LawyersandSettlements.com has reported a 70 percent jump in mortgage complaints from January through June 2012 compared with the same period a year ago. In addition, mortgage complaints to the website have risen 114 percent so far this year vs. a similar period five years ago, in 2007. Complaints are submitted to the legal news website in order to seek legal help.
There are three primary categories for which mortgage complaints to LawyersandSettlements.com continue to be submitted:
1. Predatory and Discriminatory Mortgage Lending. One example of a mortgage lawsuit involving discrimination was the recent U.S. Department of Justice case involving Wells Fargo (United States v. Wells Fargo Bank, NA (D.D.C.), Case 1:12-cv-01150, U.S. District Court, District of Columbia). The case was the second largest fair lending settlement in the department’s history. As part of the discriminatory lending settlement, Wells Fargo agreed to pay $175 million to settle allegations that it charged African-Americans and Hispanics higher fees and rates on mortgages than for Caucasian borrowers with similar credit profiles. Wells Fargo stated its intent to settle the mortgage lawsuit was to avoid contested litigation, and that it treated all clients fairly without regard to race or ethnicity. This, in spite of the large numbers of discriminatory lending victims uncovered by a government investigation.
In addition to racial discriminatory lending complaints, LawyersandSettlements.com has also received predatory lending complaints from seniors who allege they have been targeted with products ranging from mortgages with an introductory low rate (that rises substantially later on), to reverse mortgages that eat up a homeowner's equity—sometimes without the homeowner fully realizing the true source of the nonetheless welcomed income.
Wells Fargo was the target of a reverse mortgage lawsuit last year in Chandler v. Wells Fargo & Co., Case No. 11-cv-03831, U.S. District Court, Northern District of California (San Francisco). The mortgage lawsuit, which was filed as a class action, is still pending. It accuses Wells Fargo of disregarding federal rules on reverse mortgages and forcing homeowners into foreclosure instead of giving heirs a chance to buy the homes.
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3. Investment Loss Stemming from Mortgage-backed Securities. The failure of mortgage-backed securities stemming from the sub-prime mortgage meltdown of a few years ago has left many investors with substantial losses after being advised that such securities were low-, or even no-risk investments. In re Lehman Brothers Mortgage-based Securities Litigation, Case No. 08-CV-6762, U.S. District Court, Southern District of New York, plaintiffs in the class action lawsuit were awarded $40 million in damages. LawyersandSettlements.com continues to receive complaints regarding mortgage-backed security financial losses from its readership.