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Excellent Resource for Predatory Lending or Mortgage Broker Fraud


Quartermoon
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I think this is one of the most valuable resources I've found on the Internet.

I wish I would have educated myself more when we sold and purchased a home during the big "buyers market of 05" but we learned the hard way.

If someone would have made me read this, I would have been all the more seasoned and perhaps not in an ARM that is due to be refi'd in March.

I've been here for aprox one year now and that was the sole reason I came here. To clean up my credit and DH so we could refi at a better rate.

I have now ARM-ed myself with knowledge and never again will I allow anyone to take advantage of me financially.

The First American Corporation Being Sued for Appraisal Fraud

Bank Fraud Victim Center

Bank Fraud Kitchen Table Audit - How to discover if you were a victim of Bank Fraud, Truth in Lending.

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Excellent, Quartermoon! I can tell you one thing is for certain, I was fooled once but I have armed myself with information now and hopefully I will never be taken adventage of again. Upon reading all the information I have now seen, it's very clear to me that my loan stinks of fraud on the front end as well as the back end. It's not even that I was an uneducated buyer, I had even taken a home buying class! What I see now, in hindsight, was how manipulative the whole thing has been. We got to the closing table and faced many surprises. Not knowing we could wake away - which for some reason was not mentioned in my class - and not wanting to walk away, we forged ahead with every intention of refinancing as soon as we could. Then in the mean time, the servicers began piling on fees, our credit slipped backwards and our personal lives became busy with a new baby and a special needs adoption (that took every ounce of energy I had for about a year and a half) and the refi never happened. Now of course, it is too late.

Knowing now what I know, our next purchase will have us hyper aware of what our rights are and what is acceptable terms. I've been thinking of writing a post called "what I've learned from falling prey to mortgage fraud."

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I agree and have felt like you as well. I believe that sometimes you experience things to make you stronger but this time, I plan to educate as many people on these destructive practices.

I realize there a good people in the financial industry but I really thought this broker had my best interest at heart. I believe I wanted so much to give my family just a little more that I did not see. I wish I would have found this place two years ago.

I actually sent an email to the President of Merill Lynch last week, he's a new person that took over this company and explained to him our experience and yesterday they phoned us and wanted us to refi for a better loan.

We'll see..

Maybe there is a Santa?

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  • 5 months later...

Does anyone have a list of lawyers that specialize in morgage fraud?

Knowing we got taken advantage of is only the first step. To tackle these theiving mortgage servicers legally we need to know lawyers in each state that take these kinds of cases.

I know I need to find one ASAP.

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I have an honest, sincere question. Can one of you explain how you were the victim of mortgage fraud? I know predatory lenders exist, but I've also read many stories about people willingly getting ARM mortgages when they didn't fully understand the contract. Plus, I know a lot of people were buying houses with their hearts and not their brains. Oh, they knew that the rate would adjust, but they never took the time to think how they would pay if the rate skyrocketed.

Again, I know there are predators out there, but I also believe in personal responsibility. When I bought my house, I took a new home buyers course that explained the entire process.

I'm not trying to blame the victim, but I just don't understand. No one held a gun to anyone's head and made them sign the papers.

Can someone tell me their mortgage fraud story so I can understand?

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I have an honest, sincere question. Can one of you explain how you were the victim of mortgage fraud? I know predatory lenders exist, but I've also read many stories about people willingly getting ARM mortgages when they didn't fully understand the contract. Plus, I know a lot of people were buying houses with their hearts and not their brains. Oh, they knew that the rate would adjust, but they never took the time to think how they would pay if the rate skyrocketed.

Again, I know there are predators out there, but I also believe in personal responsibility. When I bought my house, I took a new home buyers course that explained the entire process.

I'm not trying to blame the victim, but I just don't understand. No one held a gun to anyone's head and made them sign the papers.

Can someone tell me their mortgage fraud story so I can understand?

You said it yourself, people get ARM's all the time without knowing what they are signing. You can bet that the predatory loan officer knows what he is manipulating the client to sign.

I signed a loan to consolidate my credit cards. Prior to re financing I was paying a total of $2300 for my mortgage and all my credit cards on a monthly basis.

The loan officer sold me a bill of goods telling me my new payment would be $2050 per month, thats almost a $300 per month savings. Of course I jumped on the deal.

Two months after my new "morgage banker" closed the loan with me they sold my loan, and my financial well being to a known mortgage servicing scammer EMC mortgage.

After my first payment to EMC they i nformed me that the prior loan holder had not calculated insurance into escrow and there was an escrow shortgae for taxes as well. Anyone who has ever closed a loan should know that they always put aside 6 months of escrow for taxes and insurance. So it was pure crap to be told there was an escrow shortage.

Shortly after that EMC allowed my flood policy (which I had for 7 years) to expire. EMC told me that my house was no longer in a flood zone. I guess someone moved the two canals on either side of my house.

Two months later EMC tells me that I am in violation of my loan agreement for not having flood insurance and they force placed me into a policy direct from them, at a cost triple the going rates. It took me 3 months to straiten out that mess only to find the rate I had been paying to my old insurance company prior to cancelation had gone up from $850 a year to $1250 a year.

All the while my original monthly payment of $2050 per month had gone up to $2450 per month. I started drowning in bills and found it was impossible to stop the steady increase every 4 or 5 months. And this was the action i was getting prior to the ARM adjustment by 2 1/2 years.

The past few weeks I researched EMC and found they are in the business of depleting suckers equity and taking their houses. Trust me, the whole economy is in a downward spiral and sub prime sharks are to blame for their reckless behavior. Fraud is fraud, whether its 3 card monte or equity draining. But dont take my word for it, here is some interesting reading material.

Introduction to Mortgage Servicing Fraud

--------------------------------------------------------------------------------

From www.msfraud.org ~

• These are not "predatory lenders." These companies do not loan money. They operate in the lending industry after-the-fact. They take on a function that a lender doesn’t want - the backroom functions of handling payments, escrow accounts, annual statements, dealing with borrowers, collections, etc. The perpetrators of the loan servicing scam acquire the servicing rights to loans that other companies have already made. (Loans that were deliberately constructed by predatory lenders are ideal for processing

through servicers that specialize in aggressive collections or rapid foreclosure processing, but the loan servicing scam can be operated against any mortgage loan if the servicer acquires the rights from the lender.)

• These scams are designed and deliberately operated. These situations are not errors, mistakes or situations where a servicer’s managers or employees failed to do their job. Their systems are well-designed and state-of-the-art in terms of analytical technology that helps them choose and process their victims. These scams generate enormous profits from a business that is difficult to run, people and litigation

intensive and normally only marginally profitable. Many have failed and been acquired (Fairbanks bought several).

• You, the borrower are not their customer. Lending companies and investors are their customers. As a borrower being "serviced" in the scam, you are simply one of millions in an ever-growing pool of what the financial services industry deliberately labels as "sub-prime" borrowers waiting to be taken advantage of.

• They have almost unlimited legal resources. If you had the financial resources to have effective legal representation and the documentation to challenge them, they would turn their attention to easier targets. Of course, because most sub-prime borrowers are not well off and don’t have an attorney, you’re a likely target.

• They have leverage and information and will prey on your fears. The fear of possibly losing your home is the key that unlocks your bank account for them. They know almost everything about you financially and even from an employment and income basis. They are made aware of your inquiries into other lenders about refinancing even without a request for a payoff and that shopping may lead them to target you before you can get out of the loan you’re in.

• They are experts with millions of successful cases behind them. The loan servicing industry, including those who founded and are running the servicing scam companies, helped craft the "standard" loan documents in widespread use. They are written entirely for the protection of the lending industry, not the consumer. That situation allows them to manipulate their processes and procedures to push you into a position where they can take funds from you or ultimately take your home, often within the terms and conditions of the loan. Some do go beyond the terms or even break the law and aren’t stopped because the

borrower does not actually understand the agreement they signed or the laws and regulations.

The path toward losing your home to this scam is actually quite simple. The first phase is designed to fabricate the default, and typically begins with one, or a combination of ways to arm the servicer's records with false data:

1) When the servicer decides to manipulate the date the payment is received in order to artificially create a late payment.

2) When the servicer applies part of the payment to something other than principal and interest and creates a partial late payment or deficiency.

3) When the servicer decides to "force place" an insurance policy on the property by claiming the homeowner has not provided proof of insurance.

4) When the servicer pays your property taxes late, then adds their late penalty to your account without your knowledge.

Any or all of those processes result in at least one month of the account being past due and a negative note is made in the credit report (which effectively prevents the borrower from refinancing). It also helps the Private Mortgage Insurance carrier keep the policy in effect on the loan, which is why these insurance companies have investments in servicing companies in the first place – a late payment or two allows the lender to keep the insurance in force.

IF the borrower has anything more than about 10-15% equity in the property, it is to the servicer’s advantage at this point to not aggressively attempt to collect. In fact, if the borrower makes contact, the servicer will engage in delay tactics to avoid resolving the problem in time to prevent default. If the equity position is considerably less than 10%, the servicer does not have as much leverage, nor is the opportunity as great and they will typically be more aggressive in collection efforts and more willing to keep the loan in

force.

In the case of force-placed insurance, it is to the servicer’s advantage to ignore the borrower and any proof of insurance as long as possible, again to keep the borrower’s credit status in a negative light and to maintain their relationship with the insurer they contract with. These policies are extremely profitable because they provide absolutely no coverage for the homeowner. They protect ONLY the value of the loan if the property is destroyed.

If the servicer has analyzed the opportunity and marked the property for default and recovery, the next payment received will be rejected as being insufficient. If it is accepted, the application of the funds leaves the loan sixty days past due. Typically, the scam now moves toward formal legal notice of acceleration in order to coerce the borrower into signing a highly-profitable forbearance agreement to somehow "save the home." The servicer rolls thousands of dollars in penalties and an incomprehensible combination of

legitimate and illegitimate fees into the agreement and the homeowner is left with no

choice but to sign it or lose their home. The amount demanded will be calculated to take as much of the homeowner’s equity as possible.

If the homeowner decides to sell the property to get out of the situation and take their equity, they will find the payoff amount (which in the last month of the scam will take longer to get than the amount of time left before foreclosure) strips them of their equity. That combined with their artificially-damaged credit rating helps keep the victim trapped.

If the borrower cannot pay the amounts demanded in the forbearance agreement, the servicer will have one of their network of specialized attorney firms foreclose and the property will be sold, typically at a county auction or through their real-estate network.

If the borrower signs the agreement, they will soon be recycled through the process with yet more late payments and fees. But in the terms of the forbearance agreement, they may find they have signed away any legal protections they may have already had, including the right to sue the servicer for fraud or misrepresentation.

In the end, if the homeowner cannot afford competent legal representation to stop this fraud, they lose their equity and in many cases, their home.

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You said it yourself, people get ARM's all the time without knowing what they are signing. You can bet that the predatory loan officer knows what he is manipulating the client to sign.

I signed a loan to consolidate my credit cards. Prior to re financing I was paying a total of $2300 for my mortgage and all my credit cards on a monthly basis.

The loan officer sold me a bill of goods telling me my new payment would be $2050 per month, thats almost a $300 per month savings. Of course I jumped on the deal.

Two months after my new "morgage banker" closed the loan with me they sold my loan, and my financial well being to a known mortgage servicing scammer EMC mortgage.

After my first payment to EMC they i nformed me that the prior loan holder had not calculated insurance into escrow and there was an escrow shortgae for taxes as well. Anyone who has ever closed a loan should know that they always put aside 6 months of escrow for taxes and insurance. So it was pure crap to be told there was an escrow shortage.

Shortly after that EMC allowed my flood policy (which I had for 7 years) to expire. EMC told me that my house was no longer in a flood zone. I guess someone moved the two canals on either side of my house.

Two months later EMC tells me that I am in violation of my loan agreement for not having flood insurance and they force placed me into a policy direct from them, at a cost triple the going rates. It took me 3 months to straiten out that mess only to find the rate I had been paying to my old insurance company prior to cancelation had gone up from $850 a year to $1250 a year.

All the while my original monthly payment of $2050 per month had gone up to $2450 per month. I started drowning in bills and found it was impossible to stop the steady increase every 4 or 5 months. And this was the action i was getting prior to the ARM adjustment by 2 1/2 years.

The past few weeks I researched EMC and found they are in the business of depleting suckers equity and taking their houses. Trust me, the whole economy is in a downward spiral and sub prime sharks are to blame for their reckless behavior. Fraud is fraud, whether its 3 card monte or equity draining. But dont take my word for it, here is some interesting reading material.

I have no idea why you would have signed the documents in the first place. You need to take part of the blame yourself, although you did fall for the notorious pitch of, "I can save you $250.00 per month by consolidating your debts." Nothing is free, and these "salesmen" were trained to tell you that they can "lower your interest rate," or "lower your payments."

Regarding your escrow not being withheld, you were the one at fault here for not asking questiions and reveiwing you loan documents when you signed. Ameriquest was notorious for selling these deals, only to have the homeowner find out later that there never was an escrow account set up with the new loan package.

I have to burst your bubble on the six month reserve thing, because Federal RESPA law dictates that only two months reserves are allowed to be kept in escrow and any excess must be refunded to the borrower. Also this statement must be presented to the borrower once a year, in writing, showing a hypothetical account noting property tax payments, and insurance payments will be deducted. At the lowest point of balance, no more than two months reserves may be retained. (This prevents the lender or mortgage servicer from maintaining to much of the homeowners money in escrow.)

On the brighter side, I am glad that you found the msfraud site. It is a very good site for these related issues.

Simply put, you fell for a sales pitch, and many others fell in the same trap. On the flip side, reputable mortgage brokers, who make every attempt to educate their borrowers, and to place their borrowers in the very best program for their situation, lost loans to "competitors" because the rate was lower (ARM vs. fixed rate) or the payment was lower (oops, did you want an escrow account).

In reviewing your closing papers, was there an escrow account set up?

Is there a mortgage servicing transfer clause not filled out,stating that they would retain servicing of the loan throughout the term?

What did the original documents say about the flood insurance (whether or not it was necessary. If the original loan documents stated that you were not in a flood plain, then flood insurance would not be a necessity (whether or not you are in a flood plain or not) A new mortgage servicer must abide by the orignal loan documents. In other words, if you were not required to maintain flood insurance, hten the lender would not be able to "force place" this insurance on you. That would be fraudulent activity of the servicer.

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  • 3 weeks later...
I have an honest, sincere question. Can one of you explain how you were the victim of mortgage fraud? I know predatory lenders exist, but I've also read many stories about people willingly getting ARM mortgages when they didn't fully understand the contract. Plus, I know a lot of people were buying houses with their hearts and not their brains. Oh, they knew that the rate would adjust, but they never took the time to think how they would pay if the rate skyrocketed.

Again, I know there are predators out there, but I also believe in personal responsibility. When I bought my house, I took a new home buyers course that explained the entire process.

I'm not trying to blame the victim, but I just don't understand. No one held a gun to anyone's head and made them sign the papers.

Can someone tell me their mortgage fraud story so I can understand?

In my case, there was an accumulation of fees from the very first statement I received. We were paying on time. The fees were "BPOS" and "Inspection" fees. When I inquired about these fees, I was told it was "standard fees in servicing the loan" and I thought it was worked in with our payment. This snowballed and when we did fall behind due to a period of unemployment, they wanted thousands of dollars to bring us current. I tried working it out and I was met with demands for payment of amounts they did not explain to us - FEES, FEES, FEES! As it turns out, what we did pay on time and amounts we paid that were late, were going towards these fees, not towards principal and interest. And we were being charged interest on the fees, too!That is why we owed them so much more than what we thought we did. If I didn't pay by the due date, I had sent in what the statement said "if you pay after this date, pay this amount" in other words, I paid the late fee when I didn't pay on time. My accounting wasn't matching theirs. They tried tacking on insurance and making us pay for it. We must have sent proof of our own insurance a dozen times.

In the end, we caught on because we were not escrowed, and the statements kept reporting an escrow balance. Last fall, my insurace agent sent us a letter thanking us for our payment of our year's home owner's premium - the problem with that was that we don't pay it once for the year, we'd been paying it monthly from direct debit of our checking account since Feb. '04 when we bought the house. The servicing company paid the premium, charging us interest, and making us owe on an escrow account that had no reason for being! Turns out that the servicer had also paid on property taxes that we hadn't paid yet. So our payments did not get applied to the P&I, they got applied to other things, like made up fees and "suspense accounts"

In our case, ARM had nothing to do with it. It didn't adjust until just before we discovered this fraud that's been going on for 4 years and by the time the payments jumped out of our comfort level, we'd already stopped paying due to Chapter 7. Learning that our mortgage is esentially a sinking ship, we're jumping off.

I hope that helps you understand. I am perfectly willing to admit that I accepted the deal I was offered, although I didn't understand every detail I thought I was ok, we had every intention of refinancing under the guidance of our broker, and we did miss some payments, but I firmly believe that this kind of fraud is so corrupt it wouldn't have mattered if I was a perfect pay or not. Because the fees were from day 1, when we had good credit and were working on keeping it that way by paying as agreed. But once we had trouble, it was like they smelled blood in the water and closed in for the kill. I believe in personal responsability as much as anyone however I also believe that ignorance and hardship on the part of the homeowner's can not justify being de-frauded out of home, money, and credit by these companies.

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