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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Task Force Will Seek
More Loan Revisions

September 8, 2007; Page A3

Attorneys general and banking regulators from 10 states have formed a task force hoping to persuade mortgage-servicing companies and investors in mortgage-backed securities to increase the number of troubled subprime loans they restructure, to stem the tide of foreclosures.

The task force, headed by Iowa Attorney General Thomas Miller, has invited a dozen of the nation's largest subprime-mortgage-servicing companies to meet later this month in Chicago. The group will ask servicers to find ways to modify more subprime loans instead of moving borrowers into foreclosure. The group also wants servicers to create more longer-term solutions for distressed borrowers, such as lowering the borrower's mortgage interest rate, rather that creating a repayment plan that offers a temporary fix.

  New Initiative: A task force wants to get mortgage-servicing firms to work with borrowers.
  Goals: The aim is to come up with ways to stem the tide of foreclosures.
  Complexities: Changes in the industry have made it more complicated to restructure troubled loans.

Mortgage-servicing companies collect loan payments in return for a fee and are charged with resolving any problems. If a borrower falls behind, they may modify the payment plan, restructure the terms of the loan or initiate a foreclosure action. Loan modifications aren't offered to borrowers routinely, and government officials and housing counselors say it can be difficult for borrowers to arrange such plans, even when it makes sense.

"Modified loans not only serve the public interest and help distressed borrowers; they are often the better business decision," Mr. Miller said in a letter sent to servicers Aug. 31. But "because of the fractured and complex nature of today's mortgage market, resolution of these troubled loans can be difficult to achieve..."

That is partly because of changes in the mortgage industry that have made it more complicated to restructure troubled loans. Many of the loans are no longer held on the books of banks or other financial institutions that granted the loan, but instead are packaged into securities and sold to investors. In those cases, trust documents determine how problem loans are handled. The company servicing the loan may or may not be the lender that originated the mortgage.

The working group plans to meet separately in October with investors who hold mortgage-backed securities, Mr. Miller said in an interview. The group was formed after a meeting in July that was attended by officials from roughly three-dozen states.

The task force also includes the attorneys general of California, Arizona, Texas, Illinois, Ohio, North Carolina, Colorado and Massachusetts, banking regulators from North Carolina and New York, and a representative from the Conference of State Banking Supervisors.

A policy paper prepared as part of the effort by Iowa Assistant Attorney General Patrick Madigan suggests, among other things, that servicers boost their loan-modification staffs, create teams dedicated to handling loan modifications, increase training and provide front-line employees with financial incentives that would encourage them to save homes rather than moving borrowers toward foreclosure. It also suggests that investors remove provisions in trust agreements that limit modifications, and pay servicers an extra fee for loan modifications that make sense for both the borrower and the investor.

In an effort to keep costs down, servicers kept their workout staff down when delinquencies were low and are now staffing up in response to the rise in mortgage delinquencies, says Doug Duncan, chief economist for the Mortgage Bankers Association. But not every borrower who asks for a loan modification deserves one, he adds. Coming up with a workout that makes sense can be particularly difficult in places where home prices have fallen and borrowers owe more than the home is worth.

On Thursday, the Mortgage Bankers Association reported that 5.12% of mortgage loans were delinquent in the second quarter, on a seasonally adjusted basis, and the number of homes that entered the foreclosure process rose to a record.

Mortgage-industry executives have encouraged borrowers to contact their servicer at the first sign of trouble. But borrowers who follow this advice are often stymied when they seek help, government officials and housing counselors say.

"The leadership would say they are in favor of restructuring loans," says Mr. Miller, but for mortgage employees who take these calls "it's counterintuitive, when you are trying to collect money, to give [borrowers] a better deal. It's easier to foreclose." His office plans in the coming week to announce a pilot program that will use third-party mediators as intermediaries between Iowa borrowers and their lenders.

State officials say they want to learn more about how the industry is handling problem loans and look for ways to overcome obstacles. "This is not an enforcement action. This is not an investigation," says Mark Pearce, deputy banking commissioner for North Carolina. "We're trying to work collaboratively and cooperatively with servicers to deal with problems of today. It's not about assessing blame. It's about helping families avoid foreclosure."

In recent weeks, some lenders have become more willing to restructure troubled loans, housing counselors say. Servicers have become more willing to give borrowers time to make up missed payments without tacking on added fees, but still need to do more to refinance borrowers who are in loans that are unaffordable, says Lou Tisler, executive director of Neighborhood Housing Services of Greater Cleveland, a nonprofit that works with homeowners.

However, as delinquencies climb, servicers are feeling the strain. It now takes some companies as long as two months to respond to proposed loan modifications, which puts added stress on borrowers, says Eileen Anderson, senior vice president of Community Development Corp. of Long Island, a nonprofit housing organization.

Write to Ruth Simon at

"Mods" would be appropriate when this MSF beast is brought to ground.  Anything less just provides friendly press to perpetrators while they continue to rip off homeowners. 
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As usual the genius government officials don't get the scam to begin with.

This is again another myth being allowed to perpetuate the servicer's control
over the borrower.

Exactly how many times do these people need to hear the servicers we are dealing with are plain and simple crooks.  They try to collect money from you that you don't owe.

We understand better than a lot of people that fraud is now legal in the United States 

They create forclosures by cooking the books to begin with.
They don't make money if the loan is being paid every month on time.

So, they dream up ways to make it appear that the borrower is not current.

We know what the servicers do to borrower's loans.

We know they are paid probably less than $10.00 a month for servicing each loan.

Processing checks timely, posting and attributing correctly to principal,
interest and in some cases taxes and insurance.

Not hardly.  Mortgage servicing is a fee generated business and they charge
these fees whether they are deserved or not.

I'd like to see others post what they think of putting mortgage servicers
in charge of restructing mortgages for borrowers.

I'm kind of under the weather today.

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This is like the old adage of what a camel is. It's a horse designed by a committee. There are just too many hands involved in this mess to come up with a viable solution. They'll never get agreement unless one of them turns state's evidence. Anybody think that will happen? We don't have enough grand juries to handle the cases.

These fools have stood by watching the mess unfold relying on the alleged good will of the companies and ethics of the executives involved. Now they're still willing to believe that there was "no wrongdoing" in cases like the Fairbanks settlement. The "no one profits from foreclosure" story will probably never be seen for what it is, a public-relations propaganda talking point.

The fact that Ocwen was called on to testify before congress should make everyone realize this mess is going to be swept under the rug no matter what party is running the hearings. What other corporate entity has ever been welcomed and touted (as opposed to dragged and interrogated) before a congressional committee when literally hundreds of civil lawsuits for abusing consumers are pending against them?

I'll save you the cost of the research. The answer is zero. Someone got to Washington on behalf of Ocwen because of the VA servicing contract award.  So no one in Washington is going to make them look bad. That would open another can of worms the players who rigged that bid don't want opened.

It's part of the con job.

The decision makers on loan revision legislation already know where their bread is buttered.


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4 justice now
Wow, what will they think of next?... Maybe they can hand out some "get of jail free cards" for all the CEOs and upper management at the servicing companies, etc? Oh, that's right, it appears they've already done that. Besides, what the point of having such a card when no one is even considering, such an outlandish thought, as actually enforcing the law.  

Actually, they'll most likely do just what is expected of them, being the true politicians that they are... Enact some more laws, which they will continue to ignore, at least until it begins to impact the so-called important people in this country (the wealthy). They will then simply blame the whole event on the MS victims; and continue to bill the working class tax payers for the clean up; reward the scammers by allowing them to keep all the riches that they have amassed; Then, in keeping with true congressional fashion: give themselves another fat raise, and call themselves "Heroes" for acting in such a decisive and swift manner. 

But again this is just my own opinion.
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4 justice now

Excellent post! More truthful it could not be. Ocwen couldn't have anymore control over this situation, even if they owned the White house. Not to imply they don't.

My Opinion Only.



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I think it would be funny if one one the law makers would go to someone house, get a copy of their mortgage, call their company and pretend to be the person and try to talk to someone about their mortgage.  I think that would knock the first posting in ht ehead in a hurry. If you can`t talk to them or get things in writing how is that going to work? If you do get to talk to a person, knowbody knows anything and you go from dept to dept and then you have spent nearly 2 hours for nothing.

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Some interesting, albeit somewhat disturbing, reading from Iowa Assistant AG Patrick Madigan:

Overview of the Subprime Foreclosure Crisis

Patrick Madigan - Iowa Assistant Attorney General

September 2007

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