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Mortgage Giant Found Guilty of Mortgage Fraud

by julie on February 23, 2011

Major Mortgage Giant Found Guilty of Defrauding Borrower – $2.7 Million in Punative Damages Awarded

A West Virginia court found the major mortgage giant Quicken Loans Inc guilty of defrauding a homeowner and was ordered to pay $2.17 million dollars in damage plus $600,000 in legal fees. Judges are beginning to wake up that the lenders have not necessarily been above reproach when it comes to homeowners and loans that were orginated between 2000 and 2008. A recent conversation with a forensic loan auditors, said that most of the loans have major violations in them, where a homeowner can seek legal means to get justice.

To find out if your loan has violations in them, a Forensic Loan Audit is a smart place to start.

Many are joining a Class Action Lawsuit, to get justice in a cost-effective manor.

Once your house has been foreclosed upon it is likely too late to get legal justice, so don’t wait!

Judge Orders Quicken Loans to Pay $2.7 Million Award in West Virginia Fraud Case
By Michael Hudson | February 22, 2011, 5:57 pm
Updated: 2/23/2011, 12:43 pm | A West Virginia judge has slapped online mortgage giant Quicken Loans Inc. with more than $2.7 million in punitive damages and legal costs after finding the lender had defrauded a borrower by misleading her about her loan and using an inflated property appraisal.
Ohio County (W.Va.) Circuit Judge Arthur Recht awarded the borrower just under $2.17 million in punitive damages. He also ordered that Quicken pay her attorneys nearly $600,000 in legal fees and costs. In a ruling last year, Recht had called Quicken’s conduct “unconscionable.” James Bordas, one of the attorneys who represented the borrower, said he hoped the award would send a message to struggling homeowners that “big companies can’t just come in and cheat them.” Dan Gilbert, Quicken’s founder and chairman, told the Center for Public Integrity that the judge’s fraud finding and damages award were “irrational and incomprehensible.” “If there was any injustice here,” Gilbert said, “it’s the other way around.” Quicken, he said, was the victim in this case rather than the borrower.
Detroit-based Quicken, the nation’s largest online home lender and fifth largest retail mortgage lender, has come under fire in a variety of legal forums. A Center investigation published earlier this month detailed claims from borrowers and ex-employees who accuse the company of taking advantage of vulnerable homeowners and using bogus appraisals and other falsified information to push through bad deals.
Quicken denies the allegations.
“We always try to do the right thing,” Gilbert said in a telephone interview. “If we truly make an honest mistake, it usually doesn’t even get to court—if we discover it, we make things right.” In the West Virginia case, the judge last year found that Quicken had put 45-year-old Lourie Jefferson, a licensed practical nurse, into a complex mortgage product that would have required her to come up with a $107,000 “balloon payment” at the end of 30 years to finish paying off a loan of just under $145,000. Quicken misled Jefferson about the loan and used an appraisal that inflated the value of her home by nearly 300 percent, according to that decision. The judge followed up that ruling last week with a Feb. 17 opinion ordering Quicken to pay punitive damages and legal fees in the case.
The company said there’s no evidence that Quicken colluded with the appraiser or “did anything usual or anything inconsistent with industry practice.” In court papers, Quicken described the problems with the loan as an “isolated incident” created by “mere excess of zeal by a poorly supervised, low level, former employee.” In a separate written statement on Tuesday, Gilbert also said the mortgage had been a good deal for Jefferson because it reduced her interest rate and monthly payments and gave her more than $40,000 in cash.
In his statement, Gilbert said the company would “be appealing this wanton injustice and is independently conducting its own investigation as well as be requesting that federal authorities also investigate the shocking and incomprehensible circumstances surrounding this scheme carried out by an unknown amount of people in West Virginia.” In the phone interview, Gilbert said he could not elaborate on the scheme against Quicken.
In another case, now being tried in federal court in Detroit, a group of former Quicken employees seeking overtime pay claim that company executives managed by bullying and intimidation, in some instances pushing them to exaggerate borrowers’ incomes on loan applications and sell overpriced deals to desperate or unwary homeowners.
The company argues that its “mortgage consultants” don’t qualify for overtime pay because they provide expert financial advice to borrowers in much the same way that stock brokers advise investors. In an effort to rebut this argument, the ex-employees’ attorneys contend that the company’s loan consultants aren’t trained to provide advice, but rather to manipulate and mislead.Michael Hudson is a staff writer at the Center for Public Integrity and author of THE MONSTER: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America – And Spawned a Global Crisis. Full article is found at http://www.publicintegrity.org/blog/entry/2933/

Homeowners Are Not the Only Ones Sueing the Lenders

by julie on January 24, 2011

JP Morgan Chase, EMC, Wells Fargo, Bank of America are all seeing the repercussions of these bad loans – by homeowners and investors alike.

Lawsuits are being filed all over the country by homeowners, and now investors who own the mortgage backed securities, against the major lending institutions based upon claims of wrongdoings by the banks and their servicers. These banks can no longer just ignore homeowner complaints, as many are taking to the court system for fraud, misrepresentation, and violations of federal law.

Mortgage fraud is rampant. Homeowners across the nation are turning toward legal action in defending themselves against the bank. Many are joining a Class Action Lawsuit. Call (831) 621-1149 for details and reference Troubled Property Solutions.

JPMorgan’s EMC Mortgage Sued Over Home Loan Documents
By Sophia Pearson – Jan 18, 2011 11:30 AM PT
Bloomberg Press

JPMorgan Chase & Co.’s EMC Mortgage, facing homeowner lawsuits over foreclosures, was sued by the trustee of a mortgage portfolio for refusing to turn over documents detailing the quality of loans bought by the trust. Wells Fargo & Co., the trustee, is seeking access to files for more than 2,000 underlying mortgages in the Bear Stearns Mortgage Funding Trust 2007-AR2, according to the complaint filed January 18, 2011 in Delaware Chancery Court in Wilmington. “The trustee has repeatedly requested that EMC provide access to the subject documents,” Wells Fargo said in the complaint. “EMC has played proverbial ‘rope a dope’ and otherwise continued to drag its feet, and has produced nothing.”

Claims of wrongdoing by banks and loan servicers triggered a 50-state investigation last year into whether hundreds of thousands of foreclosures were properly documented as the housing market collapsed. Lending practices have also pitted mortgage-bond investors against banks over misrepresentations such as overstatements of borrowers’ income and inflated appraisals. Christine Holevas, a spokeswoman for New York-based JPMorgan, declined to comment.

Wells Fargo said it needs access to the documents to answer “serious” questions raised by investors in the trust about whether EMC breached representations and warranties regarding the quality of option-adjustable rate mortgage loans the trust bought.

Investor Questions

An investor in the trust, who owns 42 percent of the outstanding face amount of the portfolio’s certificates, questioned the condition of underlying loans, Wells Fargo said in the complaint, citing an August letter it received from David Grais, the investor’s attorney. Grais, a partner at New York-based Grais & Ellsworth LLP, represents the federal Home Loan Banks of Seattle and San Francisco and Charles Schwab Corp. in litigation seeking to force banks including Bank of America Corp. and JPMorgan to repurchase mortgage-backed securities because they allegedly misrepresented the quality of the loans.

In a September interview, Grais said he was also working with two hedge funds that hadn’t filed suits and had contacted trustees with similar complaints. He wouldn’t name the funds. In the Aug. 31, 2010, letter to San Francisco-based Wells Fargo, Grais said he had investigated 1,317 of the loans held by the trust and determined that EMC appeared to have violated its representations with respect to 938 loans, according to the complaint. Grais didn’t immediately return a phone call today seeking comment on the complaint.

400 Loans

Wells Fargo began requesting the documents in January last year and reached an agreement with EMC in December on access to files for 400 loans. EMC had until Jan. 12 to produce documents on the first 100 loans, according to the complaint. EMC failed to produce the documents “culminating more than a year of good-faith negotiations and misplaced patience by the trustee in a futile attempt to avoid litigation,” Wells Fargo said in the complaint. The case is Bear Stearns Mortgage Funding Trust 2007-AR2 by Wells Fargo Bank N.A. as Trustee v. EMC Mortgage Corp., CA6132, Delaware Chancery Court (Wilmington).

To contact the reporter on this story: Sophia Pearson in Wilmington, Delaware, at spearson3@bloomberg.net.

San Diego Home Foreclosures Up in 3rd Quarter – Failure of HAMP

by julie on December 29, 2010

San Diego Real Estate and other Real Estate Nationwide has seen an Increase in Foreclosures - Resulting from the Failure of the HAMP Program as well as Lender Fraud.

According to the report below the banks have “exhaused” their options – more likely they have place insurance policies against the delinquent homeowners, which will result in the lender/servicer getting a bigger paycheck if the house goes to sale rather than modifying the loan. Most lenders/servicers are stringing homeowners out for 8-12 months only to be denied the loan modification right before the foreclosure sale. By this time it is too late for the homeowner to do much else with the property. San Diego foreclosures will continue to increase.

The homeowners have several options:

Short Sale – sell the home
Take legal action – join a Class Action Lawsuit against your lender
Get a Forensic Loan Audit - then determine which course of action is best for you

Our team of experts can help guide you through this program. Call today: (619) 631-4546.

By Dave Clarke WASHINGTON | Wed Dec 29, 2010 4:44pm EST

WASHINGTON (Reuters) – U.S. home foreclosures jumped in the third quarter and banks’ efforts to keep borrowers in their homes dropped as the housing market continues to struggle, U.S. bank regulators said on Wednesday.

The regulators said one reason for the increase in foreclosures is that banks have “exhausted” options for keeping many delinquent borrowers in their homes through programs such as loan modifications. Newly-initiated foreclosures increased to 382,000 in the third quarter, a 31.2 percent jump over the previous quarter and a 3.7 percent rise from the same quarter a year ago, the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS) said in a quarterly mortgage report. The number of foreclosures in process increased to 1.2 million, a 4.5 percent increase from the second quarter and a 10.1 percent increase from a year ago, according to the regulators. They said during a briefing that the numbers could send “mixed signals” about the health of the U.S. housing market.

Regulators also said a possible reason for the foreclosure uptick in the quarter was that a large pool of borrowers who were being considered for home retention programs but did not qualify moved through the system.

”I think you’ll see more stabilization now,” said Bruce Krueger, a mortgage official at the OCC. Foreclosures have become a hot political topic and mortgage servicers have come under fire in recent months amid accusations they did not properly review documents before attempting to take borrowers’ homes.

These concerns prompted the country’s 50 state attorneys general to coordinate an investigation of lenders such as Bank of America, JPMorgan Chase & Co and Ally Financial’s GMAC unit.

Some banks, including BofA, temporarily suspended foreclosure proceedings late in the third quarter to review procedures. Officials from the OCC and OTS declined to say what type of impact this might have on fourth-quarter foreclosure numbers.

BANKS LOOK OUTSIDE HAMP

State attorneys general and regulators have been pushing banks to perform more loan modifications and the report shows these efforts have had mixed results.

Overall home retention actions taken by banks dropped by 17 percent compared to the second quarter, but most of that was due to decreases in the Home Affordable Modification Program (HAMP), the Obama administration’s leading foreclosure prevention effort. In the third quarter, HAMP loan modifications slid by almost 46 percent, according to the report.

Regulators said the drop in HAMP modifications is likely due to a few factors, including that a large pool of borrowers who were being considered for the program turned out not to be eligible once their qualifications were fully reviewed. Treasury launched HAMP to try to find a way to reduce mortgage payments for struggling homeowners who wanted to keep their homes but who were at imminent risk of foreclosure. But it is widely regarded as a flawed program, and the incoming Republican chairman of the House Oversight and Government Reform Committee, Representative Darrell Issa, has called for it to be ended. Regulators pointed out that mortgage servicers are pursuing more modifications outside of HAMP and such efforts increased by 10 percent in the third quarter.

The report, which covers 33 million loans serviced by national banks and federally regulated thrifts, shows that the amount of borrowers making their mortgage payments on time remains steady at 87.4 percent.

The amount of seriously delinquent loans, those 60 days or more past due, dropped 6.4 percent from the second quarter. The amount of loans that were 30 to 59 days past due, however, increased 4.3 percent.

San Diego Homes Worth Less – Nationwide Home Inventory Up

by julie on December 28, 2010

San Diego Home prices continue to fall as a double dip recession is predicted. San Diego Short Sales on the Rise.

Unfortunately 2011 may not look any more promising for San Diego homeowners looking to sell their home. Seeing you equity drop to a point where there is negative equity means that you will need to short sale your home if you are in San Diego, or in other parts of California. For those having to move, or lost their income a San Diego short sale may be a good move for many. It allows the homeowner to get out from the debt, partcularly as home prices continue to fall, and move on with you life.

For those that have discovered that the lender/servicer has not been playing fair purusing legal means may be a good solution. Many homeowners are turning toward a class action lawsuit against their lender to save their home. A forensic loan audit may reveal fraud in your loan. Call (619) 631-4546 today.

By Les Christie, staff writerDecember 28, 2010: 11:24 AM ET

NEW YORK (CNNMoney.com) — Home prices took a shockingly steep plunge on a monthly basis, an indication that the housing market could be on the verge of — if it’s not already in — a double-dip slump.

Prices in 20 key cities fell 1.3% in October from a month earlier, an annualized decline of 15%, according to the S&P/Case-Shiller index released Tuesday. Prices were down 0.8% from 12 months earlier.

Month-over-month prices dropped in all 20 metro areas covered by the index. Six markets reached their lowest levels since the housing bust first began in 2006 and 2007. They were Atlanta, Charlotte, N.C., Miami, Portland, Ore., Seattle and Tampa, Fla.

“The double-dip is almost here,” said David Blitzer, chairman of the Index Committee at Standard & Poor’s. “There is no good news in October’s report. Home prices across the country continue to fall.”

The report was far more dire than anticipated by industry experts, who had forecast an almost flat market in October. It followed weak September numbers.

“It was a bit of a surprise,” said real estate analyst Pat Newport of IHS Global Research. “I wasn’t expecting it to lag so badly in all 20 cities.”

He, along with many other experts, has been forecasting further price erosion over the next few months of 5% to 7%, but didn’t expect the price drop to hit so fast and so hard. It’s mostly attributable to the end of the tax credit for homebuyers, the effects of which started to vanish beginning in June.

“The trends we have seen over the past few months have not changed,” said Blitzer. “The tax incentives are over and the national economy remained lackluster in October, the month covered by these data.”

Sales volume continues to lag, off 25% even from last October, when markets could hardly be described as robust.

Why the housing bulls are wrong

The inventory of homes on the market is up about 50% compared with last year at this time, and there are millions of potential homes for sale waiting on the sideline for markets to improve.

Much of that “shadow inventory” is held as repossessed properties by banks, who will eventually have to release them back on the market.

Most (and least) affordable cities

Prices in Atlanta, down 2.9%, and Detroit, off 2.5%, took a particular beating in October. Las Vegas and Washington came out of the month only slightly bruised, down just 0.2%.

The report ran counter to what have been generally positive signs of economic recovery, according to Richard DeKaser, an independent housing market analyst and founder of Woodley Park Research.

“The market is not showing much improvement after the summer slump,” he said. “Housing is acting as a drag on recovery.”

The coming of the second of the double dip is icing on the cake for homebuyers, who already have benefited from prices not seen in years in most markets.

“Prices have already adjusted, and are probably undervalued in most cities,” said Newport. “This will make them even more undervalued.”

Home price plunge is widespread

Record plunge in foreclosures, thanks to robo-signers

Obama’s mortgage mod plan is still lacking

Bank of America to resume foreclosures

Short Sales in San Diego – No More Deficiency Judgements – SB 931 Passing

by julie on December 22, 2010

For those completing a short sale in San Diego, or a short sale anywhere in California, the passing of SB 931 in the California Senate now bans all lenders from issueing a deficiency judgement against the homeowner after a short sale. This applies to all first liens on upside down homes, but unfortunately it does not apply to second liens that are sold during the short sale process. During a short sale in San Diego, many homes both have first and second loans on them, and both lenders have to take a loss during a short sale to complete the transaction.

Read about the ban on deficiency judgements in California: SB 931.

This is good news for San Diego homeowners looking to short sale their property. San Diego short sales are now less risky for homeowners!

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