One Big, Gaping Hole in the Mortgage Servicing Settlement

Aside from being way too small and way too sweet a deal for the banksters, the recently prematurely touted settlement between the attorneys general of 49 states (plus DC) and the five biggest mortgage banks has a big, major, enormous flaw.

That’s right. We citizens and consumers have been impatiently waiting for our states’ top defenders of the law to rescue us from the big fraud-factory banks. But it turns out a whole bunch of us weren’t included in the group of homeowners deemed worthy of legal protection.

Who? It’s right there in black and white on the official website for the National Mortgage Settlement:

“Loans owned by Fannie Mae or Freddie Mac are not impacted by this settlement.”

Yep, that’s right. If you’re one of the millions of homeowners whose mortgage was guaranteed/securitized (without your permission or even your knowledge) by these big government-supported enterprises, you are SOL. Left out. Deemed unworthy of the attention of your state’s primary consumer protection agency.

I’ve seen estimates of Freddie’s and Fannie’s immersion in the mortgage market stating they “own” from 50% to 80% of the mortgages in the nation. That means for the purposes of holding the banks accountable for the foreclosure fiasco, the situations of more than half of the taxpayers and voters and workers and even job creators in the U.S. were ignored by the officials who are tasked with overseeing justice for all their residents.

Even if your loan originated with and is still serviced by Wells Fargo, Citi, BofA, Chase or GMAC/Ally, the “investor” may still be Fannie or Freddie, big players in the so-called “secondary” mortgage market.

And that’s bad news for you because it means you have no access to the touted refinancing or principal reduction or other foreclosure-prevention options provided for by the settlement. If you were a victim of foreclosure fraud such as losing your home due to bank-forged paperwork, you have no access to the restitution payments.

Granted, getting a paltry $2,000 in exchange for having your home and your life’s savings stolen via fraudulent paperwork and underhanded maneuvering isn’t much. But, then, to be told that you aren’t even eligible due to circumstances you didn’t control, just because your state’s AG didn’t include you in his or her negotiations?

I’m furious. If you think your state AG should be protecting your rights as well as those of your neighbors, you should be, too.

If your mortgage is “owned” by Fannie Mae or Freddie Mac, I suggest you write a strongly worded letter to your state attorney general and ask him or her when your rights as a citizen of that state will be upheld.

Of course, you won’t get an answer. Well, in some states, maybe a form letter. But if enough people take the time to write, perhaps the AGs will realize we know they left a big, gaping hole in their deal and we’re not happy about being pushed into it.

News Flash. The Banksters Have Been Screwing Us for Years!

News Flash! Huge Surprise! The big banks/mortgage servicers have been systematically screwing their customers for many, many years.

Says who? Says (writes) New York Times reporter extraordinaire, Gretchen Morgenson  one of the few mainstream journalists who really gotten her teeth into investigating and writing about the glaring misdeeds of the out-of-control financial-services sector.

Turns out that waaayyyy before the start of the current foreclosure feeding frenzy, mortgage servicers like my nemesis Wells Fargo were forging documents, force-placing insurance, fabricating fees and generally disregarding little details like laws. Practicing lying, cheating and stealing, presumably in a warm-up to the current all-out power and money grab event.

And all of this was documented and reported to the big players in the mortgage industry by Nye Lavalle, a wealthy businessman whose own family was targeted by the foreclosure fraud machine. Writes Morgensen:

“In hindsight, what he found looks like a blueprint of today’s foreclosure crisis. Even then, Mr. Lavalle discovered, some loan-servicing companies that worked for Fannie Mae routinely filed false foreclosure documents, not unlike the fraudulent paperwork that has since made “robo-signing” a household term. Even then, he found, the nation’s electronic mortgage registry was playing fast and loose with the law — something that courts have belatedly recognized, too.

And what did executives at Fannie Mae and its ersatz minders at the Federal Housing Finance Agency do about the wrongdoing documented by Lavelle? How about the top management at all the major players in the mortgage industry?

Clearly the fact that the same practices are currently being perpetrated by the same players, devastating the U.S. housing market and the lives of millions of Americans, indicates the answer is a big fat NOTHING.

Why? All sorts of reasons, most of them to do with the billions of dollars being made by the loan servicers and Wall Street. Money that has bought politicians at every level of government and then systematically urged those “public servants” to pass laws stripping power and funding from regulators and undermining the legal apparatus of property conveyance.

And there have been plenty of enablers, then an now, as Morgenson quotes Lavelle in her article:

“Any attorney general, lawyer, bank director, judge, regulator or member of Congress who does not open their eyes to the abuse, ask pertinent questions and allow proper investigation and discovery,” he said, “is only assisting in the concealment of what may be the fraud of our lifetime.”

Well, finally a few intrepid attorneys general at least made noises about coming to the aid of the people by going after the banksters for the blatantly fraudulent forging of paperwork. Time will tell whether the AG settlement (when it’s actually final) helps homeowners or turns out to be another big scam that only serves the banks and the politicians.

But don’t hold your breath for Congress to move against the giant cash cow that funnels billions into campaign war chests.

I believe the fight against mortgage and foreclosure fraud will continue to be fought in the trenches. That means every homeowner being jerked around by a bank on a refinance, a mortgage modification or a foreclosure needs to fight for his or her own rights.

And that reporters like Morgenson need to keep digging out the financial-services industry’s dirty little secrets and making them public. Maybe then the masses will stop believing the banksters’ spin that the foreclosure crisis was caused by “people who bought too much house.”

Even those lucky few who haven’t fallen victim to one of the big banks’ nefarious little games need to realize that the entire nation has been victim to an intentional, devious and very nasty campaign conceived, constructed and carried out by the top managements of dozens of companies whose reason for existence is supposed to be providing services to the public.

I guarantee that every American  regardless of geographic location or income level or race or religion is no more than three degrees of separation from someone who has been victimized by the policies and practices of these institutions. If it’s not you, it’s your neighbor or co-worker, an old friend or a relative. It’s your dentist or dry-cleaner, your child’s teacher or coach, your trusted hairdresser or favorite waiter. You know someone who has been lied to and cheated by a bank or mortgage company or Wall Street firm.

Until people figure that out and a critical mass arises to say an unequivocal “NO!” to the continuing deceit and fraud, the best we can all do is stand up for ourselves and watch our own backs. I’ve been doing that for nearly two years now and I have to say I have come to the same conclusion as Mr. Lavelle:

“From my own personal experience and 20 years of research and investigation, nothing — and I mean nothing — that a bank, lender, loan servicer or their lawyer says or puts on paper can be trusted and accepted as true.”

Don’t say you haven’t been warned.