April 26th, 2016 12:23 PM by Gregg Mower
We have learned that the Big Banks (AKA Well Fargo, Bank of America, Chase, Citi etc.) are too big to fail, but what you haven’t learned is that they are not too big to be sued for their mistakes. I am not advocate of attorneys, let’s get this straight right now, and there are way too many predatory attorneys just looking to make a buck off you. You need to be careful not to use the guys that are advertising heavily on the Radio or TV as there is a reason for that (generally a bad reputation). However, if you do find yourself in a situation that you have been steered wrong by a Big Bank then your only alternative is to hire a good attorney (I know you think that is an oxymoron and most of the time I would agree). Anyway, I have been hearing more horror stories lately about the blunders Big Banks are doing to their customers in the home loan arena. This is not something you should take lightly if this has happened to you, or is happening to you.
Let’s take a look at just some of the stories I have heard recently. Remember, I am not an attorney I am a licensed Real Estate Broker and I cannot give legal advice, but I can review a situation and tell you if you do need legal assistance. That said, I do think it is probably a good idea to seek the advice of a real Loan Professional that has years of experience and understands the laws before seeking an attorney right out of the gate. The simple reason I say this is to save you money as a phone call to me is free and phone call to an attorney can cost you thousands or more, and I would hate to see you hooked up with an attorney or Law Firm that is just interested in your money.
So how can you determine if you have a case against a Big Bank? Just the other day I had a call from a person that was actually calling to see if I could get a hard money loan for him to fix his situation with a Big Bank (not to be named as I don’t wish a lawsuit from a Big Bank). He was calling for a hard money loan on his personal residence as he couldn't get a traditional loan because the bak had put him in a position that he could not qualify for a trditional loan. First of all, I can’t do a Hard Money loan a personal residence as those types of loans fall under the Qualified Mortgage rules and my private investors do not want anything to do with those laws and rules. After explaining this to him I asked what he needed the money for and he proceeded to tell me a horror story to likes I would not believe if I had not heard it with my own ears. Evidently, this poor guy called his Bank over a year ago to lower his interest rate on his home loan. The Big Bank sent him to the Loan Modification Department instead of the Refinance Department. He was told he had to be late on his mortgage and that he should not make any more mortgage payments until the modification was complete. Of course, he did what the Bank told him to do as they were servicing his loan. He has a good job, which they never asked him about in the beginning and $250,000 in equity in the home. If the Bank was prudent, they would have told him a year ago to refinance his loan and not to try to modify it, but they didn’t. So fast forward a year later the Big Bank called him and told him he did not qualify for the Loan Modification he had applied for a year ago because he had too much equity and a good job. That wasn't even the bad part. Remember he was told not to make his mortgage payment a year prior, that’s right, then the Big Bank put his home into foreclosure. He called the Bank and they told him that he would need to pay upwards of $50,000 to reinstate his loan. This is when I got the call, he was looking for a second mortgage to pay his first current. We, obviously, could not do a loan for him as his home is currently in foreclosure, but I listened to his story and I promptly told him to seek legal advice as this was about as bad a case of abuse, ignorance or negligence I have ever heard of.
It is no wonder we the little guys are paying the price for these kind of mistakes. Unfortunately, it will be the depositors that will inevitably pay for this mistake. You see the Big Banks will generally hire folks and offer little training and mistakes like this happen and they just write it off. As for the poor guy who had this happen to him, he will be spending thousands in legal fees for years before anything gets resolved. He could lose his house in the meantime and it would never make the news. Another similar story is from a client we tried to save from a Big Bank Foreclosure that actually happened to an attorney, who was not practicing, but non-the-less, he knew what to do and he still lost his battle in the short term. He had a Loan Modification gone bad on an investment property and came to us trying to get Private Money to fix it. It turned out there was not enough equity for us to find an investor to close the loan for him.
These stories curl my hair to think that a Big Bank could actually get away with this kind of behavior. The Big Banks wrote themselves out of most of the laws that effect the small Mortgage Companies today, as their lobby is so big in Washington D.C. that they had the ability to exclude themselves from most of the Dodd Frank Legislation that we are governed by when we write loans. I know I might be biting the hands that inevitably feed me, but again they are probably too Big to listen to some small mortgage blogger in Northern California.
The solutions to all of this would be natural selection among Banks, only the strongest survive and the ones that can’t die. The reason the Government deemed them “Too Big to Fail” was simply to cover our elected officials own investments, at the time of the Mortgage Melt Down they had Billions of their own money invested in the very Banks they deemed “Too Big to Fail” so they bailed them out. By bailing the Banks out of the very financial crisis they created, gave them a gold pass on future mishaps and created an environment for unregulated negligence. I hope that as you read this you are not faced with a Big Bank Blunder that could bankrupt you and not phase your Bank. If you are faced with an issue you are not sure about I would love to help you see if it is the fault of the Bank or not. Either way there are solutions that may not involve an attorney that can fix your problems with your mortgage. A tool that home owners may not be aware of is Forbearance, which is where if you have lost your job, or are going through a divorce, or some other financial situation where you cannot make your mortgage the lender has to offer you this option. Forbearance, is when the lender agrees to take less of a payment during the time of your financial crisis and will pick up the difference at the end of the loan. This can save you from foreclosure and or even late payments on your credit report. The way to do this is to contact the Lender who you make your payments to and inform them of your financial crisis. They may ask for some proof of your situation, but if the home is your primary residence (the home you live in) they have to listen and help by law. If you need a Loan Modification it should only be entered into if you currently owe more than your home is worth and if you are in the middle of a financial crisis (job loss, divorce, etc.). Both situations are necessary to be granted a modification, so if you have equity in your home do not look to a modification as an answer, you will be declined and it could take a year. Another option California has is Keep Your Home California which I have linked here that is an agency set up for Californians that have a problems making their payments. I hope this helped some of you reading this. I am in this business to help others first and to make money second, I don’t believe the Big Banks have that same philosophy. Please feel free to contact us if you have any questions or need help with your home loan or Real Estate. We are located in Rocklin California and our Phone number is 916-672-6130 Or contact us by clicking here.