Last week Lara came into our office with an interesting story of a fraudulent foreclosure and an exciting opportunity of redemption. She actually was sued for foreclosure three years ago, and suffered an adverse judgment a year later. Thereafter the bank had a sheriff’s sale set, and bought the home at the sale. A bankruptcy intervened which slowed down the process until recently. Now the bank is asking the court to confirm the sale, the next step which normally would lead to someone in Lara’s position being dispossessed of her home for good. However, Lara’s story had an interesting twist – she had just received a letter from current Ohio Attorney General Mike DeWine indicating that she could be eligible for a payment of about $850, due to fraudulent practices regularly used by her loan servicer in foreclosures. This money is the result of a $25 billion settlement reached between Lara’s bank and the government in April of this year.
In other words, the payment offered Lara was her bank’s way of apologizing to her for using illegal means to gain foreclosure. This mea culpa by the bank could turn out to be a huge break for Lara. Since the foreclosure is still pending, it presents a clear opportunity for her to go back to the court and ask it to set aside the old judgment. The argument is almost irrefutable in its logic – the recompense offered Lara is the next best thing to an out-and-out admission of wrongdoing by the bank in her foreclosure case. Given this admission, what is the court to do when asked to prevent the bank from benefiting from its own wrongdoing? Even more interesting is the question of how the bank will react when asked to cough up its ill-gotten gain, the foreclosure judgment, when confronted with a motion to set that judgment aside. The bank is in the precarious and unenviable position of having to defend a judgment which it has already admitted was fraudulently obtained. Sweet justice.
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Next week: The story of Fred and Sue, whose bank has offered them a reduction in their loan balance of $12,000, forgiveness of accrued interest and late charges of $22,000, a reduction in their interest rate from about 7% to 3.5%, resulting in a drop in their monthly payment from almost $700 to $425, all as recompense for its fraud in bringing a wrongful foreclosure.
This is a weekly column by Sandusky attorney Dan McGookey, devoted to telling true stories of homeowners who have been victimized by a lending system that makes it profitable to foreclose. The names used have been changed for privacy purposes.
Copyright 2012 Daniel L. McGookey