Modification Abuse: Ocwen, Homeward Dishonest in Handling Modifications

The incentive payments from the Federal government for HAMP modifications were merely used for profit, bonuses and the like. No attention was paid to HAMP modifications except in rare instances where the banks thought it prudent to at least make it appear as though they were following HAMP guidelines when they clearly had no interest in doing so.

Most Judges are still basing their mindset that the loans are valid and that the interests of the servicer are just like any other “bank.” Not so much.

THE FOLLOWING ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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see http://4closurefraud.org/2016/06/10/united-states-of-america-et-al-v-ocwen-judge-rules-docs-admissible-in-hamp-false-claims-act-case/

I have written about this before. But now there are 2 qui tam actions in Texas against Ocwen and Homeward. Both are governed by the rules of HAMP modifications, neither complied, and they both did so intentionally. The same holds true for most other servicers. Ocwen tried to escape the civil action by saying that the information used by the whistle-blowers was “inadvertently” disclosed and should not be allowed as evidence nor as a basis for the qui tam lawsuit. The Texas Judge rued against Ocwen citing a statute that explicitly stated that such material can be disclosed and released.

The real question, as I have repeatedly suggested, is why would the nation’s largest servicers accept billions in incentive fees from the US Government while at the same time abusing the modification process? In the real world of real banking, workouts were always the rule rather than foreclosures. All seminars I have ever attended for bank lawyers (yes, I was one of those for a while) involving bankruptcy, deficiency and defaults, start out and maintain one basic theme: workouts wherever possible. The reason? The bank does far better in workouts than in foreclosure. Most Judges are still basing their mindset that the loans are valid and that the interests of the servicer are just like any other “bank.” Not so much.

So why all the obfuscation about modifications? If you just think about it logically there are several things that come to mind. First, the servicers are only incentivized to bring cases to a “successful” conclusion which is a forced sale of the property backed up by a Final Judgment in judicial states. The basic assumption today is that the servicers are representing the investors through the pass through entity described as a REMIC Trust. Setting aside the issue of whether that assertion is even true as to form or substance, it is obvious that the push to foreclosure was adverse to the interests of the investors and adverse to other entities that had bought or sold derivative products whose value derived from the value of the performing loans in a specified pool (which probably didn’t ever exist).

If the services are acting adverse to the interests of investors, then who are they working for? The Trust exists only on paper, was never funded, never had a bank account or any active business even for the window described in the “Trust” documents or the IRC provisions allowing for REMIC Trusts. That eliminates the Trust as the party for whom the servicers are working. And the assertion that the Trust is only a holder and NOT a holder in due course corroborates the fact that there was no purchase by the Trust.

So the servicers are NOT working for the people whose money was used to fund the illusion of a securitization scheme and they were NOT working for the special purpose vehicle (REMIC Trust). If you drill down into the prospectuses and the trust document (the PSA) you will see that the designated servicer is often the Master Servicer or the Master Servicer is described deep inside the document. The Master Servicer is the one who supposedly is making servicer advance payments to investors, except they are not advancing those payments; instead they are using investor money from a reserve described in the documents, from which, the investors agree, the servicer can advance payments in order to keep the mortgage bond “performing.” Hence servicer advances are neither advances (they are return of capital to investors) nor are they payments by the servicer (who makes “payments” from the reserve of investors funds).

So you can see the incentive. If the case goes all the way through foreclosure, the “Master Servicer” can claim recovery of servicer advances at the time of liquidation of the property, but if the loan is modified, the servicer can not claim recovery of servicer advances. Most cases in which the banks have let the case go 6-8-10 years is that they were piling up their claim for servicer advances.

And the other incentive that is major is that by refusing HAMP modification and offering “in-house” modifications, they are essentially make the “loan” an asset of the bank rather than the investors. The incentive payments from the Federal government for HAMP modifications were merely used for profit, bonuses and the like. No attention was paid to HAMP modifications except in rare instances where the banks thought it prudent to at least make it appear as though they were following HAMP guidelines when they clearly had no interest in doing so.

None of this would be possible were it not for the ignorance of investors. Both investors and Trustees are contractually barred from even making inquiry “for their own good and protection.” This provision, in virtually all securitization documentation, was one of the large red flags for fund managers who peeked under the hood at this scheme. The idea that they could get no information on the loan portfolio when that was supposed to be the only asset or business of the Trust, was ludicrous and they didn’t invest.

But most fund managers go with the crowd and are lazy. Having the incentive of bonuses if they achieve certain performance levels, and having their asses covered by what appeared to be insurance that was backed up by American tax payers, and the mortgage backed securities being rated AAA by the rating agencies PLUS the representations of the underwriting bank and the seller of those mortgage “bonds,”  these find managers of stable managed funds (the investors) gave money to the underwriter in exchange for worthless securities issued by a completely inactive entity. They got nothing and they were contractually barred from learning they got nothing. It was the perfect cover for the perfect crime and the banks, so far, got away with it.

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16 Responses

  1. Let’s not forget Chase Bank’s dishonesty with modifications. Lowered the interest rate to probably hide the known robo signers on an assignment (7 years from the cutoff date for the supposed trust) and stealing Wamu loans and selling them for consideration to Wells Fargo, trustee? It’s us against the Bankster’s.

  2. I guess my in house modification is a joke also.. Lowered the interest rate to probably hide the known robo signers on the assignment along with the fact that the security was not transferred in a timely manner to the so called trust? 7 years too late according to the Bloomberg info. No one cares that our signatures at closing, the deceit and deception are causing innocent, hard working people to lose their homes. What can be done to fight the greed and corruption? It’s us against the Bankster’s. The investor’s knew the uncertainty of what they were doing – we (or I) did not!

  3. I’d check check and double check to see if those letters are really from the servicer. Sounds like a scam. If so wrap them all up and send it to your AG. Don’t waste time with the do nothing District attorney.

  4. This month I have been getting letters from the Servicer saying Ive been accepted for a new Fannie Mae modification program , that I never even asked for. They have been sending them Fedex (expensive!!) every 2 weeks, saying I must accept or I may lose future modifications. Very very strange ??????

  5. Hi poppy I have been fighting for 7 years and have learned so much. Must mortgages were securitized if they bought them back they must show it a-b-c- back to a. None ever do so they are called the original lender. The inhouse modifications were done because…….. They could. They are the bank /servicer everyone listens to them. But they lie. The right way to get a modification is to ask for proof of ownership the that no one every gets. The banks get to take advantage of us. Some day many of us will see them in court as the defense for these crimes. Until then we need to learn as much as we can. How were you able to get this info?

  6. WOW, $320 for 30 minutes. I understand that getting help om loan mods and all the other rp offs but if you are a 77 yr old disabled vet trying to get by on $1390 SSA per month well it just ain’t poddible.. I have lost hundreds of thousands of $ to Ocwen/HSBC/AHMSI and do not have a proverbial pot to urinate in. Ashsi pulled a fast one on my so, Michael by “offering him” a loan mod. They charged hin $1400 which I loan him in cash. My son fed exed the $1400 in a Wells Fargo cashiers. Asmsi even ofered hin a “$250 bank cash card to get him to send $1400. He was well within the time period but instead of the loan mod, instead of sending him his bonus $250 cash card” AHMSI, you know, the scam outfit soley owned by Wibur Ross the nefarious Vulture of Walll St, well they told my son thet never got the Fed Ef so derals odd, no #250 and the $1400 I sent him gones. On 2/12/2009 my son called me at my work ay Washington State Parks, intears and highly stressed out, clinically mentally ill over the rip off. 4 days layer my son was found dead in his bed, no drugs, no alchol, no pot. He died in his sleep. His reumatic heart just quit.. This ultimately resulted in me inheriting the house and tried everything to get AHKSI (you know, the scam outfit that Ocwen bought from Wilbur Ross, well they convinced a Portlaand Federal Ct Jughe to hand OCWEN/HSBC?AHMSI to give my home to these 2 nefarious companies with out ever ordering them to produce a shred of evidence of legal standing as defined by Federal Law Truth un Lending. My so is dead, I am old and fading, the fat cats got all the moey, UNLAWFULLY and I sit now sucking wind and waiting to join my son now would be near 50, join him whereever my faith delivers me. True story. They win, I lose!~ Bruce R Nelson

    From: Livingliess Weblog To: geezerkatz@yahoo.com Sent: Wednesday, June 15, 2016 9:37 AM Subject: [New post] Modification Abuse: Ocwen, Homeward Dishonest in Handling Modifications #yiv7689619010 a:hover {color:red;}#yiv7689619010 a {text-decoration:none;color:#0088cc;}#yiv7689619010 a.yiv7689619010primaryactionlink:link, #yiv7689619010 a.yiv7689619010primaryactionlink:visited {background-color:#2585B2;color:#fff;}#yiv7689619010 a.yiv7689619010primaryactionlink:hover, #yiv7689619010 a.yiv7689619010primaryactionlink:active {background-color:#11729E;color:#fff;}#yiv7689619010 WordPress.com | Neil Garfield posted: “The incentive payments from the Federal government for HAMP modifications were merely used for profit, bonuses and the like. No attention was paid to HAMP modifications except in rare instances where the banks thought it prudent to at least make it appear” | |

  7. The ultimate point: IMO the servicers are doing faux “in house” modifications. In my case, they actually own the “DEBT”, not the loan. Huge difference. The ledger shows a $10,000.00 payment from another servicer. ???????? back in 2008.

  8. I can add: having in my possession multiple ledgers from Ocwen and a supposed modification in 2009, which was vehemently opposed by an elder attorney friend, whom was correct; the numbers do not match.

    If you look at the original payment, P&I totals $743.31….after the “alleged” modification the P & I is the same, as is the % of distribution, with changes in interest rates-terms…only in 2012 after forging assignments, transfers and balance sheets do the numbers finally “appear” to reconcile, LOL oh and I went from 30 year fixed to an ARM….
    Took them years….even now the assignments are from Iowa(company started in 1912?), with a Ocwen employee from Idaho…I guess she drove from Idaho to Iowa to sign affidavits…I mean she says she appeared in person?

    All garbage…this case has been dismissed three times in the same jurisdiction, last I checked Res Judicata applies? Hey, I am the idiot according to them…hopes this helps someone!

  9. They were aware. In Calif. the judges retirement program were the investor. Why would they care to modify their investment when they can foreclose and get someone new.

  10. Why are judges made aware? Oh that’s right everyone makes money on foreclosures that’s sick

  11. Thanks, the ‘duel tracking’. Back then there was no website, no forms, no communication. They just waited for us to default so they could tack on the late fees and foreclose.

  12. They happened to me with wells Fargo same exact thing

  13. Has anyone actually filled out a HAMP form from AHMSI or anything formal? All I did back in 08 was fax some tax forms to Pune India while being told they never received them and then got a mod denial letter four or five months latter after the first month of default.

  14. The data is all in the internal files of the servicer – simply request a full copy of the underwriters notes, compare to the homeowner submission, subpoena the submission of the mod application to the investor, compare the figures, ask for the express written denial of the modification – under what guidelines was a homeowner denied and compare to reality, in the internal notes on a file you may find the date upon which the servicer collected the “default insurance’ payment, compare with the guidelines of the pSA – it is all there – there is nothing proprietary about the file, the notes, and the submissions – there are no trade secrets in the HAMP program – all of it is public information – it is on the web – all of it –

  15. They dumped those mod packages on my doorstep for a year.
    Didn’t need a mod, nobhardship .
    Only the the one they created in their Cook Book.

    You see…I (a non borrower) couldn’t get title insurance ( a requirement for MY loan. They wanted Proof of Chain of Title…
    ….. The Money Trail,
    Same reason the borrower couldn’t give DILs to FHA.

    Send QWRs. ….
    Not allowed discovery outside a court..discovery order.

    Good Luck getting that Kiddos.

  16. And the other incentive that is major is that by refusing HAMP modification and offering “in-house” modifications, they are essentially make the “loan” an asset of the bank rather than the investors………………Can someom please explain hoe do they get away with this fraud. they are actually stealing money from the investors and from us.

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