An attorney accuses bank of rushing to foreclose

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The attorney for a South Fayette couple trying to fend off foreclosure has filed a 209-page document in court alleging deceptive behavior by Wells Fargo Bank and its lawyers in an effort to undermine the bank's case against his clients.

Patrick J. Loughren asserts that John and Linda Kosar, both 68, of Clubview Drive, are the victims of a national phenomenon known as "robo-signing," in which mass numbers of foreclosure actions are signed by workers who swear the information is "true and correct" but who do nothing to verify its accuracy.

Rather than bending to Wells Fargo's contention that the Kosars have not paid their mortgage since July 2009 and should pony up more than $131,000, Mr. Loughren is requesting that the bank mark the mortgage "satisfied and paid in full."

In the motion filed July 21 in Allegheny County Common Pleas Court, Mr. Loughren also asked a judge to compel Wells Fargo's president and CEO, John Stumpf, to appear in court and apologize to the Kosars and the court.

Mr. Loughren, who is representing the Kosars for free, is taking to task Wells Fargo and its attorneys from Phelan Hallinan & Schmieg LLP of Philadelphia.

When the firm filed the complaint against the Kosars in February 2010, Mr. Loughren asserts, the attorney who signed it took a shortcut that violated court rules.

Mr. Loughren claims the lawyer did not abide by rules that establish limited circumstances in which an attorney can sign a complaint -- swearing to the truth of its contents -- on behalf of a client. To Mr. Loughren, an attorney's signature on a verification is typically indicative of a rush to foreclose.

"It's significant because it's showing the whole process of foreclosure has become a mill," Mr. Loughren said.

Wells Fargo said Monday the documents were handled appropriately.

"The way the complaint was handled was appropriate. The way the foreclosure affidavit was handled was also appropriate, although we have made enhancements to the process," said Jim Hines, a Wells Fargo spokesman.

No one from Phelan Hallinan & Schmieg could be reached for comment.

To compound matters, Mr. Loughren's motion says, when the law firm submitted what is known as a "verification" -- a sworn signature by the client -- it used a statement by a woman named Xee Moua, vice president of loan documentation for Wells Fargo Home Mortgage Inc.

Mr. Loughren attached a 2010 deposition from a Florida case -- described in articles by national media outlets -- in which Ms. Moua described signing hundreds of documents a day reading nothing but her name and title.

However, the verification in the Kosars' case, filed in March 2010 in Allegheny County Common Pleas Court, asserts that the statements in the lawsuit are true and correct.

Lying on such statements is called unsworn falsification to authorities and is a criminal offense.

Mr. Loughren, in the court filing, writes "Ms. Moua is quite a busy robo-signer."

He lists 89 foreclosure actions in Allegheny County by Phelan Hallinan & Schmieg on behalf of Wells Fargo, of which 59 bear Ms. Moua's signature.

"They're either living in a cave or they just don't care, because there's no way they don't know who Xee Moua is. There's no way they don't know she's been busted. When you act like that, there is vitriol," Mr. Loughren said.

A New York Times story last year quoted a Wells Fargo spokesman as describing Ms. Moua's "testimony as 'one isolated case' that is being disputed in the courts."

Wells Fargo drew a distinction between the legal standards that it said governed the signatures on the mortgage foreclosure complaint signed by the attorney on the bank's behalf and the foreclosure affidavit signed by Ms. Moua.

"Every document in the foreclosure process has different legal requirements. Complaints in Pennsylvania are verified on 'knowledge, information and belief' as opposed to the 'personal knowledge' required for foreclosure affidavits," the bank said in a statement.

"When Wells Fargo became aware, in the fall of 2010, of instances in which some team members did not consistently comply with requirements for the 'personal knowledge' standard regarding foreclosure affidavits, we instituted improvements in this area. While it is a different standard, we also have worked to improve our complaint verification process as well. It is our practice to comply with industry regulations, state laws and federal laws to ensure the appropriate processes are followed when a foreclosure -- a measure of last resort -- cannot be avoided."

The current legal action is not the first time the Kosars have tangled with Wells Fargo. In 2006 the bank sued the couple for not paying their mortgage; that suit was discontinued in 2007.

Kenneth E. Gray, a Duquesne University law professor who wrote the book "Mortgages in Pennsylvania," said his gut instinct is that regardless of who signed what, the case is going to come down to a few simple questions: Does Wells Fargo hold the mortgage? Did the Kosars borrow the money? And did they fall behind on their payments?

"My sense is this is largely a problem with paperwork. But ultimately the bottom-line question is: Did you borrow the money? That's the attitude that the courts have taken," Mr. Gray said.


Jonathan D. Silver: jsilver@post-gazette.com or 412-263-1962.


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