Wells Fargo Sued for Mortgage Fraud and Mortgage Discrimination

April 5, 2014 By

It appears that Wells Fargo is being sued on both coasts for mortgage fraud or discrimination.  In the first case, filed in New York, Wells Fargo, the nation’s largest home mortgage lender, is accused of ignoring terms of a multi billion dollar settlement that was meant to resolve foreclosure abuse. This particular case is being heard in the U.S. District Court, Southern District of New York.

The lawsuit claims that Wells Fargo violated the rules of an agreement between Wells Fargo and five other big lenders and 49 state attorneys general. Evidently, the bank is accused of not reporting defective home loans to the government.

The West Coast case was filed in December of this past year. The Los Angeles city attorney has sued Wells Fargo and Citigroup, claiming that both organizations participated in mortgage discrimination, which led to a rash of home foreclosures in minority areas during the housing bust.

The lawsuits note that “vulnerable, under-served borrowers” who had been denied due to years of unlawful redlining practices leapt at the opportunity to purchase a home when it was possible to obtain a sub-prime home loan, even if they couldn’t afford it.

Contact Shaffer & Gaier: Protecting Homeowner Rights

The law firm of Shaffer & Gaier protects the rights of those who are facing foreclosure or seeking mortgage modifications in New Jersey and Pennsylvania. To set up a free initial consultation, contact our office online or call our foreclosure hotline at 855-289-1660. Or call our office location in Philadelphia at 215-751-0100, or in New Jersey at 856-429-0970.

Filed Under: Mortgage Discrimination, Mortgage Fraud, Mortgage Lending, Mortgage Modification Tagged With: , , , , , , ,

MORGAN STANLEY AGREES TO PAY $1.25 BILLION FOR MORTGAGE SETTLEMENT

February 18, 2014 By

Morgan Stanley has now joined the ranks of JP Morgan Chase, Deutsche Bank, Bank of America and other big banks in agreeing to pay huge sums of money to the Federal Housing Finance Agency to resolve claims that it sold bad mortgage securities to Fannie Mae and Freddie Mac during the run-up to the housing market/mortgage crisis. Morgan Stanley recently agreed to pay $1.25 billion to the FHFA, which is the Federal conservator for Fannie Mae and Freddie Mac. The settlement resolved a lawsuit in which the Agency claimed that Morgan Stanley sold over $10.5 billion in mortgage-backed securities to Fannie and Freddie during the credit boom, while presenting a “false picture” of the riskiness of the loans. This is the same allegation that runs through all of these lawsuits against the big banks, but this lawsuit in particular involved securities issues between September 2005 and September 2007.

Many of the loans were originated by sub-prime lenders, like New Century and Indy Mac, and then bundled into bonds and sold to Fannie and Freddie. The lawsuit said that one group of these loans had default and delinquency rates as high as 70%. As was common in the industry, the big banks turned a blind eye to these default rates while continuing to serve as warehouse lending conduits to keep the train rolling on.

If the Morgan Stanley settlement becomes final, it will be the third-largest monetary payment by a Wall Street firm to settle an FHFA lawsuit. The largest was JP Morgan Chase at $4 billion, followed by Deutsche Bank at $1.2 billion. The FHFA still has some work to do, in that it still has approximately 12 other lawsuits filed against other financial institutions.

Contact Shaffer & Gaier

To set up a free initial consultation, contact our office online or call our foreclosure hotline at 855-289-1660. Or call our office location in Philadelphia at 215-751-0100, or in New Jersey at 856-429-0970.

Filed Under: Foreclosure, Foreclosure Defense, Mortgage Lending, Mortgage Modification, Predatory Mortgage Practices Tagged With: , , , , , , , , ,

RELIEF FOR SOME HOMEOWNERS – BUT THEN A TAX BILL?

February 12, 2014 By

The big banks will be able to write-off the billions of dollars in debt relief they agreed to give to homeowners, but for the homeowners that received that help, the debt relief is treated as taxable income, which can result in large tax bills. There had been a tax exemption for mortgage debt forgiveness, but Congress let this expire on December 31, 2013. While Congress often allows tax breaks to expire, only to reinstate them later, the mortgage debt relief exemption has not yet occurred. This could partly be because there is a movement in Congress to broadly overhaul the entire tax code, and in an election year, this year was considered “small” relative to other tax matters that affect the nation as a whole.

The tax exemption helped homeowners who are underwater in their mortgage – that is, those who owe more on their mortgage than their home is worth (approximately 6.4 million households nationwide). Put in real terms, this means that if you owe $250,000 on your mortgage, and your bank lets you sell it by way of a short sale for $150,000, then the $100,000 difference is treated as taxable income. This would lead to an approximately $28,000 tax bill because of the typical tax laws in which if someone lends you money and then later says you do not have to pay it back, the IRS counts the amount forgiven as income (except in cases of bankruptcy or insolvency). Nationwide, approximately 100,000 people used the mortgage debt relief exemption in 2011. In 2013, however, that number will be much greater, simply because there were approximately 250,000 short sales, yielding an average debt reduction of approximately $37,000. A homeowner in the 25% tax bracket would then face an extra $9,250 tax bill.

What remains to be seen is if Congress recognizes the unfairness of giving the banks a welcome form of tax relief, while piling even more debt upon the innocent homeowner.

Contact Shaffer & Gaier

To set up a free initial consultation, contact our office online or call our foreclosure hotline at 855-289-1660. Or call our office location in Philadelphia at 215-751-0100, or in New Jersey at 856-429-0970.

Filed Under: Foreclosure, Foreclosure Abuses, Foreclosure Defense, Mortgage Debt Forgiveness, Mortgage Lending, Mortgage Modification Tagged With: , , , , , , , , ,

Mortgage Modification Push Helps New Jersey Homeowners

December 18, 2013 By

Mortgage delinquencies are falling as home prices rise and the foreclosure pipeline is clearing. Many speculate that this is the result of the mortgage modification push by the Obama Administration.  The Obama Administration has used various programs like HARP, the Home Affordable Refinance Program, and HAMP, the Home Affordable Modification Program, to allow distressed borrowers to refinance or modify their mortgages into something more affordable.  These programs have been particularly effective in New Jersey, as under New Jersey law, a judge must approve foreclosures, and they often press the borrower and lender to find a way to keep the borrower in their home.  Full article.

Mortgage modification is a process where the terms of a mortgage are modified outside the original terms of the contract agreed to by the lender and borrower.  At Shaffer & Gaier, we aggressively protect the rights of property owners in Pennsylvania, New Jersey and Florida. Our lawyers bring more than 45 years of combined legal experience to every case we handle. While we recognize that your case is unique, our commitment remains the same — to use our skill, knowledge, experience and resources to help you get the best outcome possible in a timely and cost-effective manner.

Contact Shaffer & Gaier

To set up a free initial consultation, contact our office online or call our foreclosure hotline at 855-289-1660. Or call our office location in Philadelphia at 215-751-0100, or in New Jersey at 856-429-0970.

Filed Under: Foreclosure, Foreclosure Defense, Mortgage Lending, Mortgage Modification Tagged With: , , , , , , , ,

CHESTER COUNTY TRIAL RESULTS IN SETTLEMENT

December 11, 2013 By

I was on trial today in Chester County, PA, for our client who was a custodian employed by West Chester University. She was a victim of a high interest rate mortgage refinance, and was placed into a loan that required a monthly payment of almost 2/3rds of her monthly income. Since her income was not nearly enough to support the mortgage, she became delinquent and eventually defaulted in 2009.

After being sued in 2011 for foreclosure by Bayview Loan Servicing in the Chester County Court of Common Pleas, I filed an answer and undertook discovery. During the discovery process, I received documents from the lender which, in my view, raised grounds for a counterclaim (a lawsuit back against the Lender for wrongful conduct). The banks will not agree to let me add a counterclaim, so I had to file a motion to add the counterclaim; it was granted by the court in 2012.

The case was called to trial, and on December 9, 2013, the lender presented its witness on the stand for testimony. After direct and cross examination of the bank’s witness, the lender and I negotiated a settlement agreement, which enables our client to reside in the property for at least 7 more months, obtained a confidential cash payment and eliminated all past and future payments to the lender (an amount in excess of $110,000) – which I call “waiver of deficiency”.

Contact Shaffer & Gaier

To set up a free initial consultation, contact our office online or call our foreclosure hotline at 855-289-1660. Or call our office location in Philadelphia at 215-751-0100, or in New Jersey at 856-429-0970.

Filed Under: Foreclosure, Foreclosure Defense, Mortgage Lending, Mortgage Modification Tagged With: , , , , , , , , ,

Favorable Settlement During Trial in Philadelphia

November 28, 2013 By

Our client had been sued by HSBC, one of the world’s largest banks (its initials stand for Hong Kong Shanghai Banking Corporation). In 2010, my client’s employer cut back on his overtime hours, and this caused a decrease in take-home pay. During the build-up to the housing bubble, HSBC acquired hundreds of thousands of U.S. mortgages from smaller lenders. Many banks got bailed out, but HSBC did not, and now claims that since it did not take any federal bailout money, it does not have to adhere to federal guidelines to modify mortgage loans, or engage in what I call reasonable settlement/resolution practices.

HSBC, therefore, demanded that the only way to reinstate my client’s delinquent loan was for the him to come up with 40% of the arrears. For homeowners that have been in foreclosure for a year or more, this often means that HSBC will not modify the mortgage unless the homeowners has tens of thousands of dollars to put down towards the new loan. In my client’s case, as in the case of most homeowners, this was not possible.

This scenario causes, in my view, more trials than are necessary since it is so difficult to settle by a loan modification. In this trial which started on November 27, 2013, the results ended favorably for my client. In this Philadelphia County case, HSBC was demanding that my client come up with over $60,000 in order to reinstate his mortgage loan (which already contained a 10.9% interest rate). My client rejected the offer, and the case proceeded to trial. Midway through the trial, HSBC made an offer to let our client remain in the home for almost another 12 months, and to waive the entire unpaid loan amount of $177,000. The case has been in litigation for nearly 3 years so this was a fantastic result for my client. The terms of the settlement were put on the record in front of the judge.

Contact Shaffer & Gaier

To set up a free initial consultation, contact our office online or call our foreclosure hotline at 855-289-1660. Or call our office location in Philadelphia at 215-751-0100, or in New Jersey at 856-429-0970.

Filed Under: Foreclosure, Foreclosure Abuses, Foreclosure Defense, Mortgage Lending, Mortgage Modification Tagged With: , , , , , , , , , ,

J.P. Morgan Chase Settlement with Government Regulators

November 1, 2013 By

J.P. Morgan Chase is close to striking a $13 billion settlement with government regulators for a wide range of alleged mortgage-related wrongdoings. Of that amount, $6 billion will serve as compensation for investors, such as pension funds, that suffered losses from J.P. Morgan and two banks it previously acquired, Bear Sterns and Washington Mutual.

Another 4 billion dollars will be in the form of relief for struggling homeowners which will somewhat serve as a penalty for the bank’s general mortgage practices. The only “punitive” fine in the case is a $2-3 billion sum, which was the result of an investigation into mortgage securities that J.P. Morgan sold before the financial crisis.

What remains to be seen is the form of relief earmarked for struggling homeowners. In the past, instead of reducing principal on the mortgage loan balances, the banks have taken write-offs by way of a short sale or the write-off of a second mortgage. This does not help homeowners retain their homes; it just simply eliminates a debt after the homeowner has been forced to leave their home. As of October 2, 2013, J.P. Morgan and the regulators are still in discussions about how the $4 billion in homeowner relief will be carried out. We all hope for the best.

Contact Shaffer & Gaier

To set up a free initial consultation, contact our office online or call our foreclosure hotline at 855-289-1660. Or call our office location in Philadelphia at 215-751-0100, or in New Jersey at 856-429-0970.

Filed Under: Current Events, Foreclosure, Foreclosure Abuses, Foreclosure Defense, Mortgage Lending, Mortgage Modification Tagged With: , , , , , , ,

Now Lenders are Being Extra Careful

October 1, 2013 By

During the mortgage lending boom in the middle of the last decade, prospective loan originators and mortgage brokers would lend money to almost anyone, whether the perspective homeowner had sufficient income to pay the loan back or not. In recent days, however, lenders are risk-averse, and they are demanding detailed documentation for all areas of the applicant’s financial status and background. Borrowers should be prepared to answer questions about gaps in their employment, pending lawsuits and even divorce proceedings.

There is, however, a limit to how much personal information can be requested. Questions about whether an applicant is pregnant are prohibited under federal law, but lenders have figured ways of getting around those delicate (and unlawful) inquiries. For instance, the lender may ask a young woman, applying for a mortgage on her own, whether she has any children yet, or whether she likes children. While this may not be unlawful, it certainly is a turn-around from the way business used to be conducted. Racial profiling is fair game in the paperwork, largely so regulators can identify and keep statistics on whether race is a factor in the kinds of loans offered, interest rate and other qualifying factors.

Contact Shaffer & Gaier

To set up a free initial consultation, contact our office online or call our foreclosure hotline at 855-289-1660. Or call our office location in Philadelphia at 215-751-0100, or in New Jersey at 856-429-0970.

Filed Under: Mortgage Lending, Mortgage Modification, Predatory Mortgage Practices Tagged With: , , , ,

Defending the Mortgage Foreclosure Action – Current Trends and Cases

September 6, 2013 By

Defending the Mortgage Foreclosure Action – Seminar and Luncheon

Featuring Speaker Michael Gaier

foreclosure-seminar-image

Click HERE for additional information, and to sign up to attend!

Filed Under: Current Events, Foreclosure, Foreclosure Defense, Mortgage Lending, Mortgage Modification, Speaking Engagements - Luncheons - Seminars Tagged With: , , , , ,

National Mortgage Settlement Review Prompts Dual – Tracking Discussions With Banks

August 7, 2013 By

State and federal regulators are considering whether or not to impose additional restrictions on the mortgage practices of five of the nation’s largest banks. State attorneys and the U.S. Department of Housing and Urban Development have already discussed with two big banks about further restrictions, and these discussions are the result of “complaints related to provisions in last year’s multi-state mortgage robo-signing settlement between dozens of government agencies and Bank of America, J.P. Morgan Chase, Wells Fargo, and Citigroup and Ally Financial”. This settlement has delivered tens of billions of dollars in mortgage aid, and while the companies have made strides in reforming servicing practices, much more improvement is still needed. The fact is, the relief is having no effect on keeping most distressed homeowners in their homes.

Officials claim that they are considering a change in the current policy — they want banks to “halt foreclosure proceedings when borrowers first apply for loan modifications and provide basic information”. With this halt, officials hope to speed decisions on loan modifications and limit the amount of fees imposed on distressed borrowers. While it is important for borrowers to get an answer on their loan, and whether the answer is “yes or no”, the borrower should feel relieved to escape the months-long limbo that often accompanies the request for a loan modification. One official has even said that “delays in processing mortgage modification requests are the number one problem in the servicing today”.

In the new policy, Joseph Smith, the head of the Office of Mortgage Settlement Oversight and his team hope to implement up to four new tests that would grade the banks’ compliance. Two of these tests would “test the effectiveness of banks’ implementation of a requirement to provide a ‘single point of contact’ for distressed borrowers looking to avert foreclosure” (Huffington Post, 1). The third test involves modification requests and the fourth grades how well the banks upgrade borrowers’ account information. It is a tall order, in our view, to get the big banks to get anything done quickly.

Contact Shaffer & Gaier

To set up a free initial consultation, contact our office online or call our foreclosure hotline at 855-289-1660. Or call our office location in Philadelphia at 215-751-0100, or in New Jersey at 856-429-0970.

Filed Under: Bank Loan Modifications, Current Events, Foreclosure, Foreclosure Defense, Mortgage Lending, Mortgage Modification Tagged With: , , , , , , , , ,
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