The pieces of the puzzle are starting to fall into place.
This is a racket - Grand theft insurance fraud by any other name.
As we wrote earlier this week:
It also becomes clear that the interests of the servicer and the insurance company are aligned against the interests of both homeowners and investors. This is because servicers in many cases are reimbursed for the insurance they purchase on behalf of borrowers out of the proceeds of foreclosure sales, foreclosures which they helped bring about through overly expensive force-place insurance policies. That is, the servicers get paid before investors and by over-charging for the insurance in the first place the servicers are able to extract even more money from the investors they are supposed to be working for.
Where the situation gets really interesting is when a bank like BofA actually owns the insurance company, as in the case of Balboa. In this email, the Balboa employee appears to be saying that errors in tracking of mortgages were common, but that he had more incentive to blame outsourced clerical workers for errors, thereby reducing the fee Balboa paid to the other company for handling the paperwork, than he had incentive for actually preventing such errors in the first place:
Attention Eric Holder: Remove your head from Bank of America's ass.
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Susie Madrak ties it all together.
Remember when I wrote last month about a Philadelphia music promoter who sued Wells Fargo -- and won the right to auction off their property? I couldn't figure out why Wells Fargo was forcing this replacement-value insurance policy on the guy.
It took a couple of days after the Anonymous leak for the contents to sink in, but I finally connected the dots. Rodgers was more than a victim of bank abuse -- this was systematic outright fraud throughout the mortgage and banking industry. It wasn't just Wells Fargo.
Here's what Jeff Horwitz points out in the November 2010 issue of American Banker:
- Bank of America Corp. owns a force-placed insurance subsidiary, and most other major servicers receive commissions or reinsurance fees on the very same policies they purchase on investors' and borrowers' behalf.
So if it's accurate, the Anonymous leak is the smoking gun in this mess. Because it indicates from Bank of America's own internal documents that this was intentional fraud for profit, and explains just why mortgage companies were dragging out the foreclosure process - and refusing modifications. They were making so much more money on the re-insurance policies, it didn't pay to modify.
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More detail on this video is here...
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