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Suit Claims Bank Cannot Foreclose

nationalmortgagenews.com | March 16, 2014

By Tom LaVenture

LIHUE — A Koloa couple and their Williams Legal Group, PLLC attorneys are asking the court to rule that a bank cannot foreclose on a home when the mortgage was securitized and no longer in the lender’s possession.

Attorney Everett Walton said the case was filed because the homeowners, George and Naoe Pascua of Koloa, wanted a loan modification with the lender. Without providing specific details about the case, he said the plaintiffs want to make sure the lender is legitimate in the attempt to modify the loan and stay in their home.

“This case is not to get money in the form of damages from the lender,” Walton said. “Our client was looking to try to get a deal with the lender to keep their house.”

If the owner was forced to walk away from the loan then this would not be an issue, he said. If the owner has the ability to maintain a modified mortgage and the interest to keep the home, then the lender must be willing to work out a mutually beneficial solution.

The Pascua’s home loan was among more than 60 million that were sold by originating lenders to investment banks through a securitization between 1998 to 2009. The incentive to protect against bankruptcy became possible with the Real Estate Mortgage Investment Conduit Act.

The Pascua home closing occurred on Aug. 30, 2004. They obtained a $1.7 million loan from defendant Wells Fargo as a principal residence property.

The suit claims that the Pascua loan was securitized, but that the note was not transferred properly to Wachovia, which acted as the Trustee for the 2004-S TRUST. The Securities and Exchange Commission recorded the securitization with an aggregate principal balance of approximately $336,891.

Defendant Wachovia alleges it is the holder and owner of the Pascua’s note and also the beneficiary of the mortgage. However, the suit states that Wells Fargo is identified as the note and mortgage holder and no documents show a legal transfer prior to closing.

Walton is on the Big Island, where the 3rd Circuit has a pilot program that requires mandatory mediation when the homeowner requests it in a foreclosure proceeding. The 5th Circuit does not have such a program at this time, he added.

The suit alleges unfair and deceptive practices and fraud on the part of Wells Fargo Bank as the originator of the loan. Wells Fargo Mortgage Backed Securities 2004-S is named as the master servicer of an “imperfect securitization” of the note or mortgage that was transferred to Wachovia Bank as trustee for securitized trust.

Wells Fargo Consumer Lending spokesperson Alfredo Padilla said Wells Fargo has not received a complaint and is not able to comment at this time.


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CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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