Ready to jump back into the Mortgage Minefield? Take these precautions.

by K.K. McKinstry/Lendinglies.com

Despite knowing what I know about the corrupt practices of the Federal Reserve, Government sponsored enterprises- Fannie Mae and Freddie Mac; not to mention originators, lenders, trustees, and the banks themselves- I decided the benefits of home ownership outweighed the risks and decided to jump back into the lending minefield in order to purchase a home.

Knowing that my loan could always go into default in the future, especially if I have the unfortunate luck of being assigned to a corrupt loan servicer who attempts to engineer a default-  I decided to be pro-active and take some protective measures.  First of all, I emailed the originator and asked if they are the lender or merely an originator.  The broker, either unaware or deliberately lying to me, told me that his company would be funding the loan with its own money.  He likely just made his first RESPA Regulation Z violation.  I have no doubt that the funds will be coming from an entirely different party and that I will receive no disclosure of this fact.  He claims the loan and note will be held by a portfolio lender but refuses to divulge who this party is.

Next, the lender claims it will cover the broker-provided mortgage protection insurance but has not yet disclosed that I will likely be paying a higher interest rate for lender provided mortgage insurance.  According to investigator Bill Paatalo under the 1998 Home Owners Protection Act (HOPA) the lender must disclose the fee and interest rate differences between borrower mortgage protection insurance and lender mortgage protection insurance.  There is also the issue of kickbacks and other profit generating schemes that are often not revealed to the borrower at loan closing.  I will be providing the closing documents to my attorney for review prior to closing to ensure there aren’t any obvious issues or discrepancies.

Lastly, after being burned once by an unethical loan servicer who forged its name on a mortgage note during litigation and claimed the note was the original- I will take measures to ensure this doesn’t happen again.  Not only will I be recording the closing (with the consent of all parties present) and taking screenshots of all of the documents,  but I will also be signing the mortgage note with a custom color of blue ink manufactured in Japan with a unique chemical profile.  I will then provide a copy of the copier paper and ink to my attorney to maintain on my behalf.

In the future if my mortgage note is destroyed and the servicer attempts to replicate (forge/fabricate) the note, they are going to have difficulty creating the unique ink profile.  I have also provided a forensic document examiner with the same paper and ink samples.  I have heard of people mixing their DNA into the ink- but I don’t believe that is necessary- a unique ink profile should be adequate.  For the record, I use a custom mix of  two shades of Pilot Iroshizuku ink.

When I was researching mortgage lenders, I had several lending criteria in mind that I believe offer homeowners additional protections when compared to the Megabank lenders (Wells Fargo, Bank of America, JPMC).  First, I was looking for a “portfolio” lender who would agree to service and maintain my loan on its books for at least five years to avoid my loan being sold from unaccountable servicer to servicer.   I spoke to loan officers at credit unions and locally owned banks before finding a small lender out of South Carolina who held its loans in-house.  My experience is that when a lender has skin-in-the-game (carrying the paper) they will work with you in good faith if you run into temporary financial issues or have a difficult life event occur.  As we all know- life can throw some curveballs and if you are with a heartless Megabank- one missed payment can start an avalanche of problems that are difficult to resolve.

The second criteria I sought in a lender was the use of a physical, wet-ink note that would be held by the bank during the loan period.  Many banks are now using e-lending that allow documents and signatures to be digital.  The problem with electronic-mortgages is that any document can easily be altered by photo-shop in the future if needed including mortgage notes.  If e-lending was available in the 2000s it would have been much easier for lenders to alter loan documents.

If there are problems that arise in the future (foreclosure, disputes, insurance claims) and the lender decides to digitally alter the e-documents, the presumption will be that the lender is providing the accurate documents.  I recommend that people avoid electronic mortgage providers although the industry is pushing for lenders to process all loans entirely online from application to closing.

In conclusion, for now- some of the best ways to protect yourself if you decide to take out a mortgage is to find a credit union, local bank, or portfolio lender who will keep and service your loan for its duration- or at least for five to ten year of the loan. Signing a physical note with a proprietary ink and providing your attorney with paper and ink samples is another good practice to ensure there is only ONE mortgage note in commerce.  If you can, record the loan closing or at least take photos of the documents you sign.  Lastly, avoid e-documents including notes and mortgages if possible.

The banks are in the process of devising new ways to perfect the securitization scheme to their advantage that don’t benefit the homeowner.  The banks claim the new e-lending practices are faster, cheaper and benefit the consumer but ultimately they benefit the bank more.  Therefore, it is up to the consumer to protect their interests to the best of their ability.

6 Responses

  1. Sharan DePalma ,

    NOT CRAZY AT ALL ,, I have seen at least 3 versions of “my” note over the years … At closing the title company insisted on 1 thing ,, everything had to be signed in black ink… they made some lame excuse about having trouble scanning docs with colors.

  2. This sounds insane. Special ink?!

    Sent from my iPhone

  3. WFB were more busy to engineer the foreclosure on our resident than confirm the modification process, sold the loan to BSI difficult to deal with. I consulted lawyer Bruce Paller in Ventura! He said, WF lost, because the house payoff off $112. WFB estimated it as low as $119k then BSI got rid of it $89k. When I paid $50k in 2004, out of $185k pay off $175. In 2005. My question how the bank prefer to loose $30k than approve the modification 2nd how the bank estimate so low and sell so low when I could have sold it much better deal. We r elderly he is veteran cancer survivor. Sad story I m making 4 times of the mortgage $1k including prop tax n insurance!

  4. An attempt totrap lying lenders in their own trap….ugotta read this…. Sent from my MetroPCS 4G Android device

    Livinglies’s Weblog wrote:

    Neil Garfield posted: “by K.K. McKinstry/Lendinglies.com Despite knowing what I know about the corrupt practices of the Federal Reserve, Government sponsored enterprises- Fannie Mae and Freddie Mac; not to mention originators, lenders, trustees, and the banks themselves- I d”

  5. Credit Union use the same lenders or at least do the same electronic filing. My mother who is 86 paid off her loan at BECU credit union six years ago and is told there is no paperwork to give her to show she owns her home. No cancled note or paid off deed.

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