Holder and Geithner LIED About Loan Modification Scams

Today was a very sad day for me. Today was the day that I discovered the truth about something that I had been certain was just the result of the administration being misguided. They didn’t know, I reasoned. They didn’t understand, I hoped. They were misinformed, I believed. But I was wrong… they flat out lied to the American people… stood there in front of the cameras and, just like Bill Clinton when he wagged his finger and said that he did not have sexual relations with that woman… they knowingly lied. And, I have to admit, it saddens me.

Attorney General Eric Holder and Treasury Secretary Tim Geithner flat lied that Monday morning, April 6, 2009, when they addressed the nation to talk about the government’s response to the fraudulent loan modification scams that they claimed were sweeping the nation. They made it sound like the problem was an epidemic. They made it sound as if there was a fraudulent loan modification company around every corner. And they knew that the numbers they were using had nothing to do with loan modification scams.

Here it is from the Associated Press, but I’m sure you can find them on YouTube, if you’d like to see it come from the horse’s ass… I mean mouth:

Government cracking down on mortgage scams

by The Associated Press Published: April 6, 2009

Top federal and state officials on Monday announced a broad crackdown on mortgage modification scams, accusing “criminal actors” of preying on desperate borrowers caught up in the nation’s housing crisis.

Government officials say scammers are seeking to take advantage of borrowers in danger of default. The frauds often involve companies with official-sounding names designed to make borrowers think they are taking advantage of the Obama administration’s efforts to help modify or refinance 7 to 9 million mortgages.

Officials say such operations almost always are fraudulent, and that help is available for free from government-approved housing counselors.

“These predatory scams callously rob Americans of their savings and potentially their homes,” Treasury Secretary Timothy Geithner said Monday. “We will shut down fraudulent companies more quickly than before. We will target companies that otherwise would have gone unnoticed under the radar.”

The Federal Trade Commission has sent warning letters to 71 companies it says were running suspicious advertisements and has filed five new civil cases to halt illegal loan modification scams. Attorney General Eric Holder says the FBI is investigating about 2,100 mortgage fraud cases.

“If you discriminate against borrowers or prey on vulnerable homeowners with fraudulent mortgage schemes, we will find you, and we will punish you,” Holder said.

~~~

Did you catch the lie? Chances are you didn’t. I didn’t either at the time. It took me two weeks to realize that they had lied… intentionally lied. Here’s the lie:

Attorney General Eric Holder says the FBI is investigating about 2,100 mortgage fraud cases.

Is the FBI investigating about 2,100 mortgage fraud cases? You bet they are. It says so right on the FBI Website. Those 2,100 mortgage fraud cases were filed between 2003 and 2009. The problem is that the FBI’s Website also provides a definition of “mortgage fraud” and it has just about nothing to do with the fraudulent loan modification scams Holder and Geithner were talking about.

Here’s how the FBI defines “mortgage fraud crimes”:

Mortgage Fraud is defined as the intentional misstatement, misrepresentation, or omission by an applicant or other interested parties, relied on by a lender or underwriter to provide funding for, to purchase, or to insure a mortgage loan. Although no central repository collects all mortgage fraud complaints, statistics from multiple sources indicate that mortgage fraud is on the rise. Some industry explanations for this increase point to recent high mortgage loan origination volumes that strained quality control efforts, the persistent desire of mortgage lenders to hasten the mortgage loan process, the escalation of home prices in recent years, and the introduction of non-traditional loans which contain fewer quality control restraints such as low documentation and no documentation loans.

Well, that doesn’t sound like what they were describing, does it. I thought they were talking about fraudulent loan modification firms that were taking people’s money and not delivering a service. There must be something on the FBI’s site, right? And there is… all the way down at the bottom, after paragraph after paragraph describing numerous other violations. It reads:

Emerging Schemes

Foreclosure Fraud

Recent statistics suggest that escalating foreclosures provide criminals with the opportunity to exploit and defraud vulnerable homeowners seeking financial guidance. The perpetrators convince homeowners that they can save their homes from foreclosure through deed transfers and the payment of up-front fees. This “foreclosure rescue” often involves a manipulated deed process that results in the preparation of forged deeds. In extreme instances, perpetrators may sell the home or secure a second loan without the homeowners’ knowledge, stripping the property’s equity for personal enrichment.

While foreclosure scams vary, they may be used in combination with other fraudulent schemes. For instance, perpetrators may view foreclosure-rescue scams as a new method for fraudulently acquiring properties to facilitate illegal property-flipping and equity-skimming.

That’s it? “Escalating foreclosures provide criminals with the opportunity to exploit and defraud vulnerable homeowners seeking guideance…” You’re kidding me, right? No, I’m afraid I’m not kidding. That’s it and that’s all. After that, the FBI site goes into the following:

Home Equity Lines of Credit

Individuals and criminal groups are exploiting the home equity line of credit (HELOC) application process to conduct multiple-funding mortgage fraud schemes, check fraud schemes, and potentially money laundering-related activity. HELOCs differ from standard home equity loans because the homeowner may borrow against the line of credit over a period of time using a checkbook or credit card. HELOCs are aggressively marketed by lenders as an easy, fast, and inexpensive means to obtain funds. HELOC funds are normally withdrawn on an as-needed basis to conduct home repairs or to pay bills, but fraud perpetrators may withdraw the entire amount within a short time period. Lenders typically focus on property equity prior to funding HELOCs. As such, many lenders do not demand a full property appraisal or a full property title search.

So… the Attorney General of the United States, you know… the guy that replaced Attorney General Gonzalez, the AG who could not seem to remember a darn thing… had a choice when preparing his speech that Monday morning on April 6, 2009. He could have told the truth.

After reviewing online and print ads nationwide, the FTC sent warning letters to 71 companies who may be deceptively marketing mortgage services.

In the last year, the FTC said it’s brought 11 law enforcement actions against operations accused of conning consumers. There’s also been plenty of state action in running down companies engaged in fraud. Illinois Attorney General Lisa Madigan filed two lawsuits recently against alleged Chicago-area mortgage rescue scams. “We have repeatedly found that these operations are swindling desperate homeowners out of money they can’t afford to lose,” Madigan said in a release.

Wow… 11 cases of deceptive advertising and 2 lawsuits filed in Illinois. And the Illinois AG’s phrasing would make me laugh, if it weren’t so entirely sad.

“We have repeatedly found that these operations are swindling desperate homeowners out of money they can’t afford to lose.”

Well, I suppose it’s true. “Repeatedly” does mean more than once… and so two lawsuits would qualify as having happened “repeatedly”. But, you know what I have to say about that: F#@k You.

No wonder they all looked so uncomfortable that Monday morning in front of the cameras. I noticed it right away, but I figured it was because they’re all kind of new at this… and they’ve got tough jobs. But it wasn’t that, was it Tim and Eric? You were uncomfortable because you knew that what you were saying wasn’t really the truth. Right guys? It’ll be better if you just admit it… ask Bill Clinton.

Eric Holder went on to say the following that day:

“For millions of Americans, the dream of homeownership has become a nightmare because of the unscrupulous actions of individuals and companies who exploit the misfortune of others,” Attorney General Eric Holder said in a release. “The Department of Justice’s message is simple: If you discriminate against borrowers or prey on vulnerable homeowners with fraudulent mortgage schemes, we will find you, and we will punish you.”

If anyone remembers my column about that day, you’ll remember that I made fun of that line. I put in parenthesis something about Holder being the black guy and therefore required to mention discrimination so many times each year. I wrote that line because I couldn’t understand at the time what discrimination had to do with fraudulent loan modification companies. Were they discriminating against certain people and only defrauding others. Strange, I thought… criminals so rarely discriminate as to from whom they steal.

I, like everyone else, was focused on the second word in Holder’s message, “millions”. “For millions of Americans…” Millions of Americans were being defrauded… that was the message. And so, as these two stalwarts of transparency were preparing their speeches, practicing their parts, working out the timing of when each would talk, they needed a big number. 11 and 2 wouldn’t do it. So they found the FBI’s 2,100 number and decided it would go unnoticed. After all, who would know the difference between loan modification fraud and “mortgage fraud”?

And it worked. You guys pulled it off. I didn’t even catch it until two weeks later… I might never have caught it, if it weren’t for Florida’s Attorney General who tried the exact same ploy. In one article, he claimed to be investigating 30,000 cases of mortgage fraud, while in another article it said this:

Florida Attorney General Bill McCollum this month filed a civil lawsuit against a number of alleged loan-modification scam artists on behalf of scores if not hundreds of people, most of them facing foreclosure, who claim they paid upfront fees as high as $3,000 to have their mortgage terms improved so they could keep their homes. The suit alleges those services, which numerous non-profit organizations will do for free in tandem with lenders, were never delivered.

When I read that the first thing I thought was… “Wow, it’s pretty rare to see numbers measured in ‘scores’ these days.” And then… “scores, if not hundreds”? Which is it? And then I remembered the 30,000 cases reported by another Florida paper… that’s a pretty big spread, don’t you think: 30,000 or scores, if not hundreds? That’s when the whole thing started to stink up the joint… and I went to look at what Holder and Geithner had said.

And then I became sad. I know… some of you reading this will undoubtedly defend what was said as being okay for one reason or another, but you know what… save it. That’s not the kind of administration Obama promised… that’s politics as more than usual. And that’s the Attorney General, damn it. God damn it. I hated watching Bush appointee, Gonzalez say “I don’t recall” about a gazillion times. And I voted for Obama because at least I thought… “No way he’s going to appoint guys like that.”

He chose to use a number to make his point because he couldn’t come up with a legitimate number. He lied people… and if you can’t see that then you’ve refused to look. Want me to ask my mom? She’ll tell you… he lied.

So, after staring at the wall for about an hour, wondering why they would have chosen to create this fictional boogey man that was raping and pillaging throughout the land in the form of fraudulent loan modifications, I decided to see if I could find the impetus. If you’ve read my past articles, you know I have come to believe it was the banks that were behind it. Banks don’t want private loan modification companies negotiating mortgages for homeowners… because it costs them more money than if they could just abuse the homeowners directly. But how could I be sure… and then there it was… right in the Washington Post:

According to the Treasury Department’s Financial Crimes Enforcement Network, financial institutions filed an estimated 65,049 suspicious activity reports from 2007 through 2008, a 30% jump from 2006.

Did they now? Suspicious Activity Reports are known by the acronym “SARS” and they’re the kind of reports banks generally file with the IRS and Treasury when they suspect money laundering or tax evasion.

Well, what do you know… I guess all of a sudden the SARS work to report potentially fraudulent loan modification companies. Really? That’s a wild coincidence, don’t you think? And a 30% increase over 2006… the same year more loan modifications were being requested by all those FRAUDULENT loan modification firms?

So, what’s the deal? I thought the fraudulent moan modification firms were taking a homeowners money and deliver nothing in return. No? How could they all be delivering nothing in return if the banks filed 65,049 suspicious activity reports about these fraudulent loan modification scammers? I guess maybe they’re the kind of scammers that, before absconding with your cash, first go through the headache of actually trying to get your loan modified… then they go to Brazil.

Okay guys and gals in the Obama administration and you sleazebags at the banks as well… listen up. At first you were making me dizzy. Now you’re making me nauseous. Your story stinks. You’re causing people to lie to the American people. And all because you don’t want private loan modification firms to represent homeowners because you’d much prefer homeowners weren’t represented when attempting to negotiate a modification of their mortgages.

Not cool, people. Not cool at all.

Here’s a letter written by a real homeowner… I didn’t change a word… think of it as a P.S.

I was watching Fox News last night and saw their free loan modification story. They made it sound so simple and enticing that I could immediately tell that none of the people involved in the production, filming, or writing of the piece had ever tried to do a loan modification without an attorney. Well I have tried, and I’m writing this to say that even if I had completed my modification it wouldn’t have been worth the wasted time and aggravation spent pursuing it on a day-to-day basis.

In fact, the one thing I was waiting for was a couple testimonials from people that had done it themselves. Needless to say, there were no testimonials. I know why, too. Even if they had found someone that had seen their modification through to the end I’m pretty sure they wouldn’t be happy about it. Maybe relieved, but not happy. In my own experience after months of hold time, snotty people at my bank, and hundreds of unreturned calls all I wanted was for it to be over and I didn’t care whether it happened or not. I just wanted it over. Any testimonials like that would not have fit in to the sunny disposition of the report so in the back of my mind I knew I wasn’t going to be hearing from any success stories.

I’ve got to say, the piece actually upset me a bit because what was being said on the show was nothing like the reality of trying to get a do-it-yourself one done. I actually went to a couple non-profits that provided counseling and information but came away from them feeling like maybe I had taught them more about flying solo than they had taught me. At any rate, I didn’t walk out of one of those meetings feeling like I was loaded for bear and ready to represent myself in an actual negotiation. Part of that was because my mortgage was really complex with negative amortization and a bunch of moving parts that determined my interest rate.

Dealing with my bank was a pretty horrendous experience too. The bank wasn’t very helpful at all during the times where I didn’t understand what they were talking about or had questions on things like what to do next. A pretty common response was “We are your bank but we are also re-negotiating a contract you signed. It is not our job to walk you through the process to help you negotiate with us.” That seems to be a pretty common mentality as I found out from chatting with many people with similar experiences.

I should mention this as well. My house was fast coming up on a foreclosure so time was becoming more and more precious. The most wearing part of the whole thing was knowing that there was nothing I could do, being reliant on people that really weren’t interested in what happened either way.

It wasn’t until an acquaintance mentioned that (Intentionally omitted by article’s author) Law Center had done his loan mod that I first heard of the company. He said his was done by an attorney and considering that my payments were a bunch of months late that should think about using one too. By that point I was more than happy to pay whoever wanted to take over the job for me. I handed everything over to them and they got the loan mod done.

It just seems that there was so much naivety in the Fox News thing that I wanted to share my experience. I hope it helps.

Well… I’m pretty good with words and I could never say it any better than that. Take action people. Tell those in government… let the private sector help homeowners negotiate with their banks… regulate it… fine, but stop the administration’s campaign against private loan modification firms… before it ends up making the Obama administration look like you know who… Part 2.

Mandelman out.