Analyzing another mess that’s bigger and badder than the last one
Published: July 30th, 2014
OKLAHOMA CITY — Over 10,000 mortgage borrowers in Oklahoma County alone are now in the foreclosure pipeline by mortgage servicers accused of ripping off borrowers at the slightest opportunity, Oklahoma County records show.
If trends continue, many more will join them. Isn’t this disturbing trend counter intuitive in a city where the economy is booming?
The rest of the state doubtless has homeowners in the same predicament, including Tulsa county and the state’s 75 remaining counties.
This is part of the second major U.S. mortgage crisis in just a few years. Regulators and prosecutors forced JP Morgan Chase, Wells Fargo, GMAC/Ally, Bank of America and CitiBank into a $50 billion settlement for deceit, intentionally mishandling mortgages, failure to refinance qualified borrowers and illegal activities.
And this, despite a $75 billion dollar infusion from the Obama administration to incentivize lenders to refinance qualifying, troubled borrowers.
Wall Street is making a mockery of the earlier settlement by instigating this new meltdown. Why? Hedge funds have found it extremely profitable to invest in massive foreclosure packages.
Don’t believe these are all destitute borrowers. Shockingly, thousands of these deceit-fueled, foreclosures practices are being foisted on responsible borrowers, according to nearly 100 hours of research into County filings, annual reports, Better Business Bureau records and many more sources by The City Sentinel.
Sadly, mortgage borrowers have absolutely no say in whether or to whom their mortgages are sold.
So don’t rest easy if you’ve been paying on time. Be very concerned if your mortgage has been sold to two of the ones accused of the greatest volume of crooked practices:
Nationstar in Lewisville TX., and Ocwen Servicing out of Florida. Plus, more seizures are being engineered by foreclosure-happy Wells Fargo, a Nationstar stockholder.
Eventually, the Wall Street investors sell these foreclosure bundles to investors who will turn them into rental properties.
Real estate experts say excessive rentals in neighborhoods tend to result in poor upkeep and drive down property values.
Well known to be poorly regulated, disreputable mortgage servicers are getting away with it by the billions, and feed them to Wall Streeters happy to make profits off the misery of others.
Making this mortgage meltdown easy is Oklahoma law. Mortgage companies can elect judicial or Power of Sale foreclosures. “Power of Sale” are quick, easy and allow lenders to start foreclosing in as little as 45 days, then quickly get their hands on them at sheriff’s auction.
Power of Sale foreclosures also deny counties of hundreds of thousands of dollars in filing revenues they could surely use if judicial foreclosures were the law.
Judicial foreclosures can take months or years and are costly and time-consuming for lenders who might think twice if they had to go that route. Servicers’ investors aren’t that patient, so it might make an impact on foreclosure volume.
There are numerous players in this sad tale, but the 10,000 foreclosures in the Oklahoma County foreclosure pipeline that stood out most in The City Sentinel’s investigation are Nationstar and Ocwen Servicing. Wells Fargo bank and CitiMortgage are stepping up foreclosures rapidly.
For local input, The City Sentinel put in a call to Kent Carter, 2013 President of the Oklahoma Mortgage Bankers Association, but it was not returned.
Nationstar and Ocwen rank among the worst mortgage companies in a 2013 JD Power and Associates study of the nation’s major mortgage servicers.
The City Sentinel has found nearly 10,000 complaints on reputable, Internet complaint boards such as Yelp, consumerafairs.com and ripoffreport.com.
That estimate includes Better Business Bureau complaints; both Ocwen and Nationstar have lost their accreditation’s due to stunning complaint volume.
There are budding lawsuits (but no apparent outcomes yet) against these servicers in a several states for misconduct, illegal foreclosure practices, unfair shortcuts deception.
The Consumer Financial Protection Bureau (CFPB), along with authorities in 49 states and the District of Columbia, entered into a $2 billion Consent Judgment with Ocwen (which didn’t admit wrong-doing) alleging those very practices and other illegal actions.
Under it, Ocwen must provide $2 billion in loan modification relief to its customers and $125 million in refunds to foreclosed consumers.
But for Ocwen, is it really a deterrent to sign a $2 billion consent agreement – in relation to its half trillion dollar portfolio? Likewise, will it result in meaningful relief to all foreclosed consumers?
The state of Texas has asked wronged borrowers to contact its state’s consumer relief authorities, Internet records show.
Nationstar was fined $30,000 in New Jersey for denying refinancing to a mother on maternity leave. Its employees were required to take training in discriminatory practices.
In Oklahoma City, businessman Jack Werner is an example of another target of apparent deception. He’s had a long-standing record of on-time payments with Ocwen. But Ocwensent him a letter warning him he was in arrears and he’d better call them fast.
He did, only to be told he wasn’t actually behind; he was then pressured to buy other Ocwen financial products.
Furious, he complained to every Oklahoma and national regulatory and prosecutorial agency in sight, but never heard a word.
“In my opinion Ocwen reps intentionally used fraudulent practices in order to get me to call and sell me something.
“It was a scam,” Werner, a regular columnist for The City Sentinel newspaper, said. “Everybody’s going to call in when they say you’re behind on your mortgage. It’s a really effective boiler room scam.”
Some have branded servicers such as Ocwen and Nationstar, “the darlings of Wall Street.” At least through the spring, they were both on disturbingly, accelerated growth track to acquire billions more in servicing rights. GMAC/Ally sold its massive, mortgage portfolio to Ocwen, owned by Walter Investment Management, which boasts a gaggle of Wall Street institutional investors. Nationstar bought $250 billion in mortgages from Bank of America.
So now, mortgage meltdown part II is in full swing, just through less obvious avenues. Bad players simply are operating through more underground channels via or through such servicers.
They maintain cozy, profitable relationships with the servicers in several ways. They’re getting their executives placed on the servicers boards of directors or in executive positions.
Wells Fargo owns stock in Nationstar, as shown in Securities and Exchange Commission data.
Bank of America does business with Nationstar, according to its last annual report.
And they’re making massive profits by seizing what is likely most homeowners’ largest investments.
NOTE: Stacy Martin, managing editor for The City Sentinel newspaper, is an award-winning business and general news reporter.