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Is foreclosure "help" a smokescreen to shield lenders from legal liability?

By
Services for Real Estate Pros with S.P.O.C.H. a 501c3 Charitable NP

A million or more homeowners have mortgage loans which were, from the onset, unsuitable for them and have resulted in foreclosure.  Many of these foreclosures can be challenged by legal claims for unfair lending practices, fraud, misrepresentation, usury, and violations to state unfair and deceptive acts and practices laws, the Truth in Lending Act, the Equal Credit Opportunity Act, and the Racketeer Influenced and Corrupt Organizations Act (RICO).

It's likely many of those distressed homeowners' rights were violated during the mortgage solicitation and origination process, and/or during the servicing of their loans. 

Those seeking help from their lender offered quick fix repayment plans, more permanent loan modifications, or outright refinances are often required to waive their rights to pursue legal claims against all that participated in the illegal mortgage process including brokers, lawyers, originators, title companies, appraisers, and loan servicers.

When it comes to workouts to avoid foreclosure, lenders will only do what is in their best, self interest. HopeNow Alliance, whose members include some of the nation's largest lenders and loan servicers that collect payments, and a group representing investors who hold mortgage debt,  control a consortium of "non profit counseling services" who are compelled to do what is in the best interest of their employer... the mortgage loan servicing industry, and not necessarily what is in the best interest of the distressed homeowner seeking help.

Advising a distressed borrower his or her loan may be predatory and to seek legal counsel is not necessarily  part of the program.  If it isn't, it should be.

It is important homeowners know they can challenge the legality of the foreclosure, and should not simply or too quickly agree to a temporary, quick fix while ill-advisedly and perhaps unknowingly waive their future, legal rights.

Before signing any agreement involving the listing or sale of their home, a mortgage refinance or workout, homeowners should have an attorney review the documents.  Many local chapters of Legal Services will perform the review without charge to qualified homeowners.

In my book, Fight Foreclosure! (Wiley 2008), I discuss options and alternatives available to homeowners threatened by mortgage foreclosure.

independent, non profit resource

 

Charlie Ragonesi
AllMountainRealty.com - Big Canoe, GA
Homes - Big Canoe, Jasper, North Georgia Pros

Great post . Not much else to say Thanks for this

Jun 19, 2008 01:30 AM
Cape Coral Florida Golf Course and Waterfront Homes
Gulf Coast Realty Network, Inc. - Cape Coral, FL

Having been through the process myself, I can say that the "loan sevicing and credit couseling" is a totally self-serving process setting up the foreclosure.  If you ask hard questions or request information outside the "script", it never goes into the computer records, which meticulously record every word that you say otherwise.

Jun 19, 2008 01:35 AM
Brian Schulman
Coldwell Banker Residential Brokerage, Lancaster PA - Lancaster, PA
Lancaster County PA RealEstate Expert 717-951-5552

David, if the workout help is run by the lender, directly or indirectly, the borrower should realize that they need at least a review of the terms by an advocate or attorney.

Jun 19, 2008 01:39 AM