May 30, 2006

Some words of caution this morning for people in the market for a new home.

They come from the Woodstock Institute, a consumer advocacy group.

The group says predatory lending, adjustable rates, and hidden language in contracts are putting many homeowners in financial trouble.

Their advice is being heeded by a Bloomington woman who is fighting foreclosure.

“There are a lot of things that still need to be done,” says homeowner Barb Malone. “Things that need to be replaced like water damage.”

The Malones describe their home as a symbol of survival. It survived a fire and a relocation to another part of town. But can it survive foreclosure? A Connecticut company, Mortgage Lenders Network U.S.A., has sued the Malones claiming they haven’t paid their bills.

Barb Malone says the suit is about one bill that actually was paid.

Malone says, “So our counter-claim was including them not crediting our payments, was including late fees that they were charging on our account when our payments were not late and everything… and they started this foreclosure February 14, 2000, on a lie. And why are we still fighting?”

You won’t get any answers from Mortgage Lenders. The Company’s attorney refused comment.

Thus far, the Courts have sided with the Company’s claim that the Malones agreed to a settlement to avoid foreclosure.

The settlement calls for Mortgage Lenders to get a portion of the fire insurance money.

Barb Malone says her attorney negotiated the settlement without her consent and after firing the lawyer, lost a couple of technical battles in court.

Consumer advocates say the Malone case is not unusual.

Geoff Smith with Woodstock Institute said, “You’ve got cases where Borrowers are making payments or maybe they miss a payment and the Servicer doesn’t credit their payment in a timely manner and they are consistently behind in their payments and they’re consistently in default and they’re consistently paying fees and fines.”

Representatives of Chicago-based Woodstock Institute are touring downstate Illinois educating community organizations about common pitfalls in financial lending.

“Our primary goal is to make sure there is enough affordable housing finance, small business finance for low income minority citizens,” said Woodstock Institute’s Marva Williams.

So what advice would they give the Malones?

Williams says, “Gather all their documents, all their information to make copies, to develop a folder of all their documentation and to talk to a legal assistance lawyer.”

Barb Malone certainly has the folder, but says six years of legal challenges have wiped out money for an attorney. She’s hoping a lawyer will take her case pro bono.

And while consumer groups question the practices Lenders, the attorney for MLS says there’s enough documentation on the company’s claim to speak for itself.

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