Robo-Approved: Underwriting Loans Always Controlled by MegaBanks

submitted by David

Editor’s Comment: This underscores the reality of the situation. Whereas the borrower thought the lender was disclosed, was underwriting the loan and was taking the risk and therefore was interested in the viability of the loan, none of those things were true. The party disclosed as the “lender” was not the source of any money that went to or on behalf of the borrower. That was merely an agent being paid as such for the origination of the loans, which were aggregated and sold at a “profit” (yield spread premium) to pools that were “owned” by investors. The “profit” was kept by the investment banker who set up the scheme. I think if the investor actually saw the numbers they would call that theft not profit.

The originator had instructions to close the deal at the highest amount possible which meant getting appraisers who were willing to throw their industry standards to the wind. When the loan failed, as it was designed to do, then people higher up in the securitization chain would make even more money than the profit they already made in setting up the sale of bogus securities to investors.

These are probably grounds for rescission and the time limits that some people have made reference to in TILA are probably being misapplied — unless the borrower knew the true facts of the deal at the time of the closing of the transaction. Not likely, since the whole modus operandi was obviously to keep that information secret. The servicers call it “proprietary” information to which the borrower is not entitled despite provisions in TILA and RESPA to the contrary.

Regarding Countrywide – BofA and SISA & NINA Loans…

You download these two cases…

Countrywide used and Underwriting ADD-ON Software program – that automatically changed a borrowers application from conventional to a NINA or SISA loan app. This was done WITHOUT a borrower knowing it. In fact, this Underwriting program was specifically designed to capture a REJECTED LOAN APP – change it to fit the criteria – return it to the Originator APPROVED… If you read these and other lawsuits against Countrywide – it is evident that Countrywide DEFRAUDED at least – 3.5 MILLION BORROWERS.

IMHO – there is absolutely NO-WAY a judge can determine if borrowers were properly disclosed. The loan docs will NOT tell the story because most folks have NO IDEA what they were handed. They were given a fist-full-of documents and usually SEVERAL times. The more I talk with folks about how many times they signed docs for different loans or supposed “Good Faith” estimates it is blatantly clear what they were doing was gather signatures on DIFFERENT loan pkgs to sell the borrower WHATEVER paid the agent the MOST.

Specifically about UNDERWRITING – the big-dog LENDERS ALWAY controlled the UNDERWRITING standards – no matter WHAT bank – agent-broker – whatever – the Underwriting was always controlled by a select FEW big lenders. If the loan ended up with Countrywide – it was their underwriting – BofA – then BofA – no-matter who wrote the loan – the standards were from the party that was SOLD the Note – at least, that’s my experience thus far…

48 Responses

  1. Spot on with this write-up, I honestly believe that this
    web site needs a great deal more attention.

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  2. Anonymous:

    Thanks a lot – I just now found your response. So glad to know that when I did the charts for Court that I got it right and you have confirmed – appreciate your input.

  3. Joyce Louise

    Terribly sorry — just reading your post now!!! Do not always check off boxes for Comment notification.

    Security Underwriters are listed near top of Prospectus — 424B5 — usually in bold lettering.

    Some PPSI Mortgage Schedules were available on SEC website –But, these Schedules have now either been moved — or removed.

    Again — sorry.

  4. Anonymous

    Okay, Argent to Ameriquest to Park Place to WF, but who is the security underswriters parent corp that I failed to list or how do I find that? I cannot thank you enough for responding.

    Boy I was long winded in that post. I will improve on that. Thanks again.

  5. Joyce Louise

    Missed your post back then. Park Place Securities Inc was a subsidiary of Ameriquest.

    Chain should be as you state — but, fails to include sale of loans to security underwriters’ parent corp prior to securitization. .

    Argent and Ameriquest were acquired by Citigroup Inc.– not just servicing rights — but also business practice. Assume PPSI was either dissolved by acquisition time — or also acquired because it was a subsidiary.

  6. Alessandro Machi,

    Securitization is the removal of receivables from a balance sheet. In order to remove receivables – you have to have first purchased the loan. Thus, the banks purchased the loans before they securitized the receivables. But, this is rarely disclosed in SEC filed documents. And, most likely, the banks did this by prearranged agreements with originators and table funding at origination.

    What happened after that – in the securization process itself – it just a huge mess.

  7. Roger, I am producing what I think are some hard hitting articles at

    However, I was just asking, when does securitization actually occur?

    Ultimately, it may not matter because if the homeowner did not agree to be securitized, then no change in terms can occur without the expressed, written consent of the homeowner.

  8. Allessandro, because they did nothing right in the first place, what happens is that the securitization runs in reverse with the creation of fraudulent documents after the default. Maher addressed this somewhere. The default is the condition precedent to creating the revenue that they anticipated. That’s why the Sponsor/Servicer relationship is incestual. The servicer forces the default to trigger the claims and servicing (inspection, BPO, legal, junk) fees. The sponsor owns the principal-only and (z or r-x or irregular income certificates) They (originator/depositor) don’t carry the loan, they only carry the servicing rights. The money is in junk fees and theft by conversion of the asset. They didn’t just leverage the money, THEY LEVERAGED YOUR HOUSE! The event of default is what triggers the income, the foreclosure generates the wave of fraudulent, untimely, after the fact, fabricated documents purporting transfer of the note and mortgage.. Remember, most borrowers got different documents at closing than what were passed forward. That’s why you should compare your note and mortgage to the one on file at the county. Loans were closed and sold on the LOCK DATE, not the CLOSING date. There’s no telling what ended up in the loan file after closing.

  9. Am I correct to assume that securitization happens after the fact?

  10. usedkarguy,

    Aah – That “wonderful” Clearing House — where are things are “HIDDEN”. Thanks for the post!!!

  11. Thanks, John. I concur. The lawyers don’t get it or dismiss you as a ne’er-do-well out of the gate.

  12. Usedcarguy, I’m only trying to calm people so they don’t go waste alot of money trying to get the courts to listen.My experence with lawyers is not good so be careful.

  13. Neva, if true then you have completly different claims then most. How did you get away with not signing the loan application? Make sure you don’t wait to long to act because of SOL on claims.

  14. But the first thing you have to do is stop the foreclosure.

  15. John Baby,
    Most attorneys don’t know $#!+ about shinola regarding these cases. The guys that do get $750 an hour. Out of my league. Then again, so is any qualified representation for 95%+ of the borrowers at this time. I’m hoping there was no cynicism intended.

    And “standing” ” IS the only way to get “there”, wherever “there” is.

    I, personally, could never bring this case to Federal court, I’m “President” of the “Broke and Stupid Club”. That’s up to our justice department. I believe the intent of “Clearinghouse” was to put the banks on notice that they can’t commit fraud inside state lines and walk to Fed Court and get it 10(b)6’ed.

    Therefore, I, as a pro-se, submit a state claim (in my state WOCCA Wisconsin Organized Crime Control Act). There’s more than enough actors to prove collusion. I mention “Clearinghouse” because the states NOW HAVE THE POWER to deal with this. I can’t believe the AG’s have gone this long without making a PEEP! Over a year! It’s truly an outrage.

    any comments from this author do not constitute legal advice. They are the rantings of a self-described out-of-control Dago who realized he got screwed. I fought too hard to get back to “even” with Feds and other creditors to be pushed this far back down. And you know what? I could walk away NOW and not owe a dime to these pricks!! Why do I fight? This is my last shot at greatness, maybe. I don’t know why. It’s gonna come down to “pawns” or “Patriots”. And you know what? I’m gonna be the latter. I’m pretty steamed.

  16. John

    is right again about the fed judge and the cost and the attorneys who cannot defend the case. And that my friend is exactly what the big banks are counting on. I am sad to say.

  17. My intuition tells me that there will be an announcement of some kind regarding how the bk’s will have to handle the current day demise of so many homeowners. Since we have not come up with a strategy that will appropriate for what has been done to homowners, we have left it up to those who have created this mess in the first place and to the AG’s who have just gotten involved to do our negotiating for us. No one has stepped up and if it is not soon, it just won’t matter because people are tired, and most have no way to defend themselves. Oh my, the States need to control with the hlep of the people in that state a program that we can live with. Different areas of the countries have differnt needs and were affected in ways that others were not. Again, no strategy, we will have to wait and see what the powers that be plan for us, no matter how loud we scream, unless of course, the group becomes the masses and then would have some power to weild.

  18. Hey Joyce, Thanks for responding. Just one example is the BK court in No California. If a servicer files for a examption of the auto stay the debtor cannot appose if 2months in the rears. Look up the Oakland courts local rules.I don’t know how to respond to “all the people in BK” remark.

  19. usedcarguy, however Countrywide wasn’t a protected bank until late 2007. Just to let you know they still plead it in their MOD. Most attorney’s don’t know this and spend thousands fighting it.

  20. Hey John: I am confused. I am not aware of any bankruptcy court that is going to allow the servicer to keep the creditor in hiding. Also, there are hundreds of thousands of persons who do not belong in bankruptcy court so that to me is not the right path except in extreme circumstances. By the way, I agree with you that we the people do not want a free house, however, many are coming across that way. We took the money and it needs to be paid back, but the banks must be made to compensate those that they have harmed, It will be a real tragedy if they don’t receive some kind of deal that is satisfactory to them. Also, for those not yet foreclosed, the AG’s had best know what they are doing on behalf of the people when they come up with a plan for homeowners. We have already gone through two failed attempts by the government and the homeowners clearly came out on the short end of the stick. Proving standing needs to be done by the creditor but one should not have to go into bankruptcy to make it happen. This is a federal issue as well as a State, and the AG’s should get first chance at resolving it as far as I am concerned. If we are not careful, they are going to end up negotiating something we don’t want, but what can I say. Homeowners have presented no strategy that I am aware of other than making claims while some actually get in Court. If we don’t start telling them what we want, it will be a lost opportunity.

  21. usedcarguy, if you have enough money to litigate this then you have enough money to get another house. The bank was fighting the state not little old me. One bad ruling from a federal judge and your into hundred of thousands of dollars legal fees. I’ve seen it. I’ve read many MOD from banks referring to this and not one attorney could respond correctly. It’s tuff out there.

  22. Joyce…we should not concentrate on claims that have SOL on them. Most are well past. We must hit the banks with the standing issue for foreclosure in BK. I don’t feel the servicer has the right to hide the creditor so we can’t renegotiate. We the people do not want a free house but want to face our creditor to lay claims of law such as California’s net loss plan or selling the loan at a discount or getting tarp money.

  23. And the Federal charge is RICO.

  24. Cuomo v. Clearing House Association

    Facts of the Case:
    In 2005, the New York State Attorney General began investigating possible racial discrimination in the real estate lending practices of several national banks. The Attorney General requested that the implicated banks turn over certain non-public information to aid the investigation. The Clearing House Association (CHA), a consortium of national banks including several involved in the investigation, filed a lawsuit in a New York federal district court to prevent the Attorney General from continuing his investigation. The CHA argued that the Office of the Comptroller of the Currency (OCC), the federal agency charged with overseeing national banks, was appropriately responsible for regulating the banks’ compliance with activities that fall under the National Bank Act (NBA) and therefore precluded state officials like the Attorney General from doing so. In response, the Attorney General argued that the Federal Housing Act (FHA) provided an exception to the OCC’s sole stewardship of the NBA and therefore authorized his investigation. The district court granted the CHA’s request for an injunction and stopped the Attorney General’s investigation.

    On appeal, the U.S. Court of Appeals for the Second Circuit sustained the injunction against the Attorney General’s investigation, but used the decision in a separate case, filed by the OCC and utilizing different arguments, to do so. Here, the court of appeals held that the district court lacked jurisdiction to decide the FHA claim. It reasoned that since the Attorney General had not yet filed any lawsuits against the banks under investigation, the issue of whether the FHA provided an exception to the enforcement of the NBA was not ripe for adjudication.

    Are state officials precluded from regulating and enforcing banking activities governed by the National Bank Act and the Office of the Comptroller of the Currency’s regulations?

    No. The Supreme Court held that the OCC’s interpretation of the NBA that precluded state officials from regulating and enforcing banking activities was not reasonable. With Justice Antonin G. Scalia writing for the majority and joined by Justices John Paul Stevens, David H. Souter, Ruth Bader Ginsburg, and Stephen G. Breyer, the Court distinguished between a state’s “visitorial powers” – its supervisory powers – and its enforcement powers. The Court stated that the NBA only prevented a state from exercising its visitorial powers over banks. Therefore, the Court reasoned that a state was not precluded from exercising its ordinary powers to enforce state laws.

    Justice Clarence Thomas concurred in part and dissented in part. He was joined by Chief Justice John G. Roberts, and Justices Anthony M. Kennedy and Samuel A. Alito. Justice Thomas argued that because the definition of “visitorial powers” was ambiguous, the courts should have deferred to the OCC’s interpretation of the term in the NBA.

  25. to John:

    Excellent advice to Deb and others. Good Job. Now we are getting realistic. I think your findings are correct with respect to what the states are going to allow in spite of the fraud that was committed. But of course we need to keep on trucking, our tires are not flat by any means.

  26. Diane, Just one note about your state’s protection laws. if your bank is a federal bank most state protection laws do not apply. If you win in state court the bank will move it to federal court and they will dismiss because you cannot interfere with a federal bank loaning money. So beware

  27. The banksters are ” shell” humans they lie to themselves in the name of being ” intellectuals” when infact they are criminals. They know no mercy because the money us who they are banking is who they are wall street us a den if theives and out government us no better they want power and money at any price. But power over what and how proud can you be when you destroyed something that was once decent and good and stood for life liberty and safety in knowing we had good laws to ensure that somewhere we could get justice. How sad it is . Truth is truth and I always said gas a habit if prevailing eventually. I hold onto that

  28. I think in California anyway if more people would walk the banks would start begging them to stay but maybe not they are a tough bunch. They still don’t think it’s their fault.

  29. Anonymous. Deb wynns case dennwynns case deb wynns case. Cracked! You guys are impeccable

  30. Now remember in California walking away from a purchase loan is trouble free but if you refinanced then it is different because the debtor probably took money out but California’s one way rule kicks in where if the bank chose’s to do a non judicial foreclosure then they can’t go to court to get a DJ.However the debtor can sue the bank for fraud but must be very detailed in the complaint explaining everything. I hope this helps.

  31. Diane, I couldn’t agree more and in fact I would plead the same however California has deemed Banks not to owe the debtor a fiduary duty like a doctor has and is allowed to operate in it’s own interest.Soooo if the bank loans money knowing it will sell the falsiefd loan then the injured party is the investor. The debtor got the money and without strong proof the debtor didn’t allow the false docs by signing the court will not let the debtor benifit again by not paying.I’ve searched most state laws and California is the most lineant when it comes to allowing the debtor to walk away after falsifling docs. I know it’s the shit’s but at least the debtor can buy a house two years or so later and if they start now by walking away they will enjoy lower prices.

  32. John,

    I see your point about the application and the appraisal being for the benefit of the bank. However, at least in my state, it is a violation of the Consumer Protection Act to even create false documents in a consumer transaction. It also violates our Mortgage Practices Act to submit false documents into a loan transaction.

    So, even if the application and the appraisal are for the bank’s benefit, falsifying them and making them part of the transaction is illegal.

    Its like this…what if you were filling out the forms to get a hip replacement. And you disclosed that you had really high blood pressure. But the doc, who wants to make money on the surgery, changes your health history questionaire to take out the high blood pressure, so he can do the surgery without upsetting his colleuges. But then you stroke on the table. He would be fried in court for that.

    The health history is to inform the doctor, who should “underwrite” his decision to do surgery. If he had not changed the history (application) his firm would not do the surgery (loan) and you would not be dead (homeless).

  33. I tend to think the PUBLIC KNOWLEDGE of the discriminatory acts committed by these lenders will do more harm than any court. Once the American people realize the TRUTH – then the courts will suddenly change their tunes and apply our laws. Once it reaches to the judges “families” and they see the arrogance & deception – THEN – it will start to sink-in with these judges that they’ve been “used” like a cheap-Saturday-night whore…

    THEN I think the banks are going to have a VERY bad day – sort-a-like – Groundhog Day with Bill Murray… at least, that’s what I hope anyway…

    I hope he has some SERIOUSLY damaging information. It would be AWESOME if he was able to get their BOOKS & Spreadsheets… I can’t imagine what a few gigs of their accounting files would be WORTH to buy back…? Wouldn’t that be sweeeeeeetttt… That’d be funny… I’d publish them puppies in a heartbeat.

  34. Anonymous – Wow! That is stunning to think about in those terms but it makes sense. Why else would they put the files through underwriting several times to hit their numbers. Where are the whistleblowers on the inside? Doesn’t anyone at the TBTF banks have a conscience?

  35. Problem with this courts won’t allow wikileaks info into court


    I guess you heard the Wiki-Man has 5-gigs of information on BofA and is going to RELEASE it…?

    I think we need to get hackers to launch MASSIVE attacks on the Banksters computer systems to steal their data banks – maybe the Wiki-Man already did it… I have 400 megs of internal docs from lenders & wall street – 1000s of pages – Wiki has 5-gigs he’s putting on the net… that will be devastating but THANKFULLY – MAYBE it will PROVE that these folks were sold self-destruct loans and did NOT know it.

  37. AAH – Neil – now you are really digging up the real dirt. You write – “When the loan failed”. These loans FAILED at origination. Many of these loans were INITIALLY REJECTED. Full discovery, and documents, will often show the initial rejection.

    Well, what happened after that??? After that initial rejection??? Someone pulled a few strings and allowed a modification of the prior loan – and put through a refinance – this was NOT an actual refinance – but a modification of the prior debt. And, how did they do that??? By placing you falsely in default on the prior mortgage (or non-compliant as to documents)- and then – guess what?? — modifying your prior loan now “converted” to a “default debt”. No one funded this – the prior loan was simply not paid off.

    Were mortgage title insurance companies aware of this?? You bet yha – they were.

    As to new home purchases (and most subprime was for refinances), new purchases went the same route. Once rejected by Fannie/Freddie/GNMAE for MBS guaranteed – a financial institution/debt buyers/hedge funds – gobbled the loan up. In fact, that was the financial motive of the financial institutions/debt buyers/hedge funds – who “intercepted” Freddie/Fannie rejects. Wow – what a profit to them!!! High interest rates to boot!!!

    Have always emphasized securitiztion (PSA/Prospectus) to demonstrate the fraud in the chain as to challenge for foreclosure. But, the securitization is not relevant as to refinances that were actually modifications of prior loan that was never paid off, not relevant as to new home purchases that were targeted to be rejected by Fannie/Freddie – and scooped up by distressed debt buyers, and not relevant as to valid mortgage title insurance. In these cases – which was the norm – securitization – was – simply fraudulent.

    But, as I have always also said – profit was the motive and goal – and – you and your home were targeted for profit. There was nothing left in America – but to siphon every dime from home ownership – that could be siphoned. You were the target – you were their goal – you were their PROFIT..

    WE NEED ACCOUNTING – we need disclosure of trustee ledgers. Until this is done – we will remain victims.

    PROFITS???- tired of the word. We have been lied to – from A to Z. And, consumer advocate AGs have an obligation to expose the fraud.

  38. Good Job Neil,

    Here are a few trivia nuggets taken from several Investor Lawsuits I’ve read thus far…

    When I’ve noted the percentages & quantities of mortgages “infected” based on depositions and allegations “[b]admitted[/b]” by Countrywide either in court or to the Office of Thrift (if that’s what its called) – I am come up with a STAGGERING – 3.2 to 3.5 MILLION FAMILIES (mortgages) that Countrywide “ADMITTEDLY” sold KNOWING those families could NOT repay. Worse – those numbers are from 2005-2006 ONLY.

    Another very disturbing realization is – there is NO REASON to “assume” those families KNEW what they were sold. In fact, evidence indicates they not only do NOT know but that these families were specifically targeted because they are not sophisticated or educated enough to know.

    As mentioned, I was able to download over 400-megs of “internal” docs containing over 500 files in pdf format – and some have 1500 pgs. These docs go back about 10+-yrs and they carefully explain their marketing strategies – profiles of those targeted for their products. An analogy would be – they deliberately marketed to moms & dads economical safe vehicles at undeniable prices for their high-school teenage boys – without telling them they were Turbo Carrera Porsches capable of 190-mphs with a tendency to over-steer going into high-speed corners. The other part they didn’t bother telling the parents was – to get them cheap enough to sell at that price – they had to use the older drum-brakes and no air-bags, safety glass, or shock-proof bumpers – so after 10-thousand deadly accidents – they’ve decided to throw-in an additional safety card warning them not to overheat the brakes.

    These families were TARGETED – PROFILED – and setup… Here’s a comment from one report…

    “As one self-confessed predatory lender described in testimony to the U.S. Senate, predatory lenders target “blue-collar workers, people who have not gone to college, older people who are on fixed incomes, non-English-speaking people and people who have significant equity in their homes.”52 Moreover, once a predatory lender has secured a victim, his goal is to keep returning in order to repeatedly flip – refinance – the victim’s loan, churning additional fees and stripping additional equity each time.53 However, once a borrower has been trapped in an equity-stripping loan, her loan-to-value ratio is likely too high to ever allow her to trade up to legitimate subprime financing.”

    “Equity Predators: Stripping, Flipping and Packing Their Way to Profits: Hearing Before the Senate Special Comm. on Aging, 105th Cong. (n.p.) (1998) [hereinafter Testimony of Jim Dough] (statement of “Jim Dough,” Anonymous Employee, Finance Co.) (“[M]y perfect customer would be an uneducated widow who is on a fixed income – hopefully from her deceased husband’s pension and social security – who has her house paid off, is living off of credit cards, but having a difficult time keeping up her payments, and who must make a car payment in addition to her credit card payments.”), available at events/hr14jd.htm (Mar. 16, 1998).”

    —-end snip—-

    How can any government officials read the above and NOT be totally irate and want to send in military-like search & seizures of these lenders to rip the computers off the desks and begin massive prosecutions. AND NOTE the freaking DATE – 1998!

    Look at this comment – “…My perfect customer would be an uneducated widow who is on a fixed income – hopefully from her deceased husband’s pension and social security – who has her house paid off, is living off of credit cards, but having a difficult time keeping up her payments, and who must make a car payment in addition to her credit card payments. …”

    If that was 1998, then buy 2003 thru 2007, those lying thieves had “already” tweaked & honed their “infected” products to a snipers pin-pointed marksman precision. These families didn’t have a snowballs chance in hell to ever even know what hit them.

    How could ANY judge not see that this was a total scam? That comment is from a Senate hearing 12-yrs ago? And NOW they act as if they are just HEARING ABOUT IT…? What’s wrong with this picture…?

  39. I believe in California our best bet is BK because the debt must be proven to have standing. I believe I have the right to nogotiate with my creditor. This is starting to prove it self with the investors getting involved and stating that they believe that excepting loan mods are better then foreclosures since they get hurt so bad in a foreclosure mostly from the servicer however with the fee’s they deduct.One more thing should be said….California laws says that the servicer must take the more profitable road so if the servicer is cheating by using robo sighner’s to forclose then they are not spending the real amount that it take’s to foreclose they are cheating the system.

  40. Also in California the courts have ruled that the appraisal is for the banks protection not the debtor. The debtor should have one. That is why in California on purchase loans there is no dificiency judgement available to the bank after a non judicial foreclosure. I myself like this because all the rocket docket foreclosures in Florida come with a possible DJ. Even now if the bank takes a Short Sale in Ca the can’t get a DJ. So Ca is pretty good in that respect.

  41. My loan app. does not have my signature, the signature on the Note is photoshopped and my transacton had two HUD-1’s and illegal fees to the lawyer doing the closing. He did 3 years in the federal pen for wire fraud associated with flipping houses with two transactions. The title company gave a clear signal that there were no clouds on the title, but when I tried to refinance, there were clouds on the title. Two mortgage satisfactions had never been filed. My entire closing transaction was fraudulent with bad mortgage brokers, bad appraisal, bad attorney and bad seller.

  42. Hi Diane, In California the credit application is to protect the bank not the debtor. If the bank wants to lie to them
    selfs to loan you money so be it. Kinda, no private right of action crap.

  43. Neal,

    I despertly need signatures of the individuals

    Notary Ashley Elizabeth Olson and Topaka love and Jodi Sobotta all work for Lender Processing Services in Minnesota . the sign Robo for many many banks as VP’s and also as VP Mers and on and on.
    Please e-mail any and all signatures to please time is of the utmost importance.

    thanks Jerry Jurden

  44. Oh, and one more thing.

    I think that so many people are embarrassed that their loan application was changed and they signed it. They feel responsible. They don’t want to bring it to light. They worry that they broke the law.

    I think, with all of the information in main stream media that banks have created and submitted false foreclousure documents, judges are keen now to the fraudulent behavior of the “banks”.

    Judges will not be surprised that the loan origination documents were falsified by the “banks” also. I say, get a lawyer and take your “lender” to the mat on the false application and false appraisals.

  45. This makes perfect sense to me. I have reviewed several loan files with people and to their utter shock asked them “…Did you really make $8,000 per month back then as a carpenter?”

    Their loan applications were changed, printed, put into the closing docs and the borrower signed the whole package including the false application.

    Big, BIG violation of almost every state’s consumer protection laws. The “banks” can’t change and submit false documents in a loan package!

    Well, it is clearer than ever that those people have no problem creating false documents.

  46. As an originator from 1992 through 2002, mortgage brokers were provided with loan programs which listed the underwriting criteria that had to be followed in order to sell a note to their Company. In otherwords, we might have three or four programs that the loan fit. Funny thing, I always thought the mortgage broker was the one selecting the program even though at times, the wholesaler’s underwriter might find some reason that it did not fit and then moved the loan to a different program . They referred to as shopping for our borrower. As mortgage brokers we knew what the borrower had to do to qualify under certain programs. These program criteria were provided by, at least that is what I thought, Wall Street investors who were lining up loans to go into pools. For example, Park Place Securities worked with Ameriquest to provide a certain number of loans that had to be underwritten utilizing certain criteria. Ameriquest was provided the money to table fund the loan that Argent Mortgage originated. Ameriquest was never shown on any of the paperwork other than in this case, as the party that would service the loan for the first 30 days. No disclosures, etc. about Ameriquest even though they were the party table funding the loan. When one looks at the endorsement of the note together with what the PSA, Mortgage Loan Purchase Agreement indicated, it would have seemed to me that in this case, Park Place Securities would have acted as an endorser on the note because the note and liens were sold to them for value consideration, but were instructed by the PSA agreement with Park Place as the depositor, to send the note to Wells Fargo for example in blank, without recourse. Park Place never took possession of that note, etc. When one looks at the endorsement of the note, for the first time Ameriquest comes into play, but they are never listed in the PSA. Argent Mortgage endorses the note to Ameriquest who in turn endorses the note to Wells Fargo as trustee. That does not see right. Seems like the endorsement of the note would have been: Argent to Ameriquest to Park Place and then to Wells Fargo, TRustee. The POA was executed by both Argent and Ameriquest in that particular case, and it was here that we now decided, Ameriquest was not the original trustee as the lender stated, but that they had actually funded the loan and were a real player in the deal. A POA was used to prepare and execute an assignment but that was done 4 years after the PSA was signed and 2 years after both Argent and Ameriquest went out of business so the POA that was used to execute the Assignment of Note and LIen was invalid, but the servicer used it anyway. There were at least four other issues as to why the POA was not valid, but again, the servicer used it anyway to try to transfer the note and lien to Wells Fargo because they wanted to show that ARgent, not Ameriquest, per the PSA was the company selling to Park Place so they tried really hard to keep Ameriquest low key in the deal when in fact, they were the unknown investor that fulfilled the criteria for a program that I believe was given to them by Park Place. And of course now we know that the money put up was that from Park Place from securities they had sold to certificate holders. When Argent took the Application and submitted it to Ameriquest, we now know that Ameriquest must have had securities dealers as their main source of money and from then on, the profits just rolled in when Ameriquest sold the notes to the Wall Street securities dealers. And I guess there would be nothing wrong with their money except that it was clear that these securities dealers would have known exactly which loans and the type of loans that were designated for these pools. It sort of reminds me of the Goldman Sachs dealers where so much betting was going on as to whether or not the pool of loans would fail or succeed. Seems like they had all of the findings of those loans available to them as the time they were purchased by Goldman Sachs. I just don’t know exactly what the deal was, but it is clear to me that they all had to know within 24 hours of funding all that they needed to know about the pool of loans. The Congress never did ask that question as I recall but now we know, how Wall Street dealers did control the underwriting of the loan and which tranch and everything else about the loan that took place. The sick issue here is that Ameriquest and the banks and other originators and investors to these banks knew exactly what type of loan was being underwritten to fulfil the goal of the dealer. I think this is exactly what happened in this particular case. They could not bring in the investor Ameriquest because the PSA stated it was Argent who sold the loans to the Trustee, thus leaving out the real middleman in the deal to size up the loan applicants. Neil is correct in the way the loans were shuffled around through the screener (Ameriquest in this case) because the borrower received a denial of his loan one day and then a week later, his loan was approved by Argent under what may have been a different program or they just decided to salvage the loan for the pool, but the borrower never heard another word about Ameriquest even though, they were probably table funding his loan as it was later found out. I think this is what Neil is talking about, correct me if I am wrong. Just so you know, as an originator of mortgage loans, and seeing how the loans were being underwritten, it spelled nothing but trouble for the borrowers. I did not do very many of those loans and stopped in 2002 but for the loans that I did originate as subprime loans, I gave my clients a “did you know” letter which explained to them the adverse issues of their taking out the loan and that it would be difficult for them to repay it, but they paid no attention to it and took the loan anyway. Therefore, I stopped offering the loans and got out of the business so you see, most people in the business knew this thing was going to blow, and it did. In 2005 Shelby and McCain tried to pass a bill that would limit Fannie and Freddie’s participation in buying some of these loans but the Congress overruled them on it and they were too weak to keep up the fight so it dwindled away. It would be here that regulatory went awry because they reported to the Congress and this tells me they had the stamp of approval from Congress when such a bill failed to pass to ignore the proper regulation of the loan industry.

  47. Thank you Neil, this is now getting down to the nitty-gritty because it reflects not only what was going on at CW but also Argent / Ameriquest..

  48. I don’t know the foreclosure industry the way you do. I try and use logic to come up with what I think is unethical since I don’t work in the industry.

    I feel your article independently supports a theory I have that the only thing that the homeowner should be responsible for was the mortgage origination and the original bank where the loan was signed, and that the loan not be predatory in nature.

    Anything else or anyone else that was involved in creating a larger profit margin is fraudclosure.

    If I understand your article correctly, the multiple signatures by the home owner gave the the bank and loan arranger the opportunity to find the deal that gave them the best return and then made the return even better in the event the loan deal failed later on, and that this practice should be outlawed.

    One of my theories about interest rates is that the RANGE of interest rates that are offered on mortgage loans needs to be shrunk to a tighter margin, say a 2% differential from the highest to the lowest interest rates, to prevent predatory loans from occurring.

    While this could cause some people to be eligible for a smaller amount loan only, it would at the least be an AFFORDABLE loan.

    Simply doubling an interest rate loan from 4% to 8.08% creates a predatory condition in which the loan doubles in the amount of years to pay it off even though the amount paid every month would BE THE SAME for both the 4% loan versus the 8.08% loan!

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