Modification Fraud — the latest game in town
Posted on September 4, 2009 by livinglies
Here is a good article from NYT but once again they are describing the news instead of reporting it. No investigation. Why do you think that servicers et al are not REALLY interested in modifying your mortgage? Why do you think they want you to believe that you are “in process” for mortgage modification when your request was denied months before? The answer is simple: if the obligation is modified then it isn’t in default. If it is not modified then it IS in default. And the pretender lender intermediary players NEED your loan to be in default.
The actions of the servicers and other intermediaries are designed to achieve two results: (1) to make you think that you are negotiations to modify your mortgage and (2) to deny your request for modification. As this New York Times article points out, the decision not to modify comes within days of receiving your request but they NEVER tell you that. Why? Because they are running the clock in order to have you in an incurable position of default. Why? Because ONLY a default will trigger the credit default swaps that “insure” your obligation along with hundreds or thousands of others. And they have “insured” your loan as much as thirty times over. So if your loan is $300,000 it is possible that they get as much as $15 million — but only if you are in default (or at least only if the pool defaults on the obligation owed to the investors). They can’t get that money if your loan is modified. And even if your particular loan is not delinquent or in default, as long as the pool defaults, they still get paid.
So adding to the misrepresentations to borrowers and investors in the creation of these securitized “loans” (which are in reality “securities”) is the misrepresentation to borrowers and their lawyers that they are in good faith negotiations to modify the loan because (a) the servicer has been promised the house as part of the scheme (even though they never put up a dime for the loan) and (2) the Wall Street players are getting a pornographic amount of money based on the premise that your loan is in default whether it is or it isn’t, and whether it was paid by third parties or not.
And NOBODY wants to bring this to the attention of the “investors” who purchased bonds that were mortgage backed securities because some people might do a little arithmetic and quickly come to the realization that they paid as much as 3 or four times the amount actually funded in the loan and are now sitting on an unenforceable promise of security that at best is worth a tiny fraction of what they paid.
So who do you think paid for all this? YOU did along with all the taxpayers of this great nation. Do you really think that the Wall Street players like AIG who made a living assessing risk, never peeked under the hood to see what was going on? In a real deal, they inspect deals the way my grandmother inspected chickens before she made the purchase. No, they had to know that the ultimate payment on these “bad bets” (which incidentally were guaranteed to be triggered to the advantage of anyone holding a credit default swap), they must have known that the ONLY source of payment would be the Federal Government with taxpayer money and newly printed money. The TARP money went not to holders of “troubled assets” but to holders of these bets and we paid them off for a horse race that was rigged from the start.