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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This is a must read. Think they and their servicers "knew" what they were doing to the psyches and lives of their borrowers? Give me an f-ing break! Pass the pity cup!

Subprime Profiteers Go Belly Up
Nearly overnight, mortgage company execs saw their personal wealth evaporate. Some will find it hard to adapt to a less lavish lifestyle
by Ben Levisohn

In February, Michael Strauss, founder and chief executive officer of American Home Mortgage (AHMI.Q), went to bed, safe in the knowledge that his 4.5 million shares in the company were worth $160 million. Six months later, pretty much all of that wealth has vanished. Fears over subprime mortgages led to a credit crunch, squeezing subprime specialist American Home to the point that it filed for bankruptcy Aug. 6.
Strauss unloaded 3 million shares at $1.17 each just days earlier, on Aug. 1, in a move that could attract the attention of securities regulators (see, 8/13/07, "Insider Trading at American Home?") But American Home said in a filing with the Securities & Exchange Commission that the sale was to meet a margin call. The rest of Strauss' shares now are essentially worthless.


Strauss isn't the only executive smarting from the credit crunch. A slew of chief executives who had profited from the housing boom are now feeling the pain of the crash. Scott Hartman, CEO of another subprime mortgage provider, Novastar Financial (NFI), has seen his stock in the company tumble to a value of less than $10 million, from $160 million. At Tarragon (TARR), which invests in distressed properties and builds new homes, Chairman and CEO William Friedman has had his company stake drop toto $2 million, from nearly $45 million.
Of course, there are numerous victims of the credit crunch, plenty of them much more sympathetic than the top brass who participated in the bubble. Start with the homeowners who took on subprime loans to buy their dream homes and will now lose them as they're swamped by rising interest rates. Or the would-be home buyers who are trying to buy a house but now can't close the deal because their loans are falling through. Perhaps even the investors in housing-related stocks, including pension funds and university endowments, who are now seeing their holdings plummet.

But the chief executives of mortgage providers, homebuilders, and other real estate-related companies have seen some of the most dramatic twists of fate in modern business history. In mere months, they've gone from feted multimillionaires to, at least in some cases, bankrupt scapegoats. "Obviously it's devastating," says Howard Sontag, investment advisor and founder of Sontag Advisory in New York City. "It's a true reversal of fortune."


Even those who don't end up with their companies in bankruptcy will be squeezed. Sure, some still have millions, but wealth is relative. When you have a sky-high net worth, it seems everything is affordable. Maybe you've bought your own jet or have partial ownership of one through a company like NetJets. Perhaps you've purchased a summer home in the Hamptons. But with the money gone, Sontag says, "What brought joy now brings angst."
Even when the money's gone, many find it hard to let go of their jet-set ways. What once were luxuries now feel like necessities. Relationships may change as well, Sontag said. Spousal relations may deteriorate as couples battle over what costs to cut. Friends may treat an executive differently now that he appears to have lost the Midas touch. Children also suffer, becoming acutely aware of the stress their parents are facing—not to mention facing the threat of a major lifestyle change. Houses may be sold, riding lessons stopped, and private-school tuition lost.


But the biggest change of all may be internal. "It changes the psyche of the individual impacted by it," Sontag said. "There's a perception that they were a winner and now they're not."
So what can formerly super-rich CEOs do when their share price tanks? They need to adjust to their new reality. That means cutting back on expenses, including the jet and the vacation home, and unwinding any debt they may have. In a word: triage.
Perhaps these CEOs can't expect too much sympathy, especially from suffering homeowners or investors. Householder Group financial advisor and Regional Vice-President Robert Burkarth says he feels bad for the little guys who have been hurt in the credit crash—the people who lost their jobs (6,000 at American Home alone), or have watched the value of their shares fall precipitously.
As for the big shots? "I'm shedding crocodile tears," Burkarth said. "It's a little hard to feel sorry for them."
See BusinessWeek's slide show of America's Biggest Losers.
Ben Levisohn is an intern for BusinessWeek.
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