A federal appeals court has upheld a foreclosure by JPMorgan Chase Bank, N.A., on a home owned by a former classic rock star.
Many people know Todd Harry Rundgren as the musician behind such hits as Hello It’s Me, I saw the Light and Bang the Drum All Day.
Others know him as the man who played father to actress Liv Tyler, the daughter of Rundgren’s former love interest, Bebe Buell.
But few know him as an alleged victim of mortgage fraud by his lender.
The story began in early 2008, when Rundgren and his wife, Michelle, refinanced the loan on their property in Kilauea, Hawaii, for $3 million through Washington Mutual Bank, FA.
When WaMu failed in September 2008, Chase acquired the bank and the loan to Rundgren.
The Rundgrens defaulted on the loan, and Chase accelerated the note and notified the borrowers of a non-judicial foreclosure sale scheduled for August 2009. The Rundgrens responded by demanding a rescission because Chase and WaMu had allegedly violated state and federal law.
The borrower then sued Chase and WaMu seeking to void and rescind the loan, cancel the foreclosure and collect treble damages. They claim WaMu defrauded them and breached its fiduciary duty during the refinancing negotiation.
“For example, the Rundgrens allege that WaMu falsified the loan application, highly exaggerated the Rundgrens’ income and assets without their knowledge, misled the Rundgrens as to the terms of the note, secured a false appraisal, and rushed them through the signing process, among other things,” a July 29 decision from the U.S. Court of Appeals for the Ninth Circuit said.
Chase removed the case to U.S. District Court for the District of Hawaii — where it was dismissed.
The district court found the Rundgrens had failed to exhaust their claims provided by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 with the Federal Deposit Insurance Corp. — which was designated as receiver of WaMu when it failed.
So the Rundgrens appealed.
But the Ninth Circuit upheld the district court decision that the borrowers hadn’t exhausted their claims under FIRREA, which stripped the district court of jurisdiction to consider the complaint.
