Profile: steve smith
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Hi steve smith. Thank you for sharing your experience with Regulation Room. It sounds like you are concerned that requiring servicers to respond to oral requests could lead to miscommunication or encourage deceptive practices. Does anyone else share CFPB’s concern that requiring borrowers to submit formal written requests ignores the fact that most borrowers attempt to get information over the phone?
You raise a number of points relating to disclosure rights. It would be helpful to get some more detail. What sorts of disclosures do you think would be the most helpful in the checklist? And what do you think about CFPB’s proposed list of items that servicers should not have to respond to? Would you also include this list in information provided at every closing?
Welcome to Regulation Room, steve smith. As you recognize, the Consumer Handbook on Adjustable Rate Mortgages is not at issue in this proposed rule. However, disclosures that consumers receive before getting a mortgage are at issue in another one of CFPB’s proposals. You can read more about that rule and find a link to comment on it here. Also, if you would like to file a complaint with CFPB regarding how you didn’t receive the handbook, you can do that on CFPB’s website.
Bravo Steve Bravo!!! You spell it it very well. There are servicers whose conduct is reprehensible, nothing short of a lawsuit will bring any form of accountability. The rules and regulations protection consumers are already weak, and the proposed changes weaken the consumers position further in many ways. Servicers are not above lying, they do it every day. I guess the rulemakers can no seem to grasp what is really going on, but your story of being directed to a defunct loan originator is another example of their deceptive practices. None of the rules will fix that though…
Hi steve, and thanks for another thoughtful post. I’m pretty sure you’re suggesting that servicers should not be allowed to also be debt collectors. Unfortunately, making that change is beyond the scope of these rules (unless you think the requirements of the FDCPA conflict with the requirements of the new rules). Could your concern be addressed within these rules? For example, by requiring servicers to disclose on the periodic statement that they are also debt collectors?
Steve you have posted an excellent example of how people continue to get the run around. One of the reasons the servicers/debt collectors seem to not care is because really they are not obligated to the borrower. The servicer has a contract and a fiduciary duty to the INVESTOR. The borrower is an account the servicer manages on the behalf of the INVESTOR. So “customer service” really is a misnomer, they do not view us as customers. They view us as accounts. The servicer does not have a fiduciary duty to the borrower, so they really do not care about anything except the revenue the account (you) provide. The caveat is that the INVESTOR wants the account to keep paying, but the system is designed to bring more revenue to the servicer if the borrower is late or in default. Can you… more »
The old servicer should be required to send any payments recieved during the 60 day period directly to the new servicer without any penalty or late charge. If the old servicer is given the option of sending it back to the borrower, the borrower will most likely now incur a late charge with the new servicer. The “send it back to the borrower” should not be an option and should be stricken. Also the the wording “mistakenly or accidently” sent to the old servicer should be revised as well. The borrower should be able to pay the old servicer during the 60 day period without fear. What if there is a dispute or issue with the new servicer at the time of transfer? I have such issue with a new servicer, who refuses to send any information about the loan. I guess I must blindly… more »
Yes, all loan origination documentation, loan servicing history, customer contact history, etc should be transferred. If I were to transfer from 1 school to another or 1 primary care provider to another, all of my records are transferred along with me. With servicing transfers, this is often not done.
Also the new servicer should be given a specific deadline to have all of the missing customer information boarded into their systems. As this is often done en masse and electronically, it should take no more than 5 days, but let’s say 15 days just to be nice.
Also, the burden of filling in this missing information should be on the loan servicer, NOT the borrower. I don’t see any reason why if my bank decides to sell my portfolio, it’s suddenly my problem to resubmit information… more »
I don’t think there should be a small servicer exception. Large or small, mortgage servicing should remain the same. Why would we allow someone to not tell me how much money I owe just because they’re a smaller company? Doesn’t that defeat the purpose of the notification?
Look at a restaurant, for example. When I walk down the street, I can go to McDonald’s or a hole in the wall. My reasons for choosing one or the other are my own, but regardless of where I decide to eat, the transaction is the same. They present me with a menu, I give them my money, they give me a receipt. Why would mortgage service be any different than food service?
As someone who has been in the industry for well over a quarter I can give some insight here.
For a small to midsize lender the mortgages will often be stored on a system that is not connected in real time to your core processing system. This would prevent someone from being able to view their mortgage on their home banking page. It’s not meant to be secretive but it is just a fact that different computer systems often do not communicate with each other.
I am against having oral and written requests being treated equally. Written requests have, by their nature, a more formal stature and create a paper trail. An oral request will create a “he said, she said” conflict.
Slightly off topic but in my own adjustable loan. I never did see or receive the ‘Consumer Adjustable Mortgage Rate Handbook’. Was there a signature page of proof upon receiving this book?
Unless borrowers are required to tape record every conversation, I fear oral communications only adds miscommunication and could lead to possible deceptive practices.
For example, prior to my foreclosure calling the title co. only four original loan pages could be retrieved to my loan. Both the local and corporate offices couldn’t find documents to my loan. It wasn’t until after foreclosure did I learn to contact the department of insurance to file a complaint. It was then did I receive some specific loan documents requested. I later thought to ask how pages related to the loan application are transferred between the broker, loan originator, and title. I called title and was told that the only pages kept on file are per the lenders instructions and that they do not keep copies… more »
The example may not be directly related to servicers but it was meant to demonstrate how a simple inquiring question could raise new questions as to whether the oral experience was a miscommunication or a deceptive practice. Unfortunately, I do not recommend this.
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A check list of disclosures and rights to legal disclosures should be required at every closing on the front page. A borrower shouldn’t have to hire a third party or search over the internet to discover what legal disclosures they are entitled to. Here are some exampled objections to why consumers need all disclosures:
Prior to my foreclosure, a third party (under RESPA) was hired to send out a QWR; it consisted of six pages sent certified on 4-19-2009 requesting documents to which I never would have known I had any rights to.
The servicer replied on 08-10-2009 to the third party and never CC any copy over to me. When the third party sent me a copy, the letter stated that the servicer responded enclosing the Adjustable Rate Note and Mortgage but the remaining request were internal… more »
The servicer in the same response letter stated that they had nothing to do with the loans origination and that they were not affiliated with the original lender. The servicer included a contact address and phone number to where the loan originator could be reached. When trying to contact the original lender, the phone was disconnected and a letter was returned labeled rejected.
What I found out later at the Security Exchange Commission website was the bankruptcy purchase agreement between the loan servicer and my bankrupt loan originator. It described my servicer purchased the loan originators servicing rights, business assets, and the actual building to the contact address they provided to me in letter.
1. There is a great need for a third party service since consumers are limited on knowledge.
2. Notice the four months it took for the servicer to respond.
3. I did not receive an account history until after foreclosure, and after filing a complaint with Department of Corporations.
4. I don’t see how a servicer who purchases servicing rights, the building, and assets can inform a consumer to contact a defunct originator in which they know is no longer present. The joke was on me and the servicer had to be aware of it.
I do not see any points in protecting servicers if their designed intent is to stall, collect, and use deceptive practices that further damage consumer rights. Deceptive practices restrict consumers from being able to afford litigation when facing foreclosures. I do not think the CFPB should be equating any such leniency for servicers. « less
Will there be talks related to the lender paid mortgage insurance (lpmi). My intentions upon taking out the loan and putting down 20% was to avoid having to pay a pmi. I had no knowledge that a lpmi policy was in place on my loan. USC Title 12 Chapter 49 Homeowners protection sec 4905 states the required disclosure of a lpmi prior to closing the loan as it could cause a higher interest rate. But the statutory damages under sec 4907 set a maximum of $2,000 in damages. The costs of the action and attorney fees don’t promote any lawful deterrence.
The servicer wrote after my own discovery that no premiums were add to the loan. How would a consumer be able to verify this?
“What sorts of disclosures do you think would be the most helpful in the checklist?”
Financial disclosures! Loan applications must be present an accounted for. Dates and time of process with signature. Borrowers should not go home with copies having no signatures or dates. Large bold type high risk warnings to certain types of loans.
Any and all federal and state required forms or brochures from pre-approvals to the closing of the loan. Contact resources to any and every department that has oversight or jurisdiction over lending.
“And what do you think about CFPB’s proposed list of items that servicers should not have to respond to?”
Any other disputed rights. Should forever be monitored, addressed, and updated by the CFPB for the borrowers to access and… more »
“Would you also include this list in information provided at every closing?”
Oh, yes!
I haven’t found any describe disclosure list under current lending laws that borrowers can cross check with their own loan pages. But there many examples of lending forms shown over the internet. For example, I’m looking for a form called the 1008 Transmittal Summary. The vice president of title said they don’t know what that form is but will call when they find it. That was over a year ago.
Example 2.
My last letter from the servicer wrote back. “Pursuant to 12 USC 2605 sec(e), the information that may be obtained on a loan under a QWR is specifically limited to information relating to the servicing of such loan… includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower.”
I challenged the “other information sought by the borrower” trying to gain access to original documents in relation to my loan. My servicer says they do not intend to waive their rights to other various documents sought by the borrower. So, access to original loan approval documents are impossible to access since the loan originator is no longer in business.
Consumers finding themselves financially strapped in these predatory or deceptive practices can not become overnight legal experts on law and they can not afford lawsuits or subpoenas when trying to simply request disclosures related to their loans.
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Thank you Moderator. Honestly, is there any value to filing a complaint at the CFPB’s website from a foreclosure that took place in 2009? I’ve contacted and filed a complaint with every office in this country and wound up with a response stating, ” Thank you for informing us but there’s nothing we can do. Go find a lawyer.”
Thanks hotblazer. Not only do they claim that they have no affiliation with the originator and that they only purchased the servicing rights. After the borrower from frustration gives up and enters into default the servicer just calls themselves a debt collector. Has the CFPB considered these rules in connection to the Fair Debt Collection Practices Act since the servicer is now calling itself a debt collector?
The Fair Debt Collection Practices Act does seem to provide added protection for borrowers. But I’m concerned when the servicer becomes a debt collector. At the time I wasn’t in default my servicer already classed itself as a debt collector. As shown in this video.
http://www.youtube.com/watch?v=4UIbjkkv7iE
What is the need for a servicer to class itself as a debt collector? I see added conflicts just by allowing the servicer to create another entity when the foreclosure sale date hasn’t even occurred? By becoming a debt collector doesn’t this allow the servicer to decide which and at what time the laws are applicable to them.