Reference to specific matters or success in previous cases is not meant to be a prediction or guarantee of similar results in any other case. Each case consists of factors and applicable law unique to that case.
A case over six years in the process finally ended on March 4, 2011 when the Virginia Supreme Court rejected the final appeals of a Georgia-based mortgage lender found liable for defrauding a local couple in an August 2004 transaction.
Facing a stiff fight from both the lender and also an international banking company who acquired the loan, many people would have simply raised the white flag. But with help from MeyerGoergen, the borrowers won their case, recovered much of their legal bills, and even collected an award of punitive damages. In an ironic twist, only the borrowers were left standing at the end of this case. Both the defrauding lender and the loan-buying bank went bankrupt during the recession, leaving our clients to recover from the lender’s appeal bond.
The case began when the couple contacted AME Financial Corporation, looking for a mortgage for their purchase of a riverfront property in Chesterfield County. AME promised them a loan with a low interest rate that would be fixed for 10 years, followed by a 20-year period where interest would float while the principal amortized. At the closing table, all the loan documents reflected exactly what AME had promised. The borrowers signed, moved in to their new home and started paying their new monthly mortgage payments.
But unbeknownst to the borrowers, AME was a “correspondent lender,” not a deep pocketed financial institution. AME made its loans using funds borrowed from a line of credit, with arrangements to sell the loans to larger, investing banks immediately after closings occurred. The sales proceeds would be used to repay the credit line and provide a profit for AME.
In this case, AME sold the borrowers a loan program not realizing that the investing bank it had been dealing with had discontinued that program. When AME shipped the loan documents to the investing bank after the closing, the bank refused to buy the loan. That put AME into a predicament, as its credit line provider required repayment within 30 days, and AME could not default on that credit line without losing its ability to stay in business.
AME’s management panicked. On their instruction, their lawyer contacted the borrowers, demanding that they sign a replacement mortgage note that eliminated their 10-year fixed interest rights, exposing them to hundreds of thousands of dollars in additional interest charges in the coming years. That’s when the borrowers contacted MeyerGoergen for the first time. And although we helped them to rebuff AME’s overbearing demand, it was later discovered that AME had in fact already signed a new note, claiming a power of attorney status it did not have. AME sold that fraudulent note on to the investing bank.
Financially unable to rectify its misdeeds, AME embarked on a strategy to thwart the borrowers by burying them in a sea of denials, lying, and litigation. But ultimately, the Chesterfield Circuit Court vindicated our clients, binding AME and the investing bank to the terms of the original mortgage note and ordering AME to pay nearly $95,000 to the borrowers as well. As that case was progressing, AME filed a counter suit in the Richmond federal court, looking for another forum in which to pursue its litigious tactics. That backfired when AME was ultimately forced to concede and withdraw that case, with its lawyer quitting over nonpayment of his bills.
AME did succeed for a time in bogging down the Chesterfield case with its delay efforts. First, AME refused to indemnify the investing bank, and the two of them continued in litigation for a full year after the borrowers’ case had ended. Even after the investing bank won a judgment of its own, AME appealed. Then, all appeals were frozen in time when AME sought bankruptcy protection in its home state of Georgia. Only when the bankruptcy court there permitted the appeal here to move forward to a conclusion was the Virginia Supreme Court finally able to put an end to AME’s litigiousness.
No one would ever expect that, after closing on a mortgage loan, a lender would furtively try to bind you to wholly different and hugely more expensive terms. What is worse, far too many people in this situation would have felt forced by the burdens of litigation to consign themselves to being victims of this rare fraud. With perseverance by the clients and by MG, however, finally the endless denials and the attempts to defend the indefensible were cast aside, and justice was served.
The materials on this website are meant for informational purposes only and nothing contained in this site is to be construed as legal advice. If you need legal advice, you should contact an attorney directly. Do not act upon the information on this site without seeking professional guidance. Information on this website about specific matters or success in previous cases is not meant to be a prediction or guarantee of similar results in any other case. Each case consists of factors and applicable law unique to that case and you should consult an attorney.
