In Florida, a Miami-Dade Circuit Court Judge has granted Pelayo Duran permission to include investors in his lawsuit charging Wells Fargo, Greenpoint Mortgage Funding and others with mortgage appraisal and origination fraud. This development comes days after the Federal Housing Finance Agency (FHFA), conservator of both Fannie Mae and Freddie Mac, sued 17 large banks and financial institutions over losses on about $200 billion of sub-prime bonds, as well as, AIG's lawsuit against the Bank of America claiming that it lost $10 billion.
"It's believed the defendants, just like in the other high-profile cases, fraudulently induced others to invest in mortgage-backed securities supported by scores of defective loans," said Duran. "Basically the defendants generated or acquired any loan, no matter how risky, that could be sold to third party investors. I was an unsuspecting victim who applied for a loan, but was duped into something else."
Duran alleges in his suit that the fraud began when he tried to refinance his primary residence in 2005. He purchased the home in 2004 with an initial downpayment of $100,000. Shortly after the purchase, Duran needed to access some of the downpayment money to pay for a few personal and business obligations. Duran alleges that the Wells Fargo mortgage broker baited and switched him into a sub-prime home mortgage with Greenpoint.
"She created my loan by adjusting the value of my home to 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 that appraised value and my good credit score. What I also discovered was that the Wells Fargo representative was actually originating a loan for Greenpoint Mortgage Funding. After closing my loan, Greenpoint sold it right back to Wells Fargo as trust administrator for a pool of loan."
According to the lawsuit, Wells Fargo eventually 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, Trust and Investors 1-1000. Duran's attorneys say it's not clear if this entity is the true holder of his note because Greenpoint has concealed the details and hasn't complied with demands to determine the rightful owner.
Through a jury trial, Gonzalo R. Dorta and other members of Duran's legal team will represent Duran and hope to rescind the note and mortgage, to obtain restitution for wrongful acts, and to recover significant punitive damages.