Foreclosure Victims’ Blog — Foreclosure Law

If you are working to arrange a loan modification with your bank, you may notice a severe lack of respect in the communication process. Mortgages are all based on contracts. That is simply contract law. If the intention is to honor the commitments between all parties, documentation of all communications is always welcomed. But when great efforts are in place to AVOID any mechanism that provides the consumer with a documented record of what was promised, said or how questions are answered, it doesn’t take a rocket scientist to realize that the game has been manipulated to exploit and abuse one party and shift all the advantage into the lenders court

• The lender can record conversations, but if you tell them you are recording, they disconnect you (JP Morgan Chase — even with government supported mortgage consultant company calls.)
• Letters that say one thing, and phone calls that say the opposite. Loan modification requires many documents to be sent to the lender. There are numerous situations where borrowers are sending in all the required documents and the lenders send out letters threatening to cancel the modification because some documentation required is missing. The letters are often form letters and and typically say something like “One or more of the following items are missing and must be received to proceed with processing your loan modification request: (Then it lists eight or so items – with check marks – none of which are checked.) Naturally, a responsible consumer will pick up the phone and call: “I sent in all the items listed on that letter, can you tell me which ones you say are missing”? The answers are provided by your only point of contact: Credit / collection agents working for the lender. They simply don’t have access to the information you require, and their answers need to evade the question. If you pressure them, they tell you to just re-send everything. Sometimes that could be 30 to 50 pages of documents you may need to assemble and resend every time they send out a vague letter? There is no accurate record keeping of your calls or the responses made. One agent may tell you “We have everything, don’t worry…” But call back in five minutes, the next agent will have no record in your “NOTS” file that documents what you were told! The policy seems to be to notate what the consumer says: NOT WHAT THEY TELL YOU. Boy is that a scam! (Again most of these reports center around JP Morgan Chase. Please send your emails to alert us to other situations!)

If you are entrusting a lending institution with the most critical investment of your life, maybe you should get to know more about your lender? When  you apply for a loan, lenders do credit checks, well let’s do a “character check” on some lender. If they can’t be trusted, and we are depending upon them for our future, are we in trouble!

WASHINGTON (CNN) — If you hold a Discover credit card, you’re in luck — the company has decided to freeze interest-rate hikes until a new credit card consumer protection bill takes effect in February.

Bank of America was the first company to freeze its rates. Both moves come after outrage over credit card companies jacking up rates, increasing minimum payments and raising penalty fees before the new consumer protection law — which would bar sudden increases — is phased in.

Rep. Betsy Markey, D-Colorado, and 17 other lawmakers sent letters to credit card banks asking them voluntarily to freeze their rates while Congress decides whether to move up the phase-in date for the new law to December.

Markey said a CNN report about Ohio couple Chuck and Jeanne Lane inspired her to act. The Lanes said they did everything right but felt bankrupted by a sudden change in their credit card payments. Watch more on the credit card outrage »

The Lanes have a low-interest Chase credit card that was sold as a way to consolidate large debts and pay them down responsibly over time. The Lanes showed CNN that they have excellent credit, have never been late with a payment and in the last two years cut their outstanding balance in half. They said they were shocked when Chuck opened their online statement to discover Chase had driven up their monthly payment from $370 to $911.

“I was devastated,” Chuck Lane said.

When Lane called the bank to complain, he was told he could continue to make his old payment if he agreed to an ever-increasing interest rate

“I told them this was the worst economic time in history practically,” he said. “I work for a small company. We have laid off 30 percent of our work force. I just took a 10 percent pay cut this morning, and this is what you are going to do to us?”

A Chase spokeswoman said the higher rate had nothing to do with the Lanes’ credit or payment history, but rather that the company doubled the minimum payments for more than 1 million cardholders in August because it wants them to pay down more of their principal.

In a statement to CNN, the company said tens of millions of Chase loans “have been paid back in less than 24 months” but a small percentage of customers have not made as much progress and “our desire is to have these balances paid back in a reasonable period of time.”

Joe Ridout, an advocate with Consumer Action, said, “Truly, this is the the single most abusive credit card change in terms that I’ve ever seen.”

Ridout described the tactic as bait-and-switch because Chase sold the cards as low interest and now is making the card unaffordable to many customers unless they switch to a higher interest rate.

“This is a very bogus compromise, and what the bank should really do is honor their original promises.” Ridout said.

Chase told CNN it has no plans to follow Discover’s lead. Wells Fargo plans to raise credit card interest rates 3 percent.

Consumer Action is fielding hundreds of complaints from consumers who are seeing their banks raise rates, minimum payments and penalty fees before the new law takes effect.

“It’s really touched off a chase to the bottom among credit card banks,” Ridout said, “because they know that after that date it will be much more difficult to change the terms when a cardholder pays on time and commits no infractions.”

But the industry insists it’s not trying to skirt the new law.

Scott Talbott, vice president with the Financial Services Roundtable, said the companies he represents are “struggling in a tough economy and trying to provide credit for consumers.”

The reasons the rates are going up or credit lines are decreasing are based on two factors: a change in behavior — a missed or late payment, or exceeding credit limits; and the economic times.

“We’re in a recession, so the general risk of nonpayment has increased across the board, so credit card companies are adjusting to that risk by increasing interest rates or decreasing credit lines, even if the customer has a perfect history,” Talbott said. “A very small percentage may see an increase in their interest rate or a decrease in their line of credit.”

Besides the letter from Markey and her colleagues, Congress is looking at taking other action.

Reps. Barney Frank, D-Massachusetts, and Carolyn Maloney, D-New York, have introduced legislation that would move up the date when the new protection laws take effect from February 22 to December 1.

Banks said they need more time to update their computer programs to comply with the regulations. And the Federal Reserve — which decides the fine points of how the companies should comply with the law — has yet to issue the final regulations.

Earlier this week, Sen. Carl Levin, D-Michigan, and three other lawmakers asked the Federal Reserve to begin collecting data on credit card practices so changes can be monitored and so Congress can see if card companies comply with the new law. Some of this basic data — such as the different terms offered to consumers, what credit costs consumers and how available is it — has never been systematically collected.

And Congress will have another chance to beef up consumer protections when it takes up financial regulatory reform this year. Lobbying by the financial industry is intense.

And Frank’s committee already has excluded a provision that the Obama administration proposed, which would have guaranteed consumers clear, simple options to choose from when they’re shopping for credit cards, mortgages and other credit products.

The Lanes said they’re deciding between paying the new minimum on their Chase card, or paying for surgery Jeanne needs next month and supporting Chuck’s son in college.

Jeanne Lane said she feels taken advantage of.

“I’ve had this card since the early ’90s, and I’ve never missed a payment. I have excellent credit,” she said.

She said she’s angry with her bank: “They have no respect for the American people. All they think about is the almighty dollar for themselves.”