Articles Posted in Problems with Loan Servicing

A recent report by The New York Times details how billions of dollars in student loan debts have the potential to be wiped clean because of lapses in paperwork tracking – mirroring what happened during the 2008 housing crisis. debt defense attorneys

At the center of this controversy is an organization called National Collegiate Student Loan Trusts. This is a group that purchased student loan debts from investors after they had been purchased from banks.

However, now they can’t locate the paperwork that proves who owns the loans. Absent that proof, the trust is unable to prove it is allowed to collect that debt, meaning courts have little choice but to dismiss the case – and the alleged outstanding debt.  Continue reading

Loan servicing is the process by which the borrower – either of a home loan or student loan – entrusts the daily management of that loan repayment to a third party. That third party is supposed to handle the loans on behalf of the owner, directing payments through the system and deciding how best to handle defaults. money

It is not all that complicated, loan servicing. And yet, it has become an industry rife with systemic problems that continue today, even 10 years after the start of the national foreclosure crisis. It seems many servicers are unable to rely on a business model in which they can profit and also not swindle their customers. Perhaps its’ time we start weighing some alternatives.

Consider that just recently, Ocwen, one of the country’s largest servicers, was just slapped with sanctions via the National Mortgage Settlement. These were terms the company had agreed to back in 2013, after it was accused of breaking consumer financial protection laws at nearly every step in the mortgage servicing process.  Continue reading

The latest report from the Federal Reserve Bank of New York indicates a quarter of all borrowers whose loans have come due are severely delinquent.students1

That tells us the percentage of Americans who have fallen further behind on student loan debts has spiked over the last 12 months, even though other measures indicate an economy that is steadily getting better.

As of June 30th, the number of outstanding student loan debts that were at least three months late stood at nearly 12 percent. That’s up from 10.9 percent one year earlier. Continue reading

As we have come to learn, banks have attempted to take away people’s homes, even when they had no legal right. They robo-signed documents and created paperwork to try to show that they had legal standing to take a person’s house away.

But judges nationwide have been persuaded by Miami foreclosure lawyers and others throughout the state and country to not award a home in foreclosure to the bank without proper documentation. Because bundles of home mortgages are bought and sold on Wall Street constantly, the banks have to be able to prove that they own a person’s Miami foreclosure.

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A recent The Rachel Maddow Show on addressed this issue. New York Attorney General Eric Schneidermann — one of the chief opponents of a large-scale settlement between states and banks — has been tapped as the head of a new Obama administration committee through the U.S. Attorney General to look at Miami foreclosures as criminal acts.

Schneiderman called the crashing of the country’s economy a “man-made disaster” and the committee now has the authority to look into bank acts and “figure out exactly what happened and hold anyone who was responsible accountable.”

He said that many of the bundled mortgages were deposited into New York and Delaware trusts, which is why attorneys general there have been at the forefront of the prosecution of bank officials.

The new task force now has federal jurisdiction and resources, which gives officials more time and money to look closely at bank actions and violations of law. Statutes of limitations and laws are different for the federal government than for certain states, which also gives this panel more power.

Our Miami foreclosure lawyers would only question why it has taken so long for an action like this to take place. The nation’s economy has been trending downward for years, and the government’s initial foreclosure solution plans obviously didn’t work. So, why did we have to wait until 2012 to put together a group of people who want to look into the crimes that banks committed?

Lawyers nationwide are thankful at least that it has finally happened. Owners of Miami foreclosures should take comfort in the fact that finally there is a dedicated group that plans on holding bank officials criminally accountable for their actions. Unfortunately, as news reports have indicated, banks are willing to stoop as low as shredding documents and altering paperwork to get away with what they’ve done, so it will be interesting to see how much information these investigators are able to find.

Meanwhile, Miami foreclosure lawyers will continue doing the same thing — bombarding banks for documents and fighting back on behalf of homeowners, who are being forced to act as squatters in their own homes. Negotiating from a position of strength is critical to showing these banks that the homeowner won’t back down and let their family’s home be snatched away based on unlawful actions and violated rights.
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The Obama administration continues twisting the arm of every attorney general in the nation to settle with banks over robo-signing and other offenses during the housing burst, which caused strategic defaults, short sales and millions of foreclosures in Miami and elsewhere.

As San Francisco Bay View points out, the settlement with banks that the government is pushing for would essentially be a slap on the wrist and would prohibit states from bringing lawsuits against them.

Robo-signing is where employees signed other people’s names under titles they didn’t own to confirm facts they didn’t know were true. The practice dates to the turn of the century and could have invalidated tens of thousands of housing titles.
Miami foreclosure lawyers have fought many foreclosure cases where robo-signing was used because it is such an unethical practice. When a person’s home is at stake, the last thing that should happen is a bank using improper techniques to try to steal it away.

According to the news article, the settlement would let bank officials get away with criminal acts that the average person would be convicted for committing. They include fraud, tax evasion, securities violations and forgery. The author questions whether banks did this for so long because of the volume of cases or because it was profitable.

Some analysts believe that robo-signing was done in support of the shadow banking system, which some say is bigger than the traditional banking system. Securitized mortgages, as one theory goes, are pawns used in the “repo market.” Repos are quick-moving sales and collateral repurchases that require mortgage notes to be free. So, they are not assigned until a loan defaults, at which time they are robo-signed to the trusts in order to foreclose on the property.

This secondary banking system is based on high-level debt, such as mortgage-backed securities and Treasury debt. Analysts say this secondary market is essential for traditional banking because without it banks wouldn’t lend and credit wouldn’t be available.

Mortgage Electronic Registration Systems hid these transactions and allowed houses to be bought and sold quickly while getting around local laws that govern recording these transactions. MERS would be the name the property was recorded under, though it may have changed hands five times.

As Miami foreclosure defense lawyers and others began questioning whether MERS had any ability to foreclose, judges have increasingly said it doesn’t. And after officials told mortgage servicers that to get reimbursed under the federal program HAMP, the servicers would have to show the loan had been assigned to the trust. In response, robo-signing went viral.

And as a result, this process broke violating the terms of trusts as well as state real estate law. The banks also cannot comply with tax laws for mortgage-backed securities. The author points out that the shadow banking system is flawed because the collateral is both owed to the borrower and the depositor at the same time. What happens when both demand their money at the same time?

The article points out the obvious flaws in our banking system and shows that homeowners nationwide have been deceived and ripped off. Many Miami foreclosures were done through robo-signing and other illegal practices, yet the court system has been slow to hold banks accountable for their actions. As more and more evidence comes out, Miami foreclosure defense lawyers will bring this to judges in order to save homes from foreclosure.
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The New York Times reported recently it’s unlikely that Washington lawmakers will come up with a significant program to help homeowners struggling with foreclosure in Miami.

That’s not all that shocking, considering that the programs of the past have done little to help homeowners struggling with an underwater mortgage and in danger of foreclosure or strategic default. While the current administration has promised big results from its programs, there hasn’t been much help provided to struggling homeowners.
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Our Miami foreclosure defense lawyers believe and have seen proof that fighting a bank in a foreclosure case is much more efficient than waiting on a government handout. These programs have dedicated millions of dollars and yet little of it has been actually utilized to help modify loans or help people stay in their houses.

Because the programs have no teeth, banks aren’t required to use them and there is little incentive for them to do so. Rather, they believe they can make more money off a foreclosure than actually keeping a person in their house with a mortgage modification.

Taxpayers are rightfully skeptical about new government programs that promise to help homeowners. In the past, few have done so. In April, a program was designed to provide reparations to homeowners damaged by foreclosure abuse, but many officials believe it may do more harm than good.

An April program from the Office of the Comptroller of the Currency was borne out of consumer lawyers identifying forgeries and other problems with foreclosure documents filed with the courts by banks and representatives. It’s interesting to point out that it was lawyers, not bank regulators, that pointed out these massive problems.

More than four million homeowners were contacted and told they could end up getting some type of financial bonus for being trampled upon by the banks. This was after banks agreed to audit themselves. Lawmakers last month voiced doubt that the program would work and cautioned that there could be a conflict of interest among the consultants that were hired by banks to review the problems.

One researcher the newspaper talked to spotted a conflict after one hour of looking at documents, despite the comptroller’s office saying it closely vetted consultants to check for potential conflicts.

Others have pointed out that JPMorgan Chase hired Deloitte to audit its practices, the same company that audited Washington Mutual and Bear Starnes, two defunct firms. Both were later acquired by JPMorgan, so loans that could come under scrutiny would be done by the firm that audited their books.

Other problems pointed out by industry leaders is that the years under analysis are after when most subprime loans were sent into foreclosure and those homeowners who participate in the program are left unprotected against any future damage. Participating in the program could lead to a person giving up their rights to fight a foreclosure in the future. Also, participants could still lose their home to foreclosure even if they take part in a review of their case.

There are few solid programs that actually help homeowners. The only way to hang on to your home if it’s been hit with a Miami foreclosure is to fight back. Point out the bank’s faults in your case and hold them accountable to proving their case.
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A recent CNNMoney article suggests that homeowners who are willing to fight back against banks in a Miami foreclosure may be able to stay in their houses rent-free for as long as several years.

Our Miami foreclosure defense lawyers have helped many homeowners by pointing out problems with bank documents, proving the robo-signing practices that have infiltrated our real estate market and the issues that have caused many people to choose a strategic default over putting their retirement savings into an underwater mortgage.
Banks have certainly shown their inability to correctly process the millions of foreclosures that have flooded the market. In their infinite wisdom, bank officials have decided that instead of legally and morally filing foreclosure paperwork, they will create inaccurate documents in support of foreclosures.

Skilled and experienced Miami foreclosure lawyers have been able to point out these mistakes and also show that bank officials are unable to prove who actually owns the loan. That has been a recurring problem for banks.

Because of their reliance on MERS, Mortgage Electronic Registration Systems, a network of real estate purchases and sales created by and monitored by banks, home sales haven’t been well kept track of. This registry often clashes with official records kept in cities and counties where the sales take place, so when it comes time for a bank to foreclose, the information may be mixed or even unavailable.

Also adding to the problem is that banks made money off of mortgage loans by selling them as bundles to investors. Called securitized mortgages, investment groups may actually own the loan, but the bank that originally signed the loan paperwork may attempt to bring the foreclosure.

These problems have led to free rent for some homeowners. CNNMoney reports that the average time it can take for a foreclosure to be fully processed — starting with the first missed payment to the final home auction — is now 674 days. That is up from the 253-day average from about four years ago.

In Florida, however, the court system is so slammed with cases that the average time it takes to process a foreclosure is 1,027 days, which is more than three years. Only Washington D.C. tops Florida at 1,053 days. In New York, the average stay is 906 days. Nearly 40 percent of homeowners whose houses are in default haven’t paid their banks in at least two years.

While the article reports that there is rarely a dispute about whether payments have been made, homeowners are able to stay in their houses because of bank errors. Robo-signing is a big reason. When foreclosure defense lawyers discovered these problems, they were able to show that bank employees signed paperwork despite having no knowledge as to the accuracy of the documents.

In some cases, attorneys are able to show judges that employee signatures are different on multiple papers, that notarized documents are executed on dates that aren’t possible and that the paperwork signed as accurate is incorrect.

Often, lost or misplaced paperwork can lead to a botched foreclosure by the bank as well. Since many of the documents that are filed are done so electronically, they can be misplaced easily. Unless the banks can find them, the foreclosure can be tossed out of court.
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In the first two blogs in this series, our Miami foreclosure defense lawyers looked at how banks are getting away with crimes because the Obama Administration seems to think what has happened in our country was simply the “least ethical” practices, but not crimes.

The blogs also looked at how a small faction of states attorneys are going against the grain and pursuing lawsuits against the banks who caused the real estate collapse in the first place. Rather than going along with most other states attorneys and attempting to settle with the banks for cash, this group seems intent on holding them criminally accountable for causing an influx of foreclosures that left homeowners considering strategic default because of problems with mortgage servicers and shady bank practices.
And our series of blogs has also concluded, based on a Politico article, that the Obama administration doesn’t seem very interested in pursuing criminal cases against these bank officials. While it’s obvious that crimes were committed — there have been documented examples of banks foreclosing on military families — as many as 5,000 against a 2003 act. And bank officials who were ordered to alter documentation in order to support a foreclosure — yet no major criminal charges have been filed.

In fact, the administration has encouraged the states attorneys to settle with banks over their foreclosure practices instead of pursuing criminal cases. That’s what has happened on the federal level. The Justice Department is trying to squeeze the banks for money instead of charging their officials with crimes. This comes on the heels of the Federal Reserve doling out $7 trillion in secret loans to banks.

The Politico article reports that Obama seeks to coverup the bank crimes by trying to force the states into a large-scale financial settlement. The Massachusetts lawsuit, which alleges foreclosure fraud against banks and MERS, is the most sweeping and while most banks have done little to fight back, government-owned Ally Financial has said it will stop lending in Massachusetts.

Officials are now attempting to set up congressional hearings into Ally’s capital strike, a tactic which is designed to meet their legal demands while threatening to stop financing. This isn’t new. In 2003, Georgia lawmakers found that mortgage lending had problems with predation and fraud, so they passed a consumer protection law that struck back at fraudulent practices.

But the result wasn’t what they expected, as Standard & Poor’s said it would no longer rate mortgage-backed securities with loans that started in Georgia. Since S&P made big profits from rating subprime mortgages, the Georgia law could have threatened its business. Lawmakers quickly reversed the law.

The Politico article goes on to state that while the housing bubble and burst wasn’t just based on bad behavior, it included threats made by banks to stop financing or make lending difficult in states where lawmakers attempted to make things right for homeowners.

The only way to make change, which is sure to come slowly, is for lawmakers to care about justice and to make it happen. Banks have found that crime pays and until someone stops it, it will only continue.
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Our Miami foreclosure defense lawyers recently found a Politico article which makes the point that foreclosures shouldn’t just be treated as a life-altering problem, but also as a crime scene.

What bank officials did has caused a momentous spike in Miami foreclosures and in the number of people who had to work out short sales or consider strategic default as a result.
Banks ordered robo-signing and altered documents in order to support a foreclosure. They have thus far gotten off without any real penalties. Many are still making their seven figure bonuses and large salaries despite these actions.

It’s about time that prosecutors start holding these people accountable for ruining our real estate market and leading to many Miami residents having their homes taken away because of unlawful actions.

In the first part of our series on this Miami foreclosure blog topic, we discussed how several attorneys general, not including Florida’s, have gone against the grain in pursuit of these criminals. While the Obama administration has pushed these state prosecutors to agree to a settlement with banks to let them off the hook for their wrongs with few questions asked, about half a dozen have decided not to engage in talks. This will allow them to continue their prosecution of bank officials in lieu of receiving what amounts to a payoff.

Interestingly enough, one of these state attorneys is Beau Biden, son of Vice President Joseph Biden. He is suing MERS for unfair and deceptive practices. Attorneys general in New York, Nevada, Massachusetts and elsewhere are fighting back.

The second part of this blog series will look at the problems that these bank officials have caused the court system and the people who have had their life savings depleted because of the greed.

Some reports have suggested that bankers pushed borrowers into subprime loans because the interest rates were higher and they were more attractive to investors. In fact, there have been lawsuits filed alleging that black and Hispanic borrowers were discriminated against because some qualified for normal loans, but were pushed into subprime loans.

And while President Obama himself said what has happened on Wall Street wasn’t criminal, only “the last ethical,” banks have admitted to breaking the law. Earlier this year, Politico reports, JPMorgan bankers were found to have violated the Servicemember Civil Relief Act, which protects military members from foreclosure. The bank foreclosed on 18 military families.

Regulators have found recently that as many as 5,000 military families have been sent into foreclosure illegally, despite built-in protections from the SCRA. And as it seems to go, the Justice Department settled with Bank of America for alleged violations of the act, which allows the bank to not have to admit doing anything wrong.

The Politico article points out that Obama’s statement about Wall Street’s actions being unethical is incorrect. The servicemember act has been on the books since 2003 and although the president said laws need to be changed, they were already in place. The article reports that the George H.W. Bush administration sent about 3,000 white-collar criminals to prison and yet the Obama administration has yet to send one.

The article suggests that the current Attorney General hasn’t brought any criminal charges against those involved in illegal military foreclosures or foreclosure fraud. Instead of pursuing these cases criminally, it appears the current administration is happy to settle with banks to get money instead of prison time.

Sadly, this has allowed criminals to get away with crimes and has left homeowners stuck in a Miami foreclosure. When the government settles out of court for cash instead of prison time, where does the money go? Does it bring people’s homes back? No. There really is no justice in what the government has been doing.
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The Florida Supreme Court has agreed to rule on a case out of Greenacres where allegedly fraudulent bank documents were used in support of a foreclosure, The Palm Beach Post reports.

This case could have major implications on the cases of foreclosures in Miami and statewide. The use of robo-signing, fraudulent documents and other unlawful practices by banks has led to the biggest real estate collapse in decades. House values have plummeted, causing people’s mortgages to be underwater and leading to a foreclosure crisis.
Our Miami foreclosure defense lawyers recognize that the Supreme Court taking up this case could have a major impact on all foreclosure cases throughout the state. The Justices agreed that the case highlights the “mortgage foreclosure crisis throughout the state.”

While the case in question has already been settled, four of the seven justices agreed that they should look at the legal question that was posed, saying that it is bigger than this one case and could impact all others. At issue is whether a bank can still be held accountable for using robo-signed and fraudulent documents if officials decide to dismiss the foreclosure case after it has been challenged.

In this case, the bank filed to foreclose on a man’s house in 2008, alleging that it owned the mortgage via assignment from another lender. After the man’s foreclosure defense attorney challenged the backdated assignment, the bank voluntarily dropped the case and settled with the homeowner.

The man appealed, asking that the dismissal be reversed and while lower courts sided with the bank on that issue, an appeals court asked the Supreme Court to take a look. The appeals court decided that the issue is “a question of great public importance as many, many mortgage foreclosures appear tainted with suspect documents.”

The Office of State Courts Administrator reported that from July 1, 2010 to July 1, 2011, more than 104,000 foreclosure cases were dismissed. Many of these cases were likely dismissed because banks didn’t have the proper documentation, couldn’t prove who owned the note or used fraudulent documents to try to prove the facts.

This is big news for homeowners trapped in foreclosure because if the state’s high court rules in favor of the homeowner, that means that other homeowners throughout the state may be in a better position to fight back against banks who have tried to steal their homes via bad documents.

It has been reported that bank officials in some situations literally cut and pasted figures and signatures onto documents they used in support of foreclosures in Miami and elsewhere when they didn’t have the facts to prove their case. They violated homeowners’ rights in many cases simply because they couldn’t handle the glut of foreclosures that hit the court system so rapidly.

Instead of handling cases legally and upholding homeowners’ rights, banks took the low road and used slimy tactics in order to try to take away people’s homes. Even in cases where homeowners tried to work with them through loan modification programs or a short sale, banks would go behind their backs and attempt to foreclose.

Homeowners statewide — whether in foreclosure right now or not — should be thankful that the justices will look at this case. Our Miami foreclosure defense lawyers hope that the court holds banks accountable and doesn’t let them off the hook and allow them to ruin people’s lives without due process or a shred of honesty and decency.
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