An Oregon couple in their 70s have been awarded more than $8 million after a jury found that companies involved in the foreclosure of their home had committed unlawful trade practices and financial abuse. The couple, Wallace Owen and Barbara Owen, had continued living in the property even after the loan companies claimed they had moved out.According to Exlitem, a legal research platform, the house, located on Skyline Road South in Salem, Oregon, was sold at a foreclosure auction in September 2022. The sale went ahead even though the couple had not left the property. The buyer, Lantern Gate Properties, later filed a lawsuit seeking to remove them from the house.The dispute began after American Advisors Group (AAG), which serviced the couple’s reverse mortgage, claimed in 2021 that they had moved out. AAG was acting on behalf of Reverse Mortgage Funding, the company that held the mortgage deed. The loan companies treated the claim as a default and began foreclosure proceedings.However, the couple had continued to use the property as their home. The report said the companies did not inspect it to establish whether they had actually moved. The foreclosure process also went ahead despite postal tracking records showing that legal notices sent to Wallace Owen had not reached the homeowners.A jury in Marion County, Oregon, delivered its verdict in January this year. It found Clear Recon Corp and Aldridge Pite LLP liable on several claims involving the foreclosure and the handling of money left over from the property sale. AAG had earlier been found liable by default for financial abuse of a vulnerable person. The jury determined the damages payable by the companies.
How the foreclosure began
Wallace and Barbara Owen bought the Salem property in 2015, and used it as their primary residence. Barbara transferred her legal interest in the property to Wallace in 2017. Both were over 65 that year and continued living in the house.Wallace had taken a reverse mortgage using the property as security for the loan. Reverse Mortgage Funding was the beneficiary of the trust deed, while AAG managed the loan account.In 2021, AAG claimed that the couple had relocated. The loan companies relied on this claim to declare a default on the reverse mortgage. They then hired Clear Recon Corp to begin foreclosure proceedings. Clear Recon used Aldridge Pite LLP to handle the legal notices.Aldridge Pite sent foreclosure notices addressed to Wallace from its office in Georgia. However, postal tracking records showed that the notices had neither reached the homeowners nor left Georgia. Clear Recon had access to these records but proceeded with the foreclosure sale in September 2022.Lantern Gate Properties bought the house at the auction. It subsequently filed an ejectment lawsuit against the couple, seeking to remove them from the property.
Dispute over money left after the sale
The foreclosure sale generated more than $175,000 above the amount owed on the mortgage. This excess amount was meant to be available after the debt was accounted for. However, Clear Recon and Aldridge Pite withheld the money from the couple.Wallace and Barbara said they needed the funds to meet their regular living expenses. They also had to hire lawyers to obtain transaction records, check the sale figures and defend themselves against the eviction case.Their legal claims included allegations that Clear Recon and Aldridge Pite had misled them about the money. The couple said the companies told them the surplus could be released only if they signed a liability waiver.They also challenged the basis of the foreclosure, arguing that the loan companies had treated them as defaulters without confirming whether they had left the house. Their lawyers said the required notices had not been delivered and that the foreclosure sale was therefore invalid.
What the companies argued
Lantern Gate Properties maintained that it had bought the property in good faith at a public auction and held legal title to it. It argued that it was entitled to possession of the house.Clear Recon and Aldridge Pite denied the allegations of wrongdoing. They said they had followed standard foreclosure procedures. They also argued that legal documents and liability releases were required before the surplus funds could be distributed.AAG and Reverse Mortgage Funding did not present an active defence at the trial. The court had already found AAG liable by default on the couple’s claims of financial abuse of a vulnerable person.
What the jury decided
The jury found Clear Recon liable on all three claims brought against it under Oregon’s Unlawful Trade Practices Act. It found that the company had willfully conducted the foreclosure sale when Wallace was not in default. It also found that Clear Recon had made false or misleading statements about the release of the surplus money and had refused to return it when the couple demanded it.The jury awarded Wallace $108,000 and Barbara $216,000 in actual damages against Clear Recon. It also ordered the company to pay $4.4 million in punitive damages. Separately, it awarded each of them $400,000 in economic damages and $250,000 in non-economic damages after finding the company liable for financial abuse of a vulnerable person.Aldridge Pite was also found liable under the Unlawful Trade Practices Act for misleading statements about the surplus funds and refusing to release the money on demand. The jury awarded each of the two homeowners $10,238 in actual damages and ordered the firm to pay $2.5 million in punitive damages.On the financial abuse claims against Aldridge Pite, the jury awarded each homeowner $250,000 in economic damages and another $250,000 in non-economic damages.AAG’s liability had already been established by default. The jury awarded Wallace and Barbara $125,000 each in economic damages and $125,000 each in non-economic damages against the company.