During the housing boom, mortgage lenders were making loans to people who could never have previously qualified. Now, homeowners and government officials are increasingly taking these institutions to court, alleging unfair and predatory practices. While many of these suits are still working their way through the legal system, some banks have already settled cases, paying out millions of dollars. The Defendants in those cases include the biggest names in the business – from Wells Fargo to Countrywide Financial to Citigroup. Borrowers are looking to the legal system for help in keeping their houses and it certainly appears they are entitled to relief.
Homeowners are seeking help from the judicial system either individually or as part of class action lawsuits. With foreclosures continuing to rise, borrowers are still looking to force banks to modify unaffordable loans or to stop them from foreclosing on their homes. Often, they also seek monetary relief, especially in cases where a home has already been lost due to foreclosure. To be sure, banks have faced unfair lending lawsuits for years and have paid millions of dollars in settlements. But the recent housing boom was fueled by questionable and exotic loans that many borrowers had no hope of repaying.
Some of the cases involve the classic predatory lending schemes, where certain borrowers were given mortgages with high interest rates, while other suits are combating loans that are ultimately unaffordable. In addition, the mortgage industry preyed on a wider group during the housing boom capturing more middle-class borrowers, and these homeowners have more means to hire lawyers. Those in more dire financial straits are turning to lawyers who work for non-profit legal services agencies or to those who are willing to take cases against the banks on a contingency fee basis.
Some borrowers who hire lawyers to defend them against a foreclosure sale are succeed in getting the courts to stop or delay the proceeding, or at least delay until the bank considers whether a loan modification would be more appropriate. There have also been class action suits on behalf of hundreds or thousands of homeowners. In one particular current class action lawsuit, Wells Fargo is being sued because one of the banks Wells Fargo now owns originated payment option adjustable-rate mortgages. This type of loan allows borrowers to make very low monthly payments, and the unpaid interest is then added to the principal. Quite often, those loans wind up in default because the borrower simply can’t make the payments.
The goal of the class action suit is to get Wells Fargo to restructure the borrowers’ mortgages to make them affordable. The suit also seeks damages, particularly for those borrowers who have already lost their homes or paid off their loans. Wells Fargo attempted to get the case dismissed, calling the borrowers’ claims baseless and a mischaracterization of the bank’s long-standing commitment to responsible lending and pricing practices. That dog simply won’t hunt!
Despite the increase, according to the experts, there are not as many lending lawsuits as one might expect, especially considering the subprime mortgage explosion during the housing boom. The reason for this is evident. It’s because these suits are expensive and difficult to win. Cases could take anywhere from months to years to resolve. Also, there are not that many lawyers who specialize in consumer law and who are willing to take on these labor-intensive cases. Therefore, many troubled homeowners simply cannot hire a lawyer to help them. “These are not easy cases,” according to Ira Rheingold, executive director of the National Association of Consumer Advocates. Also, it should be noted that many of the biggest subprime lenders have gone out of business, declared bankruptcy or been put into receivership by the Federal Deposit Insurance Corporation.
We believe lawyers in our firm have an obligation to help folks who have been taken advantage of and cheated in situations like those discussed above. If you have any questions about predatory lending or feel that you might have been a victim of predatory lending, please contact Bill Robertson, a lawyer in our Fraud Section, who handles predatory lending claims. He can be reached at 800-898-2034 or by email at Bill.Robertson@beasleyallen.com.
Contact us today for a free legal consultation with an experienced attorney.
Fields marked *may be required for submission.
If you would like to subscribe to the Jere Beasley Report digital edition, simply visit our Subscriptions page and provide the necessary information or call us at 800-898-2034.
Attorney Advertising - Prior results do not guarantee a similar outcome.