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Mortgage Mess!

John W. Schoen

Senior producer

After years of punishing increases in the cost of energy, consumers are rejoicing these days at the sharp drop in prices at the pump. Not only that, but prices are dropping for clothing, transportation and housing, according to the government's latest report on consumer prices. With money tight, the price declines are a welcome relief.

But be careful what you wish for. If price declines continue and become more widespread, there’s a risk the downward trend could feed on itself in a spiral that can take on a ruinous momentum. It’s called deflation. And some economists are warning the threat is increasing.

“A benign decline in prices amidst a sluggish but recovering economy would be unwelcome but tolerable,” Merrill Lynch economist David Rosenberg wrote in a note to clients this week. “But the price slashing now under way as the consumer beats a hasty retreat could allow that corrosive deflationary spiral to take hold — something the Fed wants to avoid at all costs.”

Department of Corporations

File a notice addressed to the State to report your Lender & Servicing Agent for any improper collections efforts.

NLS recommends that all borrowers seek advice from an attorney regarding their claim. Mortgage lending is complex and difficult to understand. NLS Compliance officers, experienced in this very specialized field will consult with parties to ensure proper compliance and to document continued acts of negligence.

The Mortage Mess of 2oo8

10/25/2008 www.borrrowerhotline.com/

News: New Century Financial, a lender that came to symbolize the

fast-and-loose mortgage practices of recent years, filed for bankruptcy

protection yesterday and said it would lay off 3,200 employees, more

than half its workforce. (Mon, 02 Apr 2007 16:20:48 GMT)

These clowns in the ivory towers deceived the public andunfrtunaltley

will likley be foud to be in bed with their wall street conduits. The sec-

ondary and morons like these should answer to a federal investigation.

California sues Countrywide over loan practices

Office of the Attorney General News Release

June 25, 2008
For Immediate Release
Contact: Gareth Lacy

Brown Sues Countrywide

For Mortgage Deception

LOS ANGELES--California Attorney General Edmund G. Brown Jr. today sued Countrywide Financial, its chief executive Angelo Mozilo, and president David Sambol, for engaging in deceptive advertising and unfair competition by pushing homeowners into mass-produced, risky loans for the sole purpose of reselling the mortgages on the secondary market.

“Countrywide exploited the American dream of homeownership and then sold its mortgages for huge profits on the secondary market,” Attorney General Brown said. “The company sold ever-increasing numbers of complex and risky home loans, as quickly as possible.

Countrywide was, in essence, a mass-production loan factory, producing ever-increasing streams of debt without regard for borrowers. Today’s lawsuit seeks relief for Californians who were ripped off by Countrywide’s deceptive scheme.”

Brown alleges that Countrywide Financial used deceptive tactics to push homeowners into complicated, risky, and expensive loans so that the company could sell as many loans as possible to third-party investors. According to the lawsuit, the company marketed complex and difficult to understand loans with very low initial or “teaser” interest rates or payments. Countrywide employees, including loan officers, underwriters, and branch managers--who were under intense pressure to process a constantly increasing number of loans--misrepresented or obfuscated the fact that borrowers who obtained certain types of loans would experience dramatic increases in monthly payments.

In the past, lenders like Countrywide sold home loans to customers and held the loans in their own portfolio, an incentive to maintain strong underwriting standards. Countrywide, however, sold its loans to third-parties in the form of securities or whole loans, often earning more profit for riskier loans. The business model generated windfall profits for Countrywide. The company pushed these loans by emphasizing a low “teaser” or initial rate, often as low as 1 percent for pay option ARMs. Countrywide obscured the negative effects--including rising rates, prepayment penalties and negative amortization--which would inevitably result from making minimum payments or trying to refinance.

The company misrepresented or hid the fact that borrowers who obtained its home loans--including exploding adjustable rates and negatively amortizing loans--would experience dramatic increases in monthly payments. In an effort to rope in as many customers as possible, Countrywide greatly relaxed and liberally granted exceptions to its mortgage lending standards. Traditionally, lenders required borrowers to document income and assets but Countrywide offered reduced or no documentation loan programs to increase its loan sales. Angelo Mozilo and David Sambol actively pushed for easing underwriting standards and granting exceptions to documentation requirements.