CHARLESTON – An East Bank couple is suing Gateway Mortgage Group over the alleged gross mismanagement of a loan program that was designed to foster home retention for borrowers who fell on hard times.
Ashley M. Armstrong and Michael L. Armstrong Jr. allege that servicers like Gateway are directed by the Rural Development Agency of the U.S. Department of Agriculture (USDA) to utilize foreclosure alternatives to the fullest extent possible when servicing loans that have defaulted or that are in imminent danger of default, according to a complaint filed in Kanawha Circuit Court that was removed to federal court Feb. 18.
The plaintiffs claim they applied for a single-family housing guaranteed loan program mortgage loan to purchase a home in 2016 and dutifully paid their payments for two years until they fell on hardship when Michael Armstrong was off work due to an injury.
The plaintiffs requested assistance in 2019 when they had a change in income but were denied any assistance, according to the suit. They appealed the denial, but the appeal was denied and they were falsely told they were not eligible for any home retention options.
The plaintiffs claim in the summer of 2019, their loan was referred to the loan foreclosure trustee and they filed a complaint with the West Virginia attorney general.
Gateway represented that the couple did not qualify for home retention options consistent with USDA Loss Mitigation guidelines on Aug. 29, according to the suit. The plaintiffs informed Gateway of its violations, but Gateway did not attempt to cure the violations.
"Instead of putting forth a good faith effort to achieve a sustainable payment plan with plaintiffs, as specially contemplated under SFHGLP mortgage loans, defendant failed refused to properly process plaintiffs' request for appropriate loss mitigation under applicable agreements and guidelines despite inviting plaintiffs to do so and despite plaintiffs' demonstrated ability to make payments," the complaint states. "Instead, defendant pursued foreclosure."
The Armstrongs are seeking compensatory damages. They are represented by Bren Pomponio of Mountain State Justice in Charleston.
U.S. District Court for the Southern District of West Virginia case number 2:20-cv-00137