by Brian Mahany
On Friday I was chatting with one of our good friends, Marx Sterbcow of Sterbcow Law* in New Orleans. We often pursue the same type cases and invariably, we can’t discuss the outcomes. Why? Because Bank of America and other big lenders don’t want to air their dirty laundry. Unless a case is tried to a conclusion before a jury, expect the big banks to have any settlement terms permanently sealed. That means the bank doesn’t admit any wrongdoing and the homeowners and their lawyers are prohibited from discussing the case.
After Friday’s “non conversation”, I decided to seek the permission of some of our clients to tell their story before their case is resolved. We may not be able to report on the outcome but at least we can share their stories with other homeowners. There is safety in numbers and hope for many homeowners who are getting the run around from their lender.
Today we will introduce “Chris.” Chris and his wife own a lovely home in Florida. They purchased their home well before the market downturn and had built up a fair amount of equity. Their home was originally purchased through Countrywide which was later acquired by Bank of America.
In 2008, some confusion occurred regarding the couple’s homeowners insurance. All mortgages require homeowners to maintain insurance on their home. Not only does insurance protect you if your home is destroyed by a hurricane or fire, it protects the lender as well. Most mortgages say that if your policy lapses for some reason, the lender can obtain coverage at its cost. Of course, that cost is passed on to you.
These policies are called “forced place” policies because they are forced on the buyers. There is nothing wrong with a lender seeking to protect its investment. Lately, however, several of the big banks have been in trouble for charging ridiculous premiums for this insurance.
Why are the premiums so high? In many instances, the lender coincidentally owns the insurance company or gets kickbacks.
Chris and his wife were suddenly with a bill for $18,000 for forced place insurance even though they already had insurance. (At a cost of just $3000!) They immediately protested the mistake but anyone trying to get someone to answer the phone and correct a mistake at Bank of America knows what happened. Nothing.
After many months of fighting, Countrywide ultimately credited back some of the improper charges. By then, however, the couple was in a hole. Once you miss a payment, don’t pay enough or are even a few days late, the fees, required escrows and penalties begin to accrue. For most struggling Americans, its impossible to ever catch up.
Countrywide suggested that the couple refinance their loan. Chris and his wife did not have much choice because having forced placed insurance on your record is a giant red flag to other lenders. It means you are a bad credit risk.
The couple was told that they were approved for a conventional mortgage of approximately $500,000. Soon their problems would be behind them, or so they thought.
Unfortunately, the amount of mortgage promised to the couple exceeded the conventional lending limits. Countrywide couldn’t make the loan they had promised.
Once again, the couple was at the mercy of Countrywide as no one would now loan money to them.
After a series of failed promises, new loans were written. Miraculously, the couple never missed a payment and tried to protect their credit score even though their record now showed forced placed insurance.
The story might have ended there except Bank of America ultimately raised their monthly mortgage payment from $2400 to $4400. Ultimately, after two years of struggle the couple began to fall behind. All of us know the rest of the story.
We believe the only reason the couple fell behind is because the bank manufactured the default by almost doubling their monthly payments. Had the forced placed insurance never occurred, the couple would still be making their original loan payments and enjoying their home. Once the bank makes an error, we find it is nearly impossible for most homeowners to recover.
This was especially true for Chris as Bank of America knew he was a quadriplegic confined to a wheelchair and unable to work in most conventional jobs.
What makes this case so unusual is Chris and his wife’s refusal to give in and leave their home. The couple is willing to fight to the absolute end and fight smart. At one point the couple spoke with a BOA representative on the telephone. A family friend and former sheriff monitored that call. During that call, a distraught Bank of America employee admitted that the bank’s loan modification program is essentially a fraud.
We tell this story now while we can. Prior to writing this story and filing suit, the bank offered a nuisance settlement in the hopes that the couple would take a few bucks and walk away. Walk away from their family home. Walk away from years of lies and deceit.
There is hope for the couple and we are pledged to bring Chris’ family story and so many other stories to a jury of their peers. Let the people decide who was right and who was wrong. We are counting on the fact that a local jury will see through the lies and greed and send a strong message to Bank of America and other big banks.
If you are the victim of fraud by a bank or mortgage lender, give us a call. We are not a traditional mortgage foreclosure defense firm. We sue banks for monetary damages and can often work with your foreclosure lawyer.
For more information, contact attorney Anthony Dietz at If you are facing immediate foreclosure, contact a lawyer in your area or your local bar association. Most offer a free lawyer referral service.
Mahany & Ertl – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine and Minneapolis, Minnesota. Services available in most jurisdictions – we have handled cases in approximately 30 states.
* Marx Sterbcow is the go-to guy on RESPA issues. We wouldn’t hesitate to call him for such cases.