Dubious fees hit borrowers in foreclosure

[Gormy Cuss]

Yet another story illustrating that much of the mortgage crisis is fueled by the mortgage industry itself and not the homeowners.

**********************
Questionable charges add up to millions for loan servicers

Gretchen Morgenson, New York Times
Tuesday, November 6, 2007
(via sfgate)
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/11/06/BUF5T6SHU.DTL

As record numbers of homeowners default on their mortgages, questionable practices among lenders are coming to light in bankruptcy courts, leading some legal specialists to contend that companies instigating foreclosures may be taking advantage of imperiled borrowers.

Because there is little oversight of foreclosure practices and the fees that are charged, bankruptcy specialists fear that some consumers may be losing their homes unnecessarily or that mortgage servicers, who collect loan payments, are profiting from foreclosures.
(snip)

Fees add to discrepancies

Not surprisingly, these fees may contribute to the other problem identified by her study: a discrepancy between what debtors think they owe and what creditors say they are owed.
In 96 percent of the claims Porter studied, the borrower and the lender disagreed on the amount of the mortgage debt.

Based on the study, mortgage creditors in the 1,733 cases put in claims for almost $6 million more than the loan debts listed by borrowers in the bankruptcy filings. The discrepancies are too big, Porter said, to be simple record-keeping errors.

[flashl]

1. Then the tax man cometh

Taxes Due IRS When Selling Foreclosures / Short Sales
The IRS says there is no free lunch. If you transfer title on your home, whether voluntarily through a warranty deed or grant deed, or involuntarily through foreclosure, you have sold your home. You might be subject to taxes, even if you sold your home at a loss, either on a short sale or by foreclosure.

Lost your home? You may owe IRS

Even if you received no money from a foreclosure sale, you may have to pay capital-gains taxes on the phantom income. And that's not all.

[Gormy Cuss]

3. Can you imagine paying tax not only on phantom income on what you owed

but also on the higher amount claimed in error?

[flashl]

4. There are industries out there raking it in

foreclosure investors and foreclosure advisors (people who probably were once the mortgage broker who sold you the house).

We are witnessing the greatest heist in American history.

[MilesColtrane]

2. Exactly like charging you 35 bucks when you have insuficient funds to cover a check.

Unfortunately for us, this country operates on the Golden Rule: Them that's got the gold, makes the rules.