Multi-party Suit Filed by Borrowers Against Aurora Bank et al

Share Article

Lawsuit filed by UFAN on behalf of homeowners allegedly injured by the mortgage practices of Aurora Bank

News Image

United Foreclosure Attorney Network

On Tuesday October 25, 2011, United Foreclosure Attorney Network (UFAN) filed suit in Superior Court in Sacramento (case # 34-2011-00112919) on behalf of borrowers allegedly injured by the lending practices of Aurora Bank and others believed to have misled borrowers.

The complaint alleges that Aurora was one of the major players in a scheme to make fast, easy profits at the expense of proper mortgage underwriting procedures. By packing subprime loans into mortgage backed securities that were sold to investors, a bank could recoup the funds lent immediately. The suit argues that this process encouraged lenders and mortgage brokers to aggressively push high-cost subprime loans on anyone they could convince to sign on the dotted line.

According to court documents, plaintiffs argue that because of the sale of their loans, they did not receive the benefit of the contract for which they bargained. Plaintiffs, believing they would be placed into a traditional Lender/Borrower relationship, later found that they did not have a “lender” with whom they could deal. Servicers are limited in making changes to contracts when circumstances are unforeseeably changed. Furthermore, loan servicers have an incentive to foreclose whereas a lender has the incentive to modify a loan if it would be more profitable in the long run. If many of the homeowners were still in the traditional lender/borrower relationship, they could have restructured the mortgage for a more desirable result for both parties. In the current situation, the only entity profiting is the loan servicer. The complaint details how many Plaintiffs diligently sought modification of their loans but were denied either because the servicer had no authority to grant a modification or because the servicer chose not to grant a modification.    

Court documents show that Aurora is alleged to have used a variety of tactics to generate the highest amount of fees possible without regard to the injury it would cause borrowers. One tactic is “equity stripping,” which refers to making a loan based on home equity without regard to the borrower’s ability to pay. These loans are set up to fail and lead to subsequent foreclosure. Aurora is also accused of “flipping” which refers to encouraging frequent refinances by homeowners. Borrowers receive cash up front but do not realize that the fees added to their existing loan balance often exceed the amount of cash received – gradually increasing the amount owed over time. Unsophisticated borrowers are especially susceptible to these types of loans because lenders and brokers often use aggressive sales tactics and represent that they are the only type of loan available.

The complaint alleges that, in addition to harmful loan types, appraisers used by Aurora were encouraged to inflate property values in order to give borrowers higher loan amounts. The higher the loan amount, the more money Aurora was able to make on the sale of the loan to investors. It is argued that the bank incentivized appraisers to falsify property valuations in order to secure a higher loan to sell to investors. The complaint alleges that Plaintiffs borrowed excessively in reliance on inflated appraisals and other false statements.

The complaint further alleges that the ownership of Plaintiffs’ notes is unknown, thus questioning, among other things, Aurora’s right to enforce the notes. The complaint requests declaratory relief on several matters relating to the parties’ rights and duties under the contract.

UFAN has currently has lawsuits pending against Bank of America (case # 2:11-CV-02413) and Wells Fargo (case # 2:11-CV-02684) in Federal Court for the Eastern District of California, and against JP Morgan Chase (case # C-11-02390) in Superior Court of Contra Costa County on behalf of borrowers alleged to have been injured by these banks. UFAN will continue to fight for the rights of its clients.

Complementary consultations available.

ABOUT THE UNITED FORECLOSURE ATTORNEY NETWORK

UFAN Legal Group, PC dba United Foreclosure Attorney Network (UFAN) is a Roseville, California-based law firm providing mortgage litigation and other debt related legal services. The dedicated attorneys and staff at UFAN work tirelessly to seek justice and fight for the rights of its clients. For more information call toll free 1-866-400-4242.

This release may constitute attorney advertisement. The information in this release and on the UFAN website (ufanlaw.com) is for general information purposes only. Nothing in this release or on the UFAN website should be taken as legal advice. Prior successes are no guarantee of future performance. Litigation is inherently uncertain and results in litigation are never assured.

# # #

Share article on social media or email:

View article via:

Pdf Print

Contact Author

United Foreclosure Attorney Network

1-866-400-4242
Email >
Visit website

Media