Lost Sea, Sweetwater, Tennessee

 If you are facing foreclosure, you may be able to prevent it, either on your own or with our assistance or that of another lawyer. But you must act fast.

First, you should try to avoid foreclosure altogether and information from the Department of Housing and Urban Development may help. Also, consult our information about certified housing counselors.

Second, you can learn how the process works. A short memorandum on Foreclosure Law and Foreclosure Procedures in Tennessee explains it for both lawyers and non-lawyers. To read the memorandum, you will need the Adobe Acrobat Reader, available by clicking below.

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Third, we have prepared another short memorandum (this time for lay persons) on how you may challenge the foreclosure in court, preferably with legal assistance but alone if you cannot engage a lawyer.

Fourth, send us a response to our foreclosure questionnaire if you want us to examine the merits of your case (if you live in Tennessee) or refer you to another lawyer or legal organization (if you live in another state). We respond to inquiries from the following states that have laws similar to Tennessee: Alabama, Arizona, Colorado, Idaho, Minnesota, Mississippi, Missouri, Montana, New Hampshire, Oregon, Rhode Island, Texas, Utah, West Virginia, and Wyoming.

Fifth, you may have a case worth litigating because there was an illegal foreclosure or unlawful foreclosure and you want to challenge it. The following is taken from the pleadings in a lawsuit where our client alleges that wrongful foreclosure occurred: Homecomings Financial Network v. Dagnan. It started when the lender filed a detainer case seeking eviction of our client, who did not know she had been foreclosed upon. She then filed a counterclaim seeking, among other things, the return of her home. The pleadings state:

The residence located at 1719 Marion Avenue, South Pittsburg, TN 37380 was formerly owned by Alice K. Dagnan, was the object of a mortgage loan described below, was foreclosed upon by Homecomings and its agents in the way described below, and is the place where she still resides.

Homecomings says that it was the owner of the mortgage loan on her home at the time the foreclosure occurred and is now the owner of the home by virtue of the foreclosure.

The trustee under the Deed of Trust, acting on instructions of Litton, the servicing agent of Homecoming , unlawfully foreclosed upon her home on July 18, 2003. The loan was not in default or, if it was, the default was not caused by her.

Ms. Dagnan was given no notice of the foreclosure in the manner required by Section 22 of the Deed of Trust: “If Lender invokes the power of sale, Trustee shall give notice of sale by public advertisement in the county in which the Property is located …, and Lender or Trustee shall mail a copy of the notice of sale to Borrower in the manner provided in Section 15 [of the Deed of Trust].”  (emphasis added) 

The mortgage loan was originally made on November 9, 2001 by GMFS. Ms. Dagnan does not know when the loan was assigned to Homecomings by GMFS.

Ms. Dagnan made timely payments of $514.60 each month to GMFS through January 2002. No servicer of the loan had been designated by GMFS. She was later notified that she should make payments to Olympus Servicing, LP, and she did so in a timely manner through May 2002.

 Ms. Dagnan did not make any payment during June, July, August, September, October, or November 2002. She had been told that there would be another new servicer, but she did not know to whom to make payments. She ultimately received a letter dated October 15, 2002 from Fairbanks notifying her that it had assumed the servicing of her loan, effective October 1, 2002.

Fairbanks asserted that she was delinquent and gave her the option of signing a “Forbearance Agreement” dated December 11, 2002, which she did sign. It obligated her to pay $3,000 within four days of the date of the agreement, which she did, and $963.72 for eight months thereafter. The agreement called for her monthly payment to return to $514.60 in September 2003. Fairbanks’ mortgage loan statement dated December 12, 2002 showed a principal balance of $61,047.10.

 By notice dated December 13, 2002, Fairbanks said it had purchased “considerably more expensive” casualty insurance for her home, effective October 1, 2002, for which she would be obligated to pay despite the “forbearance” contract she had signed. It showed the amount of coverage to be $61,048, almost exactly the principal balance of the loan.

In a letter dated January 8, 2003, GMFS instructed Ms. Dagnan to make all subsequent payments to Litton, not Fairbanks, starting in February 2003. She sent the January payment of $963.72 to Fairbanks.

 By letter dated January 26, 2003, Litton notified Ms. Dagnan that the servicing of her loan had been transferred from GMFS to Litton, effective January 22, 2003.

 In a letter dated January 31, 2003, Litton stated that her loan was delinquent, which it was not. It said that she owed $65,519.45, a sum far greater than the amount shown to her by Fairbanks on two occasions during the preceding month. She called Litton stating that she had made timely payments since the Forbearance Agreement was signed. She said that she did not agree with the amount said to be due. She received no satisfactory response, either by telephone or by written reply.

On February 15, 2003 and March 14, 2003, Ms. Dagnan wired timely $963.72 payments to Litton. 

By letter dated February 28, 2003, Fairbanks (not GMFS, Homecomings, or Litton) advised Ms. Dagnan that Litton would become the servicer of her loan, effective March 17, 2003. This was the third notification and the third effective date for the same transfer of servicing responsibilities. Fairbanks later sent her a statement dated March 12, 2003 showing her principal balance to be $60,855.48, an amount consistent with the amounts shown by Fairbanks on two statements in December 2002. 

Ms. Dagnan wrote to Litton on March 18, 2003, demanding “written, legal proof of just who has my mortgage. . . So please let me know as soon as possible the status of my mortgage.”  

In March 2003, Litton began contacting her by telephone directly, not through an attorney despite her notification to it that she had one. A “Veronica” from Litton left a message for her informing her that the matter was now a “civil case.” Her message was left about 7:00 A.M. On other occasions, Litton’s representatives caused her telephone to ring incessantly when she would not answer. She believes she received more than 50 calls of this nature. They would come at various times during the day, sometimes very early in the morning, around 6:00 a.m., and sometimes late at night around 11:00 p.m. Although she did not answer these phone calls, she know it to be Litton because she had “caller I.D.” and Litton was identified on the telephone screen.  

Later, Litton’s representatives employed a device so that she could not identify the telephone number from which its call was placed. Her son, Billy Dagnan, Jr., answered one such phone call, and it was indeed Litton. Her caller I.D. displayed “Out of Area.” By letter dated May 15, 2003, Litton sent her a check in the amount of $963.72, dated March 5, 2003, more than two months previously, made payable to Fairbanks not to her, saying: “Enclosed is your check for $963.72. Your remittance is not enough to pay the full amount due on your loan at this time.” 

On May 28, 2003, Ms. Dagnan wrote again to Litton, demanding written confirmation about the status of her loan. She again advised Litton that she had an attorney. On June 9, 2003 Litton wrote to her, not her attorney, saying that it could take as many as 60 business days (some 12 weeks) to respond to Ms. Dagnan’s “recent” letter, presumably meaning the one dated May 28, 2003.   

By letter to her dated June 20, 2003, Litton said: “Our records indicate that you have fallen behind on your mortgage payments. Legal action regarding a foreclosure on your home may have started or may be about to start. Litton Loan Servicing LP would like to determine if we can help you avoid foreclosure and the possible loss of your property.” No mention was made of Ms. Dagnan’s correspondence and telephone calls about the status of her loan. Litton’s apparent intention was to induce her to refinance on terms advantageous to both Homecomings and Litton but not to her. 

Fearing foreclosure and having consulted a lawyer prepared to seek an injunction against foreclosure, Ms. Dagnan searched Marion County’s local newspaper, the Jasper  Journal, for notices about foreclosure proceedings in June and July, 2003. However, she did not see the “Notice of Trustee’s Sale” that the trustee under her Deed of Trust published in that newspaper on June 24, July 1, and July 8, 2003. It was in another section of the legal notices, and she did not think to look there.  

Ms. Dagnan did not receive a written communication from Homecoming , Litton, or the trustee that enclosed a copy of the published notice of the foreclosure sale. She received no  oral communication from any of them. She had no actual notice of it by other means such as a comment made by someone who had seen it in the legal notices of the Jasper Journal. 

By letter dated July 16, 2003, mailed July 22, 2003, Litton advised that “The above referenced loan is in the midst of a foreclosure action that will culminate in a foreclosure sale scheduled for July 18, 2003.” The foreclosure had already occurred by the time the letter was mailed. 

Ms. Dagnan was given no opportunity to be heard about her reasons why foreclosure should not occur. Except as discussed below, neither the Deed of Trust nor any Tennessee statute or judicial decision afforded her any right to a court’s determination, an administrative decision, arbitration, or any other form of independent hearing before foreclosure took place. Her only remedy, had she received notice, would have been to seek from a judge or chancellor an injunction against the foreclosure. Then, she would have had to give five days’ notice to Homecoming s within the first 15 days that she was seeking an injunction, further shortening the 20-day period. 

Ms. Dagnan has been informed and believes that her credit reputation has been damaged severely by the actions of Homecomings and its agent, Litton, that are described in her Counterclaim, particularly the unlawful foreclosure. She is unable to obtain credit on the same terms that would have been available if these actions had not occurred.