Your loan is probably unlawful, and you may be entitled to substantial damages whether or not you are currently in foreclosure.

Everyone has heard the term Predatory Lending, but what does it really mean? Who has been exposed to Predatory Lending? And how does a homeowner determine that he was the victim of Predatory Lending?

Predatory Lending is a term used to describe practices whereby certain borrowers are subjected to loans and loan terms that are not beneficial to the homeowner, or the homeowner is subject to certain abusive practices during the loan process. These practices are illegal under the Truth In Lending Act, RESPA and many State and Federal Statutes.

The penalties for failure to comply with the Truth In Lending Act can be substantial. A creditor who violates the disclosure requirements may be sued for twice the amount of the total finance charge on the loan. In the case of a home mortgage, this can be a very significant amount. Costs and attorney's fees may also be awarded to the consumer. A lawsuit must be begun by the consumer within a year of the violation, but certain tolling provisions apply giving the consumer more time and up to 3 years or longer to file suit.

State statutes, as the California Anti-Competition Law offers even greater protection for the borrower and  homeowner.

These laws are in place to protect you, the homeowner.  However, most homeowners, and many  attorneys, have no idea how these loans can be used to assist you in the saving of your home.

If you are in foreclosure, these different statutes can be used to stop the foreclosure process immediately. If you are a victim, don't be a victim twice and let them take your home. Fight for your rights.

Predatory Lending is a hot topic in the news and there is a good reason why. Lenders and brokers have spent the last few years taking advantage of home owners by providing low teaser rates and Pay Option ARM loans. The lenders and brokers knew these loans were deceptive, yet the borrowers weren't told the truth. 

(The loans were set up whereby the borrower would make only  "minimum monthly payments" that did not even cover the accruing interest, so each month the balance of the mortgage went up, and not down.  This was not explained to large numbers of homeowners.  Even worse, many of the homeowners were qualified for the loan on the basis of the minimum  monthly payment.  If the actual payment had been used to qualify for the loan,  then the borrowers would necessarily have been declined for the loan, and rightly so. To add insult to injury, these were the same loans that the lenders paid rebates to the brokers in the amounts of $10k-$15 or more per loan.)

The term Predatory Lending can apply to all aspects of the mortgage industry and refers to the practice whereby a creditor put a borrower into a loan that the borrower would probably not be able to repay.

Predatory Lending can be difficult to determine without a full analysis of the loan and the circumstances of the loan process, but there are certain characteristics that are usually prevalent in the process. These are just a few of the more usual tactics and characteristics. More often that not, there will be a combination of these characteristics and many others not mentioned here.

Bait & Switch

You're sold on the phone by a smooth talking loan officer who pitches you a great rate. Things move quickly and when you go to sign your loan documents with a notary, that great rate isn't so great anymore.  Or, you are told that the interest rate on the loan is 1%, as was done with the Option ARM loan.  In reality, this rate was for only one month, and then the actual rate took affect, often higher than  8%.

Excessive Fee's

This is very common. Homeowners being charged fees which are above and beyond the normal costs. This may involve large junk fees or other costs that most lenders do not charge.  HUD has created a two part test to determine when fees were reasonable or  unreasonable, but this was routinely ignored.

Elder Abuse

Elder abuse is really common because retirees often have a large amount of equity in their homes, they are prime targets for greedy and crooked creditors. We have seen mortgage sellers cold call elderly homeowners and then scam them into a loan which they do not need, can not afford, and which provides the seller with an incredibly large commission.  This was especially true when retired homeowners were placed in Option ARM Mortgages

Loan Flipping

This is the process whereby a homeowner is convinced to refinance soon after doing a previous loan. There is seldom benefit to the homeowner, with the financial benefit primarily being to the loan officer and lender.  Often,  the loan being paid off involved a hefty Prepayment Penalty that the borrower had to pay as well.

Steering and Targeting

Steering and Targeting is the practice of putting homeowners into loan products that beneficial for the lender but not for the borrower. This usually involved putting the homeowner into a subprime loan when they could have qualified for an A paper loan, or placing a borrower into an  Option ARM mortgage, when a 30 year fixed rate loan was more applicable.

Non English Speaking Borrowers

Doing loans for homeowners where English was not a native language and unable to be read or spoken, but the loan docs were in English is against the law.  This was extremely common in California.  CA Civil Code 1632forbid this practice, but it occurred anyway.

Equal Credit Opportunity Act & Fair Housing Act

Both federal and state law prohibit the mortgage industry from providing different loan terms to people based on race, sex, ethnicity, or other protected class. Such a transaction may be subject to a cause of action under the Unruh Civil Rights Act or other law.

Equity Skimming

Equity theft also called equity skimming, refers to the situation whereby the same creditor refinances the same property with the same borrower multiple times and uses the equity in the borrower's property.

What we do:

INVESTIGATE POTENTIAL VIOLATIONS

Truth-In-Lending Act ("TILA"), Home Ownership Equity Protection Act ("HOEPA"), Real Estate Settlement Procedures Act ("RESPA"), Regulation Z, or State Law, Civil Code Statutes.

We review your loan documents (the papers you signed when you applied for the loan and the papers you signed when you closed the loan). We investigate whether the information and calculations provided in those documents was accurate, truthful, and met the requirements of the applicable federal and state statutes.

We look to what the lender, broker, and agent told you about the loan. We focus on whether the loan you were told you were getting was actually the loan you received.

We determine whether there were predatory lending violations of federal law which give rise to the right to rescind or cancel. If you are successful in rescinding the loan, you may be entitled to receive back all of the interest paid on the loan, all of the points and fees paid to get the loan, all fees paid by you to the lender in connection with the loan, and statutory penalties. This allows you to get a new loan with a smaller principle, meaning that your mortgage can be affordable.

We review the loan program to determine the appropriateness of it for the borrower and the underwriting decision of the loan.  Most  important, we want to determine if the homeowner had a true ability to repay the loan.

We review the foreclosure process  to determine the lawfulness of the foreclosure.

There is much more involved in this process, but this gives a good idea of the thoroughness of the audit.

Finally, we issue a report for you and your attorney  so that the two of you can make a  rational decision on how to proceed to save your home.