Lender Made Misrepresentation Regarding Mortgage Insurance and Failed to Provide Required Notice Under Homeowners Protection Act of 1998
CHARLOTTESVILLE, VA – April 25, 2011 – Virginia law firm MartinWren, P.C. (www.martinwrenlaw.com) announces the confidential settlement of a federal lawsuit brought by homeowners against mortgage lender GMAC Mortgage, LLC alleging fraud and a violation of the Homeowners Protection Act of 1998. The case was proceeding in the Charlottesville Division of the U.S. District Court for the Western District of Virginia.
MartinWren, P.C. attorneys Jonathan T. Wren and John B. Simpson represented homeowners who were told in 2007 during a routine refinance that their new loan did not require private mortgage insurance (PMI) and then their lender violated the Homeowners Protection Act of 1998 (HPA) by failing to notify them in writing that their mortgage would be burdened by a rare and obscure form of PMI known as lender paid mortgage insurance (LPMI). The fact that their mortgage had LPMI was especially problematic for the homeowners in this case because they were under water on their mortgage (they owed more than 80% of the fair market value of their home), and the LPMI prevented them from being able to take advantage of the HARP (Home Affordable Refinance Program) authorized Freddie Mac Relief Refinance Open Access Program, which would have substantially reduced their monthly mortgage payments.
According to Mr. Wren, violations of the HPA may be widespread and have negatively affected homeowners across the country. Homeowners who have mortgages with LPMI, but who never received the HPA mandated written disclosure of this fact, may have a cause of action worth pursuing.
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