Bank-induced foreclosure

In the past few years, I’ve spoken to hundreds if not thousands of homeowners who were not behind in their mortgage payments but wanted a modification.  When these homeowners inquired with their banks, you know what the banks told them: 

“Stop paying.  Only then will you be eligible for a loan modification.”

Guess what invariably happened next?  The homeowners stopped paying, as instructed, but instead of giving them a loan modification, the banks gave these homeowners a foreclosure lawsuit.  

As I see it, banks who did this should not be permitted to foreclose.  In my view, this fact pattern gives rise to a legal defense called unclean hands.  My argument, essentially, is this – the bank cannot come into a court of equity and seek foreclosure when the bank induced that homeowner to go into default. 

Apparently, I’m not the only one who feels this way.  The National Mortgage Complaint Center is seeking homeowners who fit this description.  If this is what happened to you, call them.  And call me, too.  888-450-1549.  I strongly believe you should not be foreclosed if you were induced to go into default by your bank. 

Posted in Main | 14 Comments »

14 Responses to Bank-induced foreclosure

  1. JamesM says:

    Not sure it is unclean hands, may be more of an Estoppel defense. Defendant relied on, and proceeded on the representations of the Plaintiff. JamesM

    • Mark Stopa mstopa says:

      I see the argument for calling it estoppel. The problem there is estoppel has defined elements, so it may be harder to prove. Unclean hands is a pretty broad term – may be easier to defeat summary judgment. No reason we can’t assert both defenses, though.

  2. Colin R says:

    This is exactly what happened to us. We were NOT behind on our payments, the house is underwater though. We heard about the loan modification program so we applied through our latest lender/servicer (it has changed a couple of times) which is B of A. We were told they could not help us as we were current with our mortgage, so for them to help us we would need to go through a Forebearance, so we did. From there things went downhill. To cut it short, we have not yet been served papers, though it is only a matter of time. We will definitely contact the Mortgage Complaint Center. Mark, thanks for all the valuable info you provide on your blog and for all the other Foreclosure Warriors out there….


  3. Eugene Sandburg says:

    My bank, National City, was being bought by PNC Bank in 2008. Like Colin R above, I was advised to withhold payments in order for PNC to modify my mortgage. They offered a forbearance, dropped my interest 1% and allowed interest only payments. I made the payments and they renewed the forbearance for a second 6 month period. At the end, they refused to set up a regular payment schedule and insisted I pay off the mortgage in full. They filed foreclosure in April 2010. I have continued to make the monthly interest payments as per the statements they send.

    I have cross filed for fraud etc. The Court states that since they included my old company as a defendant, I can not include it in my pro se responses and I need an attorney.

    There is a hearing scheduled for March 8th to dismiss my defenses and the cross complaint and for a default on the company. I previously submitted for discovery and they gave me a boiler plate non responses and I re-filed. No response yet but it is due by Feb 1st.

    Would you be interested in taking on the case? I can be reached at my office, 772-335-8480 or my cell 772-284-0900. The case citation is:

    PNC BANK, National Association
    as successor by merger to NATIONAL CITY
    BANK, as successor by merger to FIDELITY
    Plaintiff, General Jurisdiction Division
    Case No: 562010CA003190

    and THAT WATER PLACE, INC., a Florida

  4. Jessica says:

    We were told we could only get loan modification if we fell behind on mortgage payments. I really felt I would be approved as my income significantly went down. After not paying 3 months, I was afraid so I sent a big payment to pay for 3 months. Instead Bank of America applied it to escrow and also paid my house taxes without my permission. Our problem has snowballed into a foreclosure now, and the bank tells me they won’t even accept a lump sum to reinstate mortgage. We cannot pay the entire $22K. We are in foreclosure now when we were really hoping for a loan modification. Do you have any collegues in Miami we could see for consultation?

  5. anthony falduto says:

    I had been trying to achieve the “Mortgage Modification”since Aug.2009.First it was like u said…”your paying your mortgage..whats the problem?”…Well after seeking and following the “advice” of a HOPE mortgage couselor to my own demise…And even getting a practical “Forebearance Agreement” (1st of several and best of all) in fall of 2009 after paying 2 installments and while paying 3rd of 4 temporary payments.It was brought to my attention that(allegedly),”someone in our refinance department recieved an e-mail from you requesting to be withdrawn from the temp. payment plan….and so began the slippery slope with th mortgage company and now am in process of foreclosure.I am single father of 4 children and am ONLY TRYN TO KEEP OUR HOME !!
    I am OPTOMISTIC you will be able to help me &my family.
    Anthony Falduto

  6. jodi vanslee says:

    WOW!! sounds so familiar……….wells fargo……………..sept 2010 we can not help you unless you are in eminemt default……………2nd set of finacial sent feb 4 2011 (still being considered because they sent me the fedex envelope) wanted it by feb 14th, saved tracking number and person who picked up envelope. …………..wells fargo calles feb 15th to see why i havnt sent my paper work………………..feb 16th hamp denial for…..”failure to send paper work requested”………..feb 21 sent foreclsoure/short sale dept………….wells fargo supervisor amber Q4s states that my paper work is not in the system. i told her i had the tracking number and the name of the person who picked my package up…………was this a case of pre determined modification denial????????/…………this is quite an out rage. i called and left a message with my name mr stoppa and congrats on randyes case in pasco county!!!!!! i hope you can help me and my family stay in our home.

  7. Patricia says:

    Well like all the others I have been in foreclosure since 2008 due only to reduced income and finally unemployment (those have now been exhausted as well). However, I have noticed that when I reinstated the mortgage, the foreclosure has been left opened and not closed. I have also requested the TILA in writing with no response until I went before the judge when I had to respond to the initial paperwork. I have not ever heard that a foreclosure being left open after reinstatement and 3 loan modifications later, now have been served that a new law firm has been “substituted” for the original group. Can you help me? I would love to hear some sound advice for a change! I have also tried to go through NACA with no response! I can be reached at 727.505.9682. Thanks Mark! You have a wonderful website with very informataive information! Patricia

  8. Pingback: giant twist comfort cs

  9. Pingback: Elektrische Zahnbuerste

  10. Pingback: Should I Default on my Mortgage? « Foreclosure Defense & Strategic Default

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Anti-Spam Quiz: