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 mortgageimplode.com 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 www.repurchasespecialists.com
or e-mail
[email protected].
