Lawsuits claim banks failing to honor loan modifications

Bank of America sold the mortgage servicing rights of $650,000 home loans to a company called Green Tree. Green Tree said it received no record from Bank of America of Adella King’s loan modification and declared her mortgage in default.

Consumer lawyers in Western Washington say they are seeing increasing instances of banks failing to honor home loan modifications.

“It scared the heck out of me. I pretty much lost it because I thought I was going to lose everything,” said Adella King of Enumclaw.

King says her home of 20 years was foreclosed upon after her bank denied that she had been granted a modification.

King says Bank of America gave her the loan modification – a reduction in her monthly payment – in 2013 after her husband’s death. But later that year, she says, BOA sold the loan to Green Tree Loan Servicing.

“(Green Tree) said they had received the documents but that there was no record of a loan modification,” said King.

After weeks of negotiation, King came home one day to find a foreclosure notice tacked up on her front door.

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Client Alert: From the Scheer Law Group: Servicer Claims for Mishandling Loan Modifications are Held to be the Obligations of the Lender

Client Alert: From the Scheer Law Group: Servicer Claims for Mishandling Loan Modifications are Held to be the Obligations of the Lender

To All SLG Clients and Affiliates.
From: Spencer Scheer
Date: July 7, 2016
Subject:  Client Alert: From the Scheer Law Group

Court are upholding Negligence Claims against Servicers for Mishandling Loan Modification Applications and holding that the Lender/Investor can be liable under agency Principles.

A California appellate court has held that borrowers can assert claims for both misrepresentation and negligent loan administration against a loan servicer and against an indenture trustee (lender/investor), as the servicer’s principal, resulting from allegedly mishandling a loan modification application  (See Daniels v. Select Portfolio Servicing, Inc., 246 Cal. App. 4th 1150, 201 Cal. Rptr. 3d 390 (2016)).

There is currently a split of authority under California law on whether there is a duty of care imposed by law on a servicer handling a loan modification application. The trend as evidenced by the Daniels case appears to be in favor of finding a duty of care under the law and  permitting the borrower to assert a negligence claim against the loan servicer for mishandling the modification process (Note: There is contrary authority). What should concern all lender/investors is that the Court in this case allowed claims against the lender/investor for acts of the servicer, for both the negligence and intentional misrepresentation claims, based on agency theories.

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Northern California property owners file suit against financial institutions over alleged breach of contract

SAN FRANCISCO – Martinez property owners have filed suit over their mortgage payments.

John Roemer and Paula Roemer filed a complaint on June 21 in the U.S. District Court for the Northern District of California against Fay Servicing LLC, U.S. Bank Trust National Association, Bank of America N.A., and Does 1 through 50 alleging breach of contract and other counts.

According to the complaint, the plaintiffs allege that Fay Servicing sent them inflated monthly payment demands on behalf of U.S. Bank that they claim were inconsistent with the terms of their loan modification. The plaintiffs holds Fay Servicing LLC, U.S. Bank Trust National Association, Bank of America N.A., and Does 1 through 50 responsible because the defendants allegedly failed to apply plaintiff’s January payment to the loan, resulting in a past due balance in their statement and placing their loan in default.

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Chase almost done with RMBS settlement’s consumer relief requirement

The Monitor of the Chase RMBS Settlement Joseph Smith officially credited Chase with providing $3,887,777,119 of consumer relief to 165,191 borrowers.

Through the third quarter 2015, JPMorgan Chase provided $206,242,520 in consumer relief to 3,389 borrowers.

This brings the bank extremely close to its required $4 billion in credited consumer relief by Dec. 31, 2017.

This is the eighth progress report on Chase’s consumer relief under its settlement with the federal government and five states concerning claims that Chase, Bear Stearnsand Washington Mutual packaged and sold bad residential mortgage-backed securities to investors before the financial crisis.

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Foreclosure Fraud Is Supposed to Be a Thing of the Past, But It Happens Every Day

Great job, David. And yes, foreclosure is still happening despite the financial analysts and banks are still stating that foreclosure is declining… A digitally notarized document? Now that is the newest fraud tactic.

By David Dayen

Chain of Title: How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud, is about three foreclosure victims who ended up doing more investigation of the corrupt U.S. mortgage industry than any state or federal law enforcement or regulatory official.

Here at The Intercept, in the past 10 months, I’ve written about the New Jersey man who had precious family heirlooms robbed by Wells Fargo subcontractors when they illegally “trashed out” his foreclosed home. I’ve written about the use of false documents in Seattle and the unregistered business trusts operating in Montana. I’ve written about the Texas jury that awarded $5 million in one wrongful foreclosure case with fabricated and robo-signed documents. I’ve written about the California Supreme Court enabling foreclosure victims to challenge phony documents in their cases.

That’s just a small sampling of what I hear nearly every day from homeowners who continue to challenge their cases and reveal massive fraud. And these are a few more:

• Here’s a document dated August 4, 2010. It’s an assignment of a deed of trust from the originator, American Brokers Conduit, to Wells Fargo. It was not only digitally signed, but it was digitally notarized. So the computer appeared personally before the other computer, I guess, to verify that this was the authentic computer that signed the document.

• Here are some documents from a “Tanya Ramirez”, signing as an officer of Countrywide, Bank of America, Recontrust, New Century Mortgage, and MERS (an private electronic registry used by banks to transfer mortgages), and once as a notary. All of the signatures are different. The partial lien release on the home of Doug Didrick, used to speed up a sheriff’s sale, was submitted to a Collier County, Florida court in April 2015, just one year ago. So this robo-signer still works for a company that forecloses on people for a living.

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• Earlier this month, a lawsuit from a Wells Fargo whistleblower named Duke Tran was unsealed. Tran says that he discovered that the bank routinely foreclosed on borrowers without proper documentation to prove they owned the loans. Wells Fargo managers instructed Tran, a 10-year veteran of a call center in Oregon, to lie about this lack of proof to customers. “When you come across a situation where we have a lost contract, deed, any type of document, really, but especially when it relates to securing a property, we are not to share that with the customer,” read one email from management. When Tran refused to comply, he says they fired him. This was in November 2014, years after Wells settled cases with the federal government over improper mortgage documentation. Tran said that Wells used improper documentation to collect on $1.4 billion in foreclosure prevention funding from the Home Affordable Modification Program. Wells Fargo denies any wrongdoing.

• After Marina Boyd, a former corporate human resources manager from Los Angeles, fell into financial trouble, she sought a loan modification to stay in her home. In July 2010 she got approved; all she had to do was send a cashier’s check for $2,000. She did, but the bank said they never received it. The property was sold to CitiMortgage without her knowing about it until the sale went through. After fighting for a year, the sheriff told her to move out in September 2011; she left with the clothes on her back, expecting to be able to come back for her possessions, most of which were boxed up. Boyd begged the real estate agent in multiple phone calls to allow her to pick up her stuff. But one day she went by the house and everything was gone. “I called the agent and said ‘where’s my property, who took it?’” Boyd said. “The agent said ‘it’s gone, that’s it,’ and hung up on me.” Boyd, acting as her own lawyer, discovered that Citi explicitly instructed the real estate agent to haul everything away, offering him thousands of dollars to do it. “Task opened for the trashout… amount approved is $3,050… please get it done ASAP,” reads one email Boyd obtained in the case. The case is still in court, as years of discovery requests and attempts to depose Citi employees continue. There’s a trial scheduled in June. “Access to justice shouldn’t take five years,” Boyd said in a recent article posted at a website she created about the case. She’s made a video about the case too.

• Just last month, a Dade County, Fla., Circuit Court judge dismissedHSBC’s foreclosure case against Joseph Buset. HSBC had cited an alleged 2012 mortgage assignment from Freemont Investment and Loan, a company that was liquidated in 2008. HSBC claimed they had bought the mortgage directly from the defunct company, but the judge ruled that the 2012 document reflected “a transaction that never happened,” was “created for purposes of litigation,” and failed to establish proof that HSBC is the proper owner and holder of the loan. It’s one of many cases out of Florida that have been reversed recently for lack of standing to foreclose, years after the issue was supposed to have been resolved.

• On May 7, protesters sought to stop the eviction of Barbara Campbell, a wheelchair-bound former Girl Scouts director, from her Detroit home. While seeking a loan modification in 2013, Campbell was told by her mortgage servicer, Nationstar, to stop making mortgage payments while they reviewed the request. The servicer then immediately moved to foreclose, citing the “failure to make mortgage payments.” A different bank, Flagstar, is the plaintiff in the foreclosure case, despite not having definitive proof that it owns the loan, according to activists with Detroit Eviction Defense. You can see at the Detroit Eviction Defense websitethat they fight dozens of similar cases.

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Why more widowed homeowners are struggling to prevent a foreclosure

en Jesus Sequeira’s wife, Yadira, died in 2008 from lung cancer, times soon grew tough.

Sequeira said his income plunged, leaving him unable to pay the mortgage on the couple’s Canyon Country home when payments more than doubled a year later.

Sequeira hoped a loan modification might save him, but there was a glitch: Even though he was listed on the title, only his wife was on the mortgage note — a setup Sequeira said a Countrywide Financial employee suggested given her superior credit.

The arrangement, he said, turned efforts to secure a modification into a multiyear red-tape nightmare that may end in a trustee sale scheduled for May 11.

“It’s like I can have a heart attack, because I don’t know what is going to happen,” said Sequeira, 58, who owns a small Koreatown market. “It’s been like that for three years.”

Consumer advocates say widows and widowers nationwide are falling into a similar bureaucratic black hole.

Although servicers will generally accept their loan payments, surviving homeowners who are not on the mortgage face significant resistance when they seek loan modifications once they’ve fallen behind on payments — often because they’ve lost their spouse’s income.

“They are being told they can’t do anything to prevent foreclosure,” said Charles Evans, an attorney with pro bono law firm Public Counsel, which is assisting Sequeira.

The problem is growing, advocates say, and has caught the attention of federal regulators and state lawmakers.

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California AG backs expansion of Homeowners’ Bill of Rights

California Attorney General Kamala Harris is throwing her support behind a bill that expand the state’s Homeowners’ Bill of Rights to include a provision designed to help widowed spouses and children stay in their homes after the primary mortgage holder passes away.

The bill, called the Homeowner Survivor Bill of Rights, would expand on the California Homeowners’ Bill of Rights, which was enacted in 2012 and provides a series of protections for homeowners against foreclosures.

The Homeowner Survivor Bill of Rights closes a loophole in California law that fails to provide surviving spouses and children important protections against foreclosure that are available to other homeowners, according to the offices of California State Senators Mark Leno and Cathleen Galgiani, who authored the bill.

According Harris’ office, the proposed legislation would allow survivors or heirs to simultaneously apply for both loan assumption and loan modification and provide a single point of contact with the lender.

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CFPB complaints from military community up 13%

The Consumer Financial Protection Bureau’s fourth annual Servicemembers report for 2015 showed 19,200 complaints from members of the military community, which is 13% more than what was reported in 2014, according to the report. The total number of complaints in 2015 by all consumers totalled 271,600.

Debt collection, mortgages and credit reporting topped the list as the most complained-about issues.

According to an article in the CFPB Monitor, the most common mortgage complaint related to the inability to make payments, including problems with loan modifications, collections and foreclosures. “In particular, service members complained about loss mitigation options when receiving a permanent change of station order, requiring them to relocate,” the article stated.

A total of 46% of military complaints concerned debt collection. The military complaints were double those of the general consumer population where debt collection is concerned.

A deeper look into the issues shows that 44% of the debt collection complaints were from debts that service members believed they did not owe, according to the report. Another 17% of complaints involved the ways debt collectors tried to contact them, including contacting a third party such as a commanding officer. Some of the complaints, about 13%, involved the collection of medical bills that service members believed was covered by VA health insurance.

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Homeowner accuses JPMorgan Chase of unconscionable conduct

Putnam Circuit Court Case number 16-C-49

West Virginia Record:

WINFIELD – A Putnam County man says that when he defaulted on his mortgage, his bank foreclosed on the house instead of working out a repayment plan.

Kyle E. Chapman filed a lawsuit Feb. 24 in Putnam Circuit Court against JPMorgan Chase Bank NA, alleging negligence, unconscionable conduct and tortuous interference with a contract.

According to the complaint, in 2011 Chapman received a mortgage loan for $123,216 under a U.S. Department of Agriculture program for low-income home buyers, serviced by JPMorgan Chase. The suit says that Chapman, who works two jobs as a lab technician, applied for a loan modification to help him afford the mortgage after the birth of his second child in 2013.

After Chase allegedlu denied the loan modification, Chapman says they offered him a repayment plan for $1,553 a month, nearly double the original monthly mortgage payment amount. Chapman says that Chase was unwilling to work out an affordable repayment plan, and instead foreclosed on his home on Jan. 5.

 

Manager of ‘predatory’ loan modification law firm sent to jail

A San Diego businessman will spend the next nine months in prison after being convicted for his role in a fraudulent mortgage loan modification business that presented itself as a “law firm” in order to con more than 1,000 struggling homeowners out of more than $3 million total.

According to a release from the U.S. Attorney’s Office for the Southern District of California, Michael Nazarinia worked as the manager of a “predatory loan modification law firm,” which promised loan modifications in exchange for money but did not deliver on its promises.

The U.S. Attorney’s Office said that Nazarinia worked as the manager of “Haffar & Associates,” which was owned by figurehead attorney Mohamed Haffar, and recruited new customers using telemarketers who lied to clients in order to induce more than 1,000 people to sign up to pay more than $3.5 million in total.

According to the release, Nazarinia supervised Haffar & Associates “case managers,” who submitted loan modification applications and negotiated with the banks on behalf of clients.

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