Have you ever challenged the lending process as a scam?
Consider these issues (Note that HDIC = Holder in Due Course):
The chronology of the closing proves that the borrower funds the loan - borrower signs papers, closer hands check to seller, closer sends note and mortgage to lender, lender deposits note just like cash, lender wires money to title company account, seller cashes check. It works exactly that way most of the time. If the lender deposits the note and THEN funds the loan, obviously the borrower funded his own loan and the lender operates only as a funding engine, not a funding source. Thus, the lender deserves NONE of the payment stream, and that DIRECTLY contradicts one of the elements of the complaint.
The lack of a bilateral contract between lender and borrower well in advance of the loan deprives the borrower of a tool for holding the lender accountable for such fraud as the above. It also creates questions about who owns what and who borrows what. It could stipulate that the note will become chattel of the maker, and remain so till satisfaction, and that the lender will compensate the maker for any conversion (or cut the maker in on the securitization profits). It could lay out the conditions of note and mortgage in advance, giving the borrower opportunity to negotiate those terms.
The borrower sees the note and mortgage for the first time at closing, and has no opportunity to scrutinize them or get a lawyer's opinion on them. The purchase agreement requires that if the loan gets funded, the buyer must buy the property on the closing date. This creates a coercive duress and pressure to sign the documents without reading them properly, and it induces fraud for the below reasons.
The borrower signs "for a loan I have received" in the note even though the borrower has received no loan. I see a tort in this - induced fraud that vitiates the note.
The borrower signs "I am seised of the estate.." even though the borrower has seised nothing yet, an induced fraud that vitiates the mortgage.
The closer writes a hot check to the seller, a crime. The check bounces when immediately after closing the seller takes it to the title company's bank to cash it. Why? Because the lender has not wired the borrower's money yet.
In the end, it appears that the mortgage conveys title to the lender, and the buyer only borrows the real estate. Why? Because the closer (acting for the lender) gives the check to the seller, but not to the buyer/borrower. The borrower therefore does not consummate the purchase agreement. Instead, the buyer does, with a sleight of hand that nobody seems to notice. In other words, the borrower borrows the lender's house, and the lender borrows the borrower's note. Instead of foreclosing, the judge should make them return the borrowed items to one another.
The mortgage allows the lender to put mortgage insurance premiums into a loss reserve fund after canceling the policy. That effectively increases the cost of the loan by a corresponding amount without notice to the borrower, and without reflection on the HUD-1 report because the lender does not have to return that money to the borrower.
Because the note maker owns the note as chattel, and the HDIC owns only a beneficial interest in the note (the right to receive payments), securitizing the note without the maker's permission constitutes CONVERSION. The foreclosure victim needs to hammer the court with this point and demand compensation for the conversion.
Since the lender has title to the real estate, the deed should reflect it and the lender should pay the property taxes. That the closer and lender conspire to put the borrower's name on the deed, and file for recording it with the county, constitutes fraud that causes the borrower to pay taxes on what he does not own.
If the note holder in due course (HDIC) has a different name from the mortgagee, then the mortgagee must show a contract of agency to the HDIC in order to have standing to foreclose. Why? Because the borrower owes nothing to the mortgagee, Foreclosure applies ot the note, not tot he mortgage, and only the HDIC (holder in due course) may foreclose, and then ONLY if the HDIC has mortgagee status, or the mortgagee formally operates as HDIC's foreclosure sale agent.
Almost every residential real estate purchase and mortgage has appraisal fraud at its base. The recent 30% to 50% collapse of real estate market values to the present level constitutes glaring proof of this. Appraisals in Florida typically ignore or lie about replacement cost and income capitalization, the main appraisal metrics. Appraisers, realtors, the seller, the lender and mortgage broker all profit by lying to the buyer through inflating the property value to double its actual value. This kind of fraud justifies fund disgorgement and treble damages.
Bad lending policies led to the collapse of real estate values, and the lenders, sophisticated investors, knew or should have known it way in advance. Many HDICs (holder in due course) have their servicer mortgagees foreclose and have an agent buy the property at auction for a song, then transfer it back to the HDIC. In this way, the lenders engineered a collapse for the express purpose of stealing real estate at foreclosure auctions. This constitutes racketeering, wire and mail fraud, honest services fraud, fraud in the inducement, and numerous other torts. Courts should, instead of foreclosing, cram down loan balances to the present value (considering income capitalization and replacement cost as the major factors) minus paid in equity, set the interest rate to the industry minimum, and start a new 30-year term. This will keep many in homes that they would otherwise lose to crooked HDICs (holder in due course).