On Jan. 27, a California appeals court ruled that U.S. Bank conned Claudia Aceves out of her home. Specifically, the court found that U.S. Bank (USB) told Aceves that if she gave up bankruptcy court protection on her home, it would negotiate a loan modification with her. But, the court found, the bank had no intention of negotiating. Instead, as soon as the bankruptcy court protection was removed, the bank foreclosed. As a result, the court ruled, Aceves can sue U.S. Bank for damages and fraud.

What she can't do, unfortunately, is get her house back. The court found the foreclosure, once Aceves was duped into allowing it, was done legitimately. In further bad news for Aceves, the opinion contains enough information to make it likely that U.S. Bank didn't have standing to foreclose when it did. But her lawyers did not raise those issues at trial, and weren't asked by the court to raise them on appeal, so the court refused to consider them.

One of her attorneys, Nick Alden, says because of that, he considers the case a loss despite the ruling against the bank. Still, he notes: "As to damages for fraud, Aceves would be entitled to damages suffered and punitive damages."

If the proper arguments were made at the trial court, Alden points out, it could possibly have reversed the foreclosure. He adds: "When the case is remanded to the lower court, Aceves will be given a chance to amend her complaint. At that time, she will allege facts showing wrongful foreclosure. If the trial court accepts her argument, and because the house was purchased by the bank and not by a bona fide purchaser, one of the possible outcomes is a reversal of the foreclosure."

Key to the appeals court's decision was the bank's promise, and Aceves's reliance on that promise to her significant detriment. Specifically, the bank promised to negotiate a mortgage loan modification, and relying on that promise, Aceves gave up her bankruptcy protections, so she was significantly damaged when the bank reneged. For the fraud claim, the court found that the bank not only failed to keep its promise, but it also never had any intent of keeping it.

As Aceves's other attorney, Dennis Moore, puts it: "Borrowers should be able to rely on the banks when negotiating."

Stringing Homeowners Along

Aceves lost her house, but she may have won a victory for other homeowners. Both Alden and Moore say they're representing clients in other, very similar, cases who could be helped by this decision. Soon, we'll learn whether or not this appellate rule can be applied to other types of bank misrepresentations relating to modifications.

For example, could the decision help Los Angeles area homeowners like the Galvans?

The Galvans, relying on what their bank, JPMorgan Chase (JPM) told them, defaulted on their mortgage in order to qualify for a loan modification. Then they made trial modification payments and otherwise complied with their bank's demands for additional paperwork for the official three-month trial period. Next, they relied on the bank's statements that a permanent modification was still possible, and they continued making trial payments and meeting other bank demands for many more months. That is, until they were told their house would be foreclosed on within a matter of weeks.

While Moore and Alden believed it was possible the Aceves decision could be helpful, depending on the details of each situation, the difficulty is in proving how the Galvans -- or other such homeowners -- were hurt by relying on the modification promises. For example, the banks could argue that the modified payments delayed foreclosure, and thus benefited the homeowner. Aceves's case is much easier to make because she gave up very specific protections that could have saved her house.

Nonetheless, the behavior of the banks in all of these cases feels very much the same -- stringing along homeowners with promises of permanent loan modifications that always hover just out of reach, a carrot tied to a stick, until, wham! -- the bank forecloses.

With so many foreclosures to litigate, I'm sure we will find out soon how widely applicable the Aceves ruling will be.

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July 18 2013 at 2:54 AM Report abuse rate up rate down Reply

Major Fraud Alert

The entire Federal Banking System under FirstGov has been "Consumed" and "Levied" by way of a Maryland State Circuit/District Court Ruled “Appropriation and Garnishment” of all Future Earnings prior to and after 2004 against Bank Of America by way of the F.D.I.C. Regulations Prohibiting failing Banks from Merging with other failing Banks between the Dates of 08/04/08 and 10/09/09.

Bank of America violated the 21st Century Act: Final Amendments to Regulation CC Section: http://www.federalreserve.gov/boarddocs/press/bcreg/2004/20040726/attachment.pdf

seeking reimbursement of Credit, Loan, and Finance Balances as a "Bank Entity" and not a "Nonbank Consumer" as specified on Pages 85 and 86.

The person they sued through a LLC. Debt Collection Company and Law Firm was the "World Fortune Owner" who "Counterclaimed" and won.

Now all Contracts of any Corporations (Including Employment) under the "Controlling Interest" of any Investment Bank Worldwide are "Null and Void", and are also under the stipulated Rules and Regulations of an "Closely-held S Corporation rendering all Employed under Legal Actions against “Domination”, and also means that "No Corporation can hold Shares" officially making every Stock Exchange on the Planet a "Ponzi Scheme" by default.

Businesses owned by the States (Public Corporations) are being sold Stock Shares by Corporations also under the Federal Banking System in this Worldwide "Ponzi Scheme". The World Fortune Company Merrick Inc. Sweden is dissolving Millions and Billions of Dollars from "All Levels of Government"in the U.S. of Financing based upon Years of "negligent inaction" involving this case.

The Federal Government has already been forced to discontinue supplying the Financing States use to pay their debts, Persons in Government Offices may want to begin to take their jobs more seriously, these are different times from 10 Years ago and you will not be accepted civil servants here just because you say you are here to do the right thing.

May 29 2011 at 1:35 AM Report abuse rate up rate down Reply

Abigail -- if you're going to take your leads from HousingWire, I'm sure the folks there would appreciate it if you would at least cite your source.

Published one day prior to this piece, as the only major media to cover this story prior to you:

Also, Abigail, while your story here recaps what was already in the HW coverage above, it fails to pick up on another dimension of the ruling:

As an attorney licensed only in NY (reading from your bio), I'm guessing this tidbit of CA law wouldn't have jumped out at you. Nor would I expect Aceves' counsel to discuss it publicly on the record, given their bound fiduciary duty to vigorously pursue their clients' interests within the limits of the law.

February 07 2011 at 12:07 AM Report abuse rate up rate down Reply

Why is it, your articles have more knowledge than the lawyers representing home owners in court?. your piece on Rocket Docket was nothing short of amazing.!
Lee county and its (court clerk,Charlie Green)should read these great articles
and see the problems they have magnified in the wake of self judgement, they have destroyed the very system which the citizens are entitle to, he has enhance and stuffed in judgement into the rights of people, AND the following articles and courts are waking up to the indiginties caused by not following the law but establishing the (Rocket Docket) shame on CHALIE GREEN and the Judges who just want to clear the docket. the courts are reversing the cases and i hope they go after pepole like Charlie Green, who made his decisions for the judges and the judges who were to lazy to read the coplaint and follow the rules of law, its not Charlies business to worry about real estate and empty houses, but to perform the duties of the clerks office and not force home owners or banks away out fear! the courts are for the people and NOT FOR clerks and judges, who have their own agender, the pride of America was justic!!! What has happen to these values? do WE go back to med-evil law of KINGS, YOU BE THE JUDGE OF THIS SELFNESS OF CHARLIE GREEN AND JUDGES IN LEE COUNT- NOT HOME OF THE BRAVE--- BUT LET'S GET IT DONE -- DON'T THE CHECK IN THE MAIL.

February 03 2011 at 10:20 AM Report abuse +1 rate up rate down Reply

Steal an apple and go to jail. Steal a house and the government gives you tax breaks. Is it just me or is something wrong here.

February 03 2011 at 8:34 AM Report abuse +1 rate up rate down Reply

Mortgage refinancing is an outstanding plan particularly as the home mortgage rates are imminent downward. Under such state of affairs it will be beneficial for you to refinance your home as you’ll be able to obtain a lower interest rate thereby reducing the amount of your monthly payment. Search online for "123 mortgage refinance".

February 03 2011 at 1:56 AM Report abuse rate up rate down Reply

Hows that for making money. A person needs a lawyer to buy their home and then needs one to take it away. There are still to many people that have done what was expected of them and still falling through the cracks.

February 02 2011 at 10:26 PM Report abuse +1 rate up rate down Reply

What bothers me is, we the people who have been kept up to date with articles, such as Abigail's and others, know more then the Attorney's. I am not an attorney but I sure and hell would have brought that up along with anything else I could use as evidence. I would have made the bank lay everything on the table and then I would have screwed them till who laid a chunk. Most attorneys have no clue on what has and is taking place. We, who have done our due diligence seem to know more of what is what then the attorneys we talk to. The Judges should also have a say in all this also but like the attorneys they haven't a clue either. Although they are starting to figure it out. Our Government on the other hand, knows exactly what has happened and knows exactly what went on. One can only imagine why the Federal Government hasn't stepped in yet or is even going to. One thing I do know is, the longer the government delays the more the lobbyist will get their hands into the pockets of the politicians to change everything into the banks favor. When and if that happens ... I turn into a modern day Jesse James.

February 02 2011 at 7:25 PM Report abuse rate up rate down Reply

Me thinks it sounds like a plea bargin between lawyers. You win the case, but on a technicality you loose the house. I would take the banks for everything I could get my grubby hands on. And I would call other attorneys -- I am sure in CAlifornia you can find high buck attorneys willing to take this to make a ton of money on a bank -- If there isn't anything worlse than a greedy banker it's a ego driven attorney.

February 02 2011 at 6:23 PM Report abuse +1 rate up rate down Reply

Shame on these attorneys for not raising the standing issue. That is a potent argument, and a hurdle many foreclosing banks/plaintiffs cannot easily overcome, or overcome at all. In foreclosure defense it has been widely known since the October 2007 decisions of the Ohio Federal Judges Boyko, Rose, Holschuh, O'Malley.

Kind of a no brainer really. If you have not suffered an injury then you have no standing to invoke the jurisdiction of the court. It should be raised in every foreclosure case.

In addition to her other causes of action I wonder if Ms. Aceves is considering a malpractice suit against her attorneys?

February 02 2011 at 5:51 PM Report abuse rate up rate down Reply