Posted on Monday, April 4, 2011
Lauderhill couple say Chase locked them out of their house
John Ferrari came home after work one night to find the locks on his Lauderhill home changed and a sign on the window declaring that the property was being managed by Chase Home LLC.
Ferrari and his wife, Lisa, knew their house was to be sold in a foreclosure sale in a few weeks, but they didn't expect to suddenly be locked out of their home without warning or a notice of eviction — especially since most of their belongings were still in the house.
They didn't know that they were still the legal owners of the property when Chase locked them out of their house and that Chase had changed the locks on the home before completing the foreclosure and taking title to the property.
It has been five months since Chase locked the couple out, and the Ferraris are still the owners of the house, according to public records.
Stories of delinquent homeowners being locked out of houses they still own — and of lenders removing furniture, appliances and personal property — are surfacing as the foreclosure crisis drags on. Lenders claim they have the right to "secure" properties to protect assets they expect to eventually own.
They rely on a clause in most home mortgages that states if a property has been abandoned, the lender has the right to secure it, including changing the locks.
But attorneys for homeowners like the Ferraris say lenders, and especially firms they hire to inspect and change the locks on the houses, abuse the system by claiming the properties have been abandoned when the delinquent borrowers haven't moved out.
The attorneys say the lenders and the firms are guilty of trespassing or breaking and entering when they go into a house they don't yet own.
The Ferraris' Case
Lisa Ferrari said Chase or a company representing the lender removed appliances and the air conditioning unit. It took away their belongings, rummaged through boxes in the garage, and trashed the house, she said.
Chase says the stove, refrigerator and air conditioning unit were already missing when its representatives entered the house.
The Ferraris bought the house in 2006. John Ferrari soon became ill and stopped working. The mortgage has been in default since 2007. They filed for Chapter 7 bankruptcy in 2009 and their debts were discharged in May of that year. Chase filed a foreclosure suit against the Ferraris in July 2009. The bank won a judgment in August 2010 for about $450,000.
U.S. Bankruptcy Judge John Olson in Fort Lauderdale recently agreed to reopen the bankruptcy case based on their allegations against Chase.
Weston attorney Jonathan Kline, who represents the Ferraris, has filed a complaint against Chase and Marshall Watson, the law firm that represented the lender in the foreclosure. The complaint alleges the bankruptcy order discharging the Ferraris' debt was violated when representatives of Chase entered the house and took personal property.
The lender and law firm acted with "malevolent intent, ... bad faith" and "utter arrogance," when they forced entry into the Ferraris house, according to the couple's complaint.
A Marshall Watson spokeswoman said the law firm does not install lock boxes on foreclosed houses and referred questions to Chase.
Chase spokeswoman Nancy Norris said the lender authorized "a vendor" she declined to identify to change the locks on Oct. 7 after it "determined" the house was vacant.
A notice on a window of the house includes a phone number to LPS, Lender Processing Service, a company that represents and provides property management for various lenders, including Chase.
An LPS spokeswoman did not respond to a call and an e-mail seeking comment but forwarded them to Chase.
Norris said Chase is "allowed to do that to protect the asset."
"Before the property was secured we confirmed that the home was empty," Norris said. "The utilities were turned off ... we took photographs on the day we secured the property and the home was in disarray."
Lisa Ferrari denies the allegation and said the photos could have been taken after the vendor entered the house.
Knowing that she was about to lose her house, Lisa Ferrari and her two children moved into her sister's house about two weeks before Chase took control of the house, she said.
Meanwhile, she said, her husband continued to live in the house.
"We had electricity ... we had running water," she said. "My husband was still living there. The house did not look abandoned. ... And regardless, they had no right to break into my home. "
Norris said "if the homeowner thinks items are missing, she needs to contact us and file a claim."
Foreclosure defense attorney Thomas Ice said he has heard of similar cases. He doubts that banks are "instructing their contractors to remove appliances," but given the volume of cases they have, they also don't have a system in place to prevent this from happening.
Lenders and their contractors should not be allowed to decide if a house is abandoned, he said.
"For property that is being defended in foreclosure litigation, it would be difficult to say the property is 'abandoned,' even if no one is living there," he said. "Also, it would seem that the bank should ask permission from the court before engaging in this sort of activity, which in any other context would be breaking and entering."
In Florida, when a lender wins a foreclosure judgment, it does not take title to the house until after a foreclosure sale.
It then is required to go through an eviction process, including serving the homeowner with a notice of eviction and a writ of possession notice.
The Ferraris, like many other homeowners, weren't aware of their rights, Kline said.
Ferrari said she didn't find out she was still the owner of the house until January — three months after Chase changed the locks — when its representative called to offer the couple a chance at a short sale. In a short sale, a lender agrees to allow the property to be sold for less than what is owed on the mortgage.
"They assured me the house is still mine," Ferrari said. "I said, 'Then why did you change the locks?'??"
The representative provided the lock box code. When Ferrari entered the house, she discovered the appliances and other property were missing.
Norris said firms hired by Chase to inspect and secure properties make "many visual inspections" and Chase's representatives check to see if utilities are turned off. They make "more than 100" attempts to contact homeowners before installing new locks.
"We believe we have a good process in place to ensure a home is vacant before we secure the property," she said.
Chase's process failed to prevent one of its vendors from breaking into Nancy Jacobini's Orlando house in October 2010, even though she was in the house. According to a federal lawsuit filed in Orlando, Jacobini, who had fallen behind on the mortgage payments, called 911 when she heard someone trying to break the lock on her front door.
Jacobini locked herself in the bathroom as she desperately asked for the operator's help. When the police arrived, she learned Chase had authorized Lender Processing Services to hire a contractor to install new locks.
In the lawsuit, Jacobini accuses Chase of trespassing, negligence, intentional infliction of emotional distress, breach of duty of good faith and fair dealing, invasion of privacy, and unfair and deceptive acts.
Norris said the Jacobini situation was a "mistake" and said the lender apologized to her and offered a loan modification.
"There was no malice here," Norris said. "This home was in foreclosure because the borrower was severely delinquent. We made numerous calls to the borrower and several visits to the home to maintain the upkeep — we never heard from her. ... We apologized to Ms. Jacobini for her scare, and hope she decides to apply for a modification to avoid foreclosure."
Jacobini's lawyer, Matthew Weidner, said the problem isn't isolated to Chase. Other lenders and the firms they hire have been entering homes prior to taking title to the house, even when it is clear the house is not abandoned.
"This is a terrifying phenomena grossly under-reported and very hard to track down," Weidner said. "Some of the stories I hear are mind-boggling. ... I've been all the way up to the sheriff's office, and they say, 'There is nothing we can do about it. It is a civil matter."
Polyana da Costa, DAILY BUSINESS REVIEW