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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Here's my story....First let me say I am not late on my mortgage. .....Wells Fargo took my insurance award that they held in escrow and placed it towards my principal mortgage. Because they did this, I cannot fix my house. Because I cannot fix my house my home owners insurance cancels tonight at midnight. I am sure they will institure forced placed insurance which will cost so much that eventually my home will be theres.  There is enough equity to make it worth their while.  I've contacted the OCC and the treasury department.  Any other ideas?

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Hi K, Actually you really did not provide enough information for anyone to give you a response.  So let me see if I can clarify some information for you.
First, you mention an insurance "award", I will assume that you made an insurance claim against your homeowners insurance policy for some type of damage to the home, correct?  Generally, when the insurance company pays your claim, it is made payable to you and your mortgage company. You sign the back of the check and send it to the mortgage company.  They will then place the funds in a "restricted" escrow account.  They will  send to you a package of documents/information. Depending on the amount of the funds, the lender will usually disburse amounts in halves or thirds.  This is provided that you are current on your loan and you have provided the necessary information and documentation that they require.  Depending on the amount of damage, they will send someone out to inspect the repairs to make sure the repairs are getting done.  Again, this all is dependent upon the type of damage, the amount of damage, the amount of the check and the status of the loan account.  I have worked with alot of homeowners as an adjuster and have not heard of the lender applying the insurance claim funds to the account until after they take title ie: foreclosure. The funds reamin in restricted escrow and can remain there for a very long time.
Also what state is the property located in? How do you know that the lender applied the funds to the principle?  And why would your insurance company cancel your policy, just because you made a claim for damages? Generally, insurance companies doe not cancel a policy just because repairs are not made, maybe for several claims made against the policy.

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George Burns
I have never seen or heard of what Trilby Smith is describing.

What I have always seen is that the insurance company send the check to the homeowner but it is payable to both the homeowner/insured AND the mortgage servicer(as lien holder). This is done when the homeowner is also the insured. With forced placed insurance the homeowner is not the insured and the homeowner would not have been sent the check and would not be named on it. The homeowner sends the check (without indorsing it) to the mortgage servicer who indorses it and sends it back to the homeowner, who then adds their indorsement and deposits the check.

Neither party can use the check unless it is indorsed by BOTH parties named as Payable To.

If the mortgage servicer held onto and/or cashed the check you should first notify and file a complaint with the insurance company. You should also request a replacement check. The bank should also be notified.

The only problem is if for some reason you had indorsed the check before you sent it to them. Then if the insurance company will not replace the check because you willingly indorsed away your money, you would have to get a lawyer.

This is all assuming that you are the insured and your name was on the check. If not then it was never your money.
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In 1988 we put in an insurance claim because of a fire in our home.  This is what happened in our case.  We were instructed by the insurance company that both my husband and I had to sign the check then forward the check to the bank.  The general contractor hired to do the work sent the bills from all subcontractors and the work his guys did to the bank and the bank sent the check to the general contractor to pay the subs.  We got copies of everything and believed the general contractor was on the up and up.  One of the employees from the general contractors office told us that his boss was not using our insurance money to pay the subs who worked on our house.  (He was robbing Peter to pay Paul.  He owed the IRS money also.)  This happened with the last check as the the work was completed.   We called the bank and the bank put a stop pay on the check.  Can't remember exactly but somehow the insurance agent got involved in monitoring the last check after it was re-issued.  Several months later I saw the plumber that did some work and he told me that he did not receive the all the money owed him.  He knew of the situation with the general contractor and told us he would just write off the balance.  We told him we would pay him but he just said not to worry about it.  We were concerned that the plumber would put a lien on our house but he never did.   Seemed like a screwed up system to me at the time.        

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