A case between Chevy Chase Bank and a Wisconsin couple is pending in a federal appeals court. Pending the outcome of this lawsuit and the court’s decision, it could for the first time enable the nation’s homeowners to join together in class action lawsuits against mortgage firms in efforts to get their loans canceled. Wall Street’s biggest banks are closely watching this case. A favorable ruling for the Wisconsin couple could cause the banks to bear the large cost of reimbursing all closing costs, broker fees, and mortgage interest to groups of homeowners who discover mistakes in their loan documents.
In this case, Chevy Chase Bank appealed to the circuit court in Chicago after a federal judge in Milwaukee ruled last year that the Wisconsin couple had been deceived and that other borrowers could join their suit. This has been described as “one of the most important cases for the mortgage industry right now.” The ramifications and impact of this case, if a class approach survives, will have a tremendous impact on not only the mortgage lending industry but on homeowners who have been victimized.
While home lending boomed in recent years, standards were loosened at many mortgage firms leading to a rise of abuses, particularly predatory practices. This has led in turn to record numbers of people currently finding themselves with loans that are more than they can afford. Estimates vary widely on the number of homeowners who could stand to benefit from this case. Homeowners who hold a home equity loan or who have refinanced are already eligible for a refund, while others can get monetary damages, and the court’s ruling will not change this. But, according to several lawyers and mortgage analysts, allowing plaintiffs to file class action suits would make it much easier and more affordable for groups of homeowners to get that relief. A tremendous number of class action homeowner lawsuits have been filed in California and other states against the nation’s largest banks. The decision in the Chevy Chase case could definitely have a bearing on those cases. Kevin Demet, from the law firm of Demet & Demet in Milwaukee, Wisconsin, is representing the plaintiffs in the Chevy Chase case.
Source: Washington Post
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