The Expert Blog
Jason D Koontz, CRC Opinions for All
The California Homeowner Bill of Rights (HBOR) is a set of protections originated by the former California Attorney General Kamala Harris. These rules and procedural requirements regulate the foreclosure process for lending institutions as they seek to manage mortgages near or in default. The intention of the legislation is to ensure standardized processes are followed before foreclosure so that borrowers in default are aware of the options available. The legislation is applied to cases where the homeowner is a tenant, and the property has fewer than four living units. Protections are instated if the mortgage loan servicer has foreclosed on more than 175 homes in the previous year. The legislation is broadly intended to ensure that unnecessary or premature foreclosures do not destabilize the housing market or unfairly impact the situation of borrowers capable of maintaining a mortgage. This article will serve as a refresher covering some of the more prominent and notable provisions of the legislation as well as recommend action for attorneys seeking expert opinions and testimony on matters relevant to this legal doctrine.
Dual Track Foreclosure Ban
HBOR requires a lender/mortgage servicer to decide on a loan modification application before advancing the foreclosure process. During the time a lender/mortgage loan servicer is considering a loan modification request, the foreclosure process is paused. No longer can a servicer work on a loan modification and a foreclosure, simultaneously.
Notification of Alternatives
This aspect of the legislation stipulates that servicers must contact the homeowner in default to review their financial situation thirty days prior to initiating the foreclosure process. They must also notify homeowners of available foreclosure alternatives within five days of recording a notice of default.
If a homeowner applies for a loan modification, the servicer must assign them a representative who is knowledgeable about their financial condition and can answer questions about the status of a modification application or other alternatives to foreclosure. In the industry, this is known as a single point of contact (SPOC). After receiving an application, the servicer must notify the homeowner of any mistakes in the information within five days.
If a servicer denies an application for a foreclosure prevention alternative, it must state its reasons for doing so. If a borrower experiences a material change to their financial condition after a denial, they can reapply for a modification.
Restriction of Fees
This provision essentially means that the lender cannot charge the homeowner a fee during the application process for a loan modification or foreclosure prevention alternative. The servicer is also prohibited from assessing a late fee when the homeowner is making regular payments under a modification or undergoing the appeal process for a denial of a modification request.
Transfer and Tenant Rights
If a modification or forbearance is approved by a servicer and subsequently transferred to a new servicer, the new servicer must honor the foreclosure prevention measures established by the former holder. Additionally, if a third party purchases a home in foreclosure, they must wait 90 days before starting the eviction process. If the resident of the property has a valid lease in place, the new property owner must honor the lease until expiration in the absence of certain exempting conditions.
It is important to note that while the overview above can be a helpful resource to individuals, there is no substitute for expert-level knowledge of the mortgage lending industry. This overview is just that: an overview. When making decisions about individual situations regarding a residential mortgage loan, it can be crucial to contact an attorney who may rely upon an expert witness. Jason Koontz can provide expert opinions and testimony for attorneys seeking to determine if a residential mortgage loan was managed in a way that conforms to the industry standards.
Will Skidmore, Research Analyst with JD Koontz, LLC, provided significant assistance in writing this blog post.
California homeowner Bill of Rights. State of California - Department of Justice - Office of the Attorney General. (2020, August 4). Retrieved June 7, 2022, from https://oag.ca.gov/hbor
A mortgage loan servicer manages mortgage loans on behalf of the owner (investor) of the loan. The loan servicer’s primary responsibility is to collect payments on the mortgage. Still, these institutions can be involved in other matters such as managing an escrow account (insurance and real estate taxes), handling payoff requests, loan modifications, and debt collection. A mortgage loan servicer can be a bank, a credit union, or a company specializing in loan servicing. The most common functions of a mortgage loan servicer include:
● Collecting monthly payments on a mortgage
● Ensuring compliance with federal and local mortgage regulation
● Generating and distributing loan statements
● Managing escrow accounts (homeowners’ insurance and real estate taxes)
● Offering general customer service to borrowers
● Working with borrowers to minimize past dues and loan losses.
It is important to distinguish between a mortgage loan servicer and a mortgage lender. A mortgage servicer manages loans after they have been originated, while a mortgage lender is a financial institution that originates the loans. The servicer is effectively an intermediary that operates in the space between the debtor and creditor to manage the loan relationship.
Management of Mortgage Loans
I often see borrower confusion in two areas: force-placed insurance and transfer of servicing.
Forced Placed Insurance
Although mortgage loan servicers are heavily involved in managing a mortgage, the property owner still has many responsibilities. One of these obligations is to carry good homeowner’s insurance coverage. If a servicer learns that a homeowner is not carrying insurance in an amount satisfactory to the loan requirements, they will promptly notify the homeowner. If a homeowner does not take action in a timely manner to comply with the insurance requirement, a loan servicer has the authority to impose forced place insurance on a property and pass the premium on to the borrower. This typically will happen after they've provided notification and at least forty-five days have passed. These policies are generally much more expensive than those typically offered by insurance companies directly to homeowners. If forced-placed insurance is instated, it is generally in the property owner’s interest to seek alternative coverage as soon as possible and communicate the change with the loan servicer.
Servicers also play a role in different types of mortgage loans. For example, in an adjustable-rate mortgage, the loan servicer will provide notification of any changes to the interest rate.
There are several regulatory requirements for investors when transferring servicing privileges. In many cases, the rights to the mortgage services are transferred after a loan is funded, which can confuse borrowers. When a mortgage is moved from a lender to a servicer (or another servicer), they must notify the borrower. This notice must be given within 15 days of the loan being transferred and must indicate when the new service will begin accepting monthly payments. The previous servicer must also tell the day that they will no longer receive payments. This requirement protects the borrower by providing the transfer documentation and indicating where to submit payments.
A loan’s terms and conditions will not change when it is transferred. Nonetheless, it's important for borrowers to thoroughly examine statements following a transfer to ensure that there are no errors. Despite receiving these required documents, many individuals miss crucial details regarding their loan transfers. In addition to reviewing these documents, mortgage borrowers should check the following:
● Any escrow account payments that were due have been made, and the remaining balance is accurate
● The balance of your principal is accurate and correct
● The most recent payments were accurately applied
Regardless of one’s experience, the mortgage loan industry regulations can be challenging to understand at times. Mortgage loan servicers are vital intermediaries between a property owner and the investor who owns the mortgage. In addition to managing the standard day-to-day calls for payment information and loan payoffs, they have many other essential duties. This includes managing escrow accounts, implementing forced-placed insurance, notifying property owners of changes in an adjustable interest rate, and debt collection.
Victims of mortgage loan servicing abuses may seek redress through the courts. These cases often utilize an expert witness with knowledge of mortgage loan servicing standards. A mortgage loan servicing expert witness can be retained to conduct an investigation and offer opinions on whether the alleged conduct was consistent with industry guidelines.
Will Skidmore, Research Analyst with JD Koontz, LLC, provided significant assistance in writing this blog post.
Although the seeming speed with which new developments spring up around the country makes construction look straightforward, it is not if done correctly. The average construction project usually involves many risks, both to the lender and borrower, and having a successful project often depends on how well the risks are managed.
It is no surprise that lending on construction projects carries substantial risks. Many things can go wrong, and any one of them can cause a significant loss to either the lender or borrower, leading to disputes between parties. Other parties not related to the transaction can also be negatively affected. This could include condominium owners in an unfinished project. Contributors to loan failure may consist of:
When these problems occur, disputes between parties are not usually far behind. In most cases, these disputes require a construction lending expert witness in the arbitration, mediation, or litigation proceedings that would usually follow. The expert helps clarify the issues, including the burdens on either party or how well these were discharged.
However, a more critical consideration for parties is limiting their exposure to construction risks in the first place, usually with the help of a construction risk management expert. With lower exposure, parties can more easily manage risks and attend to issues as they arise.
Drivers of Construction Risk Management
The market experienced a downturn after the Great Recession of 2008 but picked up the pace until the Covid-19 virus impacted the economy and the lending environment. Due to the experiences of the recession, more lenders are actively implementing lending risk management strategies. Other drivers for lenders’ construction risk management include:
Managing Construction Lending Risk
One of the common means through which lenders manage risk is by establishing and maintaining a Real Estate Construction Administration (RECAD). Whether the lender's appetite covers just owner-occupied real estate, real estate developer-investor opportunities, or commercial real estate as well, having a RECAD function is a prudent risk management practice.
A RECAD unit conducts oversight and monitoring of construction projects financed by the lender. A million and one things can go wrong with a construction project. A RECAD unit’s task will be to keep an eye on every risk factor relevant to the project to ensure the project stays on track. The unit’s responsibilities will include:
Lenders commonly utilize the services of a construction risk management expert to consult on and, in some cases, oversee the setup of a RECAD department. Regardless, a fundamental recommendation is that the department is given as much independence from the real estate lending function as possible. This separation allows clarity of purpose and a coherent function on the part of the unit.
Construction loan risk programs are critical for profitable lending. Properly structured Real Estate Construction Administration Departments reduce risks for lenders. Should disputes occur, much would depend on how fault can be apportioned between parties or whether both parties sufficiently fulfilled their obligations; a construction loan expert witness can help educate the parties involved, and if necessary, the court to clarify these issues.
Mortgage fraud covers a wide variety of fraudulent, deceptive, and illegal practices through which individuals obtain housing or make money off the mortgage loan process. Although the concept is more often associated with borrowers or consumers who attempt to obtain mortgage loans fraudulently, lenders and other professionals in the mortgage process also often play significant roles in perpetrating this fraud. The Federal Bureau of Investigations (hereinafter referred to as the FBI) defines mortgage fraud as "a sub-category of Financial Institution Fraud. It is a crime characterized by some type of material misstatement, misrepresentation, or omission in relation to a mortgage loan which is then relied upon by a lender. A lie that influences a bank's decision—about whether, for example, to approve a loan, accept a reduced payoff amount, or agree to certain repayment terms—is mortgage fraud."
Mortgage fraud is considered a serious problem in the US, partly due to the devastating effects it can have on not just the innocent homeowners and lenders involved but also on the economy. For instance, the global financial crisis of 2008 was fueled in part by the unscrupulous activities of borrowers who obtained loans on massively inflated real estate and lenders who intentionally or recklessly gave loans to people who were unable to repay.
As a result, government agencies at both the federal and state level take a serious stance towards mortgage fraud. Individuals who are apprehended may be subject to misdemeanor or felony prosecution. Also, mortgage fraud can result in civil and criminal action against professionals and lending entities who initiate or help perpetuate this fraud. In all cases, the services of a mortgage banking expert are often required to help clarify the obligations of lenders and borrowers in specific cases and determine if misconduct has occurred.
Understanding mortgage fraud and how it occurs
The FBI has identified two distinct areas of mortgage fraud. It may either occur in relation to fraud for housing or fraud for profit.
While fraud for housing is more often associated with homeowners, it may be committed by either borrowers, lenders, or other professionals in the mortgage industry. With fraud for housing, the goal is to provide false or inaccurate information or omit relevant details to obtain or maintain real estate ownership. For instance, a borrower may omit important details relating to their income level, on their own or with the assistance of a loan originator, to qualify for a housing loan.
Fraud for profit is more targeted towards illegally "gaming" the mortgage process in order to make illicit and fraudulent financial gains. It is often committed by professionals in the mortgage industry who employ fraud and deception to enjoy illegal profits on a loan transaction. However, just like a fraud for housing, the fraud here can also be committed by borrowers and, sometimes, in conjunction with industry professionals.
Mortgage fraud by borrowers
Fraud by homeowners can be committed in various ways, both aimed at obtaining housing or profit in fraudulent ways. These include the following:
Fraud by lenders is often considered even more serious than fraud by borrowers. As a result, the FBI pays special attention to scams of this nature. Some of the common types of fraud by lenders include:
The dangers of mortgage fraud and how it occurs signifies the ongoing threat that scams of this nature pose to innocent homeowners and lenders, as well as the economy at large. Combating this fraud will require even closer scrutiny from regulatory and law enforcement agencies and the input of professionals such as mortgage banking experts.
Victims of mortgage fraud may seek redress through the courts. Mortgage fraud cases often utilize an expert witness. A mortgage lending expert witness can be retained to conduct an investigation and offer opinions as to whether or not the alleged conduct was improper.
The role of mortgage loan servicers
Mortgage loan servicers play a key role in the mortgage loan industry. Securitization of mortgage loans has changed the sector; sourcing, origination, closing, ownership, servicing, and collection of these loans typically are handled by different market participants.
Mortgage loan servicers are responsible for managing mortgage loans, and most servicers provide this service efficiently. They collect and process payments from borrowers, handle loss mitigation, and are generally responsible for the day-to-day mortgage loan administration. A mortgage loan may be transferred to different servicers multiple times over the life of the loan. The consumer who pays the mortgage may or may not be aware of which company owns the mortgage itself and in fact, may not need to know its name.
After the loan has closed, mortgage loan servicers have the most direct contact with borrowers. They are often third parties, remote from the loan owner. As a result, borrowers commonly find it difficult to understand the role such a company plays in their loans. This lack of transparency can become a basis for certain predatory practices, such as refusing to acknowledge agreements with a previous loan servicer.
Mortgage servicers must maintain transparency concerning their services as much as possible. They owe several obligations to borrowers, including:
Common abuses of mortgage loan servicers
Alleged mortgage loan servicer abuse refers to a wide range of unfair or abusive practices through which mortgage servicers compromise borrowers' rights. The allegations may include charging unreasonable fees, improper payment application, unfair collection practices, or any other acts that make default or foreclosure more likely.
Predatory mortgage loan servicing has long been regarded as a problem in the US financial services system. Laws such as the Real Estate Procedures Act (RESPA) were designed to combat these practices. The Consumer Financial Protection Bureau was created to protect consumers.
Mortgage loan abuses can occur in a wide range of circumstances. These include the following:
While a borrower may feel that they are being mistreated with servicing practices that they deem too harsh, the servicer may, in fact, be following the terms under the originating loan documents or the servicing agreement. In litigation or other dispute resolution procedures between the parties, a mortgage loan servicing expert can be retained to conduct an investigation and provide an opinion regarding the mortgage loan servicer's practices and whether their methods would be consistent with industry standards.
However, the occurrence of any of these actions may not be conclusive evidence of improper mortgage loan services abuses. Determining if a breach has occurred may require the involvement of a mortgage loan servicing expert witness.
Unfair mortgage servicer practices can quickly cross the line into abusive or exploitative practices that are improper and not in compliance with regulatory rules. Borrowers who discover that they have been exposed to these practices may want to pursue redress through the courts.
A mortgage loan expert can assist in evaluating the mortgage servicer's actions regarding regulatory guidelines and industry standards.
An expert witness is an individual who possesses the specialized skills & knowledge about a topic or has sufficient experience to testify in court about what they believe has occurred.
Expert witnesses can be instrumental in legal matters and hearings. Plaintiffs and defendants are often encouraged to hire expert witnesses for their cases for a more thorough and comprehensive examination of available data.
How Are Expert Witnesses Different from Regular Witnesses?
Their specialized skills are what set them apart from regular witnesses. Unlike the latter, expert witnesses do not rely on what they have personally seen, heard, or felt when presenting their testimony. They are usually completely removed from the case and have no personal connection to it. Their testimony is solely based on their training, knowledge, and experience in their field of expertise, which allows them to draw conclusions and give professional opinions about the case.
An expert witness studies the case and takes in all of the available information. They analyze it and using their training, experience, and knowledge, provide their opinions, which could take place in a deposition or court.
What Is the Role of an Expert Witness?
As mentioned above, expert witnesses are not usually emotionally involved in the case and are independent forces.They are unbiased witnesses who do not let their emotions or personal bias get in the way of their opinions and conclusions. Their testimonies are free of prejudices and based solely on concrete facts and critical evaluation. As a result, expert witnesses are viewed as reliable and objective during a case.
It is important to note that expert witnesses are not advocates for their clients. Their opinions are their own, unaffected by any external forces or influences. Their conclusions are supported by their training, education, experience, and industry standards.
Why Should You Hire an Expert Witness for Your Case?
If you are dealing with a real estate case or a banking case, having an expert witness to educate you on the industry standards and practices can help tremendously. Their knowledge and experience can make all of the difference in a case. They can explain practices, relevant theories,and concepts to the judge and the jury in a way to help educate the court.
An expert witness will also be able to pick up on any inconsistent findings, inaccurate details, or improper methodologies in the opposing party’s reports.
In need of a banking or real estate expert witness?Contact Jason D Koontz today for his independent expert witness consulting services in Fort Worth!
Real estate feuds are all too common in the US. They may arise due to poor planning, breach of contract, and often need to be resolved in court. For this, you may need an expert real estate witness.
What are a few things to look out for when hiring an expert witness for your case? Let’s take a look.
Knowledge of the local market
Each neighborhood can have its own set of zoning laws and regulations covering residential and commercial properties. When hiring an expert witness for your case, you need to make sure that they are knowledgeable about the local rules and regulations relevant to your case.
Let’s say that the expert witness you’re interested in lives and worksin Dallas. Your matter, however, is based in Chicago, and you need appraisal expert services in your city. In this case, it’s imperative that your expert witness is knowledgeable of the Chicago, Illinoismarket
Unless the expert witness has competency in the subject’s market, they will be opening themselves up to criticism or even removed from the case as an expert. For their testimony to be credible, they should be competent in the subject’s market.
Experience in Real Estate
Experience is yet another quality you should look out for. The more experienced an expert witness is, the more credible their testimonywill be. An appraised with years of experience should have a greater knowledge of industry trends and standards. Consequently, they’d be able to present a more credible opinion.
Experience doesn’t only include the number of years an expert witness has under their belt, however. It encompasses the number of years they’ve spent working in a specialized field. In this case, it refers to the experience they have working in real estate.
Ability to Provide Relevant Documentation & Statistical Support
Finally, a real estate expert witness should be able to back up their conclusions and opinions with a credible report. A qualified expert witness will have no trouble presenting documentation that supports their claims, and may even be able to obtain information that you may not have access to. Their insights and explanations will be based on these documents.
They must also possess the ability to read and analyze complex texts presented in court by the opposing party. Property valuations, appraisal reviews, and investment analyses are just a few things an expert witness should be able to decipher and discuss.
Need a real estate expert witness for your case in West Virginia? Contact Jason D Koontz today for his independent expert witness consulting services. If you need a USPAP compliance review, he offers those services across the nation, including Dallas, Fort Worth, Chicago, New York, and Philadelphia! Also, as a former banker, he can offer banking expert witness services.
Approximately forty percent of marriages in the United States end in divorce. The divorce rate is attributed to several reasons and often results in complicated legal disputes.
How can a real estate expert witness be of help during a divorce? Here’s why you should hire one during the proceedings.
Divorces Can Be Messy
Let us be honest; divorces can be messy and stressful. As much as you may want to have an amicable divorce, sometimes this isn’t possible. If both sides are unable to reach an agreement, they may end up with unusual settlements.
If you think there is a chance of your divorce proceedings being unpleasant and real estate is involved, it’s best to hire a real estate expert witness early in the process.An unbiased opinion regarding the real estate value is one less thing to argue about when splitting assets. Even seemingly amicable divorces can take a turn for the worse when topics,such as the value of the real estate,are discussed. It is better to have a real estate expert witness involvedbefore things get sour, rather than look for one afterward.
They Provide Unbiased Representation
Real estate expert witnesses provide neutral, objective, and unbiased representation. Experts are not emotionally connected to your case, and thus, have no prior biases. An impartial opinion helps your case because their testimony is based on the market, available data, and their training and, not their relationship with you.
Need a real estate expert witness for your divorce proceedings in West Virginia? Get in touch with Jason D Koontz today for his independent expert witness consulting services. He also offers banking expert witness services as well.
An expert witness can assist an attorney before a deposition or trial. An expert can help an attorney understand the issues and if standard industry practices were followed. The expert has specialized knowledge, experience, training, and skill that qualifies them to form opinions for a case to assist with the litigation and preparation for trial. However, the court must find the expert’s qualification sufficient and the opinions relevant to the case to allow them in the court.
It is essential to understand that an expert witness can only offer opinion testimony, which distinguishes them from fact witnesses. So, the opinions given by the expert will be considered opinion evidence rather than factual evidence.
Here are some common mistakes expert witnesses are often guilty of making which can render their opinion not as helpful to the case as it could have been:
Relying Completely on The Information Given by The Lawyer
An expert witness should ask for a written agreement that defines the scope of the case as well as the purpose of engagement for the expert. Even with a written agreement in place, the expert should avoid accepting the lawyer’s words blindly regarding the critical aspects of the project and research everything thoroughly before agreeing to testify. This will ensure that there is no bias coloring the testimony of the witness, and the attorney doesn’t mold or restrict the expert’s work to present a favorable opinion.
Forgetting That They Are an Advocate Only for Their Opinions and Not for The Case Itself
Expert witnesses, much like fact witnesses, should make sure the testimony and opinion therein are true, to the point, and sincere. The witness must be objective and should only let their training, education, and experience guide their opinions. They should focus on the research and facts to form their opinions, even if they are not exactly what the client or lawyer wants. It is the lawyer’s job to advocate the case and take sides. If the expert tries to fit the opinions with the objective or goals of the lawyer’s case, they risk losing their credibility.
Trying to Sound Like the Ultimate Expert on Everything
Less is always more, and that is also true when forming an opinion as an expert witness. An expert should always be careful about the information they are sharing, what they put in writing, and especially coloring facts with personal bias. They should also be aware of the danger of trying to sound like the ultimate expert.
Even experienced lawyers and people who have been offering services as experts avoid acting superior and talking down to others. Keeping an open mind and being sincere is essential. It is also essential to consider the advice and guidance of older and wiser attorneys and experts in the field. Remember, you don’t know everything, nor do you have the same experience as others, so make sure you have argued all sides before making up your mind about a particular aspect of the case.
Find Banking Expert Services for Your Case in New York
Jason Koontz, CRC, is a former Senior Vice President and has over 20 years of experience in the banking sector. He is an independent expert and offers his expert witness consulting services to lawyers in New York. He has served as an expert and litigation support specialist on over 150 cases on a broad range of banking and real estate matters, including lender liability, commercial loans, debt collection, predatory lending, and more.
Contact him today by calling at (646) 397 – 3835 or connect with him via email at firstname.lastname@example.org
Disclaimer: This blog is for informational and educational purposes only, does not constitute professional advice. I’m not liable or responsible for any damages resulting from or related to your use of this information.
Jason D Koontz
Banking Expert Witness New York, New York
Banking Expert Witness Atlanta, Georgia
Banking Expert Witness Chicago, Illinois
Banking Expert Witness Clark County and Las Vegas, Nevada
Banking Expert Witness Dallas, Texas
Banking Expert Witness Florida
Banking Expert Witness Louisiana
Banking Expert Witness Los Angeles, California
Banking Expert Witness Miami, Florida
Banking Expert Witness Minnesota
Banking Expert Witness New Jersey
Banking Expert Witness Orlando, Florida
Banking Expert Witness Philadelphia, Pennsylvania
Banking Expert Witness San Diego, California
Banking Expert Witness San Francisco, California
Banking Expert Witness Tampa, Florida