Delinquent Homeowner's Bank Account Wiped Out By Mortgage Lender Before Foreclosure; No Court Judgment Needed, Says Bank

In Phoenix, Arizona, KTVK-TV Channel 3 reports:

• [U]nable to keep up with his mortgage payments, [Joel] Contreras is giving his condo back to the bank. He says that's depressing enough, but he certainly wasn't prepared for what happened next. "When I looked at my bank account and saw that it was all wiped out, it took me a good day to rebound from that," he said. "I was panicking. I was freaking out."

• Why? Well, Contreras discovered someone raided his bank account and withdrew nearly $2,100, leaving him penniless. Just who would do such a thing? Wells Fargo, that's who. Contreras has a second mortgage with Wells Fargo and says even though they knew he was giving his condo back, he says they took what they could from his account.

• "If your lender is the same bank that your checking account is with then they don't need a judgment," Contreras said. "They can just wipe out your whole account." He's right. In an e-mail to 3 On Your Side, Wells Fargo says, "... State and federal law gives financial institutions the right to claim unpaid and past due amounts owed to them ..." They go on to say, "This is a common industry practice."

For the story, see Mortgage lender can raid your bank account during foreclosure.