Bought home at auction- now owner tells me they have class action lawsuit filed! What do I do?


#1

got a great deal at auction today, but when I went to contact previous owner they said they are not leaving and that they are involved in a class action lawsuit against B of A for an ‘illegal mortgage’. They gave me copies of the paperwork. They only thing is, I double-checked and there was nothing of this lawsuit filed in my county. I called the Trustee and they said that they had no knowledge of this being filed, so the investor went ahead with the sale as scheduled- they did everything with the NOD and NTS in proper order, etc. I am afraid that these people are not going to get out of the home without a big fight since they have been in the house for 35 years. Can I still evict them or will this class action lawsuit stop that from happening? Has anyone experienced this and any tips for me? It is a really great deal and I am hopeful that this won’t have to drag on for a long time.


#2

You will need to hire an atty. knowledgeable about fcl. basics. Depending on your county, you may get some referrals here. Since they didn’t get a restraining order prohibiting the sale. What will happen is: You will file an Unlawful Detainer. The previous owner will have to file an answer using as a defense that it was a faulty fcl. This almost certainly can’t be done within his class action lawsuit. He will have to pay $$ to hire an atty. (The CA he is involved with didn’t cost him anything.)
You could start “cheap” by hiring a regular eviction atty. who does normal post sale evictions. Odds are better than 50-50 it might get resolved at that stage. IF the unlawful detainer gets stalled because of a contest of the fcl., you will need to get a diff. atty. In most cases, eviction attys. only do evictions.
The CA did not stop the sale per se.
Start w. the 3 day. You are in for a battle. You might want to decide whether you a better off trying to get your money back. That possibility wouldn’t happen until an action is on record contesting the sale.
Couldn’t hurt to send an email or mail to the Trustee putting them on notice that the owner claims it was an “illegal loan” and the subject of a lawsuit. If the Plaintiff prevails, you would have to seek damages against the Trustee and Lender. This letter would carry more weight coming from an atty. This initial letter could be used to demand return of funds if you don’t want to battle. The Trustee and lender would be involved in litigation if the former owners do go ahead and contest the sale.


#3

miketh- thank you so much for your response. sounds like you know what you are talking about. I met with an attny friend yesterday and he basically told me the same thing. now the question is, is there a chance that the trustee will not sign over the trustee’s deed to me if these former owners are calling them and harassing them about the sale? how often would a trustee/investor actually unwind the sale in cases like this? I am up for a fight on this one as I think there is about $125,000 profit potential- I’d rather not see the trustee reverse the sale. so should I start the eviction immediately even before I have the trustees deed in hand? do people normally do that? I have always been able to get people to do a cash for keys so I really haven’t gone down this road before. thank you for your insights!


#4

Many (Most?) professional bidders don’t contact the owner/occupant until they have the Deed in hand. Reason, they don’t want the “former” owner to rattle the lenders cage and possibly cause the Trustee not to issue the Deed and send back your money. Others feel if there is going to be trouble, they want to know now and move on. Since you’ve already done the former - all you can do is wait about 10 days and then call to see if they are going to issue the Deed. (Don’t mention possible trouble.) Most will say You can serve the 3 Day Notice before the Deed comes. Almost everyone says you need to record the Deed before filing the Unlawful Detainer (Eviction) action.


#5

thank you for your great help and insights! I really appreciate…


#6

What!? Lawyers behaving badly? The headline below comes as no surprise. While most attorneys are ethical, diligent and honest, every profession has its bad actors … and crisis breeds opportunity for the “ethically challenged” who’ve passed the Bar Exam … or those who drank too many Coors Lights and just managed to limbo under it

Lawyers accused of scam in bank suits

“California prosecutors sued several lawyers and call center operators for allegedly duping desperate homeowners across the country into paying thousands of dollars to join dubious lawsuits against big banks.”

Link > http://www.businessweek.com/ap/financialnews/D9P6NILG1.htm


#7

Wow! Thank you for that link Danny. I cross referenced the court filed paperwork that the previous owner gave to me and sure enough it was the same attorney (Philip Kramer) that was busted in this case. This all makes me feel much better about my situation with this home, although it is a shame that these owners of 35 years of this home were duped into thinking they could save their home this way- I’m sure they dropped thousands of dollars getting in on this… thank you for the post!


#8

We deal with these borrower lawsuits often. The law favors you (the BFP) in these circumstances but a very litigious borrower can really delay things by filing serial bankruptcies, appealing the UD, and recording a lis pendens against the property. I work with f/c investors often and we believe mounting a strong defense takes the wind out of the scam artists who have given many previous homeowners false hopes about their chances to set aside/vacate the trustee’s sale.


#9

FWIW, I recommend that trustee sale investors take a look at Juila M. Wei’s blog. Link > http://goo.gl/uUT8w

I’ve worked with Julia, and lawyers in her firm, and she speaks from experience.