What to Watch Out for with Your Mortgage Servicing Company

"Problems with payments head the list of consumer complaints about the companies that service home mortgages."

 

Mark Henricks

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Sep 6, 2016 10:02 AM EDT

ARTICLE LINK (CLICK HERE)

A Virginia borrower complained that after making a monthly mortgage payment via credit union electronic transfer the bank servicing the mortgage denied receiving payment despite two confirmation faxes from the credit union. In Texas, a borrower said a new servicer took over a loan, never sent a bill or responded to attempts to set up an account and make payments and then posted the home for foreclosure. 

These are two of 3,910 complaints about mortgages sent to the Consumer Financial Protection Bureau in July 2016. Mortgages represent the third-biggest category of complaints to the CFPB, behind debt collection and credit reporting. As of April 1, 2016, CFPB's online complaint system had handled nearly 860,000 complaints since it opened 2011, of which mortgages accounted for more than 223,000.

Mortgage complaints spiked during the last recession and housing downturn before falling to about their current level. Now they may be heading up again. During the first quarter of 2016, average monthly mortgage complaints were up 21% from the same period a year earlier, according to the CFPB.

Rocke Andrews, president of the Plano, Texas-based National Association of Mortgage Brokers, says during the downturn complaints tended to be about brokers but more recently concern servicers. One reason is that pricing pressure is causing servicer consolidation and efforts to reduce costs, he says.

"What you see now is there are probably five servicers that handle 75% of all servicing," Andrews says. "To make it profitable, you have to scale it up and do as much as you can automated. As a result, as a consumer, more than likely you're going to wind up with one of those automated systems when you call in for information."

Andrews says consumers with a problem can increase chances of a successful resolution by bypassing the automated systems -- often by pressing the "0" key -- and asking the human rep to speak with a supervisor. If that doesn't work, try hanging up and calling back, he suggests.

Complaints come in many varieties, but since 2011, most (51%) are "problems when you are unable to pay," according to the CFPB. Next is "making payments," cited by 31%. Complaints about applying, signing the agreement and receiving a credit offer are all single digit percentages.

Some problems are caused by borrowers confusing the servicer, which collects payments and disburses taxes and insurance, and the holder of the mortgage note. Borrowers may be upset that a servicer won't approve skipping a payment, when the borrower has to approve that, Andrews says.

Another common problem regards partial payments. Sometimes, such as during foreclosure proceedings, the amount owed may change after a payment is mailed and before it is received. The borrower may think payment has been made, when in fact it's been disallowed as a partial payment. New rules require servicers to tell borrowers upfront whether they will accept partial payments may help this problem, Andrews says.

While nearly a quarter of a million complaints to regulators sounds like a lot, Marina Walsh, a vice president with the Washington, D.C.-based Mortgage Bankers Association, notes that problems are typically handled before reaching the CFPB, and the complaint count is modest compared to the number of borrowers. "There are approximately 50 million outstanding mortgages in the U.S. and many more customer escalations or complaints are tracked and logged, then resolved directly by the mortgage servicer," Walsh says.

Walsh said dedicated phone numbers, customer service-friendly websites and better call center monitoring is helping to improve borrowers' experiences with servicers. "On the technology side, servicers have woken up and realized that they need to go digital especially for millennial borrowers," Walsh says. "This means revamping websites to provide more capabilities, offering seamless mobile options and generally moving toward a self-service and self-monitoring model preferred by some many borrowers, particularly Millenials."

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What to Watch Out for with Your Mortgage Servicing Company

"Problems with payments head the list of consumer complaints about the companies that service home mortgages."

 

Mark Henricks

 Follow

Sep 6, 2016 10:02 AM EDT

ARTICLE LINK (CLICK HERE)

A Virginia borrower complained that after making a monthly mortgage payment via credit union electronic transfer the bank servicing the mortgage denied receiving payment despite two confirmation faxes from the credit union. In Texas, a borrower said a new servicer took over a loan, never sent a bill or responded to attempts to set up an account and make payments and then posted the home for foreclosure. 

These are two of 3,910 complaints about mortgages sent to the Consumer Financial Protection Bureau in July 2016. Mortgages represent the third-biggest category of complaints to the CFPB, behind debt collection and credit reporting. As of April 1, 2016, CFPB's online complaint system had handled nearly 860,000 complaints since it opened 2011, of which mortgages accounted for more than 223,000.

Mortgage complaints spiked during the last recession and housing downturn before falling to about their current level. Now they may be heading up again. During the first quarter of 2016, average monthly mortgage complaints were up 21% from the same period a year earlier, according to the CFPB.

Rocke Andrews, president of the Plano, Texas-based National Association of Mortgage Brokers, says during the downturn complaints tended to be about brokers but more recently concern servicers. One reason is that pricing pressure is causing servicer consolidation and efforts to reduce costs, he says.

"What you see now is there are probably five servicers that handle 75% of all servicing," Andrews says. "To make it profitable, you have to scale it up and do as much as you can automated. As a result, as a consumer, more than likely you're going to wind up with one of those automated systems when you call in for information."

Andrews says consumers with a problem can increase chances of a successful resolution by bypassing the automated systems -- often by pressing the "0" key -- and asking the human rep to speak with a supervisor. If that doesn't work, try hanging up and calling back, he suggests.

Complaints come in many varieties, but since 2011, most (51%) are "problems when you are unable to pay," according to the CFPB. Next is "making payments," cited by 31%. Complaints about applying, signing the agreement and receiving a credit offer are all single digit percentages.

Some problems are caused by borrowers confusing the servicer, which collects payments and disburses taxes and insurance, and the holder of the mortgage note. Borrowers may be upset that a servicer won't approve skipping a payment, when the borrower has to approve that, Andrews says.

Another common problem regards partial payments. Sometimes, such as during foreclosure proceedings, the amount owed may change after a payment is mailed and before it is received. The borrower may think payment has been made, when in fact it's been disallowed as a partial payment. New rules require servicers to tell borrowers upfront whether they will accept partial payments may help this problem, Andrews says.

While nearly a quarter of a million complaints to regulators sounds like a lot, Marina Walsh, a vice president with the Washington, D.C.-based Mortgage Bankers Association, notes that problems are typically handled before reaching the CFPB, and the complaint count is modest compared to the number of borrowers. "There are approximately 50 million outstanding mortgages in the U.S. and many more customer escalations or complaints are tracked and logged, then resolved directly by the mortgage servicer," Walsh says.

Walsh said dedicated phone numbers, customer service-friendly websites and better call center monitoring is helping to improve borrowers' experiences with servicers. "On the technology side, servicers have woken up and realized that they need to go digital especially for millennial borrowers," Walsh says. "This means revamping websites to provide more capabilities, offering seamless mobile options and generally moving toward a self-service and self-monitoring model preferred by some many borrowers, particularly Millenials."

• . . . . . . . . . . . . . . . . .
• 
  
• Please contact us if you need help or resources as we are here and happy to help!
• 
  
• Respectfully,
• 
  
• Dana Shafman
• Managing Member
• END Consulting
• (888) 234-7006 Ext 101
• Dana@ConsultingEND.com
• 
  
• www.TheDailyComplaint.com

What to Watch Out for with Your Mortgage Servicing Company

"Problems with payments head the list of consumer complaints about the companies that service home mortgages."

 

Mark Henricks

 Follow

Sep 6, 2016 10:02 AM EDT

ARTICLE LINK (CLICK HERE)

A Virginia borrower complained that after making a monthly mortgage payment via credit union electronic transfer the bank servicing the mortgage denied receiving payment despite two confirmation faxes from the credit union. In Texas, a borrower said a new servicer took over a loan, never sent a bill or responded to attempts to set up an account and make payments and then posted the home for foreclosure. 

These are two of 3,910 complaints about mortgages sent to the Consumer Financial Protection Bureau in July 2016. Mortgages represent the third-biggest category of complaints to the CFPB, behind debt collection and credit reporting. As of April 1, 2016, CFPB's online complaint system had handled nearly 860,000 complaints since it opened 2011, of which mortgages accounted for more than 223,000.

Mortgage complaints spiked during the last recession and housing downturn before falling to about their current level. Now they may be heading up again. During the first quarter of 2016, average monthly mortgage complaints were up 21% from the same period a year earlier, according to the CFPB.

Rocke Andrews, president of the Plano, Texas-based National Association of Mortgage Brokers, says during the downturn complaints tended to be about brokers but more recently concern servicers. One reason is that pricing pressure is causing servicer consolidation and efforts to reduce costs, he says.

"What you see now is there are probably five servicers that handle 75% of all servicing," Andrews says. "To make it profitable, you have to scale it up and do as much as you can automated. As a result, as a consumer, more than likely you're going to wind up with one of those automated systems when you call in for information."

Andrews says consumers with a problem can increase chances of a successful resolution by bypassing the automated systems -- often by pressing the "0" key -- and asking the human rep to speak with a supervisor. If that doesn't work, try hanging up and calling back, he suggests.

Complaints come in many varieties, but since 2011, most (51%) are "problems when you are unable to pay," according to the CFPB. Next is "making payments," cited by 31%. Complaints about applying, signing the agreement and receiving a credit offer are all single digit percentages.

Some problems are caused by borrowers confusing the servicer, which collects payments and disburses taxes and insurance, and the holder of the mortgage note. Borrowers may be upset that a servicer won't approve skipping a payment, when the borrower has to approve that, Andrews says.

Another common problem regards partial payments. Sometimes, such as during foreclosure proceedings, the amount owed may change after a payment is mailed and before it is received. The borrower may think payment has been made, when in fact it's been disallowed as a partial payment. New rules require servicers to tell borrowers upfront whether they will accept partial payments may help this problem, Andrews says.

While nearly a quarter of a million complaints to regulators sounds like a lot, Marina Walsh, a vice president with the Washington, D.C.-based Mortgage Bankers Association, notes that problems are typically handled before reaching the CFPB, and the complaint count is modest compared to the number of borrowers. "There are approximately 50 million outstanding mortgages in the U.S. and many more customer escalations or complaints are tracked and logged, then resolved directly by the mortgage servicer," Walsh says.

Walsh said dedicated phone numbers, customer service-friendly websites and better call center monitoring is helping to improve borrowers' experiences with servicers. "On the technology side, servicers have woken up and realized that they need to go digital especially for millennial borrowers," Walsh says. "This means revamping websites to provide more capabilities, offering seamless mobile options and generally moving toward a self-service and self-monitoring model preferred by some many borrowers, particularly Millenials."

• . . . . . . . . . . . . . . . . .
• 
  
• Please contact us if you need help or resources as we are here and happy to help!
• 
  
• Respectfully,
• 
  
• Dana Shafman
• Managing Member
• END Consulting
• (888) 234-7006 Ext 101
• Dana@ConsultingEND.com
• 
  
• www.TheDailyComplaint.com

Why HAMP and HARP Have Run Their Course

Why HAMP and HARP Have Run Their Course | Carrington Real Estate – News

http://real-estate-news.bagr.com/2016/05/09/why-hamp-and-harp-have-run-their-course/

“HAMP was developed to address a crisis and we’re really not in a crisis,” said Eric Selk, executive director of the Hope Now Alliance.

The Obama administration’s Making Home Affordable program has been extended and expanded so many times that it’s gotten hard to imagine life without it. But the days may be numbered for MHA and its two primary initiatives, the Home Affordable Modification Program and Home Affordable Refinance Program.

As the housing market’s recovery continues to solidify, the number of underwater borrowers that MHA was designed to help has receded, not to mention the fact that a new administration will occupy the White House following the upcoming elections.

In one sense, the scheduled Dec. 31 end date of Making Home Affordable is a nonevent because nationally, the volume of loans flowing through HAMP and HARP has slowed considerably. But the programs are still a force to be reckoned with. The refinance program’s volume has been significant in the past and remains so in certain regions. And there’s no denying that the modification program, while small in size now, has had a huge influence over the way loss mitigation is handled in the market.

“MHA has left a lasting impact on the industry,” said Mark McArdle, deputy assistant secretary of the Treasury Department’s Office of Financial Stability. “Previously, modifications were typically about kicking the can down the road and ultimately did not reduce payments. HAMP has introduced a standardized loss mitigation waterfall as a common expectation. The question is, when we go away, how much of that will remain?”

The Federal Housing Finance Agency is weighing options for a refinance program to succeed HARP, but any plan would be limited to loans purchased by its primary charges, Fannie Mae and Freddie Mac. And it’s so far been silent on any plans for a new modification program to take HAMP’s place.

But HAMP’s influence will continue long after servicers stop taking requests for new workouts. The runoff of previously modified loans will last for years, while other forms of loss mitigation will continue to incorporate procedures that were rare, or even nonexistent, prior to its existence — not to mention how history will view Making Home Affordable’s legacy in the broader context of the Great Recession.

“What the expiration of this means will be a matter of how you view economics,” said Les Parker, an industry veteran and contributing writer to The Mortgage Professional’s Handbook, a guidebook on the inner-workings and history of the mortgage industry published earlier this year. “It is government intervention, and the questions people will look at is, was that government intervention good or bad?”

With that in mind, let’s take a look at what the mortgage industry might look like once HAMP and HARP have come to an end.

A Political Question

Both Republican and Democratic presidents have shown a willingness to let government intervene in the mortgage markets in the past. It’s unclear where the current slate of presidential candidates stand on the issue, but generally, Parker said, “I think the odds are Making Home Affordable is not going to be extended if a Republican is coming in.”

Some Republicans and investors, as well as the special inspector general for the Troubled Asset Relief Program that funds MHA, have been critical of HAMP’s redefault rate or the program’s inability to reach more borrowers. Critics also have showed concern about the potential moral hazard it presents in lowering delinquent borrowers payments in standardized ways that don’t account more granularly for individuals’ merits, while leaving performing borrowers’ unchanged, Parker noted.

Certain Democrats as well as the Treasury, the FHFA and other proponents have meanwhile defended the program. They note that the majority of HAMP loans remain current after modification, that the program was structured to minimize moral hazard and that performance improved over time, with the latest iterations proving generally more effective than proprietary modifications.
That debate will resurface in any contemplation of an extension or successor program to HAMP. But because the next president will take office shortly after MHA’s scheduled expiration, it’s unlikely there will be any change from the current plan to let it sunset, unless it is a simple extension. However, an extension remains a long shot because of the widespread perception that the program was created to respond to a crisis that no longer exists.

“I think it will sunset because how do you justify that there is still a problem?” Parker said.
Ultimately, HAMP could become the model for what some are calling a “mod on a shelf,” which could be revived in the event of a future housing crisis, said Eric Selk, the executive director of Hope Now.

“HAMP was developed to address a crisis and we’re really not in a crisis,” he said.
While the end of Making Home Affordable may serve as fodder for political rhetoric in debates about housing policy, market conditions are generally far better than they were during the crisis, said David Lykken, president and founder of Transformational Mortgage Solutions, a consulting firm in Austin, Texas.

“It’s important to realize as we go into this election cycle that there could be a lot of talk about how the end of Making Home Affordable could destroy homeownership to suggest that we need the programs,” he said.

But delinquencies have returned to normalized levels, noted Lynn Fisher, a vice president of research and economics at the Mortgage Bankers Association. And even though negative equity levels aren’t back to normal, they are far closer to it.
The percentage of underwater homes among people with a mortgage is less than 10%, as opposed to a rate more than twice that during the crisis, according to CoreLogic chief economist Frank Nothaft.

“You would normally expect to see negative equity closer to 2% to 3%. We’re at most two to three years from normality,” Nothaft said.

Overall, the number of underwater homeowners with a GSE loan has dropped by more than 80% since its peak at the end of 2011, and the vast majority of the remaining underwater borrowers are current on their mortgages, according to FHFA Director Mel Watt. About 9% are still seriously delinquent.

While borrower distress associated with crisis-era underwater homes is less of a problem on average, it remains a challenge in certain concentrated regions. So the expiration of a modification program specifically designed to help these borrowers will put some stress on these regions and entities that hold concentrations of loans there.

States with longer foreclosure timelines such as New York, New Jersey and Florida are more likely to feel some impact from HAMP’s expiration, said Michael Fratantoni, the MBA’s chief economist.
And some regions that still lag in home price recovery will be affected more than others when MHA’s refinance program ends. These include Las Vegas, the Inland Empire in California, and parts of Florida, Fratantoni added.

HARP Will Be Replaced

While it was less groundbreaking than HAMP and received the benefit of a number of refinements over time, the Home Affordable Refinance Program didn’t have as tough of a row to hoe.
“HARP was an amazingly successful program,” said Fratantoni. “I think HAMP had some more hurdles to get over.”

And unlike HAMP, there are immediate plans for a GSE successor to HARP.

“As HARP winds down, we are also working to make sure that borrowers with high loan-to-value ratio loans have a refinance option in the future,” Watt said in in a policy speech in March, noting that it “will be important in the event there are regional or localized economic disruptions that lead to negative equity.” However, borrowers who previously participated in HARP would not be eligible to refinance under the new program.

The GSEs have helped more than 3.3 million homeowners refinance their mortgages through HARP, saving them on average $2,200 a year in reduced mortgage payments.

HARP loans accounted for as much as 40% of Fannie Mae and Freddie Mac refinance volume at the program’s height in May 2012, according to Black Knight Financial Services estimates. However, that was an unusual month, and the percentage has fallen drastically over time. While it continues to aggressively target remaining eligible borrowers, the FHFA found HARP accounted for only about 5% of GSE refinances during January 2016 and quarterly averages were no higher than around 27% at the market’s peak.

So what kind of program could succeed HARP at Fannie and Freddie?

One possibility is a Fannie Mae loan modeled off of the Department of Veterans Affairs’ streamline refinance program, said Brent Nyitray, director of capital markets at iServe Residential Lending in Stamford, Conn.

“That’s one thing the government could easily do if they wanted to permanently extend HARP,” he said.

Among other things, the Department of Veterans Affairs does not require an appraisal on its streamline refinances, which would help underwater borrowers overcome any loan-to-value eligibility restrictions.

“The question will be will lenders want to do that? Because there are fears of having the loan put back to you by Fannie Mae,” Nyitray said.

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• Please contact us if you need help or resources as we are here and happy to help!
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Tick-tock goes the clock on old debts

September 10, 2015

by Cristina Miranda 

Consumer Education Specialist, FTC

ARTICLE LINK (CLICK HERE)

Here’s a fun way to think about a tricky topic. You know the scene in Lewis Caroll’s Alice in Wonderland when the white rabbit hops off saying “I’m late! I’m late! For a very important date!”? Imagine the rabbit is a debt collector. The important date? It’s his last chance to legally make you pay money you owe. Why he’s late? The debt collector has run out of time to sue you for an old and unpaid, or time-barred, debt. For more, follow me down the rabbit hole...

What is a time-barred debt?
It’s a debt that’s too old for a debt collector to sue you to make you pay. Debt collectors have a limited number of years – called the statute of limitations – to sue you to collect on money you owe. Statutes of limitations vary by state, and by type of debt.

What can I do if a debt collector calls about an old debt?
Debt collectors can contact you about time-barred debts at any time. If you get a call from a debt collector, they might come right out and say they can’t take you to court to make you pay a time-barred debt. If a debt collector doesn’t tell you this, ask for the date when you made your most recent payment. Then, ask for a validation notice – a legally required letter detailing the amount owed, and the creditor name. Once you receive the notice, send a letter back within 30 days explaining that you are 'disputing' the debt and that you want to 'verify' it. Debt collectors must stop trying to collect until they give you verification.

What if I’m sued for an old debt?
Don’t ignore it. Defend your debt collection rights. Consider talking to an attorney in order to prove that the debt is time-barred, and have the lawsuit dismissed. To do this, you may be asked to provide a copy of the verification from the collector, or any information you have that shows the date of your last payment.

Do I have to pay a time-barred debt?
It’s up to you. Here’s what can happen:

• Pay nothing. Not paying a debt may lower your credit rating. So check your free credit report first to see if a time-barred debt has been reported. If the debt appears on your credit report, this could make it harder and more expensive for you to get credit, insurance, or loans. Debts stay on your credit report for seven years after you stop paying. Although debt collectors can no longer sue you for a time-barred debt, it won’t make it go away. Debt collectors can keep contacting you to pay because you still owe the money. If you want them to stop, send a cease communications letter.
• Partially pay. If you make, or promise to make, a debt payment, the statutes of limitations clock may reset and your debt will no longer be considered time-barred. A debt collector can then sue you for the full debt amount, plus interest and fees.
• Pay it off. Before making a full payment, get a signed letter from the debt collector saying that your entire debt is being settled to release you from further obligations.

Debt or debt collection issues on your mind? Talk to us! Write your questions in the comments section below, and we will pick a few to answer. To report a scam, visit ftc.gov/complaint.

Tagged with: credit report, debt, debt collection

Blog Topics: 

Money & Credit

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

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Here's One Thing the CFPB Gets Right

BY ARI KAREN

AUG 11, 2015 5:35pm ET

ARTICLE LINK (CLICK HERE)

There are many concerning aspects of the Consumer Financial Protection Bureau's methods, not the least of which include its proclivity to regulate via enforcement and its reliance on overly broad and ambiguous languageto support its activities.

But when it comes to regulating Unfair, Deceptive, or Abusive Acts or Practices, the CPFB's actions have, for the most part, been reasonably warranted.

The CFPB recently took a series of UDAAP actions addressing a variety of wrongs in cases where, based on the allegations in recent cases, the misconduct was palpable.

In one case, a mortgage servicer was fined and forced to pay damages for allegedly failing to honor trial modification periods from prior servicers and for unnecessarily prolonging trial modification periods.

n another case, a debt collector was hit with penalties for purportedly making false threats against consumers and collecting debts consumers did not owe.

Lastly, a mortgage servicer was pounded for falsely making claims of savings by collecting bimonthly payments that did not actually result in the savings promised. In addition, the servicer allegedly did not make the payments on behalf of consumers at the times promised.

While the CFPB's self-creation, and expansion, of omnipotent power is disturbing and worrisome for the future, for the present moment it appears the agency tactically chooses cases where the potential for objection is limited. Lenders should keep this in mind this when balancing current compliance and business needs.

Ari Karen is a partner at Offit Kurman

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

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