Looking to re-victimize those already suffering abusive foreclosure practices and mortgages they can't afford, scammers are moving faster than the bureaus deploying the National Mortgage Settlement.
The $25 billion National Mortgage Settlement signed by federal and state officials and the nation's largest banks on Feb. 9, promises to cure some of the ills arising from the housing crisis, but real relief is still months away.
Meanwhile, and even before the settlement was penned, scammers were out in force using the Internet and tele-marketing guises to masquerade as settlement officials, bank representatives and third-party "settlement administrators" promising fast settlement results - for a fee - to unsuspecting, vulnerable consumers, according to attorneys general in virtually every state in the nation.
"Even before today’s $25 billion mortgage servicing settlement was announced, Alabama consumers received phone calls trying to trick them into giving out financial information that could be exploited and abused," according to Luther Strange Alabama's Attorney General.
The National Mortgage Settlement includes billions of to pay for loan modifications, mortgage principal reductions and refinancing costs for existing, qualifying homeowners, as well as money for cash payments directly to consumers who've lost their homes and were wronged during foreclosure.
Official settlement benefits are free
Despite the come-on claims from scammers, there is no cost to consumers who will eventually benefit except, perhaps, as taxpayers who continue to foot the bills for institutional wrong doings.
The largest ever federal-state civil settlement, stems largely from faulty foreclosure practices mortgage servicers instituted shortly after the housing market crashed.
Bank of America, JP Morgan Chase, Citigroup, Ally Financial and Wells Fargo, signed on to the agreement designed to cure an institutionalized culture of foreclosure abuse.
Violations included "robo-signed" (forged or falsified) affidavits in foreclosure proceedings; deceptive practices, including "dual tracking" (simultaneously working a modification application and a foreclosure procedure on a mortgage); failures to offer non-foreclosure alternatives before foreclosing on borrowers with federally-insured mortgages; filing improper documentation in federal bankruptcy court, losing and misplacing crucial homeowner documents and generally giving distressed homeowners the runaround, rather than a single point of contact.
A recent report "Servicers Continue to Wrongfully Initiate Foreclosures: All Types of Loans Affected," by several consumer law advocate trade groups found, during the year long negotiations that led to the settlement, mortgage servicers pretty much continued business as usual.
"These (foreclosure abuse) practices are current and widespread," according to the report.
Servicers Foreclose While Processing All Kinds of Loan Modifications
Of the respondents who reported representing a homeowner placed in foreclosure while awaiting a loan modification in the last year, the percentage of attorneys representing homeowners awaiting loan modifications under HAMP or for a GSE loan (Fannie Mae, Freddie Mac) were the highest.
Source: NCLC, NACBA, NACA
Now, ironically, already victimized homeowners must contend with a new form of fraud capitalizing on the old fraud committed by mortgage servicers.
The national settlement is a done deal, but not it's full implementation.
According to the settlement's timeline, beginning Feb. 9:
• "Over the next 30 to 60 days, settlement negotiators will be selecting an administrator to handle the logistics of the settlement and monitor compliance."
• "Over the next six to nine months, the settlement administrator, attorneys general and the mortgage servicers will work to identify homeowners eligible for the immediate cash payments, principal reductions and refinancing. Those eligible will receive letters."
• "This settlement will be executed over the next three years."
Harris and other attorneys general and the official settlement site, advise consumers to be alert for these fraud red flags.
• Does the caller say he or she is your loan servicer? Do they ask you to provide the name of your loan servicer? If they ask you for the name of your servicer, they may be a scammer.
• Does the caller offer to provide your personal information to assist you in identifying your account? Or do they ask you to provide it? If the caller is from your loan servicer, they will be able to tell you your personal information because they will have it. Never provide your personal information (including bank account numbers, Social Security numbers, etc.) to an unsolicited caller - no matter what they promise you.
• Does the caller offer to speed your settlement relief for a fee? It's a scam. Neither the banks nor the attorneys general will charge a fee to speed your settlement or for any other reason. No individual can speed up delivering relief.
• If you think the caller may be legitimate, ask for their contact information, tell them you are going to call your bank's hotline to confirm and then call them back. Chances are, if they're a scammer, they won't want you to check on them and they won't provide their contact information.
• Contact the official National Mortgage Settlement information web site or call the U.S. Department of Housing and Urban Development at 1-888-995-HOPE (4673).
Three more years? Mortgage servicers' behavior during the settlement's year of negotiation indicate three years is at least as long as it will take for full restitution under the settlement.
Scammers see the settlement's timeline as a great opportunity to commit fraud and haven't wasted any time trying to pull the wool over the eyes of consumers. The crooks know consumers are anxious for relief, they know anxiety breeds vulnerability and they know bureaucracy always bogs down the wheels of justice.
That includes manufactured, institutionalized bureaucracy, if statements from the mortgage servicers named in the settlement are any indication.
Aware of the settlement's likely outcome, mortgage servicers not only continued the abuses, according to the consumer law advocates study, they also appear to have spent the last year negotiating in not such good faith.
When the settlement was signed, none of the servicers said they were fully ready to reach out to those they'd abused.
As an example, "…Bank of America expects to develop new or enhanced programs to provide borrower assistance and refinancing assistance, to make direct payments to state and federal governments and borrower restitution, and to agree to national servicing standards. The agreements in principle are subject to ongoing discussions among the parties and completion and execution of definitive documentation, as well as required regulatory and court approvals," according to Bank of America's statement.
"Expects to develop?"
Between the continued abuses and heel-dragging by mortgage servicers, it's no wonder the settlement prompted California Attorney General Kamala D. Harris to call for Freddie Mac and Fannie Mae to temporarily suspend all foreclosure sales in California as a "a good-faith pause."
OCC-U-PY! OCC-U-PY! OCC-U-PY!
...but seriously, an example of what consumers need to do is what was done to get free credit reports and what's being done to get free credit scores -- letter campaigns to congress. The Occupiers are not focused enough. What's needed is a specific, targeted grassroots, consumer campaign to really fix the mortgage market.
See Consumer Reports effort regarding credit scores: http://www.erate.com/free-credit-scores-long-overdue.htm
I tell you, if ACORN was around right now....whew...http://www.deadlinenews.com/2011/06/27/acorn-shellacking-just-plain-nuts/
The scam-artists are the folks at the National Associations who own these loans. The only way to truly help the American People recover from this scam is to indict the officers of the lenders and investment bank who sold the mortgage loans to the trust's, never conveyed the collateral, and drew down years of residual interest using discount rates that should have been corrected by the fraudulent examiners, they acted in collusion with rating agencies and title companies,
Here are the facts. The folks that claim to own the loans and sue the homeowner in foreclosure continue to act fraudulently. They have no right to file and now with this settlement they are deeply entrenched in getting folks to sign new Notes through modification,HARP,HAMP HARP II,FHA refi, etc..
A true democracy would disgorge the hundreds of billions of profits the reserve system banks, investment banks, rating agencies, swap providers and correspondent lenders made without full disclosure to homeowners. They should all be prosecuted under RICO laws and their personal assets should be stripped to make restitution.
The scammers out there now are just re-invented from the era of the 'too good to be true' zero interest mortgage/re-fi guys that would prey on the most vulernable of neighborhoods and people. SO wrong and really hard to catch them I'm sure.
Scammers today are pretty sophisticated. Consumers have to be doubly alert and on their toes. And regulators have to come down hard on them or the fines become just the cost of doing business.
This is why I prefer to go old school and keep the money under the mattress! It's quite difficult to find a safe and trustworthy bank/mortgage lender, let alone a strong interest rate you won't have the rugged pulled under your feet from.
I beg to differ. See my "Dump Your Bank" series. Many small banks and credit unions have come to the rescue. http://www.deadlinenews.com/tag/dump-your-bank/
Thanks for exposing this. Good article.
This brings to light a host of issues housing consumers face these days. Great job.