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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The first limiting factor in whether a servicer will offer a loan modification is based upon the concept of “Advances”. When a borrower misses a payment, the servicer must “Advance” that payment to the Trust to ensure the payment stream. Only at such time as the loan is determined to be unrecoverable can the “Advances” stop.

The only way that the servicer can recover the advances is one of three ways:

•         Offer a forbearance whereby the borrower brings in money upfront for arrearages, then makes a few payments, and then brings in the rest due. (This is America’s Servicing Company’s initial offer.) Of course, if the borrower had that type of money, then they would not be in foreclosure.

•         Check the Pooling and Servicing Agreement to see if arrearages can be “tacked” onto the end of the loan and the servicer can recover the advances upfront. If not, they foreclose. ( I have a copy of a Deposition that the servicer foreclosure expert declares just that.)

•         Foreclose, and sell the property where they take the advances right off the top of the proceeds.

When the modification is requested by the borrower, the servicer will immediately check to see if there is any ability to recover the advances other than foreclosure. If not, they decide to foreclose. But, what is even worse, the servicer will engage in trial modification actions, usually providing a trial modification whereby the borrower will make payments to the servicer. These payments are less than what is owed, so they are placed into “suspense” whereby the payments are not credited to the account. When the lender denies the loan and forecloses, the payments are kept to offset the advances until the home is finally sold.

This benefits the servicer by allowing them to collect payments, and uses up time until the foreclosure can occur, but also denies the borrower the ability to hire an attorney to aggressively fight the servicer. Furthermore, it removes from the borrower money that will be needed to find a new place to live. (There is possible legal actions to consider which I will address further on.)

The second limiting factor is whether the servicer can in fact offer a loan modification to a borrower.

The Pooling and Servicing Agreement (PSA)

The PSA governs what can and can’t happen with regard to the servicing of a loan. It specifically details what can occur when a loan is in default or is facing default. Loan modification is one option covered.

Dependent upon the wording of the PSA, a loan modification may not be possible. It may not be authorized or it may restrict the ability to offer a modification by stating that such a modification may be offered, only if the loan is purchased back from the investor for the full balance due. Obviously, a servicer will not purchase back a defaulted loan that is “underwater” so they will refuse the modification, saying that the PSA does not allow for modifications.

The servicer knows immediately what the PSA says with regard to loan modifications. Do they immediately deny the modification? No, instead they engage in “sham” negotiations, requesting paperwork, financials and other documentation while wasting time until they can foreclose on the property. Often, they are accepting trial payments, knowing full well that the modification will be denied. Again, it is simply a way of recovering money.

What to do?

At this point, hopefully the reader and the attorney will begin to understand what I mean by Predatory Loan Modifications. I have attempted to show the issues with these modifications, and have spent several months attempting to determine an effective way to fight the servicers. Along the way, I have learned much, and I have also seen some actions filed against servicers, but because the attorneys did not understand the entire lending and modification process, gaping holes were left in the arguments.

The key to fighting the servicers on the modification issue is to attack the modification process, and show lack of intent to engage in a loan modification. In the case of Indymac/One West, you walk into court backed up by a PSA stating that the servicer could not do a modification without buying a defaulted and underwater loan from the lender. Then, you present a quote from Sheila Bair, head of FDIC, saying that Indymac PSA’s do not allow for loan modifications.

At that point, you are not done. You show the Deposition from an Indymac foreclosure expert that states their key determining factor is whether OneWest can recover “advances” from a PSA, and if it is not possible, they foreclose without regard for anything else.

Finally, you back up your arguments showing the communications between the servicer and the borrower, and showing that their modification actions were “sham” negotiations.

Oh, by the way, I have two court rulings, one in California and one being a 5th Circuit decision that states if a lender engages in loan modification negotiations with no intent to actually do a modification, it is fraud.

Read all here:
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That's right...if they have no intent that constitues fraud! 

This is why it's so important to keep good records and transmission reports from the fax machines is wonderful! 

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I am going to trial on June 1 in California; I have survived the MSJ based on Fraud -  we have alleged that they fraudalently pretended to consider my loan for a modification when in fact they could not.

Would you mind sharing with me the name of the California case in regards to the Loan Modification fraud? Thank you very much.
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Go to the link provided and use the contact info at the bottom of the article.

Good luck on June 1.

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Simonee W.
To find all case law related to your case, go to the Court House Library, ask the Librarian to show you how to use West Law or Lexis computer law research system or the Law library law book. You will find case laws related to your case.
Try to mention law case favorable to your case as many as possible and bring copies of them to the Court. Judge or the opponent lawyers can ask you a copy of your case law and if you don't have it to show them, you don't look good.  Case laws help Jugdes make decision . If the opponent lawyers mention his own case law, ask him to provide you a copy and if need ask the Judge a recess so you can study it.

Go to the Court House and ask the Clerk to see cases related to your case i.e foreclosure cases, Loan Mod. etc. Read these case to see how other lawyers handle their cases i.e pleadings, discoveries.

Find out from the Court Clerk which days there are Foreclosure or Real Estate cases hearings. Go to the Court Rooms and watch them. (Don't go to the Court  Room of your Judge). You will learn a lot. I did.
Best wishes
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Simonee, I too wish you the best of luck!!!

Some of the bigger libraries also have a law library. 

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Good Luck. Keep us posted.
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You wrote:  "Find out from the Court Clerk which days there are Foreclosure or Real Estate cases hearings. Go to the Court Rooms and watch them. (Don't go to the Court  Room of your Judge). You will learn a lot. I did.

Question:  So why do you specifically advise NOT to go to the courtroom of her Judge?
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The Judge for your own case  may not like it. I would  not take the risk. Go observe the other court rooms.

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You may be right. I don't think that I would want a judge at his boring moment to look around and see the same faces every time. Especially if I were to confront him in the future. But than again, if you see me every day in the clothes I wear and with no make up. You will never know who I am, once I clean up. Ask my friends......
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I would doubt that a Judge could assimilate who is in attendance yesterday or last week, comparing it to future cases he/she hears.  Besides, even if that were the case, there is nothing wrong with spectating/observation since court rooms are an event open to the public.

I have attended many hearings for the express purpose of gleaning the demeanor of the Judge in advance of appearing.  Never has it been an issue, but it has been useful to me if for no other reason than knowing a bit of what to expect. 

I guess that I just wanted to be clear that Ann wasn't saying there was some legal issue with observing the Judge in your case in advance.
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