Household HSBC Watch

Mon Oct 18, 2004 7:59 am      

I was absolutely appalled to read the following in my Sunday paper. Please note: Mr. Harney is by and large pro-consumer, anti-fraud etc., so in effect he is on own side. Sometimes he just gets mis-informed, like many of us. I emailed him and gave him this website, along with a few others. He answered me that this information was given by HSBC in a Congressional hearing. HSBC--ya gotta admire their b****. I'm reminded that a wolf in sheep's clothing is still a wolf.

What got me was how he quoted HSBC in his column and their anti-consumer "FRAUDSCORE" system. HSBC (through Household) has supposedly been caught and also ratted on by former employees about how this lender would falsify info on consumer apps and/or tell people to lie in order to qualify for loans they could not afford. So typical to put the blame on everybody else but themselves. I'm sure you all know about the recent and ridiculous $484 Million settlement. HSBC took over Household Finance despite the many protests made by consumer groups to Congress opposing the acquisition, as noted elsewhere on this website.

The picture of HSBC standing before members of Congress talking about a FRAUDSCORE is pretty hard for me to handle.

Please remember: Mr. Harney is on our side. Even he was scammed. In his reply to my email, he stated he will investigate further. We need all the media help we can get.

http://www.washingtonpost.com/wp-dyn/articles/A35863-2004Oct15.html

washingtonpost.com
Perfect Credit Score, Perfect Loan Fraud

By Kenneth R. Harney

Saturday, October 16, 2004; Page F01

When a home buyer has a high credit score, is self-employed with an annual income of more than $100,000, owns a few rental properties, is buying a house priced well above the area average and is buying it alone, what comes to mind?

Solid citizen? A good addition to the neighborhood? An excellent bet to get a big mortgage with a great rate? Sure.

But would you believe fraud? Would you believe that statistically the buyer with that profile is more likely than other loan applicants to be involved in some form of mortgage rip-off skullduggery when the lender he is applying to specializes in loans for home buyers with imperfect credit?

Welcome to the booming world of mortgage fraud. With larceny in their hearts and sophisticated electronic document-preparation programs in their laptops, unethical mortgage loan officers, brokers, real estate agents and lawyers can create fake credit scores, tax returns and identities, as well as ordering inflated appraisals.

According to witnesses at a congressional hearing this month, mortgage fraud is now one of the hottest con games going.

An FBI assistant director testified that fraud is "pervasive" in the mortgage market and is growing fast. Rep. Robert W. Ney (R-Ohio), chairman of the House Financial Services Committee's housing and community opportunity subcommittee, cited industry studies suggesting that "between 10 and 15 percent of all home loan applications involve some fraud or misrepresentation." The potential costs, to buyers and lenders, could be in the billions of dollars a year.

Some of the fraud may seem minor -- a little fibbing on the application about a borrower's income, or a lack of candor about where the buyer's down payment cash really came from. Other fraud is far more organized.

Frequently, mortgage fraud ends up hurting not only lenders but also innocent consumers, witnesses told the hearing. Marta McCall, senior vice president of San Diego-based American Mortgage Network, cited the example of a first-time buyer who was persuaded to purchase a property that was significantly overvalued because of a fraudulent appraisal. The seller pocketed big profit, but now the buyer finds herself unable to refinance and unable to pay off her loan by selling the house because the property is worth less than the mortgage amount.

Faced with more fraud than ever before, lenders nationwide are adopting defensive tactics to sniff out con jobs before they succeed. In one instance described at the hearing, a large national lender has developed its own risk alert system based on extensive statistical analysis of red flags associated with documented cases of fraud. HSBC Mortgage Services Inc., of Prospect Heights, Ill., which specializes in loans to borrowers with credit problems, uses its proprietary FraudScore on all its new mortgages. Some of the red flags are counterintuitive.

For example, said Loren J. Morris, HSBC senior vice president, unusually high credit scores combined with high incomes and higher-than-average mortgage amounts and home values for the neighborhood are among the key telltale signs of fraud in applications. That may sound strange because all these characteristics would normally be associated with cream-puff, problem-free applicants.

The bad guys know this too, and they often try to make a loan application "look as good as possible, so it will sail though" automated underwriting systems without a hitch, Morris said in an interview. Other red flags: self-employed, single people who are buying a home but say they own one or more rental houses.

HSBC's FraudScore system weights these and other factors, including city and state, on a scale of zero to 52. When an applicant presents combined factor weights exceeding a score of 30, an alarm goes off and the company's fraud investigation procedures kick in.

So, what does this mean for home buyers and borrowers who harbor no fraud in their hearts? First, be aware that mortgage cons are rapidly on the rise. Not all appraisers or loan officers you encounter are necessarily playing the game straight. Though they often target big lenders, con artists frequently harm innocent purchasers who end up with loans they don't want, can't afford and can't get rid of. Worse yet, if lenders keep losing millions of dollars to fraud, they're going to pass along those costs to all borrowers in the form of higher fees and interest rates.

Kenneth R. Harney's e-mail address is KenHarney@earthlink.net.

© 2004 The Washington Post Company

Tue Oct 19, 2004 9:08 am      

Recent posts refer to "Mr. Harney" and "Kenneth Harney." The article to which the comments refer is "Mortgage fraud menacing lenders, buyers"

At least at the time of this writing it can be seen in the Star Tribune here:
http://www.startribune.com/stories/417/5031268.html

As you read the article you may substitute the term "predatory lender Household International" for the term "HSBC" to see how the article is actually based.

Household Watch investigators won't list Household's (now HSBC) record on fraud. It is seen throughout this website. Instead, we simply say that HSBC knows fraud when they see it because HFC did enough of it to hurt families and single borrowers throughout America.

The article also refers to representative Bob Ney. Ney received campaign contributions from Household International and pushed to remove state and local predatory lending laws, allowing the OCC to control nationally chartered banks. Ney did more to undo fraud and predatory lending regulations and laws than any other Republican in Ohio.

Clearly Ney is in bed with Household - HSBC. His comments in Harney's article deserve to be noted in view of his track record. Do a Google Search of "Bob Ney" "Household International" and you receive 52 results.

In 2003, ACORN’s quick organizing response also played a critical role in stopping a measure proposed in the U.S. Congress by Rep. Bob Ney (R. Ohio) that would have preempted every state and local law in the country that protects borrowers against predatory lending.

While Bob Ney, elected to represent the people of Ohio took Household - HSBC's money, they were in fact performing a fraud and coverup of their own which became Shea vs Household, wherein payments were intentionally applied late for a period of almost 10 years, resulting in illegal late fees, overlimit fees, and interest due in full on interest free accounts.

As a result of Shea - Household, the borrowers with a high FICO score and unblemished credit to which Kenneth Harney refers did not come from HSBC in the first place. Those borrowers are still trying to clean up their credit reports. HSBC's testimony and comments while a wolf in sheep's clothing, and a comment from Bob Ney, look intelligent to the uninformed but have the potential to embarass Harney when examined in detail.

Kenneth Harney is a nationally syndicated real estate columnist. He can be reached at the Washington Post Writers Group, 1150 15th St. NW., Washington, DC 20071-9200 or by e-mail at kharney@winstarmail.com.

Wed Oct 20, 2004 8:41 am      

To Mr. Harney's credit, his reply to my email to him indicated he will look into the sources I provided, including this website, about HSBC. The FRAUDSCORE info was obtained from the results of a Congressional Hearing.

This is the problem: most don't recognize the nature of entities like HSBC. They have an excellent PR department that seeks to minimize damage and maximize the face they want the public to see. Notice if there is ever anything negative about such a corporation, one is hard put to find it in the newspaper. It will be in section Z on page 45 down near the bottom in a column two inches wide. And it will NEVER be heard about on the evening news.

Yep, these folks sure know how to operate. Our most important job is to educate, educate, educate. We must be careful not to alienate those who may potentially help us, but see that they learn the truth.

Mr. Ney is just one example of what is going on with our hallowed representatives. If justice is not dead, it is severely disabled.

Thu Apr 14, 2005 11:10 pm      

Hello, Household Watch!

Please do this for me if you can. Can you do a survey or poll on your website for the victims of Household/Beneficial who lost their homes after the settlement?

I going to try to get this idea published in the newspaper. If I can get an editor to do a survey on this matter. People would not have to leave or print their names. That way victims would not have to be embarrassed by what happen to them.

The Survey or poll would be like this:

Did you lose your home after the Household International $484 Million Dollars Settlement?

----Yes ----No

Did you have to file bankruptcy after you refinanced with Household?

----Yes -----No

If a large number said yes these things happen to them, maybe we can get the Attorney General attention in each state to take a second look at Household. Maybe we could get the attention of the media.

Maybe we can get the attention of Sir John Bond!

Does anyone have any other ideas? Household Watch what do you think? I'm trying to think of a way to get every state to get involve in doing this survey. Please I'm open to ideas.

Sat Apr 30, 2005 11:39 pm      

I would like to help here What is the next step!!!!