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Gaining more time: Seven steps in helping your business become organized

National Mortgage Professional
Aug 19, 2008

Watch out! Here come the lawyers!Andrew L. Liput Esq.lawyers, real estate law, NAACP, Countrywide, Wahsington Mutual Well, it was inevitable. There is no time in American history when a crisis took place and lawyers didn't immediately circle the wagons like vultures seeking new prey. Those lenders and Mortgage Brokers who had breathed a sigh of relief as they escaped the dark, anguish-filled days wondering whether their names would be added to the victims gleefully posted on are now facing new obstacles to recovery in the clever ways lawyers are finding to sue on behalf of borrowers. One interesting spectacle is the National Association for the Advancement of Colored People (NAACP) filing a class action lawsuit against Countrywide, Washington Mutual and others over the predatory practice of offering loans to borrowers who could not afford them, but who were divined by Congress and the Federal Reserve to get them anyway. Ten years ago, the same people and groups that now claim banks forced loans on marginal borrowers were calling for investigations and government action to ensure the very same lenders changed their lending criteria so that marginal borrowers could qualify for the American dream of homeownership. Smart defense lawyers should call government leaders to the stand and quiz them on their sudden conversionthe one that transformed sub-prime loans from an equal opportunity vehicle into a curse word in less than a decade. On the local front, I am seeing the most amazing lawsuits filed against lenders that one could imagine. In a notable state court action, a borrower is claiming that when they committed loan fraud and lied about their income, they "had no idea what they were doing" and, now that they are in default, want their loan canceled. In another, borrowers who signed a commitment and other disclosures, clearly spelling out a prepayment penalty, now claim their loan officer told them "not to worry about it," leaving them damaged when they were forced to pay a hefty fee to refinance their adjustable-rate mortgage loan with its adjusted, higher rate. However, my favorite is the borrower who admits in court documents that he was paid to act as a straw buyer in not one, but two deals and, now that he has failed to earn the fruits of his fraud due to his partners duplicity, has sued the mortgage lender. He claims the bank "should have known of the fraud and prevented the loan from closing." Unfortunately for lenders, there is a dearth of judges, and even lawyers, who know enough about the way the mortgage industry operates. Those involved in these cases have a perception of lenders and brokers that has been skewed by the negative publicity of the sub-prime meltdown. The screeching rhetoric of politicians in a presidential election year has merely made the gap between truth and fiction, as it applies to the perpetrators and victims in the housing crisis, much wider and more difficult to cross. Hold onto your hats (and wallets), folks. These types of lawyers are coming, and the future for those brokers and lenders still left standing doesn't look pretty. Andrew L. Liput Esq. is president of The Liput Group and owner of New Jersey-based Repurchase Resolution Specialists Inc. He may be reached at (888) 424-3728, through his company's Web site or e-mail [email protected]
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