Mortgage Lending Abuse Law Blog

Many experts point to the housing boom as having started about five years ago. One of the factors leading to the boom was the availability of adjustable rate mortgages (ARMs). These loans allowed homeowners to enjoy several years of low mortgage payments. Many of the ARMs had five year locked rates and are just now starting to adjust upwards. For some, this will mean significantly higher mortgage payments and, unfortunately, the number of foreclosures will increase.

| Posted By David Campbell Smith In Mortgage Servicing
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Homeowners who put down less than 20% of the purchase price of their home are probably paying for something called private mortgage insurance (PMI). Although PMI payments can run several hundred dollars a month, most homeowners probably don't know they have PMI, what it's for and when they can cancel it.

| Posted By David Campbell Smith In Mortgage Servicing
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The Ohio legislature recently passed a new bill to stop deceptive mortgage lending practices, which are responsible for the state's high foreclosure rate. Once Governor Bob Taft's signature makes the bill official, the focus turns to Jim Petro, Ohio's Attorney General, to enforce it, according to the Columbus Dispatch.

According to the Columbus Dispatch, the mortgage industry is a new territory for the attorney general's office. Unlike most other states, Ohio's mortgage industry has been exempted from the state's Consumer Sales Practices Act, which gives the attorney general the power to protect consumers. However, Senate Bill 185 ends this exemption for mortgage brokers and non-bank lenders.

| Posted By Azita Moradmand In Mortgage Servicing
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One result of the recent housing boom is that more people than ever are taking out mortgage loans. Many of these are first time home buyers who have never taken out home loans before. Others are current homeowners taking out exotic mortgage loans that did not exist until recently. One characteristic common to virtually all homeowners today is that very few have even a passing understanding of the loans they are committing to. People spend countless hours researching the fuel consumption of the latest cars, or pore over websites like Expedia and Orbitz to save a few hundred dollars on their next vacation. Yet these same people spend hardly any time understanding what, to most, is the biggest financial commitment they will make in their lifetime--the mortgage loan.

| Posted By David Campbell Smith In Mortgage Lending , Mortgage Servicing
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The Federal Trade Commission has a useful link that describes the "nuts and bolts" of what a mortgage servicer does. As this link makes clear, a mortgage servicer has wide-ranging responsibilities, which may include: (1) properly receiving and posting your mortgage payments; (2) paying property taxes and insurance using proceeds in a escrow account; and (3) collecting delinquent payments and commencing foreclosure proceedings if necessary.

| Posted By David Campbell Smith In Mortgage Servicing
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Countless articles have been written about mortgage lending abuses (commonly referred to as predatory lending), particularly in connection with "sub-prime" mortgages. Mortgage lending abuses deal with deceptive practices at the "front end" of the transaction, when the loan is made. Common practices may include failing to disclose loan terms (or misrepresenting loan terms) or "steering" borrowers to a sub-prime loan when they qualify for a "prime" loan. The Center for Responsible Lending's website lists "seven signs" of predatory lending: excessive fees, abusive prepayment penalties, kickbacks to brokers, loan flipping, unnecessary products, mandatory arbitration, and steering & targeting.

Once the loan is made, the focus shifts to mortgage "servicing," which deals with such things as processing (collecting and properly crediting) mortgage payments, maintaining an escrow or impound account to pay property insurance and taxes on a borrower's behalf, attempting to collect late payments and initiating foreclosure proceedings if the loan is in default.

| Posted By David Campbell Smith In Mortgage Servicing
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On April 26, 2006, the California Department of Corporations ("DOC"), California's investment and financing authority, identified mortgage fraud as one of the top 10 scams for 2006 that consumers should be aware of. The DOC press release described mortgage fraud as predatory mortgage lending involving abusive practices, usually taking place in the sub-prime market, and targeting borrowers with weak credit histories.

| Posted By David Campbell Smith In Mortgage Lending , Mortgage Servicing
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Following Ameriquest's $325 million settlement, it appears other mortgage lenders are being investigated, reported the Los Angeles Times on January 31, 2006. Mortgage servicers might also be the subject of investigation. It was reported last month that the Federal Trade Commission is investigating EMC Mortgage Corp., a mortgage servicing company and a subsidiary of Bears Stearns.

| Posted By David Campbell Smith In Mortgage Servicing
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In August 2005, J.D. Power and Associates announced the results of its mortgage servicer customer satisfaction survey. Atlanta-based SunTrust Mortgage ranked highest with 792 points on a scale of 1,000. Greentree Mortgage was lowest with 591. The industry average was 730, and Ameriquest scored below the average with 688 points. Select Portfolio (Fairbanks) did not rank because of insufficient response data. J.D. Power's press release can be viewed here.

| Posted By David Campbell Smith In Mortgage Servicing
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