Regulations

Have you lost money because your bank screwed up an ACH or Electronic Fund Transfer? – Alabama Consumer Credit Attorney Judson E. Crump

October 4, 2014 by Attorney Judson E Crump 3 Comments

I’m looking for people who have experienced problems with their creditors due to a failure of an electronic payment that was not their fault. If you have an agreement to pay a debt via ACH (automated clearinghouse), debit card, phone check, direct withdrawal, or other electronic means and for some reason (like a computer glitch, malfunction, bank error, or other screwup), the money never went from your bank to the creditor, the creditor is supposed to give you time to try the transfer again or fix the problem before taking action against you.

If an electronic payment method fails, your creditors cannot take action against you until they have requested another payment method in writing.

So for instance, if you have a mortgage payment that comes out of your checking account each month, and one month your bank starts screwing up the payments, then the mortgage company cannot foreclose on you or charge you late fees until they have sent you a written request for another payment method. Has this happened to you? Have you been foreclosed on because of an ACH failure that wasn’t your fault? If so, give me a call and tell me what happened. I’m very interested in this aspect of the law and want to see if there are violations happening out there.

Or are you paying for a car via debit card each month, and after a bank malfunction, got a car repossessed?

If something like this has happened to you, give me a call at 251.272.9148. I won’t charge you anything. I just want to hear your story.

How to assume a mortgage when the property owner dies (or divorces) – Alabama Consumer Credit Attorney Judson E Crump

July 7, 2014 by Attorney Judson E Crump Leave a Comment

When a property encumbered by a mortgage is transferred, most mortgages have a due-on-sale provision that requires you to pay off the entire loan. This means that even if have the desire and ability to take over the mortgage payments, the bank can prevent you from doing that. So you have to either a) let the home go, or b) find someone to refinance it for you. For some people, refinancing isn’t a problem. But for a lot of folks, it is, especially if a rough economy has harmed your credit rating. And even if you do qualify for a refi, you’ll still be required to spend thousands of dollars to do so.

Fortunately, if the transfer is to a relative due to a divorce or death, the law provides an escape from the due-on-sale clause: the Garn-St. Germain Act.

Garn was passed in 1982 to help the banks make more money. See, back then, interest rates were high and getting higher. A lot of people who bought houses wanted to keep the existing mortgage on the property because a new mortgage would have a higher APR. And a lot of people who sold houses that had low-interest loans wanted to be able to sell the low-interest rate along with the property – because it improved the marketability of the properties. But the banks were obviously unhappy about all of these borrowers who weren’t being forced to refinance new loans, so they started inserting due-on-sale clauses into their contracts. But then a few state courts around the country saw what was happening and said, “No, that’s not fair, you made a 20 year loan with an 8% APR, you’re stuck with a 20 year loan with an 8% APR.”

This made the banks even more unhappy, so they had to pull out their trump card: Congress. After taking a lot of steak dinners and campaign contributions, they passed the Garn-St. Germain Depository Institutions Act of 1982. It prohibited states from stopping due-on-sale clauses. Suddenly, thousands of home buyers were forced to go to banks for new loans every time a home purchase happened.

Thankfully, a few guys in the Hill were concerned enough about ordinary people to insert some exceptions to the new rule: if someone receives a property due to death, divorce, or other family-style transfer, then they don’t have to deal with a due-on-sale provision.

So if you want to assume a mortgage on a property you’re receiving through devise or divorce, you need to write the mortgage company a letter explaining what you’re trying to do. Send it to their correspondence address that they put on the latest statement. You can see a sample letter here:

Garn St Germain Act Notice – Divorce

Do you need a lawyer or any other professional help to get a Loan Modification? – Alabama Consumer Credit Attorney Judson E Crump

May 22, 2014 by Attorney Judson E Crump Leave a Comment

No. Every mortgage company has its own program for administering requests for mortgage modification or hardship assistance, and most mortgages are serviced by a company that participates in the Making Home Affordable Program that was executed by the Obama administration (but actually created by Congress and George W. Bush just before Bush left office). The process is designed to be completely achievable by ordinary people. You just need a bit of time, persistence, and proof of your income and residency.

Of course, if you search Google for ‘professional’ help with loan modification, you’ll see about a hundred different companies that claim to be able to lower your payment, stop foreclosures, reduce your principal balance if you’re underwater, and all sorts of things that they utterly cannot guarantee. You know what those companies can do that you can’t? Absolutely nothing. They aren’t attorneys and they cannot really represent you in any sort of legal or administrative proceeding. All they do is fill out the paperwork that anyone can download from the HAMP website or the mortgage servicer’s own site and get the documents from you and make a few phone calls to the mortgage servicer.

Now don’t get me wrong: I’m all for helping out homeowners who don’t understand the paperwork. And some of these outfits do provide a service. But they charge you wayyy too much for it. Some of them charge as much as $3,000 or $4,000, and they’ll even tell you to pay them instead of your mortgage company.

You could get a real attorney to help you for half that price. Generally, in the initial application stage, there isn’t much an attorney can do for you that you can’t. Having an attorney becomes useful when things go wrong. If, for instance, they say that you make too much money when in fact you sent them a tax return showing that your mortgage payment was over 1/3 of your gross income. Or if you complete all three of your trial period plan payments on time and they still don’t give you a loan modification. Or if they foreclose on you before reviewing your application for loss mitigation options. Or when the mortgage company claims that they “didn’t receive” the required documentation when you know that you’ve sent it to them. These are the things that at attorney can help you with.

How to Request Validation of a Debt via the Fair Debt Collection Practices Act – Alabama Consumer Credit Attorney Judson E Crump

April 24, 2014 by Attorney Judson E Crump 3 Comments

One of the many rights that most people don’t know they have against debt collectors is the right to request validation of the debt. Once a collector starts coming after you for money, they are required to notify you of your right to request proof that you owe them the money. Think about it this way:

Imagine that you borrowed money from your friend Luke a few years ago. You made payments as you could, but eventually fell behind and Luke got tired of asking you for the money because he didn’t want to be a jerk and had better things to do than hound you all day for payment.

So you live your life for a while, until a guy named Porkins comes up to you on the street one day and says “You owe me $500.” What? You ask. “You owe Luke $500, and Luke told me I can come get it from you, so you owe me $500. Pay up.” Do you give Porkins your money? Of course not! At least, not without proof.

Change the names from Luke and Porkins to HSBC and Portfolio Recovery Associates, and you have the same situation that tons of people face today. The law doesn’t require you to pay Portfolio Recovery Associates unless they can prove that you rightfully owe them. You have the right to request proof that the debt is owed – it’s common sense! But the law is a bit deeper than that. If you request “validation” of the debt within 30 days of first hearing from the debt collector, then THEY ARE REQUIRED to send you proof that you owed the money to HSBC and that they were rightfully assigned the debt from HSBC.

So how do you assert this right? It is easy. Just write a letter. You don’t have to quote the statute, but you should just to make it clear that they know exactly what you want. The language can be as short as this:

“I received your recent communication stating that you were collecting an alleged debt owed to HSBC. I do not believe that I owe you or HSBC for this account.

Pursuant to 15 U.S.C. §1692g, I hereby request validation of this debt. Please mail it to the address below.”
Be sure to tell them your name, address, and the account number if you have it. If you don’t know the account number, give them the last 4 digits of your social security number.

If you don’t trust yourself to do it, here is an example that I’ve written myself:

FDCPA Validation Request

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Foreclosure Timeline in Alabama Under the New Dodd-Frank Rules – Alabama Consumer Credit Attorney Judson E Crump

April 11, 2014 by Attorney Judson E Crump Leave a Comment

The Dodd-Frank Wall Street Reform Act of 2009 did a lot to help ordinary people deal fairly with their lenders and mortgage servicers. In the bad old days, the only rules that mortgage companies had to comply with were the terms of the contracts they wrote to protect themselves from greedy working people who were always looking to take advantage of their generosity to, ummm, keep a roof over their childrens’ heads. Today, things are different. One of the strongest protections that people have against mortgage fraud and abuse are the prohibitions on foreclosure during early default and during loss mitigation negotiations.

The 120 Day Rule. 12 CFR 1024.41(f)

The first and most clear rule is the 120 day rule. It’s real simple: You can’t foreclose on somebody until they’re at least 120 days in default. Now, the regulations don’t define “default,” so you’ll have to look to your bank-written contract for that term. But usually you can take it to mean what you probably think it means already: the day the grace period expired on your last full payment. If, for instance, you missed the January 2014 payment, the February 2014 payment, and the March 2014 payment, but made a full payment in April, then that April payment must be credited towards your January payment, and therefore as soon as it is received, you are approximately 90 days in default. That’s what your Credit Report should say and that’s your real status…which means that they can’t foreclose on you until you get a full 4 payments behind!

The 45 and 37 Day Rules. 12 CFR 1024.41(c)

If you have sent in a complete loan modification application, your lender or mortgage company cannot start foreclosure proceedings until they give you an answer. UNLESS, they’ve already begun the foreclosure process and you don’t mail the modification packet to them until 37 days before the foreclosure. To illustrate: The bank has set a foreclosure sale for February 10th. You send in a modification packet on January 1 by regular mail. The bank gets it January 5th, which is 36 days before the foreclosure sale. They can still foreclose. If, however, you sent the package overnight, so the bank got it on January 2nd, which is 39 days before the foreclosure sale, then the bank cannot foreclose until they have reviewed your loss mitigation application. This rule applies not only to loan mod applications, but also other loss mitigation options, like short sales and deeds in lieu of foreclosure.

If you get the packet in before the 37 day deadline, the bank MUST properly evaluate you according to its own servicing rules, the rules of its investors, and any government programs that are applicable, like HAMP, 2MP, MHA-UP, or the FHA or VA policies. All you are entitled to is a review. You are NOT guaranteed a loan mod – just a fair chance. The bank must postpone the foreclosure as needed to review your application. They are supposed to give you an answer within 30 days. If they do give you an answer, they can require a response from you within 7 days. So if they call you a week before foreclosure and say, “We’ve decided to give you a trial modification, you have 7 days to accept,” then that is OK. If you don’t give them an answer in time, they can proceed with foreclosure on the assumption that you’ve rejected their offer. The lesson: get ready to spend some money at FedEx overnighting things to make sure that you communicate quickly and in writing.

There is also a 45 day rule that says that if you send in a “loss mitigation application” more than 45 days before a scheduled foreclosure, they have to tell you within 5 days that a) they got the package and b) it’s either complete or incomplete. If it ain’t complete, then they have to tell you what you need to provide to complete the application.

One thing the rules don’t really address is the fact that Alabama law does not require more than 37 days’ notice to you before a foreclosure, so there may be situations where the 37 day and 45 day rules don’t apply because theoretically, the mortgage company could receive your loan modification packet and then immediately call Sirote & Permutt to schedule a foreclosure in 28 days. That situation hasn’t come up before the courts yet, because the law has only been in place since January 10th. If it happens to you, give me a call. I enjoy taking interesting cases.