Abusive Practices Found In Some Mortgage Lenders

[Jun 16, 2008.]

While consumers should be on the alert for scams and cons from unsolicited third parties they need to also be weary of legitimate mortgage lenders. In a recent congressional hearing several mortgage lenders were placed under scrutiny for alleged abusive practices meant to take advantage of already struggling home owners.

The hearing centered on the lenders' practices of abusing the bankruptcy courts by purchasing mortgages nearing foreclosures or properties already undergoing foreclosure that are unlawful. Some lenders will then request that the courts force foreclosure even if the home owner is current with payments or has filed for bankruptcy.

Katherine Porter who teaches law at the University of Iowa was part of the hearing and testified that while bankruptcies are aimed at aiding home owner, many mortgage lenders are using it as a way to "engage in abusive practices."

While not all mortgage lenders are guilty of participating in abusive practices the fact is many are which is causing new concern for families. Many have claimed that certain lenders such as Countrywide Financial have attempted to foreclose on properties whose payments are up to date or charging tens of thousands of dollars more then the actual payment.

As the housing market continues to fail many expect the abusive practices to continue. Many lawmakers are now taking actions to help prevent such misconduct are concerned that if the lenders are allowed to continue in an unethical manner then the rate of foreclosures will continue to rise.

There are several methods for homeowners to protect themselves from foreclosure with bankruptcy being the most extreme. Bankruptcy is supposed to stop bill collectors, repossessions, and foreclosures. Mortgage lenders who still seek foreclosure can be guilty of abusing the system in an attempt to collect more money and property which will force many home owners from their properties.

Homeowners need to be diligent against abusive practices and not be too trusting of even legitimate mortgage lenders. While lawmakers are working hard to prevent these lenders from taking advantage of home owners it is ultimately up to those same home owners to protect themselves and alert the proper channels if they suspect any unfair business practices.