Why Do Subservicers Continue to Pay Investors After Borrower Stops Paying?

It is now common knowledge that subservicers are continuing to pay investors and reporting the loan as “performing” after they have sent a default and right to reinstate notice as required by the mortgage (usually paragraph 22) and by the uniform debt collection laws. The first problem about this is that the actual creditor does not show a default whereas the bookkeeper Servicer is declaring the default. With the investor receiving his regular payments, how can a default exist? This appears to apply to securitized student loans as well.

Bottom line is that the subservicer is reporting to the borrower that the loan is in default but reporting to the investor (the creditor) that it isn’t in default. These payments have gone on for as long as 18 months that I have seen. Which brings us back to the first articles ever written on this blog.

The borrower is only required to make payments that are DUE. The payment isn’t due if it is already been made and there is nothing to reinstate if the creditor has already received his expected payment. The payments are NOT DUE TO THE SERVICER. They are due to the creditor. If the creditor received the payment on that loan as shown in the distribution report to the creditor, then the conditions necessary to declare that the loan is in default are not present. Remember that the presence of a table funded loan, an aggregator, the securitization, the trust was withheld from the borrower. The banks could have covered themselves by adding to the mortgage and note that third party payments to the creditor will not reduce the payments, principal or interest. But if they had done that, they would have required to answer so e uncomfortable questions.

The second issue is the constant question “Why would they continue making payments to the ‘creditor’ when they are not receiving payments from the borrower?” And “Where are they getting the money to pay the creditor?”

After talking with sources from deep inside the industry the answer to why they are paying is primarily to sell more bonds and hide the default issues. The secondary reason is to make the investor complacent about the accounting for what was really received on account of the loans and from whom. That inquiry could lead to a demand from the investor for payment in full and if the REMIC doesn’t pay, then the investors sue the investment banker who was the one playing with OPM (other people’s money).

The answer to the second question is that the money comes from the investment banker. Whether the investment banker is merely using the investor’s money (allowed under prospectus) or using insurance proceeds or payments on CDS (credit default swaps) or even sale proceeds to the Federal Reserve varies. Either way it is an effort to keep money that should go to the investor and reduce the amount payable to the investor and which would reduce or eliminate the debt owed by the homeowner to the investor. It is fraud, theft and probably a bunch of other things.

CONSUMER ACTION REQUIRED NOW!!! Banks Try for Amnesty at State level in Florida

Editor’s Note: Matt hits the nail on the head so there is no need to do a whole essay on the problem — just read his piece shown below. The Banks are getting itchy because like the economic crash they see a political crash coming. The Florida legislature is looking to “expedite” foreclosures. Republican controlled it is more likely that the banks will have their way with them — unless you do something NOW!

The whole premise, as Matt points out, is completely wrong. The problems with the pace of foreclosures is not that there are dilatory tactics being used by borrowers. In fact in many cases, it is the borrower who is more aggressive than the forecloser in pursuing an end to the case. The length of time it takes a process a foreclosure is caused by the illegal paperwork submitted by the banks. And the reason why they need to resort to doing something illegal is that they already did something illegal and are trying to cover it up.

If a borrower actually owes money on a loan, it should be clear in any setting how much money is owed to each stakeholder. The Florida legislation ignores this basic premise. AND if the paperwork was procured by fraud in the inducement, fraud in the execution or forgery followed by perjury of a “witness,” then nobody should be surprised why it takes so long. Requests for discovery are met with stonewalling. Before the mortgage meltdown, the lender would have been only too happy to lay down everything in their books and challenge the borrower to admit or deny it.

If it wasn’t for the deficient debts, notes and mortgages, the courts would not be clogged with foreclosures that should never have been initiated. Disclosure of the receipts and disbursements from an identified creditor (and their agents) who has proof of payment and proof of loss would end the foreclosure mess in a flash. But the banks refuse to do that because they can’t come up with a credible injured party with standing and they don’t want to reveal how much they took out of the flow of money advanced by investors in a PONZI scheme.

If you really want to stop foreclosures then pass a law that merely encapsulates what is already law in evidence, procedure, real estate and contracts — identify the creditor, show proof of payment, show proof of loss, proof of default to the CREDITOR and show documents that link up the borrower with the party who is injured.

Proof of loss and proof of payment can ONLY be established by producing a witness providing foundation for a copy of the wire transfer receipt or cancelled check. This is essential unless we are going to have two trials — one whether the foreclosure is valid on its face and the other whether the initiator of the foreclosure is a creditor (injured party) and the extent to which they were injured — or else they can’t submit a credit bid at the foreclosure auction.

If those conditions precedent to filing for foreclosure are required, either the borrower will drop out when those items are produced and alleged in the foreclosure complaint, or the case will not be filed at all. Case Over.

Send your email or letter now and by the way, send a copy to AG Bondi.

Posted by Matthew Weidner, Esq.

Every citizen who cares about justice, public policy and the rule of law should take an interest in what’s happening in Tallahassee.

The Florida House Subcommittee on Civil Justice will hear, and will likely pass, House Bill 87, a bill that aims to speed up foreclosures.  CALL THESE MEMBERS NOW AND URGE THEM NOT TO SUPPORT THIS BILL! This bill is wrong for many reasons, but let’s start first with the premise upon which it is founded….a premise which is totally false and misleading:

As a preliminary matter, public policy decisions should not be made relying upon data and information from industry sources, particularly when the methods and meaning of said data is not revealed.  In the house report on House Bill 87, they cite heavily to RealtyTrac data and other data which is not properly explained or put into proper context.  For instance, the report reads:

The average length of time between the first foreclosure filing and bank repossession is 853 days.

This statement ignores the fact that the primary reason for banks not completing foreclosures is the federal lawsuits into their crimes and wrongdoing and the related holds.

The banks, either because of the litigation or for their own business purposes are reviewing many more files for modification than before and many of the foreclosures that are “stalled” are not moving because the homeowner is in a long term modification.  A foreclosure case that has a loan that is in modification will just be “stalled” out, not moving at all in court, but this is not at all reflected in the case progress.

Current law provides for an alternative procedure that is designed to speed up the foreclosure process in uncontested cases or cases where there is no legitimate defense.

This is correct, there already exists an expedited procedure that the banks could use if they chose to….but they are choosing not to….and they cannot be forced to use this process.  Currently there are a significant portion of the foreclosure caseload for which the homeowner has not responded.  In these cases, a bank could move for judgment and get title in a matter of 60-90 days.  Before voting on this bad bill, members should consult with their chief judge and find out what percentage of cases currently pending could be quickly moved to judgment because it is investment or abandoned property or property for which no homeowner has responded to the lawsuit.

If the property is not residential real estate, the plaintiff may request a court order directing the defendant to show cause why an order to make payments during the pendency of the proceedings or an order to vacate the premises should not be entered.

This already exists in statute, but it is not being used.  Why add to a statute that the industry chooses not to use?  What percentage of current foreclosure filings in a circuit use this process currently and why has it not been used?  Why add a companion to this existing if the industry does not use it?

Provides finality of a mortgage foreclosure judgment for certain purchasers of a property at a foreclosure sale while allowing for damages in some instances.

The title insurance industry was more than willing to accept premiums knowing full well that many of their agents were engaging in improper conduct.  To allow the title insurance industry to evade their existing contracts and responsibilities to policy holders is misguided. And you cannot replace property which is unique, with any amount of money. This is a backdoor bailout to the title insurance industry and it rewards conduct that was either criminal, reckless or grossly  improper.
Amends the expedited foreclosure process to allow all lienholders to use the procedures, instead of just the mortgagee; reduces the number of hearings from 2 to 1; and prohibits service by publication when using the expedited process, unless the property is abandoned.

Only a party who initiates the litigation can make that litigation proceed.  There is no way that a junior lienholder can force the primary plaintiff to proceed with their case to judgment if they choose not to.  It is the Plaintiff’s case to proceed as it choose, and the existing law and court resources permit them to do so.
Allows any party to request a case management conference to expedite the lawsuit.

Any party to litigation may already demand that a court have case management, and the courts will do so…the court already has resources and the law gives them tools to move cases along.  And while a party cannot be forced to take a judgment, a judge can impose sanctions or enter orders that move cases toward resolution…..IF THAT’S WHAT THE PLAINTIFFS WANT!

Defines adequate protections where there is a lost, destroyed or stolen note.

The Uniform Commercial Code, adopted across the United States, and in Florida already provide protections.  This is totally unnecessary

Florida has the largest share of foreclosure inventory of any state in the nation, with 305,766 properties in some stage of foreclosure or bank-owned as of the end of 2012.1 Seven of the top 10 highest foreclosure markets in the nation are in Florida, with Palm-Bay-Melbourne-Titusville having the highest rate of foreclosure of any metro area in the nation.2
Foreclosing on a mortgage in Florida is an unusually long process. Florida trails only New York and New Jersey in terms of the length of time between the first foreclosure filing and bank repossession, at 853 days. The national average is less than half that, at 414 days.3.

Relying on all this data from RealtyTrac, which data is not adequately explained and which contains other factors and reasons should be disfavored.  Our state policy makers should only rely on data that comes from our judges and from Clerks of Courts.

Upon proper notice of default to the defendant, the mortgage servicer files a foreclosure complaint, which must allege that the plaintiff is the present owner and holder of the note and mortgage, [Editor’s Note: what happens if the allegation is made but the borrower denies it?]

Unfortunately, the underlined statement is wrong….the appellate courts across this state have made a disaster of the distinction between Owner and Holder such that it is not uniformly required anymore…this is a major problem….but this legislation does not address this….if the legislation were to change making that element a requirement would be positive

This bill is just wrong in so many ways, and making policy decisions based on flawed, and unclear data just makes no sense….call your representative and tell them to reject the bill.

ANALYSIS HERE

Email Them Here:

Larry…@myfloridahouse.govBill….@myfloridahouse.govCynthia….@myfloridahouse.govJim….@myfloridahouse.gov,Mike.Clelland@myfloridahouse.govDaniel.Davis@myfloridahouse.govTom.G…@myfloridahouse.govJose….@myfloridahouse.gov,Kathleen.Passidomo@myfloridahouse.govJose.Rodriguez@myfloridahouse.govRoss….@myfloridahouse.gov,Charlie.Stone@myfloridahouse.govJim.Waldman@myfloridahouse.gov

Fear of Being Called a Vexatious Litigant.

Editor’s comment: While I agree with the Appellate Court and its findings, reversing the judgment against the borrower for being a vexatious litigant, I strongly disagree with the characterization of the case which probably comes from bad pleading and bad argument in court. That is the danger of going into court without at least getting a consult from a knowledgeable attorney and why the number of people purchasing time from me for exactly that purpose is rising exponentially. Click Now to Consult with Neil Garfield

The obvious error here is at the  beginning, in the facts. The writer says “Factually it is yet another story of a debtor who borrowed money to buy a home, couldn’t repay it, and then filed everything she could think of pro se to prevent foreclosure.”

If the deal was subject to claims of securitizations and assignments, then the case was probably started improperly and argued improperly. Deny and Discover is getting the traction across the country. The simple reason is that if you admit that  you borrowed the money and impliedly or expressly admit that you borrowed it from the people foreclosing or their predecessors, you are already dead in the water. The transaction should have been denied.

If you admit non-payment and impliedly or expressly admit that the payment was due, you are once again, dead in the water. How do you know the payment was due? How do you whether the creditor has not already been settled out years ago with insurance, credit default swaps, federal bailouts, or Federal Reserve purchases? How do you know whether the investor-creditors made claims against the investment bank that sold them bogus mortgage bonds and then settled the case out? Why would you admit either principal or payment is due without a complete accounting from the subservicer, Master Servicer and Trustee (who by the way  knows nothing because there is probably an unfunded trust with a “trustee” who has no powers). Why would you admit something you know nothing about except that in the public domain you know these things were happening?

Deny and Discover is the way to force the other side to put up or shut up. This case was dismissed probably because the borrower admitted everything that was an element of a proper foreclosure. There was nothing left for the Judge to do except let it go through.

Madison v. Groseth (CA1 6/5/12)

Posted on June 5, 2012 by azappblog

This will interest those involved in foreclosures but for our purposes is significant as a useful discussion of the nuts and bolts of handling a vexatious litigant.

Factually it is yet another story of a debtor who borrowed money to buy a home, couldn’t repay it, and then filed everything she could think of pro se to prevent foreclosure. When she eventually lost, the trial court declared her a “vexatious litigant” and ordered her not to file further lawsuits about the property without court permission.

The court tells us in a footnote that such things are normally done by unappealable administrative order but that since this order was in a judgment (dismissing Madison’s Complaint) it is “essentially” an award of injunctive relief, which is appealable. Sometimes court are very strict about jurisdiction; other times, it seems, “essentially” having it is good enough.

A court has inherent authority over vexatious litigants but this opinion adopts a Ninth Circuit case (DeLong 1990) establishing procedural requirements. The trial court has to give notice and an opportunity to be heard, make a record for review, make “substantive findings as to the frivolous or harassing nature of the litigant’s actions,” and tailor the order narrowly.

The third step was at issue here and the Court of Appeals decides that the trial court got it wrong. Although it apparently made findings about all the lawsuits she had filed, it didn’t specifically find that any or all were frivolous or harassing. “[A] vexatious litigant order must rest on more than a recitation of the number of previously filed lawsuits.” In fact, it impliedly found to the contrary, at least about this particular lawsuit, by denying the defendants’ Rule 11/12-341.01C motion for fees. The court affirms the dismissal of Madison’s lawsuit but reverses the “vexatious litigant” order judgment.

Sometimes we like to think we have some effect on opinion writing, more often we realize we probably don’t, and once in a while we get paranoid and think that courts throw in things we won’t like just to spite us. One or two of the nine footnotes here might possibly be missed if they weren’t there. If jurisdiction is important enough to mention then its one of the more important things in the opinion and shouldn’t be stuck in a footnote. But what, for example, can possibly be the need, after mentioning in passing that this pro se plaintiff sued, among other things, for “conversion” of her home, for a footnote saying (and citing a case) that conversion applies only to chattels? The court sees the problem and so throws in a justification: “to avoid future confusion.” But who will be or has been confused? As for the people in this case, its over – and if it weren’t, if the case were going back on remand, then the court wouldn’t dare mention it. Does the court really think that somebody is going to read this case in the future and decide that it changed the law of conversion? Or is the court going out of its way to augment Ms. Madison’s legal education (for the next time she files one of those non-vexatious lawsuits)? And if it thinks that mentioning this allegation that had nothing to do with anything before the court will confuse, why mention it?

(link to opinion)

Allocation of Third Party Payments and Loans to Specific Loan Accounts

TURNING A DEFENSE INTO AN AFFIRMATIVE DEFENSE FOR SET OFF AND A CLAIM OR COUNTERCLAIM FOR DAMAGES AND ATTORNEY FEES

So the question is how would you allocate third party payments and what difference will that make to a Judge hearing the case.

ASSUMPTION: XYZ Investment Banking Holding company has received a total of $50 billion in third party payments from insurance, counterparties, credit enhancements (moving money from one tranche to another within the SPV “Trust”), and federal assistance or bailout. Each one of these is subject to separate analysis, but for simplicity we will treat them all the same.

  • The money received was for “toxic assets” meaning bad mortgages or pools that were written down in value because of the presence of bad loans in the pools. Whether those loans really made it into the pool when the “assignment” was years after the cutoff date in the PSA and was for a non-performing loan which is specifically excluded in the PSA is yet another issue that requires separate analysis.
  • Out of the many SPV entities created and sold to investors, 50 were in the status of default or write-down, triggering the insurance, bailouts etc.
  • Arithmetically, assuming $1 billion goes to each pool under the assumption they were all the same size (not true in reality, so you would be required to make a calculation to arrive at the prorata share of each pool which involve several factors and is subject to a whole separate analysis that will be ignored for purposes of this example).
  • Out of each pool, 50% of the loans were in some stage of negative credit event. Thus we have $1 billion to allocate to 50% of the loans.
  • For purposes of this example, the assumption is that each loan was the same size and that there are 4000 loans each with a nominal principal balance of $350,000 claimed.
  • For purposes of this loan each borrower stopped making payments under identical terms 6 months before the receipt of the third party payments.
  • If we ignore the payments then each loan would be entitled to a credit of $250,000 and the investors in each pool would receive a pro rated share of the $1 billion, which amounts to $250,000 per loan.
  • If we don’t ignore the payments and assume that the payments under the note would have been $2,000 per month principal and interest only, then $12,000 wood first be allocated to the past due payments and the default, in relation to the creditors (investors) would be cured. This would be in accordance with the note provisions that first allocate receipts to the payments due.
  • Then fees and costs would be paid off, which we will assume are $13,000, as per the terms of the note.
  • Thus the $250,000 allocation would be reduced by $25,000 before application to principal. That leaves $225,000 allocated to principal.
  • Reducing the principal by $225,000 leaves a balance due on the obligation of $125,000 ($350,000-$225,000).
  • Reducing the balance for the appraisal fraud at origination: (1) appraisal for this example was $370,000 (2) real fair market value was $250,000 (3) borrower made down payment of $20,000 (4) total damages for appraisal fraud = $120,000.
  • After reduction for appraisal fraud the balance on the obligation in our example here is $5,000.
  • Under TILA the failure to disclose the hidden fees and hidden parties and resulting effect on the APR, would mean that the borrower is entitled to either rescission or return of all payments made including the costs of closing and points on the loan, plus attorney fees and possibly treble damages which would mean that someone owes the borrower money, the obligation has been extinguished, the note is evidence of an obligation that has been paid in full, and the mortgage secured is incident to a note securing a non-existent obligation. Either way, under rescission or allocation, the borrower owes nothing.
  • The net result for the creditor is that they get or should get $250,000 cash plus a claim for damages against numerous parties for ratings fraud, appraisal fraud and securities fraud.
  • The net result for the intermediaries who stole all the money including the third party payments is that they get the shaft including possible criminal liability.

A very similar allocation procedure would be appropriate for the top quality performing loans under the theory of identity theft. Without using these high FICO credit-worthy people’s identity and loan score they would not have had the golden cover to the heap of dog poop stinking underneath.

Discovery Issues Revealed: PRINCIPAL REDUCTION IS A RIGHT NOT A GIFT – CA Class Action V BOA on TARP funds

REGISTER NOW FOR DISCOVERY AND MOTION PRACTICE WORKSHOP MAY 23-24

PRINCIPAL REDUCTION IS A RIGHT NOT A GIFT. IF THE OBLIGATION HAS BEEN PAID BY THIRD PARTIES, THEN THE OBLIGATION HAS ALREADY BEEN REDUCED. THE ONLY FUNCTION REMAINING IS TO DO THE ACCOUNTING.

There should be no doubt in your mind now that virtually none of the foreclosures processed, initiated or threatened so far have been anything other than wrong. The payments from third parties clearly reduced the principal due, might be allocable to payments that were due (thus eliminating even the delinquency status) and thus eviscerates the amount demanded by the notice of delinquency or notice of default.

Thus in addition to the fact that the wrong party is pursuing foreclosure, they are seeking to enforce an obligation that does not exist.”

Editor’s Note: This is what we cover in the upcoming workshop. Connect the dots. Recent events point out, perhaps better than I have so far, why you should press your demands for discovery. In particular identification of the creditor, the recipients of third party payments, and accounting for ALL financial transactions that refer to or are allocable to a specific pool in which your specific loan is claimed to have been pledged or transferred for sale to investors in pieces.

This lawsuit seeks to force BOA to allocate TARP funds to the pools that were referenced when TARP funds were paid. In turn, they want the money allocated to individual loans in those pools on a pro rata basis. It is simple. You can’t pick up one end of the stick without picking up the other end too.

The loans were packaged into pools that were then “processed” into multiple SPV pools, shares of which were sold to investors. Those shares “derived” their value from the loans. TARP paid 100 cents on the dollar for those shares. Thus the TARP payments were received based upon an allocation that “derived” its value from the loans. The only possible conclusion is to allocate the funds to the loans.

But that is only part of the story. TARP, TALF and other deals on a list that included insurance, and credit default swaps (synthetic derivatives) also made such payments. Those should also be allocated to the loans. Instead, BOA wants to keep the payments without applying the payments to the loans. In simple terms they their TARP and then still be able to keep eating, even though the “cake” has been paid off (consumed) by third party payments.

Now that the Goldman Sachs SEC lawsuit has been revealed, I can point out that there are other undisclosed fees, profits, and advances made that are being retained by the intermediaries in the securitization and servicing chains that should also be allocated to the loans, some of which are ALSO (as previously mentioned in recent articles posted here) subject to claims from the SEC on behalf of the investors who went “long” (i.e., who advanced money and bought these derivative shares) based upon outright lies, deception and an interstate and intercontinental scheme of fraud.

In plain language, the significance of this accounting is that if you get it, you will have proof beyond any doubt that the notice of default and notice of sale, the foreclosure suit and the demands from the servicer were all at best premature and more likely fraudulent in that they KNEW they had received payments that had paid all or part of the borrower’s obligation and which should have been allocated to the benefit of the homeowner.

There should be no doubt in your mind now that virtually none of the foreclosures processed, initiated or threatened so far have been anything other than wrong. The payments from third parties clearly reduced the principal due, might be allocable to payments that were due (thus eliminating even the delinquency status) and thus eviscerates the amount demanded by the notice of delinquency or notice of default.

Thus in addition to the fact that the wrong party is pursuing foreclosure, they are seeking to enforce an obligation that does not exist. This is a breach of the terms of the obligation as well as the pooling and service agreement.

INVESTORS TAKE NOTE: IF THE FUNDS HAD BEEN PROPERLY ALLOCATED THE LOANS WOULD STILL BE CLASSIFIED AS PERFORMING AND THE VALUE OF YOUR INVESTMENT WAS MUCH HIGHER THAN REPORTED BY THE INVESTMENT BANK. YOU TOOK A LOSS WHILE THE INVESTMENT BANK TOOK THE MONEY. THE FORECLOSURES THAT FURTHER REDUCED THE VALUE OF THE COLLATERAL WERE ILLUSORY SCHEMES CONCOCTED TO DEFLECT YOUR ATTENTION FROM THE FLOW OF FUNDS. THUS YOU TOO WERE SCREWED OVER MULTIPLE TIMES. JOINING WITH THE BORROWERS, YOU CAN RECOVER MORE OF YOUR INVESTMENT AND THEY CAN RECOVER THEIR EQUITY OR AT LEAST THE RIGHTS TO THEIR HOME.

On Thu, Apr 15, 2010 at 9:35 PM, sal danna <saldanna@gmail.com> wrote:

California homeowners file class action suit against Bank of America for withholding TARP funds

Thu, 2010-04-08 11:43 — NationalMortgag…

California homeowners have filed a class action lawsuit against Bank of America claiming the lending giant is intentionally withholding government funds intended to save homeowners from foreclosure, announced the firm of Hagens Berman Sobol Shapiro. The case, filed in United States District Court in Northern California, claims that Bank of America systematically slows or thwarts California homeowners’ access to Troubled Asset Relief Program (TARP) funds by ignoring homeowners’ requests to make reasonable mortgage adjustments or other alternative solutions that would prevent homes from being foreclosed.

“We intend to show that Bank of America is acting contrary to the intent and spirit of the TARP program, and is doing so out of financial self interest,” said Steve Berman, managing partner of Hagens Berman Sobol Shapiro.

Bank of America accepted $25 billion in government bailout money financed by taxpayer dollars earmarked to help struggling homeowners avoid foreclosure. One in eight mortgages in the United State is currently in foreclosure or default. Bank of America, like other TARP-funded financial institutions, is obligated to offer alternatives to foreclosure and permanently reduce mortgage payments for eligible borrowers struck by financial hardship but, according to the lawsuits, hasn’t lived up to its obligation.

According to the U.S. Treasury Department, Bank of America services more than one million mortgages that qualify for financial relief, but have granted only 12,761 of them permanent modification. Furthermore, California has one of the highest foreclosure rates in the nation for 2009 with 632,573 properties currently pending foreclosure, according to the California lawsuit.

“We contend that Bank of America has made an affirmative decision to slow the loan modification process for reasons that are solely in the bank’s financial interests,” Berman said.

The complaints note that part of Bank of America’s income is based on loans it services for other investors, fees that will drop as loan modifications are approved. The complaints also note that Bank of America would need to repurchase loans it services but has sold to other investors before it could make modifications, a cumbersome process. According to the TARP regulations, banks must gather information from the homeowner, and offer a revised three-month payment plan for the borrower. If the homeowner makes all three payments under the trial plan, and provides the necessary documentation, the lender must offer a permanent modification.

Named plaintiffs and California residents Suzanne and Greg Bayramian were forced to foreclose their home after several failed attempts to make new arrangements with Bank of America that would reduce their monthly loan payments. According to the California complaint, Bank of America deferred Bayramian’s mortgage payments for three months but failed to tell them that they would not qualify for a loan modification until 12 consecutive payments. Months later, Bank of America came back to the Bayramian family and said would arrange for a loan modification under the TARP home loan program but never followed through. The bank also refused to cooperate to a short-sale agreement saying they would go after Bayramian for the outstanding amount.

“Bank of America came up with every excuse to defer the Bayramian family from a home loan modification which forced them into foreclosure,” said Berman. “And we know from our investigation this isn’t an isolated incident.”

The lawsuits charge that Bank of America intentionally postpones homeowners’ requests to modify mortgages, depriving borrowers of federal bailout funds that could save them from foreclosure. The bank ends up reaping the financial benefits provided by taxpayer dollars financing TARP-funds and also collects higher fees and interest rates associated with stressed home loans.

For more information, visit www.hbsslaw.com.

Healthcare: Oxygen Price Gouging (Is anyone outraged YET?)

If nothing else this story demonstrates the literal death grip at the throats of you and your relatives. If you or someone you know uses oxygen, they do so to stay alive. But the decision on what to offer, how to offer it, and how much it will cost is left in the hands of small and large “entrepreneuers” who are charging, like the Pharmaceutical companies on Medicare Part D, whatever they want depending upon how much they lost at the casino last night or some other irrelveant issue. 

Many of these people who need oxygen (remember, we are talking just breathing here) are on fixed income and are getting bills that are mounting as co-pays, deductibles and payments allowances spin out of control. That is the result of having an insurance mentality inserted in between the person who needs medical attention and the people who provide it. Insurance companies provide NOTHING to the system of value.

They have increased the cost of medical care, prices of drugs, products and services to heights far beyond any other modern nation. A trillion dollars or more is available to the U.S. economy if we dissasociate ourselves from the insurance middleman. And the lives of millions of patients, and millions more as the baby boomers get older depend upon fundamental reform of this system. 

Companies like Praxair, Apria and dozens of other medical supply stores act as middlemen in delivering lquid oxygen to immobile patients at home charging around 12 times the cost of doing so. That is the result of allowing the “free market” to operate without a government referree. It is inevitable. A one-payer system (call it socialized medicine or whatver you want) would give these providers a fee for distribution and pay for or arrange the delivery of oxygen for distribution all for about 15% of what is being charged.

Meanwhile back at the ranch, treatments that could get people off of oxygen are either banned, not covered by insurance or medicare, or the physician is an NMD, homeopath or some other licensed medical provider who cannot get paid because THEIR practice is mostly preventative and does not involve, for the most part, writing prescriptions for the drugged out civilized population on earth.

Insurance companies and medicare (after you pay the rising “GAP” that is not covered by your secondary insurance as many hapless patients have found out after the fact) will quickly pay for a lung transplant and the 50-60 pills per day that are required, costing millions of dollars because the pharmaceutical companies and insurance companies like a treatment that is intervention rather than prevention and which results in high cost continued maintenance, even if it might shorten the life of the patient. 

But they won’t pay for cell therapy (performed over the border for a few hundred dollars) that gets people off of oxygen and medication, at least for a few years, they won’t pay for stem cell therapy, and they won’t pay for chelation, IV treatments, diet supplement pills, vitamins etc. that are “legend drugs” under FDA rules or proposed FDA rules all of which leave the patient in better condition and are among the only therapies that “first do no harm.”

A Living, Breathing Lobby
Oxygen-Supply Firms Turn to Customers for Help on the Hill
By Jeffrey H. Birnbaum
Washington Post Staff Writer
Tuesday, May 6, 2008; D01

 

The air we breathe may be free. Oxygen is not.

Just how much it should cost is pitting the multibillion-dollar industry that supplies oxygen to medical patients against a large number of lawmakers andMedicare, which said it was being charged many times more for oxygen equipment rentals than the actual cost.

About 1.2 million people use oxygen with help from Medicare. The price for taxpayers: $2.7 billion a year. Pending legislation to reduce reimbursements for oxygen has prompted the medical-device lobby, which spent $29 million on Capitol Hill last year, to ramp up its efforts.

Last week, patients hooked up to oxygen machines subsidized by a major medical supplier came to Washington from across the country to lobby against the payment cuts. Smaller equipment companies, which operate in nearly every congressional district, have been pressing lawmakers as well, while political donations from people involved with the medical-device industry have reached record highs.

Medicare officials said the patients, who are by far the most effective lobbyists against the cuts, argued against their own best interests. A 2006 study by the inspector general of the Department of Health and Human Services showed that Medicare pays 12 times as much for the rental of oxygen equipment, called an oxygen concentrator, as its actual cost. The patients are billed for out-of-pocket payments that are more than twice the cost of a new concentrator, $587.

“This program is outrageously overpaid,” said Corinne Hirsch, spokeswoman for the White House’s Office of Management and Budget.

Government officials have been complaining for two decades that the medical-device lobby has managed to keep reimbursements for that service too high. Last year, the Democratic-controlled House passed a bill that would have slashed oxygen payments, but the Senate did not act. Kerry Weems, acting administrator of the Centers for Medicare and Medicaid Services, said Congress could lower payments sharply and still provide profit to the companies and full service to patients.

But the American Association for Homecare, the main lobbying group for the home medical industry, rejected the government’s study about costs under Medicare. The association said the assessment ignored the cost of servicing oxygen equipment. In addition, it said, steep reductions could harm patient care.

To make its case, the industry has the assistance of patients groups, including the National Emphysema/COPD Association, the group that had 14 people on oxygen roaming the halls of Congress last week. The association claims 1,000 paid members and reaches 325,000 oxygen users through its newsletter. The group, based in New York, advocates primarily on behalf of patients with emphysema and other chronic lung diseases.

“We work closely with those groups,” said Tyler Wilson, president of the American Association for Homecare.

Barbara Rogers, a 61-year-old New Yorker who heads the patients association, spent a day last week visiting five congressional offices to urge them not to approve cuts in Medicare payments for oxygen. “They were very receptive,” Rogers said. “Nobody wants to hurt Medicare patients.”

She and her fellow oxygen users — as well as some family members along to help — held nearly 100 meetings with lawmakers and their staff members. These lobbyists-for-a-day said the uncertainty created by the pending reductions could endanger the ability of oxygen users to get reliable treatment and up-to-date equipment. They also said they wanted to make sure that any cutbacks would not come at the expense of proper care.

“We don’t know how these are going to impact us,” Rogers said. “It’s time for patients to take these issues into their own hands.” She and the other members of her lobbying team came from all over the country, including California, Florida, Texas, Arizona and Arkansas.

Members of Congress have grown accustomed to patients groups descending on Washington to echo the views of industry. “It’s a gimmick the providers have used for years. I think it’s hokey,” said Rep. Pete Stark (D-Calif.), chairman of the health subcommittee of the House Ways and Means Committee. “I like to think we are able to make an objective decision based on facts. I don’t want to make these decisions based on an emotional appeal.”

Still, the industry has found that patients make effective lobbyists. “Members of Congress and their staffs will always care more about patients than providers,” said Frederick H. Graefe, a lobbyist for Invacare, a large medical-device manufacturer.

Rogers said that her colleagues were not paid by any industry group to lobby and that their views were entirely their own.

But the group was not without industry support. Apria Healthcare, a major home-health-care company, gave Rogers’s lobbyists free oxygen, a subsidy that made the event financially feasible, she said. Apria is a member of the two largest oxygen lobbying groups, the American Association for Homecare, which highlighted the patients’ visits on its Web site, and the Council for Quality Respiratory Care.

In addition, health-care lobbyists said the industry regularly collaborated with groups like Rogers’s, briefing them about legislation and regulations in the hope that the patients would be able to get a more sympathetic hearing.

The home-medical-supply industry is made up mostly of small companies, many of them family-owned. The American Association for Homecare says there are 20,000 such firms that sell and rent medical devices. A handful of national companies are also in the business, including Apria and Lincare. The industry also includes manufacturers of medical equipment. Some of the largest are Invacare, Pride Mobility Products, Inogen and Respironics.

The medical-device industry is a significant contributor to federal election campaigns. Donations from people involved with medical-supply companies have risen steadily in the past decade and have reached $2.7 million in the current election cycle, according to the nonpartisan Center for Responsive Politics.

The American Association for Homecare normally has one “fly-in” a year that brings owners and managers of medical-supply companies to the capital from more than 20 states. This year’s event, in March, was its largest ever, with 350 people from 35 states. Attendees heard speeches from prominent federal officials, were briefed about the issues affecting them in Congress and traveled to Capitol Hill to lobby their elected representatives. So much is happening that the association is holding a second fly-in this month.

The industry is stepping up its professional lobbying, as well. “The oxygen guys have hired every lobbyist in town,” Stark said. Pacific Pulmonary Services, an equipment provider in California, plans to open a lobbying office in Washington soon.

Between fly-ins, the association keeps in steady contact with lawmakers through its smaller member companies. Stark even had a visit last week from a long-lost cousin — who is a medical supplier in Tennessee.

“There are oxygen suppliers in almost every district, and members of Congress hear from them,” said Weems, Medicare’s acting administrator. Although he wants to see reimbursements reduced, he said, “This will be a heavy lift.”

 

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