Padget v OneWest – IndyMac Provides some insight into RESPA remedies

The Ocwen Court provided an example for clarity: “Suppose an S & L signs a mortgage agreement with a homeowner that specifies annual interest rate of 6 percent and a year later bills the homeowner at a rate of 10 percent and when the homeowner refuses to pay institutes foreclosure proceedings. It would be surprising for a federal regulation to forbid the homeowner’s state to give the homeowner a defense based on the mortgagee’s breach of contract.” Ocwen, 491 F.3d at 643-44.

Padget-One west bank dba Indymac

Editor’s Note: The assumption was made that One West owned the loan when it was clearly securitized. One West used the fact that Plaintiff admitted that One West was the owner of the loan and therefore undermined Plaintiff’s case against One West as a debt collector which requires the actor to be collecting for the benefit of a third party.

This is where the rubber meets the road. either you are going to master the nuance introduced by securitization or you are going to let the other side have a field day with misrepresentations that you have admitted are true.

PADGETT, Plaintiff,
v.
ONEWEST BANK, FSB, d/b/a INDYMAC

Civil Action No. 3:10-CV-08
United States District Court, Northern District of West Virginia, Martinsburg

parties filed an Agreed Order in the bankruptcy court resolving IndyMac’s motion to lift the automatic stay. (Id. at ¶ 14). Pursuant to this Agreed Order, the plaintiff’s mortgage was deemed current as of May 1, 2008, and the one payment for which the plaintiff was in arrears was added onto the end of the mortgage. (Id. at ¶¶ 15-
16). The first payment due under the Agreed Order was due in May 2008. (Id. at ¶ 17). The plaintiff made the May 2008 payment in a timely fashion and has made his monthly mortgage payment each month after May 2008, up to and including the date of the filing of the plaintiff’s First Amended Complaint. (Id. at ¶¶ 18-19).

In March 2009, Defendant OneWest Bank, F.S.B. (“OneWest”) purchased IndyMac, whereupon IndyMac Mortgage Services (“IndyMac MS”) became a division of OneWest. (Id. at ¶¶ 20-21). On July 16, 2009, OneWest, doing business as IndyMac MS, sent the plaintiff a letter claiming he was one month behind on his payments. (Id. at ¶ 22). In response, on July 28, 2009, the plaintiff wrote to OneWest, enclosing a copy of the Agreed Order from his bankruptcy proceeding and requesting that OneWest supply him with documentation that he nevertheless remained one month behind. (Id. at
¶¶ 24-26). Again, on August 3, 2009, and September 16, 2009, IndyMac MS sent letters to the plaintiff alleging he was behind on his mortgage payments. (Id. at ¶¶ 28-29).

OneWest continues to assess monthly late fees against his account and has informed credit reporting agencies that the plaintiff’s mortgage is delinquent, though plaintiff alleges he is current on his monthly mortgage payments.

OneWest argued that all of the plaintiff’s claims for relief were preempted by the Home Owners’ Loan Act of 1933, 12 U.S.C. § 1461, et seq. (“HOLA”). (Id. at 4).

Motion to Dismiss denied in part and granted in part. Motion to Strike denied. Plaintiff was allowed to proceed.

9 Responses

  1. storm: I totally agree. I’ll keep posted here….

  2. You would obviously have to show ‘fraud in the inducement,” with specificity!

    Most of these speculative arguments being made, are just a waste of time and HO money. Moreover, it’s clearly a ethics violation to experiment on the HO’s dime!

  3. I agree with you; loan modifications are a bad idea. And the servicers may argue estoppel. But estoppel on what? Joe the HO believed we owned the mortgage and that means we owned the mortgage? i don’t think so. I would argue fraud (in the inducement)–let them argue estoppel. Educate your client not “admit” to be true what s/he didn’t know to be true.

    I mean, let’s be clear: these “pretender lenders” engaged in fraud and the HO was completely unaware that these Wells Fargos and CitiMortgages were not the true mortgagees; moreover, the very INTENT of these corporations was fraudulent. They bought & gambled on income streams; to hell with state laws governing proper filing and assignments, not to mention TILA, RESPA, FDCPA….(this is where they created MERS)…

    These “admissions” the corporate lawyers are going for can and must be prevented by educating the client. Would you agree?

  4. “Admissions” based upon “belief “are admissible: “a statement of which the party has manifested an adoption or belief in its truth…” is not hearsay! Fed. R. Evid. 801(d)(2)(B).

    As Ian had pointed out, that’s another reason why loan modifications are a bad idea, because it give the lender an estoppel argument.

  5. amicusman,

    so true. Not to put too fine a point on it; but anything a foreclosed upon
    person knows is hearsay, a belief, and not an admission. The homeowner in these cases lacks legal competency to make an admission as to
    “who owns the mortgage.” This is how a lawyer representing a foreclosed upon HO needs to advocate for their client.
    Admissions are slick legal games used upon the unwary. Why let opposing counsel get away with this game against your client. Would you agree?

  6. Larraine, The Federal Rules of Evidence treat an “admission” as non-hearsay Fed. R. Evid. 801(d)(2).

  7. Ian is exactly right. The plaintiff was not legally “competent” to know who owned the loan. The plaintiff expressed a belief–(based on intentional misrepresentations by OneWest,) and all judges should know that. Believing something does not make it true. And, any “admission” by plaintiff is hearsay!

    The truth of who owned the loan must be sought out and the servicer, “pretender lenders” must be stopped from perpetrating their fraud in all of the jurisdictions of all of the states. No courts should be allowing this wholesale fraud, and yet they go along with the corporate guys in nice suits who say their client is “CitiMortgage” or Wells Fargo, out of fear and habit. We must educate the judges at the start–and keep on asserting the law. If the alleged mortgage owner cannot produce the mortgage-or the note–they must be challenged.

    Case by case, jurisdiction by jurisdiction. Better-by class action. Does anyone know of a class action suit against CitiMortgage for fraudulent foreclosure lawsuits?

    Thanks again, Neil andf all. Keep up the good work!

  8. You guys are right on. A court should NOT allow a “belief “(based in trust-by homeowner and fraud -by servicer) of a homeowner to constitute a legal ADMISSION, because the HO is legally incompetent to know who the owner of the mortgage is these days. Nor should a court find a hapless “belief” or admission to this fact by the hapless one to be true because it’s hearsay.

    This is what we old time lawyers used to call “hornbook law,” yet it has become the stock in trade by corporate attorneys for Citigroup, Wells Fargo, etc to bamboozle courts and the “little guy.”

    The “mortgage fraud” of Wall Street is playing out house by house in each little jurisdiction in every state in this country. I see this as a coup d’etat by Wall St. on our legal system. We must fight these foreclosures-individually and by class action.

    Unfortunately, judges are often clueless-or, worse, “clued in” to the corporate fraud and afraid to counter the nice white boys in good suits. We must push back-by being the lawyers we were trained to be–to apply the law to the facts-and advocate.

    Are there any class actions pending against CitiMortgage? for filing fraudulent foreclosures when they do not own the mortgages or notes?

    Neil, and all, you’re great. Keep up the good work!

    Anyone know of any class actions pending against CitiMortgage?

  9. Neil or Brad- “…. the plaintiff admitted that OneWest owned the loan, and OneWest used that against him”. Isn’t this the crux of loan modification agreements? That the hapless homeowner, not knowing anything about what is going on here, validates the debt and gives up their right to seek redress in the courts as part of the entire loan mod scam? I mean , let’s face it, 3 million homeowners applied for load mods, and how many were made permanent? 140,000 or so, if we can believe this number? This is yet another unconscionable act of utter horror being visited upon people who are being sought out and preyed upon. This is beyond belief. And now the court predicates their decision primarily upon the homeowners’ acknowledging that so-and-so is the owner of the mortgage? Shouldn’t the judge, suspicions aroused, look into it on his/her own, like Judge Schack in NY? I am dumbstruck that this is not only continuing, but evolving into a greater evil by the week. Keep up the good work.

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