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 segment on NPR today detailed an investigation into the futility consumers are experiencing when trying to get a lender to modify their loan to prevent foreclosure.

Case covered was a gentleman who said his broker lied to him, telling him his loan would be a fixed rate loan, but later discovered it was a variable.  He was unable to meet the amplified payments, so he requested a loan mod. from Wells and was told (actual phone conversation was recorded) that even though he had submitted extensive information, he did not qualify.  NPR followed up and found out later that he WAS qualified, and when confronted, the supervisor stated that "All turndowns are reviewed automatically and that the borrower would have received a mod anyway".

The fact is that bank staff have a standing order to deny all requests for loan modifications and this has been exposed by numerous sources publicly.

Still, foreclosures continue to rise.  What's it going to take?
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    The key to understanding why servicers like Wells Fargo and others are not allowing people to assume other peoples loans and also do modifications
for original borrowers is the fact of mortgage insurance.
    The investors for whom Wells Fargo works just want their money back.
If the original borrower is in trouble, the investors will get all of their money
back by a foreclosure, part from the sale of the property and ( if it is less than the balance owed) the rest from a mortgage insurance claim. This is
why the concept of voluntary loan mods or assumptions is not working for
privately owned mortgages. Loan mods only work where the government owns the NOTE (since it bought the Note for a fraction of its face value).
     My opinion is that if the government had not bailed out AIG, the biggest
mortgage insurer and if it had been allowed to go bankrupt, the investors
holding the NOTES would have been more agreeable towards doing loan mods, but as it stands now, it is not in their interest.
     The only bright spot is that after they foreclose, they are selling the foreclosures dirt cheap so it might make sense to just let'em foreclose and buy back a similar property (or even the same property) at a much lower price!
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The Equitable One
Mike H,

That plan, buying cheaper homes after having your own foreclosed on, isn't really workable, or working.

Banks are extremely reticent to lend money to anyone at present, even those with stellar credit. Having a foreclosure in the recent credit history pretty much guarantees they won't be lending to you.

Foreclosure is a trailing indicator, not a leading one. Many, to most, involved in foreclosures are already in financial distress. The possibility that one who has had their equity stripped from them in a foreclosure being able to pony up the cash needed to buy a home outright is extremely remote.

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