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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Posted: Smurf @ 23 02 07 08:08 am
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Associated Press
HomeBanc Files for Bankruptcy
Associated Press 08.10.07, 1:46 PM ET

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Just days after it sold five retail branches to Countrywide Financial Corp., Southeast regional mortgage lender HomeBanc Mortgage Corp. filed for bankruptcy protection in U.S. Bankruptcy Court in Delaware.

Atlanta-based HomeBanc is just the latest of dozens of mortgage lenders to go out of business in recent months. Growing delinquencies and defaults on subprime mortgages - loans given to customers with poor credit history - have increased rapidly in recent months, making investors skittish about buying the loans in the secondary markets.

Without investors to purchase the loans, mortgage lenders often have no other alternatives to tap funds to make mortgages and have to shut down because they have no liquidity. Just last week, American Home Mortgage Investment Corp. filed bankruptcy in the same court for similar reasons.

HomeBanc stopped originating loans Monday because it was no longer able to fund them.

Some of the largest investment banks are listed among the creditors in the bankruptcy filing, including JPMorgan Chase & Co., ]Bear Stearns Cos. and Deutsche Bank.[/color]
Also listed among the top creditors is French bank BNP Paribas, which earlier this week froze three investment funds heavily invested in securities backed by subprime mortgages.

Earlier in the week, HomeBanc sold five retail lending branches to Calabasas, Calif.-based Countrywide for no cash premium. The deal was scheduled to close Friday.

In announcing the sale of the branches to Countrywide, HomeBanc said it was exiting the retail mortgage lending business in an attempt to maintain the value of its mortgage portfolio and servicing operations.

Copyright 2007 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed

Comments: 0 :: View Comments (Post your comment)

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Oh boy.

If anyone thinks that the mortgage company, bank what have you has the $100.000.00 sitting in a bank waiting to fund mortgages has another thought coming IMO. What all of this house of cards was built on is promissory notes. I am sure someone will correct me if I am wrong but a promissory note is only a promise to pay. When I got my mortgage I promised to pay x amount of money for x amount of years. Over a 30 year time my note is actually worth the value of my mortgage payments plus 30 yrs of interest which is a lot more money. My mortgage company sold my note bundled up in a lot of other similar notes to another company for a price based on the future earnings of my mortgage. Built into this is the idea that a certain percentage of those notes are going to default. Default builds risk. Whoever purchased these notes paid a premium for a premium rate of interest.

The reason all of this is so dubious is that money itself never changed hands. What was sold over and over were these securities. So somewhere someone is holding worthless paper because in their greed a lot of dubious loans were made. Or some people were counting on selling before these loans came due and like a bad game of musical chairs were caught.
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anon2 wrote:

The reason all of this is so dubious is that money itself never changed hands.

You forget the seller of the house got paid and that money had to come from somewhere.
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Yep I forgot that part. I think its pretty good I understand this much. I figured someone would help me out. From time to time I confess I run off at the mouth. Not too often. But its scary to think that others much smarter than me cooked up these schemes with not a whole lot more and even scarier still someone else paid some of these people a whole lot of money for a whole lot of worthless paper with as much logic behind it. Maybe I could work on Wall Street.

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okay so how about this. If I am willing to go out on a limb I might as well be prepared to swing from it.

I buy a house. I finance it. I sign a promissory note. I give it to my mortgage co. My mortgage co. funds the loan. Now my mortgage co. no more has the money than I do so they borrow the money. I have my one house as collateral. My mortgage co. has a billion houses as collateral. Trouble is waiting to get interest on a thirty year loan over thirty years is so pesky and takes so long so the CEO of my mortgage co. gets creative. A genius on Wall street get this brilliant idea. Why don't we bundle a whole bunch of notes together and sell these as securities based on the future earnings of these notes. Hell why don't we sell these notes for less than the future earnings of these notes amortized over 30 years so these suckers we are selling to think they are getting a good deal. Even better, why don't we add an element of risk so we can get even more money. So my mortgage co. bundles my note with a whole bunch of others and sells them. And even better if the homeowners do better than the CEO thinks and doesn't default this is a problem so what do they do, they encourage the homeowner to default.

Or even better I select a group of people statistically more likely to default and what do I do. I give them home loans. Then I run around and tell everyone what a terrific guy I am. (I am assuming for the sake of argument that I the CEO am a man). But all the time I am betting on the homeowner to default because I make more money that way.

What do you think. Am I way out there? Trouble with giving those peons an education, they get a mind of their own. No not a whole lot of actual money changes hands. Its only on computers, on paper. Therein lies the problem. When the music stops someone is caught holding the paper and they lose.

I am not really good at being a con man so hence I don't work in the glamorous world of high finance.
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Thats why its called a Ponzi and Pryamid scheme
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