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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Key & Pertinent Ocwen Info At End, But Need To Read Common Thread To Understand Your Situation, Need, & My Request…

Everyone must read this post.  However, Ocwen borrowers must read and then I'd ask you to reply!  What I want you all to do [PLEASE] is for any Ocwen borrower or victim where Ocwen claimed ownership of their loan and note in a foreclosure complaint, motion for summary judgment, bankruptcy, affidavit etc. to please e-mail me and send me in .pdf format any documents you have or have access to that claim Ocwen owns your note!

As we all know, the servicers, investors, MERS, and Wall Street play the "who owns the note" game or as we now refer to the 3-card Monte, Shell or Russian Doll Game with the notes.  As I have ALWAYS told ALL of you and am telling various law firms in litigation with servicers as well as congressmen and regulators I am in communication with, who owns the note and HAS owned the note all through the process.

We know that EMC, Ocwen, SPS, Litton, and others are the industry's "toxic waste" dump [not my words] and that they are engaged in sort of a money or monetized "laundering" scheme we now call "note laundering."  Basically they take some toxic waste and attempt to "clean it up" [their words, not mine] through a variety of methods which we have all come to understand as what I coined in 1999 Predatory Servicing or mortgage servicing frauds and abuses.

What many of you still don't seem to get is that many times, your loans were programmed and targeted for foreclosure due to some sort of fraud discovered by someone in the process from the origination of your loan [many times] or the servicing of your loan by a troubled bank, lender or someone like Fairbanks.

When this happens, the loan becomes a "scratch and dent" loan and "toxic" since there is tremendous liability for ALL in the line since if a loan is in "default" [default can be one day] there are no protections to the investors for assignee liability.  This is why they never disclose who really owns your loans.  Many times, private hedge funds with executives of the servicers and Wall St. firms own pieces of the hedge funds so they personally benefit from foreclosure if there is equity in the property.  This is why they do all the BPOs and inspections to determine “values” for a quick sale of your property and how much they will pay for an underlying loan.

In virtually all cases, until some exceptions recently, servicers or servicers using MERS will claim to own the loan and note.  They DO NOT in 99.99% of the time.  They may “hold” the note [a cute concept] when it is endorsed “in blank” making it “bearer paper” but they are holding it illegally if they claim ownership and there are legal, tax, accounting, and SEC security implications, if so.

Now, I have always told everyone [even Jack’s attorney] to get the ORIGINAL NOTE signed by you in ink!  Also, get ALL custodial, transfer, servicing, and securitization documents associated with your note, mortgage, loan number, name, address, and social security number [thousands of pages in EVERY loan file].

You may want to read this part from a MERS Legal Doc released last week that proves why I tell everyone that the VERY FIRST STEP IN ANY FORECLOSURE OR LITIGATION is to see if the party really owns your note and what their role and position really is.  I cannot tell you how many thousands of cases I have witnessed where there is known fraud in complaint allegations, motions for summary judgments, and the affidavits and declarations supporting such claims.

This is why [despite what some on this forum say and have complained about me on here] I ASK TO SEE DOCUMENTS THAT I REQUEST.  The documents have much evidence to ALL and leave “fingerprints” of fraud, deception, and the real parties behind that deception.  I don’t want to give out our methods for fear of letting them cover their trail, but we now have it down pat!!!!

The most prevalent deception and fraud is that MERS, EMC, Ocwen, SPS, Litton et al. OWN THE NOTE!!  They don’t!  I can’t tell you the tens of thousands of times these companies make false claims and allegations in courts that are fraud.  I can tell you though, we are on to it and now need your help, especially from those customers of Ocwen.

We need to put a database together of Ocwen borrowers, or those victims who have been foreclosed by Ocwen, to determine who and how many times Ocwen claimed to own the victim’s or borrower’s notes since THEY DO NOT OWN THE NOTES according to their own executive’s testimony in front of Congress [see below]

In MERS own language, the MERS legal document states the following:

Question:  What happens if a Recorder/Clerk refuses to record a MERS lien release?

Whether the Clerk records or marks the mortgage lien as discharged is not what evidences the lien actually being discharged.   Keep in mind that the promissory note should be marked "paid in full" when the loan is paid off.  The mortgage lien follows the note, so if there is no note, there cannot be a mortgage lien outstanding regardless of what the land records show.

The same legal concept and principal applies in legal, foreclosure and bankruptcy,  The MORTGAGE or DEED FOLLOWS THE NOTE!!!!

Now, I am aware of many Ocwen cases where they claim they “own the note.”  We also know there are many assignments of mortgages by Ocwen and others where they claim “ownership of the note” in county records when THEY DON’T OWN THE NOTE!

Let me start with some background on my employer, Ocwen Financial Corporation.  Ocwen is a publicly traded company (NYSE: OCN) headquartered in West Palm Beach, Florida, specializing in the servicing of subprime residential mortgage loans.  We currently service approximately 480,000 loans totaling $55 billion in unpaid principal.  Ocwen neither originates nor owns the loans we service; rather, we provide loan servicing for various investors who own the loans, typically large fixed-income institutional investors. Most of the loans we service are considered subprime and they are part of REMIC Securities.

Testimony before Subcommittee on Domestic Policy, Committee on Oversight and Government Reform by William E. Rinehart, Vice President and Chief Risk Officer, Ocwen Financial Corporation on March 21, 2007

The rest of his testimony will show you how the “system” and “enterprise” works!

Testimony before Subcommittee on Domestic Policy, Committee on Oversight and Government Reform by William E. Rinehart, Vice President and Chief Risk
Officer, Ocwen Financial Corporation on March 21, 2007
Page 1 of 8
Chairman Kucinich, Ranking Member Issa, and Members of the Committee, it is a pleasure to have been invited by the Committee to provide insights into the nature of the subprime lending problem as faced by borrowers. In addition, I have also been asked for my views on the effectiveness of federal regulators, the industry and on the ways in which cities are affected by the rise of foreclosure, and my views on the ways in which consumers and the stock market are affected by the proliferation of the subprime mortgage industry.

Let me start with some background on my employer, Ocwen Financial Corporation. Ocwen is a publicly traded company (NYSE: OCN) headquartered in West Palm Beach, Florida, specializing in the servicing of subprime residential mortgage loans. We currently service approximately 480,000 loans totaling $55 billion in unpaid principal.

Ocwen neither originates nor owns the loans we service; rather, we provide loan servicing for various investors who own the loans, typically large fixed-income institutional investors. Most of the loans we service are considered subprime and they are part of REMIC Securities.

I think it is important to stress at the onset that foreclosure is clearly a lose/lose/lose proposition for all parties involved in lending. It is especially most painful on families that lose their homes. As Members of this Committee know all too well, as do all the witnesses that will appear before this Committee today, homeownership is not only an American dream, but many times the first step in financial security for millions of Americas. We must do all we can to ensure this for today and tomorrowís homeowners.

As I will discuss, Ocwen is always looking for ways to make this so.  In order to better understand what Ocwen does, it would be helpful to provide an overview of the subprime mortgage industry and put in context our role in that process.
Most subprime loan transactions start with a mortgage broker who has direct contact with the consumer. The mortgage broker is responsible for understanding the consumerís requirements and helping the consumer complete the loan application. The broker then submits that application to one or more lenders or originators. The lender is responsible for underwriting the loan by reviewing the loan application, a credit report on the applicant, an appraisal on the property and other information.

The lender will base the credit decision on the applicantís credit history, income, assets and liabilities and the value of the property. The interest rate offered will reflect the overall risk of the transaction as determined by the underwriting process and the type of product requested. Certain loan characteristics (income documentation type, prepayment penalty, loan to value) and applicant characteristics (credit score) will determine the offered rate.

When the loan is funded and closed, the lender will either hold the loan in its portfolio or sell the loan. Most subprime loans are originated by lenders that are not operating under federal charters or federal regulation. These lenders are sometimes referred to as "nondepositories" as they are not banks or thrifts that accept deposits as a means of financing their loans. As these non-depositories rely on lines of credit to finance the closed loans, they typically sell the loans as quickly as possible to avoid both interest costs on carrying the loan and interest rate risk.

Most of these loans are sold to an investment bank. The investment bank purchases loans from multiple lenders, assembles the loans into a loan pool, creates a security and sells the security (or securities) to various investors. The investors are large institutional investors, hedge funds, pension funds and other fixed-income investors. The investment bank also sells the servicing rights to a servicer such as Ocwen through an auction process. Ocwen buys the right to service the loans in the security and collect a servicing fee for its work.

This is a critical element of the economics of subprime mortgages. Ocwen only collects that servicing fee as long as the loan is outstanding. If a loan goes through foreclosure,  Ocwen loses the servicing fees that it already paid for.
This is an important fact because it explains why foreclosure it not a good economic proposition for Ocwen as servicer. We lose the servicing fee if the loan goes through the foreclosure process. [NYE'S NOTE, they don't tell they get the "net liquidation proceeds from a foreclosure"] It is also important to note that foreclosure is not an event that benefits the investor who owns the loan.

Our experience is that the investor sustains a loss on 97% of foreclosures. And, of course, the consumer loses his/her home and the neighborhood has another vacant property for some period of time until the property is resold.

Foreclosure is clearly a lose/lose/lose proposition for all parties. Under the contracts that spell out our duties as servicer, we are required to take actions to return the maximum amount of contractual principal and interest to the investor. In the vast majority of cases, finding a way to keep a customer in their home and continuing to pay their mortgage is the best economic proposition for the customer, the servicer and the investor.  Ocwen is proud of our industry-leading loss mitigation efforts. During 2006 we were able to resolve the loans of more than 80% of severely delinquent customers in a way that avoided foreclosure. We do this through a consultative approach with each customer to determine the optimal resolution to their delinquency. We first determine if the customer
wants to stay in their home. In some cases they do not, and we work with them to dispose of the property in the most timely and value-maximizing manner. If the customer wants to stay in the home, we review their financial situation to determine their ability to pay, and work hard to find a payment plan that will accommodate their situation.

In the less than 20% of the cases where we are unable to avoid foreclosure, the reasons are varied. In some cases the customer has abandoned the property. In a small number of cases the customer just does not have the income to be able to stay in the home. In about half the cases of foreclosure, we are unable to make contact with the customer.  Despite repeated telephone calls and letters, several of which are certified, we are unable to talk to the customer to try and work out an arrangement. To clarify this, we may attempt to contact a customer multiple times over many months and still make no contact.

We even send our customers a DVD that explains to them why it is so important that they speak with us so we can help them. I have brought copies of this DVD to for the Committee Members and staff to review.  We consider foreclosure to be a failure. In fact, our incentive compensation plan for our late-stage loss mitigation employees includes a deduction for every loan that completes
the foreclosure process. This is why we do everything we can to contact the customer to find an alternative to foreclosure.  One of the innovative approaches we take is to partner with non-profit housing groups in various cities to help us contact our customers. Groups like the East Side Organizing Project (ESOP) in Cleveland, Ohio reach out to Ocwen customers who have otherwise
not made contact with us. Our hope is that a contact from a local, trusted consumeradvocacy group will be successful where our efforts have not been successful. If ESOP is successful in making contact with the customer, they will often meet face-to-face with the customer, collect financial information, understand their situation, and bring the customer to Ocwen to negotiate a non-foreclosure resolution.

Currently we have this program in place with nine affiliates of the National Training and Information Center (NTIC) based in Chicago. In addition to ESOP in Cleveland, we work with other NTIC affiliates in Chicago, Cincinnati, Pittsburgh, Indianapolis, Kansas and Iowa and the St. Ambrose Housing Aid Center in Baltimore. We are currently discussing this program with other national and local consumer groups. While we can only count our successes with this program in the hundreds so far, each success preserves homeownership for a family and helps maintain some stability in their neighborhood.

Our experience in this program and our daily loss mitigation efforts reveals many of the problems faced by subprime borrowers. The most common cause of delinquency and default is a change in borrower circumstances. The most prevalent cause is job loss or reduction in hours. Many subprime borrowers live from paycheck to paycheck. A reduction in income is critical to these borrowers. Death or disability of a wage earner in a household is another primary reason for repayment difficulties. Additionally, as many subprime borrowers have little or no savings, any unexpected expense can cause a financial crisis for these households. A broken hot water heater, leaky roof, or even a transmission repair on a vehicle is enough to put these families in crisis. Medical bills for a household member can also force borrowers to make painful decisions as to how to prioritize their limited resources.

An all too-frequent problem we see in our servicing business is the borrower who is unable to pay their annual bill for property taxes and hazard insurance. While most prime mortgage loans involve monthly escrow payments toward these major outlays, only 47% of the subprime first lien loans we service come to us with escrows in place. These are the borrowers who most need the discipline of contributing to these amounts each month.  Ocwen makes an effort to communicate to all new servicing customers the importance and benefits of escrow accounts, but for many of them the additional monthly amount on
top of their principal and interest cannot be accommodated.

I have been asked to address the effectiveness of federal regulators. It is important to reiterate that most subprime loans are originated by non-depositories, companies that are not federally regulated. The largest specialty subprime lenders are generally statelicensed and not subject to oversight by the Federal Reserve, the Office of Thrift Supervision, the Office of the Comptroller of the Currency or the Federal Deposit Insurance Corporation. Notwithstanding their lack of direct supervision, these regulators do influence all mortgage lenders. An example is the FFIEC guidance released in the fall of 2006 pertaining to interest-only and option ARM loans. Only months after this
guidance was released, it was quickly adopted by most state regulatory bodies.

Even without the force of law, it quickly became an industry standard.
However, as many consumer advocates and others observed, interest only and option-ARM loans are not as prevalent in the subprime industry as ìregularî ARM loans, including ì2/28î loans and ì3/27î loans. These loans generally have a lower rate than similar fixed rate loans, but the introductory fixed rate of these ARM loans resets to a spread over an index after either 24 months or 36 months. Generally, the first rate reset with be in the range of 2.5% to 3.0% above the introductory rate, and subsequently reset every six months thereafter. So, a loan initiated at 7.0% could increase to 10.0% within two to three years after origination.

In addition to the rate resets, these loans were underwritten with the assumption that the borrower was repaying a 7.0% loan, not a 10.0% loan. With the proposed new federal guidance now including regular ARM loans, underwriting standards for the subprime industry will likely change just as they did with the prior guidance.  In the recent past, borrowers facing these rate resets could simply get a new loan to avoid paying the higher reset rate. Coupled with steadily increasing property values, many borrowers not only refinanced but also pulled out more of this newly-created equity and used the cash for other personal purposes. Even borrowers facing some difficulty in repaying their current loans were able to borrower more money in a new loan to help stave off financial crisis (for a little while, anyway).

However, this game of musical chairs, borrowers getting a new loan and more money to pay out the prior loan, is over. The music has stopped. Property values are no longer increasing. In many overheated markets, property values are dropping. Moreover, more rational underwriting standards now in place or proposed will preclude these borrowers from qualifying for a new loan. These tighter underwriting standards will reduce the number of new borrowers receiving a mortgage loan they canít repay, but it locks out many current borrowers who are now stuck in a loan with increasing interest rates. These
borrowers who qualified for a loan only months ago will no longer have access to mortgage credit and will have to find a way to deal with their current loan.

What is the impact of these issues? As discussed, many borrowers who currently have loans will no longer qualify for a new loan to help solve their current problems. Many of these borrowers may experience delinquency, default and foreclosure. Relaxed underwriting allowed many of these borrowers to buy a home with no cash down payment. In some cases, as a result of cooling property values, many of these borrowers now have loans with balances in excess of the value of their homes. With no investment in the property, many of these borrowers will walk away from their homes and their
obligations. Unfortunately, those who do walk away from their obligations further tarnish their credit histories, potentially eliminating any future opportunity at homeownership. Their effort to participate in the American dream of homeownership has, for some, become a bad dream.

Foreclosures result in vacant properties. These vacant properties, if not properly secured and maintained, can quickly become a blight on their neighborhoods and depress surrounding property values. There is some evidence that the "easy credit" offered by some subprime lenders fostered property flipping where unsuspecting borrowers were sold inner-city properties at greatly inflated values.

Clearly neighborhoods and cities are impacted by an increasing number of foreclosed properties. I have also been asked to comment on the impact of subprime mortgages on the stock market. We have all read the recent impact on the stock prices of specialty subprime lenders. Some of these companies may not survive the current dislocations in the industry. Moreover, the stock prices of many companies with even modest subprime exposures are down. I am not an expert in the machinations of the stock market, but some who are suggest that investors are overreacting to the current negative news of subprime lenders. Perhaps with the exception of home builders, it is difficult to conceive that the stock prices of other businesses or industries will be affected by the poor performance of some subprime loans.
The cooling of real estate markets is not a result of issues in the subprime industry, but rather a result of rising interest rates and hyper-speculation. The increase in property values did not reflect normal supply and demand factors but irrational demand. Markets are returning to a more rational equilibrium. Will the removal of some number of potential homebuyers due to changes in subprime underwriting aggravate the downturn in the housing industry? Quite possibly. But market corrections are inevitable, particularly a market that was heavily influenced by speculation and not true buyer demand.  Changes in the subprime industry are appropriate and necessary. In their zeal to maintain their growth rates, many subprime lenders forgot (or ignored) the basic tenet of lending-
the borrower should be able to repay the debt. Market forces have already brought about change. The high delinquency of many subprime loans in mortgage-backed securities has caused investors and investment banks who buy the loans to impose tighter underwriting requirements. Regulation and, perhaps, legislation may bring about additional changes in how new loans are granted.
In the meantime, Ocwen and other servicers, investors, investment banks and groups likes NTIC and ESOP in Cleveland will have to continue to work hard and work together to help borrowers try and keep their piece of the American dream.
Respectfully submitted by:
William E. Rinehart
Vice President and Chief Risk Officer
Ocwen Financial Corporation
1661 Worthington Road
West Palm Beach, Florida 33409
Telephone: 561-682-7041
Email: william.rinehart@ocwen.com

Five minute remarks for Congressional Testimony
1. Thank you Chairman Kucinich, Ranking Member Issa and Members of the
Committee for giving me and Ocwen Financial Corporation the opportunity to
share our thoughts with you today.
2. ìWeî- and I mean that in the broadest sense to include the mortgage industry,
Congress, regulators, consumer advocates and state officials, have two issues to
address:
a. What changes are needed to ensure that the participants in the origination
of subprime mortgages act responsibly?
b. What do we do to assist borrowers who are already facing difficulty?
3. Insofar as Ocwen is a loan servicer and not an originator or broker, my remarks
today will focus primarily on the second point- ie, what Ocwen is doing to help
our servicing customers who are currently having trouble repaying their loans stay
in their homes.
4. As I indicated in my written statement provided to you, foreclosure is a
lose/lose/lose proposition -- for the homeowner, for Ocwen as servicer and for the
investor who owns the loan. Foreclosure should be pursued only when all other
options have failed.
5. Regardless of the type of loan the borrower has or how it was underwritten,
subprime borrowers often have little financial cushion to withstand any financial
shocks. Any change in their income level (job loss, reduction in hours, death or
disability of a wage earner) or unexpected expenses (leaky roof, broken hot water
heater or furnace, new transmission for their car, medical bills) can cause an
immediate crisis for these homeowners.
6. Borrowers already facing difficulty in repaying their mortgage who are then
impacted by an interest rate increase because they have an adjustable rate
mortgage rate have a high likelihood of experiencing financial default.
7. Because foreclosure is a bad economic proposition for all parties, Ocwen has
worked hard to develop processes to help defaulted customers find alternatives to
foreclosure.
8. Ocwen is proud of our industry-leading loss mitigation programs that avoid
foreclosure for more than 80% of our customers who become 90 days or more
past due.
9. In the small percentage of cases that do go to foreclosure, the primary root cause
is our inability to open a line of communication with our customer. Despite our
repeated attempts to reach out to our customers through telephone calls and
letters, some customers- due to shame, fear and a lack of knowledge- tune us out.
10. We also make available to borrowers in need an instructional DVD [hold up to
show] that explains the various solutions that may be available to them. If the
Committee would like a copy, I would be happy to provide one. But, again, if the
customer wonít talk to us, we cannot help them.
11. To close the communication gap, Ocwen has partnered with non-profit housing
advocacy groups including the National Training and Information Center in
Testimony before Subcommittee on Domestic Policy, Committee on Oversight and
Government Reform by William E. Rinehart, Vice President and Chief Risk
Officer, Ocwen Financial Corporation on March 21, 2007
Page 8 of 8
Chicago and their affiliate the East Side Organizing Project in Cleveland to reach
out to customers to try to find alternatives to foreclosure.
12. We provide lists of our customers who we have been unable to contact to these
housing advocacy groups. Receiving contact from a local, trusted community
group such as ESOP may spur the Ocwen customer to make a call and take that
critical first step to avoiding foreclosure.
13. Through these partnerships, we have helped many Ocwen customers stay in their
homes.
14. Substantial changes in how subprime mortgages are granted have already
occurred and more are likely to occur. These changes have resulted from market
factors- that is investors and investment banks requiring product and underwriting
changes- and recent regulatory guidance. These changes will reduce the number
of new borrowers finding themselves in trouble only months after receiving their
loan. These changes, however, will make it more difficult for borrowers already
in a loan to fix their current problems.
15. Ocwen and other servicers, groups like NTIC and ESOP, investors and
investment banks must work together to help those homeowners already facing
difficulties.






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Before anyone sends anyone anything, who else will see them and what will they do with them?
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Calli
Nye, at the risk of being on the receiving end of a tongue lashing from you I have a question to ask. On the advice of my lawyer I can't email or talk publicly about my case, I cannot send out documents without discussing it with him first and I cannot just pick up the phone and chat about my case whenever I choose to do so with whomever I want without discussing it with him first so I need to remain anon. for now. He is not inclined to send out documents without knowing who will see them and exactly what they will be used for.

We've been asking for the originals (both pre, post and during discovery and in a formal request to a lower court) in my situation for 4 years and still haven't gotten them. The list of reasons why they shouldn't have to provide them is long and grows all the time. We now have the request in front of another judge in a higher court. Also, we have repeatedly been told we will only be given a certified copy of the originals, not even access to see the originals. What good do certified copies do when it's the other side doing the certifying? So here's my question, has anyone come up with an ace in the hole strategy to force them to provide or give physical access to the originals?
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Yup, we have a strategy and full proof system. We get what we want now. Just have to lay a foudation and a record to do so. In any event, I prefer to speak to lawyer. Word of advice to all of you. If your lawyer doesn't follow our advice, get a lawyer who does. We have evidence of many lawyers who were on the dark side, now claiming to be on your side and selling their clients down the river!
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Who is we?

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Nye Lavalle
Identify yourself in an email and I may just tell!
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A full [sic] proof system?  Will you share actual case cites or do victims have to pay to play?

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Nye Lavalle
Get lost plant!
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