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Three Important Articles By George Mantor on Predatory Lending, Predatory Servicing Fraud, and Abject Harassment of Borrowers who Fight Back

10 Jun

These may seem like harsh words, but these are important things to know and clearly very few people outside of the ones dealing with the terrible consequences of not know them are aware of them.

We would take very careful note of every bit of these three pieces and follow the examples of how to deal with predatory servicers to the letter – there is no question in our minds after witnessing hundreds of homeowners facing these same tactics. Wee believe every word of this article:
We have put all three pieces here because we think they are all important and because we need to all be willing to step up and be seen in this battle – as it clearly IS a battle, and we will never win if we do not ever step up and try to win.

Predatory Loan Servicing–Part One

Posted at Keepin’ it real by George Mantor

Apr. 16, 2010

It’s been more than three years since I wrote an article about mortgage servicing fraud.  I’m a little older, but it’s still alive and thriving.  Since then, we’ve had a complete meltdown of our financial system, a thorough looting of the American tax payer, the destruction of the middle class, and just about every other indicator of quality of life has tanked alarmingly.

At the same time, financial intermediaries were able to reap huge profits, receive TARP funds to which they were not entitled and didn’t need because they had no real losses, and funneled it all into bonuses that catapulted number crunchers to oil Sheikdom wealth.

This didn’t happen by circumstance, but is instead part of a large and well organized fraud wherein all of the evidence points directly back to “too big to fail institutions” that are, apparently, too big to prosecute as well.

Financial intermediaries targeted the large pools of cash in pension and hedge funds.  They promised absolute safety for a slightly higher interest rate than comparably safe investments.

They pointed out that residential mortgage foreclosures were extremely rare at between 1-2%.

They failed to mention that those were just foreclosures.  Default rates are something different.  Nor did they mention their plan to create a menu of guaranteed to default loans—predatory loans.

And, they left out the part about how easy it would be to increase defaults if one controlled the servicing. At present, there are a record 13 plus percent of loans which are not current.  Coincidence?

The financial intermediary who had no actual loss also bought credit default swaps for themselves at multiple times the loan amount.

There is an inherent conflict of interest in this scenario.  The financial intermediaries, who actually have no risk, stand to gain enormously by collecting on the default swaps.

As if debt securitization and betting on failure weren’t lucrative enough, part of the plan included gaining every possible means of getting more of the borrower’s money in fees.

But even more important, by controlling servicing, they have the ability to actually control the exact number of defaults within specific pools by simply pushing people into default.

The terms of the default swaps were dictated by the financial intermediaries.

To collect on the default swaps, which the financial intermediaries created and designed, just like the onerous terms of your mortgage, only a certain percentage of defaults need to occur within a pool.

However, if they could control the performance of the underlying loans, they could manipulate the defaults in the pool.  The best way to do that is to service the loan.

In addition to putting borrowers into default at will, they make vast untold sums of money before the property is foreclosed.

And once they target you, they cannot be stopped.  That unlocks a wealth of money making opportunities. The real money, as many servicing companies are discovering, is in the very lucrative business of targeting the most vulnerable borrowers and squeezing every last penny out of them before throwing them out in the street.

Servicing, the collecting and distributing of mortgage payments, is the land of opportunity.

Who is in a better position to exploit a defaulting borrower than a person posing as someone who wants to help?  And, it’s all part of a scam planned well in advance.

All the moves are choreographed to stymie, befuddle, and eventually beat down the homeowner until they give up in despair.  Thirty states allow foreclosures to occur without any judicial review or any examination of the circumstaces, the evidence or the veracity.

They comb credit reports looking for changes in the patterns of payments.  If they see more use of credit cards, late payments, grocery charges, types of stores and purchases; there antennas go up and they smell a victim in the making. If they suspect you might be running low on cash,

they know that you can’t put up much of a fight, particularly in a non judicial foreclosure state.

Do not believe that they exist simply to process checks, but rather to put the borrower over a barrel and then offer more and more expensive “solutions”.  True, they don’t want your house, but they do want to keep you in default and every spare dime you can fork over.

They don’t care one way or the other what happens to your home; they’re just the servicing company.

All of the dialogue is finally honed and well-scripted.  They will insist that they did not receive your payment, even though they did.  They will say that the homeowner is without adequate insurance.  They will claim they paid your property taxes, even though they cannot prove it.

Here are some of the tricks thy use to push borrowers into default.

We take so long to process our mail it could really cost you.

Most mortgages have a grace period of sorts.  If your payment is due on the first, a late charge won’t be imposed until the fifteenth.  But, your payment is technically late the day after the due date.

And, that is when the telemarketers of the servicing firm begin to call.  The purpose of this call is to scare you into believing that,”due to extended internal processing times and the unpredictability of mail delivery”, you are going to incur a late fee.  To avoid that hefty late charge, they suggest stopping payment on your check and allowing them to take the money directly from your bank account.

Do not be tempted. It will certainly cost you at least for the stop payment on the check, and wouldn’t you know it, the mortgage servicer can also charge you a fee for this.

“We didn’t get your payment and you can’t prove we did.”

You send your check and they cash it.  But, no matter how many cancelled checks you trot in front of them, they deny receiving payment.

“Please try our easy pay program.”

This is the hi-tech version of above.  Your bank statement shows the payment came out on time, but the mortgage servicer doesn’t credit the payment to your account for two weeks.  Late fees begin to mount up while you send copies of your bank statements showing the withdrawals.  Nonetheless, they insist you are late, and late on the late fees, and monies start to compound.

“You didn’t pay your property taxes, so we did.”

Here again, they will deny your cancelled check or credit card receipt, and without producing any documentation, will insist that they, not you, paid the property taxes and they are entitled to establish an “escrow account ”.

“You do not have insurance.”

Or, you do not have enough insurance.  We bought some for you.  Now, they will exercise their right to open an “escrow account.”

“For your benefit, we’ve established an escrow account.”

The escrow account is where the real financial trickery takes place.  No matter how many times you ask, you will never see an accurate accounting of how they arrived at the amount they claim that you owe them.

“We’re here to help in your time of need.”

And, if you do actually fall behind on your payments, they will sniff out money you didn’t even know you had and wring it out of you.

They will try to get as much money from you as they possibly can.  First as a sizable down payment, and then as high a monthly make-up payment as you’ll agree to.  They take all of your cash and leave you with a payment that might be 35% to 50% higher.

In the process, you’ll be asked to sign away many of your rights and you’ll do it because they said they care.

They exploit you at your most vulnerable time because they know that most people would do anything not to lose their home.  They intimidate you into suspending judgment and going along out of fear and embarrassment.  And, if you put up little or no resistance, they will take you all the way to the courthouse steps.

They get paid a small fee to process payments, but when a payment is missed, they can charge whatever fees they want and keep all of the money.  They are nothing more than shakedown artists operating in a largely unregulated arena who have figured out a way to wring millions of dollars out of nervous consumers and keep the perfect mix of defaults in the pools.

They get away with all of this because they can.  You didn’t choose your servicing company, they chose you.  They chose you because they know all about you and know that you will make a good target.  You can’t fire them, quit them or take your business elsewhere.  Once they begin to destroy your credit, you couldn’t get another loan to pay them back even if you wanted to.  And, even if you refinance, there is no guarantee you won’t wind up back with the same servicer.

Lest you doubt their motives, it is a well known business axiom that you reward the behavior you want.

Read the remarks of the president of Ocwen Loan Servicing, Ronald M. Faris, after a $1.8 million judgment was awarded to a customer.  “We make sure our employees are aligned with this effort by paying them incentive bonuses when they succeed in keeping borrowers in their homes.”

Now that sounds noble if not a bit self-serving.  But, the incentive isn’t paid for keeping a borrower in their home, it’s a percentage of the money collected while stringing the borrower along.  Abuse of borrowers is their business plan and the longer they keep you in default, the more money they can collect.

Right now all of the focus is on the predatory loan-makers, not the loan servicers. There isn’t any help coming from lawmakers.  Therefore, you need to protect yourselves.

  1. Start to make your mortgage payment early.  This should help keep you under the radar screen. Once someone targets you, they will be calling.
  2. Don’t allow your homeowner’s insurance policy to lapse.  If the mortgage servicer asks for proof of insurance, provide it through every channel available and document it.  Print out and keep email, keep the fax verification and send every piece of mail “return receipt requested.”  And, make sure they know you are doing it.  Make the email confirmation part of your fax, for example.  This sends a message that you might not be the easiest of targets.
  3. Never talk to them on the phone.  Make them put everything in writing.
  4. Do not permit any sort of electronic transfer of funds; you want a paper trail.  Buy and use check writing software that allows you to update your bank account online and regularly monitor check clearing activity.
  5. Never sign anything without a professional review.  Forbearance agreements aren’t for you, they are written by the servicer and designed to strip you of your rights and every last penny.

Consider paying any late fees and contesting them after the fact. Withholding payment from the mortgage servicer in a dispute will give them just the excuse they need to deduct it from your next payment leaving you in arrears on your mortgage payment and late every month thereafter.  The late fees will skyrocket as your credit plummets leaving you no way out.

Predatory Loan Servicing–Part Two

Posted at Keepin’ it real by George Mantor

Apr. 28, 2010

I am deeply disturbed by the widespread and effective campaign of financial intermediaries to shift the blame for a plan they implemented onto an unsuspecting public who believed, because of the same unrelenting messaging, that they were doing the right things.

The letters to the editors and mindless blog rants try to reduce the argument to irresponsible sub-prime borrowers who got what they had coming to them. Almost all appear to be written by the same angry person and all express the same simplistic overview.  It’s called staying on message which is pretty much the “she deserved it defense.”

None mention the fact that real wages have been declining for a decade or that the impetus for lending wasn’t the consumer but the financial intermediaries themselves who could not stand to see all of that cash sitting in pension funds.

Nor is there any reference to securitization of every form of debt including made up debt, (Synthetic CDOs). And no one laughed.

They do not distinguish that the term “sub-prime” doesn’t refer to the borrower but to a loan product designed for maximum returns on credit default swaps.

The problem is not a greedy borrower but is instead the by product of a massive web of fraud.

We are supposed to believe that the explanation behind securities fraud, predatory lending, insider trading, fixed ratings, inflated appraisals, cooked books, and income tax evasion all leading to huge bonuses is that the consumer wanted more house than they should have, or used it like an ATM machine, or got greedy?

But that would be a lie.

The truth is that all Americans, save a handful of insiders, are the victims of organized crime just as much as if this was implemented by the Cosa Nostra.

They did it because they wanted more than they deserved, they used our houses like ATM machines and nowhere do they ever deny being greedy, arguing instead that “greed is good!”

But, they did not do all of this lawfully; they continue to steal homes to collect on the default swaps, and that is where I have a problem.

The cover-up is in full swing but the crimes continue.  Everyone knows about this.

Any rational tax payer has to wonder what it is, what the financial intermediaries have over law makers, law enforcers and judges that allows predatory lending and unlawful foreclosures to continue except in those rare instances where the homeowner fights back.  What?  Was Bernie Madoff supposed to be enough for us?

I think we are closing in on some very interesting revelations, but the truth won’t come out unless someone is pushing for it.  Everyday, another little piece of this elaborate fraud comes into focus.  As it does, events of the recent past take on greater meaning for what they tell us about our leadership.  This did not happen overnight.  Legislation was lobbied for and won.

Roll back the clock just ten years to 1999, to the dismantling of the Glass-Steagall Act which had been in place since it was enacted in response to The Great Depression, and would have prevented the financial crisis entirely.

Here is what its supporters said about it at the time:

Larry Summers, now director of President Obama’s National Economic Council:

“Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century. This historic legislation will better enable American companies to compete in the new economy.”

Senator Phil Gramm (R-Texas):

“The world changes and we have to change with it.  We have a new century coming, and we have an opportunity to dominate that century the same way we dominated this century.  Glass-Steagall, in the midst of the Great Depression, came at a time when the thinking was that the government was the answer.  In this era of economic prosperity, we have decided that freedom is the answer.”

Senator Charles Schumer (D-NY):

“If we don’t pass this bill, we could find London or Frankfurt, or years down the road Shanghai, becoming the financial capital of the world. There are many reasons for this bill, but first and foremost is to ensure that U.S. financial firms remain competitive.”

Sen. Bob Kerry (D-NB):

“The concerns that we will have a meltdown like 1929 are dramatically overblown.”

The likelihood of them ever acknowledging this complicity is remote, but so then is the hope that any of these people will be instrumental in affecting remedies for their mistakes.

Two of only seven senators who voted against the bill said this:

Sen. Byron Dorgan (D-ND):

“I think we will look back in 10 years’ time and say we should not have done this but we did because we forgot the lessons of the past, and that which is true in the 1930′s is true in 2010.  I wasn’t around during the 1930′s or the debate over Glass-Steagall, but I was here in the early 1980′s when it was decided to allow the expansion of savings and loans.  We have now decided in the name of modernization to forget the lessons of the past, of safety and of soundness.”

Sen. Paul Wellstone (D-MN):

“…determined to unlearn the lessons from our past mistakes.  Scores of banks failed in the Great Depression as a result of unsound banking practices, and their failure only deepened the crisis.  Glass-Steagall was intended to protect our financial system by insulating commercial banking from other forms of risk.  It was one of several stabilizers designed to keep a similar tragedy from recurring. Now Congress is about to repeal that economic stabilizer without putting any comparable safeguard in its place.”

So, you see, it was all part of an elaborate plan.  Change legislation, implement a credit scoring system, promise investors high return and absolute safety, develop an electronic recording system to hide the paper trail, create predatory loan products, boost appraisals, encourage frequent refinancing, establish predatory servicing companies, and make obscene profits out of massive fraud.

Who coined the phrase too big too fail?  Perfectly big and bloated enough too make permanent success impossible would be a more apt description of financial intermediaries but, on the way down, they plan to take a whole lot of our money and as many houses as they can steal until more people fight back.

And, pity the fool who pushes back too hard or asks too many uncomfortable questions as an Arizona woman recently discovered.  While considering her refinancing options, she sought to learn more about her existing loan.  Having begun to understand the complexities and problems developing around securitized predatory loans, she set out to discover exactly how her payments were being applied to her underlying indebtedness.

That is not only her absolute right, but also a prudent measure for any homeowner with a loan made in the last ten years.  However, despite the fact that she had never been late on a payment, the banksters are suing her in Federal court for “intended breach of contract.”

Message, don’t ask too many questions lady.

However, she may get the last laugh. She is not your average docile, helpless victim; she’s Ariz. Rep. Michele Reagan, R-District 8, never missed a payment and was never late, but when she set out to refinance her home she made the mistake of trying to find the note holder of record to payoff.  Stay tuned….Arizona may be coming to rescue victims.

Last week I received an ominous email.

Dear Mr. Mantor,

My family and I need your assistance.

We are mortgage fraud victims in the State of DE; and because we came forward and filed criminal complaints against the realtor, settlement attorney, insurance companies, bank, mortgage broker, Appraiser, etc…We have been literally DRIVEN out of the Good ‘ol Boys State and had to seek shelter in TN as political refugees!

These “white collar criminals” have gone to great lengths to destroy our character, health, wealth and happiness; and HUD/OIG has placed us in a victim/witness “relocation” program.

But, the DE State Housing Authority refuses to give us our relocation voucher!!!!!!!!!!!

Please contact me, if you wish; we have been advised to go public…

While I am frightened by “going public”…I am growing weary of this battle against the white collar criminals who have destroyed the happiness and well-being of my family…and I cannot rest until Justice wakes up.

Thank you for taking the time to help my family; it has been a nightmarish two years

I will look forward to hearing from you.

Sincerely,

Heidi

Or, this from a reader of my blog.

I have friends who are being harassed by BAC Home Loan Servicing LP. My friends had left a war torn country of their birth and sought refuge in US.  Although citizens, their English literacy is inadequate, but they can speak fairly well.  Almost 4 years ago they took out loan to buy a condo at peak of market as first time homebuyer.  They called me months ago when they couldn’t understand why their loan number had changed and they had 3 options of payment.  They thought they had standard 30 yr fixed loan, instead, they had fixed, interest-only 40 year loan with no oversight from Housing Authority to help them.  The husband will be 87 yrs old when it’s paid.  They did not have benefit of a translator to explain what they were to sign. Nor do they now have a complete copy of their loan docs.

Since my friends don’t read English well, I noticed that they had rec’d a debt validation notice in Nov 2009, even when they were never late making their payments.  I felt it was a foreboding sign that B of A wanted to take their property.  Market value had dropped from $305,000 to $86,000 (from recorded recent sales in their condo PUD).  They are struggling to make payments and I thought BAC might cooperate with a write-down on mortgage principle or do a short refinance.  From reading a variety of blogs over past several months, I believe that B of A almost always retracts from its trial modifications without mercy/honor/impunity because it can do so as a corporate entity.

And then there is the case of Michael Dillon of New Hampshire who was one of the earliest targets of predatory loan servicing fraud to fight back.  Since 2002, he has been engaged in a sort of running gun battle with Fairbanks and Now Quality Loan Servicing.

The evidence in this case and the one that follows clearly demonstrate the relentless effort that loan servicers put into forcing people into default and keeping them there despite judges orders to the contrary.

Daniel and Michelle Norris fought and lost a two year, four month battle for their dream home in Temecula, CA after their servicer arbitrarily established an escrow account falsely claiming their right to do so claiming that they, not the homeowner, paid the property taxes.

But, the Norris’ paid the property tax and had the receipt to prove it.  Nonetheless, the servicer continued to assert its rights to establish an escrow account and notified the borrowers on August 25, 2007 that their monthly payment was being increased form just under $2,000 to over $4,000, including a $686 monthly charge for “administration.”

Despite the Norris’ repeated requests for an accounting, they were instead dragged through an ordeal that included forbearance agreements, promises of modification, and all the while the property was headed for foreclosure while the servicer promised to “straighten everything out.”.

Predatory lending and servicing are real.  Real crimes. Homeowners in these situations need someone to stand up for them.

They aren’t trying to get out of anything, they just want to know where their prosperity went, and they’d like to get it back.

They are seeking justice.  Justice….is that too much to ask for today in America?

Predatory Loan Servicing–Part Three

Posted at Keepin’ it real by George Mantor

Apr. 28, 2010

The news of the past week has finally put an answer to the question of why banks would foreclose needlessly, unlawfully, and with sheer malice when that would appear to be bad business.  And, the answer is what I have been saying all along…because it is insanely profitable.

Goldman Sachs couldn’t stay out of the limelight.  First, came the SEC fraud charges, then two investor lawsuits, and then finally, the real truth became apparent in emails from the Goldman Sachs investigation. “Sounds like we will make some serious money.”

But, let’s not let that distract us from their use of predatory loans and predatory servicing fraud as the means by which to trigger the defaults.

You didn’t design your own loan—they did.  And, if the payoff is failure, the loan would naturally be designed not to succeed, but to default.  Isn’t that alone evidence of predatory lending?  And, that leads to predatory servicing.  If the borrower isn’t forced into default, why stop there; why not give them a little nudge?

Think of them as reverse strategic defaults.  In the topsy-turvy world of phony finance, up is down, good is bad, and failure is success.  Who has the most to gain by causing mortgage defaults?  The holders of the credit default swaps.

Your foreclosure, or how it came about, is of no concern to them.  You are but an obstacle to a payday.  The lure of credit default swaps actually makes a strong case that the inherent conflict of interest is behind reverse strategic defaults.

More people should strategically default so they can let up on those who have honored their obligation, despite the underlying fraud.

And that is why bankstas love the Home Affordable Modification Program or HAMP.

Most reports claim that HAMP is a fifty billion dollar flop.  But, that’s only a matter of perspective.  From Wall Street’s perspective, this is the system working at its very best.

HAMP is the perfect vehicle to draw in unsuspecting homeowners and begin the process of stealing their homes.  Disguised as a government assistance plan, it was really created to pacify borrowers while moving them into default and ultimately foreclosure.

The program couldn’t be more detrimental to homeowners if it had been designed by the bankstas themselves.  Wait….you don’t suppose they had a hand in shaping the rules to benefit themselves?

Most loans are serviced by a handful of companies, owned by the bankstas themselves.  In the case of Goldman Sachs, the servicer is Litton.  Look them up in the ripoffreport.com for comments of their customers.  All tell the same story of frustration, obfuscation, and deceit.  The bankstas talk of modification while secretly moving toward foreclosure.

HAMP hasn’t even put a dent in the pace of foreclosures which have skyrocketed.  And, it won’t.  Just the opposite.

As a matter of fact, HAMP has been instrumental in increasing the number of unlawful foreclosures, enormously increasing the profitability of loan servicing companies, and allowing more credit default swaps to be cashed in by financial intermediaries such as Goldman Sachs.  And, they get tax payer money to fund this scam.

It’s an evil little scenario that preys upon the most vulnerable and trusting individuals.  Some people, even after all of this, believe that government has the best intentions for citizens, and believe they mean it when they offer help.

But, once they surrender to the bankstas, their fate is sealed.  Borrowers who are current are told they must be in default; after they are in default, their credit score falls dramatically.  The servicer uses this scenario to engineer the default.  And, in non-judicial foreclosure states, there is no one to show your cancelled checks to when they simply file the notice of default and proceed toward sale.

And, what is with all of that missing paperwork?  If banks were that bad at handling paper, there would be money lying in the street outside of every bank branch.  The bankstas boldly blame the victims for not providing what they need to approve the modification.

Bankstas don’t lose paperwork….unless they want to.  As courts across the country have discovered, if they don’t have it, they just make it up, unless they don’t want you to see it.  They didn’t lose your loan modification paperwork.  Right now, they are using all of the personal information you just provided them to story-board your default and ultimate foreclosure.

Once you are in their cross-hairs, a systematic assault on you will begin.  They will slowly destroy your credit so that you have no other options.  Because they know how much you have in savings and discretionary income, they know how to plan the attack.

HAMP is now expected to assist only 1 million of the potentially fifteen million families expected to lose their homes if nothing is done to prevent predatory mortgage loan servicing fraud.

So far, 230,000 homeowners have received long term mortgage modifications under the president’s plan, a small fraction of the 6 million borrowers who are more than 60 days behind on their loans.

Tax payers will foot the bill for the $50 billion in Troubled Assets Relief, or TARP program.  Too bad they didn’t give it to FEMA.  If this were a natural disaster instead of a man made disaster, we would be in the midst of the largest relief operation in history.

What our politicians and judges are allowing to happen to homeowners dwarfs Katrina.  Instead of coming to the aid of those whose lives have been destroyed by a form of domestic terrorism, they continue to invent ways to help the bankstas.

Predatory mortgage servicing fraud is so prevalent that allowing foreclosures to proceed is willfully abetting organized crime.  How will we ever unravel this?

 

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  1. DAN MCMILLAN

    November 7, 2010 at 8:34 pm

    YOU HIT IT PERFECTLY… TRYING TO TALK WITH “BANKERS” FROM PURTO RICO OR INDIA IS DIFFICULT… THE TRIPLE PAY OFF FROM DEFAULT SWAPS MAKES ALL THE SENSE IN THE WORLD WHY IT IS DIFFICULT TO GET TO FIRST BASE WITH THESE BUMS.