Burst of Foreclosure Litigation

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MORTGAGE EXPERT
6 · 16 · 10

In one recent foreclosure case, the lender and borrower had agreed to a loan modification — but the judge wouldn’t let them cancel the foreclosure. Several foreclosures have been reversed, though one was affirmed despite a gross error, and many cases are being litigated in Florida.

When Wells Fargo Bank, N.A., was able to negotiate a modification with delinquent borrowers Carl T. and Margaret Lupica, it filed a motion to cancel the foreclosure sale on their Florida home. But the court denied Wells’ motion — forcing the lender to complete the sale and purchase the property itself for $100. A request to vacate the sale was also denied by the court.

The trial court said it denied the motions because Wells failed to attach a stipulation and/or a copy of the loan modification or forbearance agreement signed by all parties.

So Wells appealed to the District Court of Appeal of Florida, Fifth District, which agreed with the bank, reversed the lower court’s decision and remanded the case. The appeals court called the trial court’s actions “a gross abuse of discretion.”

“Foreclosures are equitable proceedings under Florida law and settlements between litigants are favored,” the decision published by Leagle.com stated. “The trial court’s denial of Wells Fargo’s unopposed motions flies in the face of these principles.”

A foreclosure against Glazy Ruscalleda and Jose Ruscalleda by HSBC Bank USA was reversed by the District Court of Appeal of Florida, Third District, according to a copy of the decision published by Leagle.com. HSBC’s foreclosure case must be reinstated, and the borrowers given the opportunity to answer the complaint and assert affirmative defenses.

“The trial court abused its discretion by denying the motion to continue the final summary judgment hearing and by failing to grant the motion to transfer the foreclosure action to the division where a separate foreclosure action was pending in which another bank was simultaneously seeking to foreclose the same mortgage,” the decision stated.

A foreclosure against Florida borrower Earnest E. Harptser was dismissed because attorneys for U.S. Bank, N.A., which represented investors in the loan, presented an assignment that was allegedly prepared the year after it was dated, WSJ.com reported. Wells Fargo & Co., the servicer, reportedly said it was “troubled” by the “conclusions the court found as to the actions of this foreclosure attorney”

Wells Fargo Bank, N.A., was able to persuade the Chancery Division New Jersey to undo a Sheriff’s sale where its bidding agent accidentally limited the bid to $63,000 instead of $629,800, an amount that would cover the note, a the Superior Court of New Jersey, Appellate Division decision published by Leagle indicated. The sale had been for $382,000 from appellant George Chukrallah.

“Plaintiff’s mistake was understandable ‘especially in times of overwhelming pressure on resources, such has been created on [p]laintiff, its agents, and the industry peers by this foreclosure crisis,'” the original judge reportedly wrote.

The appeals court affirmed the original court’s decision in favor of Wells Fargo.

Bradford Corder sued Countrywide Home Loans, BAC Home Loans Servicing and Fannie Mae in Kanawha Circuit Court, W.V., alleging that predatory lending and abusive servicing were responsible for the foreclosure on his home, according to The Record. He allegedly applied for a loan modification in January, was advised of modification approval in March and told foreclosure was postponed — though the foreclosure completed a few days later.

The District Court of Appeal of Florida, Fourth District, reversed a foreclosure judgment by Aurora Loan Services LLC against Pierre Elliott and Lisa Elliott, according to the opinion published by Leagle.com. The trial court reportedly erred in denying the Elliotts’ verified motion to vacate default and, consequently, erred in entering the final judgment of foreclosure

An Indiana trial court ruled against American Heritage Banco Inc. in its foreclosure action against Arthur W. and Joanne E. Cranston, a decision published by Leagle said. The lower court based its decision on the Cranstons’ affirmative defense and counterclaim for constructive fraud against the bank.

So American Heritage appealed to the Court of Appeals of Indiana and won.

“We reverse the trial court’s award of damages and attorney fees in favor of the Cranstons and remand to the trial court with instructions to enter judgment in favor of American Heritage Banco and all other remedies consistent with this opinion,” the decision said.

ABN AMRO Mortgage Group Inc.’s foreclosure action against Indiana borrower Nona McGahan was dismissed because the borrower had died and the lender didn’t name a personal representative. So the lender successfully appealed the case.

But the appeal was overturned by the Supreme Court of Illinois, according to the decision published by Leagle.com. The circuit court decision was affirmed.

“The question at issue here is whether a mortgagee must name a personal representative for a deceased mortgagor in a mortgage foreclosure proceeding in order for the circuit court to acquire subject matter jurisdiction,” the decision stated. “We conclude that it must.”

The Court of Civil Appeals of Alabama reversed a trial court’s decision not to vacate a default judgment against borrowers Linda Bogus and James Bogus. The decision, published by Leagle.com, indicated that the lender was Bank of New York as trustee for the Certificate Holders CWALT, Inc. Alternative Loan Trust 2005-77T1.

The Boguses claimed the default foreclosure judgment was void because they had not been personally served with process and, therefore, the trial court lacked jurisdiction to enter the default judgment. Bank of New York argues that it validly served the Boguses with process by posting the process on the property.

An unspecified settlement was reached in a $5 million lawsuit by Massachussetts borrowers Lori and Mark Pestana against Washington Mutual, the Lowell Sun reported. WaMu allegedly told the couple to skip payments so they would qualify for a special program, then foreclosed and ignored repeated requests to renegotiate the loan with the couple who faced declining income.

WELLS FARGO BANK, N.A. v. LUPICA.

Case No. 5D09-2902 (District Court of Appeal of Florida, Fifth District).

Corder v. Countrywide et al.

Case No. 10-C-698 (Kanawha Circuit Court, W.V.)

RUSCALLEDA v. HSBC BANK USA

Case No. 3D09-997 (District Court of Appeal of Florida, Third District).

AMERICAN HERITAGE BANCO, INC. v. CRANSTON.

Case No. 76A04-0907-CV-384 (Court of Appeals of Indiana)

ABN AMRO MORTGAGE GROUP, INC. v. McGAHAN.

Docket No. 107954 (Supreme Court of Illinois).

PIERRE ELLIOTT and LISA ELLIOTT, Appellants, v. AURORA LOAN SERVICES, LLC, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., as nominee and STONEBROOK ESTATES COMMUNITY ASSOCIATION, INC., Appellees.

Case No. 4D08-4362 (District Court of Appeal of Florida, Fourth District).

Linda Bogus and James Bogus v. Bank of New York, as trustee for the Certificate Holders CWALT, Inc. Alternative Loan Trust 2005-77T1 Mortgage Pass-Through Certificates, Series 2005-77T1.

Case No. 2081195 (Court of Civil Appeals of Alabama).

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