Force Placing Escrows By Lenders Is Form Of Mortgage Fraud
Since starting MFI-Miami almost three years ago, my staff and I have reviewed nearly 800 mortgage files and in nearly 70% of those files were the homeowner’s lender force placing escrows.
“Never ask when you can take” –Ferengi Rule of Acquisition #52
One of my clients in northern Michigan had been escrowing her payments to Countrywide Home Loans and later Bank of America for nearly 3 years. Last year, because of some family issues Bank of America began foreclosure proceedings against her. While her attorney and I began preparing her lawsuit against BAC Home Loan Servicing and their attorney, Trott & Trott for illegally foreclosing, Grand Traverse County initiated a tax foreclosure for unpaid property taxes from 2007. Taxes that were supposed have been paid by Countrywide Home Loans.
Another client in Massachusetts had BAC Home Loan Servicing force place flood insurance as part of her escrow payment. This would have been fine had she actually lived in a FEMA designated flood plane but she didn’t. As part of the investigation, I contacted the insurance company Bank of America had listed on her statement that they were paying $400 a month to and discovered this insurance company did not have any record of my client in their system and they don’t offer flood insurance. They only offer homeowners insurance to active and retired military personnel.
An attorney friend of mine in Fort Lauderdale, had Chase Home Finance force place an insurance policy on his home and forced him to escrow the policy because his homeowners policy lapsed for three weeks two years prior while he had been in Europe on business. Even though there was a current paid policy in place and there were no claims filed in the three week period the policy had lapsed.
Several months ago, OCWEN force placed tax and insurance escrow on a client of mine in Illinois who was one day late paying his summer tax bill.
Last week, Fox-4 News in Dallas reported the story of Bertha Andrews in Dallas, who was forced out of her house by OCWEN. OCWEN paid her tax bill of $3500 and tacked $400 a month on to her mortgage payment even though Ms. Andrews had a tax deferment from Dallas County until she sold her home because she was taking care of her ailing mother.
Last week, Philadelphia homeowner, Patrick Rodgers successfully sued Wells Fargo for not answering his Qualified Written Request when they increased his homeowner’s policy from an $180,000 policy to a $1,000,000 policy. Wells Fargo claimed it was for the rebuilding costs if something happened to the turn of the century home. Although the value on the home was under $200,000 and the homeowner only owed $130,000.
“Never be afraid to mislabel a product.” –Ferengi Rule of Acquisition #239
This is nothing compared to what they like to do for homeowners going into modifications. HAMP guidelines dictate that all HAMP approved modification must include escrowed taxes and insurance payments during both the trial period and after the permanent modification is approved.
When the homeowner receives the letter proposing modification terms, it usual contains a lower interest rate a lower principal and interest payment. This all sound great until you read the amount for the escrowed taxes and insurance. In most cases, the escrow payments are usually 200% to 250% more than what the homeowner was paying prior to the modification.
BAC Home Loan Servicing is infamous for doing this. Like my client, Lynne Lucas who I’ve written about several times. Last year, when she opened her modification approval letter from BAC Home Loan Servicing, she discovered they were lowering their interest rate from 6.5% to 4.75% which sounded great until she read demanding a monthly escrow payment of $580.17 a month from her despite her homeowners insurance being current and their taxes were current. This is a 250% increase from the $231.17 underwriters at Countrywide Home Loans used for the cost of taxes and insurance when they approved the loan in 2005. All of this increased her payment by $570 per month to $1,723.65. This meant she was paying BAC $6962.04 per year in taxes and insurance when her taxes and insurance are actually $2900 per year.
In the majority of cases I investigate, mortgage servicers are not paying the taxes in a timely manner and that’s if they’re even paying them. In most cases, the mortgage servicer usually waits until days before the property goes into tax foreclosure before paying the tax bill and in most states this means the tax bill is 24 months delinquent. Like I said, that’s if they actually pay them.
In Lynne Lucas’s case and most other modification cases, when you add up the proposed escrow payments over a two year period it adds up to the exact number the homeowner was behind on their mortgage. In the off chance the mortgage servicer does pay the taxes, they bill it to the trustee for the asset backed security or just eat it because they bought the loan from the trustee for pennies on the dollar and will recover when they sell the property after the foreclosure. So they’re really not out any money. In non-modification cases they do it simply to line their pockets.
“Not even dishonesty can tarnish the shine of profit.” –Ferengi Rule of Acquisition #181
The mortgage servicers pull this bullshit simply because they know the system in Washington DC will let them get away with it. Like two bit hood, they know it’s to easier to steal from grandma and the disabled then it is a member of the Plutocracy.
After all, the reason Bernie Madoff went to jail was not because he ripped people off but because he ripped off members of the Plutocracy. The ponzi scheme Madoff ran looks like kindergarten production of the movie, Wall Street compared to the $70 Trillion ponzi scheme that Morgan Stanley, Lehman Brothers, Bear Stearns, Bank of America, Citigroup, Wells Fargo, JPMorgan Chase, Deutsche Bank and Goldman Sachs all have their hand in it.
Last week, Matt Taibbi wrote a great piece in Rolling Stone about how the banks know they can get away with ripping off grandma because of the revolving door at the SEC. The banks also have the Speaker of the House, John Boehner as their financial bukkake boy.
You also have the Acting Comptroller of the Currency John Walsh whitewashing over these abuses by the banks which service most of the mortgage loans in this country.
Two years ago, I wrote a piece about how the FBI’s white collar crime division knew of as early as 2003 that the financial crisis was looming. The Bush Administration’s solution to this was to gut the FBI’s white collar crime division by nearly 65%.
Banks know grandma or the over extended middle class in this country won’t fight back and the ones who do don’t have the testicular fortitude to fight them indefinitely.