The story is basically the same. Hundreds of thousands of homeowners were told that in order to get refinancing or modification they needed to stop paying their monthly mortgage payments. This was a ruse. It was also practicing law without a license. It was a lie aimed at trapping homeowners into a position where they could not recover. Thousands of judges have heard the same story from hundreds of thousands of homeowners and still they refuse to believe it.
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The goal is to get homeowners into foreclosures. The plan is pretty simple. Use any means available to force the homeowner into a foreclosure. This takes several forms — one of which is the intentional “negligence” in the posting of payments and forced placed insurance that I have previously written about.
But by far the the largest scheme at work is the wrongful representation that homeowners must be 90 days behind in their payments in order to be considered for any modification or refinancing. It just is not true. And it never was true.
The script given to “representatives” (call centers) is careful not to specifically say “you must stop making payments and continue to make no payments for at least 90 days”. Instead the script contains a lie about how if they are current they cannot be considered for a workout, refinancing or modification.
And getting them to stop payments means that they won’t get refinancing because they will already be delinquent on their current “mortgage” loan.
And getting them to stop for at least 90 days means that for three months the beleaguered homeowners THINK they have some relief, while at the same time the “delinquency” is mounting to levels from which they can never recover.
All this is happening while the frightful homeowners receiving notices of foreclosure are told not to worry about it — it’s just one hand not knowing what the other is doing. But in the vast majority of cases the foreclosure notices are real and the promise of refinancing or modification is simply a lie.
ESTOPPEL: There actually is a legal doctrine that covers this situation without establishing a fiduciary relationship. Reasonable reliance upon a representation that misleads the homeowner into taking actions that work to their detriment is covered by the doctrine of estoppel. It works in many situations. The statement that homeowners must be 90 days behind to be considered for a workout, refinancing or modification is untrue. The homeowner is reasonably relying upon a large financial or non financial institution to give them correct information inasmuch as the institution has greater access better understanding of the laws and rules. If the homeowner reasonably relies upon such representations to his/her detriment the bank or servicer should be stopped, in a court of equity, from taking advantage of an action that was the proximate result of their own representation.
Most judges and lawyers still look at the mortgage situation through the lens of law school and their early practice — before the era of “securitization fail” (Adam Levitin). The thought that banks would want loans to be non-performing is preposterous through that lens. But it would also be preposterous for those same banks to have spawned an era of fabricated, fraudulent and forged paperwork that led to multiple consent decrees and the 50 state settlement.
The plain truth is that the old lens is occluded, in need of cataract surgery.
If you remove the premise that the banks want the “loans” to be performing and substitute the premise that they want the loans to be non-performing, everything makes sense. Of course this dove-tails with my many earlier articles about the absence of an actual loan contract. The business model of the banks is essentially a cover-up and making a profit from the cover-up as much as the original illegal acts.
What the banks have succeed in doing in millions of foreclosures is the introduction of a court order into an otherwise false and broken chain of claims of ownership and authority by those who stole money from investors and now regard the loss of homestead as collateral damage to people who just don’t matter.
The court order or Judgment does something that none of the prior fabricated, forged, robo-signed documents could do on their own — it provides cover for all the preceding illegal acts because a court order is presumed to be the law of the case. The courts have been the unwitting pawns in this game whose strategy crosses both state and international boundaries.
And perhaps the really shocking thing about all this is that the bank crisis in 2008 was in actuality an illusion. The only thing the banks stood to lose was prospective profits. Their scheme hoodwinked the highest levels of government. That’s what happens when you rely on the conspirators to provide data on a crisis they created out of thin air. They knew there was nobody in government who could figure out why the banks were hard selling loan products that were (a) unprofitable and (b) doomed to fail. The banks did not engage is risky behavior. There was no risk to them. It was only risky for the rest of us.
Somewhere along the line here the courts are going to get cornered into finally deciding what happens when a thief steals money from someone and then uses some of the money to lend to someone else, without either the victim of theft or the “borrower” knowing the truth.