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The Psychological Warfare of Loan Servicing

livinglies.wordpress.com | June 19, 2016

By William Hudson

"Emotional violence is another kind of abuse ... it's not about words because an emotionally abusive person doesn't always resort to using the verbal club, but rather the verbal untraceable poison." ~
—Augusten Burroughs

The banks commit felonious financial crimes against homeowners with impunity. But even more egregious and unconscionable than the theft of assets, is the theft of solitude, hope, and life quality. The banks decimate families and they eradicate a person’s belief in what is “just” and lawful.

Millions of American homeowners have arrived at the harsh reality that government, the judiciary and law enforcement are not to be trusted. The reality is that the banks are engaging in psychological warfare against the American homeowner- and no one is doing a thing to stop the bullying or psychological abuse.

Banks utilize the planned use of propaganda and other psychological operations to influence the opinions, emotions, attitudes, and behavior of homeowners, attorneys, the courts and policy makers. This practice is actually a breach of Article 10 of the European Convention on Human Rights, which reads, “Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers.”

The Foreclosure Machine is engaging in a deliberate strategy of emotional abuse towards desperate homeowners who are looking for an equitable solution (when most simply want an opportunity to meet the terms of their mortgage). The bank representatives may speak professionally, and even appear to be concerned, but their words are meant to deceive and may even kill. The stress created from corporate psychological abuse often culminates in health problems that may result in a silent death or even suicide. The banks do not play fair, and they will do whatever is necessary to take a home- including the destruction of a life if necessary.

The covert abuse used by banks is administered in barely detectable and cunning strategies that can, over time, cause a homeowner to doubt their own sanity. Called ‘gaslighting’ by psychologists, this process is implemented to cause the homeowner to doubt their own decisions and thoughts- and to keep them off-center. Because of the uniformity of this practice among servicers, there can be no doubt that employees were trained in this process.

The Gaslight Effect allows the loan servicer to define the reality and the rules, while the less powerful party is left vulnerable by relying on the abuser for information or validation. Many homes have been lost to a servicer who used this technique to exploit the vulnerabilities of a homeowner who has had financial problems, emotional upheaval, divorce, illness or job loss that resulted in the homeowner falling behind on their mortgage payments. The process is systematic, confuses the victim and by providing erroneous information ultimately results in the loss of a home. It is not a random practice but executed to target societies most vulnerable.

For instance, back when banks were pushing loan modifications, the banks deliberately lost paperwork and provided contradictory information to ensure the customer would fall further behind on their mortgage. It was a uniform practice among all large servicers. The homeowner, despite having fax and mail receipts, would be told the information was never received- and often questioned their own memory of events. In our society, for hundreds of years, banking was built on the concept of “trust” and this in itself provided a false confidence that the banks would not engage in illegal acts.

There were other games the banks played to ensure they would get the foreclosure they so desperately wanted. One game was the game of “musical-chairs customer representative agent” where the homeowner was forced to start from the beginning and explain their complex situation to a new agent every time they called the bank. This was done so there was no solution continuity. Homeowners would speak to agents who provided conflicting information from each representative. Just when the homeowner thought a solution was at hand after hours on the phone, the phone call would be “accidentally” disconnected. This psychological tactic was well rehearsed, until when after years of this abuse, new rules assigned a homeowner a single point of contact.

The negative impact of foreclosure on emotional and physical health, as well as overall mental functioning is gradual and insidious. When the trauma of endless delays in resolution, unjust court tactics, financial burden and the feeling of having impending doom hanging over your head (sometimes for over a decade) becomes overwhelming- something has to give and it is typically either mental or physical functioning. Careers are impacted, the raising of children neglected, and other opportunities forsaken because the homeowner- armed with evidence the bank has no standing- still clings to the belief that the system is fair.

The homeowner has so much invested emotionally, financially, and in life sacrifices- there becomes a point of no return where the homeowner feels they must take the case the entire distance. To quit would be to admit yet another life failure. Therefore, many homeowners will hang on until they can no longer afford the costs (financially or emotionally).

Back to the methodology employed by banks. The banks use the guise of customer service to create the appearance of assistance. Under this act the emotional abuse is passive, subtle, and covert. This strategy makes assigning blame to the bank more difficult because the bank is creating the illusion of service. “Oh go ahead and miss a few payments- we will add it back in when your modification papers are done, “ or they will say, “We can find a solution and you are a good candidate for our program.” Meanwhile, the bank has already filed to foreclose. “You can just ignore the foreclosure letters you are receiving- my notes say that your modification is waiting for final approval.” The unsuspecting homeowner is the wounded impala and the banking lion is simply toying with its prey while creating arrearages and servicing fees.

The homeowner senses that something isn’t right, but saddled with financial worries and the fear that foreclosure brings- they attempt to grasp onto anything that seems like hope. That is where homeowners can get into trouble. Desperate for a list of options or some type of solution- the homeowner, terrified and confronting a ticking clock, begin pursuing any type of remedy- instead of focusing on one that might actually work. The homeowner’s strategy becomes fragmented from the lies their servicer is telling them, the facts they see on paper, an inaccessible justice system, and a shady attorney looking for a high retainer.

Often an attorney, sensing the homeowner’s desperation, will agree to represent the homeowner when they have no knowledge of foreclosure or securitization. These attorneys are known to purchase pre-fabricated legal Motions off the internet to defend a case. The unsuspecting and naïve homeowner has no idea that their attorney is failing to properly defend their case since everything “looks” fine to a homeowner who is not familiar with law. The homeowner will lose their retainer, all payments made to date, and often the home and any equity in the property (down payment, improvements). In reality the homeowner is surrounded by vipers, opportunists, conmen and predators who will do anything to receive payment or the home.

Emotional abuse has an aim, and that is to control, belittle, isolate and shame people into subservience. It doesn’t take much skill when dealing with a vulnerable homeowner. This occurs gradually until the victim's sense of self-worth, self-confidence, and own ideas and perceptions erode.

The banks or servicers are emotional abusers and operate under the guise that they are “helping”, "advising", or “assisting", and therefore fly under the radar when they are deliberately sabotaging any opportunity the homeowner has to save the home.

Control and Domination

The bank will now attempt to extort information from the homeowner so that they know where to strike where you are vulnerable. Under the appearance of a loan modification or short sale, they will have you provide extensive personal financial information. Although they have no intention of providing assistance, this form provides your income, finances, assets, accounts and other information you might not share if you had any idea that is was being collected for nefarious purposes. Once this information is front of an agent, they can determine just how many payments at what amount you will be able to afford before you are forced into insolvency.

Because people are human and do not hide their emotions or vulnerability well, bank serving agents are able to detect blood in the water. My dealings over the years with service agents is that they treat homeowners like you are expendable, inferior, inadequate, or ignorant. Imbued with the power to engineer a default, some of them have God syndromes. I remember a client who had less than three days before she lost her home to foreclosure. After hours on the phone she was able to speak to a senior manager who promised the homeowner she could reinstate her mortgage if she agreed to pay all late fees and arrearages. The homeowner readily agreed to accept over 50k in fees and arrearages (even if she felt they were erroneous). The manager promised to overnight the papers and they would arrive by noon the next day. The manager never had any intention of sending the documents, but it allowed the bank to consume two days where the home owner should have been pursuing other options. The empty promise was given to maximize the chance of foreclosure.

Another game the banks play is to act like they are right, while the homeowner has no valid objections or complaints. Homeowners report that they feel like they must “get permission” and beg and plead for information they have an absolute right to obtain. Bank servicers are predators and it is time that some type of legislation is passed to stop their abusive tactics. The State of California has had to intervene with legislation to protect widows and widowers who are falling prey to servicers who use a spouse’s death to engineer a default.

Although loan servicers typically will accept loan payments, if a homeowner is not on both the loan, the bank will utilize this legal gray area to refuse payment, thus causing fees and an arrearage to occur. When the surviving spouse attempts to make good on the payment they may still be prevented from doing so. The banks also has the power to deny any accommodation to assist the surviving spouse- especially if the see an area to exploit that might result in default. For example, often the widowed spouse who has temporarily lost their spouse’s income, or is waiting on life insurance proceeds will be denied a loan modification.

The problem is growing, advocates say, and the issue has caught the attention of federal regulators and state lawmakers. In just the first three months of this year, the Housing and Economic Rights Advocates, a statewide advocacy group in California, had handled 16 such cases. The California Reinvestment Coalition discovered that 44% of housing counselors said that servicers "always" or "almost always" declined to discuss loan modifications with widowed clients when they weren't on the loan. Last year the National Housing Resource Center gave servicers a poor rating for communication with widows, widowers and others in similar circumstances. The banks, again, have found a vulnerable client population in which to exploit by failing to provide accurate information or assistance to increase the possibility of default.

Widows and even the elderly are especially vulnerable to the predatory practices and emotional abuse by banks. With the rise of risky first and second mortgages — including many taken out by older Americans who previously avoided getting into new debt, reverse mortgages, and complex securitization schemes, servicers have created a new business model that is intent on foreclosure at all costs. In fact loan servicers no longer service- instead they provide a predatory disservice, provide pseudo-assistance, and target the most vulnerable homeowners.

Servicing companies often refuse a modification until the surviving spouse assumes the loan, which can't happen until the owner is current on the mortgage — resulting in a catch-22. The spouse may then end up losing their life investment simply because the bank ensured there was no way to cure the default. Misinformation serves to compound the late fees and charges creating a dire situation for those who don’t have the resources (emotional or financial) to force the bank to comply with law.

The bank servicing industry is rotten to the core. It isn’t enough that they are taking a home they have no standing to foreclose upon- but to get the job done they resort to psychological warfare, target the nation’s most vulnerable homeowners, and play dirty tricks that should undermine all credibility with the industry. Homeowner beware- document EVERY conversation with the servicer, retain EVERY document they send you, and NEVER believe a word your servicer says. The Bank will do whatever is necessary, legal or illegal, to foreclose on your home-even if it requires resorting to mentally abusive tactics. Be prepared.

 

 

 

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