The Expert Blog
Jason D Koontz, CRC Opinions for All
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 email@example.com
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.
Expert witnesses bring a sense of objectivity to court proceedings that bears much influence on the outcome of the case.
Therefore, lawyers should pay special attention to their expert witnesses and help them prepare for trial, so the judge and jury will understand and rely upon the expert’s testimony.
However, there’s a difference between expert witness preparation and coaching, and it’s critical to understand the difference between both methods to avoid crossing that line.
Here are a few thoughts for consideration:
Understanding the difference between preparing and coaching your banking expert witness
Banking Expert Witness Preparation
Working with your banking expert witness is entirely acceptable from an ethical and legal standpoint. It can prove to be very important to the success of your case. It can range from briefing your expert on the trial venue and the participants to sharing with them the facts most important to your matter. An attorney should lay out the particulars of the case and discuss what specific areas the expert should be prepared to provide opinions.
Moreover, lawyers can discuss ways to boost the credibility of their banking expert witness as a part of the preparation process, without raising any concerns. Make sure that your expert studies the facts of your particular matter. It is crucial that the expert has a firm understanding and has reviewed the documents produced. An expert that freely offers opinions on an issue without a firm grasp of the case specifics can lose credibility quickly or, even worse, be excluded from the case.
Witness preparation is a time that can be used to make your expert carefully consider their testimony and make any necessary changes, which will create a better connection with a judge and jury. An expert needs to strike that critical balance between educating the jurors without sounding condescending and establish a connection to them that will strengthen their credibility. Jurors are people too, and the expert should be reminded that after sitting in a courtroom for an extended time, a juror can have a short attention span. As a result, the expert should try to deliver the most important themes early on in their testimony before a juror is distracted, or their mind drifts off to something else. Be sure to encourage the expert to review the critical parts of the material related to their testimony and practice possible answers. The better they know the case and the relevant facts, the more confident they will be when they are on the witness stand.
Last, remind your expert to be direct and answer the question to the best of their ability. Experts are not expected to know everything. Remind them that its ok to say, “I don’t know,” if that is true. Jurors are people too and prefer an honest witness to one who is trying to be witty or evasive with their answers.
Banking Expert Witness Coaching
Coaching your banking expert witness is an unethical approach that could include asking them to obfuscate the truth.
Instructing the witness to be misleading could lead to severe legal consequences and weaken a case. If it is discovered that a lawyer has coached a witness to mislead the court—they could be charged with suborning perjury while the witness could be charged with perjury.
An honest and ethical expert witness will never omit essential facts or critical information to support a specific case theory.
Why is it important to learn the difference?
It’s critical to prove to the court that your expert banking witness is invited to provide an objective opinion, which isn’t biased in your client’s favor.
Therefore, lawyers should tread carefully and make sure they don’t coach their witnesses to answer questions of opposing counsel in specific ways to twist the facts.
The testimony of your bank expert witness largely depends on their credibility, and any attempt to influence their opinion can significantly damage your case.
Hire an experienced and objective banking expert witness
It’s essential to hire an experienced and objective banking expert witness to ensure their testimony holds high value in front of the judge and jurors.
Ideally, you should find an expert with a background in the banking sector, with extensive knowledge of the financial industry, and prior experience in providing expert witness services.
An experienced expert witness is deemed more credible and doesn’t require extensive preparation, which minimizes the risk of coaching. Further, you can also review their previous engagements to see how they handled prior depositions and trial testimony. Was the expert able to communicate their knowledge of the subject effectively without sounding like a professor who wants to impress everyone? Were they able to answer the questions and communicate without lengthy answers and technical jargon that confused the audience?
Preparing an expert witness is an essential component of trial preparation. The tips in this article will help your expert testify in a way that connects with a jury, and serve as a critical asset at deposition or trial.
Jason D. Koontz is a former banking Senior Vice President with over 20 years of lending, cash management, and bank operations experience. He has vast hands-on experience in bank lending practices, deposit accounts, and matters involving residential real estate. Mr. Koontz has extensive, coast-to-coast, experience as an expert witness (retained in over 150 matters). He has served as an expert witness in cases involving commercial loans, residential mortgages, predatory lending, debt collection, underwriting, consumer protection, fraud, truth in lending, lender liability, loan servicing, deposit accounts, residential property valuation, and USPAP compliance. He has been engaged in multiple matters where predatory and abusive loan practices were alleged. Mr. Koontz has extensive testifying experience at deposition and trial. He can be reached at (646) 397 – 3835 or by email at firstname.lastname@example.org.
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Disclaimer: This blog is for informational and educational purposes only and does not constitute professional advice. Jason Koontz is not liable or responsible for any damages resulting from or related to your use of this information.
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