State mortgage regulators should get ready for a swarm of consumer complaints against lenders this fall, a California lawyer who focuses on unfair lending practices and foreclosures warned.
"If you think you are being flooded by complaints now, just wait until October first" when federal funds run out for local housing counseling agencies, attorney Maeve Elise Brown told the American Association of Residential Mortgage Regulators' annual conference in San Francisco.
Brown, who heads the non-profit, state-wide legal service Housing and Economic Rights Advocates, said counseling agencies "already are working on fumes." And because lawmakers have stripped funding for their activities from the Department of Housing and Urban Development's budget, effectively "zeroing out" reputable, community-based counseling programs, she said many will have to curtail their activities or shut their doors altogether.
Counseling agencies are the only place consumers can turn for free advice or help, Brown, who is based in Oakland, told the state regulators. So when borrowers who have a beef with their lenders or loan servicers can no longer call on those agencies, they have only one other place to take their gripes: their state agencies.
Brown and two colleagues on an afternoon consumer issues panel also called on those who oversee the mortgage market to come down harder on their fellow attorneys who take part – or even perpetuate – loan modification scams.
"There's virtually no discipline anywhere against lawyers," said Robert Strupp, who manages systemic investigations for the National Community Reinvestment Coalition. "If (the authorities) move any slower (against lawyers), they'd be backing up."
Corrupt lawyers, he said, "are not even being brought to the table."
