Jim Porter: Railing against large (foreclosing) banks
Special to the Sun
TRUCKEE, Calif. and#8212; Regular readers of this column know I am angry as hell with our large institutional banks and#8212; like Bank of America, Chase and Wells Fargo and#8212; for the way they treat their and#8220;upside downand#8221; or and#8220;under waterand#8221; residential borrowers.
Iand#8217;m not faulting the banks for providing these loans; thatand#8217;s a different story. But the way many lenders handle their upside down borrowers is almost criminal-and bad business.
Large banks uncooperative
A loan modification should be a win-win for lenders and residential borrowers whose loans exceed their home value; however, itand#8217;s almost impossible to get a modification. Adding five years to the loan to get the payments down to a manageable level would work for many borrowers and lenders. But for one reason or another, and#8220;you canand#8217;t get thereand#8221; with these banks. They almost always find a reason to say and#8220;no.and#8221; To start with, there is the bizarre, self-defeating, slippery-slope policy that the lender will not consider a loan modification if the loan is current: and#8220;Stop paying your mortgage THEN weand#8217;ll entertain a loan modification.and#8221; (And when you do you soon receive a foreclosure notice).
By and large these big banks are no more cooperative on a short sale.
If you want to get your blood boiling like mine, listen to these stories from three different, unrelated clients-told to me in the past few months. After receiving no cooperation from their bank, these homeowners finally were told by the lender they could participate in a trial loan modification program. All they had to do was make a reduced monthly loan payment for three months. All three borrower-clients did just that and#8212; made their reduced loan payments as agreed and#8212; and at the end of three months, each expected to receive formal loan modification paperwork from their bank.
Instead, all three received notices from their bank that they did not qualify for the loan modification program (the low-level employee delivering this disingenuous information did not know why). And, worse yet, they were now delinquent and#8212; going back three months because they had paid a reduced loan payment, not the full loan payment and#8212; and interest and late charges were accruing. Unbelievable.
A silver lining
There is a ray of hope and#8212; a new case out of the State of Georgia. Judge Dennis Blackmon ruled against U.S. Bank for refusing to cooperate with one of its residential borrowers on a loan modification after, as the judge wrote, U.S. Bank agreed to participate in the federal HAMP program and took $20 billion from the federal government as part of the bailout programs.
Judge Blackmon nails it
Judge Blackmon wrote that U.S. Bank denied the loan modification and#8220;without numbers, figures, or explanation, reasoning, comparison to the (HAMP) guidelines, or anything.and#8221;
and#8220;Clearly, U.S. Bank cannot take the money, contract with our Government to allow their service to the taxpayer (HAMP), violate that agreement, and then say no one on earth can sue them for it and#8230; The Bank claims that the intended beneficiaries of HAMP are the very people who canand#8217;t sue. Such argument is absurd.and#8221;
and#8220;U.S. Bank, like all parties to any contract, has a duty of good faith and fair dealing. While difficult to define, jurors know good faith and fair dealing when they see it, and jurors can spot the absence of same.and#8221;
and#8220;Georgia allows claims for Negligent Infliction of Emotional Distress by persons who are victims of malicious, willful, or wanton conduct specifically directed at them.and#8221;
and#8220;Sometimes, only the courts of law stand to protect the taxpayer. Somewhere, someone has to stand up. Well, sometimes is now, and the place is the Great State of Georgia. The Defendantand#8217;s (U.S. Bank) motion to dismiss is hereby denied.and#8221; i.e. ruling against the foreclosing bank.
Large lenders make bad situation worse
If we had a few more judges like Judge Blackmon, the large institutional lenders in this country would be encouraged to work with their residential borrowers instead of unnecessarily making life impossibly difficult with the end result, everyone loses. Memo to big banks: You are demolishing the dream of home ownership and losing money doing so.
HAVE A HAPPY AND HEALTHY 2012.
Jim Porter is an attorney with Porter Simon, with offices in Truckee, South Lake Tahoe and Reno. He is a mediator and was the Governorand#8217;s appointee to the Fair Political Practices Commission and McPherson Commission, both involving election law and the Political Reform Act. He may be reached at email@example.com or at the firmand#8217;s website http://www.portersimon.com.