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I Have a Big Truth in Lending Problem and Need Help. – Gene

Gene

“Dear Steve,

Getting to the point, I need a great Federal Attorney that can present a strong Truth in Lending action. In the current subprime meltdown my case will be a benchmark case that will be published and it will get National Exposure.

Under Federal RESPA Section 6, and the similar statute in California’s Cranston-Gonzolas Act, and within TILA, the Truth in Lending Act, and the Federal Trade Commission’s Fair Debt Collection Practices Act Section 809(b), all agencies similarily state that questions about or validation of a mortgage related debt is resolved simply with RESPA by a Qualified Written Request to the loan servicer or with the FTC, a similarily written dispute to a debt collector.

RESPA gives 60 days for resolution, FTC states all collection efforts must immediately stop until the debt is verified. Unfortunately, none of these have any teeth. I am working with both Senator’s Feinstein and Boxer’s office as well as with Representative Gary Miller, California Senator Lou Correa, the FTC, HUD, California’s Department of Real Estate and the State Attorney General’s Office to enact legislation to put teeth into the statute. The key issue that will be decided is the viability of a forbearance agreement being used as debt validation. Ultimately, the laws need to change, short term I need to prevail in a Federal Court.

Following this short request is a very abbreviated “background information”. Far greater details and complete documentation is readily available at any time for delivery to your office.

Since we first started fighting servicing abuse almost ten years ago, concerning our problems with debt validation by our home loan servicer, we have paid hundreds of thousands of dollars for their demands and now have no equity in our home of almost 30 years. Unless something quickly changes we will be forced to lose our home on March 10th, 11 days before my birthday. I will be turning 60 and I respectfully ask for a birthday present. All I want is a specific statute reference affirming or answering the following question:

When a borrower enters into a forbearance agreement with a debt collector (loan servicer) any and all amounts that may be stated as due or past due within the agreement, are still subject to validation under RESPA Section 6 and/or Section 809 of the Fair Debt Collection Practices Act.

As you may well know, a forbearance agreement, written by the loan servicer or debt collector on the eve of a foreclosure sale, is always, or most often, favoring the financial rewards of the servicer and seldom, if ever, the borrower. Our servicer, SN Servicing, Inc., claims once you are forced into an agreement and sign it, as in our case under duress, you forfeit all rights to debt validation. Your signature validates any and all sums contained or referred to within the documents and you surrender all statutory rights, both Federally and those within applicable State Statutes. Without the clearly defined legal right to have the debt factually and accurately documented, either before or after signing, has and will lead to continued abuses of the borrowers by the servicers.

Without proper regulation the forbearance agreement, in the hands of the unscrupulous collector in this devastated financial market, will become no more than a “ransom note” demanding payment of any and all sums they choose to fabricate, metaphorically, presented in a box with the severed ear of a loved one. You either accept their demands for payment or lose that which you love so dearly and have struggled for so many years to maintain. This was not the intent of the lawmakers when they wrote the statute. Apparently a few Courts agree with me on questioning the validity of such agreements.

In Waters v. Min Ltd., the court framed the question as whether the contract “was such as no man in his
senses and not under delusion would make on the one hand, and as no honest and fair man would accept
on the other.” 412 Mass. at 66, 587 N.E.2d 231.

The court noted that “[i]n Brooklyn Savings Bank v. O’Neil, 324 U.S. 697 (1945), the Supreme Court addressed the question of waiver under the Fair Labor Standards Act. The Court held that “a statutory right conferred on a private party, but affecting the public interest, may not be waived or released if such waiver or release contravenes the statutory policy”…“The public benefits from enforcement of TILA because it creates a system of disclosure that improves the bargaining posture of all borrowers.” Therefore, such a waiver is unenforceable with regards to the TILA. (I have many more references concerning our situation)

Short Background Information

Our mortgage loan has been sold 4 times. The 2nd servicer (Wilshire) made a $40,000.00 mistake in the application of payments, I protested in writing, they filed a NOD and sold the loan….. The 3rd servicer (OCWEN) offered to do an accounting, but only if we signed a forbearance agreement (claiming we were about $50,000.00 behind, which we weren’t), facing the sale date, we signed.. Our P & I payment was about $3000.00. In 9 months we paid $90,000.00 and continued to demand an accounting. They offered a replacement forbearance agreement saying our “arrearage” had only dropped $1.88.. I refused to re-sign and they scheduled the Trustee Sale. I filed a Chapter 13 bankruptcy to stop the sale and demanded an accounting.. They never provided the Court the documentation, Blaming Wilshire wouldn’t give them the information, so our plan was not confirmed and the 13 was dismissed.

Three days after the dismissal the pending sale was reset and again, a forbearance agreement (now $70,000.00 behind, they had only claimed $50,000..00 in the “final statement” in the just dismissed Chapter 13 proceeding) was offered and an accounting was promised, it’s now April 2001. I signed, made a big deposit and made big payments, all the while demanding an accounting. 6 months later I refused to make any more payments until we got the accounting. In December, 2001 OCWEN offered another forbearance agreement (this one said we were $552,700.00 behind). The writer of the agreement quickly admitted that they (OCWEN) had no idea what, if anything, we were behind. We agreed to cross out the $552,700.00 and they would “do an accounting”. OCWEN then sold the note. When they sold the loan the final closing statement accounting from OCWEN’s records showed that they had “written off” the $70,000.00+ that they 2001 agreement claimed we were behind.

The new (current) servicer, SN Servicing, demanded to collect what had just been written off. I protested, demanded an accounting, and gave them an independent accounting proving we were paid ahead. They filed a NOD. I filed a lawsuit. It came down to which of the last 2 agreements was enforceable, the terminated April agreement or its successor, the December agreement to do an accounting. I provided the court with a written statement from the December agreements author, from OCWEN, that my story about the accounting was correct. SN Servicing’s defense was “all records prior to April, 2001 agreement were “lost” and they never heard of the December agreement. The judge believed the “lost records” story and chose the terminated April agreement “because it had a number in it”. He went on to state “it may not be the right number, but it is a number”.

My question is, according to FTC, we can demand debt validation per section 809. Does FTC put a restriction on the scope of it and will they make me stop at midpoint with the 1991 agreement or will they force my current servicer to follow it all the way back to the “original” creditor like the law seems to state? By the way, 4 months prior to “losing the records” SN faxed me all of the records back to 1999 when OCWEN bought the note, so they committed perjury… With all of this my loan was Modified in 1996 by GE Capital (a mistake in the Note overstated the annual margin spread by 1/2 point) and I was given a letter of explanation and a Modification Agreement. None of the lenders have adhered to the terms of the modification.. The lender and the servicer have both “knowingly” issued false statements and have refused to validate the debt, because they “can’t”, I think their position has painted them in a corner. I have paid out hundreds of thousands of dollars in bogus fees and charges and I’d love to have you help me collect them.

If a forbearance agreement containing a specific dollar amount is terminated and replaced with another one that promises a full accounting to determine the true status of the loan and the loan is sold can I force the new servicer to audit my loan or am I stuck with the amount in the first agreement?

We are really in a time crunch, so if you have an opinion or some thoughts, please call me or email back a response. Thank you.

Gene Secrest
714-974-4280

Don’t miss our free Get Out of Debt – “How To” Guide Series on a number of topics, for loads of practical advice, tips, and help to beat back debt. – Click Here

The Answer

 

Dear Gene,

I wish I could offer you some specific advice but you need to find a lawyer that can assist you with this legal matter.

I did a quick web search and found Kenny Tan in California that might be able to help you. Visit his website here.

Big Hug!

I Have a Big Truth in Lending Problem and Need Help.   Gene
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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Art Wood

    My wife keeps asking me why, why would the bank president let this happen? Why would they ruin our lives? What on earth do they have to gain? I keep having to reassure her and remind myself that we can’t put a name or a face of a bank executive or board member to this injustice. They don’t have a clue what’s going on, they’ve turned this matter over to attorneys and the attorneys get swallowed up in their need for billable hours, it’s not personal, it’s just how they get paid. During my career as a Special Agent with the U.S. Secret Service, I investigated numerous bank frauds and arrested countless criminals, but I never did like attorneys. Let me introduce myself, my name is Arthur E. Wood, in 1986 I was named Law Enforcement Officer of the Year by the Midwest Chapter of the International Association of Credit Card Investigators. Ten years later, along with my FBI counterpart, I was the lead investigator in the successful prosecution of organized crime for the theft of millions of dollars from a prominent Pittsburgh bank. I could not begin to count the number of presentations I made to train your tellers how to protect against bank fraud, counterfeiting, and credit card fraud. I’ve long since retired, but I still work part time for the FBI as a consultant. My wife Paula and I have five children, 14 grandchildren and one more on the way.

    Helping our kids was one of the reasons we wanted to tap into our home’s equity, so we set about to borrow money from your bank. Oh, don’t worry, I’m not going to name you, if you want to know if your bank is involved just look up Arthur E. and Paula C. Wood vs. your bank. We did, we arranged to borrow $100,000.00 (one hundred thousand dollars) from your bank. The closing was held at our home, on a Saturday, by a title company. I noticed that something had changed, the loan wasn’t exactly as promised and the title company couldn’t answer my questions. On Monday, I rescinded the loan by notifying you by phone and then faxing the rescission notice to your bank. We then called another bank, who gave us the loan on the terms that were promised. Everything was fine except that two weeks later my wife noticed that we had too much money in our checking account. Uh oh, the rescinded loan must have been funded in error.
    Easy to fix, just call the bank, send them a check and everything would be fine. I did, I called, “so sorry Mr. Wood, we made a mistake, no, don’t send us a check, please leave the money in your account and we will electronically reverse the transaction.” This was two weeks before Christmas 2005. We are halfway thru 2009, I still have your money, or some of it, having spent thousands on attorneys trying to get you to rescind the loan. I’m sure it was a mistake, and I fully expected you to make it right. I called again a couple of weeks later to tell you the money is still in my account,” sorry Mr. Wood, with Christmas and all someone just dropped the ball, but not to worry, it is still in the works and we are reversing the transaction.” Then you started to call us, trying to collect on a monthly payment, everyday you would call, and everyday I would tell you the loan was rescinded, Please don’t call anymore. Then it got nasty. My new bank called and said that “they were going to have to foreclose on our loan, because they went to record the mortgage and they were not in first place.” You were!

    I don’t have any attorney friends having spent most of my life as an investigator, but, my brother a successful businessman in Virginia had several and he put me in touch with one that suggested that we march ourselves into the Circuit Court here in beautiful Marion County, Florida and sue you for rescission under the Truth in Lending Act. (TILA) That set off a chain of events that lead to the rescission. You did release the lien on our home several months into the action, but then your smart attorneys filed a counter suit against us alleging fraud, conversion and a host of made up charges, they then filed a lis pendens and notice of equitable lien on a lawfully rescinded loan and have effectively stolen our equity by preventing us from selling or refinancing our property.

    At this point in my letter you’re wondering, O.K. so where’s the beef, this should all work it’s way out in the court and what’s this got to do with American Banker? Well Mr. Bank President, here’s the beef! This $100.000.00 loan is going to cost the bank thousands and thousands of dollars in legal fees because these attorneys have to keep billing, and nobody at the bank is minding the store. Your inability to rescind a loan within the time alloted under the statute has triggered the forfeiture section of the Truth in Lending Act so your bank is now in danger of losing the original funded money and your imposition of an invalid lis pendens is going to cost your bank over a hundred grand in lost equity. Rescission under the TILA takes the loan from secured to unsecured and the imposition of a lis pendens is an attempt to circumvent the statutory requirements of the TILA. I wrote this letter to point out to you that the TILA has been amended to help banks by not holding them accountable for actions caused by a bona fide error, however, an error with respect to legal judgement regarding the banks’ obligation under the TILA is not a bona fide error. This rescinded loan should not have cost anyone a dime! Now you have allowed your attorneys to ruin the lives of a couple of retirees and your bank is going to lose hundreds of thousands of dollars, for what? You just picked on the wrong guy.

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