FTC halts mortgage operation for misrepresentation of loss mitigation

Posted on June 29, 2009. Filed under: Foreclosure Defense, Fraud, Legislation, Loan Modification, Mortgage Audit, Mortgage Fraud, Mortgage Law | Tags: , , , , , , , , , , , , , , |

At the request of the Federal Trade Commission, a federal court has halted a bogus mortgage foreclosure prevention operation that misrepresented both the “loss mitigation” services it offered and the earnings potential of the business opportunity it sold. The FTC seeks to end this deceptive scheme and make the defendants give up their ill-gotten gains.

According to the FTC’s complaint, the defendants sold “loss mitigation” services to homeowners at risk of foreclosure, falsely claiming they could prevent foreclosure in 97 percent of cases and misrepresenting that they would make a full refund if they failed. Before performing any loss mitigation services, the defendants required homeowners to pay the equivalent of one month’s mortgage payment. Their contracts instructed homeowners not to contact lenders or their contract and its money-back guarantee would be voided. In some cases the defendants’ consultants told homeowners to stop making their mortgage payments while the defendants were working on their cases.

The FTC alleged that, contrary to the defendants’ claims, they completed loan modification in only about 6 percent of cases and routinely failed to return consumers’ repeated telephone calls. In numerous instances, the defendants had not contacted the consumers’ lenders or had made only non-substantive contacts with them, resulting in late fees, penalties, and other costs for the homeowners. After failing to secure loan modifications, the defendants also failed to honor their refund policies.

The FTC’s complaint also alleges that the defendants sold a “loss mitigation consultant” business opportunity for up to $1,500, falsely claiming that purchasers (consultants) could earn various amounts, including up to $6,000 per week, by referring homeowners to them and by recruiting new consultants. In fact, throughout the defendants’ entire operation, no consultant has earned that much money.

via FTC halts mortgage operation for misrepresentation of loss mitigation | NationalMortgageProfessional.com.

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Mortgage Wars

Posted on June 26, 2009. Filed under: Foreclosure Defense, Fraud, Loan Modification, Mortgage Audit, Mortgage Fraud, Mortgage Law, Predatory Lending, right to rescind, Truth in Lending Act | Tags: , , , , , , , , , , , , , , , , , , , , , , |

Iris Martin

My new book, Mortgage Wars, will guide you, step by step, through a war plan of engagement that has been followed by many homeowners who have won their mortgage wars. You will meet them and their attorneys throughout the book. You will learn about how you were defrauded and why; why the government cannot help you; and why and how you can win your war. The law is squarely on your side. Even if you have received a sales date; even if your foreclosure has occurred and you are awaiting eviction, there is plenty you can do to stay in your home and keep it from the predators!

Now, if you do nothing, you will lose your home. You do not have the option of doing nothing. You must study your loan and your lender, or have a mortgage auditor do so for you. You can get referrals to qualified auditors at www.yourmortgagewar.com. Once your loan is audited, you will learn what fraudulent acts were committed by your broker and lender. Fraud is the intentional inducement into a contract without all the material facts. There are laws against fraud and the penalties are severe. You will have a clear picture of how you were defrauded and how your lender established a pattern of conduct in which it abandoned it’s fiduciary right to advise you. You may have been defrauded at any stage of the process: during the solicitation, origination, processing, closing and servicing of your loan. Fraud must be argued with specificity in the courtroom, and the audit is your weapon.

You will also learn if your loan was securitized, i.e. sold on the secondary market. If it was, your lender has no legal right to foreclose, as it is not a current holder of your note. This is extremely good news, and the legal approach involves filing a “quiet title action” as well as a claim for fraud and other violations. This will get your lender off your title and get you your house free and clear, if your lender cannot produce the current holders of your note. Most likely, it cannot do so at the level that will satisfy a judge in a court of law. And judges are not lenient in this matter. They are livid at the way homeowners have been defrauded. They understand completely, that this is not some chair you bought at a garage sale, this is your home! The roof over your head! The shelter that provides you with safety and security and protects your family!

More….

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Homeowners should be suing lenders!

Posted on June 26, 2009. Filed under: Foreclosure Defense, Fraud, Loan Modification, Mortgage Audit, Mortgage Law, Predatory Lending, right to rescind, Truth in Lending Act | Tags: , , , , , , , , , , , , , , , , , |

Homeowners, welcome to Paradise Lost, the fate of millions of financially strapped boomers. A simultaneous loss of life savings, job income and foreclosure has many of them wondering, “Whose America is this, anyway? The bankers got bonuses to defraud us, and our industries and economy are in the pits. We worked for decades to live the American dream, and now we are out of work, saddled with debt and thrown out on the streets! What retirement? When I’m too old to enjoy it? More like I’m living a nightmare.”

You might be quite inclined to agree. However, there is light at the end of the tunnel, even for those that have already been foreclosed and evicted from their precious homes.

Although lately, while it feels like we are in the same boat as a third world country, we still have a little document on our side called The United States Constitution, which states, among other things that, “Citizens of the United States shall not be deprived of life, liberty or prosperity without due process of law.”

Now, there’s a mouthful. So don’t despair! And don’t get left out in the cold! Baby, it’s warm inside!

Homeowners, listen up! It is time to begin a reversal of your misfortune by gearing up and waging your mortgage war. Even if you have wearily given up your keys and angrily moved out, there are legal remedies that can make you whole. Your lender has broken so many laws that you may end up with more money than you had in cash and equity in your home!

And, no, this is not a pipe dream. But it is the repossession of your American dream. And the statute of limitation is greater than three years if your lender committed fraud.

How to tell if you are a victim of illegal foreclosure and unlawful eviction? Read on. Hint: you are in good company. Your platoon is millions strong.

If you have an adjustable rate mortgage and your loan has been securitized, there is a high probability that the securitization was done illegally. Further, if you have been defrauded by a predatory lender or broker, it’s time to fight back and go to court.

I recently asked Ohio attorney Dan McCookey, an expert in foreclosure defense and offense, what traumatized and victimized homeowners can do even after they have lost their homes, and find themselves figuratively and literally, out on the street. He provided some strategic counsel and laid out two hopeful options for now homeless homeowners:

Option #1: the “void judgment defense.” Your attorney files a motion to set aside the judgment, as the court never had proper jurisdiction to begin with.

What does this mean to you? If your loan was securitized, your lender sold your note and quite profitably, retained the mortgage servicing rights. When your note was sold, your lender gave up its legal ownership of your note and was paid in full for your loan, and then some. Therefore, your lender had no legal standing to foreclose! And no matter how many times your servicer was acquired, it has no right to foreclose!

In fact, your lender is not considered by the Court, a “true party of interest” or a “holder in due course.” Since the Court’s jurisdiction was never evoked, any and all proceedings found by the Court are void. That right is given to the current holder of the note. If only your lender could remotely identify whom that is.

Your lender has no idea where your original note currently is, as it traveled the globe, during its metamorphosis from a secured interest in your property to a mere shadow of its former self. The poor thing was sliced and diced multiple times by the depositor and a series of trustees, each earning profits and fees along the way.

More….

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Loan Redos Get Tangled in Thicket of Red Tape

Posted on June 17, 2009. Filed under: Foreclosure Defense, Housing, Loan Modification, Mortgage Audit, Mortgage Law | Tags: , , , , , , , , , , , , |

More than 9% of 45 million U.S. mortgages, or about four million loans, were delinquent in the first quarter of 2009, according to the Mortgage Bankers Association. That is the highest level since the group started tracking such data in 1972. As of the end of April, though, just 518,155 home loans had been modified, says Hope Now, a coalition of mortgage companies, investors and housing counselors.

Getting a mortgage modified can take months, slowed by thin staffing and mountains of paperwork. With so many loans bundled and sold to investors, it’s sometimes hard to figure out who even owns them. The new federal program requires borrowers to meet slightly different requirements than bank programs do, meaning banks need to navigate two procedures.

Chase’s mortgage business collects monthly payments and handles other chores on $1.5 trillion of mortgages. It owns about a fifth of those loans, having sold the rest to investors. Since October, the bank says it has prevented about 180,000 foreclosures, mostly through mortgage modifications. An additional 15,000 loans modified by the bank follow the guidelines set by the White House plan.

Roughly 3,500 Chase employees are trying to restructure troubled mortgages, and 1,000 counselors have been added this year to cope with demand. Chase has opened 24 walk-in offices around the U.S. where borrowers can seek face-to-face assistance.

via Loan Redos Get Tangled in Thicket of Red Tape – WSJ.com.

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New York Sues Foreclosure Rescue Companies

Posted on June 11, 2009. Filed under: Fraud, Loan Modification, Mortgage Fraud, Mortgage Law | Tags: , , , , |

New York Attorney General Andrew M. Cuomo is suing his state’s largest foreclosure rescue company and begun investigations of 14 others that do business in the U.S., ratcheting up the legal pressure on firms that exploit consumers in danger of losing their homes.

Cuomo’s office has served a notice of intent to sue on American Modification Agency, Inc. and its owner and President Salvatore Pane, Jr., claiming the company targets homeowners facing foreclosure by claiming that it can save their homes, but often fails to provide the services promised. Cuomo says the company charges illegal up-front fees and engages in consumer fraud.

Amerimod is headquartered in Uniondale, NY and claims to operate in all 50 states, servicing thousands of consumers nationwide.

As part of his investigation into the so-called “foreclosure rescue” industry, Cuomo also has also served subpoenas on fourteen other companies in New York and across the country that offer loan modification services.

Capitalizing on the current economic downturn and housing crisis, Cuomo says these companies scour foreclosure notices and filings and prey on consumers desperate to save their homes from being foreclosed. They promise they will negotiate with the consumers’ banks to lower mortgage interest rates, lock in fixed rates, get late fees and past due payments forgiven, and even reduce principal balances.

The investigation comes in response to complaints from homeowners that these companies fail to deliver as promised, charge illegal, up-front fees and use misleading advertising to lure consumers into services that oftentimes leave them further in debt, facing a worsened threat of foreclosure.

http://www.consumeraffairs.com/news04/2009/06/ny_mortgage_fraud.html

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3 roadblocks to Obama’s mortgage rescue

Posted on May 16, 2009. Filed under: Foreclosure Defense, Housing, Loan Modification, Mortgage Audit | Tags: , , , , , , , |

NEW YORK (CNNMoney.com) — Loan servicers are overwhelmed by the flood of applications. Mortgage investors are angry about a congressional bill prohibiting them from suing servicers that modify loans. Foreclosures are rising as unemployment soars.

Nearly three months after President Obama first announced his $75 billion mortgage rescue effort, his administration is still refining the program in hopes of reaching its goal to save 9 million homeowners from foreclosure.

So far, more than 55,000 borrowers have been put into trial modifications, which become permanent if they keep up with payments for three months. Hundreds of thousands more have applied.

However, the initiative must still get over several hurdles before its chances for success can be determined.

Stressed servicers: The program’s guidelines were issued on March 4, but it took many servicers weeks to reprogram their systems and train their staffs. Many did not even start accepting applications until early- to mid-April, frustrating troubled borrowers forced to wait to find out if they qualify for lower rates.

Even now, housing counselors and borrowers report that servicers are still getting up to speed on the program, causing delays and confusion.

Take the case of Roberta Smith of Foster City, Calif. The 65-year-old has a mortgage where her minimum payments don’t cover all the interest that’s due. To stop her principal from ballooning, she has drained her retirement accounts. But she fears she soon may not be able to afford even the minimum payment.

Smith applied in late March for the modification program, but JPMorgan Chase (JPM, Fortune 500) told her nearly three weeks later that her package was not complete. She faxed the required documents and was assured by a telephone representative that the bank had everything it needed.

But this week she received a letter saying her request was being canceled because the application was incomplete.

Chase spokesman Tom Kelly said the letter was sent as a mistake and Smith’s application is still under review. He acknowledged that the bank, which began processing applications in early April, is still ramping up its modification efforts. Meanwhile, the bank is holding off on foreclosing on applicants.

“It’s an enormous task,” Kelly said. “We’re moving quickly, although not as quickly as an individual might wish.”

via 3 roadblocks to Obama’s mortgage rescue – May. 15, 2009.

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Indiana reaches $2.8M settlement with Countrywide

Posted on May 16, 2009. Filed under: Mortgage Fraud, Mortgage Law, Predatory Lending | Tags: , , , , , , , |

Indianapolis – Some relief is on the way for a small number of Hoosiers who were cheated out of their money. As much as $2.8 million will be returned to Indiana homeowners because of one company’s predatory practices.

Indiana State Attorney General Greg Zoeller announced a $2.8 million predatory lending settlement against Countrywide on Tuesday. About 1,700 Hoosiers will split the settlement.

Zoeller said individual payouts “will be based on the number of people who respond.”

The biggest immediate problem will be finding those Hoosiers who already lost their homes. An independent consultant will be hired to find those Hoosiers who qualify.

“We are going to aggressively try to find people who are eligible…every effort will be made to find as many of the 1,700 as possible,” Zoeller said.

The settlement was made somewhat easier by negotiating with Bank of America which now owns Countrywide. The overall amount of the settlement is more punishment for truth in lending infractions than actual rescue for those who lost their homes.

“They had a low rate to attract people in. They were not fully explained to the consumer so when it reset in the second year they were completely under water, unable to manage the mortgage payments,” said Zoeller.

A portion of that settlement, $50,000, will go to the Indiana Foreclosure Network. Lt. Governor Becky Skillman accepted the donation.

via Indiana reaches $2.8M settlement with Countrywide – WTHR | Indianapolis.

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American Consumer & Predatory Lending

Posted on May 16, 2009. Filed under: Legislation, Mortgage Law, Politics, Predatory Lending, Truth in Lending Act | Tags: , , , , , , |

Today President Obama is conducting a town hall meeting in New Mexico focusing on the issue of credit card debt. This is a welcome turn in the national economic conversation from the plight of big institutions and the financial system to what is perhaps the most important part of the story of the Great Recession still not adequately understood – the weakened state of the American consumer prior to the recent recession and financial collapse.

We’ve told this story many times – despite robust growth in the Bush Era, incomes for a typical family fell. Most measures of consumer health during the Bush went in the wrong direction. We saw an increase in those without health insurance, in poverty, incomes fell. The lack of income growth – coupled with a flood of cheap money – helped drive increased consumer indebtedness – mortgages themselves, credit cards, home equity loans. People borrowed to maintain their lifestyles, and to keep up with the Jones. The continued consumption and borrowing was justified in the minds of consumers by the power of the wealth effect brought about the rapidly increasing value of homes and stocks. But we know what happened next. Assets fell. Incomes did not appreciably rise. The debt remained. People lost jobs. The already very weakened balance sheet of a typical family grew much much worse.

via Simon Rosenberg: The Economic Conversation Enters a New Phase: Putting Consumers Front and Center Now.

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Obama’s Campaign Against Mortgage Modifications

Posted on April 13, 2009. Filed under: Bailout, Banking, Foreclosure Defense, Loan Modification, Mortgage Audit, Mortgage Law, Politics | Tags: , , , , , , , , , |

President Obama has apparently embarked upon a campaign to put all private sector loan modification firms out of business because some are apparently scams. It’s a curious approach when you consider that there have been and continue to be countless stock market related scams in this country, but I can’t remember a president telling me not to pay my financial advisor as a result.

Speaking on the subject of his housing rescue plan, which will, once it’s available, offer to modify certain mortgages, the president has said on several occasions: “If you have to pay, walk away.” So, the fact that they charge a fee makes them a scam? And here I always thought that it was charging a fee and not delivering a service that was a problem. Just the fact that a firm charges a fee… well, not so much, right?

If the president is right about the whole charging a fee issue, then why does the California Department of Real Estate tell homeowners that they should be sure to use a loan modification firm that uses its “Advance Fee Agreement”? I’m confused.

President Obama has also said that people don’t need to pay a fee to have their loan modified because they can simply call their banks directly. I was curious about this, so I went to IndyMac Federal’s Website that advertises their new streamlined loan modification service. Here’s what it says in the first three paragraphs:

“The goal of this streamlined loan modification program is to achieve improved value for IndyMac Federal. IndyMac Federal will only make modification offers to borrowers where doing so will achieve an improved value for IndyMac Federal.”

Unusually forthcoming, if you ask me. The bank is telling you right up front that they’re happy to negotiate a modification of your mortgage in their best interests, certainly not yours. And that’s what they should be doing, I suppose. But as a homeowner, don’t I want someone who knows mortgage modifications to be negotiating on my behalf?

Telling me I don’t need to pay an expert to represent me with my bank seems like the police telling me that I don’t need an attorney after I’ve been arrested because I can just ask the District Attorney any legal questions I might have. Gee, thanks for the advice, but I think I’ll go ahead and call my own lawyer anyway, okay?

via Obama’s Campaign Against Mortgage Modifications » Mandelman Matters.

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Fraud fears cloud FHA’s success in stabilizing housing market – National Business – MiamiHerald.com

Posted on April 6, 2009. Filed under: Banking, FHA, Finance | Tags: , , , |

WASHINGTON — As the Federal Housing Administration has stepped in to help stabilize the housing market by underwriting more mortgages, the Depression-era agency is seeing growing default rates that could undermine its health, the Department of Housing and Urban Development inspector general testified Thursday.

Kenneth Donohue also told the Senate Appropriations housing subcommittee that unscrupulous lenders who helped precipitate the housing crisis with subprime loans are moving into the FHA loan system, and the number of fraud cases is a growing concern.

Sen. Patty Murray, D-Wash., who chairs the subcommittee, said that if the FHA can’t pay its debts, Congress may have to cover the shortfall.

“And we don’t have the dollars to do it,” Murray said.

While some see the FHA as the “savior of the market,” Murray said, she’s concerned the agency suffers from outdated technology, personnel shortages and inadequate underwriting.

“Just because FHA has become a major player in saving the housing market doesn’t mean these challenges have disappeared,” she said.

In addition to the resurgence of FHA-guaranteed mortgage loans and the stimulus bill, lower interest rates and an $8,000 first-time homebuyer tax credit are helping to stabilize the market, J. Lennox Scott, the chief executive of John L. Scott Real Estate in Washington state, told the committee.

Two years ago, FHA-backed loans made up only a small percentage of the housing market. The agency didn’t underwrite subprime or adjustable rate loans. As prices rose, the FHA was barred from writing loans on mortgages above $362,500.

The maximum was raised in the stimulus bill to nearly $730,000. As subprime loans and adjustable rate loans disappeared, the FHA now guarantees nearly 30 percent of mortgages. At the same time, the number of lenders doing business with the FHA has grown more than 500 percent.

“As is the case with other mortgage market participants, currently FHA is experiencing elevated default rates and foreclosures and with it, losses that exceed prior estimates,” HUD Secretary Shaun Donovan said.

Donovan said the primary reasons for the defaults were growing unemployment and other economic factors. Donovan said FHA-guaranteed loans didn’t include “unsafe features” and poor underwriting that made subprime and other loans risky.

via Fraud fears cloud FHA’s success in stabilizing housing market – National Business – MiamiHerald.com.

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