Last week I wrote about the various ways that consumers can afford a foreclosure defense attorney. New York has passed a law allowing consumers to recoup attorney fees and at least one attorney in Florida is allowing clients, under certain conditions, to take a mortgage with his firm.
That practice might be short lived—he is now under investigation by the Florida bar.
Even before a number of big banks stopped foreclosure proceedings because of issues with robo-signers, consumers with money were fighting foreclosures across the nation. New York recently passed a law (effective next year) that allows consumers to recoup their attorney fees if they fight a foreclosure and win.
Not every state has a similar law, however. As a result, some consumers are agreeing to a new mortgages with their foreclosure attorneys.
The good news is that Wells Fargo just settled a lawsuit with the NAACP based on alleged violations of the Fair Housing Act (FHA). The bad news is that two cities have now filed suit against Wells Fargo under the FHA. This comes on the heels of a class action lawsuit filed last summer for allegedly improperly lowering lines of home equity credit.
The two new suits were filed in Baltimore and Memphis, and both allege Wells Fargo discriminatorily steered African-American into expensive mortgages they could not afford. This causes a rise in defaults and then foreclosures, which then reduces tax revenue and increases the costs of municipal services.
Bank of America (BOA) has announced they will provide some relief to homeowners with underwater mortgages. BOA said it will forgive up to 30% of the total mortgage for homeowners who are at least 2 months behind in payments and owe at least 20% more than their home is worth.
New Program Could Help Half a Million Homeowners | ABC News.com
It’s bad enough that identity thieves are now resorting to brick-and-mortar thievery, according to the Red Tape Chronicles, now mortgage lenders are stealing personal financial information, too. Apparently, some former LendingTree employees helped some unnamed mortgage lenders to hack into the LendingTree system and steal information for LendingTree customers from 2006 to early 2008.
LendingTree notified all the consumers affected, and has beefed up its security, but is not offering credit monitoring or any other consolatory compensation to those affected.
I was listening to MPR this morning—that’s Minnesota Public Radio for you non-Minnesotans—when Cathy Wurzer made the above comment. I laughed out lout and spilled my tea.
Banks are surprised that their loose lending and nonexistent oversight of brokers has led to a high default rate? I mean, who would have thought that if you don’t check your brokers’ numbers and you push nontraditional mortgages on populations whose income is unlikely to increase, that you would experience more defaults? Unthinkable!
The truth is that lenders and borrowers are in this together. But lenders have always had the power to reign in overly-aggressive and dishonest mortgage brokers. Borrowers don’t. Subprime borrowers really don’t, because their options for shopping around are very limited.
Lenders, if you want change, you are going to have to make it happen yourselves. Borrowers who default on their loans often have few options, and many times the inaccuracies in their loan applications are as much their fault as the mortgage brokers. I would anticipate increased regulation at the least—something banks are happy fighting at the moment—and potentially a few class-action lawsuits by state attorneys general to get the ball rolling.