Bank Fraud Victims

Servicing of the Loan and Collection of the Loan

 

Bank fraud and the many different ways that banks and lenders can trick homeowners into giving up their homes, and a legal remedy to recover TILA violation fines and possibly void the lenders security interest in the property.

 

Force Placed Insurance. Lenders require homeowners to carry homeowner's insurance, with the lender named as a loss payee. Mortgage loan documents allow the lender to force place insurance when the homeowner fails to maintain the insurance, and to add the premium to the loan balance. Some predatory lenders force place insurance even when the homeowner has insurance and has provided proof of insurance to the lender. The premiums for the force placed insurance are frequently exorbitant. Often the insurance carrier is a company affiliated with the lender, and the force placed insurance is padded because it covers the lender for risks or losses in excess of what the lender may require under the terms of the loan.

 

Daily Interest When Payments Are Made After Due Date. Most mortgage loans have grace periods, during which a borrower may make the monthly payment after the due date without incurring a late charge. The late charge often is assessed as a percentage of the late payment. However, many lenders also charge daily interest based on the outstanding principal balance. While it may be proper for a lender to charge daily interest when the loan so provides, it is deceptive for a lender to charge a late fee as well as daily interest when a borrower pays before the grace period expires.

 

Late fees. Some predatory mortgage lenders charge excessive late fees, such as 10% of the payment due. Sometimes they charge this fee more than once for only one late payment.

 

Part 4    Collection of the Loan

 

Abusive Collection Practices. In order to maximize profits, predatory lenders either set the monthly payments at a level the borrower can barely sustain or structure the loan to trigger a default and a subsequent refinancing. Adding insult to injury, the lenders use aggressive collection tactics to ensure that the stream of income flows uninterrupted. The collection departments call homeowners at all hours of the day and night, including Saturday and Sunday, send late payment notices (in some cases, even when the lender has received timely payment or even before the grace period expires), send telegrams, and even send agents to hound homeowners, who are often elderly widows, into making payments. These abusive collection tactics often involve threats to evict the homeowners immediately, even though lenders know they must first foreclose and follow eviction procedures. The resulting impact on homeowners, especially elderly homeowners, can be devastating.

 

High Prepayment Penalties. See description above. When a borrower is in default and must pay the full balance due, predatory lenders will often include the prepayment penalty in the calculation of the balance due.

 

Flipping. See description above. When a borrower is in default, predatory mortgage lenders often use this as an opportunity to flip the homeowner into a new loan, thereby incurring additional high costs and fees.

 

Call provision. Some predatory mortgage lenders make loans with call provisions, which permit the holder of the mortgage, in its sole discretion, to accelerate the indebtedness, regardless of whether the borrower's payments are current and the homeowner is otherwise in compliance with the terms of the loan.

 

Foreclosure Abuses. These include persuading borrowers to sign deeds in lieu of foreclosure, giving up all rights to protections afforded under the foreclosure statute, sales of the home at below market value, sales without the opportunity to cure the default, and inadequate notice which is either not sent or backdated. We have even seen cases of "whispered foreclosures", in which persons conducting foreclosure sales on courthouse steps have ducked around the corner to avoid bidders so that the lender was assured he would not be out-bid. Finally, foreclosure deeds have been filed in courthouse deed records without a public foreclosure sale.

 

Continue: A Legal Remedy

 

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Our mission is to educate homeowners about predatory lending practices and bank fraud and options available to them. 

 

We believe that if you don't know your rights, you donít know your options.

 

 

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