Judge Allows South Florida Homeowner to Sue Investors In Lawsuit Charging Financial Institutions With Mortgage Appraisal and Origination Fraud

    MIAMI, FL, October 04, 2011 /24-7PressRelease/ -- Miami-Dade Circuit Judge Spencer Eig, has granted Coral Gables, Florida homeowner Pelayo Duran permission to include investors in his lawsuit charging Wells Fargo, Greenpoint Mortgage Funding and others with mortgage, appraisal and origination fraud (Case #09-03703-CA). This development comes weeks after the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, sued 17 large banks and financial institutions including Credit Suisse over losses on about $200 billion of subprime bonds, as well as, days after AIG's lawsuit against the Bank of America claiming that it lost $10 billion in a "massive fraud." Wells Fargo and Bank of America also recently settled similar investor lawsuits for $125 Million and $8 Billion Dollars respectively.

"It's believed the defendants, just like in these other high-profile cases, fraudulently induced others to invest in mortgage-backed securities supported by scores of defective loans," said Duran. "Basically the defendants originate or acquired any loan, no matter how risky, so long as it could be sold to third party investors. I was an unsuspecting victim who applied for a loan, but was duped into something else as part of larger organized fraudulent scheme."

Duran said his lawsuit stems from the practice of securitizing loans and selling them in the secondary market for huge profits. "These mortgages were underwritten primarily on the basis of an inflated appraisal and had basically no underwriting standard other than securing a signature on loan documents that they could sell to investors," he said.

According to the lawsuit, the fraud began in 2005 when he responded to a Wells Fargo ad in the Miami Herald. In the lawsuit Duran claims that during the application process the Wells Fargo mortgage broker baited him with desirable terms then switched him into an undesirable subprime home loan with another lender by the name of Greenpoint Mortgage Funding.

Duran claims in his suit, that the fraud also involved a "pencil search," an illegal, practice used for maximizing the loan amount by which a mortgage broker would shop for an appraiser to support the highest possible value that the appraiser could "hit" for originating the loan. An appraiser by the name of Lee Rosenthal (who has since lost his license) was hired through Rels Valuation (also Wells Fargo company) to intentionally overinflated the value of Duran's home, which was purchased for $984,000 four months earlier, and was now allegedly worth $1.2 million.

"They created my loan by inflating the value of my home and adjusting my debt-to-income ratio," said Duran. "They never considered my ability to repay the loan, while the hired appraiser dramatically overinflated the value. All they cared about was the appraised value and my good credit score so they could sell the loans off to investors. What I also discovered was that the Wells Fargo representative was actually originating a loan for Greenpoint Mortgage Funding. Ironically, after closing my loan, Greenpoint sold my loan right back to Wells Fargo as trust administrator for a pool of loan, probably for a huge profit."

According to the lawsuit, Wells Fargo allegedly placed Duran's loan in a trust called Credit Suisse First Boston Mortgage Securities Corp. Adjustable Rate Mortgage Trust 2005-5, Adjustable Rate Mortgage-Backed Pass-Through Certificates, Series 2005-5 and sold it to scores of investors. Duran's attorneys are suing because they say it's not clear if this entity is the true owner of his note because Greenpoint and Wells Fargo has concealed the details and hasn't complied with demands to determine the rightful owner.

Gonzalo R. Dorta, a prominent Coral Gables trial attorney who has experience in handling complex litigation matters, especially David and Goliath-type battles against major corporations, is representing Duran.

Through a jury trial, Dorta and other members of Duran's legal team hope to rescind the note and mortgage, to obtain restitution from all the Defendants for their wrongful acts, and to recover significant punitive damages. According to the lawsuit, Duran request that an award of no less than $100,000,000.00 be entered and utilized to create a mandatory program for foreclosure mitigation and loan modifications that adequately corrects, compensates and assists home owners within the Court's jurisdiction to save their homes from "these unscrupulous, deceptive fraudulent and intentional practices of Wells Fargo & Company, Wells Fargo Bank, Wells Fargo Home Mortgage and Greenpoint."

Duran said he is current with his monthly mortgage payment despite the bank's constant efforts to push him into default.

Additional Comments from Pelayo Duran:

These banks beg the government for a bailout and claim they are "too big to fail." However, they forget that no American is too small to succeed.

Someone has to stand up for the rights of these homeowners who are loosing their homes as a result of what has now been exposed as a fraudulent scheme that defrauded millions of unsuspecting Americans by artificially and fraudulently inflating the value of real estate and then passing on the risk of obvious default to investors, all while reaping billions of dollars in illegal profits and giving themselves big fat bonuses for defrauding the American people.

It seem clear now, that the investors who bought these pools of toxic loans are successfully suing the banks who originated all these fraudulent loans in order to be made whole for their losses, while the unsuspecting homeowner's (who were the true victims of the fraud) lie homeless in America, with no meaningful form redress for their injuries.

I believe in our legal system and I have faith that we will eventually bring all these wrongdoers to justice by exposing their misdeed to a jury composed of the American people.

This is what America stands for. America is a country where one person can change the lives of millions of people by seeking justice from our courts and a jury of his peers.

I am honored to serve the American people and to be able to continue to defend the "American Dream". This is why my parents immigrated to this country. I am obligated to defend the American Dream for the generations to come.

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