Deflating a Balloon Partial Payment Conundrum: How to Handle Partial Payments After Loan Maturity - California ...
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Summer 2021
A Publication of the California Mor tgage A sso ciation
Deflating a Balloon Partial Payment Conundrum:
How to Handle Partial Payments After Loan Maturity
Elizabeth Knight – President
PLM Lender Services, Inc.
A P u b l i c a t i o n o f t h e C a l i f o r n i a M o r tg a g e A s s o c i a t i o n
Michelle Rodriguez – Vice President
R.C. Temme Corporation
Odell Murry – Secretary
MAI Financial Services, Inc.
Inside This Issue
From the President...................................................................... 2
Richard Selzer – Treasurer
Selzer Home Loans
From the Editor............................................................................ 3
David Herzer – Immediate Past President
Herzer Financial Services, Inc.
Sacramento Summary................................................................ 5
Steve Belleville James Perry
Redwood Mortgage Corp. Alliance Portfolio
Mark Forbes Lori Randich
Deflating a Balloon Partial Payment Conundrum................ 7
F.E. Forbes Company, Inc. Bay Laurel Financial
Angelica Gardner Stephen Rexrode Everything You Want to Know
Asher Evan Investments Cushman Rexrode Capital
Corporation About the New Auditor’s Report............................................10
Glenn Goldan
ReProp Financial Pam Sosa
Standard Mortgage Financial
Bradley Laddusaw, CPA Services, Inc. Eleventh Circuit Decision in Hunstein Places
S&L Capital Group
Shafiq Taymuree Debt Collection Business Models at Risk.............................. 13
Joffrey Long Stonecrest
Southwestern Mortgage
Richard Wachter
Sandy MacDougall Wachter Investments, Inc. Fall Seminar Save-the-Date..................................................... 15
Mortgage Vintage, Inc.
Annual and Summer Sponsors...............................................16
Michael Arnold & Michael Belote, Esq.
Legislative Advocates PAC Contributors........................................................................18
T. Robert Finlay K. Bradley Rogerson
Legal Counsel Securities Counsel MEMBER SPOTLIGHT: Odell Murry......................................... 21
Stricktly Strickland.....................................................................26
CMA HEADQUARTERS STAFF
Jennifer Blevins, CMP Michael Cochran is published by the California
Director of Management Services Webmaster / IT Manager Mortgage Association, a voluntary trade association
serving California mortgage and trust deed brokers
Teresa Excinia, MBA, CAE Stephanie Schoen and lenders.
Executive Director Special Projects
John Berkowitz Tricia Schrum, CPA 2520 Venture Oaks Way, Suite 150
Publications Director Accounting Sacramento, CA 95833
(916) 239-4080 – phone • (916) 924-7323 – fax
Jen Gross, CMP Natalie Sinclair cma@camgmt.com
Meeting Planner Special Projects www.californiamortgageassociation.com
Summer 2021 Page 1
Elizabeth M. Knight
2021-2022 CMA President
hope as of this writing you are all members perform many or all of these exceeded the list price by 12%, all cash, and,
doing well; taking time to be with your functions themselves. Could any of you the original list price was at market. There
families, taking time to take care of imagine simply performing one function are four driving forces that create such an
yourself, staying healthy and enhancing all day, every day? For the entrepreneurial occurrence: Low inventory, low interest
and protecting your businesses from the CMA members, it would be a “roller coaster rates, people who feel they need to jump
ongoing changes to the market and the on a flat track.” into the market, people with cash.
enactment of new legislation.
Sometimes, although we ride a roller But, as any of us know who have been in
As I had mentioned in the last Points of coaster ride every day, we want to make it this business many years, this is a cyclical
Interest President’s Message, I enjoy sharing wilder than it already is. Perhaps, it is not market and every time there is a downward
quotes from famous people. This edition’s a conscious choice. It is just something adjustment in the market it follows an
quote best described my thoughts about that wants us to feel bolder, more creative, accelerated uptick. My message here
CMA as a group since we are strong and just ... more. But, when looking back we today is to be especially cautious when
bold: think, “What was I thinking? Why did I work writing your loans in this type of market. Be
with that borrower? Why did I let them careful of the roller coaster rush of being
Yeah, life is complicated, but push me into closing so quickly without able to write a loan today because of the
if it wasn’t complicated, it performing as much due diligence as I lower LTV that you wouldn’t have written
normally do? Why did I step outside my six months ago.
would be a roller coaster on a knowledge base without further review or
flat track. Wouldn’t be a ride consult on this loan?” Maybe it is because Really get a feel of the values in your area,
worth taking. we want a bit of the shrieking highs and where they were and where they are going
— Suspense writer lows of any great roller coaster to rise to and how quickly. Perhaps you always were
Dean Koonz the precipice, free fall and then soar again. writing at 70% LTV. Today, you may want
to be more conservative. Although the
Many of the CMA members consist of small Currently, the real estate market is, in many market seems like it won’t be adjusting
enterprises which allow (or make) the areas, rising in value very quickly. Properties anytime soon since the rates are staying
owners to perform and perfect so many that sold last month for $1,250,000 are now low for at least a year or more, so say the
different functions of their business. Where selling for $1,450,000. We are seeing not feds, and the building of homes hasn’t
a large company has a team of loan officers, just multiple offers but unprecedented caught up with demand, the building
processors, underwriters, loan committees numbers of multiple offers causing offers will catch up and unless you are writing
for different types of loans, funders, closers, to exceed list price by as much as 10%, very short term loans, your loan could
post-close auditors, HR teams, accounting maybe more in some areas. I was talking get caught up in that. In some areas, tens
departments, marketing departments and to one agent who had 85 offers come in on
a myriad of other departments, our CMA one property and the final accepted offer continued on page 27
Page 2 Summer 2021
Mayumi Bowers
Editor,
hope that the first half of 2021 was fruitful shoring up the things that we should have always good to revisit. It is a nice reminder
for your business. I know that I was been doing but had not had the time to do. of those things that you should be doing, but
incredibly busy this year and my busyness These things alone have made us incredibly that may have slipped to the back burner. I
didn’t just come from new loans coming. A busy on top of dealing with new loans hope that the second half of 2021 will be great
lot of it came from making improvements coming in. for everyone, and I look forward to seeing
to our current processes and procedures, everyone at the Fall Seminar in Las Vegas. As
implementing the new rules and regulations The articles in this edition, touch on a couple another reminder, we are always looking for
that have come as a result of COVID-19, and of things that aren’t necessarily new but are new articles and newsletter ideas.
Steve Belleville Glenn Goldan Bradley Laddusaw, CPA
Odell Murry Stephen Rexrode Pam Sosa
Summer 2021 Page 3
Page 4 Summer 2021
By Michael J. Arnold & Michael D. Belote, Esq.
CMA Legislative Advocates
T
he Legislature is scheduled to adjourn both tenants and landlords. Working with to complete continuing education
this first year of the 2021-2022 two- other groups in the lending industry, we eliminating bias and cultural competency
year legislative session on September were able to avoid legislation which would – in Senate and likely to pass.
10th. Thus, it is a sprint to the end of the have impacted the foreclosure process.
session. In many respects, this is the most AB 1405:
dangerous period of the Legislature. Bills Several bills which did not pass this year, Creates the Fair Debt Settlement
are often “highjacked” at this time of year however, are now “two-year bills” which Practices Act regulating debt settlement
and a bill on garbage trucks can suddenly will be eligible for further consideration of unsecured debt, such as credit card
become a bill on mortgage lending. It during the second year of this two-year debt – in Senate and likely to pass.
is for that reason that your lobbyists session.
in Sacramento read every amendment AB 1466:
to every bill daily. Amendments can CMA is closely tracking over 60 bills during Establishes task force to search, redact,
transform a bill in our “watch” category this session. Some of the measures on our and compile a publicly searchable
into a measure we must strongly oppose list include the following: database of unlawful and discriminatory
– and on short notice. restrictive housing covenants – in Senate
AB 345: and likely to pass.
COVID-19 has made this session of the Would allow an ADU to be conveyed
Legislature the strangest one ever! separate from the primary residence SB 263:
Members and staff have been difficult pursuant to a local ordinance – in Senate Requires 2 hours training on “implicit
to reach, and lobbying committees has and likely to pass. bias” as part of the 45-hour continuing
required considerably more effort. Thus education for realtor license renewal – in
far, we have been successful in our efforts AB 255: Assembly and likely to pass.
to stop bad legislation or, in some cases, Would enact the C0VID Emergency Small
avoid the introduction of bad ideas in the Business Eviction Relief Act – killed on SB 373:
form of legislation we would have opposed. the Assembly Floor. This measure would Defines “economic abuse” as certain
have created more problems than it types of debt – 2-year bill.
The Legislature and the Governor have had would have solved – 2-year bill.
many issues to deal with this year including SB 449:
COVID-19, housing, homelessness, and a AB 561: Requires specified lenders to report on
budget outlook which went from a $54 Requires State Treasurer’s Office to climate-related risks in their portfolios to
Billion deficit to almost a $100 Billion help homeowners qualify for loans to the Department of Financial Protection
surplus. The roaring economy and construct ADUs and junior ADUs – in and Innovation – 2-year bill.
significant assistance from Washington Senate and likely to pass.
created a situation where the biggest SB 531:
problem for the Democratic majority in AB 948: Amends the Rosenthal Fair Debt
the Legislature was how to spend the Enacts measures to prevent unlawful Collection Practices Act and the Fair
unanticipated revenue. discrimination in the conduct of real Debt Buying Practices Act. Defines the
estate appraisals: (1) provides notice term “delinquent debt” as “a consumer
As we have reported, early in the session to buyers and sellers of their right to debt, other than a mortgage debt, that
the Governor signed a bill extending an unbiased appraisal of the property; is past due at least 90 days and has not
the State’s eviction moratorium through (2) establishes a mechanism to track been charged off” – in Assembly and
September and boosting funding for a complaints of underappraisals by likely to pass.
rent relief program addressing the needs of demographics; (3) requires appraisers
Summer 2021 Page 5
Page 6 Summer 2021
Sarah E.
Greenberg T. Robert
Davis, Esq. Finlay, Esq.
Wright, Finlay Wright, Finlay
& Zak, LLP & Zak, LLP
Deflating a Balloon Partial
Payment Conundrum:
How to Handle Partial
Payments After Loan Maturity
f you service loans with balloon payments,
you have almost assuredly faced a situation
where the loan has matured, but the borrower
fails to remit the full payment amount owed.
Instead, you receive a partial payment and
are left with two options – reject or accept
the payment.
Many times, the servicer, generally at the made by the borrower will not pay the
direction of the lender, accepts the partial loan off in full, which results in a large final
payment. But, by accepting, have you also payment at maturity. With respect to
inadvertently agreed to extend the loan residential loans, the Legislature decided
terms? Moreover, if you accept do you that borrowers needed to be reminded of
also need to send a new notice of payment the final payment to ensure awareness of
pursuant to Civil Code section 2924i? The what was coming due and adequate time
answer is found in the interplay between to prepare. Thus, Civil Code section
California Civil Code section 2924i and any 2924i, which requires the servicer send a
non-waiver clause contained in the loan notice of final balloon payment to the
documents. borrower, was enacted. In short, the
statute applies to balloon loans which are
for a period of longer than one year,
A. How Does Civil Code Section secured by a deed of trust on real
2924i Apply to Balloon Loans? property containing one to four
A balloon loan is a loan that does not residential units, of which at least one is
fully amortized over the course of the occupied by the borrower. Civil Code
loan term. That means any payments continued on page 8
Summer 2021 Page 7
Balloon Payments – continued from page 7
section 2924i(a). The statute requires the owed on the maturity date. Id. Notably, a Here, assuming the lender’s loan documents
lender provide a notice of final payment waiver can be oral, written or it can arise contain an anti-waiver clause which covers
to the borrower at least 90 days, but no from conduct that shows the lender clearly acceptance of payments post- maturity,
more than 150, before the final payment gave up the right. Id., see also Howard J. the lender’s mere acceptance of the
is due. Civil Code section 2924i(c). This White, Inc. v. Varian Associates (1960) 178 partial payment would not extend the
notice must identify the date the final Cal.App.2d 348, 353-355. loan terms. This is, of course, subject to
balloon payment is due, the payment the above caveat that the lender’s other
amount, where the payment should be Estoppel is an equitable doctrine codified conduct is consistent. For instance, if the
sent, and whether the borrower has a in California Evidence Code section 623, servicer orally representsto the borrower
contractual right to refinance. Civil Code which provides that when a party, by either that the loan due date has been extended
section 2924i(c). Failure to send the notice statement or conduct, leads another to or a monthly statement is sent to the
timely does not invalidate the loan but will believe a particular thing is true and the borrower showing a different due date
extend the loan terms via operation of law second party acts in reliancethereon, the post acceptance of the partial payment, a
to a date at least 90 days after the notice first party is not permitted to contradict court could find that the lender waived the
date, thus delaying collection on the loan. that statement or conduct in any litigation anti-waiver clause protections based on
Civil Code section 2924i(e), (f). Moreover, a arising out of that statement or conduct. that separate conduct. As a best practice,
willful violation of the statute can result in Cal. Evid. Code section 623. To succeed in situations where the lender decides to
an award of actual damages and attorney’s on an estoppel claim, the borrower would acceptthe partial payment, we recommend
fees. Civil Code section 2924i(f). need to show that the lender knew about the servicer also send a reservation of rights
the breach of the loan payment terms but letter to the borrower specifically advising
As relevant to our question above, this extended the loan term by accepting the them that acceptance of the payment is
section also states that “[i]f the due date partial payment, that the lender intended not to be considered a modification of the
of the final payment of a loan subject its conduct to be acted upon, that the loan or a waiver of any of the loan terms.
to this section is extended prior to the borrower did not know differently that This letter would not only cut against any
time notice is otherwise required under the loan had not been extended, and that argument by the borrower that the lender
this subdivision, this notice requirement the borrower relied upon the statement or intended to modify the loan, but also be
shall apply only to the due date as conduct to his detriment. DRG/Beverly Hills, strong evidence that the borrower knew
extended (or as subsequently extended).” Ltd. v. Chopstix Dim Sum Café & Takeout III, the acceptance was not a modification of
Civil Code section 2924i(c). Thus, if Ltd. (1994) 30 Cal.App.4th 54, 59. the due date.
accepting a payment after the loan matures
automatically extends the loan terms, then We are aware that some servicers will
C. How Do I Protect Myself?
you would arguably also need to send sometimes send a new 90-day notice
another notice to comply with Civil Code While the lender’s course of conduct/ under Section 2924i if they accept a partial
section 2924i(c) in situations where the loan acceptance of payment can potentially payment. However, we do not recommend
is extended more than 90 days. extend the loan terms, generally all such a course of action for two reasons.
loans also contain an anti-waiver clause First, logic dictates that since the loan
specifically to prohibit such an occurrence. terms have not been extended, a new
B. Can Acceptance Alone (Note – if you loan documents do not 90-day notice is not necessary to comply
Extend the Loan Terms? contain one, they should!) Anti-waiver with the statute’s requirements. Second,
As a general matter the parties’ course clauses generally provide that a lenders’ sending such a notice could actually be
of conduct, i.e., acceptance of partial failure to enforce its contractual rights in problematic because it could be used by
payments post-maturity, can extend the a breach situation shall not constitute the borrower as evidence that the lender
loan terms, usually through application a waiver of that breach or the remedies intended to voluntarily extend the due
of equitable principles such as waiver or available to the lender. Many also date, otherwise why did the lender send
estoppel. specifically provide that acceptance of late the new notice in the first place.
payments or partial payments does not
Waiver is the intentional relinquishment of constitute a modification of the loan or a In summar y, f irst check your loan
a known right after knowledge of the facts. waiver of any other remedy available by documents and review the anti-waiver
Waller v. Truck Ins. Exchange, Inc. (1995) 11 law. These clauses are consistently upheld provision. If it does not already specifically
Cal.4th 1, 31. To succeed on his waiver claim, by courts across the nation based on their address acceptance of late/partial
the borrower would need to prove by clear plain language, but enforcement is based payments, consider revising it. Next,
and convincing evidence that the lender on the parties’ actual conduct, which must consider implementing a policy requiring
freely and knowingly gave up its right to be consistent with the anti-waiver clause
require the borrower to pay the full amount terms. continued on page 9
Page 8 Summer 2021Balloon Payments – continued from page 8 a reservation of rights letter be sent to the borrower in situations where a partial payment is going to be accepted post- maturity. Ultimately, if you are unsure what level of protection you currently possess, please reach out to Wright, Finlay & Zak, LLP or your counsel to discuss your specific situation. If you have any questions regarding this topic, please do not hesitate to contact Sarah Greenberg Davis at sdavis@ wrightlegal.net or Robert Finlay at rfinlay@ wrightlegal.net. Disclaimer: The above information is intended for information purposes alone and is not intended as legal advice. Please consult with counsel before taking any steps in reliance on any of the information contained herein. Sarah Greenberg Davis is a Senior Associate Attorney at WFZ’s California office. Robert Finlay is a founding Partner of WFZ. Summer 2021 Page 9
Everything You
Want to Know
About the New
Auditor’s Report
Henry Chavez
Spiegel Accountancy Corp.
A
fter seemingly eons of time that The new auditor’s report is intended to In our opinion, the accompanying
we have had to become familiar increase its value by providing more financial statements present fairly, in all
with the standard auditor’s report, transparency into the audit and supplying material respects, the financial position
it is about to categorically change. That’s the user with more information on the of Company X as of December 31, 2021,
right, the Auditing Standards Board (ASB) auditor’s and management’s responsibility and the results of its operations and its
of the American Institute of Certified Public for the audit. cash flows for the year then ended in
Accountants (AICPA) has changed the accordance with accounting principles
auditor’s report by issuing Statement of generally accepted in the United States
What Are the Changes?
Auditing Standard (SAS) No. 134, Auditor of America.
Reporting and Amendments, including 1. Facelift
Amendments Addressing Disclosures in the 2. We are independent,
Audit of Financial Statements. The first thing you will notice is the entire ethical, and we own it
structure of the auditor’s report was flipped.
This new auditor’s report, which becomes In short, the audit opinion now comes first The “Basis for the Opinion” is a new section
effective for all reporting periods ending rather than last. Yes sir, no more waiting in the auditor’s report that provides clarity
on or after December 15, 2021, is designed for the auditor’s punch line to come at the regarding the auditor’s obligations. Here is
to give us a whole new literary thrill in end of the joke, as it will now come first. something new in the paragraph: we are
audit reporting because the report is ethical and independent. We as auditors
presumably more relevant and transparent. Report on the Audit of the find this amusing, and you should too since
Be forewarned as I attempt to elaborate Financial Statements (Template) this is the reason you hired us.
on the new standard with an injection of
humor. After all, who wants to read a dry Opinion Basis for Opinion (Template)
article on auditor’s reports?
We have audited the financial statements We conducted our audit in accordance
of Company X, which comprises the with auditing standards generally
Why the Change? balance sheet as of December 31, 2021, accepted in the United States of America
The ASB issued the new auditor’s report to and the related statements of income, (GAAS). Our responsibilities under those
coincide with international auditing and changes in stockholders’ equity, and standards are further described in the
assurance standards and create consistency cash flows for the year then ended, Auditor’s Responsibilities for the Audit
with the auditor’s report previously issued and the related notes to the financial of the Financial Statements section
by the Public Company Accounting statements.
Oversight Board. continued on page 11
Page 10 Summer 2021Auditor’s Report – continued from page 10
of our report. We are required to be the financial statements in accordance wanted to know about the steps auditors
independent of Company X and to meet with accounting principles generally perform.
our other ethical responsibilities, in accepted in the United States of America,
accordance with the relevant ethical and for the design, implementation, and Auditor’s Responsibilities for the Audit
requirements relating to our audit. We maintenance of internal control relevant of the Financial Statements (Template)
believe that the audit evidence we have to the preparation and fair presentation
obtained is sufficient and appropriate of financial statements that are free from Our objectives are to obtain reasonable
to provide a basis for our audit opinion. material misstatement, whether due to assurance about whether the financial
fraud or error. statements as a whole are free from
3. Management, you are still material misstatement, whether due
responsible, too In preparing the financial statements, to fraud or error, and to issue an
management is required to evaluate auditor’s report that includes our
Management, you are lucky! Not much has whether there are conditions or events, opinion. Reasonable assurance is
changed in what we have to say about your considered in the aggregate, that raise a high level of assurance but is not
role in making sure the financial statements substantial doubt about Company X’s absolute assurance and therefore is not
are correct. Essentially, you must promise ability to continue as a going concern for a guarantee that an audit conducted
us your company will not fold within 12 one year after the date that the financial in accordance with GAAS will always
months of issuing the financial statements. statements are issued. detect a material misstatement when
Remember, management is responsible for it exists. The risk of not detecting
the financial statements, not the auditor. 4. A discourse on your auditor and a material misstatement resulting
what work we do in your audit from fraud is higher than for one
Responsibilities of Management for resulting from error, as fraud may involve
the Financial Statements (Template) Anyone who reads the new auditor’s collusion, forgery, intentional omissions,
report will now have the joy of obtaining misrepresentations, or the override
Management is responsible for the an auditor’s “101 guide” through the audit
preparation and fair presentation of process. Voilà! Here is everything you continued on page 12
Summer 2021 Page 11Auditor’s Report – continued from page 11
of internal control. Misstatements internal control–related matters that In truth, the changes to the auditor’s
are considered material if there is a we identified during the audit. report should not impact the viewpoint
substantial likelihood that, individually of any reader. Therefore, you should not
or in the aggregate, they would influence 5. The new and exciting have to prepare them for it, other than
the judgment made by a reasonable Key Audit Matters (KAM) letting them changes exist.
user based on the financial statements.
The intent of this new, optional paragraph • Should you elect to include KAMs in the
In performing an audit in accordance in the auditor’s report is to disclose the auditor’s report?
with Generally Accepted Auditing most important audit matters encountered
Standards, we: during the audit. The spirit of this new Given that the paragraph is optional,
paragraph is to provide better information prior to including it, management should
• Exercise professional judgment and to users of the financial statements and to really consider whether it adds value to
maintain professional skepticism improve governance. While the AICPA may the readers of your financial statements.
throughout the audit. Identif y be excited about this revision, it remains
and assess the risks of material to be seen how beneficial it may be to the If you have any questions about SAS 134,
misstatement of the financial reader of the financial statements. Further, please contact me. I’m happy to help.
statements, whether due to fraud or key audit matters are already discussed in
error, and design and perform audit the communication with those charged
procedures responsive to those risks. with governance letter that auditors are Henry Chavez serves as a strategic resource
Such procedures include examining, required to provide to management. for growing organizations, guiding their
on a test basis, evidence regarding development and success. A seasoned public
the amounts and disclosures in the Key Audit Matters (Example) accountant, Henry provides assurance and
financial statements. business consulting services to privately-
Key audit matters are those matters that held businesses in the financial services,
• Obtain an understanding of internal were communicated with those charged manufacturing and distribution, technology,
control relevant to the audit in order with governance and, in our professional and non-profit sectors.
to design audit procedures that are judgement, were of most significance in
appropriate in the circumstances, our audit of the financial statements of the
but not for the purpose of expressing current period. These matters were addressed
an opinion on the effectiveness in the context of our audit of the financial
of Company X’s internal control. statements, and in forming our opinion
Accordingly, no such opinion is thereon, and we do not provide a separate
expressed. opinion on these matters.
• Evaluate the appropriateness The most sensitive accounting estimate
of accounting policies used and affecting the financial statements is Company
the reasonableness of significant X’s estimate of the collectability and valuation
accounting estimates made by of mortgage loans receivable, which is based
management, as well as evaluate the on historically collections and the fair value
overall presentation of the financial of collateral. We evaluated and tested the key
statements. factors and assumptions used to determine
fair value and found them to be reasonable
• Conclude whether, in our judgment, in relation to the financial statements taken
there are conditions or events, as a whole.
considered in the aggregate, that raise
substantial doubt about Company X’s
Are You Ready For the Change?
ability to continue as a going concern
for a reasonable period of time. The two issues management should
consider prior to the adoption of SAS 134
We are required to communicate are as follows:
with those charged with governance
regarding, among other matters, the • Do I need to inform the readers of the
planned scope and timing of the audit, financial statements about the change
significant audit findings, and certain in financial statement reporting?
Page 12 Summer 2021Eleventh Circuit Decision in Hunstein
Places Debt Collection Business Models at Risk
Brett L.
Foster, Esq.
Wright, Finlay
& Zak, LLP
Michelle A.
Mierzwa, Esq.
Wright, Finlay
& Zak, LLP
n April 21, 2021, the U.S. Court of debt, (3) the entity to which he owed creditor, or the attorney of the debt
Appeals for the Eleventh Circuit the debt, (4) that the debt concerned his collector.
issued an opinion in Hunstein vs. son’s medical treatment, and (5) his son’s
Preferred Collection and Management name. Compumail used that information Thus, the mere act of providing its
Services, Inc., creating new risk and to generate and send a dunning letter to third-party vendor with the information
uncertainty around the most common, Hunstein. necessary to create and deliver the
everyday business practices used by many collection correspondence can constitute
debt collectors, including loan servicers. On Appeal, the 11th Circuit ruled that a violation of the FDCPA.
994 F.3d 1341 (11th Cir. 2021). While a Hunstein could pursue claims that by
petition for rehearing en banc was filed providing this information to its third Often it seems Courts do not appreciate
on May 25, 2021, and thirteen industry- party vendor the debt collector violated the impact of their rulings on routine,
related amicus curiae briefs in support of § 1692c(b) of the Fair Debt Collection widely understood and accepted business
the rehearing were also timely filed, the Prac tices Ac t (“ FD CPA” ), entitle d practices on which entire segments of
opinion remains published at this time. “Communication With Third Parties.” This industry depend. That is not the situation
section provides – in Hunstein. The Court recognizes its ruling
Debt collectors often contract with third “may well require debt collectors ... to
party vendors for services such as creating Except as provided in section 1692b of in-source many of the services that they
and mailing collection letters, receiving this title, without the prior consent of had previously outsourced, potentially
incoming phone calls, even simple the consumer given directly to the debt at great cost.” The Court goes on to note
accounts receivable bookkeeping. These collector, or the express permission of that its “obligation is to interpret the law
practices now face increased scrutiny and a court of competent jurisdiction, or as as written, whether or not we think the
potential litigation as described in further reasonably necessary to effectuate a resulting consequences are particularly
detail below. postjudgment judicial remedy, a debt sensible or desirable.”
collector may not communicate, in
In Hunstein, the debt collector provided connection with the collection of any The 11th Circuit’s decision is only binding in
its mail services vendor, Compumail, with debt, with any person other than the Alabama, Florida, and Georgia. However,
information about Hunstein, including, consumer, his attorney, a consumer since the Court indicated that this is an
among other things: (1) his status as reporting agency if otherwise permitted
a debtor, (2) the exact balance of his by law, the creditor, the attorney of the continued on page 14
Summer 2021 Page 13Hunstein – continued from page 13
issue of first impression, it is very likely Both the federal FDCPA and the California
that Federal Courts of Appeals covering Rosenthal FDCPA only apply to the
other states may adopt the same approach collection of consumer debts. However,
in evaluating the inevitable lawsuits on California expanded the definition of a
this issue. It remains to be seen whether debt collector beyond the federal scope
arguments regarding agency and/or severe to include persons or entities collecting
services contract limitations on the use of their own debts, not only debts owed or
information will be considered to mitigate due to another.
claims of violation. As a result, loan servicers
and debt collectors should evaluate each If you have any questions or need assistance
third-party vendor relationship utilized evaluating your current debt collection
in relation to interaction with or about a practices in light of the Hunstein decision,
debtor. For residential loan servicers, this please contact Michelle Mierzwa at
may include call center vendors, business mmierzwa@wrightlegal.net or Brett Foster
process outsourcing vendors assisting in at bfoster@wrightlegal.net.
the processing of modification requests
and, clearly, print and mail vendors. Disclaimer: The above information is
exemption to the federal FDCPA’s definition intended for information purposes
For tunately, the initial transfer of of debt collector (and California recently alone and is not intended as legal advice.
information to counsel for the debt eliminated its attorney exemption to the Please consult with counsel before
collector would be exempt under the Rosenthal FDCPA). Thus, counsel for the taking any steps in reliance on any of
plain language of the statute. However, debt collector itself may be deemed a debt the information contained herein.
any further transfers of information by the collector under federal or state definitions
debt collector’s counsel to a subsequent of a debt collector, subjecting the transfer Brett Foster is Of Counsel for Wright, Finlay
vendor would be subject to scrutiny under of information by the law firm to a third- & Zak, LLP. Michelle Mierzwa is a Partner at
Hunstein. There is no longer an attorney party vendor to potential coverage as well. Wright, Finlay & Zak, LLP.
Page 14 Summer 2021Save the Date!
Townhall:
Current Trends and Industry Update
How I Grew My Business:
A panel of industry superstars lead by Glenn Goldan
KEYNOTE SPEAKER:
Jeff Havens of Big Pow Enterprises – “Top Business Challenges”
Landlord Tenant Issues Post-COVID Update
Cross-Collateralization Benefits and Pitfalls
Servicing and Default Issues
Broker Round Tables Ideas to improve your bottom line
PLUS – Members Only! Pool Managers Focus Group
And … TWO Sponsored Cocktail Events, Networking, and more!
Live in Las Vegas
CMA Fall 2021 Conference
October 13-15, 2021, Aria Resort
Summer 2021 Page 15CMA Thanks Our Annual Sponsors
— Platinum Sponsor —
— Silver Sponsor —
CMA Thanks Our Summer Seminar Sponsors
— Wednesday Night Mixer Sponsor — — Breakfast Sponsor —
— Thursday Cocktail Sponsor — — Thursday Food Sponsor —
— Thursday Break Sponsor — — Seminar App Sponsor —
— Wi-Fi Sponsor — — Name Badge Sponsor —
Page 16 Summer 2021Annual Sponsorship
Opportunities
Maximize your sponsorship dollars!
Don’t miss this chance to secure one of these exclusive sponsorship opportunities!
All opportunities are available on a first-paid, first-served basis.
EVENT SPONSORSHIPS: Platinum Gold Silver
$7,500 $5,000 $2,500
Splash Page on Seminar App* ✔
Push Notifications ✔ ✔
Sponsors Listing on Seminar App ✔ ✔ ✔
Banner Ad on Seminar App ✔ ✔ ✔
Logo Printed on Signage Posted Throughout Seminar ✔ ✔ ✔
Verbal Acknowledgement at Luncheon ✔ ✔ ✔
Logo Display Ad in CMA Newsletter for 4 issues ✔ ✔ ✔
Banner Ad on CMA Website 12 Months 9 Months 6 Months
Social Media Posts 2 posts (per seminar) 1 post (per seminar) 1 post (per Seminar)
Seminar Registration Vouchers 4 registrations 2 registrations 1 registration
Listing on Seminar Website ✔ ✔ ✔
Attendee List Sent After the Conference ✔ ✔ ✔
Please contact Teresa Excinia at teresa@camgmt.com if you would like to discuss other sponsorship opportunities.
We are enclosing a check for $__________ (make check payable to the California Mortgage Association)
Charge my credit card $__________: Visa American Express MasterCard
Please do not e-mail contract with credit card information, please fax or mail instead.
Card number: _____________________________________ Expiration Date: _______________ 3-4 digit CID#: ______
Billing Address: __________________________________ City, State:____________________________ Zip: _________
Name on Card: ______________________________________ Signature: _______________________________________
Name/Company (this name will be listed as the sponsor): _______________________________________________________________
Contact Person: ____________________________________________ E-mail: ____________________________________
Phone: _________________________________________ Fax: _________________________________________________
Address: _________________________________________ City, State:____________________________ Zip: _________
— Thank you for your generous support! —
* Exclusive; subject to availability.
Summer 2021 Page 17
California Mortgage Association
2520 Venture Oaks Way, Suite 150, Sacramento, CA 95833 • 916.239.4080 – phone
• cma@camgmt.com • www.californiamortgageassociation.orgPAC Contributions from July 2020 - June 2021
$2,000 – $7,300 $1,000 – $1,999 continued $500 – $999 continued
F.E. Forbes Company Inc. Cushman Rexrode Capital MAI Financial Services, Inc.
Corporation Toluca Lake
Berkeley
Oakland
Private Lender Link
Fidelity Mortgage Equity Wave Lending Redwood City
Lenders, Inc. Irvine Spiegel Accountancy Corp.
Los Angeles Pleasant Hill
FCI Lender Services, Inc.
Herzer Financial Anaheim Hills Sun Pacific Mortgage
Services, Inc. Santa Rosa
LBC Capital Income Fund
Redwood City North Hollywood Val-Chris Investments, Inc.
Irvine
To view this member-only content,
PLM Lender Services, Inc.
Campbell
Mortgage Vintage, Inc.
Newport Beach Woodland Hills Mortgage Corp
Woodland Hills
Selzer Homebecome
Loans a member
ReProp Financial
Eureka of CMA
Ukiah $200 – $499
A.C.M. Investor Services, Inc.
$500 – $999 Larkspur
Standard Mortgage
Financial Services Inc. Buchalter A.S.K. Investments, Inc.
Riverside Los Angeles Anaheim
Casco Financial Action Funding, Inc.
Stonecrest Financial Los Gatos Calabasas
San Jose Allstar Financial Services, Inc.
Creative Realty Woodland Hills
Marketing & Mortgage
Wachter Investments, Inc. Bakersfield Applied Business Software
Burlingame Long Beach
JMJ Financial Group Asher Evan Investments
Garden Grove Carmichael
$1,000 – $1,999
Lantern Financial Corp. Bay Laurel Financial
Abundance Capital Sherman Oaks San Carlos
Milpitas
Law Office of Budget Mortgage Corp.
Anchor Loans, Inc. Benjamin R. Levinson, APC
Los Angeles
Thousand Oaks Campbell
continued on page 19
Page 18 Summer 2021PAC Contributions from July 2020 - June 2021
$200 – $499 continued $20 – $199 $20 – $199 continued
Empire Trust Deed Agricultural Finance Private Financial, Inc.
Woodland Hills San Juan Capistrano Sherman Oaks
Bench Equity, LLC Redwood Mortgage Corp.
Hamilton Ridge Asset Management Mesa San Mateo
San Jose
Crawford Real Estate Services, Inc. Redwood Trust Deed Services, Inc.
Mid Valley Services, Inc. Redlands Santa Rosa
Fresno Dryden Capital Inc. S&L Capital Group
Novato Brea
Mortgage Securities Inc.
Encinitas Duner and Foote Select Mortgage
Irvine Calabasas
Mortgage+Care E.F. Foley & Co., Inc. Sequoia Mortgage Capital, Inc.
LOAN SERVICING SOFT Inc. San Jose San Anselmo
San Juan Capistrano
Federal Home Loans Corp. Soaring Falcon Mortgage Corporation
San Diego
To view this member-only content,
National Equity Funding, Inc. Pleasanton
Irvine James Baron Sunset Mortgage
Saratoga Mission Viejo
North Coast Financial, Inc.
become a member of CMA
Carlsbad
Pacific Capital Loans, LLC
Mortgage Lender Services, Inc.
Fair Oaks
Murphy Austin Adams Schoenfeld LLP
The Helvetica Group
Carlsbad
The Norris Group
Calabasas Sacramento Riverside
Private Capital Investments NDetail Capital LLC Total Lender Solutions, Inc.
Danville Newport Beach San Diego
Omni Financial Valley Mortgage Investments, Inc.
Private Mortgage Fund, LLC Capitola Bakersfield
Calabasas
Pacific Capital Funding Corp. Wilshire Finance Partners, Inc.
Residential First Mortgage Calabasas Newport Beach
Newport Beach Pivotal Capital Group II, LLC Wright, Finlay & Zak, LLP
Ladera Ranch Newport Beach
The Argus Group
Woodland Hills PrideCo Capital Management, LLC
Newport Beach
Trilion Capital
San Diego PAC
Unitrust Mortgage, Inc.
Announcements
San Diego
• Thursday AirPod Pros:
Watsonville Mortgage Mayumi Bowers
Watsonville
• Friday AirPod Pros & Apple Watch:
Woody Financial Realty Corp. Peter Steigleder
Long Beach
Summer 2021 Page 19DONATE TO THE CMA PAC TODAY!
CMA’s positive influence is crucial for our survival. Send your contribution today!
To view thistomember-only
It’s easy donate: content,
Goal
$75,000
become a member of CMA $51,768
Online at www.californiamortgageassociation.com
— or —
Send the additional amount with your monthly CMA dues
raised so
— or —
far since
Write a check to “CMA PAC” and send it today to: July 1, 2020
2520 Venture Oaks Way, Suite 150 • Sacramento, CA 95833
PROTECT YOUR INDUSTRY – CONTRIBUTE TODAY!
For more information contact:
Richard Wachter, Chairperson, CMA PAC Fundraising Committee
1-800-308-4961
Our PAC and our advocates in Sacramento always operate in full compliance with all laws and regulations relating to efforts to influence the public policy
process. We would never engage in any type of quid-pro-quo on public policy issues or entertain contributions in return for access. We support legislators
who are philosophically aligned with the interests of our membership and who work to ensure a business environment which allows our members to flourish.
Page 20 Summer 2021Odell Murry
T
he California Mortgage Association turns the spotlight on members who are making an impact
in their professional field and around the Association. These members exemplify the Mission of
the CMA. We know that our members are one of the most important aspects of this Association,
and we work hard to feature outstanding members. This time, the California Mortgage Association
turns the spotlight on member Odell Murry, President of MAI Financial Services, Inc., located in Los
Angeles, California. Odell has been a member of the California Mortgage Association since 2008.
Angelica He has also served as the CMA Board President, Vice President and Treasurer, as well as many CMA
Gardner committees, seminars, and panels. In addition to his many accomplishments in the CMA, he has led
Asher Evan quite an inspiring life. We are grateful to have Odell as a member and are excited for our members
Investments to learn more about his life.
Q Tell us a little about you, your
family, hobbies, etc.
crops, and a bayou that ran right through
the property – great for catching catfish!
We had our own cemetery, right on our
A As one of the youngest members
of my family, I was born and raised
in Los Angeles, California, but my oldest
property, where many of my ancestors are
buried. My father developed an incredible
work ethic which paid off. He left the farm
sister, Evell, and oldest brother, Nathan, and moved his family West. His first stop
were born in Opelousas, St. Landry Parish, was Houston, Texas, where my second
Louisiana. My mother and father, Ida oldest brother, Jerry, was born. Several
and Joshua, grew up as farmers in the years later, my father made a final move
tiny community of Garland, Louisiana, to Los Angeles, California, where I, and
also in St. Landry Parish. My grandfather two years later my youngest sister, Joselle,
William on my father’s side of our family were born.
was a sharecropper who never owned real
estate, but my grandfather Phillip on my There were five children in our family,
mother’s side owned an abundant amount which kept my mom busy as a stay-at-
of farmland. There were horses and cattle, home mom. She was a fantastic cook who
chickens and pigs, lots of hunting dogs,
a pecan orchard, acres of planted food Odell’s father and mother, Joshua and Ida Murry. continued on page 22
Summer 2021 Page 21Murry – continued from page 21
me. I like to take walks and exercise as
time permits throughout the day.
Q How did you find yourself
working in this industry? Was it
love at first sight or a longer path?
It was a 20-year journey that began in the
retail industry. Until 1960, F.W. Woolworth
Company, one of the country’s largest
retailers, would not allow Black Americans
to eat at lunch counters in their stores.
That changed when nationwide sit-ins led
Woolworth to rethink its policies. Little
did I know the change would launch me
on a career path.
Odell and his siblings, Evell, Nathan, Joselle, and Jerry.
enjoyed preparing delicious Louisiana- the most important and influential Black
style delicacies. Mom and dad frequently scholars and activists of his time. Among
displayed their Southern hospitality, often his many achievements, he was the first
hosting a parade of interesting people for African-American to earn a doctorate
dinner. This gave me an introduction to degree from Harvard University, and he
the value of being part of a community was a founding member of the NAACP
and of civic life. and the Pan-African Congress. The literary Woolworth’s board chairman decided the
estate is one of the world’s most extensive. company must hire an African American
As a kid, I was never good It includes not only the life works of Dr. Du executive to run one of their stores. I was
at sports, but excelled in Bois, but also those of Shirley Graham Du 17, working after school at a Woolworth
math and science and was Bois, his second wife, and David Graham Du store, and was stunned when I was offered
awarded a Bank of America Bois, Shirley’s son. Shirley was nationally the opportunity to train to become the
scholarship in mathematics. known as a playwright, composer and company’s first black store manager.
I attended Pepperdine author, and for her influence as an activist.
College (later Pepperdine David was a professor who devoted his While attending college full time, I went
University), majoring in career and much of his life to preserving through a special accelerated Woolworth
technical management, and and furthering the legacy of W.E.B. Du Bois. management training program. In 1969,
then matriculated at the age 20, I became Woolworth’s first African
California Military Academy,
where I graduated and was
commissioned a second
Q What do you do for work? What
is your typical day like?
American store manager. I was also the
first African American national chain store
manager in the United States.
lieutenant in the U.S. Army.
I did not have many hobbies growing up,
A My work includes operating a
commercial mortgage company,
managing investment properties, and
I managed several Woolworth stores over
the next 11 years. After leaving Woolworth
but as a young man, I became a sailor, managing the Du Bois literary estate. My for a new opportunity, in 1985 I opened
golfer, and mountain climber. During the typical day starts in the early morning, Mervyn’s flagship department store at
summer of 1986, I climbed to the summit and sometimes my day does not end until Horton Plaza, San Diego (Mervyn’s was
of Mount Kilimanjaro in Tanzania, Africa. late at night. When projects require lots owned by its parent company Dayton
of brainpower and concentration, I prefer Hudson Corporation, later renamed Target
A huge honor and responsibility came to to work on them early in the morning Corporation).
my life in 2005, when I inherited the rights when my energy level is high, or late in
to the W.E.B. Du Bois Estate. As everyone the peaceful hours of the night. I’m a
probably knows, Dr. Du Bois was one of workaholic, so long days do not bother continued on page 23
Page 22 Summer 2021Murry – continued from page 22
My final, capstone position in retail was
as President of Gateway Marketplace, an
affiliate of The Price Club (later named
others, I helped develop and introduce new
operational systems at CMA. Q Tell us a little about what else
you’re working on outside of the
mortgage industry.
Costco Warehouse Stores). I joined CMA after becoming interested
I then moved on to found a commercial
mortgage finance company, MAI Financial
in learning about the private mortgage
business. I discovered the value of a private
mortgage in 1989 when I learned banks
A Since 2005, I have had the distinct
honor to own and manage the estates
of W.E.B. Du Bois, Shirley Graham Du Bois,
Services, Inc. MAI specializes in origination had stopped financing industrial properties and David Graham Du Bois. As such, I
of institutional and private business- in the wake of the San Francisco earthquake. have the responsibility to oversee the vast
purpose loans in residential, retail, office, As the managing partner of a 120,000 intellectual property of the three estates,
industrial, and other income-producing square foot industrial building in the Bay including important works of fiction and
commercial real estate. Area, I needed to refinance a matured loan. non-fiction, as well as theatrical works. This
A private mortgage was my only option. is one of the most extensive literary estates
Q Who is your ideal/target customer?
That attracted me to CMA, the state’s only
private mortgage trade association, and
its long track record of providing quality
in the world, and many key works remain
unpublished or are being rediscovered.
A My b usin ess m o d e l in clu d es
origination of private and institutional
education to its members. I recently finalized negotiations with the
Roundabout Theatre Company in New
mor tgages on income producing
commercial properties, so my ideal/
target client owns or controls a portfolio
Q Knowing that you have attended
many CMA seminars, what is one
thing you look forward to the most at
York City to produce and perform Shirley
Graham Du Bois’s full-length play, “I Gotta
Home,” in one of their Broadway theaters.
of sizable income producing commercial each event? We recently did a successful live reading
properties. Such investors appreciate of the play for virtual viewers during the
having access to an experienced capital
source that understands their issues and
becomes part of their team.
A As an active CMA member, I always look
forward to meeting and networking
with my peers at events and keeping
COVID-19 lockdown. Of the viewers who
tuned in to the live event, 92% said they
are likely to see the performance and
up to date on industry news through recommend it to someone else when it is
Q What do you think your greatest
personal achievement has been?
CMA publications and seminars. The
organization affords members important
professional development opportunities,
available on a live stage.
Shirley Graham Du Bois was a noted Civil
A At age 33, I was named Outstanding
Young Man of America for 1982, which
was announced by Doug Blankenship,
as well as serving as an effective advocate
for the California private lending industry.
Rights activist and an integral figure in
Black theater. She authored an opera,
numerous plays, and many biographies
President of the U.S. Junior Chamber of With the massive uncertainty caused by that illuminated the Black experience
Commerce. I was honored to become the COVID-19 pandemic and the resulting in America. This will be the first full
a member of a group of distinguished economic fallout, CMA’s mission to educate performance of her works in 80 years. I am
Americans who have received this national its membership and to be responsive and excited to lead the resurgence of her work
award since 1934, including Nelson proactive is more important than ever. at this important time in our nation’s history.
Rockefeller, Henry Ford, John Kennedy,
Richard Nixon, Henry Kissinger, and Bill In addition, I am currently reviewing
Clinton. requests from major publishers and
producers to bring the works of W.E.B.
Q How long have you been a
member of the CMA? Why did
you join the CMA?
Du Bois to the renewed attention of the
world. It is no surprise that the works of
two of the greatest Black thinkers of the
20th century are resurfacing at this point
A I have been a member since 2008
and have served on the California
Mortgage Association board as Treasurer,
in history. I hope to continue to share
their wisdom to help illuminate the path
for future generations.
Vice President, and President. I also served
as chairperson of the Executive, Finance, I am also finishing up my memoir, titled
Nominating, and General Counsel Search The Woolworth Story 1960-1969, which I am
Committees. With the hard work of many planning to publish next year.
continued on page 24
Summer 2021 Page 23Murry – continued from page 23
Q You represent the legacy of
W.E.B. Du Bois a prominent Black
historical figure, and I know you have
Of course, I’ll never forget my time spent
working with Sol Price, the founder of
Price Club (Costco Warehouse Stores), who
in the mountains. We plan to continue that
routine. Although my heart goes out to our
many relatives and friends who have fallen
met many celebrities and famous I consider the greatest retail merchant of during the COVID-19 virus, the technology
people, who stands out as the most the 20 th century. And, I must mention that developed as a result of the pandemic
memorable? David Andrew Graham Jr. (Uncle David), the was a momentous advance, and will have
brother-in-law of W.E.B. Du Bois, who was lasting effects on the way business is
A I’m unable to list them all, but I’ve met
a lot of wonderful people in my life
my uncle, mentor and best friend. conducted. I express my gratitude to all the
first responders, front line medical workers,
and I’ve had many memorable occasions.
On December 22, 1999, I was pleased to join
Q Over the last year during the
COVID shutdown, what have you
learned to do differently? What is one
those who worked in the laboratories,
grocery stores, and other essential jobs
to keep things moving throughout our
President Bill Clinton and Hillary Clinton at new change that you will stick with nation’s shutdown.
the White House Holiday Reception. I was when everything opens up again?
also very impressed with meeting Secretary “You and I can never be satisfied
of State Madeleine Albright and David California has reopened, and things are with sitting down before a
Dinkins, the former mayor of New York City, quickly getting back to normal. I think the great human problem and
at that same White House holiday party. isolation of being in such a long lockdown saying nothing can be done.
brought everyone including me closer to
We must do something. That is
It was a delight to meet Cyril Magnin, CEO family, friends and neighbors. During the
of the Joseph Magnin Company, in San shutdown, my lovely girlfriend Cecilia and I the reason we are on Earth.”
Francisco. We spent time together in his spent time each week hiking and picnicking — W. E. B. Du Bois [1909]
office during 1980 in mentoring sessions
on fashion merchandising.
On June 19, 1981, a day I will never forget,
I had the pleasure of having dinner with
Frank Sinatra in San Francisco. Our dinner
party included Frank Sinatra, Rich Little and
Jerri Lange. Jerri was an award-winning
journalist, producer and host of several TV
shows in the Bay Area from 1969 to 1979.
She was the mother of Ted Lange who
played the bartender, Isaac Washington, on
the popular TV series “Love Boat.” Frank
and I developed a bond that night. Odell and Cecilia
at Bao Dai Summer
During the summer of 1988, I had the Palace, Da Lat,
privilege of meeting with the United Vietnam
States Ambassador to Czechoslovakia,
Shirley Temple Black, in her office in Prague,
Czechoslovakia. This was while that
country was still under communist rule. As
a little boy I had always enjoyed watching
Shirley Temple movies, but having a
personal one-on-one conversation with her
was certainly a highlight. She had been an
ambassador to Ghana and although their
paths never crossed in Africa, she knew
and spoke very highly of W.E.B. Du Bois,
and talked about the honorary doctorate
degree he received from Charles University
in Prague. Odell in Hue City,
Vietnam
Page 24 Summer 2021You can also read
