Did Your Lender Discriminate?

The robo-signing fiasco has revealed the seedier side of the mortgage business to the general public. These issues are coming back to haunt many lenders in the form of law suits and settlements with state and federal governments.

Over the last several years, homeowners and the public in general have become increasingly familiar with some of the issues that could lead to a case of fraud against a lender stemming from the way documents were signed, notarized, or dated incorrectly for mortgages or foreclosure filings. The issues that were included in the foreclosure settlement against Bank of America, Wells Fargo, JP Morgan Chase, Citigroup, and Ally are just the tip of the ice berg when it comes to proving fraudulent and inappropriate actions on the part of lenders. The more we find out about what the banks were doing, the more impossible it seems that they have been getting away with it for so long!

Sometimes the fraudulent and inappropriate behaviors that could become the basis of a lawsuit against a lender occurred when the homeowner first got the loan. Many homeowners experienced irregularities and in some cases out-and-out discrimination at the time the loan was first offered.

These are just a few questions a homeowner should answer to determine if discrimination or fraud was committed at the time the mortgage was obtained:

Did the lender say something during the process that was later found to be untrue? If they were not truthful during any stage of the lending process, you or your homeowner could have a pretty strong discrimination case in front of you.

Did the homeowner get quoted one rate and loan package and then wind up with a much different rate and package? Lots of homeowners are quoted mortgages that sound great, but then are pressured into signing much less favorable loans later on in the process.

Did the lender imply that the type of loan being offered is the best or most popular loan for their kind of person (e.g., racial, lifestyle or socio-economic group)? You would be surprised how often this happens.

Was the mortgage broker’s final commission much higher than the rate quoted initially? If they padded their own pockets at your expense by increasing their commission once the momentum of the deal was at full steam, you could have a pretty good case on your hands.

Was the homeowner promised a better loan in the future if they signed the current offering now?

Was the homeowner pressured into signing the loan?

Any of these potential discrimination issues can prove useful in filing a lawsuit against a mortgage lender. You could have a particularly powerful case if your claims can be backed up with documentation that the homeowner has kept on file. Administrative audits that search for possible discrimination claims are a powerful weapon we investors have in our arsenal to help homeowners. The more ammo you have on your side, the likelier it is that the banks/trustees will be willing to negotiate without having to enter into the litigation process, and the likelier it is you could have a pretty sweet deal on your hands!