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Wells Fargo Sells Home Despite Assuring Borrowers in Writing That It Would Not

September 14, 2010

As Fontana loan modification attorneys, we were sorry to see yet another story about homeowners who were victims of their mortgage lender's extreme negligence. Columnist David Lazarus of the Los Angeles Times wrote Sept. 10 about Mike and Ellen Kahara of Long Beach, who discovered that their home was sold at an auction less than a week after Wells Fargo assured them that it would not sell their home for at least 30 days. That assurance came with a notice that the Kaharas had been denied in their application to make their temporary loan modification permanent. The home was sold to a San Diego investment firm, which asked them to leave the home by Sept. 9. The couple plans to sue Wells Fargo and may also declare bankruptcy to try to avoid eviction.

The Kaharas' situation arose out of a mixture of the recession and their decision to buy their home through an interest-only loan in 2004. Because of this loan structure, their monthly mortgage payments eventually reached almost $3,000. Then, the bad economy hit and business was bad for Mike Kahara's small construction company. His wife's work as a nanny was not enough to help the couple meet all of their financial obligations, and they eventually racked up $30,000 in credit card debt as well as falling behind on their mortgage. Through the Home Affordable Mortgage Program, they applied for and received a trial loan modification that lowered their payments to a manageable amount around $1,400.

They made all of their payments in full during their three-month trial, but Wells Fargo did not make a decision on making the workout permanent. Instead, it told them to continue paying the trial amount, which they did. The bank also requested a lot of paperwork, which the couple continued to send. Ellen Kahara said she called repeatedly in early August to check on her status, but never got a return call. Instead, they received a letter dated Aug. 11 saying the permanent status had been denied -- five or six months after the trial ended -- and that they would have 30 days to discuss other options, during which the home would not be sold. Nonetheless, they were visited in person Aug. 18 by a representative from an investor that had bought the home, asking them to leave. A Wells Fargo spokesperson said the home had been sold Aug. 16 -- five days after the letter assuring the Kaharas that no such sale would occur. The spokesperson also said that Wells Fargo had made a mistake by making that assurance.

As Placentia loan modification lawyers, we are glad that this couple has an attorney and plans legal action against Wells Fargo. Even if the bank had not outright admitted its mistake, the evidence is clear and in writing that it did. That means they have a claim against the lender for negligence in its behavior toward them. Depending on the circumstances, they may also have a claim against Wells Fargo for failing to decide on a permanent loan modification for half a year, or even failing to grant one if they met all of the requirements of the program. This cannot help the Kaharas reverse the foreclosure, but it can help them defray some of the costs of the foreclosure and the sudden, unexpected demand to move out. Those funds would undoubtedly be welcome as the couple works to rebuild their financial lives. A lawsuit might also help raise other people's awareness of Wells Fargo's negligent behavior.

Since the start of the housing crisis, Howard Law PC has represented Californians who believe they can hold on to their homes with a reasonable change to their monthly mortgage payments. Loan modifications can't usually help people who are without any income at all, but for those who have steady work at a lower income than before, they can make the difference in keeping the home. Unfortunately, as the Kaharas' situation shows, lenders do not seem to want to make loan modifications, so much as they want to appear to make loan modifications. Borrowers are rejected without explanation, given an endless runaround or repeatedly asked for paperwork that somehow never makes it into the record. Our Rossmoor loan modification attorneys help borrowers with these and other stories fight back, using tough negotiations outside of court as well as lawsuits whenever necessary to stop an unfair foreclosure or enforce your rights.

Howard Law offers free consultations, so you can tell us about your situation and learn about your rights at no obligation or risk. To learn more, call us toll-free at 1-800-872-5925 or send us a message online.