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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Nye Lavalle
Countrywide, Critic Join to Help Borrowers
October 24, 2007
Countrywide Financial Corp., seeking to salvage a badly dented reputation in the home-mortgage market, plans to announce today a plan to cooperate with a nonprofit group that has been one of its harshest critics on a program that would help borrowers avoid foreclosure.

In another damage-control effort, Countrywide Chairman and Chief Executive Angelo Mozilo said he is "confident" that an informal inquiry by the Securities and Exchange Commission will find no wrongdoing in connection with his heavy selling of stock in the mortgage lender.

Countrywide, the nation's largest home-mortgage lender by volume, has reached an agreement with Neighborhood Assistance Corp. of America to restructure loans for people at risk of losing their homes, Countrywide and the NACA said. The agreement is notable because it teams the Calabasas, Calif., company with an organization that recently called for a boycott of Countrywide and held noisy protests outside its branches.

Testifying before the House Financial Services Committee last month, Bruce Marks, chief executive of Boston-based NACA, called Countrywide "the prime example for both predatory lending and predatory servicing" of loans. Loan servicers collect payments and handle other administrative tasks, including foreclosures.

Mr. Marks said in an interview late yesterday that the agreement will require Countrywide to reduce many borrowers' payments to levels they can afford, based on an analysis of individual household budgets by the NACA, which fights lending abuses, helps arrange affordable loans and advises borrowers through a network of 33 offices nationwide.

Mr. Marks said he believes the cooperation will help tens of thousands of Countrywide borrowers. He hopes to enlist other lenders to adopt the same approach. Countrywide approached the NACA less than two weeks ago about cooperating on loan workouts, Mr. Marks said.

Countrywide said earlier yesterday that it expects to refinance or restructure as much as $16 billion in loans by the end of next year for homeowners facing higher payments because their interest rates are "resetting" to higher levels. The company said it plans to contact 52,000 borrowers who are in a subprime loan but have "a strong payment history" to offer options to refinance them into prime loans. Subprime borrowers, who often have lower credit ratings, have to pay higher rates to compensate lenders for taking on more risk.

Countrywide is seeing some types of prime loans going bad at a rapid pace.
The moves come as lawmakers, regulators and consumer-advocacy groups are increasing pressure on home lenders to be more flexible and allow financially stretched borrowers to rework terms of their mortgages amid escalating delinquencies and repossessions. Last week, Treasury Secretary Henry Paulson cited an "immediate need" for lenders to modify and refinance more loans as the housing slump poses "the most significant current risk" to the U.S. economy.

Countrywide also has taken a public battering over Mr. Mozilo's share sales. The SEC has been examining prearranged share-sale plans used by executives at many companies and recently requested information from Countrywide on Mr. Mozilo's use of such plans. These 10b5-1 plans were designed to allow senior executives to sell shares at regular intervals automatically. If executives pledge they don't have insider information at the time the plans are established, they can be used as a defense against insider-trading charges.

Mr. Mozilo modified his longstanding 10b5-1 plans late last year to increase sales of stock that he obtains through the exercise of stock options. He sold $130.6 million in company stock in the first half of the year through executive sales plans, up from $60.4 million in the year-earlier half, according to securities filings. The 68-year-old Mr. Mozilo has said he increased the pace of selling to diversify his personal investments in an orderly way ahead of his retirement, scheduled for December 2009.

In a statement sent to The Wall Street Journal yesterday, Mr. Mozilo said he welcomes the SEC review and that the company will cooperate fully. He added: "I would like to state categorically that at no time did I make any trading decisions on material, nonpublic information and that I fully complied with all applicable securities laws."
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Do you have a link for this Nye?
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Desparate rescue plan

Countrywide's desperate rescue plan

Another day, another letter, addressed to me, from Countrywide. Two weeks ago, the company wanted to sell a protection plan for my big-ticket home appliances. Today, the pitch is for car insurance. Yesterday, yet another "special invitation" to refinance my home loan. I've been writing checks to Countrywide for six years, but in all that time I've never been blessed with such an abundance of up-close-and-personal attention.

Nonetheless, I just can't ignore the dour smell, the flop sweat of desperation that clings to every missive. Countrywide will be announcing their third quarter earnings this Friday, and the news is not expected to be good. It is beyond obvious that the corporate word has been laid down to every remaining employee: raise cash, now. If that means chopping down a forest to blanket the nation with mailings, no worries -- the forest products industry needs some love too, with all those saw mills idled by stillborn suburban developments.

Which all leads me to be skeptical of Countrywide's announcement on Tuesday that it will come to the rescue of at least 82,000 of its beleaguered subprime mortgage holders with a package of refinancing assistance and loan modifications worth a reported 16 billion dollars.

Countrywide executives are hoping that the move will be perceived as an example that the company is doing the right thing.

"We are determined to assist borrowers who have the willingness and wherewithal to remain in their homes, but need a little help to do it," said David Sambol, Countrywide's president and chief operating officer.

In some quarters, the move is being received precisely thus. Senate Banking Committee Chairman Chris Dodd called it "a welcome, if late decision" and Bruce Marks, chief executive officer of Neighborhood Assistance Corporation of America, labeled it "a big step," reported Bloomberg News. So maybe now we should all stop talking about CEO Angelo Mozilo's $136 million stock dump earlier this year, and tell the New York Times' Gretchen Morgenson to get off Countrywide's case.

Nope. Sorry. How the World Works isn't ready to move on. The rescue plan may well turn out to be a good thing for homeowners -- though the devil will be in the details, and so far all we've got is a press release to go by -- but, as CNBC's Diana Olick observes, "the company simply has to do this because there is no way it can survive otherwise." A continued swell of mortgage defaults and foreclosures will be a disaster for Countrywide. Already, reports the Financial Times, more than 13,000 properties are advertised for sale on Countrywide's Web site, up from 5000 in January.

As it sits on top of a growing stockpile of homes whose value is plummeting, in a market where no one wants to buy, with hundreds of billions of dollars of subprime ARMs yet to reset, yeah, sure, Countrywide is going to try and help you keep your home. Better you get stuck with it than them.

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forgot to cite this, sorry
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