Homeowners Hurt By Mortgage Companies Ripping Them Off

Homeowners Hurt By Mortgage Companies Ripping Them Off

CREATED Nov 20, 2008

It's the main reason we're in the biggest financial crisis since the Great Depression. 

Hard-working Tennesseans were lied to and tricked into signing home loans they couldn't afford. 

Abusive lending practices are now costing all of us.

James Slate, 65, of Greenbrier is just one homeowner who said mortgage companies ripped him off.

"I had been taken advantage of. I know it.  There's no doubt about it," Slate said. 

Alyce Simmons of Nashville is another.  

"Lo and behold I found they stole my house. They lied to me there's now other way to say it.  They just lied," Simmons said.

Simmons is a single mother who bought her first home 10 years ago. She said she never missed a payment.

As housing prices soared, she decided to refinance to get money for repairs.

But she was stunned to discover her monthly mortgage payment was $500 higher than she was promised.

"You can't afford $1,100 a month right?"asked NewsChannel 5 reporter Ben Hall.

"Right," Simmons said.

"What did they say there were going to do?" Hall asked.

"They were going to take my house.  We were going to be homeless," Simmons said.

"A hard-working very responsible borrower was induced into making a loan by trick," said David Tarpley, an attorney with the Legal Aid Society of Middle Tennessee.

Tarpley blames deceptive lenders for what happened to Simmons.  And he blames them for the current financial crisis.

"They have every reason to believe the person can't pay?" Hall said.

Tarpley agreed.

"They're interested in the equity in the house," Tarpley said.

Why didn't Simmons see the actual monthly payment when she closed the loan?

She said the notary who came to her house to get her to sign the papers had her sign blank pages and didn't give her a copy of what she signed.

Simmons demonstrated how the notary quickly rushed her through the stack of papers.

"He would come through and say, ‘Sign here, initial here, sign here,'" Simmons said.

Simmons sued Aames Home Lending and the notary.  Both denied her claims, but the company settled and Simmons is still in her house.

Aames, which is based in California, has been sued repeatedly in federal court -- more than 150 times. Many of the complaints are similar to Simmons. 

Jimmy and Joyce Slate of Greenbrier said they'll never pay off their home loan. They claim their mortgage company added a $25,000 penalty to their loan then demanded payment.

 Slate recalled one conversation with the lender. 

"He said, ‘Well it's got to be paid. And I said, "Well, what if I can't pay it?' He said, ‘We'll take your damn house,'" Slate said.

The Slates tried to join a class-action lawsuit against their lender Ocwen Federal. It has also been sued hundreds of times. The Slates eventually renegotiated their loan and kept their house.

Tarpley said he sees situation where lenders are just lied to "every month, every week, all the time."

But Commissioner Greg Gonzales with the Tennessee Department of Financial Institutions said the lack of regulation over the mortgage industry is changing. 

"States over the last few years have joined together to deal with the mortgage industry," Gonzales said.

The state of Tennessee has shut down some lenders.

"We are sending a message to the mortgage industry to those bad actors that might look to come into Tennessee that they are not welcome," Gonzales said.

But the reality is - most people don't know how to fight back - so they lose their homes and everything they've worked so hard to build.

Simmons' mortgage company is no longer licensed in Tennessee. The company decided to pull out of the state. OcWen Federal is licensed in Tennessee and the company has denied any wrongdoing.

The Federal Bureau of Investigation has arrested more than 400 people this year for mortgage fraud. 

But the vast majority of these cases are not criminally prosecuted.  They wind up in civil courts.

Back to NewsChannel 5 Investigates