Two Wood Dale residents have sued Fannie Mae, alleging the federal mortgage agency was in cahoots with a private home loan servicing company to hoodwink them into surrendering their house to foreclosure, under the guise they were late on loan payments.
Jesus Almodovar and Tina Palacios, both of Wood Dale, lodged a nine-count suit July 17 in Will County Circuit Court against Federal National Mortgage Association – better known as Fannie Mae – and Seterus Inc., alleging fraud, wrongful foreclosure, breach of contract and deceptive acts, as well as violations of the U.S. Fair Credit Reporting Act, the U.S. Fair Debt Collection Practices Act and the Illinois Consumer Fraud Act.
Seterus does business in Illinois and is incorporated in Delaware, with its main office in Beaverton, Ore. The company offers mortgage options to distressed borrowers.
On Oct. 29, Fannie Mae and Seterus filed a request in U.S. District Court for Northern Illinois to have the case moved to federal court, because violations of federal law are alleged in the suit. U.S. District Judge Rebecca R. Pallmeyer will consider that request, but no date is set as to when she will render a decision.
Almodovar and Palacios said they took out a loan in 2007 for a house in Plainfield, but Fannie Mae filed for foreclosure in October 2011. The plaintiffs then modified their loan through Seterus and were put on a trial payment plan for three months. They said they made every payment on time.
However, plaintiffs alleged Seterus kept the first monthly payment, but returned the next two, saying it could not accept them, because they were late. Plaintiffs said they sent documentation showing payments were on time, but Seterus refused to budge. Foreclosure proceedings resumed and foreclosure was ordered in March 2013, with Fannie Mae buying the property at auction in August 2013 for $356,846.
Facing eviction, the plaintiffs entered a “Cash for Keys” agreement with Fannie Mae in December 2013, by which Fannie Mae gave $4,000 to plaintiffs in exchange for them leaving the home without fuss. As part of the agreement, plaintiffs said they also released all claims against Fannie Mae. Plaintiffs maintained they inked the agreement in fear of eviction based on Seterus’ false assertions their payments were late and they were in default.
As a result, plaintiffs left the home, but then filed a consumer complaint with the Illinois Attorney General’s Office. In February 2014, plaintiffs received a letter from Seterus in response to their complaint. In the letter, Seterus admitted the supposedly late loan payments had indeed been on time and the foreclosure action should never have been launched. In this connection, attorneys for Fannie Mae filed a motion to undo the foreclosure, but the motion was never addressed in court, because plaintiffs’ attorney did not show at the hearing. According to plaintiffs, the attorney later explained he did not appear, because Fannie Mae’s attorneys told him the motion had been withdrawn.
Plaintiffs allege Seterus and Fannie Mae knew all along the plaintiffs’ payments were on time, with the result plaintiffs were “deceitfully lured into signing the agreement to turn their home over to Fannie Mae under false pretenses and were duped into signing the Release of All Claims under the same false pretenses.”
Almodovar and Palacios also alleged Seterus and Fannie Mae passed on “inaccurate” information to consumer reporting agencies, damaging their credit.
Plaintiffs seek compensatory, statutory and punitive damages to be determined at trial, as well as legal costs.
The Rogers Law Group, of Deerfield, is representing Almodovar and Palacios; Maurice Wutscher LLP, of Chicago, is defending Fannie Mae and Seterus. A case management conference is set for Nov. 4 in Will County Circuit Court.