Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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The New Normal: Mortgage Meltdown

Ed Andrews Covered Risky Loans as a Journalist, Then Took One Out Himself


June 15, 2009

A few years ago getting a mortgage on a dream home suddenly became a reality for a growing number of people. Television commercials boasted that if you had "less than perfect credit," a bankruptcy or even a previous foreclosure, you could still qualify for a mortgage.

One of the skeptics was New York Times economics reporter Ed Andrews. Andrews wrote a piece in 2004 warning about dangerous home mortgages, calling them "the ever more graspable and risky American dream."

Then, Andrews promptly did the increasingly common thing at the time. He wrote his name on a half-million-dollar mortgage for a Silver Spring, Md., home he couldn't afford.

Watch the full story Friday on "20/20" at 10 p.m. ET.

Andrews now says that he, of all people, should have known better.

"I really did know a lot more than ... most people about, specifically, these kinds of mortgages," he told "20/20" in a recent interview. "I thought about it ... and yet ... I plunged ahead."

Andrews reveals all the gory details in his new book, "Busted: Life Inside the Great Mortgage Meltdown." He said that he and his wife, Patricia Barreiro, took the plunge because they were blinded by their desire to start a new life together after going through difficult divorces. They hoped to provide some stability and a new home for their children from their prior marriages.

"I think that, like Ed, I was a little delusional and I think we weren't thinking very clearly," Barreiro said.

And why should they? Especially since banks had stopped asking borrowers what was once the most important question: Can you afford to pay us back?

"They actually didn't care one way or the other," Andrews said, detailing the math behind how unrealistic it was for the bank to lend them $500,000.

"We were going into this with me paying all of my take-home pay to the mortgage ... and the gamble was, basically, that Patty was going to be able to cover our living expenses with the money that she earned," he said.

It was "magical thinking," he said, especially because Barreiro was not even working when they bought the house and then struggled to find a good-paying job. She eventually found a job but then lost it.

Andrews soon learned that the couple's finances had stretched to the breaking point. He recalled the day when, a few months after buying his home, he went to the ATM to find he only had $196 in the bank.

"Suddenly, here we were, just a couple months later, and boom, I'm down to nothing in that bank account," he said.

New Normal: Andrews and Barreiro Hit Bottom

With nothing in the bank, Andrews turned to his credit cards to keep the family afloat. The couple quickly ran up their credit card debt. As the balances skyrocketed, so did the interest rates.

Ultimately, their debt ballooned to more than $50,000, with interest rates of more than 20 percent. With the stress mounting, their marriage began to suffer. Like many couples, they say they argued over money and, even now, are still struggling.

The couple are now eight months behind on their mortgage and facing foreclosure. Their days of "magical thinking" are over.

Harvard professor Elizabeth Warren is hoping all Americans abandon such a way of thinking. The outspoken critic of consumer lenders says they need to be more strongly regulated. But she also believes people must change the way they use consumer debt.

"The idea that you only buy what you can pay for, and then you don't have to ... worry about it anymore," Warren said of the goal. "I think that's becoming a lot more attractive for American families. I'm hopeful that'll be the new normal."

Andrews takes full responsibility for his situation, but he does think people should think twice before raining down judgment. "I'm not a victim ... [but] I really do think that many people were steered and duped into things that shouldn't have been," he said.

Today, they are living their new normal. They no longer use credit cards. They drive a 10-year-old Toyota in need of repair, hoping to make the car last a bit longer. Barreiro's young daughter has had to give up her ballet lessons. And her husband has had to have some hard conversations with his college-aged son.

"He is now preparing to borrow $5,000 a year to cover his costs," Ed Andrews said of his son.

Perhaps the biggest change is the realization that they will lose their dream home. Barreiro has begun to look at rentals in the neighborhood in preparation for that day.

She said she is actually looking forward to the future and what it has in store for her family.

"We don't want to take a gamble on our marriage anymore. ... We want to live a real life ... an authentic life without any fantasy in it," she said. "That would be good enough for me."

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tired and tattered

Why is it that these are the stories that are being given publicity. The people that truely could not afford a home are small in number compared to the fraud that was committed on those of us that could. The fraud continues to take the back burner to the "they bought too much house" syndrome.

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This is what people want to hear.  They want to believe that it is the individual buyers fault.  They don't want to think that the whole system has major flaws.  They don't want to possibly think they just might be the next victim.

I give you June Reyno as a perfect example.  Ok, she made some financial mistakes.  She tried to start a business and for whatever reason it didn't work like she expected it to.  Then she filed for bk to save the home she and her husband had for 20 years.  The bk was supposed to restructure her bills and help her family get back on their feet.  The problem was that the laws didn't protect her!  The system failed her!!!

So as she went to the extremes of trying to save her home, the media got involved.  They reported her story and the comments of her community again failed her.  Instead of support, they ridiculed her saying very ugly comments online.  These people only heard what they wanted to hear.  They refused to see the whole story and it's very sad.  I am sure more of them will be joining in her same sad situation very soon.  Then these same people will wake up to see there is so much more to this problem.


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tired and tattered
I know that no one wants to hear that the head honchos are just as much to blame for not stopping this. They knew of this a long time ago and failed to protect us. They are not going to bite the hand that feeds them. I really can't understand how so many people can be in foreclosure and it not raise some eyebrows. I havn't built any rockets lately but I certainly know that there is some fraud going on here. I think that many others know it too. Yet it is so obvious that many of the others that seem to not "see" what is happening know exactly what is going on. They turn a blind eye. The frauds have been steadily increasing and the only thing they are doing is these little bits of things that really don't amount to squat. Meanwhile the foreclosures continue. They expect this year to be the worst yet. Yet no one thinks that there is widespread fraud??? They have done nothing to protect us. Only the criminals. You know that if you see aman with a gun robbing your house he is a criminal. Yet the new criminals wear a suit and carry a pen.
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tired and tattered
It is so obvious that the fraud is going on and yet we have to dig and search and find proof. The first step should be finding the original note, and the second thing should be that the servicer has no interest in the home. Money laundering always used to be illegal. Why is it when it means stealing our homes it is now somehow OK? Why is it us that has to explain to the court and the lawyers why this is illegal? How many of us, if we knew, would have recorded these people lying to us? We were told our check was "duplicated". When I talked to the bank they said there is no such thing. They could have cashed the check. When I sent my QWR, they tell me that the routing number was wrong. When I get copies of the electronic check they were 100% correct. They did not want us to be caught up. I was not told one bit of truth for 2 months. That's when I stopped talking to them on the phone. The whole thing was based on lies as many of you here know. Yet we are the one accused of lying? We all know that something is wrong. It is really sad.
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