Homeowner's Legal Battle Against Banks Drags On

Homeowner's Legal Battle Against Banks Drags On-Image via Wikipedia

Homeowner Pelayo Duran claims in his lawsuit that what he wanted was the attractive loan he saw advertised in the Miami Herald to refinance a home for his growing family. Instead, he ended up in the middle of an endless and costly legal fight with the nation’s largest banks accusing them of illegal predatory lending and unfair and deceptive trade practices.

At the same time, Duran’s attorneys claim his mortgage has been sold in the secondary market to investors who paid a profit to Wells Fargo Bank NA who is now acting as a trust administrator to the loan pool that allegedly owns Duran’s loan, a loan lawyers say was designed to fail.

“Someone has to stand up for the rights of the defenseless and the oppressed,” said Duran. “People have to know the real story of how these banks were able to take the American dream and destroy it. We believe they reaped billions of dollars in profits by lying, falsifying documents, appraisals, applications engaging in predatory advertising and lending practices. They hide behind all the companies that are involved and the large law firms that represent them. They create layer upon layer of red tape to avoid being held accountable.”

Duran’s attorney, Adis Riveron, Esq., filed a lawsuit in Miami-Dade Circuit Court (CASE No. 09-CV-20411-CIV) naming defendants Wells Fargo, Countrywide (bought out by Bank of America), Greenpoint Mortgage Funding and two individuals Lee Rosenthal (the appraiser), and Cindy Sierra (the mortgage broker). The lawsuit has charged them with a total of 13 counts including negligence, fraud, unfair and deceptive trade practices, and breach of fiduciary duty. Duran seeks a jury trial to determine punitive damages. You can download a copy the lawsuit at https://files.me.com/cjonespr/cv3pc7

“Even though my home is not in foreclosure and I continue to make regular, on-time payments, my case is similar to the plight of millions of homeowners across the country,” said Duran, a prominent South Florida attorney. “Fortunately, I have been able to gather the financial resources, legal determination and stamina to take on the giant lenders because I refuse to give in when what they are doing is clearly unconscionable and dishonest.”

The case was immediately removed by the defendants to federal court in 2009, but has since been remanded back to the state court earlier this year after a tough and expensive legal battle. Duran also had to pay a $10,000 judgment following an order compelling part of the case against Wells Fargo to arbitration.

According to Duran’s attorneys, they have filed a motion to stay the proceeding because the arbitrator from the American Arbitration Association might have engaged in inappropriate conduct. Attorneys said they would now file a motion to force the arbitrator to recuse himself.

“It is inevitable the Mr. Duran will have to begin the entire arbitration process from the beginning,” said Riveron. “This conduct on the part of the arbitrator calls in to question the entire integrity of the expensive arbitration process that Wells Fargo includes in its mortgage agreements. The only reason they don’t agree to have the lawsuit in state court where it belongs is to make the process as dragged out and expensive as possible. They will stop at nothing to delay and obfuscate justice. I believe in my lawsuit and I will not stop until I have exhausted every avenue, said Duran.”

The lawsuit claims that this legal saga began when Duran tried to refinance his primary residence in 2005. He had purchased the home in October 2004, and had he made an initial down payment of $100,000. Shortly after the purchase, Duran needed to access some of the money he had put down to cover imminent personal and business issues.

According to the lawsuit, Duran saw an ad in the Miami Herald published by Wells Fargo Home Mortgage. The ad was offering an Adjustable Rate Mortgage (ARM) at a rate of 5.75%, with 10 years interest only payments, a fixed interest rate for 10 years, and a 5.1 annual percentage rate. Duran’s plan was to buy down the loan rate at closing 1 to 2 point and pay off the home in about 10 to 15 years.

The lawsuit states Duran contacted Wells Fargo because he had a longtime business relationship with the bank and the terms in the ad were the most favorable. Attorneys claims when Duran called Cindy Sierra who he thought was a bank representative, she first told him that the advertised rates were not available. She then told him that she would get him an even a better deal. Duran believes that he, just like millions of other Americans, was baited into applying for an attractive loan that never existed, only to be switched to a high-risk subprime loan.

According to the lawsuit, Sierra told Duran to leave the income section on the application blank until such time as she could conduct a “pencil search,” a prohibited but common practice used by mortgage brokers and lenders in order to maximize the loan amount in which a mortgage broker would shop for an appraiser to support the highest value that the lender could hit in originating the loan. Initially, Sierra informed Duran that his home was worth $1.5 Million. The appraiser, Lee Rosenthal who worked for and was hired by Rels Valuation, (also Wells Fargo company), ultimately determined and represented to Duran that his home, which was purchased for $984,000 four months earlier, was now worth $1.2 million.

“Unbeknownst to me, she created my loan by adjusting the value of my home to my debt-to-income ratio,” said Duran. “They never considered my ability to repay the loan. All they cared about was the appraised value and my good credit score. What I also discovered was that a Wells Fargo representative was actually originating a loan for Greenpoint Mortgage Funding and that immediately upon the closing of my loan, Greenpoint would turn around and sell my loan right back to Wells Fargo as trust administrator for a pool of loan. In addition, Fred Schlang, SRA, an appraisal expert, later alleges that the bank’s appraisal was inappropriately inflated.”

According to the lawsuit, after haggling over the terms for several weeks, Duran and his wife were disheartened at the closing when the final Greenpoint loan agreement reflected a financed amount of $920,000 with an APR of 5.622% fixed during a five year period, with rate adjustments up to twice per year, a pre-payment penalty, and a rate cap of 10.5%, (not the 5% he had been previously offered in writing) and they would not be able to buy down the rate 1 to 2 percentage points at closing, as he had been previously promised.

“None of these terms were disclosed throughout the entire process,” said Duran. “She attempted to fix the problem at the closing of the mortgage, but they lied to my wife and me, once again.”

Duran and Riveron claim in the lawsuit that this case stems from the common practice of securitizing loans and selling them in the secondary market for huge profits. These mortgages were underwritten primarily on the basis of an inflated appraisal and have basically no underwriting standard other than securing a signature on loan documents.

“Greenpoint and Wells Fargo’s profits are determined by the amount of and quantity of loans they successfully closed, not the quality of those loans,” said Duran. “The lender has an incentive to pressure appraisers and brokers to reach values that will allow the loan to close – without regard to whether the appraisal reflects the home’s actual value. Likewise, the independent broker is not tied to one lender, but has relationships with multiple lenders.”

Duran said since he began his investigation and even before filing of the lawsuit, his home mortgage was transferred from Greenpoint to Countrywide and now to Bank of America. Duran and Riveron said for some unknown reason, Bank of America and Greenpoint have been attempting force place insurance on his home. The last policy cost $22,000.00 a year.

“They want me to go into foreclosure in order to say ‘he is just like all the other unsuccessful people who bring these predatory lending complaints in defense of their foreclosures,’” said Duran.

“But it seems like they are trying to force him into default,” said Riveron. “Bank of America flagged his account and they won’t even speak to him. They forced him to use a lawyer so he can spend even more money. They want to break his back. They admitted that there is no reason to have placed forced placed insurance on his home, but yet they won’t apply his payments and they won’t correct their own mistake.”

“Sadly, at the end of the day, after more than two years and hundreds of thousands of dollars invested into this litigation Duran (as many Americans) is still not clear as to who he is indebted to because they will not produce documents to establish or to prove who is the true holder of his mortgage. It is one roadblock after another,” said Riveron.

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