Thursday, May 15, 2014

Pick-A-Fraud Class Action: The Misrepresentation of an Underrepresented Class

Guest post; all content is the product and responsibility of the author.

Pick-A-Fraud Class Action: The Misrepresentation of an Underrepresented Class

Lead Author:
Joshua W. Denbeaux, Esq., Partner, Denbeaux & Denbeaux
Principal Investigator and Researcher:
Joseph Hickman, President, Global Research Solutions, LLC
January 27, 2014

From 2003 until the real estate market imploded in 2008, World Savings Bank (now Wells Fargo, through purchase of Wachovia by Wells Fargo), sold tens of thousands of fraudulent Pick-a-Payment loans which devastated entire communities and tens of thousands of borrowers and families. Many of these loans were marketed and sold to New Jersey residents (approximately 5% of the total according to the New Jersey Attorney General). These New Jersey homeowners are like half a million homeowners throughout the United States who purchased those Pick-A-Payment loans, so their ordeal represents the struggles that many Americans have faced because of banks like Wells Fargo.

Wells Fargo has engaged, and continues to engage, in a very aggressive position with regard to its liabilities and rights on these misleading and fraudulent lending products. The strategy has been to pursue foreclosure at the earliest opportunity as aggressively as possible in order to force homeowners out, which also uses up homeowners’ financial resources defending the foreclosure
rather than attacking the underlying fraud in the transaction.

Given its position and the underlying fraudulent misrepresentations of its lending product and practices, Wells Fargo was faced with actions by a variety of Attorneys General, including the Attorney General of New Jersey. The New Jersey Attorney General described the State’s action against Wells Fargo as follows: “This case is part of our on-going effort to protect New Jersey
consumers, and to assist homeowners who may have fallen victim to misleading or exploitative lending practices.”

In addition, Wells Fargo faced a number of potential class actions filed against it throughout the country. Wells Fargo’s strategic response to the threats facing it on these fraudulent loans was both ingenious and disingenuous. Wells Fargo negotiated with the Attorneys General (including New Jersey, whose residents enjoy far greater fraud and foreclosure protections than most other states) to provide resident “class members” in the Class Action suit a series of promised
modifications without waiver of any of the homeowner’s rights to sue for violations of their rights and also without waiver of any homeowner’s defenses to a foreclosure action on these fraudulent loans; in response, the States’ Attorneys Generals dropped their actions. Importantly, in the California Class Action suit parallel to this agreement with the Attorneys General, there
was no New Jersey resident Class Representative to safeguard the far more stringent rights and protections of New Jersey homeowners. To that effect, the New Jersey Attorney General functioned within its Agreement as its citizens’ protector. That Agreement, however, was effectively breached and revoked by Wells Fargo.

(Please click the above link to read the full article. Thank you to Donald Tremblay for inquiring about posting it.)