Bank of America is currently standing trial following allegations by the U.S. Justice Department that its Countrywide Financial Branch misrepresented the quality of mortgages sold to taxpayer-backed Freddie Mac and Fannie Mae.
Our Miami foreclosure lawyers know it’s the first time that a major financial institution has been held accountable in this way since the financial crisis first began to unfold back in 2007. Losses to the mortgage giants are estimated to be somewhere around $1 billion.
Whether similar actions will be brought remains to be seen, but we do know that a number of smaller actions, brought by individual plaintiffs against these corporate giants, have seen judges reacting to the banks with disdain. It’s a notable shift from the tone we have seen from judges in recent years.
In many district courts, judges appear to be expressing frustration and a loss of patience with banks, many of which have deftly hidden behind legal powerhouse teams to defend actions that were clearly unethical, if not outright illegal.
While judges have historically taken the side of lenders when it came to complaints of predatory loan servicing (and many certainly still do), we are seeing more and more judges get tougher on the banks.
For example, there was the recent federal lawsuit against Wells Fargo, brought in Massachusetts by a man who claimed his loan was predatory. Although the judge sided with the bank in remitting the case to state court on a “technicality,” he scolded the bank for advertising itself as a consumer-friendly institution, while adopting a hard-nosed win-at-any-cost litigation stance in matters involving individual homeowners.
In another case, this one out of Florida, a couple had filed for bankruptcy and had their first and second mortgage on their home discharged, meaning Bank of America, the mortgage servicer, was barred from any further attempts to collect debts. Although the bank had received notice of the discharge in early 2012, it began sending letters to the couple after that point, informing them their second mortgage was “seriously delinquent” by nearly $27,000. The bank demanded payment immediately. The bank began calling three times daily, demanding to be paid. When informed of the bankruptcy, the bank’s collectors reportedly responded with, “Too bad.”
The judge’s response? To slap the bank with a contempt order, complete with a bill for the couple’s legal expenses and $10,000 monthly until the bank stopped making demands for payment. In his opinion, the judge said this was not a mistake on the bank’s part, but rather, “Policy.”
These victories might seem small. But the fact that they are happening at all is encouraging. While these financial firms in the past had been characterized as “too big to fail,” we are finally seeing that it is possible that they can be held accountable, even if it is on a very small scale.
But sometimes, that’s how these wars are won – one battle at a time.
If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Mortgage Wars,” discussing foreclosure topics that matter to YOU.
Why Judges Are Scowling at Banks, Sept. 28, 2013, By Gretchen Morgenson, The New York Times
More Blog Entries:
New Mortgage Fraud Evidence Revealed in Unsealed Court Documents, Aug. 20, 2013, Miami Foreclosure Lawyer Blog