Pelayo Duran Faces “David and Goliath” Battle In Potentially Precedent-Setting Case In Florida Court
Miami, FL (PRWEB) December 7, 2010 - Coral Gables, Fla. homeowner Pelayo Duran claims in his lawsuit that what he wanted was the attractive loan he saw advertised in the Miami Herald to refinance a home for his growing family. Instead, he ended up in the middle of an endless and costly legal fight with the nation’s largest banks accusing them of illegal predatory lending and unfair and deceptive trade practices.
According to the lawsuit, Duran saw an ad in the Miami Herald published by Wells Fargo Home Mortgage. The ad was offering an Adjustable Rate Mortgage (ARM) at a rate of 5.75%, with 10 years interest only payments, a fixed interest rate for 10 years, and a 5.1 annual percentage rate. Duran’s plan was to buy down the loan rate at closing 1 to 2 point and pay off the home in about 10 to 15 years.
The lawsuit states Duran contacted Wells Fargo because he had a longtime business relationship with the bank and the terms in the ad were the most favorable. Attorneys claims when Duran called Cindy Sierra who he thought was a bank representative, she first told him that the advertised rates were not available. She then told him that she would get him an even a better deal. Duran believes that he, just like millions of other Americans, was baited into applying for an attractive loan that never existed, only to be switched to a high-risk subprime loan.
According to the lawsuit, Sierra told Duran to leave the income section on the application blank until such time as she could conduct a “pencil search,” a prohibited but common practice used by mortgage brokers and lenders in order to maximize the loan amount in which a mortgage broker would shop for an appraiser to support the highest value that the lender could hit in originating the loan.
Initially, Sierra informed Duran that his home was worth $1.5 Million. The appraiser, Lee Rosenthal who worked for and was hired by Rels Valuation, (also Wells Fargo company), ultimately determined and represented to Duran that his home, which was purchased for $984,000 four months earlier, was now worth $1.2 million.
“Unbeknownst to me, 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. All they cared about was the appraised value and my good credit score. What I also discovered was that a Wells Fargo representative was actually originating a loan for Greenpoint Mortgage Funding and that immediately upon the closing of my loan, Greenpoint would turn around and sell my loan right back to Wells Fargo as trust administrator for a pool of loan. In addition, Fred Schlang, SRA, an appraisal expert, later alleges that the bank’s appraisal was inappropriately inflated."
According to the lawsuit, after haggling over the terms for several weeks, Duran and his wife were disheartened at the closing when the final Greenpoint loan agreement reflected a financed amount of $920,000 with an APR of 5.622% fixed during a five year period, with rate adjustments up to twice per year, a pre-payment penalty, and a rate cap of 10.5%, (not the 5% he had been previously offered in writing) and they would not be able to buy down the rate 1 to 2 percentage points at closing, as he had been previously promised.