The Psychological Warfare of Loan Servicing



Trust your Loan Servicer at your own Peril.


By William Hudson


“Emotional violence is another kind of abuse … it’s not about words because an emotionally abusive person doesn’t always resort to using the verbal club, but rather the verbal untraceable poison.”   ~Augusten Burroughs

The banks commit felonious financial crimes against homeowners with impunity. But even more egregious and unconscionable than the theft of assets, is the theft of solitude, hope, and life quality. The banks decimate families and often eradicate a person’s belief in what is “just” and lawful.

Millions of American homeowners have arrived at the harsh reality that government, the judiciary and law enforcement are not to be trusted. The reality is that the banks are engaging in psychological warfare against the American homeowner- and no one is doing a thing to stop the bullying or psychological abuse.

Banks utilize the planned use of propaganda and other psychological operations to influence the opinions, emotions, attitudes, and behavior of homeowners, attorneys, the courts and policy makers. This practice is actually a breach of Article 10 of the European Convention on Human Rights, which reads, “Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers.”

The Foreclosure Machine is engaging in a deliberate strategy of emotional abuse towards desperate homeowners who are looking for an equitable solution (when most simply want an opportunity to meet the terms of their mortgage). The bank representatives may speak professionally, and even appear to be concerned, but their words are meant to deceive and may even kill. The stress created from corporate psychological abuse often culminates in health problems that may result in a silent death or even suicide. The banks do not play fair, and they will do whatever is necessary to take a home- including the destruction of a life if necessary.

The covert abuse used by banks is administered in barely detectable and cunning strategies that can, over time, cause a homeowner to doubt their own sanity. Called ‘gaslighting’ by psychologists, this process is implemented to cause the homeowner to doubt their own decisions and thoughts- and to keep them off-center. Because of the uniformity of this practice among servicers, there can be no doubt that employees were trained in this process.

The Gaslight Effect allows the loan servicer to define the reality and the rules, while the less powerful party is left vulnerable by relying on the abuser for information or validation. Many homes have been lost to a servicer who used this technique to exploit the vulnerabilities of a homeowner who has had financial problems, emotional upheaval, divorce, illness or job loss that resulted in the homeowner falling behind on their mortgage payments. The process is systematic, confuses the victim and by providing erroneous information ultimately results in the loss of a home. It is not a random practice but executed to target society’s most vulnerable.

For instance, back when banks were pushing loan modifications, the banks deliberately lost paperwork and provided contradictory information to ensure the customer would fall further behind on their mortgage. It was a uniform practice among all large servicers. The homeowner, despite having fax and mail receipts, would be told the information was never received- and often questioned their own memory of events. In our society, for hundreds of years, banking was built on the concept of “trust” and this in itself provided a false confidence that the banks would not engage in illegal acts.

There were other games the banks played to ensure they would get the foreclosure they so desperately wanted. One game was the game of “musical-chairs customer representative agent” where the homeowner was forced to start from the beginning and explain their complex situation to a new agent every time they called the bank. This was done so there was no solution continuity. Homeowners would speak to agents who provided conflicting information from each representative. Just when the homeowner thought a solution was at hand after hours on the phone, the phone call would be “accidentally” disconnected. This psychological tactic was well rehearsed, until when after years of this abuse, new rules assigned a homeowner a single point of contact.



A majority of homeowners we have spoken with at LivingLies, have reported methods of intimidation that often result in the homeowner wanting to walk away from the home.  These tactics include having people sit outside their homes in cars watching the house, bank employees peering inside their windows (many owners claim they have resorted to covering all windows), and even having realtors list the home while they are still in possession and living in the home.


There have been hundreds of reports of banks breaking into occupied homes, and when the homeowner reports the break-in to law enforcement, the homeowner is told the trespass is a civil matter.  The homeowner literally has no relief or protection from their loan servicer, except to sue.

The negative impact of foreclosure on emotional and physical health, as well as overall mental functioning is gradual and insidious. When the trauma of endless delays in resolution, unjust court tactics, financial burden and the feeling of having impending doom hanging over your head (sometimes for over a decade) becomes overwhelming- something has to give and it is typically either mental or physical functioning. Careers are impacted, the raising of children neglected, and other opportunities forsaken because the homeowner- armed with evidence the bank has no standing- still clings to the belief that the system is fair.



The homeowner has so much invested emotionally, financially, and in life sacrifices- there becomes a point of no return where the homeowner feels they must take the case the entire distance. To quit would be to admit yet another life failure. Therefore, many homeowners will hang on until they can no longer afford the costs (financially or emotionally).   The bank has the resources to outlast, outspend and often outmaneuver but it doesn’t mean a homeowner can’t prevail.  The key is to document every interaction or event that occurs over the course of negotiations, and to examine the Note, assignments, signature and balances that inevitably tell the truth about the lack of standing.

Back to the methodology employed by banks. The banks use the guise of customer service to create the appearance of assistance. Under this act the emotional abuse is passive, subtle, and covert. This strategy makes assigning blame to the bank more difficult because the bank is creating the illusion of service. “Oh go ahead and miss a few payments- we will add it back in when your modification papers are done, “ or they will say, “We can find a solution and you are a good candidate for our program.” Meanwhile, the bank has already filed to foreclose. “You can just ignore the foreclosure letters you are receiving- my notes say that your modification is waiting for final approval.” The unsuspecting homeowner is the wounded impala and the banking lion is simply toying with its prey while creating arrearages and servicing fees.

The homeowner senses that something isn’t right, but saddled with financial worries and the fear that foreclosure brings- they attempt to grasp onto anything that seems like hope. That is where homeowners can get into trouble. Desperate for a list of options or some type of solution- the homeowner, terrified and confronting a ticking clock, begin pursuing any type of remedy- instead of focusing on one that might actually work. The homeowner’s strategy becomes fragmented from the lies their servicer is telling them, the facts they see on paper, an inaccessible justice system, and a shady attorney looking for a high retainer.

Often an attorney, sensing the homeowner’s desperation, will agree to represent the homeowner when they have no knowledge of foreclosure or securitization. These attorneys are known to purchase pre-fabricated legal Motions off the internet to defend a case. The unsuspecting and naïve homeowner has no idea that their attorney is failing to properly defend their case since everything “looks” fine to a homeowner who is not familiar with law. The homeowner will lose their retainer, all payments made to date, and often the home and any equity in the property (down payment, improvements). In reality the homeowner is surrounded by vipers, opportunists, conmen and predators who will do anything to receive payment or the home.



Emotional abuse has an aim, and that is to control, belittle, isolate and shame people into subservience. It doesn’t take much skill when dealing with a vulnerable homeowner. This occurs gradually until the victim’s sense of self-worth, self-confidence, and own ideas and perceptions erode.

The banks or servicers are emotional abusers and operate under the guise that they are “helping”, “advising”, or “assisting”, and therefore fly under the radar when they are deliberately sabotaging any opportunity the homeowner has to save the home.

The bank will now attempt to extort information from the homeowner so that they know where to strike where you are vulnerable. Under the appearance of a loan modification or short sale, they will have you provide extensive personal financial information. Although they have no intention of providing assistance, this form provides your income, finances, assets, accounts and other information you might not share if you had any idea that is was being collected for nefarious purposes. Once this information is front of an agent, they can determine just how many payments at what amount you will be able to afford before you are forced into insolvency.

Because people are human and do not hide their emotions or vulnerability well, bank serving agents are able to detect blood in the water. My dealings over the years with service agents is that they treat homeowners like you are expendable, inferior, inadequate, or ignorant. Imbued with the power to engineer a default, some of them have God syndromes.



I remember a client who had less than three days before she lost her home to foreclosure. After hours on the phone she was able to speak to a senior manager who promised the homeowner she could reinstate her mortgage if she agreed to pay all late fees and arrearages. The homeowner readily agreed to accept over 50k in fees and arrearages (even if she felt they were erroneous). The manager promised to overnight the papers and they would arrive by noon the next day. The manager never had any intention of sending the documents, but it allowed the bank to consume two days where the home owner should have been pursuing other options. The empty promise was given to maximize the chance of foreclosure.
Another game the banks play is to act like they are right, while the homeowner has no valid objections or complaints. Homeowners report that they feel like they must “get permission” and beg and plead for information they have an absolute right to obtain. Bank servicers are predators and it is time that some type of legislation is passed to stop their abusive tactics. The State of California has had to intervene with legislation to protect widows and widowers who are falling prey to servicers who use a spouse’s death to engineer a default.
Although loan servicers typically will accept loan payments, if a homeowner is not on both the loan, the bank will utilize this legal gray area to refuse payment, thus causing fees and an arrearage to occur. When the surviving spouse attempts to make good on the payment they may still be prevented from doing so. The banks also has the power to deny any accommodation to assist the surviving spouse- especially if the see an area to exploit that might result in default. For example, often the widowed spouse who has temporarily lost their spouse’s income, or is waiting on life insurance proceeds will be denied a loan modification.
The problem is growing, advocates say, and the issue has caught the attention of federal regulators and state lawmakers. In just the first three months of this year, the Housing and Economic Rights Advocates, a statewide advocacy group in California, had handled 16 such cases. The California Reinvestment Coalition discovered that 44% of housing counselors said that servicers “always” or “almost always” declined to discuss loan modifications with widowed clients when they weren’t on the loan.


Last year the National Housing Resource Center gave servicers a poor rating for communication with widows, widowers and others in similar circumstances. The banks, again, have found a vulnerable client population in which to exploit by failing to provide accurate information or assistance to increase the possibility of default.
Widows and even the elderly are especially vulnerable to the predatory practices and emotional abuse by banks. With the rise of risky first and second mortgages — including many taken out by older Americans who previously avoided getting into new debt, reverse mortgages, and complex securitization schemes, servicers have created a new business model that is intent on foreclosure at all costs. In fact loan servicers no longer service- instead they provide a predatory disservice, provide pseudo-assistance, and target the most vulnerable homeowners.
Servicing companies often refuse a modification until the surviving spouse assumes the loan, which can’t happen until the owner is current on the mortgage — resulting in a catch-22. The spouse may then end up losing their life investment simply because the bank ensured there was no way to cure the default. Misinformation serves to compound the late fees and charges creating a dire situation for those who don’t have the resources (emotional or financial) to force the bank to comply with law.
The bank servicing industry is rotten to the core. It isn’t enough that they are taking a home they have no standing to foreclose upon- but to get the job done they resort to psychological warfare, target the nation’s most vulnerable homeowners, and play dirty tricks that should undermine all credibility within the financial industry. Homeowner beware- document EVERY conversation with the servicer, retain EVERY document they send you, and NEVER believe a word your servicer says. The Bank will do whatever is necessary, legal or illegal, to foreclose on your home-even if it requires resorting to mentally abusive tactics. Be prepared.  The power to service- is the power to destroy.


18 Responses

  1. Julia try the economic crimes division of the fbi


  3. […] via The Psychological Warfare of Loan Servicing — Livinglies’s Weblog […]

  4. The banks commit felonious financial crimes against homeowners with impunity. But even more egregious and unconscionable than the theft of assets, is the theft of solitude, hope, and life quality. The banks decimate families and they eradicate a person’s belief in what is “just” and lawful.

    They may do more to extort homeowners from whom they can’t illegally foreclose their homes. They may be using psychological tactics, bribe people who like money by way of gifts and even use hi-tech nuisance noises to eject them from their homes. It is coming out as common awareness.

    Only people cause change in a democracy. So, don’t lazy around and think that someone else would fix these problems. This wont happen if you don’t have money just like banks have to make others to do it for you. Put up a picket to protest where evil comes and goes.

  5. Try to get this to media….

  6. how do you think it can be used as a defense? affirmative defenses? i am very depressed. the past 7 years have been one big blurb. it is not fair i have 3 children who grew up wit their house in foreclosure??? how do you do this to people that have paid all their bills on time , have perfect credit, never missed a payment. foreclosure has such bad conotations. it means you didnt pay your mortgage and you lose. but that is NOT what happened to so many people. I have off every friday in the summers. last summer i tried to meet with my elected officials. no one would meet with me. I wanted to get a bill in the state to help folks that had financial ruin after an illness, or a disaster ( florida sustained the BP oil spil in 2010). I wanted judges to hold banks accountable for this abusive behavior as debt collectors. I wanted a bill that there was mandatory mediation just like in medical malpractice cases. where the courts have to take judicial notice of the defenses credit score. It can say any credit score above 700 or 750. the bank must answer and prove various questions since people with such a high credit score are at no risk of “defaulting” on their own. what did the n=bank do , or what occurred to make the homeowner default on the mortgage. this will be done in court or in a lawyers office with a mediator listening to both sides. when the mediator finds out that the bank took advantage of the hamp modification guidelines and tells them to be 90 days late when it is no where in the rules that is deemed that the bank has caused the homeowner to break the adhesion contract and case is dismissed with prej. of course no one would meet with me last summer and this summer is to complicated do not have time. if anyone in florida wants to help and propose this bill would be great. it took us 25 years to build up our credit score and we paid every bill on time. this house in foreclosure is our 3rd house. we sold 2 previous homes. we are not children and foreclosure makes you feel like a child and you have been bad and daddy needs to spank you when that is not the case this has all been manufactured.

  7. @losing, I am going to use it in one of my suits and if they file another foreclosure complaint against me.

  8. Do they ask themselves what they are doing to people? Why bother when they know they got away with it.

    In 08-09 I tried reporting my mortgage broker to my California DA and Department of Real Estate for falsifying my loan but both offices fought to decline, but somewhere along the lines after reporting this to multiple offices one of them must of sent my broker a letter asking if he was a criminal.

    Five years latter I ran into him in public where he said, “That was BS what you did. You are a loser and will always be a loser.” He then walked into the bar to solicit some other sucker into a design to fail loan.

    True story. Unfortunately, he was right. Don’t try to do the right thing in this country. They will make you the loser and there’s nothing you can do about it.

  9. It’s hard to image an attorney (Mr. Hudson) having the sight to see much of what homeowners have been through (without actually having been through it. Perhaps he has.) There’s parts I had forgotten already, and even some I never recognized until I read it here. I’m thinking I need to re-read this before every hearing to get my blood to the proper temperature. How many times I thought to myself, “…what if I had kids at home…”, or, “…good thing I have a job…”. These crooks are amazing in many respects (not ‘respect’) because they’ve created a system whereby normal, everyday employees are instrumental by “just doing their job”. We all know they needed the job, but at what point do they ask themselves what they are doing to people? Doesn’t matter, they will quickly be replaced by the next glad-to-be-employed worker.

    The thing I still remember most, however, is that totally overwhelming wrenching and nausea associated with the realization that I’ve lost my home of almost 30 years now. And, all over something that should’ve been resolved with a 20-minute phone call. In my case, this was never about the ability to pay. It’s hard to say what might happen if ever I were to be placed in a room with a party whom I could consider responsible. But, that’s another beauty of their scheme, no such person really exists. And, apparently, neither does anyone whom could offer a real solution. We’re all left to Duke it out and see where the chips fall.

  10. I’ve been through hell and back at the hands of Bank of America and its minions:

  11. Excellent! I hope Neil brings these topics to TED and mentions how Hillary said borrowers paid extra to take on these abuses.

  12. When we start suing them can you use this as judicial notice of the pain and suffering this has caused?

  13. This is getting closer to the truth. But we are fighting a complete system of bullies these criminal banks have infected. And we are not all just helpless prey and depressed. Every American that’s under the delusion that they’re safe are the ones that need to wake up.

  14. Excellent I’m in the trenches of litigation With wells and have experienced much of what you explain here and seen the horrors of the elderly handicapped and all kinds of good people Dragged through this in the court rooms of the 19th district court in Lake County il (Just north of Chicago) Please send to every major newspaper Thank you for being our voice Sincerely Terrie Crowley Deerfield il

    Sent from my iPhone


  15. Good article and, no, you cannot trust anything they say or do.

  16. Oops..Hop Hop ..happening.

  17. When enough people.e stop doing business with them they will fail.
    Oh wait….that’s hopping right now.

    Lets Put the Trust back into Trust!

  18. It’s called the “Just Us” System.

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