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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http://www.house.gov/apps/list/hearing/financialsvcs_dem/hr041608.shtml

 

Subcommittee on Housing and Community Opportunity Hearing

H.R. 5679, The Foreclosure Prevention & Sound Mortgage Servicing Act of 2008

 

Wednesday, April 16, 2008, 10:00 a.m.

  

Click here to watch live webcast of this hearing.

 Housing Subcommittee to Hold Hearing on Foreclosure Prevention and Sound Mortgage Servicing Act

Washington, DC – Rep. Maxine Waters, chairwoman of the Subcommittee on Housing and Community Opportunity today announced that the subcommittee will hold a hearing entitled “H.R. 5679, The Foreclosure Prevention and Sound Mortgage Servicing Act of 2008” on Wednesday, April 16, 2008.

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.....and the Pinocchio Award goes to:

Fannie and Freddie Discuss Foreclosure Prevention & Servicing Act ... Before House Subcommittee
Kerri Panchuk | 04.16.08
Leaders with the nation's two government-sponsored enterprises (GSEs)—Fannie Mae and Freddie Mac—testified alongside consumer advocacy representatives and housing counseling agencies at the U.S. House Subcommittee on Housing and Community Opportunity's hearing on "The Foreclosure Prevention and Sound Mortgage Servicing Act of 2008” this morning. The Act is a legislative proposal that attempts to create mandates that forbid servicers from foreclosing on a property without first making a concerted effort to help borrowers stay in their homes.

Ingrid Beckles, vice president of servicing and asset management at Freddie Mac, testified on behalf of the GSE, saying with the GSEs already encouraging servicers to pursue home retention options, a new federal requirement is not needed.

“We do not believe that it is necessary to create an affirmative statutory duty that imposes particular loss mitigation activities on the entire mortgage market,” Beckles said. “Such a measure would add unneeded costs and complexity to delinquency management.”

Beckles elaborated on the initiatives Freddie Mac already has in place to encourage and ensure that servicers are actively pushing for the best possible loss mitigation solutions. These initiatives include EarlyIndicator, a tool that gives the company a heads up about potential at-risk borrowers early on; Workout Prospector, a tool that helps servicers working on Freddie loans to better determine a workout option for borrowers; as well as financial incentives for servicers who manage to save home loans.

Jason Allnutt, vice president for credit loss management at Fannie Mae, also elaborated on how his company forges close relationships with servicers and establishes a framework that encourages servicing partners to pursue all possible home retention initiatives.

Allnutt said allowing flexibility is key. “For our purposes, we do not require a standard software solution for workout,” he told the subcommittee. “Rather, Fannie Mae leverages a combination of monthly servicer score cards and on-the-ground presence to ensure foreclosure prevention performance and compliance.”

In addition, Allnutt said Fannie Mae frequently visits the offices of servicers to ensure best practices in loss mitigation are followed, while also maintaining a philosophy that removes a servicer's “foreclosure authority” when Fannie Mae determines they are not following the company's suggested best practices. Allnutt says authority is not restored until a servicer is back in compliance with Fannie's specifications.

For the most part, Allnutt attributes Fannie Mae's success in the home retention realm to the company's ability to maintain close partnerships with servicers, and its willingness to provide them with the leverage needed to save loans.

“For instance, since the market turmoil began last summer, servicers have requested 18 operational changes, including advanced authorities, to resolve problem loans without prior approval from Fannie Mae,” Allnutt said. “We have granted all 18. These changes have helped streamline the process and empowered servicers to resolve problems more quickly.”

Allnutt also mentioned the following incentives that Fannie maintains to encourage loss mitigation efforts: A financial incentive for servicers who keep borrowers in homes, an increased reliance on attorneys to prevent foreclosures since they often hear from borrowers first, and an assortment of loss mitigation and loan refinancing measures to meet the needs of individual borrowers.

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