HERA has pioneered consumer protection through our two class action cases challenging the collection practices of debt collectors against condominium owners who have fallen behind on their homeowner's dues. The challenged practices include charging illegal collection fees, violating the state condominium association laws, and making illegal threats of foreclosure. These practices put home ownership at risk because homeowner's dues can be collected by non-judicial foreclosure of homes, without any court hearing. Both cases are now in settlement mode, and promise to yield substantial benefits and future protections to homeowners.
See Hanson vs. Pro Solutions, United States District Court, Northern District, Case No. 4:13-cv-05377. Co-counsel, Cotchett, Pitre and McCarthy.
HERA has continued to take the lead in vindicating California consumer protection laws that bar mortgage lenders from collecting loan balances from homeowners personally after a lender has foreclosed or short sold the borrower's home. HERA has successfully concluded a class action settlement against JPMorgan Chase Bank after five years of litigation!
Settlement resolves four class action cases against Chase for deceptively attempting to collect mortgage balances after foreclosures and short sales where collection is barred by California's "Anti-Deficiency Laws." Former homeowners will receive monetary payments and correction of credit reports.
See Banks vs. JP Morgan Chase Bank, N.A., Alameda County Superior Court, Case No. RG 12614875. Co-counsel Arthur Levy.
In a related effort, following our motto of fighting on many different fronts, HERA filed four amicus curiae briefs in related cases, including Coker v. Chase, in which the California Supreme Court ruled that California's purchase money Anti-Deficiency Law applies after short sales as well as after foreclosure sales; Alborzian v. Chase, where the California Court of Appeal held collection practices that mislead borrowers regarding what they owe under the Anti-Deficiency Laws violate state and federal fair debt collection law statutes; and major briefs in two federal credit reporting appeals.
HERA is pursuing a class action in federal court for a monolingual Spanish speaker against DISH Network, based on California's laws requiring consumer contracts negotiated in Spanish and other non-English languages be in that language. DISH advertised an "800" call-in line to Spanish-speaking consumers, on which a DISH representative made all arrangements for DISH satellite TV subscriptions in Spanish. DISH then provided the consumers English-only contracts. The Court has ordered the case to arbitration. HERA and its co-counsel are challenging that ruling, and hope to obtain a Court judgment enjoining DISH from marketing in non-English languages without providing contracts in the same language, and for other relief.
HERAhas intervened on behalf of Latino mortgage borrowers in a housing discrimination case filed by HERA with HUD, and pursued now by HUD, in federal court under the Fair Housing Act. The lawsuit alleges that the perpetrators charged HERA's clients thousands of dollars for unnecessary "loan audits" to obtain mortgage loan modification services, and after paying the illegal charges, no modification services were provided. HERA staff attorneys expected to take a leading role in partnership with the U.S. Attorney's office.
The California Supreme Court issued its decision in Coker v. Chase on January 21, 2016, holding that section 580b of California's Code of Civil Procedure applies to short sales just as it does to foreclosure sales. http://www.courts.ca.gov/opinions/documents/S213137.PDF
Under California law, a bank that forecloses on a home gets to collect proceeds from the foreclosure sale but cannot seek further money from the former homeowner, even if the proceeds do not repay the loan. HERA drafted and submitted an amicus (friend of the court) brief to the court on this case, arguing that this protection also applies to former homeowners who had to short sell their home. The court agreed. Please note the express reference to HERA and our arguments in the opinion on page 7. HERA made a substantial contribution to this decision.
HERA and allies' amicus (friend of the court) brief was quoted extensively in seminal case of Alvarez v. BAC Home Loan Servicing. Bank of America, N.A., et al. In this case out of Sonoma County, the Court of Appeals found that the plaintiff homeowners' complaint alleging negligent review of their application for a modification, along with fraud and other claims, should be allowed to move forward. The extensive discussion about the aspects of the transaction that the homeowners were challenging, the differential in bargaining power, the modern mortgage industry, et cetera, is well worth reading, Big thanks to the Yale Clinic team and others who collaborated on the amicus brief. You can read the Court's important decision here ».
McCauley v. Bank of America | Solano County Superior Court Case No. FCS04188
Mildred McCauley, a disabled senior citizen, believed her mortgage problems were behind her when she entered into a permanent loan modification. But over a year later, Bank of America breached the modification, suddenly reversing her year's worth of timely payments, and demanding she pay over $14,000 in arrears. Ms. McCauley tried to tell Bank of America for months that she was current, but multiple representatives continued to tell her she was months behind, and she started receiving default notices, solicitations "avoid foreclosure" by starting the modification process over, and offers to consider short sale.
HERA, along with cocounsel Humphreys, Wallace, and Humphreys, filed a lawsuit on her behalf alleging, among other things, breach of contract, negligence, unfair debt collection, and financial elder abuse. Discovery revealed that Ms. McCauley's loan was one of 113 loans Bank of America was unilaterally "remediating" by stripping the modification, changing the terms, and reapplying payments - all without notice to the borrowers. HERA successfully moved the Court to compel production of records relating to the other 112 borrowers. Ms. McCauley successfully defeated Bank of America's motion for summary adjudication, which argued that Ms. McCauley could not assert a negligence claim or seek punitive damages. The case is set for trial in Solano County superior court on November 14, 2014.
Raposo v. Bank of America et al. | Marin County Superior Court Case No. 1304406.
Filed October 25, 2013.
Homeowner Maria Raposo obtained a loan modification in September 2012. For an entire year afterward, while Ms. Raposo made timely payments on the modified loan, Bank of America continued to treat her as delinquent, despite her cooperation in signing corrected documents, which Bank of America's representative countersigned, and her repeated requests that Bank of America bring her account up to date.
Bank of America representatives repeatedly assured her that the loan modification would close, but ultimately told her in June 2013 that the loan was not modified because her documents were submitted too late. Even so, Bank of America still accepted her modified payments until September 2013.
HERA filed a lawsuit in Marin County Superior Court on her behalf challenging Bank of America's failure to honor the loan modification agreement, its negligent servicing of her mortgage, its damage to her credit, and its unlawful debt collection activity. Bank of America subsequently transferred servicing of Ms. Raposo's mortgage to Select Portfolio Servicing, Inc., which decided to honor the loan modification.
HERA is still pursuing the litigation to obtain damages for the unlawful debt collection, negative credit reporting, and emotional distress caused by the mishandling of her mortgage. On May 9, 2014, the Court rejected Bank of America's attempt to dismiss her claims.
Chin v. Bank of America | United States District Court for the Northern District of California Case No. CV-13-2704.
Bank of America told the Chin family that they did not qualify for a mortgage modification. Rather than go through a foreclosure, the Chins agreed to a deed in lieu of foreclosure.
They signed their home over to Bank of America, handed over the keys, and moved into a hotel. Months after they had moved out of their home and tried to start afresh, Bank of America told them it was rejecting their deed in lieu contract. It continued to charge them interest and foreclosure-related fees, totaling over $250,000 -- including exorbitant $10,000 a year lender-placed insurance -- long after they had moved out in reliance on the deed in lieu agreement.
With co-counsel Cotchett, Pitre & McCarthy, LLP, HERA brings claims for, among others, breach of contract, unfair debt collection practices, and unfair business practices.
Esquivel v. Bank of America, N.A, | United States District Court for the Eastern District of California Case No. 12-DV-2502-GEB-KJN.
This class action challenges Bank of America's ongoing failure to promptly , accurately, or fairly implement loss mitigation for loans insured by the FHA – specifically, its practice of reneging on permanent FHA loan modification, even after it has recorded a "partial claim" mortgage in favor of HUD as part of the modification.
Plaintiffs Beatriz and Antonio Esquivel entered into a contract for permanent FHA-HAMP modification of their mortgage, beginning in March, 2012. As part of the modification, Bank of America had them enter into a subordinate loan with the Department of Housing and Urban Development (sometimes called a "partial claim") as required by FHA regulations. The Esquivels signed a Note promising to pay $93,591.63 to the Secretary of Housing and Urban Development, and Bank of America recorded a deed of trust securing the loan against the Esquivels' home.
The Esquivels made timely payments on their modified mortgage for five months. Nonetheless, Bank of America continued to treat the loan as if it were in default, sending them notices that they were thousands of dollars behind, refusing to accept payments, and starting foreclosure, even though they were current on the modified mortgage.
HERA, together with co-counsel Jenkins Mulligan & Gabriel, LLP and The Law Office of Eric Andrew Mercer, filed a class action complaint on October 5, 2012.
In an extremely favorable decision, the District Court roundly rejected Bank of America's efforts to dismiss the case. It held the Esquivels' claims alleging that Bank of America.
...could proceed to discovery. You can read the Court's opinion here.
"OTHER DEFERRED AMOUNTS" added to loans after FHA-HAMP Modifications: If your permanent FHA loan modification was delayed, and Bank of America's cover letter to the permanent loan modification you received states that "other deferred amounts" are being added to the amount you owe on your loan, those charges may be unlawful. Contact HERA for more information.
"Partial Claim" loan and deed of trust to HUD recorded, but account not brought current. If Bank of America had you sign a "partial claim" Note to HUD, and recorded a deed of trust securing that loan against your property but did not bring your mortgage account current, the amount Bank of America claims you owe may be unlawful. Contact HERA for more information.
Opinion in case G049624 - Huntington Continental Town House Association, Inc. v. Joseph Miner
The court handed down a great decision on a case for which HERA did an amicus (friend of the court) brief, in which we were able to explain to the court the state of the law and what's going on out there.
Attached is an opinion holding that tracked the part of our amicus argument that laid out the statutory scheme for collections. The holding also clarifies the illegality of a number of other common practices (requiring repayment agreements prior to accepting payment from homeowners, foreclosing where the statutory minimum of $1,800-independent of fees-isn't met, and applying homeowner payments to fees before principal.
Hanson v. JQD, LLC d.b.a. Pro Solutions, filed in U.S. District Court, the Northern District of California, Case3:13-cv-05377-RS
Gena Hanson missed three monthly payments to her homeowner association ("HOA") after becoming severely ill. Ms. Hanson tried to pay back her HOA for the missed payments after returning home, but the HOA had already transferred her account to a debt collector, Pro Solutions.
According to the complaint in a class action lawsuit filed by HERA and the law firm of Cotchett, Pitre & McCarthy, Pro Solutions charged Ms. Hanson hundreds of dollars of unjustifiable fees within days of getting her account, refused to let her pay her HOA dues without first paying these fees, and, when Ms. Hanson was unable to pay the fees, charged her even more fees and threatened her with foreclosure.
The lawsuit seeks to recoup illegal fees for Ms. Hanson and a class of California homeowners and former homeowners and also to put an end to Pro Solutions' predatory collection practices. You can read the complaint and the court's order on a motion to dismiss using the links below. HERA is amending the complaint.
Heritage Pacific Financial, LLC. v. Rosita Gonzalez, et al, and related cross-action | Santa Clara County Superior Court, Case No. 110-cv-173203.
Two former homeowners succeeded in certifying a statewide class action lawsuit against Texas debt buyer, Heritage Pacific Financial, LLC, and its attorney Brad A. Mokri for unfair and unlawful debt collection and business practices.
The former homeowners are represented by the Housing and Economic Rights Advocates (HERA), the Law Office of William E. Kennedy, Jenkins Mulligan & Gabriel LLP, and the Law Office of Simmons &Purdy.
After purchasing second mortgage notes, Heritage attempts to collect by accusing California former homeowners of mortgage application fraud long after they have lost their homes to foreclosure, threatening to sue for fraud, and demanding that former homeowners submit documentation proving that the information submitted on their original loan applications was correct. Heritage and its attorney Mokri then sued the former homeowner for mortgage application fraud.
California's anti-deficiency laws protect former homeowners who have lost their primary residence to foreclosure from debt collection lawsuits when the homeowner obtained mortgage loans only to purchase the home.
The former homeowners and class representatives allege that Heritage and Mokri violated these laws when it subjected them and other former homeowners to litigation or threats of litigation to collect defaulted second mortgages. The class representatives also allege that although Heritage uniformly asserts that former homeowners committed fraud against their original lender, it presents no proof that it Heritage obtained the right to assert these claims in the place of the original lender. In 2011, the Court denied Heritage and Mokri's Anti- SLAPP lawsuit, finding that the class submitted sufficient evidence to demonstrate that Heritage is not authorized to sue them for fraud. Thus, the fraud action is one that cannot legally be taken by Heritage against these former homeowners, and any threat to take such action violates fair debt collection practices.
Chase Unfair Debt Collection on Purchase Money Debt
JPMorgan Chase Bank sent unfair and misleading debt collection letters seeking to collect on home equity lines of credit (or "HELOC") that borrowers used to buy their homes, even after their homes had been sold in short sale or foreclosure, and Chase had gotten all it was due under the loans by law. Chase's collection letters misleadingly threatened to "accelerate" this second mortgage debt, and offered a "window of opportunity" to settle.
With cocounsel Arthur Levy, HERA has challenged this unfair debt collection with a class action suit Banks v. JPMorgan Chase Bank, N.A., Alameda County Superior Court Case No. RG12614875. Plaintiffs filed suit in January, 2012, successfully fighting off Chase's effort to remove the case to federal court, bringing it back to the complex litigation department of Alameda County.
In a major victory for plaintiffs, the Superior Court completely overruled Chase's motion to dismiss the suit, finding that Chase's letter may violate state fair debt collection laws, and that California's purchase money anti-deficiency law, Code of Civil Procedure 580b, applies after both short sales and foreclosures. Although Chase sought immediate review by the Court of Appeal, the Court summarily refused.
When the issue of whether Code of Civil Procedure Section 580b covers purchase money loans after short sale arose in a different case on appeal, HERA filed a persuasive amicus brief in Coker v. JPMorgan Chase Bank, N.A., Court of Appeal case No. D061720. The Court of Appeal ruled favorably on July 23, 2013. Chase sought review by the California Supreme Court. HERA has filed an amicus brief in the California Supreme Court; you can read the brief HERE.
In the meantime, the parties are proceeding with discovery.