Friday, January 30, 2009

Another attempt

I had to stave off another attempt to commit fraud via a HUD-1 Settlement Statement a few weeks ago. This time I alienated what is apparently the First Centrally located State Bank which is located in Iowa--if you catch my drift.

This was an FHA loan. There was a provision requiring the seller to pay $3,000 of the buyer's closing costs. Prior to closing we received a preliminary HUD-1 from the short-sleeved-dress-shirt-wearing closing agent which accurately showed the $3K as a credit from the seller to the buyer. When we arrived at closing, the seller paid closing cost credit had been reduced to $700. Since this was an FHA loan, the buyer was required to put in 3% of his own money (the closing was in 2008). If he had been given the whole $3K, he would not have met this requirement, so the lender reduced the seller paid closing cost credit.

The buyer reasonably asked how he was going to receive the remainder of his $3K in closing costs. We volunteered that we had no objection to paying the full $3K, but it would have to be shown on the settlement statement. The loan officer jumped in and told me that the seller had to write a check the the buyer for the $2,300 because it was in the purchase agreement. Apparently she was the buyer's attorney too!

Even though this was a state bank, and the loan officer was the one recommending we cut a check under the table, they were acting as a broker, so I am certain the end lender would not accept this. I told her that this was fraud, plain and simple, and I read to her the language from the settlement statement and from the the Certification of Seller in an FHA-Insured Loan Transaction, which says:

I certify that I have not and will not pay or reimburse the borrower(s) for any part of the cash downpayment.

That is when she really got mad. Actually turned red, wouldn't let me get a word in edgewise, tried to stare me down with an evil glare; that sort of mad. I gathered from her reaction that this was not her first "just write a check under the table that will solve everything the lender will never know" rodeo. Mr. Pocket Protector closing agent was not much help either, smugly repeating, "Oh, I'm sure there's something you can do to work this out." When I asked for suggestions, he was not very forthcoming.

I suggested that the purchase price and/or loan amount could be changed to ensure the buyer contributed his required 3%. They would have none of that.

Do you think I went too far when I told the loan officer that it was attitudes and actions like hers that have ruined this country? I thought maybe I had, but honestly, it really didn't seem to bother her.

Wednesday, January 21, 2009

Foreclosure suggestions

Sorry for the lack of entries of late. Somehow Google decided I was in Japan, so everything in blogspot was in Japanese. Google, I assure you that I am not in Japan, and as evidence submit the sub-zero temperatures and mounds of snow outside my window.

First, if you are having difficulties making your payments, contact your lender, and see if you can work something out with them. Document EVERYTHING. Every telephone call, every letter, every statement, every check. Write down who you talked to, what was said, what time it was, what number you called. Keep copies of everything you send to your lender and everything your lender sends to you.

If you or anyone you know is in foreclosure, or even close to foreclosure, I would suggest a consultation with a knowledgable attorney. I have seen some amazingly sloppy and/or fraudulent work on the part of lender, mortgage brokers, closing agents, appraisers, and real estate agents. Some of their sloppy and/or fraudulent work may be a foreclosure defense. I will run through a few examples, but there are so many tricks these folks pull. Even if you do not see anything in this list that you think applies to your situation, there may be something else that a thorough review of your closing documents might reveal. Be sure to refer to my Foreclosure Rescue Scams article.

In Iowa, if a spouse does not sign the mortgage, the mortgage is void. Wells Fargo recently lost big on this one. Married couple owned a home and refinanced with Wells Fargo. Only the husband was on the loan and only the husband signed the mortgage. Judge said the mortgage was void, and Wells Fargo could not foreclose. Yes, that means they could live there forever without making a house payment. Well, they could live there forever without making a payment IF they could live forever, which they probably can't, but you get my point.

For a refinance, each individual must be given two copies of the Notice of Right to Cancel.

For a refinance, if two people own the property, both of them must sign the Notice of Right to Cancel, even if only one of them is on the loan.

For a refinance, the dates on the copies of the Notice of Right to Cancel give to the borrowers must be completed. Often, I have seen where the closing agent fills in the dates on the original signed by the borrowers, but fails to do so on the copies given to the borrowers.

For some reason, many lenders are sloppy about giving required notices of default to borrowers. When a lender forecloses, they must do everything exactly, perfectly right.

Some lenders fail to provide disclosures to you prior to your closing.

Some lenders fail to provide accurate estimates of closing costs prior to your closing.

There is an interesting case brewing on the east coast. Countrywide is arguing that their claims that they are working with people to prevent foreclosure is mere puffery. Read this story, and see if your blood boils as much as mine did. How they are still in "business," if that's what you call it, completely escapes me.