Cross Lanes woman sues Flagstar Bank, employee for predatory lending

CHARLESTON -- A Cross Lanes woman is suing Flagstar Bank and one of its employees after she claims they engaged in home mortgage servicing abuse.

Kathy Belcher found a home she wanted to purchase in the summer of 2007 and was referred to Flagstar by her realtor, according to a complaint filed May 12 in Kanawha Circuit Court.

Larry Wood, an employee of Flagstar Bank, prepared the loan application for Belcher and misrepresented her income as well above her actual income at the time, despite the fact that she had provided pay stubs and proof of income during the application process, according to the suit.

On Oct. 18, 2007, Belcher claims she purchased the home with William Mitchell, who she married shortly after, and the home was financed with a home secured loan from Flagstar Bank and arranged through Wood.

In late 2008, Belcher began struggling to make her regular monthly payments due to a divorce from Mitchell and contacted the defendant about her financial hardship, according to the suit.

Belcher claims the defendant instructed her to fill out a loan modification application and return it, to which she immediately completed and returned as instructed.

The defendant repeatedly requested additional documentation, which Belcher provided, according to the suit.

Belcher claims throughout this time she still made monthly payments on her mortgage, but in April or May 2009 she was unable to continue making the monthly payments, but sent the amount she could afford as partial payment toward the account to show good faith.

The defendant refused to apply the partial payment to Belcher's account and told her it would not accept any amount less than the full amount due, according to the suit.

Belcher claims she continued to repeatedly contact Flagstar for information and updates to ensure that her home was not at risk and that in December 2009 she was able to speak with a loan modification specialist who told her that her payments would be lowered to about $250 per month.

After not hearing anything for one month, Belcher claims she contacted Flagstar again and was told she needed to provide Mitchell's income information. She claim she advised the defendant again that she was divorced from Mitchell and that since she was awarded the house in the divorce, Mitchell's income should not be considered in the loan modification application because he was not a member of the household.

Belcher claims the defendant began foreclosure on her home and refused to process her requests for appropriate loss mitigation.

Belcher is seeking actual damages and appropriate equitable relief enjoining the foreclosure sale of the home. She is being represented by Daniel F. Hedges and Jennifer S. Wagner.

The case has been assigned to Circuit Judge Louis Bloom.

Kanawha Circuit Court case number: 10-C-859