Mortgage Whistleblowers Say Servicers Foreclosed Rather Than Modify, HAMP Program Designed to Help Banks, Not Borrowers

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A report at the Dylan Ratigan show confirms what we’ve argued for some time is happening: that banks are not making mods to viable borrowers because servicing is more profitable. In addition, an insider on the HAMP program says that the pressure to make trial mods to make the program look good wound up hurting people. As we have described in older posts, people who were give trial mods under HAMP got reduced payments for a while (in theory three months, in practice often a lot longer). If they failed ot qualify, not only were they asked immediately to pay back the payment reductions, but also penalties. Not only did the servicers not prepare the borrowers for this possibility, some encouraged homeowners to use their savings to pay down other debt, thus pretty much assuring they’d lose their home if they did not get the permanent mod.

Be sure to watch to the end to see how Goldman threatened one of the whistleblowers:

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  1. Grace Dusinae

    Which banks are “viable”? Semantic games get even more humorous in the couthouse. You haven’t yet argued that “borrowers” are no such thing.

  2. JS

    DUH. HAMP wasn’t meant to help homeowners?

    This was obvious from the moment the FDIC finally released the HAMP guidelines, which include the mandate that a modification be less costly than the expected cost of a foreclosure. This means that homeowners with equity were categoricaly denied… exactly the opposite of what you’d expect of a program meant to help homeowners.

    HAMP was a scam from its inception. A scam created by our own government…heavily influenced by the bankers.

  3. readerOfTeaLeaves

    The section focusing on the whistle-blower receiving threats from GS lawyers, it’s eerily evocative of Rudolf Elmer (the Swiss bank employee who started blowing the whistle on tax secrecy jurisdictions and tax havens).
    I haven’t followed Elmer’s situation, but the last that I recall he was handing over files to Wikileaks before heading off to serve a jail sentence for ‘violating bank secrecy’.

    In other words, fraud, forgery, tax evasion, and other criminal conduct are judged to be ‘legal’, whereas providing information and disclosing the nature of the criminal activity — that’ll get a person a jail term (or worse).


    When we’ve arrived at a place where former financial sector employees are threatened with legal action for revealing the criminal conduct of banks and servicing processors, it’s hard to see any conceivable reason for maintaining this system.

    I can’t think of many better examples of why banks should be dismantled and treated as utilities. The current system is behaving in ways that certainly mimic a tax haven or tax secrecy jurisdiction, by making clear that *the protection of secrecy* is it’s primary objective.

    The best solution for that b.s. is to just turn the banks into utilities.

    1. F. Beard

      The best solution for that b.s. is to just turn the banks into utilities. readerOfTeaLeaves

      Just eliminate all direct and indirect government privilege for usury and it would rapidly wither away.


  4. F. Beard

    Bank are a means by which we steal from each other and yet imagine ourselves richer. And those who won’t or can’t borrow are looted by those who do. Look no further for oppression of the poor than banking.

  5. Jackrabbit

    This just reinforces what we learned when you and the other bloggers met with Tsy/Geithner last year. But it’s still outrageous and hasn’t gotten the coverage it deserves.

  6. Francois T

    Yet, Obama and Geithner STILL continue to bend over backward to serve the “savvy businessmen” (a.k.a. capos) of the financial industry, a.k.a. the wealth takers, as opposed to wealth makers.

    As for the GS threat of legal action, wtf is that? Does this even pass the laughing test?

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