Chicago real estate, living and neighborhood perspective
Wells Fargo

Mortgage Servicers Still at a Disconnect

The Consumer Financial Protection Bureau’s recent report on mortgage servicing found problems at banks and nonbanks alike.

Specifically, its investigation, conducted from November to June, found significant issues that could cause homeowners to miss payments, threaten their credit histories and plunge them into foreclosure.

No companies were specifically named in the report.

Among the problems: sloppy account transfers between mortgage servicing companies, delayed payment processing and loan servicers that continue to deal inconsistently or inadequately with homeowners who are trying to modify their homes and stay out of foreclosure. The bureau said in some cases, it opened investigations of servicers.

The agency also called out nonbanks for having inadequate procedures to ensure they are properly complying with federal laws designed to protect consumers, and that in some cases the bureau found violations of federal laws.

The report also noted that the agency has had discussions with major mortgage servicing companies well in advance of new loan servicing rules that take effect Jan. 10.

A day after the CFPB report, officials monitoring the $25 billion national mortgage settlement reported that the nation’s five largest servicers are close to offering the total sum of assistance they promised under that February 2012 settlement, based on their own self-reporting. Joseph Smith Jr., the settlement’s independent monitor, needs to confirm most of those numbers reported by banks.

While the financial portion of the settlement may be close to being met, it’s unclear whether lenders have made much progress in improving their servicing standards. In June, Smith found substantial problems lingered in the area of loan modification processing, billing and statement inquiries, and the requirement that consumers have a single point of contact at a mortgage servicer.

Smith said he will not release his next report on servicing standards until November or December.

And, finally, a recent court ruling has kept alive a consumer lawsuit related to loan modifications offered under the federal government’s Home Affordable Modification Program.

A lack of inventory is frustrating potential Chicago-area homebuyers, and a report last week from Zillow explains why some homeowners might like to sell their properties but can’t. Despite improving home values, 35.4 percent of Chicago-area homeowners with a mortgage were underwater at the end of June, meaning they owed more on their loan than the home was worth, Zillow said. That means those homeowners would have to sell their properties through a bank-approved short sale.

(Chicago Tribune)

 

Realty Evolved