Homeowners Filed Lawsuit to Avoid Bank Foreclosed Houses

by on Stop Foreclosures

A couple in Bowie, Maryland had filed a case against Wells Fargo Bank. According to court documents, the couple accused the bank of knowing beforehand that they could not afford to pay the mortgage for their property.

Documents filed in the U.S. District Court in Greenbelt stated that the couple accused Wells Fargo of driving them into foreclosure by offering them a second mortgage amounting to $30,000 in 2000. The couple claimed that the bank raised their monthly mortgage payments by as much as $700 which they could not afford to pay.

Court documents showed that the couple is asking for equitable and legal relief. Lawyers are hoping that the settlement would include a chance for the couple to renegotiate with their lender.

The Bowie lawsuit is just one of the hundreds filed by distressed homeowners in the region who want to protect their properties from becoming bank foreclosure houses. According to market data, Prince George’s County posted 3,427 foreclosure filings from April to June. The county’s filings accounted for 36 percent of Maryland’s foreclosure activity.

According to court papers, the Bowie couple argued that Wells Fargo had approved their second home loan despite knowing that it would be beyond their capacity to pay and thus, may lead to foreclosure.

Under the state law, any contract can be nullified or changed if it would be proven that one party in the deal acted or negotiated in bad faith. Legal experts said that if banks created a situation wherein they have pushed homeowners’ finances into foreclosure, the case falls under the unclean hands doctrine.

Many lawyers have taken on the cases of distressed homeowners at risk of foreclosures pro bono at the urging of state officials. Legal experts said that the unclean hands argument have been used by pro-bono lawyers since 2006 when foreclosures started to spread in the region. They said that in most cases, the lawsuits forced banks to renegotiate with distressed homeowners.

Furthermore, lawsuits are used to get both homeowners and lenders to negotiate. Statistics released by the U.S. Treasury Department showed that only 15 out of 100 homeowners who qualified for loan modification were offered help to save their properties from foreclosures, leaving 85 troubled homeowners facing the risk of losing their homes to foreclosures.