A half-dozen Montanans are suing Bank of America, the nation’s leading servicer of home mortgages, claiming that the company failed to honor agreements for loan modifications or failed to legally conduct the required trustees’ sales before transferring deeds to other entities.
“Plaintiffs’ claims are simple—when financial institutions enter into a contract in which it promises to modify a loan and prevent an unnecessary foreclosure, homeowners expect that promise to be kept,” Helena attorney Jonathan Motl wrote in a Jan. 6 complaint he and other attornies filed on behalf of a Flathead County couple.
That’s the situation claimed also by Donna Peterson of Helena, whose complaint Motl filed Thursday.
Peterson said she moved to Helena in 2007 and purchased what she calls her “dream house” on Wilder Street.
She was self-employed and bought the house with a high-interest (8.25 percent) loan through Countrywide Home Loans, which was taken over by Bank of America in 2008. She was diagnosed with cancer in January 2009, and was unable to work for a period of time.
In June 2009, she contacted Bank of America seeking a loan modification, she said.
“They were very sympathetic,” she said Friday. They verbally offered her a reduction of an interest rate to just 2 percent — but that she needed to be in default of her loan to get the modification, she said.
That promise, her lawsuit says, never came through. In the two-and-half years since, Peterson has submitted financial information several times and had numerous conversations with the loan servicer, she said.
Two years later, the servicer offered a 3 percent rate, but still insisted on charging the original 8.25 percent for the two years in arrears, she said. That would have wiped out just about all her equity in her home.
Peterson said she is now cancer-free, has a full-time job and is ready to continue payment. But she said it’s become clear to her that the servicer never intended to honor the promise made verbally back in 2009.
“I’ve been employed the last year-and-a-half and they’re still running me in circles,” she said. “They really try to bully you into doing what they want.”
She said she’s meticulous about keeping records and taking notes of her conversations, and said people in similar struggles should do the same.
Her home is scheduled for trustees’ sale on the courthouse steps in March. She is seeking a restraining order to delay that sale and stay in her home pending the outcome of the lawsuit.
Kenneth Lay, a local attorney with the firm Crowley Fleck representing Bank of America, referred a call to a Los Angeles-based company spokeswoman, Jumana Bauwens, who would not comment on the individual cases but said the servicer has greatly improved its loan modification process since its volume vastly increased following the acquisition of Countrywide. She said the company now provides a continuous point of contact for people seeking loan modifications and has made significant investments in technology and training.
The company explores every option to avoid foreclosure, she said.
In other cases filed by Motl, homeowners charge that Bank of America bypassed trustees’ sale and illegally signed over the deeds to new investors.
In one case, a Columbia Falls man defaulted in his loan but claims he was at the trustees’ sale with his brother, check in hand, ready to outbid the bank and save the home, but the sale was postponed and then never held as the deed passed to a new owner. That homeowner later received a notice from the new owner to vacate his house in three days.
Motl said that if banks are disregarding the Montana laws requiring open trustees’ sales, the resulting deeds will be invalid, creating big problems for future would-be owners. He likened the situation to the mining companies in early Montana, extracting wealth from the state while leaving behind a toxic legacy.
He said people with issues should keep fighting until the last minute and even attend the trustees’ sale and make sure it’s done properly.
But, not everyone with a problem with their loan will have a legal case, and it’s a significant commitment for a lawyer to undertake one.
“The opponents are large, they have a lot of money, and they have a lot of lawyers working for them,” Motl said.
Reporter Sanjay Talwani: 447-4086 or firstname.lastname@example.org