Foreclosure Prevention Spotlight

Frivolous Foreclosure Lawsuit Leads Brooklyn Judge to Order Sanctions Against Bank

A Brooklyn man being sued for foreclosure was led to a legal victory with the help of South Brooklyn Legal Services attorney Sara Manaugh. Not only did a judge find the suit frivolous, but he ordered $10,000 in sanctions against the bank for foreclosing on a property they didn’t even own.

Mr. G bought a home in Bedford-Stuyvesant in 2007 with the assistance of two loans from an organization known as “GE Money Bank.”

But within two years a foreclosure had been filed by a bank, U.S. Bank National Association, which claimed it had acquired the senior mortgage after the mortgage had been assigned first from GE Money Bank to a trust held by Deutsche Bank National Trust Company, and then from that trust to a different trust held by U.S. Bank.

SBLS attorneys dug up online records on a database maintained by Wells Fargo, the custodian of both trusts, which revealed that Mr. G.’s mortgage loan was not owned by U.S. Bank — it was still held in the original trust.

Judge Wayne P. Saitta of Kings County Supreme Court wrote, “It appears that the plaintiff never owned the debt which was the subject of the foreclosure action. Plaintiff has submitted no evidence that the note was ever transferred to it. ... Simple due diligence would have revealed that the plaintiff did not own the mortgage upon which it sought to foreclose.”

The judge threw out the foreclosure lawsuit against Mr. G and ordered that U.S. Bank pay $10,000 in sanctions for this “frivolous litigation.”

The judge wrote, “The court can only speculate in how many other cases plaintiffs with no interest in mortgages wrongfully foreclose on them and collect proceeds to which they are not entitled.”

(Foreclosure Prevention)

Equal Justice Works Fellow at SBLS Helps Brooklyn Couple Stay in Home of 30 Years

Equal Justice Works AmeriCorps Legal Fellow, Laurie Izutsu-Keener worked with South Brooklyn Legal Services to represent an elderly couple, Mr. and Mrs. B, who had resided in their home for 30 years.

In 2007, the couple was solicited by a mortgage broker to refinance with an ARM loan that significantly increased their mortgage payments. Though the couple stressed to their broker that the new mortgage payment was too high, the broker assured them they could refinance into a more affordable rate in six months. When the six months had passed, the broker told the couple they did not qualify for a refinance, leaving them with unaffordable mortgage payments.

Later that year, Mr. B lost his part-time job after he suffered a stroke that left him immobile. As her husband’s primary caretaker, Mrs. B’s ability to work outside the home was reduced, preventing her from bringing in substantial income. The couple borrowed money from friends, family members and their church to make payments to their mortgage while their other expenses fell behind. Unfortunately, the money borrowed was not enough and in 2009 the mortgage company filed for foreclosure on the home.

Laurie and her supervisor submitted a settlement letter to the couple’s mortgage company requesting a permanent loan modification that would decrease the loan’s interest rate. While the initial offer was rejected, Laurie was persistent and the mortgage company eventually agreed to a modification under the Home Affordable Modification Program (HAMP). Laurie was then able to help the couple obtain financial assistance from the New York Times Neediest Subprime Cases Fund (Fund), which will help with the mortgage payments as well as other household expenses.

Visit Equal Justice Works for more information about their work.

(Foreclosure Prevention)

SBLS Foreclosure Director Meghan Faux Helped Plan Newly-Passed Mortgage Legislation

Meghan Faux, Director of the Foreclosure Prevention Project, worked with Assembly Member Helene Weinstein and the statewide “New Yorkers for Responsible Lending” coalition to gain passage of ground-breaking legislation to help people in foreclosure. The legislation expands mandatory settlement conferences before foreclosure. These conferences were an innovative step taken last year in the context of sub-prime loans to give homeowners an opportunity to meet with banks before a foreclosure could take place. Now the conferences have been expanded to all loans, instead of just sub-prime loans.

(Foreclosure Prevention)

Woman Rescued from Subprime Mortgage by SBLS

Martha King, a 66-year-old retired woman who spent 25 years working for the telephone company, became a South Brooklyn Legal Services client at the beginning of this year after she was dragged into a sub-prime mortgage with IndyMac. Ms. King was living on Social Security and a small pension and trying to find a way to pay for repairs to her home of 32 years while paying her mortgage. IndyMac gave her an adjustable rate mortgage with an initial interest rate of 11.75% which meant $3,538.22 in monthly mortgage payments. When Ms. King raised concerns about the high monthly payments, she was told that she could re-finance at a much better rate in a year and that her payments would go down. The year passed and she could not refinance the IndyMac mortgage. After her life savings were depleted from the high monthly mortgage payments, King began to fall behind on the mortgage and was in danger of losing her home. In January 2009, she came to South Brooklyn Legal Services and became the client of attorney TaeRa Franklin. Franklin helped King obtain a reverse mortgage and do a short pay-off. They were able to wipe out the mortgage lien of more than $325,000. Now King is safe in her home and is grateful for SBLS’ assistance.

(Foreclosure Prevention)