Riverside Signal | Early Summer 2012 | Page 37 proceedings would officially begin. The family was outraged. Payments were made on October 1st, 2011 for the regular monthly mortgage, and again on October 26th, 2011 for the past due balance. “Wells Fargo received checks and were well aware of when the checks were coming because they agreed to this,” Mr. Racanelli recalled. “They even received a large check from NJRR and they returned it, claiming it was sent to the wrong office. The next explanation for returning checks was that we were in foreclosure and they weren’t obligated to accept them.” This is not an unusual problem for homeowners in foreclosure. Once in active foreclosure, payments often no longer go directly to the bank, but instead go to a separate agency handling the foreclosure. Paying the bank will cause the checks to be returned. Whether or not this happened to the Racanellis is unclear, though it is clear that the bank refused to accept partial payments, but it is illustrative of how difficult the process can be. Mr. Racanelli said this way of doing business continues only because people don’t have the money to fight them. “They think they can get away with it because most attorneys charge by the hour for this and is not based on contingency. So how do you fight them? Even if you could afford an attorney, their attorney will just drag it out and run you into the ground and either [you’re] not be able to afford the attorney or that even if you win, you lose.” Though the Racanellis say Wells Fargo purposely makes it difficult for families to grapple with the possibility of foreclosure, the bank disagrees. According to a statement released to address protests over the bank’s practices in April by Wells Fargo spokesperson Ruben Pulido, the bank seeks to avoid foreclosure when it can. “Wells Fargo makes efforts to keep people in their homes,” Mr. Pulido said. “Over the past year, less than 2 percent of owner-occupied loans in our servicing portfolio have resulted in foreclosures.” But it is not, the spokesperson said, always possible to keep a family in their home. “Unfortunately some people have seen their incomes drastically reduced due to unemployment or underemployment,” Mr. Pulido said. Yet Mr. Racanelli said in the end money wasn’t the issue, it was the bank’s willingness to accept payment. The Board of Social Services was sending checks, but the bank, Mr. Racanelli said, was finding ways to turn them away “despite the fact that not only would the payments have brought us current, but also at that time would have paid the January payment in advance.” But Wells Fargo is not required
to accept payments that are not sent to the right place or for the exact amount, according to Zucker, Goldberg & Ackerman, a Mountainside, Union County law firm that specializes in handling debt- and foreclosurerelated cases. They are the bank’s attorney in this case. A representative of the firm was not available for comment. After the family complained about returned payments, in January 2012, Jaime R. Ackerman of Zucker, Goldberg & Ackerman informed the Racanellis in a letter, “Although you take issue with my client not accepting funds from the Board of Social Services which would ‘begin’ to bring the load current, my client is not obligated to accept partial reinstatement funds at this time.” The stance was repeated in a February 22nd letter and is not unusual as many lending institutions will refuse partial payment once a mortgage is in the foreclosure process because accepting partial payment effectively resets the clock for them, forcing them to re-start the process from the beginning. Anything less than full payment will be refused. This is the wall the Racanelli family ran into, and it proved to be a problem. They said because so many checks were returned by Wells Fargo and due to the ongoing problems, the family was eventually kicked out of the NJRR program. “The people at NJRR have told us there is nothing more they can do at this point,” Mr. Racanelli said. “We cannot pay anything now. If we don’t get some intervention/assistance now we will be out on the street with three young children and no money or place to go.” This experience has not been atypical for homeowners in the United States over the last few years as homeowners go into foreclosure and find themselves in a maze they can’t understand. Just as things have not been easy for borrowers, the road has not been smooth for lenders, either, resulting in a series of changes in the foreclosure process. Wells Fargo is one of several banking institutions hit by lawsuits accusing them of illegally pursuing foreclosures. Last December, the state of Massachusetts sued the five largest mortgage servicers in America, and Massachusetts Attorney General Martha Coakley told The Los Angeles Times that “the banks have charted a destructive path by cutting corners and rushing to foreclose on homeowners without following the rule of law.” Currently, a coalition of states, including New York, Delaware, California, and others are negotiating with lenders in an effort to reach a settlement regarding their foreclosure practices. In addition to Wells Fargo, Bank of America, Citigroup, Ally Finance (formerly GMAC), and JPMorgan Chase are at the negotiating table.
On December 1st, 2011, The Los Angeles Times reported that according to the Massachusetts suit, these lenders “pervasively used fraudulent documentation in the foreclosure process, foreclosed without showing they owned the actual mortgage, and failed to uphold loan modification promises to borrowers.” The suit comes on the heels of several years of increased scrutiny on lenders. In 2010, these lenders admitted to “irregularities” in the way they handled foreclosures. According to the law firm Parker Waichman LLP, “In their rush to process foreclosures, many mortgage servicer employees were not even reading or verifying the court documents that they used to justify home seizures.” Later that same year, organizations including Bank of America put a nationwide freeze on foreclosures as attorney generals across the nation announced they would be launching a coordinated investigation into what was being called a “foreclosure crisis.” Wells Fargo, however, was not among those banks that opted to freeze foreclosures, even after two separate Wells Fargo employees admitted they signed hundreds of foreclosure documents daily without ever actually reading the documents. In a May 2010 deposition, Wells Fargo employee Herman John Kennerty admitted he signed between 50 and 150 documents daily without checking anything other than the date. He also admitted that he did not know who, or how, the information on the paperwork he signed was verified. Earlier, in March 2010, Wells Fargo employee Xee Moua said she sometimes signed upwards of 500 documents a day, verifying nothing more than her name and title. Initially, Wells Fargo took a defensive stance, suggesting the matter was an isolated case and that its practices were sound. By October 2010, they had
changed their tune. The bank amended some 55,000 mortgages because they “did not strictly adhere to the required procedures.” The bank, however, still maintained that in no case did “these instances (lead) to foreclosures which should not have otherwise occurred.” While Bank of America and others were freezing foreclosures, Wells Fargo pressed on with them. Wells Fargo was not alone in resubmitting foreclosure documents. Chase and Bank of America, for instance, were reviewing over 100,000 cases each. Bad paperwork had hurt Wells Fargo even prior to these cases. In a high profile 2009 case, the Massachusetts Supreme Court found that two foreclosures made by Wells Fargo and US Bancorp were invalid because the companies could not prove they actually owned the mortgages. In January 2011, that decision was held up on appeal. In a statement issued January 7th, 2011, Wells Fargo laid the blame outside its doors, stating, “The loans at issue in the court’s ruling were not originated, owned, serviced or foreclosed upon by Wells Fargo. As trustee of a securitized pool of loans, Wells Fargo expects the entities who service these loans to abide by all applicable state laws, including those laws that govern foreclosure sales.” Perhaps the best-known case of someone’s struggles with a Wells Fargo foreclosure is the story of Norman and Oriane Rousseau. The California couple found themselves evicted from their home after the bank misapplied the cashier’s check used to pay their mortgage. The bank cashed the check, but claimed the Rousseaus missed a payment, began applying fees, and initiated foreclosure proceedings. The matter stretched on month after month, from 2009 to this year, with the couple first being told they had caught up on their mortgage, their payments then being refused and the bank
again demanding money, only to return to the cycle. In May 2012, two days before he was set to be evicted from his home, Norman Rousseau shot and killed himself out of despair. The Racanellis are not destined for that end. “I’m still fighting with them,” Mr. Racanelli said. The former police officer stated he doesn’t want to avoid paying his debts, he just wants a fair chance at getting his like straight. “I’m not ducking the calls. I don’t tell them I’m not paying them. I tell them truthfully my situation.” Both the Racanellis are now working part-time jobs to help make ends meet. The jobs are seasonal, ending in September. What happens after that is not clear. As of this writing, the Racanelli’s foreclosure is ongoing.
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