Update on Realism

Posted by kevin on June 26, 2017 under Foreclosure Blog | Be the First to Comment

About a year ago, I posted, bluntly, that borrowers need to be realistic in today’s foreclosure environment. I suggested that in NJ, there was a demographic element to predatory lending notwithstanding that the standard definitions of predatory lending in a residential setting put the emphasis on lending to someone based primarily on the value of the collateral and not on the ability of the borrower to repay.

In one of the last cases that I have seen in NJ on the issue of predatory lending with a positive result for the borrower, the court considered that the borrower and his family were recent immigrants from South America, who spoke limited English and were unfamiliar with American banking practices, and were forced to use their savings after they were scammed by an unscrupulous representative from a large mortgage originator. Clearly, a demographic element.

Recently, I had a case involving a man who was born in rural Columbia and attended school through the 9th grade. He worked as a subsistence farmer. In his mid-20’s, he moved to the US and worked in a factory by day and a bodega at night. Eventually, the people that owned the bodega retired and he took over. He works basically 7 days a week and makes about $36,000 per year. Over the years, he was able to save about $35,000.

He speaks little English and does not read or write in English. He was able to supply his store because he dealt with Spanish speaking suppliers. He wanted to buy a house in an urban area in NJ for his father and himself. He found a place for $465,000. It was a two family with a tenant in place.

He went to Countrywide for a loan. Countrywide assigned him to a Spanish speaking rep. He turned over his tax returns and bank statements. She filled out the loan application. She listed his income at $15K per month and indicated that he had 18 years of schooling. (When I told him this in our client interview through an interpreter, he was shocked.) Not only did they lend him $372K on a first mortgage, but gave him a line of credit to pay the remainder of the purchase price. His mortgage payments and escrows amounted to over $3700 while his total income including rental income was about $3900. He was forced to use his savings to pay the mortgage, and then went into default.

A classic case of predatory lending and consumer fraud with the demographic element. And how did we fare? The court granted summary judgment to the lender ignoring all arguments about predatory lending and consumer fraud. In addition, the borrower’s motion for discovery was denied.

Since the end of spring, I have turned down 4 , what would have been consider in 2010, strong cases involving instances of predatory lending. It is unfortunate, but a reality. In 2009, when I began to concentrate on foreclosure defense, litigation was a primary tactic. That is why I called this site fightforeclosureNJ.com. Now, litigation is one tactic among many that we consider with new clients. There still are alternatives for many homeowners faced with a mortgage situation; however, we must evaluate your fact situation in light of current court decisions and objectively set realistic goals.