Obama Administration officials believe a lack of strong federal regulation in the financial industry helped create the financial crisis, the Los Angeles Times reported April 17. In a news analysis, the newspaper took the case of Orange-based mortgage lender Ameriquest as an example of the problems with leaving large parts of the financial industry without a watchdog. Ameriquest was the lead originator of "subprime" loans when, in 2006, it settled a national class-action lawsuit alleging that it preyed on consumers by falsifying loan documents and misleading borrowers. But the federal government was not involved in that $325 million settlement -- because Ameriquest hadn't broken any federal laws.
One problem was that Ameriquest, and mortgage lenders like it, were not banks or savings & loans -- and thus, they were not subject to federal banking laws. Federal regulators also left their partners, the Wall Street firms that "securitized" mortgages, almost completely unregulated. Insurance companies such as AIG then insured the mortgage-backed securities -- and as we now know, failed after waves of homeowners defaulted and made the mortgage-backed securities worthless.
In the absence of federal regulation, state regulators did have authority over mortgage lenders and insurance companies. However, the article says, state regulators generally focus their efforts on the consumer end of the mortgage lending business. This can do lot of good for victims of predatory lending -- but it doesn't do anything to police the "back end" of mortgage lending, where securitization takes place. The result, as our Santa Ana predatory lending lawyers can testify, was a strong incentive for lenders to pass on all of the risk to investors. With no risk, lenders were free to write as many risky loans as they wanted, creating short-term profit but ultimately triggering some of the financial problems we now face.
At Howard Law LLP, our La Mirada predatory lending attorneys start every case by looking for evidence that our client was lied to or misled during the original home-buying process or during a refinancing. Unfortunately, the complexity of the mortgage lending process makes this all too easy for an unscrupulous lender to do. Lenders and brokers may fail to disclose important terms of loans; inflate the values of homes; add massive fees; or mislead an inexperienced first-time buyer into agreeing to terms that he or she cannot possibly meet.
If you are a victim of this sort of deceptive mortgage lending practice, you have rights --and Howard Law can help you enforce them. In a Southern California predatory lending lawsuit, you can get the loan nullified and win back all of the payments you made on the deceptive loan. In many cases, we can also use evidence of predatory lending to help you negotiate a loan modification that allows you to stay in your home. And we offer free, confidential consultations, so there's no risk in speaking with us about your rights and your case. To set one up, please contact us online as soon as possible or call us at 1-800-872-5925.