Fair Game – In the Mortgage Drama, One Role Is Enough – Gretchen Morgenson

Enter Mr. Miller’s bill, the Mortgage Servicing Conflict of Interest Elimination Act. It bars servicers of first loans they do not own from holding any other mortgages on the same.


“Unless we can make servicers modify mortgages through bankruptcy or eminent domain, the servicers are not going to reduce principle,”


“Their stance does seem largely driven by accounting concerns — they are trying to maintain the fiction that the mortgages are worth the value they are carrying them at on their books.”


“These mortgages were not designed to increase homeownership; they were designed to trap people in debt and strip the equity in their home…”


New York Times
Fair Game

In This Play, One Role Is Enough


MEET Brad Miller, a Democratic representative from North Carolina who was elected to Congress in 2002, talks straight and understands how big banks can put consumers at peril.

He is worth getting to know, not only because of his deep concern about the foreclosure epidemic, but also because he has made a compelling recommendation to level an exceedingly tilted playing field in mortgage finance.

Depending upon your perspective, Mr. Miller is either the right man in the right place on Capitol Hill — if you’re a consumer — or a threat to the status quo.

A lawyer who worked on consumer protection issues in North Carolina, Mr. Miller is not new to battling banks. In March 2009, along with Representative William D. Delahunt, a Democrat from Massachusetts, he proposed the creation of an independent consumer agency; it became a part of the recent financial overhaul. This past March, Mr. Miller introduced a bill that would eliminate one of the most pernicious conflicts of interest in banking today: the dueling roles played by the big mortgage servicers.

These companies — the biggest are Bank of America, JPMorgan Chase, Wells Fargo and Citibank — operate as the back office for the mortgage lending industry. In good times, their tasks are fairly simple: they take in monthly mortgage payments and distribute them to whoever owns the loans. In many cases, large institutions like pension funds or mutual funds own the mortgages, and servicers are obligated to act in their interests at all times.

When borrowers are defaulting in droves, as they are now, loan servicing becomes much more complex and laborious. Servicers must chase delinquent borrowers for payments and otherwise manage these uneasy relationships, possibly into foreclosure.

So where does the conflict of interest lie? Often, the same bank that services a primary mortgage owned by another institution also owns a second mortgage or home equity line of credit on the same property. When that borrower has trouble meeting both payments, the servicer has an interest in making sure that amounts owed on the second lien, which it owns, continue to be paid even if the first loan, which it has no interest in, slides into delinquency. About two-thirds of primary mortgages are serviced by banks who do not own them but hold the accompanying seconds.

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6 Responses to “Fair Game – In the Mortgage Drama, One Role Is Enough – Gretchen Morgenson”
  1. When will judges be held accountable for making outrageous decisions, and ignoring appellant precedents. Secret kickbacks soon find their outlets, as secretaries gossip, and other forms of smoke are obvious on the skyline. Few judges can survive on their basic $85,000 salaries + $350/day maximum allowed by the legislature. after taxes there is less than $65,000 of disposable income. Not enough for 2 cars, and 2 kids in college. So how is the budget fuelled? Stupid question!!

    When will someone put the genie back in the bottle, and bring back Smoot Hawley??

    Better still when will banks be prohibited from turning prommissory notes into cashier’s checks, and lending borrowers their own money??

  2. lisamarie says:

    You never hear of anything happening to the banks cocky ‘lawyers’ when they are busted lying and pushing through the court room with their forged docs. Boy, let one of us homeowners walk into the courtroom with computer generated, signature fabricated bullcrap. Thank God it looks like the tide may change for the banks. They may actually have to begin following some laws! The world is not their toliet.

  3. PJ says:

    Michael.. you are correct… people regardless of their situation are starting to take notice… the FL AG did this nation a good service… at exposing the fraud funded by the American taxpayer.. when this is explained to people their jaw’s drop… they see friend’s, neighbor’s and family losing job’s , savings drained and heading down the path to BK or forclousure and understand… they could be next. And they will unless we stand together.

  4. Michael says:

    “What I’ve found is the more fights we pick, the more success we have.”

    Here’s to more fights, then. Many more.

    Friends … we’re in an epic battle of good and evil for the soul of our country. Make no mistake; even if you don’t have a home in foreclosure — even if you think people should lose their homes — the mess we’re fighting is nothing less than a cluster of cancer cells that have metastasized through the soul of our nation.

    The notion that the “free market” means banks gamble with public money and, when they lose, we reverse the deal so that whichever party they bet against loses instead (unless it’s another bank; then the losses of both are covered) will literally destroy this country.

    The immediacy of what we’re seeing and fighting — crooked lawyers arguing to crooked courts to enforce contracts they knew came from a Ponzi scheme they concocted — are just an early symptom. This will become progressively worse for everybody; even eventually for the bankers, unless we all do something.

    Like Gretchen says … fight. Now is the time to pour every ounce of energy you have in; contact us through this site or Lisa’s foreclosurehamlet.org and we’ll show you where help is needed. For the sake of yourself, for the sake of your kids, and — not to sound corny — for the sake of your country, join us to fight the graves threat this country has seen since the civil war.

    • They have no paperwork, no accounting, no chain of custody and a BUNCH OF FAKE PAPERS!

      They deserve a nice stiff @ss-kicking for what they have done to the American people.

      Now its time for some real action!!!

      • How about fake titles such as Snr V.P., of Citibank, assigning mortgages. But the Judges ignore facts of fraud and grant summary judgment, If you want justice you will only find it in the dark jungles of Africa, not in a courtroom of the USA. Here the $ rules, and bank’s can print money, 1000’s of times for every $1.00 IOU signed by ANY BORROWER!!

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