FORECLOSURES 1 - MODIFICATIONS 0

There is no way to maintain this BLOG as frequently as would be liked because FORECLOSURES ARE NOT DECREASING! We are saving at least one (1) house a week and for a small office that is a huge investment of time.

If you have your home sold at a foreclosure sale and you have not taken all possible steps to stop the sale, shame on you. If you never knew what options were available, shame on the attorneys and the mortgage industry. Keep in mind that a MORTGAGE SERVICER would rather foreclose than modify despite HAMP. The why is simple!

Servicers are paid a fee to handle the payments and billing on a monthly basis, of all loans in the portfolio. If a percentage of those loans get delinquent enough to warrant legal action the servicer wants no part of the process. They are paid for collecting money and sending bills, and referring mortgages to legal firms for foreclosure. THEY ARE NOT PAID FOR MODIFICATIONS! Yes, there is a provision in the Making Home Affordable package that theoretically pays $1,500 to a servicer for each modification, but that only applies to FannieMae and FreddieMac loans.

MOST IMPORTANT, A SERVICER LOSES NOTHING IF A HOUSE IS FORECLOSED AT A HUGE LOSS. The owner of the loan losses but the Servicer does not care. It gets paid for servicing the loan and gets paid for taking it to foreclosure. For example,there is no loss TO THE SERVICER because the loan was for $200,000 and the foreclosure sale resulted in the mortgagee (lender) buying the house back and then selling it for $100,000. No one has any risk of loss except the HOMEOWNER

So, we are left with the problem of a company spending money (salaries) to try to work on a modification by contacting the owner(s) of the loan and asking for permission and not getting paid for the work. Now, most servicing agreements (the contract between the owner of the loan, or the Trustee of the Mortgage Backed Security that actually owns the loan) grant a certain amount of leeway for the servicing company (A.S.C., AHMSI (old Option One), Ocwen, HomeEq, CitiMortgage etc, Chase Mortgage etc., ETC.). This flexibility is very limited. What is not limited is foreclosing, and each foreclosure gets money to the servicer for finalizing the loan.

If this all reads like "Lost in the Fun House" or "One Flew Over the Cuckoo's Nest" or the housing equivalent of FEMA during Katrina in Louisiana, that is because it is counter-intuitive and counter-productive, and costly. The monetary costs can be calculated and written-off as a "cost of doing business". The Servicer or owner of the loan, the Mortgage Backed Security or the Bank, may even receive money from the bail-out programs for foreclosing and "taking a loss"

The good news - It is possible, sometimes, to reverse a foreclosure. I know this because I have done FIVE (5). There are no tricks, no easy ways to do it, and no lender will want to cooperate AT FIRST. Details in the next installment

Author's Copyright by Richard I. Isacoff, Esq, April, 2010

rii@isacofflaw.com
http://www.isacofflaw.com/

One Bank's Lies, Another's Obfuscation?

The answer to the title question is a qualified MAYBE! (Obfuscate: to muddy the waters so no one has a clue about the real answer or even the question) Based on ever changing figures, the Wall Street Journal reported, in its December 11th edition, that there are nearly 5% of the homeowners in the Making Home Affordable Program ("MHAP")who have "permanent" mortgage modifications. If we go back to the beginning of the MHAP, it was estimated that there were 2,700,000 homeowners eligible. That figure did not include loans that did not fall within modification guidelines, even if they did come within the HARP (Home Affordable REFINANCE Program) structure.

The math on the 2.7 million figure equates to about 1.15% of those eligible have a permanent modification. That is substantially up from the numbers reported only 3 weeks ago but... The reality is that the Banks, including the biggest in the country (Bank of America, CitiBank, JPMorgan Chase) are not making loans or loan modifications without being forced to do so.

In my practice in western Western Massachusetts, I am dealing with a multitude of lenders, in every case, trying to save a home. While I have the occasional client who got into financial trouble of his/her own doing, the vast majority, 90-95%, find themselves facing foreclosure because of job loss, fewer hours available, ill health/death and the related medical bills, or family problems such as divorce, or some combination of these factors. ADDING TO THESE ISSUES IS THERE DEVASTATION OF BAD LOANS AND THE ECONOMIC COLLAPSE.

The only way I can get the attention of some of the lenders is to file suit. That is my last resort - whether the action is in a State court or in U S Bankruptcy Court. There is little interaction with loan workout specialists, now called Loss Mitigation Specialists, before documents, often obtained from the MHA.gov website, are sent to the lender. It is at this critical juncture that lenders or their servicing companies are lying or obfuscating.

All of the current articles quoting lenders as to the reason so few modifications are becoming permanent, cite the lenders as stating that only a small percentage complete all of the required paperwork, and of those, 1 out of 5 default on the "Trial Payment Period" payments. It is my personal experience that fully 50% of the submissions to the MHA program at any specific lender are LOST. I have sent 2,3 and sometimes 4 packages to the MHA department of a mortgagee/servicer before I get a set of documents that are not lost. Seldom will anyone in the servicing side say "I am sorry, we misplaced the documents we need." It is generally a form letter, received by me or my client, that states that the client did not qualify because inadequate information was provided, specifically that the package of forms was never received.

Even at that a new problem arises: after 45-60 days of waiting the documents sent are stale (outdated) or the foreclosure, which had been postponed due to the eligibility and contact under MHA, is re-scheduled. As for the default in payments - if someone receive a notice on Dec 4th that states the beginning payment under the trial period is due Dec. 1st, how can anyone comply? If I am lucky enough to get a lawyer for the lender involved, the process moves much more efficiently, as the lawyer knows the stakes for the lender.

In fairness (a phrase I am getting tired of having to use) to the mortgage folks, they are overwhelmed. No one could prepare for this number of "problem" mortgages. Okay, fine! Why then are modifications being refused by lenders? Has not the Treasury, FDIC, and the Federal Reserve, along with the "Administration" said they want the program to work, and NOW? Yes, but none of these folks tried to assist in getting a bill through the House of Representatives that would have put pressure on the Banks etc. to MAKE Homes affordable.

When the House debated a bill to allow Bankruptcy Judges to modify home mortgages, and it seemed like it would pass, but the Mortgage Backed Security holders and big investors said NO! and the spike in permanent modifications was announced to show that nothing else was needed.
On Monday the bill was defeated and I predict it will be back to business usual - just the endless loop of automated prompts from one department to another and the seemingly coordinated 45 minute wait for a representative.

Author's Copyright by Richard I. Isacoff, Esq, December 2009

http://www.isacofflaw.com/
rii@isacofflaw.com

How Many Clients Does it Take....

"How Many Clients Does It Take To Change A Light Bulb?" is the name of a small but funny (to a lawyer anyway) book by a fellow attorney from the other end of Massachusetts. Val (actually Giovanni) Diviacchi has written this short but all to true statement, not just about clients, but about all of us in reality. The Answer? One! He/she holds the light bulb and expects the world to revolve around him/her!

Looking at the growing number of foreclosures and the ever-increasing unemployment, we do not have the luxury of waiting for the world, the state, the Feds etc., to help us. As was reported in the New York Times last week by Peter S. Goodman, the modification programs, including the so-called Obama Plan, the Making Home Affordable program, are not working. Under MHA only 2,000 out of 700,000 modification in process have become permanent. Considering that there were 2.7 million loans eligible for that one program, the percentage is scary - 7/100ths of 1% (or .0007 for decimal lovers)

If you are facing a foreclosure or might be in the near future because of a job loss or cut-back, illness, marriage, baby, or just bad money management you should act now. First, contact the lenders loss mitigation department or its "troubled borrower" department. Ask what they can do to help. If you were out of work for 3 months and are just that same 3 months behind, you should be able to work out a plan quickly. I say "should" because even easy problems can be made into full blown wars .

If you have received a notice that states that the Lender is or intending to foreclose, CALL A LAWYER who works in one or more of the areas of foreclosure prevention, predatory lending, loan modifications, and bankruptcy. This is not the kind of problem that will go away. Do not think by not picking-up that certified mail that you are safe! THE WORLD WILL NOT REVOLVE AROUND YOU.

The following link is to an interview of me by a local television host, Andrew Cort, DC, JD. It describes how it came to pass that mortgages were bad and foreclosures happen in Mass. at the rate of 125 each day.

Spend the time to watch the video. I may not be pretty, but the words are worth it (Just close your eyes and LISTEN!).

http://www.andrewcort.com/spirit12RichardIsacoff.html

Money Money Everywhere But....

The money supply to Banks is there. Interest rates for Bank borrowing is still near 0%. But, homeowners are now subject to much tighter rules for borrowing because the Banks follow the BOOK, or in this case the Federal Reserve Regs. As a result, home mortgages are MORE DIFFICULT to get than anytime in the past decade or two.

There are new rules to try to reign in the high-cost, so-called "subprime" predatory loans. As of October 1st "High Cost Loans" have a new definition: any loan that is "1.5 percentage points" above the average prime mortgage rate. (Note: that is not the prime rate mortgage index but a prime rate mortgage - a mortgage given to a "prime borrower" or a so-called "a" borrower - great credit). If a loan is a "high-cost loan" under the new definition lenders must verify that the borrower can repay the loan through earnings and other income, not simply by a foreclosure or refinance.

That rule may not appear to be a departure from the "old" way but it is. The crisis we are still in was caused by some large lenders/brokers making loans to anyone who could pass a basic screening:"Can you hear thunder and see lightning?". Greedy and ignorant brokers/lenders would often give loans to borrowers without requiring any proof of the borrowers ability to pay.

Sometimes the borrowers knew exactly what they were doing and did not care - they gambled that the market for houses would keep rising and that they could refinance their way out of any problem There were no verifications of employment or verifications of deposits send. No bank statements showing a steady balance, for the self employed were requested, and often, for employed borrowers, W-2 copies were ignored or not sought.

Basically, the new rules that the Federal Reserve has put into effect as of October 1, 2009, merely force lenders/brokers AND borrowers to do what they should have been doing all along. That borrowers would fabricate income and lie on applications was ignored, or even encouraged.

Some states, like Massachusetts, Connecticut, Rhode Island, and a handful of others across the country have already put regulations in place that make the lender/broker certify that the loan is in the best interests of the borrower. In fact, Massachusetts REQUIRES this criteria be met for high cost loans, as defined by the Commonwealth General Laws. Also, many states, Massachusetts among them, have enacted legislation or have had the highest court in the state rule that certain threshold questions (like can the borrower repay and is does the loan lower payments or allow for home improvements, or lengthen the term) must be met on a refinance before the lender/broker can consider itself safe from violating such laws. UNFORTUNATELY, many of the National Banks, and some Savings Institutions governed by the Office of Thrift Supervision, claim that state law does NOT apply to them.

The Federal Reserve Rules also state, in part, that Prepayment penalties are banned if the mortgage payment can change in the initial four years of the loan. For other higher-priced, mortgage loans, a prepayment penalty period cannot last for more than two years. (this is the link to the 65 page Regulation:

http://www.federalreserve.gov/reportforms/formsreview/RegZ_20080109_ifr.pdf

Banks have over-reacted so NO MONEY TO HOMEOWNERS. Foreclosure proceedings are still climbing. The worst may not be over for the average homeowner who has a financial problem, or a first-time home buyer who does not have a high (700s) credit score.

Author's Copyright by Richard I. Isacoff, Esq, October 2009

http://www.isacofflaw.com/
rii@isacofflaw.com

Stopping Foreclosure When the Lender Says "NO!"

(THIS IS A RE-POSTING FROM AUGUST 12, 2009)

Bankruptcy is a good option if you are facing foreclosure and cannot get the lender to accept reasonable terms for a modification; terms that will allow you to either catch up on back payments over time, or which will put the arrearage at the back of the loan.

The filing of any type of Bankruptcy, which is asking for protection from creditors, will stop ALL actions for money, foreclosures, repossessions etc, against you. BUT, for most consumers, only a Chapter 13 will give you the ability to spread out payments for the arrearage over a period of up to 60 months. So, assuming you are 6 months behind in payments of $1,500 each, and there are $3,00 in legal fees because you are in a foreclosure status, and you have $300 in late fees, and the lender has paid $1,200 in taxes for you because your escrow account (where the lender collects money to pay real estate taxes each month as part of the mortgage) is short because you haven't paid in 6 months - you owe the bank $13,500.

Most of us do not have that amount of pocket change, and if you did, you wouldn't be 6 months behind. Spreading that amount of money over 60 months adds only $225 per month to your expenses. Please understand that there is no misunderstanding about a desperate financial situation, but if the arrearage occurred because of a temporary drop in income, for whatever reason, you can get caught up. Too many people give up once they get that far behind because they know they cannot pay $13,000+/- all at once, and once the foreclosure starts, the lender is not inclined to "make a deal".

The Bankruptcy Laws were established so that people could get a "FRESH START". The whole concept is to give people who get into a financial bind a way out, without losing their home, car, retirement accounts etc. Details of the protections a Bankruptcy gives you are on my website www.isacofflaw.com . Once in a Chapter 13 Bankruptcy, the United States Bankruptcy Court controls what a creditor can do. If you make payments on time, including the $225/month in the above example, the lender can only sit by a wait until you finish the Plan of payments. If you make all of them, your loan is put back into "regular" good payment status.

Also, if you miss a payment due to a temporary problem (broken arm with no sick time available from your job or a seasonal drop in hours so the overtime you have been counting on isn't available) the lender CANNOT just foreclose. It must ask the Bankruptcy Court for permission and there will be a hearing on the request. There, your lawyer (don't try a Chapter 13 Bankruptcy on your own) can explain the situation to the Court and usually work some type of compromise with the lender. The Bankruptcy Court is there to protect Debtors, provided the Debtors do what they promise.

Further, if you have equity in your house of $30,000, and your payments are $1,000 per month, the Court normally will not allow a foreclosure even if you are 2 or 3 months behind. While that is not specified in the Bankruptcy Code, the concept, called "adequate protection", is clearly spelled out. In essence it states that if the lender is not at risk of losing anything by waiting and using some of your equity to guaranty the arrearage will be paid, then the Court WILL NOT allow the lender to foreclose. The lender has no risk in waiting so you get a chance to get caught up again.

The Bankruptcy laws are complex, but the concept is not. If you are behind in your mortgage payments, and the lender wants to foreclose, and the lender will not "make a deal" with you, and you do not have a lump sum to pay all of what you owe from payments not made, a Chapter 13 Bankruptcy filing can be used to save your home. You can find a qualified Bankruptcy attorney by going to the website of the National Association of Consumer Bankruptcy Attorneys www.nacba.org , www.abi.org, or by calling my office for a "no charge" referral.

Author's Copyright by Richard I. Isacoff, Esq, August 2009

www.isacofflaw.com

rii@isacofflaw.com

Mortgage Modificiations To Get More Difficult?

Countrywide, now part of Bank of America was one of the major lenders to sub-prime borrowers (that only means a credit score below 680 (or 640 depending on the day). It also packaged and sold the loans it originated, as Mortgage-Backed Securities ("MBS"). It continued to service the loans (collect money and send bills from and to borrowers) and was paid by the owners of the MBS to do so. The owners were just investors - they bought $xxxxx of a bond, not any different than if they bought a corporate or municipal bond.

When the mortgage/housing crisis hit, in large part due to Adjustable Rate Mortgages ("ARM") there was tremendous pressure on the Servicers, of which Countrywide was one, to MODIFY loans so that they were affordable for the borrowers. Some servicers modified loans, which they may or may not have been permitted to do in their contract, called a Pooling and Servicing Agreement ("PSA"), with the "packager"/"owner" of the bond. Countrywide modified loans and then, ignoring its PSA, refused to re-purchase the loans that had been modified by lowering the interest rates or even putting payments at the back of the loan. In simpler terms, Countrywide altered the amount of interest the owners of the MBS would receive.

A federal court ruled that Countrywide's motion to dismiss the lawsuit brought against it by the investors would not succeed. The Court stated that the case was one which should be brought in State Court, the the modifications were not protected by the recent legislation and Congressional acts to force lenders and servicers to modify loans. Basically, the Court said that if there is a contract, Countrywide must observe it - any quarrels with that belong in a state court on a case by case basis. No "get out of jail card" was given to Countrywide.

WHY DO YOU CARE? Because Servicers, if they aren't protected when they make modification from the investors, who expect a certain percentage return, will refuse to modify citing the Court ruling but relying on the contract they made, and arguing that they cannot breach the contract! This means more difficulty getting Servicers, which are not participating in the Federal program to modify loans, now for fear of a lawsuit.

This issue was brought up months ago and detailed in my posts of 10/25/2008 and 11/9/2008 -
http://finance-for-us.blogspot.com/2008/10/foreclosure-crisis-how-to-stop-it.html and http://finance-for-us.blogspot.com/2008/11/who-is-bailout-helping-right-now.html.

This just points out the disconnect, the lack of communications and an efficient coherent policy to deal with the foreclosures. Maybe Congress would act if it the home of a member!!

Author's Copyright by Richard I. Isacoff, Esq, August 2009
http://www.isacofflaw.com/
rii@isacofflaw.com

Mortgages, Mortgages, Everywhere, Yet Not A Drop For Me

We finally have the basics of the Mortgage Bailout for Homeowners -at least for some homeowners. The Administration crafted a plan, touted in the mainstream media as "Plan Could Aid 1 in 9 Homeowners". This program is designed to help people who might face foreclosure, keep their homes. This is great news! With inertia being the strongest force in the universe (at least ours), a step forward is truly a huge one. There is at least one significant gap however. BUT FIRST, the good news -PLAN BASICS:

1. Plan applies ONLY to primary residence
2. Mortgage balances cannot exceed $ 729, 750.00 - (this doesn't affect my clients)
3. You will only qualify if your total monthly mortgage payment (principal, interest, taxes, insurance) is more than 31% of your PRE-TAX monthly income. Example - you (and spouse if married) take home $750 every week, but your wages BEFORE TAXES are $900 every week, Using the BEFORE TAX figure of $900-

a. multiply it by 52 (number of pays in the year), which equals $46,800 (yearly PRE-TAX income;
b. divide that by 12 (months in the year) to get the monthly PRE-TAX income amount, here equaling $3,900;
c. multiply that figure, $3,900 by 31% (.31) = $1,209

If your total monthly mortgage payment is more than $1,209 , you would be eligible for the program. It does not matter if you are current in payments or behind, but you cannot have a large stash of cash in the bank or under the mattress.

Income WILL BE VERIFIED - Borrowers will have to sign a form allowing the Servicer/Lender to get a copy of the Borrower(s)' federal tax transcript (Form 4506-T) AND, if you are employed you will need 2 months of pay stubs; If self-employed then third-party proof of earnings in addition to the tax information. Everyone will be on the lookout for fake income figures and other FRAUD.

The concept behind this approach is to have the Lender reduce the monthly payment to an amount of not more than 38% of BEFORE TAX income, with the Treasury sharing the cost of reducing the payments to not more than 31% of BEFORE TAX monthly income.

Here is the bad news: While Borrowers with loans through FHA, VA or owned by FannieMae (FNMA) or FreddieMac (FHMC), will have no problem if the otherwise qualify (above guidelines), IF YOUR LOAN IS IN A MORTGAGE-BACKED SECURITY, and if there is a Servicer, the modification can be done only if the agreement( called the Pooling and Servicing Agreement or "PSA") among the investors, lenders, servicers, trustees, etc. allows the changes. Keep in mind, that as explained in earlier posts, no one expected this collapse, so most of the PSAs are not written to allow much in the way of modifications. Also, participation is voluntary. The majority of the Adjustable Rate Mortgages made to so-called sub-prime borrowers are in this category.

The full details of the plan, the "HOME AFFORDABLE MODIFICATION PROGRAM GUIDELINES", are available at http://www.financialstability.gov/ which is the official Treasury website. It is 19 pages, most of which gets fairly technical. At the same site there is a Summary of Guidelines called "MAKING HOME AFFORDABLE".

If you are in trouble with your loan, or soon will be, call the company that sends you the monthly statements. If they are of no help, call the "Hope Hotline" at 1-888-995-4673, or contact my office.

Author's Copyright by Richard I. Isacoff, Esq - March, 2009

http://www.isacofflaw.com/
rii@isacofflaw.com

Mortgage Modification - Court Ordered

Below is a letter I have written to the U.S. Congressman from my district, outlining the reasons I believe that the measure being taken up by Congress, to give Bankruptcy Judges the right to modify primary residence mortgages, should be approved. If you can, write your Congressman to ask his support, the letter, I believe, is self-explantory

RICHARD I. ISACOFF, P.C.
ATTORNEY AT LAW
100 NORTH STREET
SUITE 405
PITTSFIELD, MASSACHUSETTS 01201
____________
e-mail rii@isacofflaw.com

TELEPHONE (413) 443-8164 TELECOPIER (413) 443-8171

VIA FACSIMILE 202-226-1224

The Hon. John W. Olver
U.S. House of Representatives
111 Longworth HOB
Washington, DC 20515

Dear Congressman Olver

I write not only as a constituent, but also as an attorney who represents distressed homeowners in our area who are trying to save their homes from foreclosure. This is a genuine and urgent crisis that demands immediate and targeted congressional action. As such, I encourage you to support H.R. 200, legislation that would provide relief to these homeowners.

Too many families in this District and throughout the Commonwealth are on the brink of losing their homes to foreclosure. Across the country, it is estimated that 8.1 million homes will be in foreclosure over the next four years if Congress does not act. As devastating as foreclosure is for the individual families whose homes are threatened, the effects of this foreclosure epidemic are felt throughout the economy. Indeed, virtually every economist has recognized that the financial crisis gripping the country can be resolved only by dealing with the root cause –the escalating millions of foreclosures. I will gladly send you detailed and summary materials on this issue.

H.R. 200 would help families save their homes by giving them more flexibility to restructure the mortgages on their primary residences. The bill would fix current law, enacted in 1993, that prevents judicial modification of primary home mortgages, but allows such changes to virtually all other loans. Why shouldn’t Judges be able to correct “bad faith” loans – regardless of which side acted in bad faith?

Sadly, the magnitude of the foreclosure crisis dwarfs the response to date from Washington. The very clear lesson of the last two years is that foreclosures will not be curbed through top-down voluntary efforts on the part of the financial services industry alone, no matter how many incentives are provided. Courts must be empowered to implement economically rational loan modifications where the parties are unwilling to do so on their own. Loan modifications through the bankruptcy courts can be accomplished on a sufficient scale and time frame to have a meaningful impact. The mere threat of judicial modification may, in fact, lead to more meaningful voluntary loan modifications.

OLVER, REP./CON’T
February 21, 2009
Page 2

President Obama recognized Chapter 13 judicial mortgage modification as an effective approach to stemming the foreclosure tide and expressed his support for legislation that would accomplish this. While the Mortgage Backed Securities investors and market-makers might lose some value, getting a modification that pays 80% of the loan with interest, is better than a foreclosure sale yielding 40%-50% of the investment cost.

Please support the Bill – campaign for it. I worked with you in the days of the BNE collapse and RECOLL Mgt.; I would be honored to do so again. If you need additional information, please contact me at my office on (413) 443-8164, my private cell phone (413) xxxxxxxx or by e-mail.


Sincerely,



Richard I. Isacoff, Esq




RII/mpb
cc: Maureen Thompson, NACBA


Website:www.isacofflaw.com

BLOG: http://finance-for-us.blogspot.com

Sub-Prime? The Next Generation! FHA? (really?)

SUB-PRIME - PREDATORY - LOANS LENDING - BAILOUT -FINANCIAL CRISIS


They're Baaack! Just when we thought it was safe to go into the wate.. no no no, I meant the mortgage market! This time, FHA loans are the mark.

With the drying-up (or is that drying-down?) of the credit and especially the mortgage market, as announced, the Federal government is trying to re-start the housing market. One way to do that is to use already existing programs, like VA, FHA, USDA Rural Home, etc. Each of these programs is very good at what it does, and with all three of them it is to make loans, specifically mortgage loans to current or existing homeowners.

There is always a catch - some mortgage brokers are committing the same kind of fraud with FHA loans as were prevalent with other loans, such as those made by IndyMacBank, Wells Fargo, Option One, Ameriquest et al. Mortgage applications and documentation is not meant to be an exercise in creative writing. Unfortunately too many mortgage originators do not understand that.

The tricks are the same -altering an application after the borrower has signed it so income can be added to make the loan more attractive to an underwriter. Getting someone in a Bank to falsify Verifications of Deposit or Verifications of Mortgage, also works well to fool the folks making the decisions. Having fake appraisals done, where the value is placed well above the market is another favorite. In June of 2008, the Massachusetts Attorney General announced that the principals of Direct Finance Corporation, which was licensed by the Division of Banks, and at least two employees of community banks were indicted for mortgage fraud and various other matters, for doing just those things.

FHA was too trusting of its originators because they were usually trustworthy. Once the "bad guys" lost the ability to do conventional non-agency loans, like to the lenders mentioned above, these middlemen/women just took the same techniques and applied them to the VA/FHA/USDA field. We might think that these groups would have been more vigilant but...

In the 1980s, while I was working with the Maryland S&L crisis, running failed S&Ls I came across a true story about mortgage fraud that seems both comical and sad now. There were two older women who had been in the mortgage business for years. Keep in mind, that in the mid 80s interest rates were in the mid teens, like 15% for a NORMAL residential mortgage rate.

These women worked with FHA and VA loans almost exclusively. To make a loan more appealing, they would alter an application, make up Verifications, change documents before, during and after closings. Remember, PCs were just getting started so the method was the comical (now) side. They had no fewer than 10 typewriters of different manufacture so they could match the type style. Additionally, they had several IBM Selectrics, the ones with the little interchangeable steel ball, so they could use a hundred different type faces and fonts. They were caught by chance and went to jail for several years (the sad part). Point is that the mortgage fraud business has always been alive and well.

Author's Copyright by Richard I. Isacoff, Esq - November 2008

http://www.isacofflaw.com/