Wrongful Foreclosure and Debt Collection Practice

Wrongful Foreclosure

Homeowners who are losing their property or who have already lost their home to a bank foreclosure may be able to receive compensation, or negotiate a deficiency judgment waiver, as a result of mortgage lenders faulty Court documents. The Attorneys' General settlement with the countries largest banks including, Bank of America, JP Morgan Chase, Wells Fargo and GMAC has exposed the banks' fraudulent practices during the foreclosure process.  Additionally, because of these faulty Affidavits and other defects, foreclosure defense attorneys are, in certain limited circumstances, asking the Courts to set aside wrongful foreclosure judgments and, in some instances, the bank's ownership after the foreclosure sale has occurred.

To understand why this is happening is to know that an essential element of a foreclosure case is the filing of an affidavit, among other documents, by the bank in which an individual swears that they have personal knowledge of a file, including how much the homeowner owes the bank. What has happened to cause the banks to enter into a landmark settlement, is that the affidavits they have filed contained information that was not truly verified by the individual swearing that the information was true and accurate. The banks have admitted to filing affidavits signed by people who really knew very little about the information in the affidavit. Because the Courts relied on this information to grant ownership to the banks, homeowners may have a legal claim that the banks have unlawfully taken their property, entitling the homeowner to receive compensation from the settlement fund or maybe even setting aside the foreclosure judgment and/or sale.

Failed Loan Modification - Lawsuit Against Banks

Another pattern that seems to occurr involves a lender or loan process server entering into loan modification agreements where the borrower / home owner agrees to pay a lower mortgage payment for a set time period and, if the borrower makes all of those temporary payments, then the bank agrees to modify the mortgage home loan permanently instead of foreclosing on the property.

However, what seems to be happening is that the lender or process server are taking the money in the trial period, and then refusing to do the permanent mortgage modification. Instead, they are choosing to move forward with the foreclosure. It's like the modification agreement never existed (except that the bank received more mortgage payments during those months of the trial period) or the banks just didn't want to grant a modification.  This behavior  is troubling because it violates their own loan servicing guidelines set forth under the government's Making Home Affordable program.

One loan modification lawsuit has already been filed by a borrower for the bank's failure to follow the government's guidelines, which was decided in the borrower's favor. (Wigod v. Wells Fargo Bank, NA, 673 F. 3d 547 (7th Cir. 2012) ).The bank lost and now Lisa Wigod is pursuing her claims against the mortgage lender for breach of contract and other causes of action under state law.

Another loan modification lawsuit is pending in California (Amira Jackmon, Individually, and On Behalf of Others Similarly Situated v. America's Servicing Company and Wells Fargo Bank). In that case, the home owner plaintiffs are aggressively seeking punitive damages by arguing that Wells Fargo deliberately made the initial deal without any intention of going through with it.

These cases are two examples of a bank going ahead with foreclosure after agreeing to a mortgage modification deal.While both foreclosure cases involve a bank will also apply to other banks, credit unions, savings & loans, and mortgage lenders who agree to different mortgage terms (modify) and then don't follow through with a permanent change and a new mortgage with new terms in price, mortgage amount, time left to repay, etc.

In these situations, the borrower home owner may have a lawsuit for breach of contract, misrepresentation, or maybe a lawsuit based on intentional conduct (tort) against that bank. Here, the bank failing to do as it promised in changing the mortgage in a loan modification may mean that instead of the bank being in the offensive role of plaintiff seeking foreclosure of someone's home in a foreclosure lawsuit, the bank takes on the defensive role of defendant in a case where the home owner / borrower is demanding significant money damages from the bank for their bad acts.

 

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