Foreclosure Stories: Fraudulent payment reporting is the norm

Jun 14, 2012


This is a weekly column by Sandusky attorney Dan McGookey, devoted to telling true stories of homeowners who have been victimized by a lending system that makes it profitable to foreclose. The names used have been changed for privacy purposes. This is the Sharpes' Tale.

Like the millions of other American homeowners financing their homes during the 2000s, until the housing market crash in 2008, little did the Sharpes know that the were throwing the fate of their families’ financial future into the hands of an institution whose conduct would be completely unchecked and whose goal would be to bleed every nickel out of them. Their story began innocently enough when they borrowed $97,000 in 2002 to purchase their rural home. The “lender” named in their papers was American Mortgage, but their real lender was any number of faceless purchasers of mortgage-backed securities (stock certificates) in the loan pool or trust into which the Sharpes loan was destined to be dumped, along with thousands of other home loans. Unfortunately for the Sharpes, the process itself takes all power out of the hands of the people who as the real owners of the loan, and vests control in others, including the servicer which actually profits by putting homeowners into default and foreclosure.

The Sharpes’ downward spiral on their loan began in 2003 when Mr. Sharpe was involved in a terrible accident, causing him to miss months of work as a plumber and to fall behind on his bills. As a result, the Sharpes, who never missed a payment on a debt before, were forced to file bankruptcy in 2004. Determined to save their home, however, the Sharpes clearly indicated their intent to reaffirm on their home loan, and continued to make their monthly mortgage payments.

Despite this showing of good faith, yet consistent with its objective to put the Sharpes into foreclosure, the Sharpes loan servicer, Town Mortgage Company, kept heaping on unwarranted fees, such as drive-by inspection costs, while at the same time failing to apply the payments the Sharpes were making to their loan. And so things went on for years following their bankruptcy – the Sharpes would regularly send in their monthly payment, tens of thousands of dollars worth in all, only to get erroneous and conflicting statements as to how much they owed, late payment charges, reinstatement amounts, etc. As any responsible person can imagine, this entire saga has been a living nightmare for the Sharpes. In fact, Town Mortgage’s fraudulent conduct is fully exposed when considering its claim that the Sharpes owe almost $40,000 more on the mortgage than they did when they took out the loan a decade earlier; this when they made almost every payment on time.

We are in the process of fighting the Sharpes’ foreclosure now. The main weapon in our arsenal will be Town’s failure to properly credit the Sharpes’ account with all the payments they made. We will simply get the Payment History directly from Town, and compare that to the payment receipts produced by the Sharpes, and the bank’s case will quickly fall apart.

The lesson in the Sharpes’ story is this: Don’t trust your bank to properly credit your account with each payment made, because there is a high degree of likelihood that it did not. Demand a copy of your Payment History. Compare that to what your records show, and decide for yourself whether you have been treated fairly, and legally.

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Next week: the story of the Williams’ who made every payment asked of them by Cheat Bank pursuant to several loan modifications, only to have their credit score ruined by the bank, resulting in the loss of job opportunities and foreclosure.

Copyright 2012 Daniel L. McGookey.