Wells Fargo and Kozeny & McCubbin just got spanked in court

What happens when you meet your end of a deal to stave off a foreclosure, and then the bank forecloses on your house anyway?

Ask David and Crystal Holm. The Holt, Missouri, couple believed that they had met Wells Fargo’s terms to stop a foreclosure on their home. Then they spent six years in limbo.

After the Holms’ house suffered damage from a 2008 storm, the couple sought to resolve a debt issue with Wells Fargo, the lender.

The Holms say they came up with the money that Wells Fargo wanted to stop foreclosure on the property. But on August 15, 2008, Wells Fargo, represented by the law firm Kozeny & McCubbin (a firm based in St. Louis with offices in Fairway), started the foreclosure process anyway.

Wells Fargo took over the property and sold it to the Federal Home Loan Mortgage Corporation (known as Freddie Mac) for $141,792.

The Holms thought that they had done their part to keep the house out of the bank’s crosshairs and decided to keep living there anyway, an act of defiance that drew a lawsuit filed by Freddie Mac. They continued to live there, under constant threat of eviction, for six years.

Until about a week ago.

In late January, the couple won a verdict of more than $3 million from a Clinton County court. The judge seemed flabbergasted by Wells Fargo’s actions.

The house was worth $50,000, according to David Holm’s court testimony, but the bank will pay out far more in punitive damages than what it stood to make by selling it to Freddie Mac.

In particular, the court took a dim view of Wells Fargo’s about-face on the homeowners, who had accepted the bank’s offer to stop the foreclosure. Wells Fargo had received a check to reinstate the Holms’ mortgage on the property, yet unleashed its lawyers to pursue eviction.

“Wells Fargo’s decision to renege on its promises and contract and to deceive plaintiffs [Holms] with the pledge to cancel the foreclosure sale, were outrageous and reprehensible,” wrote Judge R. Brent Elliott, of Missouri’s 43rd Judicial Circuit Court, in a January 26 ruling against Wells Fargo and its attorneys.

If the combination of the Wells Fargo and Kozeny & McCubbin names sounds familiar, it should. The same combination of bank and lawyers is still trying to take over a Country Club Plaza condo (see “The latest local wrongful foreclosure may have happened on the Plaza,” published in our December 4, 2014, issue). That property is owned by a loan-enforcement lawyer.

That case is pending in federal court.