There are recent commercials integrating video and sound bites of President Obama in the actual television commercial. Do not be fooled by this clever trickery. The President never intended to be used as the endorser of whatever new marketing virus is spreading in America. This is absolutely ridiculous and wrong for the unqualified and the unlicensed person to practice law without being an attorney. Often times, a loan modification can reveal multiple violations. The attorney is trained to prepare for court litigation if necessary and most often resolves matters without a courtroom battle. The attorney can discuss the legal remedies or risk and prepare legal motions. The attorney knows the value of legal research. Attorneys can prepare Points and Authorities as well as documents for Discovery and other legal documentation to help obtain a favorable outcome for the homeowner.
Many of these self proclaimed experts in loan
modification are charging $3,500 up to $10,000 or more in fees to
write a letter and gather up a few documents from you. Some of
these so called experts having no license to practice law should
not pretend to be experts in civil litigation against the lender or
the broker originating the loan. Many remedies are
available, but you should always consult a licensed and experienced
attorney first. If you need help to save your home,
there are also free services available in every County of
California. Depending on where you live, a search online will
provide phone numbers and addresses where you may apply. If you
have no computer or internet, a trip to your local County Offices
or library would be a good start. You can call the State
Capitol, for more information as well.
I worked in mortgage lending for many years and truly
understand how many fraudulent loans were created and approved.
Stated income, negative amortization, option arm loans and
subprime loans opened the door to Pandora's Box. I became an
underwriter and was trained to spot fraud in loan applications.
Believe me, mortgage loan officers from California to
Florida were guilty of enhancing the income to qualify and
explaining it all away as nothing to the
borrowers.
I recently worked in a law office that was handling loan
modification cases. The clients would show me their closing
documents, HUD 1 statement, Truth in lending docs, original
loan application 1003 and sometimes the Good Faith Estimate. What a
revelation! I spotted potential civil lawsuit
Causes of Action after a cursory
review of the documents. After a review of the 1003 loan
application, I asked the borrower’s if they were each making $8,500
per month from their jobs. The loan application showed them making
over $17,000 per month in combined income. The borrower’s stated
the Broker changed that information on the loan application for
them.
Many of the clients hurt were never told the truth by
the very person entrusted to serve them, help them or advise them
while being in a fiduciary relationship to be honest and
forthright. Real Estate License or no license did not matter. Greed
and commission money superseded principles and ethics. Commissions
on some loans for example were almost $27,000 to the loan agent.
Now... I'm not talking about a million dollar loan. At the
closing table anonymous borrowers signed the loan documents
which had the following fees and
costs:
$650,000
loan amount to refinance an owner occupied home in Ventura County,
CA.
$995 charged as loan processing fee
$595 charged as Broker Administration fee*
$50 charged as Credit report Fee
$250 charged as an appraisal review fee
$395 charged as an underwriting fee
$19,500* (3 points) was also paid as YSP or Yield Spread
Premium to the Broker for an Option Arm Loan which had a 3 year
prepayment penalty also. This amount was not shown as a charge to
the borrower since the lender funding the loan paid the broker
nearly $20,000 for 1 loan.
Get out your calculator and total this up. Ask yourself
and the attorney you hire, how did this happen to
me?
The above fees were
from the Mortgage Broker used to originate the loan. Note the
appraisal fee is usually paid to a licensed appraiser. Third
parties are supposed to be neutral without any connection or
influence to the originating loan broker. In this case, the
brother of the broker did the appraisal and handled most of the
appraisals in that office.
*Prepayment penalties should have been discussed and
disclosed prior to the loan submission and approval of the
borrower’s loan. Some loan agents just never cared about how much
cost they were passing on to the borrower. Some Brokers and
loan agents were looking for the big payday on rebates or *YSP
from the lender. The higher the rate of return for the lender, the
greater was the reward to the Broker or loan agent. Rebate and YSP
mean the same in commission language.
The loan agent/ Broker could manipulate a higher interest rate or start rate on the loan. The loan agent could also manipulate the margin on certain types of loans. The loan agent could also add in a prepayment penalty to the homeowner’s loan to increase commissions.
I believe the lenders were also
indirectly complicit in this type of activity since lenders were
producing wholesale rate sheets and promoting these types of loans
directly to the Brokers in their network of approved Brokers
nationwide.
*Recently in Federal Court a Federal Judge ruled in
favor of a plaintiff that claimed Broker Administration Fees
were unearned fees for a Broker thus violating (RESPA)
Real Estate Settlement Procedures Act of 1974. The broker was
ordered to pay back the fees on 30,000 loans they had
originated.
The additional costs listed on the HUD 1 closing statement
included title insurance, hazard insurance, escrow fees, notary
fees, appraisal and a few other assorted costs. Taxes and
insurance are considered customary costs and found in most
transactions of refinancing homes. Title insurance and escrow are
also considered customary. Some states require a recent
Survey such as Florida as part of the process in
refinancing. If you have a home loan in Texas, the State
statutes are very strict.
Escrows or impounds for taxes and insurance are required by lenders in certain transactions if the loan to value is high. Some states prohibit this practice of lender reserves.
