California Bankruptcy Attorney Blog

Our Ontario loan modification attorneys wrote last week about several Sacramento-area lawsuits alleging that lenders are deliberately trying to push borrowers into foreclosures. This is not a common allegation, but a March 2 article from the San Jose Mercury-News shows that lawsuits in general are an increasingly common tactic in California for homeowners desperate to keep their homes. The article said federal lawsuits over the Truth in Lending Act or wrongful foreclosure have skyrocketed in the past five years, from just 29 in 2005 to 1,395 last year. Many more may be filed in state courts. Lawsuits typically allege that the bank reneged on a loan modification deal, or made an original loan that it never should have made.

Both are claims made by Sonia Leverman, one of the plaintiffs in the article. The Sunnyvale homeowner was given English-only documents to sign for her adjustable-rate mortgage even though she doesn't speak English well. She says she was shocked when the rate shot up by nearly $2,000 a month, shortly after her husband lost his job and her sons' work hours were cut back. The family later completed a three-month trial loan modification, only to be denied a permanent loan modification because, the lender said, their third payment was late. They have a Western Union receipt showing it was on time. Finally, they hired a loan modification attorney who sued the loan servicer for breach of contract. Now, they're on track for a permanent modification, although they're still underwater.

The family's lawyer said the servicer refused to negotiate until he got involved. This is typical in our experience as Bellflower loan modification lawyers. Lenders and loan servicers believe they can make more money by foreclosing than by helping modify a loan that they don't think the borrower can pay off. Rather than say so, they find excuses to derail permanent loan modifications, allowing them to look like they're trying to help. Meanwhile, borrowers who are genuinely trying to meet their financial obligations get a "runaround." That's true even in cases like Leverman's, in which there was strong evidence of wrongdoing and thus a clear risk that the family would take legal action. In addition to the dispute over the on-time payment, providing English-only documents to Leverman may have been a violation of California's Foreign Language Contract Act.

Continue reading "Californians Increasingly Sue to Enforce Loan Modification Deals With Lenders" »

Our San Bernardino County loan modification attorneyshave written here before about the problem of major lenders targeting racial minorities for expensive subprime or even predatory mortgage loans. This practice, known as "reverse redlining," is the subject of lawsuits against lender Wells Fargo by several municipalities, which claim it violates federal civil rights laws and destroys city neighborhoods. Now, the New York Times reported Jan. 14, the federal Department of Justice has launched a new campaign against unfair lending practices, to be part of its Civil Rights Division. Led by special counsel Eric Halperin, head litigator for the nonprofit Center for Responsible Lending, the new unit will investigate all types of unfair lending practices and file federal civil rights lawsuits when appropriate.

Reverse redlining is the practice of targeting minority borrowers for expensive "subprime" or even predatory mortgage loans. It is illegal under the federal Fair Housing Act, which bans practices that have a "disparate impact" on minorities. This is the legal theory behind the Baltimore and Memphis lawsuits, both of which accuse Wells Fargo of explicit and intentional reverse redlining, with supporting affidavits from former loan officers. An attorney who helped both cities said he hoped the new Justice unit would consider joining the cases. The Civil Rights Division has itself opened 38 investigations into reports of lending discrimination, and more may be coming. The Justice Department plans to analyze Treasury Department data to look for disparate impacts in loan modification decisions, and is also working with state attorneys general on subprime lending issues.

As Placentia loan modification lawyers, we are extremely pleased to see the federal government paying attention to fair housing laws. In fact, as one attorney in the article puts it, the Justice Department involvement in enforcing federal law may be overdue. Because we followed the subprime lending crisis closely, we know that minority communities have been particularly hard-hit by expensive, "exotic" and adjustable-rate loans. This may be particularly true here in Southern California, where unscrupulous lenders may take advantage of our large population of non-English-proficient immigrants. With this move, the federal government has signaled that it takes this issue seriously. We hope that discourages lenders from exploiting people on the basis of race.

Continue reading "Justice Department Opens New Division to Handle Lending Civil Rights Cases" »

As Ontario predatory lending attorneys, we were pleased to see a Dec. 4 article in the New York Times announcing that the federal government is increasing the help provided to homeowners considering reverse mortgages. According to the article, the Federal Housing Administration, which insures reverse mortgages, has increased its standards for required reverse-mortgage counseling since an investigation found numerous counselors omitting important information. In fact, the Government Accountability Office found that none of the 15 counselors its agents visited covered all of the topics required, and that seven failed to discuss alternatives to reverse mortgages. In response, the FHA has required new testing, training and protocols.

In reverse mortgages, borrowers ages 62 and older put a lien on their homes to receive monthly or lump-sum payments out of existing equity. The lender is repaid after the borrower dies, sells the home or permanently moves out. This can provide important income to seniors, but it also raises predatory lending concerns. The FHA's stricter counseling rules require counselors to pass a test used by the AARP to qualify its own counselors, and attend new training sessions every two years. Counselors will also be required to follow a set procedure to determine whether a reverse mortgage would actually help the prospective borrower. If not, they may suggest alternatives such as social service programs, the Times said. And if they cannot determine with confidence that the client fully understands the information, they are required to deny the counseling certificate required for taking out a loan.

Our Fountain Valley predatory lending lawyers applaud the FHA for tightening its standards in this way. Senior citizens are an attractive target for financial fraud because they tend to have high savings and lots of home equity, but may be losing their rationality. Reverse mortgages are also used by seniors who genuinely need the money -- but they are more expensive than traditional mortgages and home equity loans, which raises exploitation concerns. The requirement to speak with an independent counselor before proceeding with a loan is intended to address these concerns, but as the article noted, counselors don't always do the job expected of them. This leaves borrowers unprotected from making a serious, sometimes irreversible financial mistake that can take away their financial security or even their homes.

Continue reading "Federal Housing Administration Sets Stricter Rules for Reverse Mortgage Counselors" »

As Riverside County loan modification attorneys, we keep a close eye on how mortgage-industry regulations -- or the lack of them -- affect ordinary people like our clients. That's why we were pleased to see an Oct. 13 article in the Los Angeles Times saying the governor has signed seven different bills intended to protect consumers when they buy, refinance, sell or pay off their homes. The bills came all at once because the legislative session is ending, prompting lawmakers to send multiple bills to the governor for approval. Among the laws, all of which were sponsored by Democrats, are:

• A bill increasing the penalty for lying on a mortgage application from a misdemeanor to a felony.
• A law requiring more and clearer information for people interested in reverse mortgages, a product allowing homeowners to draw out their equity.
• A law allowing buyers of foreclosed homes to choose their own escrow officers.
• A new registration program for appraisal firms.
• Licensing requirements for organizations that originate residential loans.
• A law requiring lenders to provide mortgage loan documents in the same language they used for verbal negotiations.

The centerpiece of the article, however, was AB 260, authored by Democrat Ted Lieu of Torrance. An important provision of the law is intended to end the practice among mortgage brokers of steering borrowers toward expensive subprime loans even though they qualify for prime loans. This is important because many brokers are actually paid a bonus for directing borrowers into more expensive loans than the cheapest they qualify for. AB 260 also bans negative amortization loans, which are loans with such low minimum payments that the loan balance can actually grow; limits prepayment penalties; and authorizes state officials to enforce federal lending laws. Gov. Schwarzenegger rejected a similar bill from Lieu last year, but changed his mind this year despite strong opposition from mortgage industry groups.

Our Placentia loan modification lawyers are particularly pleased to see the provision relating to mortgage brokers, despite the predictable outcry from the mortgage industry. Consumers without any special knowledge of the mortgage industry may believe that mortgage brokers are working in their best interests. But when brokers' compensation is tied to "upselling" more expensive loans, they are actually encouraged to work against the borrowers' interests -- which would be a conflict in any field. Worse, the upselling encourages brokers to create more subprime and exotic loans, the same loans that are widely believed responsible for the housing crash, particularly in Southern California. We are also very pleased to see the law requiring that mortgage documents' language match the language of the mortgage negotiations, an overdue measure that's nothing but common sense in a state as diverse as California.

Continue reading "Governor Signs Laws Intended to Curb Fraudulent and Unfair Practices in Mortgage Lending" »

As Fontana debt settlement attorneys, we were pleased by recent news that one of the nation's largest banks will drop its mandatory binding arbitration requirement for customers with credit card, bank accounts and certain types of loans. According to the Associated Press, Bank of America dropped its binding arbitration clause from contracts with customers. The move most likely means that the bank will face more lawsuits, because the binding arbitration requirement meant their right to sue was waived. Under it, all disputes had to be heard by arbitrators, who are a bit like private-sector judges.

A Bank of America spokeswoman said the bank made the change after hearing from customers. However, the Associated Press said, the move came after two major groups of arbitrators stopped hearing consumer credit disputes. One of those groups, the National Arbitration Forum, did so after being sued by Minnesota Attorney General Lori Swanson for its ties to credit card companies and collection agencies, which Swanson said was unfair and deceptive to consumers. Congress is also considering banning mandatory binding arbitration clauses in credit card contracts. One expert interviewed in the article said Bank of America's decision was likely caused by these developments.

Mandatory binding arbitration has long been criticized by consumer advocates as unfair and anti-consumer. Arbitrators are supposed to be neutral, but because they often have professional ties to clients, are paid by the large companies involved in their cases, or both, consumer advocates say the deck is typically stacked against consumers. Furthermore, consumers must typically agree to arbitration and sign away their right to sue in the courts as a condition of signing up for a product or service. Some courts have declared this practice "unconscionable" and invalidated the agreements. Nonetheless, Bank of America's decision is good news for consumers. As Ventura debt settlement lawyers, we strongly prefer that credit card companies have access to the courts from the beginning, rather than having to fight an expensive legal battle just for a chance at suing in a fair and open court.

Continue reading "Bank of America Drops Mandatory Arbitration Requirement for Credit Card Customers" »

Our Los Angeles County loan modification lawyers were pleased to see an Associated Press article Aug. 5 about an unusual ally for homeowners struggling with mortgage problems: a Catholic priest. According to the article, the Rev. John Lasseigne got involved in loan modifications after discovering widespread mortgage problems among his flock, a largely blue-collar and Latino population in the San Fernando Valley town of Pacoima. Lasseigne said he was stunned when he realized the extent of the foreclosure crisis, which came to his attention after multiple families in his flock faced losing their homes.

Now, Lasseigne -- a law school graduate -- organizes financial workshops, counsels homeowners and advocates for them with help from nonprofit organizations. He also meets directly with banks to negotiate loan modifications, frequently for people he says were entrapped by companies who took advantage of their limited English and lack of financial sophistication. One homeowner he helped was Juana Rodriguez, who followed bad advice to borrow $272,000, including a down payment, on a townhouse. She had an adjustable-rate mortgage whose interest reached 10.56% just before she lost her job. With help from Lasseigne and others, she was able to change the loan to a 30-year mortgage at 5% fixed interest, and now helps counsel others with similar problems. Lasseigne's work also includes lobbying for stronger laws against predatory lending.

We are delighted to see that an organization with moral authority is advocating on behalf of struggling homeowners, especially those who were misled into loans they couldn't afford. As we have recently written on this blog, the housing downturn is revealing a lot of ugly practices by mortgage industry professionals willing to exploit minorities and immigrants without the financial savvy and English skills necessary to understand their loans. That includes negotiating loans in Spanish but offering loan documents in English; offering a loan at a much higher interest rate than the borrower could qualify for; and targeting minorities with expensive and "exotic" loans. Our Chino loan modification attorneys use evidence of these predatory lending practices as leverage to get clients a fair and sustainable loan workout.

Continue reading "Catholic Priest Helps Pacoima Families Stop Foreclosure and Win Loan Modifications" »

An analysis shows that mortgage loan servicers face multiple lawsuits alleging predatory lending and collection practices, the Associated Press reported Aug. 5. The AP analysis focused on the 38 servicers participating in Making Home Affordable, the federal plan giving servicers financial incentives to approve loan modifications. Most the servicers had been sued for charging illegal fees; forcing homeowners to buy unnecessary insurance; illegal collection practices; misleading customers about the federal program; and foreclosing on homeowners with pending loan modification applications. Some servicers have promised in legal settlements to stop unfair practices, then were sued again multiple times for the same practices.

Loan servicers are go-betweens who process mortgage payments submitted by homeowners on behalf of banks or investors (in securitized mortgages). Before the housing boom, their profits came mostly from a percentage of the loans they serviced. But during the boom, servicers discovered that they could make more money servicing high-risk subprime and exotic loans, because these riskier borrowers generated more late fees, foreclosure fees and negotiation fees. Those same fees are the reason that foreclosure is now more profitable than loan modification for servicers, which critics say is one reason why loan modifications have been so hard for homeowners to obtain.

That was the reason for the federal government to offer financial incentives to servicers under Making Home Affordable. However, the AP reported, some of those servicers are taking federal money while continuing unfair practices that have resulted in multiple lawsuits. Most recently, servicers have been sued for foreclosing despite assuring homeowners that a loan modification was pending, or for misleading borrowers about eligibility for the program. But for years, many servicers have faced lawsuits alleging they charged homeowners unnecessary and illegal fees, including fees for unnecessary services. They have also faced lawsuits under the Fair Debt Collection Practices Act and other laws that protect consumers from illegal and harassing debt collectors.

As Norwalk predatory lending lawyers, we have known for quite a while that loan servicers are not on our clients' side. The loan servicing industry is not tightly regulated, which means the companies have no watchdog making sure they avoid unfair and illegal practices. That means borrowers hurt by these practices have no one to turn to for help but an Rialto predatory lending attorney like us. By that time, homeowners may already have gone into foreclosure or paid thousands of dollars unnecessarily.

Continue reading "Mortgage Servicers Face Lawsuits for Illegal Collection Practices and Loan Modification Delays" »

As loan modification lawyers in Orange County, we frequently represent clients whose first language is not English, especially Spanish-speakers. In some of these clients' cases, we discover that they were given mortgage loan documents in English, despite conducting the entire rest of the transaction, including loan negotiations, in their native language. This is illegal under California's Foreign Language Contract Act. Furthermore, in many of these cases, switching the language at contract time allows the lender to sneak in contract provisions different from what the parties agreed to, or that were not discussed, in violation of the federal Truth in Lending Act and other consumer protection laws.

Howard | Nassiri LLP has already filed several lawsuits on behalf of clients in this situation, as have many of our colleagues. One of our colleagues recently reported a victory in such a case: A judge stopped a foreclosure on a San Diego County homeowner who was a victim of these bait-and-switch tactics. That client alleged that he was given loan documents in English after Spanish-language refinancing negotiations, but also that he was granted an adjustable-rate mortgage with an interest rate above 8% -- not the 5.94% fixed-rate mortgage he agreed to. He was never given a copy of these documents in Spanish. When the interest rate on this loan adjusted upward twice, the buyer could no longer make his payments. After consulting an Escondido predatory lending lawyer, he filed a lawsuit alleging illegal practices by his mortgage lender and won a preliminary injunction stopping the foreclosure.

This may be a nationwide problem. According to a recent article in the Orlando Sentinel, Latinos in Central Florida had an above-average number of the region's subprime and adjustable-rate mortgages. Latinos also had a disproportionate share of the highest interest rates. Those findings are reflected in a recent study by the Pew Hispanic Center showing that Latinos (and African Americans) were more than twice as likely as whites to get higher-priced loans. While the study's summary did not address the role of language, common sense, anecdotal evidence and our experience as Buena Park loan modification lawyers all suggest that when borrowers don't understand English well, lenders have an opportunity to mislead and exploit them using English-only documents -- which is precisely why the Foreign Language Contract Act exists.

Continue reading "Lenders Face Lawsuits From Spanish-Speakers Illegally Provided English-Only Loan Documents" »

As Diamond Bar loan modification lawyers, we have known for some time that many of the loan modification companies that popped up in the past year are run by former mortgage brokers whose business has dried up. In many cases, these brokers are the same people responsible for selling thousands of subprime and exotic loans across Southern California -- raising questions about whether they can be trusted. On July 20, the New York Times ran an article that made the same point. As one broker-turned-consultant brazenly told the Times, "We just changed the script and changed the product we were selling."

The article focuses on Irvine-based Federal Loan Modification Law Center, a loan modification company started by several former employees and executives from subprime mortgage lenders and brokers. It was sued by the Federal Trade Commission in April for allegedly misleading and defrauding clients and is now defunct, unable to pay employees. Like other loan modification companies, the article said, employees at FedMod used their sales experience to convince panicked borrowers to hand over credit cards. Thanks to their experience, FedMod's founders also knew to hire an attorney, so that it could charge up-front fees that would otherwise have been illegal under California law. Former employees at the company described their colleagues as:

• Making up unrealistic success rates out of thin air
• Misleading clients into believing the company was backed by the federal government
• Misleading clients into thinking an attorney would work on their cases
• Promising interest rate reductions and loan structures they couldn't deliver
• Taking clients' money, then failing to turn over files for processing
• Publicly mocking clients' panicked voice mail messages

While our Murrieta loan modification attorneys do not believe that all former mortgage brokers or lenders are necessarily crooked, we're glad the Times is calling attention to the connection. Many mortgage brokers and lenders who sold subprime loans misled buyers and used pressure tactics to sell people loans they couldn't afford. Now that the housing bubble has burst and they are out of business, some of these same people are taking their questionable ethics into the loan modification business. Essentially, they are using industry experience and the same high-pressure sales tactics they used to sell mortgages to exploit people backed into a financial and emotional corner -- sometimes by them or their colleagues in the lending industry. Consumers looking for help with a loan modification should know as much as possible about these companies before they sign a check.

Continue reading "Mortgage Brokers Responsible for Subprime Loans Find New Work as Loan Modification Consultants" »

A new study by the Federal Reserve Bank of Boston confirms what our San Bernardino loan modification lawyers have thought all along: Mortgage lenders aren't really trying to grant loan modifications. According to a July 7 article in the Boston Globe, the New England branch of the Federal Reserve Bank concluded that banks avoid granting loan modifications because that means losing money. (The article did not specify how.) That's true even despite President Obama's loan modification program, which provides financial incentives for lenders to grant loan workouts. To stop the foreclosure crisis, the authors said, it would be more effective for the federal government to give payments or loans directly to struggling homeowners.

The study examined 665,410 loans made in the middle of this decade that subsequently became delinquent, and followed 150,000 homeowners for six months after they got help. It found that only 3% of borrowers behind by 60 days or more had loan modifications that actually reduced their monthly payments -- considered a good predictor of whether the loan modification will help. Another 5.5% of borrowers got loan modifications that did not lower their payments. It also found suggestions that loan modifications aren't right for all homeowners. A total of 45% of borrowers who got any kind of help re-defaulted during the study, while 30% of all delinquent borrowers are able to get out of trouble without help. The study also found no difference in the rate of loan modifications between loans sold to investors and loans owned by the issuer, suggesting that securitized loans are not the problem.

Study co-author Paul S. Willen, a senior economist at the Boston Fed, summed up the issue when he told the newspaper "Loan modification is not profitable for lenders. If it were profitable, they would go out and hire staff." This may seem like rather bitter logic to homeowners who have been struggling for weeks or months to reach their lenders, only to meet bureaucratic "delays" and "mistakes." As Chino Hills loan modification lawyers, we believe this is a cruel way to repay the trust of borrowers who genuinely believed they could save their homes by jumping through enough hoops. As Rep. Barney Frank, D-Mass., said in the article, it also prolongs the housing crisis -- which could eventually end up hurting banks that accumulate a catalog of unsold properties through foreclosure.

Continue reading "Study Finds That Mortgage Lenders Won't Grant Meaningful Loan Modifications Because They Lose Profit" »

The Obama Administration's plan to reform how the financial industry is regulated would include substantial new powers to curb abuses in the mortgage industry, Dow Jones Newswire reported June 16. The plan was officially announced June 17 and will likely go through months of debate and restructuring in Congress before it becomes final. However, Dow Jones said an early report on its provisions included an outright ban on certain mortgage industry practices and new regulations for others, intended to give consumers greater information on the decisions they make. The plan also includes the creation of a Consumer Financial Protection Agency, which would have the power to enforce the law and add new regulations.

According to Dow Jones, one key provision of the administration's plan is a requirement for banks to offer plain, conventional loans along with "exotic" and more complex loans. Consumers would still be able to take out the complex loans, but they would have the ability to opt in. The plan would also substantially change the way mortgage brokers do business. Among other things, they would be required to give borrowers the option of taking out the best loan for which they qualify and ensure that those borrowers can afford the loans they do take out -- both areas that experts believe were subject to abuse. The CFPA would be able to ban yield-spread premiums and other practices that incentivize brokers to sell overly expensive loans. And brokers, banks and non-bank lenders would all be subject to CFPA oversight, ending the potentially spotty oversight caused by the current patchwork of state and federal regulators.

The proposal includes many provisions that don't apply to the mortgage industry, including consumer-protection provisions related to credit cards. However, as Chino Hills mortgage loan modification lawyers, we are very happy with this list of the Administration's goals. Because we work every day with financially struggling homeowners, we recognize the need for many of the reforms listed here. For example, as things currently stand, borrowers have no objective way to find out whether a mortgage broker is offering them the best loan they qualify for. During the housing boom, this allowed mortgage brokers and loan officers earn big bonuses by steering consumers into expensive loans. Curbing practices like these allows consumers access to the basic information they need to make an informed decision -- including a decision for the more expensive loan, if they decide that meets their needs.

Based in Anaheim, Howard | Nassiri LLP represents homeowners throughout California who need help convincing their lenders to give them a fair and sustainable mortgage loan modification. Our San Marcos loan modification attorneys have successfully negotiated for reduced interest rates, loan restructuring and other major changes. Even if your lender or servicer won't answer your phone calls, we can often get its attention simply because we are lawyers -- and when lawyers call, financial institutions get nervous. In many cases, we've been able to use evidence of predatory lending as ammunition to get clients a better deal. Our goal is always to keep clients in their homes by lowering monthly payments to a reasonable and sustainable amount.

If you're struggling to get your lender to consider a loan workout, the Valencia loan modification lawyers at Howard | Nassiri LLP can help. To set up a free, confidential consultation, please contact us online or call us toll-free at 1-800-872-5925.

Salt Lake City's ABC affiliate is ready to help a family of six fight for a mortgage loan modification, the station, the station, KTVX, reported June 8. ABC 4 News has made the Weldons of Park City, Utah the focus of an ongoing series called "Family on the Brink." They started following Clay Weldon and his wife, Julie Weldon, as they dealt with the effects of Clay Weldon's layoff and the ballooning interest rate on their adjustable-rate mortgage. Thanks in part to the station's efforts, Clay Weldon has landed another job -- but now, the family faces the difficult task of negotiating a loan workout with their bank.

According to the report, the Weldons bought their home at the height of the subprime lending bubble and have an adjustable-rate mortgage. That would be a problem even if Clay Weldon had never lost his job, because the interest rate on the mortgage has risen sharply, to 10.5% -- giving them a monthly mortgage payment of nearly $5,000. They used their savings to continue to pay on time, but called their mortgage lender, Wells Fargo, to discuss a loan modification. Like thousands of other responsible borrowers, they were told that the bank wouldn't even consider a loan modification until they were in default. The station reported that they've spent hours on the phone, mostly on hold, trying to speak to someone about applying for the bank's version of the federal Making Home Affordable plan, whose criteria they know they meet.

As Puente Hills mortgage loan modification lawyers, we happen to know that adjustable-rate mortgages are some of the riskiest loans out there, since they allow borrowers to take out loans that they may not be able to repay later. This opens the door to predatory lending by loan officers and others willing to mislead consumers without a lot of experience with mortgage lending. In fact, adjustable-rate loans are blamed in part for the real estate crisis. On paper, the Weldons look like a pretty good candidate for a loan modification -- but apparently, neither a steady income nor the publicity surrounding the ABC 4 News reports is enough to even get their lender's attention, never mind seal the deal on a loan workout.

Howard | Nassiri LLP represents people who are just like the Weldons, except without a TV news station to help. Our Rancho Cucamonga loan modification lawyers negotiate with mortgage lenders on behalf of clients who believe they can avoid foreclosure or bankruptcy and stay in their homes if they make some changes to their loans. In many cases -- particularly those involving adjustable-rate loans -- we can use evidence of predatory lending to make sure we have the bank's full attention. Our Santa Ana mortgage loan modification attorneys have successfully gotten lenders to lower monthly mortgage payments by changing the structures of exotic and subprime loans; lowering interest rates; and changing repayment periods.

If your family is struggling to make mortgage payments, or you know you will soon, and you need help taking the next steps, you should call Howard | Nassiri for a free, confidential consultation. To set one up, you can call us toll-free at 1-800-872-5925 or contact us via email.

Loan officers at Wells Fargo Bank steered minorities into subprime loans even though they qualified for cheaper conventional loans, the New York Times reported June 6. Loan officers also made openly racist statements at work, former colleagues charged, calling minorities "mud people" who got "ghetto loans" because they don't pay their bills and have bad credit. The revelations came as part of a predatory lending lawsuit filed by the city of Baltimore against Wells Fargo, alleging that the lender's practices resulted in a staggering rate of foreclosures that left homes across the city vacant, especially in predominantly African American neighborhoods, and cost the city tens of millions in services and taxes.

According to the Times, loan officer Beth Jacobson testified that Wells Fargo systematically targeted black customers for subprime loans. This practice, known as "reverse redlining," is a problem for customers because subprime loans have a higher interest rate than traditional mortgage loans. As the Times noted, a difference of just 3% in interest rates translates to $100,000 more in interest payments. Another former loan officer, Tony Paschal, told the court that loan officers earned bonuses for steering customers who qualified for a prime loan to the subprime division. To achieve that, Jacobson testified, loan officer falsified documents and lied about clients' willingness to document their income.

We have already written a bit about reverse redlining after the NAACP lawsuit accusing Wells Fargo and other banks of similar behaviors. While the racist comments are appalling and possibly evidence of illegal behavior, our Riverside County predatory lending lawyers are also concerned about the financial side of the case. People of any color are vulnerable to manipulation by lenders if they are not familiar with the mortgage lending process -- and most people are not. If the allegations are true, these loan officers took advantage of that lack of familiarity, and the lack of regulations requiring full disclosure, to essentially cheat their clients. As a result, clients took on hundreds of thousands of dollars in unnecessary debt, leading in many cases to foreclosures that hurt them, their neighbors and the economy as a whole.

Howard | Nassiri LLP helps people who were entrapped by an unscrupulous lender demand justice through Southern California predatory lending lawsuits. Numerous state and federal laws require that lenders fully disclose the terms of loans, treat borrowers of all races fairly and otherwise refrain from unfair or manipulative behavior. If they do not, victims can sue to have the loans declared unenforceable and win back every payment they made on the unfair loans, interest, closing costs and even attorney fees. Our Monterey Park predatory lending attorneys have successfully stopped foreclosures, modified mortgage loans and released clients from onerous financial obligations they would never have agreed to if the lender had been honest.

If you believe you were misled when you took out your loan or refinanced and you're facing serious financial problems as a result, Howard | Nassiri can help. To set up a free, confidential consultation, please contact us as soon as possible via email or call toll-free at 1-800-872-5925.

Federal authorities have announced their securities fraud lawsuit against former Countrywide Financial Corp. CEO Angelo Mozilo, the Los Angeles Times reported June 5. The move was expected; Mozilo is also being investigated on criminal charges for insider trading by the FBI and a grand jury in Los Angeles. He is accused of misrepresenting Countrywide's financial health to the public, even as he privately sold off his company stock and told associates within the company that its loans were "toxic" and "poison." Lawyers for Mozilo and two associates, David Sambol and Eric Sieracki, said the allegations were baseless and politically motivated.

Countrywide's stock was valued at $45.03 a share in February of 2007, near the height of the housing bubble. By the end of that year, it was worth just $9 a share; when Bank of America purchased the company in 2008, it was trading at $4.25. Mozilo is accused of making and changing stock-selling plans throughout 2006 and once in early 2007, allegedly to dump shares he knew would soon plummet in value. During this time, the SEC says, Countrywide misled investors into believing that it was writing substantially less risky loans than it did. The "smoking gun" cited in the SEC's complaint was a statement Mozilo made in an email sent in April of 2006, saying "In all my years in the business I have never seen a more toxic product." The specific product he meant was a loan to borrowers with bad credit, requiring no money down. He went on to say "Frankly, I consider that product line to be the poison of ours."

The lawsuit does not allege that Mozilo committed mortgage fraud or predatory lending. However, both practices are widely believed to be responsible for Countrywide's downfall. Countrywide was one of the first mortgage lending companies to fall when the housing market went south; its emphasis on subprime and option ARM mortgages has already become the basis of a predatory lending lawsuit by state attorneys general, including California's own Jerry Brown. As Anaheim loan modification attorneys, we have learned to look very closely at mortgages issued by Countrywide (and now owned by Bank of America). While some of them must be aboveboard and legitimate, we have found that many more originated with misleading statements, manipulation or outright lies by loan issuers and other players in the mortgage lending chain.

Howard | Nassiri LLP can use evidence of these tactics to help Southern California homeowners who face default and foreclosure negotiate loan modifications. Even if your mortgage is held by a lender other than Bank of America/Countrywide, will scrutinize your loan and its history carefully, looking for indications of impropriety as well as other ways to convince a bank to grant you a sustainable loan modification. Banks listen to our San Marcos mortgage loan modification lawyers because we are attorneys -- meaning that we can and will sue banks for violating our clients' rights. We have successfully argued for changes to loan structures, lowered interest rates and other changes to loans that help keep families in their homes. Our goal is always to leave you with a lowered, more realistic monthly payment.

If you're facing default or foreclosure and you can't get through to your bank, Howard | Nassiri can help. To set up a free, confidential consultation with our Santa Clarita mortgage loan modification lawyers, please call us toll-free at 1-800-872-5925 today or contact us online.

The California legislature is considering a bill that would ban yield-spread premiums and put other restrictions on the mortgage lending industry, the Los Angeles Times reported June 1. Assemblyman Ted Lieu of Torrance wrote the bill, which is intended to stop certain predatory lending practices believed to have contributed to the subprime mortgage crisis and plunge of home prices. The bill has passed the Assembly and must now get through the state Senate before facing Gov. Arnold Schwarzenegger, who has vetoed similar efforts.

AB 260 mainly applies to independent mortgage brokers, who help homebuyers strike lending deals with banks. It gives them a fiduciary duty to their clients, meaning they would have a legal obligation to get clients the best financial deal. The state attorney general could revoke violators' licenses and fine them $10,000 per violation. It also bans negative-amortization loans, which allow such low payments that mortgage balances can actually increase.

But the centerpiece of the law is its ban on yield-spread premiums, which are bonuses paid to mortgage brokers for selling customers loans that are more expensive than the best ones the customers qualify for. The bill makes it illegal for a broker to steer a client into a more expensive loan, limits penalties for prepayment and forbids both brokers and lenders from making deceptive statements about subprime loans. The governor rejected a similar measure last year, saying it was unfair to California lenders because it didn't apply to federally regulated lenders.

As Orange loan modification lawyers, we hope the governor changes his mind. Yield-spread premiums have lost their appeal because the real estate market is so poor, but they remain completely legal and even encouraged by the system. That's a problem because they actually encourage brokers and lenders to deceive homebuyers into spending money unnecessarily. The average homebuyer has no special real estate finance knowledge, which is why mortgage brokers and real estate agents exist in the first place -- to guide them to the best deal. When brokers steer buyers toward loans that are more expensive than the best ones the buyers could get -- and don't tell them -- they are taking advantage of that ignorance to enrich themselves.

Howard | Nassiri LLP represents clients throughout Southern California who need help modifying less-than-stellar loans in order to save their homes. Our Ontario loan modification attorneys have had substantial success changing the structure of subprime and exotic loans, as well as interest rates and repayment terms. In many cases, we can use evidence of predatory lending as leverage to get our clients' banks to pay attention -- which they do because they know a predatory lending lawsuit could follow. Our goal is always to get our clients a meaningful, substantial loan workout that lowers their monthly mortgage payments and keeps them in their homes.

If you need help convincing a lender to take your loan modification requests seriously, you should contact the Gardenia loan modification lawyers at Howard | Nassiri as soon as possible. For a free, confidential consultation, you can reach us online or toll-free at 1-800-872-5925.