Another court in another state (besides Florida) is considering claims by home owners that they have suffered damages in a breach of their contract for a modified home loan by their lender under the HAMP program (Homeowner Affordable Modification Program). We’re already monitoring the aftermath of the federal appellate court’s decision up in Illinois where Lisa Wigod won her case and can pursue state law breach of contract claims against her lender (read about that here).
Beginning today, we’re going to start watching what happens over in California where Wells Fargo is a defendant. Several plaintiffs are joining together in what is termed a “class action” as they sue Wells Fargo for claims that Wells Fargo did not give them the permanent loan modifications that they claim were agreed upon as part of the deal to set up and complete a trial mortgage modification plan. (If this sounds similar to Wigod’s situation, you’re right.)
The Case: Amira Jackmon, Individually, and On Behalf of Others Similarly Situated v. America’s Servicing Company and Wells Fargo Bank
This California law suit is pending before the United States District Court for the Northern District of California as Case No. C 11 – 03884 CRB, styled Amira Jackmon, Individually, and On Behalf of Others Similarly Situated v. America’s Servicing Company and Wells Fargo Bank. The federal district court, unlike some other federal courts (like the United States Supreme Court, for example) does not publish everything online for public viewing – you will need a subscription to the PACER service to follow this docket as it proceeds. Right now, the case (filed in August 2011) is pending before the lower district court and the opinion there may well proceed to the United States Court of Appeals for the 9th Circuit for appellate review once a decision is reached at the district court level.
In other words, it will be awhile before we know how California stands on the issue.
Jackmon Class Action – The California Bank Breach of Contract Case
In the Jackmon lawsuit, it’s being argued by the plaintiffs that while they were in trouble with their mortgages, they didn’t ignore the situation and instead, entered into agreements with Wells Fargo, their lender, to lower their monthly mortgage payment for 3 months and if they successfully paid that amount on time each month, then according to Wells Fargo’s own written correspondence they got a new deal: the bank wrote to each of them that if they were to “…make those payments successfully and fulfill all the trial period conditions, we will permanently modify your mortgage loan.”
The home owners have sued in federal court because they argue they did do all that was required under the deal — and after that trial time period of three months was up, the bank didn’t follow through on what it committed to do for them. Amira Jackmon, the named plaintiff in this law suit, ended up losing her home in a foreclosure sale instituted by Wells Fargo.
Larry Tolchinsky’s Tip:
Here’s what is happening: borrowers in another state are suing Wells Fargo for doing something very similar to what Lisa Wigod up in Illinois argued was done to her: the bank took her trial period mortgage payments and then welched on the deal to make the new, modified mortgage a permanent deal – opting instead to take foreclosure steps. Both plaintiffs were savvy and strong, and they got foreclosure defense lawyers in their states to advocate for them, which has ended up in these law suits we are monitoring.
Twist to the California case: those plaintiffs are arguing that the lender never, ever intended to do a deal with them … their position is that Wells Fargo was sneaky and took that three months of lower mortgage payment money all the while fully intending to foreclose. Why? Just to get those three additional payments into its pocket before it started trying to take the property back.
By arguing this was all intentionally done, as a plan or scheme, the California case makes things much more serious — these are claims of knowing, intentional bad acts and that’s more than just a disagreement on what the terms of a deal were, it’s more than a failure to have a meeting of the minds on what the contract was, and what the bank was required to do.
Bottom line: across the country, more and more angry home owners are fighting back and filing claims, going after banks for these failed mortgage modifications. These cases are great examples of the ‘best defense is a good offense” approach to foreclosure defense.
Sometimes, depending upon the particular circumstances of a case, there is the opportunity for a home owner to file claims against their lender. These HARP modification breaches are one example; the pending case brought by Roman Pino before the Florida Supreme Court is another.
Once their foreclosure defense attorney has investigated and researched their situation and outlined their choices to them, it takes a strong and sure home owner who is ready to fight their bank in court for things like breach of a contract (breaking their bargain) or intentionally manipulating or misleading them in negotiations from the start.
It takes time and patience and fortitude, but these cases are important. Not only for the victorious home owner, but for others in similar situations around the country, who are watching them just as we are monitoring Illinois and California today.
Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at firstname.lastname@example.org, or (954) 458-8655. If you have a specific situation, please call or email Larry because he can’t answer specific fact questions in general comments. He’s happy to take your call.