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Judge Dismisses Mortgage Fraud-related Class Action Lawsuit
A federal judge in Philadelphia, Pennsylvania, has thrown out a lawsuit against lenders who supplied funds to a mortgage broker who previously pled guilty to charges of mortgage fraud, finding that lenders are not obliged to monitor mortgage broker actions. The decision is a major setback for 842 victims of Wesley A. Snyder’s company, Personal Financial Management, who could have used the strategy to recover some of their losses, had it succeeded. The victims are said to have approximately $30 million in the scam.
The claim rejected by U.S. District Judge James Giles started in the fall of 2007, when a Fleetwood, Pennsylvania, couple–Douglas and Andrea Jones–filed a lawsuit, hoping to have it certified as a class action suit. According to paperwork filed with the court, defendants in the complaint included:
- ABN AMRO Mortgage Group, Inc.
- Chase Home Mortgage Corporation
- Citimortgage, Inc.
- Citicorp Home Mortgage Services, Inc.
- Countrywide Home Loans, Inc.
- Fifth Third Mortgage Company
- Florida Capital Bank Mortgages
- GMAC Mortgage Corporation
- GMAC Mortgage Asset Management, Inc.
- GMAC Mortgage Group, Inc.
- HSBC Mortgage Corporation (USA)
- Indymac Financial Services Corporation
- Moorequity, Inc.
- National City Mortgage, Inc.
- nBank, N.A.
- Provident Funding Group, Inc.
- Saxon Home Mortgage
- Saxon Mortgage, Inc.
- Sovereign Bank
- SunTrust Mortgage, Inc.
- U.S. Bank, N.A.
- Wachovia Mortgage Corporation
- Washington Mutual Home Loans, Inc.
- Wells Fargo
- Home Mortgage, Inc.
- John Doe Mortgage Companies
In their suit, Douglas and Andrea Jones alleged that several Pennsylvania companies, owned or controlled by Wesley Snyder, offered them Equity Slide Down Mortgages as part of what they say was a mortgage servicing Ponzi scheme. The Joneses said Snyder failed to monitor and supervise his companies, which did not credit them properly for payments and pre-payments of interest and principal on their mortgages. They further alleged that, following the bankruptcy of Snyder’s companies, the defendants in the case–the companies listed above–failed to notify them properly that they had taken over as servicing agents on the mortgage loans and demanded payments from them in amounts substantially higher than owed on the loans serviced by Snyder’s companies. The Joneses also claimed that each defendant was guilty of having committed numerous RESPA violations.
Specifically,the Joneses alleged that they applied for and closed on two separate Equity Slide Down mortgages through Snyder’s companies–one for each of their two properties–in 2002 and 2005, respectively. They alleged that at all times after closing they remitted their monthly mortgage payments to Snyder’s company and that they were current on all payments owed and had pre-paid a large portion of the principal balance by way of a large principal reduction payment made soon after closing.
They further alleged that in September 2007, after the bankruptcy filing of the Snyder’s company, they learned for the first time that SunTrust and Countrywide claimed to hold their respective mortgages and notes. According to the Joneses, SunTrust and Countrywide demanded payment for amounts that were duplicative and excessive and that failed to credit properly the payments and pre-payments they had made to the Snyder. The Joneses say that the Snyder’s companies were the “servicing agents” of each Defendant, as defined by the Real Estate Settlement Procedures Act (RESPA), and that Snyder’s companies were otherwise the Defendants’ agents under Pennsylvania agency law.
More specifically, the Joneses alleged that:
- Each defendant employed one or more of the Snyder’s companies to originate, close, and service all the mortgage loans at issue.
- Each Defendant knew the Joneses were making all mortgage payments to the Snyder Entities.
- Each Defendant knew it was sending all mortgage statements and federal tax forms to Snyder rather than to the Joneses.
In dismissing the suit, U.S. District Judge Giles said the Joneses’ recollections were trumped by documents they signed stating payments would be made to mortgage bank ABN Amro Mortgage Group, meaning, Snyder was not ABN’s agent and ABN had no duty to oversee him.
Filed under: Mortgage Fraud, Real Estate Fraud, Pennsylvania, Ponzi Scheme, Trial, Countrywide
A Ralph Roberts Site, Copyright 2005-2008 |
Just another case of Big Corporate America protected by our government.
I do not know all the details of the case so I can’t judge. What I do know is that if these large corporations “hired” Snyder as the servicing agent, then they most certainly did have a respnsibility.
Many of the banks charged were complicit in “bad” underwriting and funding loans not only with broker submitted deals but with their in house retail loans as well.
ABN AMRO for one had a huge phone room operation. Most of the loans they did were through this telemarketing activity. Were they just funding, funding, funding with no regard to qualifications?
Saxon Mortgage is owned by Morgan Stanley, the Wall Street investment house. They were leaders in the sub prime movement.
HSBC for a time owned Option One mortgage, another pioneer of sub prime.
National City Bank owned First Franklin Financial who specialized in 100% financing. National City several months ago sold First Franklin to Merrill Lynch who has recently shut down their wholesale.
GMAC not only operated the mortgage companies listed above but also owned Di-Tech. Remember them from tv ads?
Wahsington Mutual after acquiring Great Western Bank some years ago (the creation of the WAMU we now have) acquired their primary mortgage product the Pay Option Arm and continued that product as their primary offering.
Wachovia recently bought World Savings who for years offered nothing but the Pay Option Arm.
What I’m saying is that many of these banks had a hand in the mortgage meltdown but transferred the blame to the broker community. To emphasize their blame, many have ceased doing business with brokers. In effect, destroying the entire industry. Yet they will go forward unscathed by all this, their top executives will continue to receive their huge compensations and golden parachutes while the “work force” of the industry, brokers, go broke.
Wake up America and SPEAK OUT!
Comment by Larry Rubinoff — April 22, 2008 @ 3:22 pm
:: Wake up America and SPEAK OUT! :::
We are, Larry. The problem is - nobody is listening, and those who might aren’t really interested in hearing both sides of the story.
Money and power talk - and everyone wants a little piece of it.
Comment by Dawn — April 23, 2008 @ 7:02 am
A 76 year old friend of mine is homeless, due to judges assisting a lawyer to take possession of his home, even though, the old man continues to pay his mortgage.
The lawyer Keith Oliver used a two pronged approach to steal the property from my friend.
He first advised his client, who happened to be the wife of my friend, to declare bankruptcy, that way her ½ interest would be transferred to the trustee in bankruptcy. The lawyer and Trustee figured that since my friend makes less money then his wife in pensions that he would not have continued his monthly mortgage payments and as such within three months from the assignment into bankruptcy, my friend would have been pushed out of his home due to foreclosure. This scenario did not happen since my friend continued to pay his mortgage.
However since the trustee transferred the wife’s ½ of the title to his name, he severed the joint tenancy and this allowed the lawyer to proceed with the second phase of his scam, by petitioning the court under the Partition of Property Act on behalf of his client to have the property sold, after his client was discharged from a fraudulent assignment into bankruptcy.
One of the last judges on the case, who happened to be a classmate of the lawyer in 1980 at the law faculty at UBC, assisted his friend by approving the sale of my friends property for less than what was offered and further without the knowledge as to whether the lawyer for the alleged purchasers had raised the funds to buy the property.
My friend continues to pay his mortgage every month even though he is now homeless at 76 however CIBC recently has returned the certified cheques un-cashed to my friend’s pro bono lawyer’s address of delivery and the cheques were returned back to CIBC on the basis that the bank has not provided proof that his mortgage has been paid out.
In the event the mortgage was paid out, than I believe that Keith Oliver paid the outstanding mortgage himself to keep CIBC from making any reports. And the lawyer for the alleged purchasers filed electronic documents without signatures at the Land Title Office, making it appear as though the alleged first time owners of a property obtained a loan from TD Bank for $2220,000, which TD Bank has to date not confirmed.
In effect, TD Bank would not have risked, after having been alerted of the scam, loaning 98% of the amount of the purchased price at regular interest rates, when by law, chartered banks are limited to 75% of the appraised value, which in this case, Eric Linquist, hired by Mr. Keith Oliver, appraised the property at $225,000, on the basis of a foreclosure, when it was a judicial Order and further the tax assessment of July 2007 was $234,100.
The new tyranny is no longer fought outside with guns, rather citizens are being terrorized by those placed in position of trust wherein judges assist lawyers to confiscate property.
We are indeed in a very serious crisis and people are no longer safe since laws do not apply to certain groups of people.
You never know when one of us will need the court to apply the laws and when many judges are whoring for banks, than what we have seen thus far is only the beginning.
Tina Zanetti
Comment by tina Zanetti — April 23, 2008 @ 11:21 am
Amen Tina
Comment by Bob McNeilly — April 23, 2008 @ 12:15 pm
I’ll say it again, Wake up America and SPEAK OUT!
Who do we trust, who can we trust? Who should we trust? Major questions!
Going to court has always been a 50/50 win proposition. I believe we should have more corporate patriotism along with corporate responsibility to the public to prevent situations from going to court.
If corporate America becomes satisfied with a FAIR profit and working with their customers on any level we could avoid many situations like the one above. Litigation and courts cannot resolve many of the problems we have today. The courts are overworked and understaffed and often judges do not have adequate time to fully review a case. They get snippets of information to make decisions on. As humans they do have relationships, casual or otherwise with attorneys whose words they are prone to remember.
Are the courts “just” in dispensing justice? 50/50, sometimes they are and somethimes they are not. They are also part of the system, a system that is failing all of us.
Comment by Larry Rubinoff — April 23, 2008 @ 6:09 pm