MORTGAGE COMPANY ABUSES

SURRENDERED HOMES OR OTHER REAL ESTATE

If you surrendered your home or other real estate in bankruptcy, it may be that your legal rights have been violated. Once the mortgage debt has been discharged you shouldn't be getting statements, collection letters, insurance notifications or telephone calls concerning your old mortgage. Any contact after the debt is discharged is likely to be a violation of the discharge injunction or other state or federal law. Don't ignore these violations as they will seriously impact your credit score and ability to get a home loan in the future.

ILLEGAL ACCESS TO CREDIT REPORTS

Mortgage companies or their servicers frequently continue to access a consumer’s reports long after the mortgage debt has been discharged. This violates the bankruptcy discharge and the Fair Credit Reporting Act. If this has happened to you, you may be entitled to statutory damages of up to $1,000 per pull if the act was intentional.  You should have a professional review your credit reports to make sure this hasn't happened to you.

PROSECUTION OF YOUR CLAIMS

You will need experienced litigators since these type cases are filed in federal court. You should be able to find an attorney to represent you on these matters on a contingent fee basis. When they review your credit reports they will be looking, not only discharge violations, but also for violations of the Fair Credit Reporting Act as well as other state and federal statutes that have been enacted to protect your rights as a consumer. These claims can be quite lucrative but to prevail you must have convincing evidence. If you think you might have a claim it is imperative that you read Don't Throw Away the Evidence now. Without evidence you won’t have a viable claim.

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Does Bankruptcy Ruin Your Credit

DOES BANKRUPTCY RUIN YOUR CREDIT?

It is a common belief that bankruptcy ruins a consumer's credit, but that's not necessarily true. The fresh start consumers are searching for when they file bankruptcy can apply to their credit too. When a consumer files bankruptcy all of his existing debt should be reported as "discharged in bankruptcy" and "balance -0-." If that actually happens, filing bankruptcy gives the consumer a clean slate. Sure, the bankruptcy is a negative, but its impact on the consumer's credit score will diminish in time. This gives the consumer an opportunity to re-establish their credit fairly quickly--often in six months to a year. Sure, a consumer won't have perfect credit with a bankruptcy on his record but his credit score will often be high enough to get car loan, rent an apartment or even refinance a home at market interest rates.

Unfortunately, this won't happen automatically. Creditors often do not report the bankruptcy to the credit bureaus, Experian, Transunion, and Equifax, correctly which will prevent the credit score from recovering the way it should. This is why is imperative for consumers to monitor their credit after bankruptcy. This can be done with a credit monitoring service or simply by going to AnnualCreditReport.com and doing it themselves.

For our clients it is part of our service. We help them get copies of the credit reports and then review them to be sure the reporting is correct. If it turns out to be wrong we get it corrected and do our best to make the offending creditors pay our fees. Either way, our client's never pay us a dime out of pocket.

For information on how to obtain your credit reports follow this link or, if you would like our assistance in getting a fresh start on your credit, visit our Website.

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Proving Mental Anguish Damages

If a bankruptcy filer prevails in a claim under the Fair Credit Reporting Act or in an adversary proceeding for a violation of the automatic stay or discharge injunction the most likely damages sought will be for mental anguish. After all a debtor expects to get a fresh start from their bankruptcy and when creditors continue to harass them after they have been granted a discharge, it is quite traumatic. So, it is important for bankruptcy filers, who are victims of abusive creditors, to keep a diary of the mental anguish they suffer on account of the unlawful actions of these creditors. This will allow the victim to testify in deposition or at trial fully and completely as to the suffering they have endured. And simply being upset or angry won’t cut it. To prove serious mental anguish damages a plaintiff must show physical symptoms like headache, insomnia, depression, nervousness, marital strife, or lack of concentration that effects their job or enjoyment of life. It isn’t necessary to have expert medical testimony to prove mental anguish but to convince a judge or jury that they have suffered serious mental anguish will require convincing testimony, so the more details, including dates, times and circumstances that can be provided the better.

 

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Why Don't Lenders Foreclose In a Timely Manner?

One of the great mysteries of the mortgage industry is why lenders take so long to foreclose when a debt is discharged in bankruptcy. You would think the moment the automatic stay was lifted the lender would want to dispose of its collateral as quickly as possible and move on, but the reality is that lenders often take months if not years to follow through with a foreclosure.

Bankruptcy attorneys speculate a lot about the cause of such delays and some of the most popular theories are (1) inability to deliver good title due to title problems caused by the frequent buying and selling mortgage loans, (2) investors not wanting to take a loss when the market value of the collateral is less than the balance on the loan, (3) there are more delinquent loans than the lenders and servers can effectively handle, (4) they hope that the mortgagor can be induced to cure the default and reaffirm the obligation, and/or (5) they are somehow profiting by not foreclosing.

I have ran into several situations where the lender could not prove they owned a loan. In fact our firm is involved in a case like that right now, but even after a two year battle in district court to validate the lender’s title to the loan, a year has gone by and still no foreclosure. The idea that a bad real estate market made lenders reluctant to foreclose seems logical on its face, but now that the real estate market has turned around in Texas I still don’t see lenders speeding up their foreclosures. It is true that the number of delinquent home loans are at record levels and that the lenders and servicers are just overwhelmed. This seems like a reasonable explanation except that in the three years since the real estate market cratered, you would think the major lenders and servicers would have got their act together and start moving their foreclosures along faster, but I haven’t seen that happening. That leaves us with the final two possibilities which I believe explain what is happening.

First, lenders and servicers are delaying foreclosure to give them more time to lure or trick their customers in bankruptcy into paying the discharged debt. And, secondly, the servicers are delaying because they are somehow making money by holding onto the property. But, whatever the reason, these delays in foreclosing are causing grievous injury to debtors whose debts have been discharged and sorely want to get the fresh start they were promised, but can’t do it with the liability exposure of a vacant house still in their name hanging over their heads.  

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FCRA Not Always Consumer Friendly

Although you would think the Fair Credit Reporting Act was written to protect consumers, it also has provisions that protect creditors. One specific requirement that insulates creditors, at least under federal law, from liability exposure, is the requirement that consumers dispute erroneous items on their credit reports and give the offending creditor 30 days to confirm or correct the reporting. This may seem fair at first glance, but what if the erroneous reporting was intentional or resulted from gross negligence, which is often the case. Why should creditors be insulated from liability when they cause a consumer to lose an opportunity to buy a house or a car? Why should consumers have to endure the humiliation of a credit denial without recourse when a creditor makes an obvious mistake? Why should creditors get a free pass when they injure a consumer? It doesn’t make sense. There is no doubt the credit industry lobbied long and hard for this provision in the FCRA. Luckily there are state laws that don’t recognize this requirement to dispute erroneous credit before action can be taken against the offending creditor.

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