The 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.