HOMEOWNER SUES MORTGAGE COMPANY

All Patrick Rodgers wanted was for someone at his mortgage lender to talk to him. But when the bank ignored repeated requests, the Philadelphia homeowner sued -- and won.

According to Rodgers, all he wanted was for the lender to answer his questions about its demand for him to purchase more home insurance.

Yet the bank still hasn't responded, Rodgers says, even though it has paid the $1,300 judgment.

Rodgers, a concert promoter who in January 2002 purchased a 6-bedroom, 3-bath Tudor-style home for $179,000, did as all homeowners do when they obtain a mortgage: He purchased home insurance to cover its replacement value should it ever be destroyed in a fire or other catastrophe.

About seven years later, his mortgage lender, Wells Fargo, asked him to insure the home for $1 million after an insurance inspector valued it at that amount. The amount was an estimate of what the home would cost to replace, reported the Philadelphia Inquirer. Rodgers balked. Wells Fargo went behind his back and bought him a policy, so Rodgers sued when the bank refused to respond to his inquiries.

Although home values have waxed and waned since he purchased his house in the Wynnefield Heights neighborhood, there's one thing this founder of Dancing Ferret Concerts knows for sure: The 1925-built home has never been worth $1 million.

"The area we are in is kind of close to the wrong side of the tracks," he told AOL Real Estate in a phone interview. "It was comparable to other prices in the neighborhood at the time." In fact, property records we dug up show that a smaller six-bedroom home across the street sold for $185,000 just seven months after Rodgers moved in.

"If you moved the house about five minutes west of here the price would go down about half and 15 minutes the other direction, it would go triple," he said.

Wells Fargo never sent Rodgers an appraisal report showing its estimated $1 million value, he says. To substantiate a change in the replacement value, up or down, a person or entity must show proof of the changed value through an "accepted industry rebuild estimators or an appraisal with the cost to replace new on the dwelling," says Mark Boyer, CEO of Foundation Financial Group in Jacksonville, Fla.

"The market value and the insurance coverage amount are in no way related," says Mark D'Agostino, the owner and president of R.F. D'Agostino Insurance Agency Co., in Brockton, Mass., outside of Boston. "The coverage amount is the cost to rebuild the home in the event of a total loss; the homeowner can ask that the replacement cost be reevaluated at any time. Going up is generally easier to do than going down."

Outside of some exterior repairs he did to the

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home a couple of years after he purchased it, Rodgers hasn't made any other upgrades or changes that would warrant such a drastic increase in value.

So Rodgers said no to Wells Fargo's request for additional insurance. Then Wells Fargo bought it for him, and his insurance company notified him that the new policy would cost him an additional $500 per month above his previous policy.

Rodgers wrote to Wells Fargo explaining his situation and demanding an explanation for its actions. By law under the Real Estate Settlement Procedures Act, Wells Fargo had 20 days to respond. When it didn't, Rodgers wrote another letter letting them know they had missed the deadline, and giving them one more chance to respond. After another 60 days had passed and Wells Fargo missed another RESPA-mandated deadline, Rodgers moved for a judgment against his lender for failure to respond. His reward: a default judgment of $1,000 since a Wells Fargo representative never appeared in court.

When the lender didn't pay up, Rodgers contacted the Philadelphia sheriff's department for help. The sheriff scheduled a sale of the items in a Wells Fargo office to cover the monies owed to Rodgers. That, along with media reports, got Wells Fargo's attention and they sent Rodgers several checks totaling the approximately $1,300 they owed him for the RESPA violation, court costs, sheriff's levy, and scheduled sale. (The sheriff's sale has been cancelled now that the bank has paid.)

Rodgers has received the money, but no phone call or letter. "No one from Wells Fargo has reached out to me yet and that was the point for me in initiating all of this. It wasn't that I wanted to litigate and get $1,000. I just wanted someone from Wells Fargo to talk to me."

WILL ROBO-SIGNING BANKS GET PUNISHED?

Is the ever-evolving trend of quickie foreclosures, robo-signing, rocket dockets and more that banks have adopted as of late finally going to cause them to get more than a handslap? According to recent reports, the answer is yes.

Tom Ice of Ice Legal who was profiled in AOL Real Estate however, has a different viewpoint pointing specifically to the serious flaw in the investigation. "I have said it from the beginning that this process was going to take much longer than the months they have projected," he told AOL Real Estate. He points out the article in the Washington Post which highlights a group investigation by the federal government and 50 state attorneys general.

The worst part is the attitude of the courts and the attorneys, who in many cases still don't know who owns the loan on any given home. "In every single affidavit we are signing," says Ice, "it states that the plaintiff and the homeowners are the owner of the note."


Still, the courts can't produce the paper for about 500 cases Ice and others are working, and they're saying only a handful of homeowners were foreclosed on wrongly.
"If you say servicers are entitled to foreclose, this is incorrect, because they are rarely the owners and never claim to be the owners," he says.

This threat or handslap, Ice believes, actually serves the banks in their attempt to influence public opinion, sending the message that not all banks are implicated in the scandal.

In essence, banks were accessing the accounts of homeowners before they went through the foreclosure process. Under their watch, they offered a trial period with a suggestion that at the

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end if homeowners made all their modified payments, they would get a permanent modification. That's exactly what happened. However, in the fine print of many mortgage documents, all that is stated is that the lender will consider a permanent modification.

"What I am afraid is that [the mortgage modification initiative] won't really have any permanent effect and will in turn adversely affect the economy if they take it any further," says Ice. "They're going to come up with something great on paper, but no one will ever benefit from it."

And is the practice still going on? Ice says absolutely, because even in the Florida Supreme Court system they have supposedly devised a plan to stop the robo signing that has also been "robotized" where now they're not really checking that the facts in the complaint are true.

"There's a huge resistance to get additional depositions from those who have already been deposed, because they've lawyered up," says Ice. "To me, it's an acknowledgement that there's still a problem."

UNEMPLOYED HOMEOWNERS GET HELP

Being unemployed took its toll quickly on Sharon Greene, a single mother and homeowner with three sons to feed. Greene was already struggling to stay current on her mortgage when the news hit. The security company that employed her for the past 8 years had just laid her off, and the bills were piling up. Then the notice arrived.

"Every month, I'm up for a sheriff sale for my home to get sold," Greene told AOL Real Estate. "Every month, I'm fighting and fighting."


Greene is one of millions of unemployed homeowners on the brink of foreclosure. But help may soon be on the way -- as early as spring 2011, according to the Department of Housing and Urban Development (HUD).

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The HUD confirmed to HousingWire on Tuesday that the agency will invest $1 billion in mortgage assistance this spring for unemployed homeowners at risk of foreclosure. The program would pay up to $50,000 per eligible household. (See the chart below, provided by HousingWire, for a state breakdown of aid from the Hardest Hit Fund.)

"This would give me a solid foundation. I could breathe," Greene said during a phone interview from her Philadelphia home. "This program will help us get back on track to pay current [on the mortgage.]"

The Emergency Homeowner Loan Program (EHLP) will be disbursed with a 0.0 percent interest rate and can be used for up to two years. To qualify, a borrower must prove loss of income or suffer from a medical condition. The household's annual income cannot exceed 120 percent of the area's median income, and must have been reduced by 15 percent over the last two years.

EHLP will be used to supplement the Treasury Department's Hardest Hit Fund, for a total of 32 additional states. (See left for the 18 states covered by the Hardest Hit Fund.)

EHLP was first announced in August, a month after the Dodd-Frank Act was signed. Since then, dozens of advocacy groups have urged HUD to streamline the process and set a firm start date.

According to an HUD spokesperson, homeowners should be able to apply to EHLP starting in the first quarter of 2011.

"There's money that's just sitting there –- been sitting there for six months already," says Greene. "Why is it sitting there when we can get approval and get back to our lives?"