Mortgage Servicing Fraud

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"Mortgage Servicing Fraud"

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Article: "Credit Repair Scams"
By Andre Plessis

"Mortgage Servicing Scams"

What is Mortgage Servicing Fraud?

Loan servicing companies handle the operational aspects of mortgage lending. They collect mortgage monthly payments, credit those payments, send reminders when payments are overdue, assess late charges, establish escrow accounts for the payment of taxes, hazard and flood insurance, and private mortgage insurance. They pay out taxes and insurance premiums when due, and account for all of the above to the investors who own the loans. They also are responsible for managing loss mitigation when a loan gets in trouble. This can include collection activities, loan workouts, and, if necessary, foreclosure. Some even manage the foreclosed property.

If you get a notice from the company to whom you have been making monthly payments that your loan is being transferred, it is likely that the ownership of your loan has not changed; just that one big mortgage servicing company has bought a portfolio of loan servicing rights from another.

There is a lot of money in the servicing of mortgage loans and so it has become big business in the U.S. A servicing company typically collects a small fraction of the monthly payments on a performing portfolio, a small amount per loan but a significant amount on a portfolio valued at millions of dollars, particularly since there is little work involved in servicing performing loans.

Mortgage Servicing Fraud is committed when the lender or lender's servicer manipulates performing loans to falsely indicate a default by:

	Entering on-time payments as late, to exact illegal and unauthorized fees.
	Charging force-placed insurance when the homeowner already has full coverage.
	Refusing payments to guarantee default.
	Adding thousands of dollars in unearned legal fees to create a default.
	Ignoring customer complaints and "qualified written requests".
	Arrogantly violating numerous laws and regulations.
	Falsely reporting a default to the credit bureaus when it is the servicer creating the default.
	Paying property taxes late, then charging the late penalties to the borrower.
	Paying taxes and insurance on the wrong property.
	Coercing the homeowner into signing a forbearance agreement to strip away their legal rights.
	Falsifying records.
	Creating additional false deficiencies through a variety of questionable practices.
	Adding misc. fees to purposely create a deficiency with the borrower's next payment.
	Repeatedly committing fraud upon the courts by stating they are the Holder and Owner of the Note - when in fact - they do not own the Note.
	Intentionally cause delays to run up your legal expenses.
	Not applying payments to principal and interest.
	Committing perjury through flagrant misrepresentations to the courts.
	Withholding or redacting discovery evidence.
	Conjuring up events that never happened and refusing to provide documentation to support these fallacies.
	Refusing to cooperate with other lender's attempts to refinance and stop the illegal foreclosure.
	Forging documents.
	Blatantly committing fraud upon the courts.
	Apply to the trust for reimbursement after deducting the fees from the borrowers p&i payments. (Known as double-dipping.)
	Rounding up ARM rates when on a downward trend.
	Not adhering to the terms of the loan documents.

The FTC provides excellent sample complaint letters to both servicing company and credit bureau on its website at www.ftc.gov/becp/conline/pubs/homes/mortserv.htm.

To Your Success,

Andre Plessis

Andre Plessis
"The Mortgage Guru"
"Andre Plessis is a Mortgage Planner and Author. He helps individuals improve their credit and offer guidance in personal finance. His primary goal is to provide the expertise, guidance and skills necessary to gain financial freedom through real estate and live a debt free lifestyle".
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