California Court Says Foreclosed Homeowner Can Sue Bank for Fraud
Many of the recent news stories about bankers have been less than sympathetic; and a new ruling from a California court provides yet one more illustration of why public opinion of the banking industry has fallen so low. In what could be a major setback for big banks, often accused of sabotaging loan modification efforts, the court, in a scathing 15 page ruling, found sufficient evidence that U.S. Bank had defrauded a borrower by reneging on a promised loan modification.
According to the ruling, the lender had agreed to a loan modification on condition of the homeowner dismissing a pending bankruptcy. However, according to reports, once the bankruptcy was vacated, the bank proceeded with foreclosure. (I suspect few are surprised by the bank’s actions as there have been hundreds of cases reported where banks failed to act in “good faith” on short sales, foreclosures, and loan modifications.)
And while the court failed to set aside the foreclosure—the owner was in default of her mortgage agreement with the bank—it opens the door for homeowners to pursue damages when their lender or servicer has failed to act in good faith.
See the following articles for additional details.
The Housing Guru: The expert source for all your housing questions—now featuring daily updates of Today’s Housing News
Comments(7)