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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Mortgage Servicing News - November 27, 2007
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Congress May Force Servicers to Aid Borrowers

By Ted Cornwell

 With foreclosure rates rising, Congress is considering legislation that would dramatically change the way servicers manage defaulted loans.

While various proposals are being bandied about, most would tighten the rules for foreclosing on a defaulted mortgage. Consumer advocates want to make it more difficult for lenders to repossess a home and add fees and costs to delinquent loan balances.

The National Association of Consumer Bankruptcy Attorneys recently got into the act. NACBA, citing data from the Center for Responsible Lending, says two million U.S. homeowners are currently "on track to lose their homes to foreclosure." The consumer attorneys are promoting the passage of a bill, H.R. 3609, the "Emergency Home Ownership and Mortgage Equity Protection Act," which would allow borrowers to "restructure" a mortgage on a primary residence in the case of bankruptcy. Lenders with long memories will understand what this is all about. The consumer attorneys want to "cram down" the amount of secured debt on home loans.

The bill may never become law, but it illustrates the increasing pressure servicers are under to accommodate seriously delinquent borrowers with forbearance, restructurings and workouts designed to keep borrowers in their homes. The bill also highlights a new political landscape, in which a more liberal Congress has become is receptive to consumer protection legislation.

H.R. 3609 has lending groups hopping mad. Despite the increasing emphasis being placed on loan restructuring and forbearance, lenders don't want to see changes to the loan contract terms imposed on them by bankruptcy courts. Only a couple of years after legislation strengthening the hands of creditors cases was enacted, the pendulum has clearly shifted back in favor of consumers.

Groups like the Mortgage Bankers Association and America's Community Bankers say that the bill, sponsored by some of the most liberal members of Congress, would undermine the mortgage market and make it more difficult and costly for consumers to obtain a mortgage loan.

As the ACB put it, the bill "injects risk into the secured lending process and will increase the cost of owning a home, through a higher down-payment, interest rate or both."

Meanwhile, some of the pressure on servicers isn't coming from the federal government at all. It's coming from the states. California Governor Arnold Schwarzenegger brokered an agreement with the state's four largest mortgage servicers, allowing them to extend their introductory rates on adjustable-rate, subprime mortgage loans to borrowers at risk of foreclosure. As Aite Group analyst Eva Weber puts suggests, as California goes, so may go the nation.

"A California experiment has potential implications for the whole country, and regulators will be watching closely."

A California Congresswoman, Linda Sanchez, is spearheading the effort to pass H.R. 3609. Noting that the number of foreclosures nationally increased 42% last year and is expected to rise even more dramatically this year, she said that the foreclosure rate is "approaching that of the Great Depression." That may be hyperbole, but there's enough of it fueling political discussions these days to keep a lot of pressure on servicers.

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thanks for the article, I wish they would hurry up and do something.

2 Mil. houses scheduled for F/C through the bankruptcy courts. Wow, alot of homes, and alot of homeless.

I hate this with a passion. What is the Number of F/C's Not listed in the Bankruptcy courts?
Anyone have any idea?

Sure the pressure is on the Servicers to do the right thing, but we know they won't. NOT UNTIL THEY ARE MADE TO DO SO.


Fleece the people, make them quiver at your feet, and obey your RULES, and then do it to them all over again. Gee how wonderful it is to be SERVICED!

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>>>>>As the ACB put it, the bill "injects risk into the secured lending process and will increase the cost of owning a home, through a higher down-payment, interest rate or both."<<<<<

Isn't tightening up approval criteria and requiring a bigger down payment theoretically a good thing?

Isn't no-criteria, stated-income, 0% down what got us here in the first place? I haven't seen any good numbers on it (nor do I think they exist), but I would be really interested to know how many of the currently defaulted/foreclosed mortgages are speculative or were made to flippers.

If prices come down to a sane level, the average family will save what they need for a down payment. They were doing so up until about 1997-98 anyway, it's not so big of a reversal.

I've been in this business a long time and I am continually gobsmacked that the industry could've fooled itself into believing that real estate could double, triple, quadruple in value over 5-6 years or less. And that those paper gains might possibly be sustainable. Everyone connected to real estate very certainly was optimistic to the point of insanity.

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Due dilligence is a proper way to manage assets and exert some kind
underwriting loss mitigation is something the loan originators did for as long as I have been around UNTIL the credit card companies went beserk with
fees, fines and all the other ways to ruin credit and foster panic by those using credit.  These usuary fees were the cause of fees to skyrocket profit.

This seems to be the same scam to me.

It is all about greed, the loss of common sense and temptation for the originators to get rid of those employees that were necessary to approve loans in the old days.

Why do they need them?  They don't since they almost always sell the mortgages into the secondary market sometimes on the first day.

There is no need to use any meaningful investigation into whether the borrower can afford a loan or not if you are only keeping it a short time.

It becomes somebody else's problem when you sell it.  The originator can b3e forced to buy back loans if it meets certain criteria, like

Originators need to get rid of those contracts that are fraudulent.

Next step, forclosure for the borrower whether the borrower is current or not.

The borrower naturally wants to fight forclosure.  They become buried with fees, their credit is ruined so they can't refi.

There are virtually no consumer protection laws to stop forclosure when
the reason for forclosure is a pack of lies.

Outright fraud is ignored by the justice system no matter how convincing the evidence is in favor of the borrower.

Forclosure was never meant to be a way to steal your house and equity. Yet this is exactly what happens.  Another perk of forclosure actions without
merit is the loan is now off the books.  The house enters the market again,
insurance payments are made and we start all over again.

Despicable conduct by those who were once respected.

Their integrity is for sale.


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Congress is privatizing profits and socializing losses.

Every action Congress takes has a consequence and Congress cannot seem able to figure that out. By helping borrowers Congress will ensure that investors stay away in droves and the markets and economy will take forever to recover. Where was Congress and all the regulatory agencies when this bubble was building? Asleep at the switch, allowing investors to lose confidence. Now Congress wants to penalize part of the population to pay for fraud that others committed. That is just wrong!

I am FOR borrowers all the way, but his is not the way to do this. Congress needs to go after the assets of those big newly fired CEOs who took all the risks, crashed the system and walked away very rich for being frauds. They got a lot of profit which they are keeping. Why are they not being penalized? Why are they not sharing responsibility for what they did?

When no one is forced to pay for their own bad decisions and bad corporate management what kind of message does that send? It sends the message to Wall Street and those CEOs that crime pays BIG, encouraging them to immediately begin plotting their next bubble. They have bubbled and crashed one sector of the economy after another without penalty and walked away with fat bank accounts. The rest of us pay through devalued currency and inflation.

If I stole money they would take it away from me and give to those who were defrauded. Why don't they do that in these cases??? Why not snag the ill-gotten profits, go through the loans and make restitution for all the fraudulent items found? This would have the added benefit of making the stinking servicers explain every bloated fee on their books, which would be a thing of beauty to behold.

Why won't Congress use the crook's money first? Because Congress is the ultimate thief and birds of a feather flock together!

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