Alonso vs. WaMu

Francisco Alonso, 39, who has worked for the past 12 years as a carpenter with the Los Angeles Sheriff’s Department, and Clara Alonso, 35, who has worked for the past 4 1/2 years as a vice president in the human resources department of Gourmet Award Foods in City of Commerce, Calif., are plaintiffs in the case.The Alonsos financed their 1993 home purchase with Home Savings of America, FSB, which merged with Washington Mutual not long after, according to the their complaint

Because of hard financial times and a family medical crisis, the couple fell behind on payments, the complaint said.

The couple received a notice of default in March 2002 that stated they were behind in payments totaling $17,113.74, and that the house would be sold through foreclosure. They contacted Washington Mutual, made a repayment agreement in July, and embarked on a payment plan that would cure the default, according to the complaint.

The plan called for an initial payment of $13,000, the complaint said, which the Alonsos paid, followed by 12 consecutive monthly payments of $3,994.89.

Mrs. Alonso went to a local Washington Mutual branch office on the due date of the first of the 12 payments of that agreement. She couldn’t remember the exact amount of the payment, and asked the teller to look up her account and tell her. According to the complaint, the teller told Mrs. Alonso the amount was $3,943.33 — $51.56 short of the monthly payment agreement.

On Sept. 10, the Alonsos received in the mail a letter sent by Washington Mutual stating that partial payments were not acceptable and their loan was in foreclosure. Washington Mutual also returned the check and provided a phone number for the Alonsos to call to reinstate the loan, the complaint said.

Mrs. Alonso called the phone number the same evening, leaving a message on voice mail requesting a return call. When her call was returned the next day, she offered to make up the amount at a local bank branch. She was told by a bank employee that a payment couldn’t be accepted until the repayment plan was modified to accommodate the circumstance, according to the complaint.

After being transferred to another department, she was told the modification would take place in Washington Mutual employee Rich Reynolds’s office, and that he would contact Mrs. Alonso, the complaint said.

She left several voice mails over the next few days with Reynolds, receiving no return call, according to the complaint.

Because of the stress of the foreclosure and the voice mail situation, Mrs. Alonso became ill and was admitted to a local emergency room, where she was given prescription medications and released, the complaint said. She took off work for two days.

While home sick, Mrs. Alonso called Reynolds several times, only reaching his voice mail. She then decided to contact customer service on Sept. 18, where she was told by a Washington Mutual employee that her loan was in foreclosure and the sale date was scheduled for Sept. 24, the complaint said. She also was told that time was of the essence, and that she needed to contact Reynolds right away.

She immediately tried Reynolds on the phone again, reaching only his voice mail, according to the complaint. She left panicked and urgent messages telling him when she would call next and requesting that he be by the phone. She still reached only voice mail.

The first time Reynolds contacted Mrs. Alonso, according to the complaint, was during a 1 hour and 45 minute time slot that she was away from the phone. She returned his call, but only reached voice mail. When he called back, he missed Mrs. Alonso again and left a short message stating that he knows they are both busy, but he’d be in the office all day. She called back several times that day, only reaching voice mail, according to the complaint.

On Sept. 23, one day before the scheduled sale date of her home, Mrs. Alonso called customer service. She was told by a bank employee that her home was sold at foreclosure on Sept. 20. The employee said computer notes stated that Washington Mutual had had a hard time getting in touch with Mrs. Alonso, and confirmed that Mrs. Alonso was in fact notified that her house would go on the bloc Sept. 24.

“In terms of equity and morality, the court did not allow the Goliath defendant, Washington Mutual, to take advantage of my clients,” said Browne Greene, a representative of the Alonsos. “We are confident that at the next hearing, this entire matter will be resolved and that the Alonsos can get on with their lives without the stress or fear of losing their family home.”

The Alonsos maintained in the complaint that they couldn’t attend the sale to bid on their home or otherwise tender payment because the sale was improperly held on several counts, and therefore the sale to Metcalf should be invalidated.

They also maintained that among the reasons for the sale being invalid, Washington Mutual “lulled” the Alonsos into believing that the bank would cooperate with the couple to reinstate their repayment plan. Other reasons for invalidation included the early selling of the house and a notice for sale not being properly posted, which was in violation of the terms and conditions of the promissory note and deed of trust.

The judge ordered a continuation of a temporary restraining order against Washington Mutual, along with codefendants California Reconveyance Company and Greg Metcalf, who bid on the couple’s home when it was put on the block. The judge also suggested Washington Mutual work out a resolution with Metcalf and his competing claim for the Alonsos’ home, according to a release from the defense counsel, Greene, Broillet, Panish & Wheeler, LLP.

In addition to stopping the foreclosure of the Alonsos’ home, the judge ordered the parties to return to court on Oct. 22 for a preliminary injunction hearing.

The home was worth approximately $650,000 as of September, the Alonsos stated in their complaint; Metcalf’s bid for the home was $460,100. The Alonsos’ equity in the Orange County home, was $326,000 as of September.

Olivia Riley, vice president of public relations at Washington Mutual’s headquarters in Seattle, said the company cannot comment on the case at this point, but is actively working on resolving the matter.

“We are grateful to the court and are truly relieved that we will be able to keep our home,” Mrs. Alonso said. “My family has suffered greatly with the imminent fear that we would be homeless. Tonight, we will all be able to sleep easier.”

This lawsuit joins others that have challenged Washington Mutual’s servicing of customer loans, primarily after it acquired the servicing portfolios of other banks.

The San Francisco-based law firm of Green Fauth & Jigarjian, LLP, filed a class action complaint earlier this year alleging that various servicing mistakes resulted in “in poor customer service in which borrowers spend untold hours attempting to correct Washington Mutual’s errors, improper fees paid by borrowers for which they are not reimbursed, and erroneous negative reports to credit bureaus.”

In 2001, a class action complaint against Washington Mutual Inc., Bank United Corp., and Bank United of Texas, FSB, was filed on behalf of customers acquired through Washington Mutual’s merger with Bank United. The practices alleged included failing to post payments received from borrowers in a timely fashion and then charging the borrower a “late charge” and additional interest; imposing improper “property inspection” charges; and failing to respond to borrower complaints or remove improper charges assessed on borrowers..

As of June 30, Washington Mutual reported that its servicing portfolio was just under $800 billion and its second quarter mortgage production was $50.45 billion.