Mortgage Fraud

The Consumer Financial Protection Board(CFPB) recently announced that it has ordered mortgage lender Amerisave Mortgage Corp., to pay $19.3 million for engaging in a bait and switch fraud affecting borrowers who made applications for mortgage loans from this lender.

The fraud occurred at numerous points in the borrower’s interaction with this lender. It started when the borrower first visited the company’s website and requested a quote, the quote which they received was based on an 800 FICO score. Additionally inaccurate rates and terms were posted on the company’s Website. At closing additional and unexpected fees were added to the borrower’s charges.

Ocwen is back in the news again. The New York Department of Financial Services recently reported that when has been collecting fees from distressed homeowners for force-placed Insurance through an affiliated company which practice is forbidden in New York State.

If you are considering the purchase of a home or a refinance of a home mortgage please make certain to consult with and review the documents with an attorney.

Should you require assistance with the attorneys in our office have substantial experience reviewing mortgage documents and would be pleased to assist you.

We can be reached at 732-752-8834.

Rebuilding Credit — An Old Scam Resurfaces


I write once again on the subject of rebuilding credit after a bankruptcy because it has recently come to my attention that an old scheme used by lenders to defraud consumers has recently re-emerged and if you are not cautious will result in further damage.

We do recommend that consumers take appropriate steps to rebuild credit after a bankruptcy, however we do not believe that the programs described below are in anyway useful for consumers. There is Danger in these programs.

Recently, consumers from Middlesex and North Plainfield, New Jersey, who have obtained discharges of their credit card debt in Chapter 7 filings have advised us that they have received solicitations which promise to establish a new credit card account if the consumer pays off some or all of an old debt.

The problem is that the consumer owes nothing on this debt because the consumers obligation to pay the debt was discharged in the bankruptcy case. We have also learned that in other circumstances, particularly when there has been no bankruptcy filing, the same solicitation is often sent to consumers whose debt is over 6 years old and collection efforts would be barred by the NJ Statute of Limitations which sets a fixed period of time in which a creditor must bring a legal action to collect a debt. If the creditor does not start the action within the specified time, then the creditor is barred from bringing a suit to collect the debt.

We caution all consumers to review these offers very carefully as there may be seriously bad consequences as a result of accepting any of these offers.

In the paragraphs below we offer a more detailed look at the problems with these offers and companies which make them.

Consumers have no legal obligation to repay any debt which was discharged in bankruptcy. Additionally, any creditor who attempts to collect on a discharged debt is violating the Bankruptcy Court’s Discharge Order and is violating the law. To get around this restriction the companies which offer these programs disguise what they are doing and make an offer of new credit contingent on an agreement to repay some or all of a previously discharged debt. In other cases the debt is so old that the creditor is barred from bringing any legal action by the Statutes of Limitation. Statutes of Limitation have been interpreted to start running, not from the date on which the account was opened but from the date of the last transaction on the account. A current payment by the consumer has been interpreted as sufficient to “revive” a debt under the New Jersey Statute of Limitations. By making a payment on an old debt or a discharged debt the consumer is possibly reviving the debt. Reviving an old debt is an accepted legal principal which would make the consumer liable once again for a debt on which he is not currently liable. Once a payment is made on the new arrangement the creditors also will re-age the account, that is they will reset the last activity date on the account to the date of the recent payment and the date of last activity reported to the credit bureaus to the date of the new payment. In any future legal proceeding the creditor will allege that the consumer made a voluntary payment as of a current date and that the debt is no longer stale thereby depriving the consumer of the benefit of the protection of the Statute of Limitations. Often times the creditor or its collection agents will change the account number so as to confuse the consumer.

Consumers are cautioned to review these types of offers very carefully and make sure that they understand:

The interest rate on any old debt which they agree to repay

The interest rate on any new charges on the new credit account they have been promised

The fees which they will be charged to open the new account(these are usually charged to the new account thereby reducing the amount of credit available to the consumer)

If credit on the new account will be available to them immediately on approval of their application or only after they have paid off the old debt.

The exact amount of the old debt which the consumer is agreeing to take responsibility for.

That all of the terms of the agreement should be reduced to writing and made available to the consumer to review.

The possibility that the consumer is reviving an old uncollectible debt


Consumers should also be aware that these types of scams which are designed to take advantage of individuals in financial distress have been investigated and prosecuted by the Federal Trade Commission, the Federal Deposit Insurance Corporation, and Attorneys General from various states including New York and West Virginia.


Some of the companies who have been involved in these scams include Genesis Financial Solutions, Inc; Jefferson Capital Systems, LLC; CompuCredit Holdings Corp; Monterey County Bank; Tighorn Financial Services, LLC; PrivateBancorp, Inc; Mid America Bank and Trust Co; First Bank of Delaware; First Bank & Trust of Brookings, SD.

The list of companies involved in this activity is not complete and consumers are again warned to heed the old adage,

“If it looks to good to be true ………….”

Rebuilding credit is a great idea, undertake this type of activity with caution and with the help of professionals familiar with the pitfalls.