Collateral damage

Collateral damage

Trudie Crutchfield’s epic battle with nature and Bank of America


Trudie Crutchfield has taken a fierce beating in recent years from both man and nature. After her modest Fannett home was battered in Hurricane Rita, she struggled to rebuild. But it was another quiet storm from Countrywide Home Loans and Bank of America that pushed her to the limits of human endurance. This single mother of six children stood her ground and refused to become collateral damage in the home mortgage scandal that rocked the U.S. economy and thousands of honest, hard-working homeowners like her.

“I was going to fight until there was no fight left in me,” declared Crutchfield. After an epic struggle that spanned more than five years and saw the lender wrongfully foreclose on her home not once but three times, she finally got a measure of justice in a Jefferson County courtroom.

Sadly, her story is not unique, but her resolve to never surrender against overwhelming odds appears to be paying off at last. Two things ended up working in her favor. Early on, she retained Wyatt Snider, a board-certified real estate attorney from Beaumont who championed her cause throughout a long, twisted legal saga. And, as Crutchfield recounts, she didn’t have anywhere else to go. “I couldn’t just take my kids and simply walk away,” she said. “This is our home, the only one they have ever known. We had to stay.”

A national disgrace

The home mortgage collapse that played a central role in the economic meltdown of 2008 was a complex house of cards fueled by large numbers of risky subprime loans that led to the crippling of the banking industry and the near-collapse of the financial system.

A key player in this lending frenzy was Countrywide Home Loans, whose CEO Angelo R. Mozilo collected hundreds of millions in compensation as the company’s fortunes soared. Investigators said this was accomplished by the VIP treatment offered to so-called “Friends of Angelo” who received low-cost mortgages that saved them tens of thousands of dollars. Among the recipients were members of Congress and staff members including Senate Banking Committee Chairman Christopher Dodd and Senate Budget Committee Chairman Kent Conrad.

Perhaps more significant was the preferential treatment extended to Jim Johnson, CEO of the Federal National Mortgage Association known as Fannie Mae and at least three dozen agency staffers. Countrywide gave preferential loans to these employees of Fannie Mae while that housing enterprise was locked in an expanding, multi-billion dollar business in subprime mortgages.

Ultimately, Mozilo resigned and reached a settlement with the Securities and Exchange Commission over securities fraud and insider trading charges. In 2010, he agreed to pay $67.5 million in fines and accepted a lifetime ban from serving as an officer or director of any public company. A criminal investigation into Mozilo’s activities in the Countrywide affair was concluded with no charges filed by the Justice Department.

None of this deterred Bank of America, which acquired Countrywide for $4.1 billion in March 2008 even as the federal fraud investigation continued. The deal made Bank of America the largest mortgage originator and servicer in the U.S., controlling as much as 25 percent of the home loan market.

The bank also acquired some staggering liabilities. In December 2011, the Justice Department announced a $335 million settlement with Bank of America over discriminatory lending practices at Countrywide Financial. The federal probe found discrimination against qualified African-American and Latino borrowers where minority borrowers who qualified for prime loans were steered into higher-interest-rate subprime loans.

The deal also incorporated Countrywide’s resources for servicing mortgages into the BOA portfolio. This proved to be a mixed blessing, as the abusive consumer practices of Countrywide became part of the BOA corporate culture. By that time, Trudie Crutchfield had been subjected to rough treatment for years.

Rita strikes Fannett

A mere three weeks after Hurricane Katrina dominated national headlines with the destruction in New Orleans and along the Louisiana coast, Hurricane Rita slammed into the Texas Gulf Coast at Sabine Pass on Sept. 24, 2005. The most intense tropical cyclone ever seen in the Gulf of Mexico only directly caused seven deaths but devastated many communities.

The Crutchfield home in Fannett was badly damaged. The 1500-square-foot wood-frame house on an acre of land was built in 1932. By 2005, it was 73 years old and showed its age, but for this family it was home. They set out to pick up the pieces and rebuild.

By then, Trudie had four of her six children still living with her. They temporarily stayed with friends, crowding into a single room until they got a FEMA trailer. Still it was a long, difficult process, with insurance paying for only part of the expense.

“I had never filed a claim in my life,” she recalled, and she made up the difference out of her own pocket. Like other owners of damaged homes, she applied for and was granted forbearance, which means the mortgage company agrees to suspend the payments until the house can be repaired, followed by a “workout” to determine how that money will be paid, typically with additional payments tacked on to the end of the mortgage. By November 2006, Crutchfield had begun making her payments again though work on the home continued. The storm damage had revealed extensive issues with wiring that was more than 50 years old, and a serious mold problem developed in the wake of the storm.

Then a week before Christmas, Countrywide foreclosed on the Crutchfield home. A constable came out to serve the notice and told the family they had 30 days to vacate their home. On the bottom of one of the foreclosure documents was fine print telling them they had the right to counsel. When she called the number provided, the first name on the list was the Snider Law Firm.

Wyatt Snider took the case and the first thing he did was halt the foreclosure action in its tracks. A lawsuit against Countrywide was filed in March 2007 alleging the mortgage lender failed to keep its agreements relating to the forbearance after Hurricane Rita, including imposing late fees and penalties they had promised not to impose. In addition, Countrywide filed negative reports on Crutchfield with credit rating agencies.

Enter Bank of America

The parties entered mediation and that lawsuit was settled without trial in May 2008, and a Loan Modification Agreement was signed. By this time, Countrywide had been acquired by Bank of America – but Crutchfield’s problems got worse.

Although she continued to make her mortgage payments in full and on time, she was subjected to almost daily phone calls from BOA and its agents asserting she was in default on her mortgage, and she was also assessed late fees and penalties she did not owe.

At one point, the bank refused to accept her mortgage payments at all, so she had to submit them through Snider, who ensured they were received and properly credited. Throughout this process, her attorney repeatedly contacted BOA to inform them of their misconduct and to assert his client was in compliance with the Loan Modification Agreement – to no avail.

“I don’t know if this is just a case of incompetence on the part of Bank of America or if they are just indifferent to the rights of borrowers,” said Snider, but in November 2011 the bank filed another Notice of Foreclosure on the Crutchfield home. Snider quickly responded with a lawsuit to undo the action.

This time, lawyers for the bank apparently wanted no part of taking this lawsuit – and the sorry tale that prompted it – before a judge or jury. By February 2012, they had agreed to settle and mark Crutchfield’s account as paid in full. This agreement was finalized on March 15, 2012, and also contained a pledge to finally repair the family’s credit rating, which had been agreed to in the 2008 settlement of the first lawsuit but had never been done.

A happy ending to a sad story, right? Not exactly. Six weeks later, Bank of America sent another notice of foreclosure informing Crutchfield of their intent to seize her property and sell it.

For the third time, Snider sued the lender on behalf of Crutchfield. This time he sought a Temporary Restraining Order to stop Bank of America’s rampage of legal terror against Trudie and her family. While the previous lawsuits had been sent to mediation, the TRO request meant this case was going before Judge Bob Wortham of the 58th Judicial District in Jefferson County. What would he make of the actions of Bank of America in this case?

It didn’t take long to find out.

In a blistering opinion, Judge Wortham said “Bank of America has harassed Plaintiff and wrecked Plaintiff’s quality of life through daily unwarranted phone calls (and) default notices” and said attorneys for the bank should have known their most recent foreclosure attempt was “groundless and brought in bad faith or groundless and brought for purposes of harassment.”

Finding Bank of America’s actions in this case constituted a “conscious disregard, a conscious indifference and a contempt for the rights of Trudie Crutchfield,” Judge Wortham assessed sanctions of $300,000 against Bank of America, payable within 30 days.

In addition, Judge Wortham said an additional $300,000 sanction would be imposed if Bank of America failed to restore Crutchfield’s credit rating within 90 days. He also warned that if Bank of America mails, serves or delivers another foreclosure notice to Crutchfield, they would be sanctioned an additional $300,000 for that action.

Judge Wortham noted, “Bank of America is one of the largest and most powerful corporations in the United States of America. Such a large institution cannot be allowed to ignore the traditional core values of this court.”

Trudie Crutchfield was in tears as she heard the ruling of Judge Wortham – not the first tears she has shed during her long ordeal, but tears of joy and affirmation and the knowledge that at last justice had prevailed in her case.

Attorneys for Bank of America apparently haven’t had enough. They filed a motion asking Judge Wortham to reconsider his ruling in this case. A hearing on their request will be held Friday, July 20, at 1:15 p.m. in the 58th District Court.

James Shannon can be reached at (409) 832-1400, ext. 249, or by e-mail at james [at] beaumontbusinessjournal [dot] com.