This section is from the 2-9-2011 report by E. Amon for Bloomberg News here:
Lawsuits/Pretrial
Citigroup, Ally Class-Action Foreclosure Suit Dropped
Kentucky homeowners dropped a possible class-action suit in which Citigroup Inc. and Ally Financial Inc. units were accused of conspiring with Mortgage Electronic Registration Systems Inc. to falsely foreclose on loans.
Heather Boone McKeever, the Lexington, Kentucky, lawyer who sued on behalf of the homeowners, said yesterday by e-mail that she dropped the case Feb. 3 because as a solo practitioner she wouldn’t be able to clear the “necessary hurdles” for maintaining a federal class action and she couldn’t interest a larger law firm. She said she continues to advise the plaintiffs in their individual state-court cases.
“My plan is to try to keep the cases in state court by filing class-action counterclaims against the individual creditors and MERS in each family’s action,” she said.
The lawsuit, filed as a civil-racketeering case on behalf of all Kentucky homeowners facing foreclosure, also named as a defendant Reston, Virginia-based MERS, the company that handles mortgage transfers among member banks.
MERS and banks have been accused in at least two other federal suits of violating the Racketeer Influenced and Corrupt Organizations Act, a law originally passed to pursue organized crime. A Florida case was thrown out Jan. 31 by a judge in Miami. Another is in Brooklyn, New York.
The Kentucky homeowners filed their complaint Sept. 28 in Louisville. They claimed that through MERS the banks are foreclosing on homes even when they don’t hold titles to the properties. The suit was dismissed without prejudice, meaning that the homeowners can refile it.
The case is Foster v. Mortgage Electronic Registration Systems Inc., 10-cv-611, U.S. District Court, Western District of Kentucky (Louisville).
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