by Tanta on 8/05/2008 12:52:00 PM

Now this ought to be a really interesting suit to follow. From the Boston Globe:

In their lawsuit, the Pestanas are seeking damages for their tarnished credit and are trying to reverse their eviction and foreclosure. Their Boston lawyer, Gary Klein, said their eviction has been delayed until late August.

The suit, filed one week ago, indicates the Pestanas would not have gone into foreclosure if they had reached someone at WaMu with authority to resolve their problem.

After the couple missed their August 2007 payment, Mark Pestana, a human resources specialist, and Lori Pestana, a business consultant whose work had slowed, still felt they could get current on their loan. One option might have been dipping into retirement savings, they said.

After reading on WaMu's website that it would assist distressed borrowers with loan modifications, Lori Pestana called and was told they could not qualify until their payments were 50 days late. To become eligible, they stopped paying and applied for help on Oct. 9, 2007.

It kind of sounds like these folks had the ability to make payments, but decided not to do so in order to induce WaMu to modify their loan. This ought to be interesting.

As it happens, the new FHA program authorized by the Foreclosure Prevention Act of 2008 requires borrowers to "provide certification to the Secretary that the mortgagor has not intentionally defaulted on the mortgage or any other debt." It looks like a court may be ruling on what exactly that might mean sooner than we thought.

(Hat tip to A.F.)