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Bend Man Sues Bank Over Home's Foreclosure

Still in Home, Sold by Bank as Son Returned From Iraq

BEND, Ore. -- A Bend man whose home was foreclosed upon the very day his son came home on leave from the Iraq war zone remains in the home. But after two months of legal limbo, he filed a federal lawsuit Thursday against J.P. Morgan Chase Bank, seeking at least $250,000 in damages, enough to recover his home, and an injunction against any eviction notice. The 26-page complaint seeks "equitable redemption due to wrongful foreclosure" and also accuses the bank of breach of contract and unlawful debt collection.

Collette bought the Bend home in 2006 with a $127,000 down payment. When his small flooring and countertop business was hurt by the economic downturn, he contacted Chase for help. But according to Economic Fairness Oregon, which has taken up Collette's case, "Chase put Tim on a collision course with foreclosure – advising him to skip payments to qualify for help, putting him on a trial modification for nine months, then denying him a permanent modification and slapping him with $9,000 in penalties and arrears."

"Unfortunately, Tim's situation is not unique,” says his lawyer, John Bowles. “His case is representative of what thousands of Oregonians are going through every month."

Collette's son, Aaron Collette, arrived home on leave from Iraq on Aug. 9, just hours after Chase sold his family’s home in a foreclosure proceeding on the Deschutes County Courthouse steps. Weeks earlier, the father and son's story began to draw widespread media coverage and has attracted the attention of politicians and activists. More than 120,000 supporters signed a petition created by EFO on behalf of Tim Collette on

Bowles said Fannie Mae bought the property at the foreclosure sale, "which really was a sham, because Fannie Mae already owned the loan."

"Chase was misrepresenting its position as an owner of the loan and as a creditor with the right to non-judicially foreclose," the attorney said. "There were no assignments of the deed of trust to either Fannie Mae or Chase."

Collette remains in the home, in limbo, with no eviction action taken. He said he’s taking up this fight not just for his family, but for the countless other homeowners in the same boat. “People who play by the rules and do what their banks tell them shouldn’t end up with nothing,” Collette said. “It’s time for people to stand up and demand some real accountability from these corporations that we bailed out as taxpayers.”

Chase Bank spokeswoman Darcy Wilmot in Seattle said the bank could not comment on pending litigation.

Economic Fairness Oregon has been working with Collette since he attended a community meeting on foreclosure earlier this year. Since then, he has testified on behalf of mortgage servicing reform three times before the state Legislature, and Sen. Jeff Merkley, D-Ore., shared his story on the floor of the U.S. Senate.

The lawsuit seeks "economic damages of no less than $250,000 or an amount to be proven at trial" for violations of the Fair Debt Collection Practices Act. It also seeks "monetary damages sufficient to permit him to recover title to his home."

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Angela Martin, executive director of EFO, noted that Oregon is a non-judicial foreclosure state.

"Non-judicial foreclosures are a fast-track process that allows banks to foreclose just using some forms and paperwork," she said. "No judge or anyone outside the bank ever reviews it, unless the homeowner challenges it.

"Given that there is no judicial oversight, Oregon law includes strict safeguards to ensure fairness and accuracy," Martin said. "One of the principal protections is the requirement that all assignments of the trust deed be publicly recorded in the county land records where the property is located. Public recording establishes a clear chain of ownership that allows all parties to understand who has the right to foreclose should the homeowner default. This system has worked well enough since 1959."

"The banking industry and their lobbyists would like you to believe that homeowners like Tim are looking for technical loopholes in an effort to get off scot-free," Martin said. "That is simply not the case. We are a nation of laws. During the heydays of the housing boom, banks cut corners in order to facilitate their high stakes, fast paced betting. Now that those risky bets have gone sour, they want to rewrite the rules and point the finger of blame at homeowners who seek to assert their legal rights."

Martin told KTVZ.COM shes "not going to presume to understand" why no eviction action has been taken in the closely watched case.

"The facts in Tim's case are simple," she said. "Chase failed to follow Oregon law when they foreclosed on Tim's home. Judges ruling on similar Oregon cases have been clear: Oregon law giving lenders the right to foreclose without judicial oversight requires lenders to prove standing by publicly recording all assignments. Chase did not follow the law. This isn't a technicality -- this is due process."

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