Over the past two months, I have been hearing of a potential action on the East Coast against Eastern Savings Bank. I have just been cleared to release what I know about the upcoming action.
Eastern Savings Bank is the largest privately owned bank in Maryland. They lent primarily along the East Coast, but they did loans at one time or another in most states, including California.
Eastern engaged in absolutely reprehensible lending practices. These practices resulted in the Office of Thrift Supervision filing a “Cease and Desist Order” against Eastern for many different violations including certain underwriting practices which were characteristic of Predatory Lending. I recently heard second-hand that Eastern admitted wrong doing, and as a result, they were fined the magnificent sum of $25,000. Thank you OTS for such great punishments.
(I have done examinations on two different Eastern loans, one of which was originated in the time frame that the OTS inspection would have reviewed. I can attest to the underwriting issues with these loans.)
The common characteristics of the homeowners that Eastern apparently preferred to lend consisted of the following:
• Credit impaired with scores in the 500’s.
• Large amounts of equity.
• Mortgage Late Payments or Deliquent.
• Borrowers who had no true ability to repay a loan, so Stated Income was the norm.
This type of borrower would usually have few actual lenders outside of “Hard Money” or “Sub-Prime” lenders to look to for financing. In most cases, a “Bad Sub-Prime Loan” would have been better that an Eastern Savings Bank loan.
Common characteristics of an Eastern loan consisted of:
• Loan to Value of 55% or less. This allowed for Eastern to foreclose and make money.
• Interest Rate for the first year usually about 11.5%, then it drops to 11.4% the second year, 11.2% the third year, etc.
• Bottom interest rate after ten years would be 9.5%.
• Broker fees, lender fees and other fees greater than 5%, and usually just below the HOEPA tolerance of 8% and APR’s just below the tolerance level for HOEPA. (The loans were deliberately structured that way to get the maximum profit and fees without triggering HOEPA.)
• After ten years, the loan had a “demand feature” whereby with 30 days notice, the lender could call the loan, and if the borrower could not find financing, the lender could foreclose.
The end result for the flagyl prescription buy homeowner who had these loans was that foreclosure was almost inevitable, and usually within a year or two. They had no ability to repay a loan with such a high interest rate over any extended period of time. If they had taken cash out of the home for loan repayment, once this cash was exhausted, they could no longer make the payment.
Often, the homeowner was told that with this loan, they could refinance to a better loan once their credit score improved in a year or two. What the homeowner was not told was that this scenario was unlikely in that it would usually take much longer to improve the credit score, and long before this happened, the homeowner would have run into financial trouble again, so they could not refinance. Default became inevitable.
The Law Firm taking action against Eastern Savings Bank is considering a major Class Action Lawsuit. It is expected to involve hundreds of plaintiffs, and since it would be in Federal Court, may allow for Plaintiffs from all 50 states. Those who currently have Eastern loans, and those who had the loans and refinanced, and those who were foreclosed upon would all likely qualify for this action.
Homeowners who had loans from Eastern Savings Bank should take heed of this upcoming action and find out if they qualify to be a member of the Class. For contact information for the Law Firm and for a person who is the head of an Eastern Homeowner’s Action Group, you can contact me and I can provide you the contact information.
Disclosure: I am not an employee of the Law Firm or Homeowner’s Group. I do not in any official capacity representative of either, nor am I a spokesperson. I am simply passing along the information as a Public Service. At some point, I may be asked to participate in some manner, but there is nothing contemplated yet.
(Patrick Pulatie is the CEO of Loan Fraud Investigations, a Predatory Lending Examination firm located in California. LFI has worked with attorneys in many different states. Articles by Patrick can be found at http://blog.ml-implode.com/ , www.iamfacingforeclosure.com , and weekly for the Asian Journal in California and other newspapers in California on an intermittent basis.
He can be reached at Patrick@loanfraudinvestigations.com or directly at 925-238-1221. Patrick and LFI are not attorneys, nor are they a law firm, and they do not engage in giving legal advice. Nothing in this article should be construed as giving legal advice.)