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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NY Fed investigates Goldman unit

By Suzanne Kapner in New York

Published: May 25 2011 23:12 | Last updated: May 25 2011 23:12

The Federal Reserve Bank of New York is investigating allegations that the mortgage servicing arm of Goldman Sachs failed to conduct appropriate reviews before denying borrowers a chance to lower their payments through a government loan modification programme.

A person familiar with the Goldman unit concerned, Litton Loan of Houston, Texas, said loans were denied without the proper review under a “denial sweep” strategy devised to clear a backlog of applications.

The allegations were brought to the Fed’s attention by the Financial Times, which obtained a letter written by an anonymous Litton employee.

The Fed confirmed that it was “conducting an inquiry”.

Goldman referred questions about the allegations to Litton, which said it “has robust policies and procedures in place for processing modifications, reporting complaints and assessing fees”. Goldman bought Litton in 2007, but put the unit up for sale this year.

The person familiar with Litton said he had examined loans that met the criteria for a government modification, but were denied it, sometimes because Litton employees made mistakes in how they calculated the borrower’s income. Other loans were denied the modification on the grounds that documents were missing, even though Litton’s computer system reflected receipt of the necessary paperwork, the person added.

Various regulatory and law- enforcement authorities are investigating the foreclosure practices of Litton and other large mortgage servicers which collect payments from borrowers. Goldman has said such inquiries could result in fines.

Lawyers and consumer watchdogs said they were seeing a growing number of complaints against servicers by borrowers who allege they were improperly denied a modification.

The Better Business Bureau in Houston has received 17 such complaints filed against Litton, which is more than for any other servicer.

The Fed is looking at the review process Litton used for borrowers who sought help under the US Home Affordable Modification Programme, or Hamp. Obama administration officials initially hoped the programme would help 4m borrowers. However, since its introduction in 2009, only 670,000 homeowners have received a permanent modification.

Servicers do not have to take part in Hamp, but once they do, they need to comply with guidelines that include reviewing each loan for eligibility and providing written explanations and loss-mitigation alternatives upon denial, a Hamp spokeswoman said.

Hamp modifications are supposed to take priority over non-government loan reductions offered through bank programmes and that often impose terms that are less favourable to borrowers.

The letter received by the Fed from the person familiar with Litton said that at the same time that the modifications under Hamp were being denied, Goldman was increasing non-government modifications for loans it retained on its books.

Fed Investigating Goldman Over Possible HAMP Mortgage Mod Violations
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Maybe something new to add to the next discovery request?
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"Five separate investigations were conducted by the Department of Housing and Urban Development’s inspector general and examined Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial, the sources said. The audits accuse the five major lenders of violating the False Claims Act. Two of the firms, including Bank of America, refused to cooperate with the investigations, according to the sources. The audit on Bank of America finds that the company -- the nation’s largest handler of home loans -- failed to correct faulty foreclosure practices even after imposing a moratorium that lifted last October. Back then, the bank said it was resuming foreclosures, having satisfied itself that prior problems had been solved.

According to the sources, the Wells Fargo investigation concludes that senior managers at the firm, the fourth-largest American bank by assets, broke civil laws. HUD’s inspector general interviewed a pair of South Carolina public notaries who improperly signed off on foreclosure filings for Wells, the sources said.

The investigations dovetail with separate probes by state and federal agencies, who also have examined foreclosure filings and flawed mortgage practices amid widespread reports that major mortgage firms improperly initiated foreclosure proceedings on an unknown number of American homeowners.

The FHA, whose defaulted loans the inspector general probed, last May began scrutinizing whether mortgage firms properly treated troubled borrowers who fell behind on payments or whose homes were seized on loans insured by the agency. 
A unit of the Justice Department is examining faulty court filings in bankruptcy proceedings. Several states, including Illinois, are combing through foreclosure filings to gauge the extent of so-called “robo-signing” and other defective practices, including illegal home repossessions.

The internal audits have armed state officials with a powerful new weapon as they seek to extract what they describe as punitive fines from lawbreaking mortgage companies.
A coalition of attorneys general from all 50 states and state bank supervisors have joined HUD, the Treasury Department, the Justice Department and the Federal Trade Commission in talks with the five largest mortgage servicers to settle allegations of illegal foreclosures and other shoddy practices. 

Such processes “have potentially infected millions of foreclosures,” Federal Deposit Insurance Corporation Chairman Sheila Bair told a Senate panel on Thursday.
The five giant mortgage servicers, which collectively handle about three of every five home loans, offered during a contentious round of negotiations last Tuesday to pay $5 billion to set up a fund to help distressed borrowers and settle the allegations.
That offer -- also floated by the Office of the Comptroller of the Currency in February -- was deemed much too low by state and federal officials. Associate U.S. Attorney General Tom Perrelli, who has been leading the talks, last week threatened to show the banks the confidential audits so the firms knew the government side was not “playing around,” one official involved in the negotiations said. He ultimately did not follow through, persuaded that the reports ought to remain confidential, sources said. Through a spokeswoman, Perrelli declined to comment.

Most of the targeted banks have not seen the audits, a federal official said, though they are generally aware of the findings. 

Some agencies involved in the talks are calling for the five banks to shell out as much as $30 billion, with even more costs to be incurred for improving their internal operations and modifying troubled borrowers’ home loans.

But even that number would fall short of legitimate compensation for the bank's harmful practices, reckons the nascent federal Bureau of Consumer Financial Protection. By taking shortcuts in processing troubled borrowers' home loans, the nation's five largest mortgage firms have directly saved themselves more than $20 billion since the housing crisis began in 2007, according to a confidential presentation prepared for state attorneys general by the agency and obtained by The Huffington Post in March. Those pushing for a larger package of fines argue that the foreclosure crisis has spawned broader -- and more costly -- social ills, from the dislocation of American families to the continued plunge in home prices, effectively wiping out household savings.

The Justice Department is now contemplating whether to use the HUD audits as a basis for civil and criminal enforcement actions, the sources said. The False Claims Act allows the government to recover damages worth three times the actual harm plus additional penalties. 

Justice officials will soon meet with the largest servicers and walk them through the allegations and potential liability each of them face, the sources said.
Earlier this month, Justice cited findings from HUD investigations in a lawsuit it filed against Deutsche Bank AG, one of the world's 10 biggest banks by assets, for at least $1 billion for defrauding taxpayers by "repeatedly" lying to FHA in securing taxpayer-backed insurance for thousands of shoddy mortgages.

In March, HUD's inspector general found that more than 49 percent of loans underwritten by FHA-approved lenders in a sample did not conform to the agency's requirements.
Last October, HUD Secretary Shaun Donovan said his investigators found that numerous mortgage firms broke the agency’s rules when dealing with delinquent borrowers. He declined to be specific. 

The agency’s review later expanded to flawed foreclosure practices. FHA, a unit of HUD, could still take administrative action against those firms for breaking FHA rules based on its own probe.

The confidential findings appear to bolster state and federal officials in their talks with the targeted banks. The knowledge that they may face False Claims Act suits, in addition to state actions based on a multitude of claims like fraud on local courts and consumer violations, will likely compel the banks to offer the government more money to resolve everything.

But even that may not be enough.

Attorneys general in numerous states, armed with what they portray as incontrovertible evidence of mass robo-signings from preliminary investigations, are probing mortgage practices more closely.

The state of Illinois has begun examining potentially-fraudulent court filings, looking at the role played by a unit of Lender Processing Services. Nevada and Arizona already launched lawsuits against Bank of America. California is keen on launching its own suits, people familiar with the matter say. Delaware sent Mortgage Electronic Registration Systems Inc., which runs an electronic registry of mortgages, a subpoena demanding answers to 75 questions. And New York’s top law enforcer, Eric Schneiderman, wants to conduct a complete investigation into all facets of mortgage banking, from fraudulent lending to defective securitization practices to faulty foreclosure documents and illegal home seizures.

A review of about 2,800 loans that experienced foreclosure last year serviced by the nation's 14 largest mortgage firms found that at least two of them illegally foreclosed on the homes of "almost 50" active-duty military service members, a violation of federal law, according to a report this month from the Government Accountability Office."
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robust policies ? robot police  is more like it.
litton hugs the unit
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Justice is no longer blind, it clearly only exists for those who can afford to be highest bidder. For most, its just a dream turned nightmare, at best.

Thanks to the publics three biggest and most wanted enemies:

1) Corrupt Politicians
2) Banksters
3) Corrupt Lawyers
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