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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April Charney is one of the leading foreclosure defense attorneys in the nation. A trusted and excellent colleague, below you will find some good tips from her in defending your cases.


There's no place like home

/*By Reni Gertner Staff writer*/

As the number of foreclosures across the country skyrockets, attorneys
are stepping in to help clients keep their homes.

In most instances, something can be done to stop a foreclosure, said
April Charney, an attorney with Jacksonville Area Legal Aid in
Jacksonville, Fla.

"Only the exceptionally unfortunate homeowner cannot obtain a
restructuring or a modification to avoid a foreclosure by using the law
as a tool," said Charney.

A homeowner can raise claims ranging from fraud at the origination of
the loan to failure of the loan servicer to help a struggling borrower
modify a loan. In some of the latest cases, the claim is that the entity

attempting to foreclose doesn't even own the loan.

The work can be challenging and requires the attorney to move quickly,
said Charney, because the borrower doesn't usually obtain legal counsel
until after foreclosure. Plus, it's often difficult for borrowers to
find lawyers willing to help them.

But according to Charney, there is money to be made by private lawyers
if they are willing to do the work.

"There are lawyers making money taking these cases. [They] are getting
compensated with statutory and contractual attorney fees," she said.

According to a report released in mid-July by RealtyTrac, an online
marketplace for foreclosed properties, foreclosures are up 87 percent
from one year ago, with one foreclosure per 704 households.

The steep upswing has been fueled by the rise in subprime lending, in
which mortgages are offered to lower-income borrowers at initially-low
rates, only to have payments surge later, said Jonathan Becker, a
bankruptcy attorney in Lawrence, Kan.

To address this problem, banking regulators released federal guidelines
in June designed to reduce subprime lending.

State attorneys general are also cracking down. In Massachusetts, for
example, Attorney General Martha Coakley recently secured a 90-day
moratorium on foreclosures from a major subprime lender in California
after threatening to sue under state law for incomplete disclosures.

*The major claims*

To figure out what argument might help a borrower keep his home, "you
have to drill through all the layers," said Charney.

Here's a look at some of the major claims borrowers are using to attempt

to avoid foreclosure and obtain a mortgage loan modification:

**

# *The 'lender' doesn't actually own the loan. *

Attorneys in a number of states - including Florida, Kansas, Maryland,
Massachusetts, New York, Ohio and Washington - are fighting foreclosures

when there is no paper trail to prove that the entity trying to
foreclose actually owns the loan.

This issue has arisen because nearly every mortgage is sold by one
lender to another or combined into a securitized pool or trust and sold
on Wall Street.

Charney, who has been the major pioneer on this issue, found that this
often means a lack of paperwork explaining who holds the mortgage. The
paperwork may indicate anything from more than one lender holding the
loan on the same day to another bank being assigned the loan after the
foreclosure has been filed.

"These things have been transferred so many times and the servicers are
so sloppy that you really don't know who owned it, so you don't know if
the person in court is the person who has the right to go forward with
the foreclosure," said Henry Sommer, a Philadelphia debtors' lawyer who
serves on the board of the National Association of Consumer Bankruptcy
Attorneys.

In such a case, Charney said she argues that the alleged default
servicer, trust or lender lacks standing and files a motion to dismiss.

"If I can convince the judge that the securitized trust doesn't have the

right key to get into the courtroom, then I have a lot more leverage to
do the loan work-out," she said.

"Raising this claim can cause a lot of problems on the other side and
give clients time to get themselves reorganized," agreed Becker.

A company that attempts to foreclose when it doesn't own the note may be

in violation of the Fair Debt Collection Practices Act, Charney noted.

**

# *The borrower was misled at the origination. *

If the lender trying to foreclose does own the loan, the next question
is whether the lender took advantage of the borrower at the loan's
inception.

John Rao, an attorney with the National Consumer Law Center in Boston,
said this is likely if the mortgage involves a high-cost loan.

"You want to get a sense of whether the client signed up for a loan that

was beyond his or her means from the very beginning to get a sense of
whether or not there may be claims," Rao said.

Charney agreed.

"Most subprime loans are obtained through fraudulent origination
schemes, where the required consumer disclosures are inaccurate or the
presentation of the disclosures is so overbearing and overwhelming to
homeowners that they sign without understanding them."

This is known as a "bait and switch," where the borrower is shown a
document that seems to say one thing but later learns there is more
information in the fine print that affects the mortgage rate, said
Boston consumer attorney Gary Klein, who practices with Roddy, Klein &
Ryan.

Charney said that a borrower can bring a claim if the lender failed to
accurately disclose the interest rate or payment amount, or failed to
provide a brochure explaining the mortgage's adjustable rate.

Other potential claims include the failure to provide required loan
documents, disclose the right to counsel or provide a discount even
though the borrower paid discount points to obtain one, said Klein.

If these claims are successful, the lawyer can argue that that the
mortgage is void and should be rescinded, making the loan unsecured,
said Charney.

Becker said it's also possible to have the note rewritten under the
Truth in Lending Act if there was a misstatement in the lending process.

A 30-year note could then become a 21-year note, for example, he said.

**

**

# *The loan servicer fails to complete required procedures. *

With both federally-insured loans and private loans, loan servicers are
required to meet with borrowers and give them opportunities to modify a
loan if they are in default. With a Federal Housing Act loan, said
Becker, there is a treble damage penalty if the servicer doesn't comply
with the loan mitigation procedures.

However, "mortgage servicers may pay lip service to these requirements
and you really have to press them," he said.

Charney agreed.

"The servicer oftentimes is conflicted because it benefits from the
securitized trust servicing fees," charged when the loan is in default,
she said. "They may engage in some form of loss mitigation, but it's not

intended to promote a real work-out, which will stop the fees in their
tracks."

In a situation like that, an attorney can file a claim against the loan
servicer for failure to properly service the loan according to whatever
procedures are in place, said Charney.

Then the attorney can help the client argue for a modification or
work-out plan to make it easier to pay off the mortgage.

"If there is an arrearage you can do a variety of things, forcing the
servicer to rewrite the note with a different amortization schedule or
locking them into a fixed rate to get the client out of the adjustable
rate mortgage," said Becker.

With a federal loan, "you can write the mortgage down to zero if you
have the right set of facts, such as if the client becomes severely
disabled," he added.

Klein said it can be easier to get a loan modification once litigation
begins.

"The best opportunity to get a loan modification is when the lender
realizes it has some legal exposure," he said.

In some circumstances, however, it is difficult to restructure a home
loan outside of bankruptcy, said Sommer.

But if a debtor files for Chapter 13, he or she generally can make
regular monthly payments and then pay the arrears to the trustee over
three to five years, he said.
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Thanks for posting that. SRSD needs to read this.

Where did you get it?
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http://www.lawyersweeklyusa.com/feature.cfm 
for this article:

There's no place like home

By Reni Gertner Staff writer

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Thanks, Blossom

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Wow...thanks for the post...it is extremely helpful...If anyone wants to know what is going on with me....just e-mail me and I will explain.

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