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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Another kind of Mortgage Servicing Fraud
 
 
Nomura Fixed Income Research
 
A possible outcome of a cooling housing market could be minimal dislocation of the mortgage and securitization markets. However, worse scenarios are also possible.  Securitization professionals should consider the risk that investors lose confidence in residential mortgage securities and reduce their participation in the secondary mortgage market.  Such loss of confidence could occur if investors feel that disclosure has been inadequate, if they suffer losses from issuer or servicer fraud, or if they become subject to assignee liability for predatory lending practices.  Of note, some sub-
prime lenders have committed servicing fraud to avoid repurchasing loans that suffered early payment defaults (i.e., the lenders made payments on behalf of the borrowers in order to avoid reporting the loan as delinquent). 
 
THIS could have very interesting ramifications in court if a borrower defending foreclosure is able to prove that the lender at time of alleged default was representing the mortgage as current to investors.
 
If this form of servicing fraud is proven, it also has significant impact on investor litigation and arbitration claims taking them to a whole new level beyond inadequate risk disclosure issues. 
 
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Joe B
Blossom-

     I agree that this could be very interesting, and I also believe that is what you are seeing with some of Mike's posts (and at his website) showing investor lawsuits against the servicers. I like to think of the two opposite ends of the various transactions being the investors and homeowners. So, the investors at the opposite end of the transaction are beginning to take action.

     However, the idea that during the normal course of discovery that any of the end-user victims at the opposite end of the transaction (the homeowners) could actually uncover this and use it to their advantage is likely quite remote.

     Even if we ask for the details of these transactions, it will likely be refused, and then when it is finally ordered, pouring through the reams of data would prove to be daunting.

     I believe there are numerous here on the boards (and I am one) who believe that the whole process is ripe with fraud when particular servicers are involved (insert the usual suspects here). We believe that there is likely insurance fraud, regulatory fraud, investment fraud, servicing fraud, and more. I believe the investors are starting to take action, the government has taken action (poorly), a handful of homeowners are starting to take action, and perhaps in the future a few of the insurance companies will take action as well. 

     However, only when someone with unfettered access to all business records, reasonable resources, and no political agenda has an opportunity to review the entire picture, will we see the actual breadth of this problem. Then, the whole house of cards comes crashing down! Then, all of the folks who have been talking about how deep this problem goes will be proven correct. Then the market will get it too-- it will have to!!

     It will all come out eventually. How much will get covered up, and swept aside remains to be seen. However, there will be one Enron-like exposure that will reveal this situation.

     Where is Woodward and Bernstein when we need them?

JB
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Blossom! this very conversation occurred with me and a number of lawyers in NYC more than two and half years ago!   The concern was how much was fraud, and how much damage would be done to the Bond Market!  At the time the discussion was near 1 Trillion, six months later we were talking near 3 Trillion! And the collapse of the Bond market relating to these Bonds is very real now. 
 
 
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Joe B. ~

You are absolutely right!  Homeowners have a snowball's chance in hell of unraveling what is represented to investors regarding "reported" status of their mortgages.  Reads on this board portray years of discovery stonewalling on the part of lenders and servicers in court.  Many have suffered end result of this fraud upon the court.

Given nature of investor litigant claims and their being participants in the actual funds they have a far better shot at bringing this kind of servicing fraud to light.  Like us, they were deceived, lied to and robbed.  Well, at least they probably all still have their homes.  We either don't have our homes anymore or we are engaged in the battle of our lives fighting tooth and nail to save them. 

Unfortunately, activities of hedge funds are quite opaque in that managers are not forced to reveal that much about their owners, investment strategies and financial soundness, not to mention perpetrating fraud on investors.  Hedge funds should become transparent.

Investors will not be happy learning that fund managing banksters and subsidiary servicers have been deliberately manufacturing defaults for years now in order to fatten profits at expense of investor losses.  Some know this already. 

Mortgage servicing fraud victims are participants at the other end of this spectrum.  In a perfect world defrauded investors and homeowners alike would join forces seeing that the banksters get their just due.  Hey...It could happen. 

Chicago Illinois Law Firm Levenfeld Pearlstein, LLC|News Search ... 

Oversight: Hedge Fund Transparency At Issue...Again; But will SEC working group be strong enough? By Lee Conrad. http://www.lplegal.com/quote_sam_091007/ - 15k -

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Nye Lavalle
Its what I have know for years and been saying and why I concetrated on the Wall St and investor angle. They crooks all knew however...
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I know they do it because Litton manufactured and charged false late fees on their Transaction History.  Interestingly, the loan was sold to them by Washington Mutual Bank.  However, WAMU Transaction History indicates no late fees and that loan payments were received on time.
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