LPP is a mortgage company (perhaps only the servicing company) that has taken over a lot of defaulted loans of New South Federal. Many Alabama consumers were in the process of modifying their loans with New South when the FDIC took over the bank in December, 2009.
We have met with a lot of consumers who claim that LPP has not treated them right in the loan medication process and some claim that LPP lied to them about whether a foreclosure would occur.
You may know that in Alabama foreclosures are “non judicial” which means no judge gets to approve the foreclosure before it happens. But after foreclosure, the alleged new owner (almost always the mortgage company) must sue you to eject (evict) you from the home. This gives you an opportunity to have a judge review what has happened.
Here are some of the allegations of a recent counterclaim alleging fraud in the postponement of a foreclosure we filed after LPP foreclosed on our clients’ property and then sued them to eject them from their home:
AMENDED ANSWER AND COUNTERCLAIM
COME NOW Defendants, by and through their attorneys of record and file their Amended Answer to the LPP’s Complaint, and their Counterclaim pursuant to Rule 13 of the Alabama Rules of Civil Procedure as follows:
BACKGROUND INFORMATION ON MORTGAGE FORECLOSURE CASES
1. This state is facing a crisis of epic proportions.
2. Foreclosures are sweeping through this state at an alarming rate, damaging communities in the process.
3. More alarming, however, are the vast numbers of foreclosures that are illegal.
4. All across this country, and in Alabama, companies are foreclosing when they have no legal right to foreclose.
5. Companies that do not properly own the note and mortgage are foreclosing. When questioned, they belittle efforts by Judges to ensure that only companies with the right to foreclose actually foreclose.
6. The typical response to questions by homeowners and Judges is “This is not a big deal. Don’t worry about technicalities on who owns the loan. You can trust us – we are the big banks after all.”
7. Even more disturbing is that these banks and mortgage companies are engaged in wholesale fraud against homeowners in the area of modifying the loan agreement or postponing the foreclosure.
8. This case is a perfect example of what is happening across the country and this state.
For answer to the LPP’s Complaint, Defendants respond as follows:
1. All material allegations are denied.
AFFIRMATIVE DEFENSES TO THE UNDERLYING
FORECLOSURE AND EJECTMENT ACTION
1. Defendants allege that there was no default at the time of the foreclosure.
2. Defendants allege that the LPP did not have actual physical possession of the original note at the time the foreclosure.
3. Defendants allege that acceleration was improper and in violation of the contract between the parties.
4. Defendants allege that the parties entered into an agreement which cured any alleged default and is an absolute defense to foreclosure.
5. Defendants allege that the LPP failed to comply with applicable mortgage servicing regulations, guidelines and agreements and as such a condition precedent to acceleration and foreclosure has been violated requiring dismissal of the underlying foreclosure action.
6. Defendants allege that the LPP failed to offer pre-foreclosure loss mitigation as required. This failure requires that the underlying action seeking foreclosure be dismissed or abated until such time as this requirement is satisfied.
7. Defendants allege that the LPP did not have standing to initiate a foreclosure or ejectment action against Defendants.
8. Defendants allege that the assignments, endorsements, or allonges from, to, or involving LPP, or any other entity were void, voidable, illegal, without legal effect and are otherwise invalid and unenforceable as a matter of law.
9. The foreclosing entity lacked standing to initiate a foreclosure, therefore the foreclosure is void or at least voidable and no title has passed to LPP as there was no legal title to pass to it from the foreclosing entity.
10. The title taken to the property by the LPP is of no effect and is void because the underlying foreclosure was commenced in violation of law on one or more of the following grounds:
a. The foreclosing entity lacked standing to foreclose.
b. The foreclosure was taken in violation of law in that the foreclosing entity did not own the mortgage debt upon which it foreclosed and therefore could pass no legal title to the lands it claimed to foreclose nor could it acquire legal title to the lands that it foreclosed upon.
c. The foreclosure was taken in violation of law in that the default was exaggerated, inflated and based upon improper and illegal mortgage servicing practices on the part of the foreclosing entity and its agents or employees.
d. The foreclosure is voidable in that the foreclosure sale was completed by fraud, deceit or trickery on the part of the foreclosing entity and its agents, employees or servants in that the foreclosing parties represented that Defendants would not be foreclosed upon, but then the LPP failed to follow this promise.
e. The LPP failed to strictly comply with the requirements set out in Alabama law and the contract between the parties, with respect to notice, time and place and other legal provisions thereby rendering the foreclosure void.
f. The LPP failed to engage in loss mitigation required by its agreements and federal servicing guidelines which the entity is subject to, and because of the failure of the condition precedent to foreclosure the acceleration and default were invalid and illegal and renders the foreclosure void.
g. There was no default upon which to accelerate based upon the agreement to modify or forbear the underlying debt.
h. The LPP that allegedly foreclosed on Defendants had no authority to do so as they did not own the note and mortgage so as to give them the right to foreclose.
Defendants herewith their counterclaim as follows:
1. This action arises out of LPP’s repeated violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (“FDCPA”), and out of state law violations and out of the invasions of Defendants’ personal and financial privacy by the LPP and its agents in their illegal efforts to collect a consumer debt from Defendants.
PARTIES 2. LPP LPP Mortgage, Ltd. (“LPP”) in this action is a foreign corporation doing business in Marshall County, Alabama, and is considered a debt collector under the FDCPA as it was assigned the debt at issue when the debt was allegedly in default.
3. Fictitious Defendants “A”, “B” and “C” thereby intending to refer to the legal entity, person, firm or corporation which was responsible for or conducted the wrongful acts alleged in the counterclaim; names of the Fictitious parties are unknown to the Defendants at this time but will be added by amendment when ascertained.
4. Defendants are residents of Alabama, and are over the age of 19.
STATEMENT OF FACTS
5. Congress found it necessary to pass the FDCPA due to rampant abusive practices by dishonorable debt collectors. 15 USC § 1692 is entitled “Congressional findings and declaration of purpose” and it states as follows:
(a) There is abundant evidence of the use of abusive, decep¬tive, and unfair debt collection practices by many debt collectors. Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.
(b) Existing laws and procedures for redressing these injuries are inadequate to protect consumers.
(c) Means other than misrepresentation or other abusive debt collection practices are available for the effective collec¬tion of debts.
(d) Abusive debt collection practices are carried on to a sub¬stantial extent in interstate commerce and through means and instrumentalities of such commerce. Even where abusive debt collection practices are purely intrastate in character, they nevertheless directly affect interstate com-merce.
(e) It is the purpose of this title to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.
6. Defendants incurred a financial obligation that was primarily for personal, family or household purposes (Defendants’ home loan) and is therefore a “debt” as that term is defined by 15 U.S.C. § 1692a(5).
7. LPP claims the debt was in default at the time the servicing rights were assigned or transferred to LPP on or about December 18, 2009.
8. LPP is considered a “debt collector” and began engaging in debt collection activities against Defendants.
9. LPP failed to make all required disclosures to Defendants in violation of the FDCPA.
10. Misrepresentations were made regarding the character, amount, or legal status of the debt.
11. The amount of the debt, the amount of fees and charges, were incorrect and not supported by the law and by the note and mortgage.
12. The foreclosure was illegal and constituted a threat to take action which LPP was not legally entitled to take.
13. As set forth below, LPP used false representations and/or deceptive means to collect on this debt.
14. The collection methods employed by LPP were harassing and illegal.
15. Defendants were in a loan modification process with LPP when LPP requested additional papers for the loan modification on May 11, 2010 and gave Defendants 15 days to send the papers to the LPP.
16. Thus, Defendants had until May 26, 2010 to return the papers.
17. Defendants called the week of May 11, 2010 to confirm that the sale was postponed and LPP assured Defendants it was. Defendants were told the same thing at least one other occasion.
18. Defendants sent the papers to LPP and LPP received the papers on May 23, 2010, within the 15 day period.
19. Amazingly, LPP foreclosed on May 25, 2010, within the 15 day window.
20. The sale was without proper notice to Defendants and in direct derogation of Alabama common and statutory law.
21. LPP sent Defendants a letter denying the loan modification.
22. The only reason for the denial of the loan modification was that a foreclosure occurred on May 25, 2010.
23. LPP alleges that it is the purchaser of the property made the subject of this suit.
24. LPP has pursued an order ejecting Defendants from their home while representing to the Court that the foreclosure sale was lawful and that the LPP had the present right, ownership and authority to pursue the foreclosure and that LPP has the right to evict the Defendants.
25. LPP has represented to this Court that it is the proper holder of said mortgage and therefore foreclosed in accordance with Alabama law and its rights under the security agreement.
26. Defendants allege that the LPP lacked standing to foreclose in that it has no present legal right to enforce the security agreement that underlies the foreclosure action.
27. Defendants allege that the alleged assignments between the original lender, and any other entity is defective, void, or otherwise unenforceable.
28. Defendants contend that said sale was wrongful, illegal, in violation of law and the documents governing the relationship between Defendants and the owners of their mortgage.
29. Defendants contend that the foreclosing entity lacked standing to initiate a foreclosure and that the foreclosure is void or at least voidable and that no title has passed to LPP as there was no legal title to pass to it from the foreclosing entity.
30. Defendants allege that the actions of the LPP, and its agents, employees and servants were wrongful.
31. Defendants allege that the actions of the LPP in bringing an action for ejectment from their home and the LPP wrongfully foreclosing is a violation of law, wrongful and tortuous and that LPP holds no title to the home or property, and that the actions of LPP constitutes negligence, wantonness, intentional misconduct, fraud, breach of contract, abuse of process and slander of title.
32. As a direct result of the acts complained of, Defendants have been caused to suffer, and will continue to suffer great mental anguish, damage to their reputation, economic and emotional damages and claim from LPP all damages allowable under the law.
33. All parties acted within the line and scope of any agency relationship and all of their employees and agents acted with the line and scope of their employment and/or agency relationship.
34. Defendants reallege all paragraphs as if set out here in full.
35. The LPP negligently conducted a foreclosure sale on Defendants’ property and have negligently attempted to eject Defendants from the home they rightfully own since the foreclosure performed is void.
36. The LPP negligently handled, serviced, and processed payments, charges, fees, expenses, and other aspects of Defendants’ loan and mortgage, including the loan modification process.
37. As a direct result of the said negligence, Defendants were injured and damaged as alleged above and have suffered mental anguish, economic injury and all other damages allowed by law.
38. As a result thereof, the LPP is liable for all natural, proximate and consequential damages due to their negligence.
39. Defendants reallege all paragraphs as if set out here in full.
40. The LPP acted with reckless indifference to the consequences, and consciously and intentionally conducted a wrongful foreclosure sale on Defendants’ property and the LPP has acted with reckless indifference to the consequences, and consciously and intentionally in instituting this action to eject Defendants from the home they rightfully owns since the foreclosure performed is void.
41. The LPP wantonly applied, imposed, or created charges, fees, expenses, and payments, and other aspects of the Defendants’ loan and mortgage including the loan modification process.
42. These actions were taken with reckless indifference to the consequences, consciously and intentionally in an effort to increase profits for the LPP.
43. The LPP knew that these actions were likely to result in injury to Defendants including financial and emotional injuries and mental anguish.
44. As a result thereof, the LPP is liable for all natural, proximate and consequential damages due to its wantonness as well as punitive damages.
45. Defendants adopt and reallege all paragraphs as if set out here in full.
46. The actions of the LPP in foreclosing on the home of Defendants in violation of law resulted in the LPP being unjustly enriched by the payment of fees, insurance proceeds and equity in the home.
47. As a result of the LPP’s unjust enrichment, Defendants have been injured and damaged in that Defendants have been forced to pay charges that were illegal, wrong in character, wrong in amount, unauthorized, or otherwise improper under threat of and the actual illegal foreclosure by the LPP.
48. Defendants claim all damages allowable under law as a result of the LPP’s wrongful conduct and unjust enrichment.
49. Defendants reallege all prior paragraphs as if set out here in full.
50. The LPP has initiated a foreclosure proceeding against Defendants in violation of law and the LPP has wrongfully brought an action for ejectment.
51. The foreclosure proceeding by the LPP and ejectment action by LPP was either negligent, wanton or intentional, depending on proof adduced at trial.
52. As a result thereof, the LPP is liable for all natural, proximate and consequential damages due to its actions including an award of punitive damages.
COUNT FIVE ABUSE OF PROCESS
53. Defendants reallege all paragraphs as if set out here in full.
54. The LPP maliciously obtained the issuance of the writ or process of ejectment, from this Court and had it served on Defendants.
55. The LPP abused the said writ or process because the attempt to eject Defendants from their home with the knowledge that they are the rightful owner of their home and that the LPP had no right to act against them.
56. As the proximate result of LPP abuse of the said writ or process, Defendants were caused damages and will continue to suffer injuries and damages.
57. Defendants claim all damages allowable under law.
COUNT SIX SLANDER OF TITLE
58. Defendants reallege all paragraphs as if set out here in full.
59. The LPP, in filing a foreclosure deed (which is void) have caused a cloud to be placed on the title of the property of Defendants.
60. As the proximate cause of LPP’s slandering of Defendants’ title, Defendants were caused to suffer injuries and damages and claims all damages allowable under law.
COUNT SEVEN BREACH OF CONTRACT
61. Defendants reallege all paragraphs as if set out here in full.
62. The LPP breached the contract with Defendants and thereby caused Defendants incidental and consequential damages (including mental anguish).
63. Defendants claim all damages allowable under law.
COUNT EIGHT FRAUD
64. Defendants reallege all paragraphs as if set out here in full.
65. Shortly before the foreclosure, LPP committed misrepresentations and suppressions against Defendants in that LPP told Defendants that the foreclosure would not occur as Defendants were in the process of a loan modification.
66. At the time of the fraud LPP had no intention of honoring their representation.
67. The LPP suppressed from Defendants the truth that it intended to foreclose on Defendants on May 25, 2010.
68. All misrepresentations, and suppressions of these material facts were made intentionally, recklessly, and/or negligently.
69. Defendants properly relied upon the misrepresentations and suppressions of the LPP and were damaged thereby.
70. Defendants could have taken steps to prevent the foreclosure (including filing bankruptcy or curing any alleged default) but Defendants were prevented from doing so by the misrepresentation and suppression of the LPP as it was not until after the foreclosure sale that Defendants knew they had been deceived.
71. This was the purpose and design of this common type of fraud in the mortgage industry – lie about the fact that the foreclosure will not occur so the borrower and homeowners will rely upon the fraud.
72. When there is reliance, then the homeowners will be lulled into a sense of safety by the abusive LPP and the homeowners will not take any further action as they believed that the LPP was reviewing the modification request and was not going to foreclose – precisely what the LPP intended the homeowners to believe.
73. It is proper and appropriate for homeowners to believe LPP when these types of misrepresentations and suppressions of material fact are made – who would know better than the LPP whether or not the foreclosure was going to happen?
74. No one else in the world would know better than the LPP the truth of whether or not they were going to foreclose.
75. All misrepresentations, and suppressions of these material facts were made intentionally, recklessly, and/or negligently.
76. The purpose and intent was to cause Defendants to be in a position where they could not save their home which is exactly what happened.
77. Defendants properly relied upon the misrepresentations and suppressions of the LPP and were damaged thereby.
78. Defendants claim all damages allowable under law.
COUNT NINE NEGLIGENT AND/OR WANTON HIRING, SUPERVISION, AND/OR TRAINING
79. Defendants reallege all paragraphs as if set out here in full.
80. The LPP hired, supervised, and/or trained incompetent agents or employees who committed some or all of the wrongful acts set forth in this Answer and Counterclaim.
81. The LPP knew or should have known of the incompetence of these agents or employees.
82. The LPP was negligent or reckless in their hiring, supervision, and/or training which led as a direct and proximate result to the damages suffered by Defendants.
83. Defendants claim all damages allowable under law.
COUNT TEN INTENTIONAL AND/OR MALICIOUS CONDUCT
84. Defendants reallege all paragraphs as if set out here in full.
85. All actions of the LPP were made intentionally and/or malicious and led to the damages of Defendants as a direct proximate result.
86. Defendants claim all damages allowable under law.
COUNT ELEVEN VIOLATIONS OF THE FAIR DEBT COLLECTION PRACTICES ACT 15 U.S.C. § 1692 et seq.
87. Defendants incorporate by reference all of the above paragraphs of this Complaint as though fully stated herein.
88. The acts and omissions of LPP and its agents constitute numerous and multiple violations of the FDCPA with respect to Defendants.
89. As a result of the violations of the FDCPA, Defendants are entitled to actual damages pursuant to 15 U.S.C. § 1692k(a)(1); statutory damages in an amount up to $1,000.00 pursuant to 15 U.S.C. § 1692k(a)(2)(A); (2) actual and compensatory damages; and, (3) reasonable attorney’s fees and costs pursuant to 15 U.S.C. § 1692k(a)(3), from the LPP.
COUNT TWELVE INVASION OF PRIVACY BY INTRUSION UPON SECLUSION
90. Defendants reallege all paragraphs as if set out here in full.
91. Alabama law recognizes Defendants’ right to be free from invasions of privacy and LPP violated Alabama state law as described in this Complaint.
92. Congress explicitly recognized a consumer’s inherent right to privacy in collection matters in passing the Fair Debt Collection Practices Act, when it stated as part of its findings:
Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.
15 U.S.C. § 1692(a) (emphasis added).
93. Congress further recognized a consumer’s right to privacy in financial data in passing the Gramm Leech Bliley Act, which regulates the privacy of consumer financial data for a broad range of “financial institutions” including debt collectors (albeit without a private right of action), when it stated as part of its purposes:
It is the policy of the Congress that each financial institution has an affirmative and continuing obligation to respect the privacy of its customers and to protect the security and confidentiality of those customers’ nonpublic personal information.
15 U.S.C. § 6801(a) (emphasis added).
94. LPP and/or its agents intentionally, recklessly, and/or negligently interfered, physically or otherwise, with the solitude, seclusion and or private concerns or affairs of the Defendants, namely, by repeatedly and unlawfully attempting to collect a debt and thereby invaded Defendants’ privacy.
95. LPP and its agents intentionally, recklessly, and/or negligently caused emotional harm to Defendants by engaging in highly offensive conduct in the course of collecting this debt, thereby invading and intruding upon Defendants’ right to privacy.
96. Defendants had a reasonable expectation of privacy in Defendants’ solitude, seclusion, private concerns or affairs, and private financial information.
97. The conduct of LPP and its agents, in engaging in the above-described illegal collection conduct against Defendants, resulted in multiple intrusions and invasions of privacy by the LPP which occurred in a way that would be highly offensive to a reasonable person in that position.
98. As a result of such intrusions and invasions of privacy, Defendants are entitled to actual damages in an amount to be determined at trial from LPP.
99. All acts of LPP and its agents and/or employees were committed with malice, intent, wantonness, and/or recklessness and as such LPP is subject to punitive damages.
WHEREFORE, Defendants having set forth their claims for relief against the LPP, respectfully pray of the Court as follows:
a. That Defendants have and recover against the LPP a sum to be determined by a jury of their peers in the form of actual damages;
b. That Defendants have and recover against the LPP a sum to be determined by a jury of their peers in the form of punitive damages;
c. That Defendants have and recover against the LPP a sum to be determined by a jury of their peers in the form of statutory damages;
d. That Defendants have reasonable attorney’s fees, costs, expenses;
e. That the foreclosure sale be set aside; and f. That Defendants have such other and further and proper relief as the Court may deem just and proper.
/s/ John G. Watts
John G. Watts (WAT056)
Attorney for Defendants
Watts Law Group, PC The Kress Building 301 19th Street North Birmingham, Alabama 35203 (205) 879-2447 (888) 522-7167 facsimile email@example.com
/s/ M. Stan Herring
M. Stan Herring (HER037)
Attorney for Defendants
M. Stan Herring, P.C.
The Kress Building 301 19th Street North Birmingham, Alabama 35203 (205) 714-4443 (888) 522-7167 facsimile firstname.lastname@example.org
DEFENDANTS DEMAND A TRIAL BY JURY