Wells Fargo Foreclosure: Another Unconscionable Foreclosure Tale

http://www.fltimes.com/opinion/the-bigger-picture-foreclosure-fight/article_8221132a-e7bd-11e6-a8ee-3b3290e2624c.html

THE BIGGER PICTURE: Foreclosure fight

 

  • By SPENCER TULIS nyp2904@yahoo.com

 

 

In 1998, Leanne Labadee bought a three-unit home on Ogden Street in Penn Yan for $75,000. The 50-year-old faithfully paid her mortgage every month, the majority of the time with money orders.

She never missed a payment.

Like many, she received notices about her loan being resold to another mortgage company; federal banking laws allow financial institutions to sell mortgages or transfer the servicing rights to other institutions. Consumer consent is not required. It’s a common practice, and Leanne’s mortgage has been owned by at least three different banks.

In short, the secondary mortgage industry is huge.

In 2008, out of the blue, she was informed foreclosure proceedings were being started on her home unless the mortgage was paid in full. The mortgage company? Wells Fargo, an outfit that has dealt with controversy in recent years because of questionable business practices.

Leanne has been in a fight with Wells Fargo ever since, all the while still not missing a payment. She even enlisted Congressman Tom Reed to help fight on her behalf for two years — with no success.

One would think a few phone calls would be able to straighten things out. Leanne certainly couldn’t afford to fly to Wells Fargo’s headquarters in Des Moines, Iowa. Chances are it wouldn’t have mattered anyway because it seems no one can find all the paperwork and account information that relates to her property.

Her sister, Lori, has been a tremendous help in this fight. Leanne is disabled due to a combination of diabetes, depression and anxiety. The ongoing foreclosure threats have done little to improve her health.

Lori has a file full of paperwork; it’s a foot tall. She couldn’t tell you the number of phone calls she has made on Leanne’s behalf, contacting the Consumer Financial Protection Bureau and New York State Attorney General’s Office, to name just two.

When mortgages are resold, consumers are not supposed to become collateral damage during the process. Mortgage companies have a legal obligation to protect consumers. That means paperwork should never be lost and should never hinder a consumer’s chance to save their home from unnecessary foreclosure.

Famous last words and, ultimately, empty promises for Leanne.

Two weeks ago her home was sold at foreclosure for $55,000. Not only did she lose out on all the equity she has put in through the years, but she received a bill from Wells Fargo saying the home was foreclosed for $87,200, and they insisted she has to continue making payments for the $32,200 difference.

If there is a “smoking gun” here, it may lay in some of the paperwork she possesses with the name Steven Baum on it.

In 2010, a federal, class-action complaint on behalf of tens of thousands of New York state homeowners who lost their homes to an alleged foreclosure fraud began. The fraud was orchestrated for years by a New York “foreclosure mill” attorney along with major mortgage companies. The case is filed in the U.S. District Court, Eastern District of New York, entitled “Connie Campbell against Steven Baum.

The action seeks to return tens of thousands of foreclosed homes to their owners, or its value, along with hundreds of millions in punitive damages against Baum.

“Mr. Baum is an attorney who knows better, yet his foreclosure filings for parties who have no standing to sue confuse the courts and homeowners while he and his banking clients profit tremendously by throwing people on the streets after their bad loans sold by the very same banks become unaffordable to innocent people,” said Susan Lask, who filed the claim: “The aforementioned false foreclosure filings potentially hit tens of thousands of New Yorkers who were foreclosed upon.”

Baum has been accused of deliberate sloppy filings to hasten foreclosures on unwitting homeowners and courts. In 2012, he was fined $6 million.

Last week Leanne found a Rochester attorney who has agreed to represent her in her fight against this injustice.

She is now living with her sister.

 

CHECKLIST — FDCPA Damages and Recovery: Revisiting the Montana S Ct Decision in Jacobson v Bayview

What is unique and instructive about this decision from the Montana Supreme Court is that it gives details of each and every fraudulent, wrongful and otherwise illegal acts that were committed by a self-proclaimed servicer and the “defective” trustee on the deed of trust.

You need to read the case to see how many different times the same court in the same case awarded damages, attorney fees and sanctions against Bayview who persisted in their behavior even after the judgment was entered.

Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
 
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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This case overall stands for the proposition that the violations of federal law by self proclaimed servicers, trusts, trustees, substituted trustees, etc. are NOT insignificant or irrelevant. The consequences of merely applying the law in a fair and balanced way could and should be devastating to the TBTF banks, once the veil is pierced from servicers like Bayview, Ocwen et al and the real players are revealed.

I offer the following for legal practitioners as a checklist of issues that are usually present, in one form or another, in virtually all foreclosure cases and the consequences to the bad actors when the law is actually applied. The interesting thing is that this checklist does not just represent my perspective. It comes directly from the Jacobson decision by the high court in Montana. That decision should be read, studied and analyzed several times. You need to read the case to see how many different times the same court in the same case awarded damages, attorney fees and sanctions against Bayview who persisted in their behavior even after the judgment was entered.

One additional note: If you think about it, you can easily see how this case represents the overall infrastructure employed by the super banks. It is obvious that all of Bayview’s actions were at the behest of Citi, who like any other organized crime figure, sought to avoid getting their hands dirty. The self proclamations inevitably employ the name of US Bank whose involvement is shown in this case to be zero. Nonetheless the attorneys for Bayview and Peterson sought to pile up paper documents to create the illusion that they were acting properly.

  1. FDCPA —abusive debt collection practices by debt collectors
  2. FDCPA who is a debt collector — anyone other than the creditor
  3. FDCPA Strict Liability 
  4. FDCPA for LEAST SOPHISTICATED CONSUMER
  5. FDCPA STATUTORY DAMAGES
  6. FDCPA COMPENSATORY DAMAGES
  7. FDCPA PUNITIVE DAMAGES
  8. FDCPA INHERENT COURT AUTHORITY TO LEVY SANCTIONS
  9. CUMULATIVE BAD ACTS TEST — PATTERN OF CONDUCT
  10. HAMP Modifications Scam — initial and incentive payments
  11. Estopped and fraud: 90 day delinquency disinformation — fraud and UPL
  12. Rejected Payment
  13. Default Letter: Not authorized because sender is neither servicer nor interested party.
  14. Default letter naming creditor
  15. Default letter declaring amount due — usually wrong
  16. Default letter with deadline date for reinstatement: CURE DATE
  17. Late charges improper
  18. Extra interest improper
  19. Fees even after they lose added to balance “due.”
  20. Notice of acceleration based upon default letter which contains inaccurate information. [Not authorized because sender is neither servicer nor interested party.]
  21. Damages: Negative credit rating — [How would bank feel if their investment rating dropped? Would their stock drop? would thousands of stockholders lose money as a result?]
  22. damages: emotional stress
  23. Damages: Lost opportunities to save home
  24. Damages: Lost ability to receive incentive payments for modification
  25. FDCPA etc: Use of nonexistent or inactive entities
  26. FDCPA Illegal notarizations
  27. Illegal notarizations on behalf of nonexistent or uninvolved entities.
  28. FDCPA naming self proclaimed servicer as beneficiary (creditor/mortgagee)
  29. Assignments following self proclamation of beneficiary (creditor/mortgagee)
  30. Falsely Informing homeowner they cannot reinstate
  31. Wrongful appointment of Trustee under deed of trust
  32. Wrongful and non existent Power of Attorney
  33. False promises to modify
  34. False representations to the Court
  35. Musical entities
  36. False and fraudulent utterance of a document
  37. False and fraudulent recording of a false document
  38. False representations concerning “US Bank, Trustee” — a whole category unto itself. (the BOA deal and others who “sold” trustee position of REMICs to US Bank.) 

CHAIN OF NOTHING: Wells Fargo Fraud Is Causing the Curtain to Fall Revealing Fraud in Foreclosures and Ultimately Mortgage Bonds

“Defendant Wells Fargo’s deceptive and intentional conduct displayed a complete and total disregard for the rights” of the couple, wrote Judge Elliott, a circuit judge in the 43rd Judicial District of Missouri. “Wells Fargo took its money and moved on, with complete disregard to the human damage left in its wake.”

see http://www.nytimes.com/2016/09/22/business/in-wells-fargos-bogus-accounts-echoes-of-foreclosure-abuses.html?_r=0

Gretchen Morgenson of the New York times has revived the issues of fraudulent foreclosures in mainstream media by publishing a sharply critical attack on Wells Fargo. Like Elizabeth Warren has done, Morgenson brings attention to two connected policies of the TBTF banks: (1) the the recent revelation that Wells Fargo forced 8 accounts upon each customer of the commercial banking side of the bank — regardless of whether the customer even knew those accounts existed and (2) the obvious similarity with the fraudulent sales of MBS and the fraudulent foreclosures initiated by Wells Fargo.

Senator Elizabeth Warren, who always knows more than she says, made a statement on one of the network news shows that the Banks decided that the best way to make more money was to cheat their customers. She went on to say that the latest Wells Fargo scandal was revealing something that has always been the case with the large banks since the early 1990’s, to wit: that there is a commonality between this one Wells Fargo abuse that occurred over many years and the conduct of the same bank and the other major banks in the global economic crisis of 2008 caused by those banks.

Warren chooses her words carefully. So her use of the word “customers” instead of consumers might be an indication that she was thinking about the “investors” in mortgage bonds as customers of the same bank. Pension Funds and other managed funds were customers of the banks when they gave those banks money for the purchase of mortgage bonds issued by a new business – a REMIC Trust that would use the money to acquire residential mortgage loans. The banks called it securitization. But the rest of us who have analyzed it are quite sure that it was a fraudulent scheme from the very beginning. — And it was not a securitization scheme.

The “new business” did not exist. In most cases the illusion of its existence was created by partially complete written documents that were never used or followed. The new business never had a bank account and never received the proceeds from the sale of the mortgage bonds. This was no ordinary IPO. The “new business” was actually just a proprietary arm of the investment bank that used the false documents to claim a position as Master Servicer — over a Trust that was empty.

Pretending that the “new business” was real, Wells Fargo and other participants in the scheme pocketed the money from the managed funds except for that part that was used to fund the origination of mostly toxic loans. They needed the loans to be toxic so they could foreclose. When they foreclosed they received the first legal document in the entire chain — either a foreclosure judgment or a Trustee’s deed.

CHAIN OF NOTHING: The banks treated the deposits of money from the managed funds as if it were their own. They broke every promise they made to the “investors”, commingled the money and acquired no loans because the loans were already funded at origination by the illegal use of investor (bank customer) money. In all the assignments ever represented over the last ten years, at least, there is zero evidence that any transaction occurred in which the assignee paid anything for the loans said to have been transferred by the words in the assignment. Why would the assignor not insist on receiving money in exchange for the assignment? The answer is obvious — they didn’t own the loan. And following all that back to origination you find that the originator was, in nearly all cases, never paid for the assignment of the loan because the originator did not make the loan. In fact, you find that there was no loan contract between the “borrower” and anyone who advanced money to or on behalf of the homeowner. The investors were left out in the cold while the supposed “intermediary” banks played as though they were the lenders.

 

 

 

It’s Magic! Wells Fargo creates New Accounts, Customers and Mortgage Instruments!

Not only can Wells Fargo create mortgage documents out of thin air, but they can create new accounts and customers too! It's oh so amazing what Wells Fargo can do!

Not only can Wells Fargo create mortgage documents out of thin air, but they can create new accounts and customers too! It’s oh so amazing what Wells Fargo can do!

By the Lending Lies Team

It is now obvious that the major banks have gone rogue. The latest Wall Street scandal shows that 5,800 Wells Fargo employees engaged in identity theft by knowingly setting up ghost accounts not only to bolster their sales commissions but to improve Wells Fargo’s bottom line. Where is the outrage? All customers should close their accounts with Wells Fargo to demonstrate that consumers demand accountability from their banks.

A decade has passed since the general public became aware of the outrageous mortgage fraud- and to date, the government at the behest of the big banks, has not done anything of real consequence to instill accountability and lawfulness in the lending and servicing industry.

The banks have now been conditioned that they can break any law, commit fraud, and profit from their dirty deeds and that their only punishment will be a slap on the wrist and a small fine. The fines levied against the big banks are now computed as a “cost of doing business” and added into their profit and loss analysis. The executives can relax knowing that their white collar crimes will raise barely an eyebrow and low-level employees who participate in these schemes will simply be dismissed.

Wells Fargo is a perfect example of the Fraud-Profit banking business cycle. Wells Fargo paid a little under $190 million in fines and restitution after 5,300 employees were caught opening over 2 million unauthorized bank and credit card accounts- but made how many millions by doing so? Fraudulent practices are now mainstream procedures and if by chance a bank is caught participating in illegal behavior – an insignificant fee is paid and business goes on until the next scandal is revealed.

The large fines being assessed against the big banks are evidence that crimes  have been committed and yet no criminal charges are filed. Executives appear to have plutonium shields that deflect any type of misconduct investigation or criminal charges being filed. Wells Fargo claims that the problems were systemic in nature but the general public, stakeholders and consumer advocates question why Wells Fargo is accomodated to act above the law.

The Wells Fargo modus operandi is to let low-level employees be scapegoated and take the fall. Temporary employees will likely not be eligible for unemployment benefits, but permanent employees will likely be able to claim unemployment if they weren’t fired for cause.

It is quite obvious that these profit schemes at Wells Fargo occur from the top down and yet no formal investigation of the ring leaders will be conducted. How could 5,300 Wells Fargo employees scattered across the United States all be engaging in the same fraudulent behavior unless this was a master-plan designed and implemented by upper management? What other scams are being perpetrated against Wells Fargo customers?

It is already established that Wells Fargo forecloses on homes that they don’t own, creates legal documents out of thin air and participates in other unsavory mortgage servicing activities. Wells Fargo has now been fined billions of dollars over the last decade for business improprieties by the Consumer Fraud Protection Bureau, Office of the Comptroller of the Currency, Attorney Generals at the state level, and has also paid homeowners millions of dollars in private litigation to settle servicing and foreclosure violations of law. Why has there not been a top to bottom investigation by regulators regarding these unscrupulous and illegal practices that undermine consumers and investors alike?

Regulators have failed the American people by failing to hold individual executives and bankers accountable. Until the system punishes the wrong doers and holds these individuals accountable, these institutions will continue to devise illegal and predatory schemes and destroy any remaining integrity in the banking system. The FBI and Department of Justice simply wag their fingers while doing nothing to enforce the rules, regulations and laws that govern banking practices.

Without enforcement and prosecution Wells Fargo and other banking organizations will continue to harm customers and investors. If you can’t trust the banks to safeguard investments, accounts and even consumer privacy- you are better off not doing business with such an organization. Your own mattress or coffee can buried in the back yard begin to look like safer places to put your money.

Representative Maxine Waters who is the top Democrat within the House Financial Services Committee commented that the Wells Fargo settlement mimics the same practices that occurred during the financial crisis noting that employee compensation protocols should not encourage employees to break the law. “It may be the case that some banks are simply too big and complex to manage effectively,” Waters commented.

At this point it is blatantly obvious that bank examiners must scrutinize the business practices of Wells Fargo. Wells Fargo’s behavior is damaging to the entire banking industry and has proven that in order to generate revenue they will engage in illegal and unethical business practices until forced to stop.

The CFPB and the OCC cannot criminally prosecute, but can refer cases to the Department of Justice, who has rarely taken meaningful action against bank executives. The OCC has the ability to remove officers and directors and bar particular individuals from working within the financial industry, but rarely does so and to date has not enacted any prohibitions against any Wells Fargo employees in this particular case.

Wells Fargo is already utilizing spin doctors for damage control. On Friday, Wells Fargo took out ads in every major newspaper as damage control and had the audacity to assure customers that Wells Fargo is committed to taking care of them. Obviously Wells Fargo’s customer care includes institutional customer identify theft, fraudulent foreclosure, and other unsavory business practices that may also undermine investors.

The bank executives at the mega banks have learned through the financial crisis and subsequent fallout that they can commit fraud, violate securities and bank laws, and be financially rewarded for their deliberate indiscretions and conduct. In fact Wells Fargo CEO Carrie Tolstedt, one of the masterminds of this fraud, announced her retirement in July, and is set to receive $124.6 million via stock for her fraudulent efforts. Congress may be holding inquiries and demand that some of Tolstedt’s compensation be clawed-back. See: http://www.foxnews.com/us/2016/09/13/wells-fargo-exec-who-headed-unit-involved-in-scandal-due-125-million-in-retirement.html

CEOs at the smaller and mid-sized banks will be prosecuted and heavily fined for the same practices the big banks engage in. There is something very wrong about the selective enforcement of law that allows the big banks to ravage economic stability with their misdeeds. The entire big banking system is a pathetic and unlawful sham.

Even Warren Buffett whose Berkshire-Hathaway applied to the SEC in July for special permission to purchase more Wells Fargo stock has gone silent:   https://www.bloomberg.com/gadfly/articles/2016-09-13/warren-buffett-s-silence-on-wells-fargo-speaks-volumes.  Truth is stranger than fiction.

For a list of Wells Fargo “misdeeds” see: https://en.wikipedia.org/wiki/Wells_Fargo

 

Not even the Federal Government Can Determine Who owns Your Loan

It was impossible to trace the majority of the mortgage loans on the over 300 homes sold by DSI that were the subject of the FBI investigation; it would have been harder yet to identify individual victims of the fraud given that the mortgages were securitized and traded. (Emphasis added.)

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

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Originally posted at http://mortgageflimflam.com
With additional edits by http://4closurefraud.org

“Counter-intuitive” is the way Reynaldo Reyes (Deutschbank VP Asset Management) described it in a taped telephone interview with a borrower who lived in Arizona.  “we only look like the Trustee. The real power lies with the servicers.”

And THAT has been the problem since the beginning. That means “what you think you know is wrong.” This message has been delivered in thousands of courtrooms in millions of cases but Judges refuse to accept it. In fact most lawyers, even those doing foreclosure defense, and even their clients — the so-called borrowers — can’t peel themselves away from what they think they know.

In the quote above it is obvious that the sentencing document reveals at least two things: (1) nobody can trace the loans themselves which in plain English means that nobody can know who loaned the money to begin with in the so-called loan origination” and (2) nobody can trace the ownership of the loans — i.e., the party who is actually losing money due to nonpayment of the loan. Of course this latter point was been creatively obscured by the banks who set up a scheme in which the victims (investors, managed funds, etc.) continue to get payments long after the “borrower” has ceased making payments.

If nobody knows who loaned the money then the presumption that the loan was consummated when the “borrower”signed documents placed in front of them is wrong for two reasons: (1) all borrowers sign loan documents before funding is approved which means that no loan is consummated when the documents are signed. and (2) there is no evidence that the “originator” funded the loans (regardless of whether it is a bank or some fly by night operation that went bust years ago) loaned any money to the “borrower.” (read the articles contained in the link above).

The reason why I put quotation marks around the word borrower is this: if I don’t lend you money then how are you a borrower, even if you sign loan papers? The courts have nearly universally got this wrong in virtually all of their pretrial rulings and trial rulings. Their attitude is that there must have been a loan and the homeowner must be a borrower because obviously there was a loan. What they means is that since money hit the closing table or the last “lender” received a payoff there must have been a loan. What else would you call it?

Certainly the homeowner meant for it to be a loan. The problem is that the originator did not intend for it to be a loan because they were not lending any money. The originator played the traditional part of a conduit (see American Brokers CONDUIT for example). The originator was paid a fee for the use of their name and traditionally sold the homeowner on taking a loan through the friendly people at XYZ Speedy No Fault Lending, Inc. (a corporation that often does not exist).

Somebody else sent money but it wasn’t a loan to the homeowner. It was the underwriter who was masquerading as the Master Servicer for a Trust that also does not exist. Where did the underwriter get the money? Certainly not from its own pockets. It took money from a dynamic dark pool that should not exist, according to the false “securitization” documents (Prospectus and Pooling and Servicing Agreement).

Who deposited the money into the dark pool? The sellers of fake “mortgage-backed securities”who took money from pension funds and other managed funds under the false pretense that the money would be under management of a specific REMIC Trust that in actuality does not exist, never conducted business under any name, never had a bank account, and for which the Trustee had no duties except window dressing to make it look good to investors. How is that possible? NY law allows for the documentation of a trust without any registration. The Trust does not exist in the eyes of the law unless there is something in it. This like a stick figure is not a person.

None of the money from investors went into any Trust account or any account of any trustee to be held and managed for a REMIC Trust. Sound crazy? It is crazy, but it is also true which is why it is impossible for even the Federal Government with virtually limitless resources cannot tell you who loaned you any money nor who owns any debt from you.

The money was surreptitiously deposited into hundreds of dark pools in institutions around the world. The actual business of the dark pols was to create the illusion of profits for the banks and a huge dark reserve that siphoned some $5 trillion out of the U.S. economy and more out of other economies around the world.

To cover their tracks, the banks took some of the money from the dark pool and started a chain reaction of offering what appeared to be loans but which in most cases were financial death sentences.

The investors, for sure, have a potential claim against the homeowners who received actual benefit from a flow of funds, but without being named in the loan documents, they have no direct right of foreclosure. And then there is the problem of coming up with the correct list of investors whose money was commingled with hundreds of fake trusts. The investors know that collectively, as a group they are owed money from homeowners as a group. But NOBODY KNOWS which investors match up with what alleged loan. The homeowner can ONLY be a “borrower” if they executed a loan contract and the contract became enforceable because there was offer, acceptance and consideration flowing both ways. Without all four legs of the stool it collapses.

Judges resist this “gift” to homeowners while ignoring and accepting the consequence of a gift of enormous proportions to the few banks at the top who started all this. Somehow word has spread that the middle and lower class is the right place to put the burden of this illegal bank behavior.

The homeowner’s offer of consideration is the promise to pay principal sometimes with interest. The originator’s offer of consideration is not to the homeowner. The originator has offered services for a fee to the conduits and sham corporations that put the originator up to selling bad loans from undisclosed third parties to people who lacked the financial knowledge to understand what was happening. So no contract there. No contract? No borrower. No contract? No lender. Hence the term I used back in 2007, “pretender lender.” I should have also coined the term “mock borrower.”

Sound impossible? Here is the finding from the sentencing document:

During the time of the information, DSI worked with two “preferred lenders,” Wells Fargo Bank and J.P. Morgan Chase. Certain employees and managers of those two preferred lenders knew about the incentive programs offered by DSI and the builders, and knew that the incentives were not being disclosed in the loan files. (Emphasis added.)

And that is what we mean by “counter-intuitive.” It is a lie, a cover-up and a fraudulent scheme directed at multiple  victims. Under existing law, foreclosure is not an option for persons who lack standing and have unclean hands. Nearly all loan transactions were table funded and that means, according to TILA, that they are and were predatory loans. And that means, according to me, that it is impossible to allow any equitable relief be had by those who have unclean hands — especially those who seek foreclosure, which is an equitable remedy.

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SIGTARP HAMP FINDINGS: SERVICERS REVOKING COMPLIANT HAMP PLANS

Why are modifications being undermined when they would so obviously preserve the value of the “loan?” The answer is because the real party in interest in the foreclosures is the servicer, not the trust, which doesn’t own the loan anyway, nor even the investor/beneficiaries, who reap very little out of the proceeds of foreclosure.

The servicer wants the loan to fail. The investor expects the servicer and trustee of the REMIC trust to make sure value is preserved. But that isn’t the game. If the property goes to foreclosure sale then the “servicer” can make its claim for “recovery” of “servicer advances.” The fact that “servicer advances” are made from a pool of funds established by investor money and the fact that the servicer accesses these funds to make payments, regardless of whether the borrower pays or not — all of that makes no difference in the game.

In that context a modified loan is worthless. A failed loan is the gold standard.

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HAMP Modifications Sabotaged to Fail by the Usual Suspects

By William Hudson

https://www.sigtarp.gov/Audit%20Reports/Homeowners_Wrongfully_Terminated_Out_of_HAMP.pdf

On January 27, 2016 The Special Inspector General over the Troubled Asset Relief Program (SIGTARP) released data on the poorly executed and enforced Home Affordable Mortgage Program (“HAMP”) that shows that the banks not only have the right to modify loans they don’t own, but have no interest in helping homeowners save their homes through modification when they can set the homeowner up to fail.

HAMP was created to provide sustainable and affordable mortgage assistance to homeowners at risk of foreclosure but has instead forced many homeowners into foreclosure by requiring homeowners to miss payments, revoking approved modifications and a slew of other unethical practices.

The Inspector General writes that, “mortgage servicers administering HAMP will continue to need strict oversight in upcoming years because apparently the servicers are unable to implement and properly administer the program without resorting to sabotaging compliant homeowners.”

The audit notes that  the “largest seven mortgage servicers in HAMP over the most recent four quarters show disturbing and what should be unacceptable results, as 6 of 7 of the mortgage servicers had wrongfully terminated homeowners who were in “good standing”  with their HAMP modifications.”

These failure rates demonstrate that servicer misconduct is continuing to contribute to homeowners falling out of HAMP by terminating the agreement when homeowners are making timely payments.  This practice is an obvious attempt to put homeowners at risk of losing their home so that when the foreclosure occurs, the servicer can swoop in and steal the home while keeping all of the homeowner’s equity, payments and improvements.

This study provides further documentation that homeowners are being forced out of the HAMP program for no reason and that servicers are using HAMP as another tool to steal homes.  If the servicer can keep the homeowner in a state of vulnerability, create further arrearages and provide the homeowner contradictory and confusing information- their chances of taking back the home increase exponentially. This is the modification business model of the major loan servicers.

The servicers are running the show and the government is apparently impotent to stop them from their illegal tactics. The treasury admits that they have no idea how many other homeowners were forced out of HAMP.  I can attest that I was one of the homeowners forced out of a loan modification in which I was 100% compliant. For a year I repeatedly applied for modifications, sending in documentation and spending hours and hours going through CitiMortgage’s futile application process.  Either CitiMortgage representatives are completely incompetent or their modification process is intentionally set-up to create such a diabolical application process that most borrowers give up.

Thirteen applications later and a year later I was granted an “approved repayment plan” that required three timely payments before becoming permanent.  If all three payments were made  by the first of each month I would be given a permanent modification with no need for further qualification.  After making the third timely payment by certified mail I didn’t hear back from CitiMortgage. By then I was familiar with their lack of competence and accountability so I continued to make payments hoping I would hear from them any day.

When I received the “approved repayment plan” I celebrated thinking that I was finally free from seven years of servicer torment.  The modification would allow me to immediately sell the home in which I had several buyers- and make Citi 100% whole including being paid over 15k in fees they had assessed.  At the time I received the loan modification I had over 100k in equity.  I would have paid CitiMortgage any amount they claimed I owed to be free of their tyrannical servicing practices.

Not trusting CitiMortgage to honor their word- I called CitiMortgage and once again confirmed that “approved” meant “approved” and that I could prepare the home for sale. The CitiMortgage agent promised me that as long as all three payments were made it was a done deal.  I didn’t want any surprises down the road if they changed their minds.  The home needed some updating prior to being placed on the market so I took 35k from my retirement account and went to work renovating the home top to bottom.  By the time my third payment was made I had a beautifully restored home and two anxious buyers for the property.  I was close to grasping the golden ring…..until CitiMortgage grasped the ring right out of my hands.

When I didn’t hear from Citimortgage I continued to make the modification payments for three more months while waiting to hear from them about the new loan terms. Unbeknownst to me the modification payments I had made were not being applied to my loan but placed in a suspense account while CitiMortgage was continuing to add on late payments and other delinquent fees.  I had not agreed to this arrangement but was powerless to complain.

I finally received a letter from CitiMortgage stating my check (my fifth payment) was being returned to me with no reason provided. I knew CitiMortgage was up to something, so I checked the internet to discover that CitiMortgage was dual-tracking me and had filed to foreclose on me while compliant with the modification plan. To add further injury,  I received two more offers from CitiMortgage that week offering to modify my loan! CitiMortgage did not want full payment- they wanted my house and the financial windfall that follows a successful foreclosure.

It has now been six years and the house has sat vacant since Citi revoked my modification.  All the work I did has been reversed by humidity and vacancy.  I no longer have any equity in the property.  I sued CitiMortgage over this egregious bait and switch scheme and even provided evidence to the court that I was granted an “approved repayment plan” with no contingencies.  The judge in my case, with 20 percent of his retirement in CitiMortgage, did not recuse himself but instead threw out my entire complaint and provided no reason for his decision.  Not only did CitiMortgage get away with this fraud, the corrupt judge dismissed my case on summary judgement stating there was no controversy.  Even when you have irrefutable evidence of fraud- if you have a biased and unethical judge you will not prevail.   I reported my experience to SigTarp, the CFPB, FCC and the Office of the Comptroller- and not one agency bothered to respond to my complaint or sanction CitiMortgage for this blatant contract violation.  I requested that CitiMortgage return the modification payments they fraudulently extorted from me- and of course they refused.

My situation appears to be the norm, not the exception.  SigTarp reported that one out of every three homeowners in HAMP re-defaults on their payments. They suggest that the Treasury, “research and analyze whether, and to what extent, the conduct of HAMP mortgage servicers contributed to homeowners redefaulting on HAMP permanent mortgage modifications.”  I can tell them from experience that examining the behaviors and motivations of the servicers would be a great place to start. I can almost guarantee in most modification cases that it isn’t the homeowner who defaults.  In the first place, a homeowner who prevails in obtaining a loan modification may work diligently for years before being granted a modification and persevere against great odds! I would estimate I spent around 45 hours on the phone, faxing and following up with CitiMortgage before receiving my modification.  In fact, dealing with CitiMortgage became my occupation.  The homeowner who receives a modification, in most cases, has fought a long and hard battle for the modification and has no idea that the bank can refuse to honor the agreement.

To get the true story about what is going on, the Treasury could begin by sending out questionnaires to prior homeowners in HAMP that were compliant when their modifications were revoked for no other reason than the servicer wanting to take another stab at stealing the home.  SIGTARP’s concerns over servicer misconduct contributing to homeowner redefaults in HAMP was revealed through the Treasury’s on-site visits to the largest seven mortgage servicers in HAMP over the last year and apparently reveal disturbing and unacceptable results, finding that 6 of 7 of the mortgage servicers had wrongfully terminated homeowners who were in “good standing”.

It doesn’t take a rocket scientist to assume that servicers are up to their same old tricks and forcing compliant homeowners out of HAMP.  Servicers have no incentive to not unjustly enrich themselves at the expense of the homeowner when a successful foreclosure is more lucrative than modifying a mortgage.  The usual six non-compliant culprits are named in the report:

WRONGFUL TERMINATIONS OF HOMEOWNERS FROM HAMP BY SERVICERS:

Q4 2014 TO Q3 2015    

Servicer                                       Wrongful Termination of Homeowner  From HAMP

Bank of America, N.A.                                        X

CitiMortgage Inc                                                  X

JPMorgan Chase Bank, N.A.                              X

Nationstar Mortgage LLC                                    X

Ocwen Loan Servicing, LLC                               X

Select Portfolio Servicing, Inc.

Wells Fargo Bank, N.A.                                       X

According to SIGTARP, homeowners who make their modified mortgage payments on time, or who do not fall three months behind on those payments are entitled to remain in HAMP. However, the Treasury’s results found that, within the last year, Bank of America,CitiMortgage, JP Morgan Chase, Nationstar, Ocwen and Wells Fargo all claimed that homeowners had redefaulted out of HAMP by missing three payments when, in reality, they had not.

These six mortgage servicers account for 74% of non-GSE HAMP modifications funded by TARP since the start of the program. Upon further reading, and despite the fact that the Treasury has done nothing to stop this misconduct, the servicers are engaging in a process of holding the homeowner’s payments in suspense accounts (so they can continue accruing late fees and other delinquent charges), reversing and reapplying the homeowner’s payments improperly and terminating homeowners who have not defaulted on the required three payments.

This misconduct is also probably much larger in scale than it appears because the Treasury only samples 100 redefaulted homeowners per servicer each quarter.  It is possible that the number of homeowners impacted is much, much larger.  This has been going on since the inception of the program and the Treasury’s response over time has been anemic and unresponsive.  The servicers appear to have an understanding that if they don’t comply there is no consequence other than a little bad publicity (as if a little more bad publicity would impact them at this point).

The potential profit of a fraudulent foreclosure is incentive enough to kick compliant homeowners out of the HAMP program. It should be known that many of the servicers making offers to modify do not have legal standing to make an offer to modify the loan in the first place and are simply engaging in a process to get the homeowner further into default.

In my particular case, all I wanted was to modify my mortgage, sell my home, and go forward with my life.  CitiMortgage did NOT want payment- they WANTED the HOME and used modification as a tool to  obtain this goal.  A modification is nothing short of a tool of deception used by servicers to steal a home.  Servicers use modification for these purposes:

1.  Intimidate the unsophisticated or vulnerable Homeowner- Create Fear and Confusion by processes of circular phone transfers, lost documents, false claims, conflicting messages and blatant lies.

2. Time Destruction- Time spent in modification compromises other available options like refinancing, a short sale or hiring an attorney.  A consumer’s options diminish as time goes by. It is to the bank’s benefit to not modify the loan but to paint the homeowner into a corner.

3. Equity Erosion- Every month while in a modification the equity in the home is eroded by late fees and other charges the consumer is not advised about in advance.

4. Payment Hostage- The servicer retains the monthly modification payment in a suspense account.  These funds then cannot be used for a more beneficial purpose like retaining an attorney or refinancing. The consumer is not told that the payment will not be applied to their mortgage or if the modification fails that the payments will not be returned.

5. Dual-Tracking- A homeowner in the process of modifying their mortgage or who has an approved modification may be subsequently foreclosed upon in violation of law.

6. Government Kickbacks- Servicers who engage in the modification process receive compensation for each modification attempt and successful modification.  Servicers are accepting government payments (from tax payers) only to sabotage modifications.

The time has come for a full investigation into the behavior of loan servicers.  Not only do servicers make offers to modify loans they have no legal right to modify, but they engage in fraudulent practices that are not in the best interest of the homeowner, investor or community.  This article won’t get into the fact that servicers lie about their relationship to the loan, the balance owed and need to be heavily fined and sanctioned for forging documents, filing false affidavits and other criminal acts.  The bottom line is that a servicer is incentivized to lie, to cheat and to steal by a lack of governmental oversight and by the  potential windfall of profits that occur upon a successful foreclosure (including insurance, “servicer advances” and other compensation).  The bank has bet your mortgage will fail, and you can bet they will resort to every trick in the book to take your home including the use of faux modifications.

It is ironic that two months ago I received a letter from CitiMortgage offering to modify again.  This is despite the fact that the note and mortgage were rescinded under TILA.  I’m not sure what CitiMortgage thinks they are going to modify now that the note and mortgage are void by operation of law- but why would I expect rogue servicer CitiMortgage to comply with any state or federal law?

Advice: Your servicer is not your friend and will act only in their best interest.

I have attached copies of my “approved repayment plan” as evidence of the modification agreement.

If you would like to share your modification story with us please email us at: lendingliesconsulting@gmail.com.  We would like to hear about your experiences.

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Repayment Plan One cleanRepayment Plan Two clean

City of Oakland Sues Wells Fargo for Discriminatory/Predatory Lending

see http://www.housingwire.com/articles/35126-oakland-sues-wells-fargo-for-mortgage-discrimination

My first suggestion was in 2007 that governmental units sue the big banks for what they were doing to their constituents and government budgets. Nobody was interested. They were all listening to Greenspan and Paulson saying that this was nothing and that it was contained. How do you warn people about the tidal wave when they have turned their back to it?

Had the lawsuits began then, the number of foreclosures would have dropped sharply as the predatory practices and fraudulent practices were revealed — the servicers and trustees would have been revealed as emperors without clothes, and governmental agencies would have taken over the process of cleanup instead of allowing the “servicers” and “trustees” to walk off with the money and the property.

But I now renew my OTHER question: Why would anyone spend hundreds of millions of dollars promoting loans that were guaranteed to fail? And the corollary question: Why would anyone spend hundreds of millions of dollars (remember DiTech and Quicken and the Lending Tree?) promoting loans that carried an interest rate of 2.5%???? At that rate, there is a guaranteed loss from inflation even if the borrower pays!!!

The answer is obvious but few people have really drilled down on this stuff and fewer still have done anything about it.

The answer is that no sane person would want those loans much less promote them through surrogate “originators”.

So the next question is if nobody would do that, how did it get done?

And the answer to that is also obvious,  and we all know about it now — other people’s money (OPM). The big banks were making a fortune buying and selling mortgages they didn’t own with mortgage bonds they didn’t own that were sold as guaranteed, insured, high-rated mortgage backed securities, when they were neither securities nor backed by mortgages.

AND THAT is the beginning of why eminent domain is completely appropriate to seize the loans, share the benefit with investors and kick the servicers and trustees out of the picture. Since the Trusts have zero assets anyway, the Trustee and servicer are legally empowered to do NOTHING. None of them have standing to challenge eminent domain.

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