Property Inspection Fee May Violate Mortgage Terms, Federal Regulations

A property inspection fee class action lawsuit investigation is underway that is scrutinizing the habits of a handful of mortgagees with respect to unnecessary evaluations of homes. According to this investigation, some mortgage lenders order unnecessary inspections of properties whose owners are behind in their monthly loan payments, then stick the owners with the bill for the property inspection fee.

The six mortgage lenders that are currently being investigated are Caliber Home Loans Inc., Flagstar, Freedom Mortgage, LoanDepot, Quicken Loans and U.S. Bank. The problem of ordering an excessive number of random property evaluations is that the lender charges the property inspection fee to the defaulting homeowner putting him or her further in debt and reducing their equity.

There’s More than One Way to Default

Defaulting on a home loan may be as simple as getting behind on payments through the loss of a job. It doesn’t mean that the mortgage borrower intends to completely allow the home to go into foreclosure. In fact, it is more common for borrowers to make every attempt to regain their footing and catch up on payments.

In the case of reverse mortgages where a senior citizen is no longer required to make monthly loan payments but utilizes the equity in their home to satisfy this requirement, default can occur when the elderly person fails to pay property taxes or home insurance—which are both requirements of such a contract.

Regardless of how a borrower defaults, a lender needs to protect their interest in a property by determining if a home in default is still occupied and is being maintained in such a way as to uphold its market value. This is the purpose of property inspections.

A Property Inspection Fee Can Generate Bank Income Over Time

According to a property inspection fee lawsuit filed in February 2017 against Nationstar, an elderly reverse mortgage contract holder was subject to an assessment of five $20 property inspection fee incidents during one month in November 2016. These five property inspection fee charges totaled $100 and were passed onto to the elderly plaintiff by being added to her loan balance.

The frequency with which the inspections were ordered and done were purportedly against the regulations of the Housing and Urban Development (HUD) Guidelines. These guidelines allow for inspections to occur once every 25 days at most when the loan or contract is otherwise in default and the purpose is to determine that the home is occupied and reasonably cared for.

The property inspections were allegedly done without notice to the borrower, which is also against HUD regulations. The federal agency specifies that a home loan lender must make every attempt to contact the debtor and offer a reason as to why the inspection is necessary and reasonable.

The plaintiff alleges that charges for these drive-by inspections in which she was not forewarned were generated and couched on her statements as “other fees.” The charges decreased her equity over time and added to the banks profit, providing unjust enrichment.

Have you gotten behind in your home loan payments and been subject to unreasonable property inspection charges? You may be able to join this class action lawsuit investigation. Fill out our form to request a free initial consultation.

The Nationstar Mortgage Lawsuit is Case No. 1:17-cv-01373 in U.S. District Court for the Northern District of Illinois, Eastern Division

Join a Free Property Inspection & Broker Price Opinion Class Action Lawsuit Investigation

If you were in default on your mortgage in the last three years with one of the following banks, you may qualify to join this property inspection fee class action lawsuit investigation:

• Caliber Home Loans
• Flagstar
• Freedom Mortgage
• LoanDepot
• Quicken Loans
• U.S. Bank

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