Posted on 12/24/2008 6:22:31 AM PST by big black dog
Recently I assisted two separate couples whose stories are so remarkably similar that it suggests more than coincidence. I was right. There is something going on.
Both are working couples with children, and each has a good education. Both wives were hospitalized, had lengthy absences from work, and both fell behind on their mortgage payments.
That's bad enough. But what their mortgage service company did to them next is where our story really begins. This should be required reading for everyone with a mortgage.
Sub-prime lending is really most of us. It is a category of borrowers with a broad range of circumstances. We are the people who are simply unable to prove that we really don't need the money. The self-employed, business owners and those with less than perfect credit comprise this group. Sub-prime casts a wide net and is responsible for the record number of Americans who own homes.
As one might expect, this category of loans will have a higher rate of delinquencies. You would think, therefore, that these loans would be less profitable, but this group of borrowers pay higher than prime rates. The real money, as many servicing companies are discovering, is in the very lucrative business of targeting the most vulnerable borrowers and squeezing every last penny out of them before throwing them out in the street.
This trend has the potential to make predatory lending seem generous. Servicing, the collecting and distributing the mortgage payments, is the land of opportunity.
Who is in a better position to exploit a defaulting borrower than a person posing as someone who wants to help? And it's all part of a scam planned well in advance.
Companies that are actually collection agencies are acquiring the servicing rights to sub-prime loans, not to process checks, but 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 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.
Servicing companies have gone from passive collectors and distributors of other people's money to active, predatory, hard-money lenders targeting sub-prime borrowers.
They might not even wait for you to get into trouble, but simply insist you are late.
Scam 1. 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 fifteenth. But your payment is technically late the day after the due date.
And that is when the telemarketers of the servicing firm 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.
Cha$$$Ching$$$
Scam 2. Please try our easy pay program.
This is the hi-tech version of number three. 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.
Cha$$$Ching$$$
Scam 3. 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. See above.
Cha$$$Ching$$$
Scam 4. 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 percent higher than the one you already couldn't make.
In the process you'll be asked to sign away many of your rights and you do it because they said they care.
They exploit you at your most vulnerable time, because they know that most people would do anything not to lose their home. They intimidate you into suspending judgment and going along out of fear and embarrassment.
And why? Greed. 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 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.
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. Abuse of borrowers is their business plan and the longer they keep them in their home, the more money they can collect.
Right now all of the focus is on the predatory loan-makers not the loan servicers. There isn't any help coming from lawmakers. As a matter of fact, industry lobbyists crafted the legislation that makes it all perfectly legal. Therefore, you need to protect yourselves.
1. Start to make your mortgage payment early. This should help keep you under the radar screen. Once someone targets you, they will be calling.
2. Don't allow your homeowners insurance policy to lapse. If the mortgage servicer asks for proof of insurance, provide it through every channel available and document it. Print out and keep email, keep the fax verification and send every piece of mail "return receipt requested." And make sure they know you are doing it. Make the email confirmation part of your fax, for example.
3. Never talk to them on the phone. Make them put everything in writing.
4. Do not permit any sort of electronic transfer of funds. You want a paper trail. Buy and use check writing software that allows you to update your bank account online and regularly monitor check clearing activity.
5. Never sign anything without a professional review. Forbearance agreements aren't for you, they are written by the servicer and designed to strip you of your rights and every last penny.
6. Consider paying any late fees and contesting them after the fact. Withholding payment from the mortgage servicer in a dispute will give them just the excuse they need to deduct it from your next payment leaving you in arrears on your mortgage payment and late every month thereafter. The late fees will skyrocket as your credit plummets leaving you no way out.
If the industry doesn't act soon, everyone in real estate and mortgage lending will be tainted by the consequences of this astonishing display of greed and deception. When this scam is finally exposed in the mainstream media, it will make the Enron fraud look benign.
Where are you people banking? Costa Nostra Savings and Loan? All I can say is it ain’t that way round here.
It's not Friendly Savings and Loan. It's not the company or bank that gave you the mortgage.
Your bank sells your mortgage for cash to a company such as Ocwen and the fun starts.
My loan was transferred to Ocwen about a year ago when Aegis went bankrupt and it scared the hell out of me. I haven't had any problems with them yet (knock on wood), but I got everything needed in writing (proof of insurance, taxes, etc.). I will not talk with them on the phone.
if you have sufficient equity, you can refinance to a kinder, gentler banking institution...that’s what I did with one of mine when it got sold to Aurora...
The fun only starts if you don’t make the mortgage payments you agreed to when you got the loan.
Basically the mortgage company owns your home and you are renting from them. If you were the landlord, you wouldn’t mind if your tenants were two months late paying the rent?
Now that I have their name and address I would send a letter to both the mortgage company and the fraud outfit telling them that my lawyer will talk to their lawyer.
It truly amazes me that people buy their largest session and will not spent a few dollars to get it inspected by a professional or have a professional look over their paper work.
I am a professional in the field with many years of experience and my Dr. son is buying a house. You bet that we will be doing both.
Several years ago, my loan was sold. I got a letter from the new bank, saying I hadn’t given them the information on my insurance company....and they were going to buy me new insurance from another company. It was quadruple the normal rate, so my escrow payment was going up.
I straightened it out - but I smelled scam, rip-off, preying on people, etc. all over it. I’m sure they did the same thing with every loan they bought, and a small percentage of people allowed themselves to be bullied.
Our brain dead news media finally wake up: This scam has been going on for about 12 years. The problem is there is no regulation under federal or state statute. Zero. Nada. None. The 'mortgage servicing' fraud artists [debt collectors] have been left free to rape, pillage and burn our society.
These fraud artists doctor up payment records then send late notices and collection letters. They pack on late fees like crazy. Then add bogus legal fees. People with trashed credit scores cannot refinance. Illegal foreclosures abound all across the land. Our whole country is in the greedy grip of organized crime!
Please check my freeper page and scroll down. This info has been posted there for months. Check out the yellow section near the end.
Merry Christmas !
“The fun only starts if you don’t make the mortgage payments you agreed to when you got the loan.”
If you read the article, one of the points is that they claim longer processing times. So even if you sent it in on time you still have a problem with them. The only solution is to send it in even earlier, when you are having trouble making the payment anyway.
I don’t see how this article deals with people two months late.
I agree that this is a POS.
The absolute best thing to do is only go with a lender who doesn’t sell their mortgages - I always refuse to use brokers regardless of the savings they claim to bring.
However, I disagree with not using electronic funds transfers - the remittance you get is as good as any paper trail - it shows the date of transfer, from where to where and provides a reference number as well. If your mortgage is due on the first, then schedule the transfers to happen on the first. They can’t use the arguement of slow processing time when things are done electronically.
Excellent advice — especially the one about paying the mortgage early and paying the latefees and contesting them afterwards.
While you may be right, if you don’t pay mortgage and late fees, they can still damage your credit rating seriously, which is almost impossible to correct.
This applies to any other bills as well.
I found out a lot of companies, including medical offices, have you send payments to “bank lockboxes” (of course you have no idea that the address you are sending it to is such a place), where your payments gets cashed immediately, but it doesn’t get credited to your account until weeks, even a month later.
Legally, no. You own the home. You have taken out a loan and pledged the home as security. That’s demonstrated by the fact that a rental eviction takes 3 days, a foreclosure months.
You have a number of affirmative defenses against foreclosure, few or none against an eviction.
The companies they are talking about here are the ones that do things like “lose your payment”, and then threaten foreclosure unless you move from, let’s say a 7% mortgage, to a 16% loan, which they can then sell for tens of thousands of dollars more than they bought the loan for.
It’s called “predatory lending.”
Some mortgage companies are just plain crooks. We once had one who claimed they didn’t receive our payment on time (the old lost in the mail thing) and actually sent someone out to our house. When it happened again we began sending our payments by traceable means with a return receipt requested. Would you believe they tried to hit us with late charges after that! And when I protested and said I had a signed receipt they said the post office must have signed it, it wasn’t them. So I called the post office and they sent a postal inspector over to the mortgage company. After that I never heard a peep out of them. Now days we pay electronically, automatically, and I love it!
You don’t live in Florida, right?
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