Wrongful foreclosure: the latest battleground

Banks are becoming more ruthless when it comes to seizing homes in a foreclosure situation — even when the foreclosure is unfounded. Doors are kicked in, locks broken, personal items damaged, not to mention the fear and stress of having strangers lurking around your property. There are other ways that a bank can wrongfully foreclose on a home as well. No one should have to suffer this, and it may be possible for you to get compensation for damages in a wrongful foreclosure lawsuit.
Types of damages in wrongful foreclosure action
California courts have held that consumers may be entitled to a variety of damages in these situations. First, compensation for physical damage to the home or the personal property taken or destroyed has long been recognized as a routine portion of damages allowed. More controversial is emotional distress or noneconomic damages as they are known in legal jargon. This damage can be substantial based on what was done by the bank or servicer; the more outrageous the conduct, the more emotional damaged would be expected to occur. Punitive damages can also be recovered along with possible attorney fees.
Specific examples of ‘wrongful foreclosures’
Wrongful foreclosure has been defined as “an illegal, fraudulent or willfully oppressive sale of property under a power of sale contained in a mortgage of deed of trust” (Munger v. Moore, 11 Cal App 3d 1 (1970)). This broad definition gathers a litany of types of acts and behaviors that would be deemed, “wrongful foreclosures.” Here are some categories I’ve come up with in my practice:
1. Lockout and trashout cases: Here, the bank or those hired by the bank enter your property illegally, change the locks, and maybe even steal or trash your belongings. I recently read of a high six-figure settlement of this type of case in Michigan. I think everyone can recognize that this type of bullying behavior is just plain wrong and would anger most jurors.
2. False information and advice cases: I lump quite a few different types of cases in this category. Homeowners are told they must stop making mortgage payments in order to “qualify” for a loan modification only to then have the same bank start foreclosure proceedings against them for non-payment. Similarly, often a dual track is set up by the bank; one hand is negotiating (supposedly) a loan modification, while at the same time, the same bank is also going forward with a foreclosure. Forced insurance is placed on the home even though the homeowners have their own insurance. Sloppy accounting by the servicer tells the homeowner they owe more than they really do. There are many other examples under this heading but space does not allow.
3. Phony documents and robo-signing: Only the valid owner of the security interest in the home can foreclose in California. Sounds simple enough, but if you’ve been following this issue, it’s a huge mess. Back-dating, forgery and notary fraud run rampant through the mortgage industry; all in an effort to prove the right to foreclose. Without this right, the foreclosure is illegal and wrongful.
These are just some of the types of cases we see. If you’ve been a victim of wrongful foreclosure, contact a qualified attorney!


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