Attorney Judson E Crump

How to Cancel Private Mortgage Insurance (PMI) – Alabama Consumer Credit Attorney Judson E Crump

June 24, 2014 by Attorney Judson E Crump 1 Comment

Private Mortgage Insurance (PMI, as it is affectionately abbreviated) is one of the many features of the “new” housing market. For those of you who don’t know, PMI is basically an additional fee that is charged to a borrower who cannot afford to make a 10% or 20% down payment on a home. PMI usually adds a couple hundred dollars to your monthly mortgage payment, and you don’t get anything in return for the money. It exists entirely to compensate the bank for the risk of lending to you. Needless to say, it’s a bad deal and you should avoid it if you can. If you already have a loan with PMI, you need to cancel it as soon as possible.

First, a brief summary of what private mortgage insurance is. The idea is this: traditionally (like 30 years ago), you couldn’t get a mortgage without coming up with 20% of the purchase price of your home. But even though most people can’t afford a 20% down payment, banks still want the assurance of having a 20% equity cushion to protect their investment in your home. At the same time, they don’t want to turn away the millions of borrowers who want to buy houses with less than 20% down payments. So here’s the solution: they charge you extra for the privilege of borrowing without having 20% down.

I really have no idea why it is called “private,” but I do agree that in a way, it is “insurance” that you won’t default on your loan. Or rather, it is insurance that of the thousands of PMI-burdened loans in a given lender’s portfolio, only a few will default before the bank gets its 20% equity cushion, and therefore the millions of payments made by the majority of the borrowers will more than compensate the banks for the risks they took issuing the loans in the first place.

As much as the banks would love to stick you with 20 years of PMI premiums, there is a law that was passed in 1998 (Clinton was president, and Britney Spears came out with (Hit me)”…Baby One More Time“) that prevents them from doing that. Once you have racked up enough equity in your home so that the balance of the mortgage is 78% of the original value of the property, the bank MUST cancel the PMI. This will cause your mortgage payment to go down a significant amount. But here’s the kicker: at 80% of the original value, you can write the bank a letter requesting that they cancel it, and they have to do so. On the average 30 year mortgage loan in Alabama, that means that if you don’t notify the lender that you want PMI to stop, there will be about 9 months where you’re paying about $150 more than you have to! That is as crazy as it sounds.

So here’s how to avoid it.

1. Calculate the 80% threshold you need to cross. You do this by using the appraised value of the home at the time you got the loan. If home prices have gone down, that is the bank’s problem, not yours. They are not entitled to a permanent equity cushion. So if you bought a $200,000 home in 2004 and borrowed $175,000, then you can cancel PMI once your unpaid principal balance is $160,000. It doesn’t matter if the home is now worth $100,000 or $500,000.

2. Look at your amortization schedule and mark the date that you’re expected to cross that threshold. Be sure to keep track of any overpayments. If you’re prepaying $100 per month, then you’ll get there before the amortization schedule says so.

3. Write the bank a letter the day you cross the line. It doesn’t have to be fancy lawyer stuff. Just say: my principal balance is now less than 80% of the original value of the property, and therefore I demand that you cancel all Private Mortgage Insurance related to this loan.

4. Enjoy saving hundreds of dollars. Once you’ve notified them of your request to cancel PMI, you have no further responsibility to pay PMI.

5. Make sure they respect your request. Sometimes mortgage companies “lose” paperwork or just ignore your requests. If the mortgage servicer continues to charge you for PMI, they are breaking the law. Write a second letter disputing any PMI charges or late fees that may have resulted from their failure to treat your non-PMI payment as an incomplete payment. Also dispute their reporting of the incomplete payment on your credit report. If they don’t fix it, call a lawyer.

OK, sometimes it can be slightly more difficult. The mortgage servicer can request that you provide proof that the property has not declined in value. This usually means some sort of written valuation report, like a tax assessment, an appraisal, or a Broker Price Opinion from a realtor. If you have to hire an appraiser, let them know beforehand the purpose of the appraisal. Your goal is to show that the property has not declined in value, so you want an appraisal that shows that the property has kept its value or even appreciated.

What to do if your Credit Application is Denied? – Alabama Consumer Credit Attorney Judson E Crump

June 16, 2014 by Attorney Judson E Crump Leave a Comment

I remember the first time I applied for a credit card. I wanted to buy my school books on Amazon.com, and they had this big banner on the website that said I could get a 10% discount if I bought my stuff with their Amazon.com credit card. So I clicked the link and filled out the credit card application. Then my computer waited for a minute…and came back with the result:

I was denied.

That really pissed me off. It was embarrassing, and I felt ashamed somehow. I understand now that I had no credit history at that point, so I was not a good credit risk then. But it still made me angry. It was an insult: I had been measured and found wanting.

So what do you do if this happens to you? The first thing you need to do is read their denial notice. By law, they are required to provide you with a notice of their decision on your application within 30 days of the application. The denial notice must tell you why they denied you. If they don’t give you a statement of reasons or the denial was based on a reason that is bogus or discriminatory, you need to contact a lawyer. Note that even if they don’t directly intend to discriminate – if the effect is discriminatory, they could be violating the Equal Credit Opportunity Act.

If the denial was based on a credit report, the denial notice must tell you whose credit report they used. They should provide the name and address of the credit reporting agency that gave them your report.

Write a letter to the credit bureau demanding a copy of the report that was used in the denial. LINK UPLOAD DENIAL EXAMPLE. They have to provide it to you free of charge. If they don’t, call me.

Read the credit report. Make sure everything is accurate. There very often are false items that drag down your credit rating. You have a right to remove or modify anything that is not accurate.

Dispute everything that is false. Be clear, but concise. Keep copies of everything.

They have 30 days to process your disputes and either remove the negative info, change it to make it correct, or tell you why they’re leaving it as it is.

If they fail to fix it after you’ve disputed it, you can take them to court for the damage they’ve caused to your reputation and creditworthiness.

Who’s suing you, Part IV: Who is Cavalry SPV I, LLC? – Alabama Consumer Credit Attorney Judson E Crump

June 13, 2014 by Attorney Judson E Crump 7 Comments

Cavalry SPV I, LLC is a fairly standard debt buyer. They purchase old accounts that have been charged off to loss by the original creditor. I have fought Cavalry SPV I, LLC in court before. On August 27, 2013, I tried the case “Cavalry SPV I, LLC v. Andry” in the District Court of Mobile County, Alabama, and won a judgment for the defendant. That lawsuit was brought on an account allegedly owed to CitiFinancial for about $3,000. Now it is gone forever.

I have defeated or dismissed several cases Cavalry SPV I has brought against Alabama citizens since then, so I can assure you: with the right lawyer on your side, you do have a fighting chance!

If you have received a summons from Cavalry SPV I, LLC, be sure to answer the lawsuit. Cavalry SPV I often doesn’t send collection letters or make phone calls before suing you, so some people assume that the summons is bogus or a scam. Whatever else they might be, Cavalry SPV I, LLC is not a scam! If you read my articles, you know that I will tell you if an outfit is a scam or not, and Cavalry SPV I is not. They are a real debt buyer and if you get a summons from them, it is a real lawsuit and if you don’t answer, they will get a default judgment against you and that will enable them to place liens on your property and garnish your wages and bank accounts. Trust me: you don’t want a default judgment against you.

Fortunately, Cavalry SPV I, LLC is not hard to beat in court if you have the right lawyer on your side.

A Tour of My Garden – Alabama Consumer Credit Attorney Judson E. Crump

June 11, 2014 by Attorney Judson E Crump 3 Comments

Sometimes people ask me what I do on the weekends. Or how I manage to feed my family on a consumer protection lawyer’s income. Both questions have the same answer. I have an awesome garden. To my friends and colleagues up north: Be Jealous. To my compatriots here on the Gulf Coast: look what we could be doing with all those boring green squares of centipede grass!

Porte d'jardin — Garden Gate covered in grapes and honeysuckle.

Start at the entrance: where there is a gate covered in grapes and honeysuckle. These grapes don’t produce until July & August. They’re red and white.

White Mountain Mint & Artemesia. Both grow wildly here on the Alabama Gulf Coast. Excellent groundcover. The mint is edible.

Onions, Garlic, & Shallots — Some of my onions, garlic, and shallots. Throw old onions and garlic cloves into the dirt in August, and this is what you get the next May.

Selma Suns — Sunflowers. We love them and they love us. And the birds.

Zinnias yellow — Zinnias. Easiest cutting flower to grow on earth.

White Echinacea — For some reason, my three year old son thinks this coneflower is ‘vanilla,’ and he picks them to make ice cream.

Blueberries. I have no idea why they’re so costly at the store. They grow like weeds around here.

Apples! In Baldwin County! The only thing good about a polar vortex.

3 types of Lettuc — 3 types of lettuce. All crispy and fresh. Water it a few hours ahead of time if you’re planning on making a salad.

Concord Grapes. They’ll be perfect around 4th of July. They should be called ‘Mobile Grapes,’ because I guarantee they grow better here than they do in Concord.

Heat Insulation — Natural Insulation from the blazing sun. Virginia Creeper.

How to Avoid Getting Defrauded by a Mortgage Company – Alabama Consumer Credit Attorney Judson E Crump

June 9, 2014 by Attorney Judson E Crump Leave a Comment

Sometimes mortgage servicers charge people money they don’t owe. Yea, it happens. Sometimes it happens by mistake. Despite being huge, well-funded, and advised by hundreds of different corporate lawyers, mortgage servicers can and do screw up sometimes. They may apply a payment to the wrong account. They may charge you for flood insurance when you don’t live in a FEMA-defined flood plain. They may apply a payment after the grace period, when in fact you sent it to them well before the grace period.

So how do you prevent that from happening in the first place?

1. Use online bill pay. This hugely convenient service (nowadays provided by almost every depository bank) allows you to keep years of records of payments made without having to keep giant folders full of paper somewhere in your home. If there is ever a dispute about when a check was cashed by a bank, you have the proof right at your fingertips. It also allows you to track when payments were sent.

2. Keep Notes. If you pay by writing your own checks, just keep notes of when they were sent. A lot of problems begin with the mortgage company not crediting you on time. For instance, you mail a check to Nationstar Mortgage on May 3rd, you know that the US Postal Service takes an average of 3 days to carry an envelope to Iowa, where the mortgage servicer’s lockbox is. It should be there by May 7th at the latest. But they don’t credit you until May 15th, after the 10 day grace period. That is a problem. Lenders and mortgage servicers are required to promptly credit you for payments made. If they don’t, they’re breaking the law.

3. Shop for your own insurance. Most mortgage loans have escrow accounts attached to them that provide for the payment of taxes and insurance on the property. If you let your insurance lapse or fail to obtain your own insurance, the mortgage company can place their own insurance, called “Force-placed insurance.” This is always a ripoff because it costs you more than your own insurance would and it gives you less coverage. Why? Because the mortgage companies keep the extra money. If you find your own insurance from a licensed agent in Alabama, then the mortgage company has to accept it if it provides adequate coverage. They have no choice but to pay the insurance you choose.

4. Don’t take their word for it. Sometimes a lender will place bogus fees and charges on top of your loan. You may get a statement that has a “property preservation fee” or a “miscellaneous corporate advance fee.” The mortgage contract does allow for a few reasonably necessary expenses to protect the property and their legal rights, but the keywords are REASONABLE and NECESSARY. You have a right to know what they’re charging you for. If you see something that looks suspicious, write them a letter disputing that you owe the charge and demanding an explanation for what it is. They have to tell you.

Beat Midland Funding (Again) – $2,000 collection lawsuit in Baldwin County – Alabama Consumer Credit Attorney Judson E Crump

June 6, 2014 by Attorney Judson E Crump 3 Comments

Another trial against Midland Funding. Another victory for the consumer.

On Friday, May 30th, I tried another collection lawsuit against Midland Funding – this time in Baldwin County, at the Fairhope Courthouse. For those who aren’t familiar with Alabama’s largest county, Baldwin County actually has three separate courthouses. The main one in Bay Minette is at the northern end of the County, and for people who live down at the beach, the county seat is over 60 miles away. That’s a 1.5 hour trip for people living in Fort Morgan. So a few years back, the county opened a satellite courthouse in Foley for the beach folks, and a satellite courthouse in Fairhope for those who live in the more heavily populated Eastern Shore of Mobile Bay.

This case was about an old computer purchase. They claimed that my client bought a Dell computer from a company called WebBank, who was at the time in charge of financing options for Dell computer sales. Dell Financial Services was the “servicer” of the loans. And WebBank at some point sold the account to Asset Acceptance, who sold it to Midland Funding, who then sued my client for $1900 plus court costs.

Midland actually took the case seriously: about a month before trial, they subpoena’d my client to appear in court. This is something they don’t do unless there’s an attorney involved. If you answer pro se, they’ll expect you to appear on your own. Some lawyers instruct their clients to answer pro se and then the lawyer appears on the day of court to ‘ambush’ the collector, and that’s fine, as long as no “ghostwriter” pleadings are involved, but I’ve found that isn’t even necessary. Now, sometimes a client really does call me the day before a trial and I’ll appear for them, but I prefer to let the collector know that I’m coming from a long way away. It usually doesn’t affect the end result.

When they send you a subpoena, it just means that you have to show up and testify. The idea is to try to get you to prove a) that you owe money and b) that their statements and assignment documents are true and admissible as evidence. So in this case, my client had to show up for trial and Midland’s lawyer called her up to testify. It didn’t matter though, because I convinced the judge to exclude their other evidence and without it, there wasn’t enough to prove their case. So we won.

Credit Card Aggression Ratings 2014, Continued: The Best Credit Cards to Have if you Fall Behind on Payments – Alabama Consumer Credit Attorney Judson E Crump

June 3, 2014 by Attorney Judson E Crump Leave a Comment

(Continued from Page 1)

4. Local Credit Unions. Varies from 4 to 9 out of 10.

Smaller credit unions who issue credit cards are usually pretty tough to beat in court, mostly because they’re local and they can drive a witness there to prove their case against you, rather than having to fly someone in from Des Moines. Furthermore, they usually cross-collateralize their cards with auto loans and things like that, so they can hold your car hostage to your credit card bills. But their smallness sometimes makes them easier to get to a real person who may understand your predicament and be willing to work out an affordable payment plan.

5. Chase Bank. 4 out of 10.

Chase usually won’t sue people without first putting a lot of effort into collecting voluntary payments from them. If you get behind with either of them, you’re much more likely to have the account sent to a third-party debt collector than facing a Capital One-style blast of lawsuit papers.

6. Citibank. 3.5 out of 10.

Like Chase, Citi will try very hard to get you to pay on your own before taking you to court, and even then they’ll usually farm out the dirty work to a collector. I know from recent experience that Citibank employs one of the more legit third-party debt collectors I’ve dealt with – United Collection Bureau – to handle its collections pre-chargeoff, and they can be fairly flexible if you can explain to them why you’re not making payments.

We won't sue you. We're angels! — “We won’t sue you. We’re angels!”

7. Store cards: JCPenny, Victoria’s Secret, Lowe’s, etc. 1.5 out of 10. These guys win the “Most Lenient to their financially distressed customers” prize. They hardly ever sue their customers. I suspect that it is for two reasons:

1) The balances usually are not that high, and

2) They want you to keep shopping there whenever you get out of financial trouble. Even though the stores themselves don’t actually own the debts – usually they farm out that job to other banks like GE Money Bank (which recently changed its name to GE Capital Retail Bank). They will almost certainly sell your account to a third party debt buyer, who may or may not sue you. But even then, they are typically fairly easy to settle for a decent discount.

One thing you do need to watch out for with GECRB accounts is your credit report. They often add authorized users (like your spouse or kid) to the credit card account so the whole family can shop till they drop, but then later report the account on their credit reports, even though the initial applicant is the only person who is actually liable. Check your credit reports, folks.

So that’s it for your 2014 Credit Card Aggression ratings 2014! Come back next year to see if anyone can top Capital One in Ebenezer Scrooginess.

I invite my fellow debtor’s lawyers to give their input regarding my list.

Credit Card Aggression Ratings 2014: Which Credit Cards are the Most Aggressive when you miss payments? Which are the most lenient? – Alabama Consumer Credit Attorney Judson E Crump

June 2, 2014 by Attorney Judson E Crump Leave a Comment

How you can expect to be treated if you fall behind on a credit card bill varies widely depending on what company you’re dealing with. I cannot claim to have dealt professionally with every company out there, but I have encountered enough to know what to expect with most of them. Here they are, organized in ascending aggression (meaning that the nicest ones are at the top, meanest ones are at the bottom).

1. Capital One. Aggression Rating: 10 out of 10.

Capital One Bank sues the hell out of its customers. — “What’s in your wallet?” Not a dime if your misfortunes ever put you behind with Cap One.

I have literally seen Capital One sue a customer who had paid them religiously for years exactly three months after she fell behind on her payments. Not only did they sue her right out of the gate, but they hit her with lengthy discovery requests and basically boxed her in and left her no choice but garnishment or bankruptcy. If you aren’t rich enough to be immune to, say, an accident that leaves you hurt for 6 months of no income, you may want to avoid them.

2. Discover Bank, Issuer of Discover Card. 9 out of 10.

Discover is the only credit card company I have personally seen file an appeal when they lost a collection lawsuit. They almost never refer their accounts to debt collectors. They are definitely of the “sue first, ask questions later” mindset; so much so that they make personal injury attorneys look like timid lambs. That isn’t to say that you can’t work out a deal after you’ve been sued – if you’re uncollectable, then their collection lawyer may be able to settle with you. But don’t expect any kindness at the outset.

"IT PAYS TO DISCOVER" that you may as well file bankruptcy if you can't pay them off. — “IT PAYS TO DISCOVER” that you may as well file bankruptcy if you can’t pay them off.

3. American Express. 7 out of 10.

Amex is also of the “sue first, ask questions later” mindset, but they seem to be a bit less attached to their lower-value accounts. For some reason, I don’t see many small claims suits from them, possibly because they work to make payment arrangements with people. Honestly haven’t had many chances to tangle with them in court as of yet.

Next Page: The more lenient credit card companies.

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Send your Mortgage Servicer a Qualified Written Request in Alabama – Alabama Consumer Credit Attorney Judson E Crump

May 30, 2014 by Attorney Judson E Crump 4 Comments

How do you fix a problem you’re having with your mortgage company? Most of the time, you can do it without hiring a lawyer or going to court.

But if you try to get it done with a quick phone call, you’ll probably just get that familiar message: “We’re experiencing unusually high call volume. Please hold for the next available operator.” And you hold and hold and the Indian kid that finally answers the phone is an overworked, underpaid peon who has no authority to do anything more than repeat what his computer tells him about your account.

So you write a letter. But not just any letter. A special kind of letter, one that your mortgage servicer is required by law to acknowledge within 5 days. You write a Qualified Written Request.

If you search the internet for an example of a Qualified Written Request (QWR), you are likely to find a lot of documents that claim to be QWRs, but really are not. Why? Because most of the “QWRs” out there are just blanket requests for information, demanding all sorts of loan documents and other things. Mortgage servicers have no obligation to respond to a request that doesn’t “state the reasons for the belief of the borrower that the account is in error.” Walker v. Equity 1 Lenders Group (S.D. Cal. 2009).

Here is what makes a QWR a QWR:

1. You specify particular errors or omissions that you believe to exist with the account. For instance, you may believe that you were wrongfully assessed $15 “property preservation fees” for 3 months. You need to state that fact in your letter.

2. QWR response requirements only apply to servicers, not the originator or the holder of the mortgage. This is usually the people who send you a statement every month. If you receive regular statements, look on the back of the statement for a Qualified Written Requests address. This may be different from the regular correspondence address and the payment address. If you don’t send it to that address, you may not be able to hold them liable for failing to respond.

3. Demand specific information. DO NOT send a gigantic list of requests for documents. The new CFPB regulations 1024.35 specifically exempt servicers from liability in response to an overbroad request. You can request documents, but they must relate to your dispute. For instance, if you are disputing the servicer’s right to charge you force-placed flood insurance, then you can rightfully request:

Proof that the policy was paid for;
The identity of the insurer;
The provision in the mortgage and note that allows them to charge you such fees;
Declarations pages and other documents relating to the insurance policy;
Flood zone certification.

If your only problem is that they’re charging you bogus flood insurance, that does not give you the right to demand a copy of the appraisal used when you bought the house back in 2007.

4. Demand specific corrective action. This should be obvious, but it is something that a lot of people fail to do because they’re more concerned with getting documents and hoping to find a technical violation they use against their lender. The purpose of the QWR and the Notice of Error is to help you and the bank correct mistakes without having to go to court. If you don’t tell them what you want fixed, you can’t hold them liable for failing to fix it! So if they’ve assessed you $45 of bogus “property inspections,” you need to demand that they credit you for that $45, plus any interest or other fees that arose from your not having paid that amount. You also can request that they fix any mention of such account on your credit report.

HERE is a sample QWR that demands information relating to insurance and property inspection fees. Sample QWR

NOTE: There are two exceptions to the rules that a QWR relate to a specific dispute. Even if there is no evidence of a mortgage company doing anything wrong, you always have the right to know a) who owns your mortgage and b) what is the payoff amount. The Dodd-Frank Amendments to TILA allow you to request the identity of the holder of your mortgage note at any time and without being charged a fee. 15 U.S.C. 1641(f).

In Alabama, your QWR should mention that you demand a payoff statement pursuant to Ala. Code Sec. 35-10-91. Alabama law provides a specific right to know the payoff amount for your loan.

The QWR can be a very useful tool for fixing account errors and learning why you have been charged amounts you may not legitimately owe, but it must be used judiciously and done properly. If a bank refuses to acknowledge your QWR within 5 days or correct/explain the mistake with 30, then they are liable to you for any damages you sustain as a result. You can do this.

Is a lender or finance company required to tell you why you were denied credit in Alabama? – Alabama Consumer Credit Attorney Judson E Crump

May 29, 2014 by Attorney Judson E Crump Leave a Comment

Absolutely. And they have to tell the truth as well.

Whenever you apply for credit – be it an automobile loan, a credit card, a home mortgage, refinance, or any other sort of credit, the Equal Credit Opportunity Act requires the lender to do two things:

1) they must notify you of their decision on your credit application within 30 days, and

2) if you were denied, they must tell you the reason why.

The Equal Credit Opportunity Act was initially intended to prevent unfair lending discrimination. By requiring lenders to tell applicants why they were denied, it became much harder for discrimination to occur. But you don’t have to be part of any particular race, religion, or class to be protected by ECOA. You are entitled to notice of a decision within 30 days and an explanation of the reason why. If your credit application is granted, then great, you’re free to accept their loan. If your credit application is denied, or they offer you worse terms than you applied for, then this is called an “adverse action” and they have to give you a written notice. If a denial was based on your credit report, then they must tell you where they got that credit report. You are entitled to request a free copy of that credit report from the person or company who supplied it to them. If you are ever denied credit, I strongly suggest that you do this.

Sometimes, lenders do discriminate. Even if they don’t intend to be mean to any particular class, they may have policies in place that tend to disadvantage certain groups of people. That is illegal. And if it’s happening, you can do something about it.