Treasury, Servicers: We're Doing What We Can on Loan Mods

BY BONNIE SINNOCK

JUL 30, 2015 2:56pm ET

ARTICLE LINK: CLICK HERE

The Treasury Department rebutted a watchdog's claims that it hasn't done much to lower high Home Affordable Modification Program denial rates.

The Special Inspector General for the Trouble Asset Relief Program recently renewed its criticism of the high denial rate in Hamp. Paperwork backlogs are one root cause of the problem, according to the watchdog, along with from insufficient Treasury oversight and servicer calculation errors.

The Treasury counters that things are better than they once were.

"We have seen significant improvement in servicers' compliance with program guidelines, including proper evaluation and denial decisions," said Mark McArdle, chief of the Treasury's Homeownership Preservation Office in a July 29 letter.

McArdle noted that there has been improvement in HAMP denial rates since 2012. That year, Treasury introduced HAMP Tier 2, which allowed a more flexible debt-to-income ratio. McArdle also noted that documentation has been simplified over time, and that Treasury recently introduced a Streamline HAMP program. HAMP is part of the government's Making Home Affordable initiative.

Data from SIGTARP and Treasury show denials on average fell sharply to 69% in 2013 after peaking in 2012 at 82%. The average as of April was 63%. Other statistics show cumulative HAMP denials have climbed significantly over time, increasing by 1 million since 2012. The top reasons applications get denied are incomplete applications and insufficient income, according to SIGTARP.

According to SIGTARP, the top servicers it singles out for criticism had higher-than-average denial rates of 70% to 80% — notably Citi, Bank of America, JPMorgan Chase and nonbank Ocwen.

But these companies took issue with the government watchdog's analysis of Treasury statistics on the program.

"Chase has achieved the Treasury's highest overall MHA compliance scorecard rating for six of the last seven quarters. We believe today's reported findings are based on an inaccurate analysis of Treasury data," spokesman Jason Lobo said in an email.

Citi said its denial rate is lower than what SIGTARP said it is when based on completed customer applications. It also said it is able to process most applications in no more than a few weeks. SIGTARP charges that backlogs at some servicers are more than a year long. The backlog of loan modification requests at some mortgage servicers is so bad that at one servicer the pile-up of paperwork caused a storage room floor to buckle, SIGTARP said last year. (That servicer, SunTrust, had no immediate comment Thursday.)

"Citi has consistently approved approximately 50% of complete customer applications representing nearly 100,000 HAMP loans. In most cases, Citi provides a decision within 20 days of receiving a complete application," said spokesman Mark Rodgers.

The HAMP application pipeline is generally paper-intensive and can be challenging for consumers and servicers alike, but has improved over time, according to Karl Falk, chief executive of consumer-facing mortgage default servicing technology provider ShortSave.

When asked why HAMP denial rates are so high, what the cause of this might be and who might be responsible, he said, "If you want my opinion, it's the process, but it's hard to point any fingers in that."

Streamline HAMP is one Treasury initiative that appears helpful, according to Falk. "I'd be curious to see if those have higher approvals," he said.

But top servicers said that that they felt their success in providing foreclosure alternatives should not be measured by HAMP approvals alone.

Although about two-thirds of reviewed applications cannot qualify for a modification under the explicit guidelines of the government programs, servicers are able to help many consumers avoid foreclosure through other avenues, according to Bank of America.

"In the end, 83% of more than one million customers whose HAMP applications were reviewed by Bank of America — five out of six — avoided foreclosure," spokesman Rick Simon said in an e-mailed statement.

Top HAMP servicer Ocwen said in a statement it also has helped borrowers who did not qualify for HAMP avoid foreclosure though other means. Ocwen said it has addressed some of these consumers' loans with private modification programs.

"A significant number of borrowers who did not qualify for a HAMP modification did receive a proprietary modification from Ocwen," John Lovallo, an Ocwen spokesman, said in an e-mail.

Ocwen's denial rate is roughly 10 percentage points lower than the three aforementioned banks, according to SIGTARP. Ocwen has a relatively high number of distressed loans in its portfolio. The housing recovery has reduced distress and the need for modification recently.

Ocwen Financial at one point failed a test to determine whether it had notified borrowers of missing or incomplete documents for loan modifications in a timely manner, but said it has been working since then to improve its compliance.

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SIGTARP Wants to Know Why Servicers Deny 70% of HAMP Requests

BY BONNIE SINNOCK

JUL 29, 2015 12:01am ET

The Special Inspector General for the Troubled Asset Relief Program is renewing calls for further investigation of servicers it claims may be denying too many Home Affordable Modification Program applications.

"Treasury has a small window of opportunity to figure out why so many people have been denied HAMP and to establish a zero tolerance standard for servicers who do not follow HAMP's rules," Special Inspector General Christy Romero said in a statement accompanying SIGTARP's latest quarterly report, issued Wednesday.

According to SIGTARP, 70% of homeowners who applied to lower their mortgage payment through HAMP have been denied assistance by their servicer. At some of the largest servicers, that percentage is even higher, the watchdog adds.

"There is a massive lost opportunity for an emergency program designed to help homeowners through the crisis if only 20-30% of families seeking help from HAMP actually get into HAMP," she said.

SIGTARP years ago pushed Treasury to require servicers to report why homeowners were rejectedfor HAMP, and found that servicers largely blamed it on "incomplete" applications.

It is now suggesting that the problem may lie in servicer rather than borrower inadequacies.

"Even if some people did not meet Treasury's eligibility standards, SIGTARP has repeatedly pointed out, and Treasury has found in their reviews, known problems by the largest HAMP servicers that have plagued homeowners," she said.

Examples of these include income calculation errors, lost paperwork, and improper denials, according to Romero.

HAMP mods were expected to experience some stress from upward adjustments in rate set to occur this year. Re-defaults have been high, and the program also has been the target of scam artists who have fraudulently promised borrowers assistance through the program in exchange for a fee.

Comments (4)

I can vouch that SIGTARP is correct. I applied for a HAMP loan 10 times with the same lender over 3 yrs. I was told this reason and that reason. I never missed a payment. Massive drop in income. I had to move out to another region, and was told they wouldn't do second homes. One person called me a dirt bag, another told me to stop making my payments.

Finally on attempt 9 I was told I would qualify if I rented the home. I was stunned at the rent I got. It was twice what I had expected. After getting a tenant and 3 months rent, plus 3 months up front I reapply. Again this major Bank denies the loan after 5 months.

Posted by brian B | Wednesday, July 29 2015 at 10:47AM ET

My awesome servicer just kept stating the following in mediation "we did not take any federal money so we do not need to offer any assistance". That's what I call a Class Act!!!

Posted by rita a | Wednesday, July 29 2015 at 11:02AM ET

Everytime I have any kind of interaction with a rep of my servicer it turns into a boondoggle and a quagmire swamp of practiced indifference from what sounds like to me, a barely adult arrogant, rule babbling shallow, silly illiterate.

Invariably they sound less like someone genuinely interested in helping the client than a loan shark intent on taking you for whatever you're worth. I've begun a couple of talks with various reps about modifications and/or refi's but always back out or lose interest after reminding myself of the fines and penalties associated with any further investment of my time.

The number of horrendous stories online of people just trying to hold onto their houses in the face of this Machiavellian korprate tornado of personal destruction is astounding.

We (the people) need some intervention from some loftier power; if God's too busy..., the Feds will do.

Posted by Duncan M | Wednesday, July 29 2015 at 11:42AM ET

AMEN!

Posted by Todd K | Wednesday, July 29 2015 at 1:15PM ET

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SELENE FINANCE

SELENE COMPLAINT:

Submitted:      Mar 2015

Reported By:     derrith in Saucier, Mississippi

Report Link:   CLICK HERE

UNFAIR DECEPTIVE ABUSIVE ACTS & PRACTICES

Bank of America sold our mortgage to Selene in September of 2014. This was around the same time I was transitioning from a government job that had laid of hundred of people into another job. I called Selene in November, before my payment was due, just to ask what the grace period was because I knew I would be a few days late due to my new job having a delay on my first check. I did not say I could not make my payment, and I have never been late before or never had I not been able to pay. The representative told me that as a service to their customers they had a repayment plan that I could do. She said I could skip November's payment to help me get ahead and the payment would be divided into three installments added to the next three normal monthly payments. She offered this service to me, I did not ask for any assistance. On the final month of my repayment they pulled my final payment then they pulled $2300 extra dollars out of my account for which I am not sure why. I called them and they were adamant that they did not even though my bank verified this. They would not give me back the money. My bank gave it back to me and they filed it with Selene to get their money back. Two days later my bank informed me Selene was trying to take another $1150 out of my account. I had to pay my bank to stop them from being able to take ANYTHING out of my account ever again. When I called Selene to ask why they were trying to take all this money from me, the individual i spoke to was extrememly rude and huffed in aggravation, and even mumbled bitch at one point. By this point I had had enough of Selene and we went to my bank to refinance. Upon doing this, we find out that Selene had been reporting us to the credit bureau as delinquent for November's payment. They reported us every month after. This destroyed both out credit and since we had been reported we were unable to refinance. Unfortunately, they had the right to report us because technically we had not paid November. I felt that they should have informed us this would happen if we did this repayment plan because I never would have agreed to it especially since I didn't really need to. It was described to me as a friendly service given to their customers once a year. Also, this repayment plan was never done in writing. It was verbal. I do not know that if I had gotten it in writing if it would have disclosed this information, but I was never told I would receive paperwork about this agreement nor did I receive anything. I feel that they deceived us and this is NOT how you do business. SELENE DOES NOT CARE ABOUT THEIR CUSTOMERS. WE ARE JUST OBJECTS. THEY WANT OUR PROPERTY. THEY WILL GET WHAT IS COMING TO THEM. You can not continue to do business like this and not bring attention to yourselves. Reading everyone else's experiences, it is clear to me that this has to end.

END CONSULTING ADVICE:

Hello derrith,

It is absolutely disgraceful not to mention abhorrent and egregious how Selene has treated you as a customer. With that said, you do have rights and by simply understanding them and knowing how to exercise them, you can hold Selene Finance accountable for their actions.

I would first suggest that you visit the CFPB's website at ConsumerFinance.gov to learn more about your consumer rights and you will also want to visit the FTC’s website at ftc.gov to learn more about the Fair Debt Collection Practices Act (FDCPA) as that dictates what debt collectors can and can’t do when collecting your debt…Selene Finance is acting as a debt collector in these instances.

We have battled Selene Finance and won with a forbearance agreement issues as well as other debt restructuring issues so just keep fighting until you get the solution that you are seeking.

In fact, we covered your Selene complaint today on our radio show The Daily Complaint and provided a pathway for success to include how to contact the CFPB - thank you all for posting your complaint online so that others will have the opportunity to learn from your experiences in dealing with Selene Finance. There are firm rules in place with regard to mortgage servicing and debt collection but you must know your rights in order to exercise your rights.

In addition to submitting complaints to the CFPB and FTC, I would always suggest preparing a QWR or Request for information for Selene Finance that you can submit via fax or email – you can learn how through the CFPB by typing in QWR in their search bar. Selene is required to acknowledge the QWR or Request for information per RESPA in 5 business days and answer it in 30 business days or you do have recourse, so listen to us address the Selene issues on The Daily Complaint today and contact us if you need further information on how to not only attack your problem but to get the solutions that you are seeking.

You can absolutely hold Selene Finance accountable for their actions while obtaining the mortgage solutions that you are seeking without a legal battle but there is always small claims court if you must battle legally (a minimal outlay of cash versus an attorney and doesn’t require an attorney).

Good luck!

Respectfully,

Dana Shafman

Managing Member

END Consulting

(888) 234-7006 Ext 101

Dana@ConsultingEND.com

www.TheDailyComplaint.com

Foreclosure Firm Pins Pending Demise on Non-Paying Clients

David Gialanella, New Jersey Law Journal

July 2, 2015

ARTICLE LINK

Even as foreclosure filings surge in New Jersey and elsewhere, Zucker Goldberg & Ackerman, arguably the state's bellwether foreclosure firm, finds itself in debt to the tune of $20 million and facing bankruptcy after 92 years in the business. 

But, after posting $30 million in gross revenue in 2014, the Mountainside firm's expected shuttering is not for lack of business; it is instead due to changes in the nature of the business, according to its bankruptcy counsel.

"The clients have driven Zucker Goldberg to this point," said Daniel Stolz of Wasserman, Jurista & Stolz in Basking Ridge. "The regulations and compensation structure that the large banks have imposed on firms like Zucker Goldberg do not allow them to make a profit.

"Management of Zucker Goldberg over the years has overcome a lot of these types of issues," Stolz added. "You don't want to just walk away, but if it's a downward spiral ... at a certain point you say, this is crazy."

Just walking away appears to be one of a few possible outcomes, but one for which the firm is prepared.

Zucker Goldberg made headlines last month when it filed a notice with the New Jersey Department of Labor on June 23 stating that it anticipated shuttering as of Aug. 24—news that surprised attorneys familiar with the well-established firm. 

"As far as I can remember ... that was always the pre-eminent foreclosure firm in the state of New Jersey," said Barry Levine, a Morris Plains solo who has litigated against Zucker Goldberg. 

Levine said he was "very shocked" to hear the news.

Woodbury solo Lewis Adler, who also has litigated against Zucker Goldberg numerous times, said the firm operates in "a highly competitive market."

"Busy and profitable don't necessarily follow [one another]," but "certainly I thought their practice was fairly honed after all these years," he said. 

The notice was required by the federal Worker Adjustment and Retraining Notification (WARN) Act because the planned closure affects at least 100 workers. With the law's 60-day notice requirement, Aug. 24 represented the earliest date Zucker Goldberg could close and still be in compliance with the statute. 

The notice, filed shortly after the firm retained Stolz, pinned the number of potential layoffs at 289.

Zucker Goldberg has an attorney head count of only 12, but employs ranks of paralegals and staff to support the labor-intensive practice. 

The notice's only explanation was, "Current and anticipated profitability insufficient to sustain current operations."

There's a lengthier explanation, but it all boils down to the rate and timing of compensation, according to Stolz.

The clients—who continue to service mortgages even after selling off the actual debt on the secondary market—pay little or nothing up front to the firm, and don't necessarily pay monthly bills, as clients of firms in other practices do, he said.

Through a process called "curtailment," investors who buy the bundled debt may impose penalties on the seller-originators when returns are not realized within a certain time frame, according to Stolz. When that occurs, clients pass the penalty off to Zucker Goldberg, he said. 

Private banks also voluntarily adopted payment structures formulated by Fannie Mae and other government-backed loan originators that dictate how much—and at which point during the foreclosure process—law firms may be paid, according to Stolz. 

Some of those strictures are "draconian," he said: servicers require documentation of every disbursement, down to mailings. which creates the need for more staff and puts an entire fee at risk if a client takes issue with a specific expenditure.

And as courts in New Jersey and elsewhere addressed widespread "robo-signing"—the process of rubber-stamping foreclosure paperwork with little or no verification—Zucker Goldberg was affected. During that process, which culminated in 2011 with emergent changes to New Jersey court rules, clients directed Zucker Goldberg to continue preparing foreclosure complaints even as they were unable to process them, according to Stolz. 

Zucker Goldberg's typical flat fee for handling a foreclosure to sale is $1,300, but the per-file cost to the firm has become "several times that amount," according to Stolz.

The effects were gradual and for years were staved off because vendors were extended lines of credit, Stolz said, noting that Zucker Goldberg also had to obtain a loan from Chase to meet day-to-day expenses. 

All told, Zucker Goldberg has about $20 million in unsecured debt, payable mostly to title and abstract companies, he said. 

Stolz said Wells Fargo NA is the firm's primary client. 

Wells Fargo spokesman Tom Goyda said in a statement: "While I won't comment specifically about the situation at Goldberg, Zucker & Ackerman, protracted foreclosure time lines in the states where they did work for us have created challenges for every party involved in the foreclosure process. We have a strong oversight program that closely monitors all vendor activity, including our attorneys, and are actively working to ensure a smooth transfer of the work that Goldberg, Zucker & Ackerman has in process for us."

Glenn Reiser of LoFaro & Reiser in Hackensack, who both prosecutes and defends foreclosures, said of Zucker Goldberg: "They seem to have a monopoly on the foreclosure practice," but, "when a lender is referring high-volume work ... they do it on an flat-fee basis." 

"Every two weeks, they've got to pay people," he added. "It's just cash flow."

Over the past decade, Zucker Goldberg has faced litigation over alleged foreclosure overcharges and alleged obstructionist motion practice in a bankruptcy matter. 

The bulk of litigation faced by the firm, however, has been filed by disgruntled borrowers, most of which was dismissed at an early stage, Stolz said. 

The firm "has been very careful to comply with the law, but the suits cost money to defend and raised insurance costs, even though they were largely found to be frivolous," he added.

Zucker Goldberg has about 30,000 active files that would have to be transferred in the event of a closure.

The firm, which continues to pay its staff, is likely to file a Chapter 11 reorganization petition in the coming weeks, Stolz said.

The future of the firm, as well as its lawyers and staff, is "an evolving situation that is largely beyond our control," according to Stolz.

"It could be more gradual than" a complete termination on Aug. 24, he said. 

"If we survive in some smaller form or different form, we really can't tell." •

Contact the reporter at dgialanella@alm.com.

. . . . . . . . . . . . . . . . .

Please contact us if you need help or resources as we are here and happy to help!

Respectfully,

Dana Shafman

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