Back when the housing market was hot, lenders were qualifying borrowers for loans who were probably never able to qualify for a home loan before. These borrowers are now upside down on the mortgages because the rates adjusted and they can no longer afford their homes, in turn most are going into foreclosure, or being forced to sell through a short sale.
In turn, homeowners and the government are taking more and more of these institutions to court, stating unfair and predatory practices. While most of these suits are still finding their way through the legal system, most banks have already settled for millions of dollars.
Wells Fargo, Countrywide Financial and Citigroup are just a few among the rest of the defendants. Borrowers who are suffering with such issues are turning to the legal system to save their homes. Many professionals say they have not seen so many cases in over 23 years.
Some Homeowners are seeking the courts’ help individually, while others are serving as part of class action lawsuits. With foreclosures continuing to rise, borrowers are looking to force banks to modify unaffordable loans or to stop them from foreclosing on homes. Often, they also seek money for loss and damages.
Banks have faced lending lawsuits and have paid millions of dollars in settlements. But the recent housing boom was fueled by questionable loans that many borrowers had no hope of repaying, because realistically they would not be able to afford it in the long run.
During the housing boom the mortgage industry went after the middle-class borrowers, these people are able to hire attorneys and go after the lenders. Borrowers in a more sticky financial situation, are turning to attorneys who take payment when the case is won. In most cases when an attorney is hired to help against the foreclosure of their home, they win the case.
There are also a ton of class action suits on behalf of thousands of homeowners. A lot of the class action cases are because borrowers were originated payment option adjustable-rate mortgages. This loan allows you borrowers to make very low monthly payments, with the unpaid interest added to the principal balance of your loan. Most borrowers have ended up defaulting on their payments because of this. The purpose of the lawsuits are to get the lenders to restructure the loan to make it more affordable for the borrower. This lawsuit will also seek damages for those borrowers who have already lost their homes or paid off their loans.
State attorneys general are also filing suits against the industry’s key players, stating deceptive business practices. The California-based lender agrees to do some more loan modifications and not to foreclose upon up to 2,200 loans without notifying the attorney general’s office and seeking court approval in certain circumstances. Attorney Generals continue to hold the lender liable for this nightmare they have caused so many people.
Bank of America agreed to spend $8.4 billion to lower the interest rates or loan balances of nearly 400,000 Countrywide customers with subprime loans or payment option ARMs. The number one lender in the Country is now responsible for giving out loans that the borrowers could not afford
Although there has been in increase in lending disputes, there aren’t as many lending lawsuits as expected, considering the how big subprime loans were during the housing boom. These suits are expensive and difficult to win. Said cases could take anywhere from months to years to resolve.
This lending crisis has left many people in a bind. Seeking proper legal help is the only way to insure you get out if it in one piece.