Examples of Predatory Lending Practices from the Neighborhood Works website
| Equity Stripping A lender takes a portion of the homeowner’s equity in a manner that provides no or little value to the homeowner.Asset-Based Lending A lender provides financing to a homeowner based on the homeowner’s equity and without regard to the borrower’s ability to realistically repay the loan. The lender determines that there is equity enough to cover any loss that might incur in the event of a default. Mortgage Flipping Packing “Foreclosure Rescue” Property Flipping Balloon Mortgage Home Improvement Scams |
The Truth In Lending Act (“TILA”), and the Real Estate Settlement Procedures Act (“RESPA”) are violated daily by lenders and mortgage companies. These laws are in place to protect you, the homeowner, but yet are often completely disregarded. Your loan is probably unlawful, and you may be entitled to substantial damages whether or not you’re currently in foreclosure.
If you are in foreclosure, the Truth In Lending Act can not only stop the foreclosure process immediately (without bankruptcy), but also put money in your pocket. Once TILA and/or RESPA violations are discovered in your loan documents, your lender will be eager to discontinue the unlawful foreclosure process and settle the dispute.
The Federal Truth in Lending Act is a very specialized area and only a few experts in the country are able to take on mortgage companies in this regard.I am currently working hand and hand with lawyeres across the country as a piad experts and consultant.
General Information about TILA:
| Truth in Lending Act (15 U.S.C. §§ 1601-1667f, as amended) The federal Truth In Lending Act was originally enacted by Congress in 1968 as a part of the Consumer Protection Act. The law is designed to protect consumers in credit transactions by requiring clear disclosure of key terms of the lending arrangement and all costs. The Truth In Lending Act is designed to reduce confusion among consumers resulting from the different methods of computing interest and prevent fraud, deception and unfair business practices. It does not require creditors to calculate their credit charges in any particular way. However, whatever alternative they use, they must disclose certain basic information so that the consumer can understand exactly what the credit costs. The Truth in Lending Act is implemented by the Federal Reserve Board.Regulation Z explains that lenders must comply with the consumer credit parts of the law. Regulation Z applies to offers or extensions of consumer credit if four conditions are met: 1. The credit is offered to consumers. 2. Credit is offered on a regular basis. 3. The credit is subject to a finance charge (i.e. interest) or must be paid in more than four installments according to a written agreement. 4. The credit is primarily for personal, family or household purposes. If credit is extended to business, commercial or agricultural purposes, Regulation Z does not apply. Home Mortgages One of the biggest lending transactions any individual is likely to enter is borrowing to purchase a home. These transactions have become more complicated in recent years. Historically, someone trying to buy a home had very few options. Often, only a traditional thirty year loan was available. Now, loans of various duration and interest rate variations are available to every home buyer. The Federal Reserve Board and the Federal Home Loan Bank Board have published a book entitled “Consumer Handbook on Adjustable Rate Mortgages ” to help consumers understand the purpose and uses of adjustable rate mortgage loans. Regulation Z requires that creditors offering adjustable rate mortgage loans make a special disclosure booklet available to consumers. Disclosure Disclosure is generally required before credit is extended. In certain cases, it must also be made in periodic billing statements. The term “closed end credit transaction” is defined by exclusion. That is, it includes any credit arrangement (either a consumer loan or credit sale) that does not fall within the definition of an “open end credit transaction”. Open end credit includes credit arrangements like revolving credit cards, where the “borrower” (that is the credit card holder) is not required to pay off the principal amount by any particular point in time. Rather, the borrower is simply charged interest periodically and is usually required only to make some minimum payment. Under Regulation Z, disclosure must be made of the following important credit terms: Finance Charge – This is perhaps the most important disclosure made. This is the amount charged to the consumer for the credit. Other Features of the Truth in Lending Act The Truth In Lending Act has other important features. If you elect to advertise credit terms, the law requires disclosure of key lending terms. Also, the law entitles the consumer the right to rescind certain credit transactions under certain circumstances, such as home equity loans. |
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Hello,
I have been dealing with Country Wide now for over a year in an attempt to get a better loan package.
Unfortunatly, because of the number of homeowners who are in financial difficulty,it took over a year to get the first new loan version.So, needless to say, the penaltys are ski high.
I am disabled and have a income which is not very much.
The problem that I discovered when the loan originator after a year of serviceing the loan they hoodwinked me into signing, sold the loan to Country Wide. It was at that time that I discovered that the loan was going to take tremendous jumps over the next few months.
In my opinion, I was taken advantage of because of my circumstances. If I had the knowledge back then that I do now, I certainly would not have done any business with Merit Lending.
The person who worked with the original loan was with Merit Lending. Unfortunatly, she was able to get my trust by persuadeing me that she was looking out for my best interests. She was rather pushy and repeadly told me not to talk with any other brokers as they would attempt to get me to go with them and that the more that I spoke with the worse my credit report would look. While dealing with her, I originally wanted to borrow just enough to purchase land that abuted the current homestead. She however told me that I would have to borrow more so that I could pay down other debt. By the time we were done, she told me that she had gotten the appraisal raised by a phone call she had made to the appraiser. However, I am not sure of how she raised the appraisal. She also had called the agent who held the house insurance and gotten information from him regarding costs etc. Looking back on the situation with the knowledge that I have gained since regarding her being licensed, I do not believe she was entitled to obtain some of the information which she was aware of. She persuaded me to do the interest only loan telling me that everybody was doing that loan at the time. She never told me about how high the payments were going to adjust to. I do not believe that she had my best interest in mind now, I feel that all she was concerned about was the big commission check which she was going to receive for making this loan. She obviously in my opinion did not care about what additional turmoil this loan would bring into my life.
Upon realizing the problem that I was facing, was horrifying to say the least, I contacted one of Country Wides loan officers to see if there was anyway that the loan could be rewritten and made more affordable. The loan officer told me that he could not help me, adding that in all the years that he had been doing loans, he had never seen anyone get screwed over as badly as I had been.
I should point out that at the time I was checking into loans, I was recovering from a mental break down. And because, I was having difficulty with memory matters, I had to often times have the person who was drawing up the loan repeat what we had discussed during our previous discussion. Hind sight and two years down this nightmarish road, I have realized that I made a real mistake by letting the person who was working with me know the reason that I was having difficulty remembering our conversations, I now realize that was a huge mistake. I feel that she took advantage of my situation.
Over the last year, I have been doing some research on the firm that originated the loan and have discovered that the company has a not so nice of a track record with the state of California. I also to the best I can tell have discovered that the person who worked with my loan was not licensed with the state of California, a violation which from what I can tell has been a problem for this company in the past.
In further looking over the loan, I have also discovered that the papers are not accurate in one area specifically, regarding bankruptcy, the papers stated that I had not filed bankruptcy over the last seven years. I infact had filed bankruptcy Two years prior to the loan. I do know that I told the loan person that, and I can say that because I was surprized when she told me that it was not a problem. Also, my credit report showed the bankruptcy I am sure. I just figured that she knew more of the law than I did and did not question that matter at that time.
I believe that I have located the person who was the originator of the loan, however after a couple of attempts to contact her via the internet, she has not replyed to my request to make contact with her. If this is in fact the same person, she is a dental assistant in a different state than California.
At the time of signing the agreement, I almost quite signing when I observed the cost of the fees for originating the loan which were well over 8,000.00! The witness also looked at the cost twice. However, because I was told that I would not have to worry about making credit card payments which were coming due, I was between a rock and a hard place. The only reason that I really paid closer attention to the matter of cost was that the witness did a double take when he saw the figure while he was telling me what the page consisted of.
In doing the research on the company, I also observed that they had thier license to do brokerage business revoked by the state of California in November,of that year which would have been three months after I had signed my loan agreement with them.
In realizing the problem which I was faced with, I had no choice but to look into foreclosure again! Along with the mortgage, I also had gotten suckered into a couple of internet businesses which I lost a alot of money in. I believed what I was told and being in the mental state that I was suffering with, I was what one could say, a easy target.
I had been struggling as it was at that time as I had tried to cut back on my medications and soon learned that I was setting myself up for another breakdown.Again, I was between a rock and a hard place regarding my future ability to afford medications as well as put food on my table. As far as my condition, it is clear that it continues to deteriorate as the years go past with very good chances of having to use a feeding tube in the future because of nerve damage in my neck. So, with that knowledge I can see more medical expenses further down the road. Because of my swallowing problems, I often wake at night chocking, and for that reason, my daughter has had to move in here with me in case, I get to the point of needing medical assistance.
I felt it was necassary to mention the above information so that my situation is clear.
To futher add to my expenses, this year my income became taxable, unknown to me. I was under the impression that it would become taxable at the age of 62.
In my efforts to deal with Country Wide, I informed one of thier workers of the new tax expense and he pretty much called me a liar saying that he had dealt with retirement and disability matters enough to know that the tax increase would not be accompanied without a raise in my income to make up the diffrence. However, that is not the case, there is no increase in my benefit to help absorb the tax expense.
So, in the last agreement that Country Wide sent to me which they wanted me to sign, I sent a certified letter to them stating the reasons why I felt that I could not sign the agreement. However, I continue to get calls from them asking why they had not recieved the signed agreement from me.Although, they have records of all the calls etc, which is fine with me, they seem not to want to pay notice to the certified letters which I have sent explaining why I could not sign the agreement and asking them if we could continue to negotiate.
The most recent phone call was about a week ago, and again the workout person had no knowledge of the explanation letter which I had sent them in reply to thier request for me to sign the agreement.
Because, I have been holding off on contacting legal council concerning what I feel are less than scruptulous dealings of the loan originator,I have been hoping that Country Wide and myself could come to a signable agreement.
The matters which kept me from signing the Two agreements which have been sent to me are, that the first had a payment which was about 600.00 above the loan original amount. And on the second agreement which was sent to me, they wanted me to agree that I would give up all my rights as to legal remedies against either them or thier predicesor. They are aware of the problem with the loan originator and when I asked them why they purchased the loan without realizing what they were purchasing, they simply told me that they just buy the loans and do not look to see if there is predatory lening involved or not. And then there is the matter of the percentage they were going to charge me. I believe that it is important to make note that while they were drawing up the last agreement, the fed dropped the interest rate another whole point which was not mentioned in the agreement.
When I spoke with the workout person last week she gave me a pretty hard time as to my reasons for not signing the agreement. And because I had been in touch with acorn a few months ago in my attempt to evaluate my options, I asked her if she was aware of Acorn. She asked me if they were a “loan company”. This rather surprized me as there had been a lot in the news that Acorn and Counrty Wide were going to start working together to help out the home owners who are in trouble with thier mortgages. This had been about a month ago and I really thought in that being the case, she certainly would be aware of who Acorn was.
So, I have tried the best I could to give a clear puicture of my situation here. One last point of interest which I would like to make here is that. When the loan originator took on my loan, they were supposed to have paid off, Flagstar Bank who was the note holder at that time. I am not clear as to what happened during those transactions as, it was when I fell behind on my payments to Country Wide that I recieved a original copy of the note from Flag Star Bank which had stamped on it ,”loan paid in full”. There is no date afixed on the document as to when it was paid in full.
I have made contact with Flag Star and they have told me that they have no explanation as for the amount of time it has taken to recieve the document. Why it has taken in excess of Two years to recieve this document is unknown to me.
Also, although I am behind on my payments to Country Wide, I sent a certified check to them about three weeks ago for a total of 2,100.00 to be put towards to escrow account. They returned the check to me with a explanation that it was not the agreed upon amount. In fact there was no agreed upon amount. In sending them the check, I also sent a letter of explanation with the check. In that letter I told them that when we reached a agreement which I felt was fair under the existing circumstances and I could feel good about signing, I would send the remainder of the amount they had placed into the agreement papers, which would be 1,900.00.
However, it appears that I am just the little guy and they are the giant. As I explained to a couple of the workout people, I had nothing against Country Wide at that time. Unfortunatly, as is obvious from the last requested agreement they may well be understanding that the loan in question here is indeed a loan which would be considered a predatory loan. And in regards to that, I received a letter from thier legal department back about 6 months ago telling me that in regards to the matter of predatory lending by the way which they told me they did not believe it was a predatory loan saying that all the paper work seemed to be in place, they told me that they could do nothing about that and that I would have to deal with the loan originator. However, since California has pulled thier license as a brokerage firm, they are not licensed nor as far as I can acertain in business.As I mentioned previous, I have attempted to make contact with whom I believe is the person who orignated the loan, she has not made any reply to me.
Finally, just before I filed bankruptcy, I went to the site for Country Wide and cancelled the auto payment which had been being taken from my checking account.I want to make it clear here that I am not accusing Country Wide of this matter. What I do want to make note of is that the day that I filed bankruptcy, someone, of whom I am not aware of as yet, entered my checking account through a paypal acct which I had had for the internet businesses and removed all of the monies which were in the account. I had just recieved my monthly disability payment which is deposited automatically. To this date I am still not aware of whom it was that pulled such a nasty trick. I am on some very heavy drugs for my problems and I refill them at the first of the month. I went through hell until the money was replaced which took about a week.
So, in closing I want to Thank You for taking the time to read this rather lengthy entry. As I previously stated, I felt it was necassary to make it this lengthy to attempt and show aclear picture of my siutuation.
Any advice would be greatly appreciated. I am tired of this situation and am going to attempt to start sending what I can afford to Country Wide starting this month. I do not know if it will help me to save my home or not, but at least I can feel better about myself having attempted to pay what I can.
Thank You
Chip Holk
I am researching trying to find specific Federal law my lender violated when they threw my loan modification requests submitted to them away over 4 times. This last time in November, 2009, I was sitting in my attorneys office when he and I spoke with my lender, for the required guidelines for a loan modification and watched him fax it to the lender representative we were working with (my bank statement, proof of employment and income stubb) information they requested. 1 month later my lender again claims they never received my loan modification request or the documents my attorney submitted. Hope now, and Light house, both housing government consulting agency sent them my information, and I also faxed submissions to them twice myself for loan modification but each time a few weeks or months later they claim they have nothing in my file regarding a loan modification.