Comments on: Mortgage paperwork mess: Next housing shock?
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- I wouldn't be surprised to find out that some of the nastier people posting comments actually work for the banks that were exposed in this article. Most people in these situations are legitimately doing everything they can to pay their mortgages but just need a little compassion and a fair shake. Instead, the banks act like everyone's a deabeat when the banks themselves were duplicit in creating the problem. Now they act like they don't have to follow the same rules they use to take people's homes.
Let's give the banks this same compassion and understanding until they are out of business and their executives are in prison with all of their personal assets "foreclosed" upon.
We should all find a solid and respectable bank or (gasp) credit union (you know those financial institutions that the customers actually own) and move all our money to them and reward their good stewardship.
PS I'm not even a homeowner and never have been (by choice), but I sure feel for people who are losing their homes despite their best efforts. - Reply to this comment
- 60 MINUTES CAUGHT ONLY THE TIP OF THE ICEBERG.
Millions of Adjustable Rate Mortgages (ARMs) annual adjustments are not adjusting down as index rates have declined under Fed stimulus efforts, thus counter-acting the stimulus. Today's interest rate is as low as half yet adjustable payments do not adjust down for many paying borrowers leading to more defaults, foreclosures, and reduced economic activity by over-amortizing.
Payments do not decline as expected because of calculation errors, and due to caps on adjustments (often improperly applied).
In most Chase WaMu ARMs (perhaps over a million), adjustments are limited to a "7 1/2% payment cap which applies only to the PRINCIPAL payment and does not apply to any escrow payments" (Par.4F). WaMu meant this to apply to "principal and interest" but instead capped "principal". If "principal" alone was capped as called for, ARM payments would be reduced reflecting the large reduction in interest. For example, a $4,000 payment that has a $3500 interest component and $500 principal component might see an old 7% rate drop to 3.5% or half - $1750 in interest. WaMu improperly caps the change of the $4,000 "payment" to 7 1/2% or $300 reducing it to $3,700. The $3700 new payment less $1750 in new interest results in a principal component of $1950 (up from $500). If "PRINCIPAL" had been capped, to a 7 1/2% increase it would have been capped to $537.50. Principal of $537.50 plus interest of $1750 would imply a new payment of $2,287.50 instead of $3700 - an overcharge of $1412.50 per month or $16,950/year.
Other ARM clauses have similar effects. In WaMu mortgages the adjusted payment for the first year shall be calculated at "the interest rate in effect 45 days prior to the Payment Change Date". Chase WaMu interprets this to mean the old high interest you were paying - 7% in the case above. Thus, in the first year of an ARM adjustment, the payment does not change.
In addition -
Lenders appraise homes seeking modification and base their decision on the value of the home relative to the mortgage, not borrower need, turning down modification requests of good value homes and approving underwater homes that produce losses if foreclosed.
Lenders paid brokers yield-spread commissions - incentivizing brokers that borrowers trusted to sell loans with onerous adjustment provisions more profitable to banks.
Lenders' assembly line modification reviews are designed to drag out the modification process accruing higher interest rates and wearing down borrowers to avoid modifications. Overseas low-wage bill collectors call for collection (up to 9PM), inspectors visit homes unannounced to serve call 800- notices on homeowners (to intimidate) or renters (to disrupt rental agreements), application input reps collect excessive docs and after 5-7 apps over 2 years may turn them over to underwriters who can not have any contact and deny loans for inaccurate justifications by mail, finalized by foreclosure factories that begin foreclosures until you hire a lawyer. Hring a lawyer (against the lender's advice) at the end of this de-moralizing battle can produce modification results. Unfortunatelly, the least educated and hardest working Americans have the least ability to survive this battle.
A SOLUTION TO OUR NATION'S HOUSE ARREST reqires collective action as no lender will act individually, through the AGs' efforts or other agencies combined with the private efforts of Class Action Lawsuits and RICO charges where warranted.
1) MODIFY AMORTIZATION to 40-years if requested by borrowers. Reduced monthly payments keeps people in homes, reduces defaults and foreclosures and gives consumers cash. Amortization portions of ARMs are massive in early change years. Lower payments will allow some to choose to rent their homes providing an orderly way to convert homes to rentals in an economy of more renters. It de facto increases home lending at a profit to banks and good will toward lenders.
2) MODIFY DEFAULTED LOANS TO MARKET INTEREST rates rapidly using a discount step rate (2%, 3%, 4%, market with 40-year amortization). A market loan is better than a non-performing loan by a borrower who has taken the major poor credit step of defaulting.
3. NO PRINCIPAL REDUCTIONS - the moral hazard is too high of inducing others to default. A borrower's immediate problem is the current monthly mortgage payment. A $20 billion fund is inadequate.
4. CHANGE RENTAL PROPERTY MOD UNDERWRITING from the 31% loan to income standard to the commercial underwriting standard of 80-100% loan payments to market rent.
5. STREAMLINE - assign one banker who can discuss options and resolve the mortgage with clear guidelines and parameters.
6. OFFER RELEASE FROM DEBTOR's PRISON to homeowners who cannot afford lower payments by clearly offering forgiveness of debt in short sales or foreclosures early rather than threats of seeking deficiency judgements. - Reply to this comment
- The people who are self-righteously pointing their fingers are the people who are losing their homes are arrogant people who still, despite seeing all the obviously illegal and FRAUDULENT actions going on with our own government's looking the other way make me so angry. There is no principal deduction on modifications. Modifications are almost always extension of the length of time to pay or possibly an interest rate reduction which would have been possibly by the borrower on his own were it not for the crisis. This smug complacency and holier than thou attitude is really unbecoming and the people who are making these comments look very small, mean-spirited people. So what if they are among those able to pay, that doesn't change the fact that they are bitter and smug people who really should take a lesson in compassion.
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- People - we have been through this very thing with BoA. We had a forensic load audit done and they found all of this very thing to be true. We are now on our way to a lawsuit and hopefully keeping our home. We paid a lawfirm in FL (American Residential Law Group) DO NOT USE THEM.....they "worked" with BoA for a year, and then bam, we get a foreclosure notice. Call LEGAL FORENSIC AUDITORS 540-341-1481 talk to Tyler, tell him Bobby Jackson from TN told him to call. They are great, they did have a charge, but not thousands of dollars for nothing. They produced a certified audit report for and have tried to help us find an attorney in our area to handle our case.
Also - know this, you do nto have to move out until they obtain an eviction notice from the court.
Get this audit done, do not go down without a fight. We sure aren't. We worked with BoA over a year trying to get a modification and they would not do anything. They are the ones who suggested applying for a mod after falling behind due to medical reasons of being off work. They put us in that cycle, and never let us back out. We will continue to fight and save our home - Reply to this comment
- The only question is to whom the money is owed. Please tell all of us who dudifully pay our morgages that those who don't will not be rewarded because of a lender's actions.
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- by Rudicris April 4, 2011 5:27 PM EDT
In the mid 1990's, banks were strong armed into making subprime loans by the Clinton administration.
How did the Clinton administration, (or ANY government agency for that matter), pressure a privately held corporation to do ANYTHING it didn't want to do? - Reply to this comment
- I can't believe there are people on here where their only comments are about people lying to obtain a mortgage or saying the people working at Docx, the ones signing names, should go to jail. I guess they're too obtuse to understand what is really going on here and what caused this crisis.
In the mid 1990's, banks were strong armed into making subprime loans by the Clinton administration. They knew this could turn out bad fro them so they started pressuring Clinton to repeal the Glass-Steagall act so they could have some protection. In 1999 he repealed it which opened the door for credit default swaps. Banks started buying these which would allow them to recoup their money on mortgages that were defaulted on.
It didn't take long before bankers realized they could make big money on these credit default swaps if there was a huge amount of defaults. Not only could they foreclose on a house and resell it, they also got their money back owed on the mortgage from the CDS(credit default swap). They were making profits on defaulted mortgages. And it wasn't just the banks amking money, anybody could invest in these CDS even though they had nothing to do with a mortgage banks. It was basically investors betting that these bad loans would default.
Banks started giving out mortgages like crazy. Also letting people remortgage or giving out equity loans. The banks were letting people buy houses with little or no down payments. They weren't checking applicants income and verifying their jobs. They were letting people remortgage and get equity loans on hugely inflated home values without doing appraisals. They didn't care if people defaulted because they were making profits off it.
This could only go on so long and finally there were just too many defaults and not enough CDS and banks finally started losing money. They started closing up and begging the government for help. The government handed out billions to some of the banks, money that was supposed to help people modify their loans and throttle back the foreclosures. Instead, the banks kept the money and used some of it to line their own pockets with huge bonuses.
But yeah, some people can only focus on the little people who defaulted. Or they focus on the people and high school students making $10 an hour signing names to fraudulent documents. The government loves people like that. People without the mental capacity to understand what happened, who is really at fault and why. There should be a whole bunch of bankers going to jail for this but that will never happen. Business as usual. - Reply to this comment
- How about a new law: The mortgage holder cannot sell or transfer their interest without a signed agreement with the borrower. Then the borrower will always know who he owes money to. Is this too complicated?
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- The employees of this company knowingly committed a crime, forgery, just so they could make some money. They knew what they were doing was wrong and yet continued to show up for work each day signing another person's name. They knew the documents were also phony, but kept up with the signing. They are just as criminally responsible as the document company in any of this.
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- This site was very helpful answering questions. http://******/eW8XGq
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