Do You Think You Are the Victim of Predatory Lending?

[Moe Bedard]

The facts are that there are many people who are losing their homes to predatory lending because they were placed in mortgages they could not afford. Does that make you the bad person or the one that all the blame in placed on? NO!

When people look for a mortgage they rely on professional advice and the aid of a mortgage broker or lender. The loan process is complicated and most everyone places their trust in the professional thet is guiding them through the process.

Unfortunatley, many of these professionals placed thousands and thousands of borrowers in loans that they could not afford or in just down right exotic mortgages, that now have become extinct.

Predatory lending is a buzz word that is floating around a lot right now and for good reason. There are thousands and quite possibly maybe a million plus people that have mortgages where the Truth in Lending Act was violated, thus falling under the predatory lending statue.

I wanted to post some information and a website that will help people that think they are victims.

A website you need to visit is www.FairLending.com. It is operated by the National Community Reinvestment Coalition. This explains who they are and what they do from their website.

Through the National Anti-Predatory Lending Consumer Rescue fund (CRF), NCRC works with victims of predatory lenders so their mortgage payment becomes more affordable and foreclosure can be avoided. NCRC's member groups and their communities are encouraged to tap into this program. The CRF identifies consumers who are in “high risk,” predatory mortgages. We also assist those who have made good faith efforts to pay their loans but are unable to do so due to a permanent change in circumstances.

Here is another excerpt from their website giving details of what they do and can do.

Qualifying consumers will be provided assistance free of charge. Keeping a homeowner in his or her home is of utmost importance to NCRC and its partners and members. The CRF is designed to have both a short- and a long-term benefit to the homeowner. Some of the ways we can help people include:

• Mediation with the lender or servicer to have abusive terms eliminated, and to delay or stop foreclosure proceedings.
• Through an affordable refinance, or through mediation with the customer’s current lender, NCRC has been able to modify abusive mortgage terms. This enables borrowers to attain greater financial security.
• If applicable, NCRC will negotiate with lenders to help customers whose appraisals have been inflated or whose mortgage debt is greater than their home’s worth because of a predatory loan. In cases like that, NCRC will attempt to have part of the loan forgiven.

Refinancing services are currently available in the states of: Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Maryland, Massachusetts, Nevada, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, Texas and Wisconsin.

I plan on aliging myself with them and using this forum to aid in their effort against predatory lending.

[pbbobkanobi]

When I applied aver 3 years ago for my home loan it was through Proffer Financial here in San Diego, CA. The loan was funded through Crestline who then sold my loans to Countrywide. I have an 3/27 ARM (80%) @ 5.95% and a 15 yr. fixed conv. 2nd with a 15 yr. ballon. (20% piggyback loan) @ 10.99%. When I contacted Proffer Financial I was assigned to a guy named Steve Gold. I never met him in person and now know why. Steve is no longer in the business and lives out of state. (I wonder why) When I applied for the loan I was told that my choices were very limited since I had no down payment. He told me the only loan I could get was a stated income loan.

The terms were as described above with a 3 year prepayment penalty. The prepayment penalty was supposed to be 2 years but changed before I signed the final papers. I was never told about this change. Steve Gold was nowhere to be found the day I signed the papers. The real kicker is that he put down on my application that I made $7500.00 a month gross income. This was a flat out lie. At the time I made about $2000.00 less a month than that. I do not recall ever signing a piece of paper that said I made $7500 a month income. Is this a form of predatory lending? Seems like he put down whatever he wanted for income as long as it got me the loan. I have all the original paperwork so hopefully if it comes down to it I have some proof. What are your thoughts Moe?

I am curious if there any more peolple out there reading this who have the same experience with slimy mortgage brokers. Being a first time homebuyers we put a lot of trust in these people and I think some tend to take advantage of that.

[Moe Bedard]

You may have a predatory lending case there. Many times they use switch and bait practices like the prepayment penalty. The grossly over stated income is also quite common. Many times they just slip it in the docs at signing and the notary flies through them or it was forged.

Paul J. Molinaro with Fransen & Molinaro has just joined the forum and he will address this tomorrow on this website. Both he and Nathan Fransen will be offering free legal advice now and then to assist people. So please stay tuned.

[Paul M.]

What you have fallen victim to is a predatory lending "bait and switch" which is where the terms change at the last minute... just before you sign the loan documents and when you are so eager for the loan to close you are vulnerable and will agree to terms you otherwise would not have.

My first question is when exactly did your loan close? My next question was whether it was a refinance. If it was less than three years ago and a refinance, an experienced mortgage lawyer could look at your loan documents and determine whether the documents were properly prepared. If not, you may be able to rescind (undo) the loan.

If the loan is not rescindable, you might be able to do a loan modification. Thanks to Moe and his fellow posters, there's some great advice on modification on this site.

As for loans available to you, without knowing all the personal information like your wages, credit scores, and such, it's hard to tell what programs you could have qualified for. It may be that a stated income program was your only option.

The overstatement of your income is a very common thing unscrupulous brokers and loan officers do and violate predatory lending law. Of course, he had to overstate your income, or the lender would not have approved your loan, and he would not have gotten his big commission. Unfortunately, that error doesn't get you out of the loan, it would get the loan officer in hot water with the department of real estate and other governmental oversight organizations however.

And finally, the term "predatory lending" can have many meanings, but I use it to mean putting a borrower in a loan that the loan agent knew or should have known was unaffordable.

- Paul

[evel1999]

I am a victum of preditory lending.

My primary residence did have a 5.5% 15 yr fixed rate.

In 2004 I got a mortgage with Americaquest Mortgage to buy my two sisters out of ownership of our Mom's house we had inherited. They were to pay off two cars totaling over $50,000, listed on the closing statement, but instead gave me that money in cash. Also there are lots of other things prepayment penalty and etc. I need someone to look at the papers and see if I have a case of preditory lending. Bait and switch and etc.

At that point, in 2004, then that made me own two houses. Payment on one was $2000.00 a month, payment on my primary was still a 15 year at 5.5%.

A year went buy till Sept 2005, I received a phone call from a mortgage co saying I was in adjustable rate mortgage and they could help me refinance.
They refinanced both loans at the same time. Both were adjustable rate.
The one that was not my primary residence had a prepayment penalty.

I need someone to look at the papers on both these loans that I got from One was sold to Washington Mutual the day of the loan. My primary home was sold to
Centex Mortgage .

The one with Washington Mutual I finally sold after I was 3 months behind and almost forclosed on. Sold Dec 2006.

My primary residence has been sold to America's Servicing Co.

It is due to adjust 11-07. I want be able to pay higher payments.

Can you take a look at my closing statements on all these loans and see if I have a case?

What i would suggest is that you contact our office to arrange for a doc review. This process involves us analyzing your documents for any potential predatory lending violations. We scrub them pretty thoroughly, as well as interviewing you for relevant facts.

[evel1999]

Are you able to handle a case in state of Ga?

If so I will get my documents together, and let you look at them.

[evel1999]

I forgot to ask, if an appraisal falls under preditory lending if it was greatly inflated? Not just going down a little because the markets have dropped some here, but say appraisal comes back 50% less now.

[evel1999]

I was wondering if appraisals fall under predatory lending. For example house now appraises 50% less than it did 2 years ago.

Let me first address the out of state issue. I am a licensed attorney by the State of California. This means i am not authorized to practice law in other states. That being said, i can act as a conduit by referring you to appropriate instate counsel, or representing a client by appearing "pro hac vice". This is a means by which an attorney can work with an instate attorney to practice in a particular jurisdiction.

As for appriasals i want to address this separately. Understand these are general statements and there may be specific regulations within your state that differ from these principles.
The appraisal is to determine the value of the property for the purposes of the lender determining the value of their security interest. In other words, if the appraisal is high that hurts the lender not the borrower. The borrower is agreeing to borrower a certain amount of money based on certain terms. The fact that the appraisal is inflated induces the lender to loan more money. The lender would have (and in many cases are pursuing) a good case against the appraiser, but not the same for the borrower.
If now the appraisal is significantly lower than it once was, the borrower still would not have a cause of action. Since an appraisal is merely an estimate of value it is "supposed" to be an objective analysis used for loan purposes. I know this is not always the case, but still, the harm is to the lender not the borrower. Here's another way to look at it, lets say the appraisal is for $200,000 but the lender is willing to loan $300,000 and the borrower is willing to accept $300,000. The appraisal is really not relevant.
Here's the key exception to everything i just said - if it can be shown that the appraiser was influenced by the lender/realtor/etc., then the borrower will have a case IF IT IS A PURCHASE. In a refinance even in that circumstance it is not a case i would take on.
Hope that helps.

[evel1999]

I can understand that on appraisals it is only an estimate and one persons estimate, the appraiser. Another appraiser could be hired and he make come up with a higher amount on the same property.

Doesn't feel good when this is keeping you from financing out of this toxic ARM, because the appraisal is so low.

Basically most of us are in these loans and without a modification we have no hope. Refinancing is impossible. I know deep in my heart the government can't come in and make mortgage companies give a client a modification on something they legally signed.

All I want out of my modification, is my loan fixed to a 30 year loan at the same rate I have now 8.5%. I don't think that is too much to ask. I know I borrowed the money and want to pay it back to keep my home. If it is over appraised, so be it.

When they forclose, they will loose half of their investment if the house is only worth half what I owe now.

Most everyones documents will just have a high interest rate, inflated appraisal and was closed by an attorney so they made sure they covered everything and predatory lending was probably done, but very hard to prove.

Ga has strick preditory lending laws since we had the Fleet Finance
predatory lending case in the 90's.

[Moe Bedard]

I think governement can't make them modify loans but they sure can put a lot of pressure on lenders to do that. The facts are that these loans are what I would call predatory in nature. To leave homeowners in loans that they were most likely promised by licensed professionals thet they would be able to refinance out of in 2 years isn't ethically right.

These loans were not designed for long term affordability. Just short term.

OK, why don't we just start a massive campaign and every homeowner that is stuck in these loans just decides to stop making their mortgage payment. We just organize 2 million homeowners to stop paying their mortgage? How about that? Will that get lenders moving?

mmmmmmmmmmmm.... I may be on to something there

My understanding of predatory lending is that there are definitely legal avenues people can take and also criminal. Apraisers, loan officers, brokers etc. can be gone after, sued etc. But the thing here is money. It takes money and resources to go after these people. So you have the money involved with going after them and say you win. Many of these "professionals" are now penniless or in the same boat as you, so you win a lawsuit against a predatory lender or broker and now you try and collect from a broken pigy bank or their already in Costa Rica drinking Mai Tai's by the pool.

There are definitely going to be a lot of brokers and industry professionals prosecuted but I know for a fact that the FBI is just inundated with these cases right now.

[evel1999]

It could be a class action suite but there are so many mortgage companies involved. The Fleet Case was strickly just Fleet Finance.

I was involved in the Fleet Case. Contacted a lawyer, he already had one homeowner the main one who they focused on as the preditory lending and the rest just joined in. Most of us did not make mortgage payments for two years and faced forclosure if we lost. Most had baloone notes after 5 years, and when the 5 years was up you could not refinance as you owed more on your home and when you asked to refinance they would send a letter saying "you own more on the loan than the appraised value" cannot refinance.
The only compensation the homeowners got out of it, was reduced loan amount and refiance at a good rate. Lawyers received their fee for representing the home owners directly from Fleet. Most of the homeowners were happy, as all they wanted was to have a decent loan on their home and payments they could afford.

I think this is the case here, but one mortgage company at a time just by and individual want work, it would have to be massive people united together against all of them.

This fell under predatory lending.

It would be nice to have a class action suite or some other suite filed and have it cover everyone who signs up who got these terrible loans, but who would we name in the law suite. It would have to be each mortgage co probably and that is just too broad I guess. United homeowners lawsuite would be the answer as the Fleet Finance Case shows this can be done and with good results for the homeowner.

Because what Fleet Finance did in preditory lending was mild in my oppinion, compared to these toxic loans that were really temporary loans. Being told you could refinance, but in reality they knew you would not be in your home when the rates adjusted. They just set us up for forclosure. These type of loans should not be allowed. For a long time after the Fleet case baloone loans were banned in Ga.

Now I see baloone notes are being offered again here after 14 years. One quoted me a 30 year fixed rate armotorized over 40 years. Tried to say it was lower payment that way. When the 30 years is up you have a hugh baloone payment due and have to refinance. (Don't get into this kind of loan either).

I, too, would like to see a case like this for all of us as the lawsuite protects you from foreclosure till it is settled. Most settle out of court when all evidence is presented. We all took a great chance of loosing against a powerful financial co, but the attorney was great. He wound up being the Gov Of Ga.

I have hesitated contacting him about my case again, I guess, sometimes we just feel as homeowners nothing can't be done and it is hard and stressful to go thur this type of lawsuite with your home on the line, but you would loose it anyway with the preditory loan that you can't refinance and can't pay anymore. If you win, it is well worth it as you get to keep your home and have a decent loan again. But there is power in numbers and there are probably a million or more of us out there.

[Moe Bedard]

Class action lawsuits will be huge also, yes. They can cost hundreds of thousands of dollars to litigate against a lender. So, essentially an attorney would have to have deep pockets or backing to pursue these class action suits.

It's unfortunate that many people will lose their homes to predatory lending. Hopefully more will be saved.

[MP927]

I know we were victims of predatory lending...the broker conducted the loan doc signing and basically had the notary there with tape over her mouth. We were naive, but we wanted a $800 house payment even more. Too bad it was just an illusion.
Moe, are we allowed to list the company that we feel was predatory? I don't want to be accused of defamation of character but at the same time would like to see these people out of business and not hurting other families.
Thanx

[Janeen]

I don't know all the details of your situation to comment on if your loan could be considered predatory lending, but I can comment on the Notary. I took the CA State Notary class & passed the exam. We were trained not to give mortgage advice or to answer loan questions & are instructed to refer the client back to their loan officer if they have questions about the loan program, rate or fees being charged.
A Notary's sole purpose is only to verify by specific acceptable valid identification that the person signing the document is the correct person & also it is the Notary's job to visually watch the documents being signed by the correct person without leaving the room with the documents or switching with another person.
I always see on court shows where people present a letter to the judge & say "I have a letter that was notorized!" Being notorized does not mean that they are saying whether the document is true or not......the notorizing is only to verify the person who "signed" the document was the correct person. That's all it means.

[MP927]

Originally Posted by Janeen

I don't know all the details of your situation to comment on if your loan could be considered predatory lending, but I can comment on the Notary. I took the CA State Notary class & passed the exam. We were trained not to give mortgage advice or to answer loan questions & are instructed to refer the client back to their loan officer if they have questions about the loan program, rate or fees being charged.
A Notary's sole purpose is only to verify by specific acceptable valid identification that the person signing the document is the correct person & also it is the Notary's job to visually watch the documents being signed by the correct person without leaving the room with the documents or switching with another person.
I always see on court shows where people present a letter to the judge & say "I have a letter that was notorized!" Being notorized does not mean that they are saying whether the document is true or not......the notorizing is only to verify the person who "signed" the document was the correct person. That's all it means.

I have never had the notary sit silent and just be a fly on the wall in any other housing transaction and this was our 3rd home. In fact, in another re-fi we had done it was only the notary. The representative that had us sign for the loan that has almost cost us our home, was the salesperson for the brokerage firm.
It was very shady, but we are adults and have to carry a certain responsibility for letting it happen.

[jennyb4u9]

Maybe you can help me I'm from ca. my loan was transfered to Ocwen back in 2006 my payment adjusted from 2500.00 to 3200 at the time we could not afford the payment we got behind we called ocwen and they gave us a forbearance which made the payment 3600.00 they began marking us late every other month ruined the credit.Then in 2008 we applied for a mod we got the payment reduced to 1819.00 now in jan 2009 we got behind again I called ocwen explained to them that our income has changed and we are not making as much money I just wanted a catch up payment to become current again they said no modification they told us not to worry and it would take 90 days and not to call they would call us .Then we got denied but they still said do not worry they were going to do thier own mod and not the obama well on august 25 they denied us on sep 12th we get a sale date for sep 16th I call them ask them is there anything else we could do to avoid this they say no pay the default amount i made them a payment in march they suspend it not apllying it to loan then after the sale date I get mod papers from ocwen payment due sept 30,I call ocwen they say they are sorry it reached us to late but yet the date on the mod was sep 11 they failed to tell us before the sale date this house should have never been auctioned while we were under review what can we do?help if you can.

[khmeran]

Yes I do think I'm a victim... - I posted my whole story here
EMC - I'm ready to fight back! What can I do?

Here is the of the Predatory Lending part - WHAT CAN I DO?
Attempted Refinance - Interest Only Mortgage
In October of 2007 when attempted to refinance my first mortgage to get a lower interest rate and payment the loan originator at the place I wanted to refinance through told me I had an interest only loan. I was completely unaware of this. Looking at the original Good Faith Estimate, RESPA, & Mortgage Broker Agreement - there is no place that specifies that this is an interest only loan.

A mortgage Broker in Wisconsin secured financing for my home in Febuary 2007 and on the Mortgage Broker Agreement - it is clearly checked that it IS NOT an "interest only" mortgage. When we purchased the home in 2007 when we moved from Florida to Wisconsin and felt very rushed by this company into this loan - we trusted them, and at the closing table found out that there was a prepay penalty --- which were also told there wouldn’t be but signed the closing anyways. When we found out that this is an interest only loan we were in shock, we would have gone with the other lender if we had known this was interest only. In fact - we had an approval through another bank for 30 year fixed rate mortgage at 6 percent. The Broker told us that since the other bank was not a local bank that the financing could fall through - later, we found this was misleading information.

Attempted Refinance - Prepay Penalty
In October of 2007 when I attempted to refinance my first mortgage. I requested a payoff statement from EMC and it had a six month prepay penalty on it. Due to the fact that I was unable to pay the prepay penalty out of pocket - I was unable to refinance. The Prepay Penalty should have been 60 days, not 6 months. By the time I discovered that EMC quoted me the wrong amount for the prepay penalty it was too late to refinance due to a dramatic change in our debt to income ratio.