Too Rigged to Fail: The Homeowner HAMPster Wheel of Mortgage Fraud

Ask anyone in casual conversation about the current state of homeownership or the sky-high cost of rent in most US cities and you’ll find that the majority of them are having a difficult time meeting the basic demands of bills, expenses, mortgage or rent payments, home and auto repairs, medical expenses, and the simplest needs of day to day living.

I am astonished at how many times I’ve had conversations at parties, or with friends, as to so many people have lost their homes to short sales, foreclosure or been duped by a mortgage servicing bank that denied refinance options and workout options for homeowners trying to retain their homes. Most weary homeowners quickly hand over the keys in short sales and give up after attempting to submit documents for the Home Affordable Modification Program (HAMP), which the government set up ostensibly to help struggling homeowners stay in their homes after the largest banks crashed the world economy in 2007-08.

People don’t like to talk about foreclosures or short sales. It’s distressing and often there is an association of some sort of “shame” with these epic losses, even though we are all aware of the too-big-to-fail fraudulent trade practices that have been in place since the bailout of the big banks took us off the cliff.

Had the banks actually implemented and structured the housing programs properly, and acted honorably in regard to modifying millions of trouble mortgages, American consumers would have gotten back on their feet. I’m not talking about Mr. Potter vs. George Bailey — I’m talking about a good economic recovery and a fair negotiation with the middle class that was annihilated by industry-wide greed, corruption and gluttony.

The banks, however, did not choose to honor their agreement with the government to implement these programs, whether it be via HAMP, HARP or “in house” modifications. Instead, they structured their servicing process and patterns in these applications to incentivize foreclosures and short sales — by instructing homeowners to default in order to qualify for assistance, by “losing” paperwork, and overall taking the middle class on another long and treacherous road to ruin.

I spoke to a customer service representative at Wells Fargo Home Mortgage who said, “So long as you’re not decisioned, we are not in violation.”

There’s the silver bullet of intent right there: the holy grail of the bastardized modification process. The servicing bank created the homeowner HAMPster wheel by taking programs intended to help troubled homeowners retain their homes, and turning them into yet another Wall Street house of mirrors. The HAMPster wheel spins as the homeowner runs, submitting all financial documents, tax returns, profit and loss statements, W-2s, 1099s and Schedule C’s, all the while calling, faxing, FedExing and exhausting themselves as the bank comes up with excuses like “lost paperwork,” illegible faxes, missing line items. Denial, reapply, spin spin spin, rinse and repeat.

Delving deeper into the calamity that has become the Homeowner Hunger Games, this may all have never occurred had we been fairly negotiated with regarding the programs set up to “help” homeowners in these unprecedented times. The economy would be flowing, our bills wouldn’t be so burdensome and we’d be better equipped to handle some of the losses — like jobs, healthcare, and faith in our justice system.

There’s more going on here than just greed and gluttony. “Dark money” in banking and politics, the Wall Street roulette game, the dysfunctional theatrics of our policymakers, and the lack of accountability on every level of our democracy are all components in this mess.

But it was the banks primarily that set this up: by bastardizing the intent to “make homes affordable,” by taking down the middle class, rigging the LIBOR rates, paying off the government with billions in settlements — all the while playing the same Bernie Madoff reindeer games with our investments, homes, retirement funds and lives. Big banks like Wells Fargo, JPMorgan Chase and Bank of America — and lesser known brands like Ocwen and Nationstar — continue to get away with daily accounting fraud, customer abuse, bogus fees, force placed insurance, incentivized fraud, collusion, wrongful foreclosures, short sales, rate rigging, and settlements that are unprecedented, with zero accountability to the public or the rule of law. It is perverse and astonishing how the hits just keep coming. Here is an infograf that explains just one of the scandals we’ve endured in recent years.

At this point, would we all rather be unemployed in Iceland?

In opening a dialogue with homeowners whom I’ve spoken to via social media, and in pursuit of understanding these complex issues, I have come to realize that all these crimes share the same patterns of abuse, with delays and endless applications for assistance working always in favor of the servicing bank — be it Wells Fargo, BofA, Chase or the rest — and the homeowner ever so rarely coming out on top. Obstacles, bogus excuses, line disconnects, inducement to default on payments, and a host of other unfair business practices result in epic losses of people’s retirement savings and real estate. Justice, you say?

If the government won’t break up the banks, then we the people need to break up WITH the banks. The only way they will feel our pain is if people move their money out of them — and then demand accountability and jail time for the elite financial criminals who have perpetuated these crimes.