SANTA ANA – Distressed homeowners packed an appellate court hearing Tuesday as their attorney tried to persuade justices a 2008 California law should force banks to work harder to ease the terms of their mortgages.
Attorney Moses S. Hall argued before the three appellate court justices in the Fourth District’s Santa Ana courtroom that banks holding the loans of his clients are not complying with a state law compelling them to try to negotiate modified mortgages.
Attorney Justin D. Balser, representing the RPI Quality Loan Service Corp., argued the homeowners cannot bring the class-action lawsuit to the courts and must rely on the California Attorney General’s Office to enforce the law.
The appellate court justices appeared skeptical of that claim and queried him why people could not sue to have their rights enforced in the courts.
Balser argued that letting residents try to enforce the law in the courts would lead to a “flood of lawsuits.”
“This is the only statute of its kind in the nation,” Balser said.
Attorney Melissa Coutts, who also represented RPI, said she was looking for the appellate justices to provide guidance on the law, which she argued was too vague.
“If there was a specific remedy (in the law), we wouldn’t be here,” Hall responded. “There’s nothing to help keep people in their homes.”
Terry and Mike Mabry filed their class-action lawsuit after they said their lenders refused to help them save their home in Corona.
The two had invested in 13 properties, which they rented, but when the economy soured their found themselves struggling to keep up with mortgage payments as renters left or demanded lower rent, they said. They ended up losing some of the properties and others were lost in short sales, they said.
However, when it looked like they wouldn’t be able to afford the adjustable rate mortgage on their own home they contacted their lender and were told they could not renegotiate the terms unless they missed at least two payments, Terry Mabry said. The couple had not missed any payments, she said.
“When we reached out for help we were hit with one wall after the other,” Terry Mabry said. “The bankers led us to believe they were working with us, but they weren’t. All we wanted was to be helped.”
Terry Mabry argues that all the state law was meant to do was give homeowners a chance to work with the lenders to save their houses and is not a guarantee.
“The law was meant to create a discussion, not to guarantee a solution,” Terry Mabry said. “But we never even got to the discussion point. That’s the most frustrating part.”
The Mabrys thought they were in serious negotiations until they returned home one day to find a notice to sell their home floating around the front lawn.
Carlos and Maria Hernandez of Lake Forest also thought they were going to save the home they bought 5 years ago after they were put in a home-loan modification program for eight months.
“The next thing we know we were given a notice that the house was already sold,” Carlos Hernandez said.
“We put all of our savings in that house,” Hernandez said. “We want to stay in it because it’s for the future of our kids.”
Carlos Hernandez had trouble making mortgage payments because he lost his job, but was able to keep up with the new payments, he said.
The Mabrys and Hernandezes remain in their homes as appellate court justices consider the lawsuit.
Read more: http://www.oclnn.com/orange-county/2010-05-19/business/mortgage-holders-sue-bank-in-class-action#ixzz0p84ayuW5