Homeowners Experience Déjà Vu of Injustice, as Mortgage Servicers Adopt Banks’ Abusive Practices

Once again, homeowners facing foreclosure are falling victim to abusive practices in the handling of their mortgage, but this time the overpromising and under delivering can be attributed to entities other than the banks – mortgage servicers.

As the name suggests, “mortgage servicers” are entities that handle and service mortgage loans.  A recent trend in the mortgage industry, is for banks to contract with mortgage servicers to collect payments, manage loan modifications, and handle foreclosures on loans which the bank originated. Mortgage servicers, such as Nationstar and Ocwen, have seen their influence in the mortgage-servicing market rise 3 percent in the last few years, as they now have more than 17 percent of the mortgage servicing market.

Déjà Vu of injustice

Along with this increase in business came mountains of paperwork and responsibility. As a result of the banks contracting the servicing of waves and waves of mortgage loans to mortgage servicers, the mortgage servicers bit off more than they could chew and have overpromised and underdelivered.

Complaints from homeowners have flooded the offices of federal and state regulators and firms like ours, Oppenheim Law. In fact, more than half of the 187,818 complaints filed with the Consumer Financial Protection Bureau involved mortgage problems, with a vast majority of them concerning activities conducted by servicers.

Mortgage servicers wrongdoings:

• Billing of improper fees
• Wrongly denying loan modifications
• Failing to provide adequate customer service
• Failing to process mortgage payments in a timely manner
• Failing to honor trial modifications with prior servicers, and
• Robo-signing of foreclosure documents without verifying information

These are just a few of the injustices that homeowners have experienced at the hands of mortgage servicers across the country.  Does this sound familiar? It should, because these are the same malfeasances that the nation’s largest banks committed against homeowners in its handling of millions of mortgages facing foreclosure.

New federal regulations were enacted on the heels of Ocwen Loan Servicing reaching a $2.1 billion settlement with the consumer bureau in December 2013. In January, the federal government issued a new set of rules, much like those put in place to better regulate banks after the 2012 $26 billion National Mortgage Settlement, attempting to govern mortgage servicers.

Adjust the business model

The hope is that these new regulations will hold non-bank entities, such as mortgage servicers, accountable for servicing and foreclosure abuses, thereby forcing the servicers to adjust their business model and technology to properly service the loans they undertake.

 

Oppenheim Law’s practice areas include real estate and defending homeowners and investors from foreclosure, arranging short-sales, loan modifications, commercial litigation, and business related matters. Roy is also the creator of the South Florida Law Blog,named the best business and technology blog by the Sun-Sentinel. Connect with Roy on Twitter, Facebook, LinkedIn and YouTube .