Homeowners Lawsuit Against Major Banks Progresses Slowly, Alleges Predatory Lending and Unfair and Deceptive Trade Practices by Wells Fargo and Others

Miami, FL (PRWEB) December 7, 2010

Coral Gables, Fla. homeowner Pelayo Duran claims in his lawsuit that what he wanted was the attractive loan he saw advertised in the Miami Herald to refinance a home for his growing family. Instead, he ended up in the middle of an endless and costly legal fight with the nations largest banks accusing them of illegal predatory lending and unfair and deceptive trade practices.

At the same time, Durans attorneys claim his mortgage has been sold in the secondary market to investors who paid a profit to Wells Fargo Bank NA who is now acting as a trust administrator to the loan pool that allegedly owns Durans loan, a loan lawyers say was designed to fail.

“Someone has to stand up for the rights of the defenseless and the oppressed, said Duran. People have to know the real story of how these banks were able to take the American dream and destroy it. We believe they reaped billions of dollars in profits by lying, falsifying documents, appraisals, applications engaging in predatory advertising and lending practices. They hide behind all the companies that are involved and the large law firms that represent them. They create layer upon layer of red tape to avoid being held accountable.”

Duran’s attorney, Adis Riveron, Esq., filed a lawsuit in Miami-Dade Circuit Court (CASE No. 09-CV-20411-CIV) naming defendants Wells Fargo, Countrywide (bought out by Bank of America), Greenpoint Mortgage Funding and two individuals Lee Rosenthal (the appraiser), and Cindy Sierra (the mortgage broker). The lawsuit has charged them with a total of 13 counts including negligence, fraud, unfair and deceptive trade practices, and breach of fiduciary duty. Duran seeks a jury trial to determine punitive damages. You can download a copy the lawsuit at https://files.me.com/cjonespr/cv3pc7

Even though my home is not in foreclosure and I continue to make regular, on-time payments, my case is similar to the plight of millions of homeowners across the country, said Duran, a prominent South Florida attorney. Fortunately, I have been able to gather the financial resources, legal determination and stamina to take on the giant lenders because I refuse to give in when what they are doing is clearly unconscionable and dishonest.

The case was immediately removed by the defendants to federal court in 2009, but has since been remanded back to the state court earlier this year after a tough and expensive legal battle. Duran also had to pay a $ 10,000 judgment following an order compelling part of the case against Wells Fargo to arbitration.

According to Duran’s attorneys, they have filed a motion to stay the proceeding because the arbitrator from the American Arbitration Association might have engaged in inappropriate conduct. Attorneys said they would now file a motion to force the arbitrator to recuse himself.

It is inevitable the Mr. Duran will have to begin the entire arbitration process from the beginning, said Riveron. This conduct on the part of the arbitrator calls in to question the entire integrity of the expensive arbitration process that Wells Fargo includes in its mortgage agreements. The only reason they don’t agree to have the lawsuit in state court where it belongs is to make the process as dragged out and expensive as possible. They will stop at nothing to delay and obfuscate justice. I believe in my lawsuit and I will not stop until I have exhausted every avenue, said Duran.

The lawsuit claims that this legal saga began when Duran tried to refinance his primary residence in 2005. He had purchased the home in October 2004, and had he made an initial down payment of $ 100,000. Shortly after the purchase, Duran needed to access some of the money he had put down to cover imminent personal and business issues.

According to the lawsuit, Duran saw an ad in the Miami Herald published by Wells Fargo Home Mortgage. The ad was offering an Adjustable Rate Mortgage (ARM) at a rate of 5.75%, with 10 years interest only payments, a fixed interest rate for 10 years, and a 5.1 annual percentage rate. Durans plan was to buy down the loan rate at closing 1 to 2 point and pay off the home in about 10 to 15 years.

The lawsuit states Duran contacted Wells Fargo because he had a longtime business relationship with the bank and the terms in the ad were the most favorable. Attorneys claims when Duran called Cindy Sierra who he thought was a bank representative, she first told him that the advertised rates were not available. She then told him that she would get him an even a better deal. Duran believes that he, just like millions of other Americans, was baited into applying for an attractive loan that never existed, only to be switched to a high-risk subprime loan.

According to the lawsuit, Sierra told Duran to leave the income section on the application blank until such time as she could conduct a pencil search, a prohibited but common practice used by mortgage brokers and lenders in order to maximize the loan amount in which a mortgage broker would shop for an appraiser to support the highest value that the lender could hit in originating the loan. Initially, Sierra informed Duran that his home was worth $ 1.5 Million. The appraiser, Lee Rosenthal who worked for and was hired by Rels Valuation, (also Wells Fargo company), ultimately determined and represented to Duran that his home, which was purchased for $ 984,000 four months earlier, was now worth $ 1.2 million.

Unbeknownst to me, she created my loan by adjusting the value of my home to my debt-to-income ratio, said Duran. They never considered my ability to repay the loan. All they cared about was the appraised value and my good credit score. What I also discovered was that a Wells Fargo representative was actually originating a loan for Greenpoint Mortgage Funding and that immediately upon the closing of my loan, Greenpoint would turn around and sell my loan right back to Wells Fargo as trust administrator for a pool of loan. In addition, Fred Schlang, SRA, an appraisal expert, later alleges that the banks appraisal was inappropriately inflated.”

According to the lawsuit, after haggling over the terms for several weeks, Duran and his wife were disheartened at the closing when the final Greenpoint loan agreement reflected a financed amount of $ 920,000 with an APR of 5.622% fixed during a five year period, with rate adjustments up to twice per year, a pre-payment penalty, and a rate cap of 10.5%, (not the 5% he had been previously offered in writing) and they would not be able to buy down the rate 1 to 2 percentage points at closing, as he had been previously promised.

None of these terms were disclosed throughout the entire process, said Duran. She attempted to fix the problem at the closing of the mortgage, but they lied to my wife and me, once again.

Duran and Riveron claim in the lawsuit that this case stems from the common practice of securitizing loans and selling them in the secondary market for huge profits. These mortgages were underwritten primarily on the basis of an inflated appraisal and have basically no underwriting standard other than securing a signature on loan documents.

Greenpoint and Wells Fargos profits are determined by the amount of and quantity of loans they successfully closed, not the quality of those loans, said Duran. The lender has an incentive to pressure appraisers and brokers to reach values that will allow the loan to close without regard to whether the appraisal reflects the homes actual value. Likewise, the independent broker is not tied to one lender, but has relationships with multiple lenders.

Duran said since he began his investigation and even before filing of the lawsuit, his home mortgage was transferred from Greenpoint to Countrywide and now to Bank of America. Duran and Riveron said for some unknown reason, Bank of America and Greenpoint have been attempting force place insurance on h

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Brookstone Law, PC: Obama Administrations Mortgage Deal Could Exclude Borrowers from Future Action Against Banks


Newport Beach, CA (Vocus/PRWEB) March 02, 2011

Recent media reports that the Obama administration is trying to reach an agreement with banks over mortgage-servicing breakdowns highlights the need for homeowners facing foreclosure to have legal counsel prior to any settlement, according to Vito Torchia, Jr. managing attorney of Brookstone Law.

According to media reports, the Administration’s proposed settlement would require banks and loan servicers to bear the cost of write downs but gives banks the freedom to determine what those modifications will be. Those servicers would include mortgage-finance giants Fannie Mae and Freddie Mac, as well as investors in loans that were securitized by Wall Street firms. Settlement terms remain in development and regulators are looking at up to 14 servicers that could be a party to the settlement.

Brookstone Law, PC, has filed a mass joinder lawsuit against Bank of America, potentially the most significant and precedent setting legal action taken against lenders as a result of the national foreclosure crisis. The lawsuit alleges Bank of America (BOA) and its subsidiary Countrywide Financial Corporation (Countrywide) perpetrated a massive fraud, also constituting unfair competition upon borrowers that devastated the values of their residences, resulting in the loss of net worth, and that BOA and Countrywide intended to deprive numerous rights and remedies for the problems they caused the borrowers. The case is Wright et al. v. Bank of America, N.A. et al., case no.30-2011-00449059-CU-MT-CXC filed in Orange County Superior Court.

Now that the U.S. Government is discussing settlements that will defuse lawsuits against the banks that specifically challenge aspects of mortgage securitization, the broken chain of title or MERS, principal reduction is the most important aspect of any settlement, said Vito Torchia, Jr. Until banks and servicers fully embrace principal reductions, the thousands of homeowners who are underwater will continue to struggle and that will keep the housing market and our economy down for years.

According to media reports in the Wall Street Journal, Federal agencies have been scrutinizing the nation’s largest banks over breakdowns in foreclosure procedures that erupted last fall and last week, the Office of the Comptroller of the Currency raised concerns over inadequate staffing and weak controls over foreclosure processes. In 2008, BOA settled claims worth more than $ 8.6 billion for loans allegedly involving predatory lending practices committed by Countrywide, which it acquired that year.

Any settlement could be among the largest ever against the mortgage industry especially since some are pushing for banks to pay billions or fund a comparable amount of loan workouts, said Vito Torchia, Jr. If a single settlement cannot be reached, it is likely different federal agencies will still seek smaller penalties through regular enforcement channels, so banks could face the prospect of lawsuits from state attorneys general, which means homeowners need for expert legal counsel will be just as great after any settlement as it is now.

ABOUT BROOKSTONE LAW, PC

Headquartered in Newport Beach, Calif., and with offices in Los Angeles, Calif., and Ft. Lauderdale, Fla., Brookstone Law, PC is a law firm comprised of attorneys with experience and success in business, corporate and personal finance, employment, entertainment and media, art and museum, intellectual property and real estate law. The firm has a network of more than 40 affiliate attorneys nationwide and employs highly trained specialists, paralegals, paraprofessionals and administrative staff dedicated to serving clients. For information, call (800) 946-8655 or visit Brookstone-Law.com (http://www.brookstone-law.com).

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Multi-Party Suit Filed by Homeowners Against JP Morgan Chase et al


Roseville, California (PRWEB) October 27, 2011

On Tuesday October 18, 2011, United Foreclosure Attorney Network (UFAN) filed suit in Superior Court in Martinez, CA (case number C-11-02390) on behalf of numerous homeowners against JP Morgan Chase and others alleged by Plaintiffs to be involved in a scheme to defraud and otherwise take advantage of investors and borrowers.

The complaint details how the lending practices of JP Morgan Chase led directly to Plaintiffs being placed in harmful and predatory loans. After a loosening of lending restrictions in the 1980s, banks like JP Morgan Chase began originating exotic non-prime mortgages with adjustable interest rates. These risky loans were often securitized into mortgage backed securities and sold to investors. Because a bank could quickly recoup amounts spent issuing mortgages by the sale of these residential mortgage backed securities (RMBS), banks incentivized mortgage brokers to participate in the scheme with high fees for origination. According to the filing, these fee incentives encouraged complete disregard for underwriting standards which were used to lure borrowers into highly predatory loans they could not afford.

The complaint alleges that Plaintiffs relied on statements made by JP Morgan Chase employees and mortgage brokers when they accepted bad loans. Plaintiffs were often told that they would be able to afford high loan amounts and were promised the ability to refinance at a later date. It is alleged that in some instances, loan officers blatantly lied to Plaintiffs about the quality of the loans they were receiving. The complaint alleges that Chase not only knew about these broker practices, but encouraged and incentivized them. A Chase internal memo states, If you do not get Stated/Stated, try resubmitting with slightly higher income. Inch it up $ 500 to see if you can get the findings you want. Do the same for assets.

Similarly, the complaint alleges that appraisers were encouraged to inflate property values in order to give borrowers higher loan amounts. The higher the loan amount, the more money JP Morgan Chase was able to make on the sale of the loan. It is argued that the bank incentivized appraisers to falsify property valuations in order to secure a higher loan to sell to investors. The complaint alleges that Plaintiffs borrowed excessively in reliance on inflated appraisals and other statements.

Plaintiffs also argue that because of the sale of their loans, they did not receive the benefit of the contract for which they bargained. Plaintiffs, believing they would be placed into a mortgage with a traditional Lender/Borrower relationship, later found that they did not have a lender with whom they could deal. Servicers are not at liberty to make changes to contracts when circumstances are unforeseeably changed. Furthermore, loan servers have an incentive to foreclose whereas a lender has the incentive to modify a loan if it would be more profitable in the long run. Had many homeowners had a lender with whom to deal, they could have restructured the mortgage for a more desirable result for both parties. The complaint details how many Plaintiffs diligently sought modification of their loans but were denied simply because the servicer had no authority to grant a modification.