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Question to Readers On Mods
I’ve been hearing a story this past week that intrigues me. I can’t
prove it, but I would love to know if it were true. I will throw this
out to the blog world and see what comes back. Who knows, we may get
some clarity on a key issue.
I have heard this story directly from a few folks in Nevada. I know
someone in NY who has a similar story. But when I heard from yet another
person in Florida this morning I said, “There must be something to this”.
My sample of information is too small. I want to know if this is a
coincidence or is there something bigger and nefarious afoot.
There has been (from my narrow perspective) a flood of approved loan
mods in just the last few weeks. People who were on the edge and not
paying a mortgage get a letter in the mail that says their application
has been approved. After weeks and months of hanging on a phone and
waiting for an axe to drop some relief arrives.
Nothing particularly unusual about that. Mods are granted all the time.
But I was struck by the timing. The foreclosure story is exploding
around the banks. It is not possible to see where this will end but it
is a certainty that it will cost the banks big time.
What might a banker do if he was sitting on a pile of defaulted
mortgages and now the traditional route of foreclosure was blocked?
Adding to the problems of the bankers is that there is no assurance that
they even have a valid claim to foreclose given that so much of the
paperwork is tainted.
One possible response would be to get all troubled borrowers to reaffirm
their debt, the second is to get the trouble borrowers back to paying
something on the mortgage, even if it were a fraction of what was
formerly owed on a monthly basis. A loan modification would achieve both
results. When a borrower signs up for a loan mod they sign new papers. A
portion of this process will re-establish any loan balance that is due.
The language in the mod could have new foreclosure terms that eliminate
the banker’s problem with past tainted documentation. Once a borrower
makes a few months of new lowered payments they are, in effect,
confirming their acceptance of the new terms.
Most Mods go bust in six months. So little is accomplished from the
lenders perspective. But what if the lenders motivation for doing a Mod
was not to get a borrower to a loan balance and monthly nut that they
could pay, but rather the motivation was to circumvent the foreclosure
trap the lenders are in? A Mod could legally resolve the problems.
The story I have been hearing is that tens of thousands of Mod letters
have been sent by servicers in the past few weeks. Anyone who had an
application pending is all of sudden getting the happy news in the mail.
Question to the audience: Has anyone else heard or seen evidence of this?
If this were to be true is would be a very big slap in the face of the
banks. For years they have been fighting off Mods. But when the tables
turn on them due the unforeseen explosion and chaos in foreclosure the
banks turn on a dime and go into mass Mod mode. Should that be the case
it would prove (once again) that the banks will do anything to screw
their customers. The mod is just a vehicle to perfect the mortgage lien.
Bruce Krasting
bkrasting@gmail.com
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You over-estimate the tea partiers. They love to dress up for their afternoon demonstations and wave signs and shout slogans but would never risk being late for their kid's soccer game or for dinner and would abandon their protests in a heartbeat if a thunderstorm or cold front came sweeping into a demonstration. Can you really see these flabby, untoned whities bearing the burden of a revolution? The government knows just what it is doing. Keep the citizens tranquilized with just enough comfort and give them small vents such as Hannity and Maddow and and there will be no uprising.
How often do perform oral sex on Barrack Husseing Obama?
Economy got you scabbing fluffer jobs, does it?
You mean "the right wing military industrial complex."
Odd how you left out NASCAR....
He didn't want to violate Kunstler's copyright...
And don't forget NASCAR is sponsored by Bank of America!
It only takes 5% of the population to propell a revolution, with another 30-40% going along.
You are a raging ideologue. Are you saying the "political Left" has done nothing to help create this mess???
Besides YOU are fighting the wrong war. The "war" IS against BOTH PARTIES. BOth have served Wall Street and banksers for campaign bucks. BOTH ARE TO BLAME. And you rage against the red state team.
What a pathetic loser.
What the? Where do you get that I am absolving the Political Left? I am merely saying the Left is so pathetic, the Powers That Be don't need to be worried about them. They are beneath contempt and it is the Right that must be managed because it's through them the change might come. Besides, I am speaking of the Bases, the footsoldiers, not the leadership. In the end, the leadership is just two factions of the looter party.
Chill, bro. We're on the same side. Chill.
Change aint gonna come from either side. Its AMERICA that needs to adapt, change and re-adjust to reality all over again (after the NEW reality was thrown by the way-side between 1971-2008)....
My take Bruce is that the banks and mortgage servicers are very nervous and are trying to establish "good faith" actions to take to court. This actin to me signals that they KNOW they ARE going to court and in doing these mortgage mods they are establish that they are "trying" to address this mess, and I also think that they will bring up in court that the only loans that need to be addressed under the "foreclosure" part of the civil action are the non performing loans, and the mods would reduce the number of loans and cases there.
However I think they are really concerned with the MBS investors such as pensions and trusts come to sue them, and I think the same reason applies. When these guys go to court and if they lose they will have to show their assest, and I think the banks are going to try to argue only the "non-performing" ones need to be addressed.
MY BET is that the banks will try to establish an "acceptable percentage" of non-performing loans in a MBS, REIT, Trust, Pension, etc., and then say "look we are there" so there is no "criminal liability".
I think these guys are in pre-emptive damage control and the lawyers bringing forth suit needs to concentrate these cuits and cases to the "dates at hand" and look at ALL the MORTGAGEs otherwise there will be lingering problems industry wide.
As an aside to your comment, an added reason for mods is to get people into mortgages with recourse. Walking away from your house is one thing when all they get is a ragged-out house. Knowing that they can follow you to the ends of the earth for a deficiency is another. Don't re-fi with a loan unless it non-recourse -- check with your State and "normal" transactions for clarification.
Of course it's to get them to reafirm the debt. They do the same thing with credit cards that have defaulted. They call people 7 years later and try to work out a payment plan. They have no legal recourse to do this but if they can get the people to reaffirm the debt then they can continue pestering them.
People are going to have to do the same thing with mortgages. Never try to catch up. Never try to affect their cure rate on defaulted debt. If they don't mod you down to 1/3 price or less they aren't doing you any favors.
THE “DELAYED/LATE PAYMENT” SCAM TO RAILROAD BORROWERS INTO FORECLOSUREOCTOBER 15, 2010
October 15, 2010
We previously wrote on this website about various scams being engaged in by “lenders”, servicers, “trustee” banks, and the like with regard to “temporary forebearance agreements” which are, in our view and experience, nothing more than a method for the foreclosing parties to pull money from the borrower to fund their operations and attorneys for an ultimate foreclosure when the “permanent” loan mod request is denied. However, based on the literal slew of e-mails we have been receiving lately, there is apparently a new scam which seems to be intentionally designed to railroad borrowers attempting to work with the foreclosing party into a fraudulently manufactured foreclosure.
The fact pattern is always the same: the “lender”, servicer, etc. reaches out, at least on paper, to the borrower facing or in a foreclosure as to a possible workout with a payment schedule. There is an agreement made, and the borrower makes the first payment on time, receipt and delivery confirmed (e.g. certified mail RRR, Fedex, etc.), but the “lender”, servicer, or whoever made the offer then intentionally sits on the borrower’s payment, does not post it until after the “due date”, and then claims that the borrower defaulted on the agreement and proceeds to foreclosure. To add insult to this injury, many of the so-called “workout” agreements contain waiver of defenses clauses where the borrower gives up the right, by contract, to later contest or challenge the foreclosure.
This is plain, outright, blatent fraud. There is absolutely no excuse whatsoever, under any circumstances, for a foreclosing party who sets forth a payment schedule which the borrower complies with to not code the payment as received on the confirmed day of receipt. It thus appears, under the totality of the circumstances and in view of the frequency of the fact pattern, that what the “lenders”, servicers, and others are doing is to falsely lure the unsuspecting borrower into a set of false representations for the express purpose of fraudulently manufacturing a foreclosure while depleting the borrower’s liquid reserves which could have been used to defend the foreclosure.
In view of the recent revelations in the depositions of employees of the law offices of David J. Stern where a multitude of instances of illegal and unlawful conduct were revealed (which actions were engaged in to force foreclosures through the system due to the pressure by the lenders, etc.), we are not surprised at what we are hearing. What needs to be done, however, is to vehemently challenge these fraudulently manufactured foreclosures and, if appropriate under the proper circumstances, assert claims for money damages as well.
Jeff Barnes, Esq., www.ForeclosureDefenseNtionwide.com
Small nit: The home page of your website appears to have the name ForeclosureDefenseNationwide.com with an "a" but, incredibly, both here and at the home page of your website, you link to this non-functioning syncopated version of the address: ForeclosureDefenseNtionwide.com
Now while I am prepared to applaud your mission, I fear that this kind of systemic typographical error tends to undermine your credibility.
Thanks for the update, it is not my website, just something I posted for others to consider.
http://foreclosuredefensenationwide.com/
Could the home owner in dire straights claim they signed the new paperwork under duress?
Does this really perfect the lien?
On the other hand what if their paperwork is completely lost because of a shredding party?
Lots of fun.
At this point it seems the Desperados will do anything to find a footing off this falling cliff. Would not doubt it if what you say is indeed happening !!
Bruce, from a mark-to-market perspective how does facilitating the foreclosure process help the banks ? Once they foreclose a property dont they have to write down the loss to their flawed balance sheets ?
The banks are making a bundle right now due to ZIRP. So they have the ability to take losses on a quarterly basis. They want to clean up their mess on a long time frame. They can control earnings that way.
I think that the banks are not doing so much with foreclosures for their own book of bad loans. I think the foreclosures have been coming from mbs and other pools. A big chunk has come from Fannie, Freddie and FHA. In this case the banks are just fronts for the actual owner of the loan.
MERS--a case study of antisocial clever-strokes [the enabler of all fraud].
Using the law against the law...isn't that what it is?
Isn't flawed paperwork a big part of the problem? Only the owner of the mortgage, or his agent, can initiate a foreclosure. How does the bank legally initate foreclosure if it cannot prove who the owner of the mortgage is? How does the bank get permission to modify the mortgage if it cannot prove who the owner of the mortgage is? How does the bank legally modifiy a mortgage if it cannot prove it has permission from the owner of the mortgage?
If Bruce is right in his suspicions, this is about reducing the likelihood that the evicted homeowner will sue (by not evicting them) - and less about perfecting the paperwork.
If only the owner of the mortgage, or his agent, can foreclose, then only the owner of the mortgage, or his agent, can modify what he owns. If the bank can't prove who that person is ...??
IMO again, if all loans that went through MERS (62 million) were found to be defective then essentially all of the mortgages would instantly become unsecured loans, which means the losses for banks mount further from where they currently are. The loss rates begin to double and triple. For example say the bank sues for a money judgment in Texas for the unsecured mortgage, they can not lien the house due to homestead exemptions. Nor can they garnish wages in Texas, so it could become a free house. Other states have different amounts for homestead exemptions.
It makes total sense for the banks to start to offer mass loan mods in an attempt to re-secure the note to the house.
And total sense for anyone that was ignored by these greedy dumbfucks for months despite an obvious willingness to find some kind of terms to now call their lame bluff and spend their mort payment on seeds and ammo.
http://bit.ly/dAeUpv