Can't believe I haven't blogged about this before. I have a case where my clients were ripped off by their mortgage company. This company, with a history of ripping off their customers, getting sued, and paying very large settlements to federal agencies, is about as evil a company as I've ever seen. It specializes in "subprime lending", what many people call predatory lending.
Their modus operandi is finding vulnerable people - with poor credit history, bad financial judgment, low to moderate incomes, and selling them expensive loans. They do things like mailing live checks, saying they know how tough things are at Christmastime, so here's $3K to help you through the season. The fine print mentions that the interest rate is 29.9%.
Yeah, that's a good deal. Awful nice of that sweet company to help out poor souls with some extra cash for Christmas. In three years you'll have paid them back double what they lent you.
So in our case, the evil corporation had been milking these folks for several years already. Next they suckered them into a refinancing. Pitched it to them as an "On Us Refinance". You might think that means no costs, but apparently not.
During the transaction the company diverted $11K into a credit life insurance policy, then canceled it. By doing so, clients' first mortgage was not paid off in full. Of course clients did not hire an attorney for the refinancing. You shouldn't have to really. This isn't supposed to happen in a refi.
How can you refinance your own customer's mortgage, and not pay off the original mortgage? It just doesn't make any sense.
But we're not done.
When my clients got their mortgage bills, they flipped. They called. They wrote letters. The bank blew them off. Clients complained to the Banking Dept. and the Attorney General. Bank lied to them. Still I can't believe Eliot Spitzer missed a chance to go after a corporation.
Finally the clients came to me, about the 6th lawyer they visited. I had simple advice. Stop paying the old mortgage. You don't owe it. It's not valid.
The bank will threaten you. Ignore the threat. At some point they'll commence a foreclosure, and we'll counterclaim.
The clients listened, but they didn't believe the bank would actually go through with it. These clients are really good people, so trusting. That's why the bank was playing them all these years.
The bank threatened foreclosure. Before they actually commenced they had received four letters from me. They ignored all of them and went ahead.
My clients were devastated. No matter how much I reassured them that everything would be okay, they were still shocked, depressed, angry, outraged, you name it.
Well, we served an Answer with Counterclaims. That seemed to wake the bank up, briefly. I got a call from a lawyer in their main office in Dallas. He tried to sweet talk me, but in the end the paperwork he sent did not fit with his oral proposal. Clients were so angry it didn't matter. Then the bank started delaying.
The case started in April of 2004. It's now getting close to February of 2006. We are getting moving a bit now. The bank says they're withdrawing the foreclosure and satisfying the old mortgage, but they haven't done it yet. They've also moved to compel us into arbitration. I think they're going to lose that motion.
I cross-moved to compel them to provide us with documents, produce witnesses, and also to sanction them for filing a frivolous action, along with other misconduct. Supposed to discuss this with the judge on 2/1/06, but I bet they'll ask for more time.
We'll see how this one goes.