Loan servicing is the process by which the borrower – either of a home loan or student loan – entrusts the daily management of that loan repayment to a third party. That third party is supposed to handle the loans on behalf of the owner, directing payments through the system and deciding how best to handle defaults.
It is not all that complicated, loan servicing. And yet, it has become an industry rife with systemic problems that continue today, even 10 years after the start of the national foreclosure crisis. It seems many servicers are unable to rely on a business model in which they can profit and also not swindle their customers. Perhaps its’ time we start weighing some alternatives.
Consider that just recently, Ocwen, one of the country’s largest servicers, was just slapped with sanctions via the National Mortgage Settlement. These were terms the company had agreed to back in 2013, after it was accused of breaking consumer financial protection laws at nearly every step in the mortgage servicing process.
The settlement was to include $127 million in cash to certain homeowners who were wrongfully foreclosed upon, plus $2 billion in credit for other consumer relief measures.
The agreement was to ensure the company stayed in line with lawful servicing procedures, and there were a number of criteria the company had to meet. One of those metrics involved how the company was supposed to let borrowers know when they did not qualify for modification of their loan. It was really simple. All the company had to do was to notify the borrower, show the evidence that led to that decision and notify the borrower of the timeline in which they had to appeal the ruling.
It’s sounds so simple – and it is. The underlying principle is that borrowers deserve to have a fair opportunity to stay in their homes. Yet, as our foreclosure defense lawyers can explain, Ocwen has flunked this metric time and again since 2014. It’s been two years the company has been on notice that it isn’t in compliance, and it still could not get it together.
As a result, the National Mortgage Settlement oversight monitor has prohibited the loan servicer from foreclosing on some 17,500 loans in which the owner might be affected.
Of course, it’s been noted that Ocwen is expected to be back in the foreclosure business by summer, assuming it corrects this issue.
But this is just the latest in a series of ongoing questionable practices by the company. For example, it’s been accused of sending small checks to homeowners that upon cashing them enrolled them automatically in pricey insurance plans. The company also allegedly backdated correspondence with borrowers so they would have no ability to be able to challenge loan modification denials (they received the letter the same day the appeal was due). In other cases, transactions with homeowners were stalled so the company could collect additional fees.
Ocwen insists these were all honest mistakes, and that it has fixed the homeowner correspondence issue and should be allowed to continue with its pending foreclosures.
If you’re battling debt collection in Miami or the surrounding areas contact Jacobs Legal 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 at 5 p.m. on “Debt Warriors with Bruce Jacobs and Court Keeley,” discussing foreclosure topics that matter to YOU.
Yet another way borrowers are getting screwed: Inside the long-lasting disaster of American loan servicing, May 3, 2016, By David Dayen, Salon.com
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