How to Protect Yourself Against Mortgage Loan Fraud, From Real Estate Law Center

The best defense against mortgage loan fraud is being well informed.

Here are some tips and advice from the Real Estate Law Center to help identify potentially fraudulent loan practices and avoid becoming a victim of loan fraud.

Real Estate Law Center Mortgage Lending Fraud

How to Protect Yourself Against Mortgage Loan Fraud, From Real Estate Law Center

Don’t Transfer Home Ownership

Dishonest lenders tell you that you are facing a foreclosure.  They then convince the owner to sign over the house deed “temporarily”, for a fee.  The owner loses not only the up-front fees but more importantly, the perpetrator often turns around and sells the house out from under them to someone else.  The home owner is out of their house!

Avoid No Money Down

Beware of “no money down” loan offers.  These are used to encourage people to buy homes they probably can not afford.

Don’t Be Forced Into Lying on Applications

Don’t let anyone suggest or force you into making false statements on your loan application, such as exaggerating the home’s value or lying about where your down payment is coming from.  This is illegal.  It also is a sign of a scammer looking to increase their profit on the deal by artificially inflating the home’s value.

Stay Away from Blank Contracts

Never sign a blank document or a document with blank lines that can be filled in later.  Do not let anyone say, “We’ll fill that in later.” Remember: you are legally bound by your signature and are responsible.

Get Referrals

Check referrals for any real estate and mortgage professionals when buying, selling or refinancing a home. Be sure to check their licenses with appropriate regulatory government authorities in your state, county, city or town.  For real estate agents, contact the local realtors board. Most mortgage professionals are honest and above board, but unfortunately, a small percentage are unscrupulous: referrals can help weed out the bad ones.

Review Lenders

Shop for a lender and compare costs. Be suspicious if anyone tries to steer you to just one lender.  Be suspicious when the cost of a home improvement goes up if you don’t accept the contractor’s financing.

Research Neighborhood

Review recent sales and other statistics for what other houses in the neighborhood sold for to get an idea of the current home value. Also review recent tax assessments of nearby homes.  Don’t let anyone, including a broker, or mortgage lender, force you into selling your house for less than its worth.  Knowing the home’s value gives you the advantage.

Review Documents Carefully

Be sure to carefully review ALL loan documents signed at closing.  If there is something you don’t understand, take the time to ask questions.  If you still don’t understand or agree to part of the agreement, just don’t sign the document.  Or, ask an attorney who can answer any questions and who can review the document before its signed.

Know All Costs

Review and understand all the costs associated with the loan and know what is covered. Mortgage loans can include the actual amount borrowed, private mortgage insurance and closing costs. Be sure the loan is not “packaged” with other fees or services such as premium credit insurance, or other products you dont understand, don’t want or don’t agree to.

Real Estate Law Center: 5 Tips to Avoid Mortgage Assistance Relief Scams

Real Estate Law Center Reveals Five Tips to Help Homeowners

The recent poor condition of the national housing market, combined with high unemployment, create a fertile ground for unscrupulous mortgage companies eager to take advantage of desperate homeowners.  They have been targeting states with the biggest mortgage problems, including states such as California, Arizona, Nevada, Florida, New Jersey and others.  It’s not surprising that these states have the highest predatory mortgage lender complaints as well.

The Increase of Mortgage Fraud
The FBI reports that the number of mortgage fraud a few years ago increased more than 36 percent to 63,173. In six years, the Bureau’s caseload of mortgage fraud cases has tripled.

Many homeowners turn to loan modification or foreclosure “rescue” companies to find help. But unfortunately many were duped by new scams that involve mortgage assistance relief.

These scams target homeowners with promises to save them from foreclosure, attempt to get them a reverse mortgage or reduce payments on the loan in exchange for a payment or a monthly fee.

Many of these owners will never get the help they were promised.

Marketing to Desperate Home Owners
Many rescue companies engage in tactics to find desperate home owners. Some scammers find borrowers from marketing techniques and offer misleading affiliations with a government agency to quickly gain the trust of unsuspecting victims.

Because these scams are sometimes hard to determine, and since they usually attract the most vulnerable home owners, unscrupulous companies and individuals are ready to take advantage.

Knowing these 5 tips can help protect unsuspecting home owners against mortgage fraud:

  1. Appraisal Fraud
    An appraiser, usually working with a lender, overvalues the home in order to secure an unnecessarily large loan at high interest rates for the homebuyer.  This increases the buyers expenses unnecessarily. Another scenario is that the appraiser undervalues the home in order to justify a short sale and subsequent re-sale at market value for profit.
  2. Agency Misrepresentations
    Carefully check the names, seals, logos or other representations made by a mortgage rescue company. They may be intentionally deceiving the borrowers into believing there is an afflation with a government agency. Note that a government agency never requires advance fees or guarantees a particular outcome.
  3. No Money Down Scams
    Beware of “no money down” loans. These have been used to talk people into buying a home they really can’t afford, and often lead to foreclosures and attempts at refinancing—another way to generate fees and add an expense to the home owner.
  4. False Title Transfers
    Do not transfer the title of ownership of a property to someone other than the lender, or stop making mortgage payments altogether.  These are ways that will guarantee to get into financial risk.
  5. Brokers Forcing Other Products
    Avoid brokers that want the home buyer to obtain an loan in order to buy other products from them.  These could include long-term care insurance, annuity, or other investments.  This can be common with scammers pushing reverse mortgages loans.

 

Real Estate Law Center: What is Predatory Mortgage Lending?

9 signs of Predatory Mortgage Lending Practices by the Real Estate Law Center

Predatory mortgage lending, according to the office of inspector general of the FDIC, is as “imposing unfair and abusive loan terms on borrowers.”

Real Estate Law Center Predatory Lending TipsBut what does predatory lending look like in the real world?

Unfortunately, there are many lending practices which are abusive and have been labeled as “predatory lending.” It’s not exactly clear what exactly defines “unfair” or “predatory” practices, however, and, as might be expected, lenders and consumer groups don’t actually agree.

The Real Estate Law Center looks at nine signs of predatory mortgage lending practices:

Brokers That Charge Higher Interest Rates

Real Estate Law Center TipsCharging higher interest rates can be a predatory lending practice, and is often more common than it should be.

Simply put: A broker can make more money if they increase the interest rate beyond the mortgage lender’s real interest rate charge.

To combat this, a good question to ask a broker is will they be paid a “yield-spread premium,” or basically a financial reward lenders pay for an inflated interest rate.

Unnecessarily Large Fees

Look out for large fees—especially when there is no need for them.

The lender charges “points” or a small percentage of the loan as a fee.  Generally these range from three points or 3% of the loan amount or less, including necessities such as appraisal and title insurance.  Be sure to get your credit score before hand and find out what other lenders charge in your area for comparisons.

Prepayment Penalty

Requiring a fee or paying a penalty for paying the loan off early could be a sign of predatory mortgage lending practices.  This stipulates that the borrower agrees to pay a large fee before refinancing. Note that the penalty period can last several years and this can cost thousands of dollars or more.

Ads Saying Bad Credit is Unimportant

Avoid lenders or companies who say that bad credit unimportant in their ads.  Also be especially wary of lenders or brokers who make contact directly, or those who try to rush a decisions or requires immediate responses.

Targeting Minority Groups

Also unfortunately, predatory lenders sometimes target older victims such as senior citizens or minorities in order to force unnecessarily expensive loans.

Balloon Adjustable Interest Rages

Adjustable rate loans that can rise significantly should be avoided.  Usually, a predatory loan balloons or adjusts one way—higher.   Be sure to understand exactly all the options, including what could happen in the “worst-case scenario” for any future payments. And don’t count on a future refinance to rescue you from an unaffordable loan.

Resolving Problems with Future Refinancing

Beware of the promise by a lender to correct a bad loan or deal later during a another refinancing down the road.  If a loan is not good now, just hold off until later.  Refinancing frequently can be a big financial drain too, and results in additional fees.

Not Including Insurance, Taxes

Confirm that monthly mortgage payments include additional costs, such as property taxes and insurance.  Also be sure that the lender has created an escrow account for these costs. An unscrupulous lender can make mortgage payments seem artificially low by not including all extra required costs.

Questions about what is predatory mortgage lending? Feel free to contact Real Estate Law Center.

Justice Department Official to Frontline: We Haven’t Prosecuted Wall Street Because of ‘Economic Issues’

PBS’ Frontline, known for documentary and long-form journalism, takes a hard look at the Justice Department‘s glaring lack of bringing anyone from Wall Street to court over the mortgage meltdown and the violation of banking laws when it foreclosed on families wholesale and wrongfully.

Watch The Untouchables on PBS. See more from FRONTLINE.

Titled “The Untouchables,” the hour-long episode brought witnesses and whistleblowers who were in the middle of the mortgage crisis to talk about their first-hand observations. Among them was Michael Winston, a Countrywide executive who was told that the company would fund anyone — regardless of their ability or means to pay for a mortgage.

Another person involved in the due diligence of loans said bank officials would openly laugh when applications crossed their desk and the applicant obviously couldn’t pay. Would this stop them from approving the loan? Absolutely not. Though he’s been a witness in private lawsuits, this person’s only recently been contacted by the Department of Justice.

Frontline talked Lanny Breuer, an Assistant Attorney General, as to why there’s been no prosecutions of Wall Street executives. He talked about not being able to bring a case unless they can prove it beyond a reasonable doubt and that civil lawsuits have been brought against the banks (often with cures as useless as the disease was painful).

However, former lawyers in his office claimed that Breuer was afraid of taking on the banks, and issued no subpoenas, did not review any documents or order any wiretaps against them.

Breuer also lost his temper when Frontline asked why they can find whistleblowers. He defended not bringing bank executives to court because, “if I bring the case against Institution A and as a result of that case there’s some huge economic effect — if it creates a ripple effect so that suddenly counter-parties and other financial institutions or other companies that have nothing to do with this are affected badly, it’s a factor we need to know and understand.”

He then defended his record by referring to a recent insider trading conviction involving a hedge fund manager — which had nothing to do with mortgages or the mortgage crisis.

(The Washington Post reported a day after the Frontline episode aired, Bruer resigned from his position at the Justice Department.)

There’s rarely as an example of how the government is not looking out or homeowners as this one. If the mortgage crisis has you caught up in a predatory loan or foreclosure, contact lawyers with the experience to bring banks to justice — contact Real Estate Law Center P.C.!

Real Estate Law Center: $18.5 Billion Foreclosure Settlement Against Banks; Experts Skeptical

Experts such as Real Estate Law Center doubtful that $18.5 billion settlement will help homeowners.

 

 

 

 

 

 

 

 

 

 

In an attempt to put the mortgage lending crisis behind them, 10 major banks signed on to a $8.5 billion settlement. The financial institutions answered charges that they mishandled foreclosures and loan modification, which ultimately evicted many homeowners without following banking laws and regulations.

The banks include Aurora, Bank of America, Citibank, JPMorgan Chase, MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank and Wells Fargo. An additional four banks (Ally, HSBC, OneWest Bank and Everbank ) may also enter into the agreement, increasing the settlement.

Bank of America, in an unrelated action, is also paying up for Countrywide (which it bought) failing to verify the value of homes and borrowers’ incomes. The bank will pay $10 billion to loan underwriter Fannie Mae.

Despite the total $18.5 billion payout, however, banks have consistently shown that they have no interest in remedying the situation or making right to the homeowners they’ve wronged. The $8.5 billion settlement also replaces the Independent Foreclosure Review, which was put in place for the banks bungling mortgages and foreclosures to begin with.

The settlement will most likely not be of much help to those who’ve been wrongly evicted from their homes. The National Mortgage Settlement, a separate settlement reached because of the actions of the financial institutions, will only distribute $1,500 to $2,000 to those who were thrown our of their homes.

“We’re terribly concerned that people are not going to get reimbursed at the level which they were led to believe would happen,” said Maeve Elise Brown, executive director of Housing & Economic Rights Advocates, an Oakland nonprofit. “It is not clear what remediation (path) will be followed.”

If you’re in danger of losing your home, don’t leave your fate to settlements that may never come — or that may not properly compensate you for your situation. Contact lawyers who have experience with representing foreclosure victims against the banks, such as Real Estate Law Center PC!

Government Draws Up Regulations for Mortgages, Bans Interest-Only and No-Document Loans — But It’s Too Little Too Late For Many

After years of playing fast and loose with home loans, the financial institutions that write mortgages are being compelled, by law, to ensure that borrowers have the means to pay their loans, the Suntimes.com and The Philadelphia Inquirer reports.

The Consumer Finance Protection Bureau laid out regulations for “qualified mortgages.” Banks are now required to obtain and verify the financial information — including employment, income, assets, debts and credit history — of the potential borrower. Banks are also prohibited from hiding the true costs of a mortgage behind teaser rates. The borrower must be able to repay the loan, with the mortgage debt totaling no more than 43 percent of his or her income.

The Bureau also banned no-document and interest-only home loans, which contributed to the housing bubble and ultimately the housing crisis as well as the robo-signing scandal that wrongly foreclosed on many homeowners.

Documents introduced as evidence in various lawsuits against banks because of the wrongful foreclosures demonstrates that employees were given financial incentives to drive potential homeowners who could afford and qualify for a regular mortgage into interest-only loans. Others were given loans they couldn’t afford by bank officials falsifying and doctoring income documents.

The rules will not immediately go into effect, however. They will be phased in over the next seven years — and for those who are in the process of being foreclosed on or who have been foreclosed, the new regulations are too little, too late.

If you’re facing eviction because of the foreclosure and the fault is the bank’s, contact lawyers with the experience to bring them to justice. Contact Real Estate Law Center P.C.

Wells Fargo Not Living Up to Pick-A-Pay Loan Settlement, New Lawsuit Alleges

If the mortgage crisis has shown anything, it’s that the country’s leading banks — once respected as the most conservative of society’s institutions — made some pretty dumb decisions.

Bank of America’s purchase of Countrywide is usually the first example that comes to mind, but they are by no means the only example. An Oakland, Calif. savings and loan, World Savings, began the mortgage practice that would become knows as pick-a-pay loans. These loans let homeowners choose the kind of payments they want to make: a minimum payment (which would not cover interest or principal), an interest-only payment, a payment that would pay the loan off in 30 years and another that would pay the loan off in 15 years.

World Saving was absorbed by Wachovia, which was then bought by Wells Fargo. During the time time of these acquisitions, borrowers who took out pick-a-pay loans would only pay the minimum — and when the real estate market tanked, they found themselves being evicted because their minimum payments unexpectedly spun out of control.

Many of the homeowners sued, and Wells Fargo ultimately promised to provide between $50 million to $600 million in loan modification benefits the pick-a-pay homeowners.

However, a new lawsuit filed against Wells Fargo alleges the bank did not live up to its obligations. A lawyer for the case, Jeffrey Berns, stated that Wells Fargo granted less than 3 percent of 66,000 requests for loan modifications made in the 18 months ending on Sept. 30.

Wells Fargo denies its done anything wrong in its handling of the cases.

If you’re a homeowner caught up in pick-a-pay loans from World Savings/Wachovia/Wells Fargo, don’t rely on their good intentions, especially if the foreclosure of your home is hanging in the balance.

Contact experienced foreclosure attorneys, like those at Real Estate Law Center PC, to ensure you know what your rights are!

Bank of America Supplies Answers for ‘Independent’ Foreclosure Reviewers

A rash of questionable foreclosures led to the government requiring that the Bank of America employ independent foreclosure reviewers. Sounds good so far, right? Who could argue that one of the mortgage lenders that not only wrote the bad loans that lead to the mortgage crisis, but that also seized home while violating foreclosure laws doesn’t need someone to make sure they’re operating legally and ethically?

But like most recent stories involving banks, mortgages and foreclosures, there’s always a “but.” In this case, Bank of America hired on the independent foreclosure reviewers, but they fed them the answers the bank wanted them to give.

The reviewers were an added step in the foreclosure review process and if they found bank acted improperly in the foreclosure, the homeowners were entitled to compensation. The reviewers answering questions about the foreclosures found they defaulted to Bank of America’s answers. If they wanted to answer the questions with their own responses, they would have to overwrite Bank of America’s.

While the practice did not overtly provide guidance as to whether or not to compensate homeowners (though we’d never imagine a case where a bank would voluntarily compensate a homeowner), the practice got the attention of public policy website Pro-Publica.

When pressed, Bank of America dropped the default answers appearing on their independent reviewers’ questionnaires. It also said steps would be taken to ensure they wouldn’t be able to see the answers by their researchers.

You know, like what they should have done to begin with.

If you believe you’ve been foreclosed on wrongfully, don’t count on the banks to treat you fairly. Contact a law firm that specializes in bank foreclosures like Real Estate Law Center PC to find out what your rights are!

Court Papers Allege Predatory Mortgage Lending by Wells Fargo; Ex-Employee Claims Countrywide Racist in Mortgage Lending

If you think the subprime loan and foreclosure scandals were as offensive as financial institutions could get, you just lack imagination.

Papers filed in federal court state Wells Fargo would force African-American borrowers into subprime loans, despite qualifying for regular, prime, mortgages. Even more disturbing was the language they used to describe their customers. Wells Fargo employees often threw racist terms like “mud people” to describe them and called their mortgages, “ghetto loans.”

Other employees used harsher racial slurs and also described African-Americans as living in “‘hoods” and “slums.” In one case, a Wells Fargo branch manager was promoted, despite one of his subordinates complaining about his use of the language.

The bank also reprimanded an employee for making too many FHA prime loans and not subprime loans, so Wells Fargo “could make a greater profit on the the loan.”

If you think this was an isolated incident — again, lack of imagination.

It turns out that Countrywide, at one time the largest mortgage lender in the US before it was bought out by Bank of America and imploded under the weight of its toxic subprime loans, also engaged in similar tactics and offensive behavior.

An ex-employee of the company wrote to the website The Consumerist, detailing a similar pattern of behavior.

“I can tell of several of instances where a customer would be qualified for a loan because their credit score and other factors based on the written product description, however, when I went in to put their (this only happened to African-Americans) ñ they were not qualified for the loan product and had to be referred to Countrywide’s subprime mortgage company Full Spectrum. Full Spectrum offered higher rates and fees. I got wise day and started not imputing the race so the computer could give me “approval.”"

Like Wells Fargo, Countrywide compelled its loan officers to place borrowers who qualified for prime loans into sub-prime loans like “No Income-No Ratio (NINA),” “Stated Income-Stated Assets (SISA),” any ARM product or “Pay Option ARM,” where borrowers can choose from 4 payments.

Incentives were given to the employees who placed customers in subprime loans.

If you find yourself in a situation where you’re about to lose your house, regardless of who your lender is, contact a law firm that is experienced in dealing with foreclosures.

The banks have proven that they are not only untrustworthy, but that they are also systemically and institutionally racist in their lending practices.

Contact Real Estate Law Center P.C. to fight for you and your home!

 http://consumerist.com/2009/06/08/insiders-countrywide-made-racist-sub-prime-loans/

Chase Hires Former Countrywide Exec Who Ignored Mortgage Warnings — as Head of Its Foreclosure Review Department!

We’ve written about Countrywide Mortgage’s fast and loose approval of mortgages, which included doctoring documents to show potential homeowners made more money than they actually did and overestimating the price of houses.

Countrywide’s been bought by Bank of America, and their liberal interpretation of mortgage qualification (appropriately enough called “The Hustle” within the company) caught the attention of federal regulators. The government has since brought a $1 billion lawsuit against Bank of America.

But the story doesn’t end there. Rebecca Mairone was the Chief Operating Officer of Countrywide’s subprime lending division, Full Spectrum Lending. and was warned about the consequences of the company’s actions. She reportedly ignored the warnings.

Federal prosecutors stated in a complaint: “[Mairone  was] repeatedly warned…that the Hustle would generate excessive quantities of fraudulent or otherwise seriously defective loans that were ineligible for sale to [Fannie and Freddie Mae].”

With this kind of black mark against her, did her career shrivel up and die, like the dreams of so many homeowners that were foreclosed on? If you think that was true, you’d be wrong. Very wrong.

She stayed on with Bank of America after Countrywide’s buyout. Then she landed a position heading Chase’s Independent Foreclosure Review.

Read that again. It’s not a typo.

Neil Barofsky, the former special inspector general for the Troubled Asset Relief Program, told ProPublica, “Finding out that the person running it for JPMorgan Chase is a person whose conduct in the run-up to financial crisis was allegedly so egregious that she somehow managed to be one of the only people actually named in a case brought by the Department of Justice goes beyond irony… It speaks volumes to the banks’ true intent and lack of concern for homeowners when addressing the harm that they caused during the foreclosure crisis.”

We couldn’t have said it better.

With banks employing the same person who is responsible for the crisis that’s causing the misery of so many homeowners as the head of their foreclosure review departments, is it any wonder why borrowers have to face an insurmountable fight to save their homes?

If you’re a homeowner facing foreclosure, don’t count on the banks to help you. Contact lawyers who are on your side — contact Real Estate Law Center, P.C.

http://www.propublica.org/article/exec-who-allegedly-enabled-fraud-runs-jpmorgan-chases-effort-to-compensate