Showing posts with label Foreclosure Fraud. Show all posts
Showing posts with label Foreclosure Fraud. Show all posts
09 April 2013
News & Views For Week Of April 7 - 13, 2013
25 June 2011
26 December 2010
Yves Smith of Naked Capitalism: Loan Servicing Biz Explained - Foreclosures On People Who Never Missed A Payment
Yves Smith and her blog "Naked Capitalism" are one of my weekly "must reads" and I've been linked to her blog on the Watchworld ever since our inception.
My Notes from the above interview of Yves Smith:
The Mortgage Servicing industry is a new industry sprung up around this new process of doing mortgages today called “securitization”.
In the old days of banking, the borrower would go to the bank and get the loan, and the loan would remain with the bank.
The change we had, which started in the 1980s, and which has now become the predominant way . . . at least for the way first mortgages are done . . . is you go to the bank, you might even go to the mortgage broker, and you’ll get the loan with them, but instead of keeping the loan, they will sell it. And this (loan the borrower took out) will usually not go to just one party, but it will go to a series of parties. Eventually the loan will end up with a series of investors in a legal box called a “Trust”.
Now this means someone has to somewhat play the role the bank of the old days used to play in collecting payments on the loan. So the Mortgage Servicing industry is the party which gets the payments, its the party which credits the payments, it is the party which takes all the cash from all the people the banks are dealing with and makes sure the cash is properly sent to all the parties the way the contracts are drawn up.
Lending Process Servicing Company is the company which most of the time intercedes for a bank to begin foreclosing. This company gives a lot of support to the lending Servicers in the foreclosure field. For instance, this is the company which hires a “foreclosure mill” to begin foreclosing on a homeowner.
What normally happens is the Servicer normally notifies the borrower that they are behind . . . only very late in the process. The supposed payments behind have gotten so large that the borrower is usually very surprised by the large amount of money being demanded by the Servicer . . . if its because of the compounded fees that they are in that unenviable position
Here, we get to see Yves go through the paces on the foreclosure fraud mess, focusing mostly on the Loan Servicers link in the chain of the foreclosure mess. She more than adequately explains why foreclosing on people, instead of modifying their loan, is the top priority for Loan Servicers.
Below this video are my notes on what Yves sets down. It is not an absolute transcript, but reasonably close.
My Notes from the above interview of Yves Smith:
The Mortgage Servicing industry is a new industry sprung up around this new process of doing mortgages today called “securitization”.
In the old days of banking, the borrower would go to the bank and get the loan, and the loan would remain with the bank.
The change we had, which started in the 1980s, and which has now become the predominant way . . . at least for the way first mortgages are done . . . is you go to the bank, you might even go to the mortgage broker, and you’ll get the loan with them, but instead of keeping the loan, they will sell it. And this (loan the borrower took out) will usually not go to just one party, but it will go to a series of parties. Eventually the loan will end up with a series of investors in a legal box called a “Trust”.
Now this means someone has to somewhat play the role the bank of the old days used to play in collecting payments on the loan. So the Mortgage Servicing industry is the party which gets the payments, its the party which credits the payments, it is the party which takes all the cash from all the people the banks are dealing with and makes sure the cash is properly sent to all the parties the way the contracts are drawn up.
Lending Process Servicing Company is the company which most of the time intercedes for a bank to begin foreclosing. This company gives a lot of support to the lending Servicers in the foreclosure field. For instance, this is the company which hires a “foreclosure mill” to begin foreclosing on a homeowner.
What normally happens is the Servicer normally notifies the borrower that they are behind . . . only very late in the process. The supposed payments behind have gotten so large that the borrower is usually very surprised by the large amount of money being demanded by the Servicer . . . if its because of the compounded fees that they are in that unenviable position
Keep in mind it is the Trusts (which shelter Investors) which hires the Loan Servicers. The sequence runs like this:
Yves goes on to point out one diabolical thing a Service will do. She says suppose a borrower already has one late fee. In many cases, these late fees are not bona fide late fees as the servicer applied the payment late as it circulated through the intestines of the servicing "factory". More insidious, Servicers have also been found to “hold” payments sometimes so as to purposefully make the borrowers late.
Here’s what happens with these late fees:
Let’s call the month when a first late fee payment is assigned Month #1:
Now here are the reasons why it is more profitable to push into foreclosure:
Normally, whenever you have a borrower get in trouble, in any type of lending, the first thing the lender says is “Should I liquidate the loan, should I take what I can get, or is there some way we can restructure the loan?” Yves comments, “I’m always better taking half a loaf . . . if the borrower has enough income, I’d be better served by taking less and restructuring the loan.
Hence in our above case, the Investor(s) would be better served by having the loan restructured; however, the Servicer is having to advance principal and interest, the Servicers do not get paid for modifying loans (hence they have no Economic incentive to modify the loan), and the only way for the Servicer to recoup the money it has been sending to the Investor(s) is to foreclose on the borrower. The reason for this is the Servicer can foreclose on the house, sell it for whatever they can get, take their fees out of the sale before anyone else, and send the remaining money to the Investors.
All the incentives for the Servicers favors foreclosure. None of the incentives favor loan modification.
Yves goes on to say that academics have covered many, many stories about people being foreclosed upon and they haven’t missed a payment. She contends the reason lenders will make up fraudulent documents to take away an on time borrowers home is there is more money to be made in the foreclosure process than remediation.
Yves says banks want to paint the problem as one of where borrowers are deadbeats, and she acknowledges that many borrowers can no longer afford their homes due to loss of jobs, a medical emergency, etc. On the other hand, a very significant amount of the people who are actively fighting foreclosure are victims of Servicer error and they can’t get it straightened out . . . OR . . . they have actually filed for bankruptcy, and in bankruptcy, everybody who has filed to collect money from the borrower is supposed to wait ‘til the court sorts it out.
Yves says Servicers keep trying to take the house before the bankruptcy process has been worked out fully. She says many unsophisticated borrowers and unsophisticated borrowers’ lawyers . . . they will make deals with banks the first time banks come for the house, and the deals are very unfavorable to the borrower who might have had grounds to hold on to their house.
Lastly, the banks are drawing out the process of foreclosing s-l-o-w-l-y because the banks don’t want to sit on all this Shadow Inventory all at one time.
1. The Trusts hire the Servicer.
2. The Servicer’s imperative is not whether someone is to be foreclosed upon. Instead it is focused on “keeping costs down”.
3. The Servicer does its work inside a big office like factory where processes are mostly automated.
4. And the Servicer has imperatives to Maximize fees. Foreclosures happen to be more profitable than routine servicing of a loan.
5. Hence, Servicers have no incentive to help people from getting in trouble. In fact, they have incentives to get people in trouble.
Yves goes on to point out one diabolical thing a Service will do. She says suppose a borrower already has one late fee. In many cases, these late fees are not bona fide late fees as the servicer applied the payment late as it circulated through the intestines of the servicing "factory". More insidious, Servicers have also been found to “hold” payments sometimes so as to purposefully make the borrowers late.
Here’s what happens with these late fees:
Let’s call the month when a first late fee payment is assigned Month #1:
1. The late fee will not be applied until the next month’s bill, or Month #2.
2. Currently, the borrower tears out another payment slip from his/her mortgage payment books and sends in their Month #2 payment. At this moment, they have no idea they are being assessed a late fee by the Loan Servicer . . . which for this example, let’s say is $75.00.
3. Eventhough the borrower sends in their regular payment for Month #2 on time - which by Federal law is supposed to go against mortgage principal and mortgage interest - the Loan Servicer instead will subtract the late fee from Month #2’s on time payment . . . which makes the second month’s payment short. This shorting of Month #2’s payment by the Servicer also makes Month #2’s . . . in theory . . . late . . . because it is (in the eyes of the Servicer) not PAID IN FULL.
4. Thus, in this example, another late fee is applied on top of a bogus late fee. And maybe an extra fee is charged on top of that.
5. Well, when a borrower has been late twice under the agreement, the investors require the Servicer to get something called a “Broker’s Price Opinion” (which Yves claims is kind of worthless). All this is is some broker drives by the house and makes some opinion about the real price of the house during his drive by.
6. This “Broker Price Opinion” costs somewhere between $150 - $250 for this “drive by”. This “Broker Price Opinion” is supposed to be charged to the investor(s) in the Securitization. Many times, the Loan Servicer has been found to “double dip” and charge the borrower also.
7. So now, we many times have a borrower who is tagged with two late payments(and maybe another surreptitious hidden charge on Month #2’s supposed late payment) AND many times they are assigned a “Broker Price Opinion” charge which legally the Investor(s) are supposed to pay, not the loan borrower.
8. These usurious, illegal fees compound.
Now here are the reasons why it is more profitable to push into foreclosure:
1. When the borrower goes into foreclosure, the Servicer is allowed to charge more and bigger Servicer Administrative fees.
2. These new fees for foreclosing come right off the top.
3. Also, if the borrower gets seriously delinquent, the Servicer still must continue to make the payments to the Investors as if the borrower were still making the payments on time.
Normally, whenever you have a borrower get in trouble, in any type of lending, the first thing the lender says is “Should I liquidate the loan, should I take what I can get, or is there some way we can restructure the loan?” Yves comments, “I’m always better taking half a loaf . . . if the borrower has enough income, I’d be better served by taking less and restructuring the loan.
Hence in our above case, the Investor(s) would be better served by having the loan restructured; however, the Servicer is having to advance principal and interest, the Servicers do not get paid for modifying loans (hence they have no Economic incentive to modify the loan), and the only way for the Servicer to recoup the money it has been sending to the Investor(s) is to foreclose on the borrower. The reason for this is the Servicer can foreclose on the house, sell it for whatever they can get, take their fees out of the sale before anyone else, and send the remaining money to the Investors.
All the incentives for the Servicers favors foreclosure. None of the incentives favor loan modification.
Yves goes on to say that academics have covered many, many stories about people being foreclosed upon and they haven’t missed a payment. She contends the reason lenders will make up fraudulent documents to take away an on time borrowers home is there is more money to be made in the foreclosure process than remediation.
Yves says banks want to paint the problem as one of where borrowers are deadbeats, and she acknowledges that many borrowers can no longer afford their homes due to loss of jobs, a medical emergency, etc. On the other hand, a very significant amount of the people who are actively fighting foreclosure are victims of Servicer error and they can’t get it straightened out . . . OR . . . they have actually filed for bankruptcy, and in bankruptcy, everybody who has filed to collect money from the borrower is supposed to wait ‘til the court sorts it out.
Yves says Servicers keep trying to take the house before the bankruptcy process has been worked out fully. She says many unsophisticated borrowers and unsophisticated borrowers’ lawyers . . . they will make deals with banks the first time banks come for the house, and the deals are very unfavorable to the borrower who might have had grounds to hold on to their house.
Lastly, the banks are drawing out the process of foreclosing s-l-o-w-l-y because the banks don’t want to sit on all this Shadow Inventory all at one time.
Banks don’t want to be responsible for paying taxes and insurance on these houses and want to keep those losses off on Servicers until the last minute. It’s better for banks in destroyed Real Estate markets to stay in the house, to maintain the house, to pay the RE taxes and insurance, than it is for the bank to take it back, add it to stealth inventory, and have the house sit empty eating a hole in the banks’ books.The Mortgage Servicing industry is a new industry sprung up around this new process of doing mortgages today called “securitization”.
21 December 2010
Bilk of America: Nevada and Arizona States Attorney Generals File Lawsuits Against Bank of America For Fraudulent And Deceptive Practices
The first two lawsuits by states attorney generals have just been filed against Bank of America. These lawsuits center around Bank of America's alleged fraudulent and deceptive practices concerning loan "re-modifications".
MSNBC's "Countdown" with Keith Olbermann reports why Nevada State Attorney General, Catherine Cortez Matso (D), filed her lawsuit against Bank of America:
In addition to the Nevada and Arizona lawsuits, Countdown also notes that Iowa Attorney General, Tom Miller (D), is continuing to coordinate a 50 state investigation in loan servicers' documentation practices, practices which have led some loan servicers to foreclose on homeowners who had already paid off their mortgages in full.
In a meeting with homeowners last week, Tom Miller said, "We will put people in jail," and he described the current exploitive and dysfunctional loan re-modification program as "Insane".
Countdown's fill in host, Chris Hayes, then goes on to interview Terry Goddard (D), Arizona Attorney General, for an eye opening look at how pervasive the "bilking of America" really is:
MSNBC's "Countdown" with Keith Olbermann reports why Nevada State Attorney General, Catherine Cortez Matso (D), filed her lawsuit against Bank of America:
"Misleading consumers with false assurances that their homes would not be foreclosed while their requests for modifications were pending, but sending foreclosure notices, scheduling auction dates, and even selling consumers' homes while waiting for decisions.Misrepresenting to consumers that they must be in default on their mortgages to be eligible for modifications when, in fact, current borrowers are eligible for assistance.Making false promises to consumers that their modifications would be made permanent if they successfully completed trial modification periods, but then failing to convert these modifications.And falsely notifying consumers or credit agencies that consumers are in default when they are not."
In addition to the Nevada and Arizona lawsuits, Countdown also notes that Iowa Attorney General, Tom Miller (D), is continuing to coordinate a 50 state investigation in loan servicers' documentation practices, practices which have led some loan servicers to foreclose on homeowners who had already paid off their mortgages in full.
In a meeting with homeowners last week, Tom Miller said, "We will put people in jail," and he described the current exploitive and dysfunctional loan re-modification program as "Insane".
Countdown's fill in host, Chris Hayes, then goes on to interview Terry Goddard (D), Arizona Attorney General, for an eye opening look at how pervasive the "bilking of America" really is:
Visit msnbc.com for breaking news, world news, and news about the economy
22 November 2010
Great Interview By Jon Stewart of Joe Nocera & Bethany McLain On Wall Street Fraud
Jon Stewart got so into this interview, that he kept the guests on for double their alloted time and told viewers to go to the internet to see the whole unedited version.
Stewart at one point, gets the two guests to agree to the following equations which Wall Street Banksters live by:
Gambling = Innovation
Clients = Idiots
| The Daily Show With Jon Stewart | Mon - Thurs 11p / 10c | |||
| ||||
This is the unedited version not all of which was televised. There is explicit language as Stewart gets into the book "All The Devil's Are Here" written by Joe Nocera & Bethany McLain.
Again this is NSFW - not suitable for work - because of language. But is is language we all need to hear, so, if you have to, put on some headphones and watch this at lunch or on coffee break.
Some of you know Nocera's work for the New York Times and some of you know McLain's writing from Vanity Fair. Before writing this book together, Nocera said he was already "mad" about how Wall Street worked but as he co-wrote this book he got "a whole lot madder", while McLain said, "before this book, I thought it was all a big accident, and then after I finished (the book) I didn't think it was a big accident."
Matt Taibbi On MSNBC's "Young Turks" On "Foreclosure Fraud"
Watch the video, then read the link from Taibbi's latest piece in Rolling Stone Magazine
Here's Taibbi's latest piece in Rolling Stone Magazine's November 10th issue:
Here's Taibbi's latest piece in Rolling Stone Magazine's November 10th issue:
http://www.rollingstone.com/politics/news/17390/232611
http://www.rollingstone.com/politics/news/17390/232611
Matt Taibbi: Courts Helping Banks Screw Over Homeowners
The foreclosure lawyers down in Jacksonville had warned me, but I was skeptical. They told me the state of Florida had created a special super-high-speed housing court with a specific mandate to rubber-stamp the legally dicey foreclosures by corporate mortgage pushers like Deutsche Bank and JP Morgan Chase. This "rocket docket," as it is called in town, is presided over by retired judges who seem to have no clue about the insanely complex financial instruments they are ruling on — securitized mortgages and laby rinthine derivative deals of a type that didn't even exist when most of them were active members of the bench. Their stated mission isn't to decide right and wrong, but to clear cases and blast human beings out of their homes with ultimate velocity. They certainly have no incentive to penetrate the profound criminal mysteries of the great American mortgage bubble of the 2000s, perhaps the most complex Ponzi scheme in human history — an epic mountain range of corporate fraud in which Wall Street megabanks conspired first to collect huge numbers of subprime mortgages, then to unload them on unsuspecting third parties like pensions, trade unions and insurance companies (and, ultimately, you and me, as taxpayers) in the guise of AAA-rated investments. Selling lead as gold, shit as Chanel No. 5, was the essence of the booming international fraud scheme that created most all of these now-failing home mortgages.
The rocket docket wasn't created to investigate any of that. It exists to launder the crime and bury the evidence by speeding thousands of fraudulent and predatory loans to the ends of their life cycles, so that the houses attached to them can be sold again with clean paperwork. The judges, in fact, openly admit that their primary mission is not justice but speed. One Jacksonville judge, the Honorable A.C. Soud, even told a local newspaper that his goal is to resolve 25 cases per hour. Given the way the system is rigged, that means His Honor could well be throwing one ass on the street every 2.4 minutes.
Foreclosure lawyers told me one other thing about the rocket docket. The hearings, they said, aren't exactly public. "The judges might give you a hard time about watching," one lawyer warned. "They're not exactly anxious for people to know about this stuff." Inwardly, I laughed at this — it sounded like typical activist paranoia. The notion that a judge would try to prevent any citizen, much less a member of the media, from watching an open civil hearing sounded ridiculous. Fucked-up as everyone knows the state of Florida is, it couldn't be that bad. It isn't Indonesia. Right?
Subscribe to:
Posts (Atom)
Stat Counter from 10 Nov 08
