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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FnDoomed
This is another of those research topics that's on my to-do list...

Much like the people in the OCWEN thread, I've been through the loan modification scam at least five times.   I'm trying to think of some causes of action with regard to these antics by the banks.

NH has "deceptive trade practices" at NH RSA 358-A
NH has "theft by deception" at NH RSA 637:4

Its a pretty good bet that all states have similar statutes.   Are there others that you can think of ?

If you happen to see a loan mod scam prosecuted by the state or a homeowner, I'd be interested in it - else when I actually get around to doing some research I'll post here.

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William A. Roper, Jr.
FnDoomed:

I am a little confused as to what you mean by "loan mod scam" as well as what you mean by prosecuted.

It seems to me that this rather generic term could subsume at least three rather broad areas, each of which has a large number of alternative variations.

One broad area might be what might be more appropriately described a debt elimination scams.  These include a large variety of "too good to be true" promises of some almost certain, fail safe means by which a borrower's liability for mortgage debt might be eliminated entirely.

These include various assertions that a borrower might somehow tender some specious draft, that the borrower didn't really borrower real "hard" money, and, most recently swindles that involve charging the deceived borrower to assist in debt elimination through legally questionable quiet title actions.  Perhaps it would be a good idea to catalog some of these variations, perhaps in a separate thread.  We have seen several of these recently advocated by a few of the swindlers and scam artists who have trolled the Forum looking for new victims.

But this genre is hardly new, as I was recently reminded in stumbling across mention of just such a scam defense within Federal Home Loan Mtge. Corp. v. Wuest, a case I mentioned within the new thread discussing the recent Germano decision in Ohio. 

A second broad category includes scams and swindles wherein the borrower is induced to make excessive prepayments for very often specious services and assistance, very often from persons engaged in the unauthorized practice of law, which purport to delver to a borrower the means of assuring a successful loan modification or, at least, a viable foreclosure defense.

These include various sale leaseback schemes, sale of partial interests, as well as sale of overpriced and very often useless "forensic loan audit" or "forensic securitization audit" services.  The borrower is charged hundreds or, more often, thousands of dollars up front by those assuring that these swindles have helped hundreds of borrowers before.  Of course, the claims of success can never actually be verified, and the person defrauding the borrowers very often turns out to be some boiler room operator or even a high school business teacher or bar manager with little or no formal training in law, but who can spin a good yarn online to fleece desperate persons.

A third broad category might also include the servicers themselves and the scams associated with either HAMP or proprietary loan modifications.  In these scams, the borrower is presented with some oral offer to modify and induced to default by assurances that the borrower can only qualify for the loan modification by stopping payments or by making prescribed reduced payments.  Then, the borrower is either presented with a totally oppressive modification agreement in which additional unjustifiable charges are added to the borrower's loan balance (which can very often be booked as immediate revenue by the servicer) and the borrower confesses amounts due and waives all defenses to the eventual foreclosure (which is coming anyway, very often sped along by the concessions obtained by the servicer in the modification).

That is, servicer perpetrated loan modification scams were central to the subprime meltdown.  The subprime borrower was very often given three or more separate haircuts in the process of trying to extricate themselves from some initial delinquency.  This often entailed first extracting additional fees in respect of the loan modification together with waivers as to various defenses (including fraud) as aforementioned.  Then, the servicer would trash the borrower's credit by reporting the serious delinqunecy and the fact of the modification.  The servicer would next initiate a foreclosure, expedited by the various waivers and confessions of the modification.  But a subprime loan broker would appear to assist the borrower in  getting out from under the original oppressive and fraudulent arrangement.

The modified loan, usually subject to a stiff prepayment penalty, would then be refinanced with yet another new "subprime loan" fully taking out the modified loan, allowing the original servicer to fully realize the padded fees added through the modification, as well as the prepayment penalties.  New fees were added through the origination of this new subprime loan, which seemed to be orginated by another different lender.  But after closing, the distressed borrower often discovered that their loan had been sold in a correspondent lending transaction or through securitization with the servicing landing back in the very same criminal enterprise which had fleeced them in the first instance!

*

Each of the broad categories discussed above often has a criminal and sometimes two separate civil components.

The criminal component would involve the various violations of criminal statutes both state and federal when a person or enterprise engages in criminal fraud.  When the perpetrator is engaged in the unauthorized or unlicensed practice of law, this can be a separate charge.  Many states have now passed specific legislation to protect consumers against up front modification fee scams, but as with so many swindles, very often the ditressed borrower doesn't even realize that they are being fleeced!

Armed with totally specious arguments or defenses, inadmissible or non-probative evidence or other materials, the desparate borrower is assured that the reason for the loss of their home is some dark bribery or other corruption of the judiciary.  That is, this defense is said to be working for everybody else and only fails when the judge is corrupt, so rather than reporting the criminal scam operator, the distressed and now often homeless borrower instead directs their misplaced hostility towards the courts. 

Whenever identified or exposed, these scam operators will attack and defame the person exposing them, alleging that such a person is actually a confederate of the banks, foreclosure mill law firms or corrupt judges.

*

The first civil problem in these situations arise from the fact that the borrower almost always loses their home when they fall prey to the first two specious of swindles.  And so there exists this group of cases in which the arguments on the merits are polluted and even eviscerated with the specious arguments.

Some of the scams actually accomplish the default and absolutely assure the loss of the property as a matter of law, as with the sale-leaseback scams or sale of partial interests.  The borrower neglects to consult the note, mortgage or other written loan agreement to discover that the due on sale provision makes the full balance due upon any sale of even a minute partial interest in the property, thereby effectively PROVING a default even where the borrower is absolutely current on all payments!

*

Another different civil component would arise where a borrower seeks to sue the swindler or scam artist to recover the amounts paid.  Good luck with that.  Usually, the swindlers are operating at the margin.  The criminal profits are very often quickly spent OR if not, are laundered through various avenues making recovery problematic.

This, is, of course, a reason that the scam operators typically crave anonymity and prefer to operate over the telephone or the Internet. 

The theories of civil recovery are as varied as the scams themselves.  But the fraudsters realize that if they clip each distressed borrower for only several thousands of dollars, keeping their real identies a litle murky, that the cost to the distressed borrower of bringing a civil suit to recover the amounts advanced will usually be excessive and both the outcome and the likelihood of ever collecting sufficiently speculative that recovery is rarely pursued EXCEPT by aggressive state attorney generals.

Except for the uniform Federal statutes, the state criminal and civil statutes are sufficiently varied that it is hard to enumerate the various theories of recovery without a specific example in respect of s swindle.

Ironically, while the first two broad categories of swindles purport to be rescuing the borrower from the loans and predatory conduct of the third category, it is not at all unusual for the perpetrators of the loan modification rackets to be amongst the very same operators who were involved in the original subprime swindles, former loan brokers and the like!  By their intimate knowledge of their prior subprime swindles, they can feign unique understanding of how the borrower has previously been victimized.

The borrower is then encouraged to really stick it to the lender by use of the sure fire debt elimination technique or the promising loan modification scheme.  All the borrower has to do is to advance the swindler a few hundred or a few thousand dollars.  Once they have the borrower involved, then the borrower is often coaxed to pay additional amounts to overcome the complications which arise from the failure of the "corrupt judge" to sign off on the debt elimination as required by their special maneuver.

*

Criminal  violations usually need to be prosecuted by state prosecutors, though it is essential that victims notify authorities and file formal complaints.  Without such complaints, very often prosecutors are either powerless to act or are reluctant to devote scarce law enforcement resources absent an actual outcry for prosecution.  In some jurisdictions, a citizen can file a private criminal complaint to invoke a prosecution.  Talk to a good lawyer and/or a prosecutor before filing such a complaint and be very careful to set forth only true facts that can be proven.

I hope this helps!
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FnDoomed
Thanks and it does help clarify my thinking...

It's the servicer perpetrated loan modification scams as seen on the recent OCWEN thread that I'm interested in.   They always follow roughly the same path that you outlined here:

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A third broad category might also include the servicers themselves and the scams associated with either HAMP or proprietary loan modifications.




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FnDoomed
Here's an example case pulled really quick and read even faster.  I can't say if its authoritative of anything but its the kind of thing I'll be researching in depth...

Basically homeowner was led down the HAMP modification path clear through foreclosure.   Homeowner sued on several counts:  unfair deceptive, implied good faith and breach of contract (as a 3rd party beneficiary).

Bank moved for summary dismissal of all three counts and got shot down on two of them.  The case will proceed on unfair and deceptive practices as well as breach of implied good faith...

Blackwood v. WELLS FARGO BANK, NA, Dist. Court, D. Massachusetts 2011


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Bill

FnDoomed wrote:
Thanks and it does help clarify my thinking...

It's the servicer perpetrated loan modification scams as seen on the recent OCWEN thread that I'm interested in.   They always follow roughly the same path that you outlined here:

Quote:
A third broad category might also include the servicers themselves and the scams associated with either HAMP or proprietary loan modifications.





I think it is very difficult to bring any action associated with HAMP or "in house" loan modification.  The biggest thing you have going against you is the owner of the loan is NOT OBLIGATED to give you a modification.  Even when some states have a mandatory mediation prior to the completion of foreclosure.

What the Servicers are doing does seem unethical.  They run a modification application parallel with foreclosure stringing the homeowner along until they sell the home.  In other cases, it seems that it is not uncommon for homeowners to pay over a year on a 3 month trial plan only to not get approved, or to get approved with the same or higher payment (after adding all the fees).  

To accept these trial payments for longer than the 3 month trial period then deny the modification does seem to be a way to extract money from the distressed borrower, but it appears NOTHING in the HAMP guidelines gives the grounds for a private cause of action.  Everything comes back to the owner is NOT OBLIGATED to complete a modification even after taking your money and government money.   


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FnDoomed
I've admittedly not given this a bunch of research, but the case out of Massachusetts clearly states:

For purposes of addressing the defendants' motion as to Count I, it is not necessary for this court to determine whether the HAMP program creates a private cause of action, and for present purposes the court will assume, arguendo, that there is no private cause of action. The issue before this court remains "whether the absence of a private right of action under HAMP necessarily precludes recovery for [the defendants'] actions under Chapter 93A, which is a different statutory scheme." Morris v. BAC Home Loans Servicing, L.P., No. 10-11572-PBS, 2011 WL 1226974, at *2 (D. Mass. Apr. 4, 2011). This court joins the other courts of this District which have found that the HAMP statutory scheme does not preclude an action under chapter 93A. See, e.g., id. at *3 ("a violation of HAMP that is deceptive or unfair could create a viable claim for relief under Chapter 93A"); Bosque v. Wells Fargo Bank, N.A., No. 10-10311-FDS, 2011 WL 304725, at *8 (D. Mass. Jan. 26, 2011) (allegations "that defendant made deceptive, false or misleading representations to plaintiffs regarding their eligibility for a permanent loan modification and their rights under HAMP" "are plainly sufficient to state a claim under ch. 93A for unfair or deceptive practices"); Ording v. BAC Home Loans Servicing, LP, No. 10-10670-MBB, 2011 WL 99016, at *7 (D. Mass. Jan. 10, 2011) ("the lack of a private cause of action under HAMP. . . does not automatically dispose of the chapter 93A claim").

It's not so much about HAMP as it is that banks used the HAMP carrot in a deceptive and unfair way...
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William A. Roper, Jr.
FnDoomed:

You might want to take a look at the pleadings in the case:

Marques v. Wells Fargo, Case No. 3:09-cv-01985 (U.S. Dist S.D. Calif.)http://www.scribd.com/doc/56199785/Marques-vs-Wells-Fargo-LIVES


See also:

"Federal Court: Borrower is INTENDED 3rd Party Beneficiary of HAMP – Homeowner Sues for Breach"

http://ssgoldstar.websitetoolbox.com/post?id=4859814


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Angelo
Fn

Check out the case I posted earlier, not sure if it applies to your siutation but give it a read, its about MERS and loan mods.  Its from the Weisblum decision.

Hope this helps!

http://www.nycourts.gov/reporter/3dseries/2011/2011_04184.htm


"The document submitted by Aurora in support of its motion for summary judgment and in opposition to the Weisblums' cross motion purports to be an assignment of only the first note and mortgage in the amount of $672,000 to Aurora by MERS, as nominee for Lehman Brothers. However, Aurora failed to produce evidence of MERS' authority to assign the first note. On its motion for summary judgment, Aurora failed to provide a copy of the first note but submitted a copy of the original first mortgage and a series of assignments culminating in the purported assignment of the first note and mortgage to Aurora. The first mortgage was originally held by MERS, as nominee for Credit Suisse; the mortgage document recites that the lender on the first note is Credit Suisse, but there is nothing in this document to establish the authority of MERS to assign the first note. MERS later assigned the first mortgage "together with" the underlying note, and thereafter, successive assignees assigned the first mortgage "together with" the underlying note. While, in some circumstances, the assignment of a note may effect the transfer of the mortgage as an inseparable incident of the debt (see U.S. Bank, N.A. v Collymore, 68 AD3d at 754), here the assignment instruments purport to do the opposite, without any evidence that MERS initially physically possessed the note or had the authority from the lender to assign it (see LPP Mtge. Ltd. v Sabine Props, LLC, 2010 NY Slip Op 32367[U]; OneWest Bank, F.S.B. v Drayton, 29 Misc 3d 1021, 1038-1041; Bank of N.Y. v Alderazi, 28 Misc 3d 376; cf. Mortgage Elec. Registration Sys., Inc. v Coakley, 41 AD3d 674, 674-675).

Moreover, Aurora produced no documents indicating an assignment to it of the second note and mortgage or of the entire consolidated note and CEMA in the amount of $704,000. Although Aurora's vice president averred in conclusory fashion that Aurora became holder of the mortgage which is the subject of the action "by delivery without a written assignment," the affiant failed to give any factual detail of a physical delivery of both the consolidated note and the CEMA to Aurora prior to the commencement of the action. Thus, Aurora failed to establish its standing to commence the action.

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Florida Lawyer Facing Suspension for Mortgage Modification Scam

Nearly every client or prospective client who has consulted with Stopa Law Firm over the years has expressed a desire to obtain a loan modification. As much as I’d love to tell these homeowners what they want to hear, the sad reality is that mortgage modifications are few and far between, especially those with principal reductions.

Unfortunately, not everyone in the industry shares the necessary candor with homeowners. The story below, for instance, shows how one Florida lawyer duped thousands of homeowners into paying him an up-front fee based on promises of a loan modification … promises which he obviously can’t deliver.

If you’re a homeowner facing foreclosure, let this be a gentle reminder of a a few basic things.

1. Loan modifications are rare, especially with principal reductions. I know that’s frustrating, believe me – but don’t shoot the messenger.

2. If anyone is promising you a loan modification with principal reduction, predicated on you paying an up-front fee, be very wary – it’s probably a scam. The number of scam operations has gone down in recent years, but as you can see, they’re still out there.

3. Even if you’re trying to get a loan modification, you must defend your foreclosure lawsuit in the interim. Otherwise, you may think you’re negotiating for a mortgage modification, but those negotiations will end quickly once the foreclosure lawsuit ends with a Final Judgment of Foreclosure.

Of course, if you’ve been a victim of William O’Toole or Summit Legal Group, feel free to contact Stopa Law Firm for a consultation - we’ll be happy to see if it’s not too late to help you.

Here is the article, courtesy of the Daily Business Review.

The Florida Bar has called for an emergency suspension of Boca Raton lawyer William O’Toole, declaring the foreclosure defense lawyer presents “great public harm.”

In its petition for suspension, which the Florida Supreme Court is expected to rule on today, the Bar alleges that O’Toole has partnered with non-lawyers to create Summit Legal Group and collect up-front fees from clients for mortgage modifications.

State law prohibits non-lawyers from collecting up-front fees in exchange for promises of obtaining mortgage modifications. Attorneys general throughout the country have warned consumers that mortgage modification centers are a relatively new phenomenon that produce few or no results for distressed homeowners. The Bar has warned lawyers not to partner with non-lawyers on such endeavors.

According to the Bar’s petition, O’Toole is the subject of 20 complaints and has been under investigation by the Bar since March 2010. He partnered with non-lawyer Randy Baker, who is under investigation by the Florida attorney general, the petition states, to send him “leads” and then split fees with Baker in violation of Bar rules.

O’Toole currently has between 2,500 and 3,000 clients “and admits that he has so many files he does not know the status of the client’s files,” according to the Bar petition.

O’Toole did not return phone calls by deadline.

The Daily Business Review recently reported that another lawyer, Rashmi Airan-Pace, was suspended by The Bar for allegedly operating a similar mortgage modification service with a non-lawyer company. The Bar alleged Airan-Pace took up-front fees and promised to obtain mortgage modifications for underwater homeowners without results.

Mark Stopa

http://www.stayinmyhome.com

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I am writing a paper on counterfeit fashion and I can't find any details on this! URLs if possible. Please help!
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Moose
eileen11 wrote:
I am writing a paper on counterfeit fashion and I can't find any details on this! URLs if possible. Please help!


Counterfeit fashion?

Sorry, that doesn't make sense.

Moose

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