Friendly Banks???

By now everyone knows that you can call your bank to discuss work-around solutions if you're having trouble keeping up with your mortgage. What's not well known is the risk you may face from some financial institutions. The banks are motivated to modify your loan, only if it serves their best interest. There is an endless stream of complaints from hardworking consumers who are getting no where with their banks. Read "The Niche Report" on the www.ec360.org website that further documents the concerns throughout America.

Case in point, I recently spoke with a potential client about a refinance of her primary residence. She was confused about why her bank was trying to get her to refi her first mortgage of $216,000 down to just $157,500. This wonderful woman who everyday cares for people with disabilities called her bank pro-actively to see about getting out from under her current loan because a Balloon payment was coming due in January 2010. She filled out the application and sent in her financials and bank statements. Her bank reserves showed over $100,000 in various assets that she needs and uses to care for her handicapped 10-year old daughter. She works full time caring for disable children and has a very limited income. The bank saw the large balances and sent her a new loan commitment document. She began communicating with the loan officer at the bank via email and was smart enough to save the emails. The loan officer at the bank was very vague with disclosure and never really spelled out the terms of the loan. The woman called her Realtor and her Realtor contacted us.After looking at her original loan documents with her Realtor, it was clear why this bank wanted to get her to come into close with $75,000 and switch her from a balloon, to a 3/1 ARM at 5.5%. When she emailed asking why they sent her a ARM rather than a 30-year fixed, they responded to her by saying, "you can always refi in 3 years".

Whats frightening is that this bank sent her a Residential Mortgage Loan Commitment that lacked the necessary legal disclosures for her to clearly understand what the loan would cost her.What we found after some due-diligence was horrifying! To summarize the facts, we will begin with the first loan. The original Truth-in-Lending Statement (TIL) was off by .25%. Shenever received her final HUD-1 closing statement and there were significant issues with the way her original loan was cast. Next, the bank was trying to literally steal her liquid assets from her bank account which she needs to support her disable daughter. The banks goal was to get into a positive equity position on the property instead of being upside down. There was no reason for the bank to send her a commitment letter for another Adjustable Rate loan when they could have easily offered a 5% 30 year fixed rate mortgage. Further, the new loan documents (which she never signed) also had mistakes on the Truth-in-Lending (TIL) just like the first loan.

We are thankful for the quick thinking of the homeowner and our Realtor partner who brought this to our attention. We're in the process of notifying the lender in writing of the violations and EC360 has already begun to go to work on behalf of the homeowner without any up front fees. For anyone who gets that tinge in the gut saying "somethings wrong" it's usually always right. Listen to your gut instincts, call your Realtor, if you have one, to get an objective opinion, or call Empowered Consumers for honest objective advice at no cost.