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
Democrats Raise Heat
On Mortgage Overhaul
August 7, 2007; Page A2
WASHINGTON -- As a wave of mortgage foreclosures buffets financial markets and feeds voter economic anxiety, Democratic presidential candidates are jockeying to get ahead of the emerging issue. The latest, Democratic front-runner Hillary Rodham Clinton, is scheduled to unveil today a plan to combat "mortgage lending abuse" -- another example of the Democratic Party's increasing willingness to explore new regulations on business and markets.

The U.S. senator from New York is proposing a package of measures that would impose new disclosure requirements on mortgage brokers and curb their ability to dictate lending terms. Specifically, Mrs. Clinton is planning to say today that she would force brokers to state their fees in plain language, require a full disclosure of monthly tax and insurance costs for subprime loans, and ban prepayment penalties on all home mortgages. This latter proposal could shake up the industry, one analyst said.

Thomas Lawler, a consultant who used to work for government-sponsored mortgage lender Fannie Mae, said the mortgage industry will resist the package, arguing that it will further dry up credit for many Americans. He said Mrs. Clinton's proposal could also make mortgages more expensive for conventional borrowers with good credit scores.

• The News: Sen. Clinton is the latest Democratic presidential candidate to propose tougher rules for mortgage lenders.
• The Big Picture: Democrats are showing more willingness to regulate business and markets, moving away from the party's 1990s shift to the center.
• The Downside: A proposed ban on prepayment penalties could particularly hit the industry.
Mrs. Clinton is part of an increasing number of Democratic politicians who advocate new rules for the mortgage industry, as the subprime meltdown of recent months has weighed on financial markets world-wide.

One rival, former Sen. John Edwards of North Carolina, has proposed setting up bailout pools to assist homeowners facing foreclosure and easing bankruptcy rules for people in danger of losing their houses. Another Democratic contender, Sen. Chris Dodd of Connecticut, chairman of the Senate Banking Committee, has held hearings about predatory lending. His May "housing summit" involving industry officials and consumer advocates suggested changes to current lending practices that lenders would eventually agree to voluntarily, in lieu of future legislation.

Housing isn't the only issue where candidates are moving away from the party's 1990s shift to the economic center. In Iowa yesterday, Mr. Edwards blasted free-trade agreements and proposed a ban on future pacts unless they include strong labor and environmental components. He also proposed giving the Treasury Department more tools to counter countries such as China that "manipulate" their currencies in order to give themselves a trade advantage.


• Complete Coverage: Campaign 2008
So far, such economic topics remain largely the focus of Democrats in the presidential race. Few if any of the nine Republican candidates have mentioned housing. Perhaps the closest to acknowledging problems in the industry is Republican Mitt Romney, who signed an antipredatory lending law in 2004 as governor of Massachusetts.

What may be the most significant of Mrs. Clinton's mortgage proposals is her call for an end to prepayment penalty riders on all mortgage products. Advocates of such riders, which prevent borrowers from paying off mortgages early, say they make mortgages easier to resell on secondary markets by guaranteeing a fixed rate of return to an investor. The tradeoff, advocates say, is that consumers often get a lower rate of interest when they agree to a prepayment penalty. But overhaul advocates say the riders are often used by subprime lenders to prevent holders of subprime adjustable mortgages from refinancing their loans at a lower rate with a rival lender.

Mrs. Clinton's other proposals deal with transparency. One would require mortgage brokers to disclose to borrowers that they make bigger commissions if the loans they sell carry higher interest rates or are larded with upfront fees. This disclosure of the so-called yield-spread premium that brokers receive is technically disclosed already in loan documents -- but is so loaded with jargon that few understand what it says.

The third main plank in Mrs. Clinton's policy would require lenders to include in the monthly payment estimate taxes and insurance on all higher-risk mortgages.
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I hope someone steps up to the plate and has a baseball bat in their hand. This might help others keep their houses but I don`t know how it will help the one`s that have already lost their houses and families that have been split apart or the people that are facing a crisis at this time.  It is a shame that we have to wait until another president takes office to get anything done and then I am afraid it will be put on the back burner.

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Big Bird!

Vulture investors feed on subprime carrion: The lawyers


And don’t forget the lawyers: Suits alleging bad, bad things hit lenders, packagers, raters

Getty Images

Here come the lawyers. With the casulties mounting from turmoil in the subprime lending sector and mortgage-backed securities markets, plaintiffs’ lawyers and defense counsel are gearing up for the inevitable lawsuits. They’ll have plenty of clients to choose from.

“The business cycle is one of boom, bust and recrimination; we’re now observing the bust and moving toward the recrimination stage,” said Donald Lampe, a partner with law firm Womble Carlyle Sandridge & Rice in Charlotte, N.C. “We expect that people who lose money will look for other people to take responsibility.”

Virtually every party involved in the huge Wall Street securitization machine that financed the late, great housing boom is a potential target—the lenders who originated the loans, the brokers who bought them, the underwriters who pooled them and carved them up into securities, the rating agencies that rated the securities, and the bond insurance companies that guaranteed them.

“The law firms are assembling their subprime litigation teams in anticipation,” said Allan Krinsman, a partner at New York law firm Stroock & Stroock & Lavan.

On the borrower front, claims—some of them already approved as class actions—have been filed against what litigants like to call “predatory” lenders for a variety of dodgy practices, such as inflating property appraisals, hiding closing costs or using bait and switch tactics in which companies promise a low teaser rate and ultimately offer another.

A consolidated class action suit pending against Ameriquest Mortgage Co. in U.S. District Court in Chicago is a prime example of subprime litigation, with some of the original claims dating back three years. And with state attorneys general like Marc Dann of Ohio now focused on foreclosures, claims seem sure to mount. In June, Mr. Dann filed 10 complaints against lenders and mortgage brokers operating in his state, blaming them for “driving Ohio’s shameful home foreclosure rate.” He’s also reportedly sniffing around credit raters Fitch, Moody’s and Standard & Poor’s, who put their imprimatur on subprime securitizations and then belatedly downgraded them in recent months.

The investment banks—including Bear Stearns, Lehman Brothers, Merrill Lynch and Morgan Stanley—are also going after the loan originators, filing claims against the likes of now-bankrupt mortgage originator New Century Financial and teetering Accredited Home Lenders to force them to buy back some of the worst loans that fed the bankers’ securitization departments.

Claims against the lenders, however, are small stuff, since many of them are now either bankrupt or close to it. The deep pockets are on Wall Street, of course.

Already, a 73-year-old investor in Wisconsin claims to have lost $500,000 in the subprime-soaked Bear Stearns High Grade Structured Credit Fund and has filed an arbitration claim with the National Association of Securities Dealers against the investment bank. The fund has lost almost all of its value, the company recently told clients. In the claim, the investor alleges that Bear Stearns “deceived” him into investing in the fund, “which was far riskier and more speculative than represented,” and that he was also “misled into holding on to his investment.” (Bear Stearns declined to comment.)

Meanwhile, a Moody’s shareholder filed a suit earlier this month alleging that Moody’s CFO Linda Huber had misled investors about ratings of subprime debt, reports Financial Week sister publication Crain’s New York Business. Lawyers for the holders of billions of dollars worth of those securities told the newspaper they are preparing to do the same. (Moody’s did not return calls for comment.)

The cases won’t be slam dunks. Unlike complaints against the lenders, which involve illegal business practices or breach of contract, these claims will allege securities fraud—a difficult allegation to prove, especially as courts have set higher standards to weed out frivolous securities lawsuits.

“Plaintiffs will have to prove the banks had knowledge of the improper conduct and continued to lend to the originator,” said Keith Miller, a lawyer with the Paul Hastings firm in New York. “Those are difficult facts to come by.” If there is evidence that the banks knew of the lousy lending practices and the deteriorating quality of the loans made and didn’t make proper disclosures in the securities prospectuses, they could be vulnerable.

A case being closely followed by the legal community is a claim filed in the middle district court of Florida in April by Bankers Life Insurance against Credit Suisse and a number of other defendants, including Bank of New York, which served as a trustee for bondholders, and companies that insured the bonds and serviced the underlying loans. Bankers Life purchased several investment-grade pieces of a mortgage-backed securitization originally packaged by Credit Suisse in 2001. During the ensuing years, delinquencies and defaults on the loans increased and the securities suffered through multiple credit downgrades. Bankers Life ultimately lost most of its $1.4 million investment.

The complaint, originally filed on April 23 and currently in the process of being amended, alleges that the investment bank misrepresented the quality of the underlying loans and even took actions to disguise the increasing delinquencies in the pool. “This involves a combination of fraudulent collateral and illusory credit enhancements,” said Dale Ledbetter, lead attorney for Bankers Life. “The investors were forced to take the losses.”

Credit Suisse, Bank of New York and other named players in the suit deny wrongdoing. If the suit isn’t dismissed and Mr. Ledbetter is granted discovery privileges to make his case, the seamy side of Wall Street’s contribution to the subprime crisis could be bared for all. A single e-mail could launch 1,000 suits.

Fed chairman Ben Bernanke has suggested that investor losses could be between $50 billion and $100 billion. Given the ongoing rout in the credit markets, that could be a conservative estimate. With the subprime crisis fast approaching the proportions seen in the savings and loan industry collapse of the late 1980s, the legal sharks are circling.

“We’ve seen a couple of complaints in each area, but it seems there’s a calm before the storm as people are considering their potential targets,” said Jeff Nielsen, a managing director at Navigant Consulting. “We haven’t seen the floodgates open yet.” FW
Vulture investors feed on subprime carrion: The lawyers - Financial Week

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Big Bird!

First Read : Clinton on rising home foreclosures

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Unfortunately, Senator Clinton has not clue one about predatory lending and even less of an understanding of mortgage servicing fraud. At least that's the impression she left me with....

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The problem is that Congress will tend to want to save Wall Street, NOT Main Street.

If the government becomes involved it may allow the crooks to stay in business longer, bleeding us all the while. Government intervention is always a double-edged sword. For every bit of "good" it can do, there always seem to be twice as many "bad" things that come out of it. Congress's road to Hell is paved thickly with good intentions and even more thickly with terrible results. Congress tends to set things in motion and then walk away with no follow-ups and no oversight. Any intervention by the government will be like the S & L will cost all of us in the long run.

And what did we get for bailing out the S & L's? This mess that we are fighting today!! This gawd-awful mess that is destroying so many lives. I am not inclined to pay through the nose again so that an even worse monster can be created (although I am hard-pressed to see how anything can be worse than this fiasco).

Congress does not exist to manipulate markets and the economy. They lost that right when they created the Federal Reserve and let that monster loose on us. Congress must demand its power back to create currency..."coin money"...before it can do anything other than babysit and placate these crooks! Any noise they are making can be attributed to "election-time static". Congress is powerless in this issue.

All MHO, of course.
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What we got from the S&L bailout was a "Supervisory Agreement" and the FIRREA (Financial Institution Reform and Recovery Act) which painted a glossy picture of Federal clamp-down, but actually made it worse, because it quickly became obvious that it was just a ruse.

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What about a law suit...


Start with the origination process, and each step that a homeowner loan goes through, all the way to foreclosure.

Separate Suit...

Introduce a New BILL for all parties to forward the full accounting to the next entity that ends up with the loan and or note:


Bank A only forwarded an outstanding balance to Bank B, Sent you a hello/goodbye letter with 60 days to dispute. That is the end of that history of accounting. No recovery if information, and the process continues.. to the next Bank C and Bank D and/or the pool, and/or the servicer.

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Gene may be on the right track.
Who would be brave enough, (and not be killed) to lead the pack?
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