The Loan Modification Trap: They find a way to be more sinister

by Marty Macisso Jr

From the front lines of the war, written in the 1st person, frustratedly.

It appears that a Charlatan (bad guys who lie) must always find a way to disguise. To wear many hats, to bait many traps, to always find a bigger soap box on which to stand, One Nation under God, as they say.

It just blows me away, how the Banking Industry, which I realize is a loaded term and vaguely broad, can prey on every emotion that leads to a profit center. The same clan, the same group of elites, same group of lobbyist-o-crats or banking-upublicans, have found a new and even more diabolical way to defraud America. The imaginary Loan Modification.

The loan modification is not a new thing, it has been around for years, however, the Housing Crisis, where the economy is so tightly wrapped around people and their evaporating home equity, is a new thing. Never before has America seen such a housing market, once so hot and ever prosperous for all, become what it is today. What is it? Couldn’t tell ya.

What I can tell ya, is this: The men and women responsible for generating such an artificial economy built around a manic housing bubble of malfesant reckless loans, are the same men and women using the new pop-culture term – the Loan Modification, as its saving grace. The current Presidential Administration even championed their own version as the Making Home Affordable Plan. This plan has been as successful as New Coke, or putting Dennis Miller on Monday Night Football, or maybe as good an idea as using Oxygen in passanger blimps(cough,cough Hindenberg Disaster). References are fun.

At the risk of being redundant, the Loan Modification has been a failure of policy both public and private, but not for reasons that make sense to middle-class working(or not working) America. The malicious fact of the matter, that the Main Stream Media has yet to pick up on, is that the Loan Modification is a TRAP. Yes, an absolute TRAP.

Riddle me this America, would it make sense to you that the entity claiming to be your mortgage company, the people who so graciously lent you the money to by your home, the company who so routinely sends you the statements demanding the monthly principal and interest payment, actually in their own warped sense of reality – WANT YOU TO DEFAULT ON YOUR MORTGAGE? (run on sentances are fun) Yes, its true. How? Why? Impossible? Senselessly paradoxial?

I know it sounds like an absurd accusation. But you need to think like an investment banker, and not a retail banker at your local Credit Union. Put on your greedy, financial wiazrd hat, for a moment while I break it down.

Your mortgage company is not a mortgage company, its what we call in the biz as a Servicer. A servicer is a 3rd party agent hired by a mortgage fund Trustee, the ugly guy who is in charge of funneling payments from the Homeowner to the thousands of Investors claiming a piece of your pie. A SERVICER only makes a little money (relatively speaking) in the process, through fees paid by the investors in a normal conforming loan payback. However, when a Homeowner begins to fall behind on payments, the process becomes much more profitable for Servicer, as their job become one of channeling the stream of payments to investors, to Collecting the delinquent account. This is where the Servicing entity like Countrywide, BOA, IndyMac, and other ghosts of Wall Street past really begin to rake in excessive fees.

What does this have to do with Loan Modifications? Well, plenty. When a homeowner is applying or in process for a loan modification they are typically under the false pretense – that the Mortgage company is working things out with them. It couldn’t be further from the truth, because in actuallity these unscrupulous pretender lenders (servicers) have no intention to modify the loan…its simply not in their hands. The actual decision maker is the investor or the Trustee for a mortgage backed security fund, who would rather you default and be foreclosed on because its easier and more profitable. Yes, these are real sweethearts.

So the Servicer tells Mr. Borrower, “Yes sir, we just need one more document and we’ll submit this for review by our Loss Mitigator. Just sit tight and don’t pay your mortgage.”

Mr. Borrower is feeling great and is hoping for the best. Unbeknown to him, the collection activity is continuing and the file is going nowhere, the Servicer never submits it to the Investor (reasons I’ll explain in a second) and the homeowner wakes up one day with the local town Sherriff serving him foreclosure papers. “Wait! What! Huh!???” says Mr. Borrower

Reason being for such a bait and switch is this: The Servicer must purchase every loan back that is modified under the Pooling and Servicing Agreement (contract between Investor pool and the Mortgage frontman) or they face a certain lawsuit for breach of contract.

So, in the end, it may take an actual Court ordered mediation to get a mortgage servicing company in the HOT SEAT and in front of an unbiased 3rd party mediator. This is becoming the only possibility to re-structure a loan and have it modified at terms that are affordable and permanent. But this route requires the due diligence of a qualified Housing Counselor who can guide a struggling homeowner through the process, or an Attorney, whichever is the most cost benefit.

In this messy mortgage environment, homeowners have many defenses and should always “Fight and Stay!”


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