Press Release Predatory Lender

http://rcxloan.com/Press_Release_Predatory_Lender.htm

“A good name is more desirable than great riches; to be esteemed is better than silver or gold.” - Proverb 22:1

Praises & Thanks be unto The Lord My God for the wisdom, knowledge and understanding on legal matter because I received countless feedbacks from folks facing foreclosure and bankruptcy around the United States as follows:

Comments: "I have been inundated with TILA questions. So I went out hunting to see if anyone had already written about it in terms that a lay person might be able to understand. What I found is shown below. I believe it to be generally correct and the citations are good citations of law. See this site for the entire write-up. It should give most lay people an idea on how to handle this and it will be valuable to your lawyer if he/she is not totally familiar with the TILA context at the following link:" http://rcxloan.com/Civil_Action_BK_Motion_14.htm. Statement made by Attorney at Law, Neil F. Garfield, M.B.A., J.D.

A STORY TO THINK ABOUT
“Once upon a time in the Ancient Roman Empire, 27 BC, there were two men living in Jerusalem. One was named Ameriquest-New Century-Chase Home Finance-Deutsche Bank National Trust, a rich man whose land was worth close to $700 billion in today‘s money; the other, Mr. Augustin, a farmer whose land was worth $300,000. One day, Ameriquest-New Century-Chase Home Finance-Deutsche Bank National Trust asked Mr. Augustin to give him his land, that he may have it for a vegetable garden. But, Mr. Augustin said to Ameriquest-New Century-Chase Home Finance-Deutsche Bank National Trust, “The Lord forbid me that I should give to you the inheritance of my fathers”.

When Jezebel, the wife of Ameriquest-New Century-Chase Home Finance-Deutsche Bank National Trust, heard what Mr. Augustin said to him. She said, don‘t worry love, I will take care of the matter? Arise, eat bread, and let your heart be joyful; I will give you Mr. Augustin‘s land. So, Jezebel wrote letters in Ameriquest-New Century-Chase Home Finance-Deutsche Bank National Trust’s name and seal them with his seal and sent letters to the elders and to the nobles who were living in Jerusalem. Now she wrote in the letters, saying, proclaim a ‘relief of stay trial’ in the absence of Mr. Augustin. Then, issued a decree that Mr. Augustin’s land is now Ameriquest-New Century-Chase Home Finance-Deutsche Bank National Trust.

So the men of Jerusalem, the elders and the nobles did as Jezebel had sent word to them, just as it was written in the letters which she had sent them. Ameriquest-New Century-Chase Home Finance-Deutsche Bank National Trust take possession of Mr. Augustin’s land which he had refused to give. The sad part is that Mr. Augustin was forced off his land illegally and fraudulently. Mr. Augustin left with nothing and forced to seek refuge from Jerusalem to a land called ‘Fairfax, Virginia’ to start from scratch. Whereas, Ameriquest-New Century-Chase Home Finance-Deutsche Bank National Trust became more wealthy with the unwarranted possession of his and hold more than $700 billion of assets as a result.

Questions? Why was Mr. Augustin absent in the relief of stay trial? Why did the elders and the nobles just do as Jezebel asked them? Let us all fast forward in 2008, what do you think the elders and the nobles should have done differently?”

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Pressure at Mortgage Firm Led To Mass Approval of Bad Loans
By David Cho
Washington Post Staff Writer
Monday, May 7, 2007; A01

Maggie Hardiman cringed as she heard the salesmen knocking the sides of desks with a baseball bat as they walked through her office. Bang! Bang!

" 'You cut my [expletive] deal!' " she recalls one man yelling at her. " 'You can't do that.' " Bang! The bat whacked the top of her desk. As an appraiser for a company called New Century Financial, Hardiman was supposed to weed out bad mortgage applications. Most of the mortgage applications Hardiman reviewed had problems, she said. But "you didn't want to turn away a loan because all hell would break loose," she recounted in interviews. When she did, her bosses often overruled her and found another appraiser to sign off on it.

Hardiman's account is one of several from former employees of New Century that shed fresh light on an unfolding disaster in the mortgage industry, one that could cost as many as 2 million American families their homes and threatens to spill over into the broader economy.

New Century has become the premier example of a group of companies that grew rapidly during the housing boom, selling working-class Americans with questionable credit huge numbers of "subprime" loans with "teaser" rates that typically rose after the first two years. This business transformed the once-tiny New Century into a lending powerhouse that was held up as a model of the mortgage industry's success.

But now, with home values falling and adjustable loan rates rising, record numbers of homeowners are failing to make their payments. And a detailed inquiry into the situation at New Century and other subprime lenders suggests that in the feeding frenzy for housing loans, basic quality controls were ignored in the mortgage business, while the big Wall Street investment banks that backed these firms looked the other way.

New Century, which filed for bankruptcy protection last month, has admitted that it underreported the number of bad loans it made in its financial reports for the first three quarters of 2006. Hardiman and other former employees of New Century interviewed said there was intense pressure from bosses to approve loans, even those with obviously inflated housing appraisals or exaggerated homeowner incomes.

"The stress in that place was ungodly. It was like selling your soul," said Hardiman, who worked for New Century in 2004 and 2005. "There was instant notification to everyone as soon as you rejected a loan. And you dreaded doing it because you paid for it. Two guys would come with a bat, and they were all [ticked] off because you cut their deals."

New Century officials would not publicly respond to the ex-employees' allegations. A senior executive, who spoke on condition of anonymity because of state and federal investigations into the company, acknowledged that the atmosphere in some branches might have been intense at times. But he said the firm had safeguards to make sure workers did not feel pressure to approve questionable loans. Hearing what Hardiman went through, he said, was "upsetting" and "not representative of our offices."

"In an organization with this size . . . I'm not naive to think that [such behavior] didn't happen," the executive said. "But I find it highly implausible over the last 10 years that something systemic was going on and somehow it was disguised. . . . There were pressures, especially in a declining market, and those pressures became more robust. But we turned up our controls and our vigilance at the very same time."

As Industry Grew, Standards Loosened
Once a little-used lending tool, subprime loans made up 20 percent, or about $600 billion, of all mortgages issued in the country last year. These loans carry a high risk of default because they generally are made to home buyers with questionable credit. But because they require borrowers to pay high interest rates, they have been a gold mine for lenders in recent years, accounting for 30 percent of all profits made in the mortgage business, according to Mercer Oliver Wyman, a consulting firm.

Lenders also made a fortune selling subprime loans to Wall Street. Investment banks charged huge fees for packaging them into massive bonds called mortgage-backed securities. Investors received high returns for buying and selling these bonds. But there is growing evidence that along this chain, the filters that were supposed to catch bad loans did not work.

Salespeople were supposed to be the "first line of defense" against fraud and bad loans, said Steve Krystofiak, president of the Mortgage Broker Association for Responsible Lending, a group that is trying to retool practices in the industry. But salespeople worked on commission -- meaning the more loans they sold, the more bonus money they received. "That's a bad business model. It's absolutely contradictory," Krystofiak said, adding that he has witnessed salespeople tweak numbers in mortgage applications to ensure that the loans would be approved.

Automated underwriting software that searches for irregularities and possible fraud was also supposed to stop bad loans. But industry professionals say such programs were easily manipulated. Meanwhile, some appraisers and underwriters, who examine housing values and other claims made on loan applications, say they felt pressure from bosses to let questionable loans through.

New Century and other lenders sold their mortgages through auctions to investment banks. Once a bid was accepted, the investment banks performed their own detailed review and could return any loans deemed questionable without paying for them.

Several investment banks, including Merrill Lynch, Morgan Stanley and Goldman Sachs said they rigorously examined the subprime mortgages they had bid on. Morgan Stanley, for instance, said it reviewed every loan appraisal and the credit histories of about 25 percent of borrowers.

Traders familiar with the bidding process said competition for mortgages from New Century began to heat up in 2005. Mortgage-backed securities based on New Century loans had been performing better for investors than those from other subprime lenders, in some cases producing two or three times the return of a U.S. Treasury bond. Many banks felt they had to loosen their standards and agree to return fewer bad loans in order to win the auctions, the traders said.

The head of a large Wall Street bank's mortgage group contended that his firm regularly lost out on New Century's business because its due diligence process was stringent and it had been returning a high number of loans. New Century wanted the bank to ease its standards, and the issue became a source of friction between the companies.

"The entire industry, over time, became more lax," he said, speaking on condition of anonymity because he was not authorized to talk about his company's inner workings. "The more [loans] you accepted, the better relationship and the better price you would have. The name of the game was definitely volume." A New Century spokeswoman said negotiating with banks to reduce both their due diligence and the number of loans they returned was a "generally accepted practice" that was "always a matter of discussion."

There was little downside for banks to push paper through the pipeline, said Kevin Beyers, a forensic accountant at Parkside Associates in Atlanta who specializes in the mortgage industry. Besides returning loans, these firms could require a lender to buy back loans that had cleared the banks' reviews but later turned out to be bad. Loose underwriting was not a secret," Beyers said. "[Investment] banks had to have known what was going on. They just have too much information and sophistication at their fingertips. And they knew the lenders pretty well."

Firm Unravels With Market's Slump
To address the problem of bad loans, New Century said since 2000 it has been reducing the compensation of branch managers if they approved loans that were later determined to bad. Underwriters have always been paid on the quality of their work rather than the volume of loans approved. New Century said it always had monitored the performance of employees and last year implemented a statistical program that tracked whether they were approving a high number of bad loans.

A spokeswoman said these moves helped the firm reject or reduce the appraisal value of 20 percent of the loan applications it received in the Northeast last year. The firm's comments are difficult to square with accounts from rank-and-file workers. These employees worked at five different branches that handled subprime loans all over the country. All except Hardiman spoke on condition of anonymity, citing recent e-mails from the firm telling them not to comment publicly, although the company said that is standard corporate media policy. Hardiman said she was fired for refusing to approve weak loans. Others said they left because they were pressured to pump loans through the system. A few were interviewed while they were worked at New Century but then lost their jobs after the firm filed for bankruptcy.

Although there were variations in their descriptions of the atmosphere in their offices, most said they were pushed to approve questionable loans. Several of the interviewed employees said they faced "unofficial quotas" of loans that had to be approved each day. The pressure to meet these expectations was so unrelenting that a worker in Foxboro, Mass., collapsed from stress and was taken to the hospital, two employees said. In the firm's Long Island branch, the atmosphere resembled a fraternity, largely because the average age was 23, an appraiser there said.

A veteran appraiser who worked in Pearl River, N.Y., said he joined New Century because he had heard the pay was good. That turned out to be true, but he quickly discovered that the place was a pressure cooker. He said he often was encouraged "to make loans work." His boss generally supported him when he wanted to reject a questionable loan, he said. But other office managers "were all about the numbers just so they got their bonuses." Still, the veteran appraiser didn't blame them. "They were pressured to make loans, that's how you do business," said the man. "They were trying to do more and more business. That's essentially what Wall Street wanted."

For years, the volume strategy worked. Shares in the Irvine, Calif., company rose from $5 in early 2001 to $66 at the end of 2004, cementing its status as a Wall Street favorite. Last year it issued $51.6 billion in loans, more than any other specialized subprime mortgage lender.

When times were good, the company showered lavish gifts on its salespeople, treating them to vacations in Europe and Caribbean cruises hosted by sports celebrities. As recently as March, a few weeks before it filed for bankruptcy, the company had a trip to Ireland scheduled, employees said.

The boom continued for New Century until 2006, when mortgage payment default rates spiked. That happened because homeowners who bought houses last year generally saw their values drop. And, in a declining housing market, many homeowners, especially those who are poor, choose to let their mortgages fall into delinquency rather than try to keep up with the payments, analysts said.

At first, it appeared the cumulative effect of these defaults would have only a moderate effect on New Century's earnings. Then, in February, the company said it would need to revise its financial results for the first three quarters of 2006. A few weeks later, it acknowledged that federal investigators had launched probes into the timing of the stock sales of some of its executives. The company declined to comment on the investigations.

The announcements rattled the markets because the firm was so well regarded. The stock price plummeted 90 percent, and the firm was delisted from the New York Stock Exchange. (Shares now trade under a dollar on an obscure exchange.) New Century filed for bankruptcy April 2 but said current customers would be unaffected and could continue making their mortgage payments.

The appraiser in the Pearl River branch said he considered himself a loyal employee and planned to stick by the company through its struggles. But he was fired the day after the bankruptcy filing, along with 3,200 employees, or half the firm's workforce. Most of those interviewed said they were offered two weeks of pay at rates lower than their salary. A few said they did not receive any severance.

New Century announced Thursday that it is laying off 2,000 more associates. The firm is left with about 750 employees, a company spokeswoman said. Hardiman, the former New Century appraiser, said she was not surprised by the company's downfall. Few at the company seemed to be thinking long-term when she was there. The message she heard constantly from headquarters, which was broadcast at work conferences and in e-mails, was to approve more loans.

"We were constantly told, 'If you look the other way and let an additional three to four loans in a day that would mean millions more in revenue for New Century over the course of the week,' " Hardiman said. She added that it seemed "no one, from the top levels down to the lower levels of the office, didn't want those loans to go through."

# # #

Civil Action Docket #: 06-10368 & Bankruptcy Action Docket #: 05-46957
Motion 1 Motion 1 Plus Motion 2 Motion 3 Motion 4 Motion 5 Motion 6 Motion 7
Motion BK Motion 8 Motion 9 Motion 10 Motion 11 Motion 12 Motion 13 Motion 13 +
Motion 14 Motion 15
Testimony of Blessing! Benediction de Dieu! Banking Default Letter

Qualified Written Letter Sent to Chase Home Finance and Deutsche National Trust Company

Pierre R. Augustin, Pro Se
28 Cedar Street
Lowell, MA 01852
Tel: 617-202-8069


April 12, 2007


Attorney Charles Lovell
Attorney for Chase Home Finance
and Deutsche Bank National Trust
Providence, RI 02903

Dear Attorney Charles:

In honoring your request to respond to your letter dated April 4, 2007, I am not waiving any rights under TILA, including the 20-day respond period that had expired since October 10, 2006. I categorically reject all allegations made on that letter since my TILA rescission notice sent to you on September 21, 2006, has precedence, negate your foreclosure actions and voided the security interest in my property.

Please treat this letter as a “qualified written request” under the Real Estate Settlement Procedures Act, 12 U.S.C. § 2605(e). Mr. Pierre R. Augustin, Pro Se disputes this debt and notice of foreclosure since on September 21, 2006, you have received a TILA notice of rescission which voided the security interest and the note on his principal dwelling.

Therefore, I must point out that you are in:

· Violation of the Truth-In-Lending Act (TILA) notice of rescission sent to defendants on September 21, 2006 which automatically void the security interest in my property. (Reg. Z §§ 226.15(a)(2), 226.23(a)(2), Official Staff Commentary § 226.23(a)(2)-1) and 15 U.S.C. § 1635(b).

· Violations of the Federal Fair Debt Collection Practices Act and Massachusetts Debt Collection Laws, Violation of the Fair Credit Reporting ACT and seeking punitive damages per 15 USC 1681 n(a)(2), 15 USC 1681o, 15 USC 1692e(8).

· Violation of Statute of Limitation. If you or any of the defendants disputes the plaintiff’s right to rescind, they should have filed a declaratory judgment action within twenty days after receiving the rescission notice, before the deadline of October 10, 2006 to return the plaintiff’s money or property and record the termination of its security interest according to 15 USC 1635(b).

· On November 15, 2006, you and all the other defendants were on notice that they were in default for TILA violations (see docket # 80, Case #: 06-10368).

· Violation of the statute of limitations and fraudulent assignment of the mortgage. Without a security interest in the plaintiff’s property, New Century Mortgage, Chase Home Finance, Deuthsche Bank National Trust and any other parties do not have the authority to foreclose or to assign neither the mortgage nor the note.

· Violation of the Federal Rule of Civil Procedure 17(a), (East Coast Properties v. Galang, 308 A.D.2d 431, 765 N.Y.S.2d 46 (N.Y. App. Div. 2003). Neither you nor any of the defendants are Real Party in Interest or Holder in Due Course, since the TILA notice of rescission automatically voids the security interest.

· Violation of the rule of law, since neither you nor any of the defendants have Standing to pursue foreclosure action because, once TILA notice of rescission is given, the lien or security interest in plaintiff’s property becomes void ab initio, even if a court has not yet ruled on the validity of the plaintiff’s rescission (Willis v. Friedman, Clearinghouse No. 54,564 (Md. Ct. Spec. App. May 2, 2002)).

In summary, Mr. Augustin states that the mortgage is not valid and in violation of TILA (failure to respond to TILA rescission notice by October 10, 2006) by not complying with required procedures. Without an interest in the debt, you do not have the authority to foreclose since you do not have an enforceable security in the property because the mortgage and note assignment were improper and ineffective.

If you are not the current holder of the note and mortgage relating to Mr. Pierre R. Augustin’s mortgage account, please provide the name and address of said true owner of the obligation (15 USC, 1641(f)(2)) or holder and indicate your relationship to this entity. Therefore, absent of transferring debt precludes action for foreclosures because the assignment of the mortgage alone is a nullity, the note cannot be enforced and in violation of U.C.C. requirement. This is a Fraudulent maneuver.

Mr. Augustin loan account should be zero due to TILA rescission notice. Thus, the Loan account is in error. In invoking the protection of the service act, Mr. Pierre R. Augustin is challenging this notice of foreclosure since the foreclosure proceeding is erroneous (12 USC 2602(1)(a). Do take the necessary action to correct this error in responding to this qualified written request by complying with 12 USC 2605(d), 12 USC 2605(e) and 12 USC 2505(f). Thank you for taking the time to acknowledge and answer this request as required by the Real Estate Settlement Procedures Act (sec. 2605(e)).

Sincerely,
Pierre R. Augustin, MPA, MBA

617-202-8069

# # #

WHAT IS AN ILLEGAL FORECLOSURE?

1. IF YOUR FORECLOSURE DOES NOT FOLLOW ALL OF THE STEPS REQUIRED BY LAW, THEN YOUR FORECLOSURE WILL NOT BE A VALID AND LEGAL FORECLOSURE.

2. IF YOUR FORECLOSURE IS STARTED BY THE WRONG LENDER, THEN YOUR FORECLOSURE IS ILLEGAL. (Make sure the lender on your deed of trust is the same lender foreclosing on your home. If not, then there must be a recorded assignment transferring the loan to the new lender before that lender can start the foreclosure)

3. IF YOUR FORECLOSURE IS STARTED EVEN THOUGH YOU ARE NOT BEHIND ON YOUR PAYMENTS (Yes, this happens!), THEN YOUR FORECLOSURE IS ILLEGAL.

4. IF YOUR FORECLOSURE IS STARTED BASED ON THE PROMISSORY NOTE ONLY, AND NOT THE DEED OF TRUST, THEN YOUR FORECLOSURE IS ILLEGAL (UNLESS THEY HAVE ALREADY SUED YOU ON THE NOTE, OBTAINED A JUDGMENT AND THEN STARTED A FORECLOSURE ACTION).

5. IF THE FORECLOSURE ON YOUR HOME IS THE RESULT OF A PREDATORY LOAN, YOUR FORECLOSURE MAY BE ILLEGAL.

6. IF YOU ARE NOT GIVEN AN OPPORTUNITY TO APPEAR AT YOUR FORECLOSURE HEARING AFTER FILING YOUR RESPONSE AND PAYING YOUR FEE, THEN YOUR FORECLOSURE IS ILLEGAL.

7. IF THE COURT DOES NOT ISSUE AN ORDER AUTHORIZING THE SALE OF YOUR HOME AT LEAST SEVEN DAYS BEFORE THE SALE DATE, THEN YOUR FORECLOSURE SALE IS ILLEGAL UNLESS IT IS RESCHEDULED TO A TIME AT LEAST SEVEN DAYS FROM THE ORDER.

# # #

Predatory Lending
These are some of the abusive practices you will experience from a predatory lender:
Terms, Interest Rate and Fees are Increased at Closing (bait and switch) Excessive Fees - Unnecessary Product - Excessive Kickbacks To Brokers Mandatory Arbitration - Abusive Prepayment Penalties - Loan Flipping Steering & Targeting

NOW FOR THE GOOD NEWS!
Federal Law provides protection against abusive and insensitive lending practices. Furthermore, the law provides for very stiff penalties for lenders who violate such laws.

IF YOU WANT TO KEEP YOUR HOME, ARM YOURSELF WITH AN UNDERSTANDING OF THE PROTECTIONS UNDER THE FOLLOWING:

The Truth in Lending Act (TILA)
The federal Truth In Lending Act was originally enacted by Congress in 1968 as a part of the Consumer Protection Act to protect you, the homeowner. Under TILA a homeowner has a right to rescind a loan secured by his or her primary residence. This includes home equity loans and home improvement loans and refinances, whether a first or second mortgage, so long as the money was not used to purchase the home. Under this Act, the homeowner must be provided with a notice of the right to cancel. The lender must have a notice signed by you notifying you of this right to cancel; otherwise the lender has not complied with this federal law.

THIS CAN BE FOUND ONLINE OR AT THE LIBRARY IN FEDERAL LAW: TITLE 15 U.S.C. SECTION 1601 et. seq READ IT!!!!!!!

You, the homeowner have a right to rescind your loan up to three business days after the transaction and an extended right to rescind the loan for up to three years (that’s right folks, you can cancel your loan up to three years later) if you’re not given a notice of the right to cancel the loan, OR if you did not receive notice with all of the required material disclosures. Oh it’s a stiff penalty, but it’s your right!! TILA also requires lenders to disclose the terms of loans in an understandable manner. The “National Consumer Law Center's Truth in Lending” manual provides detailed information on how TILA can be used to CHALLENGE predatory loans.

Sounds a little like poetic justice to me! Send your lender (by certified mail) your rescission notice pointing out the violations under TILA, HOEPA AND RESPA. This is federal law so take full advantage of it! Get the picture?

Home Ownership and Equity Protection Act (HOEPA)

The Home Ownership and Equity Protection Act, is an amendment to TILA. This section of law covers certain high rate home equity loans. In addition to notice of the right to cancel and other disclosures required by TILA, if a loan is covered under HOEPA, lenders must provide borrowers with additional disclosures of the “annual percentage rate” (APR) and monthly payment three days prior to closing. These disclosures must also include provisions telling the borrower that they are not required to sign the loan agreement simply because they received the disclosure statements, and they may lose their home if they do not meet their obligations under the terms of the loan. In addition to the disclosure requirements, HOEPA prohibits the inclusion of certain terms in the loan contract. A loan covered under HOEPA may not include the following:

1. Terms which increase the interest rate in the event of default. If you fall behind on your mortgage payment, they cannot increase the interest rate.

2. Balloon payments prior to ten years. The lender cannot put a stipulation in your loan that requires the total amount of your loan to be paid off in the first ten years or even a payment that is much larger than your regular monthly payment.

3. Negative amortization. If the amount of your monthly payment is not enough to cover the interest payment on your loan, the “shortage” is added to your loan balance. So with each monthly payment you make, your loan balance goes up instead of down. This type of loan violates federal law.

4. No prepaid payments. At closing, the lender cannot roll any payments into your loan. This would result in additional interest charged on interest itself, which is prohibited by state and federal usury laws.

5. Extending credit to individuals without regard to their ability to repay the loan. This is a big one folks! A lender cannot put you in a loan based on fictitious income information that was grossly exaggerated in order to make it appear that you qualified for the loan. This is an illegal practice prohibited by state and federal law and a very common abuse perpetrated on the elderly.

6. Disbursement of funds payable solely to a home improvement contractor. On a home improvement loan, the lender cannot pay the contractor directly. The check must be made solely to the homeowner or made to the homeowner and the contractor together.

7. Most prepayment penalties are also prohibited.
If you are facing foreclosure and your loan is less than three years old, you are still protected under federal law! Violations of HOEPA's disclosure provisions and inclusion of prohibited contract terms will make your lender liable to you for actual damages, statutory damages and attorney fees and costs. In addition, there are special enhanced damages, of finance charges and fees paid by the consumer, for material violations. HOEPA violations are also subject to TILA's extended right to rescind. Assignees (if your loan is sold to another lender) of loans covered under HOEPA are liable for all claims and defenses with respect to the assigned mortgage that the consumer could assert against the original lender on the loan, except to the extent of certain limitations on damages. These laws are for your protection and can save your home, use them!!!

Real Estate Settlement and Procedures Act (RESPA)
Among other provisions, the Real Estate Settlement and Procedures Act prohibits the payments of unearned fees and kickbacks. A lender kickback to a mortgage broker for making a referral is forbidden. The remedy for violation of this provision is treble (three times the amount) damages and attorney fees.

State Unfair and Deceptive Acts and Practices Laws (UDAP)
Many of the abusive practices and loan terms found in predatory mortgage loans can be challenged under state unfair and deceptive acts and practices (UDAP) laws. If a state's UDAP statute covers the type of transaction or the creditor involved, advocates may bring claims for practices such as repeated and unnecessary refinancing ("flipping") of loans, making unaffordable loans to consumers to acquire the equity in the property, or misrepresenting the loan terms. Excessive fees and costs, and other terms that are disadvantageous to the borrower may be challenged as well.

Other Laws
In addition, warranty law, usury, unconscionability, breach of fiduciary duty, fraud, and contract law have remedies which may prove helpful in challenging abusive loans. Other laws, including the Equal Credit Opportunity Act and the Fair Housing Act, have also been used to challenge these practices.

Introduction to the Mortgage Servicing Scam
• These are not "predatory lenders." These companies do not loan money. They operate in the lending
industry after-the-fact. They take on a function that a lender doesn’t want - the backroom functions of
handling payments, escrow accounts, annual statements, dealing with borrowers, collections, etc. The
perpetrators of the loan servicing scam acquire the servicing rights to loans that other companies have
already made. (Loans that were deliberately constructed by predatory lenders are ideal for processing
through servicers that specialize in aggressive collections or rapid foreclosure processing, but the loan
servicing scam can be operated against any mortgage loan if the servicer acquires the rights from the lender.)

• These scams are designed and deliberately operated. These situations are not errors, mistakes or
situations where a servicer’s managers or employees failed to do their job. Their systems are well-designed
and state-of-the-art in terms of analytical technology that helps them choose and process their victims.
These scams generate enormous profits from a business that is difficult to run, people and litigation
intensive and normally only marginally profitable. Many have failed and been acquired (Fairbanks bought
several).

• You, the borrower are not their customer. Lending companies and investors are their customers. As a
borrower being "serviced" in the scam, you are simply one of millions in an ever-growing pool of what the
financial services industry deliberately labels as "sub-prime" borrowers waiting to be taken advantage of.

• They have almost unlimited legal resources. If you had the financial resources to have effective legal
representation and the documentation to challenge them, they would turn their attention to easier targets. Of
course, because most sub-prime borrowers are not well off and don’t have an attorney, you’re a likely
target.

• They have leverage and information and will prey on your fears. The fear of possibly losing your
home is the key that unlocks your bank account for them. They know almost everything about you
financially and even from an employment and income basis. They are made aware of your inquiries into
other lenders about refinancing even without a request for a payoff and that shopping may lead them to
target you before you can get out of the loan you’re in.

• They are experts with millions of successful cases behind them. The loan servicing industry, including
those who founded and are running the servicing scam companies, helped craft the "standard" loan
documents in widespread use. They are written entirely for the protection of the lending industry, not the
consumer. That situation allows them to manipulate their processes and procedures to push you into a
position where they can take funds from you or ultimately take your home, often within the terms and
conditions of the loan. Some do go beyond the terms or even break the law and aren’t stopped because the
borrower does not actually understand the agreement they signed or the laws and regulations.

- When the servicer decides to manipulate the date the payment is received in order to artificially
create a late payment.

- When the servicer applies part of the payment to something other than principal and interest and
creates a partial late payment or deficiency.

- When the servicer decides to "force place" an insurance policy on the property by claiming the
homeowner has not provided proof of insurance.

- When the servicer pays your property taxes late, then adds their late penalty to your account
without your knowledge.

- Any or all of those processes result in at least one month of the account being past due and a negative note
is made in the credit report (which effectively prevents the borrower from refinancing). It also helps the
Private Mortgage Insurance carrier keep the policy in effect on the loan, which is why these insurance
companies have investments in servicing companies in the first place – a late payment or two allows the
lender to keep the insurance in force.

- IF the borrower has anything more than about 10-15% equity in the property, it is to the servicer’s
advantage at this point to not aggressively attempt to collect. In fact, if the borrower makes contact, the
servicer will engage in delay tactics to avoid resolving the problem in time to prevent default. If the equity
position is considerably less than 10%, the servicer does not have as much leverage, nor is the opportunity
as great and they will typically be more aggressive in collection efforts and more willing to keep the loan in
force.

- In the case of force-placed insurance, it is to the servicer’s advantage to ignore the borrower and any proof
of insurance as long as possible, again to keep the borrower’s credit status in a negative light and to
maintain their relationship with the insurer they contract with. These policies are extremely profitable
because they provide absolutely no coverage for the homeowner. They protect ONLY the value of the loan
if the property is destroyed.

- If the servicer has analyzed the opportunity and marked the property for default and recovery, the next
payment received will be rejected as being insufficient. If it is accepted, the application of the funds leaves
the loan sixty days past due. Typically, the scam now moves toward formal legal notice of acceleration in
order to coerce the borrower into signing a highly-profitable forbearance agreement to somehow "save the
home." The servicer rolls thousands of dollars in penalties and an incomprehensible combination of
legitimate and illegitimate fees into the agreement and the homeowner is left with no choice but to sign it or
lose their home. The amount demanded will be calculated to take as much of the homeowner’s equity as
possible.

- If the homeowner decides to sell the property to get out of the situation and take their equity, they will find
the payoff amount (which in the last month of the scam will take longer to get than the amount of time left
before foreclosure) strips them of their equity. That combined with their artificially-damaged credit rating
helps keep the victim trapped.

- If the borrower cannot pay the amounts demanded in the forbearance agreement, the servicer will have one
of their network of specialized attorney firms foreclose and the property will be sold, typically at a county
auction or through their real-estate network.

- If the borrower signs the agreement, they will soon be recycled through the process with yet more late
payments and fees. But in the terms of the forbearance agreement, they may find they have signed away
any legal protections they may have already had, including the right to sue the servicer for fraud or
misrepresentation.

- In the end, if the homeowner cannot afford competent legal representation to stop this fraud, they lose
their equity and in many cases, their home.

I can be reached for a FREE consultation at (cell) 617-202-8069 or (703) 584-5998,



it's FREE, there is no obligation whatsover...! Sincerely, Pierre R. Augustin, MPA, MBA

P.S. - What 3 friends do you know who would benefit from FREE Expert Loan Advice...!
1. Call and Speak with a Consultant, 1-617-202-8069 or (703) 584-5998, it's FREE!