Alabama Consumer Law Blog

USNews has posted an article that discusses how your credit cards can actually be hurting your credit score. If you have a credit card, such as a Visa Signature, World MasterCard or Amex Charge Card, that is set to No Preset Spending Limit (NPSL) it sounds like you can charge as much as you want to. Although not advertised by credit card companies, NPSL cards do have a limit and since most consumers don't know this it can hurt them in several ways.

There are two kinds of NPSL cards: charge and credit/charge "hybrid" cards. Most NPSL charge cards allow consumers to charge up to an undisclosed amount and require the balance to be paid in full each month. The charge/credit "hybrid" card has a set limit but encourages consumers to surpass the limit as long as they pay off the excess at the end of the month.

Even spending with credit cards like Visa and MasterCard is capped off at an undisclosed amount and if a consumer hits the limit their card will be declined. The same is true with NPSL cards, although credit card companies make it sound like there isn't a limit.

However, this does not represent the extent of the prospective danger for consumers inherent within current NPSL credit card offerings. The way in which NPSL cards are reported to credit bureaus can prove very detrimental to consumer credit scores as well. FICO -- the largest credit scoring agency in the United States -- calculates credit scores by considering numerous factors about people's credit history and current credit usage. One such factor is a balance-to-available credit ratio called credit utilization to which one's credit limit is obviously very important. But if the credit limits for NPSL cards are unknown, how is credit utilization calculated?

NPSL cards don't report the card's true limit to credit bureaus. Doing so would allow the limit to become public information and would then shatter the idea of not having a limit on the card. NPSL cards either report proxy limits, which is a changing credit limit or the highest balance held over a time period, or they don't report a limit at all. If the proxy limit is reported then credit utilization could reach 100% due to the credit card companies encouraging consumers to surpass the monthly limit.

If a high balance is reported then utilization will still be around 100% because spending doesn't normally fluctuate too much.

For instance, if you consistently spend around $2,000 each month, your highest balance will be close to that amount -- say $2500 -- and typical spending will exhaust most of your "available" credit and lead to your credit utilization being around 80 percent every month.

Theoretically, a consumer can mitigate the negative effects of credit utilization by adjusting spending to account for the way in which his or her card's limit is reported. If an NPSL card is reported as an open line of credit, credit utilization is left out of the credit scoring process and is therefore not a concern; if a card's revolving credit limit is reported, one could simply make sure to stay well below this amount; and if the high balance is reported, one could cease using an NPSL card altogether and move spending to a regular credit card. However, making such an adjustment would require knowing which type of proxy limit is reported for a given credit card, and according to the Card Hub study, no uniformity exists in how credit card companies report their NPSL options. Similarly, many issuers refuse to be transparent in disclosing their particular reporting methods.

NPSL cards can seriously damage your credit score. If you have had issues with your credit score or credit reporting errors, feel free to contact us through our website or by calling 205-879-2447.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

Our friend Denise Richardson of givemebackmycredit.com has posted an article about the 5 most common tax scams and how you can recognize and avoid them for the upcoming tax season.

1. Phishing

Phishing can come from several places, such as social networking sites, fake websites, or email addresses. A tax phishing scam happens when a scammer tries to convince someone they are owed a tax refund but they have to provide personal information to prove their identity before the refund can be claimed. Providing personal information opens the door for identity theft. You can prevent this by being wary of emails supposedly sent by the IRS. Don't click on any links in the email or provide any personal information. Clicking on the link can infiltrate your computer with viruses or spyware that can obtain personal information from your internet activity and files.

The IRS never sends out unsolicited emails to individuals, all matters of business are handled by mail or over the phone. The only emails they send are very general and don't ask for information. If you receive a suspicious email, forward it to phishing@irs.gov. If you think you may have been a victim of this type of scam, you should report it to the IRS and FTC, notify the three major credit bureaus and consider identity theft protection.

2. Tax Return Preparation Fraud

There are dishonest tax preparers who can damage you financially. There have been reports of preparers keeping information from clients' tax returns or charging very high fees for getting you a very high tax return. To protect yourself you should realize that not all tax preparers are honest and you should find someone with a good reputation to help you. The IRS will begin placing regulations on tax preparers in the future, which will hopefully help this problem.

3. "Frivolous Arguments to Avoid Paying Owed Taxes"

There are "frivolous schemes" that encourage people to not pay the taxes they owe. In this type of scheme, the scammer uses several arguments convinces the consumer that they don't have to pay, such as:"paying taxes is voluntary" and filing 0 return means you won't have to pay any taxes and "the first amendment allows individuals to refuse to pay taxes on religious or moral grounds." You have to remember that these arguments are false and you still have to pay your taxes, no matter how convincing the scammer is.

4. "False Forms for Bigger Returns"

In some scams, an individual will file false information on their tax return in order to claim a refund they are not owed. In a bigger scheme, a tax preparer or scammer helps a tax payer file misleading information for a larger return (in exchange for a percentage of that return).

Always report everything 100 percent accurately on your tax return. IRS computers are becoming more and more sophisticated each year. They have a program that can compare your reported earnings against what your employer or contractor reported. The IRS also runs statistical analysis on your return to check for red flags.

Even if you have gotten away with these things in the past, do not assume that you can do it again the future as the IRS is becoming extremely proactive in preventing taxpayers from getting away with this in the future. If you have any uncertainty regarding the best way to report information, obtain assistance from someone knowledgeable.

5. Social Security Benefits that aren't Taxable

Making any mistakes, accidental or intentional, when reporting on your Social Security Benefits "with excessive withholding" will result in a $5,000 fine. When you file this way, you end up without a reportable income to the IRS on a tax return. Often both the reported income and with-holding amount are incorrect. If you're unsure of how to file this type, seek help from a professional to avoid making costly mistakes.

Remembering to pay attention and be wary of scams and deals that seem too good to be true can save you from being a victim of identity theft. If you have had problems with identity theft and have questions or concerns, feel free to contact us through our website or by calling 205-879-2447.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

Associated Press has posted an article that discusses how "unfortunate errors" by banks can lead to people wrongfully losing their homes. Michelle Conlin, author of the article, gives several examples of homeowners who had either paid for their houses in full, or weren't behind on mortgage payments, receiving foreclosure notices from their banks. These homeowners often find themselves being "bounced from one bank official to the next with no resolution while the foreclosure process continues apace."

Many of these homeowners find themselves hiring a lawyer, even after they have presented adequate documentation that the foreclosure is wrongful. They say they have to sue the bank to win back their costs to pay the lawyer, as well as to stop the wrongful foreclosure.

There aren't any statistics for homeowners who have been wrongfully foreclosed on but real estate agents, lawyers and consumer advocates all say that the numbers are growing. There was a foreclosure hearing in November on Capitol Hill and several senators called banks out for wrongful foreclosures and said their offices were bombarded with complaints from people who had "done everything right but were being treated by banks as if they had done everything wrong."

"This is the worst I've ever seen it," says Ira Rheingold, an attorney and executive director of the National Association of Consumer Advocates. Diane Thompson, a lawyer with the National Consumer Law Center, has defended hundreds of foreclosure cases. "In virtually every case, I believe the homeowner was not in default when you looked at the surrounding facts. It is a widespread problem throughout the country."

Florida, Pennsylvania, Nevada and Texas homeowners have all filed lawsuits against banks for not only putting them through wrongful foreclosures, but for taking away personal belongings and changing the locks on the wrong homes.

For example, Pennsylvania homeowner Angela Iannelli came home from work one day in October 2009 to find that Bank of America had "ransacked" the house, cut off utilities, poured antifreeze down the drains, padlocked her doors, and had even taken her pet parrot. It took her six weeks to get the bank to clean up their mess. Iannelli filed a lawsuit against B of A in March, but her lawyer has said that both parties are "mutually resolving the issues" and the lawsuit is "in the process of being discontinued."

Another example is Maria and Jose Perez of Texas, who received a notice from Bank of America that said their home was scheduled for a foreclosure sale. The couple say they are up to date on mortgage payments and don't even have a loan with B of A.

Class action lawsuits have been filed in California and Kentucky against major lenders because of homeowners in loan modification programs who were foreclosed on even though they were current on payments.

"It is mind-boggling that these large banks accepted billions and billions of TARP money from the government, and they are just committing a fraud on the American people," says Jack Gaitlin, who filed the Kentucky suit on Oct. 4. He was referring to the 2008 government bailout of the banks, the Troubled Asset Relief Program.

Banks say they are reviewing foreclosure and mortgage procedures, as well as the cases of homeowners who were wrongfully foreclosed on. It appears that once your name appears on a bank's "foreclosure assembly line" list, it becomes almost impossible to get off. Bank of America refers to this as an "unfortunate error."

If you would like more information on foreclosures, please check out our articles The Three Stages Of Foreclosure In Alabama and Wrongful Foreclosures In Alabama.

If you have further questions or concerns, feel free to contact us through our website or by calling 205-879-2447. You may also obtain a copy of our free book on stopping wrongful foreclosures and the problems of hidden fees by emailing us.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

Creditslips.org has posted an article a recent instance in Pennsylvania that is very reminiscent of robosigning. Goldbeck, McCafferty and McKeever, a PN foreclosure mill, was using people who weren't lawyers to do all the paperwork in foreclosure cases. A licensed attorney wasn't even called in to review the paperwork. This isn't a big problem in small claims court, but is a huge deal when it comes to foreclosures.

Because attorneys never looked at any paperwork from Goldbeck, McCaffert and McKeever, every foreclosure filing done by the firm "appears to be facially defective because of a failure to include the note with the complaint."

The law in Pennsylvania requires that an action based on paperwork include a copy of the paperwork. A foreclosure is basically based on two things: a security instrument and a note.

Adam Levitin, writer of the article, says that:

This means that a well-pleaded foreclosure case in Pennsylvania should include the note, the mortgage, and any assignments thereof as part of the complaint. (There's even case law on this, not just statute.) Many Pennsylvania foreclosure filings properly include all of the required writings, but I have never seen any notes included in Goldbeck, McCafferty & McKeever foreclosure filings.

The law in Pennsylvania allows for "incorporation by certain public records, which might permit incorporation of the mortgage by reference." The note is almost never a public record therefore it can't be incorporated by reference. If a foreclosure is only seeking the title to a property and not any monetary gain, it still doesn't change the requirements for submitting the note. The mortgage can only be enforced if a default on the note "and the ability to cure depends on acceleration," which is all granted in the note.

The real scandal, I think, is that courts (or really court clerks) aren't tossing out these filings, irrespective of whether the borrower contests. Some judges are often reluctant to ensure proper process, especially if there is no pushback from the borrower. Indeed, one ex-judge, at least, has expressed a really Philistine view that if there's a default on the mortgage, sanctity of contract demands a foreclosure, procedure be damned. Somehow insisting on procedural rights is borderline unethical. Never mind that procedure was part of the contract and litigation risk was priced into it.

The main reason foreclosure firms turn to methods like this and robosigning is because of the "economics of foreclosure litigation." Firms are generally paid small fixed-fees for foreclosures. The only way for them to make more money is to cut costs and this leads to cutting legal corners. If the same job that' supposed to be done by an attorney can be done by a non-attorney for a much lower price, then foreclosure firms see no problem in breaking the law to save money.

If you would like more information on foreclosures, please check out our articles The Three Stages Of Foreclosure In Alabama and Wrongful Foreclosures In Alabama.

If you have further questions or concerns, feel free to contact us through our website or by calling 205-879-2447. You may also obtain a copy of our free book on stopping wrongful foreclosures and the problems of hidden fees by emailing us.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

Newsvine.com has posted an article that discusses how the mess surrounding the foreclosure epidemic can cause banks to lose billions of dollars, which would make the housing crisis even worse and hamper the government's various programs that are designed to keep people in their homes.

It's common knowledge that multiple large mortgage companies sped through thousands of foreclosures and failed to properly process, or even check, paperwork. The full impact of this error hasn't been seen yet, but if the errors were "widespread" then the consequences can be very severe. Some employees at major banks have even testified in court that they signed, and sometimes even backdated, thousands of documents that authorized home seizures. $6.4 trillion in mortgages is involved and some of the larger banks-JPMorgan Chase, Bank of America, and Ally Financial Inc.'s GMAC Mortgage- have paused foreclosing on homes due to the sloppy and incorrect documentation. State and federal regulators in all 50 states are investigating if the mortgage companies cut corners when they foreclosed on homeowners.

"Clear and uncontested property rights are the foundation of the housing market," the report says. "If these rights fall into question, that foundation could collapse."

This leads to three possible scenarios: borrowers may not be able to determine if they're paying their mortgage to the right company, judges might put a hold on all current foreclosures, and potential buyers and sellers will be left in "limbo." If major banks discovered that they still owned millions of bad mortgage loans that they thought had been bought, the loss of revenue could reach into the billions of dollars.

Despite all the problems, the Obama administration says there is no need to put a hold on foreclosures in all 50 states. The Treasury Department's foreclosure prevention program would face difficulty if the mortgage companies participating in it found themselves unable to initiate foreclosure, thus affecting their ability to modify home loans.

Treasury officials say a review has been undertaken of the procedures for certifying documents for foreclosures of the 10 biggest mortgage companies participating in the program.

"We strongly believe that the reported behavior within the mortgage servicer industry is simply unacceptable, and (companies that) have failed to follow the law must be held accountable," Treasury spokesman Mark Paustenbach said in a statement. Treasury, various regulators, the Justice Department and the Department of Housing and Urban Development are investigating, "and we will continue to monitor the situation closely," Paustenbach said.

Just one action of mortgage investors against banks, in this case Bank of America, could force B of A to buy back and harbor partial losses on about $47 billion in bad loans.

"Treasury should explain why it sees no danger" and regulators should subject Wall Street banks to new stress tests to gauge their ability to deal with a potential crisis, the report states.

If you would like more information on foreclosures, please check out our articles The Three Stages Of Foreclosure In Alabama and Wrongful Foreclosures In Alabama.

If you have further questions or concerns, feel free to contact us through our website or by calling 205-879-2447. You may also obtain a copy of our free book on stopping wrongful foreclosures and the problems of hidden fees by emailing us.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

The New York Times has posted an article about how many of the nation's largest banks have resumed-or are about to resume- trying to evict defaulted homeowners after the banks were forced to take the time to re-evaluate their error-ridden foreclosure documentation procedures.

Banks may have made gestures to "tighten up lax procedures," the question of if the bank can prove it has the right to foreclose on a property at all still looms overhead. Some in the banking industry, according to Gretchen Morgenson- author of the article, believe that questions on this issue (also called "legal standing") aren't important. These bankers say that 9 times out of 10, the right homeowner gets foreclosed on and the one person who goes through a wrongful foreclosure is just an unfortunate technicality.

The United States Trustee Program, which is in charge of overseeing the integrity of bankruptcy courts, takes a different view. It's "stepping up its scrutiny of the veracity of banks’ claims against borrowers, and its approach is evident in two cases in federal bankruptcy court in Atlanta." In both of those cases, the US trustee for the Atlanta region, Donald F. Walton, intervened and filed motions saying that the banks didn't have adequate documentation to show they had they had the right to foreclose.

The matters involve borrowers operating under Chapter 13 bankruptcy plans overseen by the court in the Northern District of Georgia. In both cases, the banks have filed motions with the bankruptcy court to remove the automatic foreclosure stay that results when a court confirms a debtor’s Chapter 13 repayment plan. If the stay is removed, the banks can foreclose.

In one case, the borrower had her Chapter 13 plan confirmed by the court early last month. About two weeks later, Wells Fargo asked the court for relief from the stay so that it could foreclose.

Responding on Nov. 16, Mr. Walton asked the court to deny the bank’s request because it had failed to produce any facts showing that it was entitled to foreclose — either as the holder of the underlying note or as the agent for the holder.

The other case involves a couple who had their Chapter 13 plan confirmed by the court in March 2009. A month ago, Chase Home Finance, a unit of JPMorgan Chase, asked the court for relief from the automatic stay so that it could start foreclosure proceedings.

Again, Mr. Walton objected, asking the court to deny the request on the same grounds as argued in the Wells Fargo matter — in this case, that Chase hadn’t proved that it controlled the note on the property.

A Chase spokesman said that since the bank is the note holder in Georgia, they then have the right to file the motion.

A spokeswoman for Wells Fargo said that in its case, it is the trustee of a mortgage security that contains the loan, not the servicer. In its capacity as the trustee for mortgage loans serviced by others, it says it expects those servicers to abide by all required laws, processes and procedures.

The judges on these cases haven't ruled yet if on either the bank's or the trustee's requests. It's possible that Wells Fargo and Chase can convince them that their filing was right.

But the trustee’s intervention in these matters indicates that it wants banks to show the courts that they have the right to foreclose, rather than simply telling them they do. That had been the custom, after all. Now, Mr. Walton’s motions may serve as a warning to banks that they need to be better prepared if they want to foreclose on a borrower.

Federal trustees in other regions of the country have also intervened on behalf of homeowners when a bank's actions include questionable foreclosure fees and/or doubtful documentation. This shows that a shift is happening wherein courts are no longer accepting the banks' arguments at face-value that they have the right to foreclose.

If you would like more information on foreclosures, please check out our articles The Three Stages Of Foreclosure In Alabama and Wrongful Foreclosures In Alabama.

If you have further questions or concerns, feel free to contact us through our website or by calling 205-879-2447. You may also obtain a copy of our free book on stopping wrongful foreclosures and the problems of hidden fees by emailing us.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

Investopedia.com has posted an article that gives a good outline of consumer laws that you need to be familiar with to protect yourself.

- Warranties and Service Contracts:

Almost every piece of merchandise you can buy comes with some kind of warranty that basically gurantees it will work as described. Two types of warranties are included: the express warranty and the implied warranty. The express warranty comes directly from the seller and can be written and included with the item, oral, or seen in an advertisement and guarantees the item, whether purchased new or used, will function correctly for a given amount of time.

The implied warranty is automatically provided by the law. Implied warranties say that the retailer of the purchased item guarantees that it will work as long, as it's used for the intended purpose, or you can return it. According to the Federal Trade Commission, an implied warranty can last up to 4 years. Whenever you buy something, it's important that you get the specifics of the warranty in writing.

-"Dealing With a Warranty Breach"

Ana Gonzalez Ribeiro, writer of the article, says that:

If a warranty is breached, get the item replaced or repaired by the seller. If that doesn't work, try resolving the dispute through mediation. If that fails you have the right to sue the manufacturer or seller. Service contracts cannot be canceled after you signed them, but according to the FTC, there is a cooling off period where under certain circumstances, you might be able to void a contract. Contact the Federal Trade Commission (FTC.gov) for information on the right way to approach your particular situation.

To file a complaint against a company or seller, you can contact the Consumer Product Safety Commission of the FTC or contact a local prosecutor and ask for the consumer fraud division.

- Avoid Scams

Scam artists always use whatever is happening to you for their advantage. For example, since the housing crisis began in 2008, there has been a surge of scams that posed as foreclosure "rescues" and ultimately caused homeowners to lose their equity. Social networking websites like Facebook have also made scamming more common for a consumer to experience and easier for a scam artist to pull off. To avoid being a victim of a scam, use a credit card when shopping online instead of a debit card. Debit cards offer much less protection and can give the scam artist access to your savings account as well.

- Watch Out for Scams

Closely watch your monthly bills for items that you may not have purchased. If you don't recognize a transaction you should contact the billing company in writing. If you suspect it's a fraudulent charge, let the credit card company know no later than 60 days after you notice the charge. Using a seperate email address for online shopping helps cut down on the amount of spam you receive. You should never respond to emails that ask you to "confirm" a recent transaction because it can be a phishing scam.

- Get the Facts

Monitoring your consumer report can be a huge help when trying to protect yourself. Many people only monitor their credit report and not their consumer report.

Under the Fair and Accurate Credit Transaction Act (FACTA) amendments to the federal Fair Credit Reporting Act (FCRA), you are entitled to a free copy of your consumer report, at your request, once every 12 months. Financial institutions use the information contained in this report to determine risk regarding bank accounts. Consumers usually find out about this report only after there has been negative information reported (mishandled accounts and so on). Again, this report can be obtained annually for free from credit reporting agencies. It contains accounts opened in your name and checks ordered in your name. However, it is not the same as the free annual credit report. This report is a completely separate report that the mass majority of consumers only find out about after they have been declined by a financial institution to open a checking or savings account. The majority of banks and credit unions use the information contained in the report to approve, decline or determine what type of account if any can be opened at their financial institution. Consumers who have a negative report may not be able to open a checking or savings account for five years.

If you have had problems with consumer or credit reporting errors, or have been the victim of a scam, and have questions or concerns, feel free to contact us through our website or by calling 205-879-2447.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

Investopedia.com has posted an article that discusses exactly what your credit score means. A credit score is one of the most important numbers attached to a person's life and can affect everything. For example, landlords are more likely to rent to tenants with good credit scores, companies hire workers whose credit scores are better because it means they're dependable, and it determines if you can be approved for a loan for a major purchase like a house or car.

The recession has forced lenders to be more particular about who they approve for loans so that their risk is minimized. Credit scores range from 330-830. 680 was considered a "good" credit score back in 2008, but currently a "good" credit score is 720 and up. The average score in the US, according to Porcshe Moran, author of the article, is 698. This means that most Americans are paying more for large purchases because of their credit score.

Lenders evaluate FICO scores based on a tiered system that divides credit scores into five ranges. Scores below 620 are often considered subprime, and borrowers in this range will either be denied loans or be offered higher interest rates and lower loan limits. For example, a non-profit state loan agency set 770 or higher as the top tier of FICO scores. Borrowers in this range received the lowest interest rates. In previous years, the same agency ranked 680 in the lowest tier in which borrowers were subject to interest rates that were 4.15% higher than those with scores in the top tier.

Borrowers with a FICO score of 689 were placed in the lowest tier. A score only one point higher, 690, was enough to be bumped up to the next tier and amounted to an interest rate that was 2.5% lower. These same dramatic jumps in interest rates can be seen in other industries such as home mortgages and car loans. Borrowers are encouraged to shop around for loans because each lender has their own "break point" between tiers. If you can find a lender that places your score in a higher tier, it could result in significant savings over the term of your loan. Another option is to find a co-signer with a higher credit score who would be able to get you placed in a higher tier.

It's possible that lenders will lower the definition of the average credit score as the economy improves. Until then, it's a good idea for consumers in the lower tiers of credit scores to hold off on applying for loans and try to improve their score by paying bills on time and checking their credit reports. If you must apply for a loan, be sure to shop around for the best rates because lenders can, and will, base the rate they give you on your credit score.

If you have had credit issues and have questions or concerns, feel free to contact us through our website or by calling 205-879-2447.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

Our friend Denise Richardson of givemebackmycredit.com has posted an article about one homeowner's successful fight against the system to get a mortgage modification that will benefit her for many years to come.

Maria of Lexington, Kentucky says that she finally obtained a mortgage modification under the government's Home Affordable Modification Program (HAMP) plan after battling for over a year with Bank of America. Her HAMP modification starts with 2% interest and tops out at 4.75% during years 8 to 32. The payment plan is for a long time period, but the modification has lessened the payment to an amount that is affordable on her income.

She was almost "duped" into signing a modification contract with Bank of America that would lower her interest rate from 6.75% to 4.75%. This sounds like a good thing, but when you add on fees and the escrow in the principal, her actual monthly payment only decreased $1 from the original amount, which is basically useless.

It took Maria 18 months to actually get the B of A contract physically in her hands and the instructions were for her to sign and return it within 11 days with a check for the December 1st payment.

I had already made November's trial modification payment, was this to be December 1st payment? They didn't indicate how it was to be credited, plus November's payment had not been credited to the contract balance.

Panic.. 10 days to read all the new terms and legalize. After reviewing, as best as I could, I had four basic questions I needed answers to. Oh no, not the Alice and Wonderland phone torture test again! Got to. Three and a half hours later, transferred from one department to another, disconnections, out-right misinformation, and threats of foreclosure if I did not sign and return by November 23 deadline. I had the answer to my first question, I think? For the next 5 days, I would have anywhere from 4 or 5 messages from B of A asking if I had signed and mailed their modification. What's going on?

Maria had signed up for Lexington's Community Ventures, a nonprofit, Making Home Affordable assistance program, and faxed the B of A documents to her case worker. The case worker responded a few days before the deadline stating that B o A's modification "didn't look like" HAMP. 48 hours before the deadline, another B of A package showed up only this time it clearly showed that it was legitimately a HAMP modification.

"With all kinds of RED flags waving and fast, fast pressure, I guess I should have realized sooner that this was some kind of scam, but still, Bank of America?

I believe that Bank of America has completely and utterly spat on Obama's Making Home Affordable program with total disregard for the spirit (if not the legal) design to help home owners in distress. Next time they need a taxpayer bailout....let them suffer the consequences of their own greedy business decisions."

If you would like more information on foreclosures, please check out our articles The Three Stages Of Foreclosure In Alabama and Wrongful Foreclosures In Alabama.

If you have further questions or concerns, feel free to contact us through our website or by calling 205-879-2447. You may also obtain a copy of our free book on stopping wrongful foreclosures and the problems of hidden fees by emailing us.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below: