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On September 11, 2009, Mike and Zerla Bell closed escrow on their first home, a 1302-square-foot single-family residence in Lincoln Acres. It was a big step for the Bell family, who had been living in a two-bedroom, one-bath apartment in La Mesa.

“This is not a La Jolla neighborhood,” said Perry Wright, the realtor who sold the Bells their Freddie Mac–owned property. As Wright described the area, a small, unincorporated community located in the southeast corner of National City, a rooster belted out powerful crows in the background. But the Bells, who qualified for an FHA loan, were proud to call the area their home.

Wright described the Bells as “the salt of the earth” because despite their low income they have good credit. “They are people who keep up with their responsibilities regardless of their financial situation,” Wright said.

Zerla, 40, a homemaker, and her husband Mike, 40, a drywall journeyman, considered the move from a cramped 800-square-foot apartment to a home of their own a momentous occasion. It meant that their children, Elena, 9, and Jovani, 6, who had already moved several times, would finally experience some stability. The children would — for the first time — have their own bedrooms, and the Bell family looked forward to many years of enjoying and living in the rustic and modest confines of Lincoln Acres.

However, that joy was short-lived.

Less than a month after buying their home, the Bells received a notice from the County’s Department of Planning and Land Use that cited their dwelling for “unlawful construction” and “unlawful use of land.” An addition on their house had been built without a permit, and it violated the ten-foot setback regulation for their property.

The notice suggested the following correction: “Submit plans to code enforcement addressing all unpermitted construction. To obtain required permit and inspection be allowed or remove or restore to original condition. Remove 363 square feet of unpermitted addition on the west side of the dwelling.”

What did this mean?

Just weeks after moving in, the Bells suddenly faced the possibility that a portion of their home would be demolished. The 363-square-foot addition included the entry, living room, dining room, and kitchen.

Zerla recalled the Saturday they received the letter and her shock that they could lose their home because of a setback violation they were unaware of. The Bells had never received any information about the violations from the seller of the home.

The following Monday, Zerla spoke with the code compliance officer and heard a daunting tale of another home, in Bonita, that was in a similar situation. Zerla was told that the property owners had hired a lawyer, spent money trying to get a variance (an approved exception to the regulation), but eventually lost their house.

A few weeks later, on October 19, 2009, the Bells wrote a letter to their title insurance company, Fidelity National Title, to file a claim, as they had discovered that the violations were a public record before and during escrow.

After some research at the Department of Planning and Land Use, the Bells had found that a citation had been issued to Freddie Mac, the property owner. It had been mailed to Litton Loan Servicing, LP, a company based in Houston, Texas.

Two documents were found: first, a warning that was issued on June 30, 2009; and second, a fine for $100 that was dated September 9, 2009, two days before the Bells closed escrow on the home.

The Bells were confident that their claim would be approved because they believed that the code violation was one of the many items that their title insurance company covered.

“We have title insurance that covers everything,” both Bells said. Or at least that’s what they were led to believe.

Specifically, their insurance, according to their realtor Perry Wright, covered subdivision map act violations, zoning violations, and forced removal, as well as boundary wall or fencing encroachment and, most importantly, forced removal due to building setbacks.

However, the title insurance company denied their claim.

“They say it’s only items of public record that they cover,” explained Wright.

According to the insurance company, citations issued by the Department of Planning and Land Use are not considered public records. Wright pointed out that the citations are accessible to the public at the Department of Planning and Land Use. You can walk in there and get the information, he insisted. But the title insurance company defines public records as documents that are recorded in the county recorder’s office.

“They don’t record these types of items at the county recorder’s office,” said Wright. “It’s a [misleading] coverage. They’re offering coverage which truly doesn’t exist.”

So the Bells were left scrambling.

With their title claim denied, they sought the aid of county supervisor Greg Cox, and he assigned a policy advisor to their case. The advisor assisted in getting the Bells a resolution meeting with the Department of Planning and Land Use.

Before their meeting, the Bells went to the County Administration Building and verified that the tax records for the property listed it as 1302 square feet. The County had been collecting taxes on the illegal square footage.

Therefore, the Bells based their application for a variance on two facts: the County had been taxing the illegal square footage and the Bells didn’t have the money to correct the violations.

“We’re on FHA — 3.5 percent down plus closing costs,” declared Zerla. “We’re poor, we’re low income.”

However, at the resolution meeting they were again rebuffed. County officials informed the Bells that a variance wouldn’t be granted because their lot was big enough that they could rebuild at the back of their home and simply correct the violation.

“Correct the violation? We don’t have the money to fund the demolition and then build a new one. Basically, it’s their win-win situation, not ours,” Zerla said. The Bells estimated the cost to rebuild at $150,000.

The Bells’ assertion that they could not afford the renovation was met with indifference at the meeting, and they say they were told to consider the experience a life lesson.

Zerla says that someone reminded them that they have two children and told them that an unpermitted addition to their property could easily fall apart or burn down.

The Bells had expected to be met halfway, but instead they were given two options: correct the violation or let the bank foreclose on their house.

“You can’t intentionally foreclose. That’s irresponsible. Why would you do that? You got your first home and now you want to foreclose it? How else can you buy another home? Who else is going to loan you the money?” asked Zerla.

The Bells did not find a resolution at their meeting. “They’re just going to belittle you in there,” Zerla said.

After they informed Greg Cox’s office of the outcome of the resolution meeting, Cox extended no further help.

Undeterred, the Bells continued to fight for their property.

On December 31, 2009, they attempted to reach out to the seller of their home, Freddie Mac.

Their friend and realtor, Perry Wright, wrote a letter requesting that the company assist in the demolition and renovation costs for the property. He asserted that Freddie Mac had failed in its duty to inform the Bells that the home violated county regulations. He wrote that neither Litton Loan Servicing, LP, nor Freddie Mac had “notified the buyers, their lender or their agent of this material fact.”

Theodore Flo, counsel for Freddie Mac, responded with the following written statement:

“The notices of violation were addressed to Litton Loan Servicing, not to Freddie Mac. Litton informs us that it never received them. Moreover, Freddie Mac became aware of the apparent violation only after closing when an individual from the Department of Planning and Land Use (DPLU) called our broker’s office and later faxed copies to him. Thus, your assertion that Freddie Mac had actual knowledge of the violations throughout the escrow period is incorrect.”

Flo further stated, “We regret that your clients are unhappy with the outcome of their purchase, but we believe that attributing their misfortune to Freddie Mac is unwarranted.”

Wright refuted Litton’s claim of never receiving the citations, saying that a photocopy of the check with which Litton paid the $100 fine can be obtained from the Department of Planning and Land Use. Since Litton was operating as an agent for Freddie Mac, said Wright, Freddie Mac should take responsibility.

“We did our due diligence. As first-time homebuyers, we went to the County records and tax records offices,” stated Zerla, who feels they did everything in their power to make sure their first home purchase wouldn’t have any problems.

Mike added, “We researched the house and anything you can find.”

Among the things that they did, the Bells confirmed that the current footprint of the home matched the square footage in the tax assessor’s records and made sure there were no recorded zoning violations or liens on the property. However, the Department of Planning and Land Use citations were not recorded by the county recorder’s office. The Bells, like most homebuyers, were unaware that a visit to the Department of Planning and Land Use was necessary.

In the course of qualifying for the FHA loan, the home was appraised by a government inspector, who confirmed that it measured 1302 square feet. The inspector was relying on square footage sourced by the county recorder’s office.

Mike and Zerla found no red flags during their research and believed that everything was fine once an inspector appraised the home and approved their loan.

After the Bells received the citation, they went to the Department of Planning and Land Use and found that the department’s records for their home showed it was smaller than 1302 square feet.

The Bells are trying to do everything they can to hold off the County from issuing further citations and forcing them off their property.

They’ve applied for a permit to demolish and rebuild the unpermitted construction to their home. They hope this will buy them time while they figure out a way to raise money.

Their realtor isn’t optimistic. “They have to try to somehow scrape up the dough. I really don’t see how that’s possible,” said Wright.

He believes that there could be an easy fix. “We want the Department of Planning and Land Use to recognize that the buyers are not at fault, that the government failed in providing protections for the client,” said Wright. “With that in mind, grant that variance. They can do that with a pen stroke.”

“It put a big dent in our plans,” said Zerla. “The County did this to us. The government did this to us. Even our lender wouldn’t help us. If we foreclose, they still get paid because of the insurance. Everybody wins, except us.

“We can’t walk away. That’s the bottom line. It’s too much of a commitment to walk away,” Zerla said, as tears welled up in her eyes.

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SurfPuppy619 Sept. 16, 2010 @ 5:01 p.m.

Wright pointed out that the citations are accessible to the public at the Department of Planning and Land Use. You can walk in there and get the information, he insisted. But the title insurance company defines public records as documents that are recorded in the county recorder’s office.

LOL....an insurance company engaging in insurance fraud-who would have guessed!!!!

NO, a document does not have to be filed with the county recorder for it to be a public record or document.

I would sue BOTH real estate agents-buy and sell side, their brokers, the seller and the title insurance company that wrote the policy.

They will settle, and fast if they are smart (don't expect them to eb smart though).


SurfPuppy619 Sept. 16, 2010 @ 5:13 p.m.

I would sue Litton Loan Servicing too.......and Freddie Mac, they were on notice of the problem and had a material duty to disclose, whether or not Litton Loan Servicing informed them.

Once Litton Loan Servicing was notified then Freddice Mac was on constructive-if not actual- notice.


SurfPuppy619 Sept. 16, 2010 @ 5:17 p.m.

The actions of the planning dept are common, these incompetent idiots run rampant in gov, and seem to be in every planning department I have encountered......all of them-Chula Vista was the worst.


RedRose Sept. 17, 2010 @ 12:04 p.m.

1- The County is not serving the needs of San Diegans. We need to: replace these county employees who are not doing their jobs right and change laws that no longer work or worst, does not make sense. 2- There ought to be laws that protect homebuyers. Who is the politician/organization who will step up to the plate? Who is the politician/organization who will keep his obligation to help and to protect the poor and the abused? Certainly, not all politicains/organizations are accepting money, bribes, and other forms of luxury from powerful banks and insurance companies. Or, am I too naive to think that there are still honorable politicians/organizations out there?


SurfPuppy619 Sept. 17, 2010 @ 3:10 p.m.

Or, am I too naive to think that there are still honorable politicians/organizations out there?

Hhahah...you made a funny.

It is right there in the story-they had help and the elected offical abandoned them when the Cuty refused to grant the requested variance.

I would try the Mayors office too I think.....


Founder Sept. 18, 2010 @ 7:52 a.m.

This story identifies a major problem that needs to be corrected and fast!

The City's various Departments, the County’s Department of Planning and Land Use and the Real Estate Industry need to meet and figure out a method to easily identify every property that is somehow "Blacklisted" so that buyers can actually "believe" the property reports they are being given!

It would seem to me that if the City and County refuse to do this then they are "at fault" because they are withholding information from the Public!

I also think it would be most helpful to provide every prospective Buyer with a "Property Clearance" sheet, that lists any un-permitted construction or setback issues, that requires a "stamp" from both the City and the County to complete escrow!


MsGrant Sept. 18, 2010 @ 8:44 a.m.

I'm baffled as to why the appraiser did not discover the unpermitted addition. And how could the county be taxing them for undisclosed square footage, unless a cash sale had transpired previously? No lender would lend on unpermitted square footage. I feel really bad for these people. This is an example of every responsible party stepping back and saying "I didn't do it". Their agent should be more involved than just this: "Their realtor isn’t optimistic. 'They have to try to somehow scrape up the dough. I really don’t see how that’s possible,' said Wright." He got his commission check.


RedRose Sept. 18, 2010 @ 8:51 a.m.

Agree. Everybody failed miserably especially protecting the buyer. The City and County departments do not communicate with each other. In the story above, the Tax Collector has been collecting property taxes for the illegal addition. The Building Records do not have accurate records. The Department of Planning and Land Use and Zoning Department should have that "clearance stamp" in all of their departments where the property is recorded as well as a piece of paper or sticker on the property itself identifyng that the property is "blacklisted." If their main goal is to correct the problem, then make it easy for everyone to identify the problem and what needs to be done. Also, why pay Title Insurance $500-$1000 for checking public records when buyers themselves can check online or visit the departments? The Bank should be liable for the Title Insurance company that they endorsed.
So, how do we fix this problem and fix it fast? But who cares? It's one more family pushed onto the streets. The American public don't seem to care if the victim has no commercial potential- gorgeously attractive or hideously ugly, no sad military story, not disabled, or not dying. In other words, does not qualify for a "reality show." This is real!


Founder Sept. 18, 2010 @ 9:05 a.m.

Reply #7 I wonder if the appraiser has E & O (errors and omissions) Insurance lie Insurance agents do?

Seems everyone will get sued and Lawyers will benefit in the end instead of the home buyers!

If I was the agent, I'd have already given my commission check to the Buyers! Saying you're sorry just does not cut it; these folks will probably lose their home and that will affect their entire future! I'm glad this story got written and I hope that we all demand some resolution for the Buyers from OUR Leaders!

If this happened to any of our Civic Leaders, you can bet that they would have gotten this matter straightened out ASAP...

Our next election motto should be: No More Double Standards...


Founder Sept. 18, 2010 @ 9:18 a.m.

Reply #8 Great post RedRose!

Well, for starters "we" care, and we should encourage all Online Readers to also care enough to call their elected Officials and get them to care enough to become an advocate for the Bell family; then list their response's here!

I also agree that when folks "play by all the rules" and still get shafted, then the County and City are to blame instead of the affected folks! If we are paying all these Civic employees to work for US, then they should do just that and not work against US!

More specifically, if the County’s Department of Planning and Land Use cannot get it's noticing ACT together, then they are leaving themselves open to public ridicule, lawsuit and possible "shake ups" especially in these tough economic times! If they are having problems making things "work" then they should be vocal about it so that "WE" can get to the bottom of problem and get it corrected ASAP; that's what our Leaders should be demanding because we are paying them to take care of Business...

I support the Bell Family 100% and so should all Readers!


x76 Sept. 20, 2010 @ 11:06 a.m.

How high up the government food chain does this family have to go, up into the strata of thousand-dollar suits and people who don't wash their own cars or mow their own lawns or whatever, to find some government official WHO CAN BE BOTHERED TO GET OFF THEIR BUTT AND HELP THIS FAMILY???

They're not asking for the moon. And this ought to be a NON-ISSUE, they did everything they could and it seems like no bloodsucking government leech can be bothered to DO A LITTLE REAL WORK and help them out -- their entryway is not exactly where some bureaucrat says it ought to be? Will that stop the world from revolving?

I mean, seriously -- which government employee has to be shaken awake to DO A LITTLE WORK BENEFITING REAL PEOPLE? Help the Bells out -- get the government bureaucracy off their back. Let them keep their home.

Who needs to hear from people? State Senators? The Governor? Who? How high up do we need to aim to get somebody's attention to save what to politicians look like ants, ie, regular people?

Lazier that housecats, politicians and government workers. "OH, we can't do ANYthing about it..." Get off your butt and do some good for a change, already.


Founder Sept. 20, 2010 @ 11:39 a.m.

Reply #11 X76, I like your style.

I'm encouraging everyone to call at least one Government Rep. and then post their response; that way we can see who is either part of the problem or part of the solution!


Founder Sept. 21, 2010 @ 5:15 p.m.

I sent a link to this Story to the City of SD's Land Use and Housing Chair Todd Gloria and cc'd his Senior Policy Advisor which also serves as Consultant to the Land Use and Housing Committee...


SurfPuppy619 Sept. 22, 2010 @ 11:48 a.m.

Who needs to hear from people? State Senators? The Governor? Who? How high up do we need to aim to get somebody's attention to save what to politicians look like ants, ie, regular people?

Lazier that housecats, politicians and government workers. "OH, we can't do ANYthing about it..." Get off your butt and do some good for a change, already.

By x76 11

Twice in the past I have had gov problems where I TRIED to enlist the help of high gov officials.

One was with this City, and Mayor Maureen O Connor was in charge, the second was with the federal gov and Senator Feinstein was contacted.

BOTH were USELESS. I would ram my head into a brick wall before trying to get help again from those clowns, you would get less brain damage from the brick wall.


x76 Sept. 22, 2010 @ 2:42 p.m.

I just got off the phone with a representative of Supervisor Cox' office, who was cordial, but insistent that since a citation had already been issued that it was looking like a civil matter and that Supervisor Cox' office had tried to steer the Bells towards legal aid.

I made the point that this kind of thing make the Supervisor look bad, the country look bad, and ultimately reduces faith in government, who look like a pack of a**holes already.

This isn't fair -- the family, through no fault of their own, finds themselves behind the 8-ball, the party least able to cope with the sudden expense of basically rebuilding half their new home.

This sucks out loud. I'm too angry to compose anything resembling an intelligent thought.


Founder Sept. 22, 2010 @ 4:48 p.m.

Reply #15 "Supervisor Cox' office had tried to steer the Bells towards legal aid."

"Cox steers Bells toward legal aid" is a mouthful!

I bet Supervisor Cox would not seek legal aid for her Real Estate Problems!

What about her role in fixing the system so other Families don't get the shaft "after they close" like the Bells?

I bet many folks will remember her "effort" when they see her name on the next ballot; where is the leadership we all are seeking?


Soxer Sept. 23, 2010 @ 7:38 p.m.

Founder - Supervisor Cox is a he, not a she, and I don't think there is anything Todd Gloria's office (or any other City of San Diego office holder or staffer) can do since this family does not live in the City of San Diego.

Hopefully there will be a positive outcome for this family.


Founder Sept. 24, 2010 @ 8:21 a.m.

Reply #17 1. Thanks Soxer, for correcting my gender error, and Sorry Supervisor Cox!

  1. "This family does not live in the City of San Diego,City"

I'm sure that there are many Real Estate "surprises" folks in the City of SD get because of situations like this.

It is up to our Leaders to make sure that noticing is timely and all Property record keeping is accurate. As an example, I know of one very funky property in NP that was bought as a tear down and AFTER the property was bought, the City suddenly decided to give it a historical designation, that the new or old Owners did not ask for, to prevent the new owner from tearing it down! This is not fair to the buyers as they now are stuck with a house that needs so many expensive repairs, than it would never be worth what the repairs cost, once it was "fixed"!


RedRose Sept. 27, 2010 @ 10:25 a.m.


The Bells live in the County of San Diego. Lincoln Acres is an unincorporated community of San Diego County. Board Supervisor Greg Cox represents District 1 where the Bells live. As a representative he has an obligation, a duty to help. Steering the Bells to legal referrals is not the answer. Legal groups do not have the resorces to help with real estate issues. Private legal groups are in the business of making money, they are not going to take the case on pro bono or on a contingency basis, that is too much work for them. The Bells, who are already poor and low-income and stuck with an FHA loan cannot afford to pay these high-priced real estate lawyers.


SurfPuppy619 Sept. 27, 2010 @ 11:18 a.m.

and that Supervisor Cox' office had tried to steer the Bells towards legal aid.

AKA "pass the buck"......or "kick the can down the road" to someone else.


SurfPuppy619 Sept. 27, 2010 @ 11:22 a.m.

Board Supervisor Greg Cox represents District 1 where the Bells live. As a representative he has an obligation, a duty to help. Steering the Bells to legal referrals is not the answer.

Yes, Cox is the one who SHOULD be doing his job-which he is not.


Because these people have no money-and money is what greases gov wheels. Cox only cares about Cox/himself, and his duty to continue on in some trough feeder gov position, not help the poor or defenseless against the tyranny (and far more powerful) of gov.........


sbd Oct. 1, 2010 @ 4:48 p.m.

The fact that this was a FHA Loan means that certain mandated compliance had to be met by the lender before FHA would have approved the loan and insured the lender for 100% of the risk. One of those requirements has to do with the safety in the building and renovations. These HUD FHA requirements were not followed in this case and HUD has an obligation to protect themselves from the risk of default.

If the property went into default due to the lender not following the FHA requirements and HUD is not informed, the lender will in fact get paid in full for the loan that they caused to go into foreclosure in the first place. That is not how it is supposed to work.

In fact, I believe that HUD will force the lender to make the fixes or they will rescind the insurance which in turn will cause problems for the lenders who have relied on that 100% guarantee to market a share in that loan.

Here is the HUD document with the requirements and the quote from the story that applies.

"Zerla says that someone reminded them that they have two children and told them that an unpermitted addition to their property could easily fall apart or burn down."


2-8 DEFECTIVE CONDITIONS. Defective construction, poor workmanship, evidence of continuing settlement, excessive dampness, leakage, decay, termites, or other conditions impairing the safety, sanitation or structural soundness of the dwelling shall render the property unacceptable until the defects or conditions have been remedied and the probability of further damage eliminated.

2-13 HAZARDS. The property must be free of hazards which may adversely affect the health and safety of the occupants or the structural soundness of the improvements, or which may impair the customary use and enjoyment of the property by the occupants. The hazards can be subsidence, flood, erosion, defective lead base paint (24 CFR Part 35) or the like.


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