Banks Keep Bleeding Homebuyers, 70 Say

     LOS ANGELES (CN) – Ally Bank fka GMAC Bank dupes homebuyers into signing loan modifications and fleeces them of thousands of dollars in fees, 70 plaintiffs claim in court.
     Lead plaintiff Carolyn Hairston sued automotive lender Ally Bank fka GMAC Bank, GMAC, Ally Financial fka GMAC; GMAC Mortgage Group, and MTC Financial, in Superior Court.
     The 24-count, 105-page lawsuit maps familiar territory in the fallout from the collapse of the housing market and the resulting financial crisis. The plaintiffs claim the banks deliberately pushed subprime mortgage loans, regardless of the credit risk of individual customers, and pumped up the California market with inflated real estate appraisals.
     Ally et al. continue to prey on struggling homeowners by offering “illusory” loan modification or workout agreements, according to the complaint.
     The agreements “purport to offer hope of an opportunity to cure loan default, but in truth and fact are merely a ruse through which the bank defendants dupe homeowners into paying them thousands of dollars immediately before they foreclose,” the lawsuit states.
     The banks “have reaped illicit profits from these actions exceeding $100 million,” the plaintiffs say.
     The homeowners claim the banks’ scheme is “nothing more than a cash-grab designed to circumvent California’s prohibition against deficiency judgments.”
     Homeowners have the right to receive payments they made to the banks as part of the workout agreements and should not have to pay legal costs or attorney fees, the plaintiffs say.
     “Where bank defendants have exercised their election to sell under non-judicial foreclosure, they must not be permitted to extract thousands of dollars in additional payments with illusory promises and false statements of opportunities to cure defaulted loans,” the complaint states.
     The homeowners seek restitution and rescission and compensatory and punitive damages for fraudulent concealment, intentional and negligent misrepresentation, price fixing, negligent, appraisal inflation, and a host of other charges.
     Ally Financial in October agreed to settle lawsuits filed by the Federal Housing Finance Agency and the Federal Deposit Insurance Corp., which accused it of making false and misleading statements about mortgage-backed securities. The settlement is expected to cost Ally about $170 million, according to Reuters.
     Hairston et al. are represented by Vito Torchia with Brookstone Law of Irvine.

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