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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News Release

HUD No. 07-123
Steve O'Halloran
(202) 708-0685

For Release
August 31, 2007

FHA to implement new "FHASecure" refinancing product

WASHINGTON - President George W. Bush today announced that HUD's Federal Housing Administration (FHA) will help an estimated 240,000 families avoid foreclosure by enhancing its refinancing program effective immediately. Under the new FHASecure plan, FHA will allow families with strong credit histories who had been making timely mortgage payments before their loans reset-but are now in default-to qualify for refinancing.

[Photo: President George W. Bush announced  FHA Refinancing Program]
In addition, FHA will implement risk-based premiums that match the borrower's credit profile with the insurance premium they pay-i.e., riskier borrowers pay more. This common-sense, risk-based pricing structure will begin on January 1, 2008.

"Many hard-working American families who were able to make their mortgage payments under the initial teaser terms of the exotic loan are now struggling to make ends meet because their rates have doubled or tripled," said HUD Secretary Alphonso Jackson. "FHASecure will bring stability to the housing market and give eligible families who were in good financial standing before their loans reset a chance to keep their homes."

The combination of FHASecure and risk-based premium pricing will permit FHA to return to the role it was originally designed to play, bringing stability to the real estate market by helping break today's cycle of foreclosures and price depreciation and creating much needed liquidity in the now-constricted mortgage market.

FHA has recently experienced a substantial increase in the number of conventional borrowers refinancing into FHA products. With FHASecure, it can help even more. The number of these refinancing transactions has tripled since the start of 2006. FHA's transactions are projected to surpass 100,000 loans by the end of the fiscal year. To date, these figures do not include refinances for delinquent borrowers.

The FHASecure initiativewill operate under the same safe guidelines as the FHA's existing mortgage insurance program without affecting FHA's financial health. Eligible homeowners will be required to meet strict underwriting guidelines and pay a mortgage insurance premium, which offsets the risk to FHA's insurance fund at no cost to the taxpayer.

The risk-based insurance premium structure will further expand FHA's reach to additional underserved borrowers, particularly minorities and first-time homebuyers who have been disproportionately lured into exotic mortgages, and enhance the FHA's overall risk management. The move to risk-based premiums ensures that FHA remains on solid financial footing as a self-financed agency for the long-term.

FHASecure, like all FHA products, will be underwritten to ensure the borrowers have the ability to repay the loan, will require escrow for taxes and insurance, and will continue to offer unprecedented foreclosure prevention assistance. The FHA has never permitted and will not include pre-payment penalties or teaser rates that are common in exotic mortgages and have caused much of the current market troubles.

To qualify for FHASecure, eligible homeowners must meet the following five criteria:

  1. A history of on-time mortgage payments before the borrower's teaser rates expired and loans reset;
  2. Interest rates must have or will reset between June 2005 and December 2009;
  3. Three percent cash or equity in the home;
  4. A sustained history of employment; and
  5. Sufficient income to make the mortgage payment.

"FHASecure is designed for families who are good borrowers but were steered into high-cost loans with teaser rates," said Assistant Secretary for Housing-FHA Commissioner Brian Montgomery. "These homeowners, many of whom are minorities, need a safe, affordable mortgage product that will help build wealth. All FHA borrowers pay mortgage insurance premiums to offset claims to the FHA insurance fund and ultimately prevent risk to the taxpayer."

FHASecure will also bring much-needed liquidity to the mortgage market. FHA anticipates more lenders will offer FHA-insured loans, pool them, and securitize them with the Government National Mortgage Association (Ginnie Mae), which has the full faith and credit of the U.S. government. This guarantee makes Ginnie Mae's mortgage-backed securities the safest on the market and helps to channel greater capital into the housing market, benefiting U.S. homeowners.

Since its inception in 1934, FHA has helped almost 35 million people become homeowners, making it the largest insurer of mortgages in the world. The 109th Congress introduced the Expanding American Homeownership Act in June 2006 which would enable FHA to be a safe option for more underserved low- and moderate-income and minority families so they can achieve the American Dream of homeownership. Today, President Bush also urged Congress to quickly pass the Administration's FHA modernization proposal to help more families in need.

For more information about FHASecure and other FHA products, please call 1-800-CALL-FHA or visit or For a list of your local homeownership center or a HUD-approved housing counseling center, go to


HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development, and enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet at and For more information about FHA products, please visit

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What is the FHASecure refinance program?


 Under the new "FHASecure" refinance program, FHA will allow families with acceptable credit histories who had been making timely mortgage payments before the interest rate on their adjustable rate mortgages reset-but are now in default-to qualify for refinancing to an FHA mortgage.

The basic requirements of the FHASecure program are:

*The mortgage being refinanced must be a non-FHA Adjustable Rate Mortgage (ARM) and the interest rate has reset.

*The homeowner is now delinquent in making payments on the mortgage after the reset.

* The homeowner's payment history must show that, prior to the reset of the interest rate on the mortgage, the homeowner was current in making the monthly mortgage payments, i.e., the homeowner's mortgage payment history during the 6 months prior to the interest rate reset showed no instances of making mortgage payments outside the month due.

* The homeowner has sufficient income to qualify for an FHA mortgage.

If there is sufficient equity in the home, FHA will allow missed mortgage payments to be included in the FHA refinance mortgage, if the arrearages arose after the interest rate reset or the homeowner may be able to use a second mortgage to finance the missed payments.

To learn more about the FHASecure program go to the following HUD website:
Homeowners should contact their mortgage lender to see if they qualify for the FHASecure program or find an FHA lender in their area by going to the following HUD website:

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Joe B
I like this program for the folks who were duped into ARMs that now have become unaffordable. If they could qualify before, and paid on time, they can qualify now; and be protected by the FHA... a good thing.

Plus they are going to get a fixed rate loan, which is something they probably should have gotten in the first place (my opinion only!).

However, those of us who have been impacted by servicing fraud are again left out in the cold...

It's a start I guess, right?

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That's the problem I'm having with both of these programs JB - if, in fact, they are separate programs. MSF victims are once again screwed. Only this time, the servicers are standing up on the stage with the administration. This is an opportunity that they have been waiting for for a long time. Somewhere, I tripped over a blurb that Countrywide Financial has officially joined HOPE NOW.

I still have yet to locate, or even hear which servicers are involved with HOPE NOW.

But just from the little I've seen so far this morning, I think you're correct in hoping that these programs provide at least some relief for borrowers in general. It's just not going to be any of us.
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There still needs to be more done since this program applies to only a fraction of borrowers. But as you mentioned it is a start and I will definitely look into it and see how it will benefit us. Our next reset for the ARM is coming up in January.


There is one thing though that strikes me: Eligible homeowners will be required to meet strict underwriting guidelines and pay a mortgage insurance premium, which offsets the risk to FHA's insurance fund at no cost to the taxpayer.”


I am not sure what this is about. I mean we borrowers need help getting our mortgage payment set back to the amount we can afford to pay, based on the income. But if this means I have to pay another bill – I am going to say – Thanks but no thanks. 


My own opinion

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Nice summary Mike.

I always like it when somebody gets away from these crooked loans.

For those that qualify, go get it now before there is no funding for it.

If you can get them stuck with the teaser rate as the fixed rate, they are going to start squealing like stuck pigs.

The secondary market is just NOT going to like this.

WTF?  Where's my money?  Those investors are going to stay angry
Just like we do when they get it; they are being fleeced.  It's deliberate
and a plan in place to fleece them.

Nice level headed post, Joe

This door for a few borrowers is closing out that problem. 

A good thing is they are giving the borrowers an opening and closing date
for loans that originated to qualify.

What happens when the originator like "Ameriquest Borrowers" are out of business?  is there a way to make them pay?  Yes, their past profits
can be tapped even to the Ambassador? Especially to the Ambassador?

There are many other originators that have gone out of business.

I think the originators should have to pay into a fund where it is found that a originator is out of business, broke, or in bankruptcy.  I don't like to see
them getting away with the profits for fleecing borrowers and investors.

This process is what insurance carriers have had to do for many years now.

Yes, the President fails to see mortgaging servicing fraud.  I don't see where
he gets his information from to consistently miss this factor and the big shots
reporting to him don't really do him a favor.  He looks like an idiot again.


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There is one thing though that strikes me: Eligible homeowners will be required to meet strict underwriting guidelines and pay a mortgage insurance premium, which offsets the risk to FHA's insurance fund at no cost to the taxpayer.”



I suspect that this is the PMI, personal mortgage insurance that borrowers have to pay

until they reach 20% paid on the loan.  At 20% this insurance can be cancelled.


The purpose is insure that the borrower actually has a stake in the loan and stastically

shows those with less than 20% are likely to default and walk away from a  house

they have no investment in.


You'll have to watch this on your own loans.  This is one reason the servicers like

to add fees and extra charges to the principal.  You get to keep paying pmi

probably to someone linked in their corporations circle of business.  They love

getting every single last penny.  We see this with Bear Stears and others in the news today.


We will stay on this until we can see if this is going to be a benefit to borrowers in case there is some room for tweaking.


I don't even like the name of the program.  HOPE from these barracuda?  Yeah.  Right.


Show me some results.  I'm not jumping on the HOPE train.  It is especially cruel

to borrowers to have them focus on hope instead of results.



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Joe B

I agree that this is now going to 'paint' the servicers as the 'good guys' who are going to work with borrowers to 'help' them! It's like the 'mod squad' and those other programs that really don't do much except buy them good will and sound bites making them look good! Even the recent news articles talk about less than 1% of these loans are being modified. Hardly a big effort to 'help,' wouldn't you agree?

The original press release said the project HOPE is made up in part of 12 or 13 of the biggest servicers representing 60% of the sub-prime loans. Based on this, I don't see how Countrywide couldn't be part of it. In fact, I think that you could round up the usual suspects and include them here.

The bit***ch here is that they are all going to look like good guys rescuing these poor naive homeowners, blah, blah, blah...

Meanwhile, the MSFraud issue gets lost or forgotten in all of the other sound bites floating around...

I would have felt a lot better if a group of homeowners were included in this program. Now imagine if 10 or 15 people who have suffered from one of these issues were going to get the opportunity to 'educate' this group on what actually happens, and be part of the solution that gets rolled out.

Mike, I'd do it, would you? Who wants to place the call, and volunteer us to be part of the solution? I am ready to go and make sure this program is truly successful. Now, do they really want it to be successful or not?

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Way ahead of you JB

Oh, btw, JB. Had a f2f conversation with one of your neighbors the other day. She's now aware that MSF victims can play "six degrees" with her and her family. May be interesting that she noted that her father is a retired pilot.

I'll let y'all know if/when I find someone that needs to hear from us.
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Countrywide Joins New National HOPE NOW Alliance

WASHINGTON, Oct. 10 /PRNewswire/ -- Countrywide Financial Corporation today joined with credit and homeowners' counselors, mortgage servicers and secondary market investors in announcing the formation of the HOPE NOW Alliance, a collaborative effort formed with the encouragement of the Department of the Treasury and the Department of Housing and Urban Development.
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Partial list of participants:
U.S. homeowners offered hope

Program meant to stymie flood of foreclosures

Patrick Rucker, Reuters

Published: Thursday, October 11, 2007

U.S. Treasury Secretary Henry Paulson on Wednesday announced that a coalition of mortgage service companies, counsellors and trade organizations was banding together to offer help to hard-pressed homeowners.

"Eleven of the largest mortgage servicers representing 60 per cent of the mortgages in America, several of the leading mortgage counsellors, investors and large trade organizations have come together and formed a partnership to help more Americans keep their homes," Paulson said at a news conference announcing the initiative known as Hope Now.

Among the mortgage lenders and servicers who pledged to offer flexible terms to borrowers in trouble were Countrywide Financial Corp., Wells Fargo & Co. , CitiMortgage Inc. , HSBC and J.P. Morgan Chase.

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Comments by Treasury Secretary Henry Paulson

Prepared Remarks for Alphonso Jackson Secretary of Housing and Urban Development at the HOPE NOW Alliance Announcement

The current list of participants can be found at the Financial Services Roundtable site but to spare the suspense:

HOPE NOW is an alliance between counselors, mortgage market participants, and mortgage servicers to create a unified, coordinated plan to reach and help as many homeowners as possible. The members of this alliance recognize that by working together, they will be more effective than by working independently. The Department of the Treasury and the Department of Housing and Urban Development encouraged these leaders to form this alliance, which includes, as of October 10th, American Financial Services Association, American Securitization Forum, Assurant, Inc., Bank of America, CCCS Atlanta, Inc., Citigroup Inc., Consumer Bankers Association, Consumer Mortgage Coalition, Countrywide Financial Corporation, Fannie Mae, The Financial Services Roundtable, First Horizon National Corporation, Freddie Mac, GMAC ResCap, Homeownership Preservation Foundation, Housing Partnership Network, The Housing Policy Council, HSBC North America Holdings, Inc., JPMorgan Chase & Co, National City, NeighborWorks America, Mortgage Bankers Association, Option One Mortgage, PMI Mortgage Insurance Co., Securities Industry and Financial Markets Association, State Farm Insurance Companies, SunTrust Mortgage, Inc., Washington Mutual, Inc., Wells Fargo & Company. More companies and organizations are expected to join in the coming months.
How many mortgage servicers are taking part in this? We're going to need to build a few more chicken coops if we're going to expect all of these foxes to have enough room to effectively guard them without becoming bored. And only one company that I am naming in a racketeering action. Anyone else suing any of these guys?  
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Didn't Countrywide have to hire a Public Relations Firm to like clean up their bad image. It will be interesting to see how that plays out.

Why is the government giving these guys more money? Oh I realize dumb question. So Mozilo can cash out more stock options.
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