A little too Late…crash happened! HUD reconsiders RESPA rule on incentives

Now if “steering” was involved…

WASHINGTON – June 4, 2010 – The U.S. Department of Housing and Urban Development (HUD) is taking a closer look at the Real Estate Settlement Procedures Act’s (RESPA) prohibition against the “required use” of affiliated settlement service providers. DinSFLA: They need to take a closer look if these were part of “Appraisal Fraud” & “Illegal Kickbacks”.

It violates RESPA if a consumer is required to use a particular mortgage lender, title company or other settlement service provider that’s affiliated with another business in their mortgage transaction. However, it’s less clear whether it’s a RESPA violation if it is offered as a discount or other incentive to steer them to a lender, title company, etc. DinSFLA: COERCION or not COERCE is the Question! I wonder what they would think of the Mills using their own title companies to close on their foreclosures? Any violations?

HUD is currently trying to determine if incentives violate the “required use” requirement. As part of the process, HUD published a notice about the issue and is seeking public comment.

HUD took the step because it has received a number of consumer complaints, many of which focused on a home builder that might reduce the cost of a home (by adding free construction upgrades or by discounting the home price) if the homebuyer uses the developer or builder’s affiliated mortgage lender. In some cases, the incentives may not represent true discounts if the homebuyers ultimately pay more in total loan costs.

According to HUD, consumers also say that the timing of the contract with the builder precludes them from shopping around, and the builder’s lender can then charge higher settlement costs or interest rates not competitive with non-affiliated lenders. HUD says that the steering of clients ” effectively violates” the “required use” ban in RESPA.

“It is our intent to keep an open mind on how to approach this vexing question over what is, and what is not, ‘required use,'” says David Stevens, HUD’s Assistant Secretary for Housing/Federal Housing Commissioner. “Clearly, consumers are complaining that they are being presented offers they believe they can’t refuse, and are essentially being required to use certain affiliated service providers.”

HUD’s current definition of “required use” reads:

“Required use means a situation in which a person must use a particular provider of a settlement service in order to have access to some distinct service or property, and the person will pay for the settlement service of the particular provider or will pay a charge attributable, in whole or in part, to the settlement service. However, the offering of a package or (combination of settlement services) or the offering of discounts or rebates to consumers for the purchase of multiple settlement services does not constitute a required use. Any package or discount must be optional to the purchaser. The discount must be a true discount below the prices that are otherwise generally available, and must not be made up by higher costs elsewhere in the settlement process.”

HUD’s call for comments is published in the Federal Register. To view the document (PDF format), go to:http://edocket.access.gpo.gov/2010/pdf/2010-13350.pdf

Comments must refer to the docket number and title:

Docket No. FR–5352–A–01 RIN 2502–A178 Real Estate Settlement Procedures Act (RESPA): Strengthening and Clarifying RESPA’s “Required Use” Prohibition Advance Notice of Proposed Rulemaking.

Comment due date: Sept. 1, 2010.

HUD strongly encourages people to submit comments electronically through the Federal eRulemaking Portal atwww.regulations.gov.

Comments can also be mailed to:

ANPR to the Regulations Division Office of General Counsel Department of Housing and Urban Development

451 7th Street, SW. Room 10276

Washington, DC 20410–0500

No FAX comments are accepted.

© 2010 Florida Realtors®

RELATED STORY:

ARE FORECLOSURE MILLS Coercing Buyers for BANK OWNED homes? ARE ALL THE MILLS?

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Homeowners strike back at banks: The Daily Tribune

“None of the named defendants have the right or authority to foreclose under (state law) or by contractual right,” he says in the lawsuit.

Published: Tuesday, May 11, 2010

By Jameson Cook, Daily Tribune Staff Writer

Ziyad Kased, left, and May Brikho, both of the Michigan Loan Compliance Advisory Group in Troy, talk to client Mahir “Mark” Salmo, 47, of Sterling Heights, one of 88 plaintiffs in two lawsuits in Oakland and Macomb counties alleging deceptive lending practices against more than two dozen banks. (Craig Gaffield/Daily Tribune)

Lawsuits filed in maneuver to try to stop foreclosure, recover losses from alleged overpayments, improper approval.

About 90 homeowners in Oakland and Macomb counties have accused more than two dozen banks of deceptive lending and other wrongdoing by approving loans far exceeding the plaintiffs’ ability to pay and charging excessive fees, among other allegations.

The accusations are levied in two lawsuits filed in each county’s circuit court within the past two weeks through the Troy-based Michigan Loan Compliance Advisory Group Inc., created to help homeowners in trouble with their mortgages. A third lawsuit with about 10 plaintiffs is expected to be filed in Wayne County Circuit Court this week.

The lawsuits represent an emerging tactic nationwide for struggling homeowners in their attempt to fight off potential foreclosure and gain relief on stifling mortgages from some of the country’s largest banks.

The plaintiffs’ representatives say the banks benefited from federal bailout money while few homeowners are getting help through federal loan modification programs.

“They (the plaintiffs) are victims of deceptive lending. They just want to save their homes,” said May Brikho, senior consultant at Michigan Loan Compliance. “They have tried to reach out to the banks, but the banks just don’t care.”

“The banks created these problems. They should’ve known better. These were all subprime loans. The banks knew they weren’t going to last.”

She noted the ubiquitous effect of the housing crisis. “These are problems that affect everybody.”

Of four banks contacted Thursday, Citimortgage and Bank of America banks indicated they had not been served with one or both lawsuits, so declined comment. Wells Fargo and Chase banks did not respond to a media inquiry.

Joe Bosogno, who operates a similar organization to Michigan Loan Compliance in New Jersey, blames mortgage brokers who worked for banks and mortgage companies for inflating applicants’ income so the mortgages could be sold as an investment device. The sale of subprime loans as investment devices contributed to the nation’s economic collapse.

“This (deceptive lending) was going on all over the country,” Bosogno said. “A number of attorneys are stepping up right now and doing aggregate lawsuits. It’s become a nightmare for the banks.”

Michigan Loan Compliance’s attorney, Ziyad Kased, in the lawsuits calls the banks’ actions “intentional and malicious,” and says the plaintiffs “have suffered substantial economic losses, loss of title and slander of title to the credit rating.”

The lenders “and their underwriters of such loans intentionally deceived the mortgagors by conspiring to promote unaffordable mortgages by companies that had direct ties to investment banks that profited from promoting and selling such debt instruments to innocent investors at everyone’s expense,” Kased said.

The loans depicted in the lawsuits range from $100,000 to $388,000 in Macomb and $87,000 to $809,000 in Oakland, with the bulk ranging from about $150,000 to $350,000.

None of the 88 plaintiffs representing 78 loans in the two counties have yet lost their homes and all are trying to prevent foreclosure. The majority of plaintiffs in Macomb currently reside in homes in Sterling Heights, Warren and Shelby Township. A majority of the Oakland plaintiffs live in West Bloomfield, Commerce Township and Farmington Hills.

The plaintiffs, who obtained the loans between 1995 and 2008, are still making payments despite their struggles.

“We advise our clients to continue to make their payments, but it’s their choice,” Brikho said.

A majority of the plaintiffs emigrated here from the Middle East, and some don’t speak English. Brikho said that while the banks may have taken advantage of that situation, it is only a secondary issue, as many of the plaintiffs are U.S. born.

Michigan Loan Compliance charges clients a fee for services. The organization is also using the courts to help other clients already in a pre-foreclosure fight losing their homes, Brikho said.

Kased said he expects the banks will try to get the cases moved to federal court, where he said bank lawyers believe they can receive better treatment and “drag it out” via legal maneuvers. Kased said he will oppose the transfer. He said he believes the cases should remain in each county since each region’s real estate market differs.

Most of the plaintiffs had their incomes inflated by a substantial amount, Kased said. The industry standard for debt to income ratio is 31 to 38 percent. The ratios of the plaintiffs far exceed that range, going from 68 percent to 714 percent, with most being between 100 and 200 percent in Macomb, and 36 percent to more than 1,000 percent in Oakland, where the differences range wider, several below 100 percent and several above 400 percent, according to the lawsuit.

In many cases, the lender or broker added income of a borrower’s family member who was not part of the loan and/or failed to learn of underreported expenses, Brikho said.

The borrower’s financial situation in most cases has worsened since then, due to job loss or reduction, she said.

One of the plaintiffs is Mahir “Mark” Salmo, 47, of Sterling Heights, and his wife, Thaira. They are suing PNC Bank for the $100,000 loan they received in 1997 before PNC acquired National City Bank.

The bank OK’d Salmo’s loan based on him earning nearly $4,000 per month, he said. In fact, he was earning $1,218 per month, he said.

“They asked me a few personal questions and I answered them,” he said. “I didn’t think I would get it. I couldn’t believe when I got it a couple of days later.”

Salmo in 2003 was given a $250,000 line of credit based only on his high credit score and his home being appraised at $415,000, he said.

He used the money to buy two businesses — a Tubby’s shop in Oak Park and a Wireless Communications store in Sterling Heights. The businesses closed, and Salmo said he lost $300,000.

“I lost both of them because the economy went down,” he said. “I had high rent and couldn’t keep up. I tried to work the landlord, but they wouldn’t budge. Now I have nothing. Everything I have worked for, for 35 years, is gone.”

He is now saddled with an approximately $1,000 monthly payment on the original loan and $600 per month for the equity loan, which is interest-only.

His home value has dropped significantly. He owes $30,000 on the original loan and $230,000 on the second loan.

“I should never have gotten that money,” he said of the second loan. “It’s like a bad dream.”

He said it hurts him most that he can’t financially help his mother, a homeowner who also is a plaintiff.

Salmo is thankful that his wife and three children aged 21 to 24 are working and supporting him, allowing him to make payments.

Salmo, a Chaldean, has lived in the United States for 35 years and said he still loves America despite his problems.

“This is the greatest country in the world,” he said.

Salmo’s interest-only loan is an example of how the banks committed homeowners to mortgages they eventually wouldn’t be able to honor; the real estate bubble that was bound to burst, Sosogno said.

Bosogno said a worse option given to some homeowners, including at least one in the Macomb lawsuit, was “negative amortization” mortgages in which the balance actually increases despite payments.

On top of the original loans, 22 plaintiffs in the Macomb case and 26 in the Oakland case obtained second loans that also were awarded deceptively, the lawsuit says.

The lawsuits ask the judges to make the mortgages “null and void.” Kased argues that the courts have determined that the mortgages should not have been assigned, so the mortgage note holders “in reality own nothing.”

“None of the named defendants have the right or authority to foreclose under (state law) or by contractual right,” he says in the lawsuit.

The plaintiffs allege the banks charged “outrageous” fees for origination, loan discount, appraisal, document preparation, broker processing, lender underwriting and yield to premium, “to name a few,” the lawsuit says. APPRAISAL FRAUD??

The plaintiffs, according to the lawsuit, “were never advised of the split charges and excess interest rate differentials split between the broker and the original lender, they were not informed of various costs that were overinflated as shown on the HUD settlement statements.”

The plaintiffs also weren’t told details of variable rate loans, the lawsuit says.

In years after the mortgage was executed, the defendants failed to respond to the “qualified written request” complaint as required by law to do so, the lawsuit says.

The lawsuit seeks compensatory damages for actual loses and exemplary damages for experiences such as mental anguish and humiliation.

The Macomb case was assigned to Judge John Foster and the Oakland case was assigned to Judge Colleen O’Brien.

Lenders Unload Mortgages to Collection Agencies

What we were discussing this morning…

dcbreidenbach, on April 26, 2010 at 9:51 am Said:in a prior posting it was stated that defense attys press people to be concerned about deficiency judgements unnecessarily. This advice may be practical for some homeowners but is extremely dangerous for borrowers generally. The current practice of most collectors is to press foreclosure on the mortgage–ignoring the note. This is an inverted approach that enables the collection agency to acquire the property and proceeds of its disposition without ever demonstrating who holds the note, or possession of the note. The collector obtains the home today, settling the mortgage, but is fully capable of selling the note deficiency balance collection rights to an even worse collection agency. The collectors are legally able to lay in the weeds for as much as 5-10 years depending on state laws and the facts of the case. When the homeowner is “back on his feet” with a good job, restored credit and other assets accumulated, the collector shows up with the old note and deficiency judgment and makes the claim plus interest accrued in the meantime. Just when the homeowner thought it was over-he/she is drawn back into the horror. another opportunity for them exists; they know you owe a deficiency amount-they record it and wait for you to die ——-then they come after your estate for proceeds of your life insurance and pension payouts that you thought were to help your family! Be wary of advice that says “dont worry-be happy” ; these people feed on deception, its a way of life to them. Beware disinformation—find attornies if you have deficiencies–force the collectors to warrant that the deficiency is waived. And get a warranty from an employee of one of the big name banks at the minimum that you will not be pursued. Trust them not.
Given any opportunity to screw you they will!

Lenders Unload Mortgages to Collection Agencies

19 April 2010 @ 05:11 pm EDT

Lenders are selling second mortgages and home-equity lines in default to collection agencies that have the right to collect this money potentially for decades.

“It’s a big business, and investors are coming out of the woodwork,” says Sylvia Alayon, a vice president for Consumer Mortgage Audit Center, which analyzes mortgage documents for lenders, advocacy groups, and attorneys.

Real estate professionals will be doing their short-sale clients a big favor if they urge them to get professional advice before they sign agreements, Alayon says.

A new government short-sale program, which takes effect Monday, aims to prevent banks from reselling this debt. Sellers covered under the program will receive notice that secondary lien holders have received part of the proceeds of the sale “in exchange for release and full satisfaction of their liens.”

 Reprinted from REALTOR® Magazine Online with permission of the NATIONAL ASSOCIATION OF REALTORS®. Copyright 2009. All rights reserved.

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FORENSIC AUDIT (FMI) & Securitization

FORENSIC MORTGAGE AUDITS AS TOOLS TO SAVE FORECLOSURE HOMES

Why Your Lawyer May Threaten You With a Deficiency Judgment After Foreclosure

Freedom of Information Act Requests Show OneWest Bank Misrepresentation

When will ALL this Bull Shit come to an END? Everything is a stage and all these “Non-Bank’s” are characters!

 Freedom of Information Act Requests Show OneWest Bank Misrepresentation
Posted on March 17, 2010 by Neil Garfield

Submitted by BMcDonald

Most of us are trying to get the info from the banks, which they will not do unless forced. Well, now many of us can walk right in through the back door. FOIA requests! I fought for 7 months to get the bank to cough up the info and it only took 6 days by going through the FDIC. So now I’m in the drivers seat. This damned bank has been lying from day one claiming they are the sole beneficiary of my loan. Now they have committed the fraud and done the crime by illegally selling my home. They are now in deep, deep, trouble.

I’ve been fighting OneWest Bank since August of last year here in Colorado. In Colorado they have nonjudicial foreclosures and the laws as so totally banker-biased it’s insane. All the bank has to do is go to the public trustee with a note from an attorney who “certifies” that the bank is the owner of the loan. What they don’t tell you is the bank has to go before a judge and get an order for sale in a 120 hearing. Most only find out about it at the last minute and don’t even show up because the only issue discussed is whether a default has occurred or not.

I discovered however that if you raise the question of whether the foreclosing party is a true party in interest or not, the court has to hear that as well. I raised that issue and demanded the bank produce the original documents and endorsements or assignements. The judge only ordered them to produce originals, which they did.

Long story short, I managed to hold them off for seven months after hiring an attorney. I found a bankruptcy case from CA in 2008 in which IndyMac produced original documents and ended up having to admit they didn’t own them. I had a letter from OneWest that only stated they purchased servicing rights. I had admissions from the bank’s attorney that there were no endorsements. And at the last minute I discovered the FDIC issued a press release in response to a YouTube video that went viral over the sweetheart deal OneWest did with the FDIC. The FDIC stated in their press release that OneWest only owned 7% of the loans they service. I presented all this to the judge but he ended up ignoring it all and gave OneWest an order to sell my home, which they did on the 4th.

About a week before the sale I went directly to the FDIC and filed a FOIA request for any and all records indicating ownership rights and servicing rights related to my loans and gave them my loan numbers. I managed to get the info in about 6 days. I got PROOF from the FDIC that OneWest did not own my loan. Fredie Mac did. And the info came directly from OneWest systems. And just last Friday I got a letter from IndyMac Mortgage services, obviously in compliance with the FOIA request that Freddie Mac owned the loan. So I now have a confession from OneWest themselves that they have been lying all along! I have a motion in to have the sale set aside and once that’s done I’m going to sue the hell out of them and their attorneys in Federal court.

So I found a wonderful little back door to the proof most of us need. If the FDIC is involved, you can do a FOIA request for the info. I don’t know if it applies to all banks since they are all involved in the FDIC. You all should try it to see.

Most of us are trying to get the info from the banks, which they will not do unless forced. Well, now many of us can walk right in through the back door. FOIA requests! I fought for 7 months to get the bank to cough up the info and it only took 6 days by going through the FDIC. So now I’m in the drivers seat. This damned bank has been lying from day one claiming they are the sole beneficiary of my loan. Now they have committed the fraud and done the crime by illegally selling my home. They are now in deep, deep, trouble.


  

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