Question: can someone help me understand this? (income fraud)

[onwards]

The quick summary:

House worth $440K per county assessor.
Primary loan at $570K, permanent HAMP mod.
HELOC at $125K, USAA, have stopped paying over a year ago.

USAA insured the HELOC through United Guaranty. Of course, the default triggered the insurance clause, and UG got the loan from USAA with the attached claim.

We just spoke to UG, because we haven't heard anything. What they said is that the loan was returned to USAA after being flagged for potential "income fraud".

Can someone explain this please?

When I took out the loan - by refinancing the HELOC I originally got with the house - I stated (IIRC) $125K in income. Our 2007 return shows $143K AGI. How can this be fraudulent? because I reported less income than I had at the time? what am I not getting?

My income got decimated in 2008 when my consulting business evaporated during the meltdown. I rapidly went from making pretty good money to making none at all, eventually culminating in a Ch7 filing late 2009. Is this somehow tied to that?

Any insights would be appreciated.

[Maurice Bedard]

If you told the truth, I would not be too concerned. Do you have a copy of your loan application (AKA 1003)? This is the app your loan officer would have filled in during the mortgage interview.

[onwards]

If you told the truth, I would not be too concerned. Do you have a copy of your loan application (AKA 1003)? This is the app your loan officer would have filled in during the mortgage interview.

Yeah, I told the truth (or rather, I estimated lower income than I actually had; I am self-employed and my income fluctuates pretty wildly, so I tend to be conservative in this regard).

I don't have an app; I never filled one. It was all done on a single, 10-minute phone call.

[TomEason]

The quick summary:
House worth $440K per county assessor.
Primary loan at $570K, permanent HAMP mod.
HELOC at $125K, USAA, have stopped paying over a year ago.
USAA insured the HELOC through United Guaranty. Of course, the default triggered the insurance clause, and UG got the loan from USAA with the attached claim.

We just spoke to UG, because we haven't heard anything. What they said is that the loan was returned to USAA after being flagged for potential "income fraud".

Can someone explain this please?

When I took out the loan - by refinancing the HELOC I originally got with the house - I stated (IIRC) $125K in income. Our 2007 return shows $143K AGI. How can this be fraudulent? because I reported less income than I had at the time? what am I not getting?
My income got decimated in 2008 when my consulting business evaporated during the meltdown. I rapidly went from making pretty good money to making none at all, eventually culminating in a Ch7 filing late 2009. Is this somehow tied to that?
Any insights would be appreciated.

Here are my thoughts. First FWIW, your county tax assessment of $440k, is not considered a reliable or even valid estimate of FMV. Second, if you've stopped paying your USAA HELOC, then I recommend you don't speak with them or their insurer United Guaranty, probably for many months, if ever. And third, don't worry about "income fraud." It's a ploy by the insurer UG to get out of paying off the insurance (I hate insurance companies!) Means nothing more, so don't worry. If, in fact, UG or USAA wanted to pursue, the burden of proof is on them and they would need to bring criminal charges and/or civil lawsuit. It won't happen. In the meantime, talk with neither of them by phone or mail. And, obviously, don't share financial info or other personal info, to include your plans or intentions with the property.

[onwards]

Thank you.

I did not speak to them for a long while, but was following up in order to figure out what the status is; I would like to settle this, after all, although I have a very clear limit of what I'm willing to spend to do so. Why not talk to them though?

Also, if UG pays this out, they own the loan then right? that is, the lien becomes theirs? or am I wrong?

[TomEason]

Thank you.

I did not speak to them for a long while, but was following up in order to figure out what the status is; I would like to settle this, after all, although I have a very clear limit of what I'm willing to spend to do so. Why not talk to them though?
Also, if UG pays this out, they own the loan then right? that is, the lien becomes theirs? or am I wrong?

onwards
I don't know the answer to your last question; but I don't think it really matters. Whoever ends up owning the loan most likely will eventually contact you with a settlement offer. A settlement of the 2nd will eventually become necessary, that is if you cant to have the lien reconveyed. In my post when I stated, "I recommend you don't speak with them or their insurer United Guaranty, probably for many months, if ever," I was referring to the know successful strategies for a successful settlement. There have been many posts on settlements on these forums. I recommend you search the forums for successful strategies used. Above all, you must use known and time proven negotiation techniques, one of which is "don't rush, don't let yourself feel time pressure, don't display eagerness to settle."

[onwards]

onwardsI don't know the answer to your last question; but I don't think it really matters. Whoever ends up owning the loan most likely will eventually contact you with a settlement offer. A settlement of the 2nd will eventually become necessary, that is if you cant to have the lien reconveyed. In my post when I stated, "I recommend you don't speak with them or their insurer United Guaranty, probably for many months, if ever," I was referring to the know successful strategies for a successful settlement. There have been many posts on settlements on these forums. I recommend you search the forums for successful strategies used. Above all, you must use known and time proven negotiation techniques, one of which is "don't rush, don't let yourself feel time pressure, don't display eagerness to settle."

Tomreason,

So I've been waiting, but a couple weeks ago I ended up breaking down and calling UG to find out status.

Remember: they are NOT allowed to call me, because the debt was discharged.

Found out they shipped the loan (and the insurance premiums) back to USAA in November, and don't consider it theirs anymore. It's been six months since then, so my guess is USAA is stuck with it, although what do I know.

So now I'm wondering if I should contact USAA and see if I can start settlement talks. What do you think? again, I can't just wait forever because legally, they are not allowed to contact me.

[Francie]

There was a thread on this forum, though I forgot what section, that some of the [sleazier] processors were using the threat of filing fraud complaints to twist the arms of debtors. It's leverage, nothing else. If you can back what you told them at the time you have no worries. Indeed, if they pressed the issue you might find that actionable (I love turnabout).

Im not 100% sure but the contact part after discharge is just for collecting debt, which they can't do. Anything related to the other potential issue is not prohibited. Since it's discharged, forget it as the financial aspects are covered. You have told them everything you need to. If the FBI shows up at the door, you have the documentation of your earnings at the time - I hope. Guard those and put them in your safe deposit box. Then get a lawyer (if it goes that far, which I doubt).

Most likely, a computer program spit it out because of the big change in income - high one year and low the next. Happens with IRS, too. Reasonable as a quick check.

[TomEason]

Tomreason,

So I've been waiting, but a couple weeks ago I ended up breaking down and calling UG to find out status.

Remember: they are NOT allowed to call me, because the debt was discharged.

Found out they shipped the loan (and the insurance premiums) back to USAA in November, and don't consider it theirs anymore. It's been six months since then, so my guess is USAA is stuck with it, although what do I know.

So now I'm wondering if I should contact USAA and see if I can start settlement talks. What do you think? again, I can't just wait forever because legally, they are not allowed to contact me.

onwards
Whoever has the lien on your home is who you will need to eventually settle with. Visit the Strategy for Settling Your 2nd thread for detailed guidance. Strategy for Settling Your 2nd

[redsoxinsocal]

I did not read the foregoing prior to my negotiations with UG. Wish I had, but am thinking about re-opening discussions because my financial distress has been elevated post-negotiations with UG. I had a $200k second with ST, which I stopped paying. ST then tendered a claim to UG. UG called me up and offered to waive the one year's back interest of $10,000 for $2,000 which I paid. As for the $200K balance, it offered me 0% interest for 30 years, which sounded great to me at the time. I accepted. However, I've since learned that ST charged off the loan at $100K. I am assuming that UG "bought" / obtained the loan for that much from ST. Can you let me know if my assumption is right? If so, then UG is making a $100K profit, while I am struggling to help my unemployed parents, both of whom are elderly and no one will hire them for work. This doesn't seem right. I can't "settle" for $25,000 or some other amount because I do not have that much cash available. I would like lower monthly payments, but am afraid that if I re-open discussions, I would lose what I have right now (unlikely) or that at any time in the future, especially when the market recovers, UG would increase the payments. I appreciate any guidance you may offer. Thank you.