One Homeowner's Uphill Battle with Wells Fargo and Goldman Sachs Shows How Badly The Courts are Stacked Against Ordinary People
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Mary Glover, a Pittsburgh-area homeowner living on Social Security disability income, is taking on Goldman Sachs and Wells Fargo, charging that they've violated federal and state consumer protection laws and breached contracts.
Yet, because of a decision by one judge, she and thousands of homeowners like her could be priced out of their ability to fight back in court against shady dealings by the nation's biggest banks. And while the decision in this case may seem exceptional, as Dahlia Lithwick and others have pointed out, it's part of a disturbing pattern of the courts shutting their doors to everyday litigants and class-action suits—and in some cases, literally handing corporations a playbook on how to get away with screwing over the little guy.
As she and her attorneys attempt to get Wells Fargo and Goldman to hand over documents relevant to her case, the banks' repeated stalling caused the judge to appoint a “special master” over the case—and required Glover to split the fees for this outside attorney equally with the defendants, banks with billions to spare (and, of course, billions in bailouts from the federal government as well).
“It's a David and Goliath situation. When you escalate the costs, there's simply no way that a low-income litigant can keep up,” attorney Scott Michelman, with Public Citizen's Litigation Group, told AlterNet. Michelman and Public Citizen are representing Ms. Glover in a new federal lawsuit filed in the Third District Court of Appeals on May 24, charging that the appointment of the special master in this case will effectively stifle Ms. Glover's ability to go forward with her claims.
Much of the discussion of the mortgage crisis over the last four years has been focused on the refusal of banks to modify borrowers' mortgages so they can stay in their homes, or on illegal foreclosure proceedings. But Ms. Glover's case shows that achieving a mortgage modification is sometimes only the beginning of a homeowner's struggle with the big banks.
A Mess of a System
Glover's original mortgage was taken out through Washington Mutual in 2002, and then sold to Goldman Sachs Mortgage, who retained WaMu to service the loan. In 2005, she was injured in an automobile accident and reached out to WaMu to modify her mortgage so she could remain in her home. According to Michelman, Glover's only income is her Social Security disability payments, which add up to around $10,000 a year.
Her original lawsuit states that WaMu's response was to threaten to evict her if she didn't immediately pay them $559. And thus began a struggle that is unfortunately familiar to thousands of homeowners who've applied for mortgage modifications since the the housing bubble burst. From WaMu to a debt collector to Wells Fargo, multiple parties attempted to collect payments and late fees from Glover; in 2006, when WaMu finally agreed to modify her mortgage, they wound up increasing her monthly payments, adding over $2000 to her principal and $806 in what they claimed was delinquent interest. She agreed to the modification to save her home from foreclosure.
But it wasn't. As of December 1, 2006, Wells Fargo took over as the servicer on her loan, but their practices were no better WaMu's. Though her mortgage was supposed to be unchanged – aside from sending payments to a different bank -- Wells Fargo sent her bills which, according to the lawsuit, proved that her loan modification agreement had not been honored. Her struggles with Wells Fargo culminated in another mortgage modification, which increased her principal and monthly payments again—and increased her repayment period by six years, which would have her paying past her 81 st birthday.