Any hope to correct bait and switch?

[sethneedshelp]

Hello

I have an interesting issue that I am looking into. Long story short, my wife and I purchased a townhouse in 2/2006. We are happy, we qualified the 'old school' way. supplying every document known to man, proof of income, credit reports, etc....We can make the payments, and all of that. We were financed by a representative of a local mortgage company who got us loans via IndyMac. Last year, after I was laid off around Thanksgiving 2007, we got about 35-40 days behind making our payment. In April 2008, we called IndyMac to see what we could do to catch up . (I was in a new, better paying job, and we wanted to get everything caught up.) IndyMac offered to modify our loan, so we went into the process with them. We have 2 mortgages, the first a 5/1 ARM at 30 years, the second 5/1 ARM 30 years as well , but at a higher rate.... As they are reviewing our loan, they mentioned that our primary loan (the one they wanted to modify) was going to be tricky, because the loan was actually a 5/1 @ 40, which matures at 30 with a balloon payment of over $140K due at the end of 30 years!

I would never have agreed to these terms, in fact, I have correspondence with the loan officer stating what we wanted. 30 year loans, no prepayment penalty ,etc.... Our good faith estimate reflects a 5/1 ARM at 30 years with NO MENTION of balloon payments, nor does the contract that the mortgage broker sent to us for review just prior to closing. Apparently at closing, the forms were switched. I know, I know read before you sign, but I thought once we had reviewed the 'copy' we were sent just prior to closing, we were covered. Well, after 9 months of dancing with IndyMac, our modification was denied. We make too much money, and can afford our payments. (which is what we said all along) Recently, we went to the safe deposit box, and got out or papers to compare, and sure enough, the primary mortgage we signed is different from the one we were sent electronically just prior to closing!

Do I have a leg to stand on here? I still have the printed out copy of the 5/1 ARM @30 yrs and a ton of email correspondence form the broker. No where is a balloon payment mentioned. I DO NOT WANT TO WALK AWAY, but looking at paying for 30 years, and then having $140K+ staring at me has me thinking........ What is can I do?

[Dan Bailey]

Seth,
This would be a legal matter for a qualified attorney.

[HealthierChoices]

Hey Seth,

Your email sounds VERY much like my story. After requesting my loan documents from IndyMac Bank, I found the same story!

A balloon payment was never discussed, yet there it was in the copies of the loan docs I requested from IndyMac Bank. My so called "original copies" did not contain this information.

I also found a copy of the TILA that was different from mine signed, but by someone else! The signature looks nothing like mine and my name was even spelled wrong!!

I approached Indy with this a few weeks ago, and all I have gotten is the run around. I'd love to hire an attorney, but the amount I would need up front is ridiculous.

Not sure what to do at this point...


P.S. I too was denied any type of refinance or modification

[sethneedshelp]

anyone else have information on bait and switch??

[Marie T]

I took my loan documents to an attorney to review for predatory lending as I knew I had a "bait and switch" case for sure as well as some other violations. The attorney said I could sue WAMU for bait and switch - under consumer law even aside from RESPA violations. He did not look further into my documents once he discovered the bait and switch.

WAMU had sent me dozens of letters prior to my refi saying they were offering me a no-closing cost/no-fee loan and even detailed all the customary closing fees they were waiving. My GFE doesn't contain closing fees and it wasn't until this year that I was looking at my credit report and I saw the total amount owed to WAMU was WRONG - I thought the report was wrong but WAMU had, in fact added in more than $13,000 in bogus closing costs.

When I initially discovered this - and before I was even looking at doing a modification - I tried to talk to WAMU just to get the extra charges removed. I spent hours and hours on the phone being transferred all over and it culminated in someone at WAMU telling me that I had signed the papers so basically tough luck! even though I had called my mortgage specialist at WAMU the morning of the closing and he had told me nothing had changed from what we had discussed! My payment had adjusted from $3,200 to $4,500 so I was backed into a corner even if I had read through and realized they had changed the documents! The attorney said I could sue for treble damages and he was willing to take it on on a contingency basis. I found out that loan modifications existed and found this site when I was on the internet trying to figure out how to get my $13,000 back and in the meantime our financials drastically changed so glad I found the loansafe site!

The consultation did not cost me anything but I am waiting to see what CHASE/Wamu is going to do as far as a modification. I have also just started working with NACA so you might want to look into that as they are known for fighting predatory lending. There is a time limit of three years from the closing date of your loan to address any predatory lending issues so you need to check that - I only have a couple more months to sue WAMU in my time limit.

[faith]

[QUOTE=sethneedshelp;63270]Hello

I have an interesting issue that I am looking into. Long story short, my wife and I purchased a townhouse in 2/2006. We are happy, we qualified the 'old school' way. supplying every document known to man, proof of income, credit reports, etc....We can make the payments, and all of that. We were financed by a representative of a local mortgage company who got us loans via IndyMac. ................................
__________________________________________________ _______________
Sethneedshelp,
I found this information for you about Mortgage Bait and Switch

Bait and Switch
Bait-and-switch abuses were cited by attorneys general and other officials from 49 states in a settlement with mortgage giant Ameriquest earlier this year. Bait-and-switch tactics are alleged in class actions, including one against Wells Fargo, which advocates say has prompted changes in company policy. At closing, subprime borrowers are often presented with terms that do not match those previously offered, and then pressured into signing documents they have not had time to review

Consumer fraud laws, including requirements that lenders disclose the terms of a loan and borrowers’ cancellation rights, have been important tools for attorneys fighting predatory lenders. But with thousands of lawsuits filed on behalf of subprime borrowers across the country, many consumer advocates are calling for government regulation of the subprime industry.

Federal and state laws have long recognized the importance of clear and timely disclosure of consumer credit terms. However, gaps in disclosure requirements and the aggressive ingenuity of mortgage lenders and brokers have left borrowers with loan terms they had no reason to expect, and their attorneys (when they have them) grasping for remedies.

Federal statutes require pre-closing disclosure of estimated loan terms, pre-closing disclosure of actual loan terms for high-rate and high-fee mortgage loans, and notice when changes are made from the terms applied for by the borrower. State statutes and common law prohibit fraud, deceit, and misrepresentation in loan transactions.

The Truth in Lending Act (TILA) sets out detailed disclosure requirements that govern virtually all consumer credit transactions, with the goal of promoting informed consumer choice. The Real Estate Settlement Practices Act (RESPA) dictates procedures and forms for residential real estate closings to make clear to borrowers the true costs of buying and refinancing. Complementary provisions of TILA and RESPA require lenders to provide ‘‘good faith estimates’’ of both loan terms and costs early in the mortgage process. Clearly, Congress had the bait-and switch problem on its mind. However, neither law has prevented problems or provided much relief for unsuspecting and unsophisticated consumers
.
RESPA requires written estimates of closing costs within three days of submission of a mortgage loan application. However, the large majority of high-rate, high-fee mortgages now go through mortgage brokers. The ultimate lender may not get a written ‘‘application’’ until closing, when this document appears as part of the vast sheaf of papers the borrower is to sign. Thus, the good faith estimate is often first shown at the same time as the closing figures it is designed to forecast. Further, RESPA omits any private right of action for violations of its good faith estimate requirements, so there is little incentive for unscrupulous brokers or lenders to change their practices.

TILA requires a good faith estimate of its required disclosures, including annual percentage rate, finance charges, payments schedule, and more, also within three business days of submission of a mortgage loan application. However, the requirement applies only to purchase money mortgages. Refinances, where many of the worst practices appear, are not covered. Further, court decisions
give lenders great leeway in their ‘‘good faith’’ estimating and have not applied TILA to prohibit abuses. One analyst has concluded that, far from protecting consumers, the loose requirement for good faith estimates ‘‘creates a federally structured opportunity for lenders to use bait-and-switch consummation tactics.’’

Congress however is unlikely to pass comprehensive legislation that deals with predatory lending. They will probably make a show of some sort of legislative fix, but legislation is not the answer — self control and common sense are needed on the part of the buyers/borrowers.

At closing, subprime borrowers are often presented with terms that do not match those previously offered, and then pressured into signing documents they have not had time to review.” TAKE THE TIME to read the contract — if it sounds too good to be true, it probably is, if you don’t fully understand it — DON’T SIGN! If there is pressure to sign —THAT’S A RED FLAG. DON’T! “

Nearly 20 percent of subprime mortgage loans made since 2005 will end in foreclosure, at a loss to the consumer of around $164 billion.” (A lot of investors are also getting burned by this — high returns are also high risk.) Have a lawyer, financial advisor, or savy friend look over the contract. Be honest and up front with him about your income and other expenses. Put off buying if the cost is more than sensible.

You may file a complaint against your lender to your State Attorney General, if you are in California, he is Attorney General Edmund Brown, search the web, they have forms to file complaint againt predatory lenders online.

Source: from A Bar Journal.

[Marie T]

The GFE is basically supposed to match the HUD1 statement. In my case I did receive the Good Faith Estimate at least a week before closing - I was not using a mortgage broker, I was working directly with WAMU to do a streamline refi.

What my attorney told me, even if I had read the HUD1 before signing it (I didn't) I was in a position that I had been promised a refi with my payments going from $4,500 a month (had adjusted to that) down to $3,506 a month, with no closing costs. I have the "no closing costs" offer in at least 10 different letters/ads they sent me plus on my GFE there are no closing costs. They literally sneaked them in on the closing and I signed without knowing.