C-Falls man sues Bank of America
Claims bank did not follow state's foreclosure laws
A Columbia Falls man who has struggled against a string of bad luck since 2007 is now facing off against one of the largest banks in the U.S.
In a lawsuit filed in Lewis and Clark County District Court, Terry Davis claims Bank of America and its subsidiaries did not follow legal procedures when handling his home in a foreclosure sale.
Davis says he and a neighbor showed up at the Sept. 19, 2011, trustee's sale at the Flathead County courthouse steps. Davis was ready to buy back his home, using money from his brother, but the agent representing the bank said the sale of Davis' home had been delayed to Oct. 10.
When Davis showed up on Oct. 10, however, no one was there. He later learned his home was sold to Bank of New York Mellon three hours before the Sept. 19 trustee's sale.
"They sold my house three hours before the trustee's sale on Sept. 19," Davis told the Hungry Horse News.
This wasn't just any home. Davis had owned the five acres of riverfront property for 20 years. Over those years, through his own skill and labor, Davis added 1,400 square feet to the existing 700-square-foot home, creating a five-bedroom home where he raised his three children. The property was appraised at one time at $360,000.
In April 2006, Davis took out a $225,000 loan from Countrywide Financial, which at the time had been running advertising campaigns across the U.S. and was acquired by Bank of America following the 2008 stock market collapse. At the time, Davis was earning good money as a plumber during the housing boom in the Flathead.
But things suddenly took a hard turn for Davis. Having dealt with diabetes since he was two years old, he found himself undergoing five-way heart-bypass surgery in 2007. A staph infection developed, leading to more surgery and more hospital time. In April 2008, Davis' left leg was partially amputated. His right foot was partially amputated in fall 2009.
By fall 2008, after he used up his savings and was unable to make further home payments, Davis asked the bank for a hardship loan modification based on a lower interest rate.
"I tried to work with Bank of America, but they kept putting me off," Davis said.
According to Davis' Helena attorney, Jonathan Motl, a bank generally has no duty to modify a loan, but that changes once a bank establishes a relationship with a borrower and talks about modifying a loan. Motl says Davis' records prove that relationship existed.
Instead, the bank turned to a nonjudicial foreclosure sale, a "streamlined process" in Montana law designed for properties with less than 40 acres, Motl said, which includes requirements for advertising and notice of trustee's sale.
Davis was prepared to spend $140,000 buying back his home. Instead, the property was sold to Bank of New York Mellon for $130,500. On Nov. 27, 2011, Davis was served with a "notice to quit" by a law firm representing the bank, ordering him - and his two children - to vacate the home within three days.
People familiar with the credit crisis that led to the current three-year long recession know that many banks sold home mortgages they held as securities to investment banks, which repackaged the mortgage-backed securities and sometimes sold them again.
As a result, homeowners with mortgages were no longer dealing with local banks. Nevertheless, according to Motl, Bank of America's refusal to modify the loan and foreclosing of Davis' home without regard to law or policy were wrongful acts.
Last week, the federal government reached a $25 billion settlement with five of the nation's top mortgage lenders that will reduce the principal for about 1 million of the 11 million Americans who owe more than their homes are worth. The settlement will also provide modest amounts of money to Americans who were improperly foreclosed upon. Bank of America will pay the most in the settlement - nearly $8.6 billion.
On Jan. 25, a Helena judge approved a preliminary injunction that allowed Davis and his children to remain in their home until the issue is fully resolved. Davis remains hopeful he'll keep his home, but a lesson he wants to pass on is simple:
"Dot your i's and cross your t's and stay involved," he said. "Make sure they follow the law."