Mortgage-Related Unfair Practices
In 2018, Wells Fargo revealed that “a calculation error” in the software it used to for the modification of mortgage loans. That error resulted in 870 homeowners being denied mortgage modifications they should have gotten. This class action is brought by a couple who were among those wrongly denied a modification.
Plaintiffs Clyde and Michelle Igarashi claim that their home was illegally foreclosed on by parties who did not own their mortgage. The central allegations in this class action involve a long list of defendants and the ways that the turning of mortgages into mortgage-backed securities (MBSs) or “trusts” has led to a clouding of title and improper foreclosures in Hawaii.
When individuals or companies are in bankruptcy, the law protects them from attempts to collect on debts that were undertaken before the bankruptcy case. Debt collectors may also not attempt to collect debts that have been settled via a bankruptcy. The complaint for this class action claims that Shellpoint Mortgage Servicing ignored a bankruptcy plan that included a property it believed it was servicing. The complaint claims that Shellpoint violated the Fair Debt Collection Practices Act (FDCPA).
Maryland law forbids lenders from charging borrowers an inspection fee in relation to a mortgage loan secured by residential real property. The complaint for this class action claims that the Federal Home Loan Mortgage Corporation, also known as Freddie Mac, did exactly that in connection with the plaintiffs’ mortgage loan.
Mortgage companies often maintain escrow accounts for customers, holding sums collected with monthly payments and from which they pay certain expenses once or twice a year. The complaint for this class action alleges that Citibank, NA violates New York and other state laws by not paying at least 2% interest on these escrow accounts to the borrowers.
Buyers used to have to make a 20% down payment on a home for banks and other lenders to feel secure in giving them a mortgage. Lenders preferred to risk only 75%-80% of the value of a property and to want buyers to risk significant equity as well. However, as home prices have gone up, lenders have devised another solution—private mortgage insurance, or PMI. However, the complaint for this class action alleges that Bank of America, NA has taken advantage of PMI and refused to stop billing borrowers even when the PMI is no longer needed.
RoundPoint Mortgage Servicing Corporation has agreed to refund money to borrowers to settle a class action about lender-placed insurance (LPI, also known as force-placed insurance). Mortgage lenders require that homeowners have an LPI policy when the homeowners’ insurance lapses or when the homeowners’ policy is not considered acceptable to the lender.
Wells Fargo has seen a number of scandals, including its employees opening fake accounts for real customers and its force-placing of unnecessary auto insurance on car loan borrowers. Now, the complaint for this class action alleges that the bank wrongfully refused certain customers home loan modifications under the Home Affordable Modification Program (HAMP).
Wells Fargo is settling yet another class action with a $30 million payout. The complaint alleged that Wells Fargo violated the terms of the promissory notes underlying certain FHA-insured home loans when it collected post-payment interest without providing proper disclosure to borrowers who made prepayment inquiries, requested pay-off figures, or tendered prepayment.
If you’re a homeowner, chances are you’re required to pay certain yearly expenses, like your property taxes or your homeowner’s insurance, to your mortgage lender. You pay a little every month, and then once a year the lender pays the tax office or insurance company on your behalf. In eleven states, lenders are required to pay interest to borrowers on the amounts stored in the escrow accounts during the year. However, it seems that not all lenders are doing this.