Suit: Countrywide approved payment suspension after Hurricane Rita, now charging late fees

David Yates Mar. 17, 2008, 9:54am

After Hurricane Rita flattened Southeast Texas, Countrywide Home Loans Inc. granted several residents a reprieve from making monthly mortgage payments. Now more than two years later, Countrywide is seeking to collect on those back payments.

Jefferson County residents Scott Bush, Horacio and Teresa Trevino, and Phillip and Amy Weatherford have filed suit against the ailing home lender, claiming Countrywide misrepresented the conditions of the payment suspension and is unfairly requesting a lump sum payment plus additional late fees.

According to the plaintiffs' petition – filed in the Jefferson County District Court on March 14 – the home owners entered into a forbearance program with Countrywide to suspend payments on their notes.

"Countrywide initiated a region-wide forbearance program due to the destruction caused by Hurricane Rita," the suit said.

"Countrywide specifically represented that a lump sum payment would not be due and payable at the end of the period, no late fees would be charged, negative credit ratings or reports would not be made, and that the payments not made during the forbearance period would simply be paid at the end of the normal term of the loan."

Contradicting its representations, "which were made in writing to all Plaintiffs," Countrywide allegedly did the exact opposite of what it had promised, making negative credit reports on all the plaintiffs' credit and noting that the loans were in default, the suit said.

"This was done at the same time Countrywide was promising it would not take such an action," the suit said.

"At the end of the forbearance period, Countrywide notified Plaintiffs that they would have to make a lump sum payment or they would be in default. The required lump sum payments included late fees and additional penalties despite Countrywide's previous representations. For the Plaintiffs who could not make the requested lump sum payments, Defendant threatened to foreclose on their property.

"In lieu of foreclosure, many Plaintiffs were forced to enter into modification agreements which resulted in Plaintiffs being charged late fees, penalties and usurious rates of interest. Defendant misrepresented the terms of the forbearance agreement to the detriment of the Plaintiffs."

The home owners in the suit allege Countrywide's actions are not only in violation of the Texas Deceptive Trade Practices Act and a breach of contract, "but are patently deceptive."

The suit lists the following violations of DTPA allegedly committed by Countrywide:

  • "Representing that services in question had sponsorship, approval, characteristics, ingredients, uses, benefits, or qualities that it did not have;
  • Representing that an agreement confers or involves rights, remedies, or obligations that it does not have or involve, or that are prohibited by law;
  • Making false or misleading statements of fact concerning the reasons for, existence of, or amount of the price reductions reflected by the Agreement;
    Representing that a guarantee, warranty or agreement confers to or involves rights or remedies that it does not have or involve;
  • Failing to disclose information about services that was known at the time of the transaction if the failure to disclose was intended to induce the consumer into a transaction that the consumer would not have entered into had the information been disclosed;
  • Taking advantage of a disaster declared by the governor under Texas government Code Chapter 418 by demanding an exorbitant or excessive price in connection with the sale or tease of fuel, food, medicine, or another necessity (such as Plaintiff's home);
  • And unconscionability.

    "Plaintiffs relied on these misrepresentations by the Defendant to their detriment," the suit said, adding that Countrywide was "unjustly enriching" itself by taking advantage of the plaintiffs predicament.

    The home owners are suing for actual and consequential damages, plus mental anguish and attorney's fees.

    They are represented by attorney Jason Byrd of the Snider & Byrd law frim.

    Judge Bob Wortham, 58th Judicial District, has been assigned to the case.

    Case No. A181-439

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