Attorney General Martha Coakley speaks at last Tuesday’s “Foreclosure Aftershock Seminar” in Boston. The event was co-sponsored by Banker & Tradesman and Boston law firm Dwyer & Collora.
The mortgage foreclosure crisis hit consumers first, but now, eyes are turning back toward the lenders accused of starting it.
At the “Foreclosure Aftershock Seminar” in Boston last Tuesday morning – co-sponsored by Banker & Tradesman and Boston law firm Dwyer & Collora – lenders and the lawyers who represent them learned what they’re likely to face in the months ahead.
Lawsuits from consumers and state government are already under way and a myriad of regulations aimed at preventing a similar crisis in the future is fast approaching, they were warned.
Attorney General Martha Coakley described her office’s recent success in a lawsuit filed against Fremont General Corp., the California-based lender, and its subsidiary, Fremont Investment and Loan, that made thousands of loans in Massachusetts. Many of the loans are in foreclosure.
Suffolk Superior Court Judge Ralph D. Gants “made a decision that [some of them] were unsound,” Coakley said, and temporarily has prevented Fremont from foreclosing on any loans before the attorney general has a chance to review them.
Noting that the Fremont case was allowed because Fremont – unlike most subprime lenders that made loans in the Bay State – has a state charter as opposed to a federal charter, Coakley said she is “limited” in how many similar lawsuits she can file.
Meanwhile, lawsuits from consumers who believe they were duped by lenders and brokers into purchasing a home they could not afford are now being prepared and filed at a rapid pace, added panelist Gary Klein, a partner at Boston law firm Roddy, Klein & Ryan, which is handling some of the lawsuits, including class-action lawsuits, for plaintiffs.
“What you see is in a lot of the Massachusetts transactions, the brokers got $10,000, $12,000 for closing one loan … and you see it’s the broker who filled out the application, and the borrower sometimes didn’t see the documents until closing,” said Klein.
Klein said the number of cases and different lenders led him to believe there was no “borrower conspiracy,” but rather, that deception was a regular industry practice.
