Homeowners Plead for Help from Abusive Mortgage Servicing Practices; Please Stop this Madness...

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Loan servicers act as middlemen between borrowers making mortgage payments and investors who own their loans.  It's the loan servicing company that is responsible for  managing the loan. Though they play a crucial role in the subprime mortgage mess, they continue to have virtually no oversight. The mortgage servicing industry is currently unregulated, equating to a system where no one is actually watching how the store is run.

Sadly, here's yet another in a long string of stories that continue to demonstrate the need for regulation and real oversight in the mortgage servicing industry.  

The mortgage industry's primary goal is to make money and concern for borrowers is often completely missing from the scenario. With little incentive to work with borrowers, mortgage servicers do little to help homeowners work out loan modifications with the lender -and the lender appears to do little but condone these abusive and unfair practices. And here, Kevin and Rosemarie Kelly share their experience to help shed light on what borrowers are left to deal with;

Dear HSBC & Fannie Mae: Please Stop this Madness and do the Right thing!
By Guest Bloggers: Kevin and Rosemarie Kelly

After 13 years with Lexis Nexis, my position was  outsourced in August of 2008.  We struggled, but kept up with the mortgage payments.  I had only been late about 3 times since the beginning of the loan, and not by more than one day.  Our property is not "underwater", it is probably in positive equity of around $7 to $10 thousand.

By February of 2009 it was clear we couldn't sustain the payments; we knew we had to do something. I contacted HSBC over their secure message center online system.  I was contacted by a rep who talked with me about my situation and said she was sending paperwork.  In March, I received the financial disclosure package, filled it out and sent it back in April.

I heard nothing, and finally called in July and was told it was "in the works". On 8/13/09, I received the forbearance agreement. I read it carefully and the only thing I wasn't comfortable with was Section G:!cid_image001_png@01CA8DA1 kevin kelly 3.pngThis section explicitly says that the servicer will report my loan as delinquent if not current under my loan documents.  We were not comfortable with that, our credit was great, in February of 2005, our credit scores were 711 (mine) and 773 (Rose), with no delinquencies ever reported. I called HSBC and left a voice mail.

On 8/25 I received a call from David Cory, Loss Mitigation Specialist with HSBC.  He was the one who sent us the forbearance agreement.  I told him we would not accept HSBC reporting our loan as delinquent.  We had been proactive about seeking out a modification  to preserve our credit, not to ruin it.  I explained that credit reports are factors in hiring managers' decision making.  A bad credit report could be the difference between getting a job and not. I told him since I was having such a hard time getting work in my field, that I would probably have to start a consulting firm or other self-employment venture, and our credit was crucial to that also.  I told him that if there were no alternative other than destroying our credit, we had options.  I have a 401(k) account I could tap into, but obviously didn't want to.  He assured me that although the first step in becoming qualified for a loan modification was to enter into a forbearance agreement, since we were not in default upon entering the agreement, that status would prevail throughout the term of the forbearance agreement.  I took him at his word. 

On 8/26, we signed and mailed the agreement to HSBC, along with the first partial payment. We continued to make the partial payments through November.  On 11/12, we received a document from HSBC regarding servicemembers civil relief for default loans.

On 11/16, we received a notice of default including a list of programs available to us and a list of information they needed.

On 11/20, I received a notice of termination from Discover card on a zero balance, $15,000 line of credit, credit card. The same day, Rosemarie received a Bank of America Credit Line Reduction from $26,000 to $8,200, roughly $300 more than our balance with them. 

On 11/24, Rosemarie received the same notice of termination from Discover Card on a zero balance, $20k plus line of credit ,credit card. 

On 11/28, I left an urgent voice mail for David Cory, the first of 14 voicemails not returned since then. 

On 11/30, I looked at our credit report. My credit score is now 623, while Rose's is 615.  A serious delinquency had been reported by HSBC, in the amount of $3203.  I called David Cory and left a voicemail.  Then I called Customer Service, and spoke with Tom for 33 minutes.  He treated me with condescension and attempted to make me feel foolish for not understanding Section G. I got nowhere with Tom. 

On 12/01, I called Customer Service and spoke with Mark for 89 minutes.  I requested that HSBC send a Universal Data Form to the credit agencies to correct the bad credit reporting.  He was belligerent and treated me disrespectfully. He told me that wasn't going to happen.  When I told him I lost my job, he chuckled.  I advised him that Cory had verbally promised me no bad credit reports. He laughed at me and implied I was foolish because it says right there in Section G they will report me as delinquent.  I told him I did feel foolish, for believing anything an HSBC rep told me, and not recording it.  He told me my only recourse was to find out when that call occurred and call back to get the call records pulled.  I pointed out to him that it might be easier for HSBC to check David Cory's phone records for late August rather than have me go through every cellphone call I made, since they had a database of them.  He finally agreed, and we determined the call occurred on 8/25 after he looked at the comments on my loan.  He promised me he would put in the request to pull the call.

On 12/9 we received a Notice of Default that said if my obligation of payment of the past due balance was not received in thirty days the entire balance of the loan would be accelerated and become due immediately.

On 12/15 I called HSBC and spoke with Javed Basha, advising him I was recording the conversation.  He told me to ignore the default letters.  He told me my loan wouldn't be accelerated because I was in a forbearance agreement. I asked him what the status was on the call log request; there was none.  I asked he put another request in to pull it, he said he would.  He confirmed that late penalties are not reported to the credit agencies.  He confirmed the total amount required to bring it current. After hanging up, I immediately went to the local branch of HSBC and paid the loan current, having borrowed the money from my wife's parents.  Based on what happened on the last time a representative from HSBC told me something over the phone that was different than what was on the document in my hand, I determined my only recourse was to bring the loan current or risk foreclosure and further credit destruction.
On 12/16 I received December's statement which said the loan was current.  On 12/18, we received correspondence from HSBC regarding the Homeowners Affordability and Stability Plan, advising I call them to discuss.  In that document, on the page with the Fannie Mae letterhead, it discussed the plan, including mentioning that there would be no fees for taking advantage of this plan.  Although on Fannie Mae letterhead, this was signed by Peter Gutowski of HSBC.  I had already been charged over $450 in late fees since September.  On 12/20, I received an offer from HSBC for a limited term 0% credit card. 
On 12/21, we received correspondence from a foreclosure relief company.  On 12/30, I called HSBC to check on the status of the call log request and discuss the most recent correspondence.  I was on hold for over 20 minutes.  I selected the option to leave a message, and got a message saying the mailbox was full. 

On 1/4/10, I received correspondence from Empire Mortgage offering a refi.  That same day, I called HSBC and was on hold for over 20 minutes, and had to hang up to go to an appointment.

Between 11/28 and 1 / 4, I left 14 voice mails for David Cory.  He has never returned my calls.
We are devastated.  Our credit will not recover for seven years.  We were lied to at worse or treated with blatant negligence at best.  We feel that  an organization included in $1.25 trillion dollar pledge for GSE securities purchases by the federal government intended to shore up their assets with the specific purpose of enabling new credit and retaining existing credit (by avoiding foreclosures if possible), has reneged on their obligation.  By allowing HSBC to service their assets and deploy these practices (which by design result in predatory fees issued to loan bearers), FANNIE MAE has at the least committed grave negligence and is complicit in unfair trade practices perpetrated by HSBC.  

We feel we can't accept anything less than the following outcomes to this debacle:

• HSBC to issue a Universal Data Form to the credit bureaus, erasing the delinquency from our credit report.

• HSBC to write off all late fees. I was never late until I entered into the forbearance agreement. No fees should be assessed.
• Forensic Audit of the mortgage and note documents. I do not suspect the loan is in violation of federal law, but the treatment we've received from HSBC warrant this.
•Since the loan is owned by Fannie Mae, current, and the property is not underwater, we hope for a loan modification refinance based on our income and economic situation, as laid out in the Making Home Affordable program, with no fees assessed by HSBC period.  We feel it would be best to wrap the second mortgage into this refi.
•Possible Class Action against Fannie Mae and HSBC for negligence, unfair trade, and whatever the best legal minds can come up with to make the stakeholders and decision-makers within these organizations rethink their strategy, or at least annoy them. HSBC may feel that foreclosures are in their best interest when considering the fees assessed to process a foreclosure are far greater than their servicing fee for managing the amortization of current loans. Fannie Mae is responsible for the organization they hired to manage their loans. Especially when their actions are contradictory to the mandates laid out in the bail-out requirements set forth in the GSE mortgage backed securities program. 

In conclusion, we are not going to take this lying down.  We are not going to fold under the predatory and unfair trade practices of HSBC and implicitly condoned by Fannie Mae.  We are going to fight back every way we can think of.

Anything anyone, including Consumer Credit Counseling can do to help us is very appreciated. We are in a very scared place and feel we need all the help we can get!

Thank you,
Kevin and Rosemarie Kelly

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Kevin and Rose,

I wish that I could say that your story was unique. There would at least be small consolation in knowing that your case was an anomaly. Unfortunately, it's not. It's more par for the course than not.

Couple of things that I can offer you which may be of little comfort at the moment...

- What you are looking for with regard to the phone call with David Cory is something along the lines of a "contact history report". Note holders/servicers may call it different things.

- you may want to read up on the Horoski case in NY before Judge Spinner - http://www.nypost.com/p/news/local/judge_kos_mortgage_to_slap_bank_28ZS1oW8Y58z6gu1AQbWMI

- Gear up. Get your docs and evidence together. Start working on a time line of events documenting every name, date, phone number, conversation, and corresponding piece of paper you can with regard to your case. You're going to need it. This will rapidly become all about the paper trial and whose is better.

- Hit your county registry/recorder of deeds and pull your chain of title. Grab anything and everything that has been filed to date and probably go back a good 5-10 years before the current mortgage in question.

- Is HSBC your note holder or servicer? This could be an important question.

- Start reading up on "Qualified Written Requests" in general. One good place to jump off from may be http://www.creditslips.org/creditslips/2009/08/what-does-respa-have-to-do-with-consumer-bankruptcy-cases.html

- You may also want to sit down and read "Where's the Note, Who's the Holder" to get a basic concept of Article 3 of the Uniform Commercial Code.

I'm not up to speed on the inner workings of loan mods but something sticks in my head that says that as long as you are pending on a modification foreclosure is not a possibility. Don't quote me... Can't remember where I saw it or if I'm quoting it properly.

Wish I had better info for you. Depending on what state you're in you may be able to find competent legal counsel nearby.

Feel free to either drop me a line directly or ask Denise to put you in touch with me. Don't know how much assistance I may be but I'll be happy to help if I can.

Hang in there.

Mike Dillon
Manchester, NH

Thanks Mike! i've been recording all calls and scanning all correspondence and making backups since the foreclosure threat started. should have been recording in august. your info above is very helpful, thanks alot! checked out your site and will read more later. we'll get em!

Thanks Kevin and Mike for the info. I am in a similar debacle with HSBC Mortgage Corporation USA and have been back and forth with Javed (Loss Mitigation) all week. There are glaring similarities to our stories. HSBC services their own loans and they are evil. They have started foreclosure on my home although I've been paying my mortgage per my settlement documents all year.

Although I have a waiver of escrow and pay my taxes and insurance on my own (have been for the past five years) HSBC paid my property taxes and forced escrow because they said I cut it too close. Never mind that my taxes had already been paid. I provided them with proof of payment to the taxation office and the taxation office confirms the payment on letterhead in addition to sending HSBC a refund for OVERPAYMENT of taxes. Still to no avail HSBC refuses to reverse the escrow. They assessed my account for two years of taxes (what they paid and what they deem they should be collecting to pay on my behalf) in addition to my principle and interest.

I have spoken to not so polite Shannon in the Customer Resolution Center, Rebecca who writes incoherent letters from their escrow department,and have had numerous conversations with folks from their India CS and New York CS offices. Peter G. is a random person from the default servicing center that appears in name only on their letterhead. Good luck reaching this guy.

This escrow issue began in February of 2009. In April HSBC doubled my mortgage payment based on their 12-month projections for escrow. In May the payment changed again with no explanation or communication what so ever. I continued to phone and write to get the escrow lifted in hopes I could resume my original mortgage payment amount- minus the escrow for property taxes.

In June - surprise, I loose my job. From Feb. to June I continued making my original mortgage payment amount. In July, I began receiving default notices, plus unexplained fees and all my payments begin going to an unapplied funds account. I continued to write Shannon and seek a resolution to this entire escrow situation. Surprise - no response. Still I continued to make my monthly payments.

I too sought a modification after I got no where with my escrow appeal and continued receiving default letters. To date HSBC has not processed my modification paperwork. Each month they request new information. Every 30 days they make sure to request a new financial statement. According to reg. they can do this but I believe this is just another way for them to intentionally delay the process and get you into foreclosure. When I ask Javed what other options are available he only presents me with two, 1. wait to hear back about the modification or 2. call the foreclosure attorney to get reinstated. How they arrived at the reinstatement figures they gave me is a mystery to me especially since I've been paying on the note every month!! Add in attorney's fees, title fee's, inspection fees, late fees, and the sum total is ridiculous.

Get this, after all this escrow mess - I go online to check to see if my property taxes have been paid, they are due December 31, and learn HSBC has not even made one semiannual payment! Today is January 8. Guess who is still responsible for making sure their taxes get paid - ME.

This is a huge mess and I ball my eyes crying daily. What else can I do? In addition to the ridiculous fees I have to pay to keep my home I also have to make sure to pick $3,000 from the nearest money tree to pay my own property taxes like I've been doing over the last five years. Remember this whole default issue arose over the forced property tax escrow!

I have not pulled my credit report or score yet but I am sure it has plummeted as a result of HSBC's improper actions. I have all but given up and fear sale of my home is immanent. I've written my state's DLLR office, Attorney General, Senator, and even the FTC to get help.

I'm at a loss for what else to do. Even the National and State HOPE hot lines are a bust. They are merely a referral service and the counselors they refer you to never call you back.


Dhalia, I wish I had more info for you to go on.

Interestingly enough, I tripped over this case this morning. No idea what it may have for legs but it the judge presiding over the case seems to think that the argument has at least some preliminary merit.

Huxtable/Agnew v. Geithner et al recent decision

CalculatedRisk commentary
HAMP Loan Modifications and the Fifth Amendment

Thanks, Mike. I will check them out.

Definitely agree with what you stated. Your explanation was certainly the easiest to understand. I tell you, I usually get irked when folks discuss issues that they plainly do not know about. You managed to hit the nail right on the head and explained out everything without complication. Maybe, people can take a signal. Thanks

I have the same problem with Countrywide now BofA. We became past due and were put on a repayment agreement making a payment and a half each month. Countrywide, BofA does it now also would post the full payment the balance was put into a suspense account held there as unapplied funds. I was told by Countrywide and I also looked it up under Fannie Mae’s Servicing Amounts received that do not constitute a full monthly contractual PITI payment, however when the total of the reduced payments held as unapplied funds is equal to a full PITI payment, the servicer is required to apply all full payments in the following priority (a) interest due under the note (b) principal due under the note (c) amounts due under section 3, taxes and insurance. Any remaining amounts shall be applied first to late charges, second to any other amounts due under this security instrument, and then to reduce the principal balance of the note.

Well Countrywide only took money out of the account and applied to one late fee here and there most of the money shows being moved out in the transaction history but does not show were they put it. Every time I called to complain, they would tell me they could post only to late fees if they want. I told them what the servicing guide said they did not care. When I asked were the rest of my money was they said they would have to research it and of course no one ever got back to me. I called everyday for 3 straight months sent letters that went unanswered.

Then in 2007 they said I was past due 4 months of course because none of my payments were posted. They gave me an amount of $4136.25 to bring current this pays all payments and late fees. I ended up taking out a home saver loan for $4136.25. The money went straight to Countrywide. They short paid one-month’s payment posted correctly to the other 3 payments and then the money disappeared. They paid nothing to the late fees. Then a couple weeks later the missing money shows up in my escrow account.

I am still past due because they short paid a months payment. My unapplied account balance is sitting at $3000.00 and they refuse to post it to payments. However, it is shrinking every month as they dip into it for whatever reason they see fit. 2008 I come home for lunch and there is a man sitting on my porch wanting to buy my house help me out of foreclosure he said. I just about died. He said that Countrywide filed for default. I called them and they said I was past due 2 months. They wanted $3850.00 to cure the default because they also wanted June’s payment. I tried to explain that they just needed to post payments with the money in the unapplied account. She said there was no money in there. I have statements showing the money. At this point, there was $582.87 in the account.

I ended up having to pay the $3850.00 because I did not want to loose my home. Sure enough. Of the $3850.00, that I paid to cure the default $532.00 is unaccounted for. Just disappeared not in the transaction history no were. They also took the money that was in the unapplied account for a total of $1080.00. When I questioned them on it, they said I was crazy that I did not know what I was talking about. I sent copies of everything no one responded.

2009 Bank of America. I was laid off my husbands hours reduced we fell behind. Back on a repayment agreement, same thing happened nothing posted to the account. Just the occasional money being transferred out for a late fee, which they cannot do. Suddenly I am offered a 6 month Home Saver Forbearance. I pay the $392.52 each month then I get a loan modification in the mail.

They are charging me $5,327.19 in delinquent interest for months February 2009 – January 2010, although I made February and March’s payment and paid the interest with my mortgage payments.

$1,704.40 in delinquent escrow same thing I paid February and March
$112.00 in fees interest rate stays the same 5.875% but my payment went from $783.72 to $852.79 when I called to ask about being charged twice for February and March and that the payment was too high, I thought these things were supposed to help. I was told that if I did not do this modification there would be no other help and they would foreclose immediately. I had no choice to sign it and send them a money order for the first payment of $852.79 that was due in February and this was December. I also had $3000.00 in the unapplied account still. I do not know what happened to the $1704.04 for escrow but they sure did not post it there. They also charged me $1000.00 for my payments for February and March when I paid February’s in December. In addition, they changed my payment from $852.79 to 990.82 and I am stuck with it. Cannot afford it so I will defiantly loose my house. In addition, my $3000.00 in the unapplied accounts ya it has gone.

Linda, that is insane. i hope things got better and not worse since march. i just spotted your comment. We finally got HSBC to admit they ruined our credit in error, they are supposed to be fixing it. we still do not have a loan modification. i hope things worked out for you, if you are still battling make sure to keep all of your correspondence together, record any phone calls if its legal where you live, and approach everything knowing that if you screw up they are going to try to crush you, you cant scream at them, just ask them to explain everything over and over, if they treat you like garbage when you finally get them on the phone, ask to speak to another rep.

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