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

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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: , , , , , , , , ,

Interest – Only Loan Settlement

July 19, 2013 By

Shaffer & Gaier’s clients owned a vacation home on the Jersey Shore since 1989, and in 2007 a mortgage broker qualified them to refinance into an “interest-only, negative amortization loan”. While our clients’ loan allowed them to make “interest-only” payments that were lower than a traditional monthly mortgage payment, the loan was misleading because the balance of the loan increased each month, even though a payment was being made. This is often because the Truth in Lending document does not appear consistent with the true terms of the loan.

These loans are so deceptive for the homeowner that they have been outlawed in many states while many of the big banks have even stopped offering the loans to prospective homeowners. Shaffer & Gaier filed a lawsuit in Cape May County, NJ against the lender and secured a confidential settlement in July, 2012 for money damages which allowed our clients to recoup the amount of interest they had paid since the loan’s inception.

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

Bank of America Withdraws Motion to Dismiss to Engage in Settlement Negotiations

May 6, 2013 By

Shaffer & Gaier, LLC represents nine homeowners who had negative amortization loans with Countrywide (Countrywide was, of course, bought by Bank of America.). Our firm represented these homeowners who brought a consolidated lawsuit against Bank of America for their fraudulent and duplicitous conduct. All of these homeowners were victims of Countrywide’s negative amortization loan scheme which they used to defraud these homeowners. Countrywide offered a variety of loan products that were both financially risky and difficult for borrowers to understand, including payment option ARM’s. Countrywide craftily hid the true cost of the loan from the homeowners by failing to issue accurate Truth in Lending Disclosure forms thereby luring the homeowners into thinking the loan was less expensive than it actually was.

The option ARM, which Countrywide classified as a prime product, is a complicated mortgage product which allows borrowers to pay a “teaser rate” then the rate jumps up beyond reasonable market levels. However, the homeowner is tricked into paying part of the principal only. Therefore, the loan keeps recalculating causing the homeowners to lose additional value. Bank of America filed extensive Motions to Dismiss and our law firm filed responses to those Motions. After significant litigation, Bank of America has agreed to withdraw those Motions to Dismiss to allow the parties to continue with settlement negotiations. Our firm welcomes inquiries into these negative amortization loans, payment option ARM’s and any other fraudulent or deceptive loan product offered by Countrywide, Bank of America or any other lending institution.

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: , , , ,

It Might Be a Good Time to Buy

April 23, 2013 By

Mortgage rates remain low and the housing market is showing signs of recovery. Even new construction is picking up. And best of all, the Consumer Financial Protection Bureau issued guidelines in January which protects consumers from the kinds of mortgages that contributed to the financial market and housing market crash.

Still, there are many ways that a buyer can end up short end of the stick by paying more than they should. The devil, as always, is in the details, and when it comes to home buying, those details are deeply imbedded in the mortgage documents. For instance, be careful to rely on the Good Faith Estimate to determine the closing costs and the amount of the loan over a 20 or 20 year term. This is because the Good Faith Estimate really just lumps all of the closing costs onto one document and it makes it very hard to see the fees which could be hidden in the loan.

Another safe guard is to S…L…O…W down the closing. Of course, there are times when a prospective homeowner feels the need to get to closing as soon as possible – marriage, a new baby may be on the way, or you just gotta get that house, etc. When this occurs, there is often the urge to tell the mortgage company something like “Look, can you get my deal done ASAP?”. This will undoubtedly lead to many unwelcome surprises at closing, when additional fees or costs are added. The homeowner can throw a fit and protest, but that will most likely be met with the broker asking if they would like to cancel the deal, which often comes with $1,000+ cancellation fee. One of the ways to avoid this is to choose a mortgage that has no closing costs. The interest rate will probably be higher, but you’ll at least know what you’re paying for. But beware—while this may be a wise decision in the short run, it could end up costing a lot more over the life of the mortgage because of the higher rate.

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 Tagged With: , , ,

Oversight for Risky Mortgage Lending Practices – Finally

April 10, 2013 By

On January 10, 2013, Federal regulators unveiled a range of obligations and restrictions on lenders for residential mortgage loans. These include bans on risky “interest-only” and “no documentation” loans that were largely to blame for the last decade’s housing crisis. The Consumer Financial Protection Bureau is the Federal entity in charge of implementing and carrying out the review, all of which will take effect in 2014.

Importantly, lenders will now be required to verify and inspect the borrower’s financial records, wage verification, employment verification and credit history. Federal regulators are hailing the restrictions by claiming that this will make sure that people who work hard to buy their own homes can be assured of greater consumer protections and reasonable access to credit. The rules also limit features like “teaser rates” that adjust upward and large balloon payments that must be made at the end of the loan. In the past, mortgage lenders found it very easy to hide or disguise these dangerous features of the loans.

An important aspect of the regulations is a new product called the Qualified Mortgage. These loans are expected to be the most common, and will have to meet affordability standards, including that the borrower’s combined debt payments cannot exceed 43% of income. Through their strong and effective lobbying efforts, the banks were able to craft various protections, including one that would largely insulate the banks from losses when some of the new loans go into foreclosure. This protection is called a “safe harbor” because it substantially limits a borrower’s ability in court to claim that a qualified loan was not affordable. The banks, however, got less protection on loans with higher interest rates to borrowers with weaker credit (sub-prime).

The new rules will also allow borrowers to introduce oral evidence to make their cases in court, if they can get their case into the courtroom in the first place. A borrower, for instance, could tell the court about a conversation with a loan officer that suggested a loan was unaffordable from the offset and should not have been made. This is called “parole evidence”, and is often not admissible in court. All in all, it is a step in the right direction, albeit about 10 years too late.

In my view, the regulators could not apply too many restrictions to the banks for fear that they would tighten the credit market and make it increasingly difficult for all borrowers to apply for and secure a new mortgage loan, and these rules may have been written in part so that the housing recovery of 2012 continues.

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 Tagged With: , , ,

US Department of Justice Continues to Pursue Wells Fargo Bank

February 28, 2013 By

Wells Fargo Bank may be the largest mortgage loan originator in the country, but the Department of Justice says that Wells Fargo continues to violate the terms of a settlement reached in July, 2012. On October 9, 2012, prosecutors in New York filed a new mortgage-based civil action against Wells Fargo, seeking hundreds of millions of dollars in damages for alleged mortgage fraud violations under the False Claims Act. The action asserts that Wells Fargo engaged in a long-standing and reckless trifecta of deficient training, deficient underwriting and deficient disclosure, all while relying on the convenient back stop of government insurance. Essentially, it is claimed that Wells Fargo originated bad loans, and then relied on government insurance through the Federal Housing Administration to pay the claims when those mortgages fell into default.

Wells Fargo, however, claims that the recent action is barred because the alleged conduct was already part of the July, 2012, settlement, and Wells Fargo claims that the slate was wiped clean. In court filings on November 1, Wells Fargo asked a trial judge to declare that the government’s second lawsuit is a breach of the July, 2012, settlement terms.

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 Modification Tagged With: , , , , , , , ,
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