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Think foreclosure fraud is a thing of the past? Think again. This local story out of Georgia suggests that it's alive and kicking veterans in the ass. Atlanta's Channel 2 Action News has been investigating claims from "dozens of veterans who are fighting to save their homes from foreclosure" about predatory practices from big banks, potentially targeting veterans for mortgage modifications because they have insured VA loans.
Army veteran John and his wife, Lydia, said their hell started after they applied for a home loan modification.
"I was not in foreclosure. I wasn't behind in my mortgage," Smith said. "They were the ones who insisted I apply for a loan modification."
Smith said Chase Bank told him the modification would take 45 days, but instead it took two years. He said during the process, Chase told him not to pay on the mortgage.
"And one day, all of a sudden, I started getting papers in the mail that it was $1,600 for three months, and then $20,000 for the next," Smith said.
Air Force veteran Richard Leder had a similar experience with Citi Mortgage.
"I was told to go delinquent by Citi Mortgage over the phone," Leder said. "They didn't put it in writing."
Leder said he knew he'd have to pay eventually, so he set the money aside. Still, the bank foreclosed on his home five months later.
Robert Thompson, an attorney working with other veterans who've been the victims of similar predatory lending schemes, believes that homeowners with VA loans are specifically targeted because those loans are insured. The banks can sell off the mortgages that they've forced into delinquency, and still get to keep the insurance money.
"So they sold the loan, so they're not owed any money. They will collect the money from reselling the house, and they'll collect the insurance from the face value on the house to start with. So that's doubling and tripling their money off the veterans and the government and the taxpayer," Thompson said.
In the Smith's case, Chase has submitted their claim to the VA, and the VA has paid the amount that Chase sold the mortgage for, and beyond that could collect upwards of $100,000 in fees of of the VA loan. That VA insurance money these big banks are getting? That's taxpayer money. That's being funded by us.
Is this going to be enough to send a bankster to jail?
Originally posted to Joan McCarter on Wed May 08, 2013 at 12:20 PM PDT.