Beware of Your Mortgage Lender’s Practices

  • April 3, 2013

The housing crisis, economic downturn, and confusion regarding mortgages that have been sold to different banks again and again have created a climate ripe for mortgage abuse cases. Distressed homeowners, facing threats of potential foreclosure, are often unaware of lender abuses or unsure where to turn for assistance.

Last month, Chase Home Finance LLC agreed to a settlement of over $48 million which will be shared among roughly 6,000 military servicemembers. The military homeowners claimed Chase violated the Servicemembers Civil Relief Act (SCRA) when the company overcharged them for mortgage interest, and then illegally initiated foreclosure proceedings against those on active duty.

The SCRA provides that military personnel on active duty have the right to have interest rates lowered to six percent. Additionally, the SCRA prohibits banks from foreclosing on the homes of active-duty military personnel in the absence of a court order.

Chase is not the only bank engaging in these wrongful practices. Saxon Mortgage Services, a division of Morgan Stanley, settled a similar case in March where a servicemember alleged the firm wrongfully seized and then sold his home. Several mortgage and lending firms are also currently being investigated by the U.S. Department of Justice’s Civil Rights Division for illegal foreclosures against military servicemembers.

Military homeowners are not the only individuals vulnerable to mortgage abuse. A recent deceptive mortgage practice that is emerging involves homeowners who are current on mortgage payments, but paid their own taxes and insurance instead of creating an escrow account.

When the mortgage is sold to another lender the second lender brings in an additional company as the “services lender.” An escrow is created and the homeowner is informed they are delinquent on their taxes and responsible for additional financial penalties. Attorney Clint Brasher has been seeing these deceptive mortgage practices frequently in Texas.

If you feel your rights have been violated under the Service members Civil Relief Act, or if you think your lender is wrongfully charging you penalties or foreclosing on your home, contact an experienced lawyer. A knowledgeable attorney can advise you of your rights and advocate on your behalf.