FRAUDULENT MODIFICATION PRACTICES BY AURORA/LEHMAN

HERE’S ONE WE MISSED:

Class action suit filed against Aurora Loan Services

Fri, 2010-08-20 16:47 — NationalMortgag…

Courthouse/Credit: Photodisc

A group of homeowners has filed a class-action lawsuit against Aurora Loan Services LLC, claiming the mortgage company duped them into paying tens of thousands of dollars each to have troubled mortgages reviewed by the company with promises of loan modifications, only to have their property foreclosed with little or no notice. The suit states that Aurora reaped more than $100 million in what the court documents call “illicit profits” from the alleged scheme.

Filed in the U.S. District Court for the Northern District of California in San Jose, the suit seeks to represent homeowners who paid the Littleton, Colo.-based company money in exchange for the company’s help in ‘curing’ delinquent home mortgages.

In exchange for between three and six large monthly payments, Aurora said it would halt the foreclosure process and work with homeowners to restructure, modify or resell the loan, allowing homeowners a chance to keep their homes, the suit states.

“We intend to prove that Aurora’s workout plan was nothing more than a cynical ploy to take advantage of homeowners desperate to hold on to their homes,” said Steve Berman, managing partner of Seattle-based Hagens Berman Sobol Shapiro LLP and the attorney representing the proposed class.

The suit contends that, after a period of months, Aurora foreclosed on the homes without giving the borrowers any notice that their requests for loan modification were denied and without allowing borrowers access to any method for ending their loan deficiency, despite the provisions of the workout agreements.

The suit states that the workout agreements provided for four methods for ending loan deficiency: bringing the loan current, refinancing with another lender, modification of the terms of the loan at the discretion of Aurora and another workout option at the company’s discretion.

“The past three years have been tough enough on homeowners without them having to worry about being preyed upon by unscrupulous loan services,” Berman said.

The complaint outlines the stories of two married couples who engaged Aurora in an attempt to forestall foreclosure. The first couple, from San Jose, refinanced their home with a mortgage company in early 2006. Two years later, the couple suffered economic setbacks in the form of poorly performing investments and a temporary loss of work. In late 2009, the couple contacted Aurora and signed one of the so-called workout agreements.

Over the next several months, the couple paid a total of $33,500 in return for Aurora’s promise to work on modifying the terms of the loan, among other possible outcomes. In May 2010, the family was served with a Notice to Vacate, indicating their home had been sold in foreclosure. The family had received no prior notice that the foreclosure process had been completed. In addition, Aurora did not notify the family that it had been denied a loan modification, according to the complaint.

In another instance, a second San Jose couple refinanced their home in mid-2007. Two years later, the couple suffered financial hardship as a result of an illness and the death of a parent, which led to increased expenses and loss of income. In early 2009, the couple contacted Aurora and signed one of the company’s workout agreements, the complaint alleges.

Over the next several months, the family paid a total of $23,700 in return for Aurora’s promise to work on modifying the terms of their loan. Like the first couple, the family was served with a Notice to Vacate in late June 2010, signaling their home had been sold in foreclosure. The family was not told prior to receiving the notice that the foreclosure process on their home had begun, according to the complaint.

“We’ve heard of cases like this a lot over the last few years,” Berman said. “We’d like to bring struggling homeowners some sense of relief.”

The complaint, which can be found at www.hbsslaw.com/cases-and-investigations/aurora, accuses Aurora of negligent misrepresentation, unjust enrichment, breach of the implied covenant of good faith and fair dealing, violation of the California Unfair Business Practices Act and other violations of California law.

Hagens Berman believes the workout agreements were fraudulent in nature and seeks to have the agreements declared void. The firm also seeks an injunction against Aurora forbidding the company from continued offering of its deceptive workout agreements, restitution to be determined at trial, damages to be determined at trial and trial and attorneys’ fees.

14 Responses

  1. I have been going through a foreclosure due to dual tracking and illegal procedures from Aurora. Even though I have an incredible attorney I still worry we will get the short end of the stick since court systems do not get this. It is criminal what is happening to so many homeowners and it needs to stop. I will not stop fighting even if I lose my home, what Aurora is doing to WRONG.
    Belinda Brooks

  2. I have experinced the same situation, and I’m presently going though this right now with aurora loan, they lied to me as well.. Please call me and keep me informed. 972-392-4046

  3. Also try and record your telephone conversations by telling the bank you are recording so you can remember what was said. In some states it’s legal some states you have to advise them of the recording.

  4. Once the NOD is filed,don’t give them any money it seems foolish. I think we know enough not to take their word.

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  6. As long as the borrower is being denied his right to due process, this krap is going to keep happening. The courts seem to think that homeowners in foreclosure are not entitled to due process. When did that happen? I believe that several notices alerting you that foreclosure is progressing is mandatory under the law in nonjudicial states. That should be included in the complaint. I know someone who has received two different notices of foreclosure with different dates of foreclosure. Hey, what happened to the Fair Debt Collection Practices Act? I guess I will just reiterate what I have in the past: loan servicers operate outside the law. AHMSI has been sued by the Attorney General in Ohio and Texas. We are all waiting with baited breath for the results. AHMSI is one of the worst loan servicers and one of the biggest. Death to loan servicers! http://www.challengingforeclosure.com Sirak@challengingforeclosure.com

  7. Concerned,

    Just this week I read that the comptroller of the currency stepped in and apparently asked/requested the banks to STOP Parallel Foreclosure practices.

    For the comptroller of the currency to make such a request just shows how disorganized the government is other this situation as others were still trying to defend Parallel Foreclosure because its “inevitable” that the homeowner will lose their home anyways.

    The arrogance, and we’re supposed to believe in this government? Hillary Clinton had a far more logical and well thought out approach to the home foreclosure problem back in 2008, but the democrat party was hijacked by “progressives”, kind of the way the republican party gets taken over by ultraconservatives from time to time.

  8. neidermeyer,

    Knock off the unseemly usage of the word ‘SEEMS.

    IF it looks like a duck, waddles like a duck, quacks like a duck, and paddles around in the lake like a duck, it is safe to say it is some type of water fowl, most likely a duck.

    In this case, we have many FOULs instead of fowl. Let them stop fooling the courts with this dual-track tom-foolery and blarney.

  9. Neidermeyer,

    I can’t follow your reasoning. It’s ok for a bank to secretly start plans to take away your home from you as long as they “try” to get you a loan?

    So if you had to return an item to Target because something was wrong with it, and as you were waiting in line, armed security guards got in position to “take you out”, “just in case” they think you misbehaved, you would be ok with that as long as the customer service rep, who you haven’t even spoken with yet, works in earnest with you?

  10. One thing everyone should know.

    If your loan is owned by either FannieMae or FreddieMac, and you can look that up here:

    http://www.makinghomeaffordable.com/loan_lookup.html

    All mortgage companies with loans owned by Fannie Mae and Freddie Mac are required to participate in HAMP, the Home Affordable Modification Program.

    They cannot foreclose while you are in the modification program. This is a matter of the government rules.

    http://www.makinghomeaffordable.com/contact_servicer.html

    Not that they don’t continue to foreclose while asking for the same documents time and again.

    But it’s good for you to know it’s just illegal.

  11. Ane the gov’t still doens’t get it. They still blame you….

  12. Not a surpirse. I had one lender tell my client that if he paid up the $20,000, they would simply tell him what his modification might look like. This was almost two years ago. And I thought it was an isolated case. Oh my.

  13. I don’t have any problem with companies preparing for foreclosure in parallel with loan mods as long as the mod team is negotiating in good faith and the foreclosure train doesn’t start down the tracks until the mod train is derailed by the borrower,, but it sure SEEMS like the mod team in most cases is just attempting to extract the last resources possible from the homeowner so they cannot effectively fight foreclosure. They are nothing but an unscrupulous tactic.

  14. …”The family was not told prior to receiving the notice that the foreclosure process on their home had begun, according to the complaint…”

    This sounds like another example of Parallel Foreclosure. Sure would be nice if the reporters who find these stories would start calling it what it is.

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