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advocate123

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advocate123
August 15, 2012 4:02 pm

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 »

…recieve all the late fees, and other fees associated with servicing an account). There are few cases when there is a legitamite investor restriction. Anytime a servicer cites one, I ask for the name of the investor and the name and series of the trust the mortgage was probably pooled into. Then, if the trust is public I look it up on the SEC website http://www.sec.gov. Then I open the Pooling and servicing agreement section which pertains to modifications. In 95% of cases the agreement petween the investor and the servicer gives the servicer the ability to recapitalize loans, reduce interest and/or reduce princible as they see fit. Oftentime the servicer is already modifying other loans within the portfolio in the same trust. We prove this by pulling up investor reports banks issue to their investors regarding each trust. When confronted with written proof that there is in fact no investor restriction, or that the restriction has been waived servicers will often retract their claim that there is a restriction. But then they often come up with another illegitamate excuse such as a modification denial due to NPV (when it’s actually positive), or that the client needs to have their second mortgage subordinated (in cases where they don’t). The problem is that few ordinary homeowners have the education or resources to push back against servicers. If the investors found out that their servicers were tanking their portfolio by not agreeing to profitable modifications (as opposed to foreclosure) they would be outraged. Some of them do end up suing, from what I’ve heard. So yes, having servicers educate homeowners to their options is a great idea. But even when they are educated they will still lose their homes if the servicers are not not further regulated. Unfortunately many homeowners were decieved by many profit-driven companies at orginination (originator, broker, appraiser, sometimes all together in “one stop shops”), and now they are being decieved on the back end when they need some real assistance to save them from losing their home. If the CFPB wants to do something about this, penalties against deceptive servicers would be a start. « less
advocate123
August 15, 2012 4:28 pm

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

advocate123
August 15, 2012 4:28 pm

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


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