Foreclosure Fraud

Posted on August 15th, 2008 by Samanta Parks

When someone first buys a home and gets a mortgage loan, they may have been offered what appeared to be a very reasonable loan with good terms. However, if they fell victim to predatory mortgage practices, things can get bad very quickly. Mortgage servicing companies are hired by investment banks to collect payments, track fees and go forward with foreclosure if they have to be. However, the first and main job of the mortgage servicing company is to get the most profit out of every loan they handle and this can lead to fraud and corruption.

In some instances a fraudulent mortgage servicing company will add on junk fees, lose payments on properties or place a forced insurance on a home before the owner of the home even misses a payment. If the homeowner does fall behind the mortgage company will accelerate fees and add changes to the loan agreement that are not even logical. When the homeowner faces a financial problem, the acceleration of the false fee will ensure that it will cost those thousands more than usual to stop a foreclosure.

The presence of junk fees during and prior to a foreclosure is a clear indication of mortgage fraud. A homeowner may make their house payment on time but it goes down on record as late so the payment will have late fees and interest tacked on. After this goes on for a few months, the homeowner appears to be “behind” even if they have made each and every payment before it was due.

Sadly, there is really no amount of arguing you can do with a mortgage company that will give positive results. Trying to get a mortgage servicer to admit the mistakes they have made may reveal that this is “business as usual”. These mortgage servicing company do not want to end up in court being accused of stealing homes in order to make big profits. Usually, the corrupt servicing company may stonewall, deny and even threaten the homeowner because they do not want to deal with the charges that have been found on the loan.

What is also sad is that there are many local judges that will favor the mortgage servicer because the homeowner is “behind” on payments. This is the truly devious part of the scam. The servicer will add thousands of fees but will not take any action until the homeowner missed a payment. When a homeowner falls behind on their payments for a few months, the thousands in fees, interest, and foreclosure cote will make it very expensive to get on track again or qualify for foreclosure help.

An additional thing that makes this process so devious and unfair is that the mortgage servicer has a lot more financial resources than your typical victim of foreclosure and can hire expensive lawyers. These savvy lawyers will do all they can to make the foreclosure proceed quickly and aggressively defend any claims of excessive fees and fraud. However, the courts may be the homeowners only respite to stop foreclosure before their home is taken from them.

To defend themselves against predatory servicing, a homeowner should request that all fees be clearly pointed out and explained o that they can verify what the fees are, what they are for, and if they are truly owed and legal. It might be best to hire a lawyer to handle this situation in court but the homeowner can request this information directly room the company. Verbal requests will be ignored why fees and interest will be continually added on. A fax may also be ignored. It is best to request the needed information in writing and send the request via certified mail.