Loan Modifications And The New Predators by guest author Wizcon

Loan Modifications And The New Predators
by guest author Wizcon

It is never ending. Throughout the housing bubble, I would arrive at the homeowner’s house and watch as they refinanced their homes with adjustable rate loans and tap into the equity on their homes for the lamest reasons. A new SUV, vacation, go to the casino, top of the line appliances, electronic toys and on and on. Many did it to consolidate debt like the loan on the new SUV, eliminating credit card debt, reducing their monthly mortgage premium and eliminating a second mortgage. All were aware that their interest rates would go up in a couple of years. But virtually all said that their loan officer promised they could refinance into a fixed rate before that happened. I heard the borrowers say it and on occasions the loan officers say it. It was party time. Everyone was happy. The loan officers were looking at another commission down the road. The homeowner got to start over on their credit cards and the lenders had another asset with the promise of great returns to sell and bundle.

It didn’t happen for all too many. Their house values went down. Most held mortgages for the full value of the house or more and it was no longer worth that much. They do not qualify for the loans anymore. The Master of ARMS (adjustable rate mortgages) Countrywide’s Angelo Mozilo left the sinking ship to form another company. He wants to buy back the bad loans he helped create (and lied to investors about the risks ) for pennies on the dollar. Better yet he was in line with his hand out for a Legacy Loan from the government to do so. He is a master hedger. Housing values will go back up. He knows how to loan to risky borrowers. He has also been indicted by the SEC for lying and insider trading. Given that he found struggling homeowners “Disgusting”, those very same homeowners made him a very rich man. So that is the mentality of those handing out the bad, risky loans. They counted on the relatively inexperienced financial savvy of the homeowners of the newfangled subprime market. They homeowners got lied to also. The lenders lobbied for Fannie Mae and Freddie Mac deregulation and contributed handsomely to the campaign efforts of those supporting the deregulation. It is a narcissistic world. There was no consideration of the effect on the homeowners and the economy. They got theirs and are in position to get more.

Information on Angelo Mozilo

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47 Responses to Loan Modifications And The New Predators by guest author Wizcon

  1. Pingback: Loan Modifications And The New Predators by guest author Wizcon

  2. Sage says:

    Thanks for writing this up and letting me post it, Wizcon.

    I’m so sick of the companies who get by with preying on the unsuspecting.

  3. Pingback: Loan Modifications And The New Predators by guest author Wizcon | Live Well With Bad Credit

  4. Wizcon says:

    Your welcome. The title is a bit misleading as I was intending to talk more about the “consultants” inserting themselves between the lenders and home owners in the process of modification of loans then disappearing with the homeowners fees. But perhaps anothe time

    Sage Reply:

    Should I change the title?

    Wizcon Reply:

    My feeling is that the next wave of naughties will be in the modification and refinance of these bad assets. Leave it.

  5. AliSilver says:

    Did I already tell ya’ll how my stepdaughter ( yes that ONE) as soon as she was 16 started getting credit card apps. Shes currently in jail and has never held a job since that time, maybe 7 years ago now, and yet they send her about 2 or 4 a month since then. They ahve NO idea if she can pay anything for anything, but since her credit is “PURE” they’ll lend her all she can stomach. i throw them in the trash every time and never told her one came ! :)

  6. skyagunsta says:

    Wiz, all of this,
    “I would arrive at the homeowner’s house and watch as they refinanced their homes with adjustable rate loans and tap into the equity on their homes for the lamest reasons. A new SUV, vacation, go to the casino, top of the line appliances, electronic toys and on and on. Many did it to consolidate debt like the loan on the new SUV, eliminating credit card debt, reducing their monthly mortgage premium and eliminating a second mortgage. All were aware that their interest rates would go up in a couple of years. But virtually all said that their loan officer promised they could refinance into a fixed rate before that happened.”
    makes me think of the Bush fuzzy math that he is so famous for; it makes me think of this new kind of money out of thin air where there is no money, and it makes me very sad for the people who fell into the trap of it all, and for those of us in the rest of the country who are suffering the effects of it all, while the crime rate goes up every where, including here in South Florida, from people desperate for whatever it is they no longer have.

    timesr Reply:

    “…makes me think of the Bush fuzzy math that he is so famous for…”

    Yep, Bush cut taxes and we were all “going to grow our way out of debt”.

    skyagunsta Reply:

    You know, tax cuts have had a very detrimental impact on our economy. Because states and local governments are not receiving the dollar support they did prior to all these tax cuts, all local taxes have gone up, counties, cities and municipalities which find it unable to sustain their services due to budget cuts originating in the lack of money due to a shortfall in the federal coffers because of taxes no longer pouring into their coffers,have had to cut services … such as police and firefighting services; property taxes have gone up; and the whole economy is falling apart, unles if you are one of those corporatists befriended by the Bushes and their circle of greedy friends. I may be wrong, but wasn’t it during the Bush Administration when Ben Bernanke and Timothy Geithner began to create what is referred to as “paper out of thin air?” All of which goes to the point made in the original article by Wizcon above. Dream big, whether you have the money or not,we will create it. And the Bushes didn’t have to worry about their big dreams … our national coffers were made open and available to them for whatever their pretty little minds desired.

    skyagunsta Reply:

    i just want to correct this, “paper out of thin air?” to read, “money out of thin air”.

    timesr Reply:

    “Dream big, whether you have the money or not,we will create it.”

    Again, I think you’re spot on.

    Ron Suskind, quoting an unnamed aide to George W. Bush “The aide said that guys like me were “in what we call the reality-based community,” which he defined as people who “believe that solutions emerge from your judicious study of discernible reality.” … “That’s not the way the world really works anymore,” he continued. “We’re an empire now, and when we act, we create our own reality. And while you’re studying that reality—judiciously, as you will—we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out. We’re history’s actors…and you, all of you, will be left to just study what we do.”[1]“

  7. Wizcon says:

    Well Bush did tell us all to go out and spend after 9/11. What agreat push for the derivative market and all the deregulation.

    Wizcon Reply:

    Also, The main selling point of the loan was the evidence of the rapid increase in value of the homes at the time. Around here it was 5-8% a year. This is a financially conservative area.

  8. “Throughout the housing bubble, I would arrive at the homeowner’s house and watch as they refinanced their homes with adjustable rate loans and tap into the equity on their homes for the lamest reasons.”

    ********

    I have to ask: in what capacity were you there?

  9. Wizcon says:

    Title companies send me the final doc’s and I close the loan by getting all the signitures and notarize where necessary. I am not a loan officer. My role is as a neutral 3rd party. Can’t even give my opinion or advice. It’s one of many hats I wear

    Pumas Unleashed Reply:

    “Title companies send me the final doc’s and I close the loan by getting all the signitures and notarize where necessary. I am not a loan officer. My role is as a neutral 3rd party. Can’t even give my opinion or advice. It’s one of many hats I wear.”
    *************************I am a Loan Officer and a Processor. You are what as known as a “closer”. I find your editorializing far off the mark in the realm of accuracy categorizing ALL mortgage brokers and loan originators categorically equating them to Angelo Mozillo.

    And further, most of the people I dealt with didn’t buy SUVs and whatnot taking vacations and frequenting casinos. They paid off credit card debt and acted responsibly. They also had jobs substantiating their income. If not, their applications were denied.

    There are new Federal Regulations in place protecting people from those who wear too many hats overlapping into the financial sector. You may have to check your hat at the door.

    Sage Reply:

    I don’t think she categorized ALL mortgage brokers and loan originators as the same as Angelo Mozillo. I think you may be a tad sensitive.

    Pumas Unleashed Reply:

    It would be good if you published my last post. There is a complete line by line dissection of Wizcon’s post. It would be unfair of you to publish one side of the responses.

    Sage Reply:

    I had every intention of publishing your post. I put one into spam because the link was broken and I was going to try and fix it when I had time to look it up……therefore your subsequent posts went into spam. I’m not here 24/7 to approve posts.

  10. Wizcon says:

    The article was about the predatory lenders and I was referencing the predatory loan officers. One right after another there were stated incomes ( no proof of income), 100% plus loan to value and many many final doc’s that were not the terms talked about and agreed to prior to the final doc’s being drawn. Appraisals were driveby’s. Credit card debt was paid off but the accounts remained open. I’d see many many credit cards in their wallet when they pulled their ID’s out for me. Way to often they sat there with a loan different then what they thought they were getting after being told by the loan officer not to make a loan or credit card payment prior to closing and expecting to pay off their debt. I dealt with a range from sobbing to cursing from both borrowers and Loan officers. I once asked one loan officer what his last job was after he begged me to “save his loan” and he said “The GAP”. They were slamming these things out in as little as 10 days from first contact. I turned in 2 loan officers to the State Dept. of Finance because they told the borrower to send a check made out to them, post dated for the next week and sent to their house. Niether was licensed and both had lost their licenses prior to the loans.
    One of the worse offenders was Countrywide. Mozila did not dirty his hands or lower himself with the details of selling a loan to Joe America. He engineered it.
    It may not be the way you do business but that is the way business was done all to often.

    Wizcon Reply:

    As far as to many hats. That is the only hat I wear as far as things financial and loans are concerned. Remember I said I am there as a neutral 3rd party. I am fully aware of the liabilities involved. I also am aware of what the unlicensed practice of law is.
    Mortgage brokers were and are doing what the law allows and also what the law did not regulate.

  11. “One right after another there were stated incomes ( no proof of income),”

    All Banks require 12 months of Bank Statements for “STATED” incomes.

    The Stated income loans are most beneficial to the Self-Employed.

    “100% plus loan to value and many many final doc’s that were not the terms talked about and agreed to prior to the final doc’s being drawn.”

    There NEVER was 100% plus. Your use of embellishment doesn’t make it so. The loans for 100% finacing are classified as 80/20s = 100%

    The First loan was usually an ARM or a Fixed Rate loan accompanied by a HELOC.. Home Equity Line of Credit. (Interest Only)

    “Appraisals were driveby’s.”

    Absolutely NOT! At the time (4yrs ago) they may have been inflated projecting future value, but they were in detail. That is pictures, Cost approach, recent sales in the area, comparable sales in the area for similar properties….

    “Credit card debt was paid off but the accounts remained open. ”

    Of course, if they understood how the Credit Bureau, Fair-Issac views your approved buying power. It reflects on your Credit Score. It’s fine to have a -0- balance on a Credit Card with a record of timely payments, No lates or delinquencies. That alone reflects 30% of how they arrive at your Credit Score.

    “Way to often they sat there with a loan different then what they thought they were getting after being told by the loan officer not to make a loan or credit card payment prior to closing and expecting to pay off their debt.”

    So far, that is the only accurate statement you’ve made to date. However, I see myself as a advocate for the homeowner, I got them the BEST rate I could and always what exactly what was quoted to them with their approval.

    “after being told by the loan officer not to make a loan or credit card payment prior to closing and expecting to pay off their debt.”

    Now, if you are who you say you are, a “Closer”.. you would know why they are advised not to make anymore payments when the closing is scheduled… Paying on a loan or a credit card changes the pay-off numbers. The documents you are having homeowners sign has to be completely accurate otherwise the documents you are having them sign are inaccurate for recoding at the City or Town Hall in the Deed Book..

    “State Dept. of Finance because they told the borrower to send a check made out to them, post dated for the next week and sent to their house. Niether was licensed and both had lost their licenses prior to the loans.”

    Excuse me… The Banking Commission handles complaints and whistleblowers.. I’ve never heard of the State Dept of Finance unless it refers to a particular states financial affairs.. such as State Budgets and Appropriations.

    “One of the worse offenders was Countrywide. Mozila did not dirty his hands or lower himself with the details of selling a loan to Joe America. He engineered it.”

    Engineered what?

    “It may not be the way you do business but that is the way business was done all to often.”

    By Who, Where and When? I have a propensity for specifics.

    Sage Reply:

    Please do not insinuate Wizcon is not who or what she says she is. She’s a long time, valued participant at this blog and I won’t see her integrity attacked. If Wizcon says something is what she experienced then that’s what she experienced. Your experience may be different from hers but that doesn’t make yours more valid.

    Pumas Unleashed Reply:

    What has time got to do with it?

    Wizcon has posted inaccuracies. The Title People that do our Closings have integrity and they know what they are talking about. Generalities just don’t cut it anymore. Not to say Brokerage Firms such as Americiquest didn’t pave the way for many fraudulent activities in the Financial industry. I dislike them as much as the next person. Right now, people aren’t getting the help they need to save their homes, the help Obama promised.

    The Banks are closed to most modifications because they will not give the homeowners a break even though the government will reimburse them for reducing the principal to an affordable payment.

    Whatsmore, there are Federal Regulations in place in every state limiting how much money can be charged for a loan modification.

    The original post is a mischaracterization of what is happening now in the marketplace and unfair to readers if I just let it go uncorrected.

    Sage Reply:

    I guess you missed the valued part. Wizcon and I correspond frequently and she has always acted with the utmost integrity and honesty. You are free to disagree but NOT to attack her personally.

    It’s a mischaracterization of what YOU believe is happening or what you have experienced.

    I’m going to tell you again, don’t attack her character or her integrity. You can present your experience and belief without making it personal and attacking her. If you can’t, don’t post again.

  12. Wizcon says:

    I stand by my so called inaccuracies. I sat in the homes, with the borrowers and saw the doc’s and heard their stories.Often there is a page about the right to get a copy of the appraisal and they would say there wasn’t one, hence the drive by appraiser. I do not keep copies of the documents to comply with Gramm Leach and to comply with various lenders policies.Also, the borrowers personal information is none of my business and why would I take on the liability of maintaining their doc’s? I also carry E&O insurance and am a registered signing agent.I end up having several back ground checks a year to comply with their policies. That includes the 7 yr FBI back ground check. I do onsite security compliance checks on companies that handle peoples credit information.

    Wisconsin has a Dept of Finance that regulates all things financial including Mortgage Brokers, loan officers and loan originators in other states that want to do loans here. This includes individuals that are “foreclosure consultants” and loan modification consultants” who all must be registered with the state, along with their companies. The Dept has a website that consumers can check out whether an individual is registered as well as their company. I wrote part of the information on loan modifications on their website ( haven’t heard when that page is going up). Until the passage of Wisconsin Act 2 this year, the Dept of Consumer Affairs had no teeth with financial complaints. Both Depts have investigators.When they are done, it all goes on to the Dept of Justice. Currently, I am involved in the investigations of 2 loan modification consutling business’s with both Depts. They are in communication with each other. One of these companies has recently had lawsuits filed by several different states (note the BY the state and not in the state) for fraud. The other company has only been in business a short time but they are telling people they don’t have to comply with state law because they have a “federal attorney on staff”.

    I also recently started working in a Title company owned by an attorney who also drafts statutes for the state in Real Estate realted Law. He hired me because of my work with the Dept of Finance. He also made the initial inquiry call to one of the rogue loan officers I mentioned before. My last purchase closing was with a well known and liked mortgage broker in ther area for the last 20 yrs. The first words out of the buyers mouth was ” I was supposed to get the final settlement statement yesterday and didn’t”. Her next comment after looking at the statement was “There are a lot of charges on here you didn’t tell me about” She and her husband read every document. It took almost 2 hours. She’d ask a question about the financing and get a vague answer.
    Yes I know about the new RESPA rules. Training is scheduled for the new HUD proceedures.
    First American Title outsources title work and scheduleing to India. That is a fact. Already one title company has received phone calls from India shopping access to First American data bases. I don’t know if they are actually the real data bases.
    I was a realtor for 10 yrs. I still work in administration for one company. The owner sits on the Dept of Regualation and Licensing board. I have access to MLS all over the state and draw comps for Current Market Anaylis and Broker Price opinions for asset management companies.Sometimes I put those reports together. Broker oversite is required for that. Imagine my surprise when I closed a refinance in one of those homes shortly after and the borrowers say there was no appraisal. I also do weekly status reports and see the trends for my area long before its reported in the quarterly reports from the feds.
    The subprime loans were often sold over and over. Notes disappeared, servicing and asset management companies disappeared. Loan officers have disappeared. Your little bubble looks a lot lot different than mine.

  13. Wizcon says:

    On The credit card thing.”To make matters worse some in the US financial services industry have blamed Fair Issac’s flagship FICO credit scoring system for failing to provide lenders with a clear view of a borrower’s ability to repay loans and the probability of default.”
    Credit card companies were raising available credit available regularly on consumer cards. My experience with credit cards showed me that and I often requested that ceiling be reduced. My Fico was around 800 last time I checked. They also change interest rates and fees at will, no matter how diligently you pay. Even if you pay it off every month. Sure, consumers don’t necessarily have them maxed at the time of their refinance but the potential is there. One lost job, one medical event or even a divorce can send the homeowner into a desparate reliance on credit. Thats what they have become accustomed to. The small brick and mortar banks I deal with do look at the maximum credit available on the cards.

  14. AliSilver says:

    May I intervene on behalf of peace? :)

    It is pretty clear that the Wiz and Puma experienced VASTLY different angles of this subject ! That’s all. It’s really nothing
    to argue about.
    It’s the very same as some troops coming home from Iraq singing the praises of what went on and others coming back angry and saying it’s a useless war. Is one of them lying? Or did they see 2 very different things happening in different regions under different commands?

    So I’m going to validate both postings and say you 2 saw 2 different angles to it. So instead of claiming the other is
    WRONG or distorting , you should just accept that there are elements that you yourself did not witness!

    You actually should even APPRECIATE a view from the other side.
    :)

  15. Wizcon says:

    Thank you Ali. Pumas is commenting from her experience and the guidelines she operates under which are considered above the board. If only all did. My experience is with both types,above and below the board. It’s the latter that contributed so heavily to the mess we are in. I am not questioning her credibility or ethics. What got me going was her questioning mine.

  16. Desert Sage says:

    Predatory lending is only peripheral to the core issue… Why not expand your prose with what allowed the predatory lending to occur, namely government forced lending practices and lack of oversight?

  17. Wizcon says:

    “The lenders lobbied for Fannie Mae and Freddie Mac deregulation and contributed handsomely to the campaign efforts of those supporting the deregulation
    Here I’ll draw you a picture
    http://www.opensecrets.org/industries/indus.php?ind=F&goButt2.x=4&goButt2.y=5

    And here’s the Lobbying Stats
    http://www.opensecrets.org/industries/indus.php?ind=F&goButt2.x=5&goButt2.y=6

  18. AliSilver says:

    It sounds to me like Puma is a very VERY upstanding person who does NOT want to see people get taken advantage of, but sadly she is ‘probably’ the exception, not the rule. I think Puma, you and probably your closer associates are good at your job and playing by the rules. But you must know that there are loads and loads of p eople in your field who do NOT follow the rules and if everyone was as legit as yourself, there would probably not have been a need for the big bailouts of the last year. Maybe you feel defensive of your colleagues because your industry has been getting a bad wrap the last year or more. If you are helping and protecting homeowners then KUDOS to you, a sincere and hearty KUDOS to you. If more were like you, a huge mess might have been avoided ! :)

  19. AliSilver says:

    I re read TWICE this morning Wizcons original posting and there was no language like ” all lenders”,, Wiz made it very clear the specific ones SHE had knowledge of and did not make any blanket statements about every single person in the lending industry.

    Wizcon Reply:

    The Consumer Mortgage Audit Center, who do forensic audits on mortgages says that potentially 98% of all mortgages may qualify for renegotiation. Missing paper work is the number 1 reason. But other reasons are:
    “-Bad “good-faith” estimates. Good faith estimates are supposed to be documentation of mortgages and costs for buyers to compare and contrast one mortgage offer to another. However, some brokers write low-ball good faith estimates as a “bait and switch” by showing homeowners they’ll offer lower costs and mortgage terms, then later inserting higher interest rates, higher closing costs or mortgages that some homeowners can’t afford. CMAC sees 21 percent of this violation in its mortgage reviews.

    –Incorrect payment representations that drive up APRs. Unscrupulous lenders play a bit of a shell game with Truth In Lending Disclosure Statements, which are estimations of the cost of borrowing money to buy a home, the expected payments for a mortgage and other related details. When lenders fill out these documents with incorrect information—particularly in the payment section–the Annual Percentage Rate for the loan changes with each error, leaving homeowners with unexpected payment increases that can lead to foreclosures, if not paid. One-quarter (26 percent) of mortgages CMAC reviews include this violation.

    –Double-dipping brokers. Within three days of offering a good faith mortgage estimate, brokers are supposed to reveal income to be paid outside closing, often referred to as the yield-spread premium. Unsavory brokers do not disclose the income to the borrower on the GFE. The borrower finds out about the YSP at closing on the HUD-1, which he/she is paying for indirectly in the form of a higher interest rate

    –No documentation of income. Initially designed to help the self-employed who don’t often have a paper trail to show income history, mortgages written with little—if any— documentation of the buyer’s income enable deceitful brokers to fill in false income data that allows borrowers to qualify for larger loans and brokers to make higher commissions. One third (33 percent) of mortgages reviewed by CMAC include this violation.”

    Makes you wonder what all the auditors the Feds are hiring are going to find.

  20. Wizcon says:

    And here is the best explanation i have heard what contributed the most to it. Watch the Senator Dorgan video fromm 1999 predicting the need for bailouts if gramm leach passed. He predicted 2010.
    http://www.sourceoftitle.com/blog_node.aspx?uniq=464

    When congress voted to pass the gramm leach bill the republicans were the majority in both houses.
    The Senate passed it 90-8. Senator Dorgan was one of the 8 democrats to vote no
    The House passed it 360-57. 6 of those nays were Republicans and one independent.
    So the dems jumped on the band wagon as well.

  21. AliSilver says:

    Question for Pumas…..Do you think you are a good loan officer and processor? Do you excel in your profession?

  22. AliSilver, the State of Massachusetts is the National model for setting the standard writing legislation to be adopted nationwide.

    I am NMLS licensed in MA and RI which hold reciprocal agreements to their laws. You cannot practice in RI if you are suspended in MA and visa-versa. To be eligible for licenses in either state, you must have 40hrs of recognized training from their list of approved schools becoming knowledgeable in State and Fed Regulations. You must take a written test, be fingerprinted, submit to a Federal background check, and pass a Credit Check. A little more than paying a fee to be a notary witness to a transaction which is generally the case for Real Estate Agents.

    The latest level of Federal and State regulations for Loan Officers and Mortgage Brokers are to be in compliance with the law is designed specifically to eliminate Mortgage brokers and loan originators from the financial landscape. Why? Because most of us advocate for our clients. The subject post speaks of Loan Modifications. A year ago, there were no regulations in place. Those regulations are in place now put there by Federal regulators. There is a limit to how much can be charged for Loan Modifications… not the purported waiting for the “next level of nastiness”..

    When a home-owner is in danger in of foreclosure they are told via a bank letter call the bank holding the mortgage. They are not speaking to the Bank itself, they are speaking to a Debt Collector hired by the bank who has access to that bank’s customer data base and has a script for dealing with the homeowner. It is a fact, 80% of the deals made with the debt collector on behalf of the banks within the last year have failed and the homeowner is being foreclosed on.

    I highly recommend dealing with a licensed Broker or Loan Originator in either MA or RI.

    Banks are the entities that want to control your lives. The sooner it is recognized by the public at large, Banks are about accruing enough power to tell you if you are even eligible to work at a job.. through your credit score.

    For more financial information you can go to my site, looking back to the March posts for more information at: http://pumasunleashed.wordpress.com

    Fair-Issac controls your credit score (and the only credit bureau recognized by banks) … Bad Credit, sorry, the report on your job application has deemed you ineligible for this job.

    Banks- The sooner you understand the dynamic going on, the sooner you will realize the jeopardy the citizens of this country are in… and it isn’t from Mortgage Brokers or Loan Originators. They were the scapegoat used by the banking industry to throw you off the sins they’ve committed with your assets.

    Your stock portfolio, your pension fund, your retirement savings, your college funds under the auspice of our glad handing Congress never regulating Hedge Funds. Which is exactly where the sub-prime loans went during 2000 to 2005 and which caused this Financial Crisis by way of derivatives.

    Each Sub-Prime Lender was a subsidy of an investment bank you would easily recognize. This is the reason why I have taken the time to explain all this in depth for alerting you to keep your eye on the right ball. It isn’t mortgage brokers or Loan Modifiers that need watching but it is the banks you should be watching as they are the nemesis that are the real threat to our way of life.

    *****************************
    Desert Sage Says:
    July 17th, 2009 at 10:15 am

    Predatory lending is only peripheral to the core issue… Why not expand your prose with what allowed the predatory lending to occur, namely government forced lending practices and lack of oversight?

    ***************************
    Desert Sage,

    I’ve touched on that issue in my above response. Worrying about Loan Modifications and the Loan Originators who do them is a complete waste of time. It’s the Banks, Congress and the Fed that should be the focus.

    I’m not sure who your question was directed to, myself or Wizcon. I’ll leave it up to you to continue.

  23. POLITICO has a new article out today on the failure of Loan Modifications and placing the blame where it belongs; on the Fed bureaucracy helping the Banks stonewall homeowners.

    Absolutely worth a read:

    http://www.politico.com/news/stories/0709/25095.html

    Wizcon Reply:

    Puma, if you scroll up you will see me stating that the title is a bit misleading. My original article was longer and talked about the loan modification/foreclosure consulatants popping up all over.
    These are the folks that offer to help you get a loan modification by contacting your lender for you and doing the negotiations. These are the folks that are ripping people off by taking their money and running. The FTC and several states have formed
    ” Operation Loan Lies” to join together in finding and prsecuting these new predators. Currently there are 189 actions started against around 169 of these companies. California’s Department of Real Estate actions consist of ‘Cease and Refrain” orders since that is the Dept that regulates this kind of business there. There are many many many of those on Operation Loan Lies list. The majority of the fly by night operations are based in California with AZ catching up. Other States have actual lawsuits filed by their attorney generals on behalf of their citizens. Bottom line there is a horde of predators totally ignoring federal and state laws. For the list in PDF form go to
    http://www.ftc.gov/os/2009/07/090715casesummary.pdf

    Like the so called loan officers and mortgage brokers of the sub prime frenzy, these loan modification consulting companies have call centers contacting homeowners offering their product. I once asked a loan officer on the phone what he did prior to his current job and he told me he worked at The Gap. At the time he was begging me to “Save his Loan” because the borrower was objecting to the terms of the final doc’s. They were very different from what they talked about. These are the loans needing to be modified.

    Notary’s are called off loan closer data bases to go to the homeowner’s homes with the modifications apllication materials.These are mostly a contract between the homeowner and the consulting company. The notary is actually acting as a courrier. There is nothing to notarize on the documents. My feeling is that notaries are sent to give them credibility as officers of the State. The homeowners are told the notary is the company rep, often the notary is not aware of this. That in itself is illegal.
    You are right, there are different levels of notary’s acting as closers. That is because many title companies utlize a middle man entity called a Signing Service to find someone to close the loan in the field. They often call the random notary to offer a low fee to close a loan while the Signing Service keeps the bulk of the fee paid by the Title company. I go and resign many refinances that these notaries have messed up. In the 10 years that I have been doing this, I have eliminated all but a few of Signing Services in my client base and work directly with attorneys and title companies. Not all notary’s are just paying a fee to do this.
    There are many that concientiously educating themselves on what they are doing. Their primary role in these closings are as a notary acting under notary law for their state first. I am not shy about refusing to witness document’s under notary law.
    I am a Registered Signing Agent. Not many notaries certified By the National Notary Association could pass that designation based on their coursework with the NNA for both notary education and Signing agent certification.
    “Each Sub-Prime Lender was a subsidy of an investment bank you would easily recognize. This is the reason why I have taken the time to explain all this in depth for alerting you to keep your eye on the right ball. It isn’t mortgage brokers or Loan Modifiers that need watching but it is the banks you should be watching as they are the nemesis that are the real threat to our way of life.”

    Wells Fargo, Bank of America, Citibank and Chase are not Banks?
    I can’t count how many nasty looking ARMs i closed for them over the years. It seems very few banks service their own loans anymore.
    In house loans tend to cost more.
    The refinances I have been closing lately have taken longer to process as the underwiters seem to be a lot more cautious. Also the borrowers seem a lot more informed. Many are asking why they aren’t seeing their HUD (settlement statement” prior to the closing as promised. In looking at my stats, 94% are still borrowing over 80% LTV and are required to have the PMI and escrow accounts. I have also closed 2 ARM’s in the last couple of weeks. I haven’t done that for about a year and a half. Both were Bank of America. They are the ones that bought Countrywide. Also BOA is using a lot of the same doc’s templates Countrywide used.

    Sage Reply:

    Wizcon, that’s an amazing amount of information. Thank you.

    Wizcon Reply:

    Your welcome. One of the investigators I am working with told me that Arkansas has also issued a Cease and Desist order against the one we are looking at. The investigation goes on there as well. That company shows up twice on the Operation PDF already.Please note that not all states have joined in the FTC effort yet. Its pretty new.

  24. AliSilver says:

    Lemme try again……

    AliSilver Says:
    July 17th, 2009 at 4:40 pm
    Question for Pumas…..Do you think you are a good loan officer and processor? Do you excel in your profession?

    Reply

    You’re like a politician. :P I asked a straightforward question and you rattled on a lot of useful information, but not an ANSWER to my question.

  25. “You’re like a politician. I asked a straightforward question and you rattled on a lot of useful information, but not an ANSWER to my question.”

    *******************
    The point is- if I wasn’t a “good” Loan Officer, I wouldn’t qualify for a Loan Officer/Loan Originator license and most of my business is by referral and repeat business.

    *********************

    ” These are the folks that offer to help you get a loan modification by contacting your lender for you and doing the negotiations. These are the folks that are ripping people off by taking their money and running. The FTC and several states have formed.”

    ***********

    Maybe you missed it in my post. Anyone seeking a Loan Modification whether they are calling themselves or are having someone do it for them are NOT talking to the Bank/Lender. They or their agent are speaking to a Debt Collector representing the Lender.

    Since February, my office has over 75 loan modifications in to the Debt Collectors representing the Banks…To date, 3 have been resolved to the benefit of the homeowner. The rest are in Loan Modification Limbo as the link from Politico indicates and verifies as of July 17 the Loan Modification programs are a failure.

    AliSilver Reply:

    So you’re good at your job! :)
    So , what is it about YOU that makes you BETTER than
    some of the others in your field ? Not in specifics, just
    generally . Are you more honest, reliable, trustworthy and hardworking than others?

  26. Wizcon says:

    LOL we are talking about 2 things. I am talking about those outside of the banks protocol professing to be consultants. They are not calling your Debt collectors on behalf of the homeowners. They are just saying they are going to and not doing it. Their target is the fee they are charging the owners on that promise. They are inserting themselves between the home owner and the Debt collector and not following through. Homeowner thinks its being processed when its not.
    Check out the BBB site on Foreclosure/loanmodification consultants.
    The irony is that once in foreclosure the banks are really losing a lot of money. One of my realtor freinds has a bank owned listings that started out at 199,900 when first listed with another realtor. Yesterday, it was reduced again to $77,900. The bank has also been paying maintenence, taxes etc on that property for a year. At the end , they will pay commission to the realtors or auctioneer . Not the sherrif. They use an online austion service. They have had 7 offers so far. All well above the 77,900. The original owner qualified for a modification for more than that but not what the bank wanted when they initially foreclosed on them.

    Wizcon Reply:

    As I said, they are nothing more than call centers.

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