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Open Letter To California Attorney General Edmund G. Brown Jr.: Foreclosure Crisis

Open Letter To California Attorney General Edmund G. Brown Jr.: Foreclosure Crisis

LAW OFFICES OF MOSES S. HALL, APC
2651 East Chapman Avenue, Suite 110
Fullerton, California 92831
Telephone (714) 738-4830
Facsimile (714)992-7916

September 9, 2010

Attorney General’s Office
California Department of Justice
Attn:  Edmund G. Brown Jr.
1300 “I” Street
Sacramento, CA 95814

Benjamin G. Diehl
Office of the California Attorney General
300 S. Spring Street,. Ste 1702
Los Angeles, CA  90013

Kathrin Sears
Office of the California Attorney General
455 Golden Gate Ave., Ste 1702
San Francisco, CA  94102

Re: Civil Code §§ 2923.52 and 2923.53
The People of The State of California vs. Countrywide et. al. LC093076
Petition for Writ of Mandamus

Dear Colleagues and Attorney General Edmund G. Brown Jr:

As you are aware, my office represents homeowners caught up in the foreclosure crisis currently occurring in the California housing market.

You may recall that my office sought your assistance in the matter of Mabry vs. Aurora Loan Services. Wherein the 4th Appellate District Division Three acknowledged a private right of action to prevent foreclosures on a citizen’s primary residence, when the bank and/or mortgage holder has not complied with Civil Code § 2923.5. However, your office opted not to participated in what I believe was a landmark decision for homeowners in the battle against foreclosure prevention here in California.

Notwithstanding the Stipulated Judgment and Injunction that your office had obtained against Countrywide/Bank of America in the above referenced case, Bank of America filed an Amicus Curia Brief in the Mabry action espousing no private right of action and no obligation to modify distressed loans.

I am fully aware, grateful and commend your office for its attempts to crackdown on loan modification schemes that have swindled millions of dollars out of frightened and frustrated homeowners. Some homeowners who were and still are willing to believe against all logic or reason that the companies, whom practiced such schemes, could actually get the mortgage holder to give them some sort of State or Federal assistance that could prevent the losing of their homes and becoming homeless.

I further commend your office for its 2008 lawsuit against then Countrywide Financial, Countrywide Home Loans, Inc., and Spectrum Lending, Inc., who are now commonly referred to as Bank of America N.A. and BAC Home Loans (BAC).  An action which ultimately resulted in the successful acquiring of a Stipulated Judgment and Injunction against (BAC) on October 14, 2008.

The BAC lawsuit’s primary focus was on the predatory lending practices of the Defendants. The Stipulated Judgment and Injunction provides a remedy that creates yet another avenue for BAC borrowers to find relief and even the possibility of preventing the loss of their homes. The loss of a home is a threat that is ever too common, albeit avoidable with help from BAC, for numerous California BAC borrowers in this foreclosure crisis.

I wish this letter could end here or at least continue to praise your efforts and accomplishments as the present Attorney General of California. However, unfortunately, it must now turn to the present state of affairs and your lack of aggressiveness in the pursuit against the foe you identified and successfully prosecuted in the People vs. Countrywide, et.al. action.

I believe judgment obtained against BAC was merely the tip of the iceberg.  You may or may not be aware that IndyMac Bank, now OneWest Bank, has been sued by their investors for providing false and misleading appraisals along with committing many underwriting violations, which gave thousands of Californians their present unconscionable loans [a copy of the court’s opinion is attached for your edification].

There are presently hearings scheduled on September 21, 2010 and September 22, 2010, that involve issues that would substantially curtail the foreclosures in California:

  • September 22, 2010 at 9:00 a.m. in Department 68 of the Los Angeles Superior Court, Mabry vs. Preston Dufauchard, Commissioner For the California Dept of Corporations, Real Party in Interest Aurora Loan Services, LLC, Case No: BS 127903. Petition for Writ of Mandamus.
    • The issue: Whether possessing a HAMP program equates as compliance with California Civil Code § 2923.53.
  • September 21, 2010 at 9:00 a.m. at the California 4th Appellate Court Division Three Vuki vs. Superior Court of California, Orange County Case No: GO43533, Real Party in Interest HSBC. Oral Argument.
    • The issue: Whether a bad faith compliance with Civil Code § 2923.53 makes the foreclosing beneficiary (HSBC) a bona fide purchaser pursuant to Civil Code §2923.54.
  • September 21, 2010 at 9:00 a.m. at the California 4th Appellate Court Division Three Sanchez vs. Superior Court of California, Orange County Case No: G043300, Real Party in Interest Litton Loan Servicing LLC.. Oral Argument.
    • The issue: Whether a fully executed and performed loan modification is terminated by the lender’s inadvertent sale of the subject real property in lieu of Civil Code § 2923.54.

These decisions are being sought by my office to help clarify citizens’ rights under the present Foreclosure Prevention Statutes.

My office has been very instrumental in not only the prosecution of these issues, on behalf of my clients, but all citizens of the State of California.

Unfortunately, the BAC Stipulated Judgment and Injunction does not provide a component for a private right of enforcement.  Thus, with respect to possible violations by BAC, such Stipulated Judgment and Injunction can only be enforced by your office.

My office would love to step into your shoes and be granted permission and the rights to enforcement under the Stipulated Judgment and Injunctions. That way we may stop all the Countrywide loan foreclosures presently scheduled and being conducted in California until each

prior Countrywide and/or BAC California borrower is offered the benefits under the Stipulated Judgment and Injunction your office obtained.

I do not believe that you could or are able to assign such a right, but I make it as a gesture of sincerity as to my conviction and belief of the wrongdoings of BAC.

I ask that you immediately seek Court intervention enjoining all Countrywide and/or BAC foreclosures proceedings that fall within the auspices of the Stipulated Judgment/Injunction.

Alternatively, you leave my office no choice but to seek a Writ of Mandamus asking the Court to instruct you and your office on your obligations as Attorney General of our great State.  I realize your business and acknowledge that this may not be your primary priority, but if I do not receive a response indicating your intent by September 17, 2010, I will deem you have no intent to respond, investigate this matter, or take other appropriate action and at that time will seek the Writ of Mandamus.

Notwithstanding the aforementioned paragraph, I wish you well on your campaign to return to the position of Governor of our great State.

Sincerely
Moses S. Hall;

Msh:

Attachments.

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© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in bac home loans, bank of america, CONTROL FRAUD, corruption, countrywide, deed of trust, foreclosure, foreclosure fraud, foreclosures, injunction, investigation, mortgage, mortgage modification, Real Estate, securitization, servicers, TRO, trustee, trustee sale, Trusts, Violations2 Comments

Whistleblower| Fannie Mae Bungled HAMP Anti-Foreclosure Program

Whistleblower| Fannie Mae Bungled HAMP Anti-Foreclosure Program

By Michael Hudson | August 06, 2010

Fannie Mae executives bungled their stewardship of the federal government’s massive foreclosure-prevention campaign, creating a bureaucratic muddle characterized by “mismanagement and gross waste of public funds,” according to a whistleblower lawsuit by a former Fannie Mae executive and consultant.

Caroline Herron, a former Fannie vice president who returned to the mortgage giant in 2009 as a high-level consultant, claims that the homeowner-relief effort was marred by delays, missteps and executives preoccupied with their institution’s short-term financial interests.

“It appeared that Fannie Mae officers were focused on maximizing incentive payments available to Fannie Mae under various federal programs – even if this meant wasting taxpayer money and delaying the implementation of high-priority Treasury programs,” she claims in the lawsuit.

Herron alleges that Fannie Mae officials terminated her $200-an-hour consulting work in January because she raised questions about how it was administering the federal government’s push to help homeowners avoid foreclosure, known as the Home Affordable Modification Program, or HAMP.

Continue Reading…PublicIntegrity.org

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in concealment, conspiracy, fannie mae, foreclosure, hamp, investigation, mortgage modification, scam1 Comment

Fannie wants to penalize. My “ARSE”…I have the solution!

Fannie wants to penalize. My “ARSE”…I have the solution!

By DinSFLA 6/30/2010

When Fannie Mae announced that she was going to start to penalize people who walk away from underwater mortgages it created a fire storm of angry individuals.

She said it would step up efforts to pursue deficiency judgment—seeking to recoup the difference between the loan balance and the net proceeds of the foreclosure sale—against so-called “strategic” defaulters in states where such suits are allowed. Fannie also will lengthen to seven years, from five, the amount of time borrowers who go through a foreclosure must wait before getting a new loan.

So here is my solution, grab a pen and write this down:

  • Homes have lost not a little but an enormous amount of it’s value up to 70% in some areas.
  • In my opinion it is going to take more than 7 years to see any hope in Real Estate stabilization.
  • Who wants to buy today when we read about possibly 8 million shadow foreclosures that will ultimately bring down the market further to dust?
  • We the tax payers are the owners so who the hell asked us if this is appropriate? Were any of us invited to this meeting and discuss this? Did we have a say in this like we never do? DISCLOSURES?
  • What about the possible millions that were denied a modification from no fault of their own? Oh but the Obama Administration admitted this too…too…too…late 🙁 Who will be responsible for those who were improperly foreclosed on?
  • With the taxes and insurance sky rocketing, it only makes sense to rent for a while.
  • Deficiency Judgment? Do you realize what this little pot you stir will cause?? Hmmm think about it.
  • Credit who wants credit? We don’t even know where our own money is being used.
  • Who do we have to contact to foreclose on Your “arse” Fannie??? After all you are owned by us… Do not bite the hand that feeds you!

You see the threat really has no impact.

Trust is earned my friends and we have absolutely none at the moment.

The evil thing here is that instead of going after the true Run A Ways “the banks” who stole the cash you go after the ones who feed you and behind our back you feed them???

Image source: The Simpsons “Angry Mob”

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in deficiency judgement, deficiency judgment, fannie mae, foreclosure, foreclosure fraud, foreclosures, mortgage modification, non disclosure, shadow foreclosures, walk away1 Comment

Mortgage Modifications: Why a Third Are Canceled

Mortgage Modifications: Why a Third Are Canceled

By Bendix Anderson Jun 29th 2010 @ 1:13PM

The federal government says foreclosure prevention has helped millions of people. But sometimes it seems hard to find a pundit or news story that mentions foreclosure prevention program without using the word “failed,” often in the headline.

Whom should you believe?

Government officials say 2.8 million homeowners at risk of foreclosure have had their home mortgages modified, lowering monthly payment by an average of about $500 since April 2009. But critics point out that not all of those modifications have lasted.

For example, of the 1.2 million trial modification started so far through the Home Affordable Modification Program (HAMP), about a third, or 429,696, have been canceled, according to the latest reports. Many skeptics worry that foreclosure prevention has merely delayed foreclosure for millions of homeowners who are still likely to eventually lose their homes.
First, let’s look at the big number: the 2.8 million modifications claimed by the government. That includes the 1.2 million HAMP trial modifications, 400,000 modifications through the Federal Housing Administration, and another 1.2 million loan modifications negotiated by HOPE NOW, a national coalition including government-approved loan counselors, mortgage companies and investors.

Based partly on these modifications, officials are taking credit for stabilizing a collapsing housing market. “We already know that due to the Obama administration’s efforts, the housing market is significantly better than anyone predicted a year ago,” said Housing and Urban Development Secretary Shaun Donovan.

But that still leaves the question of the what happened to the close to half-a-million people who had their trial modifications canceled. They were kicked out of the program for a range of reasons: Some had mortgage payments already less than 31 percent of their income, missed trial payments or had incomplete or unverifiable documentation, according to Treasury officials.

According to a January statement by JPMorgan Chase, for every 100 trial modifications begun through the fall of 2009, a quarter had not paid as agreed. Another 29 borrowers did not submit all the required documents. “Many borrowers return forms missing key information (signatures, Social Security numbers, etc.) or do not return one of four required documents,” according to a statement from Chase. Another 13 out of a 100 borrowers are not eligible for HAMP but will qualify for another type of loan modification and 33 out of 100 borrowers are able to be underwritten for permanent HAMP modifications.

What happened to these people? How were they “helped?”

It now appears that about half of the borrowers that didn’t qualify for HAMP had their loans permanently modified anyway by their loan servicers under alternative programs, according to a survey of the eight biggest loan companies in the HAMP program. Another quarter of the canceled modifications were still awaiting action by the lenders, according to the survey. The remaining quarter of the canceled modifications ended in a variety of ways, ranging from a payment plan, a loan payoff, a bankruptcy filing to knock out heavy credit card debts, or a short sale. Only 7 percent had gone to foreclosure by the end of May.

And here’s another unexpected thing — 10 percent of the loans that had their modifications canceled are now current. The borrowers got out of foreclosure and kept their homes without any help from the program. It’s not clear from the report where these borrowers got the money to get up to date on their loans. Some may have had the money all along. Others borrowers who had lost income may have found new employment.

The survey results are a surprise for all the pundits, myself included, who thought loans that had their trial modifications canceled would be headed straight to foreclosure.

Of course, the future is still unclear for many borrowers who entered foreclosure-prevention programs. More than 400,000 borrowers still have unresolved HAMP trial modifications. Researchers and officials have also begun to track the hundreds of thousands of borrowers with permanent modifications, to see how many slip back into foreclosure, according The Associated Press.

Whatever you think of the federal plan to stop foreclosures, the last page of the latest government-issued Housing Scorecard report has some important numbers. In addition to the tally of temporary and permanent modifications, there’s the number of borrowers who are “underwater,” meaning they owe a larger balance on their home mortgage than the home is now worth: 11.3 million, according to First American CoreLogic. These people might not all give up their homes to foreclosure, but they are vulnerable to new economic shocks. The report also counts 2.4 million seriously delinquent loans, according to LPS-McDash and HUD. Finally, officials count 3.6 million vacant homes held off the market, according to the Census Bureau. Those homes will eventually have to be sold.

So, no matter what you think federal foreclosure prevention effort — and I think the feds are doing better than anyone gives them credit for — the housing market still faces huge challenges that won’t go away soon.
Source: Housing Watch

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in foreclosure, foreclosures, hamp, mortgage modification0 Comments

Video: It’s time for banks to do more to help homeowners in foreclosure

Video: It’s time for banks to do more to help homeowners in foreclosure

This is exactly what is going on with these Scams. Just as in this post I made prior this homeowner tried to do all they can to work with their lender to get help, modify and pay them current market value. Instead they foreclosed.

In this case they owed about 300K, according to tax records LPS, yes Lender Processing Services inc. came in and purchased it for $74,100 at the auction. Now the  home is pending sale for $59K. Sold it for less in a matter of a month??? Okkkaaaay?

How does this make ANY kind of sense? I can only see it making FRAUD sense…these homeowners vouch not to give up contacted the listing agent about the scam as well as mentioning Law Offices of David J. Stern the foreclosing firm for the lender. This does not make ANY sense what so ever and we need to continue exposing this fraud!

David Lazarus June 24, 2010 | 10:56 pm Los Angeles Times

Consumer columnist David Lazarus says banks should end their one-size-fits-all policies and help more homeowners who are in foreclosure.

Take the Fontana woman he writes about In his latest column. She wasn’t obligated to meet the mortgage obligations her husband left when he was killed in a car accident. But she wanted to stay in the home and tried negotiating lower payments with the bank.

Should the bank do more to  help her?

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in auction, Bank Owned, conspiracy, CONTROL FRAUD, foreclosure, foreclosure fraud, foreclosures, mortgage modification, shadow foreclosures0 Comments

It’s All About the Principal: Preserving Consumers’ Right of Rescission Under the Truth in Lending Act

It’s All About the Principal: Preserving Consumers’ Right of Rescission Under the Truth in Lending Act

Lea Krivinskas Shepard
Loyola University Chicago School of Law

North Carolina Law Review, Vol. 89, 2010

Abstract:
This Article explores a significant market-based threat to the Truth in Lending Act’s right of rescission, a remedy that attempts to deter lender overreaching and fraud during one of the most complex financial transactions of a borrower’s lifetime. The depressed housing market has substantially impaired many borrowers’ ability to fulfill their responsibilities in rescission’s unwinding process: restoring the lender to the status quo ante by repaying the net loan proceeds of the mortgage transaction.

When a consumer is unable to finance her tender obligation, non-bankruptcy judges’ overwhelming response has been to protect the lender and deny rescission to the borrower. This Article argues that these courts, to fulfill TILA’s consumer-protective function, must take a different approach. Non-bankruptcy courts, which handle the vast majority of TILA rescission actions, should use their equitable authority under TILA to modify borrowers’ repayment obligations by allowing borrowers to tender in installments, over a period of years, and at reasonable interest rates. This approach both averts foreclosures that harm borrowers, lenders, and neighborhoods and ensures that TILA’s consumer-protective mandate will remain viable even in a depressed housing market.

This Article also considers an important aspect of TILA’s rescission remedy that, while tacitly acknowledged by courts and commentators, has been insufficiently explored in the academic literature. There exists an uneasy tension between the goal of the Truth in Lending Act – informing consumers of the financial consequences of their mortgage loan transactions – and borrowers’ frequent use of TILA rescission: defending their homes from foreclosure actions that the lender’s disclosure violation may or may not have precipitated. The Article concludes that TILA rescission actions, albeit a blunt instrument in the consumer protection setting, must be preserved, particularly during periods of economic calamity, since it remains a singular source of borrower leverage in a legal and economic climate that remains generally inhospitable to homeowners.

Accepted Paper Series

[ipaper docId=33526818 access_key=key-29yw7fc4p6kdwaelulz0 height=600 width=600 /]

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in bankruptcy, mortgage modification, tila0 Comments

Tracking Loans Through a Firm That Holds Millions: MERS

Tracking Loans Through a Firm That Holds Millions: MERS

Kevin P. Casey for The New York Times: Darlene and Robert Blendheim of Seattle are struggling to keep their home after their subprime lender went out of business.

By MIKE McINTIRE NYTimes
Published: April 23, 2009

Judge Walt Logan had seen enough. As a county judge in Florida, he had 28 cases pending in which an entity called MERS wanted to foreclose on homeowners even though it had never lent them any money.

Into the Mortgage NetherworldGraphicInto the Mortgage Netherworld

MERS, a tiny data-management company, claimed the right to foreclose, but would not explain how it came to possess the mortgage notes originally issued by banks. Judge Logan summoned a MERS lawyer to the Pinellas County courthouse and insisted that that fundamental question be answered before he permitted the drastic step of seizing someone’s home.

Daniel Rosenbaum for The New York Times R. K. Arnold, MERS president, said the company helped reduce mortgage fraud and imposed order on the industry.

“You don’t think that’s reasonable?” the judge asked.

“I don’t,” the lawyer replied. “And in fact, not only do I think it’s not reasonable, often that’s going to be impossible.”

Judge Logan had entered the murky realm of MERS. Although the average person has never heard of it, MERS — short for Mortgage Electronic Registration Systems — holds 60 million mortgages on American homes, through a legal maneuver that has saved banks more than $1 billion over the last decade but made life maddeningly difficult for some troubled homeowners.

Created by lenders seeking to save millions of dollars on paperwork and public recording fees every time a loan changes hands, MERS is a confidential computer registry for trading mortgage loans. From an office in the Washington suburbs, it played an integral, if unsung, role in the proliferation of mortgage-backed securities that fueled the housing boom. But with the collapse of the housing market, the name of MERS has been popping up on foreclosure notices and on court dockets across the country, raising many questions about the way this controversial but legal process obscures the tortuous paths of mortgage ownership.

If MERS began as a convenience, it has, in effect, become a corporate cloak: no matter how many times a mortgage is bundled, sliced up or resold, the public record often begins and ends with MERS. In the last few years, banks have initiated tens of thousands of foreclosures in the name of MERS — about 13,000 in the New York region alone since 2005 — confounding homeowners seeking relief directly from lenders and judges trying to help borrowers untangle loan ownership. What is more, the way MERS obscures loan ownership makes it difficult for communities to identify predatory lenders whose practices led to the high foreclosure rates that have blighted some neighborhoods.

In Brooklyn, an elderly homeowner pursuing fraud claims had to go to court to learn the identity of the bank holding his mortgage note, which was concealed in the MERS system. In distressed neighborhoods of Atlanta, where MERS appeared as the most frequent filer of foreclosures, advocates wanting to engage lenders “face a challenge even finding someone with whom to begin the conversation,” according to a report by NeighborWorks America, a community development group.

To a number of critics, MERS has served to cushion banks from the fallout of their reckless lending practices.

“I’m convinced that part of the scheme here is to exhaust the resources of consumers and their advocates,” said Marie McDonnell, a mortgage analyst in Orleans, Mass., who is a consultant for lawyers suing lenders. “This system removes transparency over what’s happening to these mortgage obligations and sows confusion, which can only benefit the banks.”

A recent visitor to the MERS offices in Reston, Va., found the receptionist answering a telephone call from a befuddled borrower: “I’m sorry, ma’am, we can’t help you with your loan.” MERS officials say they frequently get such calls, and they offer a phone line and Web page where homeowners can look up the actual servicer of their mortgage.

In an interview, the president of MERS, R. K. Arnold, said that his company had benefited not only banks, but also millions of borrowers who could not have obtained loans without the money-saving efficiencies it brought to the mortgage trade. He said that far from posing a hurdle for homeowners, MERS had helped reduce mortgage fraud and imposed order on a sprawling industry where, in the past, lenders might have gone out of business and left no contact information for borrowers seeking assistance.

“We’re not this big bad animal,” Mr. Arnold said. “This crisis that we’ve had in the mortgage business would have been a lot worse without MERS.”

About 3,000 financial services firms pay annual fees for access to MERS, which has 44 employees and is owned by two dozen of the nation’s largest lenders, including Citigroup, JPMorgan Chase and Wells Fargo. It was the brainchild of the Mortgage Bankers Association, along with Fannie MaeFreddie Mac and Ginnie Mae, the mortgage finance giants, who produced a white paper in 1993 on the need to modernize the trading of mortgages.

At the time, the secondary market was gaining momentum, and Wall Street banks and institutional investors were making millions of dollars from the creative bundling and reselling of loans. But unlike common stocks, whose ownership has traditionally been hidden, mortgage-backed securities are based on loans whose details were long available in public land records kept by county clerks, who collect fees for each filing. The “tyranny of these forms,” the white paper said, was costing the industry $164 million a year.

“Before MERS,” said John A. Courson, president of the Mortgage Bankers Association, “the problem was that every time those documents or a file changed hands, you had to file a paper assignment, and that becomes terribly debilitating.”

Although several courts have raised questions over the years about the secrecy afforded mortgage owners by MERS, the legality has ultimately been upheld. The issue has surfaced again because so many homeowners facing foreclosure are dealing with MERS.

Advocates for borrowers complain that the system’s secrecy makes it impossible to seek help from the unidentified investors who own their loans. Avi Shenkar, whose company, the GMA Modification Corporation in North Miami Beach, Fla., helps homeowners renegotiate mortgages, said loan servicers frequently argued that “investor guidelines” prevented them from modifying loan terms.

“But when you ask what those guidelines are, or who the investor is so you can talk to them directly, you can’t find out,” he said.

MERS has considered making information about secondary ownership of mortgages available to borrowers, Mr. Arnold said, but he expressed doubts that it would be useful. Banks appoint a servicer to manage individual mortgages so “investors are not in the business of dealing with borrowers,” he said. “It seems like anything that bypasses the servicer is counterproductive,” he added.

When foreclosures do occur, MERS becomes responsible for initiating them as the mortgage holder of record. But because MERS occupies that role in name only, the bank actually servicing the loan deputizes its employees to act for MERS and has its lawyers file foreclosures in the name of MERS.

The potential for confusion is multiplied when the high-tech MERS system collides with the paper-driven foreclosure process. Banks using MERS to consummate mortgage trades with “electronic handshakes” must later prove their legal standing to foreclose. But without the chain of title that MERS removed from the public record, banks sometimes recreate paper assignments long after the fact or try to replace mortgage notes lost in the securitization process.

This maneuvering has been attacked by judges, who say it reflects a cavalier attitude toward legal safeguards for property owners, and exploited by borrowers hoping to delay foreclosure. Judge Logan in Florida, among the first to raise questions about the role of MERS, stopped accepting MERS foreclosures in 2005 after his colloquy with the company lawyer. MERS appealed and won two years later, although it has asked banks not to foreclose in its name in Florida because of lingering concerns.

Last February, a State Supreme Court justice in Brooklyn, Arthur M. Schack, rejected a foreclosure based on a document in which a Bank of New York executive identified herself as a vice president of MERS. Calling her “a milliner’s delight by virtue of the number of hats she wears,” Judge Schack wondered if the banker was “engaged in a subterfuge.”

In Seattle, Ms. McDonnell has raised similar questions about bankers with dual identities and sloppily prepared documents, helping to delay foreclosure on the home of Darlene and Robert Blendheim, whose subprime lender went out of business and left a confusing paper trail.

“I had never heard of MERS until this happened,” Mrs. Blendheim said. “It became an issue with us, because the bank didn’t have the paperwork to prove they owned the mortgage and basically recreated what they needed.”

The avalanche of foreclosures — three million last year, up 81 percent from 2007 — has also caused unforeseen problems for the people who run MERS, who take obvious pride in their unheralded role as a fulcrum of the American mortgage industry.

In Delaware, MERS is facing a class-action lawsuit by homeowners who contend it should be held accountable for fraudulent fees charged by banks that foreclose in MERS’s name.

Sometimes, banks have held title to foreclosed homes in the name of MERS, rather than their own. When local officials call and complain about vacant properties falling into disrepair, MERS tries to track down the lender for them, and has also created a registry to locate property managers responsible for foreclosed homes.

“But at the end of the day,” said Mr. Arnold, president of MERS, “if that lawn is not getting mowed and we cannot find the party who’s responsible for that, I have to get out there and mow that lawn.”

Posted in CitiGroup, concealment, conspiracy, fannie mae, foreclosure, foreclosure fraud, foreclosure mills, forensic loan audit, forensic mortgage investigation audit, Freddie Mac, investigation, jpmorgan chase, judge arthur schack, MERS, mortgage bankers association, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud, mortgage modification, note, R.K. Arnold, securitization, wells fargo0 Comments

No Penalties for Mortgage Company with Worst Loan Mod Backlog

No Penalties for Mortgage Company with Worst Loan Mod Backlog

by Paul Kiel, ProPublica – May 28, 2010 1:53 pm EDT

Jeanenne Longacre said she received a letter from Saxon Mortgage saying she was approved for a loan mod, but the final terms never came. She says she lost her home because of Saxon's errors.
Jeanenne Longacre said she received a letter from Saxon Mortgage saying she was approved for a loan mod, but the final terms never came. She says she lost her home because of Saxon’s errors.

Last week, the government released data [1] showing that there’s a big problem at Saxon Mortgage, a subsidiary of Morgan Stanley. Of all the mortgage companies participating in the administration’s mortgage modification program, Saxon has the largest proportion of homeowners caught in modification limbo.

The program, which provides incentives for mortgage companies to modify loans to an affordable level, has been plagued by delays and disappointing results. About 1.2 million homeowners have begun a “trial” modification, which is supposed to last three months. But less than a quarter of them have emerged with a real, lasting modification. (Here’s our backgrounder on the program and problems with it [2].)

As of April, about 265,000 homeowners [3] were caught in trials that had lasted more than six months. Nowhere is that backlog worse than at Saxon, a mid-sized subprime servicer based in Texas that was acquired [4] by Morgan Stanley in 2006 and has had long-running customer service problems [5].

Few of Saxon’s trials have converted into lasting modifications. As of the end of April, Saxon had put 40,000 homeowners into trials, but only about 11,000, or 27 percent, had received a permanent modification. Far more had either been dropped from the program (16,000) or were still waiting for a final answer after being in the trial for longer than six months (10,000).

The Four Mortgage Servicers with The Biggest Trial Backlogs

Servicers Est. # “Aged” Trials % of Active Trials that are “Aged”
Saxon Mortgage Services 9,839 76%
JPMorgan Chase 85,678 72%
U.S. Bank 2,064 58%
CitiMortgage 26,375 48%
Total for Program 265,015 42%

A close look at Saxon provides a window into problems with the program itself, in particular a glaring lack of oversight from Washington. While the government set up the program, it relies on mortgage companies to actually perform modifications. So far Washington has shied away from penalizing those servicers that have failed to follow the program’s rules or underperformed. Indeed, despite widespread problems [3] among mortgage servicers and frequent tough talk [6] from Treasury officials, who have often threatened penalties, the government has yet to issue a single one.

A spokeswoman for Saxon said that the company has been regularly audited, as have other participants in the government’s program, and that the reviews had uncovered no “material issues.”

For homeowners, on the other hand, the consequences of servicer problems can be all-too-real. Some homeowners say they lost their home because of errors by Saxon.

The country’s largest mortgage servicers are attached to the biggest banks like Bank of America, JPMorgan Chase and Wells Fargo, but a number of mid-sized servicers like Saxon are stand-alone companies or subsidiaries of other banks. As of 2008, Saxon serviced over 340,000 loans.

According to the Better Business Bureau, Saxon Mortgage Services requests that consumers with a complaint contact Robin Chrostowski, Assistant Vice President of the Customer Solutions and Innovation Team, at 817-665-7862 or email CSIteam@saxonmsi.com to resolve the issues prior to filing a complaint with the Better Business Bureau.

 

The company already had problems before the administration launched its mortgage modification program in April 2009. As the Wall Street Journal reported last July [7], Saxon ranked last among 20 servicers in a Credit Suisse analysis of how many subprime loans each had modified. The Better Business Bureau had given the company an “F” [5] rating, based on a profusion of consumer complaints.

But the company was among the first to sign up for the government program when it launched in April, 2009. In the first few months, Saxon put tens of thousands of homeowners into trial modifications. In a November press release, Saxon CEO Anthony Meola boasted [8] that Saxon was leading all other servicers in the number of trials it had begun.

The Treasury Department had set the rules of the program [9] to encourage servicers to rapidly enroll homeowners. Servicers were allowed to accept homeowners on the basis of their “stated” income, what a Treasury official described [9] as “a wing and a prayer.” The financial information would be verified later, after the trial began. While well-intentioned, the policy resulted in an enormous backlog of trials—homeowners who had been given temporary modifications and were waiting months for a final answer — and Treasury changed the program rules this spring to require verified income information up front.

Consumer advocates say that homeowners who are denied modification after making several months of trial payments are often worse off than if they’d never started the trial at all [9], because the process damages their credit and they’re prevented from saving for the possibility of foreclosure.

At Saxon, many homeowners seem to be caught in that limbo because of mistakes and delays at the company. John Riggins, the CEO of the Fort Worth Better Business Bureau, said that the biggest complaints about Saxon are that the company has misapplied payments or lost documents sent as part of the modification process. Saxon employees often blame computer problems or a lack of staffing, according to the complaints, which number 208 in the past year.

Jennifer Sala, a spokeswoman for Saxon, said the backlog was not caused by a lack of capacity, but resulted from a “careful review process” that “can take a considerable amount of time.” She added, “We want to afford our customers every opportunity to avoid foreclosure.”

Saxon has hired about 330 new full-time employees in the past year, she said, increasing the staff by 50 percent. Riggins of the Better Business Bureau said that the complaint volume had improved since last year, but that major problems remained. Saxon has improved only from an “F” to a “D-.” rating [10].

There are other signs Saxon has been struggling to handle the volume. In April, it transferred the servicing rights [11] for about 38,000 loans to Ocwen, which specializes in servicing troubled loans. “Normally the reason for selling loans to Ocwen is you don’t want to hassle with them anymore and they’re delinquent,” said Guy Cecala, the publisher of Inside Mortgage Finance. Some of the loans transferred were in the middle of the modification process.

Sometimes the communications from Saxon can be bewildering. Barbara Niederstein of Fayetteville, Ga., said she has twice received letters saying she was being dropped from the program. Both letters cited missing documentation as a reason, but she says she was never told it was missing. Saxon has threatened to pursue foreclosure. Niederstein says that hours spent on the phone with a housing counselor and Saxon employees has at least postponed that for a month, even if the confusion has yet to be cleared up.

 Jeanenne Longacre and her husband Robert.

Jeanenne Longacre and her husband Robert.

Jeanenne Longacre says she lost her home because of Saxon’s errors. She says Saxon wrongly set the trial payments at a level Longacre and her husband could only muster for a few months, and then booted her from the program when she couldn’t keep up the payments. Her house was ultimately sold out from under her after she says she received an assurance the sale would be delayed.

For months, her husband had been struggling to find steady employment when Longacre lost her job with California Blue Cross in February 2009. They were behind on their mortgage payments and faced foreclosure.

The pair, in their 50s with grown children, had been in the house for 10 years, but had refinanced in 2006 into an adjustable-rate loan with New Century, the now-defunct subprime lender. The Longacres were underwater on their mortgage, with their Los Angeles home worth about half as much as they owed.

Longacre says Saxon’s first error with her modification came with the level of the couple’s payments. The modified mortgage payment was set at $3,400, about $1,400 lower than the couple’s payments had been, but at a level they could maintain only with the help of temporary severance she was receiving. That severance would run out in August, just two months after her trial began in June.

Sala, the spokeswoman for Saxon, said she could not discuss Longacre’s case because company policy prohibited discussing customer information.

Trials are supposed to test the homeowner’s ability to make the reduced payments for a prolonged period of time. But Longacre says she always knew they would be able to make the payments only for a few months. By the time August, September came around, we started struggling,” she said. “It’s ridiculous paying that kind of money when you don’t have it.”

Still, Longacre kept paying. After August, the third month of the trial, came and went with no news, Longacre began calling Saxon regularly to find out what was happening. For months, she says she couldn’t get an answer. She was occasionally asked to send in a new document, but then the wait would continue.

Finally, she spoke to a negotiator in January this year, the eighth month of her trial. He told her she’d be approved for a permanent modification and that the payment, based on her family’s verified income, would be much lower, just $1,300 a month.

“I was so excited,” Longacre said. “I thought a miracle had happened.”

But her excitement was short-lived. She received a letter from Saxon in early February [12] saying she’d been approved for the modification, but the final terms never came. When she called to ask about that, she says she was told she had to make the trial payments for January and February or she’d face foreclosure.

The couple had missed those payments because their money had finally run out, she says. But even though Saxon had set their permanent modification at a level far below her trial payments, she was dropped from the program for not making all of her trial payments.

In March, she received a notice that Saxon would auction her home on April 1. She hired a lawyer to negotiate on her behalf, and it seemed like foreclosure had been temporarily avoided when a Saxon employee said the sale would be postponed until May in order to provide more time to work out another solution.

Longacre thought the auction had been deferred until a man knocked on her door in early April, saying that he represented the new owners of her home and was offering her money to vacate. The home had sold for $302,000, less than half of what the Longacres owed on the mortgage.

“That home was the only thing we had. I put it everything that I own into that home.” She currently lives in an apartment with her husband.

As we reported earlier this month, mistaken foreclosures can result from a lack of communication within the servicer itself [13]. In Longacre’s case, she says she was not provided a denial letter or given an opportunity to otherwise avoid foreclosure, as the federal program’s guidelines require.

Consumers advocates say the program does not offer an effective recourse for homeowners to redress servicer wrongs. Treasury officials say [13] that homeowners in Longacre’s position should call the HOPE Hotline, which is staffed with housing counselors, for help. Advocates say that’s been ineffective, and have long complained [14] about the lack of a formal appeals process for homeowners.

Longacre’s case also reflects on a problem faced by the hundreds of thousands of homeowners who’ve been caught in prolonged trials: whether they must keep paying after the three-month period expires, and whether mortgage companies can deny modifications if homeowners miss payments while they’re in limbo.

The Treasury Department has given conflicting answers for that question.

The program’s guidelines say [15] that borrowers remain eligible for a permanent modification “regardless of whether the borrower failed to make trial period payments following the successful completion of the trial period.”

Despite that apparently clear meaning, a Treasury spokeswoman told ProPublica homeowners were required to continue the payments “even if the period was extended to allow additional processing.”

Cohen, of the National Consumer Law Center, said that’s not how consumer advocates have understood the program’s rules. “The program rules are clear: a homeowner is required to make trial payments only until the effective date of the permanent modification, which is three months after the beginning of the trial period.”

Four other Saxon customers told ProPublica that they’d been disqualified for missing the extended trial payments. Sala, Saxon’s spokeswoman, said the company follows the program’s guidelines. It’s unclear if there will be any consequences for Saxon for any errors or rule violations. The Treasury has hired [16] Freddie Mac [17] to audit the servicers participating in the program, and so far, as Saxon’s spokeswoman has said, auditors have not flagged any “material issues” at the company. The Treasury spokeswoman said some information from the compliance reviews will eventually be made public, but none was available now.

 Write to Paul Kiel at paul.kiel@propublica.org

Posted in forensic loan audit, forensic mortgage investigation audit, Mortgage Foreclosure Fraud, mortgage modification, saxon mortgage, scam0 Comments

Mortgage holders sue bank in CLASS ACTION:

Mortgage holders sue bank in CLASS ACTION:

From: b.daviesmd6605

BY STAFF,  CITY NEWS SERVICE OCLNN.com
Wednesday, May 19, 2010

SANTA ANA – Distressed homeowners packed an appellate court hearing Tuesday as their attorney tried to persuade justices a 2008 California law should force banks to work harder to ease the terms of their mortgages.

Attorney Moses S. Hall argued before the three appellate court justices in the Fourth District’s Santa Ana courtroom that banks holding the loans of his clients are not complying with a state law compelling them to try to negotiate modified mortgages.

Attorney Justin D. Balser, representing the RPI Quality Loan Service Corp., argued the homeowners cannot bring the class-action lawsuit to the courts and must rely on the California Attorney General’s Office to enforce the law.

The appellate court justices appeared skeptical of that claim and queried him why people could not sue to have their rights enforced in the courts.

Balser argued that letting residents try to enforce the law in the courts would lead to a “flood of lawsuits.”

“This is the only statute of its kind in the nation,” Balser said.

Attorney Melissa Coutts, who also represented RPI, said she was looking for the appellate justices to provide guidance on the law, which she argued was too vague.

“If there was a specific remedy (in the law), we wouldn’t be here,” Hall responded. “There’s nothing to help keep people in their homes.”

Terry and Mike Mabry filed their class-action lawsuit after they said their lenders refused to help them save their home in Corona.

The two had invested in 13 properties, which they rented, but when the economy soured their found themselves struggling to keep up with mortgage payments as renters left or demanded lower rent, they said. They ended up losing some of the properties and others were lost in short sales, they said.

However, when it looked like they wouldn’t be able to afford the adjustable rate mortgage on their own home they contacted their lender and were told they could not renegotiate the terms unless they missed at least two payments, Terry Mabry said. The couple had not missed any payments, she said.

“When we reached out for help we were hit with one wall after the other,” Terry Mabry said. “The bankers led us to believe they were working with us, but they weren’t. All we wanted was to be helped.”

Terry Mabry argues that all the state law was meant to do was give homeowners a chance to work with the lenders to save their houses and is not a guarantee.

“The law was meant to create a discussion, not to guarantee a solution,” Terry Mabry said. “But we never even got to the discussion point. That’s the most frustrating part.”

The Mabrys thought they were in serious negotiations until they returned home one day to find a notice to sell their home floating around the front lawn.

Carlos and Maria Hernandez of Lake Forest also thought they were going to save the home they bought 5 years ago after they were put in a home-loan modification program for eight months.

“The next thing we know we were given a notice that the house was already sold,” Carlos Hernandez said.

“We put all of our savings in that house,” Hernandez said. “We want to stay in it because it’s for the future of our kids.”

Carlos Hernandez had trouble making mortgage payments because he lost his job, but was able to keep up with the new payments, he said.

The Mabrys and Hernandezes remain in their homes as appellate court justices consider the lawsuit.

Read more: http://www.oclnn.com/orange-county/2010-05-19/business/mortgage-holders-sue-bank-in-class-action#ixzz0p84ayuW5

Posted in case, conspiracy, foreclosure, foreclosure fraud, foreclosure mills, forensic loan audit, Mortgage Foreclosure Fraud, mortgage modification0 Comments

CitiMortgage: Foreclosing Homes while working "LIAR" Loan Modifications!

CitiMortgage: Foreclosing Homes while working "LIAR" Loan Modifications!

[youtube=http://www.youtube.com/watch?v=c_IZTdBO7EA]

Posted in citimortgage, foreclosure, foreclosure fraud, Mortgage Foreclosure Fraud, mortgage modification0 Comments

Q & A: What’s Next for Fannie and Freddie? WSJ

Q & A: What’s Next for Fannie and Freddie? WSJ

MAY 24, 2010, 9:53 AM ET

By Nick Timiraos

It turns out that Fannie Mae and Freddie Mac, already becoming the most expensive legacy for taxpayers from the financial crisis, aren’t just too big too fail. As my column in Monday’s WSJ explains, they’re also proving too tough to reform.

Here’s a closer look at five common questions about what’s happening with—and what’s next for—Fannie and Freddie:

1. Why doesn’t the financial-overhaul bill address Fannie and Freddie?

The Obama administration says it’s too soon to take action to address the future of the housing-finance giants because markets are still fragile, and others have said the bill is already too complex without Fannie and Freddie in the mix.

Revamping the housing-finance giants, which own or guarantee around half of the nation’s $10.3 trillion in home mortgages, was never going to be easy. But the fact that, together with the Federal Housing Administration, the companies guaranteed 96.5% of all new mortgages last quarter has made the challenge only greater.

During the debate on financial-overhaul legislation, Republicans proposed measures that would have wound down the companies and limited the amount of further government aid. But the amendments didn’t specify what would take the place of Fannie and Freddie.

Both parties are “ignoring the issue,” says Lawrence White, an economics professor at New York University. Yes, markets may be too fragile for action now, but he says a plan now would give markets time to prepare for the future.

2. Why are Fannie and Freddie still losing money?

The companies have taken $145 billion in handouts, including $19 billion this quarter, from the U.S. Treasury so far, and that number could rise as foreclosures mount. Each quarter, as more mortgages go delinquent, Fannie and Freddie have to set aside more cash in reserve to cover losses if those loans end up defaulting and the homes they’re secured by go through foreclosure.

Nearly all of those defaults are coming from loans that the companies made during and immediately after the housing boom. Loans today have significantly tighter lending standards and should be profitable.

While losses could continue for several quarters, there are signs that delinquencies may have peaked during the first quarter. Fannie Mae and Freddie Mac each said that the number of its loans that were seriously delinquent fell in March, from February.

3. Why is the government still putting money into the companies?

Each quarter, the government injects new money into Fannie and Freddie to keep the companies afloat. That allows the firms to meet their obligations to investors, which keeps the mortgage market moving. If the government decided to stop keeping the firms afloat, that could send borrowing costs up sharply for future homeowners and could create new shocks for the housing market.

In February 2009, the Obama administration said it would double to $200 billion the amount of aid it was willing to put into each of the two firms. Then in December, it said it would waive those limits, and allow for unlimited sums over the next three years. The companies are now akin to government housing banks, with an independent regulator, but one that ultimately must answer to the Treasury Department, which controls the purse strings.

The current arrangement has raised concerns that the companies could continue to make business decisions that might lead to higher losses and that they wouldn’t be making if they were still being run for private shareholders. “Unregulated pots of money—that was a cause of their demise, and now we’ve taken that monster and turned it into a super-monster” with little independent oversight, says David Felt, a former senior lawyer at the companies’ federal regulator, the Federal Housing Finance Agency.

What would the mortgage market look like today without government support?

Consider the market for “jumbo” loans, or those too large for government backing. Rates on jumbos are around 0.6 percentage points higher than conforming loans. That’s nearly double the historical spread, but an improvement over the peak 1.8 percentage point spread during the financial crisis.

Lending standards are also much tighter for loans without government backing, and 30-year fixed rate loans are much less common. Mike Farrell, chief executive of Annaly Capital Management, estimates that mortgage rates today would be two to three percentage points higher without government guarantees.

What will ultimately happen to Fannie and Freddie?

Congress has to decide what it wants the housing-finance system of the future to do. “Everyone acknowledges that the model is broken, that the model was flawed, yet we don’t know how to run a mortgage market without them and we have nothing with which to replace the broken system,” says Howard Glaser, a Clinton administration housing official and housing-industry consultant.

Still, a consensus is growing between some academics and policymakers that the government will continue to play some role at least in backstopping mortgages. Recent testimony from top administration officials over some general insight into what the administration wants the future system to do.

What will ultimately happen to Fannie and Freddie?

Congress has to decide what it wants the housing-finance system of the future to do. “Everyone acknowledges that the model is broken, that the model was flawed, yet we don’t know how to run a mortgage market without them and we have nothing with which to replace the broken system,” says Howard Glaser, a Clinton administration housing official and housing-industry consultant.

Still, a consensus is growing between some academics and policymakers that the government will continue to play some role at least in backstopping mortgages. Recent testimony from top administration officials over some general insight into what the administration wants the future system to do.

There have been other clues: The Obama administration has made clear its view that the failure of Fannie and Freddie shouldn’t be pinned on government affordable-housing mandates, which suggests that any future housing-finance entities would continue to serve a role supporting that function. And an administration report on the foreclosure crisis said that better regulation of the entire mortgage market, and not just any government-related entities, would be a “high priority” for the future.

Readers, what do you think the government should do with the firms?

Posted in fannie mae, foreclosure, Freddie Mac, mortgage modification0 Comments

Freddie and Fannie won't pay down your mortgage: CNN

Freddie and Fannie won't pay down your mortgage: CNN

This is why you need a FORENSIC AUDIT…Find the missing pieces of possible violations! DEMAND IT!

By Tami Luhby, senior writer May 14, 2010: 3:58 AM ET

NEW YORK (CNNMoney.com) — Pressure is mounting on loan servicers and investors to reduce troubled homeowners’ loan balances…but the two largest owners of mortgages aren’t getting the message.

Fannie Mae and Freddie Mac, which are controlled by the federal government, do not lower the principal on the loans they back, instead opting for interest rate reductions and term extensions when modifying loans.

But their stance is out of synch with the Obama administration, which is seeking to expand the use of principal writedowns. In late March, it announced servicers will be required to consider lowering balances in loan modifications.

And just who would tell Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) to start allowing principal reductions? The Obama administration.

Asked whether they will implement balance reductions, the companies and their regulator declined to comment. The Treasury Department also declined to comment.

What’s holding them back is the companies’ mandate to conserve their assets and limit their need for taxpayer-funded cash infusions, experts said. If Fannie and Freddie lower homeowners’ loan balances, they are locking in losses because they have to write down the value of those mortgages. Essentially, that means using tax dollars to pay people’s mortgages.

The housing crisis has already wreaked havoc on the pair’s balance sheets. Between them, they have received $127 billion — and recently requested another $19 billion — from the Treasury Department since they were placed into conservatorship in September 2008, at the height of the financial crisis.

Housing experts, however, say it’s time for Fannie and Freddie to start reducing principal. Treasury and the companies have already set aside $75 billion for foreclosure prevention, which can be spent on interest-rate reductions or principal write downs.

“Treasury has to bite the bullet and get Fannie and Freddie to participate,” said Alan White, a law professor at Valparaiso University. “It’s all Treasury money one way or the other.”

Though servicers are loathe to lower loan balances, a growing chorus of experts and advocates say it’s the best way to stem the foreclosure crisis. Homeowners are more likely to walk away if they owe far more than the home is worth, regardless of whether the monthly payment is affordable. Nearly one in four borrowers in the U.S. are currently underwater.

“Principal reduction in the long run will lower the risk of redefault,” said Vishwanath Tirupattur, a Morgan Stanley managing director and co-author of the firm’s monthly report on the U.S. housing market. “It’s the right thing to do.”

Meanwhile, a growing number of loans backed by Fannie and Freddie are falling into default. Their delinquency rates are rising even faster than those of subprime mortgages as the weak economy takes its toll on more credit-worthy homeowners. Fannie’s default rate jumped to 5.47% at the end of March, up from 3.15% a year earlier, while Freddie’s rose to 4.13%, up from 2.41%.

On top of that, the redefault rates on their modified loans are far worse than on those held by banks, according to federal regulators.

Some 59.5% of Fannie’s loans and 57.3% of Freddie’s loans were in default a year after modification, compared to 40% of bank-portfolio mortgages, according to a joint report from the Office of Thrift Supervision and Office of the Comptroller of the Currency. This is part because banks are reducing the principal on their own loans, experts said.

So, advocates argue, lowering loan balances now can actually save the companies — and taxpayers — money later.

“It can be a financial benefit to Fannie Mae and Freddie Mac and the taxpayer,” said Edward Pinto, who was chief credit officer for Fannie in the late 1980s.

What might force the companies’ hand is another Obama administration foreclosure prevention plan called the Hardest Hit Fund, which has charged 10 states to come up with innovative ways to help the unemployed and underwater.

Four states have proposed using their share of the $2.1 billion fund to pay off up to $50,000 of underwater homeowners’ balances, but only if loan servicers and investors — including Fannie and Freddie — agree to match the writedowns. State officials are currently in negotiations with the pair.

“We remain optimistic that we can get a commitment from Fannie, Freddie and the banks to contribute to this strategy,” said David Westcott, director of homeownership programs for the Florida Housing Finance Corp., which is spearheading the state’s proposal.

 

Posted in fannie mae, forensic loan audit, forensic mortgage investigation audit, Freddie Mac, mortgage modification0 Comments

Homeowners strike back at banks: The Daily Tribune

Homeowners strike back at banks: The Daily Tribune

“None of the named defendants have the right or authority to foreclose under (state law) or by contractual right,” he says in the lawsuit.

Published: Tuesday, May 11, 2010

By Jameson Cook, Daily Tribune Staff Writer

Lawsuits filed in maneuver to try to stop foreclosure, recover losses from alleged overpayments, improper approval.

About 90 homeowners in Oakland and Macomb counties have accused more than two dozen banks of deceptive lending and other wrongdoing by approving loans far exceeding the plaintiffs’ ability to pay and charging excessive fees, among other allegations.

The accusations are levied in two lawsuits filed in each county’s circuit court within the past two weeks through the Troy-based Michigan Loan Compliance Advisory Group Inc., created to help homeowners in trouble with their mortgages. A third lawsuit with about 10 plaintiffs is expected to be filed in Wayne County Circuit Court this week.

The lawsuits represent an emerging tactic nationwide for struggling homeowners in their attempt to fight off potential foreclosure and gain relief on stifling mortgages from some of the country’s largest banks.

Continue reading … The Daily Tribune

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in case, concealment, conspiracy, corruption, foreclosure fraud, forensic loan audit, forensic mortgage investigation audit, mortgage gfe, mortgage modification, note, respa, tila0 Comments

Households Overreached, Led to Foreclosure Crisis:

Households Overreached, Led to Foreclosure Crisis:

See the connection here to the Bankers Association below.

Study also found evidence of reckless, predatory lending

Thursday, May 06, 2010 newswire.uark.edu

FAYETTEVILLE, Ark. – As the president and members of Congress consider possible home-mortgage consumer protection, policymakers and analysts continue to dispute causes of the 2007-2008 foreclosure crisis, which triggered a much deeper and more serious financial crisis and ultimately an economic recession. Did banks prey on unwitting consumers, or did households overreach and borrow more than they could afford? A new study by University of Arkansas economists suggests that households overreached and bought more house than they could afford, a factor that led to the 2007-2008 foreclosure crisis.

A new study by University of Arkansas economists suggests the latter. The researchers found that most households in foreclosure were relatively affluent and highly educated people, with few or no children, living in geographical areas that experienced extremely rapid real-estate appreciation – the housing bubble. Although they found some evidence of predatory lending, the authors concluded that a more accurate explanation of the foreclosure crisis was that consumers overreached and bought more housing than they could afford.

The researchers were careful not to excuse Wall Street banks, however, because reckless lending enabled households to become dangerously leveraged.

“Our evidence does not disprove or excuse reckless subprime lending by the large Wall Street banks,” said Tim Yeager, associate professor in the Sam M. Walton College of Business and lead author of “The Foreclosure Crisis: Did Wall Street Practice Predatory Lending or Did Households Overreach?”

“We argue that there is plenty of blame to go around for the financial crisis. Both banks and consumers overreached. Banks extended too much credit to households, and households purchased more home than they could afford,” Yeager said.

Relying on massive datasets provided by Acxiom, the Gadberry Group and RealtyTrac, private companies that compile information about demographics, real-estate properties and foreclosures, Yeager and four of his colleagues in the department of finance at the Walton College combined data on demographics and foreclosures to create profiles of households in foreclosure during the third quarter of 2008. Considering this information, they also analyzed geographic patterns of mortgage foreclosures.

The researchers used Acxiom’s PersonicX classification system to identify and examine the characteristics of households in default during the third quarter of 2008. The system separated U.S. households into 21 life-stage groups – “Gen X Singles” or “Mixed Boomers,” for example. Each group had specific demographic characteristics – such as age, marital status, number and age of children and household income – that tied them together. Other data helped Yeager and his colleagues understand property characteristics, such as market values and loan-to-value ratios, of homes in foreclosure compared to those not in default status.

Working with this data, the researchers developed two categories of groups based on formulas for “excess foreclosure shares” and “relative default rates.” The first calculation determined, in absolute numbers, which groups accounted for the most foreclosures. The second calculation – relative default rates – showed which groups had the highest likelihood of foreclosure. If predatory lending was occurring, households within this category were most likely to be victims.

Results showed major differences in rankings between the two categories. Groups at the top of the absolute-number list differed dramatically from those at the top of the likelihood category.  

By far, the group with the greatest excess foreclosure percentage was “Cash & Careers,” the most affluent generation (Generation X) of adults born between the mid-1960s and early 1970s. Members of this group had high household incomes, high education levels, high home values and none to only a few children. Also, members of this group were classified as aggressive investors, most of who lived in areas – California, Nevada, Arizona and Florida – of rapid real-estate appreciation.

“Cash & Careers” ranked seventh in the list of groups most likely to default. At the top of this list were four groups – “Mixed Singles,” “Gen X Singles,” “Boomer Singles” and “Beginnings” – characterized by low income and low net worth. Again, members of these groups were most likely to be victims of predatory lending. Except for “Boomer Singles,” these groups show up at the bottom of the excess foreclosure list.

“Although we did find evidence that low-income households had a higher statistical likelihood of foreclosure, most households in foreclosure were relatively affluent and well educated,” Yeager said. “Also, these household defaults were strongly clustered in southwestern and southeastern states, which is consistent with the overreaching-consumer explanation of the foreclosure crisis.”

Overall, results showed that most foreclosed households were not “duped” into bad loans, Yeager said. Instead, they were caught up in a housing price bubble in which both consumers and lenders were too aggressive. This finding is critical because strong consumer protection laws alone will not prevent future price bubbles or financial crises.

“The policy implication from our results is that strong consumer protection laws, though necessary to prevent Wall Street banks from offering high-risk loans to the most vulnerable, will not be sufficient to prevent another financial crisis like the one the U.S. economy experienced in 2007 and 2008,” Yeager said. “A return to high price appreciation could again set off dynamics in which borrowers with decent credit overreach and end up in homes they ultimately cannot afford. The only comprehensive solution may be to pop housing bubbles, which is a much more complex task that would require the Federal Reserve to recognize and limit asset price bubbles.”

An online PDF copy of the study is available for download, or a copy of the study can be provided upon request.

Yeager is a former economist at the Federal Reserve Bank of St. Louis. He holds the Arkansas Bankers Association Chair in the Walton College.

The study’s co-authors are Wayne Lee, professor; Kathy Fogel, assistant professor; and doctoral students Liping Ma and Deena Rorie. Lee holds the Alice Walton Chair and the Garrison Chair in Finance.

Contacts:

Tim Yeager, associate professor, economics
Sam M. Walton College of Business
479-575-2992, tyeager@walton.uark.edu

Matt McGowan, science and research communications officer
University Relations
479-575-4246, dmcgowa@uark.edu

Posted in foreclosure, foreclosure fraud, mortgage modification0 Comments

Things to Consider in a Loan Modification

Things to Consider in a Loan Modification

Exactly Who Is Doing The Modifying?

  1. The borrowers will think they are modifying their current loan when in fact they are starting all over again.
  2. The Foreclosing entity which lacks standing to bring lawsuit, is not authorized to modify anything since they are not the owner of the loan in question.
  3. Since the real parties in interest are nowhere to be found, they are taking it upon themselves with the help of their lawyers to steal your property.
  4. The borrower is actually getting a new loan which may enjoin borrower from rescinding new transaction.
  5. The foreclosing entity is STILL not using their own funds to modify (new loan) loan. They are getting funds to lend borrowers through Federal bail outs, insurance proceeds and believe it or not Investors. [same process]
  6. Their lawyers are not acting in a lawyer’s capacity but as BROKERS; [middlemen] they are getting paid commission on every new loan they help brokered.
  7. What Does Loan Modification Mean?
    A modification to an existing loan made by a lender in response to a borrower’s long-term inability to repay the loan. Loan modifications typically involve a reduction in the interest rate on the loan, an extension of the length of the term of the loan, a different type of loan or any combination of the three. A lender might be open to modifying a loan because the cost of doing so is less than the cost of default.
  8. Why would they need to re-qualify if they claim they would make the borrowers payments and rates to be less?
  9. The borrower took the loan out with lender “A” but an unknown lender “B” is trying to modify it.
  10. When the modification is said and done, the borrower will have lender “B” as the lender. What happened to lender “A”????
  11. Exactly what is in the waiver they ask you to sign if any?

Posted in concealment, foreclosure fraud, forensic mortgage investigation audit, mortgage modification0 Comments

Chase Sued AGAIN Over Mortgage Modifications Gone Wrong: HUFFINGTON POST

Chase Sued AGAIN Over Mortgage Modifications Gone Wrong: HUFFINGTON POST

Arthur DelaneyArthur Delaney arthur@huffingtonpost.com | HuffPost Reporting

First Posted: 05- 4-10 03:15 PM   |   Updated: 05- 4-10 04:58 PM

Three frustrated homeowners in New York City are suing JPMorgan Chase over the bank’s failure to permanently modify their mortgages under the Obama administration’s plan to help homeowners avoid foreclosure.Earns Jpmorgan Chase

The complaint, filed in federal court in New York, says the plaintiffs, who are represented by attorneys with the nonprofit Urban Justice Center, relied on promises by Chase that they could have their loans modified if they made reduced payments per the Home Affordable Modification Program (HAMP). Despite making payments on time, they’ve received foreclosure threats but no modifications.

One of the plaintiffs, Alex Lam, a 35-year-old restaurant manager, alleges Chase told him to actually stop making payments in order to be eligible for help. In early 2009, Lam contacted Washington Mutual (since absorbed by Chase) about a modification after his adjustable-rate mortgage blew up in his face. He was told he didn’t qualify for help because he was current on his payments.

“Mr. Lam was specifically told that if he stopped making payments for several months, he could be considered for a modification,” the says the complaint.

The next big surprise came in December, when, after making trial payments of $1,568 for the previous six months, Lam was told he owed the bank $12,000. When he protested, Chase relented and told Lam to apply once again for a mod, this time under HAMP. He made his payments until March, when Chase told him he’d failed HAMP’s opaque “Net Present Value” test, meaning the bank determined the investors who owned the loan would make more money via foreclosure than modification. Lam alleges Chase used bogus inputs for the NPV test and that Chase refuses to show its work.

Lam called the situation “very upsetting” in an interview with HuffPost. “I trusted them because they’re a big bank. I did whatever they asked me to.”

HuffPost asked Lam what he wanted from suing Chase.

“Just to get a modification, that’s all I’m asking for,” he said. “Since day one, that’s all I’m asking for.”

HAMP lawsuits have been flying. Last week a 91-year-old veteran of three wars named Peter Ruplenas sued Bank of America over mortgage mod malfeasance in West Virginia.

In April, Faiz and Khadija Jahani of California sued Chase for reasons similar to Lam’s — the bank told them to stop making payments to qualify for help, then foreclosed. A similar case is brewing in Seattle.

Homeowners are supposed to be eligible for HAMP mods if they’re having trouble making monthly payments, owe less than $729,750, took out the loan before January 2009, and if their payment on their first mortgage is more than 31 percent of their income. In theory, if homeowners make reduced payments (typically $500 cheaper) for three months, they are put in “permanent” modifications that last for five years.

But the banks voluntarily participating in HAMP have given permanent mods to just 230,000 homeowners in the program’s first year, a far cry from the three to four million officials said HAMP would help. Meanwhile, frustrated homeowners’ stories of lost paperwork, dishonesty, and incompetence by banks are piling up.

A Chase spokesman declined to comment on the lawsuit.

Posted in chase, mortgage modification2 Comments

Homes can be lost by mistake when banks miscommunicate: USAtoday

Homes can be lost by mistake when banks miscommunicate: USAtoday

By Paul Kiel, ProPublica

Last November, Michael Hill of Lexington, S.C., finally got the call he’d been waiting for. Congratulations, a rep from JPMorgan Chase told him, your trial mortgage modification is approved. Hill’s monthly payment, around $900, would be nearly halved. Except there was a problem. Chase had foreclosed on Hill’s home a month earlier, and his family was just days away from eviction.

“I listened to her and then I just said, ‘Well, that sounds good,’ ” Hill recalled. ” ‘Tell me how we’re going to do this, seeing as how you sold the house?’ ” That, he found out, was news to Chase.

 CHARTS: Tracking the U.S. housing market’s rise, fall and rebound

Millions of homeowners face losing their homes in the continuing foreclosure crisis, but homeowners often have more than the struggling economy and slumping house prices to worry about: Disorganization within the big banks that service mortgages has made a bad problem worse.

Hill was able to avoid eviction — for now. Chase reversed the sale by paying the man who’d bought the home an extra $19,500 on top of the $86,000 he’d paid at the auction. But other homeowners say they lost their homes because the communication breakdown within the banks was so complete that it led to premature or mistaken foreclosures.

“We believe in many cases people are losing their homes when they should not have,” said Kevin Stein, associate director of the California Reinvestment Coalition, which counts dozens of non-profits that work with homeowners among its members.

In the worst breakdowns, such as Hill’s, banks — and other companies that service loans — actually work at cross-purposes, with one arm of the company foreclosing on the home while the other offers help. Servicers say such mistakes are rare and result from the high volume of defaults and foreclosures.

The problems happen even among servicers participating in the administration’s $75 billion foreclosure-prevention program. Servicers operating under the year-old program are forbidden from auctioning someone’s home while a modification decision is pending.

It happens anyway.

Consumer advocates say the lapses continue because they go unpunished. “We’ve had too much of the carrot, and we need a stick,” Stein says. The Treasury Department has yet to penalize a servicer for breaking the program’s rules. The program provides federal subsidies to encourage modifications.

Treasury officials overseeing the program say they’re aware of the problems and have moved to fix them. Some states are going further to protect homeowners, however, with recent rules that stop the foreclosure process if the homeowner requests a modification.

Many homeowners, seeing no other option, have gone to court to reclaim their homes. At least 50 homeowners have recently filed lawsuits alleging the servicer foreclosed with a loan mod request pending or even while they were on a payment plan.

 Long waits for help

 In good times, banks and other servicers —Bank of America is the biggest, followed by Chase and Wells Fargo— were known mainly to homeowners simply as where they sent their monthly mortgage payment. But the companies have been deluged over the past couple years by requests for help from millions of struggling homeowners.

 Homeowners commonly wait six months for an answer on a loan mod application. The federal program for encouraging loan mods includes a three-month trial period, after which servicers are supposed to decide whether to make the modifications permanent. But some homeowners have waited as long as 10 months for a final answer.

The experience of Hill, married with two children, typifies the delays and confusion. After the mistaken foreclosure, he began the trial modification last December. He made those payments, but two months after his trial period was supposed to end, Hill is still waiting for a final answer from Chase.

The miscommunications have continued. He received a letter in January saying that he’d been approved for a permanent modification, but he was then told he’d received it in error.

His family remains partially packed, ready to move should the modification not go through. “I’m on pins and needles every time someone’s knocking on the door or calling,” he said.

Christine Holevas, a Chase spokeswoman, said that Chase had “agreed with Hill’s request to rescind the foreclosure” and was “now reviewing his loan for permanent modification.” She said Chase services “more than 10 million mortgages — the vast majority without a hitch.”

Communication breakdowns occur because of the way the servicers are structured. One division typically deals with modifications and another with foreclosures. Servicers also hire a local trustee or attorney to actually pursue foreclosure.

 “Often they just simply don’t communicate with each other,” said Laurie Maggiano, the Treasury official in charge of setting policy for the modification program. Such problems were particularly bad last summer, in the first few months of the program, she said. “Basically, you have the right hand at the mortgage company not knowing what the left hand is doing,” said Mark Pearce, North Carolina’s deputy commissioner of banks. Communication glitches and mistakes are “systemic, more than anecdotal” among mortgage servicers, he said.

 “We’ve had cases where we’ve informed the mortgage company that they’re about to foreclose on someone.” The experience for the homeowner, he said, can be “Kafkaesque.”

 “We’re all human, and the servicers are overworked and trying their best,” said Vicki Vidal, of the Mortgage Bankers Association. She said foreclosure errors are rare, particularly if struggling homeowners are prompt in contacting their servicer.

 Frances Gomez, of Tempe, Ariz., lived in her house for over 30 years. Three years ago, she refinanced it with Countrywide, now part of Bank of America, for nearly $300,000. The home’s value has declined dramatically, said Gomez, who put some of the money from the refinancing into her hair salon.

Last year, the recession forced her to close her shop. Gomez fell behind on her mortgage, and after striking out with a company that promised to work with Bank of America to get her a loan mod, she learned in December that her home was scheduled for foreclosure.

So Gomez applied herself. She twice succeeded in getting Bank of America to postpone the sale date, and she said she was assured it would not happen until her application was reviewed. Gomez had opened a smaller salon and understood there was a good chance she would qualify for a modification.

She was still waiting in March when a Realtor, representing the new owner of her home, showed up. Her house had sold at auction — for less than half of what Gomez owed. “They don’t give you an opportunity,” she said. “They just go and do it with no warning.”

It’s not supposed to work that way.

Under the federal program, which requires servicers to follow a set of guidelines for modifications, servicers must give borrowers a written denial before foreclosing. When Gomez called Bank of America about the sale, she said, she was told there was a mistake but nothing could be done. She did get a denial notice — some three weeks after the house was sold and just days before she was evicted.

“I just want people to know what they’re doing,” Gomez, now living with family members, said.

After being contacted by ProPublica, Bank of America reviewed Gomez’s case. Bank spokesman Rick Simon acknowledged that Gomez might not have been told her house would be sold and that the bank made a mistake in denying Gomez, because it did not take into account the income from her new salon business. Simon said a Bank of America representative would seek to negotiate with the new owner of Gomez’s house to see if the sale could be unwound.

Simon said the bank regrets when such mistakes happen due to the “very high volume” of cases and that any errors in Gomez’s case were “inadvertent.”

Even avoiding a mistaken sale can also be a stressful process.

One day in February, a man approached Ron Bermudez of Emeryville, Calif., in front of his house and told him his home would be sold in a few hours. This came as a shock to Bermudez; Bank of America had told him weeks earlier that he’d been approved for a trial modification and that the papers would soon arrive. He made a panicked phone call to an attorney, who was able to make sure there was no auction.

To contest a foreclosure under the federal program, Maggiano, the Treasury official, said a homeowner should call the HOPE Hotline, 888-995-HOPE, a Treasury Department-endorsed hotline staffed by housing counselors. Those counselors can escalate the case if the servicer still won’t correct the problem, she said.

That escalation process has saved “a number” of homeowners from being wrongfully booted out of their homes, Maggiano said. Hill, the South Carolina homeowner, is an example of someone helped by the HOPE Hotline.

Of course, the homeowner must know about the hotline to call it. Gomez, the Arizona homeowner who lost her home to foreclosure, said she’d never heard of it.

Many homeowner advocates say the government’s effort has been largely ineffective at resolving problems with servicers.

“I uniformly hear from attorneys and counseling advocates on the ground that the HOPE Hotline simply parrots back what the servicers have said,” said Alys Cohen, an attorney with the National Consumer Law Center. Cohen said she’d voiced her concerns with Treasury officials, who indicated they’d make improvements.

Offering more protection

Under the current rules for the federal program, servicers have been barred from conducting a foreclosure sale if the homeowner requested a modification but are allowed to push along the process, even set a sale date. That allows them to foreclose more quickly if they determine the homeowner doesn’t qualify for a modification.

As a result, a homeowner might get a modification offer one day and a foreclosure notice the next. As of March, servicers were pursuing foreclosure on 1.8 million residences, according to LPS Applied Analytics.

Maggiano, the Treasury official, said that’s been confusing for homeowners. Some “just got discouraged and gave up.”

New rules issued by the Treasury in March say the servicer must first give the homeowner a shot at a modification before beginning the process that leads to foreclosure.

They also require the servicers to adopt new policies to prevent mishaps. For instance, the servicer will be required to provide a written certification to its attorney or trustee that the homeowner does not qualify for the federal program before the house can be sold.

Maggiano said the changes resulted from visits to the servicers’ offices last December that allowed Treasury officials to “much better understand (their) inner workings.”

The rules, however, don’t take effect until June. Nor do they apply to hundreds of thousands of homeowners seeking a modification for whom the process leading to foreclosure has already begun. And Treasury has yet to set any penalties for servicers who don’t follow the rules.

Maggiano said Treasury’s new rule struck a balance to help homeowners who were responsive to servicer communications to stay out of foreclosure while not introducing unnecessary delays for servicers. Some borrowers don’t respond at all to offers of help from the servicer until they’re faced with foreclosure, she said.

Some states, such as North Carolina, have recently gone further to delay moving toward foreclosure if a homeowner requests a modification. State regulators there recently passed a law that requires a servicer to halt the process if a homeowner requests a modification.

Pearce, the North Carolina official, said the rule was prompted by the delays homeowners have been facing and puts the burden on the servicer to expeditiously review the request. “They’re in total control.”

Stopping the process not only removes the possibility of a sudden foreclosure, he said, but also stops the accumulation of fees, which build up and can add thousands to the homeowner’s debt as the servicer moves toward foreclosure.

In California, state Sen. Mark Leno, a Democrat from San Francisco, is pushing a bill that would do something similar. The servicers “should be working a lot harder to keep homeowners in their home,” he said.

 Kiel is a reporter for ProPublica, an independent non-profit newsroom based in New York. USA TODAY editors worked with him in preparing this story for publication.

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 HELP FOR BORROWERS

What should you do if you’re foreclosed on while you’re waiting for an answer on your loan modification application?

Treasury officials say you should call the HOPE Hotline, 888-995-HOPE. It’s staffed by housing counselors, who will contact the servicer to try to resolve the situation.

If the counselors can’t resolve the problem, they can bring the issue to a “solution center” staffed by Fannie Mae, with which Treasury contracted to administer the modification program.

Those employees can intervene on behalf of the Treasury if the servicer is breaking the program’s rules, they said.

 HOW MICHAEL HILL ALMOST LOST HIS HOME
A chronology of one borrower’s experience with a mistaken foreclosure. 

  • Early 2009: After falling behind on his mortgage, Hill has many phone calls with JPMorgan Chase but is not offered a modification.
  • April 2: Chase files to pursue foreclosure on Hill’s house.
  • Aug. 6: Chase refers Hill to a housing counselor. With her help, he applies again for a modification.
  • Oct. 5: Chase sells Hill’s home at a foreclosure auction for $86,000.
  • Nov. 5: The sheriff issues Hill a notice saying he’ll be evicted in one week.
  • Nov. 11: Chase calls to tell Hill that he’s been approved for a trial modification.
  • Nov. 18: Chase buys the home back for $19,521 above the auction price.
  • Dec. 9: Hill begins the trial modification.
    Source: ProPublica interviews with Michael Hill and Hill’s records.
 HOMEOWNER LOSES HOME
More than 50 homeowners have filed lawsuits in the past year, alleging a communication breakdown led to foreclosure.In one of those suits, David Peterson of Grain Valley, Mo. says Chase Home Finance, part of JPMorgan Chase, assured him in December 2008,  that he qualified for a loan modification and would soon receive the papers in the mail. The offer was not under the government program, which didn’t launch until April 2009.

When the papers had still not arrived a month later, he says he called to ask whether he should send in a payment. He was told to wait, the suit says, and was assured he would not be foreclosed on.

Nevertheless, Chase sold his home. More than three weeks later, Peterson says he received the modification papers in the mail. They were dated one day after the foreclosure had occurred.

Chase refused to reverse the sale, according to the suit, which was filed last month. Chase declined to comment on pending litigation.

– By Paul Kiel, ProPublica

Posted in foreclosure fraud, mortgage modification0 Comments

Foreclosure Crisis: New Center for Court Innovation paper reviews responses to mortgage fraud, foreclosure and abandoned property.

Foreclosure Crisis: New Center for Court Innovation paper reviews responses to mortgage fraud, foreclosure and abandoned property.

New Center for Court Innovation paper reviews responses to mortgage fraud, foreclosure and abandoned property.

[scribd id=30864597 key=key-93z6cuvsnz2j9njqwdi mode=list]

Posted in foreclosure, foreclosure fraud, forensic mortgage investigation audit, Mortgage Foreclosure Fraud, mortgage modification0 Comments

Florida Foreclosure Fraud Protection Law Enacted – Foreclosures / Mortgage Loan Modification

Florida Foreclosure Fraud Protection Law Enacted – Foreclosures / Mortgage Loan Modification

Florida Foreclosure Fraud Protection Law Enacted.

The Attorney General clarified that this new law will not apply to the Attorney / Client relationship or the way attorneys are paid when they are hired to help distressed homeowners. This law brings much needed protection to those consumers / homeowners who have been taken advantage of by Mortgage Loan Modification Companies – many of which are scams…Effective October 1st, 2008

501.1377 Violations involving homeowners during the course of residential foreclosure proceedings.

(1) LEGISLATIVE FINDINGS AND INTENT.–The Legislature finds that homeowners who are in default on their mortgages, in foreclosure, or at risk of losing their homes due to nonpayment of taxes may be vulnerable to fraud, deception, and unfair dealings with foreclosure-rescue consultants or equity purchasers. The intent of this section is to provide a homeowner with information necessary to make an informed decision regarding the sale or transfer of his or her home to an equity purchaser. It is the further intent of this section to require that foreclosure-related rescue services agreements be expressed in writing in order to safeguard homeowners against deceit and financial hardship; to ensure, foster, and encourage fair dealing in the sale and purchase of homes in foreclosure or default; to prohibit representations that tend to mislead; to prohibit or restrict unfair contract terms; to provide a cooling-off period for homeowners who enter into contracts for services related to saving their homes from foreclosure or preserving their rights to possession of their homes; to afford homeowners a reasonable and meaningful opportunity to rescind sales to equity purchasers; and to preserve and protect home equity for the homeowners of this state.

(2) DEFINITIONS.–As used in this section, the term:

(a) “Equity purchaser” means any person who acquires a legal, equitable, or beneficial ownership interest in any residential real property as a result of a foreclosure-rescue transaction. The term does not apply to a person who acquires the legal, equitable, or beneficial interest in such property:

1. By a certificate of title from a foreclosure sale conducted under chapter 45;

2. At a sale of property authorized by statute;

3. By order or judgment of any court;

4. From a spouse, parent, grandparent, child, grandchild, or sibling of the person or the person’s spouse; or

5. As a deed in lieu of foreclosure, a workout agreement, a bankruptcy plan, or any other agreement between a foreclosing lender and a homeowner.

(b) “Foreclosure-rescue consultant” means a person who directly or indirectly makes a solicitation, representation, or offer to a homeowner to provide or perform, in return for payment of money or other valuable consideration, foreclosure-related rescue services. The term does not apply to:

1. A person excluded under s. 501.212.

2. A person acting under the express authority or written approval of the United States Department of Housing and Urban Development or other department or agency of the United States or this state to provide foreclosure-related rescue services.

3. A charitable, not-for-profit agency or organization, as determined by the United States Internal Revenue Service under s. 501(c)(3) of the Internal Revenue Code, which offers counseling or advice to an owner of residential real property in foreclosure or loan default if the agency or organization does not contract for foreclosure-related rescue services with a for-profit lender or person facilitating or engaging in foreclosure-rescue transactions.

4. A person who holds or is owed an obligation secured by a lien on any residential real property in foreclosure if the person performs foreclosure-related rescue services in connection with this obligation or lien and the obligation or lien was not the result of or part of a proposed foreclosure reconveyance or foreclosure-rescue transaction.

5. A financial institution as defined in s. 655.005 and any parent or subsidiary of the financial institution or of the parent or subsidiary.

6. A licensed mortgage broker, mortgage lender, or correspondent mortgage lender that provides mortgage counseling or advice regarding residential real property in foreclosure, which counseling or advice is within the scope of services set forth in chapter 494 and is provided without payment of money or other consideration other than a mortgage brokerage fee as defined in s. 494.001.

(c) “Foreclosure-related rescue services” means any good or service related to, or promising assistance in connection with:

1. Stopping, avoiding, or delaying foreclosure proceedings concerning residential real property; or

2. Curing or otherwise addressing a default or failure to timely pay with respect to a residential mortgage loan obligation.

(d) “Foreclosure-rescue transaction” means a transaction:

1. By which residential real property in foreclosure is conveyed to an equity purchaser and the homeowner maintains a legal or equitable interest in the residential real property conveyed, including, without limitation, a lease option interest, an option to acquire the property, an interest as beneficiary or trustee to a land trust, or other interest in the property conveyed; and

2. That is designed or intended by the parties to stop, avoid, or delay foreclosure proceedings against a homeowner’s residential real property.

(e) “Homeowner” means any record title owner of residential real property that is the subject of foreclosure proceedings.

(f) “Residential real property” means real property consisting of one-family to four-family dwelling units, one of which is occupied by the owner as his or her principal place of residence.

(g) “Residential real property in foreclosure” means residential real property against which there is an outstanding notice of the pendency of foreclosure proceedings recorded pursuant to s. 48.23.

(3) PROHIBITED ACTS.–In the course of offering or providing foreclosure-related rescue services, a foreclosure-rescue consultant may not:

(a) Engage in or initiate foreclosure-related rescue services without first executing a written agreement with the homeowner for foreclosure-related rescue services; or

(b) Solicit, charge, receive, or attempt to collect or secure payment, directly or indirectly, for foreclosure-related rescue services before completing or performing all services contained in the agreement for foreclosure-related rescue services.

(4) FORECLOSURE-RELATED RESCUE SERVICES; WRITTEN AGREEMENT.–

(a) The written agreement for foreclosure-related rescue services must be printed in at least 12-point uppercase type and signed by both parties. The agreement must include the name and address of the person providing foreclosure-related rescue services, the exact nature and specific detail of each service to be provided, the total amount and terms of charges to be paid by the homeowner for the services, and the date of the agreement. The date of the agreement may not be earlier than the date the homeowner signed the agreement. The foreclosure-rescue consultant must give the homeowner a copy of the agreement to review not less than 1 business day before the homeowner is to sign the agreement.

(b) The homeowner has the right to cancel the written agreement without any penalty or obligation if the homeowner cancels the agreement within 3 business days after signing the written agreement. The right to cancel may not be waived by the homeowner or limited in any manner by the foreclosure-rescue consultant. If the homeowner cancels the agreement, any payments that have been given to the foreclosure-rescue consultant must be returned to the homeowner within 10 business days after receipt of the notice of cancellation.

(c) An agreement for foreclosure-related rescue services must contain, immediately above the signature line, a statement in at least 12-point uppercase type that substantially complies with the following:

HOMEOWNER’S RIGHT OF CANCELLATION

YOU MAY CANCEL THIS AGREEMENT FOR FORECLOSURE-RELATED RESCUE SERVICES WITHOUT ANY PENALTY OR OBLIGATION WITHIN 3 BUSINESS DAYS FOLLOWING THE DATE THIS AGREEMENT IS SIGNED BY YOU.

THE FORECLOSURE-RESCUE CONSULTANT IS PROHIBITED BY LAW FROM ACCEPTING ANY MONEY, PROPERTY, OR OTHER FORM OF PAYMENT FROM YOU UNTIL ALL PROMISED SERVICES ARE COMPLETE. IF FOR ANY REASON YOU HAVE PAID THE CONSULTANT BEFORE CANCELLATION, YOUR PAYMENT MUST BE RETURNED TO YOU NO LATER THAN 10 BUSINESS DAYS AFTER THE CONSULTANT RECEIVES YOUR CANCELLATION NOTICE.

TO CANCEL THIS AGREEMENT, A SIGNED AND DATED COPY OF A STATEMENT THAT YOU ARE CANCELING THE AGREEMENT SHOULD BE MAILED (POSTMARKED) OR DELIVERED TO (NAME) AT (ADDRESS) NO LATER THAN MIDNIGHT OF (DATE) .

IMPORTANT: IT IS RECOMMENDED THAT YOU CONTACT YOUR LENDER OR MORTGAGE SERVICER BEFORE SIGNING THIS AGREEMENT. YOUR LENDER OR MORTGAGE SERVICER MAY BE WILLING TO NEGOTIATE A PAYMENT PLAN OR A RESTRUCTURING WITH YOU FREE OF CHARGE.

(d) The inclusion of the statement does not prohibit the foreclosure-rescue consultant from giving the homeowner more time in which to cancel the agreement than is set forth in the statement, provided all other requirements of this subsection are met.

(e) The foreclosure-rescue consultant must give the homeowner a copy of the signed agreement within 3 hours after the homeowner signs the agreement.

(5) FORECLOSURE-RESCUE TRANSACTIONS; WRITTEN AGREEMENT.–

(a) 1. A foreclosure-rescue transaction must include a written agreement prepared in at least 12-point uppercase type that is completed, signed, and dated by the homeowner and the equity purchaser before executing any instrument from the homeowner to the equity purchaser quitclaiming, assigning, transferring, conveying, or encumbering an interest in the residential real property in foreclosure. The equity purchaser must give the homeowner a copy of the completed agreement within 3 hours after the homeowner signs the agreement. The agreement must contain the entire understanding of the parties and must include:

a. The name, business address, and telephone number of the equity purchaser.

b. The street address and full legal description of the property.

c. Clear and conspicuous disclosure of any financial or legal obligations of the homeowner that will be assumed by the equity purchaser.

d. The total consideration to be paid by the equity purchaser in connection with or incident to the acquisition of the property by the equity purchaser.

e. The terms of payment or other consideration, including, but not limited to, any services that the equity purchaser represents will be performed for the homeowner before or after the sale.

f. The date and time when possession of the property is to be transferred to the equity purchaser.

2. A foreclosure-rescue transaction agreement must contain, above the signature line, a statement in at least 12-point uppercase type that substantially complies with the following:

I UNDERSTAND THAT UNDER THIS AGREEMENT I AM SELLING MY HOME TO THE OTHER UNDERSIGNED PARTY.

3. A foreclosure-rescue transaction agreement must state the specifications of any option or right to repurchase the residential real property in foreclosure, including the specific amounts of any escrow payments or deposit, down payment, purchase price, closing costs, commissions, or other fees or costs.

4. A foreclosure-rescue transaction agreement must comply with all applicable provisions of 15 U.S.C. ss. 1600 et seq. and related regulations.

(b) The homeowner may cancel the foreclosure-rescue transaction agreement without penalty if the homeowner notifies the equity purchaser of such cancellation no later than 5 p.m. on the 3rd business day after signing the written agreement. Any moneys paid by the equity purchaser to the homeowner or by the homeowner to the equity purchaser must be returned at cancellation. The right to cancel does not limit or otherwise affect the homeowner’s right to cancel the transaction under any other law. The right to cancel may not be waived by the homeowner or limited in any way by the equity purchaser. The equity purchaser must give the homeowner, at the time the written agreement is signed, a notice of the homeowner’s right to cancel the foreclosure-rescue transaction as set forth in this subsection. The notice, which must be set forth on a separate cover sheet to the written agreement that contains no other written or pictorial material, must be in at least 12-point uppercase type, double-spaced, and read as follows:

NOTICE TO THE HOMEOWNER/SELLER

PLEASE READ THIS FORM COMPLETELY AND CAREFULLY. IT CONTAINS VALUABLE INFORMATION REGARDING CANCELLATION RIGHTS.

BY THIS CONTRACT, YOU ARE AGREEING TO SELL YOUR HOME. YOU MAY CANCEL THIS TRANSACTION AT ANY TIME BEFORE 5:00 P.M. OF THE THIRD BUSINESS DAY FOLLOWING RECEIPT OF THIS NOTICE.

THIS CANCELLATION RIGHT MAY NOT BE WAIVED IN ANY MANNER BY YOU OR BY THE PURCHASER.

ANY MONEY PAID DIRECTLY TO YOU BY THE PURCHASER MUST BE RETURNED TO THE PURCHASER AT CANCELLATION. ANY MONEY PAID BY YOU TO THE PURCHASER MUST BE RETURNED TO YOU AT CANCELLATION.

TO CANCEL, SIGN THIS FORM AND RETURN IT TO THE PURCHASER BY 5:00 P.M. ON (DATE) AT (ADDRESS) . IT IS BEST TO MAIL IT BY CERTIFIED MAIL OR OVERNIGHT DELIVERY, RETURN RECEIPT REQUESTED, AND TO KEEP A PHOTOCOPY OF THE SIGNED FORM AND YOUR POST OFFICE RECEIPT.

I (we) hereby cancel this transaction.

Seller’s Signature

Printed Name of Seller

Seller’s Signature

Printed Name of Seller

Date

(c) In any foreclosure-rescue transaction in which the homeowner is provided the right to repurchase the residential real property, the homeowner has a 30-day right to cure any default of the terms of the contract with the equity purchaser, and this right to cure may be exercised on up to three separate occasions. The homeowner’s right to cure must be included in any written agreement required by this subsection.

(d) In any foreclosure-rescue transaction, before or at the time of conveyance, the equity purchaser must fully assume or discharge any lien in foreclosure as well as any prior liens that will not be extinguished by the foreclosure.

(e) If the homeowner has the right to repurchase the residential real property, the equity purchaser must verify and be able to demonstrate that the homeowner has or will have a reasonable ability to make the required payments to exercise the option to repurchase under the written agreement. For purposes of this subsection, there is a rebuttable presumption that the homeowner has a reasonable ability to make the payments required to repurchase the property if the homeowner’s monthly payments for primary housing expenses and regular monthly principal and interest payments on other personal debt do not exceed 60 percent of the homeowner’s monthly gross income.

(f) If the homeowner has the right to repurchase the residential real property, the price the homeowner pays may not be unconscionable, unfair, or commercially unreasonable. A rebuttable presumption, solely between the equity purchaser and the homeowner, arises that the foreclosure-rescue transaction was unconscionable if the homeowner’s repurchase price is greater than 17 percent per annum more than the total amount paid by the equity purchaser to acquire, improve, maintain, and hold the property. Unless the repurchase agreement or a memorandum of the repurchase agreement is recorded in accordance with s. 695.01, the presumption arising under this subsection shall not apply against creditors or subsequent purchasers for a valuable consideration and without notice.

(6) REBUTTABLE PRESUMPTION.– Any foreclosure-rescue transaction involving a lease option or other repurchase agreement creates a rebuttable presumption, solely between the equity purchaser and the homeowner, that the transaction is a loan transaction and the conveyance from the homeowner to the equity purchaser is a mortgage under s. 697.01. Unless the lease option or other repurchase agreement, or a memorandum of the lease option or other repurchase agreement, is recorded in accordance with s. 695.01, the presumption created under this subsection shall not apply against creditors or subsequent purchasers for a valuable consideration and without notice.

(7) VIOLATIONS. – A person who violates any provision of this section commits an unfair and deceptive trade practice as defined in part II of this chapter. Violators are subject to the penalties and remedies provided in part II of this chapter, including a monetary penalty not to exceed $15,000 per violation.

Posted in foreclosure, foreclosure fraud, forensic mortgage investigation audit, mortgage modification2 Comments


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