THROWING THE DART AND MISSING THE MARK
Two myths the media must stop pronouncing are as follows:
1. The myth that the majority of homeowners that enter modifications under HAMP or any other program are falling out of the modification; in other words, are not completing the modifications. This is a false statement.
2. The myth that the Banks/Lenders were not paid 100% for these defaulted loans.
The first myth has been pervasive for over a year and it not true. Ask any attorney that does loan modification. What is happening is that the borrower finally – after 8 months or more – gets a trial period loan modification from the Lender. Why this takes so long is beyond comprehension. Nevertheless, The trial period modification amounts to something like 31% of the total income of the Borrower. The monthly mortgage is reasonable and the Borrower enters the agreement.
Several events quickly transpire after that. First and foremost, the Lender is getting paid from the U.S. Government (read Tax Payers) anywhere from $1000 to $2500 for that modification. So a Borrower you gets a payment of $1200 under the HAMP program enters the agreements and pays. At the same time the Bank is getting another $1000 to $2500 from the Government. In sum, the Bank is actually receiving between $2200 to $3700 for that same loan. What happens when the Bank no longer receives the Government money – all of a sudden the Borrower, who has paid in accordance with the agreement, no longer qualifies for the modification.
The trial period was designed to prove that the Borrower could and would pay the agreed upon sum. After the three months the trial period modification was suppose to turn into a permanent modification. What happened in the majority of cases is either the Bank simply informs the Borrower that he/she no longer qualifies or the Bank jacks the monthly payment up to the original monthly mortgage payments. Following this action the Bank wrongly reports that the Borrower fell out of the modification. What really happened is that the Bank forced the Borrower out of the modification by refusing to make the modification a permanent modification. In short, it is the Banks fraudulent activity that forced the Borrower out of the modification as it is the Banks fraudulent activity (by way of securitization) that has caused the foreclosure crisis.
Another scenario may happen. The Borrower pays on the modification for many months beyond the three months. The Lender continues to tell the Borrower to pay the modification amount because the permanent loan modification papers “are in the mail”. This goes on for many, many months while the Borrower is faithfully paying the Bank. Then one day the Borrower receives in the mail a Letter saying that the Borrower does not qualify for the modification amount and now owes all the money that has been deferred before and during the modification period. Obviously, the Borrower does not have the thousands of dollars the Bank is demanding, which the Bank knows. Bank now wrongfully reports that the Borrower fell out of the modification.
The next possible scenario that may happen is that the Bank gets a final summary judgment from the court and the Borrowers house goes up for sale. Once the court enters the final summary judgment, the Bank no longer has to deal with those pesky Borrowers paying on the modification; thus, the Bank sends a letter saying that the Borrower no longer qualifies for the modification, which the Borrower has faithfully been paying, and – oh, by the way – your house is our house in four months, which is generally when the court sells the Borrowers home online.
This last scenario happens because the Bank’s attorney continues prosecuting the foreclosure despite the Borrower entering into a modification agreement with the Bank. Why? – because the Bank does not tell the Bank’s Attorney to halt prosecuting the case. The Bank also does not tell the Borrower that the Bank will continue prosecuting the foreclosure throughout the loan modification period.
This is the absolute favorite tactic of the Bank. The Bank keeps the Borrower talking (and distracted) while the Bank’s attorneys continue through the courts getting first a default against the Borrower for not answering the Complaint and then a final summary judgment with a sale date. Many of my clients have actually been told by the Bank not to get an attorney because the Borrower is talking to the Bank. This tactic works because ordinary people do not keep track of their phone calls and conversations with the Bank and the Bank representative refuse to put anything in writing, which can be used against them in a court of law. So, when moving to vacate the default, an attorney, like myself, has no hard evidence of what the clients conversations are with the Bank.
What I, as a mortgage defense attorney must do, must do is file a motion to abate or dismiss the complaint when the modification agreement has been entered or the modification negotiations are ongoing. Otherwise, the Bank’s Attorney will continue to prosecute the foreclosure to the detriment of the Borrower. Few Borrowers know this fact and, thus, fall once again into the Fraudster Banks’ Victim column.
To conclude: It is the Fraudster Banks, and their Attorneys (who know what is the Fraudster Banks are doing), who force the majority of Borrowers out of modifications which are favorable to the Borrower, but not the Banks.
This brings us to the next question. The Banks have been paid for these bad loans. The Banks have been paid for these loans through Credit Default Swaps, which works like an insurance policy. Or, the Banks have been paid for these loans through Mortgage Insurance, paid for by the Borrower or by the excess funds collected by the Securitized Trusts. Or the Banks have been paid through the Government Bail Out.
Furthermore, there was a reason why the Banks converted many of these Notes into electronic copies and destroyed the original Notes. That made it easy to sell the same Note multiple times. Instead of transferring the Original “wet ink” Notes, electronic copies of the Notes on DVDs were transferred, multiple times. After all who is to say what is the “original” electronic copy is. Is it the one Trust One bought or is it the one the Trust 2 bought? Or maybe it is the one that Lehman Brothers bought from Indymac Bank, FSB? It’s the same Note just a different DVD.
The Fraudster Banks want the Media to throw the dart at the Borrowers but that misses the Mark. The Borrowers – read, the American people – are the last link in a Ponzi scheme that started with the Banks (read securitization) and ends with the Fraudster Banks manipulation of the system and the ignorance of the common, ordinary American Citizen.