Thursday, January 04, 2007

More pain ahead for the shady lenders

From this weeks Business Week Online:


Bankruptcy Boot Camp

How one man is training an army of lawyers to fight predatory lenders

Every week at least two homeowners walk into the office of Boston bankruptcy attorney David G. Baker looking to get out from under their mortgage debt. That's an alarming increase for a sole practitioner like himself. "I've never before had clients who walk in and say: `I just can't afford my house anymore,'" he says. "It's a little scary."

Baker needed to bone up on the intricacies of new mortgage products. So he signed up for Bankruptcy Boot Camp, the brainchild of O. Max Gardner III, the go-to guy for consumer bankruptcy attorneys across the country. The idea is to get lawyers familiar with the latest strains of mortgage abuse, then to educate them about federal laws that protect their clients. Baker now knows how to renegotiate mortgages and avoid a foreclosure. "People can ask lenders to restructure their loan," he says. "But that's something they keep from you because it's not in their best interest

Since Gardner launched the program in August, 82 attorneys have attended the 12-hour-a-day, four-day program held at his 160-acre Lizmere Farm in western North Carolina. It's a family operation: Gardner is the only instructor, and his wife does the cooking. He charges $7,775 a pop, but the lawyers don't seem to mind. Says Kathy Cruz of the Cruz Law Firm in Hot Springs, Ariz.: "It wasn't anything like law school. Boot Camp teaches what you need to know in the trenches."

It's inevitable that some homeowners get hurt in a downturn, especially those who have to sell unexpectedly and can't ride out the market. But experts say the pain will be broader and deeper this time around. In the past few years, millions of Americans bought homes they couldn't afford, lured by exotic mortgages that advertised no money down and low monthly payments--for a limited time only. As housing prices cratered and interest rates rose, borrowers got squeezed. The result: One in five subprime loans issued in 2005 and 2006 will fail, according to the Center for Responsible Lending.


ON THE OFFENSIVE

Gardner and his growing cadre of lawyers say the lending system is largely to blame. While some people carelessly got in over their heads, lenders bear responsibility for extending too much credit to unsophisticated borrowers. Worse, abusive players fail to credit mortgage payments, then charge huge late fees. Before the Bankruptcy Reform Act of 2005, most attorneys just filed the necessary paperwork to work out the inevitable Chapter 13 plans. But Gardner's model advocates scouring for violations that occur during the lending process and while the borrower is in bankruptcy protection. "My goal is to train an army of attorneys to take the fight right to the creditors and their Wall Street aiders and abettors," says Gardner. "They wanted reform, and we're going to give it to them."







Thanks to Perfect Storm for the tip

6 comments:

Anonymous said...

Gardner's model advocates scouring for violations that occur during the lending process and while the borrower is in bankruptcy protection. "My goal is to train an army of attorneys to take the fight right to the creditors and their Wall Street aiders and abettors," says Gardner. "They wanted reform, and we're going to give it to them."

Shady loan officer this situiation is only going to grow worse daily now. If you are working for a crooked loan broker you need to contact the proper authorities. Be a patriot to this Country and do the right thing. If you have any information it is in your best interest to report them.

Lou Minatti said...

There aren't enough prison cells to hold all of these fraudulent assholes, so what's to be done? Perhaps we should release the petty drug offenders and open up the space. I don't want billions in tax dollars spent on additional prisons to hold the mortgage fraudsters.

Anonymous said...

We just want the big guys. However, if any small fry loan officers who don't cooperate then of course jail time could be their fate also. If any loan officers are working for a broker who fudges loan applications, credit reports, verification of mortgage, appraisals then you need to contact the proper authorities immediately.

If you have noted even one instance of loan documentation fraud then you have an obligation to report this.

Bakersfield Bubble said...

Thanks Chip!

Anonymous said...

I hear you guys.

If I was a young loan officer or a line broker and knew some good information I would beat the rush and get on the record early as cooperating because I would much rather have my middle aged azzhole boss sucking Bubba in the Big House than my recently graduated happy azz!

Anonymous said...

I guess its good for the consumer, but if the lending was only 1 part of the problem, then what. I think they will do more harm than good. Say they bought over priced house with predatory loans. OK they get the bank to reverse course on the loan, they still have a over priced house that they owe far too much on ... wonder if the lawyers will point that out to begin with. Needless to say, you get it appraisd and it comes in under your original price ... now does it make it overpriced to begin with or just depreciated now ???
Cool.
Cow_tipping.