Wells Fargo v. Benoit — The Million Dollar Mortgage Mistake

The loan at the center of this case was made in 2004 by Ameriquest Mortgage Company — at the time, one of the largest subprime lenders in the country. Two years after making this loan, Ameriquest paid $325 million to settle claims brought by 49 states for predatory lending: falsifying borrower income, misleading consumers about interest rates, pressuring appraisers to inflate home values. The company shut down in 2007. By then the loan had already been sold into a securitization trust called Park Place Securities, Inc., Asset-Backed Pass-Through Certificates, Series 2004-WCW2, with Wells Fargo acting as trustee.

Our clients had borrowed $573,200, but the payments were much much higher than they’d thought they would be, and had to stop paying in 2005. For some reason—we don’t know why—Wells Fargo waited twelve years — to file the foreclosure. By that point, they were claiming over $1.3 million.

The Notice Was Defective

Before a bank can foreclose in Maine, it must send a right-to-cure notice that strictly complies with 14 M.R.S. § 6111. The notice must itemize exactly what the borrower owes — not just a total, but a breakdown. Strict compliance. Not close enough.

Wells Fargo's 2016 notice listed a cure amount of $706,329.42. It included a single line for "Payment due for May 1, 2005" of $636,595.63 with no breakdown of how much was principal and how much was interest or where that number even came from. At trial, Wells Fargo's own witness was asked directly: is there any itemization of principal and interest in this notice? There was not. Nor did the record really show where the numbers in the notice even came from.

Maine law required that itemization. The notice failed. The foreclosure built on top of it failed with it.

The Bankruptcy Argument

Wells Fargo had a second card to play. Our clients had filed for Chapter 7 bankruptcy in 2005 and listed the property as surrendered. Wells Fargo argued that by indicating an intent to surrender nearly two decades earlier, they had permanently given up the right to raise any defenses in a later foreclosure. The trial court agreed, entering an order barring our clients from contesting Wells Fargo's evidence or cross-examining its witnesses.

We appealed to the Maine Supreme Judicial Court.

The argument: surrender in bankruptcy means turning property over to the trustee for administration — nothing more. The Bankruptcy Code's own savings clause says a statement of intention to surrender "shall not alter the debtor's or the trustee's rights." The trustee in this case never sold the property. It was abandoned back to our clients when the bankruptcy closed, with all rights intact, treated as if no bankruptcy had been filed. Stating an intent not to redeem or reaffirm a debt in 2005 does not mean waiving the right to make a bank prove its case twelve years later.

The Law Court agreed. The bankruptcy argument failed. The defective notice defense stood.

The Result

The foreclosure was dismissed. The claimed balance — and everything that had accrued on top of it — was gone. When Wells Fargo recalculated what they could actually pursue going forward, the number dropped from over $1.3 million to just over $300,000.

A reduction of a million dollars. On a loan originally made by a company that was itself committing fraud when it made it.

What This Case Shows

Wells Fargo is one of the largest financial institutions in the world. They had attorneys. They had resources. What they had for this particular foreclosure was apparently a form letter — because when you're processing volume across thousands of files, you don't always look carefully at twelve years of history behind one of them.

That's the gap that serious foreclosure defense exploits. Banks cut corners. Maine law requires strict compliance. When those two things meet in a courtroom, the results can be significant.

Past results do not guarantee future outcomes. Every case turns on its own facts.