Role of the Mortgage Servicer?

Today, we are leaving the omnipresent and of course omnipotent lenders aside, and discussing the role of the servicer. Your servicer is no less omnipotent in any way. He does everything on behalf of much covered lenders. Servicer, as you may know, are not the lenders: they just service your loans. They also do an important job: they hide the real lenders from you. Servicers take out their cut and send the remaining payments to the lenders. This can be clarified better if you know the traditional role of the landlord and property manager. They keep and maintain all the record of the lenders and are accountable to them for this purpose. The property manager just manages the property, takes his cut, and sends the remaining amount along with the property audits and accounting to the landlord who generally is an absentee landlord. Again, your lenders may be in USA, somewhere in Bahamas or in southwest China. Most mortgage loans are pooled and sold to investors in the secondary market. This process is called securitization. Basically, it is little complex topic, and we may leave it for another discussion, but securitization is the root cause of our current financial problems. The loans are packaged, bundled and sold as security to various investors. Again, your servicer collects all the payments, maintain all necessary accounts, including escrow accounts for taxes, insurance, property taxes etc. The servicer receives a percentage of all this collection. The rights to service, mortgage loans can be sold and of course purchased.

Sometimes investors like Freddie Mac and Fannie Mae enters into this game with servicers to administer the mortgages. The servicers do not hold any interests in these loans which they service. You may have noticed that the servicers very intelligently and shrewdly hide the names of the lenders. There is a way to get the name of the lenders which probably only attorneys can do. Our office also can help in this regard. Oh yes, we make them disclose the names of your lenders. That is a specific job and only Nevada licensed attorney should handle it.

The original of any note sold to investors must be endorsed in blank and delivered to the investor’s document custodian. The servicer is assigned the mortgage. However, the servicer is then required to assign the mortgage to the investor, but this assignment is unrecorded. Thereafter the servicer will be the mortgagee of record to ensure all those legal notices which they continuously send to borrowers.

How to Challenge the Servicers Standing to Foreclose?

This is the most crucial question, and we are going to discuss it with little bit more details here. Okay, when a foreclosure action is initiated, the servicers’ standing to bring any action mostly depends on state statues and case laws. Here, comes the tricky part. It is common for servicers to file the foreclosure action through an investor or trust is the actual holder of note and mortgage. A challenge can be very successful from a borrower where state law clearly defines who is the holder of the note, and defines the mortgage as the real party in interest. Let us say in a state for strict foreclosure, the plaintiff must prove by a preponderance of evidence that it is the owners of the note and mortgage and the borrower defaulted on the note.

The servicer has only rights to collect mortgage payments from you. It cannot foreclose on you because this is not included or generally not included in the right of assignment from the lender to servicer. In Nicholson v. Washington Mutual the court, (2001 WL 1992418 (Tex. App. Aug. 32, 2001) (not designated for publication (deed of trust must be strictly construed. There was no authority in the deed of trust for the lender to delegate these tasks to the servicer. Some other courts have also found that the servicer has a pecuniary interest in the mortgage.

What should an Attorney Do?

The attorney (again a Nevada Licensed Attorney, not an attorney-affiliated or attorney-backed, what is this is a joke, we are not biased, we tell the truth) should examine the agreement between the servicers and holder to find out the contractual rights to foreclose, or to release the interest right. However, if the servicer brings an action under its name, without disclosing the true holder of the mortgage, the foreclosure may be delayed by court and it can be asked to identify the real party in interest. (in re Viencek, 273 B.R. 354 (Bankr. N.D.Y. 2002) delay granted by Court for servicer to amend proof of claim to identify actual creditor).

More later. How bout’ some discussion on MERS now? The servicers may have an economic interest, but MERS have none. MERS do not have any active interest and they don’ become holder of the loans. They do not have any beneficial interest in the mortgage. They are not trustee and can be nominee only, holding title to the mortgage and but not the note. Despite these shortcomings, MERS claims that they are the nominee of the lender and has the right to foreclose in their own name. They sometime commence foreclosures and later on will assign the mortgage to a servicer if the problem arises. Several courts have questioned their rights to foreclosue or have denied their right to foreclose.

How to Use Loan Modification to Stop Foreclosure in Nevada?

How Loan Modification Can Be Used To Stop Foreclosure?

Foreclosure is on the rise in Nevada, and everyday scores of homes are foreclosed in Nevada through non-judicial foreclosure process. Remember, there are two kinds of foreclosure: Judicial and Non-judicial and Nevada is a non judicial foreclosure state. In this article, we like to discuss how to avoid an impending foreclosure by starting a loan modification request.

Rule No. 1: Open channels of communication with your bank. Call the Loss Mitigation, or Loan Modification number of your bank right away. Do not hesitate on this issue under any condition.

Rule No. 2: Find and give your financial information right away. Make sure you ask the bank if they have a package for financial information needed to be send to them. Download from their website and sent it to them on the given fax number. Make sure you get the right fax number from Loss Mitigation Department.

Rule No. 3. Tell your lender that you are a primary home owners and have no intention to let this property go to foreclosure.

Rule No. 4: Tell your lender that you have a great payment history.

Rule No. 5: Tell your lender your story, either on phone or via letter. Send a strong hardship letter to them.

Rule No. 6: Ask them again and again if they have received your documentation. If not, send them again.

Rule No. 6: No need to argue, or indulge in heated discussion. Talk on the same level as your representative. Most of these folks are hard working and eager to help. Their education level is slightly above the high school levels, and some of them have this job as the starter job in their career.

Rule No. 7: Do not lose temper under any condition.

Rule No. 8: Write a diary in a systematic way, and write down the name of the representative, name of the supervisors, and date and time.

Rule No. 9: It is hard for your lender to foreclose as well. They will lose half of the value of the home, and they are also trying their best to stop it.

Rule No. 10: Ask them again and again, if they want short sale if loan modification is not possible. A yes answer means more time, and meanwhile you can chalk out other strategy.

More Rules:

1. Make a diary of all the phone calls.

2. Write down the number and name of the person you spoke.

3. Make sure you ask them again, if they are from collection department. Basically, these collectors would give you the impression that they are from loan modification or workout department. They will waste your time by asking you idiotic questions which has no direct link with loss mitigation. At the end, they would try to collect money from you. Because they have no impact, on the overall scheme, and you probably have no money to pay them, so be polite and firm with them, and tell them if they can connect you to loss mitigation. Remember, again Countrywide, they have too many layers to trick you and too many phone number with recording devices.

4. This one bank, or servicer EMC. It is deceptive. Each time you call them, their recording device is full of none sense. Even the recording device tell you the waiting time is 9 minutes. If you call them in the middle of the night, the waiting time is still 9 minutes. Once I waited for about 25 minutes. This is the most crooked customer service. I wonder if someone would take notice of their deception.

5. Oh yeah, City–the mother of all deceptive trade practices. Citi had eaten up close to 70 billion dollar of bailout money, and has one of the horrible customer service. They once gave me a fax number which was busy, and I got at least 30 busy printout from my fax. They are hesitant to talk to attorneys for reasons well known to them. I wish and pray this bank is either nationalized or go bankrupt. I have no compassion for them and of course Countrywide.WaMU is still not a bad bank. Even though they were the most generous people in giving money to every undeserving person but at least their customer service is better than both City and Countrywide.

6. Lots of lenders has their website full of information, and there are some changes coming in their attitude. It is public pressure, and some Congress pressure collectively. Also, they have seen the writing on the wall. Basically, it is the crooked old leadership who was awash with bonuses and big paychecks, who was reluctant to bring any major changes. I say get rid of all these fossils of the past, and start with younger people in major decision making.

More later