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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Burning Files WTF?

American Home Mortgage can't figure out who owns the mortgages -- So destroy 'em?

The fallout from the subprime crisis has gone from merely scandalous to the downright ridiculous.

American Home Mortgage has files for 490,000 loans sitting in a warehouse (at a cost of $45,000 per month), and it can't even figure out who owns the loans because they've been bought and sold so many times since they were issued sometime after September of 2005.

So American Home Mortgage has a brilliant idea for what to do with them: Burn them!

Not so fast, say Wall Street investors who claim that the files can help them prove that they are their rightful owners.

According to the Wall Street Journal(subscription required), "The Melville, N.Y., mortgage lender, which is liquidating its assets in bankruptcy proceeding, made the offer to counter opposition from former backers who said American Home's plan to destroy the files endangered their rights to enforce the loans."

The fact that it's hard to tell who owns the loans is an interesting symbol of how crazy the real estate market became: people were signing off on loans and it wasn't even clear who the ultimate lender of the money was.

This moral hazard was probably a prime contributor to rampant mortgage fraud.
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