June 21, 2013

A test for new state homeowner law

Come Saturday, Cindy Amrine and her four teenage daughters expect to be out on the sidewalk, evicted from the middle-class home where the girls grew up in a leafy neighborhood of Citrus Heights. She insists it didn't need to get this bad.

Come Saturday, Cindy Amrine and her four teenage daughters expect to be out on the sidewalk, evicted from the middle-class home where the girls grew up in a leafy neighborhood of Citrus Heights.

"We bought this house 23 years ago," Amrine said. "They were all born here."

Following an ugly divorce – with no job, no money and her credit wrecked – Amrine says she isn't even sure she can rent a storage space to put a lifetime's worth of belongings in cardboard boxes.

She insists it didn't need to get this bad.

In a lawsuit filed this week in Sacramento Superior Court, Amrine claims Bank of America violated the state's new "homeowner bill of rights" by foreclosing and auctioning her home in April, even as it worked with her to conduct a short sale, in which the bank accepts less than what's owed.

"As part of the contract for the short sale of plaintiff's property, plaintiff was to receive $20,000 in relocation fees, which would have secured her a year of rent to house her and her four children," the lawsuit claims.

BofA spokeswoman Jumana Bauwens said in an email that the bank had not been served with the lawsuit yet and could not respond.

Amrine's lawyer, Jan Dudensing of Sacramento, contends the new law forbids banks from foreclosing while they are trying to work out a short sale. The case is one of a batch of cases moving through the courts that will eventually define how the law is interpreted.

Dudensing said she's just trying to get Amrine some breathing room. "Hopefully she can get damages so she can have enough money to rent a place to get back on her feet and house a family of five," Dudensing said.

Right now, the family faces the prospect of staying in an emergency shelter or splitting up and sleeping on the couches of different friends and relatives.

Amrine's daughters – ages 13, 15, 18 and 19 – spent this week packing sports trophies from the mantelpiece and taking family photos from the walls.

At times they wiped away tears, wondering what will happen to them and their pets, two dogs and four cats, who can't go with them.

"It's overwhelming," said daughter Megan Amrine, 18, who will be a senior at Antelope High School. Like her older sister, she captained the girls basketball team.

"I have strong faith in God that he's not going to let us go out on the street," Megan Amrine said. "I try not to be a negative person. But I'm a little depressed. Sometimes I cry about it."

The outcome of Cindy Amrine's lawsuit could depend on the court's interpretation of the homeowner bill of rights.

Court cases filed since the law took effect Jan. 1 have focused mainly on so-called dual tracking – in which banks foreclosed on borrowers while negotiating loan modifications with them.

The new law prohibits that practice, which became commonplace in the housing crash and was widely criticized as deceptive.

Amrine's case presents a newer issue: Can the law's prohibition on dual tracking also apply to instances in which a borrower is trying to conclude a short sale when the bank forecloses?

Some experts in housing law said it's a clear-cut matter.

If a lender has approved a short sale, it can't proceed with foreclosure, said Kent Qian, an attorney with the National Housing Law Project in San Francisco. The group is one of several in California funded by the state attorney general's office to train lawyers on the homeowner bill of rights.

"If everything in the complaint is true, she definitely has a case," Qian said.

Others said it's more of a gray area.

Elizabeth Letcher, director of litigation at Housing and Economic Rights Advocates in Oakland, said the case and others like it likely will hinge on specifics, such as whether a lender approved a short sale in writing.

Of Amrine's complaint, she said: "I think there's substance in this case, but ultimately it's going to depend on the factual details."

Cases that will sort out the many provisions of the lengthy and complex homeowner bill of rights are just starting to move through the courts, Letcher noted.

"It's really undeveloped law," she said. "It's a brand new statute with a lot of words that have yet to be defined in more than one or two cases."

For Amrine, her situation seemed simple. Why would a bank foreclose when it was working with her on a short sale?

After her divorce and years of being a stay-at-home mom, she relied on public benefits and food stamps to stay afloat. Her daughter Lauren Amrine, 19, a freshman at California State University, Sacramento, donated the $400 a month she made at a local coffee shop to help keep the lights on.

The house would eventually have to go, Amrine knew. Working with a Realtor, she was near to completing a short sale. Would-be buyers had submitted multiple offers. One had agreed to the bank's asking price of $234,100 and had proof of available funds, the complaint states.

Amrine said she was aware the bank had sent her a notice saying it would auction her house on April 22. But a prior auction sale was postponed because she was pursuing a short sale. She thought this one would be, too.

She assumed the bank's foreclosure department would know what its short sale department was doing.

That's where she went wrong, Qian said.

Dual tracking, whether intentional or by mistake, has been common for years, he said.

"I don't know how much is incompetence by banks, but it seems like they should do better now," Qian said.

While Amrine was in a hospital recovering from rotator cuff surgery on April 23, one of her daughters called and said someone had pinned a notice to the door telling the family they had to be out in three days.

She was able to get the move-out date postponed until this weekend, but everything else remains up in the air.

"I don't know what I'm going to do yet," she said on Tuesday, weeping softly.

A bank representative is supposed to meet her Monday, once the family has moved, and give her a few thousand dollars in a "cash for keys" deal that might at least let her rent a storage space.

She and the girls will have to live out of suitcases, she said. Her father might take one of the dogs.

"I'm pretty overwhelmed. They're throwing us out on the street," Amrine said. "It's been a long haul. I'm tired."

Call The Bee's Hudson Sangree, (916) 321-1191.

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