Foreclosed Homeowners Sue To Regain Homes

November 6, 2010

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Foreclosed homeowners sue to regain homes
Class action against three major lenders could affect thousands
October 29, 2010|Diane C. Lade, Sun Sentinel


JIN LEE, Bloomberg News


South Florida homeowners have filed suit against three major banks and are demanding more than compensation for what they say were illegal foreclosures.

They want their property back, according to a complaint filed this week in U.S. District Court in Miami.

Legal experts, however, say it's highly unlikely the courts would force out new owners of these homes if they had bought them in good faith, as they would have protection under the law, said Nina Simon, director of litigation for the Center for Responsible Lending. That probably is particularly true in states like Florida, she said, where judges must approve foreclosure actions.

But if the lender or an affiliate still has the property? "Who knows?" Simon said. "A lot of stuff still is in inventory."

Attorneys who filed the suit have requested it be certified as a class action lawsuit.

The suit, filed on behalf of three Miami-Dade County homeowners, names three major lenders: BAC Home Loans Servicing, a subsidiary of Bank of America; Deutsche Bank National Trust Company, and US Bank National Association. The action alleges that court documents used in the homeowners' foreclosures were improperly notarized and false, because the agents testifying to the paperwork's accuracy never personally reviewed it.

Spokesmen for Deutsche Bank and US Bank said their companies acted as trustees for the trusts holding the mortgage securities. So it was not them but the loan servicers, and the foreclosure law firms they employed, that handled the foreclosure procedures referenced in the lawsuit, they said.

Bank of America spokeswoman Shirley Norton said the lender, one of the largest in Florida and the nation, had not yet seen the suit. But in regards to other suits filed against the company, "we believe we have valid defenses against them and intend to vigorously defend against them," she said.

Class action filings are springing up around the country, as state investigations and private lawsuits uncover similar questionable foreclosure procedures by lenders, loan servicers and their law firms. The Center for Responsible Lending is one of several parties involved in a class action, on behalf of Maine homeowners, against Ally Financial's GMAC mortgage unit.

While the allegations echo those in the Miami suit, Simon said the Maine case asks for ongoing foreclosures or evicitions to be stopped, or monetary damages if the homeowners already have lost their property.

The Miami class action, if certified, could include homeowners outside of Florida and number in the thousands.

Attorney Juan P. Bauta of The Ferraro Law Firm, one of three firms involved in the Miami suit, said innocent buyers of an illegally foreclosed upon house would have no more rights than those who unwittingly bought a stolen car. Wrongful foreclosures must be thrown out, and the paperwork redone, "or we will have issues cropping up years from now," Bauta said.

Bauta said he did not know if the properties referenced in the suite had new owners and if so, how the courts might treat them. "It's uncharted territory," he said.

Diane Lade can be reached at 954-356-4295 or dlade@sunsentinel.com.