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Predatory Lending

Predatory Lending

Predatory lending refers to misleading, fraudulent and/or unfair mortgage practices that financial institutions sometimes engage in during the loan origination process. When financial institutions engage in these practices it can create loan terms with the homeowners which are unreasonable and benefit the financial institution at the expense of the homeowner. Predatory lending involves practices which take advantage of the homeowner and financially benefits the lender.

Low Income Borrowers, Minorities and the Elderly

Low income borrowers, the elderly and minorities are more often at risk for predatory lending practices involving subprime loans than other potential homeowners. Sometimes predatory lending involves charging excessive and unnecessary fees and expenses. In other situations, predatory lenders may add on unnecessary insurance to the cost of the mortgage loan. Excessive pre-payment penalties also are a type of predatory lending practice.

Victimized by a Predatory Lending Institution

If you and your family have been victimized by predatory lending practices you may be entitled to legal relief. It is strongly suggested you contact a foreclosure lawyer to review the circumstances involved regarding your mortgage and advise you whether you have a basis for legal action to deal with this issue.

Attorney Elliot Schlissel

The law office of Schlissel DeCorpo LLP has been litigating predatory lending issues and other foreclosure defenses for more than 30 years. We offer free consultations and can be reached at 516-561-6645, 718-350-2802 or 631-319-8262. We can be e-mailed at Elliot@sdnylaw.com.

Long Island Mortgage Fraud Scheme

Fraud Investigation, Detective Files

Two men from Long Island have been charged with running a $30 million mortgage fraud scheme. The case is pending in Federal Court in the Eastern District of New York located in Central Islip. The prosecutor on the case, Artie McConnell, in his closing statement to the jury stated these two “stole more money than a man with a mask and a gun ever could,” referring to the two men charged with the mortgage fraud. The two defendants in the case are Aaron Wider, who was the head HFTC Corp. in Garden City and Joseph Ferraro, Jr., who is from Long Beach.

The Scheme

Ferraro and Wider were involved in a scheme where homes were purchased and thereafter sold to a trust on the same day. The homes were then subject to an inflated appraisal and they were resold at much higher selling prices, sometimes as much as double. Thereafter Mr. Ferraro and Mr. Wider sold the “toxic mortgages” in the secondary mortgage market and kept the difference Attorney Elliot Schlisselbetween the real and inflated values. This scheme took place between 2003 and 2008. Each home involved in the scheme ended up in foreclosure. In the end, the mortgage holders on these homes were high and dry.

Elliot S. Schlissel and his associates are foreclosure lawyers. They help homeowners who have fallen behind in their mortgages stay in their homes.

Trump Administration Creates Mortgage Problems For Potential Homeowners

Picture of a home

Donald Trump shortly after becoming President of the United States signed an administrative order to stop a fee rate cut for mortgages from going into effect. This fee rate cut would have saved potential home buyers who do not have the funds for large down payments – significant amounts of money. As a result of the action taken by the Trump administration 40% of all millennial home buyers will find it more expensive to pay their mortgage.

The Actual Events

A few hours before Donald Trump was sworn in as President he signed an order which set aside action taken by the Obama administration that would have lowered monthly fees for prospective homeowners who buy homes and have less than 20% of the cost of the home to pay as a down payment. These prospective home buyers who do not have 20% to put down for the purchase of a home use a government program operated by the Housing and Urban Development Department known as “FHA Loans” to insure their mortgages. The decrease in the cost of the FHA fees would have saved the average prospective homeowner who takes out an FHA backed mortgage in the State of New York about $1,000.00 a year.

The FHA loan fees were raised during the height of the real estate crisis. The action was taken to cover short falls within the FHA program. The action taken by the Obama administration was designed to bring the FHA costs to the level they were at before the housing bubble crisis took place. The action by Donald Trump has the impact of reducing the buying power of prospective homeowners. The amount of money that could be used for mortgage payments will be reduced by the approximately $1,000.00 a year that has to be paid for the FHA insurance fees.

Mortgage Insurance

Prospective homeowners who do not have 20% to put down as a down payment on a home must buy mortgage insurance. This mortgage insurance covers the potential losses to the financial institution if they are unable to make their mortgage payments. This is necessary because when homeowners do not have 20% to put down on their home there is often insufficient equity in their homes for banks to cover their potential losses in the event the home is foreclosed upon and sold.

Attorney Elliot Schlissel

FHA loans are most often utilized by young home purchasers. Almost 40% of all home purchases by younger purchasers are FHA backed loans.

Reverse Mortgages: What Are They and How Do They Work?

reverse mortgage

A reverse mortgage is a mortgage loan given to senior citizens that seek to utilize the equity in the home to support themselves in their old age. Generally speaking, the loan does not have to be repaid until the last surviving spouse either dies or permanently moves from the home. In the event of the death of the last of the husband and wife to die the estate of the second to die has approximately 6 months to repay the entire balance of the reverse mortgage or take action to sell the home for the purpose of paying off the reverse mortgage. After the reverse mortgage is paid off the rest of the equity derived from the sale of the home becomes an asset of the estate. Should the home be underwater, be worth less than the reverse mortgage, the estate and either the executor or administrator of the estate will have no personal liability with regard to paying off the portion of the reverse mortgage not covered by the sale of the home.

Who Is Entitled to Obtain a Reverse Mortgage?

Eligibility to obtain a reverse mortgage requires all of the homeowners be a minimum of 62 years of age. In addition, all mortgages on the home must be paid off prior to obtaining the reverse mortgage or at the time of obtaining the reverse mortgage. The home must be the primary residence of the individuals seeking to obtain the reverse mortgage. In addition, the homeowners must continue to pay homeowners’ insurance and property taxes of every type and nature that accrue on the home. The taxes can be property taxes, school taxes, town taxes and village taxes.

Loan Amounts

The amount the homeowners can obtain from the reverse mortgage depends on four (4) specific issues: the interest rate at the time of the reverse mortgage loan, the appraised value of the home, the age of the parties seeking to take the loan and the current government imposed lending limits at the time of the loan application.

How Reverse Mortgage Payments are Made

Attorney Elliot Schlissel

Reverse mortgage payments can be made on a monthly basis for as long as the homeowner lives in the home, for a fixed period of months or the homeowners can take a lump sum out all at once. In addition, the reverse mortgage can create a line of credit the homeowners can access at any time. It is not recommended that the homeowners take the lump sum of all the funds from the reverse mortgage. In these cases the homeowners may not be able down the road to pay at one time the taxes on the home. The non-payment of the property taxes on the home or failure to pay the homeowners insurance is a basis for the financial institution bringing a reverse mortgage foreclosure lawsuit.

Amount Prospective Homeowners Can Borrow Going Up In 2017

Book and gavel

In 2017, for the first time in a decade, the Federal Housing Finance Agency is raising the amount of money that will qualify for Fannie Mae and Freddie Mac, government backed loans. Loans that exceed the Fannie Mae and Freddie Mac limit are called “Jumbo” mortgages. These mortgages are held by the lenders themselves or they are sold to private investors. In most situations Jumbo loans require a larger down payment and the underwriting requirements are more detailed.

The current limit for 2016 was $417,000.00. this has been the limit since the year 2006. For 2017 the amount that can be borrowed will increase by $7,000.00 to $424,000.00. However, it should be noted in expensive areas of the country like New York, the limit will go to $686,000.00.

As home prices have recovered from the real estate crisis, higher loan limits will allow prospective homeowners to have more flexibility in terms of obtaining government backed mortgages. The real estate website Zillow expects home prices to increase by approximately 3.5% in the year 2017.

The Amount of Down Payments

Generally speaking, most financial institutions require 20% down payments on mortgages. However, the amount of down payments required has been decreasing. Some banks will accept down payments as low as between 3 and 5%. When a mortgagor seeks a down payment in the 3-5% area, they are required to buy mortgage insurance. Unfortunately, the mortgage insurance adds to the monthly mortgage cost.

Elliot-Schlissel

Elliot S. Schlissel is a foreclosure defense attorney representing homeowners throughout the Metropolitan New York area. Elliot and his dedicated associate attorneys diligently work to help their clients obtain mortgage modifications and take legal action to set aside mortgages.

Mortgage Fraud Justice After 8 Years

Signing mortgage contract

In 2007, Newsday, a Long Island Newspaper, uncovered a mortgage scheme by Alan Wildler. Mr. Wildler founded HTFC Corporation, a Garden City mortgage bank. Mr. Wildler perpetrated $30,000,000 in mortgage fraud on Long Island residents. It is now 9 years later and he has recently been convicted regarding his mortgage fraud conspiracy. He now will face up to 30 years in prison.

How The Fraud Worked

Mr. Wildler would buy properties and thereafter transfer the properties to a trust. He would then sell the properties for as much as $300,000 more than he paid for them. He utilized false appraisals which justified the higher prices. He sold the properties during the time of a hot real estate market which concealed the activity for a while. Thereafter, Wildler’s bank would sell off the mortgage loan. Other financial institutions were thereafter defrauded by Wildler’s actions. Banks that purchased the loans as well as the Nassau County Assessment Office flagged the properties as fraudulent transactions. Unfortunately, it took more than 8 years after the mortgage fraud scheme was uncovered for Mr. Wildler to be convicted for his wrongdoing.

Mortgage Fraud Convictions Are Rare

The real estate market had a significant decline in the year 2008. Thereafter there was a huge increase in foreclosure activity. Subsequent investigators uncovered numerous instances involving mortgage fraud in the metropolitan New York area as well as the rest of the country. Unfortunately, very few individuals involved in mortgage fraud have actually been convicted of their activities. Mortgage fraud has a negative impact on the financial market, destroys the lives of families that are defrauded, and creates a lack of confidence among the general public with regard to the institutions involved in buying, selling and financing of real estate transactions.

NY Foreclosure Defense Attorney Elliot Schlissel

Elliot S. Schlissel is a foreclosure lawyer representing homeowners whose homes have been foreclosed, and foreclosure cases and helps homeowners obtain mortgage modifications.

Loan Modifications: What Are They Really? Part: 2

Dollar Bills

The first step in obtaining a mortgage modification is for the homeowner to apply to their bank, loan servicing organization or the investor holding their mortgage for a modification. This requires the homeowner to fill out a mortgage modification application and provide the documentation requested. The modification should also contain a hardship letter explaining that the homeowner has had a legitimate hardship situation that will motivate the bank loan servicer or investor to cooperate with them concerning obtaining a mortgage modification. In addition, most mortgage modification applications require the submission of tax returns, bank statements and pay stubs by the homeowner.

Home Affordable Mortgage Program (HAMP)

The federal mortgage lending program called HAMP is a program created by President Obama’s administration. This program does not work well. Approximately one homeowner in five is successful in obtaining a mortgage modification under this program. Many homeowners presume that they will be given a mortgage modification if they simply submit an application. This is simply not the case. The large majority of homeowners who submit mortgage modifications will never obtain a mortgage modification.

Banks and Financial Institutions

Many homeowners who come to my office presume that the financial institutions which hold their mortgages are interested in helping them. Unfortunately, that is generally not the case. The financial institutions which hold mortgages are interested in making money! If they find the homeowner does not meet their criteria related to the profitability of the mortgage, they usually will not grant a mortgage modification. Banks and other financial institutions are not social service agencies. They are financial institutions which seek to make a profit that benefits their shareholders. Not all homeowners are good candidates for mortgage modifications. However, there is a way of maximizing the potential of obtaining a mortgage modification. When homes are in foreclosure, and the homeowner retains counsel who submits numerous affirmative defenses and countersues the bank to set the mortgage aside, the banks and their attorneys pay more attention to the applications of these homeowners for modifications. This can increase the homeowners chances of obtaining a reasonable and fair mortgage modification. This is an example of the expression, “the squeaky wheel gets more grease.”

Bank Denied Interest on Note Due to Bad Faith Negotiations

Bank Denied Interest on Note Due to Bad Faith Negotiations

In a case recently decided in Kings County, New York, Justice Donald Kurtz, sitting in the Supreme Court Foreclosure Courtroom, ordered that all interest accrued on the note be forfeited because of the bank’s failure to negotiate a mortgage modification in good faith.

History of the Case

Wells Fargo Bank had started a foreclosure lawsuit. The case appeared on the Court’s calendar in Brooklyn before a referee. The referee determined the homeowner had submitted adequate documentation of his income to qualify for a mortgage modification under the Home Affordable Mortgage Program, also known as “HAMP” mortgage modification program guidelines. The bank had all of the necessary documents to review the loan modification application, however, the bank refused to grant a mortgage modification. The referee involved asked the bank to again consider reviewing the homeowner’s HAMP mortgage modification application. The bank again denied the HAMP mortgage modification. They also denied a traditional loan modification claiming the property was not being utilized as the principle place of residence as the owner.

Bank Representative Ordered To Appear In Court

The referee ordered the bank to produce a representative from its servicing organization in court to explain to the judge why they would not grant a mortgage modification. The referee took this action because he felt the homeowners were denied a mortgage modification even though they qualified for one.

The referee wrote a report stating the bank violated his directions which recommended they grant the homeowner a mortgage modification. The bank took the position they were not required to negotiate in good faith. Judge Donald Kurtz disagreed with the bank. He ruled the bank had a duty to negotiate in good faith under New York Civil Practice Law and Rules Section 3408(f). The judge confirmed the referee’s report and stopped all interest which accrued on the mortgage and note from the start of the mandatory foreclosure court conferences going forward.

Conclusion

If you take aggressive action with regard to mortgage modifications in front of judges or referees, you can put pressure on the banks to be cooperative and grant mortgage modifications.

Foreclosure Defense in Valley Stream, Lynbrook, Baldwin, Malverne, Freeport, Oceanside, Long Beach, Elmont, Lakeview, West Hempstead, Hempstead, Merrick and Bellmore, New York

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We represent individuals throughout the New York Metropolitan area with divorce and child custody, personal injury, car accident, wrongful death, estate administration, nursing home and medicaid issues

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