Are You A Victim Of LPP Mortgage’s Fraud Concerning A Foreclosure?

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Updated December 21, 2011 — the case is back on so we will be glad to hear your story and we will update you with further information as we proceed in the case….

[Update on September 13, 2011 — the parties asked the court to dismiss the case without prejudice and today the court granted this so the trial date has been cancelled.]

We have a case going to trial in October in Alabama where our clients allege that LPP Mortgage, LTD, committed fraud against them in the foreclosure of their home.

As is often the case, a mortgage servicer will allegedly commit fraud and then foreclose. Following the alleged wrongful foreclosure, the mortgage servicer will then sue the homeowners to kick them out of their home.

The counterclaim of our clients alleges that shortly before the foreclosure, LPP promised the homeowners that the foreclosure would not occur as a modification was being considered.

The foreclosure happened anyway.

If you have had a similar experience, we would like to speak with you as we are making our preparations for trial and if your experience is similar to our case, this could be persuasive with the jury.

Please give us a call at 205-879-2447 or you can fill out our online contact form here.

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Here are the allegations of the counterclaim:

7. 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 col¬lection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt col¬lection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.

[Emphasis added].

8. 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).

9. Plaintiff claims the debt was in default at the time the servicing rights were assigned or transferred to Plaintiff on or about December 18, 2009.

10. Plaintiff is considered a “debt collector” and began engaging in debt collection activities against Defendants.

11. Plaintiff failed to make all required disclosures to Defendants in violation of the FDCPA.

12. Misrepresentations were made regarding the character, amount, or legal status of the debt.

13. 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.

14. The foreclosure was illegal and constituted a threat to take action which Plaintiff was not legally entitled to take.

15. As set forth below, Plaintiff used false representations and/or deceptive means to collect on this debt.

16. The collection methods employed by Plaintiff were harassing and illegal.

17. Defendants were in a loan modification process with Plaintiff when Plaintiff requested additional papers for the loan modification on May 11, 2010 and gave Defendants 15 days to send the papers to the Plaintiff.

18. Thus, Defendants had until May 26, 2010 to return the papers.

19. Defendants called the week of May 11, 2010 to confirm that the sale was postponed and Plaintiff assured Defendants it was. Defendants were told the same thing at least one other occasion.

20. Defendants sent the papers to Plaintiff and Plaintiff received the papers on May 23, 2010, within the 15 day period.

21. Amazingly, Plaintiff foreclosed on May 25, 2010, within the 15 day window.

22. The sale was without proper notice to Defendants and in direct derogation of Alabama common and statutory law.

23. Plaintiff sent Defendants a letter denying the loan modification.

24. The only reason for the denial of the loan modification was that a foreclosure occurred on May 25, 2010.

25. Plaintiff alleges that it is the purchaser of the property made the subject of this suit.

26. Plaintiff has pursued an order ejecting Defendants from their home while representing to the Court that the foreclosure sale was lawful and that the Plaintiff had the present right, ownership and authority to pursue the foreclosure and that Plaintiff has the right to evict the Defendants.

27. Plaintiff 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.

28. Defendants allege that the Plaintiff lacked standing to foreclose in that it has no present legal right to enforce the security agreement that underlies the foreclosure action.

29. Defendants allege that the alleged assignments between the original lender, and any other entity is defective, void, or otherwise unenforceable.

30. 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.

31. 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 Plaintiff as there was no legal title to pass to it from the foreclosing entity.

32. Defendants allege that the actions of the Plaintiff, and its agents, employees and servants were wrongful.

33. Defendants allege that the actions of the Plaintiff in bringing an action for ejectment from their home and the Plaintiff wrongfully foreclosing is a violation of law, wrongful and tortuous and that Plaintiff holds no title to the home or property, and that the actions of Plaintiff constitutes negligence, wantonness, intentional misconduct, fraud, breach of contract, abuse of process and slander of title.

34. 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 Plaintiff all damages allowable under the law.

35. 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.

COUNT ONE
NEGLIGENCE

36. Defendants reallege all paragraphs as if set out here in full.

37. The Plaintiff 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.

38. The Plaintiff negligently handled, serviced, and processed payments, charges, fees, expenses, and other aspects of Defendants’ loan and mortgage, including the loan modification process.

39. 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.

40. As a result thereof, the Plaintiff is liable for all natural, proximate and consequential damages due to their negligence.

COUNT TWO
WANTONNESS

41. Defendants reallege all paragraphs as if set out here in full.

42. The Plaintiff acted with reckless indifference to the consequences, and consciously and intentionally conducted a wrongful foreclosure sale on Defendants’ property and the Plaintiff 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.

43. The Plaintiff wantonly applied, imposed, or created charges, fees, expenses, and payments, and other aspects of the Defendants’ loan and mortgage including the loan modification process.

44. These actions were taken with reckless indifference to the consequences, consciously and intentionally in an effort to increase profits for the Plaintiff.

45. The Plaintiff knew that these actions were likely to result in injury to Defendants including financial and emotional injuries and mental anguish.

46. As a result thereof, the Plaintiff is liable for all natural, proximate and consequential damages due to its wantonness as well as punitive damages.

COUNT THREE
UNJUST ENRICHMENT

47. Defendants adopt and reallege all paragraphs as if set out here in full.

48. The actions of the Plaintiff in foreclosing on the home of Defendants in violation of law resulted in the Plaintiff being unjustly enriched by the payment of fees, insurance proceeds and equity in the home.

49. As a result of the Plaintiff’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 Plaintiff.

50. Defendants claim all damages allowable under law as a result of the Plaintiff’s wrongful conduct and unjust enrichment.

COUNT FOUR
WRONGFUL FORECLOSURE

51. Defendants reallege all prior paragraphs as if set out here in full.

52. The Plaintiff has initiated a foreclosure proceeding against Defendants in violation of law and the Plaintiff has wrongfully brought an action for ejectment.

53. The foreclosure proceeding by the Plaintiff and ejectment action by Plaintiff was either negligent, wanton or intentional, depending on proof adduced at trial.

54. As a result thereof, the Plaintiff is liable for all natural, proximate and consequential damages due to its actions including an award of punitive damages.

COUNT FIVE ABUSE OF PROCESS

55. Defendants reallege all paragraphs as if set out here in full.

56. The Plaintiff maliciously obtained the issuance of the writ or process of ejectment, from this Court and had it served on Defendants.

57. The Plaintiff 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 Plaintiff had no right to act against them.

58. As the proximate result of Plaintiff abuse of the said writ or process, Defendants were caused damages and will continue to suffer injuries and damages.

59. Defendants claim all damages allowable under law.

COUNT SIX SLANDER OF TITLE

60. Defendants reallege all paragraphs as if set out here in full.

61. The Plaintiff, in filing a foreclosure deed (which is void) have caused a cloud to be placed on the title of the property of Defendants.

62. As the proximate cause of Plaintiff’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
63. Defendants reallege all paragraphs as if set out here in full.

64. The Plaintiff breached the contract with Defendants and thereby caused Defendants incidental and consequential damages (including mental anguish).

65. Defendants claim all damages allowable under law.

COUNT EIGHT FRAUD
66. Defendants reallege all paragraphs as if set out here in full.

67. Shortly before the foreclosure, Plaintiff committed misrepresentations and suppressions against Defendants in that Plaintiff told Defendants that the foreclosure would not occur as Defendants were in the process of a loan modification.

68. At the time of the fraud Plaintiff had no intention of honoring their representation.

69. The Plaintiff suppressed from Defendants the truth that it intended to foreclose on Defendants on May 25, 2010.

70. All misrepresentations, and suppressions of these material facts were made intentionally, recklessly, and/or negligently.

71. Defendants properly relied upon the misrepresentations and suppressions of the Plaintiff and were damaged thereby.

72. 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 Plaintiff as it was not until after the foreclosure sale that Defendants knew they had been deceived.

73. 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.

74. When there is reliance, then the homeowners will be lulled into a sense of safety by the abusive Plaintiff and the homeowners will not take any further action as they believed that the Plaintiff was reviewing the modification request and was not going to foreclose – precisely what the Plaintiff intended the homeowners to believe.

75. It is proper and appropriate for homeowners to believe Plaintiff when these types of misrepresentations and suppressions of material fact are made – who would know better than the Plaintiff whether or not the foreclosure was going to happen?

76. No one else in the world would know better than the Plaintiff the truth of whether or not they were going to foreclose.

77. All misrepresentations, and suppressions of these material facts were made intentionally, recklessly, and/or negligently.

78. 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.

79. Defendants properly relied upon the misrepresentations and suppressions of the Plaintiff and were damaged thereby.

80. Defendants claim all damages allowable under law.

COUNT NINE NEGLIGENT AND/OR WANTON HIRING, SUPERVISION, AND/OR TRAINING
81. Defendants reallege all paragraphs as if set out here in full.

82. The Plaintiff 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.

83. The Plaintiff knew or should have known of the incompetence of these agents or employees.

84. The Plaintiff 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.

85. Defendants claim all damages allowable under law.

COUNT TEN INTENTIONAL AND/OR MALICIOUS CONDUCT
86. Defendants reallege all paragraphs as if set out here in full.

87. All actions of the Plaintiff were made intentionally and/or malicious and led to the damages of Defendants as a direct proximate result.

88. Defendants claim all damages allowable under law.

COUNT ELEVEN VIOLATIONS OF THE FAIR DEBT COLLECTION PRACTICES ACT 15 U.S.C. § 1692 et seq.

89. Defendants incorporate by reference all of the above paragraphs of this Complaint as though fully stated herein.

90. The acts and omissions of Plaintiff and its agents constitute numerous and multiple violations of the FDCPA with respect to Defendants.

91. 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 Plaintiff.

COUNT TWELVE INVASION OF PRIVACY BY INTRUSION UPON SECLUSION
92. Defendants reallege all paragraphs as if set out here in full.

93. Alabama law recognizes Defendants’ right to be free from invasions of privacy and Plaintiff violated Alabama state law as described in this Complaint.

94. 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).

95. 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).

96. Plaintiff 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.

97. Plaintiff 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.

98. Defendants had a reasonable expectation of privacy in Defendants’ solitude, seclusion, private concerns or affairs, and private financial information.

99. The conduct of Plaintiff and its agents, in engaging in the above-described illegal collection conduct against Defendants, resulted in multiple intrusions and invasions of privacy by the Plaintiff which occurred in a way that would be highly offensive to a reasonable person in that position.

100. 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 Plaintiff.

101. All acts of Plaintiff and its agents and/or employees were committed with malice, intent, wantonness, and/or recklessness and as such Plaintiff is subject to punitive damages.

RELIEF REQUESTED
WHEREFORE, Defendants having set forth their claims for relief against the Plaintiff, respectfully pray of the Court as follows:
a. That Defendants have and recover against the Plaintiff 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 Plaintiff 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 Plaintiff 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.

Respectfully Submitted,

/s/ John G. Watts
John G. Watts (WAT056)
Attorney for Defendants OF COUNSEL:
Watts Law Group, PC The Kress Building 301 19th Street North Birmingham, Alabama 35203 (205) 879-2447 (888) 522-7167 facsimile john@wattslawgroup.com
/s/ M. Stan Herring
M. Stan Herring (HER037)
Attorney for Defendants OF COUNSEL:
M. Stan Herring, P.C.
The Kress Building 301 19th Street North Birmingham, Alabama 35203 (205) 714-4443 (888) 522-7167 facsimile msh@mstanherringlaw.com

DEFENDANTS DEMAND A TRIAL BY JURY

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