Mortgage Fraud — a personal perspective
August 13, 2013
Yesterday, Salon posted an article about banks using forged mortgage documents to foreclose on homes they didn't own, sometimes evicting people who had no mortgages, as they set about destroying the American economy.
Although most of the discussion about mortgage fraud revolves around foreclosures during the last decade, my personal experience indicates it goes back much further.
In 1996 I moved to Oregon. I sold my house in Illinois and arranged to purchase one here. The closings were scheduled a week apart. But, the morning the house in Illinois was scheduled to close, I received a telephone call from the attorney handling the sale. (Unlike some states, Illinois required attorneys represent both sides in a real estate transaction. Most attorneys who practiced in real estate offered this service for a set fee of several hundred dollars.)
I had refinanced the house to reduce mortgage interest rates several years before moving to Oregon. Shortly after signing the papers, I was informed that the mortgage had been sold. For years, I mailed my mortgage payments on time to a company in California.
When the attorney called on the morning of closing, he informed me that the company which had accepted all those mortgage payments did not have "paper" on my loan. They couldn't provide the documents required to offer the buyer a clear title.
Fortunately, the attorney was someone I knew personally and he was very good. He managed to track the loan documents to a bank in Kansas City that owned the mortgage. He persuaded the bank to clear the title for the new buyer in exchange for my unpaid balance, even though the bank hadn't collected a single payment from me.
What could have been a disastrous day culminating in relinquishing the sale, losing the home I intended to purchase, forfeiting the money paid to the California company, and being stranded in Oregon with no place to live ... instead turned into just a paperwork headache that took several months to straighten out.
First the California company tried to penalize me for not insuring a house I didn't own. Then it tried to dun me for not making payments on a mortgage it didn't possess. I finally told a supervisor that she must prove to me that I owed her company any money or I would file complaints against her with various government agencies. (Of course this was back before all regulatory agencies had been castrated by corporate cronies in public office.)
I never heard from the California company again and, thanks to one dedicated attorney who cared about his client, the adventure became an interesting cocktail story whenever the subject of worst real estate closing came up.
But looking back at that incident from the perspective of the mortgage crisis that destroyed the American economy and forced millions of people out of their homes while the criminals behind the schemes got rich and bought Congressmen to assure they would never be punished for their crimes, it becomes prescient. The mortgage was sold twice to two different financial institutions -- one receiving the documentation and the other collecting the payments. If I had stayed in that house would I have become a victim of fraudulent foreclosure?
Now, the corporate hack Republican in the White House who masquerades as a Democrat wants to once again allow private lenders to prey upon the 99 percent, destroying the dream of owning their own home for all but the wealthy, and stealing mortgage payments, interest, fees, closing costs, etc. from anyone who dares to try and purchase a house. Obama and his cohorts want to again allow selling mortgage loans to investors so mega banks (the ones we bailed out) can continue making obscene profits at the expense of everyone else.
"That’s despite the evidence we now have that, the last time banks tried this, they ignored the law, failed to convey the mortgages and notes to the trusts, and ripped off investors trying to cover their tracks, to say nothing of how they violated the due process rights of homeowners and stole their homes with fake documents." -- David Dayen writing for Salon
Although most of the discussion about mortgage fraud revolves around foreclosures during the last decade, my personal experience indicates it goes back much further.
In 1996 I moved to Oregon. I sold my house in Illinois and arranged to purchase one here. The closings were scheduled a week apart. But, the morning the house in Illinois was scheduled to close, I received a telephone call from the attorney handling the sale. (Unlike some states, Illinois required attorneys represent both sides in a real estate transaction. Most attorneys who practiced in real estate offered this service for a set fee of several hundred dollars.)
I had refinanced the house to reduce mortgage interest rates several years before moving to Oregon. Shortly after signing the papers, I was informed that the mortgage had been sold. For years, I mailed my mortgage payments on time to a company in California.
When the attorney called on the morning of closing, he informed me that the company which had accepted all those mortgage payments did not have "paper" on my loan. They couldn't provide the documents required to offer the buyer a clear title.
Fortunately, the attorney was someone I knew personally and he was very good. He managed to track the loan documents to a bank in Kansas City that owned the mortgage. He persuaded the bank to clear the title for the new buyer in exchange for my unpaid balance, even though the bank hadn't collected a single payment from me.
What could have been a disastrous day culminating in relinquishing the sale, losing the home I intended to purchase, forfeiting the money paid to the California company, and being stranded in Oregon with no place to live ... instead turned into just a paperwork headache that took several months to straighten out.
First the California company tried to penalize me for not insuring a house I didn't own. Then it tried to dun me for not making payments on a mortgage it didn't possess. I finally told a supervisor that she must prove to me that I owed her company any money or I would file complaints against her with various government agencies. (Of course this was back before all regulatory agencies had been castrated by corporate cronies in public office.)
I never heard from the California company again and, thanks to one dedicated attorney who cared about his client, the adventure became an interesting cocktail story whenever the subject of worst real estate closing came up.
But looking back at that incident from the perspective of the mortgage crisis that destroyed the American economy and forced millions of people out of their homes while the criminals behind the schemes got rich and bought Congressmen to assure they would never be punished for their crimes, it becomes prescient. The mortgage was sold twice to two different financial institutions -- one receiving the documentation and the other collecting the payments. If I had stayed in that house would I have become a victim of fraudulent foreclosure?
Now, the corporate hack Republican in the White House who masquerades as a Democrat wants to once again allow private lenders to prey upon the 99 percent, destroying the dream of owning their own home for all but the wealthy, and stealing mortgage payments, interest, fees, closing costs, etc. from anyone who dares to try and purchase a house. Obama and his cohorts want to again allow selling mortgage loans to investors so mega banks (the ones we bailed out) can continue making obscene profits at the expense of everyone else.
"That’s despite the evidence we now have that, the last time banks tried this, they ignored the law, failed to convey the mortgages and notes to the trusts, and ripped off investors trying to cover their tracks, to say nothing of how they violated the due process rights of homeowners and stole their homes with fake documents." -- David Dayen writing for Salon