Tag Archives: mortgage servicers

Mortgage Service Companies Blasted by Regulators and Housing Advocates

Customer service satisfaction surveyThe big banks have earned a pretty bad reputation over the last decade when it comes to servicing mortgages and, in particular, dealing with homeowners facing foreclosure or struggling to make mortgage payments. So regulators and housing lawyers were hopeful when some of the biggest banks began relying more on mortgage servicing companies to handle accounts. Unfortunately, according to a recent New York Times article, mortgage services are no improvement over the banks when it comes to serious blunders and terrible customer service. In fact, some say they are worse.

What Are Mortgage Servicers?

Your home loan holder (for example, the bank you took out your loan from) can transfer the servicing rights to your loan to a specialty mortgage servicing company. The bank pays the company to service your loan, which includes collecting mortgage payments and forwarding them to the loan holder, setting aside taxes and homeowner’s insurance (if you have an escrow account), and generally managing your account. Loan servicers can also negotiate foreclosure avoidance workouts, handle loan modification applications, and supervise foreclosure procedures.

While mortgage services are not new to the mortgage scene, in the last few years banks have been transferring servicing duties to these companies in record numbers.  Today, specialty mortgage servicers (the two biggest are Ocwen Financial and Nationstar) handle six times more mortgage accounts than they did in 2010.

Complaints About Specialty Mortgage Servicing Companies

According to the New York Times, the number of complaints about mortgage servicing companies has surged in recent years.  Here are just a few of the gripes against mortgage servicers (for a more detailed list, see Common Mortgage Servicer Violations in Loan Modifications).

  • The companies often fail to appoint a single point of contact and instead give homeowners the runaround when they are trying to get a loan modification or negotiate a workout.
  • Companies repeatedly ask homeowners for the same documents during loan modifications, so that homeowners get stuck on an endless document production treadmill without any resolution of their application.
  • Companies lose loan modification files when transferring the loan to another company.

A recent settlement highlights some of the specific complaints against Ocwen. According to the investigation that ended in the settlement, in the past few years Ocwen:

  • used robosigners (employees signed foreclosure documents but had no knowledge about the information in the documents)
  • charged improper fees
  • provided false or misleading reasons for denying loan modifications, and
  • dropped the ball on loan modification applications that were processed by previous servicers. (To learn more about the investigation and settlement, see Foreclosure Relief for Homeowners With Ocwen Mortgages.)

Worse Than the Banks?

According to regulators, customer service is sorely lacking with the mortgage servicing companies, even more so than with the banks.

What Can You Do?

If your mortgage servicer is stalling, giving you the runaround, or has made errors in your account, take action. Here are some things you can do.

Consult with a foreclosure attorney. You can contact a foreclosure or debt attorney to step in and help.

Submit a complaint to the Consumer Financial Protection Bureau. You can submit an online complaint with the CFPB.  The CFPB won’t represent you, but it does gather complaints so that it can track trends and take action where necessary. It will also forward your complaint to the mortgage servicer – but it won’t stop the foreclosure.

Contact Ocwen. If your loan is with Ocwen, you might be able to get assistance under the terms of the settlement agreement.  Call 800-337-6695 or email ConsumerRelief@Ocwen.com.

Mortgage Servicers, States, and Fed Agree to Historic $25 Billion Settlement

Federal agencies and state attorneys general recently announced that the five largest mortgage servicers have agreed to pay up to $25 billion to settle legal claims related to wrongdoing during the foreclosure crisis. The participating mortgage servicers include Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial. If additional mortgage servicers join in the settlement, the total amount of the settlement could reach $30 billion or even $45 billion.

Where will the settlement money go?

It’s estimated that up to two million former and current homeowners will receive some form of help under the terms of the settlement. The settlement money will be allocated as follows:

  • $10 billion to principal reduction
  • $3 billion to underwater mortgage refinancing
  • $7 billion for other mortgage relief, such as forbearance
  • $1.5 billion for cash payments of $2,000 to an estimated 750,000 borrowers who lost their homes to foreclosure from January 2008 through the end of 2011, and
  • $5 billion to participating states and the federal government.

The money will be distributed over the next three years, but incentives are in place to encourage the banks to distribute the money in the next 12 months and to help those homeowners who are in most need of relief.

Who gets the money?

It’s still unclear who exactly will be eligible for help under the terms of the settlement. But some classes of borrowers will clearly not benefit, including the following:

  • Borrowers whose loans are not serviced by the participating mortgage servicers
  • Homeowners in Oklahoma (Oklahoma is the only state that has not agreed to sign off on the settlement), and
  • Borrowers whose loans are owned by Fannie Mae or Freddie Mac. (To find out whether your loan is owned by Fannie Mae or Freddie Mac, use the loan look-up tools on their websites at www.fanniemae.com/loanlookup and www.freddiemac.com/mymortgage.)

The mortgage servicers participating in the settlement will determine which borrowers are eligible for relief over the next six to nine months. If you think you might be eligible, you may want to contact your servicer directly.

What do the mortgage servicers get in return?

In exchange for their settlement payment, the mortgage servicers will no longer be subject to state and federal civil lawsuits for wrongdoing related to the foreclosure crisis, including robo-signing, the charging of excessive late fees, and the wrongful denial of loan modification applications. However, banks may still be subject to criminal prosecutions and private lawsuits.

For more information on the mortgage settlement, visit www.nationalmortgagesettlement.com.