MORTGAGE BROKER AND LENDER LIABILITY « Livinglies’s Weblog

20 Responses

Joseph J. Huprich, Esq., on October 16th, 2009 at 6:21 pm Said:

I have been embroiled in a predatory loan case for a while now. Borrowers only spoke spanish, broker forged all of the loan application docs, they had good credit but got an “adjustable” rate loan at 11.3%, with a minimum rate of 7.75% – which means the rate will never go below that, and paid out $17k plus for broker fees. Dragged to federal court by the banks and then then bludgeoned us to death with motions to dismiss and an MSJ before discovery ever started! Judge held that equitable tolling shouldn’t apply because borrowers were “on notice” when they sought a loan mod in Jan 2008. Now we’re headed back to state court to argue rescission by fraud. I’ve been arguing that broker is original lender’s agent and therefore liable for the forgeries/fraud. Anyone out there with similar litigation let me know or feel free to contact me for research collaboration. huprichlaw@gmail.com
Andrew, on August 13th, 2009 at 10:52 pm Said:

To homeowners and the like who are facing same situation as quoted by “Diane on December 31st 2008, need to do two very important documents;

1: File a Substitution of Trustee

2. File a Revocation of Power of Attorney

Both of these are done filed by the Trustor (who is the Borrower). They and they alone have signatures on the Trust Deed, and because there is no signatures from a Trustee, Beneficiary, Lender, Bank Official or for that matter anyone else…. This is deemed a UNI-LATERAL CONTRACT which in layman’s terms means the Homeowner may change theses above named documents, in addition to others.

All Contracts to be enforceable by any form of law are required to be signed by two parties and in the Real Estate, in most states require 2 – 3 witnesses as in Florida.

Hope this helps another Lay-person. For further non-legal, non lawyer nor financial advice, they may call 503 895 4146 or email cci_andrew@hotmail.com
EM Blocker, on June 30th, 2009 at 12:29 am Said:

My mortgage is with a federal credit union. I tried for over a year to do a modification, etc to no avail. I am trying to fight the foreclosure now. Can I use TILA as a defense. Also the copy if the “intent to forclose” they attached to the court papers is incorrect, its acually on a totally different property. HELP, my 30 days ends July 1. Thank you
John Haggerty, on June 29th, 2009 at 1:18 am Said:

Yield Spread Premium is a fancy term for a fee paid by the lender to the broker in order to secure a higher interest rate from the borrower. It is also possible for the broker to pay the lender to obtain a lower interest rate. As shady as the term YSP is since no one understands it, it is not nearly as bad as what the direct lenders do without disclosing the profit they are making on the loan by charging usury rates. The largest contributors to the Republican and Democrat campaigns one year was Ameriquest Mortgage. An example would be the cap of 6% in fees paid to the broker, where Ameriquest has many times charged 15% in fees or more. They have been caught several times and they have been slapped on the hands and required to pay back any over-payments they collected on loans that were litigated.
Rik, on May 21st, 2009 at 3:01 pm Said:

HI all,

I have reviewed my original mortgage documents and I have noticed that there are two copies of the same form….(HUD/VA Addendum t Uniform Residential Loan Application) …one with First Mortgage Corp listed as the lender and Wells Fargo Bank, N.A. as the Sponsor/Agent, and one with these roles reversed.

Also one has a Lenders ID Code (Wells Fargo as Lender) and the other has a Sponsor /Agent ID Code (First Mortgage). Neither has both.

These forms contradict one another, and I assume that only one is correct. Would this be considered a RESPA violation?

There are several other instances where either Wells Fargo or First Mortgage are interchanged as lender or Sponsor/Agent. The documents were mixed in with many other documents which I signed while at the closing, and they look identical except for the reversal of lender references.

Another point would be my “VA Report and Certification of Loan Disbursement” form. This form lists First Mortgage Corp as the lender in section 24, and lists Wells Fargo as a “In Care of” reference later in the document. I assume this indicates that First Mortgage is the lender and Wells Fargo is the servicer? (Wells Fargo filed the Lis Pendens in my case.)

Wells Fargo and Florida Default Law Group have not responded in a positive way to any of my requests for information of filings. It seems they are just throwing lots of boiler plate documents at me in hopes of scaring me off. WRONG!!

Steps Taken so far…
- Response to intial claim filed. (Lost note…usual stuff)
- QWR Submitted (45 days, no response) Motion to compel in the works.
- Recission Letter Sent to Wells Fargo and First Mortgage.
- Motion to dismiss due to Lack of Subject Matter Jurisdiction filed.
- Florida Default Law Group – submitted amended claim saying note was found. SUPRISE!! Also filed defective Affidavit. (I intend to file a motion to dismiss this affidavit.)

Comments suggestions welcomed.

Thanks in advance.

Rik
louie, on May 7th, 2009 at 9:51 am Said:

Wow, often I agree with mostly everything in this site but, when it comes to TILA issues is not a matter of opinion but a matter of rules and facts. i would advice anyone here searching for TILA information to consult a qualified attorney. Please do not attempt to argue on your own. Someone’s opinion may sound good to you but may not be the answer. Good luck
Mortgage Audit, on April 29th, 2009 at 10:14 am Said:

HI Alina,

Can you send me a copy of your HUD-1?

Thanks,

Mortgage Audits
oliver@ipa.net
john
Alina, on April 29th, 2009 at 9:38 am Said:

Hi Mortgage Audit and Judy Scott,

When I reviewed my loan documents, my YSP was also not disclosed under the 800 section of the HUD-1. There is a mortgage broker’s agreement I signed at closing that stated that the mortgage broker fee will be between 0 and 7200 and that if a range is disclosed the actual amount will be disclosed at closing. IT WAS CLOSING. Nothing listed on the HUD-1.

Alina
Mortgage Audit, on April 29th, 2009 at 9:04 am Said:

Judy and Michael,

Here is a site to which you can learn the issues of YSP and Novastar.

http://www.kuow.org/program.php?id=12809

This site is perhaps the start and you will see that Novastar settled out of court with the suits in Washington state.

Mortgage Audits
oliver@ipa.net
john
Mortgage Audit, on April 29th, 2009 at 8:58 am Said:

Hi Judy Scott,

I would need to look at the complete loan documents to be able to see what is going on with your loan.

You should see the YSP listed in the 800 section (2nd page) of the HUD-1 Settlement Statement.

IF not you have hidden YSP in your loan. You can contact me at my email.

Mortgage Audits
oliver@ipa.net
john
Judy A Scott, on April 28th, 2009 at 5:45 pm Said:

The YSP was stated it will not be charged to us however; it was. They stated the loan amount of $170,000.00 on the TIL yet they charged us and financed our principal loan amount at $175,500.00 .
Where does the $5,500.00 come in at?
Judy A Scott, on April 22nd, 2009 at 9:47 am Said:

I have read pertinent parts of the TILA ACT do I get it ? That it states that the bank (ie) funder, lender is not allowed to charge any costs or fees to be financed into the principal loan?

Judy Scott
Illinois
Michael Phillips, on April 19th, 2009 at 3:08 am Said:

John Dunn:

John we don’t disagree, in fact I agree with what you said. However your statement assumes I was a proponent of not stating the YSP on the GFE and HUD-1 closing statement –THAT’S ILLEGAL and unnecessary. If you have a good relationship with your client they don’t mind.

Autoloan YSP’s. You said you one a case in Arkansas, which then I am assuming you have been admitted to the bar in that state. California has a law limiting YSP to $200 dollars on auto loans-stick with mortgages.

Bumping the interest rate for YSP. John an interest rate increase of 8% would give an YSP of 1600-2400 basis points-that would have been great if it existed, but it didn’t. The max increase for a YSP in the universe was 2.5%. From an increase of 1% on a 5% loan for 200k costs $45k on a thirty, a 2.5% $117k, an 8% $185k.

I don’t know what you mean by “Nova Star broker”, Nova Star was a lender and received no YSP, as they securitized their loans. Perhaps you were referring to brokers who used their wholesale line.

John I would be happy to correspond with you, you sound intelligent, and albeit perhaps inexperienced at the level I have been.

I would love to work with you, if you send me information on your company I would be happy to refer you business.

Yours truly,

Michael Phillips, W.T.F.
Wealth and Trust Financer
michaelp@lmallp.com see us at saveyourcave.org a new site coming, and donate to livinglies.wordpress.com.
Michael Phillips, on April 19th, 2009 at 3:07 am Said:

MF

I would like to respond to MF question about YSP and POINTS being paid to a broker. The answer is its okay. And a 4% broker fee is okay depending on the loan type and amount. You can be paid YSP only, YSP and Points or just points. Remember, every US citizen has the right let themselves be screwed by not shopping not reading their loan docs, make stupid decisions. Every business person has the write to attempt to get as much money from his clients. We don’t live in a Democracy, that’s what the people in power would like you to think – we live in a Capitolcracy who’s only conscience is money. Accept that MF and you will fair better.

Yours truly,

Michael Phillips W.T.F.
michaelp@lmallp.com see us at saveyourcave.org a new site coming, and donate to livinglies.wordpress.com.
Mortgage Audit, on April 14th, 2009 at 7:47 am Said:

Hi Michael Phillips.

I am sorry but I must disagree with you on the issue of the YSP.

The TILA requires the Lender to disclose the true cost of the loan to the borrower. By failing to disclose the YSP until closing is not “full disclosure” and telling the borrower that the fee is being paid to the broker by the lender and that they do not have to worry about it is “NOT FULL DISCLOSURE.”

Nova Star was one of those companies that made it a practice to hide this from the consumer. I know this first hand as I worked with a Nova Star broker several years ago and who informed me that all of their new brokers were taught how to do it.

The up-sale of the interest rate causes the note payment to be higher and over the course of the loan that 1% to 8% runs into the $10,000.00 of dollars and strips the equity right out of the home.

It is constructive fraud. Just won a case in Arkansas on Friday of this past week. We were able to get the Servicer to remove all the YSP out of the loan. We are still in litigation as we are suing the Servicer who was attempting to foreclose and as of May of 2008 they have not been able to produce the NOTE. Fannie Mae owns the note.

I would like to see an investor come into my organization so that we can go after YSP in auto loans.

John Dunn
Mortgage Audits
oliver@ipa.net
MF, on March 30th, 2009 at 11:50 pm Said:

Michael P,
You said that YSP are not inducement for fraud. It can be used for a no closing cost loan, etc. What about if the buyer paid 2% to broker and broker got another 2% from lender due to YSP? wouldn’t that qualify as a RESPA violation? Just asking
Michael Phillips, on March 27th, 2009 at 9:46 am Said:

Dan Junk, With regard to your question about the warehouse line of credit. A warehouse line of credit is available to brokers, lenders, from lenders, and investment organizations like Bear Stearns. They (were) similar to a an unsecured line of revolving credit, except you could only use it to fund mortgages. It allowed the small lender the ability to fund and underwrite mortgages at a discount either through themselves or through brokers, where they would make a slim margin. The loan title was then registered in the lender’s name, the institution giving the line of credit (in the case of a warehouse line from Countrywide) or Waldo? You can find the last person who recorded purchasing your loan by asking a mortgage or real estate professional to contact his/her title rep and get full background information on the title.

As for your comment that the lender had sold a fictitious loan before it was consummated, that would cause more issues for a lender than profit, as a percentage of loans do not get funded. For example, on a $400,000 loan @ 5% interest, if I draw docs on Monday, the loan is signed on Monday, I fund it Friday, the interest cost is $164. On a $400,000 I will make 2.5 points, if I am greedy I will make four and if I am naughty I will get 8 between the yield spread, points and junk fees. You’re talking $10k to $30k profit, I am not worried about $200 bucks. Besides, I could tack in on junk fees, or beat up my title guy or appraiser on price. Another factor why we could not pre-sell a loan is because the buyer has to choose to buy it based on their review, they can say no, and then I have to find a buyer it for it or carry it myself.

As far as who owns your loan, its not the revolving line of credit that owns the loan. If the lender went bankrupt before it was sold, the trustee would sell the note and pay the money to the creditors. Believe me the creditors didn’t leave anything left. Somebody bought it.

Hope that helps, if you have any questions, contact me at michaelp@lmallp.com or login to the soon to be saveyourcave.org, a broker’s non-profit site
Dan Junk, on March 16th, 2009 at 2:26 am Said:

Warehouse Line of Credit.

Can you elaborate for us on how these work and whether they are the true source of funding the loan? From what I have been reading, it seems these are the vehicles that allow the broker or originator to sell the loan prior to closing. As I understand it, the loan is paid for by the WLC and sold be the originator in advance of the closing and he originator pays fees only for the time the loan remains on the WLC entity’s books. many times it allows for the sale of the loan into the secondary market even before closing and allow the originator/broker to perform the transaction as an off balance sheet transaction.

Is this correct?

What in your opinion is the result of a loan being originated through such a process/vehicle where the originator then files bankruptcy and lists the WLC as a non-priority, unsecured creditor (and the amount listed exceeds $1B)? Is there a way to find out whether an individual note is a part of that unsecured creditor amount listed?
Michael Phillips, on March 12th, 2009 at 4:49 pm Said:

Yeild spread premiums can be paid on virtually every loan except in a couple of states. They are not an inducement for fraud. YSP’s are one way for broker compensation, the other is points paid by the borrower. A ysp increases the interest rate. I could do a loan with no points, no fees increase the interest rate and ysp and pay the closing costs out of my YSP. For example in the reverse a customer can pay points and buy down the interest rate. In both cases it is better for the borrower to get a no points no fees loan. The reason why is if you take your origination fees closing costs or buy down points as an investment-they don’t pay off.

Also many times on cash out refinancing the borrower did not have equity for broker fees and closing costs.

However, like in many cases a similar scenario would give a lender a higher YSP, maxing the ysp by increasing the interest rate, giving a person a fulling adjustable MTA ARM.

YSP’s are not inherently bad. The Lender gets a YSP when he sells the note on the secondary market – that’s how its done.

Michaelp@lmallp.com
George, on March 4th, 2009 at 10:10 pm Said:

There is indeed another mers-type entity as described in another posting, Virtual Mortgage Services, updated 3/4/09, the main item I noticed is that they operate in each and every state in the US, and that “yield spread premiums are’t disclosed”. Perhaps someone can explain the ramifications of that statement and that entity. I understand that yield spread premiums are paid to the mortgage broker for steering borrowers into higher-priced or more profitable loans, and as such, are illegal as a breach of the brokers’ fiduciary duty to the borrower. Well then what the…?