Suit Blames Loan Servicer for Pending Foreclosure

Boston Globe (08/05/08); Blanton, Kimberly
Lori and Mark Pestana of Massachusetts have filed a lawsuit against Washington Mutual, charging the loan servicer with being unresponsive to their repeated phone calls and to their applications to negotiate an arrangement that would have enabled them to avoid foreclosure. The allegations illustrate a growing problem among loan servicing firms, which handle mortgage duties on behalf of lenders or the Wall Street investors that hold the loans. Such firms, which have been inundated with loan delinquencies and foreclosures in recent months, are often unable to respond to the volume of phone calls or letters and fail to accept late payments, renegotiate loans or approve house sales that would avert foreclosures. Through the lawsuit, which is seeking class-action status on behalf of thousands of Washington Mutual borrowers, the Pestanas are pushing for damages to shore up their tarnished credit and are trying to reverse their foreclosure.