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Today, again like a reoccurring nightmare, the institutions of high finance are up to their skulduggery again. We have all been taught that home ownership was a right of passage for a lot of Americans. Sadly, though, that American dream has fast become a tool for our financial institutions to reap enormous profits at the expense of the homeowner. What has been hidden for years are the ways banks and mortgage companies trick the home buyer not only into adjustable interest rates, but all other forms of financing that is basically fraud committed by those banks and mortgage financiers.
How this occurs is that the banks use credit as the agreement between the buyer and the lender. To explain this further Henry James sees a house for $100,000 and goes to Bank of America to which the bank issues a credit agreement dated January 28, 2019. This agreement has the credit limit of $100,000 from grantor to lender. The final maturity date of this credit agreement is January 28, 2049, with a variable interest rate. We have to understand the terminology here, borrower is Henry James, and the word grantor also means Henry James. A 30-year adjustable rate mortgage assigned to Henry James. But, here lies the fraud, no money exchanges. It is all based on credit. So for 30-years with interest rates that fluctuates Henry James by January 28, 2049, will have paid Bank of America more than $250,000. The seller, meanwhile, receives Bank of America's credit for the total amount of the original credit agreement for Henry James. When in fact, that credit agreement should have read from "lender to grantor." There lies one of the fraudulent tactics that banks use to reap more profits.
Another fraudulent practice that is still happening, just like in 2008, bank backed mortgages and the mortgage service industry are still being played out like a game of heads. They, the banks and financial institutions, win and tails, you the homeowner loses. In certain sports where a simple toss of a coin we make the difference between winning or loosing is an analogy we can use when describing what is really happening in the mortgage business. But, in the banking and mortgage business it is a two-headed coin. Not only in mortgages, but credit cards are a win win for every financial institution. In an age of high tech thievery when so many credit cards accounts have been compromised it is no wonder that the United States in so immersed in internet and banking schemes, lies, malfeasance and fraud. Have we learned anything from the financial disaster of 2008? Apparently not, because ever since 2008 so many major banks, like Bank of America have consistently been selling off their mortgages to mortgage service companies and other financial institutions. The mortgage service industry has become the Frankenstein monster for the millions of homeowners all across the country. Today, banks like Chase or Bank of America have become synonymous with their accomplices in the mortgage servicing industry. And, lately a tip of a financial iceberg has ripped open a financial gash, like on the Titanic, that is poised to sink so many homeowners into the depths of debt and foreclosure.
Case after case have come to light where homeowners face foreclosure due to the increased practices of banks selling mortgages to mortgage servicing agencies and other financial lending corporations. There are still more foreclosures happening today as a result of these mortgage servicing agencies grabbing existing mortgages from banks all over the country. As a result, there has been an epidemic of mortgage servicing fraud where the average homeowner is at the mercy of these servicing conglomerates.
Take the case of Henry Smith, a hard working American who thought he had achieved the American dream, home ownership. It was only after four months that Henry got notice that his mortgage with Bank of America was sold to a mortgage servicing company called Nationstar. Like clockwork Henry sent his monthly mortgage payment to Bank of America, but after three months sending his payments to Nationstar, Henry got notice they were beginning to foreclose on his house. Little did Henry know that Nationstar was failing to apply those monthly payments to his account. Some short oversight. With Henry's current income it left no room to hire a lawyer or an auditor to go over his account to determine what the heck Nationstar did with his payments.
This is one type of mortgage fraud that is only increasing in cases where so many are falling victim to these mortgage servicing agencies and losing their homes. Henry tried to show Nationstar his canceled checks but they continued to foreclose on his house anyway. What is so alarming not only in the number of actual incidences like Henry, but once the house is resold these mortgage serving companies use those hidden payments to pay the costs of the foreclosure. This is typical of the mortgage fraud that is currently used by so many mortgage servicing companies. Without the aid of an attorney people like Henry are literally screwed. In today's economy there are so many who cannot afford the $2,500 plus retainers to come to their rescue to save their homes. In Florida, like so many other states, you could file a complaint with the state's attorney general, but even if you have all the proof in the world that the mortgage service company like Nationstar has already set you up to fail, the chances of them staving off your foreclosure is very improbable.
What is so troubling is the fact that when one typically walks into a major bank and is approved for a mortgage, you the borrower are really not their customer. It turns out that lending companies and investors are the banks real customers. As a borrower, today we are literally being forced into a large scam. Like Henry Smith who is just one of millions in an ever growing pool of what the financial services industry deliberately labels as a sub-prime borrower just waiting to be taken advantage of.
The number of mortgage servicing scams have only increased since 2008. Banks and their willing accomplices continue to reap huge profits while so many homeowners have been victimized by mortgage fraud and the malfeasance of lending institutions all over the country. What is so horrendous not only to the individual homeowner, but the staggering number of instances of foreclosures that are still occurring? In essence, these mortgage services continually make huge profits by deliberately making fraudulent claims on homeowner's accounts to force them out of their homes. One of largest types of mortgage fraud is designed to fabricate the default by using false data added to mortgage account records.
There are other ways for mortgage service accounts to become victims of fraud and malfeasance. When the banks sell bundled mortgages to these service companies like Nationstar, too many decide to manipulate the date payments were made by people like Henry Smith in order to create a late payment. When the servicer applies part of the mortgage payment to something other than the principal and interest this creates a partial late payment or deficiency too. When the servicer decides to, what they call, force place an insurance policy on the property claiming the homeowner has no proof of insurance is yet another scam. When the servicer pays your property taxes late, then adds their late penalty to your account without your knowledge happens more frequently than anyone can imagine.
Anyone of these instances results in at least one month of an account being past due. When that past due notice comes out it creates a very negative impact on ones credit report. This negative credit report does in fact prevent one from refinancing even with the current emphasis on the president's HARP program. Any type of refinancing does require a high credit score. Today, too many Americans can't and won't be able to take advantage of any refinancing programs all because of manipulated credit scores by these mortgage service industries. This is another factor why there's still is so many foreclosures occurring.
The people that are most affected by the mortgage servicer scams and fraud are homeowners who have a modest amount of equity in their home. Seniors are most susceptible in being victimized because their homes are almost paid off. Even if one is tempted to sign a reverse mortgage one word of caution, don't. That old saying, "If it sounds too good to be true it probably is" is so evident today with all the hype by lending institutions trying to make seniors who have equity built up fall into yet another type of predatory lending. And, in too many cases those that have falling prey are now what many call "victims of purgatory lending" by these same lending institutions. Their lives are now pure hell.
In the instance when there is a force placed insurance on an account it makes the mortgage servicer more inclined to ignore the borrower, you the homeowner, and any proof that they may have as long as possible. This is solely to keep the borrower's credit at a level where they won't be able to refinance and to keep the borrower to maintain the relationship with the insurer that the servicer's has already contracted or partnered with. This makes the mortgage servicer more money because they provide absolutely no coverage for the homeowner. They only protect the value of the loan, including interest if the property is destroyed. Now if the mortgage servicer has analyzed the opportunity and marked the homeowner's property for default and recovery, the next mortgage payment will be subsequently rejected as being insufficient. What this means is that in order to stave off foreclosure the borrower practically is forced through subtle coercing by the mortgage servicer into signing a highly profitable forbearance agreement in order to save his home.
These mortgage service companies like Nationstar actually don't loan money. They operate in the lending industry after the fact. These mortgage servicers take on functions that banks or the original lender doesn't want. Today, it is called backroom functions of handling payments, escrow accounts, annual statements, collections and all other financial matters that the borrower has. It is these backroom functions that have increased the profitability of the mortgage service industry. There is little or no oversight as to the way they coerce and manipulate homeowners into falling into the predicaments where the chances of foreclosure remains a constant reality for far too many Americans today.