“We’ve lost something vital, I tell you. When we lost it, we lost the ability to make good decisions. We fall upon decisions these days the way we fall upon an enemy — or wait and wait, which is a form of giving up, and we allow the decisions of others to move us. Have we forgotten that we were the ones who set this current flowing?” – Princess Irulan from Frank Herbert’s Dune
I subscribe to a lot of websites and Twitter accounts that post articles about the mortgage industry and politics. I do this to stay as informed as possible of what direction the mortgage industry is heading and what is going on in the industry. Because I do this and with having a background in politics and as a mortgage broker, I have a unique insight that most of these people don’t have when it comes to this industry. And usually allows me to accurately post things four months to six months ahead of what most foreclosure attorneys or mortgage activists post on their websites.
Recently, I’ve been inundated with press releases from state Attorney Generals’ offices across the country and from the federal government about modification companies and forensic audit companies all being scams because they charge for services. These press releases also tell homeowners to contact their lender for help or go to a non-profit housing agency.
I know, there were a lot of shady modification companies out there that were ripping people off and a lot have re-emerged under a different name. Matter of fact, many are now using cheap automated mortgage audits as a way to get people in the door by claiming the homeowner is being charged $2000-$3000 for an audit and the modification is free. This is deceptive and illegal especially in states like California and Florida.
When I started MFI-Mod Squad last year, the goal was to expose the fraudulent companies and promote and give a voice to the legitimate modification companies. I did this because when the housing market began to crumble in 2007, the banks, the media and Elizabeth Warren were putting the sole blame of the collapse of the housing market on the shoulders of mortgage brokers which wasn’t entirely true.
As any experienced mortgage or finance expert can tell you there were abuses of non-disclosure to homeowners but that wasn’t where the problem was. It was on the lender side. As a former broker, I can tell you that underwriters at lenders such as Ameriquest, Wells Fargo, First Franklin, Countrywide and others routinely told us how to circumvent underwriting guidelines to get a deal funded. These lenders didn’t care and I was constantly told “We just want it to look okay, so we can sell it on the secondary market.”
As we later found out the reason for this attitude and why these lenders eagerly created these exotic programs was because the boys on Wall Street had pre-sold these securitized trusts to investors and needed to fill them. This led to sloppy underwriting and due diligence of mortgage loans that should have never been approved.
Now let’s fast forward 3 years to today, most modification companies have come and gone. Many of them deserved to go and I say good riddance to them. The few good ones who remain are being chased out of business by smear campaigns and false accusations of conning homeowners. Since the passage of SB94 in California last summer, both the California Bar and Jerry Brown’s office have done what can best described as Kristallnacht-style attack on law firms and modification companies. But it wasn’t just the shady firms they went after, they began rounding up everyone. They raided offices and confiscated bank accounts. Martin Andelman from the Niche Report and the website, ML-Implode writes about Paul Lucas. Lucas was an attorney who had his name dragged through the mud by Jerry Brown’s office and the California Bar. They publicly accused him of scamming distressed homeowners which he fought and won. It turned out it was a shallow victory because with all media Jerry Brown’s office and the California Bar’s office did with their dragnet; they have permanently labeled Paul Lucas with a scarlet letter of “Scam Artist” thanks to the internet.
The propaganda tells people to call their bank because the bank wants to help them stay in their home or go to a non-profit housing agency that is funded by the banking industry. Excuse me, but this is like telling a rape victim to go seek rape counseling from the rapist.
Now rabid “mortgage activists” in Florida are believing the propaganda and going on the offensive and helping the FTC and banks smear the remaining legitimate modifications companies that are still standing. Mortgage Activists make for easy recruits because most are in foreclosure and have had spent thousands of dollars working with modification companies who were unsuccessful. They’re pissed off because they were unsuccessful and feel they’ve been ripped off. It doesn’t matter they may not have met HAMP guidelines or because of mod company incompetence, they want someone to blame.
So who’s behind this propaganda war? You guessed it, the banks and the politicians who are beholden to them for campaign cash. You see the banks don’t like legitimate modification companies, smart foreclosure defense attorneys or companies like MFI-Miami because we take the power they have to control the negotiations and place it in the hands of the homeowners. I can say that here at MFI-Miami, our investigations in the past two years have saved our clients nearly $30 million dollars in excessive fees or costs the lender should not have been collecting. MFI-Miami has also helped stopped nearly 300 illegal foreclosures. With that said, the banks have the motivation to shut companies like MFI-Miami down by any means at their disposal and to silence their critics.
The federal government also tells people to go to non-profit housing agencies to get modifications if they want a third party expert to help them. I deal with some non-profits in both Michigan and Florida and they have a lower success rate than the private 3rd party firms and in the off chance they can get one done, it takes them nearly three times as long.
I am constantly bombarded by unsatisfied homeowners who had tried to work with NACA or Hope Now. I have found that not only are the forensic audits these groups write up are worthless, the staff at most these non-profits know less about lending regulations than the phone jockeys homeowners are forced to deal with when they call their mortgage servicer.
These non-profit housing groups claim to be helping homeowners are funded by and dependent on the banks to keep their staff paid and lights on. Groups like NACA even go as far as using aggressive tactics to raise money from the banks and force lending agreements with them that it could be considered a shakedown. Yes, NACA makes its money from writing loans and when a bank won’t negotiate a correspondent lending agreement with them, they have no problem trashing talking them on their website while posting propaganda for their partners like this little gem about Bank of America on their website:
“As a result of NACA’s partnership with Bank of America’s previous CEO, Hugh McColl, and its current CEO Ken Lewis, Bank of America divested all of their subprime and predatory lending operations. Their acquisition of Fleet Bank, without its predatory lending subsidiary as a result of NACA’s advocacy, resulted in the only major financial institution not burdened with predatory lending issues.”
I don’t know what is going on over on Planet NACA but last time I checked Bank of America was paying out hundreds of millions of dollars in fines and court settlements over the past three years for predatory lending practices committed by Bank of America Home Loans most of which went on during the tenure of Ken Lewis.
So what’s the point of this article? Lynch mobs and bandwagons are born when people abandon logic and reason and when people want an easy and immediate answer. An answer that most of the time the answer doesn’t benefit them like they think it will but it does benefit the ulterior motives of the ringleader of the mob.