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UncleNasty -> RE: Evil deadbeat borrowers and the Foreclosure of America!! (11/1/2008 8:44:26 AM)
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TN,
I typically fall on your side of the fence when I read your posts. I'm not trying to "rip you new one" here.
It sounds as if you haven't looked over much of the deeper information. In attempting to ply reason to this mess you may be overlooking a fair amount of the facts. And facts that must be dug after in order to find. As I said previously the MSM has not covered this issue in any substantial depth.
An oft repeated phrase is the "The bank doesn't want your house." I think if that were true we wouldn't be at record foreclosure levels, with numbers increasing every quarter. So even without doing any research the facts seem to contradict that common phrase.
The advantage in pushing and forcing home owners into default is the leverage the servicer gains over the home owner in doing that. Home owners will typically do almost anything to keep from losing their homes. That provides servicers with a tremendous amount of leverage. A typical scenario is something like this:
Payment is timely made. The servicer doesn't post it until it past due. A late fee is assessed and applied. When next months timely payment is sent servicer splits the payment applying part to the late fee, the balance going to the payment. This may again have been posted late, adding another fee. Because the payments are being split the regular payments are recorded as deficient and the fees continue to mount. Play this out for a few months and a default status is built.
Perhaps the homeowner was in discussions with the servicer in attempt to have them correct the bookkeeping. All the servicer needs to do is delay, offer the slightest resistance (automated phone banks can be the first step in this, followed by dealing with someone in India that has little or no power and/or control - this also brinbgs in a language barrier and problems in communications), or minor error, and before you know it default status is imposed. It gets down to this. Borrowers have few rights and little power. They also have limited knowledge and limited resources. Servicers are quite knowledgable about all of these processes and mechanisms, and additionally have practically endless legal resources. Once a legal process is started it is extremely difficult to stop.
In fairly short order the home owner finds they are either in, or being threatened with, foreclosure. A very common next step for the servicer is to offer a "loan modification." Typically this is a new contract offer with terms not as good as the original, and also requires the homeowner to make a lump payment in order to "buy into" the new contract. Any and all rights (if the original contract had given them any) are signed away by the home owner. The foreclosure is not dismissed. Rather only forebearance is offered. The foreclosure can be restarted at any point. The servicer knows how much money the homeowner has because they insisted on getting new financial information from them. And guess what - the lump "buy into" amount is usually the amount of liquid assets, if any, the home owner has. Several months down the road this scenario is played out again.
Did you look over any of the links in the cut and paste article? I believe the ones at the top linked to more sites that covered the FTC decisions and fines. Looking at the language and requirements the FTC imposed shows pretty clearly the types of bad, unethical and illegal behavior serviers routinely engage in.
LOL, I'm really not making this stuff up. I've been studying the issue for months. My study shows me clearly that what is really happening is far from what is being reported.
There are a number of reasons most folks know little to nothing about what is really happening. It isn't all the fault of the MSM, though they have some culpability.
Many foreclosures (the vast majority) are not defended at all. Home owners simply slink away in shame and defeat preferring not to talk about it with many people. Further, because they are unlearned about the issue overall they really aren't clear in regard to what is happening to them, so they could'nt tell you if you asked them. If foreclosures are defended it is usually through a bankruptcy. Most attorneys know very little about banking and real estate law and those that deal with foreclosures at all usually do so only through a bankruptcy.
I can't tell you how many attorenys have looked at me whith a straight face, believing when they say, "Oh, the UCC isn't applicable to mortgages." That is so far from the truth I just want to shake them. Of course the UCC is applicable, and directly so. UCC 3 covers negotiable instruments and that is exactly what a promisory note is. So even if an attorney is hired to defend most haven't a clue what proper defenses are, or how to mount them.
In a slightly different direction I offer a link to an abstract of a study by Katherine Porter, University of Iowa Law (full text of the study can be accessed and downloaded from the abstract page) covering bankruptcy.
http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=509479
The study, titled "Misbehavior and mistake in bankruptcy mortgage claims" is quite telling in re the dynamics and patterns of behavior lenders and servicers routinely engage in. It is important to recognize that foreclosure is the leading cause of bankruptcy, and also that bankruptcy and foreclosure are trailing indicators, not leading indicators.
My point with the above is that the defects in claims, the trash and illegitimate fees, and other similar behavior, is not limited to bankruptcy. It begins in foreclosures and continues into bankruptcies.
Another slightly different direction....
The issue of money has been mentioned. You bet they are making money on foreclosures. There are all kinds of fees, and trash fees, that are attached. Attorneys fees, appriaisal fees, title search and insurance fees...... If there is any equity in the home it is absorbed, and there frequently is some equity. The industry that has built up around this is pretty big and lots of folks have toes and fingers in the money pool. And the interconnectivity of the corporations enagaed in all of it is extensive running from appraisers, to realtors, to maintainance companies, remodeling companies, etc.
There are even what is being referred to as "foreclosure mills" whose sole purpose is to facilitate the speed of the entire process. These mills go to the extent of literally fabricating and forging documents to submit to the courts. Again, I'm not making this stuff up.
Also again, if reason and logic are the tools you're using to try and understand this issue (as opposed to data, fact, information) it begs the question "If banks don't want your house, and if banks loose money on foreclosures, then why do we have foreclosures in record numbers?"
If anyone is truly interested, I mean truly interested, I can provide more detailed information to substantiate statements and claims I have made here. Contact me privately and I will do such as my time allows.
Uncle Nasty
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