Comments on: Well Now Isn’t This Interesting… A New Spin on Bank Fraud: Banks Defrauding Their Investors, Auditors and Regulators RE Foreclosures

By: avirani0203

avirani0203 — Fri, 30 Jul 2010 14:22:33 +0000

Pursuant to many of the PSAs, the servicer is contractually obligated to advance the monthly principal and interest payments of any defaulted loans as long as they believe they will be able to recoup the advances from a foreclosure. Bottom line, the servicer is actually the only entity in this whole scheme that comes out ahead. I have seen investor lawsuits against servicers such as Ocwen and Select Portfolio, but there are not many. IMHO, this is the entity the investors should pursue because it is the servicer that has direct contact with the homeowner and the one who is burining both ends of the candle.

By: indio007

indio007 — Fri, 30 Jul 2010 04:18:40 +0000

They must have some insurance mechanism with the servicer that is “paying” for the borrower. The incentive to fudge the loan loss reserve is high because it directly effects the leverage ratio. What choice do they have? Pay the loan themselves or become insolvent to depositors?

By: Richard F. Kessler

Richard F. Kessler — Thu, 29 Jul 2010 13:56:47 +0000

If a defendant in a foreclosure proceeding can produce evidence that the lender is reporting the loan as current, the defendant would have the basis for a motion to dismiss because of inconsistent statements by the plaintiff. The account cannot be in default for purposes of foreclosure but current for bank reporting purposes. By the way, how can a mortgage creditor pay itself what the debtor owes every month and still maintain the debtor is in default? There is something surreal about a creditor making itself payments which a debtor has defaulted. The last sentence does not make sense.