Mortgage ‘Modification’| Called RICO Fraud

MARIETTA, Ga. (CN) - A homeowner claims Wells Fargo instructed her to stop making her monthly mortgage payments to qualify for its loan modification program, then foreclosed after she followed the bank's instructions. The class action seeks damages for RICO fraud, in Cobb County Court.

Lisa Smoak Reid claims the bank "lulled [her] into inaction by offering to work out options to resolve her delinquency, but failed to provide any means to do so, and has failed to provide the plaintiff with the amount of the deficiency."

Reid says a Wells Fargo representative told her on April 1 this year "to fall behind on her mortgage payments," to qualify for assistance programs. "Defendant Wells Fargo informed plaintiff that a modification was possible, but told the plaintiff that she had to be three months behind on her payments," the complaint states.

So, Reid says, "Plaintiff, upon the advice of the defendant's representatives, fell behind three mortgage payments and was in contact with defendant Wells Fargo, who told plaintiff to look on the website for assistance programs."

She adds: "On or about August 1, 2010, plaintiff regularly started to make payments on the property again."

In the meantime, she says, she "filled out the requested documentation [for mortgage modification] and sent it back to Wells Fargo."

Reid says Wells Fargo told her they had received her documentation, but never told her whether the bank accepted or rejected her request, "although they continued to draft payments from the plaintiff for differing amounts."

But the bank never told her "of the reasons for the different amounts of the bank drafts," and they never contacted her attorney about her request for modification either, Reid says.

Instead, the bank foreclosed, putting at risk her $50,000 in equity and the $60,000 she spent on renovations. It also "threatened to obtain a dispossessory order" unless she pays "an alleged deficiency in the mortgage note," but Reid says that bank never told her "how much she allegedly owes."

Reid wants an emergency hearing and injunction to stop the foreclosure proceedings and set aside the foreclosure permanently. She also wants $15 million in punitive damages for RICO fraud, breach of fiduciary duty, breach of contract and emotional distress.

She is represented by Frank Marquez with Belli, Weil, Grozbean & Davis of Atlanta.

Similar complaints have been filed, and continue to be filed, against banks across the United States.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit