TransUnion and Equifax are refunding $17.7 million to consumers and paying $5.5 million in fines for giving consumers misleading and deceptive credit scores.
New Flex Modification Program Will Replace HAMP
The Home Affordable Modification Program (HAMP) that helps homeowners avoid foreclosure by adjusting interest rates and modifying loans expired at the end of the year. A new Flex Modification program will replace HAMP starting in 2017.
The new Flex Modification program is designed to cut back on monthly mortgage payments when homeowners are experiencing financial hardships and behind on their mortgage. Some homeowners are expected to receive up to a 20% payment reduction on their mortgage. Introduced by Fannie Mae and Freddie Mac, the Flex Modification foreclosure prevention program is supposed to be adaptive to regional differences and the ever-changing housing market.
Fannie Mae and Freddie Mac are government enterprises developed by Congress to help loan servicers convert assets to cash, a concept known as liquidity. To do this, Fannie Mae and Freddie Mac buy mortgages from lenders and loan servicers. The lenders then take the profit from selling the mortgages and relend it to other consumers buying a home or property. The government enterprises help lenders have an affordable supply of monetary funds to distribute in mortgage loans around the United States.
Flex Modification is expected to help lenders, homeowners, taxpayers, Fannie Mae, and Freddie Mac save money by avoiding the expensive and long foreclosure process. If you are having financial difficulties and struggling to pay your mortgage payment in full every month, a loan modification may be able to help you keep your home. Contact a foreclosure defense lawyer at Doucet & Associates Co., L.P.A. at (614)944-5219 for legal assistance securing a loan modification today.
Trash Out – Lock Out
It is illegal for a mortgage company or lender to remove a borrower’s personal belongings from a property and change the locks before the foreclosure process is complete. This action is called a “trash out” or “lock out”.
In Ohio, a lender has to wait 120 days after one missed payment to send a borrower a foreclosure notice. Then the borrower has 28 days to reply to the lawsuit or face default judgment. During this time the borrower is allowed to continue living at the property.
The lender has to notify the borrower through the sheriffs office when they are required to move – which occurs when the property is sold. Usually the borrower is not required to move out during the foreclosure process until the property has been sold. The property could have been sold by the consumer, an approved short sale, or through a sheriff sale.
The property becomes a sheriff sale if the borrower loses the lawsuit or faces default judgment. The borrower may continue living on the property until after confirmation of a sale. This could be a day or a couple months depending on how long it takes for the property to sell.
After confirmation of the sale, a writ of possession is filed. At this time the lenders will notify the borrowers of a move out deadline. If the borrowers fail to move out by the deadline, then the lenders have the right to hire a trash out company to remove the remaining possessions and change the locks for the new owner.
Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA) requires credit reporting agencies to provide accurate information to lenders. The FCRA also creates legal rights for consumers whose information is being investigated and misrepresented by credit reporting agencies such as TransUnion, Experian, and Equifax.
Credit report agencies make money off of lenders who are requesting credit reports to justify loans and interest rates. Credit report agencies are not government funded. Credit reports are often required for loans on larger purchases such as cars and homes mortgages. Credit reporting agencies over report negative credit information to lenders, such as missed payments and debts. Lenders make more money off of people who are deemed a higher credit risk because they can enforce higher interest rates. Therefore, a lender will keep returning to a credit reporting agency who can help provide information that can support higher interest rates.
Consumer Rights Protected by the Fair Credit Reporting Act (FCRA)
A consumer has the right to have an accurate credit report distributed to lenders. A consumer also has the right to challenge credit report agencies who are providing false or inaccurate information. A lender must provide a consumer with the name of the credit reporting agency who allegedly provided inaccurate information on a credit report if requested.
The FCRA also made it illegal for credit reporting agencies to provide subjective information on a credit report such as religion, race, how long you have been committed to your job and details about other people you may live with.
How Can a Consumer Challenge a Credit Reporting Agency Under the FCRA?
A consumer must send a written letter to the credit report agency detailing the inaccurate information provided on the credit report. It is important for the consumer to provide as much documentation as possible to support why the information is inaccurate. Depending on the inaccurate information bank statements, records, and receipts of purchases are good examples of documents to provide.
A credit reporting agency who receives a letter must re investigate in the information being provided on the consumers credit report. Then must reply to the consumer detailing if the information was corrected or not. If a credit reporting agency refuses to fix inaccurate information, the consumer should then seek out a consumer lawyer to help sue the company.
What Type of FCRA Damages Can a Consumer Sue For?
- Actual damages are real losses for the consumer. Regarding the FCRA, a consumer might experience financial loss due to inaccurate information being provided on a credit report. A consumer who receives a higher interest rate on a loan or mortgage can experience economic loss and possibly debt.
- Statutory damages are when the credit reporting agency is providing inaccurate information, but the consumer has not financially been affected yet. The inaccurate information could be preventing the consumer from even acquiring a loan.
- Punitive damages are deliberate wrongdoings by a credit reporting agency. An example of a wrongdoing would be a credit report agency refusing to read a letter from a consumer or refusing to re investigate the information being provided on a credit report. Punitive damages are rare in cases regarding the FCRA.
A credit reporting agency will also be responsible for paying lawyer fees if the consumer wins the case.
Why May There Be Inaccurate Information on a Credit Report?
Mistaken identity is an issue the credit reporting agencies battle. These mistakes are often due to a merged file. Consumers with common last names and the same first names can be confused. False addresses can appear on credit reports from someone with the same name living at a different address. Seniors and Juniors can be commonly confused especially if they live at the same address to.
There are many complaints about credit report agencies. The Federal Trade Commission (FTC) does not have resources and funding to check all the information the credit report agencies are providing to lenders.
How Can a Consumer Check Their Credit Report?
Consumers are able to access their credit report annually from TransUnion, Experian, and Equifax. Most negative information is only listed on a credit report for seven years. Bankruptcy is usually listed for ten years. Also consumers have to give permission to lenders to look at their credit report.
You can find more information about the Fair Credit Reporting Act (FCRA) by reading 23 Legal Defenses to Foreclosure: How to Beat the Bank by Troy Doucet. If in Ohio, call Doucet & Associates Co., L.P.A. at (614) 944-5219 for a consultation.
Truth In Lending Act
The Truth in Lending Act (TILA) is a federal law legislated on May 29, 1968 under the Consumer Credit Protection Act. The TILA was created to protect consumers involved in contracts with credited purchases with creditors and lenders. Essentially the TILA act enforces loan companies and credit card companies to provide all information regarding interest rates and other fees before a consumer agrees to borrow.
TILA covers open-ended credit and close-ended credit. Open-ended credit includes borrowed funds such as credit cards, debit cards and home equity loans. Examples of close-ended credit include auto loans and home mortgages. Information regarding terms of an Annual Percentage Rate (APR), the total amount offered in a loan and the frequency of due dates to repay the loan is now obligatory for the loaner to provide to the consumer under this act. The dispense of required information now allows consumers to be aware of contracts, costs of credit and so-called hidden fees. Consumers are also able to be more confident and comfortable agreeing to credit related contracts because they can use the provided information to compare a variety of loans or borrowed money.
Failure of cooperation by a loaner or creditor to provide the required information to the consumer can result in rescission in certain instances. The loan or credit transaction would be disentangled and canceled, and all fees and paid money would be returned back to the consumer in a rescission. Lenders and credit companies are more disposed and willing to provide the required information based on TILA due to the amount of loss which could generated during a rescission.
You can find out more information about the Truth in Lending Act (TILA) regarding home owners and foreclosure by reading 23 Legal Defenses to Foreclosure: How to Beat the Bank by Troy Doucet.
Spouse on Deed But Not Mortgage?
If a spouse is on the deed but not on the mortgage, your lender has serious problems! Seek a real estate lawyer immediately!!
The deed is the document that transfers interest in a property from one party to another (different from a deed of trust). A deed usually provides that each person who owns the property has an undivided interest in it (two people each own half the property, but a line isn’t cut down the center of it). Thus, if one spouse is on the deed but the spouse’s interest isn’t encumbered by the mortgage, then they likely own their half free and clear of the mortgage. Assuming they are not on the loan, the lender will probably half to fork over half the proceeds to the spouse who didn’t sign the mortgage but is on the deed.