News

The Disaster of American Loan Servicing

August 28, 2016

From David Dayen at Salon:

It shouldn’t be terribly difficult to accept a monthly loan payment from a homeowner or a student borrower, and to manage day-to-day operations on the loan. This is the job function of a servicer, a company that handles loans on behalf of the ultimate owner, funneling payments through the system and deciding how to manage defaults.

Why this has become the most impossible business in America doesn’t make a lot of sense. But with evidence mounting up, we should acknowledge that servicers either don’t know what they’re doing or can’t turn a profit on their operations without doing so at the expense of their customers.

[Read More]

Inside the FBI’s Investigation into DocX

May 31, 2016

Lynn Szymoniak’s Freedom of Information Act request has helped generate a compelling article by David Dayen for Vice regarding the FBI’s investigation into the DocX document mill, and the limited prosecution that followed.

Six years ago, FBI agents in Jacksonville, Florida, wrote a memo to their bosses in Washington, DC, that could have unraveled the largest consumer fraud in American history. It went to the heart of the shady mortgage industry that precipitated the financial crisis, and the case promised to involve nearly every major bank in the country, honing in on the despicable practice of using bogus documents to illegally kick people out of their homes.

[Read More]

‘Chain of Title’ Review in the New York Times

May 14, 2016

David Dayen’s Chain of Title, which chronicles the fight against foreclosure fraud through the eyes of three South Florida activists: Lisa Epstein, Michael Redman, and Lynn Szymoniak. The book is available for purchase on Amazon and though other retailers. Here’s Frank Portnoy’s assessment from The New York Times:

On Sept. 26, 2008, 11 days after the Lehman Brothers bankruptcy, I proposed in the opinion pages of The New York Times a straightforward alternative to Treasury Secretary Henry Paulson’s plan to bail out the banks.

[Read More]

Recent Articles

NOVASTAR FINANCIAL FILES FOR BANKRUPTCY

By Lynn Szymoniak August 28, 2016

 

Novation Companies, formerly known as NovaStar Financial, a company that made over $11 billion in mortgage loans that failed at very high rates during the housing crisis, filed for bankruptcy court protection in Baltimore on July 20, 2016.

NovaStar was a major participant in mortgage-backed securities. NovaStar created its first mortgage-backed trusts in 1997 and continued making trusts in 1998, 2000 and from 2001 through 2003. In 2004, NovaStar made four trusts, each with loan balances of over $1 billion:

Series 2004-1:  $1,727,250,100

Series 2004-2:  $1,374,800,100

Series 2004-3:  $2,156,000,000

Series 2004-4   $2,468,750,000

 

In 2005, NovaStar created four more trusts, each with loan balances of at least $1.5 billion:

Series 2005-1:   $2,073,750,000

Series 2005-2:   $1,791,000,000

Series 2005-3:   $2,432,500,000

Series 2005-4:   $1,558,400,000

 

In 2006, NovaStar created seven trusts:

Series 2006-1:   $1,320.074,000

Series 2006-2:   $1,010,890,000

Series 2006-3:   $1,089,000,000

Series 2006-4:   $1,004,851,000

Series 2006-5:   $1,279,850,000

Series 2006-6:   $1,233,750,000

Series 2006-MTA1: $1,182,600,000

 

In 2007, NovaStar created two additional trusts:

Series 2007-1:  $1,813,274,000

Series 2007-2   $1,324,400,000

 

The NovaStar trusts included loans originated by NovaStar Mortgage, Inc., a Virginia corporation, and by other lenders which sold their loans to NovaStar Mortgage Funding Corporation, a Delaware corporation that acted as the depositor for the trusts. [Read More]

NEW CFPB RULES TO THWART WRONGFUL FORECLOSURES

By Lynn Szymoniak August 28, 2016

 

The Consumer Financial Protection Bureau (CFPB) approved rues on August 5, 2016, to help prevent wrongful home foreclosures.

Mortgage servicers will be required to promptly notify borrowers when loss mitigation applications are complete.  Many mortgage servicers never considered an application complete and repeatedly demanded information and documents that the borrower had already provided.  Many borrowers complained that the servicers often demanded federal income tax returns over and over.  Borrowers were required to make adjusted monthly payments while the applications were pending.  The repeated stalling benefited the banks and servicers.  Many borrowers reported that when their applications were finally refused, … [Read More]

Florida’s 4th DCA Reverses Many Foreclosure Judgments

By Lynn Szymoniak May 1, 2016

“Oops – Our Bad – The Banks Didn’t Have Standing to Foreclose”

In the first four months of 2016, Florida’s 4th District Court of Appeals reversed many foreclosure judgments, primarily on standing grounds. In these appellate opinions, the appellate court repeatedly held that the banks failed to prove that they had standing to foreclose when they failed to prove that they had possession of the indorsed original note at the time the complaint was filed. These were all cases where the foreclosure was sought by a bank that was not the original lender. In the vast majority of foreclosure cases decided after 2008, … [Read More]

Injecting Integrity into the Mortgage Business

By Lynn Szymoniak March 7, 2016

Trump Mortgage was a company started in 2006 and closed 18 months later, following a scandal that involved significant over-stating of the credentials of the company’s president, E.J. Ridings.   When Trump Mortgage closed, Donald Trump licensed his name to First Meridian Mortgage as his next partner in the residential mortgage business.  How well did First Meridian Mortgage, a/k/a Trump Financial, operate?

First Meridian Mortgage made money, but not because of its careful lending practices.  First Meridian Mortgage made money by selling its loans to big banks and securities companies so that the loans could be included in residential mortgage-backed trusts … [Read More]