In recent months, hundreds of complaints have been filed against banks and collection agencies for unethical and illegal practices when it comes to collecting debt and foreclosing on homes. The complaints have put hundreds of thousands of foreclosures into question as more homeowners are losing their property. On Thursday, Forbes published an interesting article about one woman’s lawsuit against U.S. Bank, NA that sheds some light on the fraudulent practices banks are employing during the foreclosure process.
The woman took out an $845,000 mortgage that was later taken over by U.S. Bank. After two years of owning the property, the adjustable rate increased to the point where the woman could not keep up with her monthly mortgage payments. In March 2008, the woman received a notice of foreclosure and decided to file for Chapter 7. When she filed for bankruptcy protection, an automatic stay was imposed, preventing U.S. Bank from proceeding with the foreclosure.
The woman initially filed for Chapter 7, which meant that she would be discharged of the debt on the home and would not keep the home. However, she later decided to file for Chapter 13 so that she could keep her home while making lower monthly payments that were affordable. But when U.S. Bank was notified of the bankruptcy filing, the lender requested permission from the woman’s attorney to speak directly to her about possibly modifying the mortgage.
Since the woman did want to modify her mortgage, she spoke with a representative at U.S. Bank who told her that they needed permission to lift the automatic stay so that the lender could move forward with the loan modification process. The stay was lifted on Dec. 4, 2008 and the woman dropped the bankruptcy case, believing that U.S. Bank would negotiate a loan modification as promised. Instead, U.S. Bank scheduled the woman’s home to be put up for auction on Jan. 9, 2009.
After the woman lost her home in foreclosure, she filed a lawsuit with the Los Angeles Superior Court. When the Superior Court ruled in favor of the lender, the case was brought to a three-judge panel Appeals Court. The panel ruled in favor of the woman stating that U.S. Bank failed to keep their promise to negotiate a loan modification.
Individuals who are concerned about losing their homes to foreclosure can seek guidance from experienced bankruptcy attorneys regarding the legal process of foreclosure. Although individuals may have an understanding that banks are following through properly with foreclosure proceedings that is not always the case. Hundreds of homes have been lost due to fraudulent or illegal foreclosure practices. Foreclosure and bankruptcy attorneys represent clients to ensure that their rights are protected, and they help clients explore other solutions that may help a client keep his or her home.
Source
Forbes: “Judge Rules Against Bank In Mortgage Modification Suit,” Shah Gilani, 10 Feb. 2011