homesmillbrae.com » Mortgage Banks

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

When Banks Walk Away, Homeowners Don’t Always Win

Tue, 15 Jan 2013 07:47:08 +0000

The trouble is, there are many borrowers who received delinquency notices or notices of default and thought they had to vacate. These were not notices of eviction or final foreclosure. Still, the borrower left before receiving the notice that the bank had walked away and extinguished the mortgage. The borrowers therefore may not know they own the home, nor do they know that they are still responsible for property taxes and upkeep. Rather than finding out that they’ve just been relieved of a huge debt, they discover later that they are just in more legal trouble.

“Does the bank rep think people are sophisticated enough to know the difference? They get a notice from a bank … this is complicated stuff. They don’t know if the sheriff will be out in 30 days. In some cases they probably stopped opening the letters from the bank. Some homeowners have fatigue,” Jacob noted.

Other homeowners, however, have just walked away voluntarily. They don’t expect to see any value in the home any time in the foreseeable future, and they’re not interested in negotiating with banks for a mortgage modification. Banks are unable to find them to notify them that the lien has been released, and now cities and municipalities are left holding the bag. Eventually the homes end up in a tax foreclosure, but will likely sit empty for years.

“It’s a challenge for the cities now because if they want to redevelop that property, who do they go after?” Jacob said. (Read More: Housing Recovers, but the Repo Man Is Back.)

Again, this problem is most prevalent in the nation’s hardest hit neighborhoods, where home values are very low and where some properties are uninhabitable.

If a bank sees any real value in a house, they will take it to foreclosure and likely sell it to an investor. What is still unclear is timelines. How long will it take for a bank to make a decision on a potential foreclosure? While some homeowners may refuse to leave until they get an eviction notice, more will walk away if they think foreclosure is inevitable.

A homeowner who leaves the house unwillingly before an eviction notice is “unusual” according to a bank source, but it can and does happen. Whether out of confusion or expectation, the person picks up and moves, never knowing that the possibility exists that the bank will walk away and leave them owning the home free and clear. (Read More: Already Time to Throw Up Caution Signs on Housing?)

The consequences could end up costing the homeowner thousands in taxes, maintenance and utilities and leaving them open to wage garnishment and legal liability. In other words, until the sheriff kicks you out, it’s probably best to stay put.

Article source: http://www.cnbc.com/id/100377676

Big Banks Pushed to Outsource Mortgages

Tue, 14 Aug 2012 01:16:16 +0000

In the wake of the financial crisis and still in the midst of the foreclosure mess, the Consumer Financial Protection Bureau announced new rules for mortgage servicers designed to protect borrowers and get them faster, more effective and informative service.

The proposed changes by the CFPB would require servicers to consider applications for help from troubled borrowers within 30 days of receiving them. Meanwhile, servicers would not be allowed to proceed with a foreclosure until the decision on a potential modification has been made.

The new rules would apply to all mortgage servicers, not just the nation’s five largest banks that earlier this year agreed to a $25 billion settlement in the wake of the “robo-signing” paperwork scandal.

The new guidelines present new challenges to mortgage servicers — especially big banks already overwhelmed with delinquent loans.

“There’s a finite amount of capacity in the servicing enterprise today, and the system by design was never set up to withstand these rates of delinquency, these high rates of foreclosure for an extended and protracted period of time which is where we’re at right now,” said Edward Delgado, COO of Wingspan Portfolio Advisors, a Texas-based specialty servicer.

That is why many institutions are increasingly farming out servicing, or directly selling the loans to so-called specialty servicers. These entities, which number about two dozen, often have more experience and resources to deal with troubled loans.

Despite improvements in the overall mortgage markets, 5.8 million loans — or 11.9 percent of all residential U.S. mortgages — were either delinquent or in the foreclosure process at the end of June, according to Mortgage Bankers Association data. Mortgage delinquencies increased in the second quarter of this year, reversing a trend of fairly steady drops in the rate.

The bureau’s new policy “amplifies our role as a strategic partner in the prevention of foreclosures for the most part, by enhancing our outreach to homeowners and working closely with the banks to make contact,” said Delgado. He said his company works with smaller pools of troubled loans and can therefore conduct consumer outreach more effectively, even go door-to-door.

Just last week CitiMortgage
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] announced it is selling $158 million worth of mortgages to special servicer Carrington Capital, which will conduct a deed-for-lease program. That’s where troubled borrowers turn over ownership of the home to Carrington and then can rent the home back if they choose, sidestepping a more costly and credit-crushing foreclosure.

“As a financial institution, managing a program of this nature is not within our area of expertise, so we joined with Carrington, one of the best property management companies in the country, to help make this program work,” said Sanjiv Das, CEO of CitiMortgage in a release.

Insiders at Carrington said they expect to see more deals like Citi’s, saying federal regulators are actually pushing larger banks to offload bad loans. The larger firms simply don’t have the capacity to handle the large volume of delinquent loans, made abundantly clear in hundreds of stories from frustrated borrowers who face foreclosure. They tell of lost documents, impersonal service and constant runaround.

Now specialty servicers stand to gain more business; publicly traded servicers like Nationstar
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], Walter Investment Management
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] may be good bets for investors, as the foreclosure crisis plods on.

“The further we go into the crisis — the addition layers of regulatory oversight, the complexity of various programs that are being engaged — the more that the larger banks will presume a position of being a master servicer maintaining control and oversight of key functions,” said Wingspan’s Delgado. He added the role of special servicer would “continue to expand across the marketplace.”

—By CNBC’s Diana Olick

Questions? Comments? And follow me on Twitter @Diana_Olick

Article source: http://www.cnbc.com/id/48648395?__source=RSS*blog*&par=RSS