California Mortgage Attorneys Assist you with Mortgage Fraud

For most families, the purchase of a home is an exciting, and memorable experience. Unfortunately, the potential for fraudulent transactions exists during every stage of buying a house. Homeowners are often most vulnerable during the confusing process of obtaining a mortgage loan, referred to as the "origination" process. Mortgage lawsuits accusing mortgage companies of improper finance charges and undisclosed fees are not uncommon.

Mortgage litigation usually focuses on a few important areas of fraud: escrow account improprieties, private mortgage insurance fraud, title insurance, settlement charges, document fees and prepayment penalties.

Escrow accounts are setup by mortgage companies as a way for homeowners to pay for taxes and insurance through monthly withholding by the lender. Homeowners add money to this account, which the mortgage company maintains and uses to pay for taxing authority bills. The account balance is supposed to be reduced during the year (and used to pay taxes and other assessments or property insurance). Often, however, the mortgage servicer fails to reduce the account, and it begins to hold too much of the homeowner's money that he or she does not have access to. This can frequently lead to mortgage servicing litigation.

When a potential homeowner puts down less than 20 percent of the amount financed, private mortgage insurance is often required. When the homeowner has reached 20 percent equity in his or her house, the mortgage company is required to notify the borrower that he is eligible for cancellation of the forced private mortgage insurance. Often, the lender fails to notify the homeowner that he has reached the required equity level, this can lead to mortgage servicing litigation. Additionally lenders frequently require homeowners to use one of the mortgage company's own appraisers to verify the borrower has reached 20 percent equity, which causes the homeowner to pay higher fees. Of course if the homeowner objects to such an arrangement, they are frequently denied any explanation. At that point, the only way to address the situation is to initiate mortgage servicing litigation and battle with the lenders mortgage litigation department or outside counsel.

Controversy can also surround title insurance policies, especially when a homeowner is refinancing a mortgage loan. During refinancing, a homeowner should be issued a reissue rate title insurance policy that is usually half the cost of the original policy. Agents sometimes fail to inform a homeowner of the discount and charge a normal rate in order to increase their sales commission. This can lead to mortgage servicing litigation, which McFarlin & Geurts, LLP would be happy to discuss mortgage servicing litigation with homeowners through our mortgage litigation department.

The markup of third party charges and improper document preparation fees is another area of mortgage litigation and mortgage servicing litigation. Lenders and settlement agents often mark up third party charges such as courier fees, appraisal fees, and credit report fees in an effort to increase profits. Unfortunately, many of these charges are "undisclosed finance charges" to the homeowner at the time of closing. Lenders also frequently charge borrowers for the preparation of loan documents, which is prohibited in many states. Our mortgage litigation department is available to discuss these issues with homeowners.

Consumer's lawsuits have also been filed over excessive prepayment penalties. A few states require a prepayment penalty when refinancing or paying off a loan. The fee varies depending on the mortgage loan amount and state law. Lenders have been accused of charging excessive prepayment fees to unsuspecting borrowers resulting in mortgage servicing litigation.

If you have been the victim of a fraudulent mortgage transaction, it may be important to contact an attorney who can help you protect your legal rights and possibly initiate mortgage servicing litigation. Please keep in mind that there may be time limits within which you must commence suit so contact the mortgage litigation department at McFarlin & Geurts, LLP right away.

Companies that process mortgages payments on behalf of the borrowers, are known colloquially as "mortgage servicers". Frequently, the servicer will be the only party with whom the homeowner has any contact. Abusive servicing can involve a variety of practices, some of which have resulted in huge financial losses for low-income homeowners and mortgage servicing litigation. Recent press reports and mortgage servicing litigation cases have documented widespread misconduct in the industry, including misapplying mortgage payments; charging customers unlawful late fees and charges; prematurely launching foreclosure proceedings against homeowners; and "force placing" high-cost homeowners insurance on borrowers despite receiving evidence that the borrowers already had insurance. This type of conduct has resulted in mortgage servicing litigation around the country by both private law firms, such as McFarlin & Geurts, LLP as well as the mortgage litigation department within various states attorneys general departments.