I have previously written about the shabby progress that is being made with mortgage modifications to help prevent foreclosures. (For more, see my last article here.) There are some interesting recent developments regarding this topic.
I also reported previously that Bank of America/Countrywide had entered into an agreement last December year with Jerry Brown, California’s Attorney General, along with those of 10 other states to set aside more than $8 billion and agreed to modify a huge number of loans that were allegedly procured through questionable lending and sales tactics.
So BofA/Countrywide has this obligation. Note also that key provisions of federal legislation known as the Helping Families Save Their Homes Act of 2009 either “encourages” or “requires,” depending on how you read the vaguely worded law, mortgage servicers to modify loans. So here you have this mega-lender trying to do the right thing. As soon as they entered in to the agreement, they were sued by the investors who really owned these loans.
That’s because in most cases, Countrywide may have originated the loan, but they sold it to some investor who then had an agreement with Countrywide (now BofA) to “service” the loan. Many of these servicing agreements contain provisions that Countrywide would have to buy back modified loans. And indeed, that’s the issue. The investors took BofA/Countywide to federal court to get them to buy back the loans.
BofA/Countrywide took the position that provisions of the federal legislation shielded them from such suits. In fact, the law gives servicers:
“a safe harbor to enable such servicers to exercise these authorities [modifying loans].”
That seems clear, but that’s federal law. The judge said that the investors can still pursue their cases in state courts. Who knows what state courts might rule or when it might be settled; certainly not anytime soon, for sure. And the foreclosures roll on. What a mess!
While it is clear that many lenders, including Countrywide, engaged in harsh practices that resulted in the abuse of borrowers, it sure seems to me that investors like those who are currently suing knew full well the quality of the loans they were buying. They also knew that the underwriting standards that were used were not the same ones used for “A” paper quality loans. If they had to take a loss, it should not have been unexpected and should have been part of their evaluation when they bought the loans.
At this point, feigning ignorance and complaining about losses sounds an awful lot like, “I don’t know nuthin’ about birthin’ babies, Miss Scarlett.”
Randy Johnson – Author of How to Save Thousands of Dollars on your Home Mortgage and Savvy Borrowerarticles, Randy is a mortgage broker who has financed over $1 billion
in properties. He writes about home buying and real estate finance
topics for CreditBloggers.com.
Randy Johnson Randy is a Credit.com contributor and seasoned mortgage expert. He writes about home buying, mortgage laws and real estate finance issues. He has financed over $1 billion in properties, is the author of How to Save Thousands of Dollars on your Home Mortgage and he is a feature columnist for Savvy Borrower.
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My short sale horror story:
A Tale of Two Dirty Banks
(Boycott J.P. Morgan Chase-Wamu & Bank of America)
After being laid off, I could no longer afford my mortgage payment. I did not want a foreclosure to occur so I tried to do the right thing and located a realtor and an attorney to work with to help facilitate a short sale. I have brought four different buyers to the lenders. These buyers were pre-approved and ready to close. Every time we got close to closing, the lenders would kill the deal. They should be on their knees, kissing my ass, thanking me for finding them even one buyer in this horrible economy and even worse real estate sector, let alone four. J.P. Morgan and Bank of America have lied, manipulated, and jerked us around for over a year. These two scumbag, lying, dirty banks make my skin crawl and make me want to vomit my stomach contents. One bank representative even told me that “They were going to ruin my credit and destroy my life for putting them in this position.” I put them in this position????? I had an 804 FICO Score before I was laid off. I had a 30 year low rate fixed mortgage. I did everything right. These criminals, who should be in prison for their fraudulent activities, now get 7 figure bonuses as rewards. Not to forget, these criminals had their hat-in-hand begging the government for a handout of billions of yours and mine tax dollars. Let’s have a brief history listen. The bulge bracket firms on Wall Street are the DIRECT CAUSE of the great recession. They are the ones who bought the crap sub-prime loans, replenished the coffers of fly by night lenders, sliced and diced them, re-named and re-packaged them as Mortgage Backed Securities, coerced and blackmailed the ratings agencies to give them triple AAA credit ratings, and then sold these garbage investment vehicles around the world knowing full well the whole time this was a scam. These banks perpetrated the largest fraud known to mankind. They systemically brought down not only the U.S. economy but also the global economy. Countries such as Iceland have collapsed because they believed the lies that the thieves on Wall Street fed them and over levered themselves to buy RMBS investments. And now that the real estate bubble has collapsed, and these thieves cannot milk anymore revenue from the RMBS fraud, they are trying to create revenue on the backside by destroying the middle class and people’s lives, including mine. I have lost everything. I am three months from being homeless and living in my truck. I don’t have a ten million dollar mansion like Richard Fuld (Former Lehman Brothers CEO) to go home to or hundreds of millions of dollars in savings. The only way an individual can let their anger known is by exercising freedom of choice. BOYCOTT these scumbag criminal organizations masquerading as banks and take your business elsewhere. They are a disgrace to America.