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The purchase of a home is supposed to be an
exciting and memorable experience. However, finalizing a purchase on a home can be a daunting experience, requiring not only physical stamina but careful attention to detail.
Unfortunately, fraudulent transactions exists during every stage of buying a house. Homeowners
are susceptible to fraud, especially during the often confusing proceedings of obtaining a
mortgage loan. Mortgage fraud litigation is usually centered on six areas of
fraud: escrow account improprieties, private mortgage insurance fraud, title
insurance, settlement charges, document fees and prepayment penalties.
Escrow accounts are setup by mortgage companies as a way
for homeowners to pay for taxes and insurance. Homeowners add money to this
account, which the mortgage company uses to pay for taxing authority bills. The
account balance is supposed to be reduced during the year. Often, however, the
mortgage company fails to reduce the account, and it begins to hold too much of
the homeowner's money that he or she is not eligible to use.
When a potential homeowner puts down less than 20
percent of a loan amount, private mortgage insurance is usually required. When
the homeowner has reached 20 percent equity in his or her house, the mortgage
company is required to notify the borrower that he is eligible for cancellation
of the private mortgage insurance. Often, the lender fails to notify the homeowner
that he has reached the equity level or requires him or her to use one of the
mortgage company's appraisers to verify the borrower has reached 20 percent
equity. The homeowner ends up paying higher fees.
Controversy also surrounds title insurance policies,
especially when a homeowner is refinancing a mortgage loan. During refinancing,
a homeowner should be issued a reissue rate title insurance policy that is
usually half the cost of the original policy. Agents sometimes fail to inform a
homeowner of the discount and charge a normal rate in order to increase their
sales commission.
The markup of third party charges and improper document
preparation fees are other areas of mortgage litigation. Lenders and settlement
agents may mark up third party charges such as courier fees and credit reports
in an effort to increase profits. Unfortunately, many of these charges are
undisclosed to the homeowner at the time of closing. Lenders may also charge a
borrower for the preparation of loan documents, which is prohibited in many
states.
Consumers have also filed lawsuits over excessive
prepayment penalties. Some states require a prepayment penalty when refinancing
or paying off a loan. The fee varies depending on the mortgage amount and state
law. Lenders have been accused of charging excessive prepayment fees to
unsuspecting borrowers.
If you have been the victim of a fraudulent mortgage
transaction, it may be important to contact an attorney who can help you protect your legal rights. Please keep
in mind that there may be time limits within which you must commence
suit.
Please contact us for more information on the services we provide. Please fill out our General Questionnaire if you wish for us to evaluate your case.
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