, even when notified thereof.
9
10 THE MERS ENTITY: A PHANTOM CREATED BY DEFENDANTS AND THEIR ILK
11 306. MERSCORP, Inc., who is not and does not need to be a party to this lawsuit at the
12 present time, is a foreign corporation created in or about 1998 by conspirators from the largest
13 banks in the United States in order to undermine and eventually eviscerate long-standing
14 principles of real property law, such as the requirement that any person or entity who seeks to
15 foreclose upon a parcel of real property: (1) be in possession of the original note and mortgage;
16 and (2) possess a written assignment giving he, she or it actual rights to the payments due from
17 the borrower pursuant to the mortgage and note. MERSCORP, Inc. claims to be the sole
18 shareholder in an entity by the name of Mortgage Electronic Registrations Systems, Inc.
19 (“MERS”). MERS is an important innovation through which the Defendants have accomplished
20 their illegal objectives as detailed throughout this Complaint.
21 307. One material factor in the use of MERS by Defendants was the inclusion in new
22 mortgages of intentionally ambiguous and infinitely malleable provisions pertaining to MERS.
23 As is the case with most of the written documents routinely used in the scheme, such as
24 “assignments” and complaints for foreclosure, each word concerning MERS in these
25 standardized mortgages is carefully crafted so as to allow those relying upon it to infinitely
26 recede in their positions and to be moving targets virtually unreachable by standard legal means.
27 One of the standard mortgages is a form entitled “STATE-Single Family- Fannie Mae/Freddie
28 Mac UNIFORM INSTRUMENT-MERS,” or some slight variation thereof. Upon reading the
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COMPLAINT
1 standard mortgage clauses pertaining to MERS, even persons of high intelligence will have a
2 sense that they should, but do not quite, comprehend them.
3 308. Consider the following illustrative language from some of the underlying
4 documents:
5 MERS is Mortgage Electronic Registration Systems, Inc.; (2) MERS is a separate
6 corporation that is acting solely as a nominee for Lender and Lender‟s successors and
7 assigns; (3) MERS is the mortgagee under this security instrument; (4) MERS is
8 organized and existing under the laws of Delaware, and has an address and telephone
9 number of P.O. Box 2026, Flint, MI 48501-2026, tel. (888) 679-MERS.
10 ……
11 TRANSFER OF RIGHTS IN THE PROPERTY
12
13 This Security Instrument secures to Lender: (1) the repayment of the Loan, and all
14 renewals, extensions and modifications of the Note; and (2) the performance of
15 Borrower‟s covenants. For this purpose,2 Borrower does hereby mortgage, grant
16 and convey to MERS (solely as nominee for Lender and Lender‟s successors and
17 assigns) and to the successors and assigns of MERS,3 the following described
18 property in the County of [_________].4
19 Borrower understands and agrees that MERS holds only legal title to the interests
20 granted by Borrower in this Security Instrument,5 but, if necessary to comply with
21 2
There is no “purpose” stated in the preceding sentence.
22 3
How can the borrower simultaneously “convey” the property to: (1) MERS as nominee for
lender; (2) MERS as nominee for lender‟s successors and assigns; and (3) MERS‟s own
23
successors and assigns? Furthermore, who are such successors and assigns? No assignment
24 could have existed as of the moment the mortgage was executed by the borrowers, and if
somehow same did exist, it should have been disclosed as a fundamental and material aspect of
25 the transaction. If the assignment occurred prior to the mortgage, the mortgage itself is void
26 because the lender had no interest to secure.
27 4
A mortgage is not a conveyance of property by operation of law in some states.
28 5
What “interests” does this passage refer to, and to whom were they granted?
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COMPLAINT
1 law or custom,6 MERS (as nominee for Lender and Lender‟s successors and
2 assigns) has the right to exercise any or all of those interests, including, but not
3 limited to, the right to foreclose and sell the Property, and to take any action
4 required of Lender including, but not limited to, releasing and canceling this
5 Security Instrument
6
7 309. With the oversight of Defendants and MERSCORP, Inc. and its unknown
8 principals, the MERS artifice and enterprise evolved into an “ultra-fictitious” entity, which can
9 also be understood as a “meta-corporation.” To perpetuate the scheme, MERS was and is used
10 in a way so that to the average consumer, or even legal professional, can never determine who or
11 what was or is ultimately receiving the benefits of any mortgage payments. The Defendants set
12 about to confuse everyone as to who owned what. They created a truly effective smokescreen
13 which has left the public and most of the judiciary operating “in the dark” through the present
14 time.
15 310. On its website, www.mersinc.org, MERSCORP, Inc. lists the shareholders of
16 “MERS,” which are defined on a separate page of the site as “Mortgage Electronic Registration
17 Systems, Inc.” Among the shareholders of MERS, according to the site, are the following
18 institutions: Bank of America, Chase, CitiMortgage, Inc., Fannie Mae, Freddie Mac, HSBC,
19 SunTrust, and Wells Fargo.
20 311. The Defendants of course did not want there to be any documentation which
21 could later potentially be used as evidence of their crimes. They did not want to pay the fees
22 associated with recording mortgages and they did not want to be bothered with the trouble of
23 keeping track of the originals. That is the significance of the word „Electronic‟ in Mortgage
24 Electronic Registration Systems, Inc. The Defendants, through this exceptionally sophisticated
25 legerdemain, made over the American judicial system‟s long-honored requirements for
26 mortgages and foreclosures to serve their own selfish interests and to minimize the possibilities
27
28 6
No “law or custom” could possibly necessitate action by MERS, as opposed to action by the
original lender and agreements under this Security Instrument and the Note.
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COMPLAINT
1 of the victims obtaining any meaningful redress through the courts. They undermined long-
2 established rights and sabotaged the judicial process itself by de-emphasizing the importance of,
3 and eventually eliminating, “troublesome” documentation requirements. While conversion to
4 electronic loan documentation may eventually be implemented, it will ultimately be brought
5 about only through duly enacted legislation which includes appropriate safeguards and
6 counterchecks, instead of the present practice where the banking industry foxes are guarding the
7 henhouse as each new golden egg (a new mortgage) is hatched.
8 312. Some of the employees or agents or representatives of the Defendants, including
9 attorneys, have become skilled in using the artifice of MERS to sabotage the judicial process to
10 the detriment of borrowers, and, over the past several years, have routinely relied upon MERS to
11 do just that.
12 313. Upon information and belief:
13 a. MERS is not the original lender for any of the Plaintiffs‟ loans;
14 b. MERS is not the creditor, beneficiary of the underlying debt or an
15 assignee under the terms of the Promissory Notes of the Plaintiffs;
16 c. MERS does not hold the original of the Promissory Note, nor has it ever
17 held the Promissory Notes of the Plaintiffs;
18 d. The Mortgagee, MERS, is owned by the company, MERSCORP, Inc.,
19 which is in turn owned by a group of Wall Street investment Banks,
20 including some of the Defendants;
21 ///
22 e. At all material times, MERS was unregistered and unlicensed to conduct
23 mortgage lending or any other type of real estate or loan business in the
24 State of California and has been and continues to knowingly and
25 intentionally illegally and fraudulently record mortgages and conduct
26 business in California and elsewhere on a large scale and systematic
27 fashion, for some of the Defendants and other lenders;
28
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COMPLAINT
1 f. No promissory Note or other evidence exists which could ever make the
2 Plaintiffs indebted to MERS in any way.
3 314. Some of the Defendants make additional revenues doing such things as “title
4 work” to assist in the disposition of foreclosed properties. Some of the Defendants provide legal
5 and non-legal services regarding “lender owned real estate.” Properties of this type, which are
6 owned by the lenders or other real parties in interest, are referred to as “REO‟s.” Some of the
7 Defendants perform “processing” and title services relating to those post-foreclosure REO
8 properties, thereby increasing their massive profits from the illegal activities herein described
9 resulting in substantial additional profits to those Defendants.
10 315. Through these and other “spin-off” activities and entities, Defendants have made
11 hundreds of millions of dollars fraudulently subverting the judicial process and the constitutional
12 safeguards designed to protect the rights of litigants so as to manufacture a foreclosure and
13 foreclosure-litigation industry which simply drives the hapless citizens in their path to cycle after
14 cycle of impossible loans, refinancing, loan modifications, and inevitable foreclosure.
15
16 ACTION BY THE ATTORNEY
17 GENERAL OF CALIFORNIA (AND OTHER STATES)
18 316. Upon information and belief, the Attorney General of California, and the Attorney
19 Generals of all 50 states, are currently investigating the acts of the Defendants, or some of them,
20 in this case, and Plaintiffs reserve the right to amend this Complaint to reflect the results of such
21 investigations and any complaints or other actions taken by the Attorney General of California or
22 the Attorney Generals of other states, against the Defendants in this case or any of them, and to
23 incorporate any findings or determinations made by said Attorney Generals or tribunals in which
24 they assert such claims on behalf of consumers who are affected in ways similar to those of the
25 Plaintiffs here.
26 ///
27 ///
28 ///
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COMPLAINT
1 OTHER RESERVATIONS AND FUTURE AMENDMENTS
2 317. Plaintiffs reserve the right, and make seek to amend this Complaint, to add
3 additional causes of action, or allege additional facts, or new parties, as new information is
4 developed and discovery in this case, in the ongoing governmental investigations of the
5 Defendants, or otherwise, or any new developments occur with respect to the Plaintiffs herein,
6 including but not limited to:
7 a. The filing of any new Notices of Default against the named Plaintiffs of
8 the ROE Plaintiffs.
9 b. Any illegal activities concerning, or means of attempting to collect on the
10 Plaintiffs‟ promissory notes or to assign or transfer those notes or the
11 associated deeds of trust, or any of Defendants‟ alleged rights in or title to
12 the California real estate securing such promissory notes.
13 c. Any foreclosure proceedings instituted after the filing of this Complaint,
14 or any actual foreclosure sales consummated or attempted to be
15 consummated, after the filing date of this Complaint,
16 d. Any attempts to coerce or threaten the Plaintiffs or any of them by
17 Defendants or any of them regarding the activities upon which this
18 Complaint is based or the assertions by Plaintiffs of their claims in this
19 Complaint, or any further disclosure or sale of Plaintiffs‟ private or
20 confidential information.
21 e. Any disparaging comments or remarks by Defendants or any of them
22 about Plaintiffs or their claims in this Complaint or as a result of
23 Plaintiffs‟ assertion of their claims in this Complaint, or any retaliatory
24 conduct by Defendants or any of them.
25 f. Any false or fraudulent promises of loan modification or other subsequent
26 wrongful activities by Defendants or any of them.
27 g. Any attempts to evict or institute unlawful detainer actions or the filing of
28 such actions against the Plaintiffs or any of them by any of the Defendants
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COMPLAINT
1 or their agents or representatives.
2 h. Any attempts by the Defendants or any of them to force any of the
3 Plaintiffs into bankruptcy due to the real estate mortgages described
4 herein, or to seek to lift any automatic stays if any of the Plaintiffs are
5 forced into bankruptcy due to the real estate mortgages describe described
6 herein.
7 i. Any change in status on the current “moratorium” on foreclosures on any
8 of the Plaintiffs‟ properties which may be in effect or which may hereafter
9 go into effect.
10
11 FIRST CAUSE OF ACTION
12 (By All Plaintiffs – Fraudulent Concealment – Against All Defendants)
13
14 318. Plaintiffs incorporate all preceding paragraphs of the Complaint as though fully
15 set forth herein.
16 319. Defendants had exclusive knowledge not accessible to Plaintiffs of material facts
17 pertaining to its mortgage lending activities that it did not disclose to Plaintiffs at the time it was
18 entering into contracts with Plaintiffs. As more fully alleged herein, these facts included false
19 appraisals, violation of Defendants‟ underwriting guidelines, the intent to sell Plaintiffs‟
20 mortgages above their actual values to bilk investors and knowledge that the scheme would
21 result in a liquidity crisis that would gravely damage Plaintiffs.
22 320. Further, in connection with entering into contracts with Plaintiffs, Defendants
23 made partial (though materially misleading) statements and other disclosures as to their
24 prominence and underwriting standards in the public releases, on their web site, in their literature
25 and at their branch offices. However, Defendants suppressed material facts relating thereto as set
26 forth above. Countrywide knew that the mortgages would be “pooled,” and “securitized sale.”
27 Countrywide also knew that within a foreseeable period, its investors would discover that
28 Countrywide‟s mortgagees could not afford their loans and the result would be foreclosures and
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COMPLAINT
1 economic devastation. It was the movie The Sting in real life, with real lives and with people
2 whose homes were often times their only asset.
3 321. Countrywide was more dependent than many of its competitors on selling loans it
4 originated into the secondary mortgage market, an important fact it disclosed to investors.
5 Mozilo expected that the deteriorating quality of the loans that Countrywide was writing, and the
6 poor performance over time of those loans, would ultimately curtail the company‟s ability to sell
7 those loans in the secondary mortgage market. Mozilo and the company‟s chief risk officer
8 warned David Sambol (“Sambol”), Countrywide‟s chief operating officer and president, and Eric
9 Sieracki (“Sieracki”), chief financial officer about the increased risk that Countrywide was
10 assuming. Each of the foregoing was aware, but Countrywide failed to disclose, that
11 Countrywide‟s business model was unsustainable.
12 322. In fact, the credit risk that Countrywide was taking was so alarming to Mozilo
13 that he internally issued a series of increasingly dire assessments of various Countrywide loan
14 products and the risks to Countrywide in continuing to offer or hold those loans, while at the
15 same time he, Sambol, and Sieracki continued to make public statements obscuring
16 Countrywide‟s risk profile and attempting to differentiate it from other lenders. In one internal
17 email, Mozilo referred to a particularly profitable subprime product as “toxic,” and in another he
18 stated that the company was “flying blind.” Mozilo believed that the risk was so high and that
19 the secondary market had so mispriced Pay-Option ARM loans that he repeatedly urged that
20 Countrywide sell its entire portfolio of those loans. Despite their awareness of, and Mozilo‟s
21 severe concerns about, the increasing risk Countrywide was undertaking, Countrywide hid these
22 risks from the borrowers, potential borrowers and investors.
23 323. Defendants misled borrowers, potential borrowers and investors by failing to
24 disclose substantial negative information regarding Countrywide‟s loan products, including:
25 a. The increasingly lax underwriting guidelines used by the company in
26 originating loans;
27 b. The company‟s pursuit of a “matching strategy” in which it matched the terms
28 of any loan being offered in the market, even loans offered by primarily
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COMPLAINT
1 subprime originators;
2 c. The high percentage of loans it originated that were outside its own already
3 widened underwriting guidelines due to loans made as exceptions to
4 guidelines;
5 d. Countrywide‟s definition of “prime” loans included loans made to borrowers
6 with FICO scores well below any industry standard definition of prime credit
7 quality;
8 e. The high percentage of Countrywide‟s subprime originations that had a loan
9 to value ratio of 100%, for example, 62% in the second quarter of 2006; and
10 f. Countrywide‟s subprime loans had significant additional risk factors, beyond
11 the subprime credit history of the borrower, associated with increased default
12 rates, including reduced documentation, stated income, piggyback second
13 liens, and LTVs in excess of 95%.
14 324. Countrywide knew this negative information from numerous reports they
15 regularly received and from emails and presentations prepared by the company‟s chief credit risk
16 officer. Defendants nevertheless hid this negative information from the public, including
17 Plaintiffs.
18 325. Plaintiffs did not know the concealed facts.
19 326. Defendants intended to deceive Plaintiffs. As described herein, that deception
20 was essential to their overall plan to bilk investors, trade on inside information and otherwise
21 pump the value of Countrywide stock.
22 327. Countrywide was one of the nation‟s leading providers of mortgages. It was
23 highly regarded and by dint of its campaign of deception through securities filings, press
24 releases, web site and branch offices, Countrywide had acquired a reputation for performance
25 and quality underwriting. As a result, Plaintiffs reasonably relied upon the deception of the
26 Countrywide Defendants.
27 328. As a proximate result of the foregoing concealment by Defendants, California
28 property values have precipitously declined and continue to decline, gravely damaging Plaintiffs
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COMPLAINT
1 by materially reducing the value of their primary residences, depriving them of access to equity
2 lines, second mortgages and other financings previously available based upon ownership of a
3 primary residence in California, in numerous instances leading to payments in excess of the
4 value of their properties, thereby resulting in payments with no consideration and often
5 subjecting them to reduced credit scores (increasing credit card and other borrowing costs) and
6 reduced credit availability.
7 329. Without limiting the damages as described elsewhere in this Complaint, Plaintiffs
8 damages arising from this Cause of Action also include loss of equity in their houses, costs and
9 expenses related to protecting themselves, reduced credit scores, unavailability of credit,
10 increased costs of credit, reduced availability of goods and services tied to credit ratings,
11 increased costs of those services, as well as fees and costs, including, without limitation,
12 attorneys‟ fees and costs.
13 330. To this day, Defendants profess willingness to modify Plaintiffs‟ loans in
14 accordance with law, but nonetheless they persist to this day in their secret plan to use Indian or
15 other offshore servicing companies to deprive Plaintiffs of their rights.
16 331. As a result of the foregoing, Plaintiffs‟ damages herein are exacerbated by a
17 continuing decline in residential property values and further erosion of their credit records.
18 332. Defendants‟ concealments, both as to their pervasive mortgage fraud and as to
19 their purported efforts to resolve loan modifications with Plaintiffs, are substantial factors in
20 causing the harm to Plaintiffs described in this Complaint.
21 333. Defendants acted outrageously and persistently with actual malice in performing
22 the acts alleged herein and continue to do so, and acted with callous disregard of Plaintiffs‟ rights
23 which, however, were known to Defendants. Accordingly, Plaintiffs are entitled to exemplary
24 and punitive damages in a sum according to proof and to such other relief as is set forth below in
25 the section captioned Prayer for Relief which is by this reference incorporated herein.
26 ///
27 ///
28 ///
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COMPLAINT
1 SECOND CAUSE OF ACTION
2 (By All Plaintiffs - Intentional Misrepresentation – Against All Defendants)
3
5 set forth herein.
6 335. From 2005 through 2007, Countrywide misled the public, including Plaintiffs, by
7 falsely assuring them that Countrywide was primarily a prime quality mortgage lender which had
8 avoided the excesses of its competitors. As described herein with specific examples, affirmative
9 misrepresentations and material omissions permeated Countrywide‟s website, customer and
10 investor materials, required securities filings and presentations.
11 336. Without limiting the foregoing, Countrywide‟s Forms 10-K for 2005, 2006, and
12 2007 falsely represented that Countrywide “manage[d] credit risk through credit policy,
13 underwriting, quality control and surveillance activities,” and the 2005 and 2006 Forms 10-K
14 falsely stated that Countrywide ensured its continuing access to the mortgage backed securities
15 market by “consistently producing quality mortgages.”
16 337. During the course of this fraud, Mozilo engaged in insider trading in
17 Countrywide‟s securities.
18 338. Countrywide‟s Forms 10-K deceptively described the types of loans upon which
19 the Company‟s business depended. While Countrywide provided statistics about its originations
20 which reported the percentage of loans in various categories, the information was misleading
21 because its descriptions of “prime non-conforming” and “nonprime” loans in its periodic filings
22 were insufficient to inform Plaintiffs what types of loans were included in those categories.
23 339. Nothing in Countrywide‟s securities filings informed Plaintiffs that
24 Countrywide‟s “prime non-conforming” category included loan products with increasing
25 amounts of credit risk. While guidance issued by the banking regulators referenced a credit
26 score (“FICO score”) at 660 or below as being an indicator of a subprime loan, some within the
27 banking industry drew the distinction at a score of 620 or below. Countrywide, however, did not
28 consider any FICO score to be too low to be categorized within “prime.” Nor did Countrywide‟s
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COMPLAINT
1 definition of “prime” inform Plaintiffs that its “prime non-conforming” category included so-
2 called “Alt-A” loan products with increasing amounts of credit risk, such as: (1) reduced or no
3 documentation loans; (2) stated income loans; and (3) loans with loan to value or combined loan
4 to value ratios of 95% and higher. Finally, it did not disclose that Pay-Option ARM loans,
5 including reduced documentation Pay-Option ARM loans, were included in the category of
6 prime loans.
7 340. Though Countrywide proclaimed in its Forms 10-K for 2005, 2006, and 2007 that
8 it managed credit risk through its loan underwriting, the company‟s increasingly wide
9 underwriting guidelines and exceptions process materially increased Countrywide‟s credit risk
10 during that time.
11 341. Countrywide depended on its sales of mortgages into the secondary market as an
12 important source of revenue and liquidity. As a result, Countrywide was not only directly
13 exposed to credit risk through the mortgage-related assets on its balance sheet, but also indirectly
14 exposed to the risk that the increasingly poor quality of its loans would prevent their continued
15 profitable sale into the secondary mortgage market and impair Countrywide‟s liquidity. Rather
16 than disclosing this increasing risk, Countrywide gave false comfort, again touting
17 Countrywide‟s loan quality. For example, Countrywide stated in its 2005 Form 10-K: “We
18 ensure our ongoing access to the secondary mortgage market by consistently producing quality
19 mortgages . . . . We make significant investments in personnel and technology to ensure the
20 quality of our mortgage loan production.” A virtually identical representation appears in
21 Countrywide‟s 2006 Form 10-K. Accordingly, Countrywide‟s failure to disclose its widening
22 underwriting guidelines and the prevalence of exceptions to those guidelines in 2005 and 2006
23 constituted material omissions from Countrywide‟s periodic reports.
24 342. In January 2007, a senior Countrywide executive McMurray sent an email to
25 Sieracki, which he subsequently incorporated by reference in his MD&A questionnaire,
26 explaining that Countrywide‟s delinquencies would increase in the future due to a weakening
27 real estate market and what McMurray characterized as credit guidelines that were “wider than
28 they have ever been.” On January 29, 2007 McMurray provided Sambol and others with an
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COMPLAINT
1 outline of where credit items impacted Countrywide‟s balance sheet. McMurray then forwarded
2 the email to the financial reporting staff, and specifically requested that a version of the outline
3 be included in the 2006 Form 10-K. The information was not included in the 2006 Form 10-K.
4 343. Countrywide never made any disclosures in its Forms 10-Q or 10-K for 2005,
5 2006, or 2007 about the unprecedented expansion of its underwriting guidelines. Instead,
6 Countrywide made public statements from 2005 through 2007 that were intended to mislead
7 Plaintiffs about the increasingly aggressive underwriting at Countrywide and the financial
8 consequences of those widened underwriting guidelines.
9 344. These documents contained misrepresentations as follows:
10 a. First, Countrywide‟s Forms 10-K for 2005, 2006, and 2007 stated that
11 Countrywide “manage[d] credit risk through credit policy, underwriting,
12 quality control and surveillance activities” and touted the Company's
13 “proprietary underwriting systems . . . that improve the consistency of
14 underwriting standards, assess collateral adequacy and help to prevent fraud.”
15 These statements were false, because Countrywide knew that a significant
16 portion of Countrywide‟s loans were being made as exceptions to
17 Countrywide‟s already extremely broad underwriting guidelines.
18 b. Second, Countrywide stated in its 2005 Form 10-K: “We ensure our ongoing
19 access to the secondary mortgage market by consistently producing quality
20 mortgages . . . . We make significant investments in personnel and
21 technology to ensure the quality of our mortgage loan production.” A
22 virtually identical representation appears in Countrywide‟s 2006 Form 10-K.
23 These statements were false, because, as set forth in detail above,
24 Countrywide was aware that Countrywide was originating increasing
25 percentages of poor quality loans that did not comply with Countrywide‟s
26 underwriting guidelines.
27 c. Third, the descriptions of “prime non-conforming” and “subprime” loans in
28 Countrywide‟s Forms 10-K were misleading because they failed to disclose
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COMPLAINT
1 what types of loans were included in those categories. The definition of
2 “prime” loans in Countrywide‟s 2005, 2006, and 2007 Forms 10-K was:
3 “Prime Mortgage Loans include conventional mortgage loans, loans insured
4 by the Federal Housing Administration (“FHA”) and loans guaranteed by the
5 Veterans Administration (“VA”). A significant portion of the conventional
6 loans we produce qualify for inclusion in guaranteed mortgage securities
7 backed by Fannie Mae or Freddie Mac (“conforming loans”). Some of the
8 conventional loans we produce either have an original loan amount in excess
9 of the Fannie Mae and Freddie Mac loan limit for single-family loans
10 ($417,000 for 2006) or otherwise do not meet Fannie Mae or Freddie Mac
11 guidelines. Loans that do not meet Fannie Mae or Freddie Mac guidelines are
12 referred to as “nonconforming loans.”
13 345. Nothing in that definition informed Plaintiffs that Countrywide included in its
14 prime category loans with FICO scores below 620. Neither did the definition inform Plaintiffs
15 that the “prime non-conforming” category included loan products with increasing amounts of
16 credit risk, such as: (1) reduced and/or no documentation loans; (2) stated income loans; or (3)
17 loans with loan to value or combined loan to value ratios of 95% and higher. Finally, it did not
18 disclose that Countrywide‟s riskiest loan product, the Pay-Option ARM, was classified as a
19 “prime loan.”
20 346. Mozilo and Sambol made affirmative misleading public statements in addition to
21 those in the periodic filings that were designed to falsely reassure Plaintiffs about the nature and
22 quality of Countrywide‟s underwriting. Mozilo repeatedly emphasized Countrywide‟s
23 underwriting quality in public statements from 2005 through 2007. For example, in an April 26,
24 2005 earnings call, Mozilo falsely stated that Countrywide‟s Pay-Option portfolio at the bank
25 was “all high FICO.” In that same call, in response to a question about whether the company had
26 changed its underwriting practices, Mozilo stated that “we don‟t see any change in our protocol
27 relative to the quality of loans that we‟re originating.”
28 ///
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COMPLAINT
1 347. In the July 26, 2005 earnings call, Mozilo claimed that he was “not aware of any
2 change of substance in [Countrywide‟s] underwriting policies” and that Countrywide had not
3 “taken any steps to reduce the quality of its underwriting regimen.” In that same call, Mozilo
4 touted the high quality of Countrywide‟s Pay- Option ARM loans by stating that “[t]his product
5 has a FICO score exceeding 700 . . . the people that Countrywide is accepting under this program
6 . . . are of much higher quality . . . that [sic] you may be seeing . . . for some other lender.” On
7 January 31, 2006, Mozilo stated in an earnings call “[i]t is important to note that [Countrywide‟s]
8 loan quality remains extremely high.” On April 27, 2006, Mozilo stated in an earnings call that
9 Countrywide‟s “pay option loan quality remains extremely high” and that Countrywide‟s
10 “origination activities [we]re such that, the consumer is underwritten at the fully adjusted rate of
11 the mortgage and is capable of making a higher payment, should that be required, when they
12 reach their reset period.” These statements were false when made, because on April 4, 2006,
13 Mozilo wrote of the bank‟s pay-option portfolio, “[s]ince over 70% [of borrowers] have opted to
14 make the lower payment it appears that it is just a matter of time that we will be faced with much
15 higher resets and therefore much higher delinquencies.”
16 348. Then, on May 31, 2006, at the Sanford C. Bernstein Strategic Decisions
17 Conference, Mozilo addressed investors and analysts and made additional false statements that
18 directly contradicted the statements he was making internally within Countrywide. Specifically
19 addressing Pay-Option loans, Mozilo told the audience that despite recent scrutiny of Pay-Option
20 loans, “Countrywide views the product as a sound investment for our Bank and a sound financial
21 management tool for consumers.” At the May 31 conference, Mozilo added that the
22 “performance profile of this product is well-understood because of its 20-year history, which
23 includes „stress tests‟ in difficult environments.”
24 349. Mozilo‟s statements at the Sanford Bernstein Conference were false, because at
25 the time that he made them he had just written to Sambol and Sieracki in a May 19, 2006 email
26 that Pay-Option loans would continue to present a long-term problem “unless rates are reduced
27 dramatically from this level and there are no indications, absent another terrorist attack, that this
28 will happen.”
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COMPLAINT
1 350. At a Fixed Income Investor Forum on September 13, 2006, Mozilo upheld
2 Countrywide as a “role model to others in terms of responsible lending.” He went on to remark
3 that “[t]o help protect our bond holder customers, we engage in prudent underwriting guidelines”
4 with respect to Pay-Option loans. These statements were false when made.
5 351. In the January 30, 2007 earnings conference call, Mozilo attempted to distinguish
6 Countrywide from other lenders by stating “we backed away from the subprime area because of
7 our concern over credit quality.” On March 13, 2007, in an interview with Maria Bartiromo on
8 CNBC, Mozilo said that it would be a “mistake'' to compare monoline subprime lenders to
9 Countrywide. He then went on to state that the subprime market disruption in the first quarter of
10 2007 would “be great for Countrywide at the end of the day because all of the irrational
11 competitors will be gone.”
12 352. Sambol also made misleading statements that were designed to reassure Plaintiffs.
13 For example, at a May 24, 2005 investor day presentation, Sambol reassured analysts that
14 Countrywide addressed the higher credit risk associated with adjustable rate mortgage programs
15 by requiring different underwriting criteria such as “higher credit scores or lower loan to value
16 ratios.” At the September 13, 2006 Fixed Income Investor Forum, Sambol downplayed
17 Countrywide‟s participation in originating subprime loans by falsely stating that Countrywide
18 had been “on the sidelines” of the risky subprime market. The statements in Countrywide‟s
19 periodic filings and statements by its chief executives were materially false when made because
20 Mozilo and Sambol were well aware that Countrywide had increasingly widened its underwriting
21 guidelines year over year from 2004 through 2006, and Countrywide‟s loan quality had
22 deteriorated as a result.
23 353. The foregoing misrepresentations were made with the intention that Plaintiffs rely
24 thereon. It was important to Countrywide that Plaintiffs rely on its misrepresentations so that
25 Plaintiffs would come to a false understanding as to the nature of Countrywide‟s business. The
26 foregoing misrepresentations were specifically intended to convince Plaintiffs to take mortgages
27 from Countrywide Defendants.
28 354. The campaign of misinformation succeeded. Plaintiffs relied upon the
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COMPLAINT
1 misrepresentations and entered into mortgages with Countrywide Defendants.
2 355. By reason of Countrywide‟s prominence and campaign of deception as to its
3 business plans and the relationship of trust developed between each of the Defendants and
4 Plaintiffs, Plaintiffs were justified in relying upon Defendants‟ representations.
5 356. As a result of relying upon the foregoing misrepresentations, each Plaintiff
6 entered into a mortgage contract with Countrywide Defendants.
7 357. In fact, the appraisals were inflated. Countrywide did not utilize quality
8 underwriting processes. Countrywide‟s financial condition was not sound, but was a house of
9 cards ready to collapse, as Countrywide well knew, but Plaintiffs did not. Further, Plaintiffs‟
10 mortgages were not refinanced with fixed rate mortgages and Countrywide ever intended that
11 they would be.
12 358. As a result of Countrywide‟s scheme described herein, Plaintiffs could not afford
13 the Countrywide mortgage when its variable rate features and/or balloon payments kicked in.
14 Further, as a result of the Countrywide scheme, Plaintiffs could not refinance or sell their
15 residence without suffering a loss of their equity investments.
16 359. As a result of the foregoing, Plaintiffs have lost all or a substantial portion of the
17 equity invested in their houses and suffered reduced credit ratings and increased borrowing costs,
18 among other damages described herein.
19 360. Plaintiffs‟ reliance on the misrepresentations of the Countrywide Defendants all
20 directed and ratified by the Countrywide Defendants, was a substantial factor in causing
21 Plaintiffs‟ harm.
22 361. BofA and the Countrywide Defendants represented to multiple Plaintiffs that they
23 would be assisted by Defendants in a loan modification. As described herein, that representation
24 was false. Defendants knew that representation was false when they made it.
25 362. Because of new laws pertaining to loan modifications and Defendants‟ insistence
26 that they had a genuine interest in complying therewith and in keeping borrowers in their homes,
27 Plaintiffs reasonably relied on the representations.
28 ///
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COMPLAINT
1 363. By delaying Plaintiffs from pursuing their rights and by increasing Plaintiffs‟
2 costs and the continuing erosion of each Plaintiff‟s credit rating, each Plaintiff‟s reliance harmed
3 that Plaintiff.
5 damages arising from the matters complained of in this Cause of Action also include loss of
6 equity in their houses, costs and expenses related to protecting themselves, reduced credit scores,
7 unavailability of credit, increased costs of credit, reduced availability of goods and services tied
8 to credit ratings, increased costs of those services, as well as fees and costs, including, without
9 limitation, attorneys‟ fees and costs.
10 365. Plaintiffs‟ reliance on the representations made by BofA and Countrywide
11 Defendants was a substantial factor in causing Plaintiffs‟ harm.
12 366. Plaintiffs are entitled to such relief as is set forth in this Cause of Action and such
13 further relief as is set forth below in the section captioned Prayer for Relief which is by this
14 reference incorporated herein.
15
16 THIRD CAUSE OF ACTION
17 (By All Plaintiffs - Negligent Misrepresentation – Against All Bank Defendants)
18
20 set forth herein.
21 368. Although BofA and the Countrywide Defendants may have reasonably believed
22 some or all of the representations they made, as described in this Complaint, were true, none of
23 these parties had reasonable grounds for believing such representations to be true at the time:
24 (1) the representations were instructed to be made, as to those Defendants instructing others to
25 make representations, or (2) at the time the representations were made, as to those Defendants
26 making representations and those Defendants instructing others to make the representations, or
27 (3) at the time the representations were otherwise ratified by the Countrywide Defendants.
28 ///
- 87 -
COMPLAINT
1 369. Such representations, fully set forth in the First Cause of Action and previous
2 sections of this Complaint, were not true.
3 370. BofA, the Countrywide Defendants intended that Plaintiffs rely upon those
4 misrepresentations.
5 371. As described herein, Plaintiffs reasonably relied on those representations.
6 372. By reason of Countrywide‟s prominence and campaign of deception as to its
7 business plans and the relationship of trust developed between each of the Defendants and
8 Plaintiffs, Plaintiffs were justified in relying upon Defendants‟ representations.
9 373. As a result of relying upon the foregoing misrepresentations, each Plaintiff
10 entered into a mortgage contract with a Countrywide Defendant.
11 374. As a result of Countrywide‟s scheme described herein, Plaintiffs could not afford
12 his or her Countrywide mortgage when its variable rate features and/or balloon payments kicked
13 in. Further, as a result of the Countrywide scheme, Plaintiffs could not refinance or sell his or
14 her residence without suffering a loss of Plaintiff‟s equity.
16 damages as a result of the foregoing also include loss of equity in their houses, costs and
17 expenses related to protecting themselves, reduced credit scores, unavailability of credit,
18 increased costs of credit, reduced availability of goods and services tied to credit ratings,
19 increased costs of those services, as well as fees and costs, including, without limitation,
20 attorneys‟ fees and costs.
24 ///
25 ///
26 ///
27 ///
28 ///
- 88 -
COMPLAINT
1 FOURTH CAUSE OF ACTION
2 (By All Plaintiffs – Injunctive Relief for Violation of Cal.
3 Civil Code § 2923.5 – Against All Bank Defendants)
4
6 set forth herein.
7 378. California Civil Code § 2923.5 requires that each mortgagee, trustee, beneficiary,
8 or authorized agent may not file a notice of default pursuant to California Civil Code § 2924
9 until 30 days after initial contact is made as required therein, or 30 days after satisfying the due
10 diligence requirements to contact the mortgage described therein. Defendants violated the
11 foregoing law by causing a notice of default to be filed against Plaintiffs‟ primary residential
12 properties without the mandatory notice. Defendants did not diligently endeavor to contact the
13 Plaintiffs as required by § 2923.5(g) and Defendants thereby also violated California Civil Code
14 §§ 2923.5 and 2924.
15 379. Included in the noncompliance, Defendants, and each of them, caused
16 declarations to be recorded in the public records that were, each of them, false. This act also
17 violates § 2923.5 and other California laws precluding the filing of false statements.
18 380. As a result of the foregoing unlawful conduct, Plaintiffs suffered further injury in
19 fact by the filing of notices of default and as such the Plaintiffs suffered monetary and property
20 loss. Such injuries and loss included diminished credit scores with a concomitant increase in
21 borrowing costs and diminished access to credit, fees and costs, including, without limitation,
22 attorneys‟ fees and costs with respect to wrongful notices of default and loss of some or all of the
23 benefits appurtenant to the ownership and possession of real property.
27 ///
28 ///
- 89 -
COMPLAINT
1 FIFTH CAUSE OF ACTION
2 (By All Plaintiffs – Unfair Competition – Against All Bank Defendants)
3
5 set forth herein.
6 383. Defendants‟ actions in implementing and perpetrating their fraudulent scheme of
7 inducing Plaintiffs to accept mortgages for which they were not qualified based on inflated
8 property valuations and undisclosed disregard of their own underwriting standards and the sale
9 of overpriced collateralized mortgage pools, all the while knowing that the plan would crash and
10 burn, taking the Plaintiffs down and costing them the equity in their homes and other damages,
11 violates numerous federal and state statutes and common law protections enacted for consumer
12 protection, privacy, trade disclosure, and fair trade and commerce.
13 384. The Defendants perpetrated their fraudulent scheme of selling off overpriced
14 loans by making willful and inaccurate credit disclosures regarding Defendants‟ borrowers,
15 including Plaintiffs, to third parties. This false credit disclosure was critical to the success of
16 Defendants‟ continued sales of the massive pools of mortgage loans necessary to perpetuate the
17 scheme. The Defendants were aware that if the true credit profiles of the borrowers and the
18 values of their real estate were accurately disclosed, the massive fraudulent scheme would end.
19 As a result, the Defendants repeated, reinforced, and embellished their false disclosures.
20 385. The Defendants knew the borrowers‟ credit was inadequate to support continued
21 loan payments, absent unsustainable inflation of property values. These pervasive false credit
22 disclosures to third parties (including purchasers of bundled mortgage pools created by the
23 Defendants) constituted false credit reports in violation of the Fair Credit Reporting Act, 15
24 U.S.C. §§ 1681 et seq., and these pervasive false disclosures permitted the Defendants to
25 continue their scheme and victimize the Plaintiffs.
26 386. These pervasive false disclosures also caused the bubble to burst. Once it became
27 known that some of the information provided by Defendants was false, the market for the sale of
28 bundled loans dried up. The Defendants began to issue foreclosure notices, property values
- 90 -
COMPLAINT
1 began dropping, and then, under the weight of deflation in a market that requires inflation, the
2 equity investments made by Plaintiffs and others in their homes was lost . . . and then Plaintiffs
3 were lost in the greatest economic recession since the 1930s.
4 387. As alleged by the SEC, this fraud also violated Federal law, including, without
5 limitation, the antifraud provisions and insider provisions of the Securities Act of 1933
6 (“Securities Act”) and the Securities Exchange Act of 1935 (“Exchange Act”) including, without
7 limitation:
8 a. Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a), by engaging conduct
9 which acted as a fraud on the purchaser of securities based on collateralized
10 mortgage pools;
11 b. Section 10(b) of the Securities Act and Rule 10b-5 thereunder, 15 U.S.C. §
12 78j(b) and 17 C.F.R. 240.10b-5, by making untrue statements of material fact
13 and omitting to state material facts necessary in order to make the statements
14 made, in the light of the circumstances under which they were made, not
15 misleading and/or otherwise engaging in acts, practices, or courses of business
16 which operated as a fraud or deceit upon purchasers of securities based on
17 collateralized mortgage pools; and
18 c. Section 13(a) of the Securities Exchange Act and Rules 12b-20, 13a-1 and
19 13a-3 thereunder, 15 U.S.C. § 78t(e), by filing with the SEC false information
20 for the fiscal years 2005 through 2007.
21 388. The foregoing violations were in furtherance of the fraud perpetrated on Plaintiffs.
22 In fact, Defendants could not have told the truth in their public filings without that truth
23 becoming known to Plaintiffs. Conversely, the false filings gave additional credence and support
24 to omissions, concealment, promises and inducements.
25 389. While processing the home loans of each Plaintiff herein, the Countrywide
26 Defendants and other Defendants came into possession, custody and control of their Private
27 Information.
28 ///
- 91 -
COMPLAINT
1 390. The guarantee of privacy granted to each Californian is a special personal and
2 property right. Other states may accord privacy rights by way of statute, or otherwise, but the
3 privacy right in California is a unique, fundamental, Constitutional, and inalienable right that is
4 also a protectable property interest. The privacy right granted by the California Constitution
5 necessarily includes protection from the release of the Private Information.
6 391. The Countrywide Defendants acknowledge and admit that their agents and/or
7 employees disclosed the Private Information of Plaintiffs to outside persons.
8 392. This Private Information of Plaintiffs was sold or otherwise disclosed to third
9 parties without Plaintiffs‟ consent, further violating Article I, § 1 of the California Constitution
10 and the California Financial Information Privacy Act.
11 393. The Private Information was disclosed and then used unlawfully and fraudulently
12 to apply for and receive multiple credit cards, charge accounts, and other credit from businesses
13 in the mistaken belief that they were dealing with a Plaintiff, and not with an identity thief.
14 394. These undeniable disclosures by the Defendants of nonpublic personal
15 information of the Plaintiffs and others also violated the Gramm-Leach-Bliley Act, 15 U.S.C. §§
16 6801 et seq.
17 395. By violating Plaintiffs‟ right to privacy and by misappropriating nonpublic
18 personal information for their own use, the Defendants thus wrongfully took each Plaintiff‟s
19 property interest in his or her Private Information and privacy, injuring each Plaintiff, and, as a
20 result, Plaintiffs are eligible for restitution because the Defendants wrongfully acquired the
21 property in which Plaintiffs had an ownership or vested interest.
22 396. The forgoing fraudulent concealment, material misstatements, and the intentional
23 violations of state and federal statutes cited herein constitute unlawful, unfair and fraudulent
24 business acts or practices and so constitute unfair business practices within the meaning of the
25 California Unfair Practices Act, Cal. Bus. & Prof. Code §§ 17200, 17500. Sections 17200 et seq.
26 of the California Business & Professions Code provides, in the disjunctive, for liability in the
27 event of any such “unlawful, unfair or fraudulent business act or practice.”
28 ///
- 92 -
COMPLAINT
1 397. The violations described herein are unlawful, in that they violate inter alia Article
2 I, § 1 of the California Constitution, the California Financial Information Privacy Act, Cal. Civil
3 Code §§ 1798.80-84, the Fair Credit Reporting Act, the Gramm-Leach-Bliley Act and the
4 Federal laws described herein. These violations are the basis for liability under § 17200 of the
5 Business and Professions Code, as is the unlawful and fraudulent activity described herein.
6 398. The actions described herein are unfair and patently fraudulent in that they were
7 conducted for the sole purpose of perpetuating an unlawful and unsustainable investment
8 scheme.
9 399. As a result of the actions, concealment and deceit described herein, each of the
10 Plaintiffs has suffered material financial injury in fact, including as described elsewhere in this
11 Complaint, loss of equity in their houses, costs and expenses related to protecting themselves,
12 reduced credit scores, unavailability of credit, increased costs of credit, reduced availability of
13 goods and services tied to credit ratings, increased costs of those services, as well as fees and
14 costs, including, without limitation, attorneys‟ fees and costs.
15 400. As a further result of the actions, concealment and deceit described herein, each
16 of the Plaintiffs has lost money or property as a result of such unfair competition, including the
17 loss of Plaintiffs‟ property interest in their Private Information as a result of the unconscionable
18 invasion of privacy and misappropriation of nonpublic personal information.
19 401. California Civil Code § 2923.5 requires that each mortgagee, trustee, beneficiary,
20 or authorized agent may not file a notice of default pursuant to California Civil Code § 2924
21 until 30 days after initial contact is made as required therein, or 30 days after satisfying the due
22 diligence requirements to contact the mortgage described therein. Defendants violated the
23 foregoing law by causing a notice of default to be filed against Plaintiffs without the mandatory
24 notice. Defendants did not diligently endeavor to contact the Plaintiffs as required by §
25 2923.5(g) and Defendants thereby also violated California Civil Code §§ 2923.5 and 2924.
26 402. As a result of the foregoing unlawful conduct, Plaintiffs suffered further injury in
27 fact by the filing of notices of default and as such the Plaintiffs suffered monetary and property
28 loss. Such injuries and loss included diminished credit scores with a concomitant increase in
- 93 -
COMPLAINT
1 borrowing costs and diminished access to credit, fees and costs, including, without limitation,
2 attorneys‟ fees and costs with respect to wrongful notices of default and loss of some or all of the
3 benefits appurtenant to the ownership and possession of real property.
4 403. The foregoing unlawful activities were pervasive and violate Business and
5 Professions Code § 17200 et seq.
6 404. As a result of Defendants‟ unfair competition, Plaintiffs are entitled to restitution
7 for all sums received by Defendants with respect to Defendants‟ unlawful and/or unfair and/or
8 fraudulent conduct, including, without limitation, interest payments made by Plaintiffs, fees paid
9 to Defendants, including, without limitation, the excessive fees paid at Defendants‟ direction as
10 alleged by the FTC, and premiums received upon selling the mortgages at an inflated value.
11 405. Plaintiffs are also entitled to the issuance of a temporary restraining order, a
12 preliminary injunction, and a permanent injunction restraining and enjoining Defendants from
13 any further concealment with respect to the sale of notes and mortgages, any further violation of
14 § 2923.5, any further violation of Article I, § 1 of the California Constitution, the California
15 Financial Information Privacy Act, Cal. Civil Code § 1798.82, the Fair Credit Reporting Act, and
16 the Gramm-Leach-Bliley Act, and any further disclosure or use of the Private Information, other
17 than as intended by the Plaintiffs.
21 407. To the extent, if at all, that any of the foregoing facts give rise to claims
22 cognizable under federal law or in federal courts, Plaintiffs are expressly electing, at the present
23 time, not to pursue any such federal claims or pursue any of Plaintiffs‟ claims in federal court.
24 ///
25 ///
26 ///
27 ///
28 ///
- 94 -
COMPLAINT
1 PRAYER FOR RELIEF
2 WHEREFORE, Plaintiffs pray for judgment against Defendants and each of them as
3 follows:
1. General, special and exemplary damages according to proof under the First,
4
Second, Third, and Fifth Causes of Action;
5
2. Declaratory relief voiding the notes and mortgages of Plaintiffs held or serviced
6
by the Bank Defendants and temporary, preliminary, and permanent injunctive relief under the
7 First, Second, Fourth, and Fifth Causes of Action;
8 3. Statutory relief according to proof under the Fourth Cause of Action;
9 4. Restitution according to proof under the Fifth Cause of Action;
10 5. Temporary, preliminary, and permanent injunctive relief under the Fourth and
11 Fifth Causes of Action;
12 6. On all causes of action, for costs of suit herein;
13 7. On all causes of action, for pre- and post-judgment interest;

8. On all causes of action for which attorney‟s fees may be awarded pursuant to the
14
governing contract, by statute or otherwise, reasonable attorneys fees;
15
9. On all causes of action, for such other and further relied as this Court may deem
16
just and proper so that each Plaintiff shall recover no more than $70,000 in restitutionary or
17
compensatory damages and so that each Plaintiff shall receive a judicial determination that the
18 mortgage lien alleged to exist against their particular property is null and void ab initio; and
19 10. On all causes of action, for such other and further relied as this Court may deem
20 just and proper.
21
Dated: February 15, 2011 Respectfully submitted,
22
23
24
25
26
27
Philip A. Kramer
28 Kramer & Kaslow
Attorneys for Plaintiffs
- 95 -
COMPLAINT

Country Wide BofA Feb 2011 Complaint

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Country Wide BofA Feb 2011 Complaint

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Philip A.

Kramer SB# 113969

SOSTENES MURGA, an individual; LEE E. 2. INTENTIONAL

15 Plaintiffs and other Countrywide borrowers.

16 6. Hand-in-hand with its fraudulently-obtained mortgages, Mozilo and others at

19 standards and fraudulently inflate property values – county-by-county, city-by-city, person-by-

22 mortgagees on an unprecedented scale.

23 7. From as early as 2004, Countrywide‟s senior management led by Mozilo knew

22 induced the Plaintiffs into their scheme without telling them.

25 is supported and sanctioned by the Defendants herein.

16 17. Plaintiff, DANIEL MAXAM, is an individual residing in the State of California,

21 18. Plaintiff ALEJANDRO ALARCON, is an individual residing in the State of

25 over processing the loan.

26 19. Plaintiff JULIE ANDERSON is an individual residing in the State of Oregon,

23 24. Plaintiff BUNNY BOWERS is an individual residing in the State of California,

16 28. Plaintiff HENRY BURGESS is an individual residing in the State of California,

21 29. Plaintiff JOSE CABANAS is an individual residing in the State of California,

26 30. Plaintiff ELVIRA CADENAS is an individual residing in the State of California,

17 processing the loan.

23 35. Plaintiff LISA DAGGS-CHARETTE is an individual residing in the State of

27 over processing the loan.

15 Servicer or some other control capacity over processing the loan.

16 39. Plaintiff K.C. CRANDALL is an individual residing in the State of California,

21 40. Plaintiff ANTONIO CRUZ is an individual residing in the State of California,

18 45. Plaintiff DOLORES SABLAN is an individual residing in the State of California,

23 46. Plaintiff ROBERT DUBOIS is an individual residing in the State of Colorado,

16 50. Plaintiff EVELYN SISTRUNK is an individual residing in the State of

20 capacity over processing the loan.

26 52. Plaintiff ENIO FONTANELLI is an individual residing in the State of Florida,

18 56. Plaintiff GENARO MENJIVAR is an individual residing in the State of Utah,

27 or some other control capacity over processing the loan.

15 over processing the loan.

16 61. Plaintiff STEPHANIE GOTTERO is an individual residing in the State of

20 over processing the loan.

21 62. Plaintiff KARLA GOULART is an individual residing in the State of California,

26 63. Plaintiff SALVADOR GUTIERREZ is an individual residing in the State of

17 over processing the loan.

18 67. Plaintiff BENJAMIN INGRAM is an individual residing in the State of

22 capacity over processing the loan.

23 68. Plaintiff TAMMY JACKSON is an individual residing in the State of Florida,

26 74. Plaintiff LAVANCE JOHNSON is an individual residing in the State of Virginia,

16 83. Plaintiff ASHLEY LARSEN is an individual residing in the State of California,

21 84. Plaintiff LEVON LATCHINIAN is an individual residing in the State of

25 over processing the loan.

26 85. Plaintiff OLIVER LAZARO is an individual residing in the State of California,

17 processing the loan.

23 90. Plaintiff MADONA OANDASAN is an individual residing in the State of Hawaii,

15 over processing these loans.

16 94. Plaintiff NAOMI MARTINSEN is an individual residing in the State of Utah,

21 95. Plaintiff MARVIN MENDONCA is an individual residing in the State of Nevada,

21 106. Plaintiff DONALD OKADA is an individual residing in the State of California,

17 over processing the loan.

23 112. Plaintiff RICHARD PILLSBURY is an individual residing in the State of Oregon,

16 116. Plaintiff LORETTA RAYA is an individual residing in the State of California,

21 117. Plaintiff RHONDA CHISHOLM is an individual residing in the State of Nevada,

26 118. Plaintiff DANIEL RICHARD is an individual residing in the State of Nevada,

17 over processing the loan.

18 122. Plaintiff FRANK ROPER is an individual residing in the State of Massachusetts,

22 processing the loan.

23 123. Plaintiff HOWARD ROSENTHAL is an individual residing in the State of

27 over processing the loan.

16 127. Plaintiff SHARON KING is an individual residing in the State of Washington,

21 128. Plaintiff JEREMY SHEAFFER is an individual residing in the State of Virginia,

17 over processing the loan.