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High Court Ruling: Bank Cannot Take Home of Foreclosure Rescue Scam Victim

On June 16, 2010, in Julian v. Buonassissi, No. 37, Sept. Term 2009, the Maryland Court of Appeals vindicated the rights of defrauded homeowners over the interests of large financial institutions.  The Court ruled in favor Ms. Harriette Julian, a homeowner who had allegedly been defrauded in a foreclosure rescue scam.  The Public Justice Center and Civil Justice Inc. co-counseled Ms. Julian’s appeal to Maryland’s highest court. In the brief co-authored by former Murnaghan Appellate Advocacy Fellow Matthew Hill and Phillip Robinson, Executive Director of Civil Justice, Ms. Julian argued that Wells Fargo’s interest in the property was void or at least subordinate to Ms. Julian’s right of ownership, since Wells Fargo, and its successor U.S. Bank, took their interest in the property as part of an illegal, fraudulent transaction violating the Maryland Protection of Homeowners in Foreclosure Act (PHIFA).

While the Court did not go as far as Ms. Julian had urged and hold that the Bank’s interest was void, the Court affirmed Ms. Julian’s right to claim ownership of the property. The Court made clear that U.S. Bank or any foreclosing party must act without notice of fraud or statutory violations in the transaction particularly when it moves forward with a foreclosure sale, or any interest in the property it has will be subordinated to that of the homeowner. Accordingly, the Court reversed the trial court’s ruling against Ms. Julian and remanded the case for further exploration of what the Bank knew about the fraudulent transaction before it purchased its own interest at the foreclosure sale. Two of the Court’s seven justices would have gone even further, arguing that the Bank’s interest was never valid because it knew or should have known from the beginning that the transaction violated PHIFA.

This is a significant victory for homeowners in foreclosure and furthers the Public Justice Center’s mission of advancing a human right to housing over the interests of financial institutions that recklessly ignore potentially fraudulent activity in their loan transactions.
Ms. Julian’s brief was supported by amicus curiae briefs filed by the Maryland Legal Aid Bureau, the Maryland Attorney General Consumer Protection Division, the Community Law Center, the Maryland Cash Campaign, the Maryland Consumer Rights Coalition, and St. Ambrose Housing Aid Center.

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