Nathan's Blog

mortgage audit - are you kidding me?

Nathan Fransen (Fransen and Molinaro) — Tue, 25 Aug 2009 10:44:06 -0500

I recently did a search on Google for "mortgage audit" and came up with 369,000 entries. I am amazed at how many "forensic loan auditors" there now are. I know of companies charging anywhere from a couple hundred bucks to ten thousand. I am a practicing attorney and my focus is on mortgage litigation and i think the mortgage audit is a joke. Most results are wrong. Even when there are technical violations, the borrower likely does not have a viable claim due to other reasons.

If you really want to know if you have a legal case, talk to a laywer. Do not pay anyone any money for an audit that is supposed to somehow give you leverage with the bank. It doesn't. Sorry if this offends anyone, but i get several calls a week from people who are excited due to the false hope they were given and have spent money they did not have for some auditor to tell them they have a great case. Please save your money.

LOAN MODIFICATION - ATTORNEY / BROKER / NEITHER?

Nathan Fransen (Fransen and Molinaro) — Sun, 25 Jan 2009 12:52:25 -0600

I remember two years ago thinking, what are all of these loan officers and real estate agents going to do after the contraction of the industry? Well i think most of know the answer. Loan Modifications have become more than just a cottage industry. As a mortgage attorney and real estate broker, my firm has been involved in these, well i guess since the beginning. I say the beginning, because despite all the adds from those claiming years and years of experience, i still think loan modifications as they exist today are a more recent phenomenon. We did our first loan mod in 2007.

Anyways, i'm always interested to hear about experiences by homeowners in this area. Specifically, did you use an attorney? a broker? or did you do it yourself? I have heard hundreds of success stories so i know all three options can produce results. Here's my analysis but i would love to hear others:

Do It Yourself:
This is obviously the lowest cost option. Aside from the financial advantage, it is unlikely that anyone will care about your home and your mortgage as much as you. If you are a detailed, organized and persistent person, this may be a good option for you. I tend to recommend this for people who are current on their mortgage and do not anticipate missing payments due to unaffordability. In other words if you have a decent loan, but are tired of hearing about your friends and neighbors getting reduced payments and balances and think you should also get something, this may be for you. Chances are you are not going to have a lot of "legal" issues since you can afford your home and are not likely to fall into foreclosure regardless of the outcome. The other reality is that lenders are more willing to help those who need help. For this reason the chance of success for you is lower. No sense in paying for a service that is not likely to produce results.

Broker:
Broker shops definately understand mortgages. They often are staffed with processors and underwriters who are efficient and competent when it comes to working with lenders. The downside is they are unable to counsel you on issues such as bankruptcy, foreclosure defense, tax issues, etc. Given their limitations, i tend to think they should be considered as a lower cost alternative to an attorney. I know, I know, there are exceptions and there are some brokers who are far better than some of the attorneys doing this. remember, these are just my general broad stroke comments. I have great affinity for brokers. I have been a licensed broker longer than i have been an attorney.

Attorney:
First, let me clarify that i am speaking of an attorney that has experience with real estate / loan issues. I don't know the first thing about workers comp so even though i technically can practice in that area, don't hire me for it. Anyways, hiring an attorney should give you a few advantages. First, they should be able to provide you competent counsel about your issues, options, consequences, etc. Am i subject o a deficiency judgment? What about the fact the title is in my spouse's name? Will i get a 1099 after a foreclosure? These are just some of the questions that likely come up when analyzing these issues. As discussed above though, use an attorney for attorney work. if you just want to test the waters and see what the lender will say, probably not a good use of money to hire an attorney to do it for you. Maybe as an alternative, pay for a one hour consultation with an attorney and then do it yourself? just a thought.

I'm not really hear to promote my firm, so i'm not going to pepper this post with phone numbers and website addresses. I'm really just interested in hearing what others think about the options facing homeowners today.

duty of an agent

Nathan Fransen (Fransen and Molinaro) — Thu, 29 May 2008 23:38:34 -0500

I have a client that fell victim to an unscrupulous realtor. Basically the client was pursuaded to purchase 3 homes as investments which would be flipped within a couple months. The problem was that it happened to be end of 2006. There are other details involved, but my issue is this; I want to examine the standard of care for an agent. Hopefully some agents who view this can express what they consider to be their fiduciary duty when advising a client. At what point should a realtor be held liable for their recommendations?

As a follow up on this issue, what should be considered reasonable efforts in promoting a listed property? Is a single picture on the MLS sufficient? what response time is appropriate in responding to inquiries?

My goal as an attorney is to praise the good and admonish the bad. I think in doing this, the real estate industry is well served by protecting the reputation of the profession. Hopefully i am not alone in this view, but would love to hear feedback.

RESPA - Qualified Written Request

Nathan Fransen (Fransen and Molinaro) — Tue, 27 May 2008 21:49:48 -0500

Occassionally i get a client that comes to me and says they want to do a "RESPA request" or a "QWR" (Qualified Written Request). What they are referring to is a requirement under the Real Estate Settlement Procedures Act (RESPA) that requires lenders to reply to a written request for information or statement of dispute from a borrower. The lender must acknowledge receipt of the letter within 20 days and respond within 60 days. An example would be a life of loan accounting. The lender would then have 60 days from receipt to provide this. Another example would be a dispute regarding a service fee. This would have to be investigated and addressed within the 60 day period.

Now, if the lender does not do this, there is some civil liability. If found liable, the lender must pay actual damages (probably minimal or non-existent in most cases), attorneys fees, and possible $1,000 (if it can be shown that there is a pattern and practice of the violation).

Here are things a QWR does not do:
- stop a foreclosure
- stop negative credit reporting (unless there is a dispute as to a credit reporting issue)
- stop the collection of payments
- guarantee a loan modification

Overall, RESPA is a useful consumer law that is violated by lenders/servicers on occassion. It is a good way to obtain information as well that may form the basis of a later civil action. In order to make a QWR you simply have to identify the loan and borrower in a letter sent to the servicer along with a request for information or dispute. As with many laws, its always best to seek legal counsel.

Good Faith Estimate disclosures

Nathan Fransen (Fransen and Molinaro) — Mon, 26 May 2008 18:01:37 -0500

I've been asked a few times recently what happens if the Good Faith Estimate is inaccurate or never provided after origination. RESPA requires certain initial disclosures, some of which are included in the GFE. The law requires they be sent out within 3 days of application. Noticeably silent is a requirement that they are signed or acknowledged. Most brokers/lenders have the borrower sign it because it is a great way to protect them down the road in case someone claims they did not get it. Most lenders require it as part of their underwriting from the Broker just to be safe. Largely though, as with many laws that affect Mortgages, their is not necessarily a civil right of action. In other words, the government can pursue the culprit, but individuals cannot. Thats not to say that you could not use the violation as part of a state law claim, (unfair deceptive and practices act, etc.).

As for the GFE not being accurate, truthfully it would be hard for the initial GFE to be accurate. Its just too early for the broker/lender to know all the details. It should be redisclosed though as soon as it is known to be inaccurate, and definately before closing. We have argued in our cases that a severely inaccurate initial GFE is evidence that a broker/lender was defrauding the borrower. Interesting topic.

Disclaimer:
This should not be construed as creating any attorney/client relationships, or the providing of legal advise to anyone.

loan modifications - different lenders approaches

Nathan Fransen (Fransen and Molinaro) — Thu, 22 May 2008 22:08:51 -0500

In my practice we have gotten more and more into loss mitigation services. Specifically, we have been working with borowers to negotiate modifications. I have noticed a wide variation between different lenders approaches to this common problem. As an example, Suntrust Bank seems very proactive. They send out letters inviting borrowers to initiate the process and seem receptive to reasonable offers. Conversely, dealing with ASC has been problematic. I have been told by numerous representatives that they absolutely do not modify a loan below the initial rate of the loan. What they really push are forebearance agreements, which often is not enough for the borrower.

Does anyone else have examples of different experiences with lenders in loan modifications? I am working on a table outlining the different requirements and options for each lende and any input would be appreciated.

Disclosure of fees

Nathan Fransen (Fransen and Molinaro) — Wed, 21 May 2008 22:27:19 -0500

One of the things we check for on all cases is the accuracy of the fees disclosed to the borrower. When a borrower signs there loan they receive a Truth In Lending Disclosure Statement. This form, which disclosed the APR, etc., satisfies the "material disclosure" requirement of the Truth In Lending Act. The problem we sometimes see is that the fees on used to calculate this form, often found on the "Itemization of Amount Financed" form, are less than what is shown on the final closing statement. How can this happen?

It usually requires the "assistance" of a willing escrow company. Basically, the broker increases his demand to escrow. This should be caught by the funder at the lender when they review the final Hud1, but what if escrow prepares 2 different versions, one for the borrower and one for the lender? We have discovered the scam on multiple occassions. The result of course is that the borrower did not get accurate material disclosures and thus is entitled to a rescission (see my other posts regarding rescission). The remedy can be significant.

I guess the moral to the story, if you are a mortgage broker, is don't ever change fees after loan signing, even if escrow allows it.

Bankruptcy and foreclosure

Nathan Fransen (Fransen and Molinaro) — Tue, 20 May 2008 20:22:31 -0500

I have been asked more and more what the effect of bankruptcy is on a foreclosure. As a California attorney i want to limit this discussion to California residents, although the laws in other states are likely similar. A bankruptcy filing stops all foreclosure proceedings. This is true even if it is filed the day of the Trustee sale. What we are seeing more of is the benefits of a Chapter 13 filing. In a chapter 13, a payment plan is arranged with a trustee. Essentially credit is categorized (secured and unsecured) and a plan is setup to satisfy debt obligations. The plan is 3-5 years in length. In the case of 2nd mortgages that are effectively unsecured due to declining property value, they can be treated as unsecured, just like credit card debt. The significance of this is that at the end of the plan unsecured debt can be completely discharged. This can be a favorable result and arguably the best "loan modification" available to someone.

It is important to consult with a bankruptcy attorney when dealing with these issues, as they can be complex at it is important they are done correctly. The laws are also continually changing, but a good attorney can be a great resource.

business loans secured by primary residence - careful!

Nathan Fransen (Fransen and Molinaro) — Tue, 20 May 2008 00:44:03 -0500

Given the implosion of the mortgage industry, I am noticing more and more advertisement for business loans. Many former hard money lenders are now focusing on "business loans". Many lenders mistakenly think these loans are not subject to the Truth In Lending Act. I am handling several lawsuits under this exact premise. By simply adding a disclosure that says "this is a business loan", or even having the borrower sign something attesting to the fact, is not the determining factor. The commentary to Regulation Z gives some guidence here, but its basically substance over form. Setting up a loan as a "business loan" and then not providing the otherwise necessary disclosures will likely lead to future problems. Its always best to consult with an attorney if you are engaged in making these loan types, and if a borrower happens to get such a loan, a consult with a consumer attorney may be very rewarding :)

Hard Money Loans are easy targets for consumer attorneys

Nathan Fransen (Fransen and Molinaro) — Sun, 18 May 2008 00:16:31 -0500

The requirements under the Truth In Lending Act and the Homeownerhip Equity Protection Act (HOEPA), also found in Regulation Z (226.32), are very difficult to comply with. I have had numerous successful suits against hardmoney lenders and i rarely see one that was done correctly. There are essentially two areas to be concerned with when making these type of loans. First, there are added restrictions, such as limitations on prepayment penalties, negative amortization, default rates, balloon payments, etc. If the loan contains any prohibited terms, it is a violation and subjects the loan to an extended rescission (see my other post on extended rescission). Second, there are additional disclosures that must be provided to the borrower that are very specific. They basically tell the borrower that the loan is horrible and they shouldn't get it (paraphrasing :). These disclosures must be provided 3 days prior to signing, and if they are not, then the loan is also subject to the extended right of rescission.

There are also additional statutory penalties, and in some state, California included, the lender may be subject ot punitive damages (California Covered Loan Law, section 4970). If you are a hard money lender, a good attorney is invaluable. Make sure your documents are compliant and your procedure is also proper. You don't want to see anything from my law firm hit your desk :)

FHA balance reduction?

Nathan Fransen (Fransen and Molinaro) — Sat, 10 May 2008 12:47:57 -0500

The latest plan by the feds is to use FHA as a means to reduce balances for those consumers in over their heads. Well, actually the real heavy lifting is done by the borrowers current lender. The way its supposed to work is that the existing lender has to reduce the loan amount down to 85% of the current property value. If the lender does that, then FHA will ensure the loan. For example, a borrower with a loan amount of $350,000 on a house worth $300,000 would have a new loan amount of $255,000. The existing lender would lose $95,000. The argument is that its better than a foreclosure. Of course the devil is in the details... qualifying for this program is limited to certain criteria which are sure to change between and now and the time it actually passes Congress. The end result will probably be a presidential veto, but it sure makes for interesting times...

Yield Spread Premium

Nathan Fransen (Fransen and Molinaro) — Fri, 09 May 2008 00:10:39 -0500

There is a great deal of discussion centered around whether or not Mortgage Brokers should be able to charge YSP and how it should be disclosed. I often viewed this is similar to requiring the grocery store to disclose how much they actually paid for each item they sell, right below the retail price. Of course we cannot deny that it has been abused by many. The real question is what impact would it have on homeowners if Brokers were not allowed to make YSP?

If a Mortgage Broker could only charge origination, would they be competitive with retail operations?

The question that this leads to is: Do we need restrictions on Brokers, or will more "disclosure" laws suffice? Unfortunately this also ignores another question which is, are direct lenders inherantly more honest and ethical than brokers? As an attorney representing consumers in predatory lending cases, i have to say that i have seen dubious conduct from all sides. Personally I don't think "being a broker" should require the following of higher ethical standards than lenders. Truthfully, i think all those in the financial and real estate profession should be held to the same, high standard of ethics. Despite my seeing the worst of the worst, i still believe that many in the Real Estate profession, are truly fair and honest. we just need to find a way to get rid of the rest.

right to rescind

Nathan Fransen (Fransen and Molinaro) — Thu, 08 May 2008 19:09:04 -0500

I have seen a tremendous influx in the amount of information (and misinformation) pertaining to the extended right to rescind provided for by the Truth In Lending Act (TILA). TILA is a very powerful tool for consumers but it is often misunderstood. Still, violations of TILA should be raised as appropriate due to the ability of a consumer to rescind, and thus "undo" their mortgage. A borrower effectively can recover all of their payments and closing costs through the use of this law.

Here's an article i wrote on the subject last year:

LOAN RESCISSION - WHEN THREE DAYS REALLY MEANS THREE YEARS

In recent months Southern California has seen a staggering increase in the number of defaults of residential mortgages, specifically those involving "sub-prime" borrowers and what I would like to call "predatory lending" practices. Thee defaults will continue to lead to foreclosures, short sales, subsequent property devaluation, and other related adverse circumstances. Many borrowers will end up in bankruptcy or credit counseling, often reaching out to attorneys for direction. Regardless of the attorney's area of practice or background, a solid understanding of the remedies available to desperate homeowners is perhaps now more timely than ever. Arguably the most valuable remedy available exists in The Truth In Lending Act, promulgated by Regulation Z, specifically a borrowers right to rescind.

Most people are familiar with the "three-day right to cancel" period after signing a refinance loan secured by a principle dwelling. Lenders even provide documentation that clearly identifies the procedure for canceling the loan and the time in which it can be done. What the documentation fails to explain is that if any one of three key aspects of the loan package is not properly completed, the three day period is extended to three years.

Before explaining what these three defects are, it is helpful to first understand what canceling, or "rescinding" a loan really means. In a very general sense, to rescind is to "undo". Basically put the injured party back to their original position. When a person rescinds a loan during the three day period the loan is simply not funded. There are no closing costs because there is no closing (exceptions such as appraisal fees may apply). The borrower simply keeps their existing loan; but what about when the loan has already closed? What about when the borrower has made payments on the loan for say, two and half years? In that case, what happens is that all closing costs and all interest paid to date on the loan are returned to the borrower. I highlight these two items because most people find the need to read them several times. The truth is there are other favorable events that take place, but this should at least peak your interest.

What makes a loan rescindable for more than three days.

First, a loan must qualify, that is it must be a refinance, or non-purchase loan, secured by a principle dwelling (Second mortgages and home equity lines of credit qualify since they meet the requirements above.) 15 U.S.C. § 1635(a); 12 C.F.R. §§ 226.15(a) 226.23(a)

Second, there must be a failure by the creditor to provide accurate material disclosures or the notice of right to cancel in the prescribed manner. 12 C.F.R. §§ 226.15(a)(3), 226.23(a)(3). Regulation Z defines, in no uncertain terms, what the term material disclosures is intended to include. "The term "material disclosures" means the required disclosures of the annual percentage rate, the finance charge, the amount financed, the total payments, the payment schedule, and the disclosures and limitations referred to in sections 226.32(c) and (d)." 12 C.F.R. § 226.23(a)(3)(fn48). In a typical loan transaction these terms can be found on a document called "Truth In Lending Disclosure Statement". The numbers on this disclosure statement must be accurate to within very narrow tolerances. Depending on the type of loan, the Annual Percentage Rage (APR) must be within 1/8 of 1 percentage point of the actual APR. 12 C.F.R. § 226.22(a)(2). The total finance charge can not be understated by more than $100 in most cases, and not more than $35 if the creditor has initiated foreclosure proceedings. 12 C.F.R. §§ 226.23(g), 226.23(h). It is necessary to carefully examine the final closing statement and compare it to the Truth In Lending Disclosure Statement to identify possible discrepancies.

The notice of right to cancel is perhaps the most straight forward requirement of the creditor set forth by TILA, yet the most commonly violated in predatory lending. It seems apparent from reading TILA, Regulation Z and the associated commentary, that Congress was concerned with two aspects of the creditor/borrower relationship. First, they wanted to make sure borrowers received as much disclosure as practical so that they can make an informed decision. Second, they wanted to make sure that borrowers had ample time to consider this decision after being presented with all the details. The three-day right to cancel is intended to accomplish this second concern.

The law is very clear on what is required when it comes to the notice of right to cancel. Each borrower, must receive two notices of right to cancel which clearly and conspicuously disclose: (1) the retention or acquisition of a security interest in the consumer's principal dwelling; (2) the consumer's right to rescind the transaction; (3) how to exercise the right to rescind with a form for that purpose, designating the address of the creditor's place of business; (4) the effects of rescission; and (5) the date the rescission period expires (Regulation Z § 226.23(b)(1)(i-v)). In an effort to assist creditors, Regulation Z even includes a model form showing exactly what must be disclosed. 12 C.F.R. § 226 App. H. Unfortunately, creditors often leave the completion of these forms to the closing agent or notary public. Given the recent rise of "mobile notaries" or "loan document signers", the environment is fraught with negligence when it comes to this duty.

To understand how this negligent disclosure occurs, it is important to understand how the loan signing is conducted in practice. After loan documents are generated and issued by the lender, they are sent to an escrow company designated often times by the mortgage broker. Typically the loan documents are transmitted via email but regardless of the form, the escrow company prepares the loan document package, including the lender documents with documents prepared by escrow. The notice of right cancel is one of the documents provided by the lender, however since the lender does not know when the borrower will ultimately sign the documents, they typically leave certain fields on the notice blank, specifically the date the rescission period expires (see item #5 above). The documents are then presented to the borrower, often in the comfort of their home with a "mobile notary" present to notarize the requisite documents and direct the signing. The notary public will usually present the borrowers with a "copy package" of the loan documents that is an exact duplicate of the ones to be executed and returned to escrow. This is often where the problem arises. A prudent lender will put sufficient copies of the right to cancel in the loan documents when they deliver them to escrow. In a transaction with a husband and wife this usually means a total of five (5) copies, two per borrower as required by statute, and one to be acknowledged by the borrower and returned to the lender. However the notary will often presume that the copy package contains all necessary paperwork for the borrower(s) and proceed to have them execute all notices and retain them in the package. When the lender receives five notices they logically presume that the borrower is in possession of a copy package and thus the remaining four are redundant. The problem is that the notary never opened up the copy package and properly completed these notices and thus, the borrower never received adequate notices of right to cancel. This scenario has numerous variations but the result is that many borrowers were never properly given their notice of right to cancel, and as such, are entitled to rescission pursuant to TILA.

In defense, a lender will undoubtedly raise is that they are in possession of an acknowledged copy of the notice of right to cancel which clearly states the borrower acknowledges that they received two copies of such notice. TILA addresses this defense in section 1635(c) stating "Notwithstanding any rule of evidence, written acknowledgment of receipt of any disclosures required under this subchapter by a person to whom information, forms and a statement is required to be given pursuant to this section does no more than create a rebuttable presumption of delivery thereof. (emphasis added)". 15 U.S.C. 1635(c). Further case law has indicated that this is a low burden (See Cooper v. First Gov't Mortg. & Investors Corp., 238 F. Supp. 2d 50 (D.D.C. 2002)). Presumably the defective notices the borrower(s) is likely in possession of from their copy package is at least a strong argument in overcoming the presumption.

Raising the Issue of Rescission

Although a rescission claim can be brought initially in a complaint, it is often prudent, and more cost effective to do so by sending a letter. The letter should be sent to the current lender who although may not have been the original party to the loan transaction, is still liable under TILA. 15 U.S.C. § 1641(a). A borrower should be prepared to "tender" which is a requirement of TILA and basically means the borrower must return the money that is still owed to the creditor. 15 U.S.C. 1635(b). Essentially, the calculation requires taking the money that was actually received by the borrower or paid to others on their behalf (such as the payoff of the previous loan), and deducting all interest payments and attorney's fees. Since it is likely the borrower will not have this money on hand, it is best to have the borrower arrange for a new loan conditioned on the rescission, and notify the creditor of this fact in the rescission letter. Technically, the lender has 20 days after receipt of a notice of rescission to terminate the security interest and return all monies owed. 15 U.S.C. 1635(b). Returning the monies owed is usually done in the form of a new "payoff statement" reflecting the adjusted amount. Given the severity of this remedy, a lender will often respond with reasons as to why they do not feel rescission is proper. A discourse can ensue that can last for any length of time. At some point it may be necessary or appropriate to file a suit in order to conduct proper discover and ultimately have the question resolved in court. Regardless of the method of obtaining a rescission it is important to note that the lender is responsible for reasonable attorney's fees and costs. 15 U.S.C. 1640(a)(3). This is of particular importance because without such a provision the remedy is often meaningless to a borrower despite obvious justification.

Some may argue a violation such as the failure to properly date the right to cancel notice is overly technical and abusive. This position is myopic in that it minimizes the value a remedy such as rescission plays in defending borrowers against predatory lending. A borrower who is satisfied with their loan and the transaction that proceeded rarely seek legal counsel; rather it is those who have stories of misrepresentations and deceptive practices that do so. Violations of TILA may not be the sole cause of action in a case, but it certainly is one that can potentially provide the greatest relief, that is, returning the borrower to their original position. Failure to identify a potential rescission effectively denies a key remedy available to a borrower in need. In addition to a thorough understanding of TILA and Regulation Z, a solid understanding of the loan process is critical. Discussing a borrower's transaction with a mortgage broker, escrow officer or notary public can be extremely enlightening in bridging this gap.

The law in this area will continue to evolve as we are already seeing numerous court decisions hand down significant rulings with respect to predatory lending. Unscrupulous lenders will always be a part of home financing, but at least with remedies available such as the ones provided under TILA, a borrower will have some recourse, and hopefully, lenders will weight the risks of such activity and err on the side of caution.

Written By Attorney Nathan Fransen of the Fransen & Molinaro Law Firm 888-7-LOAN LAW or 951-520-9684

This articale is copyrighted by Fransen & Molinaro and cannot be used, duplicated or framed in any way shape or form.

3 year rescission

Nathan Fransen (Fransen and Molinaro) — Wed, 07 May 2008 12:31:03 -0500

I have seeen a tremendous influx in the amount of information (and misinformation) pertaining to the extended right to rescind provided for by the Truth In Lending Act (TILA). TILA is a very powerful tool for consumers but it is often misunderstood. Still, violations of TILA should be raised as appropriate due to the ability of a consumer to rescind, and thus "undo" their mortgage. A borrower effectively can recover all of their payments and closing costs through the use of this law.

Here's an article i wrote on the subject last year:

LOAN RESCISSION - WHEN THREE DAYS REALLY MEANS THREE YEARS

What makes a loan rescindable for more than three days.

Raising the Issue of Rescission

This articale is copyrighted by Fransen & Molinaro and cannot be used, duplicated or framed in any way shape or form.

Loan Modification scams

Nathan Fransen (Fransen and Molinaro) — Wed, 07 May 2008 12:14:53 -0500

Is it me or are "loan modification" companies becoming as prevelant as mortgage broker shops were a couple years ago? I don't mean to be overly critical, and i understand many do good work, but I have heard stories of "former industry professionals" charging thousands of dollars to negotiate with the bank on behalf of the borrower. At the risk of sounding like a protectionist, isn't this something that should be done by a lawyer? I have so many people come into my office who were victims of "predatory lending" and then victims of this next craze.

In California there are laws prohibiting fees being charged to those in foreclosure (Foreclosure Consultants Act, CCP Sect. 2945). I know this type of law is also common in other states. I think we will see this law enforced more and more going forward, but as of now it seems like the wild west. By the way, i was a mortgage broker before becoming an attorney and i have a great deal of respect for professionals in the industry, i just wonder about the "opportunistic" agents who may be continuing where they left off...