Mortgage Lender Deceptive Practices and Fraud
Part of what caused the economic crisis we we see today is a pattern and practice of fraud and deceit on a large scale by many mortgage lenders. AmeriQuest Mortgage, for example, one of the largest lenders in the country, was sued for deceptive business practices on a massive scale by the Attorneys General of 49 states (the only reason it wasn't 50 was that they didn't conduct business in one state). Although the company is no longer in business, and its founder is now deceased, there are still hundreds of thousands of outstanding mortgages issued by AmeriQuest which are now owned by other lenders who are continuing to foreclose.
And Ameriquest was by no means, alone. Fraud, deceptive practices and numerous violations of the consumer protection laws cloud hundreds of thousands of today's mortgages. This chaos has been made even worse (if one can imagine), by the practice of securitization, under which bundles of mortgages were "pooled" together and Security Instruments "backed" by these mortgages then sold to groups of investors.
In the midst of the current chaos, even a minor lateness in payment can trigger a quick foreclosure on unwary homeowners. In the absence of legal representation, homeowners are often bullied into signing new mortgage documents at even worse terms -- and the banks are able to "launder" their bad and unenforceable mortgages with new "enforceable" mortgages. We cannot stress the importance of seeking qualified legal representation BEFORE signing any new documents with your lender.
In the case of many of these "securitized" mortgages, the foreclosing entity is unable to produce the original mortgage or even prove that it is the true holder of the lien often because no one lender actually "holds" or "owns" the mortgage. In the case of fraud or other violation of the consumer laws, the mortgage may be unenforceable. In these cases, the homeowner may have a number of remedies available to help them save their home.
This problem is so extensive that the Pending Legislation, H.R. 200, even contains explicit provisions blocking lenders from trying to enforce their bad mortgages in a court if they were initiated through any violation of the Federal Consumer Protection Laws.
Stay tuned, updates on pending legislation to follow.