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For many years it has been apparent most observers of the mortgage crisis that the Banks have switched their traditional role of creditor seeking to get paid to something else — a “servicer” or “Trustee” seeking foreclosure. in fact, in multiple cases where the homeowner has had sufficient funds to pay off the “debt” upon proof of ownership and balance, the banks have actually argued in court that they should not be required to accept the money. They argue that is their election to seek foreclosure. Judges did not agree, but they still are pursuing a business model of exactly that — seeking foreclosure rather than payment.
An important quote from the above article strips the tip off of the iceberg —
When a bank assigns the risk of a loan to the investors of a securitized trust, the “bank” is no longer a traditional bank that gets the benefit when mortgage payments are made. Instead, the bank has become a servicer that actually benefits disproportionately from foreclosure on a homeowner’s property.
Note the language that says at some point the Banks decide where to assign the risk of loss to investors. It is only after they have sold the loans, obtained insurance payments, Government funds, credit default swap bets, and other things that make every loan a virtual fountain of money. This also suggests that the risk of loss had not been assigned to investors before which means by definition in most cases that the alleged transfer to the trust was an illusion.
[PRACTICE HINT FOR LAWYERS: Given that it may be possible to show that the servicer has an economic interest in the outcome, and that its interest is enhanced by foreclosure rather than modification or settlement, the foreclosure defense lawyer might argue that the servicer is not entitled to the same presumptions that would apply to a “disinterested party.” And that can lead you into forcing them to prove the real facts instead of having the court accept presumed “facts” that are actually false.]
The article states
Most homeowners are unaware that their mortgage banks make more money from foreclosure than actual payment. Mortgage banks give as few modifications as possible and comply minimally with statutes put in place to protect borrowers, all while employing tricks to “cash in” on homeowners’ defaults, pushing them to foreclosure. The banks take the risk of litigation because few people sue, but getting legal assistance as soon as possible can make the difference between homeowners asserting their rights or losing their homes while being bulldozed by the bank.
In other words the banks know that they have no right foreclosing and that they are gaming the system pretending to be lenders, servicers or trustees for essentially nonexistent trusts. And they know they will lose some cases. And in some cases the sanctions or punitive damage awards is in the millions of dollars. But it doesn’t matter. The fact remains that they are still successfully pushing through wrongful foreclosures by the thousands for each one they lose. And since it is not their money at risk, this is a perfectly acceptable business model.
So the article points to 6 common tricks that banks sue to push homeowners into foreclosure. These tricks work because on some level most borrowers still trust the bank’s representations of ownership and balance and don’t think to challenge the basic foundation of the party claiming to be servicer or trustee or owner of the debt. There is no default if the alleged debt never existed. That doesn’t mean you didn’t get a loan. But ti does mean that you didn’t get the loan that is referenced in the closing documents including the note and mortgage.
The six tricks:
Bank Trick #1: Refusing Payments
Bank Trick #2: Switching Service[r]s During Modification
Bank Trick #3: Breaching a Modification Contract
Bank Trick #4: Extra Fees & Escrow Accounts
Bank Trick #5: False Notices [like including an amount required to reinstate that is completely without any basis]
Bank Trick #6: Multiple Modifications
Foreclosure is clearly the fattest pot of gold possible and it’s for this reason foreclosure is the bank’s primary goal.
If a homeowner spots any of the above tricks, the best thing to do is immediately seek legal assistance in order to avoid the situation from getting any worse.
Filed under: foreclosure | Tagged: business model, servicers, TRUSTEES | 28 Comments »