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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There's a new scam I've recently discovered. It has to do with adjustable rate mortgages.

Lenders are using a date when the LIBOR is higher to adjust the rates to increase monthly payments. The Note Documents clearly states the date they should be using, but they don't. In my case my payment should have gone down. People have to pay attention to this, and I want this to get out.

Please spread the world, and if you know of anyone who is in the same situation as I am, please email me!

I can not be the only one! May be a class action law-suit would be in order!


PS: I need a real estate attorney from Orlando, FL, or who is willing to work with me on this one!
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This is not new, Judith. 

In Tampa, FL., discovery found 2001 & 2002, dating back to May, 1999, on my son's loan.

I posted all this on W. Craig Kenny's Web site back in 2002.
Of course Kenny's site is now deleted, but this site followed with some of the information from brought over to this site, Mortgage Servicing Fraud ""


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Thanks Gene!
No, I didn't think it was new. I'm positive that this is happening often, but not everyone actually realizing it.
What did you do? Did you contact the lender? Did they change it?
Please let me know. Thank you!

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Judith wrote:
Thanks Gene!
No, I didn't think it was new. I'm positive that this is happening often, but not everyone actually realizing it.
What did you do? Did you contact the lender? Did they change it?
Please let me know. Thank you!

FYI folks, there is a trend toward jumping the gun on fruitless lawsuits - people are finding out that attorneys aren't willing to give them the time of day on these kinds of issues and there is a reason for it:  You haven't exhausted your own remedy, as in making a provable case that shows (1) - you make a good-faith effort to resolve the situation via the ONLY law that has any affect in these matters (RESPA) by submitting a Qualified Written Request (QWR) letter.

Now, many here will discount the value of doing that because the predators will sometimes just ignore the QWR, but WHEN THEY DO, they've opened the door for an attorney to collect their fees in a lawsuit as provided by the statute.

Without your going through the process, an attorney is basically going to charge you to do what you could have done - and he or she will want to be paid in advance for it.

If you go to an attorney with a couple of ignored QWR's and your version of the facts is substantiated by your evidence, it's a no-brainer.  In fact there are enough cases filed out there that you could pretty much copy and paste parts into a pro se complaint if you're up to the task and have the time.

As far as class action suits go, you're in for a long and disappointing experience.

If the amount in question in your LIBOR situation is small, I would suggest (and this isn't legal advice), that you go through the QWR process then file in small claims court - some states allow several thousand dollars to be considered in small claims.


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Yes Moose, I agree with you. I am willing to do my homework, and go as far as I can without an attorney. I do not have hundreds, or thousands to pay them for what I can do myself.
I also happen to agree with you about a class action law-suit, and my reason for doing it <may be> is to make others be aware of what is going on. Can you imagine how many people are being scamed like this, and they don't even know it? A lawsuit, even a simple one might be more effective though than a small claim, because if they did it once, they would probably do it again, and again, and not only to me. The first adjustment might not add up to a lot, but on the long run it could be thousand, and thousands of dollars.
Do you by any chance know how I can find "customers" of the same lender? Is that public information?
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Theres probably a suit already in the works out there. Get someone with PACER access if you can.
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I've addressed this issue in Gregory L. Collins v. Ameriquest Mortgage Company
filled in Federal court Northeastern district of Illinois.

[815 ILCS 205/4(2)(b)]

42. Plaintiff realleges and incorporates paragraphs 1-41 of the Complaint into this Count

43. The Illinois Interest Act at 815 ILCS 205/4(2)(b) states:
(b) No agreement, note or other instrument evidencing a loan secured by a mortgage on residential real estate, or written Contract, agreement or bond for deed providing for the installment purchase of residential real estate, may provide for any change in the
contract rate of interest during the term. thereof. However, if the Congress of the United
States or any federal agency authorizes any class of lender to enter, within limitations, into mortgage contracts or written contracts, agreements or bonds for deed in which the rate of interest may be changed during the term of the contract. any person, firm, corporation or other entity not otherwise prohibited from entering into mortgage contracts or written contracts agreements or bonds for deed in
Illinois may enter into mortgage contract$ or written contra~ agreements or
bonds for deed in which the rate of interest may be changed during the term of
the contract, within the same limitations:.
44. The note evidencing the subject loan provides for a change in the contract rare of
interest during the term of the loan. The subject loan is. in other words. a variable rate loan prohibited
by the Interest Act, unless federal law otherwise permits- Moreover, the subject loan must comply with
the same regulations as those imposed on loans made by federally authorized lenders.
Federal law does allow variable interest rate mortgages, but only if the lender has
demonstrated compliance with the Office of Thrift Supervision ("OTS") regulation found at. 12 C.F.R. §
560.35. which mandates use of a "national or regional index" in connection with adjustable rate loans.
Had Defendant used one of the national or regional indexes listed in the regulations it
could have easily demonstrated compliance with § 560.35 by simply pointing to the note. But instead. as is evident on the face of the note, Defendant chose to go off the board and use a different index: the
London Interbank Offered Rare (LIBOR).I -one. to be sure, that favors them and disfavors
Even the use of an alternative index such as LIBOR is permissible under §560.35,
provided Defendant ask for and receive from OTS permission to use such an index. As the Treasury Department explained when it promulgated § 560..35:
OTS also decided. however. to give an association the flexibility to use alternative indices after notifying OTS. The notice should address how indices will be derived, how the association will be derived the indices' availability and verifiability. and how the indices will be disclosed to borrower. Additionally. the notice should outline the internal controls and processes that the association will put in place to administer and monitor such indices. Once OTS has reviewed and not objected to an institution's internal procedures for the use of alternative indices, subsequent notices need only address how new indices are derived Use of

(Thrifty Oil Co. v. Bank of Am. Nat’l Trust &Sav. Assn. 310F.3d 1188.1192 (gill Cu.
2002) “LIBOR is the rate at which top-rated banks in the European money market provide funding to each other"')

alternative indices will also be reviewed as part of the agency's safety and soundness compliance examinations!

Defendant's note does not disclose that Defendant applied for and obtained OTS
approval to use LIBOR as an alternative index. Without OTS approval the subject loan was not made within the same limitations imposed on loans made by federally authorized lenders. and thus runs afoul
of the Interest Acts prohibition on variable rate loans
The Illinois Interest Act at 815 ILCS 205/6 states:
"If any person or corporation knowingly contracts for or receives, directly or indirectly. by any device, subterfuge or other means, unlawful interest, discount or charges for or in connection with any loan of money, the obligor may, recover by means of an action or defense an amount equal to twice the total of all interest, discount and charges determined by the loan contract ox- paid by the obligor, whichever is greater, plus such reasonable attorney's fees and court costs as may be assessed by a court again« the lender."
50. Defendant knowingly contracted for unlawful interest in connection with a loan of money by means of a variable rate Joan.
WHEREFORE, Plaintiff asks that this Court enter judgment in his favor and against Defendant.
and award damages as follows:
A. Damages under 815 ILCS 205/6;
B. Reasonable attorney fees and costs; and
C. Any such other relief the court deems appropriate.
Respectfully submitted.
Gregory L. Collins, Plaintiff
~ 61 Federal Register 50951 at 50955.

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Gary - was Ameriquest chartered under the OTS at that time?


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Sorry - I meant Greg!


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To certain extent it's bunch of legal non-sense that goes around in a circle.

The courts, lenders, mortgage fraud plaintiffs, regulatory agencies etc. have been playing legal musical chairs with jurisdiction and culpability for years.

The OTS and OCC are not truly Federal regulatory agencies any more than the Federal Reserve is, as the general public was rudly awenked to this fact by the bailout agreement.

The OTS and OCC are funded by the banks and do not have the staff or ability to regulate, much less prosecute fraud chain of mortgage transfer and funding and even if they did they have no incentive becuase they are funded by the lenders and have a vesting interest in protecting the lenders and associates. The short answer is the regulatory agency represent the interests of the financial services industry not the borrowers. Do they occasioanly regulate themselves of course when it's in thier own best interest or to maintain an image of accountability.

This should answer a couple of questions.

Subprime ‘Culpability’ for OCC, OTS?

October 11, 2007 9:15 pm



A viewpoint published by American Banker, penned by [1] Arthur Wilmarth at the George Washington University Law School, wonders if the OCC and OTS are as clean as many might think when it comes to the issue of who to blame for the subprime mess:

[2] An excerpt:

It is now obvious that wholesale lenders and securitizers, including many of the largest national banks and federal thrifts and their affiliates, were the driving forces behind the subprime lending boom.

The OCC and the OTS maintain teams of on-site examiners at major national banks and federal thrifts. Both agencies repeatedly assured Congress that their examiners are vigilant and effective in uncovering and correcting unsound and abusive practices.

State officials have taken thousands of enforcement actions against predatory lenders, including orders that assessed more than $800 million in penalties against Ameriquest and Household. However, when the states tried to apply their laws on predatory lending to national banks and federal thrifts, the OCC and the OTS issued regulations preempting those laws.

Wilmarth goes on to lament the “virtual absence of public enforcement actions by the OCC and the OTS to prosecute violations of consumer protection laws by the largest national banks and federal thrifts” and suggests that neither agency should be absolved from blame in terms of the mortgage mess we’re now having to face.

Subscribers can read the full letter — well worth the read.

Article printed fromHousingWire || financial news for the mortgage market:

URL to article:

URLs in this post:
[1] Arthur Wilmarth:
[2] An excerpt:

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Can they still use an alternative index, even if the ARM Note specificaly calls the adjustment to be set on the LIBOR rates????
I wouldn't think so, since it is a contract. Could I be wrong?
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I just found this today:

Wilbur Ross buys Citi servicing rights for 1.5 billion

"Ross's American Home Mortgage Servicing Inc will assume the servicing rights and become what Ross believes to be the largest subprime mortgage servicer in the United States".

American Home Mortgage Servicing, Inc is my servicer!!! It is very easy to become one of the largest subprime servicer, when they are out cheating their customers! As I mentioned above, by the setting the adj. rates illegaly, and probably by other means I am not yet aware of! FYI: I do know that for late payment (I would never let this happen!), the late fee is $85.00!!!!!!!!  
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4 Justice Now
FWW: I totally agree with Moose. If you happen to have several years to spare and only a few hundred dollars at stake a Class Action Law Suit might be reasonable. But for the most part small claims court would be a better way to go in my opinion. If you're hoping to have any kind of real impact on Mortgage Serving Fraud or are attempting to bring relief for MS Fraud victims Class Actions Law Suits are at best a joke, and a very bad one at that.

My Opinion

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