When your friends turn agains you

Courts against the banks

Not all judges are friends of the banks

Judge for the banks, business as usual
The courts are the banks best friends, no matter how strong the evidence. When banks cheat and go on cheating, it's because the courts let them; should they sometimes lose, it is just a minor inconvenience, just costs for doing business. But some judges do take offence at the banks.

Not as usual
An Ohio judge rejected the foreclosure on 14 properties because the bank could not show it had the right to foreclose. A study of 1733 foreclosures found that 40% did not present proof of ownership; still it might be difficult for a distressed homeowner to fight the bank.
A Massachusetts judge invalidated two foreclosures because the lenders did not hold clear title to the properties, a ruling that could have wide reaching consequences.
In Florida, banker's attorneys presented cases so badly documented that judges just wrote them off, including writing the debt off and giving the house to the borrower.

GMAC sued for $25,000 per false affidavit
Sometimes it's not just a pissed-off judge. The Ohio state attorney general sued GMAC for using false affidavits, asking $25,000 a piece with a potential total of more than $10 billion just in Ohio. If this succeeds, it could mean some serious setback for the mortgage industry.

Attorneys must notify a judge about fraud
In Florida, the state bar association has told foreclosure lawyers they have a duty to report fraud to the court; a duty that supersedes their responsibilities to clients. What remains is for the lawyers to follow the ruling and report as requested, also for the judges to act on the reports; maybe not always the natural action it ought to be.

Wells "duplicitous and misleading"
Even if the bank is found liable, it can still refuse to make corrections and to pay.
A New Orleans bankruptcy judge disallowed more than 80 home inspection and late charges made by Wells Fargo, most of them imposed while the borrowers were making regular monthly payments. She found Wells "duplicitous and misleading" and in one case ordered them to pay $27,000 in damages and attorneys' fees. She also ordered an audit of 400 home loan files; Wells made an appeal and the audit part was overturned. In another case, a borrower was awarded $24,000, with Wells' conduct ruled to be willful and egregious. Without telling the borrower, Wells had diverted payments to satisfy claims not authorized by the court.

Wells admits systematic abuse, then renegades
Wells even admitted that overcharging was their normal conduct, practiced in perhaps thousands of cases. They agreed to remedy certain "systematic problems". The court also awarded the borrower an additional $67,000 in compensatory sanctions. Evidence established abuse in every bankrupted mortgage loan. Wells accepted the verdict but renegaded and appealed. Their tactic was drowning the court in motions, memoranda, objections, appeals, assignments and subassignments of error. While the original trial took seven days, the delay until Wells' appeal was dismissed was 493 days. And then another appeal and another 269 days to the next dismissal.
To get a correction, Wells forced every debtor in the district to make a separate suit. Although their representatives admitted that misapplied payments and improperly charged fees were routine, Wells refused audits and voluntarily correcting errors and they continued trying to collect loans owed in error.
Instead of delivering a complete debt history, Wells stopped communicating when the borrower was deemed in default; without any notice, payments for other debt were used for Wells' fees. This was not discovered until Wells was sued, and Wells admitted that this was routine for all loans in bankruptcy or default. To get a simple accounting of the loan's history, it took four to six months and more than four court hearings, something many debtors couldn't afford.

© Anders Floderus