Homeowner Sues Mortgage Company, and Wins!

homeowner suesAll Patrick Rodgers wanted was for someone at his mortgage lender to talk to him. But when the bank ignored repeated requests, the Philadelphia homeowner sued -- and won.

According to Rodgers, all he wanted was for the lender to answer his questions about its demand for him to purchase more home insurance.

Yet the bank still hasn't responded, Rodgers says, even though it has paid the $1,300 judgment.

Rodgers, a concert promoter who in January 2002 purchased a 6-bedroom, 3-bath Tudor-style home for $179,000, did as all homeowners do when they obtain a mortgage: He purchased home insurance to cover its replacement value should it ever be destroyed in a fire or other catastrophe.

About seven years later, his mortgage lender, Wells Fargo, asked him to insure the home for $1 million after an insurance inspector valued it at that amount. The amount was an estimate of what the home would cost to replace, reported the Philadelphia Inquirer. Rodgers balked. Wells Fargo went behind his back and bought him a policy, so Rodgers sued when the bank refused to respond to his inquiries.

Although home values have waxed and waned since he purchased his house in the Wynnefield Heights neighborhood, there's one thing this founder of Dancing Ferret Concerts knows for sure: The 1925-built home has never been worth $1 million.

"The area we are in is kind of close to the wrong side of the tracks," he told AOL Real Estate in a phone interview. "It was comparable to other prices in the neighborhood at the time." In fact, property records we dug up show that a smaller six-bedroom home across the street sold for $185,000 just seven months after Rodgers moved in.

"If you moved the house about five minutes west of here the price would go down about half and 15 minutes the other direction, it would go triple," he said.

Wells Fargo never sent Rodgers an appraisal report showing its estimated $1 million value, he says. To substantiate a change in the replacement value, up or down, a person or entity must show proof of the changed value through an "accepted industry rebuild estimators or an appraisal with the cost to replace new on the dwelling," says Mark Boyer, CEO of Foundation Financial Group in Jacksonville, Fla.

"The market value and the insurance coverage amount are in no way related," says Mark D'Agostino, the owner and president of R.F. D'Agostino Insurance Agency Co., in Brockton, Mass., outside of Boston. "The coverage amount is the cost to rebuild the home in the event of a total loss; the homeowner can ask that the replacement cost be reevaluated at any time. Going up is generally easier to do than going down."

Outside of some exterior repairs he did to the Search Homes for Sale See photos of homes for sale in your area and across the country on AOL Real Estate home a couple of years after he purchased it, Rodgers hasn't made any other upgrades or changes that would warrant such a drastic increase in value.

So Rodgers said no to Wells Fargo's request for additional insurance. Then Wells Fargo bought it for him, and his insurance company notified him that the new policy would cost him an additional $500 per month above his previous policy.

Rodgers wrote to Wells Fargo explaining his situation and demanding an explanation for its actions. By law under the Real Estate Settlement Procedures Act, Wells Fargo had 20 days to respond. When it didn't, Rodgers wrote another letter letting them know they had missed the deadline, and giving them one more chance to respond. After another 60 days had passed and Wells Fargo missed another RESPA-mandated deadline, Rodgers moved for a judgment against his lender for failure to respond. His reward: a default judgment of $1,000 since a Wells Fargo representative never appeared in court.

When the lender didn't pay up, Rodgers contacted the Philadelphia sheriff's department for help. The sheriff scheduled a sale of the items in a Wells Fargo office to cover the monies owed to Rodgers. That, along with media reports, got Wells Fargo's attention and they sent Rodgers several checks totaling the approximately $1,300 they owed him for the RESPA violation, court costs, sheriff's levy, and scheduled sale. (The sheriff's sale has been cancelled now that the bank has paid.)

Rodgers has received the money, but no phone call or letter. "No one from Wells Fargo has reached out to me yet and that was the point for me in initiating all of this. It wasn't that I wanted to litigate and get $1,000. I just wanted someone from Wells Fargo to talk to me."

Sheree R. Curry
, who has owned three homes and once had a Wells Fargo mortgage, is a three-time award-winning journalist who has covered real estate for six years. During her 20-year career, her articles have appeared regularly in the
Wall Street Journal, TV Week, and Fortune. She's been writing for AOL Real Estate since 2009 from a Minneapolis-area rental. She seeks a book publisher -- or at least a lender who'll give a reasonable mortgage rate to a self-employed mom.

For more on mortgages and homeownership see these AOL Real Estate guides:

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Are any of you people Insurace Agents? I am and all of these harebrained comments are so below me. They do not even deserve a response. Call your insurance agent for the CORRECT facts.

February 27 2011 at 9:23 AM Report abuse rate up rate down Reply

The $1300.00 is nice . . . but I don't see that getting that resolved the underlying problem, which is that he is paying $500 a month in unnecessary insurance premiums. Was there more relief according him in the default judgment that the damages/costs award?

February 22 2011 at 5:07 PM Report abuse rate up rate down Reply

Im about to forgo foreclosure, so I need to sell my home in Texas www.needtosalemyhomefast.webs.com Thanks

February 19 2011 at 11:59 AM Report abuse rate up rate down Reply

Hmm, looking at that house...I'm suddenly craving one of those chocolate striped cookies!

February 19 2011 at 5:00 AM Report abuse rate up rate down Reply
Paula Kessler


February 19 2011 at 3:08 AM Report abuse rate up rate down Reply

Mortgage companies you have to look out for. Some are very corrupt and you cant trust any farther then you can see them! Put mortgage companies and realtors companies in the same boat and you have the reason why houses aren't selling!

February 19 2011 at 2:21 AM Report abuse rate up rate down Reply

having had personal experience with rebuilding after a fire, we came to realize that there is a BIG difference between insuring a house for it's value and insuring for it's rebuilding cost. most older homes would cost a lot more to rebuild than they are worth on the market because a lot of the older workmanship cannot be duplicated cheaply. everything has to be purchased new, and labor costs have gone up dramatically. even if your house isn't totalled in a fire, only partially destroyed, you can loose out if you do not have enough insurance.

February 19 2011 at 1:58 AM Report abuse rate up rate down Reply

i thought about something. just what if someone saw your home and wanted it so bad that they hatched up this skeem to out price your mortgage payment and the only way they had leverage was to increase your insurance premium payment because your interest rate may be fixed and no moving that. and as most people do they feel they have to pay it and dont question and eventually lose their property which is very sad. so look into all other aspects of this situation. i have never had a financial company go all the way to where that office's item where almost sold out of the office and i bet the home office was pissed off big time at the staff!!

February 19 2011 at 1:19 AM Report abuse rate up rate down Reply

Your agent was wrong.

February 19 2011 at 12:25 AM Report abuse rate up rate down Reply

I've been doing business with WFB for 40 years. They took the mortgage on two of my homes. I have two checking accounts and two savings accounts, a credit card, plus two credit lines. I do 99 percent of my banking on-line. My experience with them has been near perfect. Plus, I pay no fees. I love them!

February 19 2011 at 12:15 AM Report abuse rate up rate down Reply