Just the facts, please: Foreclosures, Mortgage Servicing and Loan modifications

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What a relief to be finished with this year's crop of negative political ads.  We have all had our fill of campaign rhetoric, commercials, and recorded phone calls, and we've all pretty much had enough of negative advertising and special interest agendas.  Rather than talking about the issues--and sharing how each candidate would rectify the problem--more often they tell us what the other won't do, rather than what they will do.  So many political ads are simple scare tactics, and many are merely diversionary smoke and mirrors.  Still more are sheep dressed in wolves' clothing. 

As smart consumers, we have all learned to read between the lines and sift out what is propaganda and what is fact.  But it's time to do some more sifting, since there still seem to be a lot of untruths and distorted facts floating around after the recent political season.

Here's a quick fact-check on three issues that big business, politicians, and other powers that be would rather you, the consumer, didn't know too much about.
Mortgage/Loan Servicing

Myth: Banks don't make accounting errors.
Mortgage servicing, accounting and foreclosure practices are all in order.  If you make your payments on time you won't ever have a problem with your bank reporting negative information to the credit bureaus nor will you need to worry about anyone foreclosing on your home.

Fact: Not all is transparent. Loans are often full of accounting and/or title flaws, Period. Unfortunately, just making timely loan payments will not guarantee your loan, accounts, or your credit report remains free from errors or fraud. (See below video: Wells Fargo repossess paid car)

We know the importance of reviewing our credit reports on a regular basis, but what is all too often overlooked is the importance of reviewing our monthly loan statements.  If credit reports contain erroneous late payments, restoring your credit rating can take years. And if you suffer an identity theft on top of a contaminated report, clearing your name will be far more complicated and time consuming.  Do you know if your mortgage/auto loan payments are accounted for and applied accurately?   What about any additional principal payments?  Escrow payments?

In a nutshell, if you are paying a mortgage, student or auto loan without tracking and verifying your payments have been properly accounted for and applied accurately, you could be headed for trouble-- without even knowing it.

Many borrowers are not properly notified that their mortgage and/or the servicing rights were sold or transferred -let alone -to whom.  Uninformed of the transfer, the borrower continues sending their payments to the wrong entity, and are completely unaware their mortgage had  fallen into default -left to incur hefty penalties, late fees, and accrued  interest charges. When the borrower is stunned by a notice of default from the new company, they soon learn that it arrives with a demand for thousands of dollars. They are informed that without making full payment -immediately, their home will be foreclosed on.   

Loan modifications

Myth: Mortgage servicing companies want to help.  At least that's what the ads say.  Most big Mortgage servicers continue to say, "We want to modify, not foreclose.  We are doing all we can to help homeowners stay in their homes.  It's the borrower who hasn't supplied the correct paperwork."

Fact: Obtaining a loan modification is like winning a lottery: odds are not good.  One commonsense solution to the foreclosure crisis would seem to be offering borrowers loan modifications.  But as countless borrowers continue to point out, HAMP turned into hell and all they have been really getting is a loan modification run-around that further ruins their credit and pushes them into unfair or illegal foreclosures

By any account, the Obama administration's efforts to get banks to renegotiate mortgages with borrowers have been an abysmal failure.  By the end of July, there were only 421,000 homeowners who had managed to get permanent loan modifications from their banks out of more than 1.5 million trial modifications and nearly 3.1 million eligible loans


Myth: If a borrower is being foreclosed on, they must deserve it.  They didn't pay their bills and that is what brought the global economy to its knees.  It makes no difference if our paperwork is "out of order" and needs "review" because the borrower still owes "someone."
Fact: There are many reasons for foreclosure, and not all of them are legit.

No lender wants to foreclose -or do they? 

The so-called paperwork is called a chain of title.  That chain of title is important in keeping our courts clean from fraudulent (or fabricated) documents.  What happens if the borrower is foreclosed on by bank #1 and the real owner of the note comes forward to get paid?  Hmm, is bank #1 going to pay bank #2?  I doubt it. The fact is many innocent homeowners who have paid their mortgages on time have had their homes "stolen"...reverse bank robbery.

Keep reading between the lines. Just like with political advertisements, you can't always believe what you hear. Do your own research and always, look before you leap to judgment.  It's a shame that we have to be such vigilant consumers, but that's another fact.

For more info on consumer complaints and issues surrounding mortgage servicing see earlier blogs here.

Paying off your car --doesn't guarantee your car won't be repossessed.

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1 Comment

Just was wondering if you know if Franken's Homeowners' Advocate Office is in place yet,I deperately need help. Wells Fargo is playing games on the HAMP, and I am at mercy of them. They just keep asking for the same info over and over again,month after month, keep changing reps, keep dropping the ball, all the things you have been reading.It is an extremely obvious game they are playing, and the worst emational time of my life.

Thanks for your articles,
White Plains, NY

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