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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MUDD IN MY EYE!

Cuomo's Statement on Mortgage Probe
November 7, 2007 12:53 p.m.

NEW YORK ATTORNEY GENERAL CUOMO SENDS LETTERS OF NOTICE AND DEMAND TO FREDDIE MAC AND FANNIE MAE

Issues Notice of Martin Act Subpoenas to Nation's Two Largest Mortgage Financiers Expanding Industry-Wide Investigation

Fannie Mae and Freddie Mac Agree to Demand for Immediate Independent Examiner to Review All Washington Mutual Appraisals

NEW YORK, NY (November 7, 2007) – Attorney General Andrew M. Cuomo today announced his office has sent Letters of Notice and Demand, providing notice of the issuance of Martin Act subpoenas and a demand for an Independent Examiner, to the nation's two largest financiers of home mortgages, Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE). Cuomo also announced that Fannie Mae and Freddie Mac have agreed to the demand to retain an Independent Examiner, subject to the Attorney General's approval, to conduct a total review of all Washington Mutual (NYSE: WM) appraisals and mortgages purchased by the companies.

The Martin Act subpoenas sent by Cuomo seek information on the mortgage loans Fannie Mae and Freddie Mac purchased from banks, including Washington Mutual, the nation's largest savings and loan. The subpoenas also seek information on the due diligence practices of Fannie Mae and Freddie Mac, and their valuations of appraisals.

Today's announcement marks the latest expansion of Cuomo's industry-wide investigation of mortgage fraud. Last week, Cuomo filed suit against First American Corporation (NYSE: FAF), and its subsidiary eAppraiseIt, one of the nation's largest real estate appraisal management companies, for colluding with Washington Mutual to inflate the appraisal values of homes.

"In order to fulfill their duty to consumers and investors, Fannie Mae and Freddie Mac must ensure that Washington Mutual's mortgages have not been corrupted by inflated appraisals," said Attorney General Cuomo. "Our expanding investigation into the mortgage industry has uncovered that Washington Mutual improperly pressured appraisers to provide inflated values that best served the lender's interest. Knowing this, Fannie Mae and Freddie Mac cannot afford to continue buying Washington Mutual mortgages unless they are sure these loans are based on reliable and independent appraisals."

The subpoenas issued include requests for:

 Information about all of the mortgage loans Fannie Mae and Freddie Mac have purchased from any bank, including Washington Mutual, and the mortgage-backed securities associated with those loans;
 
 Information about due diligence practices of Fannie Mae, Freddie Mac;
 
 Information about appraisals and valuations by the originating lenders;
 
 Policies and procedures related to valuing properties and appraisals.
 

Fannie Mae (Federal National Mortgage Association and Freddie Mac (Federal Home Loan Mortgage Corporation) are two of the largest financiers of home mortgages in the country, and both purchase loans from Washington Mutual. Washington Mutual is the third largest provider of loans to Fannie Mae, selling $24.7 billion in loans in 2007 alone. Washington Mutual is also the fourteenth largest provider of loans to Freddie Mac, selling $7.8 billion in loans in 2007.

"The integrity of our mortgage system depends on independent appraisers," said Cuomo. "Washington Mutual compromised the fairness of this system by illegally pressuring appraisers to provide inflated values. Every company that buys loans from Washington Mutual must be sure that the loans they purchased are not corrupted by this systemic fraud."

The lawsuit filed last week details a scheme in numerous e-mails showing First American and eAppraiseIT caved to pressure from Washington Mutual to use appraisers who provided inflated appraisals on homes. E-mails also show that executives at First American and eAppraiseIT knew their behavior was illegal, but intentionally broke the law to secure future business with Washington Mutual. Between April 2006 and October 2007, eAppraiseIT provided over 250,000 appraisals for Washington Mutual.

"I wish I could say I am shocked by the discoveries made by the Attorney General and his staff. Sadly, what allegedly happened between First American and Washington Mutual is not an isolated incident. Rather, it is symbolic of a problem that has plagued the appraisal industry for years," said Terry Dunkin, President of the Appraisal Institute. "As the allegations against First American show, the mortgage industry's dirty secret has been that banks exert tremendous pressure to extort appraisers."

Cuomo's office has been conducting a nine month investigation into the mortgage industry, which has identified two key areas of concern: appraisals and securitization. On Monday, November 5, Attorney General Cuomo traveled to Washington, D.C. to endorse the Escrow, Appraisal, and Mortgage Servicing Improvements Act (H.R. 3837), sponsored by Representative Paul E. Kanjorski (D-PA). This bill will create new protections for consumers and investors and prohibit the improper coercion of appraisers to meet target appraisals.

This investigation is under the direction Executive Deputy Attorney General for Economic Justice Eric Corngold.

Attachments:

Letter to Mr.Mudd

Letter to Mr. Syron

Source: New York Attorney General's Office

RELATED ARTICLES AND BLOGS
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Here is what I don't get. We have been working on a modification for nearly a year altogether. First, they had us do a pymt agreement with an upfront lump sum, followed by 1 1/2 pymts each mth for 6 months to prove we could make the payments. We turned in our modification docs in June. They lost them 3 times!! Finally, they claim to have received them, and turned them over to their "investor" for review. That was just 3 days ago 11/7- in the meantime they continued their foreclosure proceedings. Now we receive notice that we are up for sherrif sale Dec. 5th. I think they are twiddling their thumbs purposely. If they foreclose, they will either own the house, which is worth more than we owe, or make enough money off the sale to clear their interest. Possible?

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Moose
Jodi wrote:

Here is what I don't get. We have been working on a modification for nearly a year altogether. First, they had us do a pymt agreement with an upfront lump sum, followed by 1 1/2 pymts each mth for 6 months to prove we could make the payments. We turned in our modification docs in June. They lost them 3 times!! Finally, they claim to have received them, and turned them over to their "investor" for review. That was just 3 days ago 11/7- in the meantime they continued their foreclosure proceedings. Now we receive notice that we are up for sherrif sale Dec. 5th. I think they are twiddling their thumbs purposely. If they foreclose, they will either own the house, which is worth more than we owe, or make enough money off the sale to clear their interest. Possible?


First - do you have an attorney?  This sounds like ol' Moose is working overtime this week for the Bar Association, but I've been engaged elsewhere in the past few months and things have had taken a turn here.

Second - this is not legal advice, which means you should always get competent legal advice.

Third - you are in a typical situation and you're running out of time. If you have enough equity the predatory servicers WILL COME AFTER IT. Period.

The foreclosure process won't be interrupted or delayed, let alone stopped until the servicer recalls the pack of hunting dogs they threw the meat to.  They will only do that when you either meet their terms and conditions or you file suit and your evidence and arguments convice a court to issue an order to temporarily stop them.

They didn't "lose" the paperwork three times. They ignored it, hoping you'd make a tactical error and they wouldn't have to call off the dogs in time to stop the foreclosure sale.  A lot of this depends on the state you live in. 

IF a loan modification is possible (HUGE 'IF') they do have to get permission from the trustee for the pool of mortgages.  The agreement they have (the PSA - Pooling and Servicing Agreement) defines quite specifically what they can and can't do.  The problem is those trustees aren't exactly happy campers nowadays, especially when there are so many failing loans. And the entire industry is in a state of finger-pointing warfare.

Your deal could even be jeopardized by a trustee who is looking at a hundred similar loans from the same servicer.  Those loans could be toxic waste that they don't want to ever see the light of day. They may need to have them disappear and yours may just get dragged into the garbage disposal. Who your servicer is is a good indicator of how badly it needs to go away before there are legal consequences.

Again - the department of redundancy department requires me to point out that this isn't legal advice, but depending on who you're dealing with, THEY WILL TAKE ADVANTAGE OF YOU BECAUSE THAT IS THEIR JOB.

Their real customer is the trustee/investor. You are not their customer. If an employee makes a bad call in your favor they jeopardize their bonus, maybe even their position. If they make a bad call in favor of the trustee/investor they don't risk anything, in fact , they may get rewarded if you're screwed and the numbers still come out OK for them.

They don't fear lawsuits from borrowers.  They do fear lawsuits from trustees/investors.  Some of them have very deep pockets.  Borrowers don't.

Get professional advice.

Moose

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Several months ago I was asked about the "Martin Act" with regard to New York.  The spin off investigations that will result NY Attorney General's Investigaioton.  I hope she remembers what I told her here on msfraud.org!
 
 

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O -
Texas AG Says Homeowners Have Alternatives to Foreclosure
KFDM-TV News - 22 hours ago
In September, Attorney General Abbott launched the Texas Residential Mortgage Fraud Task Force, a partnership that involves key state regulatory agencies to take a proactive stance towards tracking and prosecuting mortgage fraud.
 
AP NewsBreak: Banks blamed by borrowers in mortgage company mess
Philadelphia Inquirer - Nov 9, 2007
"Like closing the barn door after the horse is long gone, it simply is too late for the defendants to attempt to disclaim the Snyder Entities' role as their servicing agents and to transfer the losses caused by their own agents to the innocent ...
 
 
In Defense of Predatory Lending?
New York Times - 1 hour ago
The new site purports to be from the Predatory Lending Association. And whereas the other site has a page seeking to prove payday loans are not predatory, the PLA embraces the term - the American Eagle is a predator, after all - and has a page ...
Welcome groundswell on payday lending The Virginian-Pilot
Payday Loans Coming Under Increased Scrutiny Best Syndication
all 3 news articles »
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Mo Mudd

Democrats seek subprime role for Fannie, Freddie - MarketWatch

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