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Mortgage Lawsuits News | Mortgage Litigation Index
Mortgage industry lawsuit news and mortgage litigation coverage. Stories about legal settlements, judgments and mortgage class actions.


Lenders Navigate Litigious Foreclosure Process

Recent foreclosure litigation activity

Feb. 15, 2010

By SAM GARCIA


Four foreclosure lawsuits against units of Bank of America Corp. include three where the company allegedly foreclosed on the wrong properties -- though the Charlotte, N.C.-based institution isn't the only servicer accused of erroneous foreclosures. Judges in two different states ruled against American Home Mortgage Servicing Inc. in two foreclosure lawsuits.

The Court of Appeals of Indiana overturned a foreclosure filed by Ocwen Bank on behalf of JPMorgan Chase Bank against an Indiana couple, according to a copy of the judge's opinion. Ocwen foreclosed despite that Chase had already executed and recorded a satisfaction of lien after the original borrower had paid the loan in full in 2001.

The court said that Marilyn Elliott and Michael Elliott -- who inherited the property when Dorothy Elliott died in 2006 -- contacted Indiana's attorney general after they learned of the judgment and decree of foreclosure. The Elliotts were referred to the Office of the Comptroller of the Currency, and subsequently filed a cross-complaint to set aside the mortgage with jury demand, motion to set aside judgment of foreclosure and sheriff's sale and motion to withdraw order of possession.

The trial court ruled against the Elliotts, noting it was their fault they neglected to act sooner. But the appeals court reversed that finding.

American Home was denied its motion to change court venues in a lawsuit filed by Pansye Williams, according to a memorandum opinion and order by the U.S. District Court for the Southern District of West Virginia. Williams is trying to avoid a foreclosure on the loan originally obtained from National City Mortgage.

In a California case, a federal judge denied American Home's move to dismiss the lawsuit filed by Walter Baldain Jr. and Michael Baldain in U.S. District Court for the Eastern District of California. The refinance loan was originated by Olympia Mortgage, a broker for Option One Mortgage Corp., in December 2006.

A foreclosure relief settlement with Montana's attorney general will cost Countrywide Home Loans $247,247, the state said Friday. The agreement was made in July 2009 amid allegations that originators at the BoA subsidiary "fast-talked borrowers into dubious loans they didn't fully understand and had little or no hope of ever paying back."

According to Montana, checks for $3,129 were mailed to 79 Countrywide borrowers with interest-only or payment-option adjustable-rate mortgages.

BoA itself faces litigation over Countrywide's July 2009 foreclosure of a free-and-clear property owned by Charlie and Maria Cardoso, causing the loss of the family's belongings, the loss of a tenant and frozen pipes, the National Law Journal reported. The lender reportedly acknowledged the mistake and promised to fix the problem -- but didn't. So the borrowers sued BoA in the District of Massachusetts.

And in Texas, Dr. Alan Schroit claims in a lawsuit filed in the 122nd State District Court in Galveston that BoA mistakenly foreclosed on his free-and-clear Galveston vacation home -- changing the locks, shutting off the power and resulting in 75 pounds of spoiled salmon, The Daily News reported. The lawsuit came only after unsuccessful settlement negotiations.

Schroit's lawsuit reportedly followed a similar lawsuit filed by Christopher Hamby of Wheelwright, Ky., against BoA.

The same day that the REO department of U.S. Bank sold a property to Jennifer Zollars, another department at the bank filed a notice-of trustee's sale based on an earlier deed of trust, the Hanson Law Firm PC said in a recent news release. Real estate investor Stan Kahan, who successfully purchased the property, filed an eviction notice against Zollars.

Zollars filed a lawsuit in Solano County Superior Court, Calif., asserting that she owned the home because she didn't receive adequate notice of the pending foreclosure. But she lost her case.

"California law provides protection for a bidder at a foreclosure sale, especially upon delivery of a trustee's deed after a non-judicial foreclosure sale," the statement said. "But to get that protection, the bidder must be a 'bona fide purchaser' -- someone without notice of any defects in the trustee sale procedure. Zollars claimed that Kahan was a 'professional bidder' and thus he had an extra duty to inquire of a
ny potential adverse claims, or he would lose the bona fide purchaser protections."

The Minnesota Court of Appeals found that a mortgage was valid and enforceable against a wife who didn't sign the loan documents as a co-borrower, Finance & Commerce reported. The wife stopped making payments after her husband died and convinced an Anoka County District Court judge that the mortgage was void because she didn't sign it. But the appeals court reversed the decision because she actively participated with her husband in the mortgage transaction.

The Supreme Court of Florida approved an amendment to the Florida Rule of Civil Procedure proposed by the state's Task Force on Residential Mortgage Foreclosure Cases. The amendments require the use of mediation. In addition, a new form Affidavit of Diligent Search and Inquiry is required.

The Lit Law Group, P.A., which goes after mortgage companies on behalf of delinquent borrowers, published a list of the biggest mistakes borrowers can make during the foreclosure process. The Clearwater, Fla.-based law firm claims the list can help borrowers stop foreclosure.



National City Bank v. Engler.

United States of America v. Edward G. McCusker, Jeffrey A. Bennett, Stephen G. Doherty, John Alford Bariana, Jacqueline McCusker.
Dec. 8, 2009 (U.S. District Court for the Eastern District of Pennsylvania).

MARILYN L. ELLIOTT and MICHAEL S. ELLIOTT, Appellants-Defendants, v. JPMORGAN CHASE BANK, as Trustee on Behalf of the Registered Certificate Holders of GSAMP Trust 2004-SEA2, Mortgage Pass-Through Certificates, Series 2004-SEA2, Appellee-Plaintiff.
Case No. 30A01-0907-CV-356 (Court of Appeals of Indiana).

PANSYE WILLIAMS, Plaintiff, v. PNC BANK and FIRST FRANKLIN FINANCIAL CORPORATION and HOME LOAN SERVICES, d/b/a FIRST FRANKLIN LOAN SERVICES, and SELECT PORTFOLIO SERVICING, INC. and AMERICAN HOME MORTGAGE SERVICING, INC. and U.S. BANK NATIONAL ASSOCIATION and CITIGROUP GLOBAL MARKETS REALTY CORP., Defendants.
Civil Action No. 2:09-CV-953 (U.S. District Court, S.D. West Virginia, Charleston Division).

WALTER BALDAIN, JR., MICHAEL BALDAIN, Plaintiffs, v. AMERICAN HOME MORTGAGE SERVICING, INC., OPTION ONE MORTGAGE CORPORATION, QUALITY LOAN SERVICE CORP., OLYMPIC MORTGAGE & INVESTMENT COMPANY, INC., PHILLIP RUBLE and TIMOTHY ALAN SMITH and DOES 1-20, inclusive, Defendants.
Case No. CIV. S-09-0931 LKK/GGH. (U.S. District Court, E.D. California).


Sam Garcia worked in mortgage lending for twenty years prior to becoming publisher of MortgageDaily.com in 2000.

e-mail:
[email protected]




Servicing News | Servicer Ranking | Delinquency Statistics
Stories about mortgage servicers, delinquency and f o r e c l o s u r e s. Coverage of servicing lawsuits and loan servicing technology.


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