Archive for the ‘bankruptcy lawyer’ Category

A Bankruptcy Attorney Shares His Thoughts On Mortgage Servicing Companies

Sunday, October 10th, 2010

The biggest mortgage servicers in the United States function like the mafia. It’s a bold statement, but as an ex-employee of one of the biggest loan servicers who became a I think it’s not an inaccurate statement.

Most people have heard (particularly those confronting or foreclosure), numerous mortgage servicing firms, including Ally Financial (which used to be GMAC) and Bank of America, have stopped foreclosure actions in more than 20 states. They halted the foreclosures because of “irregularities” regarding the documentation proving that they own the mortgages on the homes they want to foreclose on. In one particularly bad case, an Ally employee told the borrower’s attorney at a deposition that he had signed about 10,000 declarations a month saying that he had reviewed the loan file when in fact he had not. Predictably, representatives of the major servicers claim that they would never ask an employee to commit a fraud on the court by signing declarations that aren’t true. Maybe so, but they do make it very clear to their employees they are likely to lose their jobs if they can’t figure out a way to sign off on 10,000 loan files a month. Besides quitting, the employee doesn’t have any other real options.

These mortgage servicers’ strategy of making money off the misdeeds of their employees while avoiding responsibility themselves is more or less the same strategy the mafia godfathers use. The godfather lets the lackey know that an enemy must “go away” or some other similar euphemism. When the lackey is apprehended by law enforcement, he spills the beans and tells the investigators that he was told to act by somebody else. Once law enforcement catches up to the godfather, he always explains that he never told the lackey to do what he is accused of. He says that the subordinate was just acting on his own or must have misunderstood what the godfather wanted him to do. Then the godfather finds a new subordinate and continues to engage in the same behavior, makes the same profits, and stays out of jail while the subordinates do the dirty work.

This idea probably would never be practical, but I believe it should be possible to hold the managers of these mortgage servicers responsible when they order their employees to accomplish certain tasks if it would be impossible to do so without breaking the law. The managers of these firms should not get off scot free when they remain intentionally ignorant of illegal acts done by their employees.

Since this widespread fraud has been exposed, there are some reports of lenders offering borrowers substantial mortgage modifications in exchange for the borrowers not exercising all of their legal rights in the bankruptcy court. I’m keeping my fingers crossed.

Author: John Fox

The Fox Law Office

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