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Deutsche's $2M Foreclosure 'Mistake'

A District Court jury has awarded a Billings, Montana man just over $2 million in his action against a bank that foreclosed on and sold a house that he and his wife had purchased outright for cash two years earlier.

After a four-day trial in the court of Yellowstone County District Judge Ingrid Gustafson last week, the jury unanimously awarded Jason Norman $350,000 in lost profitability, $100,000 for emotional distress and $1.6 million in punitive damages against Deutsche Bank National Trust Co.

Also named as defendants were Ocwen Loan Servicing, which handled the sale of the Normans’ house, and MOM Haven 6 LLP, the company to which the house was sold.

In 2010, Jason and Liz Norman moved back to Billings, Jason’s hometown, from Austin, Texas, where they’d spent 15 years.

They bought a 120-year-old farmhouse at 633 Howard Ave. for $50,000 and spent two years and $40,000 renovating it themselves. Three years ago this month, with the house by then valued at $230,000, they began the process of obtaining a home equity loan on it. With that loan money, they planned to buy another property they could renovate and re-sell.

That’s when they were told by the Montana Department of Revenue that the house on Howard was no longer theirs, that it had been foreclosed on and sold.

Their attorney, John Heenan of the Billings firm Bishop and Heenan, said his clients were perplexed.

“They kind of wondered, well, how’s that, since we paid cash for it?” he said.

They had made the $50,000 cash payment to Deutsche Bank and then were told two years later that the house had been foreclosed on and sold to a company called MOM Haven 6 LLP.

They soon found out—Jason Norman worked in the mortgage business during their years in Austin—what had gone wrong: an error had been made on a quitclaim deed for a house in Butte that had been foreclosed on. That deed correctly listed the address of the house at 618 W. Platinum St., in Butte, but a legal description of the property, attached to the deed, described the property at 633 Howard that was owned outright by the Normans.

Because of the erroneous legal description, the deed was filed in Yellowstone County, and the Department of Revenue consequently transferred ownership of the house on Howard to MOM Haven 6. MOM Haven 6 had purchased 36 properties from Ocwen Loan Servicing, which was associated with Deutsche Bank.

In a pretrial “order and memorandum,” Judge Gustafson ruled on several motions in the case, meanwhile summarizing some of the facts in the case. In it, she said the erroneously prepared quitclaim deed had been signed by Robert Kaltenbach, a senior manager for Ocwen and attorney-in-fact for Deutsche Bank.

On April 9, 2013, MOM Haven 6 executed another quitclaim deed for the Howard property, which would have transferred the property back to the Normans, but they rejected it because it listed the company as an “LP” rather than the correct “LLP.”

Another quitclaim deed was prepared, but the Normans rejected it as well because it included language saying that the previous mistakes were the result of a “scrivener’s error.” Heenan said the language would have had the effect of leaving the bank blameless.

The Normans knew they wanted some kind of compensation because from the day they found out their house had been foreclosed on mistakenly, they had been effectively barred from doing anything with it.

They were denied the home equity loan they had originally applied for, and since they no longer had the deed to the house, they couldn’t list the home for sale and no property management company would consider renting it under the circumstances. And even though they figured the house needed only about three more weeks of trim work to be fully renovated, they couldn’t work on property they no longer owned.

There was also the difficulty of knowing that the house could be seized by the new owners at any time.

“We were just out of our minds with paranoia,” Jason Norman said.

All those considerations, and the fact that they weren’t making any money in Billings, prompted them to move back to Austin, where Jason went to work painting cars.

As part of their legal battle against Deutsche Bank, the Normans were granted a motion for summary judgment for quiet title, and the bank signed a “disclaimer of interest” in the property on May 8, 2014. The trouble was, Heenan said, the bank did not actually record the disclaimer with the Yellowstone County clerk and recorder until August of this year.

At trial, Heenan maintained that the defendants’ actions, far from being merely a series of mistakes, constituted an intentional disregard of facts that were likely to cause injury to the Normans, and that “disregard or indifference” amounted to malice.

The 12-person jury agreed, and unanimously awarded the compensatory damages totaling $450,000, then went into deliberations again and unanimously awarded the punitive damages of $1.6 million.

Cal Stacey, the Billings attorney who represented Deutsche Bank, could not be reached for comment, but Heenan said he expects the bank to appeal the jury verdicts.

“They haven’t done anything voluntarily,” he said, “so I’d be surprised if they paid the jury verdict voluntarily.”

#foreclosure #homeowner #mortgage #nordicstar #wrongfulforeclosure

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