NEW YORK (CNNMoney.com) -- During the housing boom, mortgage lenders were doling out the dough, giving loans to people who could never have qualified before.
Now, homeowners and government officials are increasingly taking these institutions to court, alleging unfair and predatory practices. While many of these suits are still winding their way through the legal system, some banks have already settled for millions of dollars.
The defendants include the biggest names in the business -- from Wells Fargo (WFC, Fortune 500) to Countrywide Financial to Citigroup (C, Fortune 500).
"Borrowers are looking to the legal system for help in keeping their houses," said Gary Klein, a partner in Boston-based Roddy Klein & Ryan, which focuses on consumer law. "There are more cases pending than I've ever seen in my 23-year career."
Homeowners are seeking the courts' help either individually or as part of class action lawsuits. With foreclosures continuing to rise, borrowers are looking to force banks to modify unaffordable loans or to stop them from foreclosing on homes. Often, they also seek money.
To be sure, banks have faced unfair lending lawsuits for years and have paid millions of dollars in settlements. But the recent housing boom was fueled by questionable and exotic loans that many borrowers had no hope of repaying.
Some of the cases involve the classic predatory lending schemes, where certain borrowers were given mortgages with high interest rates, while other suits are combating loans that are ultimately unaffordable.
In addition, the mortgage industry preyed on a wider group during the housing boom, capturing more middle-class borrowers. These homeowners have more means to hire attorneys.
Those in more dire financial straits are turning to lawyers who work for non-profit legal services agencies or who agree to seek payment from the banks if they win the case.
Some borrowers who hire lawyers to defend them against a foreclosure sale are successful in getting the courts to stop or delay the proceeding, at least until the bank considers whether a loan modification would be more appropriate.
Then, there are class action suits on behalf of hundreds or thousands of homeowners. In one of his current class action cases, Klein is suing Wells Fargo because one of the banks Wells Fargo now owns originated payment option adjustable-rate mortgages. This type of loan allows borrowers to make very low monthly payments, and the unpaid interest is then added to the principal. Many borrowers end up defaulting on their payments.
The suit's goal is to get Wells Fargo to restructure the borrowers' mortgages to make them affordable, Klein said.
"They are looking for a second chance," he said of the homeowners.
The suit also seeks damages, particularly for those borrowers who've already lost their homes or paid off their loans.
Wells Fargo said it was filing a motion to dismiss the case, calling the claims baseless and a mischaracterization of the bank's long-standing commitment to responsible lending and the pricing practices.
Attorneys general file suit
Meanwhile, state attorneys general are likewise filing suit against the mortgage industry's major players, alleging predatory lending and deceptive business practices. Banks are also getting hit with suits from the NAACP, some cities and individuals claiming discrimination against minority borrowers.
In Massachusetts, Attorney General Martha Coakley reached a $10 million settlement in June with subprime lender Fremont Investment & Loan for its unfair lending practices. The state will distribute $5 million to state residents with Freemont loans, and another $3 million will go foreclosure relief and homeowners education. The rest will go to the state and to cover costs.
The California-based lender agreed to do more loan modifications and not to foreclose upon up to 2,200 loans without notifying the attorney general's office first and seeking court approval in certain circumstances.
"The American dream of homeownership has turned into a nightmare for many borrowers because of predatory lending practices," said Massachusetts Attorney General Martha Coakley, when the settlement was announced in June. "We will continue to hold companies responsible for their role in the foreclosure crisis."
The Fremont settlement came a few months after Coakley negotiated a $60 million settlement with Goldman Sachs (GS, Fortune 500) over its role in bundling subprime loans into securities and selling them to investors. As part of the deal, the Wall Street investment bank agreed to modify loans of more than 700 troubled borrowers.
Attorneys general reached the largest predatory lending settlement a year ago. Bank of America agreed to spend $8.4 billion to lower the interest rates or loan balances of nearly 400,000 Countrywide customers with subprime loans or payment option ARMs.
"This settlement holds the number-one mortgage lender in the country accountable for deceptively putting borrowers into loans they didn't understand, couldn't afford and couldn't get out of," Illinois Attorney General Lisa Madigan, one of the lead negotiators, said at the time. "These are the very practices that have created the economic crisis we're currently experiencing."
Bank of America said the agreement was in the best interest of its customers and investors in mortgage-backed securities, though a group of investors is suing the bank over the settlement terms.
Not as many suits as expected
Despite the increase, there aren't as many lending lawsuits as one might expect, considering the subprime mortgage explosion during the housing boom, experts said.
That's because these suits are expensive and difficult to win. Cases could take anywhere from months to years to resolve. Also, there are not that many attorneys who specialize in consumer law and who want to take on these labor-intensive cases.
Therefore, many troubled homeowners cannot hire attorneys to help them.
"These are not easy cases," said Ira Rheingold, executive director of the National Association of Consumer Advocates.
Also, many of the biggest subprime lenders -- such as New Century Financial --have gone out of business, declared bankruptcy or been put into receivership by the Federal Deposit Insurance Corp.
So there's no one worth suing, said Stuart Rossman, director of litigation at the National Consumer Law Center.
"Litigation has not been the primary avenue for getting someone to pay for what took place," Rossman said
For more information on how our FMA (Forensic Mortgage Audit) program and loan modification processing services can help you to be more effective in your fight to save homes, or if you or someone you know is a victim of Predatory Lending and/or Mortgage Fraud, please call NAFMA TODAY: (888) 201-8608. You can also email us at help@nafmainc.org
Showing posts with label Predatory Lending. Show all posts
Showing posts with label Predatory Lending. Show all posts
Friday, November 27, 2009
Wednesday, September 9, 2009
Don't Try This at Home or You Just Might Lose it; Your Mind and Your Home!
Thinking of negotiating a loan modification on your own?
STOP! Before you venture forth into the land of 45 minute holds, 9 digit extensions and dropped calls, I encourage you to grab a seat and watch the following video.
Congresswoman Maxine Waters spent hours on end testing the loan modification approval process with "Bank of America" and "Indymac" only to be placed on hold, misdirected and told to complete an online application before any definitive information could be provided. To make matters worse, the people on the other end knew they were talking to a member of Congress and still proceeded to place her on hold. At one point she was given an extension that didnt work and in the end nothing was done to resolve the problem for any one of her constituants.
THE MORAL OF THE STORY?: You only get one chance at a loan modification. Make it count! Have your loan documents evaluated for predatory lending practices and mortgage fraud before hiring a professional to negotiate on your behalf. If you've already been served with foreclosure papers, hire an attorney that specializes in foreclosure defense to represent you in stopping the foreclosure.
For more information on how our FMA (Forensic Mortgage Audit) program and loan modification processing services can help you to be more effective in your fight to save homes, or if you or someone you know is a victim of Predatory Lending and/or Mortgage Fraud, please call NAFMA TODAY: (888) 201-8608. You can also email us at help@nafmainc.org
STOP! Before you venture forth into the land of 45 minute holds, 9 digit extensions and dropped calls, I encourage you to grab a seat and watch the following video.
Congresswoman Maxine Waters spent hours on end testing the loan modification approval process with "Bank of America" and "Indymac" only to be placed on hold, misdirected and told to complete an online application before any definitive information could be provided. To make matters worse, the people on the other end knew they were talking to a member of Congress and still proceeded to place her on hold. At one point she was given an extension that didnt work and in the end nothing was done to resolve the problem for any one of her constituants.
THE MORAL OF THE STORY?: You only get one chance at a loan modification. Make it count! Have your loan documents evaluated for predatory lending practices and mortgage fraud before hiring a professional to negotiate on your behalf. If you've already been served with foreclosure papers, hire an attorney that specializes in foreclosure defense to represent you in stopping the foreclosure.
For more information on how our FMA (Forensic Mortgage Audit) program and loan modification processing services can help you to be more effective in your fight to save homes, or if you or someone you know is a victim of Predatory Lending and/or Mortgage Fraud, please call NAFMA TODAY: (888) 201-8608. You can also email us at help@nafmainc.org
Thursday, August 27, 2009
Wells Fargo Ordered to Testify on Loan Modification Practices
[Scroll down to view video]
When it comes to obtaining a loan modification, Wells Fargo’s reputation is a long way from being stellar. In fact, they’re one of the worst, according to several attorneys who have had significant experience working with the bank on behalf of clients over the past six months. So, when I read this past week that a woman in Phoenix had filed a complaint claiming that Wells Fargo had ignored her request for a modification, it was hardly news to me.
According to a story from KPHO.com, Channel 5 in Phoenix, the woman’s name is Bobbi Giguere, and apparently she applied to Wells Fargo for a modification this past December after losing her job, and got nothing but lies, the run-a-round, and finally a foreclosure notice in return. The KPHO.com story quoted her as saying:
“I sent them everything they asked for, and then when I called to follow up they said, ‘What paperwork? What modification? We don’t know what you’re talking about,’” said Bobbi Giguere.
So, now a federal bankruptcy judge in Phoenix, Judge Randolph Haines, has ordered that a top Wells Fargo executive must come and testify about the bank’s loan modification policies.
Ms. Giguere’s bankruptcy attorney was also quoted in the story as saying that it’s “very unusual” for a judge to issue such an order. “The judge is trying to send a message to Wells Fargo and other banks that they need to pay better attention to customers who want to modify their home loans,” Nussbaum told Phoenix’s Channel 5.
Okay, so what? Big deal, right? Yet another story about a bank or servicer not doing what they’re supposed to do under the president’s Making Home Affordable program. Well, here’s the rub…
Again, according to the KPHO.com story, Wells Fargo responded by issuing the following statement from Mary Coffin, the bank’s head of home mortgage servicing. It said:
“We appreciate the court giving us the opportunity to share our servicing practices, which include working with all customers facing hardships — even if they declare bankruptcy — until every reasonable option to prevent foreclosure has been exhausted.”
The bank “appreciates” the court providing the opportunity to “share” servicing practices? Does anyone not see just how far from contrition we are here. We, and by “we” I mean anyone involved in obtaining loan modifications from servicers, all know what’s going on here… Wells Fargo is full of you know what.
They routinely deny having received paperwork, routinely refuse to comply with the rules of the president’s program, and obviously aren’t the slightest bit concerned that they be called to task for their widely known shortcomings that are putting people out of their homes and onto the street. Their practices are costing our president a great deal of credibility, and preventing our economy from even coming close to starting on a path to recovery.
CBS 5 News also reported that after running the story, many other homeowners contacted the station, “sharing remarkably similar frustrations”.
According to the station:
“Getting the runaround about lost paperwork was amongst the most common complaint. The complaints came from customers using a variety of loan providers, including but not limited to Wells Fargo and Bank of America.”
Channel 5 also quoted Arizona Attorney General Terry Goddard as giving banks and servicers “a D minus” when he was asked to grade them as related to helping homeowners obtain loan modifications. He went on to refer to the servicers’ response to the president’s program as “pathetic”.
Apparently, Channel 5 called Wells Fargo for a comment on the case and Ms. Coffin replied that the bank “could have offered better customer service and definitely could have communicated better.” Well, gee golly whiz… could they now? Is that all they could have done?
Listen, I’ve had enough with the sugarcoating that surrounds this issue. What the bank/servicer could have done is live up to its agreement to participate in the Making Home Affordable program. Wells Fargo took billions of dollars from taxpayers and they agreed to the terms of the president’s program. They need to live up to that agreement and they’re not… not even close. What was the percentage of Wells Fargo loans modified under the program that was reported last week in the administration’s “report card”?
Oh yeah… 6%. And in response, Wells Fargo’s Mike Heid, co-president of Wells Fargo’s mortgage unit issued the following statement:
“We know we’ve fallen short of our customer service goals in some cases.”
They’ve got to be kidding.
According to Phoenix’s Channel 5, “a Wells Fargo executive is scheduled to testify in federal court on September 3rd. The hearing was originally scheduled for this week, but the judge granted Wells Fargo an additional two weeks to research internal records and prepare their case.”
Wells Fargo needed a little extra time? In my view, they should have been given the same amount of extra time they’ve too often given homeowners before they’ve foreclosed on their homes… none.
For more information on how our FMA (Forensic Mortgage Audit) program and loan modification processing services can help you to be more effective in your fight to save homes, or if you believe you or someone you know has been a victim of Predatory Lending and/or Mortgage Fraud, please call the following number TODAY: (888) 201-8608. You can also email us at help@nafmainc.org
When it comes to obtaining a loan modification, Wells Fargo’s reputation is a long way from being stellar. In fact, they’re one of the worst, according to several attorneys who have had significant experience working with the bank on behalf of clients over the past six months. So, when I read this past week that a woman in Phoenix had filed a complaint claiming that Wells Fargo had ignored her request for a modification, it was hardly news to me.
According to a story from KPHO.com, Channel 5 in Phoenix, the woman’s name is Bobbi Giguere, and apparently she applied to Wells Fargo for a modification this past December after losing her job, and got nothing but lies, the run-a-round, and finally a foreclosure notice in return. The KPHO.com story quoted her as saying:
“I sent them everything they asked for, and then when I called to follow up they said, ‘What paperwork? What modification? We don’t know what you’re talking about,’” said Bobbi Giguere.
So, now a federal bankruptcy judge in Phoenix, Judge Randolph Haines, has ordered that a top Wells Fargo executive must come and testify about the bank’s loan modification policies.
Ms. Giguere’s bankruptcy attorney was also quoted in the story as saying that it’s “very unusual” for a judge to issue such an order. “The judge is trying to send a message to Wells Fargo and other banks that they need to pay better attention to customers who want to modify their home loans,” Nussbaum told Phoenix’s Channel 5.
Okay, so what? Big deal, right? Yet another story about a bank or servicer not doing what they’re supposed to do under the president’s Making Home Affordable program. Well, here’s the rub…
Again, according to the KPHO.com story, Wells Fargo responded by issuing the following statement from Mary Coffin, the bank’s head of home mortgage servicing. It said:
“We appreciate the court giving us the opportunity to share our servicing practices, which include working with all customers facing hardships — even if they declare bankruptcy — until every reasonable option to prevent foreclosure has been exhausted.”
The bank “appreciates” the court providing the opportunity to “share” servicing practices? Does anyone not see just how far from contrition we are here. We, and by “we” I mean anyone involved in obtaining loan modifications from servicers, all know what’s going on here… Wells Fargo is full of you know what.
They routinely deny having received paperwork, routinely refuse to comply with the rules of the president’s program, and obviously aren’t the slightest bit concerned that they be called to task for their widely known shortcomings that are putting people out of their homes and onto the street. Their practices are costing our president a great deal of credibility, and preventing our economy from even coming close to starting on a path to recovery.
CBS 5 News also reported that after running the story, many other homeowners contacted the station, “sharing remarkably similar frustrations”.
According to the station:
“Getting the runaround about lost paperwork was amongst the most common complaint. The complaints came from customers using a variety of loan providers, including but not limited to Wells Fargo and Bank of America.”
Channel 5 also quoted Arizona Attorney General Terry Goddard as giving banks and servicers “a D minus” when he was asked to grade them as related to helping homeowners obtain loan modifications. He went on to refer to the servicers’ response to the president’s program as “pathetic”.
Apparently, Channel 5 called Wells Fargo for a comment on the case and Ms. Coffin replied that the bank “could have offered better customer service and definitely could have communicated better.” Well, gee golly whiz… could they now? Is that all they could have done?
Listen, I’ve had enough with the sugarcoating that surrounds this issue. What the bank/servicer could have done is live up to its agreement to participate in the Making Home Affordable program. Wells Fargo took billions of dollars from taxpayers and they agreed to the terms of the president’s program. They need to live up to that agreement and they’re not… not even close. What was the percentage of Wells Fargo loans modified under the program that was reported last week in the administration’s “report card”?
Oh yeah… 6%. And in response, Wells Fargo’s Mike Heid, co-president of Wells Fargo’s mortgage unit issued the following statement:
“We know we’ve fallen short of our customer service goals in some cases.”
They’ve got to be kidding.
According to Phoenix’s Channel 5, “a Wells Fargo executive is scheduled to testify in federal court on September 3rd. The hearing was originally scheduled for this week, but the judge granted Wells Fargo an additional two weeks to research internal records and prepare their case.”
Wells Fargo needed a little extra time? In my view, they should have been given the same amount of extra time they’ve too often given homeowners before they’ve foreclosed on their homes… none.
For more information on how our FMA (Forensic Mortgage Audit) program and loan modification processing services can help you to be more effective in your fight to save homes, or if you believe you or someone you know has been a victim of Predatory Lending and/or Mortgage Fraud, please call the following number TODAY: (888) 201-8608. You can also email us at help@nafmainc.org
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