Posted on 02/01/2008 10:06:48 AM PST by no nau
When you're on the one of the fast-tracks to foreclosure, accepting a payment can imply that the servicer agrees you aren't delinquent. It's legal advice vs. positive cash flow. Guess which way they lean? Even among those who accept it, they will apply it to one of the mysterious and invisible "suspense" accounts and not to the principal or interest.
Typically, a payment is returned because it does not include additional fees or charges that may or may not have been appropriate for the loan.
In more egregious levels of the scam, it is returned to add another month's late fees and interest, and in particular, they will be returned in the third month which opens the door to acceleration and even more fees, including legal fees to one of the foreclosure mills and reinstatement charges under a forbearance agreement.
These kinds of cases are not errors or simple mistakes. It is a well-thought out, carefully calculated and very systematic scheme. There are behavior forecasting models applied to loan portfolios that they claim can accurately predict which borrowers are supposedly more likely than others to default and which among those are less likely to be able to put up a fight.
You're a loan officer - look at the tools the industry offers for judging risk in originating and underwriting loans. The same kinds of analytical tools have been developed by and for the special servicers for them to maximize their return on investment. Put it this way, they wouldn't buy problem loans if they thought they might lose money on them.
They stand behind the phony shield of the "sub-prime" borrower, such that any action they take is justified because the hapless consumer is nothing more than a deadbeat that is trying to live in a house without paying for it.
When it's the borrower's word against theirs, the vast majority of victims are instantly discounted, and a very simplistic view of the world such as yours, dominates the discussion. "Companies wouldn't do that," is the most common view, followed quickly by "that would be illegal," along with, "if you made your payment on time you wouldn't have a problem."
None of those immediate conclusions is true when it comes to a victim of a scheme such as predatory servicing.
Speeding is illegal but almost everyone does it because the chances of being caught are very slim if you're familiar with the roads you're driving on. The laws that penalize speeders haven't stopped people from speeding, nor have the laws against driving while intoxicated stopped people from drinking and driving.
We live in a society that is apparently willing to put up with a certain amount of illegal behavior.
No matter what you ask them on the phone, it doesn't matter; they don't have to answer honestly. No one is getting criminally prosecuted for outright lying or misleading a borrower, despite what the laws say. Here and there a few civil suits get filed and then settled in private, and in at least one case an actual (albeit miniscule) penalty was assessed against Fairbanks, but it is still simply to profitable and too easy to stand back and say this is what you get when you have sub-prime borrowers.
They paid the speeding fine because they were unlucky enough to have been caught.
So first, take off the blinders and realize not everyone in the lending industry behaves in the way you expect. They have other motives that you may still not accept as real.
I have to agree. I work in the finanancial industry and told a coworker to go with our firm instead of a mortgage broker. She didnt listen and got screwed at the last minute with all sorts of oddball fees.
I had a mortgage w/ Countrywide way back when and had no trouble with them, even as I prepaid that mortgage down every month and paid it off 4.5 years into a 15 yr loan. They tend to hold onto their loans (but if BoA buys them out, that may be another story).
Even my firm has pulled out the wholesale/correspondence loan business (dealing w/ mortgage companies and small banks to originate your mortgage). In a few years, we should see the mortgage broker go the way of the travel agency; a layer that is squeezed out by the internet and big players.
I originally took the loan out with a local savings and loan who, after a few years, sold out to a major. Bingo, no control. Then that outfit a couple of years later was shut down by the FSLIC, the notes were then packaged and sold in auctions.
Your reasoning may sound good but the borrower is at the mercy of some of these scumbags. There is no law that says they cannot sell your mortgage to whom ever and when ever they want. I know because I went thru several lawyers over the course of this deal.
Will never under any circumstances have any debt again.
Washington state charges a fee ($5) to pay quarterly business taxes online.
Uh, oh. Ocwen has generally dealt with suprime and other not-to-stellar mortgage products. That’s how they got so experienced in foreclosures.
EMC (owned wholly by Bear Stearns) is another servicer that specializes in lower-quality mortgages.
Another problem is the current consolidation of servicers, with most of the independent and even medium shops being forced out/bought out. That creates even greater opportunities for problems as loans are moved around disparate computer systems.
Might be a good time to refinance with another lender. Someone who tends to hold onto their loans.
bump
Thanks for posting this. I wasn’t aware of the mortgage scam.
This is another way for lawyers to make big bucks if they’re smart. They target one of these mortgage servicers with a few homeowners who go into foreclosure and then start documenting the process, nail the company under RICO statutes. Treble damages and plenty of free advertising/media and lots of customers out there.
That happened to us once and I cancelled the card the same day. We've only had two interest charges ever, and that was one of them.
Yea, they pretty much screwed the health industry too. I pay a fortune for private insurance, and there are only 2 carriers left to choose from. I'm told they tried Hillary Care here back in the 90's and that drove all the carriers away. Doctors can't make any money due to all the state regulations and the higher than otherwise malpractice insurance here.
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