A Massachusetts couple claim they were just following the advice of Washington Mutual Bank when they stopped making their mortgage payments so they could qualify for an assistance program being promoted by the bank. But following the foreclosure of their home, they became lead plaintiffs in a class action against the company.
In a class-action lawsuit alleging bad faith foreclosure tactics, borrowers Lori and Mark Pestana sued WaMu for negligent misrepresentation. The borrowers also brought individual claims, including wrongful foreclosure, against the thrift and its foreclosure law firm.
In their complaint, the Pestanas allege that WaMu foreclosed on their home despite public statements that it would assist distressed borrowers in fashioning repayment plans and other alternatives to foreclosure, as well as statements directly to the Pestanas that it would not foreclose while it considered their application for homeowners assistance.
The Pestanas allege that, after making timely payments for the first three years of their loan, Ms. Pestana experienced a sudden drop in income. Prompted in part by statements on WaMu's Web site that it was interested in assisting distressed borrowers avoid foreclosure, she called the Seattle-based company to see if she could negotiate a solution to their anticipated delinquency.
According to the complaint, WaMu's representative told Ms. Pestana that it could not help her until the account was delinquent for 50 days, and recommended that the Pestanas stop making their mortgage payments in order to qualify for WaMu's homeowners assistance program. Consequently, the Pestanas stopped paying their mortgage.
Subsequent conversations with WaMu representatives allegedly confirmed that the Pestanas should not make interim payments, but should complete the homeowners assistance program application that they would receive when the account was 50 days overdue. The Pestanas sent in the application, but heard nothing from WaMu. Instead, they were contacted by a law firm retained by WaMu to foreclose on their home.
The complaint describes numerous attempts to communicate with representatives of WaMu and the law firm to explain that the Pestanas' failure to make mortgage payments was at the direction of WaMu, to ascertain the status of their application, and -- in the absence of a response as to the status of their homeowners assistance program application-- to determine the reinstatement amount for their mortgage. Most of these attempts resulted in unreturned messages, faxes to unanswered fax numbers, or routing to computerized automated telephone loops.
The suit claims that both WaMu and the law firm knew that the Pestanas planned to cure the default. Despite WaMu's eventual assurance that it had received the application and that all foreclosure activity would be suspended while the application was being reviewed, the foreclosure sale took place as scheduled, and the Pestanas have been served with an eviction action.
The Pestanas filed their complaint in the Massachusetts Superior Court for the County of Suffolk on July 29, 2008, on behalf of themselves and a class of similarly situated Massachusetts residents to challenge WaMu's lack of good faith during the process of foreclosure.
Lori and Mark Pestana v. Washington Mutual Bank and Harmon Law Offices, P.C.
Civil Action No. 08-3393 (Suffolk Superior Court)