After reading my column about the family who tried and failed to give their house back to the bank, Ian Traquair Ball, a lawyer in Minneapolis with experience in bankruptcy cases, did some research and drew his own conclusions. I told him I'd like to share his email to me with Whistleblower readers. Here are some highlights of his reaction:


"Your article on the Lerner and U S Bank foreclosure was interesting but a little one-sided.  There's more to the story than what was described.

First of all, when the Lerners refinanced their overpriced home and re-borrowed $325,000 from U S Bank in May, 2007 (according to U S Bank's bky court motion for relief), they made a deal with the bank - the bank had the option of either foreclosing, if it wanted the property back, or letting the Lerners keep the home and instead suing the Lerners for the money they borrowed.  If they didn't like the loan terms, the Lerners could have borrowed elsewhere - although every lender would have likely offered the same options.  When the Lerners decided to bail out, they did what a lot of other homeowners have decided to do: abandon the property, dump it in the lender's lap, and expect the lender to take the loss with no further obligation on the part of the Lerners.  And, when the bank didn't jump for the house when the Lerners tried to give it to them, the Lerners started whining.


Sure, it took the bank a while to foreclose but in this time of economic recession and house foreclosures, lenders are overwhelmed with property abandonments and foreclosures so why should the Lerners expect the bank to place their loan at the top of the bank's work list - join the line!  Moreover, your article says they moved out in October, then filed their Chapter 13 case in January, 2009 - which resulted in a bky court order to      U S Bank ordering the bank to not take any action to repossess the house or collect on the loan, so the Lerners' own bky filing delayed the house transfer further.  The bank filed its motion for stay relief about 60 days later - not an unreasonable period of time, in the world of bankruptcy and foreclosure procedure - and finally got to the foreclosure sale in September, again, not an unreasonable period of time in the present circumstances.


Oh, by the way, the Lerners aren't stuck with the property taxes and water and sewer bills and house insurance  - U S Bank will have to pay those as part of its foreclosure costs.  And the Lerners' Chapter 13 filing will protect them from Centerpoint and Xcel postpetition utility bills, too.  Your article failed to mention that.


I'm no great fan of U S Bank but it doesn't seem to me that the bank did anything wrong or unduly dragged its feet deliberately to make things tougher on the Lerners.  The bank is taking a hit - the Lerners are let off the hook - and they still don't get it."

I'm still wondering why U.S. Bank couldn't tell the Lerners what was going on. The answer likely lies in what Ball says above: "lenders are overwhelmed with property abandonments and foreclosures..." Whose fault is that? We'll be arguing about that for a long time.




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