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| Economy |
| Lawsuits allege OneWest bank can profit from foreclosures |
| 2010-02-26 |
| A spate of recently filed lawsuits allege OneWest Bank is systematically hiking loan payments for struggling home loan borrowers and pushing them into foreclosure. Sacramento attorney Peter Macaluso said the Pasadena-based bank is doing it because it can make more money that way than by keeping borrowers in their homes. He has filed eight lawsuits in the Eastern District of U.S. Bankruptcy Court against OneWest on behalf of borrowers and said a ninth action will be filed later this week. "I see this as a business practice," he said of OneWest's actions. "I think this is a command decision by very smart people who used to run IndyMac and are maximizing shareholder wealth." OneWest officials through a public relations agency declined to comment. A call to Chief Executive Officer Terry Laughlin's cell phone was not returned. OneWest's investors acquired failed Pasadena-based mortgage lender IndyMac from the Federal Deposit Insurance Corp. in March 2009 and rechristened the bank OneWest. As part of the transaction, OneWest entered into a shared-loss agreement with the FDIC. The federal agency agreed to absorb some of the losses from OneWest's loan portfolio, but only after the bank shoulders the first $2.5 billion in losses. Macaluso said OneWest typically performs an escrow analysis after a struggling borrower files for bankruptcy protection. "They increase the mortgage payment after the bankruptcy has been filed," he said. "They changed the mortgage payment for one of my clients eight times in eight months." In one instance, he said, a borrower's monthly mortgage payment jumped from $1,578 to $2,996.26 - and eventually to $3,286.93. In a lawsuit involving borrower Gennadiy Arushanov, Macaluso said OneWest's escrow analysis and resulting payment hike were "defeating feasibility of each and every previously proposed Chapter 13 plan." Under the terms of the shared-loss agreement, OneWest has the potential to make a profit when it forecloses on a home, Macaluso said. The FDIC, he said, will eventually repay the bank for 80 percent or more of its losses, and OneWest can also keep the proceeds from the foreclosure sales. |
| Posted by:Fred |