Erie Homeowner Hurt In Mortgage Scam Settles Suit; 40%+ Cut In Loan Balance, Interest; Non-Profits Reviewing 50 Other Cases Say Class Action Possible

In Erie, Pennsylvania, the Erie Times News reports on the settlement of a predatory lending case brought in an Erie Federal Bankruptcy Court by local resident Eloise Woodsbey, who nearly lost her home to foreclosure:

• [I]n the main provision of the settlement, the principal on Woodsbey's mortgage was cut from $44,900 to $25,000, and the interest rate was set at 5 percent, over 30 years. That rate had been as high as 11.75 percent.

• Using the Woodsbey case as a guide, the statewide legal-aid organization that represented her is working with local groups to try to help hundreds of other Erie homeowners caught up in the same Erie subprime mortgage scam, which was at the center of a federal criminal probe. Among those indicted in the case were the mortgage broker and developer involved in selling Woodsbey her house.

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• "It is a good result for her," said one of Woodsbey's lawyers, Kevin Quisenberry, of the Pittsburgh-based Community Justice Project. "I wish there was a way to get relief for the other 100 people who bought these homes." He said the nonprofit Community Justice Project has been receiving information from St. Martin Center Inc. and other Erie-based groups on other homeowners who might need assistance.

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• Dave Pesch, the housing counseling manager at St. Martin Center Inc. [...] said that he and lawyers from the Community Justice Project are reviewing the mortgages of about 50 Erie residents who purchased houses from the defendants in the criminal case. [...] When asked if the review could result in a class-action suit involving some of those homebuyers, Pesch said, "I certainly think that is a possibility." Quisenberry said he hopes that local lawyers and other officials can provide the resources to review the cases of other homeowners to see if they merit legal action. "What would be really great is if we can get a dedicated pool of attorneys who would be available for cases that would be referred to them," Quisenberry said.

For more, see Woman settles mortgage fraud suit. UndoMortgageLoans TILAdelta