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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Hi ann do you remember in 2007 we spoke about the good faith esimate and Hud 1 paper and the turth and lending.you told me to look to those three papers and see if the number were the same.Well when I look threw my papers I didn't not have the good faith esimate paper. So I worte to Respa and the banking department and they worte to my mortgage company and they send me the good faith estimate.When I check the papers the numbers were diffrent so I worte back to the mortgage company and they told me I such have said something in the begining of the loan,but I worte back and told them how could I if I did not have the good faith estimate.I also told them I did not know until someone told me to check those papers.Noting happen it just stood that way.Well Just yesterday I was going threw my papers because I worte to a lawyer that investigating my mortgage company and was trying to get the papers togetheir well to our surprise we found that my husband  signature was forge in one of the papers.I would like to know what can we do about that.It took us 4 years to notice that we did not notice it when we first got the good faith esimate,we just notice yesterday since 2007.

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William A. Roper, Jr.
smurf:

I want to preface my comments first by reminding you that I am NOT an attorney and that this is NOT legal advice and second by observing that I have NOT researched the law or the cases relating to Good Faith Estimate ("GFE") and other RESPA issues.

Instead, I am giving you a lay impression reinforced by prior mortgage industry experience.  The experience can at least inform you somewhat as to HOW things are supposed to work and WHY.

Whether or not the purpose is expressly set forth within the legislation or within the legislative history of the Federal enactment, there are a number of salutary features of the legislation requiring the GFE that benefit both borrowers as well as honest lenders.  The Lender is expected to set forth within the GFE estimates as to precisely what charges are to be assessed in respect of the proposed loan.

There are a variety of ways that Lenders can pad or inflate the closing costs by the imposition of fees that do not precisely conform to out of pocket amounts that the Lender is paying in respect of the proposed loan transaction.

These can include an "application fee" in an amount in excess of the appraisal and credit report (or which is not applied to the cost of the appraisal and credit report), underwriting fees (when the loan is underwritten in house), origination fees and points, as well as a variety of other trash charges.

Quite literally if I wanted to add the cost of a round of golf with the underwriter or the cost of lunch with the appraiser, I could probably legally do so as long as the lender and the borrower freely agree to this.  The problem arises because at a typical loan closing the borrower, often unrepresented by an attorney, is in a particularly vulnerable position, particularly when the loan is in respect of a sale rather than a refinance.

The vulnerability arises because the contract of sale usually calls for the closing to be completed upon some date certain and the purchaser / borrower has usually made an earnest money down payment for the property, which can be subject to loss if the transaction fails to go through.  While there is usually a financing contingency written into the contract of sale, this contingency most often is expressed as an option on the part of the buyer to cancel the contract if the buyer is unable to obtain financing within some specified period of time.  Once this time frame passes and the buyer has failed to exercise this option, the buyers' earnest money deposit is usually fully at risk.  So any deviation in the terms of the proposed transaction which causes the buyer to balk, might very well result in the loss of the deposit.

The Lender literally has the buyer / borrower over a barrel!  And it is here that the GFE comes in.

RESPA imposes upon the Lender the duty to make a GFE at the time of the borrower's original application, setting forth in detail the precise terms of the loan and the charges associated with that loan.  While these terms are not expressly contractually binding upon either the Lender or the borrower, any significant deviations from these terms would need to be explained.  And if a Lender was found to be consistently underestimating closing costs, then this could be ascertained from a study of the GFEs and the GFE could be found to be demonstrably NOT made in good faith.

The honest GFE also can be beneficial to the Lender in at least two ways.  Honest Lenders may always suffer from inadvertent or intentional omissions or misleading statements by employees who are compensated on an incentive basis for obtaining loan applications.  The Lender might be honest, but may have failed to discover that a loan officer within its employ is using fraudulent or misleading practices to obtain loan applications.

The written GFE assures that there is some common understanding about the terms of the proposed loan.

Moreover, if the borrower appears at the closing with a materially faulty understanding or apprehension of the terms, the borrower might very well lack the ready funds to complete the closing, resulting in a transactional failure.  THE BORROWER NEEDS TO HAVE A RATHER PRECISE UNDERSTANDING OF THE PROPOSED CHARGES SO THAT THE BORROWER BRINGS SUFFICIENT FUNDS TO THE CLOSING SO THAT THE TRANSACTION CAN BE COMPLETED.

Other critical documents associated with the loan include the Truth-In-Lending Disclosures, the HUD-1 Settlement Statement and the instruments themselves -- the promissory note and the mortgage, deed of trust or other mortgage security instrument.

Most responsible Lenders will seek to prepare a GFE which accurately describes and estimates each of the loan charges and closing costs.  If anything, the responsible Lender will seek to OVERSTATE rather than understate these charges, much as any other responsible contractor might slightly pad an estimate so that unexpected surprises and disappointments can be avoided.

The borrower / customer will rarely be unhappy if the charges come in LOWER than estimated, but might be very unhappy if socked with an unexpected charge which totals hundreds or thousands of dollars.

When you examine the covenants of the promissory note and mortgage, you will find that these will expressly state that they reflect ALL of the terms of the loan deal, superseding any other prior oral or written representations.

Similarly, the HUD-1 Settlement Statement usually reflects ALL of the charges applied at closing.  The borrower is required to review and sign the HUD-1 Settlement Statement acknowledging receipt of a copy.

It would usually be in this review of the HUD-1 Settlement Statement that the borrower might discover any material deviations in the charges estimated and set forth within the GFE.

Regrettably, many borrowers go to closing unaccompanied by an attorney.  And in their eagerness and excitement to buy the property, they very often fail to carefully scrutinize the HUD-1 settlement statement, which can be difficult for the inexperienced purchaser to understand.

While the GFE reflects the estimate of the costs, the HUD-1 Settlement Statement sets forth an accounting of precisely how the proceeds of the transaction are being applied.  And it is really at the CLOSING the the Borrower has the opportunity to OBJECT to unfair charges.  In accepting and signing the HUD-1 Settlement Statement, the borrower is mostly assenting to the terms set forth therein.

Even AFTER the closing, when the transaction involves a subject property which is to be the borrower's principal residence, the transaction is subject to a three day right of rescission.  That is, even AFTER signing all of the documents at closing, including the note, mortgage, TIL and HUD-1, if the borrower subsequently concludes that the transaction is NOT in the borrower's best interest, the borrower can exercise the right of rescission within this three day period and UNWIND the transaction.

As a practical matter, this is problematic, though, as the borrower's earnest money down payment is usually still at risk.

Very few borrowers ever rescind.

*

This brings us around to the specifics of the transaction at hand.  You mention that your husband's signature appears to have been forged on the GFE.

While I do NOT want to minimize or dismiss the significance of a criminal forgery, I am inclined to think that standing alone, even if conclusively proven, such a forgery of going to be of very nominal use to you in a foreclosure situation.

Initially, the forgery of the GFE rather begs the question of whether the loan officer or the Lender misrepresented the terms of the original loan.  That is, are the terms of the loan as orally described to you materially different than those presented to you at the loan closing.  Even if the terms WERE different, there emerges a proof problem.  That is you might now SAY four years later that the mortgage broker or loan officer made certain oral representations to you, but how can you PROVE THIS?  Do you have any written documents or correspondence which reflects more favorable terms which you claim were offered?

If you appeared at the closing and were surprised to learn of unexpected, unfavorable and even oppressive terms, you could have (a) walked away from the proposed transaction, and/or (b) closed and then exercised your right of rescission.  In failing to do either, the Lender is going to argue that you waived any objection to these oppressive terms and affirmatively agreed to the loan on the terms expressed.

There are quite a few appellate cases where the courts have held that a borrower who went forward with a transaction on a basis other than originally represented had assented to the unfavorable and oppressive change in terms.

You had some further rights under TIL to rescind the loan based upon TIL violations (if any).

There is no question that a forgery of your husband's signature by an unauthorized person would be a criminal actBut who was the perpetrator?  Within days or weeks of the transaction, if you had made an issue of the terms, the matter might have been investigated.  The perpetrator's handwriting or fingerprints on this instrument might have been a giveaway.  But after the original instrument was scanned into the Lender's imaging system and the original shredded as a part of a routine document retention policy, the chance of actually identifying the culprit was lost.

While there were no doubt many subprime Lenders who encouraged or coached the loan officers to engage in this sort of forgery, there were no doubt also a few honest Lenders seeking to do the right thing who had some dishonest employees who engaged in this sort of behavior undetected.

And if the borrower failed to make an issue of unexpected charges, bringing the misrepresentations to the attention of the Lender's management, HOW would the Lender discover this fraud?  (Admittedly, the loan closing department at an honest Lender probably ought to be at least comparing signatures on the documents and a good auditor would be conducting some random audit tests.)

*

I am extremely doubtful that the forgery, if proven, by itself would excuse or absolve a borrower of an actual default OR preclude a foreclosure.

This is NOT to say that you should simply set the matter aside.  At a very minimum, the forgery might be used together with other evidence to show a PATTERN of document forgery or fabrication which might be very useful within the context of a clean hands doctrine equitable defense.

As to the criminal aspects of the forgery, I think that you are likely to find a local or federal prosecutor disinterested in this crime UNLESS you can show much more specific and clear cut evidence as to the identity of the perpetrator.  (While the perpetrator is almost surely the mortgage broker, loan officer or a processor working for that loan officer it is one thing to suspect who did this and yet another to PROVE IT.)  Given the passage of time, neither the police or the prosecutors are likely to be interested, particularly if the Lender is now out of business.

I would very much encourage you to discuss this matter with a qualified attorney and to further investigate the specific statutory provisions and the cases which define your rights and responsibilities.  But I wanted to share with you my reaction and to help you think about this information in a different way.

Perhaps other Forum participants have some different insights and suggestions!
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William A. Roper, Jr.
can I just ask you one question are you lender, loan officer or something like that.

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William A. Roper, Jr.
Smurf:

I have previously identified my background in other Forum posts.  I served as the president of a residential mortgage company more than two decades ago.  This both informs and colors my responses.

I also have been completely OUT of the mortgage business for such an extended period that I have NOT kept up with specific developments of the law or business practice in the years since.

I am NOT an attorney and cannot give you legal advice.

I hope this is helpful.

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I just got that impression since you kept favoring the lender's in your comment back to me.I feel it a big thing when someone forge my husband signature in the good faith estimate I think it fraud they had no permission to that..And yes I have prove of what this mortgage company did to us when we try to cancel I refinance and they would not answer us until after the 3 days when they email us and told us it was to late and we have that email.They told us our mortgage payment would be lower payment instead it double.

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William A. Roper, Jr.
Smurf:

The forgery in conjunction with the other issues you cite may make a stronger case.

Standing alone, I frankly believe that the forgery helps very little.

As to rescission, there is as specific procedure to be employed for rescission.  You needed to rescind IN WRITING, possibly with the form given to you at closing.  Whether an e-mail message indicating an intention to rescind is effective under the law is unknown to me.

I am NOT at all surprised that the Lender strung you along and let the rescission period run.  THIS KIND OF DECEPTION IS COMMON.  You really needed to consult with a lawyer IMMEDIATELY when the transaction became suspect.  Better still would been to have brought an attorney along to the closing.

You need to bear in mind that rescinding the transaction is also somewhat problematic from a procedural standpoint.  I would think that you would have been in the BEST situation if you rescinded in writing and ALSO INFORMED THE PRIOR MORTGAGE HOLDER NOT TO ACCEPT THE PAYOFF OF YOUR LOAN.

If you gave such instructions and continued to pay the OLD lender the required monthly payments, then you would be in a stronger position.  Once the old lender was actually PAID OFF and the old lien cleared, making the rescission effective becomes more problematic, as it requires a REFUND of the payoff, a reinstatement of the OLD LOAN or a refinancing with another lender.

I am NOT arguing that you do not have a case.  But every litigant is faced with certain PROOF PROBLEMS.  The stronger YOUR PROOF, the better position your situation.

*

If you began PAYING the new loan, you probably substantially WEAKENED your case, because it can be argued that you were RECOGNIZING that the asserted rescission had been ineffective.

Moreover, if you had continued to CONTEST THE VALIDITY OF THE LOAN IN WRITING, this would have made it difficult for a subsequent purchaser of the mortgage to claim holder in due course status.

A holder of a negotiable instrument cannot usually be a holder in due course unless the instrument was taken WITHOUT PROTEST and while NOT IN DEFAULT.

I WOULD HIGHLY ENCOURAGE YOU TO CONSULT A QUALIFIED AND EXPERIENCED LAWYER!

Once again, I am simply expressing my lay opinion on these questions.  I do NOT think that your interests are served by simply agreeing with you of enunciating views which I believe to be incorrect or to which I do not subscribe.

I would welcome thoughtful and critical posts by others who believe that the ideas I have expressed are erroneous and who can offer you some better and more encouraging suggestions!


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I  welcome opinion posted by others I like to hear what other have to say.That's why I join this message board.This message board has help me  to learn about the mortgage system's.When I first refinance my mortgage or got my mortgage I really did not know anything about mortgage's.I really never even looked at my papers until members of this group told me what to look for on my papers.When I first search and found this group was because Of what they did to us in the beginning of the refinance it was thing that we did not agree with the loan.Our biggest mistake was signing the loan.When we try to cancel the loan we called them we did not know their was a paper that we had to sign and send to them.So we just have an email when they answer us back.After going threw papers after I join this message board I sure the paper that we had to sign and send.But the lawyer that came to the house so we can sign the loan, did not explain that to us.When we told him that they were suppose to lower our mortgage payment not make it higher then what we were paying.He just told us that he came from a long distance that just to sign the papers and that to call the the one that did our mortgage and that we had three day's to fix thing on the mortgage.Please don't get me wrong I appreciated your comment's

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seeking2learn

I strongly suggest that you very quickly consult with a qualified and experienced lawyer. This is not something that you can handle yourself.

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seeking2learn I know I know we can not handle it our self but I don't know what lawyer to contact.Their a lawyer that going after EMC he doing a class action lawsuit  and he told me to call him to tell him our story that how I came across this because I was trying to get notes together  for him to send him.Dose a class action law suit work on a case like this too.See my problem is I really don't trust anyone anymore since this happen to us with the mortgage.Do you or anyone know of a pro bono lawyer that handle things like this with homes  upstate NY.

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seeking2learn
Search through cases in this link and you should find lawyers in your area. Ask them about pro bono or a referral. You might also try the Legal Aid people. In some areas the Legal Aid people have developed some expertise.

http://stopforeclosurefraud.com/2010/10/20/new-york-state-court-foreclosure-fraud-cases/
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Thank you seeking2learn
I will check it out

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