Gramm-Leach-Bliley is an Act of Congress that strengthens consumer privacy. Its requirements force lenders to hold borrower personal information as sacred and not share it unnecessarily with other parties. Among the protections it offers consumers of loans and other financial products are:
- Your lender must disclose to your any intent to share your private information with another party
- You have a right to direct your lender not to share your personal information
- A lender may not share account numbers and similar information to other parties for marketing purposes
In addition, your lender must provide you with a written policy of its privacy protection practices annually. This written statement should address the lender’s policy regarding disclosures of personal information with third parties, disclosures of personal information of people who are no longer customers of the institution, and how the lender protects consumer information. Your lender must keep you informed of which types of third parties may gain access to your personal information, the categories of personal information it may share with such parties, and the lender’s policies for protecting your information.
Failure to comply with the Gramm-Leach-Bliley Act could lead to stiff penalties for your lender. A mortgage document review can determine if your lender is in violation of the Act.
In California earlier this year a company calling itself Federal Loan Modification Law Center (FedMod) hit the spotlight after it was learned that they had not been successful in delivering loan modifications to consumers who were paying them thousands of dollars for their services. FedMod is not the only company to succumb to this temptation.
You can call this practice the flip side to predatory lending. It’s predatory loan salvation - only no one’s loans are being saved. It amounts to financial rape.
FedMod had been a mortgage broker helping people get in over their heads in loans they couldn’t afford. Then, when the loan modification trend started, they started billing themselves as loan modification experts. Here’s what the Modesto Bee reported in July this year:
Despite making promises of relief to homeowners desperate to keep their homes, FedMod and other profit-making loan-modification firms often fail to deliver, according to a New York Times investigation based on interviews with scores of former employees and customers, more than 650 complaints filed with the Better Business Bureau and documents filed by the Federal Trade Commission in a lawsuit against the company.
According to the Bee, FedMod failed to deliver one successful loan modification. That’s unacceptable.
In our view, if you want to succeed in getting your clients the loan modifications they deserve, you have to start with solid information on their loans - the good, the bad, and the ugly. A forensic loan audit is designed to uncover lender violations that could lead to a successful loan modification. It’s about time we rid ourselves of predatory lenders and their friends and help people with real services designed to keep them in their homes. A trustworthy company will offer a full money-back guarantee.
As a loan modification attorney, you need to surround yourself with people you can trust. One such person is a knowledgeable and professional loan auditor.
A loan auditor is someone who can perform a thorough and comprehensive analysis of a client’s mortgage documents to ascertain whether or not there are any lender violations with regard to applicable case law. With more than 80% of all mortgages containing some kind of lender violation, the chances are fairly high that any client you have facing foreclosure could benefit from a loan audit and if a lender violation is uncovered it will prove to be a valuable negotiating point for you whether you are headed to litigation or not. In the end, it can mean the difference between saving a homeowner from losing a home and keeping a family sheltered.
That’s why a loan auditor could very well be your best friend. Why not give your best friend a call today?
A forensic loan audit is an essential tool for a loan modification attorney. But not all of them are created equal. You can’t make a decision based on price alone. There are some essential elements to an effective loan audit that you should know before you purchase one. Here’s a short list of things to look for in your next loan audit:
- Your loan auditor should not promise to uncover lender violations; it’s not a guarantee that can be kept.
- A good loan audit is comprehensive and involves a review of every document in your client’s mortgage contract.
- A loan audit should be forensic; that is, scientifically conducted.
- Should be performed by human eyes, not a computer.
- Mortgage documents should be reviewed and compared to all relevant and applicable mortgage case law.
- Your loan audit should be in writing with an analysis indicating problem areas that your client should know about.
In the end, your loan audit should give you a clear indication on how best to proceed with negotiations for better mortgage terms for your client. If it doesn’t do that then you’ve paid too much for the loan audit at any price.
If you received a home loan between 2002 and 2008 then you could be a prime candidate for a loan modification. But before you attempt a loan mod, you should first have your attorney seek a forensic loan audit.
Most loan violations occur in loans that were originated between 2002 and 2008. During that time many lenders issued high interest loans, refinanced loans, and ARMs - adjustable rate mortgages. Those types of loans are the most often problem loans for the homeowners because the borrowers end up not being able to afford them. The banks should never have issued those loans based on the borrowers incomes and ability to pay. That makes them bad loans.
That’s not to say that if you have a loan that originated in those years that you automatically qualify for a loan modification. Your loan is not necessarily bad because it was issued during this time frame. But the fact that your loan originated during that time puts you in a high risk category. If you think you may be headed toward foreclosure or you’ve been getting foreclosure threats from your bank then you should seek assistance from an attorney and request a loan audit. The loan audit will tell you if your lender has violated any applicable law and give your negotiating power in seeking a loan modification.
Chances are, if you live in the U.S., you live in a state with strict laws about predatory lending and mortgage practices. Many states have stricter laws even than the federal government. One such state is Vermont. While borrowers in other states were signing dangerous mortgage documents and putting themselves in a financial hole, Vermont residents were more aware due to the strict mortgage laws in that state.
For instance, in Vermont, mortgage lenders have been required since the 1990s to warn customers when their mortgage rates were high relative to the market. And, this is a big and, mortgage brokers were held responsible if they had a high number of loan defaults. That could be one reason why Vermont has had one of the lowest foreclosure rates in the nation.
Vermont also outlaws prepayment penalties. Period. A lender cannot charge a borrower for paying off the loan early. Now that’s a good law. If other states followed suit and outlawed those penalties then there would be fewer foreclosure rates and homeowner mortgage issues.
In Texas, they’ve outlawed prepayment penalties and balloon payments. Again, laws that are stricter than federal lending guidelines.
What does all this mean to a loan modification attorney? It means that if you live in one of the states with stricter laws than the federal government on lending practices, you’ve got a whole new set of case law to get through. That case law is just as important when conducting your loan document review.
Loan modification attorneys are special people. You help people keep their homes and get them at affordable mortgage rates so that they live within their means. In the worst cases you are up against some tough predatory lenders. And if you have the right tools at your disposal you’ll beat them. Here are some loan modification terms you should know in order to win in court and at the negotiating table:
- Loan Modification - Any change to an existing loan, usually that is favorable toward the borrower.
- Loan Settlement Statement - A document given to a borrower at closing that shows all disbursements being paid to all parties involved in the transaction.
- TILA - Truth In Lending Act. Passed in 1968.
- Regulation Z - A part of TILA. Most often cited for its right to rescission for the borrower.
- HOEPA - Home Ownership And Equity Protection Act. Affords protections to consumers of high interest and high fee loans.
- RESPA - Real Esate Settlement Procedures Act. Protects consumers of loans on HUD homes.
- ARM - Adjustable Rate Mortgage.
- Loan Auditor - An individual who does not represent either party to a loan transaction, but is capable of reviewing loan documents and finding lender violations
- Lender Violation - Any law that a lender has broken intentionally or unintentionally while servicing a loan.
- Mortgage Document Review - An independent review of a homeowner’s mortgage documents and analysis regarding whether any lender violations exist.
- Forensic Loan Audit - A thorough, scientific investigation of a loan to determine whether a lender has violated any federal, state, or local laws in the servicing of the loan.
- Foreclosure Defense - A strategy used to help stop the foreclosure process before the homeowner loses her home.
These are just a few of the terms a loan modification attorney should be familiar with in order to help homeowners keep their homes and save their mortgages. Hope it helps you succeed.
Doug Willis in Pasadena California waxes poetic about loan modification attorneys sticking it banks and predatory lenders. He says one thing that is many homeowners may take out of context or not understand at all. But there is truth in it.
A successful outcome can reduce your mortgage balance to 90% of the appraised value and also secure a market interest rate on the new balance.
He’s talking about a successful outcome on a loan modification attempt. If your client is like most homeowners, he is upside down on his mortgage. His interest rate is through the roof and his monthly payments are so far out of reach that he can’t see the fingers. He may even owe more on the house than it’s worth due to declines in real estate values. Of course, the banks will argue that isn’t their fault.
To be fair, the banks don’t have control over market value, but they can control approving loans for people who can’t afford the terms. And that’s where the loan modification is necessary. The loan audit comes in when you are looking for reasons to start a modification negotiation. Without the loan audit you may not succeed.
Under the Real Estate Settlement Procedures Act (RESPA) Regulation X, a lender is required to provide a borrower a special information booklet not later than three business days after the mortgage application is received or prepared. The booklet may be mailed or delivered in person, but it must be sent during the time frame. There are two exceptions to this rule:
- If a borrower is using a mortgage broker then the mortgage broker must give the booklet to the borrower;
- If the borrower is turned down for a loan during the time frame then the booklet is not required.
The special information booklet contains important consumer information regarding a variety of real estate settlement services. While there is no explicit penalty for failure to provide the booklet, bank regulators have been known to impose fines and penalties for not providing the special information booklet. If your client did not receive the booklet during the time frame then you can register a complaint under RESPA law at
Director, Office of RESPA and Interstate Land Sales
US Department of Housing and Urban Development
Room 9154
451 7th Street, SW
Washington, DC 20410
Learn more about RESPA violations and loan audits from U.S. Lender Audit.
If you are an attorney performing loan modifications then you’ve probably heard this question a few times.
How do you get a fair loan settlement? What do you have to do?
You should know (and you probably do) that there’s not just one thing a homeowner can do to get a fair loan settlement. There are a lot of things he can do and many ways to approach a situation. Every situation, however, is different and calls for a different strategy. As an attorney entering into the loan settlement negotiation role on behalf of homeowners, you’ve got to have more than one weapon at your disposal.
But you want to be sure that one of your weapons is a forensic loan audit. There is probably no tool that a good loan modification attorney can use that will get better results more often. It’s like using a dump truck to poor cement. What else would you use?
Seriously, a loan audit should be your door to the best evidence to use in your client’s favor. A loan document review and audit will uncover which lender violations are the most serious and which ones are the best ones to target for renegotiation. By know that information you can enter loan settlement negotiations from a position of strength.