Mississippi Lawyer Blog

Everyone, from the wealthy down to the hourly worker, wants to own a home. It's the American Dream right?
Until around 15 years ago, if you didn't have money for a down payment and pretty good credit, it was almost impossible to get a mortgage. Then things started changing. Banks started approving mortgages for more and more people. Suddenly everyone could have a home of their own.
But the mortgage companies weren't being kind, they were secretly getting ruthless. They started peddline mortgages with adjustable rates, interest-only payments, and multiple-payment options. Why did they do it? Simple - to make more money.
Maybe you got one of those mortgages. There's nothing wrong with most of them. In fact, they helped millions of people finally step out from under the shadow of a landlord and get a place of their own.
The problem is that no one explained to you exactly what you were getting and what the implications of these loans really were. The loan officers and morgage brokers painted a very rosy picture telling borrowers that they could just refinance in a couple of years. Nobody told you the full story...About how refinancing depended on your home's value going up. About how your adjustable rate loan could go up every single year if you couldn't refinance. About how your principal balance would never go down and your payments could double or even triple.
Didn't the banks know people would fall behind on their mortgages? Didn't they see this coming a mile away?
Absolutely! So why did they push these loans on people? Simple. It was all about money. You see, mortgage banks knew that they could package and sell these mortgages to investors who were hungry for high-risk, big-money deals. And were not talking just about investors in the United States. Much of this investment came from hedge funds filled with money from China, Japan, Saudi Arabia, and a host of other far-flung parts of the world. What's incredible is that one mortgage might be divided up 30 or 40 times; little pieces held by 30 or 40 investors. This is greed in its most basic form.
If you've been watching the news at all the last couple of years, this shouldn't all be new information. So why am I going on about this? To let you know that if you are one of the millions of Americans facing foreclosure (more than likely on property that is no longer worth what it was) or are falling behind on payments not knowing how much longer it will be before the lender forecloses - that there are real ways to fight back and hold on tightly to that house you scrimped and saved for. To let you know that if you own a home in Mississippi and are ready to take control and fight for your home - pick up the phone and call me to discuss a plan of attack.

Mississippi is number one in delinquent mortgages. During the month of October, there were more homeowners behind on their house payments in Mississippi than any other state.
According to the Mortgage Bankers Association there are 4.2 million homeowners across the country that are more than 90 days behind on their house payments or already in foreclosure. This indicates that we are not on the road to recovery like the media would have you believe.
Foreclosures are increasing and mortgage companies are still not willing to help homeowners with modifications. If you want to save the house you cannot sit around and wait for the foreclosure sale. Get your documents together now, meet with a lawyer that does foreclosure defense and bankruptcy and learn what your options are. Get the information now before you need it. Be prepared. Plan ahead. You don't buy car insurance after the wreck. Over and over people come in to meet with me after the foreclosure sale is set trying to find out what to do. In most cases we can still help them and save the house, but they would have been a lot better off meeting with me as soon as they started getting behind.

If your home was foreclosed between January 1, 2009 and December 31, 2010, you can request a review of the foreclosure process to see if it was handled properly. Fourteen mortgage companies are required to participate in this process. If there were errors, misrepresentations or other irregularities with the process, you may be entitled to financial compensation or other remedies. This process only applies to the home that was your primary residence. Letters will be mailed out from the mortgage companies, but they will probably be sent to the house that you no longer live in. If you would like to have your foreclosure reviewed, you can call 1-888-952-9105 for the form you will need to fill out or visit the web site at www.independentforeclosurereview.com.

The fourteen mortgage servicers involved in this process are America's Servicing Co., Aurora Loan Services, Bank of America, Beneficial, Chase, Citibank, CitiFinancial, CitiMortgage, Countrywide, EMC, EverBank/EverHome Mortgage Company, GMAC Mortgage, HFC, HSBC, IndyMac Mortgage Services, MetLife Bank, National City Mortgage, PNC Mortgage, Sovereign Bank, SunTrust Mortgage, U.S. Bank, Wachovia Mortgage, Washington Mutual (WaMu), and Wells Fargo Bank, N.A.

I normally don't write this type of blog but this has been one of the strangest weeks for legal news I've seen in a while. I don't know where to begin. How 'bout Burt Reynolds and his foreclosure woes? As many Americans face foreclosure due to predatory loans, Mr. Reynolds is looking at losing his Florida mansion. Bet he wishes he could do another Smokey and The Bandit sequel. If you have foreclosure issues, you need to call Frank Coxwell for advice.

You like hot sauce on your food? That's good but please don't use it to punish your children like this Alaska woman did. I just don't even know what this woman was thinking. Her trial is going on as I type this.

And what's up with Gerard Depardieu? The French movie star apparently had a bladder issue on a recent flight and, well, relieved himself on the plane. What's wrong with that you ask? Well, he relieved himself on the floor of the plane. Allegedly. He went oui oui oui all over the place! (You see what I did there? He's French so I used "oui" instead of "wee". Nevermind) Good thing he didn't do DeparTWO instead.

But what about the University of Miami athletic program? Nevin Shapiro, one of the university's biggest boosters has decided to blow the lid off all the money and other perks he has been showering on "the U's athletes for the last decade. Shapiro made his money defrauding investors in an elaborate Ponzi scheme. Well, at least he did reinvest some of his money back into the community, right?

Facebook creator Mark Zuckerberg if facing a lawsuit by a former classmate who is seeking half ownership of the popular networking site. The former classmate, Paul Ceglia, claims that he has a contract signed by himself and Zuckerberg which shows that he gave Zuckerberg $1,000 in startup money to create his idea, which was Facebook. The man's lawsuit claims that when he hired Zuckerberg as a Harvard University freshman to work on the Streetfax business in 2003, he gave him $1,000 in start-up money for his fledgling Facebook idea with the condition he'd own half if it expanded. The problem? Facebook believes that for his lawsuit, Ceglia altered the Streetfax contract to insert references to Facebook. Ouch.

And then there's the crystal meth dealer. When police raided his California home they found...tombstones. And I'm talking about Tombstone Pizzas but real tombstones. Apparently he had taken the tombstones from a local cemetery. Why? I don't know and neither do the police but you kids out there can learn a lesson from this: doing drugs will make you steal tombstones so don't do it.

Late show host David Letterman received a death threat from a Muslim militant which the FBI is taken seriously. Apparently terrorists are not fond of Letterman's Top Ten Lists. Who knew?

Continue reading "Weird Legal Week in Review and the Chupacabra" »

The Clarion Ledger ran a story regarding the federal government suing Deutsche Bank because they lied about mortgages. It appears Deutsche was taking loan applications and failing to confirm the applicants' employment. In fact, it appears that the bank wasn't too concerned about whether the applicant was capable of making loan payments at all. The loan was insured by the government so if/when the applicant defaulted, the loan was paid in full. Deutsche apparently knew this and now the feds are seeking to get the money back. We represented 200 Mississippians against major banks several years ago who were doing the same thing. However, instead of helping, the President at the time (George W. Bush) passed an executive order that seriously impacted how defrauded homeowners could sue banks in State court! As a result, banks were allowed to prey on unsuspecting homeowners for years. You will recall that the collapse of the subprime housing industry led to the stockmarket crash a few years back. Oh well...here's the story

Bank accused of loan fraud
•Federal suit says Deutsche Bank lied about mortgages

The federal government sued Deutsche Bank Tuesday, saying the bank committed fraud and padded its pockets with undeserved income as it repeatedly lied so it could benefit from a government program that insured mortgages.

The lawsuit in U.S. District Court in Manhattan seeks to recover hundreds of millions of dollars in insurance claims that the government has had to pay when homeowners defaulted on their mortgages. The lawsuit also asked for punitive damages. The government said the bank made substantial profits between 2007 and 2009 from the resale of the risky mortgages, leaving the government to foot the bill for loans that defaulted. The mortgage insurance is issued by the Federal Housing Administration.

The lawsuit said the bank carried out the fraud through its subsidiary, MortgageIT, which employed more than 2,000 people at branches in all 50 states. Deutsche acquired MortgageIT in 2007.

At a news conference, U.S. Attorney Preet Bharara said the bank "repeatedly and brazenly" engaged in a pattern of reckless lending practices for mortgages "that were really ticking time bombs," sometimes failing even to verify that a mortgage applicant had a job.

"In fact, they often seemed to treat red flags as if they were green lights," he said.

Still, the prosecutor said the government found no evidence of the criminal intent necessary to take the case beyond a civil lawsuit. "Every lie is not a crime," he said.

In a statement, Deutsche spokeswoman Renee Calabro said the bank was reviewing it.

"We believe the claims against MortgageIT and Deutsche Bank are unreasonable and unfair, and we intend to defend against the action vigorously," she said.

Calabro said nearly 90 percent of the activity described in the lawsuit occurred before Deutsche Bank acquired MortgageIT, which had been an FHA lender operating with government oversight for almost a decade.

Since last fall, federal regulators and attorneys general of all 50 states have been investigating lenders accused of cutting corners and using flawed documents to foreclose on many homeowners. In some cases, employees of financial institutions engaged in so-called robo-signing - approving documents in foreclosures without actually reading them. Foreclosure-fraud class-action lawsuits are also piling up against major banks nationwide.

Bharara said it "would not be a fantastical stretch to think we are looking at other lending institutions as well."

The lawsuit against Deutsche Bank sought to recover more than $386 million that the Department of Housing and Urban Development has paid out in FHA insurance claims and related costs arising out of MortgageIT's approval of more than 3,100 mortgages, among 1,400 loans that have defaulted so far.

Continue reading "Feds Accuse Big Bank of Fraud-How many Mississippians were affected?" »

I'll bet you don't know anyone who has ever collected on title insurance. It seems expensive, no one wants to pay for it and many people today would say it is not needed. But the turmoil in today's real estate market makes having title insurance even more important. Mortgage fraud, fake mortgage documents and the recent robo-signing scandal make title insurance an absolute necessity these days.

Due to sloppy record keeping, sloppy foreclosure procedures and plain old mortgage fraud you will need title insurance to protect you from heavy losses and maybe losing your home. Due to recent court rulings, if you bought a foreclosed property there is a good chance that the property could revert back to the previous owner with no compensation to you.

Title insurance protects you, the rightful owner, if there are liens or prior claims on the property you own. Mississippi Chancery Clerks and County officials across the nation are discovering forged loan documents in their files. Given today's reliance on easily altered computer data, title insurance is crucial if you want to protect your Mississippi property ownership.

So you think you found someone to rescue you from foreclosure?
A mortgage rescue company comes forward and claims to be able to help you save your home and your credit. You probably just signed your house away.

There is an army of scammers and con artists using the Internet, television, radio and the mail who are waiting to take your money and your home. They make claims to be able to save your home, or promise a new loan, or a loan modification.

These scammers guarantee to stop foreclosure or save your home, say they have a high success rate, you won't have to move, and may use names and logos that make them appear to be part of the government or a recognized charity. Paying fees up front for foreclosure rescue services is illegal in most states and a clear sign of a ripoff.

If a company or individual requests any of the following, RUN AWAY FAST!

• Pay fees up front for a modification,


• Tells you to stop making mortgage payments,


• Offers to handle your payments or financial arrangements,


• Wants you to pay for a second opinion on your denied modification


• Sign your house over or put someone else's name on the deed,


• Offer to buy your house and rent it back to you, or a sale leaseback.

If you have any questions about foreclosure, modifications, or saving your home, see your own attorney first and let him assist you or review the paperwork. When you are desperate and vulnerable you are liable to believe anyone and anything and that is when you need to stop and let a lawyer step in and look things over.

Completing a Chapter 13 Bankruptcy can be difficult. Chapter 13 allows you to pay your creditors over a period of 36 to 60 months. The amount that you must pay is different for each case. However, the monthly payment is usually a lot less that what you were paying before bankruptcy.

There are many advantages and tools that can only be used in a Chapter 13. Here is a list of a few of the "tools" that are available and helpful to debtors in a Chapter 13. This is not everything since each person's needs and circumstances are different.

1. Peace and Quiet: Stops creditor calls and harassment.
2. High Interest or Overvalued Vehicles: You only pay the current value on any vehicle purchased at least 2.5 years prior to the bankruptcy filing.
3. Stop Foreclosure: Keep your home and start back making your current house payment as well as a small additional payment to catch up the mortgage over 3 to 5 years.
4. Get Rid of A Second Mortgage: Another benefit of a Mississippi Chapter 13 is the ability to get rid of your second mortgage if your home is worth less than what you owe on your first mortgage.
5. Child Support or Alimony: Chapter 13 allows you to catch up child support or alimony support obligations over a longer period of time.
6. Co-signers are protected: Anyone who is a co-signor or co-debtor on one of your debts is protected from the creditors when you file bankruptcy.
7. Income Taxes: Income taxes that are over three years old can be wiped out and newer taxes may be paid out over the 36 to 60 month plan. You can become current on tax debts and emerge from bankruptcy with no debt to the IRS or the State of Mississippi Department of Revenue.
8. You Are Under Court Protection: Creditors are not allowed to call or contact you in any manner or to file lawsuits, foreclosures or garnishments. Any lawsuits, garnishments or foreclosures that have been filed are stopped.
9. Pay Less than you Owe: You usually pay back less than you owe to unsecured creditors. When you receive a discharge at the end of the Chapter 13 bankruptcy, the unsecured debt is wiped out even through it was not paid in full during the repayment plan.
10. Pay back Creditors: You may not consider this an advantage to filing a Chapter 13, but many people do want to pay their creditors at least something.

If you would like an evaluation of your financial situation and your debts, call us today at 601 948-1600 or email frankc@coxwelllaw.com, for a free consultation.

The US is officially experiencing the worst house housing depression ever and the second phase is just beginning. It is expected to peak beginning July of this year, continuing through the first half of next year.

Let these statistics sink in for a minute:
• 3 million homes were repossessed between January 2007 and August 2010
• Over 1 million families will be evicted from their homes in 2011
• 72% of the major cities in the US had more foreclosures in 2010 than 2009
• 8 million Americans are at least 1 month behind on their mortgages
• 5 million are at least 2 months behind on their mortgages

The Mississippi counties with highest volume of new foreclosures are (starting with highest) Harrison County, Hinds County, De Soto County, Rankin County, Jackson County, Forrest County, Lee County, Pearl River County, Marshall County, and Madison County.

The volume of people that have been injured by mortgage fraud, predatory lending practices, and mortgage modification schemes is almost unimaginable. At the same time laws are changing and require new strategies for litigation.

Mortgage companies seem determined to take homes by refusing payments, denying modifications or worse promising homeowners a modification while at the same time processing foreclosures, increasing payments, adding fees, and continually threatening foreclosure.

I'm seeing success in my practice by fighting mortgage companies and disputing their mortgage proofs of claim, their documentation practices, application of funds and fees, and many other items. See my prior blog discussion regarding the sloppy record keeping practices of mortgage servicers.

The 14 largest US mortgage servicers have recently agreed to review all foreclosed loans from 2009-2010 and pay back losses in cases that were mishandled - but we don't know how the reviews will work, (if they work at all) and what types of "losses" will lead to payments for homeowners.

I can't express enough the seriousness of the housing situation in Mississippi and the importance of addressing issues with your mortgage company before foreclosure. Call Coxwell & Associates immediately if you are having any problems whatsoever with your mortgage company.

In every county in Mississippi, homes are being foreclosed with forged and false documents. There are office buildings filled with robo-signers, employees who create and sign false affidavits and documents by the thousands. The news magazine program 60 Minutes did a story on this April 4, 2011. The story reported on one robo-signer who said he signed up to 4,000 documents a day, all in the name of Linda Green. This was 350 forgeries per hour! He admitted that he didn't know what documents he was signing or even if they were true.

We have been challenging and fighting these abusive practices and false documents for our Mississippi bankruptcy clients but many other Mississippians wait until the foreclosure is over to seek help save their home.

In Mississippi, we are a non judicial foreclosure state. Banks and mortgage companies don't have to take you to court to foreclosure on your home. They don't even have to tell you they are foreclosing. They run an ad in the newspaper for three weeks and hold the foreclosure sale on the fourth week.

The real truth is that the banks and mortgage companies can't find the original notes and deeds of trust that they say they own. So instead of using the original documents the make up copies of assignments and affidavits that are supposed to show that they are the lawful owner of your contract. These are really just fake documents created so the foreclosure can be done as quickly as possible. Since most people don't resist the foreclosure, this usually works.

The mortgage industry has been caught committing crimes, fraud, forgery, burglary, breaking and entering, by the tens of thousands for quite some time now. It is commonly referred to as sloppy paperwork and it is regularly reported that the Attorneys General are investigating and Congress is holding hearings, but not one person has been charged with a crime.

Don't lose your home to sloppy paperwork. If you are behind in your house notes, contact us now, before the foreclosure starts.

We are in some tough economic times. People in the City of Jackson, Ridgeland, Madison, Clinton, and all throughout Mississippi are suffering economically. Economists are not certain when the U.S. will come out of these tough economic times or when we do if the economy will ever be as robust as it was in the 1990's. Dozens of people who need bankruptcy in Ridgeland, Madison, Clinton, and the City of Jackson call Frank Coxwell every week to help with economic issues. In addition to bankruptcy problems and after bankruptcy has been completed people need good credit in order to purchase items and household goods. Few people can afford to pay cash for all the household products they need.

There are a number of companies advertising on the internet to help "repair a person's credit." These companies often charge large fees and do little to help the person. The simple truth is anyone can repair their credit if they are will to take the time. There are good agencies and groups that can provide advice. The Federal Trade Commission has a very good website. There are also useful links on consumer issues.

The National Associaton of Consumer Advocates is another great resource. This organization can provide advice and suggestions on many areas of consumer law. The best way to start is to get your credit report from all three of the major credit reporting agencies and then follow the helpful tips below. If you run into a stumbling block don't hestitate to call or look around on the internet for more information.

What to do and What not to do:


Many Mississippians have suffered financial hardships that left black marks on their credit reports. Salaries and hours have been cut, jobs lost, illness and medical bills, late payments and foreclosures have all damaged the FICO score. This is the standard most traditional lenders use to determine a person's creditworthiness. The FICO score has a scale that runs from 300 to 850 points. With FICO, the higher the score, the better your credit.

Although time is the best cure for a low score, there are ways to hasten the movement of your score up to a higher number.

What to do.

First, get copies of your credit reports and see what is being reported right now. Each one of the three major credit bureaus-Experian, Equifax and TransUnion, create their own FICO scores from the information they collect about you.

Second, don't get into more credit trouble. Pay your bills on time from now on. Call your creditors and try to negotiate payments that you can keep up with. Make sure you get any new agreements in writing.

Third, use the credit reports to clean up incorrect or outdated information. The bureaus are required to remove any information that they cannot verify. Paying off credit cards will give your credit score the biggest boost. Paying off student loans, car loans, mortgages, and other installment loans won't raise your score that much. See how the ratio of the total amount of debt you have compares to your total available credit. The lower your balance is to the percentage of available credit, the higher your FICO score will be.

Also, each credit bureau will allow you to place a one hundred word statement on your report explaining any hardship or reason for your trouble. This may help explain your misfortune to some lenders or to an employer if you are job seeking, but it won't affect your FICO score.

Fourth, what you are doing now and what you have done most recently has the most powerful effect on your score. That is why it is so important to get back on track and pay your current bills on time. But if you are paying a debt on time but it is not being reported to Experian, Equifax or TransUnion, one of the big three credit bureaus, it is not helping your score. There are methods for reporting these on time payments to the three bureaus, but paying some agency or company to do it for you is not the way.

Consider Joining a Credit Union.

Credit Unions connected with you or your spouse's job may be more willing to work with you. They have better interest rates, and will give you a checking account when no one else will. Many credit unions have special loans to help you rebuild your credit.

Filing Bankruptcy.

If you already have very high balances, late payments, collections and charge offs, filing bankruptcy can actually improve your credit scores. Chapter 7 and Chapter 13 Bankruptcy affect your credit scores in the same way and the damage to your credit score is not as bad as you might think. You might even see a boost in your score. Bankruptcy gives you a clean slate, a fresh start, and will help you get back on your feet again.


Let's Talk About Secured Credit Cards.

A secured credit card, if used correctly, can get your credit score back up quicker, but only if you use it cautiously and deliberately. These cards obligate you to put up money in a savings account which is used as collateral for the card. Your credit limit is usually the amount you put in the savings account. Make sure your payments are reported to the three major credit bureaus and read the small print before signing up for the card. Use the card, but remember what was said earlier about the debt to credit ratio of the card. Visit the web site CardRatings.com for their recommendation on the best secured cards.

What Not To Do.

Offers to Repair Your Credit.

Just assume all of these offers are a scam. There is nothing a company can do that you can't do yourself at little or no cost. Most will dispute all the information on your credit reports, even accurate information, and this can make you look dishonest if you have to dispute inaccurate information. Even when they manage to get bad data off your reports, once the credit bureau validates the account and debts, it will reappear and your score will drop. Federal Law prohibits a credit repair company from charging you any fees up front until they deliver what they promise and since they can't really deliver, you should not have to pay.

Credit Card Offers You Receive in the Mail.

If you have a poor credit history you may receive credit card offers in the mail. These cards are designed to get your attention as a way to rebuild your credit. They have high fees and high interest rates attached to them and there is a good chance they will hurt your credit rather than help it.

Continue reading "HOW TO REPAIR YOUR CREDIT" »

The United States is currently in a economic downturn of the worst kind. Irresponsible business practices on Wall Street and the predatory, aggressive mortgage practices that put people in mortgages they could not afford are certainly a substantial contributing factor to our economic problems. Predatory lending is a general term that is used to describe irresponsible lending practices, and can take many forms, from mortgages to consumer lending. At Coxwell & Associates we have been actively engaged in representing people who have been the victims of predatory lending. This type of legal work is very hard for several reasons. First, banks and lending institutions have lobbyists and enough money to spend to keep Legislators from passing consumer protection laws. Second, predatory lending often occurs to people in the lower income, and in my experience there is never a great rush or demand to protect or help low income people. Mississippi has traditionally been an agricultural state and in the past power was centered in the land owning class.

There was an article in the paper recently exposing a troublesome form of predatory lending. This lending practice is called reverse mortgages. The reverse mortgage is aggressively promoted to seniors, people over 62 who own a home and have substantial equity. According to the article, seniors can borrow money on their home and they are not required to pay back the money until the die or move out of their house for more than a year. The mortgages have high up from costs and high interest rates. Because no payments are made the interest quickly compounds and can take away a senior's entire equity. One example was of a senior who borrowed about $120,000 and ended up owing $610,000.00. People have the right to dispose of their property but before our seniors are subjected to aggressive reverse mortgages there should be laws to make sure they are fully informed of all the consequences. We don't need another mortgage crises.

Frank coxwell is a member of Coxwell & Associates who focuses on consumer bankruptcy and predatory lending. Frank files hundreds of bankruptcies for people each year. He is a frequent speaker on consumer issues. for a free consultation call 601-948-1600.

Frank Coxwell will be training consumer and debtor attorneys to litigate creditor and mortgage violations in Chapter 7 and Chapter 13 Bankruptcy. This seminar will be held March 13, 2009, at the Mississippi College School of Law and is open to debtor attorneys only.

LITIGATION IN CONSUMER BANKRUPTCY

Mississippi College School of Law Room 151B March 13, 2009 9:00 until 4:00
151 East Griffith Street, Jackson, MS, 39201

9:00 - 10:30 PROOFS OF CLAIM (POC)
How Debt Collectors and Mortgage Servicers Operate. What to look for in reviewing proofs of claim. Who owns the debt? What type of objections to file and when to file them. Stale debts and statutes of limitation. When not to object. Objections as res judicata and estoppel. When to file an adversary proceeding on a proof of claim. Disclosure of private data and Social Security numbers in proofs of claim. (1.5 hrs)

10:30 - 10:45 BREAK

10:45 - 11:44 MOTIONS FOR RELIEF FROM STAY (MFRS)
Who has standing to file a MFRS. Responses, Countersuits and AP's. Gaining more time and shutting down the creditor's right to a hearing. Discovery in Contested Matters. Fraudulent Creditor Affidavits and Fraud on the Court. Fraudulent A to D Assignments and Endorsements. (1 hr)

11:45 - 12:30 LUNCH AND CHECK IN WITH YOUR OFFICE

12:30 - 2:00 MORTGAGE SERVICING VIOLATIONS
What are they doing and who is doing it? Standing. Who owns the note? Bankruptcy Code and Rule Violations, RESPA, Fair Debt Collection Practices Act Violations, Breach of Contract, Common Law violations. Getting the information you need to file the AP - Payoff Statements, Qualified Written Requests, Transaction Histories, Bankruptcy XLS spreadsheets, Pooling and Servicing Agreements. (1.5 hrs)

2:00 - 2:15 BREAK

2:15 - 3:30 ADVERSARY PROCEEDINGS (AP)
Federal Rules, Bankruptcy Rules, Local Rules. Preparing and Filing the Complaint, Who to Serve, Discovery, Motions, Settlement Demands and Getting Paid. Setting up the next violation. (1.5 hrs)

3:30 - 4:00 QUESTIONS AND FOLLOW UP
Due to the amount of material to be covered please save all questions for this time period.

Your speaker is Frank H. Coxwell, a '78 graduate of the Jackson School of Law at Mississippi College. He is a member of all the usual organizations and has handled criminal defense, domestic, civil and mass tort cases. He is currently happiest with a practice that emphasizes consumer bankruptcy litigation against creditors for discharge and stay violations and mortgage servicers for predatory lending and predatory loan servicing. He is a graduate of Pete Barry's FDCPA Boot Camp and a two time graduate of Max Gardener's Bankruptcy Boot Camp. He is pleased to be a member of the National Association of Consumer Bankruptcy Attorneys and the National Association of Consumer Advocates. Mr. Coxwell is frequent speaker on bankruptcy, foreclosure, mortgage and technology issues. His e-mail is frankc@coxwelllaw.com. Coxwell & Associates, PLLC 500 North State Street, Jackson, MS 39201. Voice 601 948-1600 Fax 601 948-7097 www.coxwelllaw.com

PREDATORY MORTGAGE SERVICING

This is an extremely complex subject if you dig down into it, but theft and fraud are always easy to understand, if not always so easy to uncover.

First of all, your mortgage company is not your mortgage company. The majority of mortgage loans, vehicle loans and credit card debt are pooled, securitized, packaged as investment trusts and sold on Wall Street as tradable securities. Agreements are in place so that the mortgage loans for a certain time period are committed to a particular trust before they are even made to borrowers. For example, four thousand residential mortgages would be pooled into a $600 million dollar special purpose vehicle (SPV), an investment trust. Care is taken to make sure the trust is bankruptcy proof. Pieces of this trust, called tranches, are sold to investors at different levels of return and risk. The Saudi's and Chinese are heavy investors in tradable securities. (Yes, that means they own all or at least a piece of your mortgage.) The original lender is immediately paid for the mortgage loan and usually agrees to stay on as the servicer of the loan. The original lender now becomes the middle man between the owner of the mortgage and the borrower.

When borrowers say their loan was sold to another company, what really happened is the servicing of the loan was transferred to another servicer, since the investment trust would be the true owner of the mortgage loan. There are many different levels of servicers. Some servicers are default servicers and only take over loans that are behind or in default.

Secondly, since the servicers do not own the mortgage, they really don't care if the mortgage is paid or the borrower is current. This is why we see loans that are six months or more delinquent with no foreclosure filed. The servicers are paid a fee for servicing the loan and the servicing agreement usually gives them the right to collect and pocket late fees, property inspection fees, appraisals, broker price opinions, attorney fees, foreclosure fees and any other fees they can dream up and assess to the borrower's loan. This has led to the abusive servicing practices that dominate the subprime market and show up in nearly every bankruptcy case, where the servicers are using the bankruptcy filing as an excuse and opportunity to load up the loans with illegal, bogus and excessive fees and charges.

Predatory lending seems to get all the press these days, but a huge portion of consumer complaints involve servicing, not the original lending. Predatory Mortgage Lending and Predatory Mortgage Servicing are two separate issues and can be engaged independently of each other. Borrowers can be taken advantage of at the inception of the loan and the loan serviced fairly or the loan can be fair and serviced predatorily. Of course, you will also have loans where the borrower is victimized from beginning to end.

Predatory Mortgage Servicing Involves the Following Abusive Practices

Entering on-time payments as late so they can charge late fees;
Improper use of and mishandling escrow funds;
Foreclosure attempts when borrowers are current or failure to initiate workouts;
Placing payments into suspense accounts and not crediting them to the mortgage account;
Charging prepayment penalties when the note does not provide for them;
Charging higher fees for third party services and pocketing the difference;
Mis-labeling fees and hiding fees in a catch-all account such as corporate advances;
Refusing payments so as to guarantee a default;
Charging force-placed insurance when the homeowner already has full coverage;
Paying property taxes late, then charging the late penalties to the borrower;
Adding bogus fees to create a deficiency with the borrower's next payment;
Not applying payments to principal and interest;
Billing for events that never happened;
Ignoring customer complaints;
Charging unwarranted fees, such as late fees, default or foreclosure fees;
Damaging the borrower's credit so they can't refinance out of the loan;

There are many other acts done intentionally and some done merely negligently by the servicer.

The end result of these abusive practices is that they all generate fees for the servicer. It's all about money. These fees are a huge part of the profit center of a servicing department. Assuming a servicer only "overcharges" a loan account one hundred dollars per year and it services ten thousand mortgage loan accounts, this results in one million dollars of extra profit. But the "overcharges" are much more than one hundred dollars and they all service more than ten thousand loans.

The terms of the loan are complex and difficult for a borrower to understand, so they never really know if they are being overcharged. Many servicers track these fees on their software systems and never notify the borrower that the fees and charges are being added to the loan. The fees will then be added into a payoff request for a sale or refinancing or into a reinstatement amount if the borrower is in default. Since they are part of the overall lump sum number the borrower never knows they are paying these extra fees.