The general history of the instant foreclosure is all too familiar. Home loan borrower starts with a low adjustable rate loan based on now-bygone high home values. The interest adjusts in a few years to more than twice the original rate, more than doubling the homeowners’ payment on a home that now is substantially “underwater” due to decreased home values. Eventually, the lender itself goes under and is replaced by a successor.
In Ragland v. U.S. Bank National Association, Inc. (filed September 11, 2012) 2012 DJDAR 12769, we have the added facts that the borrower, Pam Ragland, had remained current on her mortgage obligation up to April 2008, when she spoke about loan modification to a lender representative who told her she would have to get “behind” on her loan in order to modify the loan. Additionally, Ragland had executed her note after complaining that her signature had been forged on other loan documents (confirmed by a handwriting expert). She thought this part of her loan history justified her request to have the lender waive the normal modification fee. The rep said he would get back to her. As she was not certain she wanted to miss her loan payment and apply for a modification without further assurances and she did not hear back at the time for her to make her April 2008 payment without incurring a late charge, she called the rep again. He referred her to his supervisor who stated that if any documents in her loan packet had been forged, she may not be responsible for anything in her loan. She was advised not to pay anything while the legal department investigated.
By late April 2008, Ragland received a delinquency notice from the lender. She immediately called and was advised by two separate reps not to worry because collection activity was frozen. Still nervous about all of this, she attempted to transmit a loan payment, which was refused by the lender. On May 5, 2008 she received a notice of foreclosure. Yet another call to the lender was responded to: legal department will get back to you. Predictably, she did not hear back and instead was greeted by another letter in early July 2008 that advised foreclosure was under way. She again got the “runaround,” being told her situation was not properly flagged with legal and the foreclosure would be on hold. She again tried to make mortgage payments, three in this instance, which were again rejected. The foreclosure went forward and she filed her lawsuit.
Ragland initially requested injunctive relief to stop the foreclosure sale of her home. The trial judge essentially ruled that if she did not pay everything in full (payments, late and delinquency charges, foreclosure costs and interest) by December 16, 2008, she would be denied relief and the foreclosure sale would take place. She could not pay the full amount and her home was sold. So she amended her action to include, among the causes of actions, claims for fraud and negligent misrepresentation. The trial court granted summary judgment in favor of the defendant lenders finding her failure to pay the full amount demanded was fatal to her case.
The Court of Appeal, Fourth Appellate District, Division Three, reversed the summary adjudication of the fraud and negligent misrepresentation claims and allowed her leave to amend to include other claims, such as emotional distress. Because her home had been sold to a third party, she would not be able to rescind the foreclosure sale itself. There were triable issues of fact, ruled the court, as to whether the lender had advised Ragland as she had claimed. If the lender wrongfully placed her deed of trust in foreclosure, it had no right to demand payment of additional fees and interest to reinstate the loan.
The above facts are perhaps a homeowner’s worst nightmare. There is no assurance of how the case will ultimately come out in terms of credibility determinations at trial, and how long it will be before there is a resolution. The homeowner will have her day in court, unless a settlement is reached short of trial. To me, this is a case that cries out for settlement to bring this nightmare to a close.