Remedies and Tips
There are a number of consumer protection laws in place to protect the public from predatory lending practices. The Real Estate Settlement Procedures Act is one of them and Regulation Z (12 CFR 226) is another.
If a person purchases on credit for investment or profit, such as purchasing a rental property, you are considered a sophisticated purchaser and are subject to the standing commercial laws. However, if you are purchasing for consumption, such as purchasing a house as a primary or secondary residence, you are considered a consumer as you will be consuming the product by living in it. In such a case, you have added protections in the form of a number of consumer protection laws.
This program will compare the information presented here to the consumer protection laws and the standing commercial code. First it will look for direct violations of specific statutory requirements, and then it will look for trends and patterns that indicate commercial fraud, theft, and usury.
Once you complete the Calculate Fraud, a letter will be generated and can be sent to the company that receives your payments. The letter will challenge the validity of the entire debt based on indications of fraud found in the data. This will trigger the requirement to stop all collections procedures until the RESPA letter is complied with.
20 Days to Respond to RESPA
The lender has 20 days to notify you that the letter was received and 60 days to correct or explain any alleged errors indicated in the letter. Failure on the part of the lender to fully comply opens up all sorts of potential remedies that will keep the lender from moving ahead with foreclosure or collections.
No Phone Conversations with Lender
The letter will include a prohibition against calling you at all and against contacting you at any place other than your primary residence. Every violation of this restriction is a separate statutory violation. If you are called and the caller fails first to notify you that the s/he is a debt collector, that is a separate violation.
The RESPA letter is designed to act as fair warning to the lender. The things asked for will let the lender know that you are aware of the types of fraud the lender has been committing. This will act as fair warning and give the lender opportunity to come to the bargaining table in good faith. If the lender does not, you will be laying the groundwork for the next move which will up the stakes considerably.
The RESPA letter serves as the first step for the consumer in the exhausting of all remedies before going to the courts. Before going to the courts for remedy, the courts want you to show that you have acted with due diligence to exhaust all civil remedies before coming to the courts. This letter is the first step in that direction.
Offer to Modify
A common tactic of lenders is to treat the RESAP letter as a request for modification. The lender knows most people know little about the financial industry and, if in financial difficulty, are more vulnerable than otherwise, and easy prey to tactics intended to short-circuit any action that would expose their fraud.
When the lender responds to the RESPA letter as if it were a request for modification instead of in compliance with the consumer protection laws, we will follow with more accusations of wrong-doing on their part.
If the lender fails to fully respond to the RESPA letter, you can follow with a tort letter notifying the lender that they are non-responsive and in violation of RESPA.
The lender has sixty days to completely answer and correct any errors. We generally wait until the lender sends some sort of reply or attempts to resume collection activity. When that happens, we follow up with an exhaustive tort letter. The tort letter stipulates all the claims against the lender which will be considerable. However, the tort letter will not simply go to the lender, it will also go to every past and present real party in interest, stipulating an amount of damages, which will be considerable, and demanding that they make you whole or be sued.
Securitization of the Note
The above reference to the “real party in interest” needs a bit of explanation. Almost as soon as the Note is finalized, the lender sells it to a third party. The Note then becomes a security instrument. When the Note is sold, the purchaser apparently believes itself to be a holder in due course, but such is not the case.
A holder in due course is someone who holds a security instrument without liability. For instance, if I write you a check, that is a security instrument. If you take it to the bank and the check bounces, the bank will not come after you, but rather, will go after the issuer as you are the holder in due course of the instrument.
The Holder Rule
In the instant case, the security instrument is the result of a consumer transaction. Under the Federal Trade Commission Holder Rule, the holder of a security instrument that is the result of a consumer loan is liable to the borrower for any claim the borrower would have had against the original lender. In the matter of a consumer loan, there can be no holder in due course.
Notice to Holder
When the lender fails to respond in good faith to the RESPA letter, the computer will create a tort letter based on the information you input. Actually it will produce several tort letters, one for each entity that is, or ever has been a real party in interest to the Note and notify them they have participated in unjust enrichment to the detriment of borrower and demand of each that they make the borrower whole or be sued.
Bring the Lender to the Table
The above is intended to bring the lender to the negotiating table in good faith and acts as exhaustion of all civil remedies. When the past and present real parties in interest receive the tort letter, they are going to be very unhappy with the lender. They will want answers that the lender will be hard pressed to answer. This should bring the lender to the table with a deal you can’t live without.