Fraud and Prevention

Majority of Homeowners Aren't First to Notice Mortgage Violations

By James Comtois
September 16, 2009

Homeowners aren't typically the first to notice violations in their mortgages and often don't realize any wrongdoing has occurred, according to 63.8% of Florida attorneys polled in a recent Consumer Mortgage Audit Center webcast. While some homeowners suspect there are violations in their mortgages, they aren't sure where the trouble spots lie (14.9%).

CMAC, a due diligence and consulting company specializing in the field of mortgage forensic research and analysis, sponsored a Continuing Legal Education webinar for attorneys in July. Of the attorneys in attendance, 47 who practice in Florida shared their opinions, which were used in the above release. Responding attorneys specialize in foreclosure defense (42.6%), general practice (17%) and real estate (17%).

"As Florida continues to hold its front-row seat in the national foreclosure crisis, attorneys working to help homeowners are constantly facing new challenges," said Sylvia Alayon, vice president of operations for CMAC. "With many of the more exotic adjustable-rate mortgages starting to recast in the years after the boom of those products, homeowners are realizing they signed on for more than they can handle."

Ms. Alayon added that as these mortgages have a higher probability of mortgage violations, CMAC is able to work with attorneys nationwide to help them identify mortgage violations and instances of predatory lending which can ultimately provide options to possibly save homeowners from foreclosure.

A majority of poll respondents (66%) indicated that more mortgage violations and predatory lending would be detected in the coming 12 months, as opposed to the past 12 months.

Foreclosure is often the time at which many homeowners engage legal counsel, according to 68% of respondents.

CMAC recommends homeowners nearing or in foreclosure to compare their HUD-1 document, which buyers get at settlement to outline most costs, with the same lender's good faith estimate. If the figures on the HUD-1 and the good-faith estimate look different, it may be time to call an attorney.

In addition, if a homeowner suspects there are violations in the mortgage paperwork, but can't be sure, take the time to consult an attorney. Legal teams, according to CMAC, appreciate proactive, rather than reactive, efforts.

Homeowners should also look for a local attorney who handles foreclosure defense cases, as they're typically most familiar with national homeowner's rights, as well as laws designed to protect borrowers in the state. Most foreclosure attorneys do not charge for an initial consultation. Further, if an attorney wins the foreclosure case against a lender, the lender is responsible for paying the homeowner's attorney fees.