LOS ANGELES (CN) - Indymac Bank and its successor, OneWest Bank, defrauded homebuyers by promising to modify their mortgages, but "never at any time possessed a good faith intention to perform on these loan modification agreements," a class action claims in Superior Court. "Defendant sought only to induce homeowners into making further payments and defraud homeowners of their money."
The class claims the bank packaged and sold "mass numbers" of mortgages as mortgage-backed securities (MBS) and sold them to investors, "and retained or otherwise negotiated for the servicing rights to such mortgage loans." They claim that "Defendants knew, or reasonably should have known, that the private investors of the MBS in which plaintiffs' mortgage was a part of [sic], had not and would not authorize defendants to modify plaintiffs' mortgage loans, whereby [sic] reducing plaintiffs' monthly mortgage payment and effective mortgage rate. ...
"Hoping to keep their homes, thousands of defaulted borrowers relied upon defendants' promises and paid to defendants significant amounts of money that they would not otherwise have paid, had they known that defendants did not possess a good faith intention to perform pursuant to the loan modification letter agreements. ...
"This action seeks to stop defendants' wide-scale scheme to defraud thousands of vulnerable California homeowners under threat of foreclosure on their homes and to recover compensation for this fraudulent conduct."
The class seeks promissory estoppel and punitive damages for fraud, breach of contract, breach of faith, unjust enrichment, negligent misrepresentation, and business code violations. They are represented by Caleb Liang with Lee Tran & Liang.
Read the Top 8
Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.