EASTLAKE, Ohio -- The first time Michael and Pamella Negrea were foreclosed upon in 2001, the suit was thrown out of court. They had never even made a late payment.

That didn't stop GMAC Mortgage.

In 2005, two years after the case was dismissed, GMAC filed for foreclosure again. This time, the Negreas sued for breach of contract, fraud and unfair debt collection. They won more than $217,000, and the foreclosure was thrown out again.

And still that didn't stop GMAC.



The mortgage company now has foreclosed again, just as GMAC sits at the heart of a national foreclosure scandal. The company has suspended foreclosures in 23 states, and is reviewing cases in all 50 states, over revelations of possibly fraudulent documents, and several other banks have followed suit.

"It's like a foreclosure machine," the Negreas' attorney, Stephen Futterer of Willoughby, said of GMAC. "It won't stop."

The Negreas' case reveals the inner workings and the depth of the troubles facing the mortgage industry, which seems to have blindly shoved through thousands of foreclosures without even reading the documents.

Michael Negrea, a Willoughby police officer for 25 years, says most people he talks with can't even comprehend their tale. "You think, 'You make your payments, and everything is fine.' You would think this couldn't possible happen."

A representative for GMAC did not return a phone call seeking comment.

The Eastlake couple's story started in 1995, when they built their modest 2,400-square-foot colonial and borrowed $200,000. They refinanced in 1998 with a local mortgage company, which sold the loan to Advanta Mortgage Corp.

The loan was sold a year later to Nation's Credit, then it was sold to Homecomings Financial, with the loan being serviced by Fairbanks Capital Corp., one of the nation's most notorious mortgage lenders. The Federal Trade Commission in 2003 sued Fairbanks for deceptive and illegal practices, including not posting customer payments, and the company agreed that year pay $40 million in damages.

Sometime while Fairbanks was in the picture for the Negreas, two payments didn't get posted.

"You'd call and talk to someone and they said they'd look into it," said Michael Negrea, 53. "When you called and asked for the person you talked to, they no longer worked for the company. You'd leave a message for a supervisor, and they'd never call you back."

A foreclosure was filed in 2001 on behalf of Homecomings, which owned the loan. Right around the same time, the servicing was transferred from Fairbanks to GMAC. Once Homecomings said the Negreas were in foreclosure, the company wouldn't accept their monthly payments. So the couple simply put the money in the bank.

When attorneys for both sides sat down in 2003, they worked out a written settlement: All penalties and interest would be wiped out and the Negreas would pay the actual payments owed. Homecomings/GMAC also would erase the foreclosure and negative information from the Negreas' credit files. (The Negreas say that still has never happened.) The Negreas started making normal payments again in early 2004.

By June, GMAC sent another default letter. The couple had copies of their canceled checks and even the return receipts from the Postal Service showing when the payments had been sent and received. All payments had been on time, and GMAC apologized in July for the mistake.

In October, they got another default letter. And they got a letter saying that GMAC thought their $500 homeowners' insurance premium hadn't been paid, so they were imposing a new policy at $3,200. In truth, their insurance hadn't lapsed. They'd had the same company since buying the home.

GMAC again sent apology letters.

After the couple sent their December payment, it wasn't cashed. The next month, in January 2005, GMAC again filed for foreclosure and wouldn't back down.

"They pretty much treated us like criminals," Michael Negrea said.

Futterer, who has been their attorney in the case since 2003, filed a counter claim for breach of contract, fraud and violating debt collection laws.

The Negreas insisted on going to trial. As the evidence unfolded, Michael Negrea said, "you could hear some of the people on the jury saying, 'Oh my gosh.' "

It turned out that GMAC had applied their payments to the bogus penalties that had been forgiven in court proceedings back in 2003, as well as to payments that had already been posted.

Futterer asked for a large enough award from GMAC to wipe out their roughly $200,00 mortgage forever. By the time they got the $217,244 settlement more than three years later -- in 2009 -- GMAC had again added on more than $50,000 worth of fees.

So why wouldn't they refinance the balance with a more reputable bank? It is because they still had two foreclosures on their credit records, along with dozens of erroneous late payments. "They screwed up our credit so bad we can't get any kind of loan," said Pamella Negrea, 57.

But GMAC wasn't done.

In 2008, the couple got a statement from GMAC demanding payment for its attorneys in the second foreclosure case -- the one in which GMAC lost the counterclaim. "How can you ask for legal fees when you paid our legal fees?" Michael Negrea asked.

During the last few years, GMAC has repeatedly accused the Negreas of not having homeowners' insurance and insisted on making monthly home inspections, charging $700 or more for each one. GMAC told them the inspections were to make sure they still lived there. Michael Negrea considered them harassment.

The couple had been making normal payments last year when GMAC again stopped cashing them, saying they owed a lump sum of nearly $310,000 plus attorneys' fees on their $208,000 mortgage.

In August 2009, GMAC/Homecomings filed for foreclosure again, this time in federal court instead of common pleas court. "We feel they're court-shopping," Futterer said. The trial is set for January.

The Negreas are ecstatic that GMAC's practices may finally be coming to light, even though the accusations so far are limited to whether GMAC gave false information about foreclosures.

"I can't image how many people lost their houses who didn't deserve it," Michael Negrea said.

The couple is drained from years of back and forth with GMAC.

"I think a lot of people would have just given up," said Pamella Negrea, a graphic designer. "Nobody believes us. People think, 'A bank wouldn't file for foreclosure if the bank wasn't right.' "

"People ask me, 'How do you put up with this?' I have no choice," Michael Negrea said. "It has cost us a fortune. We don't make that much. But it's our home."