Agency Proposal
For Borrowers in Trouble: Options for Avoiding Foreclosure
Skip to issue§1. Considering all possible options
Everybody pretty much agrees that, during the mortgage crisis, lack of information about options and lack of help from their mortgage servicer caused some borrowers to lose their homes to foreclosure, even though they might have qualified for a “loss mitigation option” (i.e., some new arrangement that would have let these borrowers work their way out of trouble, or at least reduce the amount they lost.) CFPB is proposing to require servicers to identify possible options for borrowers in trouble, help them do what’s necessary to apply, and make a prompt decision on their application. Helping people through this process is one of the most important jobs of the customer service representatives that servicers would now have to assign to borrowers as soon as they start to get into trouble. (See the Reliable Contact with People Who Can Help and Early Intervention Help posts.)
What this means for consumers. The law doesn’t require mortgage lenders to offer borrowers in trouble any alternatives to foreclosure. CFPB is not proposing to change this. But, since foreclosure isn’t a good outcome for lenders or consumers, at least some loss mitigation options (LMOs) are often available on certain conditions or to certain borrowers. CFPB is proposing that if a servicer offers LMOs in the ordinary course of business, and if the borrower applies, the servicer must figure out whether the borrower qualifies for any option the servicer offers, within 30 days of getting the complete application. (A single application would be enough to be considered for all possible LMOs.)
A “complete” application means that the servicer has all the information it usually considers in making LMO decisions. The servicer has to make reasonable efforts to get the borrower to complete his/her application. It can set a deadline for completion, but special steps would be required as the deadline approaches: If a borrower starts the application process at least 5 business days before the deadline but hasn’t completed it, the servicer would have to contact the borrower, and tell him/her what information is missing and how soon it must be submitted.
If the servicer decides to offer the borrower a loss mitigation option, it must give him/her at least 14 days to decide whether to accept. CFPB specifically asks whether borrowers should be able to give their decision orally (rather than in writing). Would benefits to borrowers justify problems this would create for servicers?
If the servicer denies the borrower’s LMO application, it must notify the borrower of its decision. If the denial involves a temporary or permanent ”loan modification” (such as reducing the interest rate, extending the loan term, or changing the kind of loan) additional rules would apply. First, the notice must include specific reasons why the borrower didn’t qualify. Second, servicers would have to set up an appeal process, and give borrowers at least 14 days to appeal. The denial would have to be reviewed by different people than the ones who made the initial decision. The borrower must get a written decision on the appeal within 30 days.
The requirement of specific reasons and an appeal would apply only to LMOs that involve loan modification. CFPB is trying to balance the interests of borrowers with the burdens on servicers. But it specifically asks, should it require reasons and appeal for denial of all kinds of LMOs? (Examples of non-loan modification options include forbearance, short sale, and deed-in-lieu of foreclosure.) Is the appeals process a good idea at all — or will it not fix enough mistakes to be worth the cost?
CFPB doesn’t want servicers to have to consider duplicate LMO requests, but it wants comment on whether a borrower should be able to get another evaluation if an appropriate time has passed since the original evaluation. If so, what is an “appropriate” amount of time?
As it is now, servicers are responsible to the mortgage owner for making bad LMO decisions. CFPB considered whether they should also be responsible to borrowers. For example, it could make incorrectly deciding an LMO application a covered error (see Getting Errors Fixed §2). But sometimes the factors being considered in LMO decisions are judgment calls that could go either way. CFPB is hoping the new appeals process will be enough to make sure that the most complicated LMOs – that is, loan modification options — are correctly decided. Should CFPB go further? If so, what would be the standards for judging whether the servicer made a “correct” LMO decision? Since lenders aren’t required to offer LMOs in the first place, would stricter requirements cause lenders to offer fewer, or no, LMOs?
What this means for servicers. CFPB is particularly looking for comment from small servicers about the impact of these new proposals.
Servicers would be required to have “reasonable information management policies and procedures” that enable them to:
- provide accurate information regarding LMOs
- identify all LMOs for which the borrower may be eligible
- identify information the borrower needs to submit to apply
- provide the assigned “continuity of contact” personnel with prompt access to all information and documents the borrower submits (see the “Reliable Contact with People Who Can Help” post)
- evaluate borrowers for all loss mitigation options for which they may be eligible
- review a denial if the borrower appeals
Failing to provide accurate information to a borrower about LMOs is one of the proposed new 9 covered errors. (see Getting Errors Fixed §2). If documents provided by borrowers are “lost or misplaced on a regular basis,” the servicer could be guilty of a “pattern and practice” of violations.
Servicers will want to review CFPB’s commentary on when a servicer offers LMOs in the “ordinary course of business.” The deadline for applying for an LMO can’t be more than 90 days before a scheduled (or anticipated) foreclosure sale. The requirement to use “reasonable diligence” in completing the borrower’s application would include taking steps to get all required information before the earlier of (i) the servicer’s own deadline for submitting a completed LMO application; or (ii) the time when anything the borrower has already submitted becomes stale. An authorized representative can submit an LMO application for a borrower.
Since the servicer is in a better position than the borrower to know which LMOs might be appropriate, it must make at least a threshold eligibility determination for every LMO offered by it, a guarantor, an owner, or an assignee. (CFPB emphasizes that this is the servicer’s obligaton; the proposed rule would not impose an obligation on an owner, assignee, or guarantor that is not also a servicer.) If net present value calculation plays a role in denying a loan modification option, the notice must specify the monthly gross income and property value used. The goal of the proposed appeal process is having the loan modification decision reviewed by a fresh pair of eyes. This can be done by a supervisor of the people who made the initial decision, so long as he/she was not directly involved in that decision. Will this be a problem for small servicers? The servicer would have to allow a borrower to appeal denial of any loan modification concurrently with his/her accepting a different LMO.
Servicers would be allowed to set standards for acceptance and rejection. But, if a borrower who has been offered an LMO makes the first payment due under that option on time, the servicer must treat this as an acceptance, whether or not the borrower formally accepted the offer. A borrower who has not responded within 14 days could be deemed to reject the offered LMO. Is this a good idea?
Read what CFPB says in the NPRM about LMOs, small sevicers, and reasonable information management.
Read CFPB’s analysis of the costs and benefits of LMO determinations (general) (small business) and reasonable information management (general) (small business).
See the text of the proposed rule and CFPB commentary: §1024.41; §1024.38
§2. Avoiding premature foreclosure sales
During the mortgage crisis, there were times when a foreclosure sale took place even though the borrower was trying to work out, or even had worked out, an LMO. CFPB’s proposed new requirements for better recordkeeping, and more communication between servicers and borrowers in trouble, should help prevent such mistakes. One specific goal of the required recordkeeping is a system that lets servicers submit documents or filings for a foreclosure process that reflect “accurate and current information.” But CFPB is also proposing specific consumer protections around foreclosure sales.
What this means for consumers. Servicers would be forbidden from conducting a foreclosure sale for a borrower with a completed LMO application unless:
- the servicer sends a denial notice and the borrower hasn’t asked for an appeal within the time allowed (or an appeal isn’t available because the available LMOs did not include loan modification)
- the servicer denies the appeal, if the borrwer makes one
- the borrower rejects an LMO the servicer offered
- the borrower doesn’t comply with the terms of the LMO
CFPB emphasizes that nothing prevents servicers from taking other steps in the foreclosure process during this time. It is trying to balance borrowers’ interests in having LMO applications carefully considered against lenders’ interests in getting their money out of a loan situation that can’t be fixed. Has it got the right balance? In particular, CFPB wants to know if it should make servicers completely suspend foreclosure proceedings while evaluating LMO applications. (E.g., should a “substantially complete” loss mitigation application prevent the servicer from referring a loan to foreclosure?)
To help the borrower avoid premature action by other lenders who have an interest in the property, within 5 days of getting an LMO application servicers would be required to check whether there are other mortgages, etc. on the property and, if so, send those creditors a copy of the application. Also, if there is a change in servicers during the application process, the original servicer must make sure the new servicer knows about the application. (See Who’s Servicing Your Loan § 2.) (The new servicer might have different rules about LMOs, that could be better or worse for the borrower, but the new servicer will have the same responsibilities to help the borrower complete his/her application and decide whether he/she qualifies.)
What this means for servicers. Failing to stop a scheduled foreclosure sale once the borrower has applied for an LMO is one of the proposed new 9 covered errors. (See Getting Errors Fixed § 2.) Servicers will want to read CFBP commentary on how to treat short sales for these purposes. CFBP particularly wants to know whether the LMO proposals would require servicers to undertake practices that conflict with other federal regulatory requirements or state law.
Servicers would have to use reasonable diligence to discover others with an interest in the property; this could include asking the borrower to provide this information as part of the LMO application. A servicer on the receiving end of information that a borrower has an LMO application pending with another servicer would be equally responsible for complying with the new requirements. Note that one part of CFPB’s new proposals in general is that secondary lienholders will now have the same responsibilities to borrowers as primary lienholders.
Two of the specific criteria for judging reasonable information management practices are that the servicer can (1) provide owners or assignees of mortgage loans with accurate and current information about any mortgage loans they own, and (2) submit documents or filings required for a foreclosure process that reflect accurate and current information and comply with applicable law. Also, failing to promptly transfer accurate and current information about the borrower’s account to a new servicer is one of the proposed new 9 covered errors. (See Getting Errors Fixed § 2.)
Read what CFPB says in the NPRM about foreclosure and other liens, and reasonable information management.
Read CFPB’s analysis of the costs and benefits of LMO determinations: general; small business.
See the text of the proposed rule and CFPB commentary:§ 1024.41(g),(j)
§3. Providing prompt and accurate payoff balance
Getting accurate information about the amount required to payoff a mortgage is essential if the borrower is hoping to refinance. However, consumer advocates have said that some servicers don’t respond to requests, refuse to give payoff statements to certain borrowers, or require borrowers to make up missed payments before giving them a payoff balance. This interferes with borrowers’ ability to avoid, or get out of, trouble with their mortgage.
What this means for consumers. CFPB proposes that servicers must provide an accurate payoff balance no later than 7 business days after getting the borrower’s written request. If a borrower complains that the balance is wrong, the servicer must either correct the error or explain why the number is correct within 5 business days.
Servicers could not require borrowers to make loan payments, but could charge a fee for this information. Right approach?
What this means for servicers. Failing to provide an accurate payoff balance is one of the proposed new 9 covered errors. (See Getting Errors Fixed § 2.) The 5-business day period for investigating or correcting this error claim could not be extended because CFPB thinks having this information is essential to pursuing options that protect the borrower — but it does want comment on whether 5 days is an appropriate timeframe.
Unlike many other parts of CFPB’s proposals, the new payoff statement requirement would apply to open-end, as well as closed-end, loans.
Read what CFPB says in the NPRM about payoff balances and timeframe.
See the text of the proposed rule and CFPB commentary: § 1024.35(b)(6), (e)(3)
Another issue during the foreclosure sale is the placement of Real Estate Owned (REO) insurance, which protects ONLY THE LOAN SERVICER AND NOT THE BORROWER. These premiums are ALWAYS charged directly to the borrower’s escrow account (one is created for non-escrow liens). When a borrower pulls out of foreclosure, they are then held responsible for REO premiums that did not have them listed as the beneficiary on the policy. If the foreclosure is sold, the escrow balance is rolled into the balance of the loan. Either way, the Loan Servicer and Force-Placed Insurer force these post-foreclosure REO policies to renew MONTHLY on a borrower’s account.
To Whom It May Concern:
• I bought my home in 2001. CITIMORTGAGE later purchased my mortgage. From 2001-2009 I made all my payments on time. In early 2009 I asked for a 3 month deferment on the payments while awaiting my disability to go through and payments to begin.
• I was then told I qualified for a “loan modification” and that it would reduce my payments and interest rate and make them more affordable.
• I was advised not to send in any payments during the modification. The bank would not accept them.
• They would let me know when to start making payments again. Then the paperwork and reps process began.
• I sent in the paperwork at least four dozen times and went through many steps and departments.
• I… more »
• In 2009 And 2010 I was put on temporary payment programs. I made all the payments on time.
• For six months they were elevated payments and made all the elevated payments on time.
• Then back to the modification process and no payments accepted again by the bank.
• In June the modification process was closed because I could not furnish a letter from SS on how long I would be on disability. That’s like asking someone how long do you plan on being employed at your job. There is no timeline I told them. Social Security’s answer with regards to this is “indefinite”. I am on it till I get well, which doesn’t look anytime soon. I sent them a Dr. note outlining a time frame as much as possible. That’s all I can get to do so.
• I am now over $45,000 in debt over a three-month deferment and am in imminent threat of losing my home.
• We are a family of two adults and five children that are going to be put on the streets in Cassellbery Florida.
• This is a widespread problem and they might as well be getting away with murder doing this to people. This has to be put to a stop immediately. Is this legal? Please help my family stay in our beloved home.
THEY ARE USING THE H.A.M.P PROGRAM IN A PREDATORY WAY! DISABILITY DISCRIMINATION ALSO.
[Note: Regulation Room Moderator removed personal contact information]
PLEASE FILE A COMPLAINT ON MY BEHALF.
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Kamymenapace, it sounds like you’ve had a terrible time. Regulation Room can’t file a complaint for you, but we suggest you contact either CFPB’s complaint center or a HUD approved housing counselor to see if they can help.
So that everyone has space to comment, we’ve removed all the other copies of your comment. And we’ve taken out your personal information from this copy.
Moderator…I can still see all of Kamy’s other copies…I can also still see her personal information on this copy…
The law may not require lenders to offer modifiations but it certainly does require lenders to treat all similarly situated parties the same. The mortgage industry issued over 5 million NEGATIVE EQUITY modifications to avoid the investor losses proven by the mathematical result of a +NPV setting their own NEW PRECEDENT what is the new course of business. Every homeowner with a loan to value of 80% of greater is legally, ethically and morally entitled to a similar financial advantage, capitalism and the law.
For more information see the petition located at Unitedinprosperity.org
Hi sue, and thanks for your comment. It sounds like you’re discussing a loss mitigation option that lenders offer to some borrowers, but not to others. Under the proposed rule, servicers would be required to notify borrowers of all available LMO’s, and to tell them which LMO’s they qualify for after they’ve applied. Does this sound like it would address your concern?
This addresses nothing in my example. They notified me of LMO’s but then hid the fact they applied extra risk percentage of 2.5%, meaning the NPV caluculated by my using the HAMP site did not match the NPV value they came up with, since Wells Fargo was adding unbeknown to consumers 2.5% risk to the prime.Telling them all the LMO’s means nothing if they do not have full disclosures on the numbers used in the NPV model their calculations, and their deteminations. They should not be able to disqualify anyone from a LMO unless they fully disclose all the calculations used to determine that disqualification.
No, It doesn’t. The new industry practice is that loss Mitigation or modifications are to be offered IF it is financially better for the INVESTOR to modify the homeowner instead of foreclosing, a positive net present value.
But the proposed rules are just a delay for Wall Street to continue business as usual with no regard for fairness or equality, when there were over 5 million modifications issued to avoid the investors fiancial loss when negative equity was involved, setting the new industry practice or legal precedent what is offered in the normal course of business for negative equity homeowners.
The home was bought and the mortage was invested in under the principles of capitalism, we need our governmental agencies to not only recongnize this but to act on it.
There is… more »
My argument is unless we treated housing as the capitalistic product it is, there will be no recovery.
What is being proposed is that we continue to allow the “fox in the hen House” making their own decisions on who gets a modification or gets foreclosed on based on totally unrevelant factors, this is what must be changed. All homeowners have a built in reliance because of existing laws that Wall Street would have to act with good faith and fair dealings with them. « less
This duplicate comment was removed by the moderator.
Hi sue, sorry I misunderstood your suggestion at first. It sounds like you’re suggesting that CFPB should regulate how servicers are allowed to decide which borrowers qualify for LMO’s. How, specifically, do you think the current practice should be changed?
That’s easy, existing laws. The financial industry already decided on which borrowers should receive a LMO for their own financial protection, the homeowners who if foreclosed on would cost the investor to lose a guaranteed portion of their initial investment proven by a +NPV. (ANY HOMEOWNER WITH A LOAN TO VALUE ABOVE 80% WOULD COST THE INVESTOR TO LOSE A SIGNIFICANT PORTION OF THE CAPITAL INVESTMENT, A POSTIVE NET PRESENT VALUE REGARDLESS OF THE HOMEOWNERS PERSONAL FINANCIAL STATUS)
Since no other branch of the govermnent has enforced existing laws, it is up to the CFPB, which was in my proposal to the government in the fall of 2008, to get the “fox out of the henhosue”.
It is in direct violation of the law when two homeowners with the same negative equity (similiarly… more »
Wall Street will not change their ways as long as there are NO PENALTIES THAT ARE ENFORCED since most homeowners do not have the financial whereitall to sue and the banks have the governments blessing and taxpayers money to do whatever they want, there are no penalities to them. AND MOST IMPORTANT UNTIL THE TAXPAYER PAID ENTITIES OF THE GSE’S AND THE FHA ARE INCLUDED INTO STANDARD CAPITALISTIC LMO’S, OF A MODIFICATION FOR EVERY NEGATIVE EQUITY HOMEOWNER, How do you really expect Wall Street to follow the law if the government is violating it along with them?
The solution has been given to all seven governmental agencies back in the fall of 2008. The proof is in the pudding so to speak, the OCC, and the AG’s have included PARTIAL numerous guidelines from my proposal, UNITEDINPROSPERITY.ORG to stop the Foreclosure Crisis from continuing, such as single point of contact, dual tracking, staffing, time limits, communications, standards etcc.. BUT all without including the underlying principle that housing is a capitalist product not a socialistic one. The mortgage clause of “dont pay be foreclosed on” was changed to “let me modify you if you have negative equity, not if you can’t afford it”
Because of the governments actions and inactions and the lenght of time past, it is crucial that the solution be enforced NOW not in another 6-9-12-15-18-21 months.
I would welcome the opportunity to discuss this with any member of government at their convenience. « less
1. This rule only works if there are requirements to notify on denials, with harsh penalties for failure to send notice of a denial timely, including loss of right of forclosure for a proscribed period and that the clock would not start until person was sucessfully contacted via certified signature required mail.
2. Servicer denies appeals as a rubber stamp of their own actions. Does nothing. Should be requires that all LMO’s have an appeals process, if one is offered.
3. Borrowers Rejections must have ample time to evaluate the situation 48 hour decision windows, on real estate transactions like your primary residence should not be allowed.
4. This should also have an appeal window.
This option does not take into account the fraud perpetrated by many lenders. While they manipulated LIBOR rates and charged outrageous interest, lying to homebuyers about the loans and ignoring phone calls and pleas for workouts until it was too late to fix the problem.
The lenders were required to write modifications by our government, however it was not legally enforceable so they played games with borrowers by dragging out the modification process until the borrower missed a payment or became dismally discouraged or lost a job.
Many of these lenders are still playing games with the homebuyers and not working with them, but foreclosing with impunity.
I think that lenders should be forced to include principle write-downs as part of their “workout” to prevent foreclosure.
“The… more »
The amount of information that is publicly available regarding the fraud that brought us into this place should be enough evidence that the homebuyer should not have to bear this burden alone.
It is time to get some real relief for the homebuyers – currently their are more foreclosed homes than families without homes, and no sign of letting up. The consumer cannot continue to carry this fraud alone – we did not initiate it. « less
The servicers are all about making a buck. They need to be held to mortgage modification offers. If they lose paperwork, it needs to be on them, NOT the homeowner. Modifications should be processed and approved with or without paperwork.
The servicers aren’t non-profit organizations. They were hit with an influx of loans tht were defaulting for various reasons from job loss, bankruptcies, medical emeregencies, etc. But recall that some people used their homes as ATM machines and that was another part of the problem. There is definitely enough blame to go around. But going forward, adding “expectations” and regulations doesn’t really add up to a solution. Fair and reasonable enforcement needs to be part of the solution.
The main problem with HAMP and the other programs is that they are voluntary on the part of the servicers and banks. These programs need to be mandatory. The taxpayers bailed out the banks. Now the banks need to bailout the taxpaying homeowners.
As an advocate for homeowners in foreclosure, I am on the phone with servicers large and small every day. while foreclosure education is always needed, I think a more pressing issue is regulation of servicers who misrepresent their own investors and who decieve borrowers for their own financial gain. In several of our firms’ cases major servicers have claimed they could not offer a loan modification to our our clients’ because there was an “investor restriction.” This would be valid if it were true, as investors are not required to to consent to a modification. However, oftentimes this is just an excuse the servicers use to keep a client in default and to keep raking in fees that benefit themselves (investor’s usually recieve principle and interest, while servicers… more »
The CFPB could expand the covered error “Not providing accurate information to a borrower in trouble about loss mitigation options” to specifically include decpetive practices, such as improper denials i mentioned. This will pave the way for enforcement actions which will be necessary to check most for-profit servicers
I bought my home in 2005 and took out a fixed rate loan. I put $100,000 down and in 2005 it was worth $267,000.00. Now it is worth $144,000.00. I started my title company in 2004. In 2007, when the market tanked, we were able to stay afloat for 3 years. During this time period, we were on the equity acceleration program and were making 2 payments a month. We were attempting to get the loan paid off as quickly as possible. In 2009, I closed my company due to a lack of business. I was lucky to get a job a month after I closed the company and started making payments again. I was only behind on my mortgage 2 months. I tried to work with Chase later in 2010 to see if I could get the 2 months added to the back of the loan and was told that I could not afford the home. I told the rep that… more »
I have one more thing to say, If I or any other consumer forge someone’s signature or fraudulently file a paper, and we are caught, I would go to jail, and would not be able to walk the streets and continue to hurt people. The Lenders need to be held accountable for their actions. I don’t understand how they can conduct business like this without having to face the consequences for the wrong that they have done.
I realize that many people chose to purchase a home that they really could not afford, but that does not give the right for the lender to foreclose with the incorrect paperwork or fraudulently signed papers. If they are going to take someones house, then they need to do it the right way, with the correct paperwork and signatures.
It is not the homeowners fault that the lenders cannot get the appropriate paperwork signed at closing and it is also not their fault if the lenders cannot keep the documents in the file where they belong. I am sorry that the lenders do not have a system set up to where they can keep the paperwork safe for the time when they possibly need it. « less
Welcome to Regulation Room losinghome2012, thank you for sharing your experiences. It sounds like you didn’t get the help or information you needed. CFPB is proposing to require servicers to evaluate borrowers for all loss mitigation options they might be eligible for and provide prompt, accurate information about those options. In addition, servicers could be found in violation of CFPB regulations if they fail to keep records properly. Would these rules have helped in your situation? CFPB needs detailed regulations to protect consumers in the future, so any specific recommendations you could share based on your personal experiences would be valuable to the agency.
Thanks for the reply. I do think that it would have helped if these rules had been in place. Rules are great if they are regulated and followed. We can create rules all we want along with fines, but in the end if they are not followed and consequences are not served, they will just continue to take advantage of distressed homeowners.
The lenders are still filing inaccurate paperwork and by falsifying and forging paperwork. Money fines are not going to do it. They are wealthy individuals and corporations and I don’t see that money fines are going to make a difference to them. They will just pay the fine and move on. They need to serve jail time. They may be very wealthy individuals, but in the end, they are no different then you or I. They eat the same kinds of foods,… more »
I have been a negotiator that assists homeowners with their homes for the last 2.5 years and was working with homeowners and the banks before the settlement as well as after the settlement, and I can tell you that NOTHING has changed. The lenders do not call back, they are always loosing documents. And you cannot get a response in 30 days even if your life depended upon it, but again, NOTHING is being done. I am sure he mortgage settlement has done some good for many homeowners, but for many it has not. But yet, you don’t hear about the lenders/servicers receiving any fines or even jail time.
They need to be prosecuted in court just like everyone else or else they will continue the same behavior. Make some rules that make sense and hold them accountable.
You are on the right track with what has been done, but we are far from there. We will never get there if the servicers and lenders are not prosecuted for violating the laws.
Again, thank you for taking the time to listen and trying to make it better for many homeowners who desperately need assistance. « less
Dear CFPB,
Right now your proposed rules for Avoiding Foreclosure presume every foreclosure is lawful, which is absurd. Unlike the national foreclosure fraud settlement, your proposals do not address wrongful foreclosures. However, even though the national foreclosure fraud suit alleges deceptive practices in wrongful foreclosures, the administration of the settlement will not stop them. Your proposed rules for “Avoiding Foreclosure” need to add a provision to stop an unlawful foreclosure in progress and you need to enforce the national foreclosure fraud settlement because the state attorneys general have no intention of doing so.
Page 27 of the multistate complaint, which is posted on nationalmortgagesettlement.com brought by the state attorneys general, the DOJ and other… more »
From page 27:
64. The Banks’ failure to follow appropriate foreclosure procedures,
and related unfair and deceptive practices include, but are not limited to, the following:
a. failing to properly identify the foreclosing party;
b. charging improper fees related to foreclosures;
c. preparing, executing, notarizing or presenting false and misleading documents, filing false and misleading documents with courts and government agencies, or otherwise using false or misleading documents as part of the foreclosure process (including, but not limited to, affidavits, declarations, certifications, substitutions of trustees, and assignments);
d. preparing, executing, or filing affidavits in foreclosure proceedings without personal knowledge of the assertions in the affidavits and without review of any information or documentation to verify the assertions in such affidavits. This practice of repeated false attestation of
information in affidavits is popularly known as “robosigning.” Where third parties engaged in robosigning on behalf of the Banks, they did so with the knowledge and approval of the Banks;
e. executing and filing affidavits in foreclosure proceedings that were not properly notarized in accordance with applicable state law;
f. misrepresenting the identity, office, or legal status of the affiant executing foreclosure-related documents;
g. inappropriately charging servicing, document creation, recordation and other costs and expenses related to foreclosures; and
h. inappropriately dual-tracking foreclosure and loan modification activities, and failing to communicate with borrowers with respect to foreclosure activities.
However, your proposed rule for Avoiding Foreclosure does not investigate whether the foreclosing party has committed a deceptive practice by foreclosing. The state attorneys general having brought suit over Wrongful Conduct Related to Foreclosures, but now will not investigate it or stop it, so it is up to the CFPB.
As of today:
* None of the state attorneys general offices or the CFPB will investigate and stop in progress the deceptive practices described beginning on page 27 of the lawsuit.
* None of the state attorneys general offices or the CFPB have a consumer complaint form on their website which seeks information about violations of the deceptive practices described beginning on page 27 of the lawsuit.
* None of the state attorneys general offices or the CFPB will acknowledge over the phone they have the authority to investigate and stop in progress the deceptive practices described beginning on page 27 of the lawsuit.
Would the CFPB propose a rule for Avoiding Foreclosure that will help with at least the following: Stop wrongful foreclosures based on deceptive practices in progress.
Justice will not happen on its own.
We could use some help. « less
Thank you for your comment, justiceunited. CFPB discusses the relationship of its proposals to the National Mortgage Settlement at several places in the NPRM. Here is a section that you might be especially interested in. Although you’re right that these proposals don’t directly prohibit wrongful foreclosures, CFPB thinks the proposed new information management and error correction requirements will help. So should requiring early… more »
Dear Moderator,
As you may know, it has been the common public practice of bank regulators to listen to complaints from foreclosure fraud victims and respond by attempts at misdirection. Like children’s birthday party magicians regulators halfheartedly attempt to distract their audience with a shiny object in one hand, such as information management proposals, while looking away from the truth of Wall Street prosecution failure in the other. This has become so common place in local hearings and legislative testimony it has spawned new phrases into the English language such as “Regulatory Theater” and “Enforcement Fraud”. I support error correction. But error correction only corrects errors, not deceptive practices. A substantive response from the CFPB would… more »
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The key to stopping foreclosures is to stop overpricing housing. The effects of a bubble economy are simply to onerous. The problem is that the real estate industry has resisted and whittled down all attempts to limit those mortgages containing a government guarantee. The underlying economic value of a home in the economy by the top 30% wage earners should be used as a basis for cutting off government mortgage subsidies (both passive and active) Part of this is the mortgage home deduction. There should be a maximum value this deduction based on the maximum earning capacity of the 70th percentile. this would be in many markets in the $200K to $300K size. Mortgages should not be guaranteed above this amount. So if a $700K mortgage was originated only $300K would be tax deductible and only $300k… more »
I have to disagree with this thoery. Real Estate is very much local, and everyone needs housing. Your proposal does not take into account that the average single home in San Francisco is valued well over $300,000. So is NYC, Honolulu, LA, San Diego… I don’t know where you live, and perhaps a $300,000 home in your area is a benchmark for the well to do. But $300,000 is not even a starter home in some areas. Why punish the average citizen of those cities just because of where they live? Great plan for those in Ohio, not so great for those in California.
Your misrepresentation in your signature line is amazingly bold. Clearly you are not researching you are a real estate industry stooge intent on confusing regulators.
You confuse valuations (recent sales price) with economic value. You equate equate lack of government subsidy a punishment.
In the plan proposed if Californians made more or had less other expenses such as transportation then there would be a greater house price to subsidize. However that is not the case in a bubble economy and a real estate market that confuses recent sals prices with economic value.
So you resort to calling names when someone disagrees with you? For the record I am not in the real estate business, I’m in the military. So your rant is without merit. And the median home in your area of CO (80231) is only $192,000, how convenient of you to suggest imposing rules on others that would not affect you. I will not resort to calling you names, your actions say it all for you.
Labeling one as a stooge or a dupe is not calling names. It is assessing the level of the comment. You are ignoring the point and throwing out a non-starter as a means to win a debate. It is your arguments that are as berift of substance as the Atacama desert is berift of water. Why is it that you believe all Americans regardless of economic stature and bubble economy position are entitled to the same government subsidies? Answer that with a reasonable degree of clarity and persuasive arguement then you will have others listen to you.
It looks like you want a debate, but I’m not interested. Try a debate team or something.
co80231, The purpose of Regulation Room is to provide an environment in
which people can learn about important proposed government regulations and and discuss them in ways that help the agency make a better final decisions. Everyone who comments on the site is expected to remain civil and respectful of each other. Please see the Terms & Conditions you agreed to when you registered. Comments should also address the regulation CFPB is proposing. Changes to the tax code or other forms of mortgage subsidies aren’t part of the proposal.
Their is only one simple solution to knowing all your options fast and at one easy to use location available to everybody. Using available computer technology to have someone write a program where you click on your state and answer a series of questions and all government programs are in the program along with all bank programs. You hit “enter” and it tells you all your options with phone numbers and links to on line forms to fill out to enter the program all in minutes. There should even be a make an offer section where the bank can offer the home owner money to walk away because it’s cost effective or where the home owner can ask to be entered into a short sale program or offer a Deed in Lieu agreement if they can remain in the home for 6 months for free for example. Or… more »
Hi transparency, and thanks for your participation. If I understand you correctly, servicers and banks would need to provide information to the website you’re describing, so that consumers could access it. Who would bear the cost of maintaining the website?
Moderator, maybe the government could buy one less military plane and fund this program. The American people are not afraid that Iran or Russia are going to bomb their homes. The American people are afraid of the banks that are already here, that collapsed the economy and are taking advantage of them now, by inflating the fees and then stealing their homes with fake document by hiring a slimy attorney. They are living with fear and anxiety because their chain of title has been destroyed with MERS and the banks are killing their homes values and stable neighborhoods are turning into rental neighborhoods with run down homes deserted with expensive insurance on them to fix them up but it is not being used, just billed. This system would be a lot cheaper than a plane and would save a lot more… more »
Hi transparency, We are sorry if you feel you are not being heard or that our questions are too narrow. We should explain that the Regulation Room moderators are neutral, we don’t take a position on the proposed rules. Our job is to help every person contribute their viewpoints in way that will be useful to the agency when they finalize the proposed rules. During the discussion, we may point users to additional information about the rules, pose questions designed to prompt fuller or more detailed discussion, and facilitate discussion between users with different views. Our questions may appear narrow, because we only focus on issues the agency is addressing in these rulemakings. You can learn more about effective commenting and our project.
Where the note and mortgage are missing the bank should not be allowed to report to the Credit Bureau. The credit reporting agency should not be based on the hear say of a bankster. This is unethical and unfair. This would leave a lot of people with good credit where they can buy a new home again because of bank fraud and irresponsibility. Why is it a bank that admits they have no proof you owe them anything, with a lost note and mortgage, can leave a life wrecking statement that says you do owe them? And there is no place for the homeowner to report on the banks fraud, racketeering, pay to play, empty insurance shells set up for billing etc… so the bank can not loan money any more. In a fair society, this would be working both ways, the same. This has to change! Instead of 10 questions… more »
We purchased a home in CA in 2005 via Country Wide with an adjustable rate interest. We also took out a 2nd with Citi. Citi purchased our first from Country Wide. We are currently 40% underwater.
We worked with NACA and waited 5 months to be approved for a lower fixed interest rate on our 1st two years ago.
We fell behind on our 1st due to multiple health related issues (major car accident & work related injuries). We jumped through hoops with Citi for 5-6 months, again, via NACA regarding the 1st.
We stopped making payments in Jan 2012 due to the lack of income during the injuries and in order to persuade them to work with us. They resently sold our 1st to Carrington, after telling us that we made too much money to qualify for any type of loan modifiation (days prior to selling… more »
Citi via NACA refused to negotiate with us on our 2nd. Now Carrington is telling us that we qualify for a FHA 30 year fixed rate mortgage @ 6.50% and that they will pay off the 2nd (Citi now is willing to take only $7,000 for a $95,000 @ 7.75%).
We are both still employed, but we are facing some possible lay offs due to Sequestration in Jan 2013 and will have a large increase in our Health Insurance, beginning Oct. 1st, via the employer, along with furlough days. More furlough days may be on the way after the November 2012 elections (up to 15).
We are working with NACA to see if we qualify for the HAMP, but they do not think we will qualify based upon our income, right now. We physically have recovered, for the most part, from our injuries and have some current pending litigation which will take years to settle.
Carrington and First Alliance Bank are very, very interested in us pursuing the refinance option as opposed waiting for the results of the HAMP determination (had to resubmit all paperwork via NACA for Carrington).
I am not in such a hurry to follow through with the refinancing until I hear about the decision regarding the HAMP.
Could there be other options for us? We now have credit scores of 630 and 650 instead of 730 and 720 (prior to stop making 1st mortgage payments). A 6.50 interest rate sounds very high and we are current with all of our creditors.
Can we put off filling out the paperwork for the refinancing until we receive a decision on the HAMP?
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It sounds like you’ve had a tough time, fisch2821. Regulation Room can’t tell you how to proceed, but we suggest you contact a HUD approved housing counselor to see if they can help.
Would like to change my screen name, please. How do I do this and I do not want some information shared.
Regulation Room will be sending you an email regarding changing your screen name.
Hi transparency. We are sorry if you feel you are not being heard or that our questions are too narrow. We should explain that the Regulation Room moderators are neutral; we don’t take a position on the proposed rules. Our job is to help every person contribute their viewpoints in a way that will be useful to the agency when they finalize the proposed rules. During the discussion, we may point users to additional information about the rules, pose questions designed to prompt fuller or more detailed discussion, and facilitate discussion between users with different views. Our questions may appear narrow, because we only focus on issues the agency is addressing in these rulemakings. You
can learn more at the following links about effective… more »
It is important that if a house has gone into foreclosure that the payoff information remains the responsibility of the lender not the attorney taking care of the foreclosure. This is very important because I got a payoff from both the servicer and the attorney to see what would happen, in Florida. There was close to a $10,000.00 difference in payoff statements. The attorney overstated the payoff in almost every category that he gave to the closing agent. I have proof. The servicer still needs to provide service and be held accountable for the accuracy. The FBI has determined that Florida is one of the worst states for mortgage fraud and with over 90,000 attorneys in Florida the Florida bar revokes very close to “0″ licenses. So, leaving an attorney responsible for payoffs is a risk that is not necessary to take and I don’t think it should be allowed.