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Dueling timelines

By Holden Lewis · Bankrate.com
Tuesday, October 19, 2010
Posted: 8 am ET

Nowadays, it takes six or more weeks for a consumer to get a mortgage, from application to closing. The lender takes more than a month to go through each borrower's paperwork, making sure that all the documents are genuine and true.

It took Bank of America two and a half weeks to confirm that the paperwork had been done correctly on 102,000 foreclosures in 23 states.

If Bank of America can verify 102,000 foreclosures in 17 days, it makes you wonder why it can't make faster decisions on loan modifications and mortgage applications.

GMAC Mortgage, which also announced a 23-state foreclosure moratorium in early October, says it is proceeding with foreclosures in those states, too, as soon as faulty affidavits are "remediated."

Loan officers like to tell me how persnickety lenders have become, regarding borrowers' paperwork. If you have a six-page checking account statement, and the last page is blank, you have to submit that blank sixth page. Otherwise, you risk having your application rejected. If you apply for a credit card while awaiting approval on the mortgage and orget to tell your loan officer about the credit card application, you can get all the way to the closing table before finding out that your mortgage will go unfunded.

If you don't follow the banks' rules to the letter, no loan. No modification. No exceptions.

But when banks don't follow the courts' rules on judicial foreclosures, they don't expect to suffer any hardship for it: Simply refile a "remediated" affidavit that implicitly admits that the servicer lied or cut corners, and expect the judge to shrug and let it go.

Here's why the foreclosure scandal is a big deal: It demonstrates, yet again, that strict rules apply to the little people, while the Big Boys get away with all sorts of violations.

Yesterday I read a deposition of an employee of one of the "foreclosure mill" law firms in Florida, in which convincing evidence was brought forth that the law firm backdated legal documents. The employee of the law firm didn't seem to think it was unusual or important. Do you think you could get away with backdated documentation when applying for a home loan or a mortgage modification?

What would happen if you followed the foreclosure mill's example and submitted backdated documents to a court? If you did it, you would risk jail time. If a big bank does it, no biggie. Just remediate the document and resubmit it.

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2 Comments
Debra James
October 19, 2010 at 12:58 pm

There are always double standards, and those that possess something that is highly desired usually have the power to work outside of the rules. For example, my doctor's office will re-schedule your appointment if you are 10 minutes late. It doesn't matter that you were stuck in traffic because of an accident or that the commute train broke down. What's most annoying about that policy is that I always have to sit in the exam room for at least 20 minutes for her to see me. My time is important also, but the office has never offered to refund my co-payment or pay the extra parking fees because of her tardiness.

So, to answer the rhetorical question about what would happen if I back dated loan documents. Depending on when the bank found out about my deception, it would either not fund my mortgage or look to void it after funding, and possibly try to penalize me financially or legally. I probably wouldn't be able to just say, "Oops, my bad, let me just take care of this right quick."

Homeless
October 19, 2010 at 11:30 am

Holden, that is totally the frustration with the whole process. I commented on a previous post about losing my home (which is not in foreclosure yet) but I submitted all the requested docs (including blank pages!!) on 7/31/09. Got a letter 2 weeks later telling me they would let me know a status in 45-60 days. Promptly at the 45 day mark I called to follow up. I was asked to update my financials, which I did. Then they said we will call you in 10 days. 15 days later (now the 60 day mark)I call and they said it's now 90 days. I called EVERY single week from that point until December. Sometimes, they would ask for an update, which I provided and sometimes they would say "your case is under review". Through all this I also kept in contact with HOPE Now because I was concerned about the delays and falling further and further behind on not just my mortgage but other items as well. They told me the same thing BOA did. They will call you. Finally in December, I was on the phone for THREE hours talking to "supervisor" after "supervisor" because I told them I was not getting off the phone until SOMEBODY gave me an answer. Finally I get a guy and he says did anybody mention this number to you and I said no. He gives me a number and it is literally $180 less than my normal payment. I was able to make ONE payment before we just were so overcome by everything. That was their idea of a modification...$180/month. Needless to say, that did nothing for our situation and we had leave our home and are now in the process of filing bankruptcy.

The big banks have the big bucks to lobby and grease the pockets of the politicians...it is not surprising to know they can easily cut corners, while the people that are paying taxes to keep them in business are suffering. It's truly despicable, and made worse by the politicians shouting from the rooftops that they have done so much for the american people!!