Freedom Mortgage is a big company. They are one of the largest lenders focusing on VA loans. According to one veteran, however, they may be preying on our military men and women. We have been contacted by a potential client /veteran who is certainly unhappy with Freedom.
Those who regularly follow this blog know that we are no fans of dirty lenders. We prosecute False Claims Act cases brought by whistleblowers against banks and mortgage companies. We were proud to serve as one of the lead counsels in the record breaking $16.65 billion recovery against Bank of America. Sometimes we help individual loan officers with unpaid commission or overtime claims too. We never represent banks or mortgage companies, however.
Unfortunately, we rarely take individual homeowner cases. There are simply too many of them and too few of us. There are exceptions however and this may be one.
My father and brother were both veterans. Same for my late uncle and grandfather. Simply enlisting makes you a hero in our book. And as lawyers and a nation we owe a tremendous debt and gratitude for their service.
So what is Freedom Mortgage doing wrong?
According to one veteran, Freedom is operating a sophisticated two-step predatory lending scheme that leaves vets vulnerable to losing their home. Freedom, however, earns lots of money from this scheme. In fact, they receive two commissions for new loans.
Step one of this scheme involves convincing a vet to take a cash out refinancing loan. Unique to the VA, a cash out refi allows a vet to get up to 90% of the value of his or her home in cash. Some loan officers entice veterans to accept these high interest rate loans as a way of paying off credit cards. Even though the rates are high, vets are told they are getting a better “deal” because their payments are lower.
How is that possible? Mortgage debt is typically amortized over 30 years. Credit card debt has a much shorter historical payout. By spreading credit card debts over 30 years, borrowers will pay far more in interest but do have marginally lower monthly payments. Instead of paying off their credit card in a few years, however, they could be stuck with a mortgage until they are in their 80’s or 90’s.
When told that their credit card payments can be reduced, borrowers will often jump at the offer even though they are paying far more in the long run. Whether or not the borrower gets a good deal, Freedom Mortgage makes a commission, often a sizable one.
Unfortunately, the scheme doesn’t end here. Months later as the borrower continued to struggle, Freedom Mortgage offered an IRRL or “interest rate reduction loan.” Unique to the VA, these loans can lower the interest rate. More points and more commissions.
Curious to see if this was true, we began asking around. We know many loan officers. No one would confirm the practice but one former Freedom Mortgage worker said he had heard similar things. We also heard that the owner of Freedom, Stan Middleman, “runs the place like Vladimir Putin.”
Putin? Stan Middleman might take that as a compliment but many people who work there are not impressed. We found many employee reviews of Freedom Mortgage on glassdoor.com. Some were quite positive while others called the place a boiler room focused on maximizing sales.
We are looking to speak with anyone that has information about Freedom and predatory loan practices. Another vet told us last year that he was charged excessive fees not properly disclosed in advance of his loan.
Is there a problem? Help us figure that out.
If there is a problem, those with inside information may be eligible for a large cash award courtesy of Uncle Sam. The federal False Claims Act pays awards for inside information about fraud involving a government program or funds. Since the VA is a government agency, information about predatory underwriting or servicing may be eligible for an award.
MahanyLaw – America’s Fraud Recovery Lawyers