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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Ok peeps, I have been doing a little research.  I thought I would check out this site and see what they had in my area.  This place is holding a auction for NC/SC at a metroplex with 300+ homes being auctioned over a 2 day period.

http://www.ushomeauction.com/

I find a house I like.  Actually, it's perfect for me.  The bidding starts at $5,000 and they say it is a cash purchase only.  They also state the previous value is $248,000.  I later see the last sale in 2006 was $225,000.

I look up through my county records online and see the owner was forclosed on.  And guess what, the same bank who foreclosed on him bought the house at the county auction for $156,000.

A little more research, I find the owner was trying to do a short sale for $124,000. hmmm...

Now, is this where the banks and our "lovely" servicers are selling off these homes, which are really our homes?  Is this place the last stop? 

And why are the banks and mortgage companies starting the bidding at such rediculous prices when they purchased the property back (at the county foreclosure auction) for so much more?

How does this work into their little scheme?  Yes, I know this is really creepy!

Sara
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Sara,

If I was going to believe some thing like this I would check with the county first. I know some homes are going cheap cheap cheap...However, unless its from the county paper that lists 4/clsres and you can verify info I wouldn't use this.

As far as the way they act who will ever really know? Possibly this New World Order is coming? Only thing that makes sense anymore. They sure have NO ANSWERS FOR THEIR INJUSTICES UPON US.
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Where I live, the majority of foreclosures (that are sold through the county auctions) are being bought up by the financial institutions that foreclosed in the 1st place.  The evidence is online.  And many of them have ended up here.

These auctions (from this site http://www.ushomeauction.com/) are all foreclosures bought back from the top major players.  Some properties in prime locations are starting at higher bids but nothing compared to what the homes are actually worth.  Yes, even considering the declining market.

I checked out the Charlotte Metroplex and this is a real auction.

What I want to know is what are the financial institutions really doing?  This just seems so wrong in  so many ways.  But I am sure it goes all the way to Wall Street again, in one way or another.

Sara
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Just some food for thought Sara. Given what we all know about homes and mortgages the past few years, to me it just takes a little careful thought to figure out the mystery.

First, the originator wrote a loan. The loan was funded by investments in asset backed securities and the originator received 102.5% for passing along the loan. The loan was packaged with many other loans and sent to the trustee of the asset backed security. When the buyer defaulted the loan was assigned to the special servicer to be foreclosed. It was also claimed on insurance by the issuance of a certificate of non-recoverability. This insurance paid the trustee, the trustee paid the investors, and the loan was moved out of the asset backed security to be foreclosed upon.

Since the investors were covered by insurance, who was selling the foreclosed property at the first auction? The Lender right? But which one? The originator or assignee which ever the case may be who by the way was already paid for the mortgage or was just assigned it without even paying for it. When the "lender or owner" bought the property at the auction, they paid 2/3 the value usually right? So now they have a 1/3 of the value write-off from the auction loss with no investment. And do you think the sheriff is going to make the "lender or owner" come up with cash or a check to pay itself for the winning bid?

So let's recap...
A loan was made that cost nothing.
They buyer defaulted and was foreclosed.
The investors were paid by insurance.
The trustee assigned the loan for no money.
The new owner foreclosed and sold the property at auction.
The new owner paid 0% to itself and got a 33% write off at auction.
And there's a mystery as to how they can let it go so cheap?

At this point there has been a total realization of 335% of the original value by various parties combined and they get a bonus by selling it again at a second auction. Of course that's my 2 cents and I'm sure someone could explain it alot more eloquently than I could.

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My guess is it's the only way to cover up what they did think about it why were all these appraisals inflated past the amount that the borrower got loaned? Follow the link that i provided below it will give you some insight about why they gave out all these loans that were destined for foreclosure because it as the only way to cover up the fact that they pulled out 2 loans, 1 or the borrower 1 for the bank, without the borrowers knowledge.

http://livinglies.wordpress.com/2008/12/10/identity-theft-mers-and-other-issues-great-post-from-james/
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Moose
There is so much misinformation wandering around here that it really could hurt people facing serious mortgage servicing issues so here goes:
Tom wrote:
Just some food for thought Sara. Given what we all know about homes and mortgages the past few years, to me it just takes a little careful thought to figure out the mystery.

First, the originator wrote a loan. The loan was funded by investments in asset backed securities and the originator received 102.5% for passing along the loan.

Not really. There was no "funding" by asset backed securities at the time of origination and the originator didn't receive 102.5% for passing along the loan. Asset backed securities don't come into play until the loan is placed in the conduit (REMIC) trust and an offering registered with the SEC. At the time of closing, where the funds came from is anyone's guess. It could be a line of credit they tapped for a series of closings or it could come from the lender's own funds - which could have (and probably did) come from previous rounds of financing.
Tom wrote:
The loan was packaged with many other loans and sent to the trustee of the asset backed security.

See above - the asset backed security doesn't exist until the trust is formed and the offer to sell bonds is issued.
Tom wrote:

When the buyer defaulted the loan was assigned to the special servicer to be foreclosed. It was also claimed on insurance by the issuance of a certificate of non-recoverability. This insurance paid the trustee, the trustee paid the investors, and the loan was moved out of the asset backed security to be foreclosed upon.

That is partially true in the case of insured loans. "Credit enhancement" (including PMI) insurance is not required in all loans and is not 100% of the loan amount. It varies, but is rarely more than about 30% and it is not paid at the time the loan goes into default or is assigned to a special servicer. Until the loan is sold or foreclosed, there is no way to compute the loss.
Tom wrote:
Since the investors were covered by insurance, who was selling the foreclosed property at the first auction? The Lender right?

No. The bond values may have been partially "covered" but the party selling the foreclosed property at the "first auction"(?) is whoever the trust has acting on their behalf as specified in the offering and the PSA.
Tom wrote:
But which one? The originator or assignee which ever the case may be who by the way was already paid for the mortgage or was just assigned it without even paying for it.

The originator has nothing to do with a securitized mortgage once it has gone into the REMIC - unless the trustee exercises it's rights to force the originator to repurchase it under specific circumstances, i.e., misrepresentation of the value.
Tom wrote:
When the "lender or owner" bought the property at the auction, they paid 2/3 the value usually right?

Keep in mind, this isn't legal advice and there will be differences between states, but typically the agent for the owner will make the minimum bid. If no higher bids come in, they "buy" it (pay off the loan just as if a third party had) and put the property in their REO inventory. The trust no longer owns the note - they own (or have an interest in) the property. Either way, the loan no longer exists in the pool. In some states, the trustee/servicer may go after the borrower for any deficiency. In others, the borrower may have a right of redemption within some period of time.

Tom wrote:
So now they have a 1/3 of the value write-off from the auction loss with no investment. And do you think the sheriff is going to make the "lender or owner" come up with cash or a check to pay itself for the winning bid?


Your numbers don't work (see above) and the party doing the auction (typically the sheriff in most states) has to follow whatever state law governs how the auctions are conducted. 

Tom wrote:
So let's recap...
A loan was made that cost nothing.

No. Remember someone got paid for the sale of their home. Money isn't free and that money came from somewhere. Everyone playing the game made money along the way except the borrower.
Tom wrote:
They buyer defaulted and was foreclosed.
The investors were paid by insurance.

Partially in many cases.
Tom wrote:

The trustee assigned the loan for no money.

No, the trustee either assigned the right to act on their behalf to an agent (i.e., the servicer or special servicer) or they sold it at (at a discount) to another entity who, as the new owner, foreclosed - which is what companies like EMC specialize in - buying allegedly troubled mortgages out of loan portfolios and pushing them into foreclosure for fun and profit. But assignees do get paid for their work. Nothing happens in this business without someone charging something for it. That's how millions of people make their living.
Tom wrote:
The new owner foreclosed and sold the property at auction.
The new owner paid 0% to itself and got a 33% write off at auction.

No. Again at the auction, the owner's agent makes the minimum bid and will actually "buy" the property out of the pool and into the REO inventory if no higher bids are obtained. Again, at this point the loan is gone. Assuming the new loan owner scenario, if the auction results in someone buying it for more than the new owner paid, this new owner can make a killing.
Tom wrote:
And there's a mystery as to how they can let it go so cheap?

At this point there has been a total realization of 335% of the original value by various parties combined and they get a bonus by selling it again at a second auction. Of course that's my 2 cents and I'm sure someone could explain it alot more eloquently than I could.



There's no way one can assume a "total realization" in this mess. There are simply too many variables. But I assure you, the myth of foreclosures not being profitable is just that. They can be.

Moose


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Your right Tom there are no losses from the foreclosures and they transfer legal liability for everything from origination fraud and securitization fraud to ms fraud.

These mortgages back both highly leveraged financial instruments generally refereed to as derivatives or structured investment vehicles. A couple of the specific instruments involved in mortgages particularly sub-prime are RMBS residential mortgage backed securities which are converted into CDO's collateralized debt obligations worth from 30-60 times the value of the mortgage. This explains why in a conventional loan the borrowers down-payment provides the colateralization for a fractional reserve loan you are right the lender mealy charges you interest for brokering your collateral into a fractional reserve loan at a roughly 8-1 ratio, and yet low or no money down loans are funded with high LTV ratios (Loan to value) because they are reverse collateralized by the securitizations. What I mean by reverse collateralized is that once a lender funds a loan it can be converted into a security worth many many times the value of the loan refereed to in the financial industry as leverage.

Another issue is that the loans are transferred into PSA's pooling and servicing agreements "insured" by credit default swaps if you thought a 30-60
leverage ratio was astonishing some synthetic CDS (credit default swaps)
have a leverage ratio of 80 or even 100:1.

But that's not all in this bankers paradise and borrowers and taxpayers hell
multiple title claims are created though trust relationships in a complicated chain from originator to secondary to servicer to trustee relationships after the foreclosure process.

Freddie Mac owned a majority interest in MERS (mortgage electronic registration) not only created title claims though a few computer key strokes and mouse clicks without actual signed notes but actually foreclosed on behalf of lenders/servicers with the borrower having no contract with Mers and Mers having no actual note.

Derivatives are a complicated subject and if you think about it really a bunch of imaginary non-sense as is the entire economic meltdown.  These supposed losses were purely fabricated and the government wants us to pay of the leveraged losses so the crooks and politicians do not go to jail. The numbers are truly mind-boggling and estimates for derivatives exposure ranges from several hundred trillion to over one quadrillion dollars. In all the confusion of the financial crises it seems the majority of the people have confused millions. billions and trillions and do not fully realize the meaning of trillions but certainly quadrillion is not a number you here of everyday.

Our politicians and lenders are burying us in debt slavery by conning us into paying for their imaginary leveraged losses of hundreds of trillions of dollars.

Here is a basic article explaining the risk before the crash.

The MBS refereed to are RMBS Residential CMBS are commercial

http://www.marketwatch.com/news/story/subprime-mortgage-shakeout-cdos-may/story.aspx?guid=%7B620D90CA-3A9E-4A21-9591-E772D59E5CF3%7D

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Subprime shakeout could hurt CDOs

Complex structures helped fuel mortgage boom, but may suffer losses

By Alistair Barr, MarketWatch

Last update: 6:38 p.m. EDT March 13, 2007

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SAN FRANCISCO (MarketWatch) -- After a mortgage is sold, it's usually packaged up with other home loans into a mortgage-backed security, or MBS.

But who buys the riskier parts of these derivatives -- the bits backed by subprime mortgages offered to poorer borrowers with lower credit scores? The answer may be collateralized debt obligations, or CDOs.

These complex structures, which are similar to a mutual fund that buys bonds, helped fuel the U.S. mortgage boom in recent years by purchasing some of the riskier parts of MBS that other investors didn't want.

They could now do the reverse, according to a recent study by Joseph Mason, an associate finance professor at Drexel University's business school, and Joshua Rosner, a managing director at research firm Graham Fisher & Co.

By exiting in search of more attractive assets, CDOs could limit the supply of money to the mortgage market, making home loans more expensive and reducing the availability of subprime loans, Mason said in an interview this week.

"We started out a few months ago trying to find out who is investing in the riskiest portions of these MBSs," Mason said. "We found the answer to the big question: the CDO sector."

"CDOs are providing the primary liquidity at this level, but they're hot money that will jump in and out of sectors," he added.

'Power packs'

The growth of CDOs has been explosive during the past decade. In 1995, there were hardly any. Last year, more than $500 billion worth were issued, according to the study by Mason and Rosner.

About 40% of CDO collateral is residential MBS. Almost three quarters of that is in subprime and home-equity loans, with the rest in higher-quality, prime home loans, the study estimated.

CDOs have become an important part of the mortgage market because they buy the riskier parts of MBS that others don't want. The higher-rated portions, or tranches, of MBS are sold to pension funds and insurers. But if the riskier tranches aren't sold too, the whole deal is off, Mason explained.

Jim Grant, editor of Grant's Interest Rate Observer, called CDOs "the power packs of the late housing boom" earlier this month, and said they've partly replaced the old banking system in which lenders kept mortgages on their own balance sheets.

"You may remember the phrase 'banking system,'" Grant wrote on March 9. "Today, in residential mortgage finance, there is a CDO system."

CDO exit

Stagnant home prices and rising delinquencies on subprime mortgages have sparked concern that some riskier MBS tranches could suffer losses. That, in turn, could hit CDOs.

"Even investment grade rated CDOs will experience significant losses if home prices depreciate," Mason and Rosner said in their study.

If CDOs take some of the hit, they could exit the residential mortgage market, Mason warned.

Something similar happened several years ago. During the late 1990s, CDOs invested a lot in asset-backed securities backed by manufactured housing loans and aircraft leases. After suffering losses, CDOs got out of those sectors, Mason said.

Even today, the manufactured housing and aircraft leasing industries still feel the effects of that shakeout when trying to borrow money via the asset-backed securities market, Mason said.

These older CDOs over-estimated the benefit of diversification, Mark Adelson, head of structured finance research at Nomura Securities International, said in a 2004 report on the sector.

"Now, however, newer computer models for creating CDOs attempt to reflect diversification more accurately. The jury is still out on whether the newer models actually work better," he noted.

Implications

The implications of CDOs withdrawing from the residential MBS market could be far-reaching, Mason said.

 

 

 

The bottom line here is that though the chain of mortgage originations millions of dollars of leveraged securitized money can be created from a loan

that was leveraged in the first place and collateralized by the borrower through the standard 8-1 fractional reserve lending sytem. So irrationally these crooks and gangsters have figured out how to steal potentially several million from a borrowers downment of  few thousand or tens of thousands of dollars. The borrower provides the only real assets our labor which was traded for the downpayment.

 

The sytem has collapsed on itself and the government and lenders will use the hysteria of the bogus losses to seize power and trap us in debt slavery, unless we expose them and stop them that's why it's critical to asign blame before taking any action at all.

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Moose
Sara wrote:
Ok peeps, I have been doing a little research.  I thought I would check out this site and see what they had in my area.  This place is holding a auction for NC/SC at a metroplex with 300+ homes being auctioned over a 2 day period.

http://www.ushomeauction.com/

I find a house I like.  Actually, it's perfect for me.  The bidding starts at $5,000 and they say it is a cash purchase only.  They also state the previous value is $248,000.  I later see the last sale in 2006 was $225,000.

I look up through my county records online and see the owner was forclosed on.  And guess what, the same bank who foreclosed on him bought the house at the county auction for $156,000.

A little more research, I find the owner was trying to do a short sale for $124,000. hmmm...

Now, is this where the banks and our "lovely" servicers are selling off these homes, which are really our homes?  Is this place the last stop? 

And why are the banks and mortgage companies starting the bidding at such rediculous prices when they purchased the property back (at the county foreclosure auction) for so much more?

How does this work into their little scheme?  Yes, I know this is really creepy!

Sara


Sara, I think what you'll find is the $5000 isn't the minimum bid. That's the amount you have to take to the auction in order to qualify to bid through US Home Auction. If you dig deeper into their plan, you will probably find that you also have to qualify for a loan to pay whatever amount you finally bid.

And yes, servicers do play fast and loose with sale prices. Fairbanks was sued by one trustee for artificially lowering sale prices by the way they commissioned RE agents to market properties they held in the trust's REO inventory.

Moose


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Wow Moose, you were quick to jump on that post. Sorry if it was a bit off, but the principle was right. First of all, are you really going to sit there and deny that mortgages were pre-sold to aggregators with the sole purpose of placing them into asset backed securities? There are posts and cases all over the net where the defendants are contesting foreclosure because the notes and mortgages are forgeries that were sold before or contemporaneously (I prolly killed that one...lol) with the closing. And if you'd like I'll go back and find the posts I read by attorneys etc that stated that the aggregators paid the originators 102.5% of the value of the loan. Livinglies was one place.

As for packaging and placing the loans, are there, and were there not existing securities that made swaps in the pools? Like when one defaults and is removed and replaced by another? In active securities? And can you say that no investor bought securities that were pledged by pre-sold mortgages? Read a prospectus. They all show assumed mortgage characteristics.

I believe Greg covered the insurance area of my post very well above.

As for the rest about the auctions, believe what you like. I've been to hundreds of them as an investor. I've never seen one sheriff make a bank, or agent as you like to say, make a deposit for a property they bought from themselves.

As for the numbers, yes, that could be a bit misleading. The fact is that at least one party was fully paid for the mortgage, and other parites were paid insurance, and in the end the owner takes the property and sells it for even more profit. Isn't that what we're here complaining and talking about every day?

Sorry for any confusion I may have caused anyone but I did say I'm sure someone could say it alot more clear and correctly.
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