Monday, May 28, 2012

Lone Star Firm Tags F'closed Calif. Borrowers For Unpaid 2nd Mtgs; Homeowners' Lawyer: Outfit Nothing More Than "People In Texas Acting As Vultures!"

In Southern California, Rick Jurgens of California Watch reports:

  • Adding new uncertainty in the state’s ongoing mortgage crisis, a Texas company is aggressively pursuing hundreds of Californians to collect second-mortgage debt – on homes they’ve already lost through foreclosure.

  • Many of these former homeowners believed their mortgage debt had been erased after their houses were taken by banks and lending companies. But the Texas company, Heritage Pacific Financial, has pursued collections and filed lawsuits claiming those debts still linger.
  • Critics of Heritage Pacific say the company’s central tactic is forcing settlements from people who can’t afford a drawn-out legal fight and who don’t know the details of California law. The company has sued people with second-mortgage debts of less than $150,000, despite a state law prohibiting lawsuits alleging fraud on mortgages below that amount.

  • Heritage Pacific’s collection methods now face legal challenges, including a class-action lawsuit in Santa Clara County Superior Court that contends that the company is carrying out an “insidious and illegal debt collection scheme.”
  • By demanding payments from more than 1,000 individuals in California, the lawsuit contends, Heritage Pacific has violated “the rights of those who have already suffered the emotional and financial distress that results from the loss of their foreclosed home.”

  • Heritage Pacific is nothing more thanpeople in Texas acting as vultures,” said Will Kennedy, a lawyer in the class-action suit.
  • Heritage Pacific’s first big foray into California came in U.S. District Court in Los Angeles, where in a three-month period beginning in December 2009, Heritage Pacific filed three lawsuits seeking $46 million in actual and punitive damages from 158 defendants who took out 143 loans.

  • Meanwhile, Heritage Pacific opened another front in California state courts. California Watch reviewed online records in 10 of the state’s 17 largest counties and found 365 lawsuits in which Heritage Pacific was a party. Heritage Pacific also has filed 226 cases in federal bankruptcy courts in California.

  • This story was produced by California Watch, the state’s largest investigative reporting team. It is a part of the independent, nonprofit Center for Investigative Reporting. For more, visit Jurgens can be reached at

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