Negative amortization happens anytime you make a payment towards a loan for an amount that is less than the amount of interest that accrued to the balance of your mortgage during that same timeframe.  If a certain amount of interest adds to the balance each month and your payment is less than the amount of interest charged, the outstanding principal balance of your mortgage loan will increase.

If you continue to make payments that do not cover the interest charges each month,  you will end up owing much more than you expected.  To fix a negative amortization problem after a more extended period of low payments, you will need to start making more substantial payments towards the balance owed.  If you do not fix a negative amortization loan, sooner or later, it may result in your home value to decline to less than what you owe your lender – a situation which is known as negative equity also referred to as being underwater.  Homes that are underwater are harder to sell as they have to go through a short sale, if not, the proceeds from the sale will not be enough to pay off the mortgage.

All banks and lending institutions will base your qualification and the terms of your loan on the risk they take of being repaid.  The risk factors a lender takes into account include but are not limited to your credit, income, assets, and liabilities.

Risk-based pricing becomes predatory when a lender charges even more than they should to those already in the high-risk category.  This higher than needed interest rate makes the recipient of the loan even more likely to default.  Once defaulted, the lender then sues through foreclosure and if successful, will take the property back.  The borrower not only loses their home but along with it, their down payment that was used to purchase the house in the first place.

A Balloon Mortgage in and of itself is not a predatory lending violation. However, there are several violations associated with how brokers or lenders disclose the Balloon payment that comes at the end of a mortgage.  Balloon payments are often used to make the regular mortgage payments more affordable.

If you were told to refinance your existing loan into a loan with lower monthly payments and a balloon payment due at the end, this advice might have been predatory in nature.  If you are not able to pay the Balloon amount when it is due, you will risk losing your home to foreclosure.  Alternatively, if you are not able to pay the balloon amount, your broker or lender may suggest that you should refinance your loan yet again, often with a higher interest loan in which you’ll have to pay more and pay commissions, closing costs, and fees all over again.

A Prepayment Penalty is an additional charge imposed by your lender when you pay off your loan balance before the maturity date.  Prepayment Penalties are often included in subprime mortgage loan agreements, so when you try to pay off or refinance out of your high rate mortgage, you will have to pay extra in hopes that it will deter you from paying off the loan so your lender can continue to charge you interest.

If the Truth in Lending Act (TILA) disclosure states that there is a prepayment penalty associated with your loan you should be sure to know all the details involving your prepayment as some lenders levy excessive prepayment penalties that are unwarranted.

If at the time of your closing, if you were made to pay extra or exceissive fees or other costs that were higher than usual such as appraisal costs, home inspection fees, title fees, loan origination fees, document preparation fees, or other junk closing fees that seemed excessive or were written in fine print hoping to go unnoticed.

Loan packing is the act in which either a mortgage broker or lender will add additional products or services to the mortgage loan that are not necessary.  The most common type of Loan Packing is for credit insurance.  Credit insurance is not needed, especially if the borrower already has sufficient life insurance coverage.  Many borrowers were forced to purchase additional insurance coverage after being convinced their loan application would be denied without it.

If you have lower income but own substantial assets, many lenders will give you a mortgage loan using your assets as collateral.   An Asset-Based loan may be a predatory as they are often set up in the first place for the borrower to fail.

The ability to pay the loan each month should be the basis on which the bank issues a loan.  If you are unable to pay your mortgage based on your income but are approved for the loan anyway, you are almost sure to default.  Once you default, you not only are subject to losing your home in foreclosure but also, any assets you pledged as collateral are now subject to seizure in the case your home sells at auction for less than what is owed to the bank.

Similar to Asset-Based lending, Equity Stripping occurs when a lender issues a loan based on an amount of equity in your property – regardless of your ability to pay off the mortgage loan.  Equity Stripping is typically predatory when a new lender pays off an existing loan on a property that is facing foreclosure.  They’ll issue a new loan based solely on the amount of equity in the home which does not determine your ability to repay the loan.

Often, these loans are set up to fail, and once you default on your payments again, your new lender will start foreclosure proceedings to take your home away, along with your equity.

Equity stripping can also occur if you are convinced to refinance multiple times, incurring new fees on each occasion, further depreciating the amount of equity in your home.

Loan Flipping or Loan Churning occurs when a lender or broker makes it seem as if it’s in your best interest to refinance your current loan into a new one that, in reality, is a more costly than was your existing mortgage.  Each time you replace your current mortgage loan with a new one, you are paying additional costs in the form of another commission for the broker and the other closing costs.

.In order to understand what “Reverse Redlining” is, it is helpful first to understand what “Redlining” is.

Redlining is where lenders typically deny credit based on factors unrelated to an individual such as the demographics of their location.  This is generally done based on the average household income for an area, or an area’s race or ethnicity.  Areas that don’t fit the lender’s criteria were drawn on a map in a red circle to ensure they didn’t originate loans within the redlined communities.

Reverse Redlining occurs when lenders do originate loans in the red districts.  This seems like it would be a good thing; however, most lenders that do extend credit within those redlined areas do so at extremely unfair terms to the borrowers – even if the borrowers are well qualified.  Essentially, all members of the redlined regions are unfairly charged higher rates on their loans without taking into account individually each borrowers credit profile, their income, or their ability to actually pay their mortgage.

When a Bank wants to foreclose against your property, they are obligated to file certain notarized affidavits with the court, proving the legitimacy of their foreclosure action.  Your current mortgage bank needs to certify both that:

1. They do in fact own your mortgage, and
2. As per your mortgage agreement, that you are in default to the point that they have the right to foreclose.

Since mortgages are traded by banks and other financial institutions, many banks did not have the proper mortgage assignment documents needed to attest to their ownership of their mortgage loans accurately.  If your bank doesn’t have the appropriate assignment documents, they don’t have the right to foreclose against you – it’s that simple.  Rather than take the time to track down the chain of assignment, the banks fraudulently completed these court affidavits in order to proceed with their foreclosure efforts.  Since the documents weren’t being properly reviewed, but instead, were just being falsified by the banks in as little as 30 seconds per file – a speed not humanly possible if done correctly – the falsification of millions of affidavits came to be known as the “Robo-Signing” scandal.  In addition to falsifying foreclosure affidavits, other documents, such as mortgage assignments, were also forged.  Major banks like GMAC, JP Morgan Chase, Bank of America, and Wells Fargo, were all involved in the scandal.

If your bank fraudulently completed your mortgage assignment, or, if your assignment documents are otherwise invalid – it voids the transfer.   If the assignment is invalid, in order for your bank to foreclose, they must first obtain the valid documentation from the previous owner/holder of the mortgage.  In some instances, the former holder may no longer be in business or may have filed bankruptcy, therefore making it impossible for them to sign off on the transfer.  If that’s the case, your current mortgage holder will have no right to foreclose against you.  In these situations, filing a “Quiet Title Lawsuit” may help to cancel your obligation to pay your mortgage loan.  In order to file a Quiet Title Lawsuit, in addition to the fraudulent or invalid assignment, there must be additional claims raised against your bank that are factual and provable, not solely the invalid or fraudulent assignment alone.

It is important to note that the Robo-singing of foreclosure affidavits may not solely qualify you to have your loan dismissed – here’s why…

Typically, Robo-signing fraud relates to the transfer of your mortgage or promissory note, NOT the origination of either of those documents when you signed them at your closing.  If your original note and mortgage were valid to begin with, robo-signing fraud might invalidate the transfer of the note and mortgage, but the loan and mortgage themselves may still be legitimate (whoever has the right to collect is a different story).  If your original loan or mortgage documentation were fraudulently completed or your promissory mortgage note no longer exists, along with your testimony, we can prove it, and your mortgage and loan will be invalidated, relieving you of your obligation to pay!

If you think your original lender fraudulently completed documents are your closing, or if your current mortgage note holder fraudulently robo-signed documents or provided invalid documents just to take you into foreclosure, we can help stop the foreclosure!  Your bank or current lender is not able to foreclose on your home legally without the proper foreclosure documents. Without the knowledge of the Robo-Signing scandal, thousands of people have lost their homes as innocent victims.  Don’t let that happen to you!  Even though Robo-Signing victims are less frequent these days, if your foreclosure affidavits, mortgage assignment, or other documents were fraudulently completed, we can help!  We can use the fraud as a bargaining tool to help you modify your loan to more affordable payment terms, or, can even contest your foreclosure action to have it halted or dismissed!  Contact one of our Foreclosure Defense Attorneys today to help Avoid Foreclosure or Invalidate your Mortgage Loan!  The consultation is free, so you have nothing to lose.  Call now!

When you signed your mortgage or refinance paperwork, you should have signed both the “promissory note” (referred to as the “note“) and a “Deed of Trust” known more commonly as a “Mortgage.”  These two terms are often confused for one another as they do relate to each other as a mortgage doesn’t exist without the note. The “note” is the agreement between you and your lender for you to repay the amount they lent you.  It states the amount lent, the payments, interest rates, etc.  A “mortgage” or “deed of trust,” is the agreement between you and your promissory note lender, allowing them to sell your property (through foreclosure) if you do not pay the note as agreed upon, to satisfy the full amount owed to them under the note.  Your mortgage is recorded in the county where your property is located; the promissory note is not.

Banks and other financial institutions can buy and sell loans secured by mortgages to and from each other.  If your mortgage has been sold or assigned to another bank, an “assignment” is filed to record the transfer of the mortgage.  When the note is transferred from a bank to another bank or institution, it is simply “endorsed” by the new owner.  Some notes are endorsed blank, allowing anyone that holds it to enforce it.  Since banks buy and sell mortgages often, your note may have changed hands numerous times making it hard to trace it down.  If the current lender doesn’t have the note, they have no right to foreclosure or even collect from you. 

If you are not yet in foreclosure, “Produce the Note” can work to your advantage as you may not have to pay back your promissory note.  If you are newly in foreclosure, the Produce the Note Defense doesn’t work as well as it did a couple of years ago, since more recently, banks are less likely to foreclose if they do not have your note to in the first place.  If you have been in, foreclosure for a while, the Produce the Note defense may still work well.  However, don’t get too excited yet as the bank can file a “Lost Note Affidavit” if they claim the original promissory note was lost, destroyed, or unavailable.  Many courts have ruled in favor of the banks, noting the Lost Note Affidavit is proof enough of the banks claim, and allow the foreclosure action to continue.  To see if we can help determine if your current mortgage loan bank or servicer has your note, call today for a free consultation.