WAYS TO
STOP FORECLOSURE THAT ONLY A LEGAL PROFESSIONAL IS QUALIFIED TO FIND
ILLEGAL SECURITIZATION
Under US laws,
securitization is illegal, primarily because it’s fraudulent and causes
specific violations of RICO, usury, and antitrust laws.
RACKETEERING AND CORRUPT ORGANIZATIONS ACT
(RICO)
A borrower may successfully plead a RICO
claim in a yield spread premium case. The elements of a RICO claim are
satisfied where the payment of the premium was not disclosed and the cost of
the premium is passed on to the borrower in the form of a higher interest rate;
and the broker represented that it would provide the lowest available rate.
APPRAISAL FRAUD
Many appraisers inflate the value of a
property to help a lender justify a predatory loan. Sometimes the appraiser
does this to please particular lenders to obtain repeat business from those
lenders; other times appraisers may be colluding with lenders and receiving
kickbacks for fraudulent appraisals. Remedies for appraisal fraud can include
actual damages, punitive damages, and attorney fees.
NOTARY FRAUD
Quite often the Notary’s Commission is
invalid, or they notarized documents without observing/witnessing the borrower
sign documents. This invalidates all documents and can lead to beneficial
concessions from the lender, and possible punitive damages.
FAILURE TO ESTABLISH CONDITIONS PRECEDENT
Want to get a foreclosure action thrown
out of court right away? Use this defense that attacks the lender’s
pre-foreclosure processes.
REAL PARTY IN INTEREST
This is a procedural defense to
foreclosure that can be extremely effective at stopping the lender’s ability to
foreclose. It essentially questions the ownership of the mortgage and questions
whether the foreclosing party is, in fact, the holder of the mortgage and note.
UNCONSCIONABILITY
This defense is focused on the events
surrounding the creation and closing of the mortgage loan. A violation here
gives the court great leeway in deciding whether the mortgage should be voided
or changed.
FAILURE TO STATE A CLAIM
This general defense attacks the
lender’s ability to foreclose and can be used in conjunction with one of the
other foreclosure defenses.
BREACH OF CONTRACT
Just as you have an obligation to pay
the mortgage, the lender has a responsibility not to interfere with your
ability to do so – like force placing insurance making the payments
substantially more expensive than they should have been. In addition, lenders
who quietly reward brokers for brining borrowers to them—and subsequently
passing on the cost of that reward to the borrower—may share liability for the
broker’s breach of fiduciary duty.
FHA PRE-FORECLOSURE REQUIREMENTS
FHA requires every lender to mail a
booklet called “How to Avoid Foreclosure” and set up a face-to-face meeting
with the borrower before foreclosing (in most cases). If the lender does not
take these steps, then it cannot foreclose.
UNFAIR AND DECEPTIVE PRACTICES
Over reaching mortgage transactions can
often be challenged under state unfair and deceptive acts and practices (UDAP)
law. Broker misconduct and yield spread premium, at least without disclosure,
may violate a UDAP statute. There may be licensing violations. Transactions
with lenders and/or brokers who are not licensed, but should be, may be void.
It may be a UDAP violation for a lender to do business with an unlicensed
broker. Most UDAP statutes provide for some combination of actual damages,
statutory damages, multiple damages, attorney fees and costs, and some states,
punitive damages.
EQUAL CREDIT OPPORTUNITY ACT (ECOA)
Bait-and-switch tactics can state a
claim under the ECOA. ECOA provides private remedies for actual and punitive
damages, equitable relief, and attorney fees.
TRUTH
IN LENDING ACT (TILA)
As part of every loan transaction, the
bank must provide the homeowner correct disclosures at or before the time of
closing, like the amount of the finance charge and APR. If these disclosures
are inaccurate, the loan may be statutorily rescindable under TILA. The lender
must also provide a “Notice of the Right to Rescind.” This is a specific notice
that must be provided to refinance customers at closing. If this form is
inaccurate or incorrect, the loan is rescindable up to three years after the
date of closing. Rescission means the loan is canceled and all money paid to
the lender is refunded. Moreover, if you purchased the property or used the proceeds
to refinance and proper disclosures were not given, then you may also be
entitled to money damages to offset the foreclosure.
REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA)
This federal law governs many types of
disclosures that lenders must provide at the time of closing, in addition to
prohibiting things like kickbacks and unearned fees. It enables damages, and
sometimes rescission if the error triggers TILA.
HOME OWNERSHIP AND EQUITY PROTECTION ACT
(HOEPA)
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