Hitting For Singles

When I first began the work of representing homeowners in foreclosure several years ago I truly thought that the battles of protecting consumers would be won or lost by raising issues regarding fraudulent, deceptive or negligent business practices on an industry-wide basis. We spent hours and hours briefing issues related to the securitization of notes and mortgages and challenging the rights of lenders to foreclose on Ohio Homeowners.

We filed class action complaints against foreclosure mill law firms and mortgage loan servicers. These cases brought occasional success, but more often than not ended up slowed or stopped by arcane issues of state or federal civil procedure and pleading. Lenders argued that every loan, every default and every borrower was different and, despite the abhorrent business practices we detailed in our lawsuit, the only way those issues could be raised would be one case at time.

What the loan servicing industry, and their lawyers, didn’t bank on is that we would take them up on their challenge.

So, for the past few years my long-time colleagues, Grace Doberdruk, Dan Solar, the late great Jim Douglass, and I stopped trying to hit for home runs against the banks and mortgage servicers and started to defend each case by hitting for singles.

We have had successes in a few areas recently that I thought would be important to share. In several cases, we have been successful in persuading courts of appeals in Ohio that the evidence the Loan Servicers put in front of the court in support of their motions for summary judgment were simply insufficient to support the judgments that they were being routinely granted. Right before Jim Douglass passed away, several cases he argued regarding the sufficiency of individual affidavits and other summary judgment evidence were reversed by courts of appeals:

In Deutche Bank v. Dvorak the court of appeals held that the witness who signed the affidavit on behalf of Deutche Bank simply lacked sufficient personal knowledge to attest to that which she was testifying to. Similarly, in Bank of America v. Loya and Bank of New York Mellon v. Villalba, our firm persuaded the Court of Appeals for the 9th Appellate District to reverse foreclosure judgments because affidavit evidence offered was insufficient. In Bank of New York Mellon v. Froimson, another of our cases, Jim Douglass persuaded the 8th District Court of Appeals on Reconsideration to reverse a foreclosure judgment because the Plaintiff failed to put forward specific evidence of a merger of one of the holders of the note. These cases forced banks and loan servicers, who chose to avail themselves of Ohio’s courts, to actually prove their case.

It is a simple concept but it has proven effective.

On February 10, we had a similar success when a Butler County Common Pleas Judge granted our motion to dismiss a foreclosure because the Plaintiff failed to record a prior loan modification as required by the Ohio Revised Code. A copy of the decision is here:

McLaughlin 2015 02 10 decision Dismissing Case

Good basic thorough lawyering. Making the Banks and other Lenders prove their case and not backing down.

Its not going to land us in the Wall Street Journal or the New York Times but it creates the leverage to get our clients the results they need and deserve.

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Alternatives For Homeowners Facing Sheriff’s Sales

Too often we receive calls from homeowners who were deceived by their loan servicers into not defending their foreclosure case and who end up with a judgment of foreclosure. While I have written before about how the Ohio Supreme Court has made it more difficult to vacate foreclosure judgments, the Consumer Finance Protection Bureau (“CFPB”) has created an entire new framework that requires loan servicers to work constructively with homeowners as long as the work begins more than 37 days before a scheduled Sheriff’s Sale.

The CFPB Regulations X and Z that took effect a year ago require loan servicers to follow tight timelines and to act in good faith in reviewing borrowers for assistance on loan modifications, applications for deed in lieu of foreclosure or short sales. For anyone who has been through a loan modification application process, perhaps the most appealing new rule requires that loan servicers tell borrowers within 5 business days if any documents are missing from their applications.

The lender must make decisions within 30 business days of submission of a complete loan modification application. Significantly, the submission of a complete loan modification application prohibits the loan servicers from proceeding to Sheriff’s sale as long as the application is submitted more than 37 days before the scheduled sale.

The new regulations also provide homeowners the right to sue if the loan servicer fails to comply with the regulations, provides for statutory penalties, actual damages and the shifting of attorney’s fees.

As with with any federal regulation, the process is complicated. Here is a flow chart that we have developed for training other lawyers about these important new rules:

Loss Mit Flow Chart

As you can see, this is rather complicated stuff. We have established a systematic process in our office to guide our clients who are pre-foreclosure, currently in foreclosure, post-judgment or coming out of Bankruptcy to put together loss mitigation applications thoroughly and professionally and with an important focus on tracking the dates and times of submission to make sure that, if necessary, we are in position to enforce our client’s rights.

So far we have only had to sue 5 loan servicers to enforce our clients’ rights under these new regulations (Chase, Wells Fargo, BSI, Fay Servicing and PHH). Our hope is, as time goes on, the regulations and efforts by the CFPB and firms such as ours to enforce the laws will encourage better, more consumer-friendly conduct by lenders. The results we have obtained for clients without having to sue seem to already support that theory.
We have also expanded our Bankruptcy Practice where there are additional options for homeowners who are facing sheriff’s sale. A Chapter 13 plan can be designed to keep a homeowner in their home. A Chapter 7 can delay a sheriff’s sale and put a homeowner in a better position to apply for a loan modification.

The bottom line is that, while it is better to retain a lawyer as early in the process as possible, there are tools available to help homeowners even weeks before a scheduled Sheriff’s Sale.

Marc Dann



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The Foreclosure Crisis is Not Over

As Martin Andelman points out, reports of the death of the foreclosure crisis have been greatly exaggerated. According to Bankrate.com, foreclosure filings in Ohio were up by six percent at the end of 2014. According to Bankrate, 1 out of every 872 houses in Ohio received a foreclosure filing through December of 2014. At the Dann Law Firm we have seen a similar rise in new clients facing foreclosure over the past several months.

Since the decision of the Ohio Supreme Court in Bank of America v. Kuchta, retaining a lawyer early in the foreclosure process is more important than ever in Ohio. In Kuchta, the Ohio Supreme Court severely limited the circumstances under which a homeowner in foreclosure, or a litigant in any lawsuit for that matter, can attempt to challenge a judgment of an Ohio Common Pleas Court after it has been rendered. The Court’s theory is that someone who is sued for foreclosure in a judicial foreclosure state, such as Ohio, should understand that when they receive personal service or certified mail from the Clerk of Courts they have 28 days to answer a complaint for foreclosure as they should have sufficient notice to step up and defend the case or to hire a lawyer experienced in representing homeowners to do it for them.

What the Supreme Court failed to understand is that many homeowners and borrowers think that just because they are in default, that they have no potential defense to a foreclosure filing. For example, in the Kuchta case itself the Court acknowledged that at the time Bank of America sued the Kuchtas they had no right to sue them, but they said that they forfeited the chance to make that argument by not raising it specifically enough before they retained our firm to represent them. The Kuchtas, like many homeowners faced with foreclosure, were focused on trying to work out a modification of their loan with the bank and not focusing on highly technical legal and jurisdictional arguments.

That is why it is critical that someone in Ohio who is in default on their mortgage loan, and particularly anyone who has been served with a lawsuit for foreclosures, pay attention to both the legal issues and defenses they need to raise directly in court and work with their loan servicer to find a smart and reasonable solution to their problems.

New Federal Regulations provide additional protections and avenues for homeowners who fall behind on their mortgage but wish to stay in their homes. At the Dann Law Firm we have now filed 5 lawsuits against mortgage loan servicers who have violated Federal Regulations X and Z which are now just over one year old, and we anticipate filing more in the future. These regulations require quick disclosure of information critical to understanding and defending a foreclosure and, most importantly, set strict timelines and rules of conduct for mortgage loan servicers who undertake to modify an individual’s home loan.

For a family facing foreclosure, it is critical to retain a lawyer who understands both the potential state law defenses to the foreclosure complaint itself and the rights of borrowers under these new federal regulations, because the intersection of these two laws create a much better opportunity for a positive outcome for those homeowners.

Marc Dann



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Failed Termite Treatments Gives Rise to Serious Consumer Fraud Lawsuit

Last night  Fox 19 in Cincinnati reported on a tragic situation involving the home of one of our clients.  Mary Ellen Boutet of Reading Ohio paid to have her home treated to prevent termites and continued to pay for annual treatments and inspections.  After she passed away and her daughter undertook to sell the house it became clear that those treatments were completely ineffective and that Ms. Boutet’s home was so infested with termites that her daughter has been unable to close a sale on the property.

It turns out that some of the chemicals that Terminix, the pest control company Ms. Boutet hired, were ineffective when they were applied and that the company concealed that fact from our client and their other customers for years

We have teamed up with the Campbell Law Firm from Alabama to bring suit in Hamilton County Common Pleas Court. A copy of our complaint is here:Yelkin T 2014 09 16 Complaint.

Marc Dann



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Fox 19 in Cincinnati Exposes Terminix Consumer Fraud Alleged in Dann Law Firm Suit in Hamilton County

Fox News Previews Tonight’s Story that runs at 10:00 p.m.

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Lessons Losing A Supreme Court Case: Retaining a Lawyer is More Critical Than Ever

Its never fun to lose a case.

And it is especially not fun to lose a case in the Ohio Supreme Court.

That is why it has taken me a couple of weeks to write about the Court’s decision in Bank of America v. Kuchta. In part I waited because we have been working on a motion to reconsider. We are filing that motion to reconsider today. Kuchta G 2014 10 17 Motion for Reconsideration with Memorandum. We are, of course hopeful that the Ohio Supreme Court will reconsider some very wide reaching implications of their decision. In a nutshell, we have argued in our motion to reconsider that if a plaintiff in a lawsuit does not have a dispute with the defendant that they sue at the time the suit is filed than the entire suit is void. The Court has ruled that unless the defendant raises that issue during trial or on appeal that the fact there was no real controversy cannot ever be raised.

Those of us who practice in the Foreclosure and Debt Buyer defense arena understand, perhaps better than the Ohio Supreme Court how difficult that it can be for a Defendant, especially one not represented by an attorney to figure out if a Plaintiff in a lawsuit is misrepresenting facts about their standing in the short time frames that courts allow to answer or to respond to a motion for summary judgment. In the Kuchta case, by the time the Defendant’s figured out that Bank of America did not hold either their note or mortgage at the time they filed the foreclosure lawsuit against them and hired us to file a motion to vacate the judgment, the Ohio Supreme Court says they were too late to raise the issue.

We argue in the Motion to Reconsider that that right and duty belongs to the court not the parties and cannot be waived. We certainly hope, in the interest of justice that they give this matter a second look.

But as hard as it is to lose a case it is most important that lawyers and litigants in present and future focus on the important lessons that this case provides to anyone in Ohio who has been sued for any reason. Even for individuals who have been sued over debts where they might have actually defaulted. Those lessons are as follows:

  1. Just because you’ve defaulted on a debt (mortgage debt, credit card or other debt) and have been sued doesn’t mean that the person suing you has the right to bring the claim. (Everyone agreed that if the Kuchta’s had raised the issue earlier the case should and would have been dismissed)
  1. It is critical to file an answer or motion to dismiss within 28 days of being served with a lawsuit by certified mail or process server or you risk losing the right to ever be able to challenge the standing of the party suing you.
  1. Understand that in a surprising number of cases involving the collection of mortgage notes and other debts the entity filing the lawsuit is unable to prove that they have the right to enforce the note. (If Bank of America, one of the largest banks in the world can screw this up anyone can and many debt buyers really don’t know if they have the right to sue you)
  1. If you have been sued you need to consult a lawyer. If you have been sued over a debt, a Dann Law Firm lawyer will consult with you for free. We don’t do that to be nice (although I think we are nice). We have found in the vast majority of debt lawsuits that there may be legal defenses, bankruptcy strategies or even affirmative claims that can be brought against the plaintiff. We may also discover that you have claims for damages under the Fair Credit Reporting Act, The Telephone Consumer Protection Act, the Fair Debt Collection Practices Act, or state consumer protection laws.
  1. If you have an application pending for a loan modification and you have been sued for foreclosure you may not only have defenses to the foreclosure but you may have claims under new Truth In Lending Act and Real Estate Settlement Protection Act Regulations that took effect this year against the loan servicer for damages that may include the costs of defending the foreclosure. We’ve filed two of the first such cases in the country.
  1. We are starting to get traction in Ohio Courts on a variety of issues that allow us to defend foreclosure lawsuits and lawsuits attempting to collect other debts:
  1. Plaintiffs regularly fail to prove that they have standing.
  2. Plaintiffs often fail to properly accelerate the debt.
  3. Homeowners with FHA mortgages have special statutory and regulatory protections.
  4. Affidavits used in foreclosure and debt collection cases are being to be rejected by courts in Ohio.
  5. Plaintiffs regularly sue defendants in the wrong court.

There are many more lessons to be learned but the most important take away is this, it is more critical than ever when faced with foreclosure or a lawsuit by anyone to seek the advice of an attorney experienced in defending such claims who is unafraid to financial institutions and other financial predators.

Marc Dann




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CFPB Brings First Enforcement Action under Regs X and Z

In the first of what should be many The Consumer Finance Protection Bureau entered into a $37.5 Million settlement with Flagstar Mortgage today.

The CFPB outlined conduct that our office has attacked on behalf of our clients since the new Federal Servicing Regulation went into effect on January 10 of this Year.

Flagstar was cited for the following conduct that violates Federal TILA and RESPA laws.

  • Closed borrower applications due to its own excessive delays: Flagstar took excessive time to review loss mitigation applications, often causing application documents to expire. To move its backlog, Flagstar would close applications due to expired documents, even though the documents had expired because of Flagstar’s delay.
  • Delayed approving or denying borrower applications: Under the new CFPB mortgage servicing rules, Flagstar must evaluate a complete loss mitigation application within 30 days, if it receives the complete application more than 37 days before a foreclosure sale. Flagstar also failed to adhere to these timelines.
  • Failed to alert borrowers about incomplete applications: Flagstar is responsible for reviewing borrowers’ initial loss mitigation applications to determine what documents are missing. It must then tell borrowers what documents are missing, usually by sending a “missing document” letter. Flagstar failed to send, or delayed sending, missing document letters to borrowers.
  • Miscalculated incomes: Eligibility for some loss mitigation programs, such as a loan modification, is highly dependent on borrower income. If borrowers have too much or too little income, they do not qualify. Flagstar routinely miscalculated borrower income and wrongfully denied loan modifications.
  • Denied applications for unspecified reasons: Under the CFPB’s new rules, mortgage servicers must provide the specific reason a complete loan modification application is rejected. Flagstar’s policy was to say only “not approved for loss mitigation options by the investor/owner of the loan,” even though Flagstar’s internal systems contained the true reason for the denial.
  • Misinformed borrowers about their appeal rights: Under the CFPB’s new rules, Flagstar must provide certain borrowers the right to appeal the denial of a loan modification. But Flagstar failed to provide this notice, and it wrongly stated that borrowers have an appeal right only if they reside in certain states.
  • Put borrowers in trial period purgatory: Flagstar needlessly prolonged trial periods for loan modifications. This caused some borrowers’ loan amount under the modified note to increase and, in some cases, jeopardized borrowers’ permanent loan modification.

Consumers and Homeowners who encounter such conduct from their own loan servicer have a right under the new CFPB regulations to bring an action in Federal Court for Damages against their mortgage company. The Dann Law Firm has been on the forefront of bringing claims under Regulations X and Z.

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Pro Publica Reports: Wage Garnishments Becoming All Too Common

Over the weekend Pro Publica published, “Unseen Toll, Wages of Millions Seized to Pay Past Debts” reporting on an analysis of data from payroll service ADP showing one out of 10 american workers between the ages of 35 and 44 had their wages garnished in 2013.

Just as our economy improves and  American workers are regaining lost financial footing and moving into better paying jobs, millions are facing garnishment of up to a quarter of their net wages that pull them back down and reduce their spending power.

This is an astounding finding in light of the fact that in so many cases, lawsuits brought on old credit cards, pay day loans and other bills can often be successfully defended in state court or easily addressed in Bankruptcy court.

Further, we have had success turning debt collection case against our clients into Fair Debt Collection Act Claims, and claims under state law against those who sought to sue them. These same faulty debt collection filings may also lead to claims against lenders under the Federal Fair Credit Reporting Act.

The Pro Publica details the problem that creditors in these cases are always represented by attorneys, but debtors rarely appear in court to fight them:

“When these creditors and collectors go to court, they are almost always represented by an attorney. Defendants — usually in tough financial straits or unfamiliar with the court system — almost never are. In Clay County, Missouri, where Capital One brought its suit against Evans in 2011, only 7 percent of defendants in debt collection cases have their own attorneys, according to ProPublica’s review of state court data. Often the debtors don’t show up to court at all: The most common outcome of a debt collection lawsuit in Missouri (and any other state) is a judgment by default.”

The Dann Law Firm regularly represents debtors in these lawsuits and can evaluate each person’s individual situation to determine if they have potential claims against a creditor or options in bankruptcy court

Marc Dann



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Bank Of America Settlement Looks Impressive But Maybe Its Time To Take One Of These Cases To Trial

I should be excited about the nearly $17 Billion Settlement agreement between Bank of America and the U.S. Department of Justice announced yesterday. I am happy for our clients here in Ohio facing foreclosure because according to initial press reports, the agreement, like previous agreements with Citibank ($7 Billion) and Chase ($13 Billion) contains language that allows Bank of America to liquidate part of its obligation under the agreement by reducing principal on mortgage loans fraudulently originated by BOA and its predecessor Countrywide in the alleged origination and securitization fraud scheme.


Anyone facing difficulty paying their Bank of America, Countrywide or America’s Wholesale Lender originated mortgage or who is in foreclosure currently, even though those companies are no longer involved as an investor or servicer of their loan should wait if possible until this new settlement agreement takes hold to see if there is an opportunity to negotiate a better outcome. If this agreement is anything like the National Mortgage Settlement it may require persistence and the assistance of a lawyer to access the benefits that the government has negotiated for you in this settlement.


My guess is that as in prior settlements DOJ left too much discretion in the hands of the Defendant in the case Bank of America to pick and choose who they will help.


But despite the good news, I have some serious concerns about these settlements. These pacts are about the origination and securitization of hundreds of thousand of fraudulent and unsuitable mortgages to American Consumers and their sale to unsuspecting investors throughout the world that nearly caused the collapse of the US economy in 2008. The illegal and possibly criminal conduct of these bad actors left millions of Americans financially insecure, caused a depression of the housing market that continues to this day and have cost investors and homeowners billions of their hard earned dollars.


What disturbs me the most is that theses settlements have been reached before a lawsuit was filed against the banks. If a complaint laying out the government’s case against Chase, and Citi and BOA had been filed before settlement, the public and future generations would have had a chance to see the unfiltered findings about the conduct of these bad actors by the Department of Justice and 5 State Attorneys General who participated in the settlement. If any of these cases had actually gone to trial, whether the government had won or lost, the adversary process would have revealed a much more realistic picture of what actually happened between 2001 and 2008 that caused the apocalyptic collapse in 2008.


For the agreements to come to fruition, a formal complaint and consent judgment entry will have to be filed but that complaint will be carefully drafted with the consent of Bank of America. Just as the complaints and agreements in the Chase and Citi cases were drafted jointly by lawyers for the DOJ and those banks. Historians, legal scholars and future market participants trying to determine the parameters of proper conduct will be left without the guidance that a contested trial, judgment and decision of a court of appeals could provide to how such market participants acted to incur such massive liability and how they should act in the future to avoid causing such pain and hardship to future consumers and investors. The New York Times addressed this risk of the Bank of America Settlement and other settlement on the eve of yesterday’s announcements.


In defending individual homeowners in foreclosure, bringing claims under state and federal consumer protection laws and civil tort claims we are taking cases to trial in Ohio every day setting standards for everything for who has standing to enforce a note and mortgage to what kind evidence a lender is required to proffer to establish a default on a mortgage or compliance with federal regulations that govern the enforcement of FHA or VA loans. These trials, decisions and appeals will provide a chronicle of the abuses of the past and a roadmap for proper conduct for mortgage lenders for the future.


We should expect no less from the United States Department of Justice and the State Attorney General Partners.


Marc Dann



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Homeowners Mistreated By Banks Often Mistreated a Second Time By a Modification Mill or Out Of State Law Firm

It is bad enough that most people facing foreclosure who reach out to our law firm have been badly mistreated by their banks, but over the last few weeks it seems like almost every new client who has called us has also been victimized a second time by a predatory loan modification mill or out of state law firm making illusory promises to stop an Ohio foreclosure and obtain a loan modification.

Several of these well meaning clients find themselves on the brink of a Sheriff’s Sale only to learn that these firms they have been paying are not licensed to practice law in Ohio and therefore can do nothing to “Stop a Foreclosure” as they promise and do nothing more than pass the homeowner’s paperwork onto a loan servicer without providing any advice or expertise that adds any value whatsoever to likelihood of obtaining a loan modification.

Apparently this is happening all over the country. Last month Federal and State Regulators intiated “Operation Mis-Modification” cracking down on firms that took large upfront fees and guaranteed results. The Director of the Consumer Finance Protection Bureau Richard Cordray had this to say about these operations:

These companies pocketed illegal fees, taking millions of hard-earned dollars from distressed consumers, and then left those consumers worse off than they began,” said Richard Cordray, the bureau’s director. “These practices are not only illegal, they are reprehensible.”

The CFPB issued an advisory with specific advice about what people looking for help when facing foreclosure should look for and look out for.

Just last week my friend Martin Andelman reported in his blog Mandleman Matters that several State Attorneys General took action against lawyers promotion “Mass Joinder” lawsuits taking millions from homeowners who they fooled into thinking were part of a class action.

We are doing our part. For our clients who have been scammed by modification mills or out of state lawyers we are bringing lawsuit under Ohio’s strong Consumer Protection Laws on their behalf and stepping into their Ohio state court proceedings raise issue when possible to slow or stop foreclosure efforts. We are counseling our clients on new Federal Law Protections that make loan servicers more accountable in the loan modification process and can work to keep homeowners in their homes.

Sadly once burned, homeowners who need legal representation the most are twice shy about retaining experienced aggressive local lawyers to bring the necessary motions and raise appropriate arguments in court and to create real leverage to get loans modified or who can counsel those homeowners about bankruptcy options that allow them to stay in their homes.

Marc Dann



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