Commentary by George W. Mantor
RISMEDIA, August 17, 2010—As the vast majority of applicants for loan modification have learned, HAMP, the Home Affordable Modification Program, is little more than a thinly disguised mechanism through which to conclude the foreclosure process on behalf of financial intermediaries who never loaned a dime and never lost a dime on the property.
HAMP has contributed nothing to help the millions of families it promised to help. In effect, it is just another weapon of mass destruction in Wall Street’s consumer assault arsenal.
Wall Street stole borrower’s identities to defraud pension funds out of most of their cash, which they swirled around in a vile concoction of CDOs, special purpose vehicles, non-trust trusts, non-insurance insurance and TARP funds.
These were labeled with ratings inversely proportional to standard underwriting guidelines or even common sense, and slapped together with pages of mind numbing legalese and a few French words.
All of this is part of an ongoing unlawful plan to steal the investor’s money, the homeowner’s equity, collect on insurance and avoid paying taxes or being litigated regarding any of it.
What people entering the HAMP modification process don’t understand, until they are out on the street, is that it wasn’t designed to limit foreclosures; it was intended to expedite them. Tax laws are changing and the race is on to get the defaulted pools off the books while the tax laws are still favorable, and before the evidence of their crimes is discovered.
I’ve talked to people from all over the country who have attempted a modification, and their stories are identical to those being reported by main stream media. So much homeowner paperwork has been lost that it must be having an impact somewhere. They’d need diesel powered shredders and a fleet of trucks running twenty-four-seven to get rid of it all.
The numbers, only 389,000 permanent modifications, and the experiences of homeowners unavoidably suggest that this, too, is all part of a bigger plan.
How the White House can go on ignoring what everyone else already knows is inexplicable. The foreclosure crisis will leave a scar deeper, wider and slower to heal than the Great Depression.
We’ve got foreclosure mill law firms making up bogus documentation to defraud the homeowners of their property, and judges commending these charlatans for their effort and ingenuity in getting ‘er done and helping the court save time. In Florida, they call it the “Rocket Docket.”
Save time? Why not just close the courts down if they have become so burdensome to the judges? Has everyone gone nuts?
And, then last week, just when I thought I had heard everything about how low banksters will stoop to get their credit default swaps, comes now a Stockton, California businesswoman and single mother, Deanna Walters.
In October 2004, she obtained a first mortgage on her residence and shortly thereafter was informed that the servicing of her loan had been assigned to Ocwen Federal Bank FSB.
Ms. Walters thought nothing of it at the time and began making her regularly scheduled payments. But, little did she know that she had been selected for their foreclosure fast track.
Perhaps, they underestimated her financial resources, her will to fight, or her exceptional record keeping, but despite a five-year battle, they have yet to throw Ms. Walters from her home.
Ms. Walters made all of her payments on time and has the evidence to prove it. What she also has is evidence of a criminal conspiracy. Because of her persistence in trying to get her account straightened out, she has been able to reveal and document a pattern consistent with what I have been reporting for several years.
As I have said in the past, servicers do not exist simply to process checks, but rather, to put the borrower over a barrel and then offer more and more expensive “solutions.” True, they don’t want your house, but they do want to keep you in default, as well as, every spare dime you can fork over. They don’t care one way or the other what happens to your home; they’re just the servicing company.
All of the dialogue is finely honed and well-scripted. They will insist that they did not receive your payment, even though they did. They will say that the homeowner is without adequate insurance. They will claim they paid your property taxes, even though they cannot prove it.
Here are some of the tricks I have heard about over and over again, and most of them were used against Ms. Walters.
“We take so long to process our mail it could really cost you.”
Most mortgages have a grace period of sorts. If your payment is due on the first, a late charge won’t be imposed until the 15th. But, your payment is technically late the day after the due date.
That is important because that is when the telemarketers of the servicing firms begin to call. The purpose of this call is to scare you into believing that ”due to extended internal processing times and the unpredictability of mail delivery,” you are going to incur a late fee. To avoid that hefty late charge, they suggest stopping payment on your check and allowing them to take the money directly from your bank account.
Do not be tempted. It will certainly cost you at least for the stop payment on the check, and wouldn’t you know it, the mortgage servicer can also charge you a fee for this.
“We didn’t get your payment and you can’t prove we did.”
You send your check and they cash it. But, no matter how many cancelled checks you trot in front of them, they deny receiving payment.
“Please try our easy-pay program.”
This is the high-tech version of above. Your bank statement shows the payment came out on time, but the mortgage servicer doesn’t credit the payment to your account for two weeks. Late fees begin to mount up while you send copies of your bank statements showing the withdrawals. Nonetheless, they insist you are late, and late on the late fees, and monies start to compound.
“You didn’t pay your property taxes, so we did.”
Here again, they will deny your canceled check or credit card receipt, and without producing any documentation, will insist that they, not you, paid the property taxes and they are entitled to establish an “escrow account.”
“You do not have insurance.”
Or, you do not have enough insurance. We bought some for you. Now, they will exercise their right to open an “escrow account.” That insurance, which covers only them, has an annual premium 10 times that of a normal homeowner policy.
“For your benefit, we’ve established an escrow account.”
The escrow account is where the real financial trickery takes place. No matter how many times you ask, you will never see an accurate accounting of how they arrived at the amount they claim that you owe them.
“We’re here to help in your time of need.”
And, if you do actually fall behind on your payments, they will sniff out money you didn’t even know you had, and wring it out of you.
They will try to get as much money from you as they possibly can. First as a sizable down payment, and then as high a monthly make-up payment as you’ll agree to. They take all of your cash and leave you with a payment that might be 35% to 50% higher.
In the process, you’ll be asked to sign away many of your rights, and you’ll do it because they said they care.
They exploit homeowners at their most vulnerable time because they know that most people would do anything not to lose their home. They intimidate homeowners into suspending judgment and going along out of fear and embarrassment. And, if the homeowner puts up little or no resistance, they will take them all the way to the courthouse steps.
They get paid a small fee to process payments, but when a payment is missed, they can charge whatever fees they want and keep all of the money. They are nothing more than shakedown artists operating in a largely unregulated arena who have figured out a way to wring millions of dollars out of nervous consumers and keep the perfect mix of defaults in the pools.
They get away with all of this because they can. You didn’t choose your servicing company, they chose you. They chose you because they know all about you and know that you will make a good target. You can’t fire them, quit them or take your business elsewhere. Once they begin to destroy your credit, you couldn’t get another loan to pay them back even if you wanted to. And, even if you refinance, there is no guarantee you won’t wind up back with the same servicer.
In a non-judicial foreclosure state, such as California, virtually all foreclosures, whether they are lawful or not, go uncontested so it is very easy for the servicer to manufacture a default.
Lest you doubt their motives, it is a well-known business axiom that you reward the behavior you want.
Read the remarks of the president of Ocwen Loan Servicing, Ronald M. Faris, after a $1.8 million judgment was awarded to a customer. “We make sure our employees are aligned with this effort by paying them incentive bonuses when they succeed in keeping borrowers in their homes.”
Now that sounds noble if not a bit self-serving. But, the incentive isn’t paid for keeping a borrower in their home, it’s a percentage of the money collected while stringing the borrower along. Abuse of borrowers is their business plan, and the longer they keep homeowners in default, the more money they can collect.
In Ms. Walters’ case, they lost payments which she can prove she made, force placed insurance though she has adequate coverage, she was coerced into signing a forbearance agreement, all of which they wanted to rectify with a modification, which Ms. Walters did not need, did not ask for, and had no intention in doing.
Over the years, Ms. Walters paid thousands of dollars in additional fees and charges that were simply manufactured by Ocwen. Then, without even the required notice of sale, a note was left at her house that it had been sold and she needed to move.
Ms. Walters’ attorney, Anne-Marie Dinius of Redwood City, CA, is as feisty and itching for a fight as her client.
“It’s outrageous,” she said with obvious frustration in her voice.
“At least when you deal with the Mafia, you know what you are getting into. Here, what begins as what seems like a small accounting error on the part of the servicer, winds up being the means to make a family homeless. And, rarely can they be stopped.”
“It’s going to take patience, tenacity, intellect and community to unravel the complex web of illegalities that have been routinely perpetrated by lenders, servicers, and the rest of the mortgage machine,” she concluded.
In the months to come, we are going to follow Ms. Walters’ case as it winds its way through the legal labyrinth of California’s foreclosure court. We are going to follow her story as she battles the system and tries to overcome the hurdles to regaining property of which she was unlawfully deprived. Stay tuned.
George Mantor is a nationally respected authority on all areas of real estate and is frequently quoted in a wide range of publications. He is an oft-invited guest of Fox Business Network and for many years, he was the host of “Keepin’ It Real…Real talk about the real thing, real estate” on KCEO radio. His articles have also recently appeared in Real Estate Finance, The Real Estate Professional, National Real Estate Investor, Broker Agent News and Realty Times. His blog is http://www.realtown.com/gwmantor/blog.
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