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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How Someone Else's Bankruptcy Could Take your Home

9/14/2007 5:18:09 PM

by Alan Hall

Complex systems fail in unpredictable ways: the more complex, the more unpredictable. If you are in such a system -- whether health care or the Space Shuttle -- you are hostage to its complexity. But what if you are just a homeowner, paying your mortgage on time, and the system fails and somehow sucks your payment into limbo and causes you to lose your home?

An article in today's Wall Street Journal describes that bizarre scenario unfolding now.

American Home Mortgage collapsed on August 6 and recently filed for bankruptcy. Freddie Mac and Ginnie Mae, the government-chartered housing finance agencies, have seized the $7 million in payments for principal and interest, property taxes and insurance that homeowners sent in prior to that date. This means insurance policies may lapse for non-payment triggering foreclosure.

The agencies have the money to pay the insurance, but they don't have the loan records, which belong to American Home Mortgage.

Freddie Mac says it can't get AHM's loan service files without a court order, and so agency bureaucrats don't know who to pay or how much. The files are one of AHM's remaining saleable assets, which the company hopes to sell and in turn use the proceeds to pay offer creditors. Wall Street's biggest banks are hungry to grab the loan servicing files on $50 billion worth of AHM's mortgages.

The article describes a literal showdown at the subprime corral at AHM's facility in Texas: "In court documents, American Home said Ginnie Mae representatives 'stood in a line in front of the doors and sat on the stairs, preventing AHM Servicing employees from entering the office.' Freddie Mac said American Home 'had its security personnel escort the Freddie Mac representatives out.'"

The likely result of the showdown? Homeowners will appear to have missed payments, face several kinds of late fees, possible individual rate hikes, trashed credit reports, and even foreclosure.

Several complex systems are in play here: the subprime mortgage system, the bankruptcy court system, the Wall Street banking system, a Tampa class action law firm, the government actors Freddie and Ginnie, and a herd as big as Texas. It's a complicated failure.

Like bureaucracies, systems develop goals of their own the instant they come into being, and the longer they exist, the more the primary self-preservation becomes, and the less they care about you, the individual.
 
"somehow sucks"  =  Mortgage Servicing Fraud
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And on the other end, the borrower is left dangling not knowing who to pay
or have any confidence that either one of these entities own the right
to service their own loans.

This is a perfect example of just how much these loans are NOT transparent.

can't help but laugh at all the representatives standing in line waiting for the doors to open.

I hope they are able to  make the correlation between their situation and how the borrower is being harmed again with no way to fight back.

This must be an equivalent to a borrower standing on the court house
steps watching their home auctioned?

This should wake up these judges that rubber stamp forclosures and refusing to even listen to borrower testimony.

Why shouldn't a judge now request the original loan document be produced
first to verify the amount of the loan and then to see if it has been sold.
If so, to who and verify the secondary market's representative has the right to forclose.

Dee
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The longer I deal with this garbage the more I'm beginning to think that maybe we should start pushing to get rid of the "non-judicial" foreclosure nationally. Yes, more work for the court system, but it would give homeowners and/or their attorneys at least some kind of chance to show that there may be a problem with their loan before it gets led off on the last leg of the slaughter. Yes/no?

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Yes, Absolutely

I definitely would like to see these servicers have to come to court
to prove the borrower is in default.

Stop them dead in their tracks.

Dee
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Yes.....
Judicial .....in spite of all too many judges, incapable of being fair and objective is at least a means to getting evidence on the record. 

Some evidence of MSF victims doing better in Bankruptcy Court where proof of claim is contested, but again, depends on the judge. 
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Has anyone heard of this?  It was mailed to MSFraud.

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Hi I am a real estate broker, I have a few clients who have said that the servicing company on their mortgage has called them and offered to discount the note, by doing a loan modification if they will refinance with another company and get them paid off, these folks say they are not behind on their mortgage payments and are wondering why would the lender discount a mortgage by as much as 25% ???? I could maybe understand this if they were in default or a reset had hit ie , do you think there is fraud involved ???? and if so who would i contact????

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I haven't heard this one.

Could it be that three of his clients are saddled with poorly written
mortgages and they are looking to bury those eventhough borrowers
are paying current on their mortgage.  Maybe

Why doesn't this broker give them a call and see what the deal is.

Maybe the lender or secondary market are calling in for assets.

Maybe that lender needs to cash out, right now.

They will make this deal if the borrower agrees to finance away from this lender.

That seems to be the motivation.

The fact this lender is willing to discount the loan at about 25% makes me
think that he is giving the borrower this discount to make it appear he
has the 20-30% down for the borrowers next mortgage in equity.

This remiinds me of the scam.  Just backwards.  When the borrower tries
to get a new loan, he is going to be telling lies to get the loan.  Where did this money come from? 

Without more detail, we would be specuclating and that is unhelpful.

Dee

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Joe B
Hold the presses. Have this person check their records VERY carefully!

This lender has uncovered fraud on this loan, and is hoping to get rid of it to cover it up!!!

Have this person go through everything VERY carefully to see if my hunch is right! Maybe a 25% discount is OK, but maybe it is far better to uncover the underlying fraud and 'renegotiate' with this information in hand!

There MUST be a reason for this, and my instincts are that the homeowner is in a position of power here, and should move very deliberately to understand the whole picture!

Good luck!
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SM
Hi I am a real estate broker, I have a few clients who have said that the servicing company on their mortgage has called them and offered to discount the note, by doing a loan modification if they will refinance with another company and get them paid off, these folks say they are not behind on their mortgage payments and are wondering why would the lender discount a mortgage by as much as 25% ???? I could maybe understand this if they were in default or a reset had hit ie , do you think there is fraud involved ???? and if so who would i contact????

Many loans done in the last several years(prime and sub-prime) were based off the LIBOR, which is the London InterBank Rate, and  have gone up a great deal over the last few weeks... Rather than take a chance and have clients that will possibly foreclose due to rising rates, they are trying to unload these loans at a discount. 

Also many lenders are going through a rough time financially and may not have a better option. This may be a good chance for people to take advantage of the lender's situation.

There may be closing fees with the new loan and may end up in the same situation with the next lender. Every one of these situations should be considered on a case by case basis, as you know the extra equity in their home may just be a reason for the new lender to steal their home.

SM

 

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