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Ninth Circuit Rules Against Wells on Loan Mod Case

SEP 5, 2013 10:34pm ET
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The 9th U.S. Circuit Court of Appeals said Wells Fargo was required under the Federal Home Affordable Modification Program to offer mods to those borrowers who demonstrated their eligibility during a trial period.

The 9th Circuit reversed the dismissals by a San Francisco federal judge of two lawsuits seeking class-action status. The appeals court rejected the argument that Wells Fargo became bound only upon sending borrowers signed modification agreements.

The court said this would create "unfettered discretion" for the San Francisco-based bank to reject modifications "for any reason whatsoever−interest rates went up, the economy soured, (or) it just didn't like the borrower."

A federal appeals court in Chicago reached a similar conclusion last year.

Both the unsigned majority opinion and a concurring opinion by Circuit Judge John T. Noonan faulted Wells Fargo's drafting of the trial period plan, saying that to rule in the bank's favor would render the benefits for borrowers illusory.

"No purpose was served by the document Wells Fargo prepared except the fraudulent purpose of inducing Corvello to make the payments while the bank retained the option of modifying the loan or stiffing him," Noonan wrote. "'Heads I win, tails you lose' is a fraudulent coin toss. Wells Fargo did no better."

The case is Corvello v. Wells Fargo Bank NA, et al., 9th U.S. Circuit Court of Appeals, No. NO. 11-16234. 8-8-2013

MORAL

Keep good documented records. Save everything in both directions. Especially the emails. Keep this citation and show to the lender if you successfully complete the trial modification plan and get no response or a negative response for a permanent modification. I would also suggest sending it to the CFPB if you have issues. Consult your attorney if that is an issue.

POLICE OFFICER ARRESTED FOR AIDING AN ILLEGAL LENDER THAT WAS ALLEGEDLY LOAN SHARKING

FACTS

On Aug. 30, Anthony Duong Donner, a Westminster (Calif.) Police Officer was arrested by the Federal Bureau of Investigation and placed on administrative leave from the Westminster Police Department. Donner and Kevin Khanh Tuan Do face extortion charges.

Donner reportedly lived with Do, owner of Do’s Construction and Design, at the latter’s Fountain Valley home. Donner allegedly lived there free in exchange for “helping out”  Do including using his authority as a police officer to collect payments for what FBI officials described as Do’s “illegal lending and collection business.”

By way of example in an affidavit filed by an FBI agent Donner and Do allegedly interacted with a Garden Grove coffee shop and a Westminster lounge and restaurant identified simply by the initials H.L.

Investigators say Do loaned H.L. $170,000.00 to open her business, and then charged her 60% annual percentage rate interest. Prosecutors allege H.L. paid Do $168,000 in interest payments. When she could not continue the payments, authorities allege Do told Donner to “take police actions” on her business.

H.L. alleged Donner and other officers “interfered with her business” by “spotlighting her business with patrol cars, doing car stops on employees after work and entering the business to intimidate customers.”

Donner allegedly admitted enforcing the violations at H.L. business at Do’s request and agreed to make recorded phone call to Do who allegedly acknowledged telling Donner to collect money from H.L. but denied doing anything illegal.

Both Donner and Do were in Federal Court on Aug. 30, and made bond and were released.  They face up to 20 years in prison.  (ocregnws1883113)

MORAL

What do you know about these gentlemen? I am interested in hearing from you. Did you borrow money? Do you know someone that did?

ILLINOIS AMENDS FORECLOSURE LAWS AND TERMINATION OF TENANCIES

FACTS

Effective Nov. 19, Illinois has amended its provisions on foreclosure and termination of tenancy by providing that in the case of a foreclosure, a landlord may terminate a tenancy only at the end of the lease agreement term; that a deficiency judgment may not be entered against a deceased mortgagor; that the entry of a foreclosure judgment will not affect the rights of any occupant of a dwelling unit who has a lease or tenancy; and that the holder of a certificate of sale or deed will assume leases or tenancies of mortgaged real estate and assume housing subsidy contracts.

MORAL

Why would you want to fund a second mortgage if you cannot collect when the mortgagor dies?  Especially without mortgage life insurance where the beneficiary is the mortgagee or its assigns? Presuming that is, you are allowed to charge for the insurance directly or indirectly when the mortgage is created.

THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE. AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.

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