Ohio Homeowner Sues Mortgage Company Over Foreclosure Filing

An Ohio homeowner may be among the first individuals to use a provision of the Dodd-Frank law to file a lawsuit against a mortgage servicing company.

Although the Dodd-Frank law may be thought of by many as a law dealing largely with securities regulation, one provision deals with a problem that some homeowners have encountered when it comes to properties under threat of foreclosure. Specifically, the law requires banks and other mortgage lenders before filing for foreclosure to entertain in good faith attempts by homeowners to apply for loan modifications.

In the plaintiff’s case at hand, approximately two years after taking an adjustable rate mortgage on her home, she evidently began having difficulty keeping up with the payments. She claims that she approached the company servicing the mortgage to inquire about a loan modification, but the serving company allegedly told her that to qualify for consideration she would first have to stop making payments on her existing mortgage, which she did.

After that however, the plaintiff accuses the loan servicer of initiating a foreclosure action despite having received her request for a loan modification. Moreover, she accuses the company of refusing to accept her offers of payment on the existing mortgage.

Whether this case arose as a symptom of a larger phenomenon of banks “pushing back” against legal requirements obligating them to consider loan modifications, or out of a misunderstanding or some other reason, the incident itself shows that the passage of a law by itself is not necessarily a guarantee that the problems it is intended to safeguard against will simply go away.

Although laws like Dodd-Frank give homeowners certain legal protections against the threat of foreclosure, it may still be necessary for homeowners to resort to legal means to secure those protections. In such an event, a good first step is to consult with an attorney about how to best go forward.

Source: Cleveland Plain Dealer, “Chase Bank being sued by Ohio woman claiming violation of mortgage law,” Teresa Dixon Murray, July 22, 2014