Highlights from Maureen McGrath’s Testimony
Posted by CM on September 4, 2009
Highlights from Maureen McGrath’s Testimony to Congress in 2004
- Ms. McGrath is the founder of the National Advocacy against Mortgage Servicing Fraud.
- Schlosser v. Fairbanks decided that Fairbanks Capital (a mortgage servicer) was in fact a “debt collector” when it acquired a debt in default.
- Consumers do not have a choice concerning who will service their loans.
- Force Place Insurance: Mortgage loan documents allow the lender to add insurance when the homeowner fails to maintain the insurance. However, some predatory lenders force place the insurance when the homeowner has current insurance.
- Most predatory lenders lend up to only 80% of the value of the home, leaving the other 20% as a cushion to protect the lender in case of foreclosure.
- When default occurs, the lender will foreclose, buy the home at the foreclosure sale and resell it for a substantial profit.
- Class Action: If enough loans in a trust are placed in default, the trustee will not have sufficient funds to make a distribution. Shareholders sue.
- If a multitude of homes are wrongfully foreclosed on, the REMIC (Real Estate Mortgage Investment Conduit) may be in violation of tax code. The foreclosures may not be considered “foreclosures” and may actually be considered a “prohibited transaction” causing the asset cap to be effected.
- Recommends a certified appraiser perform an independent appraisal of properties.
- Recommends an opt-out period of 6 months for our mortgage servicers.
Look at bullet # 6 again. Do you notice something with that statement? The lender will foreclose, then buy the property at auction and then sell it? How could the lender foreclose when they didn’t own the property in the first place? I see this as a HUGE problem.
Please read Maureen McGrath’s testimony in its entirety. Click Here
1. Testimony of Maureen McGrath on behalf of National Advocacy Against Mortgage Servicing Fraud. Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises. United States House of Representatives. Field Hearing on “Broken Dreams in the Poconos: The Response of the Secondary Markets and Implications for Federal Legislation.” 6/14/04.