CFPB Report

Posted by kevin on November 1, 2014 under Foreclosure Blog | Comments are off for this article

On October 28, 2014, the Consumer Financial Protection Bureau issued a report on mortgage servicers/servicing. It wasn’t pretty.

The report found that servicers are engaging in significant delays which lead to higher payments to the borrower. In addition, the servicers are not, for the most part, properly notifying credit reporting agencies that borrowers are no longer delinquent.

The problem has been exacerbated because major bank, which were subject to the $25 billion dollar settlement, are getting out of the servicing business and selling their portfolios to non-bank servicers such as Ocwen or Greentree.

Higher costs are incurred when servicers keep borrowers in trial modifications for more than three months at interest rates that are higher than the ultimate permanent mod. If the trial mod payment does not cover the fully amortized payment, then the difference is added on to the principal. More trial mod payment, the greater the amount that is added on to principal.

Recently, the CFPB fined Ocwen $2.1 billion for taking advantage of borrowers. The New York attorney general is investigating Ocwen for backdating letters.

I have always been leary about dealing with servicers on modifications, short sales and deeds in lieu. Back in 2011, most attorneys who brought the foreclosures actions would work with me on getting a resolution of the case. Not any more. I make proposals to my adversaries only to be told that I must deal with the servicers. Then, the games begin.

On paper, MHA (formerly called HAMP) has decent guidelines that seem to protect the consumer. However, you have no recourse if the servicer does not follow the guidelines. In addition, you are left swinging in the breeze when servicers sit on your file for 3-4 weeks, and then demand more or updated information, and then continue with this process for months. Currently, I have a modification that started last November and is still not into underwriting.

The CFPB is going in the right direction by holding the servicers’ feet to the fire. A change in the compostion of Congress, which looks likely, may have a negative impact on CFPB’s impact.