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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Aren't mortgage servicer's required to keep both the insurance and the taxes paidso as to protect the property? Originally this was done from the escrow account.

Seems I remember reading this somewhere but brain meltdown has me flummoxed. Does anyone know where I could find this information? And any ideas on what, besides a Breach of contract,  I could use to bring this before the courts? Thank you very much in advance for your time and consideration of this matter.
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Do you currently have an adequately funded escrow account? Or are you in default and your loan does not require an escrow account?
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Bill

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Seems I remember reading this somewhere but brain meltdown has me flummoxed. Does anyone know where I could find this information? And any ideas on what, besides a Breach of contract,  I could use to bring this before the courts? Thank you very much in advance for your time and consideration of this matter.



This is not legal advice, just a few thoughts..............

Why are you interested in bringing this before the court?  I'm sure if you read your loan documents (your mortgage) you will find that YOU are the PARTY that is breaching the contract by not maintaining insurance and paying the taxes.   Most of the time the Lender May place an insurance policy of their choice and at your expense if you do not maintain the insurance. 


Do you have an attorney?

If you are proceeding Pro Se you really need to focus your arguments on points that you will prevail on to prevent summary judgment.  If you fail to do this you are going to have several problems:

1.  The Judge is going to stop listening and the arguments/defenses you have that DO have merit will not prevail.  After a few "wing-nut" theories and bad unsupported arguments the Judge may dismiss anything else you have to say.

2.  You are going to WAIST valuable time that you can use to research arguments that have merit.

 

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Way To Go
When the poster says: "Originally this was done from the escrow account" could mean the servicer has failed to make payments from the escrow account or the escrow account is empty because the loan is in default.  Which is it?

I doubt there is a single PSA's in the land that fails to require the servicer to make insurance and property taxes on behalf of the borrower if the borrower fails to do so or non-payment has dried up the escrow account.

This is not legal advice but I wouldn't think the borrower would not have standing if the servicer failed to advance the payments for property taxes and/or insurance.  Although if the house burned down or was sold at a tax sale auction the investor sure would have a valid cause of action against the servicer.

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Bill
I may be reading this differently than you:

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Aren't mortgage servicer's required to keep both the insurance and the taxes paid so as to protect the property


That would be pretty much "NO".

The borrower is usually required (in the mortgage) to maintain insurance and pay the taxes.  I have not seen the Servicer even mentioned in any mortgage I have seen.  This is an agreement between the borrower and the lender.

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I doubt there is a single PSA's in the land that fails to require the servicer to make insurance and property taxes on behalf of the borrower if the borrower fails to do so or non-payment has dried up the escrow account.




I would agree with this Way To Go, but the problem is as we have discussed in quite a few posts, you would have to admit the PSA into evidence.  Also you are not privy to the PSA, it is going to be difficult to enforce ANYTHING the PSA says.  This just leaves you with a borrower that has failed to pay the taxes or/and insurance as agreed upon in the mortgage. 

I personally don't see where this kind of argument benefits a borrower at all. 

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William A. Roper, Jr.

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C A Butler said:

Aren't mortgage servicer's required to keep both the insurance and the taxes paidso as to protect the property?  Originally this was done from the escrow account.


C A:

I am aware of no legal duty for the mortgage servicer to either pay the taxes OR pay for hazard insurance under either Federal or State law in any jurisdiction.

But as Way To Go suggests, there ARE provisions of the PSA for most private mortgage trusts AND in the Fannie Mae and Freddie Mac Servicers' Guide which REQUIRE the servicer to pay the taxes and keep insurance in place.

But the borrower is NOT a party to these contracts nor can the borrower typically enforce the Fannie or Freddie Servicers' Guide.  And Bill is correct that failure of the borrower to either pay the required escrows and/or to pay the taxes and to keep the property properly insured is going to be an express breach of the mortgage, deed of trust or other mortgage security instrument.

So going into court and asserting that the servicer is NOT paying the taxes or insurance seems likely to be a rather self-defeating initiative!  

It is definitely true that servicers some time deliberately play roulette with taxes and homeowners association fees, despite the requirement in THEIR servicing contract that THEY PAY.  They do this because they have found that they can GET AWAY WITH IT.

Fannie and Freddie do NOT actually exercise ANY meaningful discipline over the larger servicers.  Neither do the trusts.  So the servers pretty much do as they please, KNOWING that they have paid off various local officials and that they can usually extricate themselves from any legal problems.

A borrower CAN be rightfully concerned when the taxes and/or insurance goes unpaid for entended periods of time.  The former is a bigger problem than the latter.  When the borrower stops paying, the servicer will put a forced placed insurance policy in place at above market prices and uses this to rip off BOTH the borrower AND the mortgage trust.  THEY MAKE MONEY OFF OF FORCED PLACED INSURANCE.  They do NOT make money off of unpaid taxes, but can at least improve cash flow by ripping off municipalities.
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Way To Go
Bill; I agree that admitting the PSA is problematic.  But a MSJ in favor of the servicer would happen long before the PSA gets in.  We'll have to wait until the poster presents a bit more information.  Although I think his question has been addressed.
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I asked as it was paid by the escrow account and we, my fiance and I, are not aware of when the insurance and taxes are due and payable as it has always been taken care of by the escrow account. We don't even get a notice that our taxes and insurance are due.

I was asking as it seems that I remembered that reading, in some rule book I think, that it was a requirement of the servicer to pay the taxes and insurance to protect the property while in foreclosure and afterwards till sold, the foreclosure is dismissed or the default cured etc.

I would assume that if we were to work out an agreement and things were settled they would still be paying and if they are taking my house and they want to protect their investment they would do this. We found this out in mediation the other day.

And now that mediation is over and they want to go to court I have the new paper generated so I can remove to federal court. So I don't have to bring it up but for the fact that the taxes for the last 6 months, which we knew nothing about, were owing and is why they will not modify the loan at least that was the reason they gave.

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Bill

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And now that mediation is over and they want to go to court I have the new paper generated so I can remove to federal court. So I don't have to bring it up but for the fact that the taxes for the last 6 months, which we knew nothing about, were owing and is why they will not modify the loan at least that was the reason they gave.



1.  You did know the taxes were due.  It is part of the security instrument.  You will pay the taxes and keep insurance.  Because of this you set up an escrow account. 

2.  Part of your mortgage payment is the escrow payment to cover the taxes and insurance.  Every time you missed a mortgage payment the taxes and insurance went further and further behind.  They will ask for anything they paid as part of the foreclosure judgment along with attorney fees. 

3.  The owner of the note is under no obligation to modify your loan at any time or in any way.  Usually this will not create a separate cause of action for any failure to modify your loan. 

4.  While I think it is great to explore any defense/counter claim that may be available, this just doesn't seem a very helpful argument to any case.  I do not know the details of your case but I also do not see a benefit to moving a foreclosure case to Federal Court where as a defendant you carry more of a burden than in State Court in Summary Judgment.  Personally, I would want a very good attorney to proceed in a Federal Court.  I wish you the best of luck.

This isn't legal advice, FIND A GOOD ATTORNEY   
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I said I did not know and the reason for that lack of awareness due to this function being something the servicer has done for over ten years now through the escrow account.

The Deed of Trust and the promissory note and yes, albeit when I read the note and mortgage and that still does not displace the fact that it has been taken care of for over ten years, that I knew I had to keep the taxes and insurance paid, and that being the reason that I opened the escrow account so it would be done and no surprises.

What I was asking is since I wasn't aware that,

        A: they only pay the taxes and insurance for 6 months at a time
        and
        B: that the taxes and insurance were due, being as the last time I knew it had    
        been paid, and since there is and was NO NOTICE SENT TO THE HOUSE
        making me aware of this fact I simply asked, based on a memory that I can't
        place where, when, what or how, I didn't know that said items were now due. 
        Who is responsible to do so. Of course if they don't I will, nothing short of
        death would be so crappy as to have the house burn down and I have to pay
        for something I don't even have anymore, I just wanted to know if they were
        responsible, as my first post stated, contractually to maintain the property while
        in foreclosure, since they are responsible for this normally and must do so
        particularly after foreclosure and yes when this started it was a fully funded
        escrow account.

Second I choose Federal Court because it is the court I am most familiar with, but as I said I realized the final report was the paper I needed to move forward to federal court,

and

Third the US Government, due to the fact that the program the loan was written under was a federally funded joint venture with the state of Maine, the Government becomes a defendant in this matter on the basis of a fraudulent misapplication of a federally guaranteed loan program and in the case of default  a Qui tam claim could be the result based on the false claim made to the gov for reimbursement on a loan that went bad and discovery of the fraud the loan was based on and the fact that banks, it seems lately, try and collect as many times as they can on any one mortgage.

Fourth and it may be just my anecdotal observation but I have never seen the crap and games that go on in a state court go on in a district court. I expect the state court to be biased...as in its a STATE COURT their interests and judgements, and fairly so at least in my opinion,  are more geared toward the state and the population of that states best interests and not the country as a whole where, besides the occasional 2000 type election issue, district court and supreme court judges are politically and locality, in theory, neutral they work for the benefit and adjudicate for the populations benefit for the country as a whole...at least that's the theory.

I hope this last communique sufficiently answers your question. This is a clear, and by certifiable documents, provable case I am really not worried. Anything less than adjudicated as a nullity of course will be appealed as anything less would reward the plaintiffs “for their ingenuity”  and violates the equity provisions of contract law based on the doctrine of "unclean hands".


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FnDoomed
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But the borrower is NOT a party to these contracts


Is there any play under the doctrine of third party beneficiaries ?



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Bill

FnDoomed wrote:
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But the borrower is NOT a party to these contracts


Is there any play under the doctrine of third party beneficiaries ?




An Alabama circuit court in Russell County has issued a summary judgment in the case of Horace v. LaSalle Bank where the Judge agreed that the borrower is a 3rd party beneficiary.  I'm sure there will be an appeal.  This argument is pretty much Russian Roulette with only one cylinder empty.  You would be entering quite a bit of evidence like the PSA that would HURT your case much more then help.  There is not caselaw supporting this position.  Either you get REALLY LUCKY and the Judge agrees, or you have given the Plaintiff all the evidence they need to PREVAIL.  

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Horace is a third-party beneficiary of the pooling and servicing agreement … without such … plaintiff Horace and other mortgagors similarly situated would never have been able to obtain financing."

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Moose
C A Butler wrote:
...

What I was asking is since I wasn't aware that,

        A: they only pay the taxes and insurance for 6 months at a time
        and


I'm not aware of any state property taxes that are paid in 6 month terms - but it is fairly common to have property insurance in semi-annual payments.

C A Butler wrote:
...
        B: that the taxes and insurance were due, being as the last time I knew it had been paid, and since there is and was NO NOTICE SENT TO THE HOUSE making me aware of this fact I simply asked, based on a memory that I can't place where, when, what or how, I didn't know that said items were now due. 
        Who is responsible to do so.

The taxing and insurance entities send notices to the property owner/borrower (at the Last Known Address) and when they become delinquent, they report to one or more of the information-gathering companies who run notification reports for the servicers.

C A Butler wrote:
...
Of course if they don't I will, nothing short of death would be so crappy as to have the house burn down and I have to pay for something I don't even have anymore, I just wanted to know if they were responsible, as my first post stated, contractually to maintain the property while in foreclosure, since they are responsible for this normally and must do so particularly after foreclosure and yes when this started it was a fully funded escrow account.

Actually, and this isn't legal advice, escrow accounts are a convenience for the borrower for which the servicer is allowed to charge a fee (~17%).

If the servicer failed to pay the taxes, the taxing entity will file a lien against the property and in most states, you'll be sued and thus served and have some period of time to respond or pay. Some servicers will step in and pay before this happens and force-open an escrow account.

If the servicer failed to pay the insurance premiums, the policy would lapse and the servicer would have the opportunity to force-place a VERY LIMITED but VERY EXPENSIVE policy that covers only the home itself, not any of the borrowers personal property.

If the property has been foreclosed on, some servicers will deliberately fail to record the new title assignment, leaving you, the former owner, supposedly on the hook for taxes. But there is no law requiring property/casually insurance so once you've been foreclosed on you're no longer the "owner."

C A Butler wrote:
...
Second I choose Federal Court because it is the court I am most familiar with, but as I said I realized the final report was the paper I needed to move forward to federal court,


The reality is, if you sue in state court, you will save a significant amount of money because the servicer will almost immediately move it to Federal court and pay the fees.
C A Butler wrote:
...
and

Third the US Government, due to the fact that the program the loan was written under was a federally funded joint venture with the state of Maine, the Government becomes a defendant in this matter on the basis of a fraudulent misapplication of a federally guaranteed loan program and in the case of default ...


Again, not legal advice, but you can't sue the Federal government without its permission.

What is the "fraudulent misapplication?"

C A Butler wrote:
...
a Qui tam claim could be the result based on the false claim made to the gov for reimbursement on a loan that went bad and discovery of the fraud the loan was based on and the fact that banks, it seems lately, try and collect as many times as they can on any one mortgage.

Fourth and it may be just my anecdotal observation but I have never seen the crap and games that go on in a state court go on in a district court. I expect the state court to be biased...as in its a STATE COURT their interests and judgements, and fairly so at least in my opinion,  are more geared toward the state and the population of that states best interests and not the country as a whole where, besides the occasional 2000 type election issue, district court and supreme court judges are politically and locality, in theory, neutral they work for the benefit and adjudicate for the populations benefit for the country as a whole...at least that's the theory.

I hope this last communique sufficiently answers your question. This is a clear, and by certifiable documents, provable case I am really not worried. Anything less than adjudicated as a nullity of course will be appealed as anything less would reward the plaintiffs “for their ingenuity”  and violates the equity provisions of contract law based on the doctrine of "unclean hands".




Only slightly less confused . . .

Moose

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C A Butler wrote:
Aren't mortgage servicer's required to keep both the insurance and the taxes paidso as to protect the property? Originally this was done from the escrow account.

 

Not legal advice: CA, servicers are generally more than happy to keep your taxes and insurance current. It entails an escrow account which 100% of all servicers truly love. An escrow account is the best way to hide things, overcharge, camouflage, and actually steal from customers. Even more coveted by servicers are FPI "Forced Paid Insurance" plans funneled through insurance escrow accounts. Example: The infamous Balboa Insurance crime syndicate* in collaboration with servicers gouge borrowers at unheard of (often criminal) markups, outright lies, and sophisticated deception..

 

***********************

Keep your taxes and insurance current if at all possible.

As soon as your servicer begins to “help” you are in real trouble.

***********************

 

Ed Cage   |  ecagetx@gmail.com

* Balboa Insurance is used by arch mortgage fraud criminals Wells Fargo and Wachovia

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Thanks Ed this all came up because I went to mediation with my fiance and the attorney for the bank decided, as is his right but a slim one I might add, to not have to participate with non parties to the contract. Thus in the interest of not going to jail, we were at the courthouse and I could see them trying to create some deal where because they managed to get me arrested...well you see where that goes you guys are not dumb,  I acquiesced and left the room and kept my cool until I could get home and do some research on the subject. I was at the early stage of trying to bend shape or carve a theory out of whole cloth statutes and regs lolol to meet the roadblock thrown up. In the message above and as for why I would want to bring the insurance and taxes I was hunting for something to make the move to a court I understand better and know how to deal and act in better than the State court of a state I did not grow up in nor ever practice law in.

Additionally it was here that the Attorney from the Bank misrepresented to fiance that the representative from "MSHA" Maine State Housing Authority would be represented by phone. Later when talking about the meeting my fiance mentioned that the person on the end of the phone was different than the person that had been in that position before. Ok I said that's odd this person from earlier meetings was still employed in the job she had before why the change shes the MSHA rep for these actions when it concerns a foreclosure through a mortgage the state holds or helped finance for an MBS as an investment tool, I guess, for the state and  MSHA operational costs.

Then I read the final mediation report and see that the other person was actually an employee of the bank that the attorney represented. So they fraudulently misrepresented this person as the MSHA rep and stated, in direct conflict with MSHAs' position before of they unequivocally would not be foreclosing, now were saying, supposedly, they wouldn't be be modifying due to an erroneous sewer bill of 200 dollars which we can straighten out and the taxes that hadn't been paid yet, says them, of 700 dollars,...hence my question above. It was when that I read the report and saw those facts I realized they had for some strange reason decided that this mirepresentation had occurred why? no clue I have yet to see the benefit of that action I get why they chose to try and keep me out, obviously they must consider me a threat of some sort, it's the only thing I can think of.

Now I am on a hunt to find a law, dower for example or co-ownership and not on the mortgage, or married, was thinking impleading at first but I can't come up with a legal indebtedness or liability besides the normal you are married and your income while not a legal indebtedness directly never the less some portion of the husband to be's  income is going to go towards the payment of this liability of wive's.

Still trying on this one looking for law that  I can hang my hat on so as to force them to allow me back in and have a voice in the whole matter thus impleading came up because in that I can offer direct evidence and testimony for more than just my position in the matter and talk about all the crap as a whole, fiance's and mine, thus it's my attempt at an end run around the practicing law without an attorney charge and be able to help my fiance as planned.

Dower seems a dead end at the moment seems if I can gain an element or two I can prove there still remains some portion I can't evidence or present proof  of at trial. And if I remember correctly it requires some element of before marriage and blah blah that doesn't fit our situation.

Sooooooo if anyone else has any ideas concerning this plan I would deeply appreciate it. Just trying to get back in the game anyway I legally can. and protect my fiances home.


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Again, not legal advice, but you can't sue the Federal government without its permission.

What is the "fraudulent misapplication?" "Moose"

This was a purchase money loan so no one is confused and asks that question of why two loans...we are asking the same thing as there is no support for the 2 loans that makes any financial sense to anyone but the Bank.

I am not suing the Federal Government I said they are a victim as well in this and I probably meant "fraudulent application" not "Fraudulent misapplication."

By that I mean they used federal funds to make a loan under a joint effort of the State and of the Feds in stimulating economically depressed areas of towns and cities that are experiencing urban blight.
BUT
They didn't do it the way that the Government instructed them to, they did not follow the processing guide which is read "do it this way."

They are taking advantage of the fact that the loan is a federally insured but only the first mortgage. So as bait, lol, the program offered higher interest rates for any lender who took a 2nd mortgage and not a shared first priority. The lender took the shared priority and then charged a second priority lenders interest on a loan, rules of the program, that the interest attached to the first mortgage cannot exceed 4.5% there is now 13% interest attached to the first mortgage. This in addition to the fact that by doing what they did they have been charging 8.5% more interest than they were/are not entitled to and by some other things that all equate to deceiving (defraud) the Gov.
I can't even find my loan out there, supposedly Fannie or Freddie has it, but I can't find the loan on their site search. Nor on MERS yet I know that one of the loans was transferred and serviced by a MERS company and the lender is a MERS member and its the servicer that's foreclosing not the lender and it is obvious that when asked to show the note they will not be able to.
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