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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I want to help homeowner file lawsuit pro se need some case law.
Client purchased loan through BofA. He is on fixed income. Broker overstated his income and never redisclosed. In addition they calculated his escrow at $8/month.
After the first year he had an escrow deficiency of over 3K, now they are jacking his payment up over $300/mo to cover escrow. Never should have qualified, even with the overinflated income.
Can anyone provide some case law for South Carolina for predatory lending, breach of contract, good faith and fair dealing, unjust enrichment...
What claims does he have and case law would be great.
Thanks!!
Taking the Big Banks down one by one!!!!

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George Burns
Assuming that there is a cause for action, What is he hoping to get out of this?

He is in a house that you say he cannot afford which, to me, means that he will soon be foreclosed upon and lose the house. I do not think that filing what seems to be a pre-emptive lawsuit, will have any delaying effect on a foreclosure when it comes. In fact, filing a lawsuit might even accelerate this.

Looking at each issue that you pose:

Predatory Lending - I do not think that he would have standing. This is more of a regulatory issue.

Breach of contract - I see no breach. What breach of contract do you see ?They seem to be just pro-rating the actual costs for the taxes and insurance. Every contract which includes escrow is recalculated at least once per year. How else would the taxes and insurance get paid? I see more contributory negligence and a lack of understanding, more than any breach of contract. It should have been very noticeable that $8 x 12 months would only accumulate $96. A simple look at the tax bill, of which he recevived a copy, would have shown that the taxes alone was more than $96. He had to know about the taxes since he had to file the change of ownership and sign with the tax office himself.

Good faith and fair dealing - What relief is he seeking? Recission?  If he wins on this point, he probably would get a negligible amount. I think $250 for TILA violation plus recission. Recission means he gives back the house and they give back his money, less actual costa such as taxes and insurance. The end result is that he loses the house and owes them money since he already has an escrow deficit.

Unjust Enrichment - Who got enriched and how much? It probably will turn out that he got the use of the house etc and so probably benefited the most other than the Broker against whom he probably cannot take any action.

I do not see any Claims, but that is just my opinion from what you posted.
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Will
It was an in house rep from BofA that did the loan. He wants out of the house, unjust enrichment from loan officer BofA who still has the loan. He has been paying on this loan since inception. All interest paid back plus destroying his credit once impounds caused his payment to become unaffordable. It is not his fiduciary duty to ensure appropriate amounts are being withheld for taxes and insurance required in his loan. He followed the advice and amounts asked of him from his mortgage company.
Plenty of claims here burns

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Bill
Will wrote:
It was an in house rep from BofA that did the loan. He wants out of the house, unjust enrichment from loan officer BofA who still has the loan. He has been paying on this loan since inception. All interest paid back plus destroying his credit once impounds caused his payment to become unaffordable. It is not his fiduciary duty to ensure appropriate amounts are being withheld for taxes and insurance required in his loan. He followed the advice and amounts asked of him from his mortgage company.
Plenty of claims here burns


I'm sure there are plenty of claims, people can claim anything they want.  My concern is that these homeowners would have to PROVE these claims with evidence in court.  

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I want to help homeowner file lawsuit pro se need some case law.

Your suggestion that you need some "case law" would lead everyone to believe you DON'T know if they have any claims.  The case law would provide the elements required to prove a claim.  I'm not sure HOW you think you have a valid cause of action when you don't know what a valid cause of action is (the elements).  

I think George was pretty much on target with his post.  

While you "THINK" you may be helping these homeowners, filing a lawsuit in which you do not prevail does have a cost.  We have posted many different instances where the homeowner has lost and is required to pay THOUSANDS in attorney fees (the most recent 16K).  

The most "HELP" you could give is to have these homeowners contact an attorney to see if they have any claims.


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Will
Ok Bill If you signed a mortgage which stated the payment would be $x per month with impounds and then after the first year found out that the bank who quoted you $x was incorrect and couldnt pay your tax appropriately per the contract you signed then came after you for an additional 300 per month and threw you in forecolosure what would you do?
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George Burns
Most mortgages give you an option of having an escrow account or paying the taxes and insurance yourself. The reason for an escrow account is so that you can set aside in installments the amount neede rather than having to fork out a lump sum at the end of each year or policy period. Historically most people are not able to handle the lump sums, so monthly amounts which are held in escrow are easier to handle. This is also true for health insurance, auto insurance etc where the insurance company allows monthly installments rather than annual lump sum premiun.

The lender does not have to give you the facility of having an escrow account and the borrower does not always have to allow an escrow account to be set up.

However, the mortgage requires that the borrower have at all times the required minimum insurance coverage and the taxes paid. If not, there is a breach of contract and a default.

If the borrower had decided not to have the needed amount accumulated in the escrow account and then could not pay the taxes and insurance when due, the lender has the option of placing its own insurance coverage (force placed insurance) and also paying the taxes OR declaring a breach of contract or adefault.

If the lender pays the taxes and insurance for you, then you owe them and they are entitled to recover those amounts from you. The usual way of showing the bookkeeping is by posting the entries to the escrow account where the amounts can be easily seen whether expenditures or reimbursements.If they did not use the escrow account to show the transactions they would have to create an Accounts Payable system and then you would be surely confused.

This is all clearly stated in the mortgage contract and elsewhere. It is not hidden.

When the loan was given, the borrower had the opportunity to get insurance quotes and to select any insurance company and agent they wanted. Who selected the insurance coverage in this case?

The insurance premium is clearly shown on the closing papers and the insurance coverage binder also showed the amount of the premium and when the coverage expired. So the borrower knew up front what the premium for the year was and surely must have seen that the premium was more than $96. How could he have expected to pay the next premium with only $96 ?

A similar situation exists with the taxes. It was not the lender who filed the property tax registration form, it was the borrower who physically did this. He signed the tax form that gave his status etc, it was not the lender. Also on the closing form the taxes are clearly stated. He must have seen the amount of the taxes and when the next taxes were due. The taxes were more than $96 per year.

So when the taxes and insurance became due, there was not enough money to pay so the lender paid the bill for your friend and debited the escrow account so that your friend could pay in installments along with his monthly mortgage payments. BUT your friend cannot afford it. He cannot pay the Principal & Interest plus the proper escrow amount (for future expenses) plus the arrears in the escrow account (for the shortfall). What he can afford and does pay is not enough because the lender takes out the escrow shortfall first and not enough is left to pay the Principal and Interest. This creates a default and has lead to foreclosure action.

Now you want to blame the lender because your friend did not read, see or understand simple arithmetic.

Did I get you right ?


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Floyd
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Ok Bill If you signed a mortgage which stated the payment would be $x per month with impounds and then after the first year found out that the bank who quoted you $x was incorrect and couldnt pay your tax appropriately per the contract you signed then came after you for an additional 300 per month and threw you in forecolosure what would you do? 
 

 
What you seem to be missing here, Will, is that escrows are for the protection of the Lender.  Protection of the borrower is incidental.
 
Taxes and hazard insurance are the responsibility of the borrower and an additional condition of the security instrument.
 
I seriously doubt that there exists any valid cause of action against a Lender for failure to properly estimate taxes or insurance.
 
If anyone has a cause of action, it seems more likely to be that the mortgage investor might have a cause of action against the originator, because the loan probably didn't actually meet the investor's lending and underwriting requirements.
 
While I understand that an unsophisticated borrower might feel misled and deceived, since tax assessments and tax rates are published information, equally at the disposal of a borrower as to the Lender, I cannot imagine that a Lender has any duty to disclose these to the borrower.  The borrower should have ascertained the taxes before even making an offer on the property.
 
Hazard insurance is generally available from a variety of property insurance concerns and varies widely in price.  The borrower is usually responsible both for finding an insurer and paying for the policy.  Only when the borrower fails to do this will the servicer typically obtained a forced placed insurance policy.
 
The forced placed policy is usually a total rip off affording LESS coverage at prices two to three times higher than could have been obtained had the borrower obtained and paid for a policy.
 
Unquestionably, servicers have been ripping off borrowers by inventing insurance defaults and then placing the borrower in a forced placed insurance policy.  That this insurance is much more expensive is NOT so much a disclosure problem as a matter of fraud in the forced placed insurance itself. 
 
Your focus and theories seem misplaced!
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Bill
+1 George 

+1 Floyd  
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Will
Ok thanks
How about any case law for the loan officer overstating his income on the final application. He submitted a full doc loan with his Social Security Award letter.
Magically looking at the final 1003 it stated double that amount.
Worse off they threw him in an ARM loan knowing his income would remain stable
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Bill
Will wrote:
Ok thanks
How about any case law for the loan officer overstating his income on the final application. He submitted a full doc loan with his Social Security Award letter.
Magically looking at the final 1003 it stated double that amount.
Worse off they threw him in an ARM loan knowing his income would remain stable

I'm not sure that is much of an argument.  This was HIS "final application" not the loan officer's.  If the income was stated incorrectly I would think he had some duty to correct the error.  He also AGREED to an ARM loan.  You are asking the lender to be a psychic and know what his plans were.  He could have been planning on refinancing in a year or two, he could have been expecting his income to change, the list goes on and on.  
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Floyd
Quote:
Ok thanks
How about any case law for the loan officer overstating his income on the final application. He submitted a full doc loan with his Social Security Award letter.
Magically looking at the final 1003 it stated double that amount.
Worse off they threw him in an ARM loan knowing his income would remain stable 
 
If the Borrower signed a "final" loan application on Form 1003 which overstated the borrower's income, even in a stated income loan program and even if the 1003 was prepared by the loan officer, then the Borrower, NOT the loan officer committed a FEDERAL CRIME.
 
Here is the language which appears on the Freddie Mac Form 65 / Fannie Mae Form 1003 the "Uniform Residential Loan Application":
"I/We fully understand that it is a Federal crime punishable by fine or imprisonment, or both, to knowingly make any false statements concerning any of the above facts as applicable under the provisions of Title 18, United States Code, Section 1001, et seq."
I would call your particular attention to Title 18, Section 1014, which reads:
§ 1014. Loan and credit applications generally; renewals and discounts; crop insurance
Whoever knowingly makes any false statement or report, or willfully overvalues any land, property or security, for the purpose of influencing in any way the action of the
Federal Housing Administration, the Farm Credit Administration, Federal Crop Insurance Corporation or a company the Corporation reinsures, the Secretary of Agriculture acting through the Farmers Home Administration or successor agency, the Rural Development Administration or successor agency, any Farm Credit Bank, production credit association, agricultural credit association, bank for cooperatives, or any division, officer, or employee thereof, or of any regional agricultural credit corporation established pursuant to law, or a Federal land bank, a Federal land bank association, a Federal Reserve bank, a small business investment company, as defined in section 103 of the Small Business Investment Act of 1958 (15 U.S.C. 662), or the Small Business Administration in connection with any provision of that Act, a Federal credit union, an insured State-chartered credit union, any institution the accounts of which are insured by the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, any Federal home loan bank, the Federal Housing Finance Agency, the Federal Deposit Insurance Corporation, the Resolution Trust Corporation, the Farm Credit System Insurance Corporation, or the National Credit Union Administration Board, a branch or agency of a foreign bank (as such terms are defined in paragraphs (1) and (3) of section 1(b) of the International Banking Act of 1978), an organization operating under section 25 or section 25(a) [1] of the Federal Reserve Act, or a mortgage lending business, or any person or entity that makes in whole or in part a federally related mortgage loan as defined in section 3 of the Real Estate Settlement Procedures Act of 1974, upon any application, advance, discount, purchase, purchase agreement, repurchase agreement, commitment, loan, or insurance agreement or application for insurance or a guarantee, or any change or extension of any of the same, by renewal, deferment of action or otherwise, or the acceptance, release, or substitution of security therefor, shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both. The term “State-chartered credit union” includes a credit union chartered under the laws of a State of the United States, the District of Columbia, or any commonwealth, territory, or possession of the United States.
 
So if I correctly understand your argument, you believe that it would be a good defense in a foreclosure action to argue that you are guilty of a Federal jail felony punishable by a thirty year prison sentence and a $1 million fine!  Good luck with that, Chump!
 
Sounds like you have Mike H. advising you!
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Floyd
As long as you are pleading guilty, pick your Federal jail felony:

http://www.law.cornell.edu/uscode/html/uscode18/usc_sup_01_18_10_I_20_47.html



Title 18, § 1014 is here:
 

http://www.law.cornell.edu/uscode/html/uscode18/usc_sec_18_00001014----000-.html


Maybe you and Aces can be cellmates with Mike H. someday!
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lol
"Yes, Officer.  No I wasn't trying to hold up the liquor store.  A fellow gave me this pistol and told me to come into the store and show it to the cashier and to tell him to give me all of the money from the register.  He said that the cashier was very generous and would make a nice contribution to help me out.

I had no idea that there were laws in this state that made it a crime to bring a weapon into the liquor store and point it at the clerk.  Honest, I didn't.

I was just soliciting contributions and wanted to show him my new pistol.

No, I don't remember the man's name.  I had never met him before.

No, I don't know WHY the man in that car says he doesn't know me and denies my story.

I was only following his instructions and you cannot hold me responsible for my behavior since I was only doing what I was told!" 
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Will
The guy sent in all his information, proof of income, signed 4506T, explained situation to the LO. He didnt even know his income was different until it was pointed out to him by someone.
You guys are a bit harsh, this guy is losing his house Im just trying to give him some possible ideas...

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f
Quote:
The guy sent in all his information, proof of income, signed 4506T, explained situation to the LO. He didnt even know his income was different until it was pointed out to him by someone.
You guys are a bit harsh, this guy is losing his house Im just trying to give him some possible ideas...

 
No, Will.  Forum participants are NOT being harsh.  They are being realistic.
 
The stated income loans were ALWAYS a scam.  The LAW and the RULES made it a CRIME to misstate your income.  I has pretty much ALWAYS BEEN A CRIME to make false statements on a residential loan application.
 
And yet on a daily basis, real estate brokers, real estate salesman and loan officers have been coaching borrowers to make UNLAWFUL representations on their loan applications.
 
The stated income loans simply made it easier to coach and encourage borrowers to do so.  But is ALWAYS remained ILLEGAL.
 
So you have a friend who is now a distressed borrower.  He was coached and encouraged to borrow.  He SAYS that the lender prepared the false application and he merely SIGNED IT.  But the preparation of the false application probably wasn't a CRIME.  SIGNING IT WAS.
 
So explain the defense to us again, please?  Does it go?:
"My friend committed a Federal crime and is subject to up to thirty years imprisonment.  Because he is a felon and subject to incarceration, he should be exempt from foreclosure."
 
There are several Forum participants who try to keep defenses REAL.  Mr. Roper encouraged that.  He gave thoughtful, practical and effective advice until the site administrators allowed themselves to be intimidated into removing expository posts about swindlers who were using the Forum to scam borrowers.
 
Many of us are UNHAPPY that Mr. Roper doesn't post here any more.  We continue to participate and give useful advice.  Your queries seem NOT to be getting your friend near a viable defense, but instead seem to be helping him find his way towards jail time.
 
WHY CAN'T YOUR FRIEND SHOW UP AT THE FORUM HIMSELF?  WHY WOULD YOU THINK THAT IT WOULD BE TO YOUR FRIEND'S ADVANTAGE TO HAVE YOU, AN UNSKILLED AND CLEARLY UNINFORMED NON-ATTORNEY READ THESE POSTS FOR HIM?  IT APPEARS THAT INSTEAD OF HELPING YOUR FRIEND, YOU ARE PROBABLY GOING TO GET YOUR FRIEND IN SERIOUS TROUBLE.
 
HOW ABOUT THIS FOR AN IDEA.  HELP YOUR FRIEND FIND A QUALIFIED ATTORNEY SPECIALIZING IN CONSUMER DEBT AND FORECLOSURE.
 
IF YOUR FRIEND WANTS TO BENEFIT FROM THE FORUM, YOU FRIEND NEEDS TO COME TO THE FORUM HIMSELF AND READ THE POSTS HIMSELF.  IF YOU TRY TO DO THIS FOR YOUR FRIEND, YOU ARE GOING TO (A) BE ENGAGED IN THE UNAUTHORIZED PRACTICE OF LAW, (B) CAUSE HIM TO LOSE HIS HOUSE AND WORSE, (C) DESTROY YOUR FRIENDSHIP.
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I get what you are talking about.  You are not stupid or an idiot.  Geesh.  Some of you people on this board are so arrogant!!  I get that you know what you are talking about, but the constant cutting others down is just ridiculous!

Several years ago, I had a neighbor who worked in a title office.  We were talking one day about the housing development across the road and how there were so many empty houses.  Our conversation progressed to her talking about a fellow co worker who had purchased a home in that development.  This development had their own loan broker btw.  The exact same thing happened to her.  The result was that when she was sued for foreclosure, she counterclaimed adding the loan broker, claiming in a nutshell predatory lending yada yada yada.  The end result was that she walked away from the house.  She didn't get to keep it or anything.  I do remember that the loan broker lost his license too!

Unfortunately, I have NO idea what her name was but I believed my neighbor.  She had no reason to lie and this was around 2004/2005 when all this stuff began to surface.  The case would have happened in Warren County Ohio.  That's all I can tell you.

With that said, good luck!!


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Bill
sirrowan wrote:
I get what you are talking about.  You are not stupid or an idiot.  Geesh.  Some of you people on this board are so arrogant!!  I get that you know what you are talking about, but the constant cutting others down is just ridiculous!

Several years ago, I had a neighbor who worked in a title office.  We were talking one day about the housing development across the road and how there were so many empty houses.  Our conversation progressed to her talking about a fellow co worker who had purchased a home in that development.  This development had their own loan broker btw.  The exact same thing happened to her.  The result was that when she was sued for foreclosure, she counterclaimed adding the loan broker, claiming in a nutshell predatory lending yada yada yada.  The end result was that she walked away from the house.  She didn't get to keep it or anything.  I do remember that the loan broker lost his license too!

Unfortunately, I have NO idea what her name was but I believed my neighbor.  She had no reason to lie and this was around 2004/2005 when all this stuff began to surface.  The case would have happened in Warren County Ohio.  That's all I can tell you.

With that said, good luck!!



I get what he's talking about also.  Yes, in the sub-prime boom people did a lot of things incorrectly.  A lot of people made their pay checks off of commissions and quotas.  With the lax standards in their rush to get more loans, my dog could have gotten a loan (or at least co-signed).  

The problem is that his "friend" signed the documents certifying that all the information is correct and that he agreed to the terms.  He used the money to buy a home.  He lived in the home and now years later is unhappy with the decision.  

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It was an in house rep from BofA that did the loan. He wants out of the house, 

In reality, he doesn't just get to change his mind.  He can't just void the contract because he is unhappy now.  

He keeps saying that his friend was given a loan he couldn't afford.  I have never seen anything that puts a burden on a lender to DECIDE if someone could afford a loan.  His friend TOOK OUT A LOAN he couldn't afford.  At any time he could of said that this payment is going to be too high. 

 Most mortgages have a requirement for the homeowner to maintain the appropriate amount of insurance and pay the taxes which protects the lenders interest in the property.  When a homeowner decides to escrow these costs, the lender pays the costs and recovers the money from the homeowner.  He could easily tell what the taxes and insurance are by a quick call to the county and insurance company.  You divided these by 12 and this is what you have to pay a month in escrow.  It's not an excuse that the homeowner didn't know what the escrow was.  There is no mystery to the escrow amount.  

Will just hasn't posted any claims that can be prevailed upon.  He is just grasping at straws in an attempt to help his friend.  THAT IS A REAL PROBLEM. 

WILL SHOULD REFER HIS FRIEND TO AN ATTORNEY.  If he cannot afford the house, the attorney can advise him of ways to get out of the house (strategic default, bankruptcy, ect...) and his friend and take the best route when the facts of his situation are considered.  The attorney will be able to tell him if he has claims (TILA) against the lender.  

If Will decides to play "lawyer" for his friend, dealing with things he doesn't understand, the end result will be a HUGE FINANCIAL BURDEN to this individual.  

When you sue someone in court, the opposing party has a right to recover attorney fees if they successfully defend the action.  These fees are THOUSANDS of dollars.  The most recent example I posted was 16k.  Does Will know enough to burden his friend with THOUSANDS of dollars in attorney fees if he is wrong?  

Will needs to send his friend to an attorney.


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Right.  His friend definitely needs an attorney.  But 2 wrongs don't make a right.  His friend wasn't the only one who is in the wrong here.  He couldn't have done any of this if the loan officer didn't fudge the figures.  I'm pretty sure that the loan officer is the more sophisticated individual in this instance.  His friend more than likely did not realize/understand what would have a year down the road.

This huge jump in escrow that causes people's monthly payments to skyrocket isn't uncommon. It's VERY common.  It's not that adjusting the monthly escrow to reflect the correct amount that's the problem.  It's that the loan officers do this to qualify people for homes that they'd otherwise wouldn't be able to afford.  The loan officer gets his/her commission, the lender makes money from this and the homeowner is left holding the bag.

I can tell you from personal experience that this happened to me years ago.  My monthly escrow payments doubled.  The reason is because there is a clause in the mortgage that allows the lender to add a cushion to the escrow.  So not only are they increasing the escrow to reflect the correct monthly payments needed to cover taxes and insurance, they are initiating the right to pad the escrow by 6 months to a year's worth of moneys needed to cover the escrow expenses. 

Personally, I had no idea this was going to happen to me.  When I took out the loan, I thought everything was correct!  My escrow went up to almost $400/month.  I couldn't afford that and like most everyone else, this sent me into foreclosure.

Of course, his friend is expected to fully understand everything in the loan papers, but most do not.  The problem is that he was used by the loan officer/lender to make lots of money off of him and now he will suffer for it.  But who is the more sophisticated party in these transactions? 

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I just wanted to add that the "contract" was entered into by fraudulent means and if I'm not mistaken, are contracts entered into by fraudulent means voidable?  Just thinking out loud....
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Floyd

Quote:
I just wanted to add that the "contract" was entered into by fraudulent means and if I'm not mistaken, are contracts entered into by fraudulent means voidable?  Just thinking out loud.... 

 

No.  Anyway, the promissory note is NOT a contract.  It is a unilateral undertaking.

 

If there was fraud in the origination, usually a subsequent purchaser can interpose holder in due course immunity against your claims against the originator.

 

See the discussion of holder in due course within the UCC.

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Floyd

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Right.  His friend definitely needs an attorney.  But 2 wrongs don't make a right.  His friend wasn't the only one who is in the wrong here.  He couldn't have done any of this if the loan officer didn't fudge the figures.  I'm pretty sure that the loan officer is the more sophisticated individual in this instance.  His friend more than likely did not realize/understand what would have a year down the road. 

 

The friend has a proof problem.  While I have little doubt that the loan officer coached the borrower to make the fraudulent representations, the loan officer is likely to DENY IT if the loan officer can even be FOUND.

 

You also present this as though the borrower is without blame.

 

If real estate prices had continued their precipitous ascent the increasing bubble value of the property would have bailed out this transaction no matter how oppressive the payments had been and the borrower would NOT then be seeking to UNWIND the transaction.  The borrower HOPED TO PROFIT from his fraud.  Instead he LOST MONEY.  Now he is unhappy.  If prices had kept going up, he would have been reminding us what a genius he was!

 

The borrower made criminal false representations on the loan application.  Taxpayers are now BAILING OUT these transactions.  Pension funds are bailing out these transactions.

 

Maybe you THINK that you are NOT having to pay for these transactions.  When you discover that your pension (including Social Security is going to get DEFERRED and CUT), maybe you will understand that this is NOT a victimless crime.  Some will lose their pensions altogether.  Many will now never live to collect.

 

I wasn't directly invested in any mortgage debt.  Indirectly, through costs to investments and pensions, I believe that this mortgage fraud is going to cost me about a half a million dollars personally.  I am NOT HAPPY ABOUT IT!

 

Signing a loan application that contained false representations was a FEDERAL CRIME for which the borrower is subject to incarceration.  Fortunately for the borrower, there are not enough prison cells in the United States to accommodate all of those who committed this crime.

 

But WHY tempt the Judge by adopting a defense based upon telling the Court that you are a criminal?

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Right.  His friend definitely needs an attorney.  But 2 wrongs don't make a right.  His friend wasn't the only one who is in the wrong here.  He couldn't have done any of this if the loan officer didn't fudge the figures.  I'm pretty sure that the loan officer is the more sophisticated individual in this instance.  His friend more than likely did not realize/understand what would have a year down the road. 

 

The friend has a proof problem.  While I have little doubt that the loan officer coached the borrower to make the fraudulent representations, the loan officer is likely to DENY IT if the loan officer can even be FOUND.


A proof problem? It's right there in the loan app's lol.  It's right there in all the income verifications that were collected with the loan app lol.  The loan officer CHOSE to finagle things.  He/She could deny all they want, but again, who is the most sophisticated person in this transaction?  The loan officer works for the lender.  Whether found or not is irrelevent. 

 

You also present this as though the borrower is without blame.


I NEVER stated or implied that the borrower is without blame.  If that's what you took from what I wrote then I'm sorry.  That is not what I meant in any way and I'm pretty sure I didn't imply that.  ie 2 wrongs don't make a right?


 

If real estate prices had continued their precipitous ascent the increasing bubble value of the property would have bailed out this transaction no matter how oppressive the payments had been and the borrower would NOT then be seeking to UNWIND the transaction.  The borrower HOPED TO PROFIT from his fraud.  Instead he LOST MONEY.  Now he is unhappy.  If prices had kept going up, he would have been reminding us what a genius he was!


You are making assumptions that are NOT based in fact.  IF a froggy had wings, he wouldn't bump his little azz everytime he hopped.  That's a lot of if's......

 

The borrower made criminal false representations on the loan application.  Taxpayers are now BAILING OUT these transactions.  Pension funds are bailing out these transactions.


NO the Loan officers coaxed the borrower to make these representations, and if anything is criminal, it's NOT just on the borrower's end.  It's also on the end of the loan officer.  He/She knew WAY more about what they were implying.  Once again, who is the more sophisticated party to this issue?  But you know what?  We are both making assumptions because we don't know what the borrower supplied/agreed to because neither of us has seen the paperwork right?  And bailouts on behalf of the homeowners?  Are you friggin' kiddding me?  OMG!!!  I cannot even go there without bursting a blood vessel in my eyeball!!!!!!!!



Maybe you THINK that you are NOT having to pay for these transactions.  When you discover that your pension (including Social Security is going to get DEFERRED and CUT), maybe you will understand that this is NOT a victimless crime.  Some will lose their pensions altogether.  Many will now never live to collect.

 

I wasn't directly invested in any mortgage debt.  Indirectly, through costs to investments and pensions, I believe that this mortgage fraud is going to cost me about a half a million dollars personally.  I am NOT HAPPY ABOUT IT!

 

Signing a loan application that contained false representations was a FEDERAL CRIME for which the borrower is subject to incarceration.  Fortunately for the borrower, there are not enough prison cells in the United States to accommodate all of those who committed this crime.

 

But WHY tempt the Judge by adopting a defense based upon telling the Court that you are a criminal?


By claiming that this or other unsophisticated borrowers (I know I keep using this word but its the most fitting at the moment ya know?) caused this whole mess is just ludicrous!  They could have NEVER done this without the loan officers coaxing them to do so.  These people walk in with check stubs, etc.  The loan officer does all the verifications of income/rent/debt.  They are the one's "fixing" the figures to match what they need to close the loan and get their commission.  This guy didn't ruin your pension fund.

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f

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A proof problem? It's right there in the loan app's
lol.  It's right there in all the income verifications that were collected with the loan app lol.  The loan officer CHOSE to finagle things.  He/She could deny all they want, but again, who is the most sophisticated person in this transaction?  The loan officer works for the lender.  Whether found or not is irrelevent.  

 

You seem NOT TO GET IT.  The FINAL APPLICATION on Form 65 / 1003 is THE FINAL APPLICATION which supersedes ALL PRIOR applications.

 

The borrower SIGNS this application under both state and federal criminal statutes attesting to the CORRECTNESS of the representations.  The loan officer REPRESENTS NOTHING.

 

IF a borrower has witnesses, copies of the documents or a video tape recording of the loan officer inducing the borrower to make false representations, then this might certainly make the loan officer liable on criminal conspiracy counts.  Good luck with that.

 

Under NO CIRCUMSTANCES would being COACHED into making false representations absolve a borrower of repaying a loan that was not in default when negotiated to another mortgage investor without knowledge of the fraud.

 

The originator is out of business.  The borrower lacks proof.  The statute of limitations for civil fraud has passed.  Only the criminal counts chargeable to the borrower remain.

 

MY ORIGINAL SUGGESTION IN ANOTHER THREAD INVOLVING ACES WAS THAT IT WAS A REALLY BAD IDEA TO GO INTO COURT AND ARGUE THAT THE BORROWER HAD MADE FALSE REPRESENTATIONS, SINCE THIS WAS CRIMINAL!

 

Floyd picked up on that theme in this thread.  Then I agreed with Floyd.

 

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NO the Loan officers coaxed the borrower to make these
representations, and if anything is criminal, it's NOT just on the borrower's end.  It's also on the end of the loan officer.  He/She knew WAY more about what they were implying.  Once again, who is the more sophisticated party to this issue?  But you know what?  We are both making assumptions because we don't know what the borrower supplied/agreed to because neither of us has seen the paperwork right?  And bailouts on behalf of the homeowners?  Are you friggin' kiddding me?  OMG!!!  I cannot even go there without bursting a blood vessel in my eyeball!!!!!!!! 

 

If you read the laws, you are going to find that generally IF proven what the loan officers did was probably a criminal conspiracy.  The serious count is lying on the loan application.  Period.

 

If borrowers READ what is presented and take care NOT to make ANY representations that are UNTRUE, then borrowers have little to fear from these laws.

 

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By claiming that this or other unsophisticated borrowers (I know I keep using this word but its the most fitting at the moment ya know?) caused this whole mess is just ludicrous!  They could have NEVER done this without the loan officers coaxing them to do so.  These people walk in with check stubs, etc.  The loan officer does all the verifications of income/rent/debt.  They are the one's "fixing" the figures to match what they need to close the loan and get their commission.  This guy didn't ruin your pension fund. 

 

I am NOT denying that loan officers are also culpable.  But they bear minimal criminal responsibility.  What you are asserting about lack of sophistication of borrowers is disingenuous.  The borrowers knew that what they were doing was dishonest, but did it anyway.

 

Sure the loan officers coached them.  But when the loan officer tells them to misrepresent their income and expenses and sign right here, just below the line that says that making a false statement is a Federal Crime, most KNEW that what they were doing was both dishonest and illegal.

 

*

 

You also need to get your anger in check.  I have been endeavoring to help distressed borrowers.  I am NOT a distressed borrower.  I am NOT in default.  I am NOT facing a foreclosure.  But I AM paying for the disaster that was created BOTH by irresponsible banks and irresponsible borrowers.  Whether YOU were an irresponsible borrower is known only to YOU.  I am NOT.  But I AM paying every day.

 

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I do get it.  There are alot of calculation methods that are used to determine those final figures.  Like if you have a deferred loan where there is more than a year before you start making payments then that debt isn't included in debt ratio.

There are ways to increase the income.  I know that if your source of income is not taxable then they will recalculate your income at a higher figure since you wouldn't be paying taxes.

There are so many and when the LO tells a borrower that this is what he's doing then that's what you do.

I used to process loans and honestly I had never seen anyone finagle with escrow to qualify a buyer. I guess I worked with honest people.  But I see how this would affect the debt/income ratios.

We're talking about from $8 to $300  am month increase.  That's not small change for the average homebuyer.

There are many things that caused the market to tank.  When people lose their jobs they cannot pay their mortgage!!

Once again, this guy didn't ruin your pension fund.




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f

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I do get it. There are alot of calculation methods that are used to determine those final figures. Like if you have a deferred loan where there is more than a year before you start making payments then that debt isn't included in debt ratio.

There are ways to increase the income. I know that if your source of income is not taxable then they will recalculate your income at a higher figure since you wouldn't be paying taxes.

There are so many and when the LO tells a borrower that this is what he's doing then that's what you do.

This is all utter nonsense.  The borrower's income is what the borrower's income is.  THERE ARE NO CIRCUMSTANCES UNDER WHICH THE BORROWER'S INCOME IS TO BE ALTERED BECAUSE THEY HAVE A HIGHER OR LOWER TAX LIABILITY.
 
The calculation of carious housing to income ratios and debt to income ratios is exogenous to the borrower's representations.  One does NOT ALTER THE BORROWER'S REPRESENTATIONS to obtain the ratio result that one desires.  THIS IS FRAUD PLAIN AND SIMPLE.
 
Yes, if YOU encouraged a borrower to alter their representations, then, yes, YOU were probably engaged in criminal conspiracy.
 
I am certainly not taking the position that a borrower wouldn't have a valid civil cause of action against both the loan officer and the lender if induced to commit criminal acts. 
 
However this presents a PROOF PROBLEM.
 
*
 
You can assert that you engaged in criminality all you want.  But if you go to the Fannie Mae or Freddie Mac sellers' and servicers' guides or the lender's written lending and underwriting guides for ANY LENDER, you will NEVER FIND any written guidance that suggests or encourages loan officers, processors or underwriters to alter or to encourage the borrower to alter income in this way.
 
Moreover, these same written representations form the basis for underwriring decisions for both primary and pool mortgage insurance policies.  These insurers rely upon the borrower's representations in making policy decisions.
 
Neither will there be any written suggestion in the underwriting guidelines of the mortgage insurers to alter income.
 
YOU are suggesting that this behavior is either common or justified because YOU ENGAGED in criminality.  Your criminal behavior does NOT excuse the similar criminal behavior of others.
 
I will make a note to refrain from provision of any further help to YOU, since you are clearly part of the PROBLEM and do not merit ANY HELP from those volunteering their time at the Forum.
 
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There are many things that caused the market to tank. When people lose their jobs they cannot pay their mortgage!!

Once again, this guy didn't ruin your pension fund.

 
The housing market did NOT tank because of unemployment.   Rather, unemployment was caused by the tanking of the housing market after an unbelievable speculative bubble.
 
When housing prices peaked in California, only 1% of California home buyers could afford a house of median price.
 
In Las Vegas, three times more housing units were built than could be occupied by Las Vegas households.  Houses were being built simply to be sold and resold at increasing prices with NO ONE EVER OCCUPYING THE PROPERTY.
 
These housing prices were absolutely unsustainable.
 
If you think that the effects of the housing price bubble didn't effect the value of my pension fund and the pension funds of almost every other American, then you are really a complete idiot!
 
At the peak, there was about $11 TRILLION in mortgage debt outstanding.  Who do you think OWNED this mortgage debt?
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You know what?  I read the first 2 sentences and realized that you have absolutely NO IDEA what you are talking about.  You are arrogant and make alot of assumptions.  Have you EVER been a loan officer?  Have you? 

There are instances and you just don't know what you are talking about!!  Seriously!  OMG...rolls eyes.....

There are instances that relate to non taxable income, part time income and on and on and on.  There are also instances concerning debt and how they are treated as to the debt/income ratio.

Just because you THINK it should be wrong does NOT make it so.....



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Jim
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There are instances that relate to non taxable income, part time income and on and on and on.  There are also instances concerning debt and how they are treated as to the debt/income ratio. 


Clearly f is correct.  You are out of your mind if you think that some sort of underwriting guidance justifies changing a borrower's stated income.
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Angelo
You guys are having a heated discussion about a topic that was created by the banks for the banks, its that plain and simple!!!

Why in gods name were NO DOC loans ever created???, they weren't created by the borrower, thats for sure.  Any true financial institution that was about to lend 300K to someone would check how much $$$ they truely make, and if they didn't then they should get burned, sorry. They didn't care, they were going to pawn off the loan as fast as they could, so it didn't matter if the income was true and correct. 

Punch me in the face once, shame on you, punch me in the face twice shame on ME.  JMHO

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OMG really?  NOOOOO f is wrong.  This isn't just done with stated income loans.  It's done with FHA etc.

f.....how many loans have you processed in your life?  Where do YOU get your information?  If its ok with the underwriter, which it has to be btw, then its ok.....

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William A. Roper, Jr.

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I do get it.  There are alot of calculation methods that are used to determine those final figures.  Like if you have a deferred loan where there is more than a year before you start making payments then that debt isn't included in debt ratio.

There are ways to increase the income.  I know that if your source of income is not taxable then they will recalculate your income at a higher figure since you wouldn't be paying taxes.

There are so many and when the LO tells a borrower that this is what he's doing then that's what you do. 

 

Sirrowan:

 

I AM going to jump into this one thread to point out that you are absolutely INCORRECT.  A borrower's income can NEVER BE INFLATED on the application and expenses can NEVER BE OMITTED.  This is simply criminal.  ALWAYS.

 

I was the President of a mortgage company.  I am well familiar with Fannie and Freddie underwriting requirements.

 

Adjustments to income or expenses to support ratio analysis are done outside of the application and are supported by Memoranda to record in the loan file.  The borrower may NEVER BE COACHED to inflate income based upon underwriting analysis.

 

I have no idea where you worked or who told you that this was acceptable.  But what you are describing would be a crime everywhere.  Floyd and f are correct about this.  You really ought to refrain from posting information which is clearly erroneous.

 

There are two types of adjustments to income that would be acceptable on the borrower's final application.

 

First, would be those adjustments which are correcting.  For example, suppose that the borrower states that his monthly gross income is $3,200 and the employment verification comes back with a figure of $3,234.  The underwriter would change the figure on the final application to reflect the amount represented by the employer.  But if this figure was NOT, in fact, correct, the borrower would still have a legal duty to CHANGE IT BACK or to otherwise correct the number.

 

Second, there are some instances where income that might be real must necessarily be excluded.  For example, suppose that someone was receiving a certain level of investment income from a note or bond that was maturing within six months.  The income is currently REAL, but is going to GO AWAY within a very short period of time.  (While the funds could be reinvested, whether they could be reinvested at the same yield is questionable.)  Take the current interest rate environment.  If a ten year Treasury yielding 6% matures, in the current interest rate environment, you are NOT going to get 6% upon reinvestment.)

 

So the borrower's income on the final application could go up by very small amounts relating to correction or might come down if the income was found to be ineligible for inclusion.

 

*

 

Let us take another example.  A borrower is completing a medical residency and will soon be employed as a fully qualified physician with a specialty.  The physician's income is going to soar!  Can the income be INFLATED?  Absolutely NOT.  NEVER.  Inflating the income is a violation of the underwriting guidelines and a Federal crime.

 

This is not to say that the borrower might not be qualified.  But the method is clear and it NEVER INVOLVES inflating the borrower's income.  Both the GSEs have express provisions in the underwriting guidelines allowing the housing and debt to income ratios to be exceeded under special circumstances.  One such circumstance would be precisely the sort of situation described, where there is a clear reason to expect income to increase significantly.

 

NOTHING is done to the application.  Instead, the underwriter adds a Memorandum to File explaining the circumstances justifying the exception and attaching appropriate supporting paperwork.

 

Similarly, your assertion that the borrower would EXCLUDE expenses is also erroneous.  This is required to be handled in the SAME WAY.  The borrower accurately discloses.  If the expense is NOT required to be included in the calculation of the ratios, this is explained in a Memorandum to record.

 

This is not something about which there is simply a difference of opinion or about which there exists any doubt.

 

Your assertion that the borrower should simply follow the loan officer's instructions in making false representations is not only inaccurate.  It is really idiotic.  This would never be a valid defense in a criminal prosecution any more than the analogy posted earlier about coaching someone to hold up an establishment.  If I told you to go rape someone, would that make it OK?

 

If you worked for an employer that encouraged you to alter borrower's income representations or to omit expenses to make a loan go through, then you were probably engaged in an ongoing criminal conspiracy and you probably ought not be publishing your confession here online.  It might be better to go and turn yourself in to prosecutors or to at least lay low rather than both misleading others while exposing yourself to possible criminal prosecution.

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William, I didn't read anything that you wrote because of COURSE you would say that I was incorrect.  I processed sooooooooooooooooo many loans (refinances) in the early 90's that it could make my head spin.  I reported to the Executive Vice President of the Bank (who trained me) who reported to the President of the Bank.  Our procedures were subject to the "underwriters", rules.  We would have never ever ever processed a loan that someone wouldn't have purchased.  It was that simple.  We followed THEIR guidelines because in the end they were purchasing the loan and our bank didn't have the money to fund these loans.  It's just that simple.

Y'all can tell me I'm wrong all day long, but I've  been there done that bought the tshirt.lol

It's just really THAT simple.
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I cannot remember everyone we sold to but Washtenaw (sp) and Lincoln are the two that I remember .  There were others.



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Bill
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I get what you are talking about.  You are not stupid or an idiot.  Geesh.  Some of you people on this board are so arrogant!!

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You know what?  I read the first 2 sentences and realized that you have absolutely NO IDEA what you are talking about.  You are arrogant and make alot of assumptions.  Have you EVER been a loan officer?  Have you?  



sirrowan wrote:
William, I didn't read anything that you wrote because of COURSE you would say that I was incorrect.  I processed sooooooooooooooooo many loans (refinances) in the early 90's that it could make my head spin.  I reported to the Executive Vice President of the Bank (who trained me) who reported to the President of the Bank.  Our procedures were subject to the "underwriters", rules.  We would have never ever ever processed a loan that someone wouldn't have purchased.  It was that simple.  We followed THEIR guidelines because in the end they were purchasing the loan and our bank didn't have the money to fund these loans.  It's just that simple.

Y'all can tell me I'm wrong all day long, but I've  been there done that bought the tshirt.lol

It's just really THAT simple.

Pretty funny stuff.

sirrowan calling people arrogant is like the pot calling the kettle black.  
Everything he post is correct and he DOESN'T EVEN READ WHAT 
OTHERS POST.  
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Manny

What Mr. Roper posts makes sense.  What sirrowan tells us doesn't pass the smell test.

 

It seems that sirrowan worked for a crooked lender and engaged in ongoing criminal behavior himself, for which he is now in denial.

 

It is well known that ignorant people, and even the bright, but lazy and compliant, tend to follow guidance from persons in authority and even cave in to peer pressure.

 

Has anyone watched the video depositions of the mindless employees of Nationwide Title Clearing?  Or have you watched the DOCX employee interviews appearing within the 60 Minutes piece on DOCX?

 

The Nationwide Title Clearing employees express righteous indignation when challenged about their criminal activities.  Of course everything they did was OK, because that is their standard business practice.

 

Instead of engaging in some reasonable introspection, sirrowan is certain that everyone else is wrong.  Alteration of the borrower's income is OK, because the underwriter said it was OK.  Right.

 

Fortunately for sirrowan, there is not enough jail space to incarcerate all of the criminals such as himself involved in the fraud during the bubble.  Sirrowan will never be prosecuted for his criminal behavior, but not because this behavior was OK.  It wasn't.  He will simply get over, because the fraud was so breathtaking in its scale that prosecuting everyone is not practical.  But that still doesn't make it right.

 

Sirrowan ought to meditate and pray a little over his crimes and ask God's forgiveness!  

 

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