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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A major mortgage lending reform bill — sparked by abuses first identified in Monroe County — has been introduced by U.S. Rep. Paul E. Kanjorski, D-11.

Kanjorski, chairman of the Government Sponsored Enterprises Subcommittee of the House Financial Services Committee, said the bill is in reaction to skyrocketing foreclosures this decade in Monroe County.

He said it also is in response to growing complaints across the nation about abusive practices related to mortgage serving and the home appraisal process — particularly for subprime loans typically issued to borrowers who don't qualify for conventional home loans.

"Far too many residents in Northeastern Pennsylvania have personally seen the detrimental effects that abusive and deceptive mortgage lending practices unfortunately had on new homeowners in the area," Kanjorski said in a written statement. "To prevent these abuses from occurring again, this bill offers a comprehensive, balanced and progressive set of solutions to solve a number of perplexing policy issues."

The bill aims to safeguard the independence of appraisers — who establish property values as part of the home sales process — by strengthening federal standards and more closely monitoring state agencies that regulate them.

It would require lenders and loan servicers who buy mortgage notes from lenders to set up escrow accounts for certain borrowers. These accounts enable borrowers to make regular prepayments for annual property tax bills and home insurance, so they don't have to pay those bills all at once.

By some estimates, more than 90 percent of prime loans have escrows, but less than 25 percent of subprime loans have them. Lenders and servicers would be required to provide disclosures of taxes and insurance to buyers who opt out of establishing escrow accounts.

The bill also strengthens mortgage servicing requirements. It prohibits servicers from establishing forced-placement insurance on loans when servicers are already protected from catastrophic loss of a home. It requires servicers to promptly credit payments from borrowers and increases penalties for mortgage servicing violations.

The bill drew praise from Maureen McGrath of Middle Smithfield Township, who represents the National Advocacy Against Mortgage Servicing Fraud. She testified at a 2004 congressional hearing on Poconos homesale problems, held at East Stroudsburg University.

"I am very grateful for the continued interest and leadership that Congressman Kanjorski has demonstrated to improve mortgage servicing and protect against inflated appraisals," McGrath said.

Michael D. Calhoun, president of the Center for Responsible Lending, said the bill is a step forward.

"Requiring lenders to escrow for taxes and insurance on subprime mortgages is an essential step to preventing families from unfairly losing their homes," Calhoun said.

Inflated appraisals and mortgage servicing practices have been identified as major factors in Monroe County's skyrocketing foreclosure rate. The problem prompted the state Banking Department to commission a 2004 foreclosure study that focused solely on Monroe County.

The number of foreclosures in Monroe County jumped from 120 in 1990 to 925 in 2002. Monroe County is on pace this year for more than a thousand foreclosure filings.

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Hope in Michigan

Published October 21, 2007
[ From Eaton Rapids Community News ]

From MI State Representative Mike Simpson (D) DIST-065.

Simpson: Post budget crisis, legislature back at work


I bet you're ready for some good news. Here's some: With the budget crisis over, I have rolled up my sleeves and continued with the task of moving Michigan forward.


The Michigan House has passed legislation and announced important plans during the past few weeks. I'm especially proud to be a sponsor of the state's new mortgage assistance program for people who are facing foreclosure. Foreclosure is a big problem here in Michigan, and it is a devastating one. I sponsored a bill in a package that will establish programs to allow homeowners saddled with risky adjustable-rate mortgages (ARMs), and those who have missed mortgage payments, to refinance and secure a fixed-rate loan. The plan, which will allow more Michigan residents to avoid losing their homes, is part of the Democrats' comprehensive approach to help jump-start the state's economy.


The plan allows at-risk, low and moderate income borrowers/homeowners facing a spike in housing expenses due to their adjustable-rate mortgage, or residents who have already missed payments due to financial constraints to secure a fixed-rated loan through the Michigan State Housing Development Authority (MSHDA). The agency provides loans financed through the sale of tax-exempt and taxable bonds and notes to private investors, not from state tax revenues. Federal policies have utterly failed to prevent the meltdown of the sub-prime mortgage market. This refinancing legislation puts Michigan at the forefront of states' efforts to protect hard working men and women from losing something they have spent their lives working for.

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