On March 23, 2014 I penned the article entitled Freddie Mac teams up with Wesley Edens on bait & switch loan modifications.
Since publishing that article Freddie Mac officials have contacted both the borrowers attorney and myself. They have indicated that Freddie Mac has nothing to do with individual loan modification approvals and that it appears that mistakes may have been made in the initial trial modification.
Freddie Mac is now investigating the circumstances surrounding this case - stay tuned for an update.
Early in the crisis Freddie Mac established a case unit to investigate and resolve borrower/servicer issues. Individual homeowners and their advocates can call 1-800-Freddie (1-800-373-3343). Borrowers who are represented by legal counsel can have their attorneys call 1-703-903-2000 and ask for legal.
Fortress Investment Group lead by Wesley Edens has teamed up with Nationstar Mortgage to perpetrate what appears to be a cruel hoax in the form of a bait & switch on homeowners desperate to keep their homes.
In this case a borrower who had begun the process of applying for HAMP was offered a "trial payment" of $801.25 and after making the three required and agreed upon payments was presented with the Freddie Mac Standard bait & switch version of the modification with a payment of $1,701.67.
The lender was sent a Qualified Written request and unbelievably, Nationstar's response was that the borrower couldn't afford the $801.25 payment so he was offered the Freddie Mac Standard modification payment of $1,701.67.
Putting the obvious profit motive aside, who in their right mind would think that people are so stupid that they would buy this self serving illogical blather, which says a borrower who can't afford an $800 payment can afford a $1,700 payment.
The borrower in this case was pleased with the new payment which was affordable at $801.25 per month. When the employees at Nationstar were questioned about the payment they represented that it included escrows and would remain the same at final modification as long as the borrower made his trial payments on time. Indeed, this seemed to coincide with the trial modification letter which does not indicate that the final payment amount will be different from the trial or that the trial payment does not include escrows.
The borrower made those three agreed upon trial payments of $801.25 and received the final bait & switch Nationstar version of a Freddie Mac modification with payments in the amount of $1,701.67.
In doing this to unsuspecting homeowners Wesley Edens through Nationstar appears to be purposefully dodging Freddie Mac guidelines and creating false hope in an attempt to get desperate homeowners to accept the streamline modification.
The trial agreement indicates that to get to the new $801.25 payment Nationstar would defer up to 30% of the mortgage balance and extend the terms to 40 years.
The property is valued at $143,971 and has an unpaid principal balance of $178,480.
115% of $143,971 = $165,566.65 making this property eligible for the principal forgiveness or deferment mentioned in the trial modification letter.
In an article in March of 2013 I highlighted the departure from HAMP by Freddie Mac and Fannie Mae because it was obvious then that this was an attempt to dupe homeowners into entering into a more expensive payment in an effort to short circuit the profit killing provisions of HAMP.
Brian McCaffrey attorney who represents the borrower pro-bono says this case gives rise to a breach of contract claim.
It now appears that servicers will stop at nothing to move homeowners away from HAMP to the more profitable "streamline modification", including the likes of Wesley Edens, Fortress Investment Group and Nationstar Mortgage.
Attempts to communicate with Treasury, Wesley Edens, Fortress Investment Group and Nationstar Mortgage prior to publishing this article resulted in "no comment".