CLASS ACTION SUIT AGAINST BANKS & MORTGAGE COMPANIES PLANNED

July 16, 2009

In an attempt to force banks and mortgage companies to deal with distressed homeowners, we've learned that a class action suit against these organizations is being considered by a number of community action organizations. These suits would be the result of investigations that indicate low-mid income home buyers, especially loans made to minorities, were deceptive at best. Felony fraud charges are being considered against the top brass of many of these companies.

The coalitions we've spoken to prefer to remain quiet on many of the details concerning the suit, but some groups have said that they plan to consolidate their efforts. Initial targets will include virtually all major banks (e.g., BofA, Citibank, Wells Fargo, Chase, etc.) and mortgage companies (e.g., Countrywide). Also included will be a demand for mortgage servicing companies to immediately identify the "investors" they're representing for purposes of payment collection.

The identification of "investors" being represented by mortgage service companies has been at issue nearly since the real estate meltdown began. Even though required to provide this information by law when requested by the mortgagee, these "black holes" have refused to comply.

The failure to disclose the identification of "investors" makes us think there may be more to their refusals than simply arrogance and incompetence. Is it possible that by revealing these "investors" it will show that the whole CDO venture was a scam?

Since Congress is apparently not interested in saving the homes of taxpaying voters, it's great to see people taking things into their own hands! If Congress wants to this class-action suit to go away, maybe we'll see some action from them. But I would warn against thinking Congress would have home owner's best interests at heart, so watch what might be proposed. If it smells, throw it back!