Deutsche Bank and a New Jersey homeowner have reached a compromise to settle a foreclosure action that has been taking place for the last two years.
The German-based bank agreed to pay the homeowner $30,000 in cash after the bank attempted to foreclose the investment property that is worth $65,000.
As part of the settlement, the homeowner is entitled to retain the property and collect rental income for approximately 15 to 18 months. After this time, the homeowner will vacate the underwater property.
In this complaint, Deutsche was acting as the trustee on behalf of Morgan Stanley ABS Capital Inc., the mortgage pool that claimed to own the defendant’s loan.
“I’m especially pleased with the outcome of this case,” said Michael Gaier, an attorney of Philadelphia-based Shaffer & Gaier, who represented the defendant in this complaint. “This was an investment property that was purchased with a limited downpayment and has been earning income for the last two years. The issue is that my client never should have been approved for this loan in the first place.”
Gaier said the lenders severely inflated the borrowers' income on the loan application. After hiding this inaccurate figure, the lender disclosed a rate and payment that was substantially different from what was agreed upon at the closing table. The lender pressured the borrower to close with a threat of forfeiting a deposit.
“Bottom line is fraud is fraud. I anticipate there will be many more settlements going forward,” Gaier said.
The law firm said counterclaims of fraud and predatory lending were the main reasons why the settlement occurred, despite the bank having records of the assigned date prior to the foreclosure complaint.
The settlement also requires the bank to issue a letter to the three credit bureaus for them to restore any credit problems that the defendant suffered from this case.
