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Fighting back on foreclosures

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Contributed by: Joseph Kirchmer/YourHub.com on 6/24/2008

A local law firm is setting its sights on mortgage lenders and banks in an effort to help people fight back against pending foreclosures.

Attorneys Michael Robinson and William Henry took a big step forward in that fight June 19 after a Douglas County judge dismissed a foreclosure action filed against Margaret Sadle, of Larkspur.

The case, Bank of New York vs. Margaret Sadler, is considered to be the first of its kind in Colorado, Robinson said. He hopes it will send a message to mortgage lenders and banks, which he says have grown increasingly unscrupulous in their business practices.

"People aren't going to just roll over anymore," Robinson said. "They're going to fight. Nobody ever fights these guys."

Sadler was facing foreclosure on a home in Castle Rock that she and her husband, Lou, helped purchase for their daughter. Their daughter had trouble making payments after signing on to an adjustable-rate mortgage, which offers low introductory rates that increase over time, usually after a year.

The rates of the loan, which was provided by Countrywide Financial, jumped overnight from 6.2 to 10.5 percent. As a result, her daughter's payment on the house went from $1,500 per month to $2,700, she said.

It wasn't long before a foreclosure notice was sent.

Margaret Sadler believes representatives from Countrywide misled her during the loan application process. The loan in question was made using a complex formula called the London Interbank Offered Rate (LIBOR), which she says contained a number of rate increases she wasn't aware of when she signed.

Her frustrations led her to take the issue to a Douglas County court.

The foreclosure action against the Sadlers was dropped at a Rule 120 hearing, one of the few chances borrowers have to plead their case in court. Borrowers often overlook the hearing, Robinson said.

"The day we went to court, there were over twenty Rule 120 hearings and we were the only ones to show up for ours," he said.

Theforeclosure action was ultimately dropped over what could be viewed as either a technicality or bad business practices. The defense couldn't prove Bank of New York, which filed the action against the Sadlers, actually owned the promissory note at the time the suit was filed.

Robinson said the mistake is a common one, adding mortgage lenders commonly fail to follow all the laws and rules the industry is supposed to uphold. He points to a federal judge in Ohio who recently dismissed 14 foreclosure suits for the same reason.

Though the Sadlers were able to avoid the foreclosure for now, it's almost a certainty that another action will be filed. But for the time being, they have more time to go over their options.

"They still owe the money; I can't make that go away," Robinson said. "They don't get a free house."

But he says it sends a message to residents facing foreclosure: Don't give up hope.

Read more at the legal duo's Web site -- www.blockcoloradoforeclosure.com.

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