Homeowner Loan Complaints On the Increase – Again

An increasing number of people working hard to avoid foreclosure are running up against the same kinds of issues that dogged the mortgage industry in years’ past.
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Poor record-keeping. Errors in fees. Wrongful evictions. These are the same problems we saw with the large financial institutions leading up to the federally-negotiated $26 billion mortgage fraud settlement.

Yet, our Miami foreclosure lawyers know we’re seeing them again. These same problems are being noted in dozens of foreclosure lawsuits against companies tapped to collect on mortgages. It’s not just foreclosure lawyers who recognize that we’ve got a problem. State and federal regulators have stepped forward to voice concern.

These firms are technically known as mortgage “servicers,” but they are responsible for more than simply arranging payments from borrowers to banks. They wield a lot of say in whether a borrower is able to secure a home loan modification, or whether a foreclosure will be initiated.

Servicing rights have been sold aggressively in recent years from companies who were bound by the terms of the national settlement agreement that was supposed to make the process fairer for homeowners. Those new rules had included a single point of contact, clear billing statements, no more dual-tracking, etc.

But these new companies aren’t beholden to that agreement.

That means that more and more frequently, we’re seeing homeowners falling victim to the same kinds of mortgage woes we saw previously. In some cases, there are huge delays in securing home loan modifications, if they are granted at all. Homeowners trying to claw their way out of a foreclosure filing are having to ask for the same paperwork again and again from a firm that seems uninterested in helping them stabilize and stay in their homes. Mortgages change hands from company to company, and homeowners are left with little idea of who to contact or what they need to halt the process.

The biggest culprits are companies like Nationstar and Ocwen Financial. They have secured nearly on-fifth of the market, which is a three percent gain from what they had just four years ago, according to Inside Mortgage Finance.

Initially, federal regulators believed that specialized companies like these might do a better job where larger firms had failed. There was a belief that smaller firms would be more in tune to borrower’s needs, and more easily able to address issues and concerns.

However, they are fast finding that the opposite appears to be true.

As a result, regulators have begun to intervene. Just recently in New York, officials stopped the transfer of nearly $40 billion in servicing rights to Ocwen from Wells Fargo.

In California, regulators say the number of complaints regarding mortgage transfers has seen enormous growth, with too many firms reportedly over-promising and then under-delivering on services to borrowers.

These problems have also drawn the attention of the U.S. Consumer Financial Protection Bureau, where a top official was highly critical of the fact that the transfer process created major issues for homeowners when in fact, it should be seamless.

Banks view the mortgage servicing rights as a headache precisely because of the regulatory guidelines to which they are bound. But these other companies have found a loophole – and they appear to be exploiting it to the fullest.

From what we can see, they have done little to help homeowners stay in their home, which was the primary goal of the new regulations.

If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Mortgage Wars,” discussing foreclosure topics that matter to YOU.

Additional Resources:
Loan Complaints by Homeowners Rise Once More, Feb. 18, 2014, By Jessica Silver-Greenberg and Michael Corkery, The New York Times
More Blog Entries:
$1.25 Billion Settlement for Morgan Stanley to Resolve Mortgage Fraud Claims, Feb. 10, 2014, Miami Foreclosure Lawyer Blog