homesmillbrae.com » Loan Modification

Mortgage Cop: Four Top Banks Fail Consumers

Wed, 19 Jun 2013 19:46:27 +0000

“The banks take this very seriously. They were not elated at having failures. I know they’ve spent a lot of money and a lot of time trying to correct their processes in a way that will serve the public better, but we’re not there yet,” said Smith, who was hesitant even to call the report’s results “satisfying.” He was also reluctant to praise any one bank over another, unwilling to declare, “who is best yet.”

(Read More: Rising Rates Scare Borrowers Into Action)

In addition to the 29 servicer test results, Smith also reported receiving 59,586 consumer complaints as well as 797 from mortgage professionals between October and the end of March 2013.

The top consumer complaint was that a single point of contact was not provided or that contact was either difficult to deal with or to reach. The lack of a single servicing agent to work with each customer has led to dual-tracking; that is when one side of the bank is unaware that the other side is working on a loan modification and a foreclosure is completed while the borrower is still working through a mortgage modification.

Dual tracking violations of single point of contact and of timeline standards for loan modifications are also the crux of a lawsuit announced in early May by New York State Attorney General Eric T. Schneiderman against Bank of America and Wells Fargo. Schneiderman jumped the gun on Smith’s report, citing 339 violations of the National Mortgage Settlement in New York.

“Wells Fargo and Bank of America have flagrantly violated those obligations, putting hundreds of homeowners across New York at greater risk of foreclosure,” Schneiderman said in a statement released May 6.

(Read More: More Evidence Banks Violated Mortgage Pact: NY AG)

Former Bank of America employees, in affidavits filed in a Massachusetts lawsuit last week, claimed the lender paid them bonuses to deny loan modifications, lie to customers and initiate new foreclosures. Bank of America denied the allegations.

Smith had no comment on either lawsuit, saying only, “The single biggest deficit we have in the mortgage business is a deficit of trust.”

Article source: http://www.cnbc.com/id/100825528

Homeowner Fighting Foreclosure Wins Trial Loan Modification

Thu, 06 Jun 2013 06:48:31 +0000

Ricardo Rodriguez, a San Francisco resident who has been fighting to save his home from foreclosure, has received some good news from Bank of America. After unsuccessfully applying for at least 10 loan modifications since 2009, Rodriguez was accepted by Bank of America last week for a trial loan modification.

He has made his first payment and will get to stay in his home. If he makes his payments on time during the three-month trial period, he may qualify for permanent loan restructuring.

“We’re just happy we get to keep our house after more than three years of this stuff,” Rodriguez said Monday. He said he is optimistic that he can meet the requirements to make the trial loan permanent.

NBC Bay Area and the Center for Investigative Reporting highlighted Rodriguez’s case in a joint report in April on questionable foreclosure practices in the Bay Area. The investigation found that thousands of homeowners were fighting in court to save their homes from a foreclosure system filled with mistakes, mismanagement and, on occasion, fraud. The report also found that in some cases, Bank of America was skirting proper foreclosure procedures, leaving Rodriguez and other borrowers unsure of the status of their loan modifications or who owned the rights to their home.

When Rodriguez lost his job delivering newspapers in 2011, he had trouble making the payments on his mortgage. He repeatedly applied for loan modifications but said Bank of America lost his paperwork and shuffled him among account managers, despite a state law requiring banks to provide homeowners with a single contact. Rodriguez became fed up and joined a local advocacy group to fight foreclosures in his neighborhood.

Bank of America spokeswoman Jumana Bauwens said in April that the bank previously had worked with Rodriguez and reduced his interest rate to 2 percent, but he was unable to pay the lower amount.

“If even the lowest possible payment is not affordable for a borrower, homeownership may not be the best or most responsible option for them,” the bank said at the time.

Bank of America plays the largest role of any bank in Bay Area foreclosures. From July 2008 through October, Bank of America’s foreclosure trustee, ReconTrust, handled 1 in 5 defaulted properties in the Bay Area, roughly 70 percent more than the next biggest trustee, according to RealtyTrac Inc., a real estate information company.

Article source: http://www.nbcbayarea.com/news/local/Homeowner-Fighting-Foreclosure-Wins-Trial-Loan-Modification-210295101.html

Obama Gets Big ‘No’ On Slashing Mortgage Debt

Wed, 01 Aug 2012 05:30:16 +0000

Despite strong pressure from the Obama administration, a federal regulator will not allow Fannie Mae and Freddie Mac to reduce mortgage principal. The Federal Housing Finance Agency’s Ed DeMarco has previously opposed the program, which uses taxpayer money to pay lenders to reduce loan balances of severely troubled borrowers, but had not made the final decision until now.

“After much study, I have concluded that Fannie Mae and Freddie Mac’s adoption of HAMP PRA [the government's Home Affordable Modification Program Principal Reduction Alternative] would not make a meaningful improvement in reducing foreclosures in a cost effective way for taxpayers,” DeMarco wrote in a letter to the chairman and ranking member of the Senate Committee on banking, Housing and Urban Affairs.

DeMarco concludes that the program presents the risk of more losses to taxpayers, not to mention operational challenges to the GSE’s. He cites moral hazard, suggesting that as many as 19,000 borrowers who are current on their mortgages could strategically default in order to qualify for debt forgiveness. Even more significant, he goes on, could be long-term consequences for mortgage credit availability.

“Fundamentally, principal forgiveness rewrites a contract in a way that other loan modification programs do not. Forgiving debt owed pursuant to a lawful, valid contract risks creating a longer-term view by investors that the mortgage contract is less secure than ever before,” writes DeMarco in the letter to lawmakers.

Treasury Secretary Timothy Geithner responded immediately in a letter to DeMarco:

“I do not believe it is the best decision for the country, because, as we have discussed many times, the use of targeted principal reduction by the GSEs would provide much needed help to a significant number of troubled homeowners, help repair the nation’s housing market, and result in a net benefit to taxpayers.”

A study of the program by Treasury’s Michael Stegman showed that mortgage modifications that included principal reduction had a far lower re-default rate than those without the debt forgiveness.

“Fannie Mae’s analysis suggests that using principal reduction to reduce the loan-to-value- (LTV) ratio not only increases a borrower’s ability to pay, but for these selected borrowers, it also increases the likelihood that they will continue to pay,” writes Stegman in the analysis.

The FHFA estimates that up to 500,000 Fannie and Freddie borrowers could have been eligible for principal reduction. The Treasury’s current program pays lenders large incentives to write down loan balances, using unspent money from the $700 billion TARP (Troubled Asset Relief Program). But FHFA says despite a positive financial benefit to Fannie and Freddie, it is really just a transfer of taxpayer funds, adding “to the over $188 billion in taxpayer support the Enterprises have already received.”

Some lawmakers, however, may not be done fighting yet. Several have been pushing for more action to help homeowners, and the heat is on with the election less than 100 days away.

“It is incomprehensible that Mr. DeMarco would reject the chance to save up to a billion dollars in taxpayer funds while helping nearly half a million homeowners stay in their homes,” said Rep. Elijah Cummings (D-MD) in a statement. “He should immediately withdraw this reckless and misguided letter and start following the law Congress passed.”

Questions? Comments? And follow me on Twitter @Diana_Olick

Article source: http://www.cnbc.com/id/48425201?__source=RSS*blog*&par=RSS

Federal Regulators Hit Banks on Mortgage Practices

Wed, 13 Apr 2011 21:44:13 +0000

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It’s not the big penalty from the fifty state attorneys general, but it will hit big bank bottom lines in a big way.

The Office of the Comptroller of the Currency, the Federal Reserve and the Office of Thrift Supervision released enforcement action against fourteen major bank/servicers in the form of consent orders.

Bank of America , JP Morgan Chase , Ally Financial, Wells Fargo, SunTrust, Citibank, HSBC, MetLife, PNC, U.S. Bank, Aurora Bank, EverBank, OneWest Bank and Sovereign Bank will all be hit with no fewer than 16 new requirements for mortgage servicing and loss mitigation.

They will also have to overhaul oversight of third-party vendors, including lawyers, who provide foreclosure services.

“These reforms will not only fix the problems we found in foreclosure processing, but will also correct failures in governance and the loan modification process and address financial harm to borrowers,” according to acting Comptroller of the Currency John Walsh.

While there is no penalty involved in this action yet (penalties often follow enforcement actions), the Federal Reserve release says, “The Federal Reserve believes monetary sanctions in these cases are appropriate and plans to announce monetary penalties.”

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Article source: http://www.cnbc.com/id/42573141?__source=RSS*blog*&par=RSS

Protesters Ream State AGs over Foreclosure Settlement

Mon, 07 Mar 2011 20:55:52 +0000

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There is no official settlement.

There is no multi-billion dollar fund or penalty and there is no word from Federal Regulators as to how the banks will ultimately “fix” the foreclosure paperwork issues.

Yet.

But a meeting here in DC of the fifty state attorneys general was too good to pass up for a couple of hundred protesters demanding, “a strong settlement that includes principal reduction on millions of mortgages.”

I have to hand it to the Iowa deputy attorney general, Tam Orminston, who put himself into the middle of a crowd of troubled, and angry borrowers, led by National People’s Action and PICO National Network. One by one borrowers told of their mortgage woes, amid shouts of “That ain’t right!” from the surrounding crowd.

The protesters called a potential $20 billion settlement with the big banks “chump change,” even though that number is far from agreed upon. As I stood watching, Missouri Attorney General Chris Koster came over to our camera to chat. He was advocating that a settlement be done quickly and almost sounded as if he were willing to back off some of the demands of a 27 page settlement “framework” from Iowa attorney general Tom Miller, who is leading the 50 state foreclosure investigation, that outlines new foreclosure procedures and loan modification mandates for the banks as part of a potential settlement. That document will be presented to all the AGs this afternoon but was leaked to the press Friday.

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Article source: http://www.cnbc.com/id/41951970?__source=RSS*blog*&par=RSS