Predatory Lending - Are You a Victim?

With all of the finger-pointing and outcries about corrupt lenders and greedy mortgage brokers and real estate agents, every homeowner facing foreclosure may feel victimized. And certainly, there was a lot of deception and outright fraud in the mortgage markets during the boom years. But there are a few important signs to watch out for that may indicate the presence of a predatory mortgage company.

One of the clearest signs of predatory lending may be when homeowners or buyers are asked to sign documents that are completely blank or told to leave off the date. This gives criminals the opportunity to backdate, forward-date, or fill in incorrect information on a mortgage application or disclosure forms, keeping important notices from the borrowers. When the time comes to close the loan, the buyers may receive a completely different loan than they originally were sold, but which curiously has what appears to be their signatures on all the required documents.

Closely related is the issue of being asked to sign documents that have blatantly misleading or false information on them. Inflating a family’s monthly income to qualify for a higher mortgage payment is nothing more than a set-up for failure down the road. Of course, some borrowers did this voluntarily and lied on their loan applications without the knowledge of their broker, but being asked by a loan originator to sign off on incorrect figures will lead to unintended consequences and possible foreclosure or prosecution for mortgage fraud.

Loan originators were also guilty during the bubble of putting homeowners in inappropriate loans with high interest rates or deadly interest rate adjustments. They persuaded the borrowers to go along with the loan in the hopes of refinancing in a year or two when their credit had improved. As is now known, however, most people did not qualify for the mortgages in the first place and were unable to qualify for a refinance once interest rates were raised and credit started becoming scarce. This helped lead directly to the foreclosure crisis now facing the economy, as subprime borrowers never became prime; they just became sub-subprime.

Also, it is vitally important that homeowners, at the time of closing, carefully read the sales agreement and loan documents, especially the sales contract and Truth in Lending disclosures. If there are any discrepancies, or the borrowers are being asked to sign for a loan that is different than the one they were promised, predatory lending may be being committed. In fact, borrowers should have copies of the closing documents at least 24 hours before the closing, and have reviewed them thoroughly and be ready to have any questions answered.

Realtors and mortgage brokers who relied on corrupt appraisers were also complicit in predatory mortgage schemes designed to boost their own profits at the expense of borrowers’ abilities to pay their loans. Although homeowners want some appreciation of their properties, if they were originally sold a house at the top of an artificial market, an inflated appraisal may have been used. Home values should reflect the current market conditions — not be inflated to the very highest amount that can be borrowed, putting the owners into a loan on a house that is not worth even close to what they pay for it.

Unfortunately, the amount of greed in the real estate markets facilitated by the Federal Reserve and the banks have led directly to a foreclosure crisis of epic proportions. So many first time buyers and uneducated owners were taken advantage of by mortgage lender misconduct and predatory loans that it is difficult to separate the unqualified borrowers who got in over their heads from the truly criminal mortgage companies that fraudulently induced this toxic debt. But if homeowners suspect they are a victim of mortgage fraud in any way, they should contact the appropriate regulatory agencies and make sure to fight their foreclosure in court for as long as it takes.

The ForeclosureFish website has been created to help homeowners research ways they can stop mortgage foreclosure and defend against their bank’s attempts to sell the house out from under them. The site describes various methods to use, including foreclosure refinancing and mortgage modifications, along with more information about predatory lending and other mortgage lender misconduct. Visit ForeclosureFish to read more about various aspects of the foreclosure process, as well as how to recover from a financial hardship: http://www.foreclosurefish.com/

source: offshoreblog.net

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http://offshoreblog.net/predatory-lending-are-you-a-victim/

Fort Lauderdale Blog and Real Estate News
Rory Vanucchi
RoryVanucchi@gmail.com

http://waterfrontlife.blogspot.com

www.FortLauderdaleLiving.net

Business likely will feel pinch of tighter criteria

Banks based in Lee and Collier counties are saddled with $418.4 million in bad real estate debt — up from $19.1 million two years ago, according to data from the Federal Deposit Insurance Corporation.

Banks are required to report to the FDIC how much they have in loans that aren’t being repaid and the reports for the quarter ended Sept. 30 show an explosion of bad debt.

State and federal regulators have stepped in with public oversight orders directing three local banks — Orion Bank, Riverside Bank and Florida Community Bank — to raise their loan qualifications, step up management and make other improvements.

Experts say the worst is not over: All signs point to increasing debt because of foreclosures already in the pipeline and worsening unemployment.

“Banks and all financial institutions are under a lot of stress because of the overall financial conditions out there now,” said Linda Charity, director of the Division of Financial Institutions of the Florida Office of Financial Regulations. “It’s fair to say this environment is probably going to continue for a while.”

The result is likely to be an increasingly tough borrowing environment for already strapped small businesses and consumers.

One local businessman said he’s already feeling the strain.

“I’m struggling over here,” said custom tailor Remy Fenelus, who owns Remy’s Custom Design in south Fort Myers. Already hard hit by the recession, he had 250 suits stolen by burglars who ransacked his store four weeks ago.

It’s tough to get a bank loan these days, he said.

“You have the credit line with the bank and they just take it away,” he said. “Or they’ll just reduce it to nothing.

It’ll be $200,000 and they reduce it to $10,000. What can you buy with $10,000?”

Bad debt held by banks typically contributes to their customers’ difficulties getting a loan, said Karen Dorway, president of Fort Lauderdale-based BauerFinancial, which tracks bank information nationwide.

“You see a shift in how the management is managing the resources,” she said. “Instead of focusing on the growth and building the company, they’re focusing on how do we solve these problems.”

The oversight agreements are intended to help banks get back on the right track and typically involve the Florida Office of Financial Regulation and either the Federal Reserve Bank or the FDIC, depending on how the bank is chartered.

The regulatory orders can come in a variety of forms, including confidential agreements with banks and public orders.

“It sort of moves up in terms of severity as things progress,” Charity said. “But it is not necessarily a bad thing. It’s a road map and a working partnership with the bank to strengthen the operation.”

An order issued recently to Immokalee-based Florida Community Bank listed 20 stipulations, including tightening lending to customers who already have troubled loans and requiring regulatory approval of new executive officers. The bank had $8.5 million in bad real estate debt in 2006, but had $105.7 million as of Sept. 30.

Bank president and chairman Stephen Price did not respond to requests for comment.

Even if the bank is not consciously tightening lending policies, Dorway said, “if you’re a loan officer and you’re looking at your portfolio and you say ‘My goodness, 3 percent of these loans are non-performing,’” there’s likely to be a more cautious attitude.

Banks that find themselves with a lot of bad debt have to be cautious and deliberate in their lending policies, said David Hall, president of Fort Myers-based First Community Bank of Southwest Florida — the only locally based bank to appreciably reduce its real estate debt this year.

First Community was ordered by the FDIC in June 2005 to stop making construction loans for commercial builders and, in retrospect, that set the bank on a course of financial responsibility, he said.

The bank’s real estate debt was $4.2 million in the third quarter of 2006 and increased to $6.5 million a year later. But it was down to $3.3 million in the latest FDIC report.

Recovering has been hard, Hall said.

“It’s been many late nights and weekends,” he said, but he expects his bank to survive and thrive now. The FDIC’s order was lifted in July 2007.

Any local bank could have cut back on real estate lending as the market went downhill, he said, but many did not.

Why?

“I’ve asked myself that question,” Hall said. “Everybody was up (in bad debt) except our little old bank.”

Other banks haven’t fared so well. Riverside Bank of the Gulf Coast, for example, was being considered for purchase by group of Brazilian businessmen.

But the deal fell through, Riverside chairman Elmer Tabor said Friday — although he noted there are six more interested buyers in the wings.

The Brazilians, he said, passed on the deal because of “not only the instability of the local economy, but the national economy with the markets going wild. They don’t think this is a good time to be putting money in the United States.”

Riverside’s bad real estate debt ballooned from $1.5 million in 2006 to $52.4 million this year. In June it closed four branches and laid off 45 of its 157 employees.

Kent Ellert, who was president of Fifth Third Bank in South Florida until Nov. 1, has formed Southeast Acquisition Holding Corp., with three partners to scout for investment opportunities among cash-strapped local banks.

“We are big-time believers in the long-term strength of the local and state economy and we think the current environment presents some opportunities,” Ellert said.

Ellert said the group will seek investment interest in banks, outright acquisition or might aggregate smaller banks.

source:
news-press.com

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Business likely will feel pinch of tighter criteria



Fort Lauderdale Blog and Real Estate News
Rory Vanucchi
RoryVanucchi@gmail.com

www.LasOlasLifestyles.com
www.FortLauderdaleLiving.net