DELINQUENT BORROWERS ARE VICTIMS OF PREDATORY LENDING! SAYS INDUSTRY ANALYST

MAJORITY OF DELINQUENT BORROWERS ARE VICTIMS OF PREDATORY LENDING! MOST UNAWARE OF THEIR VICTIM STATUS, SAYS INDUSTRY ANALYST
Fraud Caused by Lenders and Borrower Lack of Awareness Is An Unknown Market Problem
Los Angeles, CA – Despite a surge in news reports about mortgage delinquencies, foreclosure rates and loan modifications, over 80 percent of the late-paying borrowers don't know their lenders may be guilty of originating a predatory loan against them. The implications could make for a much different set of alternatives for the borrowers seeking alternatives to help them avoid foreclosure, says Maher Soliman, an industry expert to legal professionals and founder of the consumer advocacy website www.borrowerhotline.com
According to the governments Department of Housing and Urban Development, or HUD, instances of predatory lending are very specific and necessitate the consumer filing an investigative report request against the lender. HUD's mission is to increase homeownership, support community development and increase access to affordable housing free from lender unlawful practices and discrimination. To fulfill this mission, HUD will embrace high standards of ethics, management and accountability and forge new partnerships--particularly with faith-based and community organizations--that leverage resources and improve HUD's ability to be effective on the community level.
A study conducted on a sampling of incoming inquiry calls to the website posted an alarming discovery as borrowers had no idea, for the most part, of what constitutes a predatory loan.
The survey was even more shocking when considering the overwhelming number of minorities with delinquent loans who failed to negotiate a workout plan with their lender. This finding was in complete contrast to the findings of the agencies, such as Freddie Mac, that found 61 percent of delinquent borrowers didn't know their mortgage lender offered workout options. This is more lender hype and an attempt to confuse the facts according to Soliman. He believes the lenders of America are trying to dodge and deflect the reality of the situation.
I won’t deny the increase in the percentages of delinquent borrowers who understand their lender is appearing to reach out to them. Those versus recent reports that suggest the borrowers are reaching out to their lender to discuss workout options.
Soliman is referring to the 2007 Freddie Mac/Roper survey results based on responses from 2400 plus adult homeowners, including 1,004 delinquent borrowers more than one month late. Roper conducted the survey by telephone from October 23 through November 14. The survey has a three percent margin of error. The new Freddie Mac/Roper poll also says the percentage of delinquent borrowers aware there are housing counselors they can talk to about their mortgage has increased from 36 percent in 2005 to 44 percent today. "This new survey shows efforts to get borrowers to call counselors are starting to work, but that too many at-risk borrowers are still unaware their servicers routinely provide alternatives that can help them stay in their homes," said Ingrid Beckles, Freddie Mac's Vice President of Servicing and Asset Management. "This fact underscores the importance of convincing borrowers to pick up the phone, call their servicer, and find out whether they can avoid foreclosure." Servicers are firms that collect monthly mortgage payments on behalf of investors such as Freddie Mac.
The truth, from Soliman’s perspective, is too many borrower’s are not willing to fight through the multiple telephone “road blocks” that come with seeking help and enduring the often dropped calls. They start to believe almost immediately that the effort is nothing more than adding additional frustration to an already sad situation. Soliman notes, “They (borrowers) often give up after a few hours of effort and resign themselves to the reality that they cannot save their home”.
The majorities of the borrowerhotline.com web visitors are either facing foreclosure or are in the late stages of the process leading up to a trustee sale. Viewers are somewhat shocked to realize for the first time that they are part of an unsettling high number of all delinquent loans whereby one or more examples of lender fraud exists in their file. These instances include fraudulent activity where Soliman believes the borrower was induced to do something unethical at closing. For example, he cites something simple as where the borrower unknowingly misrepresented income on a stated income loan application or was told to exaggerate the amount of total savings in the borrower’s bank account with the lender waiving the need for a verification of deposit. These types of unlawful activities are beyond the borrower’s comprehension say Soliman, as people do not understand the underwriting process or implications of these and other specific secondary mortgage market requirements. The secondary mortgage market is the market for the sale of securities or bonds collateralized by the value of mortgage loans. The mortgage lender /commercial banks/or specialized firm will use specific criteria to qualify borrowers and then group together many similar loans and sell grouped loans as securities called collateralized mortgage obligations (CMOs). In theory, the risk of the individual loan is reduced by the aggregation process. In hindsight it was such a loser situation set up in part due to Wall Street “algorithmic” assumptions and other technical “inside” nonsense determined to eventually come toppling down. And as Soliman puts it, “the pyramid came toppling down with American homeowners receiving the brunt of the responsibility whereby they now are losing their homes”.
Maher Soliman, Managing Director for www.Borrowerhotline.com