The Real News

June, 2018
Dodd-Frank Rollback Signed by President Trump

President Trump signed a bipartisan bill which seeks to loosen key portions of the Dodd-Frank Act of 2010. This is the first major change to President Obama's banking law. The new legislation exempts dozens of banks from strict federal regulation. Trump had pledged to "dismantle" the Dodd-Frank Act. The Dodd-Frank Act has been targeted by Republicans because they believe it is too strict. This new legislature is deemed the first step in the process of completing dismantling the Dodd-Frank Act. It does release dozens of banks from the stronger Federal Reserve oversight but falls quite a bit short of the vow to repeal and replace. The Republicans did not have enough votes to pass the bill in the Senate and needed some critical votes from moderate Democrats.

The new legislature raises the threshold for Federal oversight from $50 billion to $250 billion in assets. Banks that fall below the new threshold are no longer subject to automatic Federal stress tests and capital buffers that were put in place to protect large firms from severe financial crises. They are also no longer required to submit a "living will" to the Federal Government for approval. The living will outlines how the bank would be able to liquidate its assets during a bank's failure without causing a widespread meltdown.

The bill also includes several provisions that scrap rules effecting community banks and credit unions. For firms that hold 500 or less mortgages in a year will no longer have to report certain data on home loans to the federal regulators. This data was required under anti-discrimination laws. The bill broadens the definition of what a qualified mortgage is for smaller firms. It also exempts banks and credit unions with less than $10 billion assets from the Volcker Rule. The Volcker Rule bans firms from making risky bets with their own assets.

Trump stated that the legislation will allow community banks and credit unions to become vibrant and strong after being suffocated by years of overregulation. Trump called the Dodd-Frank Act a disaster that was regulating small firms the same way as big complex financial institutions are. Bank and credit union lobbying groups praised the regulatory relief they've sought for years. It was stated that this new regulation will put community banks in a much better position to unleash their full economic potential.
Case of the Month

Placer Foreclosure Inc., Plaintiff and Appellant, v. Solomon Aflalo, Defendant and Appellant

Solomon Aflalo borrowed funds to buy a home. Placer Foreclosure, Inc. was the trustee under the deed of trust used to secure the loan. When Aflalo defaulted on the loan, Placer conducted a foreclosure sale. Pro Value Properties, Inc. bought the property through the foreclosure sale. After payment of the fees and costs of the sale as well as the obligations on the loan, the transaction resulted in a surplus of funds to the amount of $974,786.81.

Aflalo filed a wrongful foreclosure action against Placer and Pro Value in an attempt to invalidate the foreclosure sale and to quiet title the property. Placer responded with an interpleader complaint. An interpleader is when there is a dispute over funds from a real estate transaction and the parties hand the money over to the court for the court to decide who gets what funds. At the end of an interpleader, the court releases the funds directly to any party awarded the funds. Aflalo filed a demurrer to the interpleader complaint without leave to amend. The court granted Aflalo's demurrer to the interpleader. Aflalo then filed an application for a judgment of dismissal and for the court to release the interpleaded surplus funds to Aflalo. The Trial Court entered a judgment of dismissal but denied Aflalo's request to release the interpleaded funds to him. Placer appealed the decision.

During the appeal process, Aflalo and Pro Value entered into a settlement agreement where Pro Value agreed they had no claim to the interpleaded funds and that they should be released to Aflalo. Since it appeared there was no longer any dispute over who should receive the funds, Aflalo requested the appeal be dismissed because the interpleader complaint was now moot. The Appellate Court disagreed that the complaint was moot.

The interpleader complaint was not deemed moot because Placer requested attorney's fees, a discharge from liability, and dismissal from the wrongful foreclosure action. The Appellate Court determined that the interpleader was properly dismissed by the Trial Court, but Placer is not entitled to their attorney fees, discharge from liability, or an order of dismissal from the wrongful foreclosure action.

Under statute, Placer was supposed to release the surplus funds to Aflalo. They did not because Pro Surplus (the new Buyer) could have made a claim to the funds. However, the statute is very clear and the funds were supposed to go to the Trustor, which is Aflalo. Therefore, the Appellate Court remands to the Trial Court to release the funds to Aflalo. The judgment of dismissal is affirmed. Placer is denied attorney fees and Aflalo is awarded costs on appeal.

California is First State to Mandate Solar

New homes and apartment buildings built after January 1, 2020 in California are now mandate to include solar panels. The California Building Industry Association has been working with the California Energy Commission for the last 10 years to bring this mandate to fruition using new standards that will help the building industry. Builders have the option to build solar panels onto individual buildings or utilize a shared bank of panels to accommodate multiple buildings. This is a big step in the California Energy Commission's plan to make California a "greener" state. California state law already requires that 50% of all electricity is generated from non-carbon-emitting sources by 2030.

Critics of the new law point out that this new mandate will add an estimated $8,000 to $12,000 cost per home in a market that is already deemed by many too expensive for the average homebuyer. The California Energy Commission estimates this increase will amount to roughly a $40 increase in monthly mortgage payments while saving the homeowner roughly $80 per month on heating, cooling, and lighting costs.

There are exceptions to the new mandate, such as buildings where solar is not feasible or cost effective, such as a building in an area where it's entirely shaded. Current homeowners are not required to install solar panels. However, many homeowners have added solar panels through government rebate programs.

California is ranked by the Solar Energy Industries Association as the top state in the US for solar energy production. Almost 16% of California electricity last year came from solar power.
Upcoming Speaking Engagements

June 23 - Escrow Training Institute 

June 27 - Lab Coat Agents Live 

July 14 - Long Beach Escrow Association 

July 21 - Nor Cal Conference 

July 24 - San Diego Escrow Association 




Jennifer Felten, Esq., Principal & Editor
(805) 265-1031 
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