7 Years, Lawyers & 3 Lender Tall Tales

To some extent, it’s time again for me to eat a little crow. I’d been pretty much a stalwart defender of the lenders as they dealt with owners failing to pay their mortgages, but I’ve seen enough to know I that my support was at least partially misplaced. I still think financial obligations should be upheld, but clearly these lenders overstepped. The lenders were handed truck loads of cash to help stabilize the housing industry; that went to their bottom lines and to hiring Three Card Monty dealers to handle calls from distressed owners. I’m not a bleeding heart liberal, in fact I’m fiscally conservative but come on already. Doing the right thing is all but pointless and clearly the lenders are more comfortable obfuscating the truth than dealing with the reality that says they are not always correct.

The New York Times tells the story of Zella Mae Green….When Zella Mae Green of Georgia filed for bankruptcy to save her home from foreclosure in 2004, she and her lawyer wanted to know two things: Did she actually owe any back payments on her mortgage? And, if so, to whom? It didn’t seem like a lot to ask. But until last week, those questions had been unanswered for seven years.

Howard Rothbloom, a foreclosure defense lawyer in Marietta, Ga., represents Ms. Green. “The point of this whole case is that inaccurate, incomplete and conflicting information has been provided to Ms. Green over the course of seven years,” he said. “Determining the balance due on her loan should not have to be so difficult.” The whole episode makes you wonder, yet again, how many of the millions of foreclosures in recent years might have been based on questionable accounting or improper practices by loan servicers.

Mr Rothbloom could not get a straight answer on the mortgage, three institutions claimed ownership but none could produce the original note. He field suit in May 2006 and began the discovery process. The trail lead right to Wells Fargo and immediately the trail turned into a sand dune. During this exercise, three different Wells Fargo employees made three different representations to the court about the whereabouts of the note.

Story No. 1: The note was lost. Wells Fargo’s lawyers produced a sworn statement to that effect made on Oct. 20, 2004, by Lisa Joseph, a Wells Fargo employee. But that affidavit was incomplete. The section where Ms. Joseph was supposed to describe the diligent search she had conducted to find the note was blank. The document also said that a copy of the mortgage was attached. It wasn’t. Hoping to verify that no one else might be holding the supposedly lost note, Mr. Rothbloom asked for Ms. Joseph’s deposition. Wells Fargo’s lawyers refused to supply her address. Instead, the bank produced an employee who knew nothing about the loss of the note or what Ms. Joseph had done to try to find it.

It was during that interview, in July 2006, that Story No. 2 emerged. The Wells employee said that the note had never been transferred to the bank, ergo, Wells could not have lost it, as Ms. Joseph had previously sworn. Two months later, Wells filed a brief conceding that it did not own a security interest in Ms. Green’s loan but asking the court to dismiss Ms. Green’s suit. The court refused.

Late last month came Story No. 3. Wells told the court that it had found the missing note. It sits in the bank’s files in Maryland.

Over almost seven years, Wells Fargo employees swore to three different stories about the note on Ms. Green’s property. When asked two weeks ago how this could be, a spokeswoman for the bank said: “We regret any difficulties our customer experienced in this circumstance. This is the kind of situation we seek to avoid, and we are working on this customer’s situation to reach a solution.”

Late last week, Wells Fargo agreed to a settlement with Ms. Green. The terms are confidential. The deal came shortly after the United States Trustee, the unit of the Justice Department that oversees the nation’s bankruptcy courts, indicated it was interested in the facts of the case.

I really want to believe that if you take care of your business, meet your obligations and follow the “golden rule” that everyone benefits. I also know that things are hard enough these days without dealing with some skeevy lender – or cable company – or phone company – or insurance company – or retail store……..good thing the feds are right there to help them – I mean us – through these tough times.

Pass the barbecue sauce and that plate of crow.
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Hank Miller is an Associate Broker & Certified Appraiser working full time in real estate since 1989. He specializes in the north Atlanta real estate market which includes Alpharetta, Marietta, Roswell, Duluth, Kennesaw, Sandy Springs and surrounding areas. Visit the main site at www.hrmiller.com and reach Hank anytime at 678-428-8276 or EMAIL Hank