Is your lender charging you for questionable fees? Fight back against predatory fees!

[Moe Bedard]

“Mr. Jones, you owe $12,327 to stop foreclosure on your home and bring your mortgage current.” The lender’s collections employee says to Mr. Homeowner Jones that is desperately trying to save his home of 27 years.
Mr. Jones does not question these fees. Hell, he’s the one that is late and in foreclosure. He’s the one that owes money to his lender.

So these fees are never questioned by Mr. Jones as he cashes in most of his 401k and life savings to pay his lender what he assumes he owes. The full $12,237.

Welcome to business as usual in the mortgage servicing industry. Call it what you like, I call it predatory servicing because that’s exactly what it is.

What if Mr. Homeowner Jones really only owes $9,235 and not $12,237? Should he pay his lender for something they cannot prove that he owes? Should he just take their word and pay the piper, take his foreclosure medicine and not question these fees?

I don’t know about you, but I do not like to pay for something I do not owe. Especially when I am behind the proverbial 8 ball and cash isn’t something that is easy to come by.

So, how do lenders and servicers get away with charging these bogus fees?

It usually begins with fees being added for services that they cannot fully explain or substantiate and many times these fees are for payments you had made on time, yet they credit your account late and the fees start piling on daily. When you attempt to question or dispute these
questionable fees, they may abuse you verbally and use scare tactics to shut you up or they may just forward it to the scary guys, collection attorneys or a law firm that will step up the abuse and threatening collection tactics with phone calls and certified letters.

This is exactly what is happening in probably 99% of the loans that are modified, on repayment or forbearance plans. Borrowers are paying for fees in huge numbers without ever verifying that they do in fact owe the money that their lender or servicer claims they owe.
What can a homeowner do when they are confronted with questionable fees?

The first thing a homeowner should do is ask the lender to fully document all fees that are owed. More often than not, a verbal request will go ignored as the fees tack on, daily and if not by the minute. They may even say, “No problem Mr. Jones, we’ll send that to you ASAP.” Just to get you off the phone and guess what? Your fees keep adding on as you wait by the mailbox for something that will never come.

You need to just cut to the chase and fight fire with fire or you are going to get eaten alive by your lender/servicer. Plain and simple.

What a homeowner can do is request in writing what is called a “Qualified Written Request” (QWR). There is a little know law that protects homeowners against questionable fees, entries, documentation and a “life of loan history” (all fees and payments ever made on your mortgage) from your lender. Under Section 6 of the Real Estate & Settlement Procedures Act (RESPA), a borrower can request that the lender document all claims for fees.

The Real Estate Settlement Procedures Act (RESPA) is a consumer protection statute, first passed in 1974. The purposes of RESPA are to help consumers become better shoppers for settlement services and to eliminate kickbacks and referral fees that unnecessarily increase the costs of certain settlement services.

Details about RESPA Corresponding with the above purposes:

1. RESPA requires that borrowers receive disclosures at various times. Some disclosures spell out the costs associated with the settlement, outline lender servicing and escrow account practices and describe business relationships between settlement service providers.

2. RESPA also prohibits certain practices that increase the cost of settlement services. Section 8 of RESPA prohibits a person from giving or accepting any thing of value for referrals of settlement service business related to a federally related mortgage loan. It also prohibits a person from giving or accepting any part of a charge for services that are not performed. Section 9 of RESPA prohibits home sellers from requiring home buyers to purchase title insurance from a particular company.

RESPA in general
RESPA covers loans secured with a mortgage placed on a one-to-four family residential property. These include most purchase loans, assumptions, refinances, property improvement loans, and equity lines of credit. HUD’s Office of RESPA and Interstate Land Sales is responsible for enforcing RESPA.

If you have been charged questionable fees or even if you have not, isn’t it wise to make your lender prove to you every penny that you owe them? Please follow the below instructions to fight for your rights!

An informed homeowner is a person that can fight back against questionable fees and use the law to save their home

Loan servicing complaints
Section 6 provides borrowers with important consumer protections relating to the servicing of their loans.

Under Section 6 of RESPA, borrowers who have a problem with the servicing of their loan (including escrow account questions), should contact their loan servicer in writing, outlining the nature of their complaint. The servicer must acknowledge the complaint in writing within 20 business days of receipt of the complaint. Within 60 business days the servicer must resolve the complaint by correcting the account or giving a statement of the reasons for its position. Until the complaint is resolved, borrowers should continue to make the servicer’s required payment.

A borrower may bring a private law suit, or a group of borrowers may bring a class action suit, within three years, against a servicer who fails to comply with Section 6’s provisions. Borrowers may obtain actual damages, as well as additional damages if there is a pattern of noncompliance.

Other enforcement actions

Under Section 10, HUD has authority to impose a civil penalty on loan servicers who do not submit initial or annual escrow account statements to borrowers. Borrowers should contact HUD’s Office of RESPA and Interstate Land Sales to report servicers who fail to provide the required escrow account statements.

Filing a RESPA complaint
Persons who believe a settlement service provider has violated RESPA in an area in which the Department has enforcement authority (primarily sections 6, 8 and 9), may wish to file a complaint.

The complaint should outline the violation and identify the violators by name, address and phone number. Complainants should also provide their own name and phone number for follow up questions from HUD. Requests for confidentiality will be honored. Complaints should be sent to:

Director, Office of RESPA and Interstate Land Sales
US Department of Housing and Urban Development
Room 9154
451 7th Street, SW
Washington, DC 20410

from my blog at http://loanworkout.org/2008/01/04/is...redatory-fees/

[Jose L. Semidey]

Dear Moe,

I am running a loss mitigation company that has been struggling with the poor service and poor attitude of loss mitigation departments, I read The TILA info in your site and it seems to be very powerful tool at the reach of the consumer, What do we have to look at in detail, in order to realize if TILA violations exist in a file, we are currently working on 600 cases, and I am sure, many of them have problems. Is there a particular letter template that may be used?, If I forward you a copy of a file would you be able to point those issues to us.

Jose L. Semidey

Our clients in general are only $500 to $700 short to make the payments and these lenders do not work in good faith the first thing they tell you is to advise the client to sell the home, when the home gets a contract they deny the sale, and then they push to foreclose. What are these people doing?

[Moe Bedard]

Hello Jose,

What company is it that you operate?

I read The TILA info in your site and it seems to be very powerful tool at the reach of the consumer, What do we have to look at in detail, in order to realize if TILA violations exist in a file, we are currently working on 600 cases, and I am sure, many of them have problems. Is there a particular letter template that may be used?, If I forward you a copy of a file would you be able to point those issues to us.

Here's the deal, I am not too fond of loss mitigation companies at all. But, I also feel there are some legit people out there. You seem pretty legit by placing your name on this public forum.

I think a lot of you guys are not really helping people by not knowing this. This is good that you seem to realize this.

So, I have been thinking about this. Do I just let this keep going on or do I help some of you legit guys do it right? I think if I help you, you in turn will of course be able to more effectively serve your clients.

We can train you for a fee.

What are these people doing?

I think it's a huge scam and they are taking these homes using the law. So, what should you do? Learn the law and fight back against these guys.

[Jose L. Semidey]

Dear Moe,

Can I call you or e mail you to get the necessary details as to the training you mention on your reply?. Just to give you more info about myself and my company, I am a Real Estate Broker Licensed in VA and MD, MD license # 522726, VA license # 0225-0378898. I have been in the real estate industry for over 15 years, I am a founding member and former president of the National Association of Hispanic Real Estate Professionals in the Washington DC Metro area. I have a radio show (in Spanish) regarding real estate that has been on the air for over 10 years. Before I became a Realtor I was a victim of Loan Fraud, and Predatory Lending, I made it a matter of interest in my business to learn as much as I can to help people to do the right thing.

About 36 months ago, we started getting phone calls on air and in my office from people who were starting to have trouble with their loans, in our local area, and they started calling because we were cautioning them about the shift in the market that we had observed, people were being offered option arms, and other hybrid loans, many real estate companies, title companies and mortgage brokers and lenders started teaming up to cater to more clients, and I knew this was just the recipe for trouble. Some of the loan papers we got in our office from these borrowers had many misleading information, and in many cases were missing paper work. It was then that we decided to start providing seminars to assist people to understand what was going on and to enable them to protect themselves from these types of issues. But the wave totally overwhelmed our capacity at the beginning of last year, when closing issues transformed into, payment difficulty and lender lack of cooperation.

We were sure there were other ways of helping the borrowers but this information is not easily available. We did a lot of research and have set up a system of seminars, and assistance that provides people with some basic knowledge to deal with the banks, only if the person is not able or capable of doing it on their own, do we step in. Our frustration comes into play
when the lenders mistreat and misinform their borrowers, and take advantage of the ignorance and lack of financial sophistication of their borrowers.

TILA does come into play since at the end of 2004, many of that cases we are looking are REFI's, Also most of the information available is in English and most of our client base is of Hispanic Ethnicity, and many even though may speak English, they do not handle the financing area very well, making them easy pray. We have been in search of help and assistance, and we do not trust the lenders to provide the training as it will surely be tilted to their advantage.

I do appreciate your offering and look forward to take full advantage of it. Our clients and our community need it, and we want to be fully able to provide the best possible assistance. And above it all we want to this the right way. That is why I am not concerned about putting my name out there, I believe in What I am doing and I believe in that we may be making a difference.

Thanks again for this FORUM, and the opportunity to learn more, and do better.

[Moe Bedard]

Jose,

Thanks for clarifying my concerns and I already knew who you were I'm pretty fast. I didn't post that info and I appreciate that you did. It show you are not trying to hide anything. You have quite an impressive background and it's nice to have you here.

I am sure there are many people like you that can help people in their communities with the information and skills I can teach you.

Please email me at moe @ loansafe.org, all your contact info.

Take care!