Over 400 people have been charged in the government’s national mortgage fraud probe, called “Operation Malicious Mortage,” which dealt with individual rather than corporate fraud. [Reuters]


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  1. thatgirlinnewyork says:

    oh no, we mustn’t prosecute for corporate fraud here–that would be as effective as our “war on terror”!

  2. Gopher bond says:

    After reading one of the mortgage posts here, I’ve sent a few inquiries to my mortgage holder asking them for copies of the documents showing that they own my mortgage. I’ve disguised the request by telling them I need to show proof of this for some additional insurance I would like to purchase. The only response I got was “What documents exactly would you like to see?” from some anonymous rep.

    Truth is I don’t know, but I imaging they must have some of the documents I signed when I first bought my house. There’s got to be something. Do I ask for something specific?

    I’m hoping they lost my documents in all the mess. I’m thinking I wouldn’t have to pay at all if they can’t prove I owe them anything. But I’m not such a bad guy so I’d re-negotiate, at like 0.25% interest.

  3. blue_duck says:

    @testsicles: Sounds fair to me..

  4. A.W.E.S.O.M.-O says:

    @testsicles: What are you trying to prove? Mortgages get sold on the secondary market all the time. There’s nothing bad about that. Subprime was only a problem because people were defaulting, but there’s no crisis in prime mortgages on the secondary market.

    And even if they did sell your mortgage, if you’re still paying your bills to the same bank, it means they’re still servicing the mortgage even though they don’t own it. That is also common, and they’re not just going to lose your loan’s documentation.

  5. Gopher bond says:

    @A.W.E.S.O.M.-O: I read in some post here that some mortgage company couldn’t provide the documents to a customer about his mortgage. That it was sold a few times and/or one of the companies went under and the documentation was lost so he stopped paying.

    I just figured, what the hell, and wanted to see if anyone could provide me with the original obligation documents. I realize it’s not likely, but I imagine if my mortgage holder can’t provide me the original documents that show I owe them money, then I technically don’t have to pay, right?

  6. Gopher bond says:

    I went looking for the post and maybe it wasn’t posted here. Basically some guy was about to be foreclosed for not making payments but in the end, the mortgage company or bank or both of them couldn’t provide any of the documents pertaining to the mortgage. All they had was the account in the computer.

    It just made me think about long-term loans and how it might be a good idea to check occasionally to ensure the lender still has your records. I don’t even have a bad mortgage, it’s a 30 year fixed 5.25% so I’m just curious.

  7. NoNamesLeft says:

    @testsicles: Then who would actually own the property? Wouldn’t they technically be the property owner? The loan paperwork is there to protect them AND you.

  8. Gopher bond says:

    @NoNamesLeft: I don’t know. If there’s no paperwork then what? Who keeps records of liens on property? I guess the Government somwhere? But does the Government keep a record of how much?

    It seems that if they lost the paperwork, all that could be proven is that they have a non-possessory lien but I live in the place. But how would they prove what I owe? You’d think they’d have to have the original documents I signed, otherwise we would have to re-negotiate.

  9. A.W.E.S.O.M.-O says:

    @testsicles: Yeah, but just because they can’t find your documents doesn’t mean that a $300,000 loan flips completely over to you. That’s unconscionable. If you stopped paying, they’d take you to court and subpoena your copies. Or if you claimed you didn’t have them, they’d subpoena your bank account to see how much you were paying–presumably you were paying a certain amount because you consented to those terms.

  10. fearuncertaintydoubt says:

    @NoNamesLeft: No, actually, the homeowner is really the property owner. With a car loan, for instance, the bank actually holds the title to the car and it is much easier to repossess, because the bank is the rightful owner. However, with a mortgage, the borrower gets the title to the land, but the bank issues a promissory note which requires them to foreclose (through a court) if the borrower stops paying. So if the bank can’t find the documentation of their right to foreclose, then the court can’t (shouldn’t) enforce it.

  11. A.W.E.S.O.M.-O says:

    @fearuncertaintydoubt: That makes absolutely no sense. So if the building with the signed contracts burns down, the bank has to give out all those loans for free? The law isn’t completely moronic.

  12. Gopher bond says:

    @A.W.E.S.O.M.-O: Hmm, they can look in my bank records but all they’d see is the monthly deduction (not itemized). I could claim I was paying extra principal which would make it nearly impossible to deduce an actual loan total.

    If they don’t have my signtature on a document, I can’t see how an obligation can be proven.

  13. Gopher bond says:

    @A.W.E.S.O.M.-O: presumably they have electronic copies, original documents, and copies at different locations. I know I would if I lent someone several hundred thousand dollars. But if they can’t provide any of those, then what?

  14. u1itn0w2day says:

    The NY Times said it was real estate industry players and the most common type of fraud was mis-statement of assets and income.

    Another thing that was listed was fraudulent appraisals.I saw earlier in the year where some banks were under investigation for bad appraisals.And of course how can you not complete a story on the mortgage meltdown/housing bubble without the fraken flippers.The TV flippers help perpetuate the current mess participated in this as well.

    In an older episode of Flipping Out the Jeff guy TRESSPASSED on a potential house purchase and had contractors do work to INCREASE the value for a pending APPRAISAL/inspection.He said on camera because of his poor credit rating a higher value on the house for collateral would help him get approved for the purchase.Now since they’re arresting people for this why not arrest some of these TV show flippers,the ones who helped perpetuate the whole mess and make an example out of them.

    I don’t know if its fraud but even on other flipping shows it shows them breaking and entering on property they don’t own yet.I guess their fellow banks or realtors don’t care.

  15. A.W.E.S.O.M.-O says:

    @testsicles: Well you have to file sale records with your locality, so they can quite easily deduce a loan total.

  16. Gopher bond says:

    @A.W.E.S.O.M.-O: Would sale records indicate how much I put down and APR?

  17. A.W.E.S.O.M.-O says:

    @testsicles: I think you’re not grasping that documentation is not as vital as you think. Oral contracts without documentation have always been enforceable under the right conditions. The statute of frauds would seem to require that a mortgage be initially committed to writing due to its unique aspects, but it doesn’t require you to store eight copies in vaults. Honestly, like I said, what happens when the bank’s one branch burns down? Does everyone get a free house? No.

    They’d subpoena your agent, your broker, your parents, bank records, country records, whoever knew about your purchase, and they’d piece it together.

  18. @testsicles:

    I purchased an investment property recently, so I have my mortgage paperwork handy. The only two mortgage documents I got at closing were a document titled “Mortgage” and one “Note”. The Note seems like a summary docuement; it has my name, the bank’s name, the term, rate, and amount.

  19. fearuncertaintydoubt says:

    @A.W.E.S.O.M.-O: Please. You are making wild assumptions far beyond anything I said. Get a grip on yourself. All your posts are so argumentative. My point is that the bank has to produce documentation of the contract in court in order to demand that the court enforce the contract. As you pointed out earlier, the bank could subpoena the borrower. They could probably get a copy from the title company who closed the loan. If a bank burns down, I would sincerely hope (for their sake) that they had at least paper copies of their contracts at another location, if not electronically stored off-site.

  20. opfreak says:

    In court there is a chain of costady of documents. What is happening is some of these loans are getting sold so many times. A link between the current owner and the paper gets broken.

    All that happens is that in court the company that holds the note, cannot prove that they do own the loan.

    It doesn’t mean the person that owes them money gets away with not paying… All they did was delay the Loaners ability to foreclose… once they find the paper work you get kicked out of the house.

    Theres actually some logic behind this, if lenders cannot prove they own the loan, how can a court kick you out at their request?

    if that was possible, I could try to sue you, saying you are behind on a loan i own (even if I dont), and the court should kick you out.

  21. Gopher bond says:

    @A.W.E.S.O.M.-O: I really have no idea, which is part of the reason I got curious. But really, I understand that it’s not a lottery and I wouldn’t be walking away with a free house. I just wanted to find out if they could easily prove that they owned my mortgage and that I owed them money. Might be fun just to pester them and make them look for stuff.

    Maybe part of the article I read was a guy who was upside down on his mortgage and the bank was trying to get money from him that they couldn’t get by selling the house. In that case, maybe it would matter a little more in that case?

  22. satoru says:

    @testsicles: My fiancee is a real estate agent and I can tell you it is absolutely trivial to find out how much you put down and how much your mortgage was. It’s all listed in the public documents when you buy/sell a house. The only thing you can’t get is your APR and how much you owe on the mortgage.

    It’s pretty hard for you to weasel your way out of it. I’ve seen it done in Boston, but only because there was a giant protest outside the eviction. They seem to ignore the whole “why did this person get a 450,000 loan they defaulted on a year ago” but hey, logic gets in the way of a good story. In any case, they postponed it mostly out of PR, not because they had no legal standing. If you default on your mortgage, they will find your note, they will find the securities package its linked with, and they will foreclose on you.

  23. A.W.E.S.O.M.-O says:

    @fearuncertaintydoubt: There’s nothing unreasonable about argument. If you can’t stand the heat, get out of the kitchen.

    With that said, I simply don’t think it’s possible that a bank will ever be without enough evidence to enforce those contracts, even absent the original mortgage documents. That’s all I was saying. And if you agree, then I did make the wrong assumption about your earlier comment.

  24. satoru says:

    @testsicles: You’re right in that its kinda hard to track the note and securities your mortgage is actually linked to. But if you foreclose on the house, be assured the hounds will be released and it will be tracked down.

  25. A.W.E.S.O.M.-O says:

    @A.W.E.S.O.M.-O: Supposed to be “county” records, by the way, not “country.” Unnecessarily Orwellian, sorry.

  26. notallcompaniesareevil says:

    If you try to renege on a loan for no other reason than you can, you are no better than burglar that takes money from a bank vault. Responding to wrongs (perceived an actual) with wrongs is the way to anarchy.

    Now, back to post at hand: who are they not looking at that you think perhaps they should be?

    The schemes include cheating lenders, swindling those facing foreclosure and filing fraudulent bankruptcy claims, officials said. Among those indicted were real-estate agents, lawyers, appraisers and borrowers. [www.bloomberg.com]

    It appears they are looking at all areas of the problem. Remember, making stupid decisions is not illegal (so Countrywide’s expansion into subprime was not on its face illegal even though it cost its investors billions). Forging documents is.

  27. bizzz says:

    wonder if the net caught young Casey Serin? Snowflake rolled up over $2 million in debt when the market started tanking and pretty much made any case for a prosecutor a slam dunk by blogging non-stop about it.