Mortgage and Foreclosure
Notable Verdicts & Settlements in Mortgage and Foreclosure Cases
Settlement Recovery for Children
Shaffer & Gaier represented a son and daughter whose father was tricked into refinancing their Philadelphia home they grew up in and which had been in the family for 42 years. Our clients’ father was 79 years old and did not realize the extent of the awful mortgage loan terms when he was refinancing. He was barely able to make the mortgage payments, but when he died suddenly, that left his son and daughter to pay the mortgage loan if they wanted to keep the house in the family’s name.
After Shaffer & Gaier reviewed the loan documents, the clients elected to fight and litigate the foreclosure action against the lender who took advantage of their father. Soon after the bank filed a foreclosure action against the father’s estate (i.e., the son and daughter), Shaffer & Gaier filed a counterclaim right back against the bank seeking money damages for the fraud inflicted upon their father and entire family. After discovery was exchanged between the parties, a confidential settlement was reached in April, 2012 which not only included cash and reduction of the loan balance, but more importantly, our clients were given the right to purchase the home at a reduced value and at current low interest rates.
Significant Principal Reduction
Our client, a fireman in Camden, New Jersey, bought a house in 2006 for $252,000. He was promised a 6% interest rate, but at closing, the rate jumped to 10.5%, with the potential to reach 16.5%. our client already committed to the new home by putting a down payment ad agreeing the seller to make expensive repairs. At closing, the mortgage broker told him that he needed to get a second mortgage in order to qualify for the home, and this meant he had to pay for the interest and closing costs of an additional $60,000 in financing. Sensing our client’s apprehension, the lender told him that he could refinance in one year. After one year, our client tried refinancing, but his mortgage company refused to answer his phone calls or emails; they went out of business in 2008.
In 2009, one of the “big banks” acquired the loan, and filed a foreclosure lawsuit. Shaffer & Gaier represented and defended the foreclosure action, and the bank withdrew its lawsuit on the day before the trial. Shaffer & Gaier also brought a parallel action against the bank for predatory lending, fraud and misrepresentation of important terms of the mortgage, which resulted in a settlement that lowered the principal balance by $166,000 and the remaining $209,000 was payable at a 3.5% interest rate. In addition, Shaffer & Gaier were able to get the principal balance of the second mortgage reduced by 90% (from $58,000 down to $5,800). This settlement resulted in our client’s home going from “underwater”, to now having positive equity.
Trial Against Deutsche Bank Results In Settlement
Our client agreed to a $30,000 cash settlement with Deutsche Bank in an action filed by the banking giant to foreclose on his New Jersey investment property. When purchased in 2006, the property was worth approximately $110,000, but at the time of the trial, the value had fallen to $65,000. Shaffer & Gaier’s review of the loan documents uncovered fraud committed by the Lender in the underwriting process.
After Deutsche Bank filed its foreclosure action, Shaffer & Gaier filed a counterclaim based on fraud and misrepresentation (the lender grossly inflated our clients Federal Tax Return income when qualifying him for the loan and failed to disclose that to the client). During pretrial discovery and trial preparation, Shaffer & Gaier proved that the bank’s Assignment documents (which give the Lender the right to bring the foreclosure lawsuit) were defective and therefore it did not have the right to foreclose. Along with the counterclaim, this allowed the client to successfully settle the claim on the third day of trial. As part of the terms of the settlement, our client was entitled to retain the property and collect the rental income for an expected period of 18 months, free of mortgage payment obligations.
Settlement For Senior Citizen
Shaffer & Gaier represented a 71 year old woman, who lived in her Sicklerville, NJ home for 25 years. In 2006, she was solicited over the telephone by a mortgage broker, who promised her the right kind that would fit her financial situation as she got older, and contemplated retirement. Our client trusted the mortgage broker, who even came to her home to process the mortgage loan application.
At settlement, however, the loan terms were far less favorable than what was originally promised. Our client, a waitress who didn’t have sophistication to know if she was even able to get her closing costs back if she cancelled, trusted the lender and went through with the closing. The broker told our client that the payments may go up in 6 months’ time, but she would be able to refinance in 6 months; this, of course, turned out not to be true. The increased monthly mortgage payments caused serious financial hardship, and our client wasn’t able to make the full amount of 3 mortgage payments. When she tried to “catch-up”, the lender (which now claimed to own the loan) refused to work things out with her.
A foreclosure lawsuit was filed against our client in Camden County, New Jersey. Shaffer & Gaier contested the foreclosure and litigated the case. The lender was not willing to present a witness at trial, and it withdrew its foreclosure action just prior to the first day of trial.
Shortly thereafter, Shaffer & Gaier filed an action directly against the lender for fraud, misrepresentation and other conduct that occurred during the loan application process. Discovery was taken, including depositions, and the lender agreed to a confidential settlement in June, 2012.