A California law firm has created a 20-attorney National Foreclosure Litigation and Investigation practice to represent financial firms and corporate defendants named in class actions, criminal investigations and other legal actions associated with the recent foreclosure freezes.
Luce, Forward, Hamilton & Scripps, based in San Diego, launched the interdisciplinary group on Oct. 19, one day after the first known class action was filed in California by a foreclosed homeowner alleging fraud against a financial institution.
Many of the nation's biggest lenders have halted foreclosures due to potentially false documents. Bank of America Corp. announced it would lift the freeze on some foreclosures. Other lenders have renewed foreclosure proceedings.
In the meantime, attorneys general in all 50 states have announced a combined investigation into the legitimacy of documentation that was used in foreclosures. The Associated Press has reported that the FBI has launched an investigation into possible crimes associated with foreclosure practices.
The Luce Forward group will represent lenders, servicers and institutional investors in defending against claims in class actions, conducting internal investigations and negotiating deferred prosecution agreements.
"We have a number of clients at the firm that are probably going to be involved in the process in some form or the other, whether they're the subject of investigations or defendants in civil lawsuits," said Steven Wall, chairman of Luce Forward's real estate litigation practice group, who heads the foreclosure group with fellow San Diego partners Edward "Pat" Swan Jr. and Christopher Healey. "To know exactly what will come out of the attorney general investigations…or the Justice Department is tough to tell, but we think there is a very good possibility you'll have to defend yourself on multiple fronts."
Firms that have established similar practices include K&L Gates and Washington-based BuckleySandler.
On Oct. 18, a Los Angeles woman whose home faced foreclosure after she was unable to pay her $528,000 mortgage sued Chase Home Finance LLC for fraud, claiming the bank used "robo-signing" to process foreclosures — or used false documents and signatures to approve thousands of foreclosures at a time. The woman is suing on behalf of a class of more than 10,000 Californians who received notices of default from Chase since Oct. 15, 2006.
The suit was filed under California consumer-protection law.
"Specifically, in California, Chase has a standard practice of utilizing false documents in order to expedite the foreclosure process thereby sacrificing the consumer protections afforded to its customers by the State of California," the complaint says. "Moreover, thousands of citizens of California have been wrongfully evicted from their residences.
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