Americans United Against Fraud

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Federal Ninth Circuit Court of Appeal’s Major Home Owner Ruling

This week, the Ninth Circuit Court of Appeal’s, located in San Francisco California, released one of the most significant legal opinions concerning Home Owners rights in the predatory lending arena.

In Merritt v. Countrywide Financial Corporation, Bank of America, Angelo Mozilo, David Sambol et al, Case No. 09-17678, the Federal Court of Appeal’s established a precedent under the Real Estate Settlement Practices Act (RESPA), Truth in Lending Act (TILA).

Under TILA, a home owner is allowed 3 days to rescind a loan if they are provided with all of the information regarding the loan. If they are not, they have up to 3 years to discover any issues that exist with the loan. According to the pleadings in the case, and the Ninth Circuit opinion, in 2009, David and Salma Merritt was served with their loan documents for the first time since closing the loan in 2006. The documents had been withheld from them for nearly 3 years. Once served with the documents they discovered that they had been defrauded by Countrywide Home Loans under the leadership of Angelo Mozilo, David Sambol and others. 

The Merritts attempted to rescind the loan and were willing to turn their home over to Countrywide in exchange for a return of the approximately $200,000 that they had made in payments and otherwise invested into home. Bank of America, now owner of Countrywide, refused to honor the TILA laws, and, according to the complaint, instead attempted to cover up the fraud that was committed by Mozilo and his co-conspirators, by trying to dupe the Merritts into signing a loan modification which would have waived any rights that were violated by Mozilo and Countrywide.

The Merritts rejected the modification, according to court records, and instead filed a lawsuit not only against Countrywide defendants, but Bank of America, Wells Fargo, appraiser John Benson, real estate agent Johnny Chen, loan agent Michael Colyer as well, charging them all with conspiracy to commit fraud among other civil violations. The Merritts could not afford to pay lawyers hundreds of thousands of dollars and so they pursued the case themselves as pro se litigants.

The San Jose Federal District court dismissed the case in 2009 and the Merritts appealed to the Ninth Circuit, filed a pro se appeal’s brief and the Ninth Circuit found enough merit in their appeal to order oral argument and appointed a lawyer from their Pro Bono listing, Jacob Foster, of the prominent law firm Kasowitz, Benson, Torres & Friedman, LLP.

Attorney Foster prepared the case for oral argument in 2011 and presented the Merritts arguments before the Court of Appeal’s took the case under submission. Attached is the results of this appeal, along with a very strong dissent from one of the judges on the panel who was more concerned with the Merritts ceasing their mortgage payments instead of the actual fraud and other violations of law that was committed by Bank of America, Countrywide and others.7-16-14 Reversal & Remand

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July 23, 2014 - Posted by | Uncategorized

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