Bank Business Model is Foreclosure NOT “Repayment”

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For many years it has been apparent most observers of the mortgage crisis that the Banks have switched their traditional role of creditor seeking to get paid to something else — a “servicer” or “Trustee” seeking foreclosure. in fact, in multiple cases where the homeowner has had sufficient funds to pay off the “debt” upon proof of ownership and balance, the banks have actually argued in court that they should not be required to accept the money. They argue that is their election to seek foreclosure. Judges did not agree, but they still are pursuing a business model of exactly that — seeking foreclosure rather than payment.

An important quote from the above article strips the tip off of the iceberg —

When a bank assigns the risk of a loan to the investors of a securitized trust, the “bank” is no longer a traditional bank that gets the benefit when mortgage payments are made.  Instead, the bank has become a servicer that actually benefits disproportionately from foreclosure on a homeowner’s property.

Note the language that says at some point the Banks decide where to assign the risk of loss to investors. It is only after they have sold the loans, obtained insurance payments, Government funds, credit default swap bets, and other things that make every loan a virtual fountain of money. This also suggests that the risk of loss had not been assigned to investors before which means by definition in most cases that the alleged transfer to the trust was an illusion.

[PRACTICE HINT FOR LAWYERS: Given that it may be possible to show that the servicer has an economic interest in the outcome, and that its interest is enhanced by foreclosure rather than modification or settlement, the foreclosure defense lawyer might argue that the servicer is not entitled to the same presumptions that would apply to a “disinterested party.” And that can lead you into forcing them to prove the real facts instead of having the court accept presumed “facts” that are actually false.]

The article states

Most homeowners are unaware that their mortgage banks make more money from foreclosure than actual payment.  Mortgage banks give as few modifications as possible and comply minimally with statutes put in place to protect borrowers, all while employing tricks to “cash in” on homeowners’ defaults, pushing them to foreclosure.  The banks take the risk of litigation because few people sue, but getting legal assistance as soon as possible can make the difference between homeowners asserting their rights or losing their homes while being bulldozed by the bank.

In other words the banks know that they have no right foreclosing and that they are gaming the system pretending to be lenders, servicers or trustees for essentially nonexistent trusts. And they know they will lose some cases. And in some cases the sanctions or punitive damage awards is in the millions of dollars. But it doesn’t matter. The fact remains that they are still successfully pushing through wrongful foreclosures by the thousands for each one they lose. And since it is not their money at risk, this is a perfectly acceptable business model.

So the article points to 6 common tricks that banks sue to push homeowners into foreclosure. These tricks work because on some level most borrowers still trust the bank’s representations of ownership and balance and don’t think to challenge the basic foundation of the party claiming to be servicer or trustee or owner of the debt. There is no default if the alleged debt never existed. That doesn’t mean you didn’t get a loan. But ti does mean that you didn’t get the loan that is referenced in the closing documents including the note and mortgage.

The six tricks:

Bank Trick #1:  Refusing Payments

Bank Trick #2:  Switching Service[r]s During Modification

Bank Trick #3:  Breaching a Modification Contract

Bank Trick #4:  Extra Fees & Escrow Accounts

Bank Trick #5:  False Notices [like including an amount required to reinstate that is completely without any basis]

Bank Trick #6:  Multiple Modifications

Foreclosure is clearly the fattest pot of gold possible and it’s for this reason foreclosure is the bank’s primary goal.

If a homeowner spots any of the above tricks, the best thing to do is immediately seek legal assistance in order to avoid the situation from getting any worse.

27 Responses

  1. Who is stephen carr and why and how has he jacked my scribd account?

  2. usedkarguy, Okay I found it (I think):

    IN RE: SALAMON (B.A.P. 9th Cir. 4-6-2015)
    chapter 7 trustee for the estate of David J. Behrend, Appellant, v. JAMES HARRY SALAMON; JEANNE FIXLER SALAMON, Appellees.
    BAP No. CC-14-1334-PaKiTa, Bk. No. SA 12-17145-ES
    United States Bankruptcy Appellate Panel, Ninth Circuit
    Argued and Submitted on March 19, 2015 at Pasadena.
    Filed April 6, 2015.

    Appeal from the United States Bankruptcy Court for the CENTRAL District of California, Hon. Erithe A. Smith, U.S. Bankruptcy Judge, Presiding.

    John N. Tedford, IV, of Danning, Gill, Diamond, and Kollitz, LLP, argued for appellant Peter J. Maston. Michael R. Totaro of Totaro & Shanahan argued for appellees James Harry Salamon and Jeanne Fixler Salamon.

    I put it at scribd as:

    In re Salamon B A P 9th Circuit re Anti Deficiency


    this looks like a good one and discusses
    The fair Value Limitation: CCP 580a; CCP §726(b).

  4. “Senate Bill 458 Signed into Law (2011)

    California homeowners who are considering a short sale and wondering about the consequences of this decision can rest easier effective immediately.”

  5. quick and dirty on ca anti-deficiency (written in 2008)

  6. Strategy? How did that work out?

    Truly surreal.

  7. jellybeans is in CA too, UKG. That party is a pack rat with this…

  8. In RE: Salamon

    9th Cir., B.A.P.
    Hon. Erithe A. Smith, U.S. Bankruptcy Judge, Presiding Before: PAPPAS, KIRSCHER, and TAYLOR, Bankruptcy Judges.

    California’ s anti-deficiency laws negated lien against estate property after foreclosure sale, precluding bankruptcy creditor’ s amended claim (Pappas, J.)

    Somebody find this opinion. I’m busy. A-Man, get on it. You’re in CA.

  9. Being a victim of such life-destroying tactics by mortgage lenders, I am more than familiar with these practices, and the difficulty a private individual has even finding an attorney that will take on a bank. Then getting a judge to look at your evidence is even more difficult.

    Rose vs. Guaranty Bank, Judge John Meyer, Dept. 61, San Diego Superior Court

  10. Thinking outside the box is called: strategy.

    It is all a game for sure…particularly if in a bankruptcy court event, yawn, yawn, all a scam. Money for all except the real injured parties, to include the investors…

    However, insulting people and demeaning them is so, um, common, ordinary and distasteful. No big brain there.

    Just my thoughts on IT!

  11. Too funny!

    When “naysayers” happen to be court certified and always appear as sworn officers of the court, whether in court, in mediation or arbitration (or even jail), when they have done so in every possible kind of criminal case (from misdemeanor to murder, including juvenile) and every kind of civil case, from breach of contract to repo, wage attachment, seizure, foreclosure, bankruptcy and everything in-between, including medical and legal malpractice, they’ve picked up a thing or two along the way…

    Thinking “outside of the box” still requires adhering to guidelines, procedures, law and case law, and protocol. Misinterpreting cases out of ignorance is excusable. Deliberately misinterpreting them in order to make an irrelevant and frivolous point and being condescending toward the court isn’t: it’s called bad faith and it’s contemptible, regardless who displays it (MN William Butler is a perfect example of that, hence the trouble he’s in now. Likewise, Judge Boyko dismissed 14 foreclosures filed by Deutsche Bank exactly for those reasons). And to claim that the system doesn’t work after having lost a foreclosure defense based on… Sherman’s antitrust violation, to justify not having paid one’s mortgage for years, is flat out ludicrous. The result attained amply proves it.

    Rigidity in not a prerequisite. Coherence and understanding of issues and jurisdictions are. Most people here insist that they can’t find/afford a “competent” attorney and that’s why they defend pro se. The truth is… most people here are so dense and irrational that no competent attorney would want to look at their case. Besides, despite being warned for over 5 years that the best defense is always a good attack, they still procrastinate until it’s too late anyway.

    That’s what cults do: build unreasonable expectations based on blind faith and absolutely no common sense whatsoever and encourage cult members to run around giving bad advice based on their “IMO” void of any solid knowledge.

    Just for the hell of it… naysayers don’t function on IMO but on experience: they learn from what works and what doesn’t. Pro se function on “it’s not fair!!!” and “all judges are crooked, all attorneys are greedy” once they’ve lost.

    There are no victims. Only participants who either understand the game or don’t.

  12. Reading everything, IMO is good for the brain. It teaches…learn the how too’s of this legal maze, even if in bits and pieces.

    The losing cases have a great deal of information, IMO, even if you find the flaw and correct it in your own case.

    Too rigid is not a winning attitude. Just me, but if you read enough of these things, the lawyers are the one’s copy and pasting everything; from notes to motions. Think out of the box here, there are serious flaws in all of the cases here. It’s not as simple as: signing a note to XYZ Corp….a lot of background, IMHO.

    Don’t listen to the naysayers….they haven’t won with certainty either. Even if they get your house you have recourse and time to go back at it!

    Kool-aid drinker…and non-lawyer

  13. And it doesnt matter if she made a payment or not because in the Michigan case she didnt Tender.


    Cyber bullying is a serious crime Christine, dont endup in jail like Rock Maher Sulleiman

  14. Basically what Justice Scalia said in my opinion with TILA ruling is Produce the Note and Deed of Trust etc… withing 20 Calendar Days or else go home.

    Once we send the letter of Recission.


  15. 1) Kathreen Jo Torrenga in Michigan ONLY got a reprieve AND she, allegedly, “never missed one payment in 20 years.” 99% of people posting here defaulted long ago, knowingly, and did nothing to preempt foreclosure or even properly position themselves. Torrenga may come out on top, with a solid attorney.

    Not one bozo here will.

    2) Reading Amicus Curiae and appellate briefs is a waste of time until they have been ruled upon. Only once they have does it make sense to read the entire case from beginning to end. Why? Because thousands of such documents are being filed every single day.

    This entire website is an exercise in futility. Besides, the marginally intelligent Garfield cult followers don’t understand what they read anyway. And bad attitude doesn’t make up for stupidity.

  16. Thank you Jellybean



  18. This is Attorney Antognini’s Reply Brief filed at the California Supreme Court in the Yvanova v. New Century Mortgage, Ocwen, Deutsche appeal case going on now in 2015

  19. You don’t have to answer that question…I already know the answer.

  20. I can’t believe I am saying this Christine but I have to give Neil credit on this one…..

    I have copies of dated canceled checks front and back for payment BOA claims were not paid and trying to collect on again…including tax and INS.
    And they actually argued in court they should not be forced to accept payoff on my husbands loan. As a matter of fact they requested the court deny our redemption rights.

    Now why would they do that?

  21. Legislating from the bench with a financial interest equals Serial corruption that even Jesus wont and cant save from eternal hell


    I know people in California that have sent QWR and have sued.
    The excuse given by the banksters. This is a pre emptive move by the so called borrower.




  23. Garfield has now sunk to a new low. Posting something he found on the internet by someone with no credentials whatsoever, as if it was gospel.

  24. “in fact, in multiple cases where the homeowner has had sufficient funds to pay off the “debt” upon proof of ownership and balance, the banks have actually argued in court that they should not be required to accept the money.”

    Anybody making that kind of sweeping statement better come up with cases to support it. What has happened in most cases where banks refused the pay off is simply that the accounting was wrong, they couldn’t come with the proper amount, homeowner demanded the right figure and both parties hit a dead-end. When homeowner presses forward for the correct accounting by suing the bank, he usually gets a positive result or… the bank becomes pretty amenable to negotiations. Right Shadowcat?

    In order to not be pushed into foreclosure, one has to start studying the accounting long before being in default, send QWRs and… sue the pants of everyone involved. Hence the insanity of waiting to no longer be able to pay a mortgage and to be in default and in foreclosure to take action.

    The martyr blaming game played here is simply unbelievable!

  25. Finally something you can sink your teeth into…
    But there is so much more!

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