Post Number: 23
|Posted on Wednesday, September 17, 2003 - 11:14 pm: ||
Banker Sued Over Alleged Home Foreclosure Fraud
By Bob Mims
The Salt Lake Tribune
A disabled woman has filed a federal lawsuit alleging Salomon Smith Barney Inc. conspired with a loan servicing firm, a debt collection agency and others to fraudulently foreclose on, then sell her West Jordan home.
Attorney D. Bruce Oliver says Beverly J. Mast's family has since negotiated to buy back the home at an unspecified but "substantial profit" for the owner. However, Oliver said the woman, who depends on limited disability benefits and relatives' charity to survive, still stands to lose the $75,000 in equity she had built up in the house prior to losing it last July.
"While she is still residing in the home, it is important to realize the only reason she wasn't displaced is that her family stepped in to repurchase it," said Oliver, who accepted Mast's case on a contingency basis. "It never should have happened to begin with."
The complaint accuses Salomon, a global investment banker; debt collector Clayton National Inc.; Litton Loan Servicing LP, a C-Bass LLC subsidiary; Litton officer Edward C. Hill; and 20 "John Does" not only with conspiracy to violate Mast's civil rights, but with fraud and disability and housing discrimination.
Scott Lundberg, the Murray attorney representing the defendants, said Thursday that he could not comment on the case, having not yet had time to review the lawsuit.
Mast seeks unspecified damages, to be determined by a jury. No hearings have yet been scheduled in the case.
The complaint, filed late Tuesday, contends Mast's saga began not long after Clayton -- having gained a reputation for collecting on nonperforming loans -- became the federal Department of Housing and Urban Development's preferred loan servicing provider.
In March 2000, Clayton -- acting under Americans with Disabilities Act and HUD guidelines for financially stressed "impaired persons" -- renewed a "forbearance," or payment deferment. It was the second such interruption in Mast's mortgage payments due to economic hardship, court documents state.
Three months later, Clayton -- purportedly to avoid the federal forbearance provision and allegedly without proper notice -- sold the loan to C-Bass, which then assigned it to Salomon. C-Bass, the suit charges, used its Litton subsidiary as a loan servicer.
Believing they had effectively removed Mast's loan from HUD regulation, the complaint alleges, the defendants then began an aggressive campaign to declare the mortgage in default and foreclose on the property.
Litton repeatedly claimed nonpayment and default on the loan, though Mast countered that her payments were current. Foreclosure proceedings began in March 2001. Mast eventually filed for bankruptcy protection, but in May 2002 Litton was granted release by federal bankruptcy court to proceed.
In July 2002, the defendants sold the house to Phoenix Property Management Inc.
Oliver argues that Litton's release was based on misrepresentations that Mast was behind on her payments, as well as an allegedly fraudulent Deed of Assignment relating to Clayton's sale of the loan.
That document was recorded in July 2001, but, the suit claims, back-dated to June 2000. Oliver contends the deed actually was not signed until June 2001 -- three months after foreclosure efforts began.