Not the insurance you're looking for
March 15, 2011 3:52 AM Subscribe
Bank of America has allegedly engaged in mortgage fraud, according to an Anonymous website. The first batch of leaked emails appear to show that bank employees were trying to hide documents from regulators. The emails are put into context on the website Seeking Alpha which explains that they refer to the use of force-placed insurance to increase mortgage servicers' profits through kickbacks from insurers - a practice which has just been forbidden under a settlement imposed by the US' states attorneys general.
Note: This appears to be distinct from the leak promised by Julian Assange some time ago. (previously)
Note: This appears to be distinct from the leak promised by Julian Assange some time ago. (previously)
It seems the main purpose of leaks are to confirm what we already know.
posted by fuq at 4:06 AM on March 15, 2011 [6 favorites]
posted by fuq at 4:06 AM on March 15, 2011 [6 favorites]
Doesn't Anonymous know that bank tellers will get killed over this?
posted by Blazecock Pileon at 4:08 AM on March 15, 2011 [38 favorites]
posted by Blazecock Pileon at 4:08 AM on March 15, 2011 [38 favorites]
This just seems to indicate how easy it should be to put these BOA fuckers in jail, which brings up the question of why they aren't.
posted by tommyD at 4:08 AM on March 15, 2011 [5 favorites]
posted by tommyD at 4:08 AM on March 15, 2011 [5 favorites]
This just seems to indicate how easy it should be to put these BOA fuckers in jail, which brings up the question of why they aren't.
Because it's like so much fraud when you look at the economic destruction left behind it is hard to tell if it was the earthquake, the tsunami, or the nuclear meltdown that caused it.
The biggest crime in history has too many criminals.
posted by three blind mice at 4:34 AM on March 15, 2011 [10 favorites]
Because it's like so much fraud when you look at the economic destruction left behind it is hard to tell if it was the earthquake, the tsunami, or the nuclear meltdown that caused it.
The biggest crime in history has too many criminals.
posted by three blind mice at 4:34 AM on March 15, 2011 [10 favorites]
This just seems to indicate how easy it should be to put these BOA fuckers in jail, which brings up the question of why they aren't.
Why would the people in charge of the system put themselves in jail?
posted by DU at 4:36 AM on March 15, 2011 [11 favorites]
Why would the people in charge of the system put themselves in jail?
posted by DU at 4:36 AM on March 15, 2011 [11 favorites]
Wow. Wow. Wow. A $4,000 insurance policy suddenly jumps to $33,000? That's insane. And all because the insurance company was in bed with the mortgage company, who "accidentally" let the insurance payments lapse after collecting escrow for them. That's disgusting.
And that completely ignores the $7100 kickback the bank received.
posted by This Guy at 4:37 AM on March 15, 2011
And that completely ignores the $7100 kickback the bank received.
posted by This Guy at 4:37 AM on March 15, 2011
Also in the news: mafia are crooks.
posted by londonmark at 4:47 AM on March 15, 2011
posted by londonmark at 4:47 AM on March 15, 2011
My question is, why did Anonymous decide that this week was the best effective time to release these emails? They had two weeks of Charlie Sheen bullshit dominating the news cycle, and they waited until NOW? Were they looking, specifically, for this leak to compete for attention against the biggest story of the year?
posted by incomple at 4:49 AM on March 15, 2011 [3 favorites]
posted by incomple at 4:49 AM on March 15, 2011 [3 favorites]
Who here recommends violence against these bullying banks?
posted by Obscure Reference at 4:52 AM on March 15, 2011 [4 favorites]
posted by Obscure Reference at 4:52 AM on March 15, 2011 [4 favorites]
This Guy: It can be even better than that - from the link to the Reuters article:
The problem is that this is a massive conflict of interest. Previously its duty was to the mortgage holders, and if the property burned down it would (in theory) fight the insurer to ensure that the mortgage holders get their money. But now that it's insuring the property itself, any payout to the mortgage holders will come out of JPMorgan's pockets, and JPMorgan will have a strong incentive to deny or reduce the claim, thereby harming the mortgage holders. This is very, very unethical.
posted by Joe in Australia at 4:53 AM on March 15, 2011 [25 favorites]
JPMorgan Chase buys overpriced insurance from a third-party insurer, which then reinsures the property with JPMorgan Chase. This is doubly evil: it not only means that investors are paying far too much money for the insurance, but it also means that, as both the servicer and the ultimate insurer of the property, JPMorgan Chase has every incentive not to pursue claims on the houses it services.So JPMorgan is servicing a mortgage on behalf of a bank or some investors. It gets paid to look after their interests, that's its job. It finds that the borrower's insurance is in default, so it buys insurance from a third party. Once again, this is what it is paid to do - the mortagage holders don't want to lose money if the property burns down. But instead of getting a good deal, JPMorgan buys really expensive insurance. This is arguably not immoral - JPMorgan doesn't owe anything to the borrower, and the expensive insurance may even provide better protection to the mortgage holders' interests. But here's the clever bit - JPMorgan then buys the insurance contract back from the insurer, possibly via a different division. So it is really insuring the property itself and it is profiting from both the mortgagor and the mortgagee!
The problem is that this is a massive conflict of interest. Previously its duty was to the mortgage holders, and if the property burned down it would (in theory) fight the insurer to ensure that the mortgage holders get their money. But now that it's insuring the property itself, any payout to the mortgage holders will come out of JPMorgan's pockets, and JPMorgan will have a strong incentive to deny or reduce the claim, thereby harming the mortgage holders. This is very, very unethical.
posted by Joe in Australia at 4:53 AM on March 15, 2011 [25 favorites]
My question is, why did Anonymous decide that this week was the best effective time to release these emails? They had two weeks of Charlie Sheen bullshit dominating the news cycle, and they waited until NOW? Were they looking, specifically, for this leak to compete for attention against the biggest story of the year?
I wonder whether someone at the top of BOA specifically decided to start leaking these revelations now for strategic reasons.
As one of Tony Blar's advisors once said, it's a good day for burying bad news. Only instead of a day it's a few weeks. And If the toxic business practices of various crooks can be quietly dissipated into the ideosphere now, most people won't notice it and those who do will classify it with general background shittiness they already were aware of on some level, like Abu Ghraib or the War On Drugs or something, and won't be motivated into active outrage.
posted by acb at 4:59 AM on March 15, 2011 [2 favorites]
I wonder whether someone at the top of BOA specifically decided to start leaking these revelations now for strategic reasons.
As one of Tony Blar's advisors once said, it's a good day for burying bad news. Only instead of a day it's a few weeks. And If the toxic business practices of various crooks can be quietly dissipated into the ideosphere now, most people won't notice it and those who do will classify it with general background shittiness they already were aware of on some level, like Abu Ghraib or the War On Drugs or something, and won't be motivated into active outrage.
posted by acb at 4:59 AM on March 15, 2011 [2 favorites]
This is ridiculous fear-mongering.
First of all, forced-place insurance isn't fraud. It is not a surprise to anyone who has bought a house (or at least it shouldn't be) that the homeowner has an obligation under their mortgage to keep the house insured. This is not "insurance you didn't even need," as Anon's source alleged. It is there for a very good reason (i.e., the bank doesn't want to let your house burn down without the bank having a right to collect from the insurance payments). And it's not a surprise to the legislature or the public, either: in Illinois, for example, the law requires the disclosure to be in ALL CAPS, and to clearly state both that you have an obligation to maintain the required insurance, and that if you don't maintain the insurance, the lender will buy the insurance for you at rates higher than you would otherwise pay. This is not fraud, and it's not a surprise to anybody who bothered to even scan their loan documents.
Don't want to pay their ridiculously high rates? Then keep insurance in place as your loan documents require. If you do that, the lender can't touch you.
posted by gd779 at 5:27 AM on March 15, 2011 [4 favorites]
First of all, forced-place insurance isn't fraud. It is not a surprise to anyone who has bought a house (or at least it shouldn't be) that the homeowner has an obligation under their mortgage to keep the house insured. This is not "insurance you didn't even need," as Anon's source alleged. It is there for a very good reason (i.e., the bank doesn't want to let your house burn down without the bank having a right to collect from the insurance payments). And it's not a surprise to the legislature or the public, either: in Illinois, for example, the law requires the disclosure to be in ALL CAPS, and to clearly state both that you have an obligation to maintain the required insurance, and that if you don't maintain the insurance, the lender will buy the insurance for you at rates higher than you would otherwise pay. This is not fraud, and it's not a surprise to anybody who bothered to even scan their loan documents.
Don't want to pay their ridiculously high rates? Then keep insurance in place as your loan documents require. If you do that, the lender can't touch you.
posted by gd779 at 5:27 AM on March 15, 2011 [4 favorites]
Who here recommends violence against these bullying banks?
Criminal prosecution, fines, and jail time are what grown-ups use instead of violence.
I am for all of these things being used against these bully banks.
posted by three blind mice at 5:28 AM on March 15, 2011 [6 favorites]
Criminal prosecution, fines, and jail time are what grown-ups use instead of violence.
I am for all of these things being used against these bully banks.
posted by three blind mice at 5:28 AM on March 15, 2011 [6 favorites]
the lender will buy the insurance for you at rates higher than you would otherwise pay. This is not fraud, and it's not a surprise to anybody who bothered to even scan their loan documents.
OK, but what about the fact that the insurance being sold was a fraud? IIRC, it was the taxpayers had to step in and make good on those claims - not the insurance companies who received the premiums. Right? There was no insurance.
Is it not fraud to sell an insurance product without the ability to make good on claims?
Like I said above, so many criminals you don't know where to begin.
posted by three blind mice at 5:33 AM on March 15, 2011 [1 favorite]
OK, but what about the fact that the insurance being sold was a fraud? IIRC, it was the taxpayers had to step in and make good on those claims - not the insurance companies who received the premiums. Right? There was no insurance.
Is it not fraud to sell an insurance product without the ability to make good on claims?
Like I said above, so many criminals you don't know where to begin.
posted by three blind mice at 5:33 AM on March 15, 2011 [1 favorite]
OK, but what about the fact that the insurance being sold was a fraud? IIRC, it was the taxpayers had to step in and make good on those claims - not the insurance companies who received the premiums. Right? There was no insurance.
You are confusing AIG with every other insurance company in the world.
And even if every other insurance company had been financially unable to support its obligations as a result of the financial meltdown, that still wouldn't be fraud. Mismanagement, possibly, but not fraud.
posted by gd779 at 5:37 AM on March 15, 2011
You are confusing AIG with every other insurance company in the world.
And even if every other insurance company had been financially unable to support its obligations as a result of the financial meltdown, that still wouldn't be fraud. Mismanagement, possibly, but not fraud.
posted by gd779 at 5:37 AM on March 15, 2011
Then keep insurance in place as your loan documents require. If you do that, the lender can't touch you.
I try to avoid participating in this topic due to the potential conflicts of interest, but I wanted to ask a quick hypothetical to clarify the situation.
I don't think anyone has a problem with needing to maintain the coverage required by your lender.
Could you tell us what you do when your lender 'disappears' the copy of your dec page you faxed them proving that you've always maintained the required coverage? That is what is email chain appears to be discussing....
posted by mikelieman at 5:38 AM on March 15, 2011 [7 favorites]
I try to avoid participating in this topic due to the potential conflicts of interest, but I wanted to ask a quick hypothetical to clarify the situation.
I don't think anyone has a problem with needing to maintain the coverage required by your lender.
Could you tell us what you do when your lender 'disappears' the copy of your dec page you faxed them proving that you've always maintained the required coverage? That is what is email chain appears to be discussing....
posted by mikelieman at 5:38 AM on March 15, 2011 [7 favorites]
Don't know if it is related, but two months ago our insurer called to ask why we decided to not pay the premiums on our policy. A few nastygrams and phone calls later, the premiums were paid from escrow by our mortgage servicers as they were supposed to be. The servicer chalked it up to ours being "a new mortgage" and "someone dropped the ball on the paperwork." Can't help but think that if we hadn't gone with a insurer who does a lot of proactive customer service instead of the one we were being steered toward, our plan would have just been dropped and we would be in the same position. Our servicer is not BoA FWIW. But if they were doing the same thing, I'll be looking to throw our story on the pile of firewood used to burn the bastards.
posted by Fezboy! at 5:41 AM on March 15, 2011 [9 favorites]
posted by Fezboy! at 5:41 AM on March 15, 2011 [9 favorites]
Don't want to pay their ridiculously high rates? Then keep insurance in place as your loan documents require. If you do that, the lender can't touch you.
My understanding is insurance was in place in many of these cases. It was escrowed but the premiums weren't paid. That is absolutely not the homeowner's fault, nor should it be their responsibility.
This is not fraud, and it's not a surprise to anybody who bothered to even scan their loan documents.
It's your fault, dumbass. It's right there on page 23, paragraph 4b, subparagraph 20. It's not my fault you can't read legalese. It's not like I'm trying to put anything past you. I have nothing but your interest at heart.
How many corporations have to be exposed as thieves before anything sinks in?
posted by Benny Andajetz at 5:41 AM on March 15, 2011 [14 favorites]
My understanding is insurance was in place in many of these cases. It was escrowed but the premiums weren't paid. That is absolutely not the homeowner's fault, nor should it be their responsibility.
This is not fraud, and it's not a surprise to anybody who bothered to even scan their loan documents.
It's your fault, dumbass. It's right there on page 23, paragraph 4b, subparagraph 20. It's not my fault you can't read legalese. It's not like I'm trying to put anything past you. I have nothing but your interest at heart.
How many corporations have to be exposed as thieves before anything sinks in?
posted by Benny Andajetz at 5:41 AM on March 15, 2011 [14 favorites]
gd779: "Don't want to pay their ridiculously high rates? Then keep insurance in place as your loan documents require. If you do that, the lender can't touch you."
From what I saw in the articles, they cite situations where the mortgage servicer was collecting money in an escrow account to pay the insurance. They failed to do so when the bill came, which left the homeowners without insurance through no fault of their own, besides trusting the servicer to do what it was contractually obligated to do. Then the servicer purchased a much higher-priced insurance policy from an insurer willing to give them a kickback for said purchase. That seems incredibly wrong even before we go into what Joe in Australia pointed out.
posted by This Guy at 5:41 AM on March 15, 2011 [4 favorites]
From what I saw in the articles, they cite situations where the mortgage servicer was collecting money in an escrow account to pay the insurance. They failed to do so when the bill came, which left the homeowners without insurance through no fault of their own, besides trusting the servicer to do what it was contractually obligated to do. Then the servicer purchased a much higher-priced insurance policy from an insurer willing to give them a kickback for said purchase. That seems incredibly wrong even before we go into what Joe in Australia pointed out.
posted by This Guy at 5:41 AM on March 15, 2011 [4 favorites]
In other news, people pay more for bottled water than they do for gasoline. Come on folks, you knew it was a scorpion when you picked it up.
posted by Mooski at 5:42 AM on March 15, 2011 [1 favorite]
posted by Mooski at 5:42 AM on March 15, 2011 [1 favorite]
There were also apparently cases where the BofA mortgage servicer purchased back dated insurance from a BofA related company against events that they knew hadn't happened (because they were already in the past). If they found out that someone's insurance had lapsed nine months ago they would take out a policy and back date it nine months and charge them for the nine months all at the same time. This nine months is pure gravy because they already know that they won't have to pay off anything.
posted by jefeweiss at 5:58 AM on March 15, 2011 [1 favorite]
posted by jefeweiss at 5:58 AM on March 15, 2011 [1 favorite]
Could you tell us what you do when your lender 'disappears' the copy of your dec page you faxed them proving that you've always maintained the required coverage? That is what is email chain appears to be discussing....
Ah, yes, this. I sort of skimmed past this, because these allegations are being made by a disgruntled ex-employee (who was fired and then sent a certified letter by the bank's attorney warning him not to set foot on their property again) using evidence that I could dummy-up in my sleep. Something nasty went down with this guy, and in my experience disgruntled ex-employees who make anonymous reports usually aren't very reliable. So I discounted this part of the allegation.
Assuming that this is in fact what happened, I would of course agree that this is fraud. However: do you have any idea how big Bank of America is? The fact that a couple of rogue agents somewhere in the organization might have done this doesn't indict the entire company, MUCH LESS the entire financial industry.
That's not to defend Bank of America's actual practices: waiting until a borrower has defaulted, and then springing outrageously high fees on them is a slimy way to do business, and it might very well be an excellent reason to refinance your B of A home loan with another lender (perhaps someone more friendly, like your local credit union or a community bank). And from what I hear of Bank of America, there's lots of other good reasons to avoid their "customer service" practices. But that doesn't make it fraud.
I suspect much of the rest of the industry is the same. Was there opportunistic behavior on the part of the largest residential lenders, and a willingness to screw their customers for short-term profits (especially when those customers were in default)? Probably, and that's a very good reason to avoid those lenders and do business with someone you can trust. But that's as far as it goes.
posted by gd779 at 5:59 AM on March 15, 2011 [1 favorite]
Ah, yes, this. I sort of skimmed past this, because these allegations are being made by a disgruntled ex-employee (who was fired and then sent a certified letter by the bank's attorney warning him not to set foot on their property again) using evidence that I could dummy-up in my sleep. Something nasty went down with this guy, and in my experience disgruntled ex-employees who make anonymous reports usually aren't very reliable. So I discounted this part of the allegation.
Assuming that this is in fact what happened, I would of course agree that this is fraud. However: do you have any idea how big Bank of America is? The fact that a couple of rogue agents somewhere in the organization might have done this doesn't indict the entire company, MUCH LESS the entire financial industry.
That's not to defend Bank of America's actual practices: waiting until a borrower has defaulted, and then springing outrageously high fees on them is a slimy way to do business, and it might very well be an excellent reason to refinance your B of A home loan with another lender (perhaps someone more friendly, like your local credit union or a community bank). And from what I hear of Bank of America, there's lots of other good reasons to avoid their "customer service" practices. But that doesn't make it fraud.
I suspect much of the rest of the industry is the same. Was there opportunistic behavior on the part of the largest residential lenders, and a willingness to screw their customers for short-term profits (especially when those customers were in default)? Probably, and that's a very good reason to avoid those lenders and do business with someone you can trust. But that's as far as it goes.
posted by gd779 at 5:59 AM on March 15, 2011 [1 favorite]
My question is, why did Anonymous decide that this week was the best effective time to release these emails? They had two weeks of Charlie Sheen bullshit dominating the news cycle, and they waited until NOW? Were they looking, specifically, for this leak to compete for attention against the biggest story of the year?
These guys aren't that smart.
First, this is not fraud. Its massively unethical, and the mortgage industry has agreed not to do it, but it is not fraud.
Second, they are ripping off the parties that purchase the loan, not the homeowner.
Its this kind of imprecision that drives me nuts. Something does not have to be fraud to be unethical and wrong, ok? So let's stop saying "fraud" when its clearly not.
This is why news orgs don't bite. Because you don't do your homework and oversell them.
posted by Ironmouth at 6:03 AM on March 15, 2011 [1 favorite]
These guys aren't that smart.
First, this is not fraud. Its massively unethical, and the mortgage industry has agreed not to do it, but it is not fraud.
Second, they are ripping off the parties that purchase the loan, not the homeowner.
Its this kind of imprecision that drives me nuts. Something does not have to be fraud to be unethical and wrong, ok? So let's stop saying "fraud" when its clearly not.
This is why news orgs don't bite. Because you don't do your homework and oversell them.
posted by Ironmouth at 6:03 AM on March 15, 2011 [1 favorite]
That's not to defend Bank of America's actual practices: waiting until a borrower has defaulted, and then springing outrageously high fees on them is a slimy way to do business, and it might very well be an excellent reason to refinance your B of A home loan with another lender (perhaps someone more friendly, like your local credit union or a community bank). And from what I hear of Bank of America, there's lots of other good reasons to avoid their "customer service" practices. But that doesn't make it fraud.
Expecting customers to be savvy enough to look out for expertly-placed traps isn't good enough. There needs to be regulation to prevent this. I.e., a regulatory framework which hasn't been captured by the very interests it's meant to be keeping in check.
posted by acb at 6:05 AM on March 15, 2011 [1 favorite]
Expecting customers to be savvy enough to look out for expertly-placed traps isn't good enough. There needs to be regulation to prevent this. I.e., a regulatory framework which hasn't been captured by the very interests it's meant to be keeping in check.
posted by acb at 6:05 AM on March 15, 2011 [1 favorite]
Expecting customers to be savvy enough to look out for expertly-placed traps isn't good enough. There needs to be regulation to prevent this. I.e., a regulatory framework which hasn't been captured by the very interests it's meant to be keeping in check.
You mean, say, a law requiring you to disclose this practice in ALL CAPS (and usually bold letters, too, just to be safe) using consumer-friendly wording provided by the legislature? At least in Illinois, that's already the law. I suspect that's the case in other states too.
No amount of regulation can protect a borrower who doesn't bother to read the disclosures provided by the lender.
posted by gd779 at 6:10 AM on March 15, 2011
You mean, say, a law requiring you to disclose this practice in ALL CAPS (and usually bold letters, too, just to be safe) using consumer-friendly wording provided by the legislature? At least in Illinois, that's already the law. I suspect that's the case in other states too.
No amount of regulation can protect a borrower who doesn't bother to read the disclosures provided by the lender.
posted by gd779 at 6:10 AM on March 15, 2011
Don't want to pay their ridiculously high rates? Then keep insurance in place as your loan documents require. If you do that, the lender can't touch you.
Did you miss the part where the servicer intentionally let the mortgage holder's insurance policy lapse after taking their payments and ostensibly placing them in escrow to cover the premiums? I think you did.
That's where the "forced" in "forced place insurance fraud" comes from.
posted by T.D. Strange at 6:11 AM on March 15, 2011 [5 favorites]
Did you miss the part where the servicer intentionally let the mortgage holder's insurance policy lapse after taking their payments and ostensibly placing them in escrow to cover the premiums? I think you did.
That's where the "forced" in "forced place insurance fraud" comes from.
posted by T.D. Strange at 6:11 AM on March 15, 2011 [5 favorites]
You are confusing AIG with every other insurance company in the world.
Flesh this out for me gd779.
If mortgage insurance was not a fraud, then it should have worked, and all of those underwater homeowners who stopped making their monthly payments would have been covered and the insurance industry - and not the taxpayer - would have made the banks whole.
But AIG - and apparently every other insurance company in the world - was unable to make good on those claims.
Mismanagement per se is not fraud but I repeat myself and say that selling an insurance product without the financial means to make good on claims is. The latter seems to be absolutely what was going on.
posted by three blind mice at 6:29 AM on March 15, 2011 [4 favorites]
Flesh this out for me gd779.
If mortgage insurance was not a fraud, then it should have worked, and all of those underwater homeowners who stopped making their monthly payments would have been covered and the insurance industry - and not the taxpayer - would have made the banks whole.
But AIG - and apparently every other insurance company in the world - was unable to make good on those claims.
Mismanagement per se is not fraud but I repeat myself and say that selling an insurance product without the financial means to make good on claims is. The latter seems to be absolutely what was going on.
posted by three blind mice at 6:29 AM on March 15, 2011 [4 favorites]
Mortgage Insurance is not the same as hazard insurance. mortgage insurance reimburses the lender for any losses resulting from you not making your payments and the house going to foreclosure sale. Hazard insurance protects the lender (and you) in case the house burns down. They are two completely different things.
posted by ValkoSipuliSuola at 6:33 AM on March 15, 2011 [1 favorite]
posted by ValkoSipuliSuola at 6:33 AM on March 15, 2011 [1 favorite]
Every day I feel like more and more of a chump for paying my mortgage.
There's still time.
posted by fusinski at 6:36 AM on March 15, 2011 [1 favorite]
There's still time.
posted by fusinski at 6:36 AM on March 15, 2011 [1 favorite]
Listen, here's what we all have to do, and I'm totally fucking serious:
1. Withdraw all of our assets from banks and close our accounts.
2. Put our money in credit unions, and if there isn't one where we live, start credit unions.
3. stop borrowing money: the finance industry gouges us by trading our debt. If we all have less debt, finance has less relevance, and eventually fewer huge piles of our money to siphon.
posted by Jon_Evil at 6:41 AM on March 15, 2011 [12 favorites]
1. Withdraw all of our assets from banks and close our accounts.
2. Put our money in credit unions, and if there isn't one where we live, start credit unions.
3. stop borrowing money: the finance industry gouges us by trading our debt. If we all have less debt, finance has less relevance, and eventually fewer huge piles of our money to siphon.
posted by Jon_Evil at 6:41 AM on March 15, 2011 [12 favorites]
Well, at least we can take comfort that a Fed Report Finds No Wrongful Foreclosures By Banks. All those houses that BoA foreclosed on, even though they didn't hold a mortgage on them were behind on their payments - even the ones bought for cash.
posted by Kirth Gerson at 6:43 AM on March 15, 2011 [3 favorites]
posted by Kirth Gerson at 6:43 AM on March 15, 2011 [3 favorites]
re: fed report. oh for fuck's sake. I'm getting my pitchfork and torch.
posted by Jon_Evil at 6:46 AM on March 15, 2011
posted by Jon_Evil at 6:46 AM on March 15, 2011
three blind mice - You are very confused.
AIG (and the monolines, although they were not bailed out) insured securities that consisted of mortgages that had been sliced and diced. They buyers of this insurance were they people who bought the sliced and diced mortgages in case homeowners defaulted.
Mortgage Insurance - Is purchased by the homeowner for the benefit of the mortgage underwriter/holder.
What this particular article refers to is the Homeowners insurance that every mortgage holder is required to carry. It is property and casualty insurance that covers the home for damages. It has nothing to do with the mortgage other than the way homeowners insurance gets paid on a house with a mortgage is by a payment to the mortgage servicer who transfers the money to an escrow account to pay the insurance company. In this particular instance what they are refering to is that if the homeowner stops paying his mortgage, he also stops paying his homeowners insurance. The servicer is then obligated to force in place a new P&C carrier. What the sleaziness is (And this is not a new thing, its been going on for decades), is that the new carrier usually sells the insurance at insanely overpriced rates - and either gets a kickback from the insurer, or actually owns the insurer.
The more damning allegation is that banks willfully and knowingly misplaced escrow payments so they could force in place these very profitable super overpriced policies.
The former is legal but sleazy, the latter is illegal if it was being done intentionally.
posted by JPD at 6:46 AM on March 15, 2011 [4 favorites]
AIG (and the monolines, although they were not bailed out) insured securities that consisted of mortgages that had been sliced and diced. They buyers of this insurance were they people who bought the sliced and diced mortgages in case homeowners defaulted.
Mortgage Insurance - Is purchased by the homeowner for the benefit of the mortgage underwriter/holder.
What this particular article refers to is the Homeowners insurance that every mortgage holder is required to carry. It is property and casualty insurance that covers the home for damages. It has nothing to do with the mortgage other than the way homeowners insurance gets paid on a house with a mortgage is by a payment to the mortgage servicer who transfers the money to an escrow account to pay the insurance company. In this particular instance what they are refering to is that if the homeowner stops paying his mortgage, he also stops paying his homeowners insurance. The servicer is then obligated to force in place a new P&C carrier. What the sleaziness is (And this is not a new thing, its been going on for decades), is that the new carrier usually sells the insurance at insanely overpriced rates - and either gets a kickback from the insurer, or actually owns the insurer.
The more damning allegation is that banks willfully and knowingly misplaced escrow payments so they could force in place these very profitable super overpriced policies.
The former is legal but sleazy, the latter is illegal if it was being done intentionally.
posted by JPD at 6:46 AM on March 15, 2011 [4 favorites]
If mortgage insurance was not a fraud, then it should have worked, and all of those underwater homeowners who stopped making their monthly payments would have been covered and the insurance industry - and not the taxpayer - would have made the banks whole.
But AIG - and apparently every other insurance company in the world - was unable to make good on those claims.
Actually this is pretty much not true. Basically all of the claims have been fuliflled when they've been made. The bigger issue has to do with the nature of mark-to-market accounting versus how the insurance payouts were structured.
posted by JPD at 6:54 AM on March 15, 2011
But AIG - and apparently every other insurance company in the world - was unable to make good on those claims.
Actually this is pretty much not true. Basically all of the claims have been fuliflled when they've been made. The bigger issue has to do with the nature of mark-to-market accounting versus how the insurance payouts were structured.
posted by JPD at 6:54 AM on March 15, 2011
This is interesting but not a leak to the degree of the state department or HBGary, and (even in this thread) the veracity of the leaker is easier to impugn. BOA is probably thanking their lucky stars it was just PNGs of a few dozen emails, not a whole mailspool.
posted by These Premises Are Alarmed at 7:01 AM on March 15, 2011
posted by These Premises Are Alarmed at 7:01 AM on March 15, 2011
three blind mice - You are very confused.
No longer. Thanks for the clarification JPD.
Too many crimes and too many criminals to keep track of.
posted by three blind mice at 7:24 AM on March 15, 2011
No longer. Thanks for the clarification JPD.
Too many crimes and too many criminals to keep track of.
posted by three blind mice at 7:24 AM on March 15, 2011
Also, does anyone else feel like this Anonymous has a very different 'voice' than previous releases? A little less polished?
posted by These Premises Are Alarmed at 7:30 AM on March 15, 2011 [1 favorite]
posted by These Premises Are Alarmed at 7:30 AM on March 15, 2011 [1 favorite]
First, this is not fraud. Its massively unethical, and the mortgage industry has agreed not to do it, but it is not fraud.
Well, it depends on when the servicer formed the intent to withhold the policy payments and force default. If they collected funds into an escrow account without ever intending to pay them as directed, in order to get a kickback from the insurers, I'd call that fraud.
posted by palliser at 7:33 AM on March 15, 2011 [2 favorites]
Well, it depends on when the servicer formed the intent to withhold the policy payments and force default. If they collected funds into an escrow account without ever intending to pay them as directed, in order to get a kickback from the insurers, I'd call that fraud.
posted by palliser at 7:33 AM on March 15, 2011 [2 favorites]
In regards to the violence against bullies, I will add again this:
This will continue until the rich are afraid of or show respect to the middle class and the poor. I don't care how we get there, but it needs to be soon.
posted by Fuka at 7:34 AM on March 15, 2011 [3 favorites]
This will continue until the rich are afraid of or show respect to the middle class and the poor. I don't care how we get there, but it needs to be soon.
posted by Fuka at 7:34 AM on March 15, 2011 [3 favorites]
Also, does anyone else feel like this Anonymous has a very different 'voice' than previous releases? A little less polished?
Every Anonymous has a different voice. It's not a formal group. Kind of like Al-Qaeda. OMFGGGGG
posted by mek at 7:34 AM on March 15, 2011 [1 favorite]
Every Anonymous has a different voice. It's not a formal group. Kind of like Al-Qaeda. OMFGGGGG
posted by mek at 7:34 AM on March 15, 2011 [1 favorite]
This is not "insurance you didn't even need," as Anon's source alleged.
I disagree.
This is the same thing as PMI, where you are basically paying insurance on your own inability to pay a mortgage. You're betting against yourself in essence.
CPI is no different. Think I'm not going to cover my house adequately? Then take out your own damn insurance. Making me pay for it is scam that wouldn't be legal if the banks and mortgage companies hadn't bought themselves a closed system.
(and yes, I am well aware of the disclosure in your mortgage documents. Doesn't change a thing)
posted by madajb at 7:40 AM on March 15, 2011 [1 favorite]
I disagree.
This is the same thing as PMI, where you are basically paying insurance on your own inability to pay a mortgage. You're betting against yourself in essence.
CPI is no different. Think I'm not going to cover my house adequately? Then take out your own damn insurance. Making me pay for it is scam that wouldn't be legal if the banks and mortgage companies hadn't bought themselves a closed system.
(and yes, I am well aware of the disclosure in your mortgage documents. Doesn't change a thing)
posted by madajb at 7:40 AM on March 15, 2011 [1 favorite]
My question is, why did Anonymous decide...
What makes you think Anonymous is a group with a decision making process?
So let's stop saying "fraud" when its clearly not.
You mean like saying 'theft' when it's clearly 'file sharing'? People like to use emotionally charged terminology instead strictly accurate vocabulary, I don't think a short comment on Metafilter is going to damn that particular flow.
posted by robertc at 7:43 AM on March 15, 2011
What makes you think Anonymous is a group with a decision making process?
So let's stop saying "fraud" when its clearly not.
You mean like saying 'theft' when it's clearly 'file sharing'? People like to use emotionally charged terminology instead strictly accurate vocabulary, I don't think a short comment on Metafilter is going to damn that particular flow.
posted by robertc at 7:43 AM on March 15, 2011
1) You pay PMI because you don't have 20% to put down. It isn't a fraud. Its part of the deal. You don't want to pay it - prove you have the financial where with all for a loan by saving 20%. Everyone else in the world manages to do that at least - why shouldn't Americans.
2) No idea what CPI is, but you do buy your own homeowners insurance. It's only if you default that this bullshit happens to you, or if the bank fucks up. It is fair to say its bullshit that its so overpriced, but then don't default. Besides if you actually are defaulting the person actually getting screwed is the note holder not the homeowner - the insurance has to be paid off before the note holder gets his cash.
posted by JPD at 7:47 AM on March 15, 2011 [2 favorites]
2) No idea what CPI is, but you do buy your own homeowners insurance. It's only if you default that this bullshit happens to you, or if the bank fucks up. It is fair to say its bullshit that its so overpriced, but then don't default. Besides if you actually are defaulting the person actually getting screwed is the note holder not the homeowner - the insurance has to be paid off before the note holder gets his cash.
posted by JPD at 7:47 AM on March 15, 2011 [2 favorites]
First, this is not fraud. Its massively unethical, and the mortgage industry has agreed not to do it, but it is not fraud.
This is not a hat. It may have a crown and a brim and be worn on your head to keep the sun and rain from your face, and you may have purchased it at a haberdashery, but it is clearly not called a hat, see right here on the label? It's a "protective head covering." Not a hat.
Did it turn into corrupt industry apologist week on metafilter? Nuclear power is perfectly safe. Banks have every right to rip you off. I don't recognize this place.
posted by fourcheesemac at 7:56 AM on March 15, 2011 [9 favorites]
This is not a hat. It may have a crown and a brim and be worn on your head to keep the sun and rain from your face, and you may have purchased it at a haberdashery, but it is clearly not called a hat, see right here on the label? It's a "protective head covering." Not a hat.
Did it turn into corrupt industry apologist week on metafilter? Nuclear power is perfectly safe. Banks have every right to rip you off. I don't recognize this place.
posted by fourcheesemac at 7:56 AM on March 15, 2011 [9 favorites]
or if the bank fucks up.
Is that what we're calling intentional deception now?
posted by fourcheesemac at 7:58 AM on March 15, 2011
Is that what we're calling intentional deception now?
posted by fourcheesemac at 7:58 AM on March 15, 2011
How is it intentional deception? Nearly all of the evidence surrounding the entire servicing scandal points to massive failure rather than some planned conspiracy to defraud.
As far as the nature of Forced-In-Place homeowners insurance - it is a concept that dates back to when the banks held whole mortgages that they originated. Pre-1983 when securitization didn't exist.
posted by JPD at 8:01 AM on March 15, 2011
As far as the nature of Forced-In-Place homeowners insurance - it is a concept that dates back to when the banks held whole mortgages that they originated. Pre-1983 when securitization didn't exist.
posted by JPD at 8:01 AM on March 15, 2011
A point of clarification: this practice has not been banned. the AG's settlement is merely a proposal, the banks have not agreed to it, they are in fact lobbying heavily against it, and if they agreed to it it would seriously impact their bottom line, as the linked American banker article alludes to.
posted by Diablevert at 8:01 AM on March 15, 2011 [1 favorite]
posted by Diablevert at 8:01 AM on March 15, 2011 [1 favorite]
I don't care whether it's technically "fraud" or not, it makes me as someone whose mortgage was bought by BOA concerned about whether BOA will fulfill its legal obligations to me (paying insurance from the escrow) even if I pay my mortgage properly.
posted by immlass at 8:07 AM on March 15, 2011 [1 favorite]
posted by immlass at 8:07 AM on March 15, 2011 [1 favorite]
Hi JPD,
I'm reluctant to jump in on this because you're a professional in this field and I'm not. Having said that, your assessment regarding the servicers seems more upbeat than what I have read. I have a hard time understanding much of what is written in this piece, but it seems to me that the case for planned activity on the part of servicers is stronger than you seem to be giving credit to.
If I am wrong, that's cool...I'd just like some insight on the linked article.
posted by Hypnotic Chick at 8:15 AM on March 15, 2011
I'm reluctant to jump in on this because you're a professional in this field and I'm not. Having said that, your assessment regarding the servicers seems more upbeat than what I have read. I have a hard time understanding much of what is written in this piece, but it seems to me that the case for planned activity on the part of servicers is stronger than you seem to be giving credit to.
If I am wrong, that's cool...I'd just like some insight on the linked article.
posted by Hypnotic Chick at 8:15 AM on March 15, 2011
Is it not fraud to sell an insurance product without the ability to make good on claims?
Well auto insurance is legally sold still, at least in Canada. We fear daring to make a claim though. Despite putting enough money into for years on end to buy a new car making a claim might result in the rate being jacked up so that you could buy a new car in 4 years with the money you're paying out. So yes, you'll get your coverage and then be punished for it.
posted by juiceCake at 8:18 AM on March 15, 2011
Well auto insurance is legally sold still, at least in Canada. We fear daring to make a claim though. Despite putting enough money into for years on end to buy a new car making a claim might result in the rate being jacked up so that you could buy a new car in 4 years with the money you're paying out. So yes, you'll get your coverage and then be punished for it.
posted by juiceCake at 8:18 AM on March 15, 2011
If you want an indicator of how evil bankers are here is a curious UK datapoint:
Fred Goodwin gets superinjunction to stop him being called a banker
Fred Godwin would be the man who led RBS into the crapper.
posted by srboisvert at 8:41 AM on March 15, 2011
Fred Goodwin gets superinjunction to stop him being called a banker
Fred Godwin would be the man who led RBS into the crapper.
posted by srboisvert at 8:41 AM on March 15, 2011
Well auto insurance is legally sold still, at least in Canada. We fear daring to make a claim though. Despite putting enough money into for years on end to buy a new car making a claim might result in the rate being jacked up so that you could buy a new car in 4 years with the money you're paying out. So yes, you'll get your coverage and then be punished for it.
As someone who has worked in the personal lines insurance I can say that while that may be a fear that you and others have it isn't a good reflection of the automobile insurance industry in Ontario at least. The rates that insurers can charge are strictly regulated. Even after you have claims. House insurance on the other hand isn't regulated and if you are unfortunate enough to have a house burn down then you are most likely screwed for getting any insurance in the future.
Also the reason your rates are high have nothing to do with replacing your car. That is a trivial cost for an insurance company. It's all about liability. You may have just dented a bumper this time but next time you could kill or - worse from an insurance perspective - maim someone.
This is not to say that insurance isn't filled with frauds and scams - brokers make so little sense for customers I honestly can't fathom why anyone would use them. They have a strong financial interest in screwing you - the more you pay the more they make - the more they move you from company to company the more they make. There is no customer service that can possibly make up for this.
posted by srboisvert at 8:50 AM on March 15, 2011
As someone who has worked in the personal lines insurance I can say that while that may be a fear that you and others have it isn't a good reflection of the automobile insurance industry in Ontario at least. The rates that insurers can charge are strictly regulated. Even after you have claims. House insurance on the other hand isn't regulated and if you are unfortunate enough to have a house burn down then you are most likely screwed for getting any insurance in the future.
Also the reason your rates are high have nothing to do with replacing your car. That is a trivial cost for an insurance company. It's all about liability. You may have just dented a bumper this time but next time you could kill or - worse from an insurance perspective - maim someone.
This is not to say that insurance isn't filled with frauds and scams - brokers make so little sense for customers I honestly can't fathom why anyone would use them. They have a strong financial interest in screwing you - the more you pay the more they make - the more they move you from company to company the more they make. There is no customer service that can possibly make up for this.
posted by srboisvert at 8:50 AM on March 15, 2011
You pay PMI because you don't have 20% to put down. It isn't a fraud.
I did not suggest it was.
Its part of the deal.
Just because something is legal does not make it right or ethical.
posted by madajb at 8:56 AM on March 15, 2011
I did not suggest it was.
Its part of the deal.
Just because something is legal does not make it right or ethical.
posted by madajb at 8:56 AM on March 15, 2011
No idea what CPI is
And yet, here you are participating in a thread about it...
posted by madajb at 8:58 AM on March 15, 2011 [3 favorites]
And yet, here you are participating in a thread about it...
posted by madajb at 8:58 AM on March 15, 2011 [3 favorites]
Fred Goodwin gets superinjunction to stop him being called a banker
Fred - you're mishearing us. I'm sure you a useless banker, but that's not what we're calling you.
posted by MuffinMan at 9:03 AM on March 15, 2011
Fred - you're mishearing us. I'm sure you a useless banker, but that's not what we're calling you.
posted by MuffinMan at 9:03 AM on March 15, 2011
Nothing pisses me off more than the "Yawn, what else is new?" crowd. At least the people arguing that it's not fraud have some contribution other than "Feelin' cool."
Can your brain truly not wrap itself around the idea that having public facts of criminal behavior is a million miles away from shit "everyone knows", or is it just some kind of impulsive narcissist response to make sure everyone knows you saw this coming?
posted by fartron at 9:19 AM on March 15, 2011 [8 favorites]
Can your brain truly not wrap itself around the idea that having public facts of criminal behavior is a million miles away from shit "everyone knows", or is it just some kind of impulsive narcissist response to make sure everyone knows you saw this coming?
posted by fartron at 9:19 AM on March 15, 2011 [8 favorites]
The reason your rates are high have nothing to do with replacing your car... It's all about liability.
Well yes, I am aware of that. Lawsuits can and do occur. Nonetheless, as far as perception goes, you get in an accident, even say, hitting a pole and demolishing your car, you basically screwed. The concept of insurance is to pay into something so that should something happen you're covered and should it not, the insurance companies banks what you paid. But the perception is you pay into it and you pay more into it all the time, despite not making a claim, and then the moment you make a claim, you're basically screwed and may not, in the case of car insurance, ever be able to afford to drive again, even when there is no lawsuit or medical expenses covered.
posted by juiceCake at 9:20 AM on March 15, 2011
Well yes, I am aware of that. Lawsuits can and do occur. Nonetheless, as far as perception goes, you get in an accident, even say, hitting a pole and demolishing your car, you basically screwed. The concept of insurance is to pay into something so that should something happen you're covered and should it not, the insurance companies banks what you paid. But the perception is you pay into it and you pay more into it all the time, despite not making a claim, and then the moment you make a claim, you're basically screwed and may not, in the case of car insurance, ever be able to afford to drive again, even when there is no lawsuit or medical expenses covered.
posted by juiceCake at 9:20 AM on March 15, 2011
What irritates me about this is the timeline and conflation of stories.
Dec-ish 2010: Julian Assange, at the height of his international scariness, hints that he has and will soon deliver damning documents that will "take down a few banks", specifically mentioning BofA. Everyone gets really excited.
Jan 2011: No docs forthcoming. Lots of internet comments to the effect of "boy, can't wait til Assange drops those BofA docs".
Feb 2011: Still nothing, and IIRC Assange backpedals a bit on what he has and how damaging it might be. Most reasonable people come to the conclusion that this is a non-story.
Mar 2011: Reddit explodes with posts about how OMG The Docs Are Finally Here!!! But what is here has nothing whatsoever to do with the BofA hints dropped previously! The doc droppers are not even the same people! It's "Anonymous", which in this case translates to "some guy", dropping an extensive interview with a disgruntled ex-employee who supposedly saw some bad practices going down at work.
For some reason the internet has apparently just kind of decided that this interview is the end-point and result of Assange's threats from last year, when it is obviously not. This is essentially Wikileaks fan fiction.
If I'm a BofA exec this week I'm mopping my brow and smiling at having dodged a bullet. You think anyone is even going to receive disciplinary action over this fart in a windstorm? Keep dreaming.
posted by chaff at 9:25 AM on March 15, 2011 [7 favorites]
Dec-ish 2010: Julian Assange, at the height of his international scariness, hints that he has and will soon deliver damning documents that will "take down a few banks", specifically mentioning BofA. Everyone gets really excited.
Jan 2011: No docs forthcoming. Lots of internet comments to the effect of "boy, can't wait til Assange drops those BofA docs".
Feb 2011: Still nothing, and IIRC Assange backpedals a bit on what he has and how damaging it might be. Most reasonable people come to the conclusion that this is a non-story.
Mar 2011: Reddit explodes with posts about how OMG The Docs Are Finally Here!!! But what is here has nothing whatsoever to do with the BofA hints dropped previously! The doc droppers are not even the same people! It's "Anonymous", which in this case translates to "some guy", dropping an extensive interview with a disgruntled ex-employee who supposedly saw some bad practices going down at work.
For some reason the internet has apparently just kind of decided that this interview is the end-point and result of Assange's threats from last year, when it is obviously not. This is essentially Wikileaks fan fiction.
If I'm a BofA exec this week I'm mopping my brow and smiling at having dodged a bullet. You think anyone is even going to receive disciplinary action over this fart in a windstorm? Keep dreaming.
posted by chaff at 9:25 AM on March 15, 2011 [7 favorites]
Too many crimes that aren't illegal.
posted by tommyD at 9:29 AM on March 15, 2011 [1 favorite]
posted by tommyD at 9:29 AM on March 15, 2011 [1 favorite]
You think anyone is even going to receive disciplinary action over this fart in a windstorm?
If everybody says "You think anyone is even going to receive disciplinary action over this fart in a windstorm?" then yes, absolutely nothing will happen.
posted by Threeway Handshake at 9:32 AM on March 15, 2011
If everybody says "You think anyone is even going to receive disciplinary action over this fart in a windstorm?" then yes, absolutely nothing will happen.
posted by Threeway Handshake at 9:32 AM on March 15, 2011
Don't get me wrong, it's a terrible story and I believe it happened, I just don't see how you get from this poor guy's interview to any kind of prosecution. I hope I'm wrong.
posted by chaff at 9:34 AM on March 15, 2011
posted by chaff at 9:34 AM on March 15, 2011
Wikileaks fanfiction is the perfect phrase for this.
posted by These Premises Are Alarmed at 9:41 AM on March 15, 2011
posted by These Premises Are Alarmed at 9:41 AM on March 15, 2011
My question is, why did Anonymous decide that this week was the best effective time to release these emails?
Perhaps they did not have 'em till this week? Or lacked conformation from other source?
I doubt anyone was thinking "hey, lets sit on this 'till there is an Earthquake that knocks about some rocks that gets a big wave to wash a fish on shore that causes a cat* to fall into a exhaust pipe that causes a generator to not work which causes a meltdown"
*No cats are known to have blocked an exhaust pipe in this case.
posted by rough ashlar at 9:58 AM on March 15, 2011
Perhaps they did not have 'em till this week? Or lacked conformation from other source?
I doubt anyone was thinking "hey, lets sit on this 'till there is an Earthquake that knocks about some rocks that gets a big wave to wash a fish on shore that causes a cat* to fall into a exhaust pipe that causes a generator to not work which causes a meltdown"
*No cats are known to have blocked an exhaust pipe in this case.
posted by rough ashlar at 9:58 AM on March 15, 2011
BofA is a perfect example of a sociopathic corporation running amok in our society. Someone needs to unwind that fucker and give it the corporate death penalty.
The problem with the corporate death penalty is that you get a lot of ordinary workers, who just did a job and had nothing to do with the malfeasance, losing their jobs. Unlike the cells in the body of a condemned criminal, these are actual people with their own lives. Also, unlike a human criminal, a corporation is not indivisible, but has internal processes which can be scrutinised.
Which is where the corporation-as-person metaphor breaks down. It's not good when it gives corporations human natural rights, and it's not good when it treats criminal corporations as if they were first-degree murderers. A better option would be to ditch the metaphor, prosecute those involved in the crime as individuals, according to degree of culpability, and bring in regulations and audits to ensure that the practices in question don't happen again. That way, you don't end up with a lot of bank clerks on the breadline.
posted by acb at 9:59 AM on March 15, 2011
The problem with the corporate death penalty is that you get a lot of ordinary workers, who just did a job and had nothing to do with the malfeasance, losing their jobs. Unlike the cells in the body of a condemned criminal, these are actual people with their own lives. Also, unlike a human criminal, a corporation is not indivisible, but has internal processes which can be scrutinised.
Which is where the corporation-as-person metaphor breaks down. It's not good when it gives corporations human natural rights, and it's not good when it treats criminal corporations as if they were first-degree murderers. A better option would be to ditch the metaphor, prosecute those involved in the crime as individuals, according to degree of culpability, and bring in regulations and audits to ensure that the practices in question don't happen again. That way, you don't end up with a lot of bank clerks on the breadline.
posted by acb at 9:59 AM on March 15, 2011
No idea what CPI is
And yet, here you are participating in a thread about it...
Yeah, I'm gonna have to ask you to explain that one. As someone who has worked in the mortgage servicing industry for many years, I have no idea what you're talking about.
Let me see if I can explain this one more time.
If you have a mortgage on your home, you are required to insure the house against fire, hail, windstorms, lightning, theft, frozen pipes, basically anything that would damage the structure. That's one of the conditions of them loaning you huge piles of money. If you fail to provide your insurance policy info to your lender, they are required by law to send you a letter saying WE DO NOT HAVE YOUR INSURANCE INFO. PLEASE PROVIDE IT ASAP, OTHERWISE WE'LL HAVE TO BUY IT FOR YOU AND IT'S REALLY EXPENSIVE. And it is really expensive. The insurance companies we contracted with (Safeco and Balboa) charged 5-6 times more than Allstate or State Farm would, because to them LPI was WAY riskier.
Anyway, if you ignore the letter IN ALL CAPS that says they don't have a copy of your policy, they will buy a policy for you and charge you for it. Again, they send you a letter WITH LOTS OF ALL CAPS STATEMENTS stating that they have purchased a policy for you and telling you the price of that policy. This letter also says IF YOU ALREADY HAVE INSURANCE, PLEASE SEND US A COPY SO WE CAN CANCEL THIS RIDICULOUSLY OVERPRICED POLICY AND REFUND YOUR ACCOUNT. If you manage to ignore both letters, I have no sympathy for you.
On the other hand, sometimes servicers fuck up. They're staffed by humans after all, and sometimes mistakes happen. Sometimes wires get crossed and payments to insurance companies get lost, or they get sent to the wrong company, or your co-worker goes on maternity leave and while looking through her desk for a pen you find a stack of 3 month old checks in her drawer (true story). Trying to go back through that mess and getting everyone's insurance reinstated was nightmarish, but we got it done. All except for one. The insurance company decided to play hardball and upped the premium amount. They argued that since the policy was canceled for nonpayment, the borrower was considered higher risk (even though it was the lender who didn't pay). So what did we do? We paid the premium difference for the next two years out of our corporate coffers until they dropped the borrower back to the lower risk category. Why? Because it was the non-shitty thing to do, and honestly, she could have sued us over it and won. A lot.
And this was at a truly shady company (that was investigated by both HUD and FHA) long before the "mortgage crisis" hit. We're talking about 2001-2004. If anyone would have tried to scam the borrowers, it would have been this company, and even WE didn't do what this guy is alleging.
What I'm saying is, perhaps we're attributing malice where there is none, but instead gross incompetence. Sure, the letter says BofA or Countrywide or whatever on it, but in reality it's being serviced by some tiny shop in Jacksonville, where half the people have at best a high school diploma and a handful of temp jobs under their belts and make $14 an hour.
posted by ValkoSipuliSuola at 10:08 AM on March 15, 2011 [3 favorites]
And yet, here you are participating in a thread about it...
Yeah, I'm gonna have to ask you to explain that one. As someone who has worked in the mortgage servicing industry for many years, I have no idea what you're talking about.
Let me see if I can explain this one more time.
If you have a mortgage on your home, you are required to insure the house against fire, hail, windstorms, lightning, theft, frozen pipes, basically anything that would damage the structure. That's one of the conditions of them loaning you huge piles of money. If you fail to provide your insurance policy info to your lender, they are required by law to send you a letter saying WE DO NOT HAVE YOUR INSURANCE INFO. PLEASE PROVIDE IT ASAP, OTHERWISE WE'LL HAVE TO BUY IT FOR YOU AND IT'S REALLY EXPENSIVE. And it is really expensive. The insurance companies we contracted with (Safeco and Balboa) charged 5-6 times more than Allstate or State Farm would, because to them LPI was WAY riskier.
Anyway, if you ignore the letter IN ALL CAPS that says they don't have a copy of your policy, they will buy a policy for you and charge you for it. Again, they send you a letter WITH LOTS OF ALL CAPS STATEMENTS stating that they have purchased a policy for you and telling you the price of that policy. This letter also says IF YOU ALREADY HAVE INSURANCE, PLEASE SEND US A COPY SO WE CAN CANCEL THIS RIDICULOUSLY OVERPRICED POLICY AND REFUND YOUR ACCOUNT. If you manage to ignore both letters, I have no sympathy for you.
On the other hand, sometimes servicers fuck up. They're staffed by humans after all, and sometimes mistakes happen. Sometimes wires get crossed and payments to insurance companies get lost, or they get sent to the wrong company, or your co-worker goes on maternity leave and while looking through her desk for a pen you find a stack of 3 month old checks in her drawer (true story). Trying to go back through that mess and getting everyone's insurance reinstated was nightmarish, but we got it done. All except for one. The insurance company decided to play hardball and upped the premium amount. They argued that since the policy was canceled for nonpayment, the borrower was considered higher risk (even though it was the lender who didn't pay). So what did we do? We paid the premium difference for the next two years out of our corporate coffers until they dropped the borrower back to the lower risk category. Why? Because it was the non-shitty thing to do, and honestly, she could have sued us over it and won. A lot.
And this was at a truly shady company (that was investigated by both HUD and FHA) long before the "mortgage crisis" hit. We're talking about 2001-2004. If anyone would have tried to scam the borrowers, it would have been this company, and even WE didn't do what this guy is alleging.
What I'm saying is, perhaps we're attributing malice where there is none, but instead gross incompetence. Sure, the letter says BofA or Countrywide or whatever on it, but in reality it's being serviced by some tiny shop in Jacksonville, where half the people have at best a high school diploma and a handful of temp jobs under their belts and make $14 an hour.
posted by ValkoSipuliSuola at 10:08 AM on March 15, 2011 [3 favorites]
You pay PMI because you don't have 20% to put down. It isn't a fraud.
I did not suggest it was.
Its part of the deal.
Just because something is legal does not make it right or ethical.
Let me rephrase this for you, since you are so convinced its unethical. You pay PMI because a loan with 5% down is riskier then a loan that is 20% down. In most countries you can not get a 5% down mortgage - it.does.not.exist. The "solution" someone came up with in the US was to charge people more money for their low downpayment mortgage to compensate for the higher level of risk. Because of the way housing finance traditionally works in the US, using Fannie and Freddie, it was not politically possible for Fannie and Freddie to take on the added risk of the higher priced/higher risk low downpayment mortgages, instead that added sliver of risk was underwritten by the mortgage insurers via them selling you mortgage insurance. Essentially its Cost of 20% down loan + PMI = Cost of a 3.5% down loan. The weird way the US does it is slightly more expensive then if you rolled it up into one single structure just due to overheads and what not, but it certainly isn't wrong or unethical - unless of course you believe its wrong or unethical to charge people different interest rates based on their perceived creditworthiness. If you honestly believe that, then I hope you have a sterling credit rating.
No idea what CPI is
And yet, here you are participating in a thread about it...
Well I'd like you to tell me what CPI is. You appeared to be referring to Homeowners insurance, and I've not seen that acronym used previously.
posted by JPD at 10:32 AM on March 15, 2011 [1 favorite]
I did not suggest it was.
Its part of the deal.
Just because something is legal does not make it right or ethical.
Let me rephrase this for you, since you are so convinced its unethical. You pay PMI because a loan with 5% down is riskier then a loan that is 20% down. In most countries you can not get a 5% down mortgage - it.does.not.exist. The "solution" someone came up with in the US was to charge people more money for their low downpayment mortgage to compensate for the higher level of risk. Because of the way housing finance traditionally works in the US, using Fannie and Freddie, it was not politically possible for Fannie and Freddie to take on the added risk of the higher priced/higher risk low downpayment mortgages, instead that added sliver of risk was underwritten by the mortgage insurers via them selling you mortgage insurance. Essentially its Cost of 20% down loan + PMI = Cost of a 3.5% down loan. The weird way the US does it is slightly more expensive then if you rolled it up into one single structure just due to overheads and what not, but it certainly isn't wrong or unethical - unless of course you believe its wrong or unethical to charge people different interest rates based on their perceived creditworthiness. If you honestly believe that, then I hope you have a sterling credit rating.
No idea what CPI is
And yet, here you are participating in a thread about it...
Well I'd like you to tell me what CPI is. You appeared to be referring to Homeowners insurance, and I've not seen that acronym used previously.
posted by JPD at 10:32 AM on March 15, 2011 [1 favorite]
Unlike the cells in the body of a condemned criminal, these are actual people with their own lives. Also, unlike a human criminal, a corporation is not indivisible, but has internal processes which can be scrutinised.
Which is where the corporation-as-person metaphor breaks down. It's not good when it gives corporations human natural rights, and it's not good when it treats criminal corporations as if they were first-degree murderers. A better option would be to ditch the metaphor, prosecute those involved in the crime as individuals, according to degree of culpability, and bring in regulations and audits to ensure that the practices in question don't happen again. That way, you don't end up with a lot of bank clerks on the breadline.
Whoo-hoo! Ding-ding-ding-ding! Finally someone else said it perfectly (I never have managed to). This is what is correct, right here. Except for the part about the corporate death penalty. The corporate death penalty should still exist as an option, but when the company's dissolved, its assets should first be used to help ease the displacement of its work force by funding unemployment payments and career-training/placement support. If you occasionally have to screw the shareholders and other creditors in the process, that will discourage investment in less scrupulous enterprises.
posted by saulgoodman at 10:32 AM on March 15, 2011 [5 favorites]
Which is where the corporation-as-person metaphor breaks down. It's not good when it gives corporations human natural rights, and it's not good when it treats criminal corporations as if they were first-degree murderers. A better option would be to ditch the metaphor, prosecute those involved in the crime as individuals, according to degree of culpability, and bring in regulations and audits to ensure that the practices in question don't happen again. That way, you don't end up with a lot of bank clerks on the breadline.
Whoo-hoo! Ding-ding-ding-ding! Finally someone else said it perfectly (I never have managed to). This is what is correct, right here. Except for the part about the corporate death penalty. The corporate death penalty should still exist as an option, but when the company's dissolved, its assets should first be used to help ease the displacement of its work force by funding unemployment payments and career-training/placement support. If you occasionally have to screw the shareholders and other creditors in the process, that will discourage investment in less scrupulous enterprises.
posted by saulgoodman at 10:32 AM on March 15, 2011 [5 favorites]
Well I'd like you to tell me what CPI is.
Collateral protection insurance. In the home mortgage context, it's synonymous with homeowner's insurance (either owner-purchased or lender-purchased) as far as I can tell.
posted by jedicus at 10:43 AM on March 15, 2011
Collateral protection insurance. In the home mortgage context, it's synonymous with homeowner's insurance (either owner-purchased or lender-purchased) as far as I can tell.
posted by jedicus at 10:43 AM on March 15, 2011
You know, I keep seeing the argument against the corporate death penalty rendered as "Yes, but if we shut down this terrible corporation all of the low-level employees wouldn't be able to pay mortgages!" But, if wages within a firm are distributed in the same proportion that wealth is at the level of the whole economy (which may not be a tenable hypothesis, I'm not an economist) then the bottom 80% of the workers are only responsible for 20% of the labor costs. I doubt it's quite that severe, but is there any reason that an implementation of the 'corporate death penalty' couldn't provide at least severance pay for departing workers? It seems like a comparatively small amount of money, especially considering that any such corporation would probably be forced into recievership, and cover the costs by selling assets.
Am I totally off base here?
posted by nerdinexile at 11:03 AM on March 15, 2011
Am I totally off base here?
posted by nerdinexile at 11:03 AM on March 15, 2011
You don't need a "corporate death penalty" you just need to fine companies until the equity is worthless and bond holders take a haircut. That'll change corporate behavior in a split second. When was the last time a court forced a company into bankruptcy for their behavior?
posted by JPD at 11:08 AM on March 15, 2011
posted by JPD at 11:08 AM on March 15, 2011
It seems the main purpose of leaks are to confirm what we already know.
If I was a police office, I'd probably suggest the whole purpose of jury trials is merely to confirm what I already know.
And that's a good thing. "What we know" and "what we can prove" may be two different things.
posted by rodgerd at 11:32 AM on March 15, 2011 [2 favorites]
If I was a police office, I'd probably suggest the whole purpose of jury trials is merely to confirm what I already know.
And that's a good thing. "What we know" and "what we can prove" may be two different things.
posted by rodgerd at 11:32 AM on March 15, 2011 [2 favorites]
You know, mortgage companies are guilty of doing some really awful and illegal things, and I get the outrage. I really do. There are LOTS of reasons to be angry, and believe me I was screaming about them ten years ago as an employee, but this is not one of those cases. But this just seems like one of those times where you all just want to get your GRAR on, reason be damned. Just because you don't want to pay for something doesn't make it illegal or unethical, and the fact that you don't like something doesn't make it wrong.
forced insurance, it should be noted, protects the lender, but not the borrower
Yes and no. LPI (lender placed insurance aka force placed insurance) insures the property against damages. It does not cover contents, because let's face it, the lender doesn't give a shit about your stereo system. That's not part of the collateral securing the loan, so if your house burns to the ground, your mortgage is paid off, but it won't replace your stuff.
If they found out that someone's insurance had lapsed nine months ago they would take out a policy and back date it nine months and charge them for the nine months all at the same time
You're damn right they do. They're not going to send someone out to your house to make sure that you didn't have any water leaks, electrical shorts, or hail damage to your roof during the time the house was uninsured. And it's not like they have 24/7 security footage of your property to make sure no one slipped and fell on your front porch and just hasn't gotten around to suing you yet. They make sure that property is insured every second of every day to cover their own asses. I don't see the problem there.
Bank of America Corp. owns a force-placed insurance subsidiary, and most other major servicers receive commissions or reinsurance fees on the very same policies they purchase on investors' and borrowers' behalf.
This is a serious problem, highly unethical, and the government needs to shut it down. Now.
As for PMI ( MI, mortgage insurance), it's a well known fact that the more money you sink in to your house, the less likely you are to default and let it go to foreclosure. If you put $40k in cash as a down payment on your $200k house, you're not very likely to just walk away from it. You're much more likely to do anything and everything you can not to lose the house and your investment in it. The less you put down, the easier it is to walk away, the higher the risk. That's just common sense.
When a lender forecloses on a house, they lose on average 20-25% right off the bat. Seriously. If a home is valued at $100k the lender is lucky to net $80k after paying legal fees, realtors, utilities, delinquent property taxes, etc. If you borrowed $95k (meaning you put less than 20% down and were required to have mortgage insurance), the insurer will reimburse the lender for their losses. Don't want to pay for MI? Put more money down. It's as simple as that.
posted by ValkoSipuliSuola at 11:56 AM on March 15, 2011 [2 favorites]
forced insurance, it should be noted, protects the lender, but not the borrower
Yes and no. LPI (lender placed insurance aka force placed insurance) insures the property against damages. It does not cover contents, because let's face it, the lender doesn't give a shit about your stereo system. That's not part of the collateral securing the loan, so if your house burns to the ground, your mortgage is paid off, but it won't replace your stuff.
If they found out that someone's insurance had lapsed nine months ago they would take out a policy and back date it nine months and charge them for the nine months all at the same time
You're damn right they do. They're not going to send someone out to your house to make sure that you didn't have any water leaks, electrical shorts, or hail damage to your roof during the time the house was uninsured. And it's not like they have 24/7 security footage of your property to make sure no one slipped and fell on your front porch and just hasn't gotten around to suing you yet. They make sure that property is insured every second of every day to cover their own asses. I don't see the problem there.
Bank of America Corp. owns a force-placed insurance subsidiary, and most other major servicers receive commissions or reinsurance fees on the very same policies they purchase on investors' and borrowers' behalf.
This is a serious problem, highly unethical, and the government needs to shut it down. Now.
As for PMI ( MI, mortgage insurance), it's a well known fact that the more money you sink in to your house, the less likely you are to default and let it go to foreclosure. If you put $40k in cash as a down payment on your $200k house, you're not very likely to just walk away from it. You're much more likely to do anything and everything you can not to lose the house and your investment in it. The less you put down, the easier it is to walk away, the higher the risk. That's just common sense.
When a lender forecloses on a house, they lose on average 20-25% right off the bat. Seriously. If a home is valued at $100k the lender is lucky to net $80k after paying legal fees, realtors, utilities, delinquent property taxes, etc. If you borrowed $95k (meaning you put less than 20% down and were required to have mortgage insurance), the insurer will reimburse the lender for their losses. Don't want to pay for MI? Put more money down. It's as simple as that.
posted by ValkoSipuliSuola at 11:56 AM on March 15, 2011 [2 favorites]
When was the last time a court forced a company into bankruptcy for their behavior?
Well, if the behavior was not managing their finances properly--and the company wasn't a bank--that happens all the time. If it's a bank, though, the rules change. And that's the problem.
posted by saulgoodman at 12:04 PM on March 15, 2011
Well, if the behavior was not managing their finances properly--and the company wasn't a bank--that happens all the time. If it's a bank, though, the rules change. And that's the problem.
posted by saulgoodman at 12:04 PM on March 15, 2011
First, this is not fraud. Its massively unethical, and the mortgage industry has agreed not to do it, but it is not fraud.
This is not a hat. It may have a crown and a brim and be worn on your head to keep the sun and rain from your face, and you may have purchased it at a haberdashery, but it is clearly not called a hat, see right here on the label? It's a "protective head covering." Not a hat.
Did it turn into corrupt industry apologist week on metafilter? Nuclear power is perfectly safe. Banks have every right to rip you off. I don't recognize this place.
Don't get me wrong. I think it is at best incredibly unethical and at worst illegal. I am just saying it is not "fraud." It is very important to be accurate here or the bad guys use the inaccuracy to wrongly complain the information shows no wrongdoing.
Don't believe me? Check this BBC article:
The minute you get the facts wrong, you have zero story, zero.
The mortgage industry has done a lot of terrible, terrible things in the last few years. But you only help them when you botch the attack at the last minute like these bozos did. The next time they get something good, nobody is going to believe them.
posted by Ironmouth at 12:12 PM on March 15, 2011 [3 favorites]
This is not a hat. It may have a crown and a brim and be worn on your head to keep the sun and rain from your face, and you may have purchased it at a haberdashery, but it is clearly not called a hat, see right here on the label? It's a "protective head covering." Not a hat.
Did it turn into corrupt industry apologist week on metafilter? Nuclear power is perfectly safe. Banks have every right to rip you off. I don't recognize this place.
Don't get me wrong. I think it is at best incredibly unethical and at worst illegal. I am just saying it is not "fraud." It is very important to be accurate here or the bad guys use the inaccuracy to wrongly complain the information shows no wrongdoing.
Don't believe me? Check this BBC article:
The leak, which includes correspondence between staff at BoA subsidiary Balboa Insurance, details plans to delete sensitive documents.This is the big fucking leagues. They don't play for chump change. I spent last night trying to convince a network evening news producer to take a story. You want exposure? GET THE FACTS EXACTLY RIGHT.
It does not explain why the files were to be removed or how this supports Anonymous' accusation of criminality.
Bank of America has denied wrongdoing and called the claims "extravagant".
The minute you get the facts wrong, you have zero story, zero.
The mortgage industry has done a lot of terrible, terrible things in the last few years. But you only help them when you botch the attack at the last minute like these bozos did. The next time they get something good, nobody is going to believe them.
posted by Ironmouth at 12:12 PM on March 15, 2011 [3 favorites]
If you put $40k in cash as a down payment on your $200k house, you're not very likely to just walk away from it. You're much more likely to do anything and everything you can not to lose the house and your investment in it. The less you put down, the easier it is to walk away, the higher the risk. That's just common sense.
I understand that. But don't think that the bank gets nicer when the pendulum swings the other way. I bought my last house at the top of the market (long story, but the timing sucked).
I had a good job, had sacked away some dough, and thought I was being responsible by paying 50% down.
So, like a lot of people, I lost my job in Dec. of 2008 and have limped along ever since. I went from making good money to making ,basically, nothing. I approached the lender about the Making Homes affordable program, was told that I qualified - and then totally dicked around for 18 months. They made every excuse to not help me - until I gave up.
Why did they dick me? Easy. It's all my skin in the game. The shoes on the other foot, as it were. It doesn't surprise me in the least that they are fighting these changes in the rules - it would be like handing over their pistol.
Fuck banks and mortgage companies.
posted by Benny Andajetz at 12:14 PM on March 15, 2011 [2 favorites]
I understand that. But don't think that the bank gets nicer when the pendulum swings the other way. I bought my last house at the top of the market (long story, but the timing sucked).
I had a good job, had sacked away some dough, and thought I was being responsible by paying 50% down.
So, like a lot of people, I lost my job in Dec. of 2008 and have limped along ever since. I went from making good money to making ,basically, nothing. I approached the lender about the Making Homes affordable program, was told that I qualified - and then totally dicked around for 18 months. They made every excuse to not help me - until I gave up.
Why did they dick me? Easy. It's all my skin in the game. The shoes on the other foot, as it were. It doesn't surprise me in the least that they are fighting these changes in the rules - it would be like handing over their pistol.
Fuck banks and mortgage companies.
posted by Benny Andajetz at 12:14 PM on March 15, 2011 [2 favorites]
I can't tell from looking at these screenshots if any fraud occurred, but I'm doubtful. Why? Because the person who expresses worry about audit compliance, Jason Vaughn, is the same person who asked for the images to be removed from the DTNs. Joanne Anderson, apparently in the IT department, tells him that he can't have the images removed as requested but can have them disconnected from the loans, and he responds by saying he's not sure that that's appropriate. He wants to remove incorrect information - a copy of a letter that was sent in error, and which would result in further errors if left in place - but does not want to obscure the fact that an error took place.
On the contrary, he wants to preserve the record of the error to ensure the auditor can understand what took place. If one person was requesting a deletion, and someone else was opposing it, then a cover up might be taking place. But if the person who requested a deletion is also concerned about maintaining an accurate history of changes to the file, that's pretty much the opposite of a cover-up.
Bank Of America is so fucked up with their mortgages in so many ways. They routinely foreclose on properties which aren't even mortgages, let alone mortgages with BofA [...]
How frequently does this happen? It's not that I don't agree these things are disgraceful. I have no sympathy for BofA or their recent acquisitions such as Countrywide. I certainly don't own any shares or work for any of these companies. But when you say this is a matter of routine, that this is the norm, then you're making fairly serious allegations. So put a number on it: what percentage of mortgages/titles are affected by this? And if you don't have a number, why not? I object to unqualified handwaving, because that's exactly what allows companies to blow off legitimate criticism. If you want your criticisms to stick, then make them accurate and give people a detail they can repeat and a reference they can cite. Otherwise you're going down the same road as this guy.
It doesn't surprise me in the least that they may have a systemic problem which allows them to get away with basic insurance fraud.
By definition, it's not fraud if it isn't deliberate. Now, such routine incompetence is unacceptable and might be a kind of professional negligence, but calling it fraud when it obviously is not just confuses and misleads people even more. The FPP alludes to the fact that this practice of requiring and servicing forced-place insurance has just been forbidden under the settlement with the state AGs (if it goes through); that is equivalent to observing that it was not forbidden before.
Yes, yes, this seems so pernickety...but as pointed out upthread, borrowers do have some responsibilities. For example, the responsibility to read one's loan documents; and while some posters complain they don't read legalese, or that regulators should take care of this, that's what lawyers are for. As this case from 2006 shows (hilariously and in English) you do, in fact, need a lawyer. Even though mortgage issuers are required to disclose things like a requirement for mortgage insurance in BOLD ALL CAPS on the front page of a mortgage contract, it's still up to the borrower to read this and think about what it means - and if it's not completely obvious, to hire a professional to explain it to them before they sign.
No matter how consumer-friendly you make the law - and I think it should be as consumer-friendly as possible - borrowing money to buy property is still a big complex transaction. Typically it involves several hundreds of thousands of dollars to be paid back over two or three decades. If some friend or relative came to you and said 'I'm thinking about entering into a business transaction for about a quarter of a million bucks, which will involve a 25 year business relationship, do you think I should chat to a lawyer before I sign?' then you wouldn't think twice about saying 'hell yes you should!' That's a lot of money and a long time, any number of things might happen and you need to be very clear about what sort of deal you're getting into. So why should it be any different for buying a house? It's a similar amount of money and a time, and a similar amount of potential complexity. We all need a place to live and we've all experienced living in a house or an apartment, but that doesn't mean that buying one is necessarily simple.
The point here is not that Bank of America should get off the hook (if it has broken any laws) or that people should be happy to deal with them (if they haven't broken the law but are behaving unethically); the point is that borrowers have a responsibility to know what they're getting into, and to walk away if they don't like the terms of the deal, even if that means passing up something they want in the short term. Part of the deal with getting a long-term loan is insurance. If it was your $250 grand that was being lent to someone else, you would want some kind of contingency plan in place. so contrary to what this Anonymous leaker says, it is something you need. And if you don't want to buy insurance from the mortgage service company and pay inflated premiums (a sensible preference), then you need to be aware in advance of what sort of insurance the loan requires, and make sure that you have it; and if you run into money problems you need to know very clearly which payments have priority and how to get the insurance policy to pay out.
All the comments to the effect that the bank is committing fraud by forcing insurance on people are complete BS. It's as if people who previously had childlike faith in their bank have lost it, only to place their childlike faith in Anonymous - and in this case, an Anonymous person who doesn't seem too good at basic grammar. I'm sorry, but if someone can't string a sentence together properly, why would you trust them to form a legal opinion?
Immlass writes: I don't care whether it's technically "fraud" or not, it makes me as someone whose mortgage was bought by BOA concerned about whether BOA will fulfill its legal obligations to me (paying insurance from the escrow) even if I pay my mortgage properly.
Now this is a sensible position - it's perfectly sensible to be concerned, because the industry is complex and many of the players are doing business in an unethical way, even if it's not illegal. That's a good reason to consider moving your mortgage to a company you feel comfortable with, or hiring a lawyer to scrutinize your existing setup if you have any doubts about it, and learning about title insurance reform - which I think will require the creation of a national title registration system and
property survey.
Mrs. Browl & I don't own a home at present, though we've been looking after sitting the boom out. But anyone who does own a home is paying (either directly or indirectly) for title insurance and the existence of systems like MERS - a system which it is popular to demonize as part of the problem, but which was set up in order to reduce the uncertainty from dealing with 50 different state systems for tracking title to real property, many of which are hopelessly antiquated. A national title registry ought (in my view) to be a public resource rather than a private one operated for the benefit of lenders, but despite all its flaws MERS helped to keep costs down for borrowers and prevent a variety of criminal scams which took advantage of obscure quirks in state title registration laws.
Considering that the US invented the GPS system and has launched more satellites than any other nation, we should have a consistent national system employing modern technology, for the same reason that you expect your credit or debit card to just work regardless of which state you happen to be in, and indeed for the same reason that you rely on a US dollar being legal tender anywhere in the US: to foster economic activity by keeping economic transactions predictable, reliable and affordable. Sale of property is a very common transaction, and needs to be brought into the 21st century. MERS was an attempt to do that, even if it was a flawed one; it worked well enough during the boom that people overlooked some of its serious shortcomings. So now we should learn the lessons from that and press for a better national title registry. It's very much in the interest of anyone who owns property to have a reliable system of title registration, so that they can sell or borrow against their property if the need arises. And as residential property owners can collectively wield a great deal of influence over politicians when they choose to do so, they need to organize and push for this. It does set up a federal vs. state conflict (because a federally-operated registry would put state registries and clerks out of business), but because it seeks only to correctly identify and record real property, and not confer any particular benefit on anyone, it can be promoted as a non-partisan measure. If it's framed as an attack on Wall Street, it will fail. If it's proposed as a joint project of the US Geological Survey, the Department of the Interior, and the US postal service, then it has a strong chance of success.
posted by anigbrowl at 12:36 PM on March 15, 2011 [3 favorites]
On the contrary, he wants to preserve the record of the error to ensure the auditor can understand what took place. If one person was requesting a deletion, and someone else was opposing it, then a cover up might be taking place. But if the person who requested a deletion is also concerned about maintaining an accurate history of changes to the file, that's pretty much the opposite of a cover-up.
Bank Of America is so fucked up with their mortgages in so many ways. They routinely foreclose on properties which aren't even mortgages, let alone mortgages with BofA [...]
How frequently does this happen? It's not that I don't agree these things are disgraceful. I have no sympathy for BofA or their recent acquisitions such as Countrywide. I certainly don't own any shares or work for any of these companies. But when you say this is a matter of routine, that this is the norm, then you're making fairly serious allegations. So put a number on it: what percentage of mortgages/titles are affected by this? And if you don't have a number, why not? I object to unqualified handwaving, because that's exactly what allows companies to blow off legitimate criticism. If you want your criticisms to stick, then make them accurate and give people a detail they can repeat and a reference they can cite. Otherwise you're going down the same road as this guy.
It doesn't surprise me in the least that they may have a systemic problem which allows them to get away with basic insurance fraud.
By definition, it's not fraud if it isn't deliberate. Now, such routine incompetence is unacceptable and might be a kind of professional negligence, but calling it fraud when it obviously is not just confuses and misleads people even more. The FPP alludes to the fact that this practice of requiring and servicing forced-place insurance has just been forbidden under the settlement with the state AGs (if it goes through); that is equivalent to observing that it was not forbidden before.
Yes, yes, this seems so pernickety...but as pointed out upthread, borrowers do have some responsibilities. For example, the responsibility to read one's loan documents; and while some posters complain they don't read legalese, or that regulators should take care of this, that's what lawyers are for. As this case from 2006 shows (hilariously and in English) you do, in fact, need a lawyer. Even though mortgage issuers are required to disclose things like a requirement for mortgage insurance in BOLD ALL CAPS on the front page of a mortgage contract, it's still up to the borrower to read this and think about what it means - and if it's not completely obvious, to hire a professional to explain it to them before they sign.
No matter how consumer-friendly you make the law - and I think it should be as consumer-friendly as possible - borrowing money to buy property is still a big complex transaction. Typically it involves several hundreds of thousands of dollars to be paid back over two or three decades. If some friend or relative came to you and said 'I'm thinking about entering into a business transaction for about a quarter of a million bucks, which will involve a 25 year business relationship, do you think I should chat to a lawyer before I sign?' then you wouldn't think twice about saying 'hell yes you should!' That's a lot of money and a long time, any number of things might happen and you need to be very clear about what sort of deal you're getting into. So why should it be any different for buying a house? It's a similar amount of money and a time, and a similar amount of potential complexity. We all need a place to live and we've all experienced living in a house or an apartment, but that doesn't mean that buying one is necessarily simple.
The point here is not that Bank of America should get off the hook (if it has broken any laws) or that people should be happy to deal with them (if they haven't broken the law but are behaving unethically); the point is that borrowers have a responsibility to know what they're getting into, and to walk away if they don't like the terms of the deal, even if that means passing up something they want in the short term. Part of the deal with getting a long-term loan is insurance. If it was your $250 grand that was being lent to someone else, you would want some kind of contingency plan in place. so contrary to what this Anonymous leaker says, it is something you need. And if you don't want to buy insurance from the mortgage service company and pay inflated premiums (a sensible preference), then you need to be aware in advance of what sort of insurance the loan requires, and make sure that you have it; and if you run into money problems you need to know very clearly which payments have priority and how to get the insurance policy to pay out.
All the comments to the effect that the bank is committing fraud by forcing insurance on people are complete BS. It's as if people who previously had childlike faith in their bank have lost it, only to place their childlike faith in Anonymous - and in this case, an Anonymous person who doesn't seem too good at basic grammar. I'm sorry, but if someone can't string a sentence together properly, why would you trust them to form a legal opinion?
Immlass writes: I don't care whether it's technically "fraud" or not, it makes me as someone whose mortgage was bought by BOA concerned about whether BOA will fulfill its legal obligations to me (paying insurance from the escrow) even if I pay my mortgage properly.
Now this is a sensible position - it's perfectly sensible to be concerned, because the industry is complex and many of the players are doing business in an unethical way, even if it's not illegal. That's a good reason to consider moving your mortgage to a company you feel comfortable with, or hiring a lawyer to scrutinize your existing setup if you have any doubts about it, and learning about title insurance reform - which I think will require the creation of a national title registration system and
property survey.
Mrs. Browl & I don't own a home at present, though we've been looking after sitting the boom out. But anyone who does own a home is paying (either directly or indirectly) for title insurance and the existence of systems like MERS - a system which it is popular to demonize as part of the problem, but which was set up in order to reduce the uncertainty from dealing with 50 different state systems for tracking title to real property, many of which are hopelessly antiquated. A national title registry ought (in my view) to be a public resource rather than a private one operated for the benefit of lenders, but despite all its flaws MERS helped to keep costs down for borrowers and prevent a variety of criminal scams which took advantage of obscure quirks in state title registration laws.
Considering that the US invented the GPS system and has launched more satellites than any other nation, we should have a consistent national system employing modern technology, for the same reason that you expect your credit or debit card to just work regardless of which state you happen to be in, and indeed for the same reason that you rely on a US dollar being legal tender anywhere in the US: to foster economic activity by keeping economic transactions predictable, reliable and affordable. Sale of property is a very common transaction, and needs to be brought into the 21st century. MERS was an attempt to do that, even if it was a flawed one; it worked well enough during the boom that people overlooked some of its serious shortcomings. So now we should learn the lessons from that and press for a better national title registry. It's very much in the interest of anyone who owns property to have a reliable system of title registration, so that they can sell or borrow against their property if the need arises. And as residential property owners can collectively wield a great deal of influence over politicians when they choose to do so, they need to organize and push for this. It does set up a federal vs. state conflict (because a federally-operated registry would put state registries and clerks out of business), but because it seeks only to correctly identify and record real property, and not confer any particular benefit on anyone, it can be promoted as a non-partisan measure. If it's framed as an attack on Wall Street, it will fail. If it's proposed as a joint project of the US Geological Survey, the Department of the Interior, and the US postal service, then it has a strong chance of success.
posted by anigbrowl at 12:36 PM on March 15, 2011 [3 favorites]
Has anyone brought up Dana Milbanks yet? This just happened to him, a real live Villager.
posted by Max Power at 2:45 PM on March 15, 2011 [1 favorite]
posted by Max Power at 2:45 PM on March 15, 2011 [1 favorite]
Hippybear, you didn't say the specific words 'this is the norm,' but you did certainly suggest that the problem is widespread:
I know I'm being a pedant here, and I'm sorry. But if you make sweeping generalizations without any kind of statistics to back them up, then you're undercutting your own argument. Anecdata don't tell us a thing about the overall trend.
posted by anigbrowl at 4:22 PM on March 15, 2011
Bank Of America is so fucked up with their mortgages in so many ways. They routinely foreclose on properties which aren't even mortgages, let alone mortgages with BofA. Time and again they are unable to produce the necessary paperwork to truly follow-through on a valid foreclosure (and they seem to have managed to rig the courts in some parts of the country to let them get away with it). They aren't even able to properly follow-through with the ending process to a paid-off mortgage, often attempting to continue to collect payments (or even start foreclosure) on properties which should be registered and deeded to the paid-in-full customer.Now I share your belief that this is both unacceptable and problematic. But I'm not as confident as you seem to be in how widespread it is. And giving me a clutch of random examples from different newspapers doesn't answer that; there's ~330m people in the US and something like 100m homes; odds are that I can find a few news stories on just about any topic related to home ownership. If I could summon the CEO of BoA right now and demand answers, he'd probably say they were isolated incidents or something. More realistically, that's the response I would probably get from a sceptical elected representative or neighbor if I repeated your claim that this kind of thing happens 'routinely.'
I know I'm being a pedant here, and I'm sorry. But if you make sweeping generalizations without any kind of statistics to back them up, then you're undercutting your own argument. Anecdata don't tell us a thing about the overall trend.
posted by anigbrowl at 4:22 PM on March 15, 2011
I had planned to post further responses tonight, but other Mefites (in particular, anigbrowl, JPD, and ValkoSipuliSuola) have handled the issue completely. I don't see how I can add anything more to what they've already said.
posted by gd779 at 4:35 PM on March 15, 2011
posted by gd779 at 4:35 PM on March 15, 2011
hippybear, if you won't or can't back it up, then fine. I invited you to expand on your idea with more information rather than dismissing it; it is generally up to the person who asserts something to give a citation. I also think it's pretty obvious that I was responding to this comment, given that I quoted it almost in full. To link to a completely different comment you made and suggest that I had picked out 'one small part of it' is entirely untrue.
I also responded to several other comments besides yours, but am not in the habit of trying to address every last idea in a long thread. I have just now looked at your profile for the very first time, we've never exchanged any email, and I don't recall having had any arguments with you in the past although I may well have commented on something else you wrote in some other thread; in short, it is not about you.
posted by anigbrowl at 5:51 PM on March 15, 2011
I also responded to several other comments besides yours, but am not in the habit of trying to address every last idea in a long thread. I have just now looked at your profile for the very first time, we've never exchanged any email, and I don't recall having had any arguments with you in the past although I may well have commented on something else you wrote in some other thread; in short, it is not about you.
posted by anigbrowl at 5:51 PM on March 15, 2011
I'm shocked, shocked to find that gambling is going on in here!
posted by jwest at 7:51 PM on March 15, 2011
posted by jwest at 7:51 PM on March 15, 2011
If the mortgage servicers really are taking kickbacks from insurers then they're committing fraud on both the property owner and the mortgage holder.
It's a fraud against the property owner because he or she has a duty to insure the property, not a duty to pay any arbitrary amount to the mortgage servicer. When the mortgage servicer receives a kickback it is exactly the same as falsely charging the property owner a higher price and pocketing the difference. I can't see any legal or moral difference in the fact that the money briefly lands in the insurer's pocket on its way to the mortgage servicer.
It's a fraud against the mortgage holder for two reasons. Firstly, the reason servicers take out insurance is that the property owner has apparently defaulted, implying they probably can't pay for the new, more expensive insurance. Even though the property owner has a duty to pay this charge it's still a debt incurred on behalf of the mortgage holders, and unless the property owner suddenly becomes wealthy the mortgage holders will probably have to pay for it. So overcharging is actually a fraud against the mortgage holder.
The second reason it's a fraud against the mortgage holder is that the mortgage servicers are the mortgage holders' agents - apparently they even pretend to be the mortgage holder! As agents they have a fiduciary duty to act in their principal's interest and not their own. This includes surrendering any sort of commission they receive for acting as agents, and it also includes a duty to avoid conflicts of interest. Taking kickbacks is a classic conflict of interest - the agent will be looking out for the best deal he or she can receive, not the best deal for the principal. This means that the servicers will be breaching their fiduciary duty even if the mortgage holders acquiesce in letting them keep their kickbacks.
So I don't think the term "fraud" is unjustified here. This is quite separate from the other alleged forms of fraud that have taken place with foreclosures and title ownership, but it's apparently going on, and the banks are either complicit in it or parties to it.
posted by Joe in Australia at 4:21 AM on March 16, 2011
It's a fraud against the property owner because he or she has a duty to insure the property, not a duty to pay any arbitrary amount to the mortgage servicer. When the mortgage servicer receives a kickback it is exactly the same as falsely charging the property owner a higher price and pocketing the difference. I can't see any legal or moral difference in the fact that the money briefly lands in the insurer's pocket on its way to the mortgage servicer.
It's a fraud against the mortgage holder for two reasons. Firstly, the reason servicers take out insurance is that the property owner has apparently defaulted, implying they probably can't pay for the new, more expensive insurance. Even though the property owner has a duty to pay this charge it's still a debt incurred on behalf of the mortgage holders, and unless the property owner suddenly becomes wealthy the mortgage holders will probably have to pay for it. So overcharging is actually a fraud against the mortgage holder.
The second reason it's a fraud against the mortgage holder is that the mortgage servicers are the mortgage holders' agents - apparently they even pretend to be the mortgage holder! As agents they have a fiduciary duty to act in their principal's interest and not their own. This includes surrendering any sort of commission they receive for acting as agents, and it also includes a duty to avoid conflicts of interest. Taking kickbacks is a classic conflict of interest - the agent will be looking out for the best deal he or she can receive, not the best deal for the principal. This means that the servicers will be breaching their fiduciary duty even if the mortgage holders acquiesce in letting them keep their kickbacks.
So I don't think the term "fraud" is unjustified here. This is quite separate from the other alleged forms of fraud that have taken place with foreclosures and title ownership, but it's apparently going on, and the banks are either complicit in it or parties to it.
posted by Joe in Australia at 4:21 AM on March 16, 2011
This is old and not particular interesting news, which I fear will divert attention away from the presumably more significant WikiLeaks revelations. As others have noted, the (necessary) practice of forced place insurance, when combined with the (unnecessarily) sloppy practices of the banks and servicers pretty much guarantees that there will be times when a homeowner is incorrectly assigned forced place insurance. And the profit motive of the banks led to the (again, well-known) ownership or interest of the banks in the company providing the forced place insurance, and the high prices charged, which are meant to be a penalty and which are also meant to make money. And the nice profit meant that the incentive for banks to correct their sloppy practices re: forced place insurance. For a couple of my clients, a certain bank (not Bank of America) will regularly claim to have not received proof of private insurance, and you've got to fight with this bank every year to demonstrate that, yes, you do have insurance.
Not saying the practice shouldn't be regulated or stopped (it should), but none of this is a relevation (except the kickback part, which I'm doubtful about and which is, anyway, unnecessary given the bank or servicer's interest in the insurer).
posted by seventyfour at 6:56 AM on March 16, 2011
Not saying the practice shouldn't be regulated or stopped (it should), but none of this is a relevation (except the kickback part, which I'm doubtful about and which is, anyway, unnecessary given the bank or servicer's interest in the insurer).
posted by seventyfour at 6:56 AM on March 16, 2011
Now this is a sensible position - it's perfectly sensible to be concerned, because the industry is complex and many of the players are doing business in an unethical way, even if it's not illegal. That's a good reason to consider moving your mortgage to a company you feel comfortable with, or hiring a lawyer to scrutinize your existing setup if you have any doubts about it, and learning about title insurance reform - which I think will require the creation of a national title registration system and property survey.
Which is all very well and good. I did read my contract, and had an attorney read it as well, but that doesn't help if BOA doesn't follow through by doing what the contract requires it to do. My concern is that BOA has an (admittedly at this point, anecdotal) trail of not fulfilling its obligations, sloppy documentation, etc. As for refinancing with another financial institution, apart from the question of which financial institution would be more trustworthy either ethically or procedurally--USAA or a small enough credit union would be my guess--I'm well aware that in any dealing with a large bank or financial institution, any individual consumer is at a severe disadvantage both financially and legally. This is one of the aspects of the mortgage crisis that's so frightening to consumers: financial institutions have demonstrated that they behave negligently and with at best questionable ethics towards those whose interests they're legally supposed to act on behalf of. Combine that with the money and legal firepower to crush consumers like a bug, and it's no wonder people are nervous about BOA and its peers.
posted by immlass at 8:03 AM on March 16, 2011
Which is all very well and good. I did read my contract, and had an attorney read it as well, but that doesn't help if BOA doesn't follow through by doing what the contract requires it to do. My concern is that BOA has an (admittedly at this point, anecdotal) trail of not fulfilling its obligations, sloppy documentation, etc. As for refinancing with another financial institution, apart from the question of which financial institution would be more trustworthy either ethically or procedurally--USAA or a small enough credit union would be my guess--I'm well aware that in any dealing with a large bank or financial institution, any individual consumer is at a severe disadvantage both financially and legally. This is one of the aspects of the mortgage crisis that's so frightening to consumers: financial institutions have demonstrated that they behave negligently and with at best questionable ethics towards those whose interests they're legally supposed to act on behalf of. Combine that with the money and legal firepower to crush consumers like a bug, and it's no wonder people are nervous about BOA and its peers.
posted by immlass at 8:03 AM on March 16, 2011
I keep seeing the argument against the corporate death penalty rendered as "Yes, but if we shut down this terrible corporation all of the low-level employees wouldn't be able to pay mortgages!"
Yes, and if you send a parent to jail, the children suffer. But I'm guessing there are plenty of moms and dads in jail...
posted by LordSludge at 12:12 PM on March 16, 2011 [1 favorite]
Yes, and if you send a parent to jail, the children suffer. But I'm guessing there are plenty of moms and dads in jail...
posted by LordSludge at 12:12 PM on March 16, 2011 [1 favorite]
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