Banking Law

It appears that Manny Pacquiao isn't the only Filipino who's beating up much larger opponents these days. According to Filipino news site ABS/CBNnews.com, a "73-year-old Filipino woman made history when she became the first person in California to win her house back from her lender even after it was foreclosed in San Jose, California."

The woman, Corazon Palma, a 73 year-old cancer survivor living on a fixed income, in 2008 asked Washington Mutual to modify a loan to reduce her monthly payment of $3900.00 on a rental home. I'm not sure what the "fixed income" might be, but it must not have been enough to cover that awfully high monthly housing "nut" after the rent she received was deducted. She mailed in a modification "packet" provided by the lender, but according to an article in the Pudget Sound Business Journal, instead of getting a modification, she found out a few months later that the property was posted for a foreclosure sale (the loan servicing was apparently transferred to Bank of America, which foreclosed on the home). She called the bank and "a loan officer told her BofA would cancel the sale and send her documents relating to the modification." The next thing she knew, a realtor tells the home has been sold at foreclosure. So, she did the next logical thing that any immigrant to this country who is fully assimilated would do: she hired a trial lawyer and sued the bank.

In January of this year, the trial judge issued a ruling that voided the foreclosure and the parties have been slugging it out since then over what, if anything, Ms. Palma owes the lender in connection with the loan.  A decision on that issue is expected to be rendered on December 3rd. Her lawyer laid out a best case/worst case scenario.

"The best case scenario for Mrs. Palma is if a judge rules that the lender has no further right to exercise the loan against the property. Hence, Mrs. Palma gets the property for free."

Worst-case scenario for Palma is that she continues to pay her mortgage but at a lower monthly rate.

Maybe BofA could also throw in a pull-over with the logo "I Asked For A Loan Mod, But All I Got Was This Lousy T-Shirt And A Foreclosure."

I haven't read the court documents or the legal basis for the court's ruling. However, the borrower's attorney alleges that "WAMU deceived Mrs. Palma into thinking they were making loan modification efforts on her behalf while they were secretly planning a foreclosure sale on the property." It was either that, or the right hand of BofA didn't know what the left hand was doing, or there was a Cool-Hand-Luke-like "failure to communicate" as a result of the transfer of servicing from WAMU to BofA. Whatever the basis, this is another public relations black mark for BofA, which has a proud history of foreclosure faux pas that make great fodder for reporters worldwide.