Homeowner Takes "Product Liability Approach" To Foreclosure Defense, Accusing Lender Of Peddling Defective Product; Seeks Class Action & Voided Loan

In Central Florida, reporter James Thorner of the St. Petersburg Times blogs:

• This is the first I've heard of this novel foreclosure defense. Largo's Linda Soronen, sued in December by her lender for foreclosure, is counter-suing by claiming her fast-and-easy home loan arranged in 2006 constituted a "dangerous financial product." Taking a page from product liability laws, Soronen argues that Wachovia Bank peddled a defective product when it approved no-documentation home loans for barely qualified borrowers. Those tainted loans, made without reference to a borrower's tax forms and pay stubs, ultimately backfired on the nation's financial system, costing taxpayers hundreds of billions of dollars.

• In 2006, Soronen borrowed $162,000 from World Savings Bank, a California lender known as a top purveyor of no-doc loans. Wachovia bought World Savings in 2006. At the time of the loan, Soronen was a "partially disabled, unemployed 57-year-old nurse with no income." Soronen is seeking class action status and wants her loan voided. She's also seeking $10 million in punitive damages, money that would go to the state.

• I don't know if shoddily-approved mortgages rise to the level of faulty automobile accelerators, lead-based paint or poisoned oysters. But they certainly cost the public a lot more.(1)

Source: Pinellas County foreclosure defendant: Banks sold me defective product.

(1) In another recent story with a somewhat similar story line, a Brooklyn, New York judge is reported to have refused to dismiss a lawsuit against two attorneys, a real estate broker, Bank of America and others who are accused of facilitating a $629,000 mortgage for a waitress who earned less than $25,000 a year. See New York Law Journal: Suit Proceeds Against Attorneys Accused of Facilitating Mortgage 'Doomed to Failure'.