Lawsuit Filed in Federal Court Alleges Illegal Foreclosures in RI
Thursday, October 06, 2022
A lawsuit filed in federal court alleges that a third-party mortgage servicer acted illegally when it foreclosed on multiple properties in Rhode Island.
The suit, filed in U.S. District Court on behalf of 11 plaintiffs who owned homes across the state, claims that defendant Caliber Home Loans “failed to obtain a third party servicing license” and was not permitted by law to “act on behalf of Defendant U.S. Bank in order to notice, publish, and invoke the statutory power of sale” on the plaintiff’s properties.
Attorney Todd Dion, who filed the suit, maintains that Caliber was “not permitted by applicable law and the mortgage contracts to execute all affidavits and foreclosure deeds on behalf of U.S. Bank.”
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTU.S. Bank is also named as a defendant in the suit.
According to national data, lenders repossessed 3,938 U.S. properties through completed foreclosures in August 2022, up 28% from last month and up 59% from 2021.
Suit Alleges Foreclosures Were Illegal
The lawsuit outlines how Caliber became the servicer of the plaintiffs’ mortgages prior to 2015, and remained the servicer -- without first obtaining a servicing license as required by state law that went into effect on July 1, 2015.
Dion in the lawsuit noted that the requirement in the statute, Rhode Island General Law 19-14-26, “sets criminal penalty for violations.”
The 47-page complaint alleges that the other plaintiffs similarly were foreclosed upon when Caliber — a company based in Texas — did not hold a license in Rhode Island at the time in accordance with the state law.
According to Dion, it is still the law (R.I.G.L. 19-14.11-1) but, Dion says that case law shows that penalties under the statute have since been changed from criminal to civil.
"The Representative Plaintiffs and members of the class suffered quantifiable damages such as illegal servicing fees, loss of use and equity in their homes, money spent on funding bankruptcy, legal defense of foreclosure and eviction, and moving and relocation expenses," writes Dion in the class action suit.
Caliber did not respond to requests for comment.
Latest in Foreclosure Lawsuits for Attorney
In 2018, Dion had filed a class action suit against Ocwen Loan Servicing, alleging that Ocwen was not licensed in Rhode Island at the time it executed foreclosures, as required by law.
In that case — which is now going to trial — U.S. Magistrate Judge Lincoln Almond turned back the loan servicing company’s motion to dismiss.
“Defendants argue that Plaintiffs’ only challenge to the foreclosures in issue relate to the licensing issue. In other words, they contend that these defaulted mortgages were destined ultimately for foreclosure, license or no license. While Defendants may well be correct and Plaintiffs may not have any evidence of actual damages flowing from the alleged breach, that is a fight for another day and presents a factual issue which cannot be resolved at this stage of the proceedings,” wrote Almond.
Foreclosures in RI
For those facing the possibility of foreclosure in Rhode Island, RI Housing -- and HousingWorks RI -- offered the following.
"The first step for homeowners struggling to make their mortgage payments should be to reach out to their mortgage servicer to explain their situation and to discuss available options. The sooner homeowners act, the more options they may have to apply for a mortgage modification and/or repayment plan," said RIHousing spokesperson Christine Hunsinger.
"The RIHousing HelpCenter is available to assist Rhode Island homeowners concerned about their ability to make their mortgage payments. The HelpCenter is a HUD-approved counseling agency that provides free foreclosure prevention counseling services to all Rhode Island homeowners," she added.
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