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What's Happening Now

August 10, 2012 5:12 pm

There are various holes in these regulations that will continue to be exploited by the Insurance Trackers/Force-Placed Insurers, who act on behalf of the Loan Servicers:

1) The wording on the letter doesn’t matter, because the outside of the envelope does not state anywhere that it is from the Loan Servicers nor that it is important information regarding their mortgage. This means borrowers will likely overlook the notice no matter how well the letter is written.

2) No loan servicer’s website currently allows a borrower to update their insurance information online. This can only be done via Assurant/QBE First’s generic 3rd party websites. In today’s digital age, there should be a way for borrowers to PROACTIVELY provide this information, rather than being guided… more »

…toward a confusing unknown website. In the case of Wells Fargo, for example, a borrower would need to go to separate websites for their home & auto loan, since QBE First processes their auto insurance information, while Assurant processes their mortgage insurance information. This is confusing and unacceptable.

3) A borrower should be able to speak to an actual employee of the Loan Servicer. Currently ANY insurance related interaction (to include claims) is handled by the Insurance Tracker/Force-Placed Insurer. This is especially upsetting in a claims situation where the Insurance Tracker acts as both parties (the mortgage company & the insurance company) and the borrower’s interests are completely ignored.

4) The Insurance Tracker and Force-Placed Insurer should not be allowed to be the same company, nor subsidiaries, nor any other version the banksters can come up with. There is rampant abuse created by this conflict of interest. « less

August 10, 2012 5:47 pm

The beginning of this section makes it sound like it only applies to Hazard insurance, however a “Hazard” LPI policy covers both Hazard & Wind/Hurricane. In addition, there is a LPI Flood product. In states where a separate wind policy is necessary (Florida, Hawaii, etc) the placement of these policies creates an issue of duplicated coverage. This happened en masse in 2009 when most major insurance companies (except Citizens) stopped underwriting wind policies in Florida. The negative escrow accounts created by false placement of duplicate coverage are how Florida became one of the leading states for foreclosure.

Remember that escrow accounts are PREPAID insurance accounts, so when a LPI policy is place, and the Loan Servicer processes an escrow analysis on the loan, the… more »

…borrower is given 1 year to make up for 2 years of insurance payments. To make matters worse, the LPI premiums are inflated, and often backdated, so often the borrower is given much less time to make up for this negative escrow balance. If an escrow analysis is completed on a borrower with LPI, the premium can drive their monthly mortgage payment up by as much as 1000% to make up for this deficit. In addition, they can not qualify for a loan modification while they have a negative escrow balance (which is normally caused by the bank’s recommendation not to pay their mortgage while the loan mod is processed). Force-Placed Insurance is why so few borrowers have qualified for the HAMP & FHA loan modification programs.

But wait…there’s more…

If a borrower does not have an escrow account for their loan (or the escrow is only set up to pay property taxes), one is automatically created by the loan servicing system as soon as the loan is flagged to be placed in an LPI letter cycle. Think I’m done illustrating how corrupt this system is? Think again. All of this is actually done by a 3rd party Insurance Tracker. The 2 largest Insurance Trackers in the US are Assurant & QBE First/Praetorian (fka Balboa Insurance Group). If these companies sound familiar, it is because they are also the Force-Placed Insurers. This is how the kickback scheme works, and this is why voluntary companies like State Farm, USAA & Allstate don’t provide the Force-Placed Insurance “product” to anybody.

Which brings me to another point. LPI should not even be a product. The Insurance Tracker is providing the service of placing insurance on a loan. They are simply choosing to only place their in-house proprietary insurance. When you send your insurance information to your Loan Servicer to prove you have insurance, it is actually received by the Insurance Tracker. Check the volume of UTL (Unable To Locate) documents these Insurance Trackers recycle on a daily basis, and you’ll see that they “lose” literally tens of thousands of insurance documents every day. Please read my blog to see how this occurs: Insurance Fraud 101 (From a Whistleblower)

Now…another issue is that a loan servicing transfer (which is often not initiated by a borrower) will create a “Deletion of Interest” cancellation. This often create an issue in both home & auto loans where a borrower will be saddled with LPI coverage despite doing nothing to trigger the event. These Insurance Trackers can’t seem to track your insurance from one of their servicing portfolios to another.

As for Escrow vs non-Escrow, as I’ve stated previously, the servicing system will AUTOMATICALLY CREATE an escrow account in the event of a non-escrow account. Currently the Insurance Trackers divide the mail received into queues, meaning they are purposely dividing them to treat escrow and non-escrow accounts different. It is very simple to remove these systematic rules from their system to ensure all insurance documents are handled the same. They are flat out lying when they say it is difficult. There are absolutely no practical problems, and I’d be happy to provide a sworn testimony in court to that effect.

Other issues include:

1) Placement of Force-Placed Flood on condo units above the ground floor. Flood policies only cover ground water. If a condo unit above the first floor is being affected by ground water, the structure will likely collapse, and flood insurance is no longer the problem.

2) Force-Place Insurance is often placed on homes and other structures within Planned Unit Developments (which includes any neighborhood with an HOA, gated communities, neighborhoods where you see a name as you enter from a main street) simply because the HOA policy covering common areas is expired. This is almost laughably ridiculous, and the servicing abuse shouldn’t even need further explanation.

3) Force-Placed policies provide no contents coverage, liability, etc. At least minimal amounts of these important coverages should be included.

4) A Force-Placed Insurer should not be able to act as the Insurance Tracker, as it is a conflict of interest.

5) Executives responsible for the servicing abuses I’ve outlined should be held responsible for racketeering under federal RICO laws, and I believe they should all be imprisoned for their crimes against humanity. « less

August 10, 2012 5:50 pm

When a servicing transfer is done, insurance information is rarely transferred alongside the mortgage information, despite the fact that it is often the same Insurance Tracker that acts as both Loan Servicers. Because of this, many borrowers are saddled with false placement of Force-Placed Insurance.

August 10, 2012 5:53 pm

Whenever a borrower communicates with their Loan Servicer in regards to ANY & ALL insurance related matters, they are actually speaking to the Insurance Tracker (who also acts as the Force-Placed Insurer) whose representatives state that they are actually the Loan Servicer. In the event of a claim, if a borrower is unhappy with the resolution from the Force-Placed Insurer, they will call the Loan Servicer, who will transfer them to the Insurance Tracker, who is acting as the Loan Servicer, but is actually the Force-Placed Insurer. This is such an illegal conflict of interest it’d be funny if it weren’t true.

August 10, 2012 5:56 pm

If a partial payment is made, the representatives for the Loan Service should be trained in ALL escrow matters so they can inform the customer that the partial payment will create an escrow shortage that can lead to placement of Force-Placed Insurance, nonpayment of property taxes, and denial of a loan modification…all of which lead to foreclosure.

August 10, 2012 6:01 pm

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.

August 10, 2012 6:07 pm

Escrow accounts have entirely too many unexplained fees. Loan Servicers should be forced to explain every fee on an escrow account on a monthly basis so borrowers are made aware of what they are being charged and why.

Also the Loan Servicer should not be allowed to create an escrow account for borrowers with a non-escrow loan without explaining why.

In addition, a negative escrow account created by insurance (likely due to false placement of illegally and artificially inflated Force-Placed Insurance premiums) should not interfere with a borrower’s ability to pay their property taxes via escrow. The tax balance and insurance balance should (and can be practically accomplished within their software systems, whether they utilize AS/400, LPS, FIS, CCS, or any other loan servicing software)be… more »

…kept separate to prevent the borrower from being pushed into foreclosure for nonpayment of taxes due to the Loan Servicer’s erroneous placement of Force-Placed Insurance. « less
August 10, 2012 6:08 pm

All phone calls should be tracked & recorded, regardless of the Servicer’s size. Customer Service is Customer Service. It is not a borrower’s responsibility to judge the size of the company serving them.

August 10, 2012 9:57 pm

Moderator…I can still see all of Kamy’s other copies…I can also still see her personal information on this copy…

August 11, 2012 12:44 pm

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 »

…before being hit with fees. I didn’t ask to be part of a portfolio they sold. That’s all banking issues that I, as a consumer, should have no responsibility in. « less
August 11, 2012 12:53 pm

The list looks fine on the surface, but I’m not fully versed on all possible loan servicing abuses. I only know what I’ve seen. I don’t like the idea of a set “covered error” list, but right now I can’t think of a better solution. I’ll spend some time pondering and let you know if I come up with any suggestions on this front.

August 11, 2012 1:58 pm

It’s as easy as 1-2-3:

1) The Loan Servicer should be required to disclose that you are being transferred to a 3rd party vendor. This includes updating their IVR to let you know when a selection is taking you to a 3rd party & requiring that a customer service rep to notify you when they transfer you to a 3rd party. When you click a link for turbotax on irs.gov, for example. It will tell you that you are about to leave the site. Why is that warning given for every website in the world, but not over the phone by your loan servicer? It’s a deceitful practice that is abused.

2) Representatives from the Insurance Tracker should have to introduce themselves as the insurance tracker (again, both via the IVR and customer service reps). When you have insurance on your cell phone,… more »

…for example, the representative (whether in person or over the phone) ALWAYS informs you that you will be speaking to a 3rd party insurance service to file a claim. Why do mortgage servicers not do this? What are they attempting to hide?

3) The Insurance Tracker should NEVER be allowed to also act as the Force-Placed Insurer. The mortgage company and insurance company should always be separate entities in order to protect the borrower. Allowing an Insurance Tracker to act as both creates a situation where they will act in their own interests first, then they will act in the loan servicer’s interests, as they are a large portfolio client. In this scenario the borrower always loses.

Allowing Force-Placed Insurers to act as Insurance Trackers led to a situation where many Hurricane Katrina claims are STILL unresolved TO THIS DAY! That is completely unacceptable and should in fact be considered illegal.

This set up also negates the servicing industry’s claims that LPI premiums are so high because they are blindly insuring. The reality is that the representatives from the Force-Placed Insurer have usernames that allow them to log into the mortgage servicing system. They also have all prior insurance information, claim information, etc. Many representatives have even deeper access to your account. This means they actually have MORE access to property information than a voluntary insurance company such as Farmers, Allstate, etc. In many cases they even have more access than the Loan Servicer. This is all highly suspect and needs to be stopped immediately. « less

August 12, 2012 8:09 am

Shannon,

From a technical standpoint, direct access to a loan servicer’s web based client portal via a simple username/password is impractical. There are many technical settings, VPN’s, etc that are set up when vendors access these. What they can do, however, is build the code & databases to allow borrowers to access this information via their consumer websites. They also need a way for borrowers to be able to submit, review, and update insurance information on these websites.

Many servicers, such as Bank of America, already have customer service available via chat through their website as well. Chat could be an option for customers who are weary of speaking to a representative over the phone and would like a record of the conversation. Either way, you have the right… more »

…idea that these companies need to both upgrade & better utilize their technological capabilities. « less
August 12, 2012 8:20 am

What many people don’t realize is that ALL customer service representatives (even those for 3rd party vendors such as Assurant & QBE First) have AT LEAST read-only access to all borrower information. In the case of a system like FIS/LPS, if a customer calls in asking for a complete history of their loan, it would take a a customer service rep a maximum of 1 minute (assuming the loan is very old and the rep is very new) for a representative to screenshot the SER_ screen subsets (Services Performed), including SERN (C/S Notes), the HAZ_ screen subsets (Hazard Insurance), ORI_ (Loan Origination), or FOR_(Foreclosure), etc. For example, if you call in asking for Foreclosure information, they can fax/email you a screenshot of the FOR1 and FOR3 screens along with a quick breakdown of what… more »

…information to look for. Your lawyer should be able to call for this same information. Again, EVERY EMPLOYEE has access to this information. It takes 5 keystrokes to switch between screens if you manually type it or just press a function key (F1-F24) if you’re good. There is no reason this information can’t be provided to a borrower within 5 minutes instead of 30-45 business days.

Who owns the mortgage is simple…INV_ is the investor screen subset which shows all historic investors on the loan, and the current investor is listed on every _ _ _ 1 screen (such as SER1, HAZ1, etc). If original copies of loan closing documentation is needed, in a worst case scenario, it takes 5 business days to order from Iron Mountain. In most cases, it takes 1 minute to retrieve from the loan servicer’s loan documentation imaging database. « less

August 12, 2012 8:48 am

In giving the banks 5-45 business days to respond to information requests, I am left to assume that the CFPB has been watching too much Mad Men and is attempting to regulate a bank in 1960. Allow me to illustrate:

If I were to use my debit card to make a purchase anywhere in the world, it will show pending on my account instantly. Let’s say I’m really behind the times and I write a check. That check will clear the instant it is scanned by anything attached to the internet. We are no longer living in the checking times described by Tom Hanks’ character in Catch Me If You Can. There’s not a 10 day delay in a check clearing because it has to be mailed through central depositories and to corporate offices, etc. The banks who made this process instantaneous are the same… more »

…ones servicing our mortgages (and auto loans. I can not stress enough that these rules need to apply to ALL COLLATERAL LOANS).

Now. Let’s try an experiment to illustrate another point. No matter who you have an account with, whether it’s a bank or credit union, large or small, it doesn’t matter…Walk into a branch and ask for account information. That representative will immediately pull your information up and tell you what you need to know. If there’s a discrepancy and you’re arguing with them, they’ll even turn their monitor around and show you what they’re looking at right then and there. If you ask for anything in writing, they will hand it to you. If you ask for a screenprint, they will provide it. The line at the bank today still moves faster than it did in your grandparent’s day. Why then, when it comes to mortgages, does it suddenly take a week, a month, or longer to provide this instantaneous information? In fact, why can’t you walk into the same building you went to sign your loan closing documentation and retrieve that same information? You mean to tell me it’s an instantaneous process to deduct a check card transaction from the balance of my Arizona-based account for a $10 purchase I made in China, but that same bank is given nearly 2 months or more in order to find even the most minimal information for my $500k house?!?! Somebody please explain to me how that’s considered acceptable in any way.

Now think about something else. Have you ever seen a behind the scenes feature on a DVD? Have you ever seen the show How It’s Made on Science? No matter what it is, you can figure out how everything in the world works, is made, etc…except in the financial and insurance industries. Why can I watch a hundred videos for every aspect of how exactly Avatar (the highest grossing movie in history) was made, but the financial industry operates in the shadows? Am I the only person seeing how obviously corrupt this system is? « less

August 12, 2012 9:10 am

If the CFPB gives the servicers a pass on not giving information more than a year after a servicing transfer, it is IMPERATIVE that the rules for a full information servicing transfer are solid and enforced. That has been addressed in another section, but I need to repeat how important it is that this is very closely regulated, monitored, and enforced. Loss of information between 2 banks at no fault to the borrower should never be allowed, and it happens all too often in the current environment.

As for “reasonable efforts” I illustrated this in section 1, but I’ll paraphrase for length here: all of the information is instantaneously available. If it’s not, it’s the bank’s fault, not the borrower’s. It is “reasonable” to expect that if… more »

…you lent me $100,000 that you would be able to tell me absolutely ANYTHING I ask about that $100,000 within a 5 minute phone conversation. If anyone needs an illustration, lend me $100,000 in cash right now from 1 private citizen to another. You are 1 person, and I am 1 person. I’m willing to bet I can call you at any time, and you will know how much I owe you. If you can do that as a private citizen, why can’t a loan servicer whose entire business is servicing loans do the same thing? A professional should always be better than an amateur. That’s why they’re professionals. If they’re not better, they will be displaced. That’s how capitalism works. If they haven’t been displaced, there is corruption in the air.

For “overbroad” and “unduly burdensome” information or “unreasonable volume of documents or information” I have to point out that there are hundreds of employees at every servicer capable of creating queries that can be implemented & applied quite easily (and cheaply) to pull ANY & ALL loan information for a specific borrower. It can all be exported into a spreadsheet, PDF, image file, and more. It is a simple process and can be attached to the SQL GUI’s utilized by every loan servicer with very minimal effort or cost to the servicer. There is absolutely no excuse not to be able to provide any information within 5 minutes. It is not a borrower’s fault that the banks lost their information, and if the situation were reversed, the borrower would not be given 45 days or any types of excuses.

Use your physical debit card anywhere in the world. Sign into your bank account 15 minutes later. The charge will show in your account. Write a check to pay one of your bills. Within 5 business days (slowed only by the company you wrote the check to, not the bank), an image of that check will be available online. If these companies can accomplish this, why can’t they access their loan information? It is criminal racketeering, and it needs to be stopped, and they need to be thoroughly punished for these continued crimes. These CFPB rules thus far are a complete joke.
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August 12, 2012 4:19 pm

In contacting a customer, emails & text messages should be allowed, but they should be done in conjunction with the 3 phone calls, not in lieu of them. For example, if the loan servicer has an email address available, after the 3 phone calls, they should be required to try 3 emails.

Starting contact efforts 16 days out should be completely fine if a borrower opts in for text messaging. A simple text of “Your mortgage payment is now due. Payment must be received by (insert last day of grace period) to avoid any late fees or collection efforts. If you are unable to make your payment, please contact (servicer’s name) at (servicer’s phone #) for alternative options.” text would actually be a great customer service option.

What does the CFPB propose in the case… more »

…that on the first call, the lender finds out the phone is disconnected or they have a wrong number? Does a voicemail count as contact? It may be good to mirror these after Fair Debt Collection practices.

The servicing systems need to be updated (or c/s reps trained) to ensure that once a borrower accepts a loss mitigation option, these notification options are properly updated. For example, there’s no need to keep calling someone to say their payment is late if they’ve already begun the forebearance process, the loan term change should update the contact dates, etc.

Also, if a borrower has a HELOC, 2nd mortgage, or is listed as a co-borrower any other property, they should all be considered together at the time of the initial call. These accounts should all be linked so that a borrower facing default on 3 loans for the same property is not overwhelmed, confused, etc. « less

August 12, 2012 4:27 pm

The written notice approach seems like it’ll work. The samples are as clear as they can be. Most borrowers won’t understand any of it anyway. The biggest thing is to ensure they know who they can contact and making sure the c/s reps are fully trained on proper options and disclosures.

I would definitely recommend that a written notice of confirmation is sent to the borrower for any changes made to their account as well. While it may not fully assist them, and they may choose to ignore the letters, it will help an attorney in discovering useful foreclosure defense information if it gets to that point.

From a servicer standpoint, it is very simple for a large or small servicer to create letter templates and systematically fill in the appropriate dates, amounts, customer info,… more »

…etc. This technology is built into loan servicing software suites, and if a company can’t afford loan servicing software, they really have no business servicing loans. « less
August 12, 2012 4:47 pm

The statement needs to include an escrow breakdown. There is plenty of space on this document to include it, and I don’t understand why this is not being addressed. This escrow breakdown should state what insurance information is on file for the property, the expiration date, & premium. It should also include a tax breakdown, PMI, and any other fees, along with an escrow balance. If a borrower has an escrow account open in their name, they have a right to know the balance & why. This is all very simple information for loan servicers to provide.

As for passing the costs on to consumers, I completely disagree. How about they take the costs out of the stimulus package they were given in 2009? How is it the consumer’s fault that the servicers didn’t keep their software… more »

…updated? If the current servicers can’t handle the financial burden, then maybe they need to sell their servicing portfolios to companies who ARE equipped to handle it. There are plenty of companies who can step up. I’m sorry, but it’s long been time we stopped babying these “too large to fail” institutions and let capitalism run its natural course. It’s called survival of the fittest.

As for the actual cost to these servicers to access this loan information? It’s minimal. They already have and store this historical information for a minimum of 6 months. It’s all built into the systems. Even if something needed to change, it wouldn’t be the servicer changing it. They don’t have the capability. It would be the Fidelity Powercell handling this change and/or providing training. « less

August 12, 2012 4:54 pm

Just like with banking statements, a borrower should have the option to opt in for paperless. If they do, everything can be handled via the web, and email/text notifications can be sent. These notifications should contain the exact same information as the paper statement. They would just be received earlier since there’s no physical mail involved. Again, since everything can be done electronically, there needs to be a way for borrowers to view/update their insurance information electronically through the loan servicer, without having to go to Assurant/QBE’s highly deceptive websites.

If a borrower doesn’t want electronic access, that is their choice. Servicers such as Wells Fargo, Bank of America, & JPMorgan already have websites set up. Adding mortgage/insurance information should not be difficult and should already have been done.

August 12, 2012 5:00 pm

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?

August 13, 2012 9:42 am

REO and Force-Placed Insurance are 2 different products. The REO policy shouldn’t have a borrower’s name as the beneficiary because it is placed on a property post-foreclosure, however, you are 100% correct that these policies should NOT be charged to the borrower’s escrow account (which they currently are), and a borrower should NOT be held responsible for any REO charges whatsoever. Currently, escrow accounts are systematically added to EVERY foreclosure. The point it happens is dependent on the state and whether the lender is FNMA, FMAC, or other. These illegally created escrow accounts are illegally saddled with exorbitant MONTHLY REO premiums, which end up being charged to the borrower, NOT the lender.

This is also an example of rampant racketeering and mortgage abuse,… more »

…but it is a separate issue from the Force-Placed premiums falsely placed on mortgages, automobile liens, and other collateral loans. « less
August 14, 2012 1:12 pm

The way the statement is broken down is fine (with the exception of the Escrow & Insurance transparencies I recommended in the Periodic Statements section). What I mean is that even though it’s provided on the statement, customer service reps (whether online, over the phone, or in person) need to be required to disclose the same information to borrowers. In today’s day and age of automatic payments and electronic transfers, it’s important that ALL lines of communication are treated the same. Few people use snail mail, and in another 20 years, it’ll likely be a thing of the past. Many of these regulation seem geared toward the past rather than the technological present and future.

Also, why is there an app for everything except filing a consumer complaint with the appropriate government agency? Transparency is ALWAYS the answer.

August 14, 2012 2:19 pm

The cost to enter the market or remain in the market shouldn’t be a consideration. That’s all between the investor and the servicers. If the investor (largely FNMA & FMAC) want to provide options for smaller servicers, that is up to their discretion.

If you leave a small servicer exception, it will be used as a loophole for the larger banks to create subsidiaries and exploit these, much like they do with taxes.

If a company in any industry can’t handle the costs of that industry, then they have no business being in that industry. If there ends up not being enough servicers to service the loans, then that’s something the investors need to look at. From my perspective, you’re trying to fix the effects rather than the cause.

August 14, 2012 2:40 pm

Does a small, mom & pop restaurant get any leniency on health regulations simply because it’s not a chain? Would you want to eat there if they did?

Does an MD with a private practice get exceptions vs a hospital on the care he provides? Is malpractice defined by the size of the care provider?

Are the safety and manufacturing standards for a small start up automobile manufacturer different than they are for a company like Ford?

When a small college receives accreditation, are they allowed to provide less education or a degree for less credits based on the size of their faculty?

Why would the financial servicing industry suddenly be different? I’m not understanding.

August 14, 2012 3:42 pm

There definitely needs to be rules stating that a borrower is NEVER saddled with REO fees. This is one of many reasons escrow accounts need to be transparent on a bill. People need to be able to see what they’re being charged, or fees like REO will continue to be illegally added to their accounts.

August 14, 2012 3:56 pm

How is sending an email too expensive? As far as I was aware, emails are free to send en masse. The loan servicing software used already produces delinquency reports. That’s how a servicers know to foreclose in the first place. There would be a one-time resource cost to pay somebody for the hour it would take to draft/approve a generic email, but the CFPB is providing most of these templates anyway. Why can a loan servicer not afford to pay the $0.0000000000000000000000001 in electricity & internet connectivity costs it would take every year to send these emails?

August 14, 2012 4:00 pm

How…you’ve given a concrete stance w/ absolutely no statistics to back it up. I’ve given well thought out and detailed arguments for why everything should be treated evenly. Rather than just stating there’s no merit, how about providing actual information?

August 16, 2012 11:45 am

Most information can be provided electronically. If servicers are interested in cutting costs, they already have many electronic systems in place to provide this information. I’ve worked in the back end with these servicers. I know how their systems and SQL databases are connected. I know what reports are available. It is absolutely unacceptable for them to claim any information is “unreasonable” to retrieve. It is nothing more than an excuse they are using to keep anything from changing.

For the record, there are VERY FEW “rules” that the CFPB are proposing that are any different than what the servicers already have in place. How does the CFPB plan to catch anyone violating these rules anyway? The fines are minimal, and the audits are a joke. In the 7 years… more »

…I worked in the back end, there was only ever 2 audits, and in both cases, we were given a week’s notice of the information what would be reviewed during the “surprise” audit. During this time, reports were adjusted, numbers were faked, and mistakes were hidden. I’ve seen nothing in these proposed “rules” that will have any affect whatsoever on any of the corrupt happenings I’ve witnessed during my career with the banks. « less
August 17, 2012 12:38 am

One major Force-Placed Insurance issue that needs to be addressed is how it is constantly referred to as a product. LPI is not a product. LPI is a service by definition. Whether you refer to it as Force-Placed or Lender-Placed, the point is that it is insurance that they are buying for you. Why are they allowed to buy proprietary insurance? They should ONLY be allowed to charge a maximum of $35 (similar to an overdraft charge) for the SERVICE of price shopping insurance for a consumer. They should be legally required to select the cheapest insurance available through this necessary force-placed insurance SERVICE (NOT PRODUCT).

The collection of this $35 service fee would offset any of these mortgage servicing costs the CFPB feels should be passed on to consumers for creating a bill.

August 17, 2012 1:04 am

Thank you kindly for your response, and please allow me to clarify a few points:

1) What I was clearly doing was bringing up examples of other “service” industries in order to illustrate the obvious connection that regulation in every other “service” industry is the same, and yet as soon as the words “mortgage” or “financial” are placed in front of the word “service” the regulations suddenly change. You are failing to see the forest for the trees. I’m not as easily fooled. This is why I compare the health “service” industry to the food “service” industry to the financial “service” industry.

2) In regards to your argument about small businesses being reachable, once again, laws have to… more »

…be written in a consistent manner. Technically a corporation like Wells Fargo, JPMorgan, or Bank of America can make the exact claim you’re making for small business, and with more validity. They have tens of thousands of worldwide branches and call centers staffed nearly 24/7 by tens of thousands of employees. They have websites that can be accessed globally. I can be on vacation in Tahiti and still view my balance on their website and possibly still even find a branch to talk to someone in person. Your small business can’t do that, and therefore in the eyes of the law, they are not nearly as reachable as you think from your narrow viewpoint.

3) I know exactly how much it costs to make a system change. I know what systems are involved. In fact, if your small business is strapped for cash, I’d be more than happy to offer my services to assist in creating the templates necessary to create and send out a monthly bill to a customer. I’ll do it for very cheap, because it’s very easy to do. As a matter of fact, it’s a feature built into any office program. If your mom & pop bank has Microsoft Office, they can do it within an hour. If they don’t, they can download the freeware OpenOffice suite to accomplish the same task in the same amount of time. I can link everything to a SQL database, but as we’re discussing a small mom & pop shop with 1-30 employees, they likely don’t have enough customers to necessitate SQL servers.

As a former employee of the mortgage servicing industry for clients such as JPMorgan, Wells Fargo, Bank of America, Countrywide Home Loans, Aurora Loan Services, IndyMac Federal, OneWest Bank, Financial Freedom, Saxon Loan Services, Select Portfolio Services, PennyMac, Wachovia, Compass Bank, Downey Savings & Loans, GMAC, Homecomings Financial, Ally Financial, and more, I’d be happy more than happy to address any further concerns you may have and provide any additional training or education you may need in order to fully understand these rules as well as I do. « less

August 20, 2012 6:29 pm

Just to let you know…it was the Force-Placed Insurer acting on behalf of your lender that determined your flood zone and placed the policy on your account. They are also the ones you spoke with every time you called your lender.

August 11, 2012 1:05 pm

versability, do you have a suggestion for how cfpb should respond to this problem. Should it explicitly set rules for these communications? If so what should they be?

August 11, 2012 12:30 pm

Versability, thank you for your comment. The transparency of escrow account related fees is not covered in this proposed rule. (CFPB is working on another proposed rule that covers escrow account disclosures). However, charging the borrower a fee that the servicer “lacks a reasonable basis to impose” is listed as one of the errors that CFPB is covering with its proposal. What do you think of the list of 9 covered errors that CFPB has put forth? Can you think of other items to be included?

August 11, 2012 12:34 pm

You raise an interesting point, versability. Under CFPB’s proposal servicers would have to transfer all information relating to the borrower’s mortgage. See the text here. CFPB specifically mentions information regarding loss mitigation options, should it also do so for information regarding force-placed insurance?

August 12, 2012 9:46 am

versability: beautifully said!!! Brilliant! It took my servicer about 70 days to send a printout with my fees (not even half the fees were listed). The printout itemized the fees as: $ 625 “allowable fees” and $ 750 “mediation fees” (we refused to mediate). Well if I was the servicer I would do anything to NOT give out such crappy itemization, too.

August 14, 2012 1:05 pm

Versability, how should consumers be notified about these consequences? Do you have specific suggestions for changes in the new Periodic Statement form, which deals with partial payments in several places? If, e.g., CFPB required something in the new Messages section, what should the message say?

August 14, 2012 1:13 pm

CFPB is particularly interested in discussion of a small-servicer exemption. If the new rules cost small servicers too much, CFPB is afraid they will get out of the market, leaving only large companies to service residential mortgages. Would this be a bad thing? What are the costs to small servicers?

August 14, 2012 2:17 pm

Do others agree that phone calls should be required, even if a servicer decides to contact a consumer through email or text messages?

Regarding voicemails, 3 attempts to reach a consumer by phone, on 3 separate days, would count as “good faith effort” to make live contact, even if the calls went to voicemail. CFPB wants to encourage servicers to make contact, but in some cases servicers cannot make contact because of forces beyond their control.

Do others agree that a servicer should have to tell a borrower about all delinquent loans in the same contact?

August 14, 2012 3:15 pm

Yes, and after calling 3 times and sending 3 emails, they must send 3 singing telegrams. Let’s be realistic here, the borrower needs to take some responsibility since they should know they are delinquent on their loan. I think three phone calls on three separate days is more than a good faith effort. If the consumer fails to notify the bank that they changed their phone number, it once again points to the negligence of the consumer. These rules are so restrictive that new systems and staff training has to be implemented. This is going to drive up the costs and fees associated with getting a mortgage in the first place.

One phone call or contact of some sort should be more than enough effort on the lender’s side. The consumer knows they are delinquent and needs to take… more »

…some responsibility for their actions. I agree that a change should be made if the borrower has already negotiated terms so that they aren’t repeatedly contacted. « less
August 14, 2012 3:55 pm

The comparisons you are making have no merit. You are missing the point here. Requirements like these can regulate smaller banks and credit unions right out of business. Then your only option would be to use a Wells Fargo-type bank for your mortgage loan. Small, rural institutions know their customer base and always make themselves available.

August 28, 2012 11:26 pm

You can advise all you want, but without enforcement, nothing will occur. My bank is completely nonaccoutable. They advertise that they are though.

August 10, 2012 11:49 am

This should not be an issue if the homeowner had escrow for insurance. The Servicer should pay the original insurer. Notice should be sent to the homeowner that the policy was paid on every anniversary with the name of the insurance company.
We have submitted 5 complaints to the New York State Banking Dept. of homeowners who received forced placed insurance that was 5 times more than the policy on record.

August 14, 2012 11:15 am

We received our notice of servicing as outlined here, however, the company doing the servicing did not have all the correct information and did not honor the temporary modification outlined by the previous servicer causing us untold hardship and stress.

Because of their delay in information and application they immediately came after us for charges and late fees that we could not have avoided. It was unfair and predatory.

In addition, our previous lender did not work fairly with us, but now that they have sold our loan they no longer have to work with us to correct the flaws in our loan, they simply wash their hands and the new lender/servicer can truthfully say it was not “their” fault.

August 14, 2012 3:55 pm

The comparisons you are making have no merit. You are missing the point here. Requirements like these can regulate smaller banks and credit unions right out of business. Then your only option would be to use a Wells Fargo-type bank for your mortgage loan. Small, rural institutions know their customer base and always make themselves available.