From HW:
A California appeals court ruled that a former homeowner’s lawsuit against U.S. Bank for fraud may continue after the bank allegedly reneged on a promise to negotiate a mortgage modification, opening the door for claims from potentially thousands of similarly situated troubled borrowers in the Golden State.
While the court ruled that a case for fraud–which includes claims for damages–could proceed, it also ruled that the homeowner, Claudia Jacqueline Aceves, lacked sufficient cause to get her home back after the foreclosure sale.
What could become a landmark foreclosure ruling appears to be both a win and a loss, for mortgage servicers and foreclosure defense attorneys alike. Mortgage servicers prevailed on issues of alleged defects in the foreclosure process, with the court ruling that none of the Aceves allegations of irregularities “would permit the trial court to void the deed of sale or otherwise invalidate the foreclosure.” Aceves had claimed, for example, that the notice of default was defective and therefore void, a claim the court rejected outright. “Absent prejudice, the error does not warrant relief,” according to the ruling.
The court spent most of its 15-page ruling, however, discussing how U.S. Bank had purportedly promised to negotiate a potential loan modification if the homeowner agreed to allow the bank to lift a bankruptcy stay, which had protected the home from seizure. Yet, when the homeowner agreed and attempted to begin negotiation on a loan modification, the bank allegedly opted to foreclose without negotiating.
For homeowners, the case affirms their ability to go after banks and mortgage lenders for monetary damages when lenders promise to negotiate mortgage modifications but fail to do so in good faith.
Read full details of story here.
I sit as a pro tem in UD Court and you would be surprised how many people claim the were not given notice of default or other notice prior to the UD filing.
I wonder if this had anything to do with the Robo-signers?
The problem with this lawsuit is whether it takes into consideration the circumstances of the defaulter.
I couldn’t give rat’s ass for people who default on purpose…they should not be allowed to keep their homes, stay in their homes, or buy another house for AT LEAST another 10 years.
But if the person defaulting fell on tough times, that’s a different issue. I do feel people who are willing to keep their home should deserve a chance to do so…but not the douchebags who bought tonnes of stuff and feel it’s their right to walk away.
They didn’t give the exact reason for why she defaulted. But she couldn’t make her payments before the rate went up on her ARM – here is the story:
In April 2006, Aceves took out a 30-year, $845,000 loan at a rate of 6.35% with original payments about $4,860 per month. After two years, the rate became adjustable. In January 2008, Aceves could no longer make her payments, and a notice of default was filed in March of that year. Shortly thereafter, Aceves filed for Chapter 7 bankruptcy protection, which automatically stops foreclosure proceedings.
Aceves contacted U.S. Bank, which told her it “would work with her on a mortgage reinstatement and loan modification” as soon as the loan was out of bankruptcy, according to the ruling. Aceves said her intention was to convert the Chapter 7 case to Chapter 13, which allows a homeowner in default to reinstate original loan payments, pay the arrears over time and avoid foreclosure. U.S. Bank, meanwhile, filed a motion to lift the bankruptcy stay.
In November 2008, Aceves’ bankruptcy attorney received a letter from the attorney for the loan’s servicer, American Home Mortgage Servicing. The letter asked for an agreement in writing to allow American Home to contact Aceves to “explore loss mitigation possibilities.” When Aceves contacted the servicer, she was told American Home would not speak to her before the motion to lift the bankruptcy stay was granted. Aceves decided not to pursue Chapter 13 bankruptcy protection based on U.S. Bank’s promise to reinstate and modify the loan, according to the appellate court.
On Dec. 4, 2008, the bankruptcy stay was lifted. Five days later, without contacting Aceves, U.S. Bank scheduled the home for a Jan. 9, 2009, foreclosure sale. Aceves sent documents to American Home on Dec. 10 and was told on Dec. 23 that a negotiator would contact her on or before Jan. 13 (four days after the scheduled auction.). On Dec. 29, a negotiator called and said to forget about the foreclosure because the “file” had been “discharged” in bankruptcy. On Jan. 2, the negotiator called again and said American Home was incorrect and that it would reconsider.
On Jan. 8, the day before the scheduled sale, the negotiator said the loan’s new balance was $965,926, the new monthly payments would be $7,200 and a $6,500 deposit was due immediately. The negotiator refused to put the terms in writing, according to the appellate court’s finding. Aceves did not accept the offer, and the house was subsequently sold back to U.S. Bank the next day.
“U.S. Bank never intended to work with Aceves to reinstate and modify the loan,” the latest ruling said. “The bank so promised only to convince Aceves to forgo further bankruptcy proceedings, thereby permitting the bank to lift the automatic stay and foreclose on the property.”
If that USBsnk story is true (and since it’s JtR telling it, I don’t doubt it)–that is some seriously shady crap.
We, too, have been robbed by US Bank NA in CA. We were never in default, and they would not work with us. We just lost our UD and are in the Appellate court. So far, nothing we say, do, plead, issues we raise, argue…none of it works. The courts just won’t listen! Are the courts Pro-bank and anti-homeowner?? US Bank has defrauded us terribly, committed fraud upon the court and contempt of court, lied in court…yet they still prevail, while we are ignored! How can this be allowed? US Bank has done the same to many people around the nation that we have met in our battle against this terrible epidemic of injustice!
Ruth, big business has spent the past 30 years buying the courts. They own them, lock, stock and barrel. Business has underwritten the campaigns of judges and fronted money to push out anyone in the courts who stood up for the citizens.
Some pockets still exist where the court system functions as designed, but in most places it has been bought to the same degree our regulators have been bought (and Congress/Senate.)