Pulling yolks from the scramble. Part 8 - The crisis didn't happen the way you think it happened. As far as I can tell, just about everyone agrees on the following series of events: Delinquencies started to pile up.
The Foreclosure Machine NYT Nobody wins when a home enters foreclosure — neither the borrower, who is evicted, nor the lender, who takes a loss when the home is resold.
The reality is very different.
Behind the scenes in these dramas, a small army of law firms and default servicing companies, who represent mortgage lenders, have been raking in mounting profits. These little-known firms assess legal fees and a host of other charges, calculate what the borrowers owe and draw up the documents required to remove them from their homes.
As the subprime mortgage crisis has spread, the volume of the business has soared, and firms that handle loan defaults have been the primary beneficiaries. Law firms, paid by the number of motions filed in foreclosure cases, have sometimes issued a flurry of claims without regard for the requirements of bankruptcy law, several judges say.
Court documents say that some of the largest firms in the industry have repeatedly submitted erroneous affidavits when moving to seize homes and levied improper fees that make it harder for homeowners to get back on track with payments. John and Robin Atchley of Waleska, Ga.
Twice during a four-month period inthe Atchleys were almost forced from their home when Countrywide Home Loans, part of Countrywide Financialand the law firm representing it said they were delinquent on their mortgage.
The possibility that some lenders and their representatives are running roughshod over borrowers is of increasing concern to bankruptcy judges overseeing Chapter 13 cases across the country. LAST month, almostproperties in the United States were in some stage of foreclosure, up nearly 60 percent from the period a year earlier, according to RealtyTrac, an online foreclosure research firm and marketplace.
These proceedings generate considerable revenue for the firms involved: The borrower, already in financial distress, is billed for these often burdensome costs. While much of the revenue goes to the law firms hired by lenders, some is kept by the servicers of the loans.
It assists 19 of the top 25 residential mortgage servicers and 14 of the top 25 subprime loan servicers. By contrast, the increase from to was just 1 percent. The firm is not associated with Fidelity Investments. Law firms representing lenders are also big beneficiaries of the foreclosure surge.
While these private firms do not disclose their revenues, Wesley W. Insome McCalla, Raymer employees left the firm and created MR Default Services, an entity that provides foreclosure services; it is now called Prommis Solutions.
And none too soon, consumer lawyers say, because most foreclosures are uncontested by borrowers, who generally rely on what the lender or its representative says is owed, including hefty fees assessed during the foreclosure process.
In Georgia, for example, a borrower can watch his home go up for auction on the courthouse steps after just 40 days in foreclosure, leaving relatively little chance to question fees that his lender has levied. A recent analysis of 1, foreclosures across the country by Katherine M. Specific cases inching through the courts support the notion that figures supplied by lenders are often incorrect.
Lawyers representing clients who have filed for Chapter 13 bankruptcy, the program intended to help them keep their homes, say it is especially distressing when these numbers are used to evict borrowers.
Rothbloom, a lawyer in Marietta, Ga. That work, usually done by a lawyer, is costly. Rothbloom represents the Atchleys, who almost lost their home in early when legal representatives of their loan servicer, Countrywide, incorrectly told the court that the Atchleys were 60 days delinquent in Chapter 13 plan payments two times over four months.
Borrowers can lose their homes if they fail to make such payments.Case 8 Countrywide Financial Our economies downward spiral began with the subprime loans of the 90s and although it was not intentional the lending practices of the subprime loans were abused.
Countrywide Financial September 26, “Countrywide Financial,” cofounded by Angelo Mozilo, was known as one of the most successful financial companies in the beginning of the 21st century. The cofounder had a solid business philosophy; to help low-income individuals and minorities.
Countrywide Financial September 26, “Countrywide Financial,” cofounded by Angelo Mozilo, was known as one of the most successful financial companies in the beginning of the 21st century. Financial institutions used subprime loans to get rich at the expense of consumers Bank of America bought Countrywide They took on $ billion of Countrywide's debt Bank of America plans to do away with subprime lending.
Countrywide Financial September 26, “Countrywide Financial,” cofounded by Angelo Mozilo, was known as one of the most successful financial companies in the beginning of the 21st century. The cofounder had a solid business philosophy; to help low-income individuals and minorities. Countrywide Financial was one of the largest mortgage lenders in the United States, but CEO Angelo Mozilo did not heed his own warnings in the lead-up to the financial crisis.
Case study Countrywide Financial was .