Banks Set for Next Scam 7


Okay, so the government has finally decided that HARP 2.0 (Home Affordable Refinance Program) is a good idea and should get off the ground. If you remember the politics behind it you know what a beating the government took just to get that much. Well, not surprisingly the 4 biggest mortgage servicers are squarely behind the program. If you’re not sure why, then maybe you haven’t been paying enough attention these past few years.

Basically, no matter how you slice it the big banks are able to scam the system. No matter how pure the motives of a program might be (refinancing for lower interest rates, short sale incentives, deferments, etc.) the banks still find a way to turn it to their advantage. And why shouldn’t they? They’re not in the business of serving customers, they’re in the business of making money.

Now, the government that is trying to regulate them, it’s not so clear what business they’re in. I mean, are they out to protect the homeowners or the banks? Aren’t banks afforded the same protections as everyone else? Don’t homeowners need help making their payments due to how badly the banks screwed up? It’s a fine line for politicians to walk especially since they’re all looking to get reelected.

I’m really excited to see how this one plays out. Someone set a reminder for 6 months from now to check back in on what I’m saying here. In six months or less it’s going to come out that all major banks have found loopholes to deny homeowners refinancing when it suits them and somehow get loads of free government money that was intended to help struggling homeowners. You’ve seen it happen time after time so please remember that you saw this one here first. The banks will figure out how to do it. Well, they’ll figure it out faster than Washington anyway.


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7 thoughts on “Banks Set for Next Scam

  • DP

    Cory,
    You just keep on keepin’ on with these Teaser blog entries. In the time it takes me to click thru and read them, it would certainly be helpful of you to provide a LINK(s) to a reputable 3rd party source of detail information on the topics about which you blog.

    I’ve said this before, but I seriously doubt that you or your staff read the comments.

    Finally, at the risk of being obvious, a word of clarification re: “…how badly the banks screwed up?” The banks DID NOT SCREW UP, my friend; everything they do is proactive and ON PURPOSE. These “problems” with scamming the system are FEATURES, not bugs. Or maybe YOU haven’t been paying attention these past several years.

    Toodles,
    DP

  • Cola

    As I understand it the refi/new mortgage paperwork whitewashes the chain of title fraud that has been highly profitable to the banksters. To give up a few points of interest on an underwater home that has a good payment history in exchange for a bit of laundering of the fraud as well as being sheltered from having to to “buy back” a toxic “loan” seems like a good win for the banks. The homeowner might weaken their defenses from any mortgage fraud should foreclosure become necessary and in some states they could lose deficiency protections if the law protects and they have a purchase money loan but perhaps the law does not protect deficiency on a refinance loan.
    But most important the politicians look like they are doing something while helping the banksters and not helping those most at risk and behind on payments.
    The law is the cure for massive fraud/foreclosures. If the courts and legislatures would only support and enforce what laws exist and use a bit of common sense the fraud will go away and not come back on such a huge scale. Respect for the rule of law as it applies to all including too-big-to-fail banks will be restored. Very simple, very equitable but not easy and not painless.

    If I were a bankster I would probably want to check to see where the worst fraud/most exposure was in our inventory and send a courtesy letter out to “help” those particular homeowners that qualify for “lower interest”.
    I think the banks like the HARP changes and were likely assisting in the development of them. Therefore I don’t expect total avoidance of the program by exercising loopholes.

    Six months should shed some light on all of our speculation. 🙂

  • Kathleen Couch

    Cory,
    I couldn’t agree more. As a short sale facilitator, I work with the banks daily, and find rules change as it suits their needs. I have marked my calendar for 6 months, but do not think it will take that long.

  • Ronald Shultz

    Re: DP’s comment
    You are correct in your assessment that the banks didn’t “Screw up… everything they do is on purpose”. So the author miss stated, so what? I believe the author’s intention is to point out that without proper over-site, the banks will merely use this well meaning effort to further “embezzle” from their customers. (If you or I did the things the banks do, we would be charged with embezzlement.) The bank’s management personnel should be charged, and held accountable to the taxpayers for their actions.

  • Guy Morgan

    Cory,

    I appreciate your selection of topics because they are relevant to the market.

    I also enjoy your take on things. And often agree with you.

    Thanks.

    Banks, like everyone, do what’s in their own best interest.

    Some banks (most), as with people, will also violate the law and the trust of it’s customers to make profits. That’s simply how profit driven they are.

    The individuals who run the banks then cite the health of the institutions as justification to screw people and break the laws. And the politicians knowingly and unknowingly help them.

    Banks work by design. Sometimes they are super slow to figure stuff out, but they eventually do, and profit however they can.

    Major banks are gutting their loan origination pillars now.

    In some cases knowingly and some not.

    I think they’re doing it because they are making so much money on the foreclosures.

    They are shifting their attention to that area of the business for the foreseeable future, and accordingly have abandoned origination as a money maker for now.

    Prices continue to collapse. And then the banks re-enter to origination market when it’s safe.

  • Ron Bell

    Cory is right on… ONE word of clarification: “Don’t homeowners need help making their payments due to how badly the banks screwed [THEM]?

  • Kim

    More of the comedy of errors. I am hearing of more paperwork being lost over and over, then nothing more for homeowners. Just that endless loop of incompetent nonsense. The person whose name they put on HARP paperwork who is supposed to be presenting meetings for homeowner help near here faxed paperwork clients sent by postal mail to the lenders. The lender then tells the homeowner they must send it again. That the faxes were blank. Acting as if the homeowner did it. No…the person hired to do it did it wrong. That much is obvious. The phone numbers given to get back to the people who did not deliver the paperwork properly goes right back to the lender’s office and the person who did wrong is very hard to contact. The homeowners then get the threatening calls from the lenders and deadlines while the only person they say can make the final decision to help skates along doing what? We haven’t figured out what that is, but I am betting it is very lucrative. Only one example of the many ploys I’ve run across lately. My concern is where is all of the lost paperwork going, and should homeowners be forced to send more private info to folks who may not be keeping it safe and risk identity theft at the worst possible time? They hire felons in prison for god’s sake to do some data entry now in the lending world.