Issue link: https://newsleader.uberflip.com/i/170820
Sarasota News Leader September 13, 2013 Page 40 from the communities and neighborhood organizations, everybody has foreclosure fatigue." She and an associate were responsible for courts across the nation throwing out thousands of foreclosure cases because of what they called "robo-signing," when banks produced fraudulent documents in attempts to seize property. No bank officers were ever prosecuted for trying to hoodwink the courts, though. Instead, the infection of bogus financial instruments is spreading. The latest wrinkle: "forced placement of insurance." Follow along on this trail of bad corporate behavior: A bank gives you a loan to buy a house, even though it knows you are not qualified. Then the bank gets rid of your mortgage by selling it to an aggregator, who bundles up the bad paper like a bale of rags (called "securitization") and sells that product to investors around the world. Pension funds loved those bundles — an investment literally "safe as houses," or at least that was what the aggregators said. Today many municipal and state worker pension funds are backed by "securitized mortgages." April Charney/Contributed photo theft and other losses. This new and expensive policy will cover no more than a default on your mortgage. "Forced placement covers only the public amount of the debt," said Charney. "The lender secures this single-interest product, what I would call a toxic product, from a collusion of entities, including the banks. This is not property insurance." The problem affects more than the homebuyMeanwhile, your home loan is "serviced" by er falling one month behind on the mortgage. a company that cashes your mortgage payment checks and keeps an eye on your escrow "Why does it matter?" asked Charney. "If this for insurance. Now here is the new wrinkle, is an insurance product sold at a 600-percent markup, this affects my insurance, too. And called "forced placement." these debts are becoming part of our pension If you miss a payment, the servicing company plans and trusts. Meanwhile, property values can say part of the money was for escrow to over the past five years have drifted down. Alpay for insurance. And since you missed the most everybody is underwater." payment, your insurance is no good, but the firm will provide you another policy — for a Inaction or slow action by the federal govmuch steeper rate, and with a savage catch: It ernment allows the financial shenanigans to no longer will be an insurance policy for fire, flourish. "Loans that were sub-prime were not