20 Reasons For Getting The PSA When Suing A Servicer

In The Bankruptcy Litigation and Consumer Rights Blog, consumer bankruptcy litigation attorney Max Gardner writes:

• Every time I file a civil action against a mortgage servicer the very first document I want is a copy of the “Pooling and Servicing Agreement.” This is the legal document that creates the securitized trust of mortgage loans and also strictly provides for the duties of all entities who are assigned the responsiblity of servicing loans for the Trust.

For 20 of the reasons you need to request through formal discovery in any mortgage-related lawsuit the PSA Agreement and why it is relevant, see Max Gardner’s Top Resasons for Wanting a Pooling Servicing Agreement.

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Minneapolis Suit Seeks To Halt, Void Foreclosures; MERS' Failure To Record Assignments At Issue

In Hennepin County, Minnesota, the Minneapolis Star Tribune reports:

• A complaint by some borrowers that they can't learn who owns their mortgages turned into a full-blown effort to halt a substantial share of Hennepin County's foreclosures [late last month]. A Legal Aid lawsuit contends some pending and recent foreclosures don't meet requirements of state law. [...] Although Hennepin County Sheriff Rich Stanek is named as a defendant for his office's role in selling foreclosed property, the real target is a national mortgage registry formed by lenders and known as Mortgage Electronic Registration Systems (MERS). The lawsuit contends the registry hides who really owns a mortgage, creating difficulties for borrowers or their advocates trying to negotiate with lenders.

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• A 2004 change by the Legislature was intended to make clear that the registry could legally be listed as the holder of mortgages filed in courthouses. But the registry also needs to file assignment of the mortgage to new owners, said Amber Hawkins, lead attorney for the lawsuit. [...] Besides pending foreclosures, the suit also seeks to void recent Sheriff's Office sales in which the registry has initiated foreclosure. That measure would apply if the borrower is still living in the house up to six months after foreclosure, as permitted by state law. It asks damages for those who already have lost a home in a foreclosure brought by the registry.

For more, see Lawsuit seeks to block some foreclosures (Hennepin County is swept up into an action targeting lenders).

Go here for follow-up posts on this story.

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Fidelity Nat'l "A Secret Puppetmaster" For Creditor's Attorneys That Bilk Bankrupt Consumers In Foreclosure, Says Class Action Suit

In Houston, Texas, The Associated Press reports:

• Homeowners have sued Fidelity National Information Services Inc., a giant financial data-processing company, accusing it of raising the price that cash-strapped consumers must pay to avoid foreclosure of their homes. The lawsuit, filed Jan. 16 in the U.S. Bankruptcy Court in Houston, contends that Fidelity has conspired with mortgage-servicing companies and law firms to "add to the indebtedness" of homeowners by tacking on secret fees that remain undisclosed for years.

• "The fees the Fidelity-controlled law firms charge in Chapter 13 bankruptcies are inflated by 25 percent to 50 percent," the lawsuit asserts. The law firms, it says, then "kick back" the extra amount to Fidelity under a formal agreement under which the law firms' fees are set. "Fidelity keeps its role, as well as the kickback, hidden from the courts as a matter of systematic policy."

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• Fidelity counts Washington Mutual and Bank of America among the biggest clients of its default-management services. The company says it handles default mortgage servicing for 22 of the top 25 residential mortgage servicers, and 13 of the top 25 subprime servicers.

For more, see Suit claims Fidelity abuses homeowners.

Editor's Note:

The lawsuit also describes Fidelity's alleged role as follows (page 5, paragraph 21 of lawsuit):

• [F]idelity’s “comprehensive” role is really that of secret puppetmaster of the law firms that appear in [the Houston Bankruptcy] Court on behalf of mortgage servicing lenders. These law firms (in the Harrises’ case, Mann & Stevens, P.C.) collect their fees by tendering their bills through Fidelity and then on to the mortgage servicer – in this case Saxon, which then charge debtors, like the Harrises, without ever obtaining this Court’s approval.

To view the entire lawsuit, see Harris vs. Fidelity National Information Services Inc.

Go here to download Misbehavior and Mistake in Bankruptcy Mortgage Claims, a recent report on the conduct of some lenders in court proceedings when homeowners file for bankruptcy protection (by Katherine M. Porter University of Iowa - College of Law).

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Homeowners Accuse Another Loan Servicer Of Clipping Them With Dubious Fees; Class Action Status Sought

In Minneapolis, Minnesota, the Pioneer Press reports:

• A group of homeowners is suing Homecomings Financial, a Bloomington-based loan servicer handling nearly 800,000 mortgages, accusing it of charging dubious fees as it processes homeowners' monthly payments. The lawsuit, filed Thursday in U.S. District Court in Minneapolis, is the latest in a slew of legal actions around the country against mortgage lenders and the servicers who process payments for them since the crash of the subprime mortgage industry. Attorneys are seeking national class status. The plaintiffs are five homeowners in Michigan, Illinois, California, Kentucky and Florida. They allege that Homecomings uses deceptive fees to deliberately put borrowers into default in order to maximize profits. The charges violate state and federal laws, they charge, including the Fair Debt Collection Practices Act and the Truth in Lending Act. [...] Their attorney, Doug Micko at Sprenger & Lange in Minneapolis, said he doesn't yet know how large the class might be or how many borrowers might be in Minnesota.

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• The company last month lost a somewhat similar lawsuit in Missouri over fees. A jury awarded homeowners $99 million in punitive damages - $92 million from Homecomings. The company said it planned to appeal. Homecomings is part of Residential Capital Corp., also in Bloomington and the mortgage arm of GMAC Financial Services in Detroit.

For more, see Loan servicer Homecomings sued over fees (Firm services 800K mortgages).

See also, Class Action Lawsuit Filed Against Homecomings.

To view lawsuit, see Motley, et al v. Homecomings Financial, LLC.

Co-counsel for plaintiffs in this lawsuit is Mehri & Skalet, PLLC, in Washington, D.C.

For more information on this class action, see the Homecomings Financial Class Action website.

For the attorneys' press release about this case, see Homeowners Allege Illegal Business Practices in Servicing Home-Secured Loans.

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Class Action Against Deutsche Bank; Ohio Homeowner Claims "No Legal Standing" To Foreclose

In Cleveland, Ohio, WKYC-TV Channel 3 reports:

• The Cleveland law firm of Novak, Robenalt, and Pavlik has filed a class action lawsuit on behalf of local homeowners who lost their homes to foreclosure by Deutsche Bank. "Most of the homeowners had never even heard of Deutsche Bank," said attorney Thomas Robenalt. "There was a rush to file, to sell these mortgages because they were selling them at a profit." Two Cleveland federal judges have dismissed all pending Deutsche Bank foreclosures, and Robenalt's firm has filed a class-action lawsuit. The suit contends the bank began foreclosure action before it had legal standing to do so. Robenalt believes homeowners foreclosed upon by Deutsche Bank may be entitled to recovery of substantial [fees] and damages, and in some cases, where the bank re-purchased the homes at sheriff's sales, could actually recover their homes. "That is the potential upside of this," he said.

• The law firm, which is also working with the firm of Cohen, Rosenthal, and Kramer, would be interested in hearing from those whose homes have been foreclosed by Deutsche Bank.

Source: Foreclosed homeowners could get their houses back.

For more extensive report, watch the WKYC-TV Channel 3 video, which also reports that Wells Fargo, which has reportedly foreclosed on almost 5,000 Cleveland-area homeowners, may be the next class action target.

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Ohio AG's "Real Party In Interest" Claim In Foreclosure Action Rejected Again By Ohio Court

In Hamilton County, Ohio The Cincinnati Enquirer reports:

• Ohio Attorney General Marc Dann has lost a second attempt to dismiss a foreclosure lawsuit in Hamilton County, with a Common Pleas Court magistrate ruling that a lender doesn't have to prove it owns the mortgage when it first seeks to take back the property. The decision Thursday in Residential Funding v. Anthony Muhammad, involving a vacant West End rental property, followed similar lines of reasoning as a ruling earlier in the week. Magistrate Michael L. Bachman said that because the state has an interest in the property - a lien for unpaid state income taxes for $1,264 - the attorney general has a conflict of interest. The attorney general's office said it would dispute the rulings to a common pleas judge.

Source: State's attempt to stop foreclosure rejected.

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