Feds still targeting deceptive mortgage ads

Effective August 19, 2011 a federal truth-in-lending law strengthens bans against deceptive advertising from mortgage lenders, brokers, and servicers; real estate agents and brokers; advertising agencies; home builders; lead generators; rate aggregators; even on- and off-line publications.

by Broderick Perkins
© 2011 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime



Deadline Newsroom - A new federal rule targets mortgage advertisers who attempt to pull the wool over consumers' eyes when they shop for a home loan.

Effective August 19, 2011 a federal truth-in-lending law strengthens bans against deceptive advertising offered by mortgage lenders, brokers, and servicers; real estate agents and brokers; advertising agencies; home builders; lead generators; rate aggregators; and others, including on- and off-line publications.

The Federal Trade Commission (FTC) rule does not cover banks, thrifts, federal credit unions, and other entities not regulated by the FTC.

For years, the FTC has been at war with outfits using deceptive mortgage advertisements.

As recently as June this year, the agency sent hundreds of advertisers and media outlets warning letters that some mortgage ads are either potentially deceptive or in violation of the Truth in Lending Act.

The massive missive mailing came following a nationwide review of claims for low monthly mortgage payments or low, low interest rates, without adequate disclosure of other important loan terms.

Some ads claimed rates as low as 1 percent, but failed to disclose adequately:

• That the stated rate was a "payment rate," not the interest rate.

• That the payment rate applied only during the loan's brief initial period.

• The loan’s Annual Percentage Rate (APR), the uniform measure of the cost of credit that enables consumers to shop for and compare mortgage offerings.

The fraudulent behavior is not unlike actions used to push toxic mortgages that became the scourge of the economy and helped plunge the nation into recession, the effects of which are still felt today.

Since 1995, the FTC has busted dozens of mortgage operations for a host of infractions, including:

• Claims for loans with specified terms, when no loans with those terms were available from the advertiser.

• Misrepresentations that rates were fixed for the full term of the loan.

• Misrepresentations about, or failure to adequately disclose, the existence of a prepayment penalty or large balloon payment due at the end of the loan.

• Claims of mortgage payment amounts that failed to include loan fees and closing costs of the kind typically included in loan amounts,

• Failure to disclose adequately that the advertiser, not the consumer’s current lender, was offering the mortgage.

• False or misleading claims that consumers were "pre-approved" for mortgage loans.

The new rules list 19 examples of prohibited deceptive claims including misrepresentations about:

• The existence, nature, or amount of fees or costs to the consumer associated with the mortgage and other products sold in conjunction with the mortgage, including credit insurance and credit disability insurance.

• The terms, amounts, payments, or other requirements relating to taxes or insurance associated with the mortgage.

• The variability of interest, payments, or other terms of the mortgage.

• The type of mortgage offered.

• The source of an advertisement or other commercial communication.

• The consumer's ability or likelihood of obtaining a refinancing or modification of a mortgage or any of its terms.

New rules also address misrepresentations involving pre-payment penalties; interest rate and payment comparisons; affiliation with government agencies and a consumers likelihood or ability to obtain a home loan.

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MARS shines on short selling homeowners

Homeowners facing foreclosure could enjoy greater access to short sales and less confusion about the foreclosure alternative, thanks to new federal regulatory relief for real estate brokers and agents.



by Broderick Perkins
© 2011 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Homeowners facing foreclosure could enjoy greater access to short sales and less confusion about the foreclosure alternative, thanks to new federal regulatory relief for real estate brokers and agents.

The Federal Trade Commission (FTC), on July 15, announced it will immediately stop enforcing most of the provisions of the "MARS" rule against real estate professionals representing homeowners in short sales.

A short sale occurs when the bank allows the sale of a home for less than the existing mortgage balance, provided the seller finds a qualified buyer. Such homes are often held by homeowners struggling with "underwater" mortgages -- mortgages with balances larger than the value of the home.

MARS, the federal "Mortgage Assistance Relief Services" rule, protects homeowners from fraud by forcing mortgage assistance relief services to disclose information about their services. It also mandates certain business practices.

The FTC ordered the stay of enforcement because real estate brokerages' distinctive relationship with homeowners selling short conflicts with many of MARS disclosure requirements.

The full story is here: "MARS Shines on Short Selling Homeowners"

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Under the DeadlineNews Group umbrella:

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
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ACORN shellacking just plain nuts

Known for results-oriented, boots-on-the ground, in-your-face, confrontational indignation that brought the Ameriquest and Household International subprime predators to their knees -- before "subprime" was a household word -- ACORN would be in our corner right now, if it still existed.

by Broderick Perkins
© 2011 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Largely unfounded and often rabid charges that smacked of McCarthyism, led to the demise of one of the nation's staunchest supporters of community development and fair housing.

Given the banking industry's continued betrayal of its customer base and persistent collusion with the still largely self-regulated financial industry, we could really use a champion like the Association of Community Organizations for Reform Now (ACORN), now.

You can bet if ACORN was alive today, it would be dug in at the corporate headquarters of the nation's largest banks for shoving homeowners over the cliff and then tossing boulders after them to keep them down.

ACORN would have sent troops to Wall Street to face off against financial giants and greedy speculators who made billions feeding on the hopes and American Dreams of homeowners.

Known for results-oriented, boots-on-the ground, in-your-face, confrontational indignation that brought the Ameriquest and Household International subprime predators to their knees -- before "subprime" was a household word -- ACORN would be in our corner right now.

Phoenix not rising

Instead, the now bankrupt ACORN finds no vindication in the release last week of the U.S. Government Accountability Office report "ACORN: Federal Funding and Monitoring". Like other studies the GAO report reveals there was little to substantiate the vast majority of charges that drove ACORN into the ground.

ACORN's admitted infractions and isolated failures were small potatoes compared to surreptitious "Inside Job" infractions conducted by an unbridled financial infrastructure of perpetuators responsible for spawning the worst recession since the Great Depression.

Charges against ACORN, related to voter registration fraud, voting fraud and federal funding violations, among others, began largely after ACORN spearheaded many efforts to register voters for the historic 2008 presidential election which catapulted Barack Obama into the role of the nation's first African American president.

At the time, the operation was also grappling with an internal $1 million embezzlement case it admittedly handled poorly.

During investigations into these matters, a new scandal surfaced when "hidden camera" videos purportedly revealed ACORN volunteers and employees offering tax advice on a proposed prostitution business.

ACORN blames "Republicans" and "conservative activists" for leading the charge to strip federal funding from what was perhaps the nation's largest grassroots community organization of low- and moderate-income people, often African-Americans.

At its height, ACORN boasted nearly a half million member families organized into more than 1,200 neighborhood chapters in about 75 cities across the nation. For 40 years, ACORN broke down barriers of discrimination and prejudice..

The controversy, stemming from nearly 50 federal state and local investigations, cost ACORN and its affiliates federal funding (more than $50 million from 2005 through 2009) and cast a shadow over its private fund-raising efforts.

Beating the charges

ACORN was first cleared of wrong doing in 2009, by the Congressional Research Service in an investigation requested by the U.S. House of Representatives Financial Service Committee.

The report "CRS: Association of Community Organizations for Reform Now (ACORN) " not only exonerated ACORN, but also questioned the constitutionality of the legislation used to withdraw ACORN's funding. Without due process, legislation that inflicts "attainder," a type of punishment, could be considered unconstitutional, the report said.

The CRS report also questioned the impunity of those performing "evidence-gathering" dirty-tricks in hidden-camera stings used to bring additional charges.

At about the same time, U.S. District Judge Nina Gershon likewise argued Congress violated the Constitution by illegally targeting the group and attempted to block U.S. officials from enforcing the funding ban.

Months later, in March 2010, she upheld that order saying it was "unmistakable that Congress determined ACORN's guilt before defunding it." She also said Congress damaged ACORN's reputation and its ability to raise funds in the process. Not only were federal funds cut, but major contributors, the Ford and Mott Foundations, cut off funding to ACORN.

The Second U.S. Circuit Court of Appeals later disagreed with the Gershon ruling, forcing ACORN to take its federal funding case to the Supreme Court.

Meanwhile, by March, 2010, both Brooklyn, NY prosecutors and an independent investigation by the California Attorney General's Office cleared ACORN of criminal wrong doing over the hidden camera videos, after determining the videos were heavily edited, manipulated and distorted to meet then tricksters' agenda.

Except for millions of dollars in lost federal funding and ACORN's demise, little proof of wrong doing has come from the dozens of investigations.

John Atlas' "Seeds of Change, The Story of ACORN, America's Most Controversial Anti-Poverty Community Organizing Group" (Vanderbilt University Press, $27.95) documents ACORN's rise and untimely fall.

Final chapter

The final ironic ACORN chapter is the latest exoneration by the GAO. The report says:

• Of 22 investigations of alleged election and voter registration fraud, most were closed without prosecution.

• One of eight investigations of alleged voter registration fraud resulted in guilty pleas and seven were closed without action due to lack of evidence.

• The Federal Election Commission (FEC) reported five closed matters – one resolved, one dismissed and the others dropped after FEC "found no reason to believe the violations occurred."

In March, this year, in one of the ACORN website's final blog entries by outgoing CEO Bertha Lewis "Vindication Doesn't Pay The Bills", Lewis writes:

"ACORN has faced a series of well-orchestrated, relentless, well-funded right wing attacks that are unprecedented since the McCarthy era. Our effective work empowering African American and low-income voters made us a target. The videos were a manufactured, sensational story that led to rush to judgment and an unconstitutional act by Congress. For ACORN as a national organization, our vindication on the facts doesn't necessarily pay the bills. I know that ACORN's dedicated community members will continue to speak out for justice and organize in their communities."

We can only hope.

Post mortem: On June 20, 2011, the U.S. Supreme Court refused, without comment, to review Acorn v. U.S., the advocacy group's attempt to revive its lawsuit claiming that Congress had acted unconstitutionally when it denied ACORN federal funds.

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

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Californians, ethnic minorities hit hardest by foreclosure rescue scams

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Nearly one-in-four complaints from foreclosure scam victims come from Californians and virtually half of all complaints nationwide were from homeowners who voluntarily identified themselves as African-American, Hispanic, or Asian.

by Broderick Perkins
© 2011 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - If you live in California and find yourself facing foreclosure, chances are greater than in any other state, you'll be the victim of foreclosure rescue fraud.

Nearly one-in-four complaints from foreclosure scam victims come from Californians, according to the Homeownership Preservation Foundation (HPF).

HPF is a U.S. Department of Housing and Urban Development (HUD)-certified, independent, national non-profit dedicated to helping distressed homeowners avoid mortgage foreclosure.

Since February of last year, HPF found that 22 percent of complaints about foreclosure fraud came from California, followed by Florida, with 7 percent of the calls, Texas and New York, both with 5 percent, and Georgia with 4 percent.

While California's reported fraudulent activity was significantly higher than other states, only one city from the Golden State, Los Angeles, ranked in the top five, indicating foreclosure scams can hit anywhere and aren't concentrated in any one area.

"Although California was among the states most hard hit by the housing crisis, the reported foreclosure rescue scam activity seems disproportionately higher than we would have expected," said Colleen Hernandez, HPF's CEO.

Hernandez said other than Los Angeles, there isn't a concentrated scam area in California, but virtually half of the complaints were from homeowners who voluntarily identified themselves as African-American, Hispanic, or Asian.

"Repeated studies have shown that minorities were disproportionately targeted for predatory lending during the housing boom, and we have compelling evidence indicating that minorities are bearing the brunt of an unusually high percentage of mortgage scams," said Hernandez said.

Effective Jan. 31, 2011 the Federal Trade Commission's (FTC) "Mortgage Assistance Relief Services (MARS) Rule," went into effect to protect consumers from being taken by all kinds of foreclosure rescue services, including negotiating a mortgage modification, short sale or deed-in-lieu of foreclosure and intervening in a foreclosure or repossession; a forbearance or repayment plan; an extension of time to cure default, reinstate a loan, or redeem a property; a waiver of an acceleration clause or balloon payment and other related services.

HPF says consumers facing foreclosure and looking for help should know the law bans service providers, including real estate agents offering the services, from collecting fees until a home owner agrees with a finalized, written foreclosure or modification plan approved by their lender or loan servicer.

MARS allows licensed attorneys to charge advance fees, provided the fees are held in an escrow (trust) account and provided the attorney complies with state laws and regulations related to the federal rule.

In addition to not paying money up front, consumers should expect a host of disclosures required by the law, including disclosures:

• Of the proposed cost of the service.

• Telling consumers they have a right to reject any offer from the service or the lender without charge and can stop doing business with the service company at any time.

• Stating the service is not affiliated or associated with nor approved by any government entity.

• Revealing the lender can reject any change to the home owner's loan.

• Explaining the home owner could lose their home and damage their credit rating if they follow a service's advice to stop paying their mortgage.

Despite the new rule, HPF said numerous companies and individuals flagrantly violate the rule, asking for an average upfront fee of more than $2,500 to modify a mortgage. In virtually all instances, either no mortgage reduction was achieved or no work was actually performed, according to HPF.

Hernandez says companies illegally demanding upfront fees to renegotiate mortgages are often run by individuals who were responsible for facilitating highly dubious mortgage loans during the housing bubble.

"They profited on the front end and now they are seeking to cash in on the back end," she said.

Also exacerbating the problem, reductions in federal housing counseling funds have reduced the availability of previously limited free counseling services. That's likely to lead to a surge in mortgage scams as consumers scramble for help.

"Being scammed out of thousands of dollars is often a knockout punch for already distressed homeowners. Reducing funding for counseling would be tantamount to giving foreclosure rescue scam artists a major subsidy as they will be able to operate virtually unfettered," Hernandez.

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Under the DeadlineNews Group umbrella:

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
• National Real Estate Examiner
• National Consumer News Examiner
• National Offbeat News Examiner

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'Flopping' works other side of the 'flipping' street

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Following in the footsteps of foreclosure rescue scams and mortgage modification schemes, flopping is one of the latest scourges of the housing market.

by Broderick Perkins
© 2010 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom -

Real estate investors who legally cash in on rising home values by buying and quickly reselling, or "flipping" properties shouldn't be confused with an offshoot band of "floppers" working the other side of the street.

Honest flipping profits from a true increase in property value. Conversely, flopping illegally profits from a false decrease in property value.

Following in the footsteps of foreclosure rescue scams and mortgage modification schemes, flopping is one of the latest scourges of the housing market.

Flopping takes aim at the short sale sector of distressed housing.

Get the full story here: "Fraudulent ‘Flopping’ Takes Cue from Legal ‘Flipping’ "

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Under the DeadlineNews Group umbrella:

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
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• National Offbeat News Examiner

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Federal consumer watchdog digging into mortgage disclosures

Your new consumer watchdog agency is asking you, consumers, and mortgage professionals to participate in getting this right. This is a sterling example of social networking at its finest. The agency wants you to take a look at two new mortgage disclosure forms and provide feedback, telling the government exactly what you think. They need all the help they can get.  DVD to the right explains, in vivid detail, why the sky fell and why CFPB was necessary. 

by Broderick Perkins
© 2010 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Chronic confusion about home loans has prompted a new federal consumer agency to attempt what has been impossible -- create mortgage disclosures that clearly explain the true cost of borrowing.

The new Consumer Financial Protection Bureau (CFPB) recently released two draft mortgage disclosure forms designed to take some of the hair pulling and teeth gnashing out of learning what your mortgage really costs.

The consumer watchdog agency is asking you, consumers, and mortgage professionals to participate in getting it right. This is a sterling example of social networking at its finest. The agency wants you to take a look at the two forms and provide feedback, telling the government exactly what you think.

"Know Before You Owe," is an example of the new consumer watchdog's effort to put true clarity in "transparency" when it comes to financial disclosure forms.




Mortgage disclosures are a top priority for many reasons.

• Buying a home is the most expensive acquisition or investment most consumers will ever undertake. A home is often a consumer's or family's most valuable asset. You have a right to know what your home truly will cost.

• Ignorance, due to poor disclosures (in addition to outright deception, as well as consumers' own lack of due diligence) gets some of the blame for housing's crash and the worst recession since the Great Depression.

• Consumers have been complaining about mortgage disclosures and the difficulty they have understanding a home loan contract for eons.

"Most consumers have a tough time wading through all the fine print typically found on mortgage documents and other financial disclosure forms," said Norma Garcia, senior staff attorney for Consumers Union, the nonprofit publisher of Consumer Reports.

Among other elements, CFPB's forms include a clear statement, explaining that the borrower is under no obligation to choose a loan product. That helps take away undue influence which has been common in the mortgage lending process.
"This statement will help encourage consumers to shop and compare products, which will have the added benefit of increasing competition among lenders for borrowers' business," Garcia said.

Chronic confusion

A litany of studies reveal just how little consumers know about mortgages.

• Five years ago, just about the time the nation discovered Chicken Little wasn't crying "Wolf!" the AFL-CIO and BankRate.com issued studies that revealed mortgage consumers were confused, concerned and craving more regulatory protection.

The AFL-CIO found 73 percent of adjustable rate mortgage (ARM) holders, didn't have a clue how much their monthly mortgage payment will increase or decrease the next time their rate adjusts. Nearly half, 49 percent, said they weren't very informed about their mortgage's terms and conditions. One in five did not know their current interest rate.

Bankrate.com found more than one in three homeowners didn't even know what kind of mortgage they had, a fixed-rate mortgage (FRM) or an ARM.

• A November 2010, Consumer Reports national poll found that 76 percent of respondents wanted the CFPB to make clearer mortgage and financial disclosures a priority. The majority, 84 percent who had applied for or received a loan or credit card in the past 12 months indicated difficulty with financial disclosures; 31 percent described the disclosures as not clear or easy to understand.

• Early this year a MortgageMatch survey noted the mortgage application process was so excruciating, 21 percent said the ordeal was more stressful than waiting to hear if they got a job. Technical jargon was too much for 21.6 percent of those surveyed and 20.7 percent said it was a challenge to find a lender who was easy to work with. More than 32 percent of survey respondents ranked the application process more challenging than getting the mortgage itself (23 percent) or negotiating the sale price on the home (25.3 percent).

• Finally (but probably not), this month, after years of attempts to overhaul the mortgage industry, not only isn't greater transparency inducing consumers to shop around for mortgages, Zillow Mortgage Marketplace found many home buyers are still miserably in the dark about mortgages.

The Zillow-surveyed group was wrong 46 percent of the time when asking basic questions about mortgage information. More than half, 57 percent of prospective home buyers did not understand how ARMs work. Nearly half, 45 percent, believed they should always buy mortgage discount points. More than one third, 34 percent, did not understand that lender fees vary by lender and are negotiable.

"The draft mortgage disclosure forms prepared by the CFPB will help borrowers compare loans more easily and help eliminate surprises at closing and during the life of the loan. But it's important to remember that consumers need strong protections against shady mortgage practices not just improved disclosure," she added.

For sure.


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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Under the DeadlineNews Group umbrella:

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
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• National Offbeat News Examiner

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MARS' loan modification protections extend to short sales, other foreclosure relief

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MARS news has been focused largely on the cottage industry of private companies offering modification services to consumers, but the rule impacts all mortgage assistance relief services including those offering short sale services and other assistance.

by Broderick Perkins
© 2010 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Rules protecting consumers from being taken by modification services also extend to short sale services and other forms of mortgage assistance, including some assistance offered by real estate agents.


Effective Jan. 31, 2011 modification assistance firms have been banned from collecting fees until a home owner agrees with a written foreclosure or modification plan approved by their lender or loan servicer.

The ban and other related disclosure and regulatory provisions are part of the Federal Trade Commission's (FTC) "Mortgage Assistance Relief Services (MARS) Rule", designed to curb fraud, scams and rip-offs in the distressed mortgage services industry.

While MARS news has been focused largely on the cottage industry of private companies offering modification services to consumers, the rule impacts all mortgage assistance relief services including those offering short sale services and other assistance.

Some real estate agents must comply

Laurie Janik, National Association of Realtors' general counsel, recently reviewed the new rule at a forum during the Realtors 2011 Midyear Legislative Meetings & Trade Expo in Washington, D.C. and put on notice, real estate agents who provide short sale services, according to a recent DSNews report.

"As the leading advocate for homeownership, NAR supports efforts to ensure that mortgage assistance relief services truly benefit consumers. Nevertheless, NAR has some concerns about the rule and its application to real estate professionals involved in short sales transactions," Janik told DSNews.

But it's not just short sales. The official Federal Register Vol. 75, No. 230 rendition of the rule is pretty clear, as federal regulations go.

"The Rule is intended to regulate for-profit providers of mortgage assistance relief services...defined as 'any service, plan, or program, offered or provided to the consumer in exchange for consideration, that is represented, expressly or by implication, to assist or attempt to assist the consumer' in negotiating a modification of a dwelling loan…stopping, preventing, or postponing a foreclosure or repossession; or obtaining one of several other types of relief to avoid delinquency or foreclosure... (including) a forbearance or repayment plan; an extension of time to cure default, reinstate a loan, or redeem a property; a waiver of an acceleration clause or balloon payment; and a short sale, deed-in-lieu of foreclosure, or any other disposition of the property except a sale to a third-party that is not the loan holder."

One question is obvious: If a company doesn't charge for mortgage relief services, does the MARS rule apply?

"Most of the local short sale specialists advertise this as a free service to our sellers and understand that the cost of the professional negotiations will be paid out of the hired Realtor's commission," said Julie Larsen Wyss, broker associate, Intero Real Estate Services, Los Gatos, CA.

Janik acknowledged to DSNews that real estate agents who do offer fee-based services must not take upfront fees, as the law requires, but she also voiced concern that other MARS rules could also apply to real estate agents helping with short sales, including rules that touch on disclosures, advertising, communicating with clients, negotiating a short sale or arranging for a short sale negotiation.

"NAR is discussing with the FTC some language in the second and third disclosures as well as some other requirements found in the MARS rule," Janik said, according to DSNews.

"The FTC is considering possible options to help make the rule more applicable to a real estate brokerage…when they are performing traditional real estate functions in a short sale transaction," she added.

A history of fraud

Too many foreclosure rescue and loan modification services became a festering outgrowth of the mortgage market meltdown that left many home owners underwater with a mortgage balance greater than the value of the home.

The operations often promised to be a go-between and negotiate with the lender to obtain a modification, short sale or some other relief from foreclosure. Some also duped home owners into believing they were affiliated with real government assistance programs.

Now, without up front fees, many fly-by-night operations don't have the capital to resume operations.

MARS does allow licensed attorneys to charge advance fees, provided the fees are held in an escrow (trust) account and provided the attorney complies with state laws and regulations related to the federal rule.

MARS rules are disclosure heavy. The rules say mortgage assistance relief services must disclose:

• The proposed cost of the service.

• That consumers have a right to reject any offer from the service or the lender without charge and can stop doing business with the service company at any time.

• That the service is not affiliated or associated with nor approved by any government entity.

• That the lender can reject any change to the home owner's loan.

• That home owners could lose their home and damage their credit rating if they follow a service's advice to stop paying their mortgage.

If services are offered or negotiated in Chinese, Korean, Spanish, Tagalong or Vietnamese, the disclosures must also be provided in the same language.

Foreclosure rescue and loan modification services are also prohibited from making any false or misleading claims about their services, including claims about results, government affiliation; the consumer's financial obligations; refund and cancellation policies; legal representation and the amount of savings a consumer can expect, among others.

Home owners should also check with their state rules for the services. Some states have stronger regulations than the federal MARS rule.

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© 2010 DeadlineNews.Com

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Under the DeadlineNews Group umbrella:

Perkins is managing editor of HomeAway.com's Gulf Coast Response Center.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
• National Real Estate Examiner
• National Consumer News Examiner
• National Offbeat News Examiner

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CRL lists top mortgage servicing abuses

Dance moves women want

The cost of doing business in mortgage lending includes finding more and more ways to separate you from what's in your wallet and regulations are typically too little, too late.

by Broderick Perkins
© 2010 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Think federal regulations are making mortgage lenders behave?
Do you believe mortgage lenders have seen the light and want to make your experience as low cost as possible?

Have you been told the mortgage lending trade is looking for ways to cut your costs?

Bullocks.

Fugedaboudit.

Getting a home loan is an adversarial proposition. It's you against them.

The cost of doing business in mortgage lending includes finding more and more ways to separate you from what's in your wallet and regulations are typically too little, too late.

The Center For Responsible Lending found 10 ways mortgage lenders try to generate fees at your expense.

• 1. Misapplied payments. Even when payments are made on time, mortgage servicers "mistakenly" reject the check or apply it to the wrong account. The result is unjustified late fees and often other penalties as well. For homeowners, misapplied payments are a huge headache; for loan servicers, misapplied payments mean a chance for more income.

• 2. Illegal fees. It's not legal to charge the homeowner when the loan company pays for property monitoring or price opinions from brokers (BPO), but they do.

• 3. Two-faced "assistance." Many homeowners who are actively working with their mortgage servicer to work out their loan are surprised to learn that the company is also actively pursuing foreclosure, something called "dual tracking."

• 4. Blocked refinances. Loan servicers don't like to lose the steady income flowing from their mortgages, so it's in their best interests to stall attempts to refinance with a different company. Some loan servicers have refused to provide loan payoff information, preventing refinances and even home sales.

• 5. Squelched legal rights. Loan companies often include "waivers" with their loan modifications, which essentially say, "If you accept this modification, you give up your right to pursue any legal actions against us no matter what egregious acts we commit."

• 6. Botched taxes and insurance. Many mortgages have an escrow account for taxes and insurance that the loan company manages -- or not. When the company fails to pay these expenses on time, the homeowner is stuck with the penalties. And some companies require expensive hazard insurance (to cover damage from accidents, storms, etc.) even when insurance is already in place.

• 7. Zipped lips (no communication). When loan servicers believe a homeowner is late on a mortgage, it's important to send a notice. Sometimes they do, sometimes they don't.

• 8. Whirlwind foreclosures. Each state has laws governing the foreclosure process and when a lender can initiate foreclosure. In the rush to foreclose, some loan companies ignore key steps required by law.

• 9. Crazy foreclosures. This one is hard to believe, but it happens: the loan servicer begins foreclosure proceedings even though the homeowner is current on the mortgage.

• 10. Robo-signing and other fraud. Loan companies fail to review key documents or falsify court documents used to evic -- often because the companies haven't kept accurate records of ownership, payments and escrow accounts that would enable legal foreclosures.

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© 2010 DeadlineNews.Com

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Under the DeadlineNews Group umbrella:

Perkins is managing editor of HomeAway.com's Gulf Coast Response Center.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
• National Real Estate Examiner
• National Consumer News Examiner
• National Offbeat News Examiner

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Unsupervised risky business, greedy homebuyers tanked the housing market

Lot's of blame to spread around for the housing crash: insufficient regulatory oversight in D.C., excessive risk taking on Wall Street and greedy homebuyers.

by Broderick Perkins
© 2010 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Insufficient regulatory oversight leading to excessive risk taking and homebuyers biting off more than they could chew, spelled doom for the housing market, according to a Harvard University study from the school's Joint Center for Housing Studies.

"Understanding The Boom And Bust In Nonprime Mortgage Lending" says originating risky mortgages was "inextricably linked to demand on the secondary capital markets for mortgages with higher yields than prime mortgages, as well as the multiplication and magnification of this risk through actions taken in the capital markets."

"The combination of a glut of global liquidity, low interest rates, high leverage, and regulatory laxity in the context of initially tight and then overvalued housing markets triggered staggering risk taking," says Eric S. Belsky, managing director of the Joint Center and one of the study's authors.

"Capital markets supplied credit through Wall Street in large volumes for risky loans to risky borrowers and then multiplied these risks by issuing derivatives that exposed investors to risks in amounts much larger than the face amount of all the loans," he added.

Homebuyers didn't help.

Focusing on the monthly mortgage payment rather than the true value of the home, homebuyers used low mortgage rates to bid high in tight housing markets, the report said.

Once house price appreciation took off, the report suggests, backward looking price expectations led both equity grabbing homebuyers and salivating mortgage investors to bank on rapidly rising prices, further fueling the bubble.

Risky loans, the sheer volume of them and the share of them made to speculators and those who couldn't really afford a home, followed by bundling the mortgages into securities caused much damage to the US economy and global financial markets.

Regulatory lapses were many and included the failure to closely supervise nonbank financial intermediaries, the failure to prevent unprecedented risk layering in mortgage underwriting, the failure to adequately supervise the credit ratings agencies, the failure to impose greater transparency in the capital markets and the failure to require higher reserves against risks, the report said.

"One of the biggest problems s that the whole system created the illusion that risks were being adequately managed. This is because rating agencies assigned AAA-ratings to large portions of securities backed by subprime and Alt-A loan pools and synthetic derivatives based on them," said report co-author Nela Richardson.

Securities were over collateralized - the process of issuing a smaller face amount of securities than the total face value of loans in the pools - to hold aside reserves against losses.

"The fundamental underpinnings of the models used to rate these securities were deeply flawed and the capacity of third-party insurers and credit default swaps to make good on claims was inadequate," the report said.

The report also discovered that while high price loans as reported under the Home Mortgage Disclosure Act were disproportionately concentrated in low-income, predominantly minority census tracts, the vast majority of high-priced loans were issued to homeowners outside these communities.

It also finds that loans made by financial institutions regulated under the Community Reinvestment Act in areas where they were assessed for meeting the credit needs of low and moderate income communities constituted less than five percent of all high-price loans at the peak in 2005.

"Looking forward, it is encouraging that actions have been taken within the past two years intended to address many of the regulatory problems we found," commented Belsky.

So-called "Wall Street Reform," the new Restoring American Financial Stability (RAFS) Act of 2010" is heavily laden with strong mortgage regulations.

Said Belsky “But many of the details are left for regulators to work out and how they do so will determine the balance achieved between consumer protection and management of systemic risk on the one hand and financial innovation, efficiencies, and consumer access on the other."

The report says the bust could have been worse.

"The housing market would have struggled even more to recover, absent federal guarantees of mortgages and mortgage-backed securities, and both the cost and availability of mortgage credit moving forward would be negatively affected by any curtailment in the scope of the guarantees," the report says.

However, the report notes the importance of government charging for these guarantees rather than allowing unfunded implicit guarantees of the kind Fannie Mae and Freddie Mac offered.

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© 2010 DeadlineNews.Com

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Get "News that really hits home!" for your Web site or blog from the DeadlineNewsGroup.Com.

You are reading a sample of "News that really hits home!" now available from several beats and published in a growing number of locations.

Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Under the DeadlineNews Group umbrella:

Perkins is managing editor of HomeAway.com's Gulf Coast Response Center.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
• National Real Estate Examiner
• National Consumer News Examiner
• National Offbeat News Examiner

Other DeadlineNews Group Feeds are available from DeadlineNews.Com.

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Landmark consumer protection law heavy with strong mortgage rules

The far-reaching new law creates a new Federal Reserve-based watchdog, the Consumer Financial Protection Bureau to ensure consumers get clear, accurate information necessary to shop for mortgages, credit cards and other financial products.

by Broderick Perkins
© 2010 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - President Obama recently signed the landmark H.R. 4173: Restoring American Financial Stability (RAFS) Act of 2010 which, in part, eliminates many of the lax mortgage lending practices that sparked the financial meltdown.

Among its provisions, the far-reaching new law creates a new Federal Reserve-based watchdog, the Consumer Financial Protection Bureau to ensure consumers get clear, accurate information necessary to shop for mortgages, credit cards and other financial products. It also protects consumers from hidden fees, predatory terms and deception.

It's not clear when all the provisions will roll out, but an overwhelming majority of consumers demanded the protections.

Often called Wall Street Reform, the RAFS Act has many provisions for those who live on Main Street, including a national consumer complaint hotline so consumers will have, for the first time, a single, toll-free number to report problems with financial products and services; a new Office of Financial Literacy; and a new U.S. Department of Housing and Urban Development (HUD) Office of Housing Counseling to boost homeownership and rental housing counseling.

The bureau will be lead by an independent director appointed by President Obama and confirmed by the Senate, who will be able to autonomously write rules for consumer protections governing all financial institutions, banks and non-banks, offering consumer financial services or products.

The new director will oversee the enforcement of federal laws intended to ensure the fair, equitable and nondiscriminatory access to credit for individuals and communities.

The new law governs banks and credit unions with assets of over $10 billion and all mortgage-related businesses (lenders, servicers, mortgage brokers, and foreclosure scam operators), payday lenders, and student lenders as well as other non-bank financial companies, including debt collectors and consumer reporting agencies. Banks and credit unions with assets of $10 billion or less will be examined for consumer complaints by the appropriate regulator.

Among it's provisions, the RAFS Act includes help for homeowners and home buyers, including:

• Prohibiting unfair lending. It prohibits "yield spread premiums" and other financial incentives that encourage lenders to steer borrowers to more costly loans and pre-payment penalties that trapped so many borrowers in unaffordable loans.

• Establishing penalties for irresponsible lending. Lenders and mortgage brokers who don’t comply with new standards will be held accountable by consumers for as much as three-years of interest payments and damages plus attorney's fees. The law also protects borrowers against foreclosure for violations of these standards.

• Expanding consumer protections for high-cost mortgages. The new law expands the protections available under federal rules on high-cost loans by lowering the interest rate and the points and fee triggers that define high cost loans. Also, lenders must disclose the maximum a consumer could pay on a variable rate mortgage, with a warning that payments will vary based on interest rate changes.

• Requiring lenders to ensure borrowers' ability to repay. The act establishes a simple federal standard for all home loans: institutions must ensure that borrowers can repay the loans they are sold.

• Requiring additional mortgage disclosures. Lenders must disclose the maximum a consumer could pay on a variable rate mortgage, with a warning that payments will vary based on interest rate changes.

• Emergency mortgage relief. Based on a successful Pennsylvania program, the new law provides $1 billion for bridge loans to qualified unemployed homeowners with reasonable prospects for reemployment to help cover mortgage payments until they are reemployed.

• Foreclosure legal assistance. The law authorizes a HUD -administered program for making grants to provide foreclosure legal assistance to low- and moderate-income homeowners and tenants related to homeownership preservation, home foreclosure prevention, and tenancy associated with home foreclosure.

• Free credit scores. Consumers will get free access to their credit score if their score negatively affects them in a financial transaction or a hiring decision.

President Obama signs Wall Street reform: "No Easy Task"



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© 2010 DeadlineNews.Com

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You are reading a sample of "News that really hits home!", now available from several beats and published in a growing number of locations.

Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
• National Offbeat News Examiner
• National Consumer News Examiner
• National Real Estate Examiner

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Site to See: Esteemed Lending Services (It's a fake)

Cow dentist prolongs bovine life

The FTC created a faux website for a fictitious lending company to warn consumers how easy it is to be fooled by scammers, especially online scams, charging up-front fees for bogus loans, including mortgages.

by Broderick Perkins
© 2010 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - The Federal Trade Commission's new loan website Esteemed Lending Services offers "A Loan for every situation. Guaranteed."

However, and pay attention now, unlike other websites offering similar come-ons, it's a fake.

The website is a convincing example of how the Obama Administration gets it when it comes to what consumers face in the financial world -- too much bull.

The FTC created the faux website for a fictitious lending company to warn consumers how easy it is to be fooled by scammers, especially online scams, charging up-front fees for bogus loans, including mortgages.

The site also explains how to spot and avoid loan scams.

The website is part of the FTC's stepped up consumer education campaign to help consumers manage their money and learn to recognize rip offs.

At Esteemed Lending Services consumers enter the fictitious world of "a guaranteed loan for every situation – regardless of your credit history," only to find a world where:

• Lenders aren't interested in your credit history and claim bad credit isn't a problem. (Honest ones are and bad credit can be a problem.)

• Fees aren't' disclosed clearly or prominently. (Honest firms disclose fees. Regulations mandate it.)

• Loans by phone are legal. (They aren't.)

• Lenders use copy-cat names that sound like well-known or respected organizations to convince you they're legitimate. (While using variant names isn't necessarily illegal, it is a scamming tactic.)

• Lenders are not registered in your state. (While state registration is not a guarantee the best loan, it does help weed out the come-ons by giving you a government agency to seek redress.)

• Lenders ask you to wire money or pay a particular person. (Don't!)

The FTC explains its ruse with links to "testimonials," "FAQs," "loan programs," "contact us," all of which point to warnings about scammers masquerading as lenders.

While Esteemed Lending Services isn't particularly loaded with a lot of new information, it is a website that reveals how easy it is to scam consumers. It's also a handy website to use as a reminder of what's out there to take you to the cleaners.

Bookmark it.

A feature of DeadlineNews.Com, "Site To See" reviews are occasional, but timely critiques of content-heavy real estate Web sites deemed unique, consumer-friendly, informative and easy to use.

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© 2010 DeadlineNews.Com

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Get "News that really hits home!" for your Web site or blog from the DeadlineNewsGroup.Com.

You are reading a sample of "News that really hits home!", now available from several beats and published in a growing number of locations.

Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
• National Offbeat News Examiner
• National Consumer News Examiner
• National Real Estate Examiner

DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Is A Federal Crime

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