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May
01

DOER UPDATE: Patricia Martin v. Wells Fargo – Court Grants Injunction, Injustice on Trial Ahead

By | Foreclosure Fraud, HAMP, Housing & Economic Research, Loan Modification, News for the Patriot

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What you’re about to read about should never be allowed to happen in this country, and what is particularly troubling is that Wells Fargo Bank could have very easily prevented it by simply communicating with its customer honestly or competently.

 

And the law firm employed by Wells Fargo to wrongfully foreclose on this 73 year-old widow’s home of 43 years, Anglin, Flewelling, Rasmussen, Campbell & Trytten, LLP of Pasadena, California, could have stopped this travesty of justice as well, but these lawyers can’t even be bothered to actually appear in the courtroom, choosing instead to phone in their odious nuggets of legal claptrap, entirely devoid of common sense, because that’s how they roll.

 

As it stands, and as a result of Wells Fargo’s handling of the matter, a 73 year-old woman is at risk of losing a home that she has owned for 43 years… and all because she fell behind on her mortgage by $104.27. 

 

That’s right… we’re talking about a hundred bucks and change here.  You want some offensive stupidity?  Wells you’ve certainly come to the right fargo.

 

A Personal Note to Laurie Maggiano at Treasury… I just wanted you to know that I was sincere when I told you that I’m trying to suppress my aggressive tendencies and stop being so snarky all the time, but are you following this case at all?  Because as long as the Obama Administration continues to ignore this sort of thing, you could be the Michelangelo of Home Preservation and it won’t matter because your ceiling’s being covered in a Navajo White semi-gloss with a stipple effect.  I’m just saying…

 

Remember Patricia Martin’s foreclosure situation with Wells Fargo? 

 

I wrote about it on February 20th of this year, and if you didn’t see it, I’d suggest that you continue reading what follows and then if you think it necessary, you can click DOER ALERT to read the original article.

 

Patricia Martin’s DOER ALERT, by the way, was the only one that did not succeed. Although Wells Fargo had responded to a DOER ALERT in the past, this time they completely ignored our pleas for the bank to do the right thing and stop her eviction.

 

She was not evicted, however, as her attorney, Mark Zanides (who happens to be a good friend of mine), drove a few hundred miles to appear in court on her behalf and successfully stopped the eviction.

 

And this past week, Mark won in court again, with the court granting the preliminary injunction… so at this point… Patricia Martin will be remaining in her home as the case proceeds to trial… a jury trial, by the way.  (You can read Patricia’s declaration HERE.)

 

You can call me naïve, but I just can’t believe that even Wells Fargo, the bank that appears committed to being the worst the servicing industry has to offer, wants to do this.

 

Zanides estimates that the bank has spent a significant amount already on legal fees and now is certain to spend a whole lot more.  Patricia Martin’s home is worth no more than $275,000.  How can it be worth it to spend $50,000 or more to take her home, when she wasn’t even late… didn’t want a loan modification… and could have simply continued making her payments… as she has for the last 43 years?

 

How can anyone want this to happen?

 

Memo to Wells Fargo: If you’ll just have someone contact me to explain the reasoning behind this situation, I promise to explain it from your perspective and stop calling your bank disparaging names.

 

But, until then, and absent any information to the contrary, what am I or anyone else to think other than that you are the epitome of the worst sort of corporate citizen… the sort of bank that is not to be trusted… a bank that we should all warn our children about… a bank that should reasonably be despised for its behavior.

 

 

Here’s an in-a-nutshell type recap with quotes from the declarations of those involved:

 

Patricia Martin’s daughter, Nicole Ortega (who lives in the home with her husband and her mother) went into a Wells Fargo branch on September 27, 2010 and asked how much was owed to satisfy the August and September payments.   She then paid the amount that Wells Fargo said she owed, $3238.30, which she thought represented a monthly payment of $1619.15.

 

She didn’t know it for several months, but the amount she was paying was $104.27 short of the required amount.  In her own words, from her declaration…

 

“I had previously been told by Wells Fargo Bank’s agents that the bank does not take partial payments.  The fact that the bank took these payments confirmed to me that I had made a full payment.  Had I known that the full payment for September 15 was supposed to be $1723.41, I was ready willing and able to pay it.  In no way would I ever jeopardize our family’s home to save $104.27, that is, the difference between the amount paid and what was apparently the amount owed.”

 

Yes, and we certainly believe you.  In fact, I think it’s safe to say that every single human being with a fully developed adult brain on the planet believes you… okay, except maybe Larry Summers and Ed DeMarco… and the fact that you had to write a declaration stating this fact so that it could be used in court is absolutely emblematic of the insanity American homeowners continue to face today.

 

Roughly five years into the financial and resulting foreclosure crises, and this story, instead of shocking every ear who hears it, is starting to sound like meatloaf and mashed potatoes.

 

Wells Fargo’s employee, Michael Dolan, states in his declaration that he is an Operations Analyst in Wells Fargo’s Mortgage Lending Operations, located at 4101 Wiseman Blvd. in San Antonio, Texas.

 

Prior to his current position, he states he was a Vice President in the Portfolio Retention Department at Wachovia Mortgage, FSB, and prior to that he says he was Vice President of Loan Services at World Savings Bank, FSB.  He also mentions that he started at World Savings in 1984, so he was at World and Wachovia for a combined 23 years.  So, I’m going to go ahead and assume that he knows how to read a calendar and mail a letter.

 

Here’s what Patricia Martin’s daughter’s declaration says about a statement made in Mr. Dolan’s declaration…

 

“The Dolan declaration states that ‘on or about September 29, 2010, the Bank sent the borrower a letter informing her that the loan was due for September 15, 2010 loan payment, and that $1619.15 had not been applied to the loan because it was not enough to cover the balance due.’  (The letter is marked Exhibit Q.)  I am aware that my mother did receive this letter dated September 29, 2010.  However, we did not receive this letter until early June 2011, when it arrived in an envelope postmarked May 30, 2011.  I have attached this letter and the envelope in which it came.  I remember this letter specifically because it arrived so far after the letter itself was dated.  I thought that was significant, so I saved the envelope in which it arrived.”

 

Now, you see Mr. Michael Dolan… that makes you a lying piece of itinerant trash, because not only did you lie in your declaration, but you also figured you could cover the lie and your worthless ass by sticking a backdated letter in the mail more than eight months later.

 

And why not?

 

I mean, what are the chances that anyone would have kept a certain blue dress around all that time without sending it to the cleaners, right Mikey?

 

 

If this were the first time that Wells Fargo was ever accused of such behavior, I’d have the tendency to say… maybe it was an error.  If it were the second time… okay, what the heck.  But since no one can even count how many similar things Wells has not only been accused of doing, but in fact has been proven to have done… well, there’s no benefit of the doubt due here.  The mere suggestion is utterly laughable.

 

Patricia’s daughter continues in her declaration to state what anyone would have to agree is the obvious.  (You can read the Plaintiff’s Evidentiary Objections to Dolan’s Declaration HERE.)

 

“I did not know the September payment whose amount had been given to me by the bank employee and which had been paid on September 27 had not been credited.  Had I received Exhibit Q in early October, it would have explained what happened and I would have asked how I could pay the remaining balance of $104 or so and made arrangements to pay the late fees.”

 

Yes, that’s right because that’s what ANYONE would have done under the same circumstances.  She continues…

 

“Had I received Exhibit Q, I would not have had to make all of the calls to the bank seeking clarification that I made later on in December when I learned the September payment had not been credited.  Nor would I have needed to write the letter in December seeking explanation of why the September payment had not been credited.”  (Her letter is marked “First Ortega Dec. Exhibit A.”)

 

And again… she is making complete sense.  The question is why is any of this being questioned and who is the imbecile questioning it?  She continues…

 

In early October, I received a letter dated October 5, 2010, stating that the September payment had not been made.  (Marked “Dolan Exhibit R.”)  The letter states that ‘if this payment has already been made, then please disregard this notice.’  Since I knew that I had made the September payment, I disregarded the notice, as the bank’s letter invited the borrower to do.”

 

Yep, that’s what I would have done as well.

 

Okay, look… this tale goes on and on and as it does, it gets worse and worse.

 

The homeowner received another letter late in October saying that the last two payments had not been received, and that the loan was now in default.  Another letter arrived a few days later saying basically the same thing.  Again, the homeowner assumed that the letters were wrong, as in their mind the September payment had definitely been made, so they did the next logical thing… they called Wells Fargo at the number provided on the letters.

 

The homeowner’s daughter told the bank that they were aware that they owed the October and November payments, explaining that her mother, Patricia Martin, had been hospitalized and there were other hardships involved… but that the September payment had been made.

 

They asked the bank if it would be okay to make the October and November payments on December 3, 2010… and Wells Fargo representative stated that by doing so, “you will be fine,” with the exception that the December payment would be due later that month.

 

The Wells agent then said that she would notate the account to that effect.

 

 

During that same call, the Wells Fargo representative uttered the words that would make a bad situation far worse, she suggested that the borrower should apply for a Map2 modification, and then transferred the call to a Ms. Leffert.

 

Patricia Martin’s daughter spoke with Ms. Leffert and gave her some of the information she requested.  She didn’t have all of the information, however, and told Ms. Leffert that she would have to speak with her mother before going further.  Subsequently, she called Ms. Leffert to provide the missing information, and in late November Ms. Leffert stated that “you qualify” and that “you’ll be ahead of the game since the late payments will be added to the modified loan.”

 

And then things got even worse.  A letter dated November 18, 2010, but not received until the end of that month, now said that the note was delinquent and would need to be reinstated by paying $4829.96 by November 30th.  Patricia’s daughter immediately contacted Wells Fargo to find out what was wrong with their system and records, as she had already made arrangements to pay October and November payments on December 3rd.

 

She spoke with a representative named Jason who told her that there were some unapplied funds in the amount of $1619.15 that it looked like something was happening with, also saying that it may be applied to October’s payment.

 

Jason was told that September’s payment had been made, and he said he couldn’t tell her why September was not credited, but he suggested that she wait and let the bank finish whatever they were doing and it would clear things up.

 

Patricia’s daughter then states in her declaration…

 

“Had I been told by the bank’s representative that we were required to make a payment of $4829.96 by November 30 or lose our home, we could and would have done so.”

 

And again, all I can say is… OF COURSE YOU WOULD HAVE.  Your mother has lived in the home for 43 years… good Lord, when did our world lose its common sense and critical thinking skills?

 

So, of course, when she goes into branch on December 3rd to make her two delinquent payments as she had arranged that she would do… the bank won’t accept the payments, as they were due by November 30th.

 

Does everyone realize how many billions in delinquent and defaulted loans Wells Fargo has on its books… to say nothing of the untold billions in worthless garbage that exists off the bank’s balance sheet?  You do, right?

 

And does everyone realize that the President of the United States, the U.S. Attorney General and the Secretary of Housing and Urban Development have all made it abundantly clear that unnecessary foreclosures are to be avoided as they are not in our national interests?

 

So, what possible difference does it make whether a homeowner is paying on November 30th or December 3rd?  Wells Fargo… are you stupid, irrational and incompetent… or are you just plain evil and sadistic?

 

And don’t start blaming anything on “the investor,” Fannie Mae, or the mystery trust that thinks it holds this loan because this beauty of a loan is one of those fabulous pick-a-pay jobs made popular by World Savings, so it’s on you, Wells Fargo, all the way.  And should I even ask who might be responsible for such a loan being sold to a 68 year-old widow?

 

I’ve never been a great speller, so maybe someone at the bank could help me out here… how many “Wells” are there in “predatory shithead?”

 

By January Wells Fargo says they won’t fix it, won’t accept payments, and months later when loan modification is denied, house goes to foreclosure sale and is taken back by the bank.

 

The modification, by the way, is denied months later because Wells Fargo says they won’t consider Patricia’s son-in-law’s income.  He lives in the house with his wife… her daughter… ever since Patricia, whose husband passed on a few years ago, started having some serious medical problems.  Oh, and he’s a police officer… a sergeant on the local police force… someone who protects and serves his community.

 

Writing this article, I had to wonder… on how many other occasions has Wells Fargo improperly credited amounts paid by borrowers?  Luckily, I didn’t have to wonder for very long, as I remembered the article I wrote a little over a week ago about a case in Louisiana involving Wells Fargo and in front of Federal Bankruptcy Court Judge Elizabeth Magner.  If you haven’t read it, I highly recommend that you do.

 

In Judge Magner’s own words, after describing Wells Fargo’s behavior as being, “highly reprehensible,” she went on to say…

 

“Wells Fargo has taken advantage of borrowers who rely on it to accurately apply payments and calculate the amounts owed, but perhaps more disturbing is Wells Fargo’s refusal to voluntarily correct its errors.  It prefers to rely on the ignorance of borrowers or their inability to fund a challenge to its demands, rather than voluntarily relinquish gains obtained through improper accounting methods.”

 

So, is what has happened to Patricia Martin yet another example of Wells Fargo’s systemic misapplication of funds in order to repossess homes?

 

I would imagine that Wells Fargo would answer “No,” to that question.

 

So, fine… then you’d have me believe what?  That it’s a fluke?  An aberration?  Some sort of inexplicable, unfortunate deviation from the norm perhaps?

 

HORSE PUCKY.

 

For all of you legal eagle types… You can read Wells Fargo’s Opposition to the Preliminary Injunction HERE, Wells Fargo’s Appendix to Opposition to Preliminary Injunction HERE, and the Plaintiff’s Reply to Wells Fargo’s Objection to Preliminary Injunction HERE.

 

Mandelman out.

 

 

HEY DOERS… Looking for Something to DO?

 

Wells Fargo’s CEO, John Stumpf “earned” $19.8 million last year, according to the Wall Street Journal and documents filed with the SEC in March of this year.

 

If you’d like to congratulate him, you can try reaching him by email:

john.g.stumpf@wellsfargo.com

Or, by phone: (415) 396-7018 or (866) 878-5865

Or, if you want to have some fun, since I know this physical address is correct, why not grab an envelope, buy a stamp and reach out to him via regular mail.  For extra smiles, consider throwing old keys in with your letter, or I’ve always enjoyed tossing a small handful of sunflower seeds in before sealing…

John G. Stumpf

Chief Executive Officer

Wells Fargo Bank

420 Montgomery St.

San Francisco, CA 94163

### 

 

You’ll also be happy to hear that Wells has just launched its new business unit, Abbot Downing, which is dedicated to caring for the wealth of the super rich… its clients have more than $50 million in investable assets.  Only recently launched, Abbot has already recruited about $33 billion in investable assets under management.  So, very well done there.  (And I heard that one of their clients holds the patent on the color “blue.”)

 

 

Jul
12

Why 99% of All “Forensic Audits” are Scams

By | Featured, Forensic Loan Audits

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Ok, it really bothers me… I’ve been wanting to write this post for a very long time. I’ve just been so stinkin’ busy it’s been put on the shelf several times. I’ve just tried to address this issue one by one as homeowners call me. But I cringe every time I hear the words “forensic audit” and I hate having to even say the words but sometimes I  have to in order to help a homeowner or attorney understand what I (and a very select few others) do versus what the vast majority of these other individuals/companies out there are doing. That is why I have a category on this blog called “Forensic Loan Audits…” because the scammers that used to be in the “Loan Modification” business got put out of business by most Attorney Generals around the US after they saw millions scammed on that cottage industry. Nearly overnight, a new cottage industry of “retired” shall we say loan mod experts became “forensic auditors.”

Let me say this from the outset… there is a wide range of people and companies out there (including even some attorneys) who are selling “Forensic Audits.” They vary from outright scam artists to slick salespeople performing some [overly simplistic] level of some sort of a mortgage loan transaction audit but who charge exorbitant prices for the services and, ultimately, the work product they produce rises to the level of a scam as well because their fee and what they produce are universes apart – so I deem that a scam as well – that’s just my humble opinion of course.

There is one fairly high profile retired attorney out there operating a very popular blog selling extremely high-priced garbage [in my opinion]; unfortunately, many of his victims, I mean clients, have purchased this “audit” are left with many pages of virtual nothing-ness that they will never be able to use in a court of law. Quite ironic that it’s coming from an “attorney” or “counselor at law” – so to speak.

But, I don’t think any of you reading this right now are actually surprised of the story of another attorney or ex-banker taking advantage of people because they have a license, degree or bar number and using that “credential” to sell people on a scam. There are many prisons with such people calling those places home for these types of crimes.

So, now that I’ve spent a minute on the soap box, let me get to work to explain the difference between a “Forensic Audit” and a “Mortgage Loan Compliance Analysis” because there is a difference – like night and day. I think it’s a good place to start to say that I come from the mortgage banking industry and I have over a decade in actual experience in the inner workings of this industry and I have had to demonstrate continued competence in the actual compliance with the very laws we are looking into to see if these loans complied with these laws. I challenge you to find a “forensic mortgage loan auditor” out there in or even around the mortgage banking or finance industry. You won’t. You will find compliance officers. You will find fraud investigators. You will find compliance analysts and underwriters and risk managers. The closest thing might be the field of Forensic Accounting. But you will never find a legitimate forensic mortgage loan compliance officer using the term “forensic audit” or “forensic auditor” or even “forensic loan audit.” This is simply some deceptive marketing term invented by slick scammers who could probably sell a lot of people a box of coal and pass it off as a box of diamonds.

“Forensic” literally means “suitable for use in a court of law.” So the layman’s translation means that whatever report or whatever you might get from a “forensic auditor” must, and I mean MUST, withstand the legal scrutiny of a judge, jury and opposing counsel.

So, I’ll just dive right in here and make a point: you can use the word “forensic” if – and only if – your work product is deemed suitable for use in a court of law. So that’s the lens that any and all investigation by YOU as a homeowner MUST use in conducting your due diligence if you’re in the position of needing help to defend yourself from foreclosure or the potential illicit collection of mortgage loan debt.

I will say this… if you see ANYONE pitching a “Forensic Audit,” I would just turn and run. Even the simple use of that title – forensic audit – should set of alarm bells. What is it a forensic audit of? What does that even mean? Really, it doesn’t even tell you anything – other than it’s a slick marketer using a buzz term to sell you something. The question really is or should be – “will it be suitable in a cour of law?”

Conversely, a Mortgage Loan Compliance Analysis is EXACTLY what it’s name implies plus a bit more. What do we do? We analyze the mortgage loan documents for actual compliance with Federal Lending Laws. Did the original lender provide the borrower with the mandated loan disclosures from the date the borrower applied for the loan through to the closing or ratification of the mortgage loan transaction and were the material Truth in Lending Disclosures such as the APR, Amount Financed, Finance Charge, Amount of Payments and Payment Schedule were properly and accurately computed – this is a mathematical process that requires a very comprehensive understanding of Regulation Z, Section 226.4 along with the Official Staff Commentary for that section. It’s also an investigation and analysis of the transaction to see if the original lender [and any mortgage broker involved] that may have been involved complied properly with underwriting guidelines and a look into any possible mortgage fraud or predatory lending violations such as bait and switch tactics or even forgery of the borrower’s initials or signature on loan disclosures or loan closing documents. Finally, it’s also an investigation into whether the lender and/or broker was properly licensed. All of these issues are examined, documents analyzed, TILA disclosures re-computed for accuracy and comparison and then all of this is [or should be] rendered in a report or affidavit format along with any and all supporting exhibits such as the loan documents and other components of the investigation.

Now, here’s the clincher… a “Forensic Audit” is almost always going to be a collection of boiler plate fluff with a few specifics strewn throughout the template to pass this garbage off as legitimate. However, any real scrutiny of these documents by someone who knows what to look for – or worse, a judge or creditors rights attorney – will easily reveal the  fact that 99% of these “forensic audits” aren’t worth the paper they’re printed on [ie. utter worthlessness]; which is real shame seeing that the homeowners who get suckered into these scams have precious few economic resources. They deserve a real service and a real work product that will actually stand up in a court of law.

A real mortgage loan compliance analysis and investigation will be highly CASE SPECIFIC. For it to be considered “forensic” in any sense of the word, it MUST be specific to YOUR CASE, not boiler plate. And judges HATE boiler plate, non-specific pleadings and if you try to throw a boiler-plate, template of a “forensic audit” at a judge in your case, you are asking for his/her wrath not to mention being completely discredited which never has a happy ending. I always tell people who are inquiring to hire me that there is no shortcut to these analyses and investigations. A mortgage loan transaction and any corresponding foreclosure case is like a fingerprint… no two of them are the same. Yes, you have a set of laws and guidelines that apply to all transactions but no two transactions are the same, period. Any and all work product must reflect that level of specificity if it is to be considered “forensic” in any way and has any chance of actually helping you make valid claims in a court of law.

So here’s my tip to help any homeowners facing foreclosure reading this: ASK for attorney references even IF they are an attorney. Ask to see their credentials. Ask for actual samples. Ask to see actual court cases their work product has been filed in and/or used in. Ask for customer references. Two words: DUE DILIGENCE… plus four words: DON”T BELIEVE THEY HYPE.  Because your money can either be completely wasted or put to very good use depending on WHO you hire and what they produce. Finally, call or email me… I’ll send you a couple samples with borrower info redacted so you have something to compare the garbage to. Hopefully this helps a bit… Good luck and happy hunting.

Jul
08

Beware of Scam “Forensic” Loan Auditors/Companies

By | Featured, Forensic Loan Audits, Truth in Lending

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Ok, here we go go again… now the scams have hit the loan auditing industry. Most of these fakers are ex-mortgage brokers who didn’t make it in the mortgage industry and are now looking for a new way to make money. There are a few good auditors out there who have really put in the time, effort and research to actually know the laws and know how to properly state the elements of these violations in a manner that can actually help a homeowner in a foreclosure matter (and can help an attorney bring these violations as affirmative defenses or counterclaims in a foreclosure case).

 TILA or supposed “Forensic” Audits that use standardized check-off lists without providing a mathematical determination of the TILA Disclosure Statement and amounts are NOT Forensic Audits.  A check-off list  or automated/software-driven TILA Audit describing potential violations as “Serious,” or “Moderate” is incompetent and useless.  A Forensic TILA Audit must provide accurate TILA; Regulation Z citations, case law precendent, as well as actual computation of all settlement service fees properly allocated in the TILA Disclosure Statement or the Audit will NOT withstand scrutiny by legal authorities.  Do not be fooled by imitations using standardized check-off lists.

There is absolutely nothing “forensic” about plugging loan data into some software and having it spit out a report. But that is exactly what most of these fakers are doing and they are charging anywhere from $395 to $995 based on what I have seen so far.

If the loan audit will NOT stand up to legal scrutiny then you have wasted your money and someone has scammed you into believing you were paying for something that would help you. Why would  you pay for a loan audit that would not stand up to legal scrutiny?

The software driven report serves a limited purpose and I use a popular banking compliance software for my audits as well but this software-driven report is only a small piece of my actual audit and findings report. A true forensic auditor examines every document relevant to the loan and looks at signatures, dates, parties on the documents, who provided those disclosures or documents and also obtains the story from the client because every loan is a story. It involved people and usually quite a bit of communication between the borrower and the indispensable parties to the transaction.

I have myself setup for Google Alerts on a number of search terms so I go to these other websites pretty frequently. I also get clients who have dealt with some of these fraudsters and now want my help to clean up the mess and the wasted money. Hopefully this post will cause those who read it to really do some good checking before they part with hard-earned money.

Bottom line is to make sure you follow your gut. Do your homework, ask questions, ask for references. A good auditor will most likely have attorneys they work for and consult for.

Feel free to contact me if you have any other questions on this topic or would like a sample of my audit reports. You’ll be able to see the true forensic nature of a good audit vs. these computer-generated reports.

Apr
27

What is a “Forensic Loan Audit?”

By | Forensic Loan Audits, Truth in Lending

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Definition of the word ”Audit“

  • A systematic, independent and documented process for obtaining evidence.
  • formal examination of an organization’s or individual’s accounts or financial situation. An audit may also include examination of compliance with applicable terms, laws, and regulations.
  • The physical review of practice records to determine if the practice has been (and is being) compliant with carrier requirements.

Definition of the word “Forensic”

  • Relating to, used in, or appropriate for courts of law or for public discussion or argumentation.
  • Of, relating to, or used in debate or argument; rhetorical.
  • Relating to the use of science, specific methods or technology in the investigation and establishment of facts or evidence in a court of law:a forensic laboratory.

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 non-compliance.

According to the Truth in Lending Act even a small mistake with calculating the borrower’s annual percentage rate could be an actionable violation, enabling the borrower to rescind the loan. Therefore, the threat of a lawsuit is often sufficient to persuade an otherwise uncooperative lender to negotiate an attractive work out with the borrower. Because the Truth-in-Lending Act (TILA) requires all attorney fees to be paid by the predatory lender (in which a new servicer is now the responsible party ), the vast majority of cases settle out of court quickly.

Even non-material disclosure violations or violations over a year old can still be used as claims and defenses in recoupment in a foreclosure defense. (See 15 U.S.C. § 1640(e)) – these claims and affirmative defenses raise genuine issues of material fact sufficient to survive any motion for summary judgment.

Until recently Forensic Loan Examinations were only made available to large banks and lending institutions wanting to determine their own exposure to risk and potential legal liabilities prior to purchasing large pools of mortgage loans.

Providing the loan audit gives homeowners more ammunition so they can stand a chance in negotiating a decent modification with lenders who have far more resources than the average borrower and often play hardball unless they are faced with the risk of a costly lawsuit.

A Forensic Mortgage Loan Audit using Lane Houk’s Proprietary Methods and Technology results in the most comprehensive and thorough audit reporting process of its kind that reveals ALL violations of Federal and State Codes including RESPA, TILA, HOEPA and ECOA along with detailing EVERY VIOLATION, its severity, and the specific law/regulation in violation in an easy to read format. ALL of the forensic loan audits reports can reveal these guiding queries:

 Was fraud involved?

  • Constructive Fraud
  • Misrepresentation
  • Victim of Bait and Switch
  • Straw Buying Victim
  • Steering
  • Appraisal Fraud

Common Abuses:
Predatory mortgage lending involves a wide array of abusive practices. A brief description of some of the most common are:

  • Excessive Fees
  • Hidden Fees
  • Abusive Prepayment Penalties
  • Kickbacks to Brokers (Yield Spread Premiums)
  • Loan Flipping
  • Unnecessary Products
  • Mandatory Arbitration
  • Steering & Targeting
  • Breach of Contract

We can help you find out…

  • Did the loan officer accurately disclose the loan terms to you?
  • Did you sign a separate broker fee agreement?
  • Was your home’s value inflated by the lender’s appraiser?
  • Did the lender fail to verify your ability to repay the loan?
  • Were you given all federal and state disclosures?
  • Were you properly notified of your right to cancel the loan?
  • Do your closing documents contain any technical errors?
  • Were you charged excessive or undisclosed fees?
  • Has your loan been sold without your knowledge?
  • Any and all applicable federal and state law violations
  • The real terms of your loan
  • Outline of hidden fees and/or commission earned by your broker or lender
  • A complete assessment so you can pursue possible legal claims against your broker and/or lender
  • Report of all factual findings of the forensic audit

 In my experience, there are very few auditors out there who truly know the “forensic” aspects of the loan audit process. The real litmus test is to ask the auditor where most of their business comes from? If it’s not from consumer law attorneys walk away. Ask for attorney references at all times.

Jan
17

Your best chance at a real Loan Modification – TILA Rescission

By | Loan Modification, Truth in Lending

4 Comments

 

I wrote a post similar to this yesterday. It was a post on TILA rescission that referred to a married couple who rescinded their loan AFTER foreclosure was filed. They subsequently filed a Chapter 13 bankruptcy as well. The lender (Option One Mortgage Corp. – division of Wells Fargo) balked and refused to honor the rescission. The borrowers filed an Adversary Proceeding in bankruptcy court and won. CLICK HERE to read the full post.

This post is focused on alerting America’s homeowners who want to stay in their homes (but cannot afford the payment anymore) of the BEST REMEDY you may have. This is not for the proverbial “deadbeat” who just wants to cheat the system and live for free. However, there are much fewer of those kinds of people than those that can afford the payment might think. Millions of Americans are losing their jobs, being laid off, having their salary and overtime cut back while the costs of living have increased. The cost of living has been increasing (ie. inflation) for quite a while. From insurance costs to groceries to the costs of labor. Because of this cost of living increase, many fixed income families were forced to start living partly on credit cards. By the way, had this “credit” not been available in the first place, I don’t think we’d be where we are today. Supply and demand will keep the economy in check unless you can artificially fuel demand with borrowed money that someone can’t really afford to pay back.

Because of these extra credit payments and loss of income or a job, millions of families are on the verge of foreclosure or already there. If this is where you (or a friend/family member) is at, you MAY have one very powerful remedy to force the lender/servicer to work with you.

This remedy is called “TILA Rescission.” TILA stands for the “Truth in Lending Act.” It is the major piece of federal legislation that regulates lending practices of financial institutions. A borrower may have the “extended right to rescind” a loan for UP TO THREE YEARS FROM THE DATE OF CLOSING.

It is important to note that a loan can ONLY be rescinded when:

  1. The loan is a refinance transaction;
  2. Funded in the last three years
  3. On the borrower’s primary residence;
  4. When a “material disclosure violation” is found

The term “material disclosure violation” is a very important component. Many people (including self-proclaimed experts in loan auditing) think that “any” violation of the Truth in Lending Act gives someone the right to rescind.  That is patently wrong. The four conditions above must be true in order for the borrower to have the possible “extended right to rescind” the loan transaction. There are only 4 potential “material disclosure violations.”

Many homeowners don’t want to just “walk away.” They want to stay in their home. The bad news is that these lenders are run by criminals. Literally. They’re getting billions in bailout money. They’re getting millions to billions more in insurance payouts on defaulted debt. Homeowners who are trying to save their homes are running into the brick wall of GREED. Loss mitigation departments are being run by a bunch bungling fools who don’t even know how to answer a phone much less deal with a homeowner with dignity and respect. The corporate bottom-line is driving our country to the bottom.

So, if you’re like me, when you’re backed into a corner, you take the gloves off and you come out swinging. I think that Congress and corporate America really does underestimate the average American patriot. That’s their first and biggest mistake.

If you want to fight the battle to save your home… if you want to go on the offense, then TILA Rescission is one great weapon to fight with. You need to have an audit of your loan file done by someone who really knows what they’re doing. Most of the businesses and people out there claiming to know what they’re doing, don’t. Beware. If someone is trying to charge you over $750 for an audit, don’t just beware, don’t do it.

With a professional audit of your loan closing file, the auditor is investigating for material disclosure violations. If one is found, you have the right to rescind the loan – if the loan has been closed in the last three years and it was funded on your primary residence.

The loan is rescinded by sending a “rescission letter” to the servicer, the originator of the loan and any special servicer(s) that may need to be notified as well.

This puts the screws to the lender immediately and they end up in a real quagmire. TILA is meant to be a “self-enforcing” statute. This means that the lenders are supposed to enforce it on themselves. They are not allowed to sue a homeowner to get around the self-enforcing nature of the statute. Doing so is another violation. The only thing a lender can do is to “seek judicial guidance” in a TILA rescission claim.

In practice, when a homeowner rescinds the loan and IF they have a competent attorney well-versed in TILA, they are going to be asked by the lender or opposing counsel to submit a “proposal.” Folks, this is legal-speak for we’re willing to modify your loan, send us a proposal.

If you truly want a loan modification, a workout of your existing loan, a payment reduction plan, this is THE best and most powerful remedy one can have. Not all homeowners qualify and not all loans will have a material disclosure violation. I can tell you that I find material disclosure violations in greater than 50% of all loan packages I audit.

You have to be very careful to ensure that the “chain of custody” of your loan documents is protected. This is one main area a lender’s attorney will try to attack in an attempt to discredit the claim by saying that the documents could have been lost or altered because the homeowner, auditor and/or attorney for the homeowner were careless in preserving the integrity of the original loan copy package they received from the closing agent.  A good attorney and auditor should have procedures and systems in place to combat this potential attack and preserve integrity of the documents.

If you have any questions about the loan audit process or would like to inquire about a professional mortgage loan audit, contact me by email at Lane@LaneHouk.com

DISCLOSURE: I am not an attorney and nothing in this post should be construed as legal advice. Seek out an attorney for any questions pertaining to legal matters. I audit loan files for violations and have education and training in this area of practice. I work with competent consumer-based attorneys who handle legal matters for clients and provide audit report services for consumers and a select group of attorneys.

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