By Scott McCluen, Attorney at Law 9/17/08

In the last column, I commented on the increasing number of foreclosures that are due to illegal, predatory lending. These practices include inflated appraisals, excessive fees, abusive prepayment penalties and kickbacks to brokers, loan flipping, without providing any net tangible benefit to the homeowner; unnecessary products sold and financed with the loan; mandatory arbitration and improper steering of homeowners to subprime mortgages when in fact they may have qualified for less expensive mortgages.

The threat of foreclosure can make a homeowner feel totally overwhelmed - - the financial equivalent to being run over by a truck.
Nevertheless, a homeowner can take immediate action, in addition to challenging predatory lending practices, which can begin shift the balance of power from the lender to the homeowner. The homeowner should make a “qualified written request” for information
concerning his loan under the Real Estate Settlement Procedures Act, 12 U.S.C. § 2605(e).

The loan servicer is required to provide a written response acknowledging receipt of the correspondence within 20 days and, within 60 days, provide the information requested. If the servicer fails to comply with the law concerning a “qualified written request”, then the homeowner is entitled to damages and cost against the servicer. If the “qualified written request” raises a dispute regarding the borrower's payments, a servicer may not provide information to any consumer reporting agency regarding any overdue payment, owed by the borrower and relating to the qualified written request.

A homeowner should make a written request for a credit report after a reply has been made by the loan servicer to the “qualified written request”. The request should be made to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5261. The request form is available at www.annualcreditreport.com By requesting a credit report the homeowner can find out if there were any “hits” to their credit report during the pendency of a dispute regarding the homeowner's payments. This is a commonly occurring violation of the Fair Credit Reporting Act, also giving rise to damages and costs.

These are several ways a homeowner can, by taking full benefit of the protection of the law, become empowered and shift the balance of power from the lender to the homeowner as part of a strategy to save their home.

Spotlight on the Law is for educational purposes and to give general information and a general understanding of the law; it is not to provide specific legal advice. Suggestions for commentary may be sent to smccluen@comcast.net or made by calling 1-800-688-7176.

Do NOT use Spotlight on the Law as a substitute for competent legal advice from a licensed professional attorney who is familiar with your particular situation

SPOTLIGHT ON THE LAW - FORECLOSURE

By Scott McCluen, Attorney at Law 8/25/08

Sometimes the American Dream of owning a home can quickly become the American Nightmare.

According to the RealtyTrac U.S. Foreclosure Market Report, 1 in every 639 Tennessee households faced a foreclosure filing in May 2008. 

Foreclosure can happen because of unforeseeable loss or tragedy.  In a growing minority of instances, it can be the foreseeable result of illegal, predatory practices of the lender.

Such lender practices may include: inflated appraisals, excessive fees, abusive prepayment penalties and kickbacks to brokers.

Other predatory practices may include loan flipping, without providing any net tangible benefit to the homeowner; unnecessary products sold and financed with the loan; mandatory arbitration and improper steering of homeowners to subprime mortgages when in fact they may have qualified for less expensive mortgages.

Because mortgages are bundled together and sold several times, increasingly, homeowners are successfully challenging foreclosures started by “foreclosure mills”, law firms handling hundreds of foreclosures, by proving that so-called "securitization lenders" that bought scores of mortgages as investments — are initiating foreclosures without the original paperwork and proper chain of title (ownership of the mortgage) and sometimes, without ensuring that homeowners are properly notified.

Homeowners are protected from these practices by federal and state law. 

Because of the speed of foreclosure, usually within 60 days from Notice of Foreclosure, it is best for the homeowner who anticipates foreclosure problems to begin defending against foreclosure as soon as foreclosure becomes a worry.

Prompt legal action is required to defend against these practices and, perhaps, save their home.

There are state and federal programs to help homeowners avoid foreclosure. Call (888) 995-HOPE (4673).  Also, help is available through legal aid and private attorneys.

Spotlight on the Law is for educational purposes and to give general information and a general understanding of the law; it is not to provide specific legal advice.

Suggestions for commentary may be sent to smccluen@comcast.net.

Do NOT use Spotlight on the Law as a substitute for competent legal advice from a licensed professional attorney who is familiar with your particular situation.